[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2517 Introduced in House (IH)]
104th CONGRESS
1st Session
H. R. 2517
To provide for reconciliation pursuant to section 105 of the concurrent
resolution on the budget for fiscal year 1996.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 20, 1995
Mr. Kasich introduced the following bill; which was referred to the
Committee on the Budget, and in addition to the Committees on
Agriculture, Banking and Financial Services, Commerce, Economic and
Educational Opportunities, Government Reform and Oversight,
International Relations, the Judiciary, National Security, Resources,
Rules, Science, Transportation and Infrastructure, Veterans' Affairs,
and Ways and Means, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To provide for reconciliation pursuant to section 105 of the concurrent
resolution on the budget for fiscal year 1996.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Seven-Year Balanced Budget
Reconciliation Act of 1995''.
SEC. 2. TABLE OF TITLES.
This Act is organized into titles as follows:
Title I--Committee on Agriculture
Title II--Committee on Banking and Financial Services
Title III--Committee on Commerce
Title IV--Committee on Economic and Educational Opportunities
Title V--Committee on Government Reform and Oversight
Title VI--Committee on International Relations
Title VII--Committee on the Judiciary
Title VIII--Committee on National Security
Title IX--Committee on Resources
Title X--Committee on Transportation and Infrastructure
Title XI--Committee on Veterans' Affairs
Title XII--Committee on Ways and Means-Trade
Title XIII--Committee on Ways and Means-Revenues
Title XIV--Committee on Ways and Means-Tax Simplification
Title XV--Preserving, Protecting, and Strengthening Medicare
Title XVI--Transformation of the Medicaid Program
Title XVII--Abolishment of Department of Commerce
Title XVIII--Welfare Reform
Title XIX--Contract with America-Tax Relief
Title XX--Budget Enforcement
TITLE I--COMMITTEE ON AGRICULTURE
SEC. 1001. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This title may be cited as the ``Agricultural
Reconciliation Act of 1995''.
(b) Table of Contents.--The table of contents of this title is as
follows:
TITLE I--COMMITTEE ON AGRICULTURE
Sec. 1001. Short title and table of contents.
Subtitle A--Freedom to Farm
Sec. 1101. Short title.
Sec. 1102. Seven-year contracts to improve farming certainty and
flexibility.
Sec. 1103. Availability of nonrecourse marketing assistance loans for
wheat, feed grains, cotton, rice, and
oilseeds.
Sec. 1104. Reform of payment limitation provisions of Food Security Act
of 1985.
Sec. 1105. Suspension of certain provisions regarding program crops.
Subtitle B--Dairy
Chapter 1--Authorization of Market Transition Payments in Lieu of Milk
Price Support Program
Sec. 1201. Seven-year market transition contracts for milk producers.
Sec. 1202. Recourse loans for commercial processors of dairy products.
Chapter 2--Dairy Export Programs
Sec. 1211. Dairy export incentive program.
Sec. 1212. Authority to assist in establishment and maintenance of
export trading company.
Sec. 1213. Standby authority to indicate entity best suited to provide
international market development and export
services.
Sec. 1214. Study and report regarding potential impact of Uruguay Round
on prices, income and Government purchases.
Chapter 3--Dairy Promotion Programs
Sec. 1221. Research and promotion activities under Fluid Milk Promotion
Act of 1990.
Sec. 1222. Expansion of dairy promotion program to cover dairy products
imported into the United States.
Sec. 1223. Promotion of United States dairy products in international
markets through dairy promotion program.
Sec. 1224. Issuance of amended order under Dairy Production
Stabilization Act of 1983.
Chapter 4--Verification of Milk Receipts
Sec. 1231. Program to verify receipts of milk.
Sec. 1232. Verification program to supersede multiple existing Federal
orders.
Chapter 5--Miscellaneous Provisions Related to Dairy
Sec. 1241. Extension of transfer authority regarding military and
veterans hospitals.
Sec. 1242. Extension of dairy indemnity program.
Sec. 1243. Extension of report regarding export sales of dairy
products.
Sec. 1244. Status of producer-handlers.
Subtitle C--Other Commodities
Sec. 1301. Extension and modification of price support and quota
programs for peanuts.
Sec. 1302. Availability of loans for processors of sugarcane and sugar
beets.
Sec. 1303. Repeal of obsolete authority for price support for
cottonseed and cottonseed products.
Subtitle D--Miscellaneous Program Changes
Sec. 1401. Limitations on assistance under emergency livestock feed
assistance program.
Sec. 1402. Conservation reserve program.
Sec. 1403. Crop insurance program.
Sec. 1404. Repeal of farmer owned reserve program.
Sec. 1405. Reduction in funding levels for export enhancement program.
Sec. 1406. Business Interruption Insurance Program.
Subtitle E--Commission on 21st Century Production Agriculture
Sec. 1501. Establishment.
Sec. 1502. Composition.
Sec. 1503. Comprehensive review of past and future of production
agriculture.
Sec. 1504. Reports.
Sec. 1505. Powers.
Sec. 1506. Commission procedures.
Sec. 1507. Personnel matters.
Sec. 1508. Termination of Commission.
Subtitle A--Freedom to Farm
SEC. 1101. SHORT TITLE.
This subtitle may be cited as the ``Freedom to Farm Act of 1995''.
SEC. 1102. SEVEN-YEAR CONTRACTS TO IMPROVE FARMING CERTAINTY AND
FLEXIBILITY.
(a) Contracts Authorized.--Section 102 of the Agricultural Act of
1949 (7 U.S.C. 1443), which is obsolete, is amended to read as follows:
``SEC. 102. SEVEN-YEAR MARKET TRANSITION CONTRACTS.
``(a) Contracts Authorized.--
``(1) Offer and main terms.--Beginning as soon as possible
after the date of the enactment of this section, the Secretary
shall offer to enter into a contract (to be known as a `market
transition contract') with eligible owners and operators
described in paragraph (2) on a farm containing eligible
farmland. Under the terms of a market transition contract, the
owner or operator shall agree, in exchange for annual payments
under the contract, to comply with the conservation compliance
plan for the farm prepared in accordance with section 1212 of
the Food Security Act of 1985 (16 U.S.C. 3812) and wetland
protection requirements applicable to the farm under subtitle C
of title XII of such Act (16 U.S.C. 3821 et seq.).
``(2) Eligible owners and operators described.--The
following persons shall be considered to be an owner or
operator eligible to enter into a market transition contract:
``(A) An owner of eligible farmland who assumes all
of the risk of producing a crop.
``(B) An owner of eligible farmland who shares in
the risk of producing a crop.
``(C) An operator of eligible farmland with a
share-rent lease of the eligible farmland, regardless
of the length of the lease, if the owner enters into
the same market transition contract.
``(D) An operator of eligible farmland who cash
rents the eligible farmland under a lease expiring on
or after September 30, 2002, in which case the consent
of the owner is not required.
``(E) An operator of eligible farmland who cash
rents the eligible farmland under a lease expiring
before September 30, 2002, if the owner consents to the
contract.
``(F) An owner of eligible farmland who cash rents
the eligible farmland and the lease term expires before
September 30, 2002, but only if the actual operator of
the farm declines to enter into a market transition
contract. In the case of an owner covered by this
subparagraph, payments will not begin under a market
transition contract until the fiscal year following the
fiscal year in which the lease held by the
nonparticipating operator expires.
``(3) Tenants and sharecroppers.--The Secretary shall
provide adequate safeguards to protect the interests of
operators who are tenants and sharecroppers.
``(b) Elements of Contracting.--
``(1) Time for contracting.--
``(A) Deadline.--Except as provided in subparagraph
(B), the Secretary may not enter into a market
transition contract after April 15, 1996.
``(B) Special rule for conservation reserve
lands.--Eligible owners and operators on farms covered
by a conservation reserve contract under section 1231
of the Food Security Act of 1985 (16 U.S.C. 3831) that
expires after April 15, 1996, may enter into or expand
a market transition contract to cover the acreage equal
to the quantity of the farm's crop acreage bases
restored with respect to the farm under the terms and
conditions of the conservation reserve program. The
Secretary shall annually conduct an enrollment for such
conservation reserve program acreage for the fiscal
years 1997 through 2002.
``(2) Duration of contract.--The term of each market
transition contract shall--
``(A) begin with the 1996 crop year, or the crop
year in which the contract is entered into in the case
of a contract entered into after April 15, 1996; and
``(B) extend through the 2002 crop year.
``(3) Estimation of payments.--At the time the Secretary
enters into a market transition contract, the Secretary shall
provide an estimate of the minimum payments anticipated to be
made under the contract during at least the first fiscal year
for which payments will be made. If the actual payment under
the contract for the first fiscal year is less than 95 percent
of the estimated payment, the owner or operator subject to the
contract may terminate the contract without penalty.
``(4) Report on contracting.--Not later than 90 days after
the date of the enactment of this section, the Secretary shall
submit to the Committee on Agriculture of the House of
Representatives and the Committee on Agriculture, Nutrition,
and Forestry of the Senate a report describing the manner in
which the Secretary proposes to enter into market transition
contracts, the number of persons and acreage covered by such
contracts, and the total amount of anticipated payments to be
made under such contracts (consistent with the limitations
specified in subsection (e)).
``(c) Eligible Farmland Described.--Land shall be considered to be
farmland eligible for coverage under a market transition contract only
if the land has crop acreage base attributable to the land and--
``(1) for at least one of the 1991 through 1995 crop years,
at least a portion of the land was enrolled in the acreage
reduction program authorized for a crop of rice, upland cotton,
feed grains, or wheat under section 101B, 103B, 105B, or 107B
or was considered planted to rice, upland cotton, feed grains,
or wheat, as certified under section 503(c)(7);
``(2) was subject to a conservation reserve contract under
section 1231 of the Food Security Act of 1985 (16 U.S.C. 3831)
whose term expired on or after January 1, 1995; or
``(3) is released from coverage under a conservation
reserve contract by the Secretary during the period beginning
on January 1, 1995, and ending on April 15, 1996.
``(d) Time for Payment.--
``(1) In general.--An annual payment under a market
transition contract shall be made not later than September 30
of each of the fiscal years 1996 through 2002.
``(2) Advance payments.--Beginning in fiscal year 1997,
half of the annual payment may be made on March 15 at the
option of the owner or operator subject to the contract. At the
option of the owner or operator, half of the annual payment for
fiscal year 1996 may be made within 90 days of the date on
which the owner or operator enters into the market transition
contract.
``(e) Total Amounts Available for Payments Under All Contracts.--
``(1) Total payments.--Total payments under all market
transition contracts for fiscal years 1996 through 2002 shall
not exceed $38,733,000,000.
``(2) Total payments per fiscal year.--Beginning in fiscal
year 1996, the Secretary shall expend on a fiscal year basis
the following amounts to satisfy the obligations of the
Secretary under market transition contracts:
``(A) For fiscal year 1996,
$6,014,000,000.
``(B) For fiscal year 1997,
$5,829,000,000.
``(C) For fiscal year 1998,
$6,244,000,000.
``(D) For fiscal year 1999,
$6,047,000,000.
``(E) For fiscal year 2000,
$5,573,000,000.
``(F) For fiscal year 2001,
$4,574,000,000.
``(G) For fiscal year 2002,
$4,453,000,000.
``(3) Adjustment of payment amounts.--The Secretary shall
adjust the amount specified in paragraph (1), and the amount
specified in paragraph (2) for a particular fiscal year, as
follows:
``(A) Subtracting an amount equal to the amount, if
any, necessary during that fiscal year to satisfy
payment requirements under sections 101B, 103B, 105B,
and 107B for the 1994 and 1995 crop years.
``(B) Adding an amount equal to the sum of all
producer repayments of deficiency payments received
during that fiscal year under section 114(a)(2).
``(C) Adding an amount equal to the sum of all
market transition contract payments withheld by the
Secretary, at the request of producers, during the
preceding fiscal year as an offset against producer
repayments of deficiency payments otherwise required
under section 114(a)(2).
``(D) Adding an amount equal to the sum of all
refunds of market transition contract payments received
during the preceding fiscal year under subsection (i).
``(f) Contract Payments to be Based on Historic Expenditure
Levels.--
``(1) Contract commodity defined.--For purposes of this
section, the term `contract commodity' means rice, upland
cotton, feed grains, or wheat.
``(2) Calculation of historic expenditure levels.--
``(A) In general.--For each contract commodity, the
Secretary shall calculate the total expenditures that
were required for the 1991 through 1995 crops of that
contract commodity under section 101B, 103B, 105B, or
107B, including expenditures in the form of deficiency
payments, loan deficiency payments, gains realized from
repaying loans at a level less than the original level,
and marketing certificates.
``(B) Special rule for 1995 crop year.--In the
absence of information regarding actual expenditures
for the 1995 crop of each contract commodity, the
Secretary may use an estimate of expenditures under
section 101B, 103B, 105B, or 107B for that crop year.
The Secretary shall base such estimate on information
contained in the President's budget for fiscal year
1997 submitted to the Congress under section 1105 of
title 31, United States Code.
``(3) Amounts available for each contract commodity.--The
amount available for a fiscal year for payments with respect to
crop acreage base of a contract commodity included in market
transition contracts in effect during that fiscal year shall be
equal to the product of--
``(A) the ratio of the amount calculated under
paragraph (2) for that contract commodity to the total
amount calculated for all contract commodities under
such paragraph; and
``(B) the amount specified in paragraph (2) of
subsection (e) for that fiscal year, as adjusted under
paragraph (3) of such subsection.
``(g) Determination of Payments Under Particular Contract.--
``(1) Individual production of contract commodities.--For
each market transition contract, the amount of production of a
contract commodity covered by the contract shall be equal to
the product of--
``(A) the crop acreage base of that contract
commodity attributable to the eligible farmland subject
to the contract; and
``(B) the farm program payment yield in effect for
the 1995 crop of that contract commodity for the farm
containing that eligible farmland.
``(2) Annual total production of contract commodities.--For
each of the fiscal years 1996 through 2002, the total
production of each contract commodity covered by all market
transition contracts shall be equal to the sum of the amounts
calculated under paragraph (1) for each individual market
transition contract in effect during that fiscal year.
``(3) Annual payment rate.--The payment rate for a contract
commodity for a fiscal year shall be equal to--
``(A) the amount made available under subsection
(f)(3) for that contract commodity for that fiscal
year; divided by
``(B) the amount determined under paragraph (2) for
that fiscal year.
``(4) Annual payment amount.--For each of the fiscal years
1996 through 2002, the amount to be paid under a particular
market transition contract in effect during that fiscal year
with respect to a contract commodity shall be equal to the
product of--
``(A) the amount of production determined under
paragraph (1) for that contract for that contract
commodity; and
``(B) the payment rate in effect under paragraph
(3) for that fiscal year for that contract commodity.
``(5) Assignment of payments.--The provisions of section
8(g) of the Soil Conservation and Domestic Allotment Act (16
U.S.C. 590h(g)) (relating to assignment of payments) shall
apply to payments under this subsection. The owner or operator
making the assignment, or the assignee, shall provide the
Secretary with notice, in such manner as the Secretary may
require in the market transition contract, of any assignment
made under this paragraph.
``(6) Sharing of payments.--The Secretary shall provide for
the sharing of payments made under a market transition contract
among the owners and operators subject to the contract on a
fair and equitable basis.
``(h) Limitation on Total Amount of Payment.--The total amount of
payments made to a person under a market transition contract during any
fiscal year may not exceed $50,000. The Secretary shall issue
regulations defining the term `person' as used in this section, which
shall conform, to the extent practicable, to the regulations defining
the term `person' issued under section 1001 of the Food Security Act of
1985 (7 U.S.C. 1308). In the case of payments under a market transition
contract provided to corporations and other persons described in
paragraph (5)(B)(i)(II) of such section, the Secretary shall comply
with the attribution requirements specified in paragraph (5)(C) of such
section.
``(i) Effect of Violation.--
``(1) Termination of contract.--If an owner or operator
subject to a market transition contract violates the
conservation compliance plan for the farm containing eligible
farmland under the contract or wetland protection requirements
applicable to the farm, the Secretary may terminate the market
transition contract with respect to that owner or operator.
Upon such termination, the owner or operator shall forfeit all
rights to receive future payments under the contract and shall
refund to the Secretary all payments under the contract
received by the owner or operator during the period of the
violation, together with interest thereon as determined by the
Secretary.
``(2) Refund or adjustment.--If the Secretary determines
that a violation of a market transition contract does not
warrant termination of the contract under paragraph (1), the
Secretary may require the owner or operator subject to the
contract--
``(A) to refund to the Secretary that part of the
payments received by the owner or operator during the
period of the violation, together with interest thereon
as determined by the Secretary; or
``(B) to accept an adjustment in the amount of
future payments otherwise required under the contract.
``(3) Foreclosure.--An owner or operator subject to a
market transition contract may not be required to make
repayments to the Secretary of amounts received under the
contract if the eligible farm land that is subject to the
contract has been foreclosed upon and the Secretary determines
that forgiving such repayments is appropriate in order to
provide fair and equitable treatment. This paragraph shall not
void the responsibilities of such an owner or operator under
the contract if the owner or operator continues or resumes
operation, or control, of the property that is subject to the
contract. Upon the resumption of operation or control over the
property by the owner or operator, the provisions of the
contract in effect on the date of the foreclosure shall apply.
``(4) Review.--A determination of the Secretary under this
subsection shall be considered to be an adverse decision for
purposes of the availability of administrative review of the
determination.
``(j) Transfer of Interest in Lands Subject to Contract.--
``(1) Effect of transfer.--Except as provided in paragraph
(2), the transfer by an owner or operator subject to a market
transition contract of the right and interest of the owner or
operator in the eligible farmland under the contract shall
result in the termination of the contract with respect to that
farmland, effective on the date of the transfer, unless the
transferee of the land agrees with the Secretary to assume all
obligations of the contract. At the request of the transferee,
the Secretary may modify the contract if the modifications are
consistent with the objectives of this section as determined by
the Secretary.
``(2) Exception.--If an owner or operator who is entitled
to a payment under a market transition contract dies, becomes
incompetent, or is otherwise unable to receive such payment,
the Secretary shall make such payment, in accordance with
regulations prescribed by the Secretary and without regard to
any other provision of law, in such manner as the Secretary
determines is fair and reasonable in light of all of the
circumstances.
``(k) Planting Flexibility.--
``(1) Permitted crops.--In the case of acreage on a farm
that serves as the basis for payments under a market transition
contract, an owner or operator on the farm may plant for
harvest on the acreage--
``(A) rice, upland cotton, feed grains, and wheat;
``(B) any oilseed;
``(C) any industrial or experimental crop
designated by the Secretary;
``(D) mung beans, lentils, and dry peas; and
``(E) any other crop, except any fruit or vegetable
crop (including potatoes and dry edible beans) not
covered by subparagraph (D), unless such fruit or
vegetable crop is designated by the Secretary as--
``(i) an industrial or experimental crop;
or
``(ii) a crop for which no substantial
domestic production or market exists.
``(2) Limitation.--At the discretion of the Secretary, the
Secretary may prohibit the planting of any crop specified in
paragraph (1) on acreage on a farm that serves as the basis for
payments under a market transition contract.
``(3) Notification.--With regard to commodities that may be
planted pursuant to this subsection, the Secretary shall make a
determination in each crop year of the commodities that may not
be planted pursuant to this subsection and shall make available
a list of the commodities.
``(4) Conservation uses.--In lieu of planting any crop
specified in paragraph (1), the owner or operator on a farm may
devote to conservation uses all or part of the eligible
farmland subject to a market transition contract, in accordance
with regulations issued by the Secretary.
``(5) Haying and grazing.--Haying and grazing of eligible
farmland subject to a market transition contract shall be
permitted, except during any consecutive five-month period that
is established by the State committee established under section
8(b) of the Soil Conservation and Domestic Allotment Act (16
U.S.C. 590h(b)) for a State. The 5-month period shall be
established during the period beginning April 1, and ending
October 31, of a year. In the case of a natural disaster, the
Secretary may permit unlimited haying and grazing on the
eligible farmland. The Secretary may not exclude irrigated or
irrigable acreage not planted in alfalfa when exercising the
authority under the preceding sentence.
``(l) Market Transition Contracts.--Notwithstanding any other
provision of law, no order issued for any fiscal year under section 252
of the Balanced Budget and Emergency Deficit Control Act of 1985 (2
U.S.C. 902) shall affect any payment under any market transition
contract.
``(m) Commodity Credit Corporation.--The Secretary shall carry out
this section through the Commodity Credit Corporation, except that no
funds of the Corporation shall be used for any salary or expense of any
officer or employee of the Department of Agriculture in connection with
the administration of market transition payments or loans under this
Act.
``(n) Regulations.--The Secretary may issue such regulations as the
Secretary determines necessary to carry out this section.''.
(b) Conforming Amendments.--
(1) Wheat 0/85 program.--Section 107B(c)(1)(E) of the
Agricultural Act of 1949 (7 U.S.C. 1445b-3a(c)(1)(E)) is
amended by striking ``through 1997'' in clauses (i) and (vii)
each place it appears and inserting ``and 1995''.
(2) Feed grains 0/85 program.--Section 105B(c)(1)(E) of
such Act (7 U.S.C. 1444f(c)(1)(E)) is amended by striking
``through 1997'' in clauses (i) and (vii) each place it appears
and inserting ``and 1995''.
(3) Cotton program.--Section 103B of such Act (7 U.S.C.
1444-2) is amended--
(A) in the section heading, by striking ``1997''
and inserting ``1995'';
(B) in subsections (a)(1), (b)(1), (c)(1)(A),
(c)(1)(B)(ii), and (o), by striking ``1997'' each place
it appears and inserting ``1995'';
(C) in subsections (c)(1)(D)(i) and
(c)(1)(D)(v)(II) by striking ``through 1997'' each
place it appears and inserting ``and 1995'';
(D) in the heading of subsection (c)(1)(D)(v)(II),
by striking ``through 1997 crops'' and inserting ``and
1995 crops'';
(E) in subsection (e)(1)(D), by striking ``29\1/2\
percent for each of the 1995 and 1996 crops, and 29
percent for the 1997 crop'' and inserting ``and 29\1/2\
percent for the 1995 crop''; and
(F) in subparagraphs (B)(i), (D)(i), (E)(i), and
(F)(i) of subsection (a)(5), by striking ``1998'' each
place it appears and inserting ``1996''.
(4) Rice 50/85 program.--Section 101B of such Act (7 U.S.C.
1441-2) is amended--
(A) in subsections (c)(1)(D)(i) and
(c)(1)(D)(v)(II), by striking ``through 1997'' each
place it appears and inserting ``and 1995''; and
(B) in the heading of subsection (c)(1)(D)(v)(II),
by striking ``through 1997 crops'' and inserting ``and
1995 crops''.
(5) Oilseeds.--Section 205(c) of such Act (7 U.S.C.
1446f(c)) is amended by striking ``through 1997'' both places
it appears and inserting ``and 1995''.
(6) Crop acreage base.--Section 509 of such Act (7 U.S.C.
1469) is amended by striking ``effective only for the 1991
through 1997 program crops'' and inserting ``effective only
until January 1, 1996''.
SEC. 1103. AVAILABILITY OF NONRECOURSE MARKETING ASSISTANCE LOANS FOR
WHEAT, FEED GRAINS, COTTON, RICE, AND OILSEEDS.
(a) Nonrecourse Loans Available.--The Agricultural Act of 1949 is
amended by inserting after section 102, as amended by section 1102, the
following new section:
``SEC. 102A. NONRECOURSE MARKETING ASSISTANCE LOANS FOR CERTAIN CROPS.
``(a) Nonrecourse Loans Available.--For each of the 1996 through
2002 crops of wheat, feed grains, upland cotton, extra long staple
cotton, rice, and oilseeds, the Secretary shall make available to
eligible producers on a farm nonrecourse marketing assistance loans
under terms and conditions that are prescribed by the Secretary and at
a loan rate calculated under subsection (c). A marketing assistance
loan shall have a term of nine months beginning on the first day of the
first month after the month in which the loan is made. The Secretary
may not extend the term of a marketing assistance loan.
``(b) Announcement of Loan Rate.--The Secretary shall announce the
loan rate for each commodity specified in subsection (a) not later than
the start of the marketing year of the commodity for which the loan
rate is to be in effect.
``(c) Calculation of Loan Rate.--
``(1) Calculation.--Subject to adjustment under paragraph
(2), the loan rate for marketing assistance loans under
subsection (a) for a particular commodity specified in such
subsection shall be equal to 70 percent of the simple average
price received by producers of that commodity during the
marketing years for the immediately preceding five crops of
that commodity.
``(2) Required budgetary adjustments.--If the Secretary
estimates for one of the marketing years for the 1996 through
2002 crops of a particular commodity specified in subsection
(a) that the average price to be received by producers of that
commodity is likely to be less that the loan rate calculated
under paragraph (1) for that marketing year, the Secretary
shall reduce the loan rate for that commodity for that
marketing year by an amount sufficient to enable the Secretary
to provide marketing assistance loans at no net cost to the
Federal Government by preventing the accumulation of that
commodity by the Commodity Credit Corporation through loan
forfeitures and by limiting producer gains under the marketing
loan provision under subsection (d).
``(3) Simple average price.--The Secretary shall be
responsible for determining the simple average price received
by producers of a commodity specified in subsection (a). In
determining the simple average price a commodity for a five-
year period, the Secretary shall exclude the year in which the
average price was the highest and the year in which the average
price was the lowest during the period.
``(d) Marketing Loan Provision.--If during the marketing year, the
Secretary determines that the market price of a commodity subject to a
marketing assistance loan under this section falls below the lower of
(1) the loan rate, or (2) the loan rate as adjusted by subsection
(c)(2), the Secretary shall allow such loan to be repaid at such market
price. This subsection shall not apply in the case of marketing
assistance loans for extra long staple cotton, rye, or oilseeds.
``(e) Adjustments for Grade, Type, Quality, Location, and Other
Factors.--The Secretary may make such adjustments in the announced loan
rate for a commodity specified in subsection (a) as the Secretary
considers appropriate to reflect differences in grade, type, quality,
location, and other factors.
``(f) Producers Eligible for Loans.--Only the following producers
shall be eligible for a marketing assistance loan under this section:
``(1) In the case of a marketing assistance loan for a crop
of wheat, feed grains (other than rye), upland cotton, or rice,
a producer whose land on which the crop is raised is subject to
a market transition contract under section 102.
``(2) In the case of a marketing assistance loan for a crop
of extra long staple cotton, rye, or oilseeds, any producer.
``(g) Prohibition on Storage Payments.--The Secretary may not make
payments to producers to cover storage charges incurred in connection
with marketing assistance loans made under this section.
``(h) Definitions.--For purposes of this section:
``(1) The term `feed grains' means corn, grain sorghums,
barley, oats, and rye.
``(2) The term `oilseeds' means soybeans, sunflower seed,
rapeseed, canola, safflower, flaxseed, mustard seed, and, if
designated by the Secretary, other oilseeds.
``(i) Regulations.--The Secretary may issue such regulations as the
Secretary determines necessary to carry out this section.''.
(b) Repeal of Current Adjustment Authority.--Section 403 of the
Agricultural Act of 1949 (7 U.S.C. 1423) is repealed.
SEC. 1104. REFORM OF PAYMENT LIMITATION PROVISIONS OF FOOD SECURITY ACT
OF 1985.
(a) Attribution of Payments Made to Corporations and Other
Entities.--Paragraph (5)(C) of section 1001 of the Food Security Act of
1985 (7 U.S.C. 1308) is amended to read as follows:
``(C)(i) In the case of payments to corporations and other entities
described in subparagraph (B)(i)(II), the Secretary shall attribute
payments to individuals in proportion to their ownership interests in
the corporation or entity receiving the payment or in any other
corporation or entity that has a substantial beneficial interest in the
corporation or entity actually receiving the payment. This subparagraph
shall apply to individuals who hold or acquire, directly or through
another corporation or entity, a substantial beneficial interest in the
corporation or entity actually receiving the payment.
``(ii) In the case of payments to corporations and other entities
described in subparagraph (B)(i)(II), the Secretary shall also
attribute payments to any State (or political subdivision or agency
thereof) or other corporation or entity that has a substantial
beneficial interest in the corporation or entity actually receiving the
payment in proportion to their ownership interests in the corporation
or entity receiving the payment. This subparagraph shall apply even if
the payments are also attributable to individuals under clause (i).
``(iii) For purposes of this subparagraph, the term `substantial
beneficial interest' means not less than five percent of all beneficial
interests in the corporation or entity actually receiving the payment,
except that the Secretary may set a lower percentage in order to ensure
that the provisions of this section and the scheme or device provisions
in section 1001B are not circumvented.''.
(b) Tracking of Payments.--Paragraph (3) of section 1001A(a) of the
Food Security Act of 1985 (7 U.S.C. 1308-1(a)) is amended to read as
follows:
``(3) Notification.--To facilitate administration of this
section, each entity or individual receiving payments as a
separate person shall notify each individual or other entity
that acquires or holds a substantial beneficial interest in it
of the requirements and limitations under this subsection. Each
such entity or individual receiving payments shall provide to
the Secretary, at such times and in such manner as prescribed
by the Secretary, the name and social security number of each
individual, or the name and taxpayer identification number of
each entity, that holds or acquires a substantial beneficial
interest.''.
(c) Conforming Amendment.--Paragraph (2) of such section is amended
to read as follows:
``(2) Substantial beneficial interest.--For purposes of
this subsection, the term `substantial beneficial interest' has
the meaning given such term in section 1001(5)(C)(iii).''.
SEC. 1105. SUSPENSION OF CERTAIN PROVISIONS REGARDING PROGRAM CROPS.
(a) Wheat.--
(1) Nonapplicability of certificate requirements.--Sections
379d through 379j of the Agricultural Adjustment Act of 1938 (7
U.S.C. 1379d-1379j) (relating to marketing certificate
requirements for processors and exporters) shall not be
applicable to wheat processors or exporters during the period
June 1, 1996, through May 31, 2003.
(2) Suspension of land use, wheat marketing allocation, and
producer certificate provisions.--Sections 331 through 339,
379b, and 379c of the Agricultural Adjustment Act of 1938 (7
U.S.C. 1331 through 1339, 1379b, and 1379c) shall not be
applicable to the 1996 through 2002 crops of wheat.
(3) Suspension of certain quota provisions.--The joint
resolution entitled ``A joint resolution relating to corn and
wheat marketing quotas under the Agricultural Adjustment Act of
1938, as amended'', approved May 26, 1941 (7 U.S.C. 1330 and
1340) shall not be applicable to the crops of wheat planted for
harvest in the calendar years 1996 through 2002.
(4) Nonapplicability of section 107 program.--Section 107
of the Agricultural Act of 1949 (7 U.S.C. 1445a) shall not be
applicable to the 1996 through 2002 crops of wheat.
(b) Feed Grains.--Section 105 of the Agricultural Act of 1949 (7
U.S.C. 1444b) shall not be applicable to the 1996 through 2002 crops of
feed grains.
(c) Cotton.--
(1) Suspension of base acreage allotments, marketing
quotas, and related provisions.--Sections 342, 343, 344, 345,
346, and 377 of the Agricultural Adjustment Act of 1938 (7
U.S.C. 1342-1346 and 1377) shall not be applicable to any of
the 1996 through 2002 crops of upland cotton.
(2) Nonapplicability of section 103 program.--Section
103(a) of the Agricultural Act of 1949 (7 U.S.C. 1444(a)) shall
not be applicable to the 1996 through 2002 crops of upland
cotton.
Subtitle B--Dairy
CHAPTER 1--AUTHORIZATION OF MARKET TRANSITION PAYMENTS IN LIEU OF MILK
PRICE SUPPORT PROGRAM
SEC. 1201. SEVEN-YEAR MARKET TRANSITION CONTRACTS FOR MILK PRODUCERS.
(a) Contracts Authorized.--Section 204 of the Agricultural Act of
1949 (7 U.S.C. 1446e) is amended to read as follows:
``SEC. 204. SEVEN-YEAR MARKET TRANSITION CONTRACTS FOR MILK PRODUCERS
AND RELATED PROVISIONS.
``(a) Market Transition Contracts Authorized.--
``(1) Offer and main terms.--The Secretary shall offer to
enter into a contract (to be known as a `market transition
contract') with willing milk producers, under which the milk
producers agree, in exchange for seven payments under the
contract, to comply with--
``(A) governmental animal waste management
regulations otherwise applicable to the milk producer;
and
``(B) any wetland protection requirements
applicable to the farm under subtitle C of title XII of
such Act (16 U.S.C. 3821 et seq.).
``(2) Milk producer defined.--For purposes of this section,
the term `milk producer' means a person that was engaged in the
production of cow's milk in the 48 contiguous States on
September 15, 1995, and that received a payment during the 45-
day period before that date for cow's milk marketed for
commercial use. Such term includes a person considered to be a
producer-handler that satisfies the requirements of the
preceding sentence.
``(b) Time for Contracting; Duration.--The Secretary shall begin to
offer to enter into market transition contracts as soon as possible
after the date of the enactment of this section. The Secretary may not
enter into a market transition contract after April 15, 1996. The term
of each market transition contract shall extend through December 31,
2001.
``(c) Estimation of Payments.--At the time the Secretary enters
into a market transition contract, the Secretary shall provide an
estimate of the payments anticipated to be made under the contract for
at least fiscal year 1996.
``(d) Time for Payment.--The fiscal year 1996 payment under a
market transition contract shall be made on April 15, 1996, or as soon
thereafter as practicable. The Secretary shall make subsequent payments
not later than October 15 of each of the fiscal years 1997 through
2002.
``(e) Payment Rate.--The Secretary shall use the following payment
rates to calculate payments under a market transition contract for a
fiscal year:
``(1) For fiscal year 1996, 10 cents per hundredweight.
``(2) For fiscal year 1997, 15 cents per hundredweight.
``(3) For fiscal year 1998, 13 cents per hundredweight.
``(4) For fiscal year 1999, 11 cents per hundredweight.
``(5) For fiscal year 2000, 9 cents per hundredweight.
``(6) For fiscal year 2001, 7 cents per hundredweight.
``(7) For fiscal year 2002, 5 cents per hundredweight.
``(f) Contract Payments To Be Based on Production History.--
``(1) In general.--The Secretary shall determine the
historic annual milk production for each milk producer that
enters into a market transition contract on the basis of milk
checks reflecting payments for commercial marketings of cow's
milk or such other records of commercial marketings or product
sales as may be acceptable to the Secretary. Each milk
producer's historic annual milk production shall be expressed
in terms of hundredweights of milk.
``(2) Producers with three or more years of production.--In
the case of a milk producer that has been engaged in the
production of milk for at least three of the calendar years
1991 through 1995, the milk producer's historic annual milk
production shall be equal to the average quantity of milk
marketed by the milk producer during the three years of such
period in which the largest quantities of milk were marketed by
the milk producer.
``(3) Producers with fewer years of production.--In the
case of a milk producer not covered by paragraph (2), the
Secretary shall assign the milk producer an historic annual
milk production equal to an annualized average of the monthly
quantity of milk marketed by the milk producer during the
period in which the milk producer has been engaged in milk
production. The Secretary shall not consider months of
production after December 31, 1995.
``(g) Calculation of Payment Amount.--The total amount to be paid
to a milk producer under a market transition contract for a fiscal year
shall be equal to the product of--
``(1) the payment rate in effect for that fiscal year under
subsection (e); and
``(2) the historic annual milk production for the milk
producer determined under subsection (f).
``(h) Assignment of Payments.--The right of a milk producer to a
payment under a market transition contract shall be freely assignable
by the milk producer. The milk producer or assignee shall provide the
Secretary with notice, in such manner as the Secretary may require in
the market transition contract, of any assignment made under this
subsection.
``(i) Effect of Violation.--
``(1) Termination of contract.--If a milk producer subject
to a market transition contract violates any governmental
animal waste management regulation that applies to the producer
or wetland protection requirements applicable to the
producer, the Secretary may terminate the producer's market transition
contract. Upon such termination, the milk producer shall forfeit all
rights to receive future payments under the contract and shall refund
to the Secretary any payment under the contract received by the
producer after notification of the violation, together with interest
thereon as determined by the Secretary. The Secretary shall make a
determination regarding violations of animal waste management
regulations under this paragraph in consultation with the appropriate
State governmental authority.
``(2) Refund or adjustment.--If the Secretary determines
that a violation of a market transition contract does not
warrant termination of the contract under paragraph (1), the
Secretary may require the milk producer subject to the
contract--
``(A) to refund to the Secretary any payment under
the contract received by the producer after
notification of the violation, together with interest
thereon as determined by the Secretary; or
``(B) to accept an adjustment in the amount of
future payments otherwise required under the contract.
``(j) Market Transition Contracts.--Notwithstanding any other
provision of law, no order issued for any fiscal year under section 252
of the Balanced Budget and Emergency Deficit Control Act of 1985 (2
U.S.C. 902) shall affect any payment under any market transition
contract.''.
(b) Continued Operation of Existing Program Through 1995.--
(1) Price support operations.--Until December 31, 1995, the
Secretary of Agriculture shall continue to use section 204 of
the Agricultural Act of 1949 (7 U.S.C. 1446e), as in effect on
the day before the date of the enactment of this Act, to
support the price of milk produced in the 48 contiguous States.
(2) Price Reduction.--Subsection (h) of such section,
relating to a reduction in the price received by milk producers
for all milk produced in the 48 contiguous States and marketed
for commercial use, shall continue to apply with respect to
milk marketed through December 31, 1995. In the case of milk
producers that did not increase milk marketings in 1995 when
compared to 1994 milk marketings, the Secretary of Agriculture
shall make refunds available in 1996 to such milk producers in
the manner provided in paragraph (3) of such subsection.
(c) Conforming Repeal of General Authority to Provide Price Support
for Milk.--
(1) Designated nonbasic agricultural commodity.--Section
201(a) of the Agricultural Act of 1949 (7 U.S.C. 1446(a)) is
amended by striking ``milk,''.
(2) Other nonbasic agricultural commodities.--Section 301
of the Agricultural Act of 1949 (7 U.S.C. 1447) is amended by
inserting ``(other than milk)'' after ``title II''.
SEC. 1202. RECOURSE LOANS FOR COMMERCIAL PROCESSORS OF DAIRY PRODUCTS.
The Agricultural Act of 1949 is amended by striking section 424 (7
U.S.C. 1433c), as added by section 1003 of the Food Security Act of
1985 and effective for 1986 through 1990 crops, and inserting the
following new section:
``SEC. 424. RECOURSE LOANS FOR COMMERCIAL PROCESSORS OF DAIRY PRODUCTS.
``(a) Recourse Loans Available.--On and after January 1, 1996, the
Secretary may make recourse loans available to commercial processors of
eligible dairy products to assist such processors to manage inventories
of eligible dairy products to assure a greater degree of price
stability for the dairy industry during the year. Recourse loans may be
made available under such reasonable terms and conditions as the
Secretary may prescribe.
``(b) Amount of Loan.--The Secretary shall establish the amount of
a loan for eligible dairy products, which shall reflect 90 percent of
the reference price for that product. The rate of interest charged
participants in this program shall not be less than the rate of
interest charged the Commodity Credit Corporation by the United States
Treasury.
``(c) Period of Loans.--A recourse loan made under this section may
not extend beyond the end of the fiscal year during which the loan is
made, except that the Secretary may extend the loan for an additional
period not to exceed the end of the next fiscal year.
``(d) Definitions.--For purposes of this section:
``(1) The term `eligible dairy products' means cheddar
cheese, butter, and nonfat dry milk.
``(2) The term `reference price' means--
``(A) for cheddar cheese, the average National
Cheese Exchange price for 40 pound blocks of cheddar
cheese for the previous three months;
``(B) for butter the average Chicago Mercantile
Exchange price for butter for the previous three
months; and
``(C) for nonfat dry milk, the Western States price
for nonfat dry milk for the previous three months.''.
CHAPTER 2--DAIRY EXPORT PROGRAMS
SEC. 1211. DAIRY EXPORT INCENTIVE PROGRAM.
(a) In General.--Section 153(c) of the Food Security Act of 1985
(15 U.S.C. 713a-14(c)) is amended--
(1) by striking ``and'' at the end of paragraph (1);
(2) by striking the period at the end of paragraph (2) and
inserting ``; and''; and
(3) by adding at the end the following new paragraphs:
``(3) the maximum volume of dairy product exports allowable
consistent with the obligations of the United States as a
member of the World Trade Organization are exported under the
program each year (minus the volume sold under section 1163 of
the Food Security Act of 1985 (7 U.S.C. 1731 note) during that
year), except to the extent that the export of such a volume
under the program would, in the judgment of the Secretary,
exceed the limitations on the value set forth in subsection
(f); and
``(4) payments may be made under the program for exports to
any destination in the world for the purpose of market
development, except a destination in a country with respect to
which shipments from the United States are otherwise restricted
by law.''.
(b) Sole Discretion.--Section 153(b) of the Food Security Act of
1985 (15 U.S.C. 713a-14(b)) is amended by inserting ``sole'' before
``discretion''.
(c) Market Development.--Section 153(e)(1) of the Food Security Act
of 1985 (15 U.S.C. 713a-14(e)(1)) is amended--
(1) by striking ``and'' and inserting ``the''; and
(2) by inserting before the period the following: ``, and
any additional amount that may be required to assist in the
development of world markets for United States dairy
products''.
(d) Maximum Allowable Amounts.--Section 153 of the Food Security
Act of 1985 (15 U.S.C. 713a-14) is amended by adding at the end the
following:
``(f) Required Funding.--The Commodity Credit Corporation shall in
each year use money and commodities for the program under this section
in the maximum amount consistent with the obligations of the United
States as a member of the World Trade Organization, minus the amount
expended under section 1163 of the Food Security Act of 1985 (7 U.S.C.
1731 note) during that year. However, the Commodity Credit Corporation
may not exceed the limitations specified in subsection (c)(3) on the
volume of allowable dairy product exports.''.
(e) Conforming Amendment.--Section 153(a) of the Food Security Act
of 1985 (15 U.S.C. 713a-14(a)) is amended by striking ``2001'' and
inserting ``2002''.
SEC. 1212. AUTHORITY TO ASSIST IN ESTABLISHMENT AND MAINTENANCE OF
EXPORT TRADING COMPANY.
The Secretary of Agriculture shall, consistent with the obligations
of the United States as a member of the World Trade Organization,
provide such advice and assistance to the United States dairy industry
as may be necessary to enable that industry to establish and maintain
an export trading company under the Export Trading Company Act of 1982
(15 U.S.C. 4001 et seq.) for the purpose of facilitating the
international market development for and exportation of dairy products
produced in the United States.
SEC. 1213. STANDBY AUTHORITY TO INDICATE ENTITY BEST SUITED TO PROVIDE
INTERNATIONAL MARKET DEVELOPMENT AND EXPORT SERVICES.
(a) Indication of Entity Best Suited to Assist International Market
Development for and Export of United States Dairy Products.--If--
(1) the United States dairy industry has not established an
export trading company under the Export Trading Company Act of
1982 (15 U.S.C. 4001 et seq.) for the purpose of facilitating
the international market development for and exportation of
dairy products produced in the United States on or before June
30, 1996; or
(2) the quantity of exports of United States dairy products
during the 12-month period preceding July 1, 1997 does not
exceed the quantity of exports of United States dairy products
during the 12-month period preceding July 1, 1996 by 1.5
billion pounds (milk equivalent, total solids basis);
the Secretary of Agriculture is directed to indicate which entity
autonomous of the Government of the United States is best suited to
facilitate the international market development for and exportation of
United States dairy products.
(b) Funding of Export Activities.--The Secretary shall assist the
entity in identifying sources of funding for the activities specified
in subsection (a) from within the dairy industry and elsewhere.
(c) Application of Section.--This section shall apply only during
the period beginning on July 1, 1997 and ending on September 30, 2000.
SEC. 1214. STUDY AND REPORT REGARDING POTENTIAL IMPACT OF URUGUAY ROUND
ON PRICES, INCOME AND GOVERNMENT PURCHASES.
(a) Study.--The Secretary of Agriculture shall conduct a study, on
a variety by variety of cheese basis, to determine the potential impact
on milk prices in the United States, dairy producer income, and Federal
dairy program costs, of the allocation of additional cheese granted
access to the United States as a result of the obligations of the
United States as a member of the World Trade Organization.
(b) Report.--Not later than September 30, 1996, the Secretary shall
report to the Committees on Agriculture of the Senate and the House of
Representatives the results of the study conducted under this section.
(c) Rule of Construction.--Any limitation imposed by Act of
Congress on the conduct or completion of studies or reports to Congress
shall not apply to the study and report required under this section
unless such limitation explicitly references this section in doing so.
CHAPTER 3--DAIRY PROMOTION PROGRAMS
SEC. 1221. RESEARCH AND PROMOTION ACTIVITIES UNDER FLUID MILK PROMOTION
ACT OF 1990.
(a) Extension of Order.--Section 1999O of the Fluid Milk Promotion
Act of 1990 (subtitle H of title XIX of Public Law 101-624; 7 U.S.C.
6414(a)) is amended--
(1) by striking subsection (a); and
(2) by redesignating subsections (b) and (c) as subsections
(a) and (b), respectively.
(b) Definition of Research.--Paragraph (6) of section 1999C of such
Act (7 U.S.C. 6402) is amended to read as follows:
``(6) Research.--The term `research' means--
``(A) market research to support and increase the
effectiveness of industry advertising, promotion, and
educational activities; and
``(B) other research to expand sales of fluid milk
products, including research regarding the development
of new products, new product characteristics, and
improved technology in the production, manufacturing,
or processing of milk and the products of milk.''.
(c) Conforming Amendments Regarding Marketing Orders.--Section
1999J(b) of such Act (7 U.S.C. 6409(b)) is amended--
(1) by striking paragraph (1);
(2) in paragraph (2), by striking ``(2) otherwise'' and
inserting ``(1)''; and
(3) by redesignating paragraph (3) as paragraph (2).
(d) Clarification of Referendum Requirements.--
(1) Suspension or termination.--Subsection (b) of section
1999O of such Act (7 U.S.C. 6414), as redesignated by
subsection (a)(2), is amended--
(A) in paragraph (1), by striking ``all
processors'' and inserting ``all fluid milk
processors''; and
(B) in paragraph (2)(B), by striking ``all
processors'' and inserting ``all fluid milk processors
voting in the referendum''.
(2) Conforming amendment.--Section 1999N(b)(2) of such Act
(7 U.S.C. 6413(b)(2)) is amended by striking ``all processors''
and inserting ``all fluid milk processors voting in the
referendum''.
SEC. 1222. EXPANSION OF DAIRY PROMOTION PROGRAM TO COVER DAIRY PRODUCTS
IMPORTED INTO THE UNITED STATES.
(a) Declaration of Policy.--Section 110(b) of the Dairy Production
Stabilization Act of 1983 (7 U.S.C. 4501(b)) is amended by inserting
after ``commercial use'' the following: ``and dairy products imported
into the United States''.
(b) Definitions.--
(1) Milk.--Subsection (d) of section 111 of such Act (7
U.S.C. 4502) is amended by inserting before the period at the
end the following: ``or cow's milk imported into the United
States in the form of dairy products intended for consumption
in the United States''.
(2) Dairy products.--Subsection (e) of such section is
amended by inserting before the semicolon the following: ``and
casein (except casein imported under sections 3501.90.20
(casein glue) and 3501.90.50 (other) of the Harmonized Tariff
Schedule)''.
(3) Research.--Subsection (j) of such section is amended by
inserting before the semicolon the following: ``or to reduce
the costs associated with processing or marketing those
products''.
(4) United states.--Subsection (l) of such section is
amended to read as follows:
``(l) the term `United States' means the several States and
the District of Columbia;''.
(5) Importers and exporters.--Such section is further
amended--
(A) in subsection (k), by striking ``and'' at the
end of such subsection; and
(B) by adding at the end the following new
subsections:
``(m) the term `importer' means the first person to take
title to dairy products imported into the United States for
domestic consumption; and
``(n) the term `exporter' means any person who exports
dairy products from the United States.''.
(c) Membership of Board.--Section 113(b) of such Act (7 U.S.C.
4504(b)) is amended--
(1) in the first sentence, by striking ``thirty-six
members'' and inserting ``38 members, including one
representative of importers and one representative of exporters
to be appointed by the Secretary'';
(2) in the second sentence, by striking ``Members'' and
inserting ``The remaining members''; and
(3) in the third sentence, by striking ``United States''
and inserting ``United States, including Alaska and Hawaii''.
(d) Assessment.--Section 113(g) of such Act (7 U.S.C. 4504(g)) is
amended--
(1) by inserting ``(1)'' after ``(g)''; and
(2) by adding at the end the following new paragraph:
``(2) The order shall provide that each importer of dairy products
intended for consumption in the United States shall remit to the Board,
in the manner prescribed by the order, an assessment equal to 1.2 cents
per pound of total milk solids contained in the imported dairy
products, or 15 cents per hundredweight of milk contained in the
imported dairy products, whichever is less. If an importer can
establish that it is participating in active, ongoing qualified State
or regional dairy product promotion or nutrition programs intended to
increase the consumption of milk and dairy products, the importer shall
receive credit in determining the assessment due from that importer for
contributions to such programs of up to .8 cents per pound of total
milk solids contained in the imported dairy products, or 10 cents per
hundredweight of milk contained in the imported dairy products,
whichever is less. The assessment collected under this paragraph shall
be used for the purpose specified in paragraph (1).''.
(e) Records.--Section 113(k) of such Act (7 U.S.C. 4504(k)) is
amended in the first sentence by inserting after ``commercial use,''
the following: ``each importer of dairy products,''.
(f) Termination or Suspension of Order.--Section 116(b) of such Act
(7 U.S.C. 4507(b)) is amended--
(1) by inserting ``and importers'' after ``producers'' each
place it appears;
(2) by striking ``who, during a representative period (as
determined by the Secretary), have been engaged in the
production of milk for commercial use''; and
(3) by adding at the end the following new sentences: ``A
producer shall be eligible to vote in the referendum if the
producer, during a representative period (as determined by the
Secretary), has been engaged in the production of milk for
commercial use. An importer shall be eligible to vote in the
referendum if the importer, during a representative period (as
determined by the Secretary), has been engaged in the
importation of dairy products into the United States intended
for consumption in the United States.''.
SEC. 1223. PROMOTION OF UNITED STATES DAIRY PRODUCTS IN INTERNATIONAL
MARKETS THROUGH DAIRY PROMOTION PROGRAM.
Section 113(e) of the Dairy Production Stabilization Act of 1983 (7
U.S.C. 4504(e)) is amended by adding at the end the following new
sentence: ``For each of the fiscal years 1996 through 2000, the Board's
budget shall provide for the expenditure of not less than 10 percent of
the anticipated revenues available to the Board to develop
international markets for, and to promote within such markets, the
consumption of dairy products produced in the United States from milk
produced in the United States.''.
SEC. 1224. ISSUANCE OF AMENDED ORDER UNDER DAIRY PRODUCTION
STABILIZATION ACT OF 1983.
(a) Implementation of Amendments.--To implement the amendments made
by sections 1222 and 1223, the Secretary of Agriculture shall issue an
amended dairy products promotion and research order under section 112
of the Dairy Production Stabilization Act of 1983 (7 U.S.C. 4504)
reflecting such amendments, and no other changes, in the order in
existence on the date of the enactment of this Act.
(b) Proposal of Amended Order.--Not later than 60 days after the
date of the enactment of this Act, the Secretary of Agriculture shall
publish a proposed dairy products promotion and research order
reflecting the amendments made by sections 1222 and 1223. The Secretary
shall provide notice and an opportunity for public comment on the
proposed order.
(c) Issuance of Amended Order.--After notice and opportunity for
public comment are provided in accordance with subsection (b), the
Secretary of Agriculture shall issue a final dairy products promotion
and research order, taking into consideration the comments received and
including in the order such provisions as are necessary to ensure that
the order is in conformity with the amendments made by sections 1222
and 1223.
(d) Effective Date.--The final dairy products promotion and
research order shall be issued and become effective not later than 120
days after publication of the proposed order.
(e) Referendum on Amendments.--Section 115 of Dairy Production
Stabilization Act of 1983 (7 U.S.C. 4506) is amended--
(1) by redesignating subsection (b) as subsection (c); and
(2) by inserting after subsection (a) the following new
subsection:
``(b) Referendum.--Not later than 36 months after the issuance of
the order reflecting the amendments made by sections 1222 and 1223 of
the Agricultural Reconciliation Act of 1995, the Secretary shall
conduct a referendum under this section for the sole purpose of
determining whether the requirements of such amendments shall be
continued. The Secretary shall conduct the referendum among persons who
have been producers or importers during a representative period as
determined by the Secretary. The requirements of such amendments shall
be continued only if the Secretary determines that such requirements
have been approved by not less than a majority of the persons voting in
the referendum. If continuation of the amendments is not approved, the
Secretary shall issue a new order, within six months after the
announcement of the results of the referendum, that is identical to the
order in effect on the date of the enactment of the Agricultural
Reconciliation Act of 1995. The new order shall become effective upon
issuance and shall not be subject to referendum for approval.''.
CHAPTER 4--VERIFICATION OF MILK RECEIPTS
SEC. 1231. PROGRAM TO VERIFY RECEIPTS OF MILK.
(a) Establishment of Verification Program.--Section 204 of the
Agricultural Act of 1949 (7 U.S.C. 1446e), as amended by section 1201,
is further amended by adding at the end the following new subsection:
``(k) Verification of Receipts of Milk.--
``(1) Verification program required.--The Secretary shall
establish a program through which the verification of receipts
of all cow's milk marketed in the 48 contiguous States and the
auditing of marketing agreements with respect to receipts of
such milk may be accomplished. The Secretary shall prescribe
regulations to establish the program required by this
subsection.
``(2) Administrative services.--The program shall provide a
means by which (A) processors, associations of producers, and
other persons engaged in the handling of milk and milk products
file reports with the Secretary regarding receipts of milk,
prices paid for milk, and the purposes for which milk was used
by handlers, (B) authorized deductions from payments to
producers, including assessments for research and promotion
programs, are collected, (C) assurance of proper payment by
handlers for milk purchased is achieved, and (D) the reports,
records, and facilities of handlers are reviewed and inspected
to assure their accuracy. The regulations shall provide for the
publication of statistics regarding receipts, prices, and uses
of milk. Statistics published by the Secretary shall include
information regarding payments received by producers for milk
on a component basis, including payments for milkfat, protein
and other solids. The Secretary shall collect an assessment
from handlers required to file reports under this paragraph to
cover any expenses associated with the collection and
publication of such statistics. Assessments shall be based on
the relative volume of receipts of milk by each handler and
shall not exceed the total cost of such expenses.
``(3) Marketing services.--The program shall further
provide a means by which the weighing, sampling, and testing of
milk purchased from producers is accomplished and verified.
This paragraph shall not apply to producers for whom such
marketing services are rendered by a cooperative marketing
association qualified under the provisions of the Act of
February 18, 1922 (7 U.S.C. 291-292), commonly known as the
`Co-operative Marketing Associations Act'. An assessment may be
levied on producers for whom such services are performed to
cover the expenses of the Secretary or the cooperative
marketing association providing the services. Assessments shall
be based on the relative marketings of milk by each producer
and shall not exceed the total cost of providing such services.
``(4) Marketing agreements.--Producers or associations of
producers, including cooperative marketing associations
qualified under the provisions of the Act of February 18, 1922
(7 U.S.C. 291-292), commonly known as the `Co-operative
Marketing Associations Act', may negotiate and enter into
marketing agreements or other private contracts with handlers
for the marketing and receipt of milk. Upon the request of
either or both of the parties, the Secretary may perform an
audit of the agreement or contract to assure compliance with
its terms, except that the Secretary shall be reimbursed for
any costs associated with the audit in the manner provided in
the agreement or contract. If there is no provision for the
reimbursement of the Secretary in the agreement or contract,
the party or parties requesting the audit shall provide such
reimbursement.
``(5) Prohibition on marketing limitations.--No marketing
agreement or Government order or regulation applicable to milk
and its products in any marketing area or jurisdiction shall
prohibit or in any manner limit the marketing in that area of
any milk or product of milk produced in any production area in
the United States.
``(6) Effect on existing marketing orders.--Effective July
1, 1996, the program established under this subsection shall
supersede any Federal marketing order issued under section 8c
of the Agricultural Adjustment Act (7 U.S.C. 608c), reenacted
with amendments by the Agricultural Marketing Agreement Act of
1937, with respect to milk or its products.''.
(b) Time for Issuance.--Not later than July 1, 1996, the Secretary
of Agriculture shall issue final regulations under subsection (k) of
section 204 of the Agricultural Act of 1949, as added by this section,
to establish the verification program required by such subsection. The
regulations shall take effect on that date.
(c) Process.--In preparation for the issuance of the regulations
under subsection (k) of section 204 of the Agricultural Act of 1949, as
added by this section, the Secretary shall comply with the following:
(1) The Secretary shall issue proposed regulations not
later than April 1, 1996.
(2) The Secretary shall provide for a comment period on the
regulations, as proposed under paragraph (1). However, the
comment period shall not exceed 60 days nor extend past May 31,
1996.
SEC. 1232. VERIFICATION PROGRAM TO SUPERSEDE MULTIPLE EXISTING FEDERAL
ORDERS.
(a) Termination of Milk Marketing Orders.--Section 8c of the
Agricultural Adjustment Act (7 U.S.C. 608c), reenacted with amendments
by the Agricultural Marketing Agreement Act of 1937, is amended by
striking paragraphs (5) and (18) relating to milk and its products.
(b) Prohibition on Subsequent Orders Regarding Milk.--Paragraph (2)
of such section is amended--
(1) by striking ``Milk, fruits'' and inserting ``Fruits'';
and
(2) by inserting ``milk,'' after ``honey,'' in subparagraph
(B).
(c) Conforming Amendments.--(1) Section 2(3) of such Act (7 U.S.C.
602(3) is amended by striking ``, other than milk and its products,''.
(2) Section 8c of such Act (7 U.S.C. 608c) is amended--
(A) in paragraph (6), by striking ``, other than milk and
its products,'';
(B) in paragraph (7)(B), by striking ``(except for milk and
cream to be sold for consumption in fluid form)'';
(C) in paragraph (11)(B), by striking ``Except in the case
of milk and its products, orders'' and inserting ``Orders'';
(D) in paragraph (13)(A), by striking ``, except to a
retailer in his capacity as a retailer of milk and its
products''; and
(E) in paragraph (17), by striking the second proviso,
which relates to milk orders.
(3) Section 8d(2) of such Act (7 U.S.C. 608d(2)) is amended by
striking the second sentence, which relates to information from milk
handlers.
(4) Section 10(b)(2) of such Act (7 U.S.C. 610(b)(2)) is amended--
(A) by striking clause (i);
(B) by redesignating clauses (ii) and (iii) as clauses (i)
and (ii), respectively; and
(C) in clause (i) (as so redesignated), by striking ``other
commodity'' in the first sentence and inserting ``commodity''.
(5) Section 11 of such Act (7 U.S.C. 611) is amended by striking
``and milk, and its products,''.
(6) Section 715 of the Agriculture, Rural Development, Food and
Drug Administration, and Related Agencies Appropriations Act, 1994
(Public Law 103-111; 107 Stat. 1079; 7 U.S.C. 608d note), is amended by
striking the third proviso, which relates to information from milk
handlers.
(d) Effective Date.--The amendments made by this section shall take
effect on July 1, 1996.
CHAPTER 5--MISCELLANEOUS PROVISIONS RELATED TO DAIRY
SEC. 1241. EXTENSION OF TRANSFER AUTHORITY REGARDING MILITARY AND
VETERANS HOSPITALS.
Subsections (a) and (b) of section 202 of the Agricultural Act of
1949 (7 U.S.C. 1446a) are amended by striking ``1995'' both places it
appears and inserting ``2002''.
SEC. 1242. EXTENSION OF DAIRY INDEMNITY PROGRAM.
Section 3 of Public Law 90-484 (7 U.S.C. 450l) is amended by
striking ``1995'' and inserting ``2002''.
SEC. 1243. EXTENSION OF REPORT REGARDING EXPORT SALES OF DAIRY
PRODUCTS.
Section 1163(c) of the Food Security Act of 1985 is amended by
striking ``1995'' and inserting ``2002''.
SEC. 1244. STATUS OF PRODUCER-HANDLERS.
The legal status of producer-handlers of milk under the
Agricultural Adjustment Act (7 U.S.C. 601 et seq.), reenacted with
amendments by the Agricultural Marketing Agreement Act of 1937, shall
be the same after the amendments made by this title take effect as it
was before the effective date of the amendments.
Subtitle C--Other Commodities
SEC. 1301. EXTENSION AND MODIFICATION OF PRICE SUPPORT AND QUOTA
PROGRAMS FOR PEANUTS.
(a) Extension of Price Support Program.--Section 108B of the
Agricultural Act of 1949 (7 U.S.C. 1445c-3) is amended--
(1) in the section heading, by striking ``1991 through 1997
crops of'';
(2) in subsections (a)(1), (b)(1), and (h), by striking
``1997'' each place it appears and inserting ``2002'';
(3) in subsection (g)(1)--
(A) by striking ``1997 crops'' the first place it
appears and inserting ``2002 crops''; and
(B) by striking ``1997 crop'' both places it
appears and inserting ``1997 through 2002 crops''; and
(4) in subsection (g)(2)(A)--
(A) by striking ``1997 crop'' in clause (i)(IV) and
inserting ``1997 through 2002 crops''; and
(B) by striking ``1997'' in clause (ii)(II) and
inserting ``2002''.
(b) Changes to Price Support Program.--
(1) Quota support rate.--
(A) Support rate for 1996 through 2002 crops.--
Subsection (a)(2) of section 108B of the Agricultural
Act of 1949 (7 U.S.C. 1445c-3) is amended to read as
follows:
``(2) Support rate.--The national average quota support
rate for quota peanuts shall be equal to $610 per ton for each
of the 1996 through 2002 crops of quota peanuts.''.
(B) Effect of amendment on current crop.--The
national average quota support rate in effect under
section 108B(a)(2) of the Agricultural Act of 1949 (7
U.S.C. 1445c-3) on the day before the date of the
enactment of this Act shall continue to apply with
respect to the 1995 crop of quota peanuts.
(2) Offers from handlers.--Subsection (a) of such section
is amended--
(A) by redesignating paragraphs (4) and (5) as
paragraphs (5) and (6), respectively; and
(B) by inserting after paragraph (3) the following
new paragraph:
``(4) Offers from handlers.--The Secretary shall reduce the
support rate by 15 percent for any producer on a farm who had
available to the producer an offer from a handler to purchase
quota peanuts from the farm at a price equal to or greater than
the applicable quota support rate.''.
(3) Covering losses.--Subsection (d)(2) of such section is
amended to read as follows:
``(2) Quota loan pools.--Losses in quota area pools shall
be covered using the following sources in the following order
of priority:
``(A) Transfers from additional loan pools.--The
proceeds due any producer from any pool shall be
reduced by the amount of any loss that is incurred with
respect to peanuts transferred from an additional loan
pool to a quota loan pool by such producer under
section 358-1(b)(8) of the Agricultural Adjustment Act
of 1938.
``(B) Other producers in same pool.--Further losses
in an area quota pool shall be offset by reducing the
gain of any producer in such pool by the amount of pool
gains attributed to the same producer from the sale of
additional peanuts for domestic and export edible use.
``(C) Use of marketing assessments.--The Secretary
shall use funds collected under subsection (g) (except
funds attributable to handlers) to offset further
losses in area quota pools. The Secretary shall
transfer to the Treasury those funds collected under
subsection (g) and available for use under this
paragraph that the Secretary determines are not
required to cover losses in area quota pools.
``(D) Cross compliance.--Further losses in area
quota pools, other than losses incurred as a result of
transfers from additional loan pools to quota loan
pools under section 358-1(b)(8) of the Agricultural
Adjustment Act of 1938, shall be offset by any gains or
profits from quota pools in other production areas
(other than separate type pools established under
subsection (c)(2)(A) for Valencia peanuts produced in
New Mexico) in such manner as the Secretary shall by
regulation prescribe.
``(E) Increased assessments.--If use of the
authorities provided in the preceding subparagraphs is
not sufficient to cover losses in an area quota pool,
the Secretary shall increase the marketing assessment
established under subsection (g) by such an amount as
the Secretary considers necessary to cover the losses.
The increased assessment shall apply only to quota
peanuts marketed in the production area covered by that
pool. Amounts collected under subsection (g) as a
result of the increased assessment shall be retained by
the Secretary to cover losses in that pool.''.
(c) Extension of National Poundage Quota Program.--Part VI of
subtitle B of title III of the Agricultural Adjustment Act of 1938 is
amended--
(1) in section 358-1 (7 U.S.C. 1358-1)--
(A) in the section heading, by striking ``1991
through 1997 crops of'';
(B) in subsection (a)(3), by striking ``1990'' and
inserting ``1990, for the 1991 through 1995 marketing
years, and 1995, for the 1996 through 2002 marketing
years'';
(C) in subsection (b)(1)(A)--
(i) by striking ``1997'' and inserting
``2002''; and
(ii) in clause (i), by inserting before the
semicolon the following: ``, in the case of the
1991 through 1995 marketing years, and the 1995
marketing year, in the case of the 1996 through
2002 marketing years''; and
(D) in subsections (b)(1)(B), (b)(2)(A), (b)(2)(C),
(b)(3)(A), and (f), by striking ``1997'' each place it
appears and inserting ``2002'';
(2) in section 358b (7 U.S.C. 1358b)--
(A) in the section heading, by striking ``1991
through 1995 crops of''; and
(B) in subsection (c), by striking ``1995'' and
inserting ``2002'';
(3) in section 358c(d) (7 U.S.C. 1358c(d)), by striking
``1995'' and inserting ``2002''; and
(4) in section 358e (7 U.S.C. 1359a)--
(A) in the section heading, by striking ``1991
through 1997'' and inserting ``certain''; and
(B) in subsection (i), by striking ``1997'' and
inserting ``2002''.
(d) Prioritized Quota Reductions.--Section 358-1(b)(2)(C) of the
Agricultural Adjustment Act of 1938 (7 U.S.C. 1358-1(b)(2)(C)) is
amended--
(1) by striking ``all the''; and
(2) by adding at the end the following new sentence:
``Rather than allocating the decrease among all the farms in a
State, the Secretary shall allocate the decrease among farms in
the following order of priority:
``(i) Farms owned or controlled by
municipalities, airport authorities, schools,
colleges, refuges, and other public entities
(not including universities for research
purposes).
``(ii) Farms for which the quota holder is
not a producer and resides in another State.
``(iii) Farms for which the quota holder,
although a resident of the State, is not a
producer.
``(iv) Other farms described in the first
sentence of this subparagraph.''.
(e) Elimination of Quota Floor.--Section 358-1(a)(1) of the
Agricultural Adjustment Act of 1938 (7 U.S.C. 1358-1(a)(1)) is amended
by striking the second sentence.
(f) Spring and Fall Transfers Within a State.--Section 358b(a)(1)
of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1358b(a)(1)) is
amended--
(1) by striking ``any such lease'' in the matter preceding
the subparagraphs and inserting ``any such sale or lease''; and
(2) by striking ``in the fall or after the normal planting
season--'' and subparagraphs (A) and (B) and inserting the
following: ``in the spring (or before the normal planting
season) or in the fall (or after the normal planting season)
with the owner or operator of a farm located within any county
in the same State. In the case of a fall transfer or a transfer
after the normal planting season, the transfer may be made only
if not less than 90 percent of the basic quota (the farm quota
exclusive of temporary quota transfers), plus any poundage
quota transferred to the farm under this subsection, has been
planted or considered planted on the farm from which the quota
is to be leased.''.
(g) Transfers in Counties With Small Quotas.--Section 358b(a) of
the Agricultural Adjustment Act of 1938 (7 U.S.C. 1358b(a)) is amended
by adding at the end the following new paragraph:
``(4) Transfers in counties with small quotas.--
Notwithstanding paragraphs (1) and (2), in the case of any
county for which the poundage quota allocated to the county was
less than 10,000 tons for the preceding year's crop, all or any
part of a farm poundage quota for a farm in that county may be
transferred by sale or lease or otherwise to a farm in any
other county in the same State.''.
(h) Undermarketings.--
(1) Elimination.--Subsection (b) of section 358-1 of the
Agricultural Adjustment Act of 1938 (7 U.S.C. 1358-1) is
amended by striking paragraphs (8) and (9).
(2) Conforming amendments.--(A) Such subsection is further
amended--
(i) in paragraph (1)(B), by striking ``including--
'' and clauses (i) and (ii) and inserting ``including
any increases resulting from the allocation of quotas
voluntarily released for 1 year under paragraph (7).'';
and
(ii) in paragraph (3)(B), by striking ``include--''
and clauses (i) and (ii) and inserting ``include any
increase resulting from the allocation of quotas
voluntarily released for 1 year under paragraph (7).''.
(B) Section 358b(a) of the Agricultural Adjustment Act of
1938 (7 U.S.C. 1358b(a)) is amended--
(i) in paragraph (1) (as amended by subsection
(f)), by striking ``(including any applicable under
marketings)'' both places it appears;
(ii) in paragraph (2), by striking ``(including any
applicable under marketings)''; and
(iii) in paragraph (3), by striking ``(including
any applicable undermarketings)''.
(i) Limitation on Payments for Disaster Transfers.--Section 358-
1(b) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1358-1(b)),
as amended by subsection (h), is further amended by adding at the end
the following new paragraph:
``(8) Transfer of additional peanuts.--Additional peanuts
on a farm from which the quota poundage was not harvested and
marketed because of drought, flood, or any other natural
disaster, or any other condition beyond the control of the
producer, may be transferred to the quota loan pool for pricing
purposes on such basis as the Secretary shall by regulation
provide, except that the poundage of such peanuts so
transferred shall not exceed the difference in the total
peanuts meeting quality requirements for domestic edible use as
determined by the Secretary marketed from the farm and the
total farm poundage quota, excluding quota pounds transferred
to the farm in the fall. Peanuts transferred under this
paragraph shall be supported at a total of not more than 70
percent of the quota support rate for the marketing years in
which such transfers occur and such transfers for a farm shall not
exceed 25 percent of the total farm quota pounds, excluding pounds
transferred in the fall.''.
(j) Temporary Quota Allocation.--
(1) Annual allocation.--Subsection (b)(2) of section 358-1
of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1358-1) is
amended--
(A) in subparagraph (A), by striking ``subparagraph
(B) and subject to''; and
(B) by striking subparagraph (B) and inserting the
following new subparagraph:
``(B) Temporary quota allocation.--
``(i) Allocation related to seed peanuts.--
Temporary allocation of quota pounds for the
marketing year only in which the crop is
planted shall be made to producers for each of
the 1996 through 2002 marketing years as
provided in this subparagraph. The temporary
quota allocation shall be equal to the pounds
of seed peanuts planted on the farm, as may be
adjusted under regulations prescribed by the
Secretary. The temporary allocation of quota
pounds under this paragraph shall be in
addition to the farm poundage quota otherwise
established under this subsection and shall be
credited for the applicable marketing year
only, in total to the producer of the peanuts
on the farm in a manner prescribed by the
Secretary.
``(ii) Effect of other requirements.--
Nothing in this section shall alter or change
in any way the requirements regarding the use
of quota and additional peanuts established by
section 359a(b) of the Agricultural Adjustment
Act of 1938 (7 U.S.C. 1359a(b)), as added by
section 804 of the Food, Agriculture,
Conservation, and Trade Act of 1990.''.
(2) Conforming amendment.--Subsection (a)(1) of such
section is amended by striking ``domestic edible, seed,'' and
inserting ``domestic edible use''.
(k) Suspension of Marketing Quotas and Acreage Allotments.--The
following provisions of the Agricultural Adjustment Act of 1938 shall
not apply to the 1996 through 2002 crops of peanuts:
(1) Subsections (a) through (j) of section 358 (7 U.S.C.
1358).
(2) Subsections (a) through (h) of section 358a (7 U.S.C.
1358a).
(3) Subsections (a), (b), (d), and (e) of section 358d (7
U.S.C. 1359).
(4) Part I of subtitle C of title III (7 U.S.C. 1361 et
seq.).
(5) Section 371 (7 U.S.C. 1371).
(l) Extension of Reporting and Recordkeeping Requirements.--Section
373(a) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1373(a)) is
amended by inserting after the first sentence the following new
sentence: ``In the case of the 1996 through 2002 crops of peanuts, this
subsection shall also apply to all producers engaged in the production
of peanuts.''.
(m) Suspension of Certain Price Support Provisions.--Section 101 of
the Agricultural Act of 1949 (7 U.S.C. 1441) shall not apply to the
1996 through 2002 crops of peanuts.
SEC. 1302. AVAILABILITY OF LOANS FOR PROCESSORS OF SUGARCANE AND SUGAR
BEETS.
(a) Sugar Loans.--Section 206 of the Agricultural Act of 1949 (7
U.S.C. 1446g) is amended to read as follows:
``SEC. 206. ASSURANCE OF ADEQUATE SUGAR SUPPLY.
``(a) Sugarcane Processor Loans.--For the 1996 through 2002 crops
of domestically grown sugarcane, the Secretary shall make loans
available to sugarcane processors on raw cane sugar processed from such
crops. Subject to subsection (c), loans under this subsection shall be
made at a rate equal to the rate provided under this section, as in
effect on the day before the date of the enactment of the Agricultural
Reconciliation Act of 1995, for raw cane sugar produced from the 1995
crop of domestically grown sugarcane.
``(b) Sugar Beets.--For the 1996 through 2002 crops of domestically
grown sugar beets, the Secretary shall make loans available to sugar
beet processors on refined beet sugar processed from such crops.
Subject to subsection (c), loans under this subsection shall be made at
a rate equal to the rate provided under this section, as in effect on
the day before the date of the enactment of the Agricultural
Reconciliation Act of 1995, for refined beet sugar produced from the
1995 crop of domestically grown sugar beets.
``(c) Reduction in Loan Rates.--
``(1) Reduction required.--The Secretary shall reduce the
loan rate specified in subsection (a) for domestically grown
sugarcane and subsection (b) for domestically grown sugar beets
if the Secretary determines that negotiated reductions in
export subsidies and domestic subsidies provided for sugar of
the European Union and other major sugar growing, producing,
and exporting countries in the aggregate exceed the commitments
made as part of the Agreement on Agriculture.
``(2) Extent of reduction.--The Secretary shall not reduce
the loan rate under subsection (a) or (b) below a rate that
provides an equal measure of support to that provided by the
European Union and other major sugar growing, producing, and
exporting countries, based on an examination of both domestic
and export subsidies subject to reduction in the Agreement on
Agriculture.
``(3) Announcement of reduction.--The Secretary shall
announce any loan rate reduction to be made under this
subsection as far in advance as is practicable.
``(4) Major sugar countries defined.--For purposes of this
subsection, the term `major sugar growing, producing, and
exporting countries' means--
``(A) the countries of the European Union; and
``(B) the ten foreign countries not covered by
subparagraph (A) that the Secretary determines produce
the greatest amount of sugar.
``(5) Agreement on agriculture defined.--For purposes of
this subsection and subsection (d), the term `Agreement on
Agriculture' means the Agreement on Agriculture referred to in
section 101(d)(2) of the Uruguay Round Agreements Act (19
U.S.C. 3511(d)(2)).
``(d) Loan Type; Processor Assurances.--
``(1) Recourse loans.--Subject to paragraph (2), the
Secretary shall carry out this section through the use of
recourse loans.
``(2) Switch to nonrecourse loans.--
``(A) In general.--During any fiscal year in which
the tariff rate quota for imports of sugar into the
United States is set at, or is increased to, a level
that exceeds the loan modification threshold, the
Secretary shall carry out this section by making
available nonrecourse loans. Any recourse loan
previously made available by the Secretary under this
section during such fiscal year shall be modified by
the Secretary into a nonrecourse loan.
``(B) Loan modification threshold defined.--For the
purposes of this subsection, the term `loan
modification threshold' means--
``(i) for fiscal years 1996 and 1997,
1,257,000 short tons raw value; and
``(ii) for fiscal years after fiscal year
1997, 103 percent of the loan modification
threshold for the previous fiscal year.
``(3) Processor assurances.--If the Secretary is required
under paragraph (2) to make nonrecourse loans available during
a fiscal year or to modify recourse loans into nonrecourse
loans, the Secretary shall obtain from each processor that
receives a loan under this section such assurances as the
Secretary considers adequate that the processor will provide an
appropriate minimum payment for sugar beets and sugarcane
delivered by producers served by the processor. The Secretary
may establish appropriate minimum payments for purposes of this
paragraph.
``(4) Announcement of threshold.--As soon as practicable,
but not later than September 1 of each fiscal year, the
Secretary shall announce the loan modification threshold that
shall apply under paragraph (2) for the subsequent fiscal year.
``(e) Length of Loans.--Each loan made under this section shall be
for a term of three months, and may be extended for additional three-
month terms, except that--
``(1) no loan may have a cumulative term in excess of nine
months or a term that extends beyond September 30 of the fiscal
year in which the loan is made; and
``(2) a processor may terminate a loan and redeem the
collateral for the loan at any time by payment in full of
principal, interest, and fees then owing.
``(f) Use of Commodity Credit Corporation.--The Secretary shall use
the funds, facilities, and authorities of the Commodity Credit
Corporation to carry out this section.
``(g) Marketing Assessment.--
``(1) Sugarcane.--Effective only for marketings of raw cane
sugar during fiscal years 1996 through 2003, the first
processor of sugarcane shall remit to the Commodity Credit
Corporation a nonrefundable marketing assessment for each pound
of raw cane sugar, processed by the processor from domestically
produced sugarcane or sugarcane molasses, that has been
marketed. The assessment rate per pound is equal to 1.5 percent
of the loan rate for raw cane sugar under this section.
``(2) Sugar beets.--Effective only for marketings of beet
sugar during fiscal years 1996 through 2003, the first
processor of sugar beets shall remit to the Commodity Credit
Corporation a nonrefundable marketing assessment for each pound
of beet sugar, processed by the processor from domestically
produced sugar beets or sugar beet molasses, that has been
marketed. The assessment rate per pound is equal to 1.6083
percent of the loan rate for raw cane sugar under this section.
``(3) Collection.--
``(A) Timing.--Marketing assessments required under
this subsection shall be collected on a monthly basis
and shall be remitted to the Commodity Credit
Corporation within 30 days after the end of each month.
Any cane sugar or beet sugar processed during a fiscal
year that has not been marketed by September 30 of that
year shall be subject to assessment on that date. The
sugar shall not be subject to a second assessment at
the time that it is marketed.
``(B) Manner.--Subject to subparagraph (A),
marketing assessments shall be collected under this
subsection in the manner prescribed by the Secretary
and shall be nonrefundable.
``(4) Penalties.--If any person fails to remit the
assessment required by this subsection or fails to comply with
such requirements for recordkeeping or otherwise as are
required by the Secretary to carry out this subsection, the
person shall be liable to the Secretary for a civil penalty up
to an amount determined by multiplying--
``(A) the quantity of cane sugar or beet sugar
involved in the violation; by
``(B) the loan rate in effect at the time of the
violation.
``(5) Enforcement.--The Secretary may enforce this
subsection in the courts of the United States.
``(6) Definition of market.--For purposes of this
subsection, the term `market' means to sell or otherwise
dispose of in commerce in the United States (including, with
respect to any integrated processor and refiner, the movement
of raw cane sugar into the refining process) and to deliver to
a buyer.
``(h) Information Reporting.--
``(1) Duty of processors and refiners to report.--All
sugarcane processors, cane sugar refiners, and sugar beet
processors shall furnish the Secretary, on a monthly basis,
such information as the Secretary may require to administer
sugar programs, including the quantity of purchases of
sugarcane, sugar beets, and sugar, and production, importation,
distribution, and stock levels of sugar.
``(2) Duty of producers to report.--In order to efficiently
and effectively carry out the program under this section, the
Secretary may require a producer of sugarcane or sugar beets to
report, in the manner prescribed by the Secretary, the
producer's sugarcane or sugar beet yields and acres planted to
sugarcane or sugar beets, respectively.
``(3) Penalty.--Any person willfully failing or refusing to
furnish the information, or furnishing willfully any false
information, shall be subject to a civil penalty of not more
than $10,000 for each such violation.
``(4) Monthly reports.--Taking into consideration the
information received under paragraph (1), the Secretary shall
publish on a monthly basis composite data on production,
imports, distribution, and stock levels of sugar.
``(i) Sugar Estimates.--
``(1) Domestic requirement.--Before the beginning of each
fiscal year, the Secretary shall estimate the United States
demand for sugar for that fiscal year, which shall be equal
to--
``(A) the quantity of sugar, that will be consumed
in the United States during the fiscal year (other than
sugar imported for the production of polyhydric alcohol
or to be refined and reexported in refined form or in
sugar containing products); plus
``(B) the quantity of sugar that would provide for
adequate carryover stocks; minus
``(C) the quantity of sugar that will be available
from carry-in stocks.
``(2) Quarterly reestimates.--The Secretary shall make
quarterly reestimates of sugar consumption, stocks, production,
and imports for a fiscal year no later than the beginning of
each of the second through fourth quarters of the fiscal year.
``(j) Regulations.--The Secretary shall issue such regulations as
the Secretary determines necessary to carry out this section.''.
(b) Effect on Existing Loans for Sugar.--Section 206 of the
Agricultural Act of 1949 (7 U.S.C. 1446g), as in effect on the day
before the date of the enactment of this Act, shall continue to apply
with respect to the 1991 through 1995 crops of sugarcane and sugar
beets.
(c) Termination of Marketing Quotas and Allotments.--
(1) Termination.--Part VII of subtitle B of title III of
the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359aa-
1359jj) is repealed.
(2) Conforming amendment.--Section 344(f)(2) of such Act (7
U.S.C. 1344(f)(2)) is amended by striking ``sugar cane for
sugar; sugar beets for sugar;''.
SEC. 1303. REPEAL OF OBSOLETE AUTHORITY FOR PRICE SUPPORT FOR
COTTONSEED AND COTTONSEED PRODUCTS.
(a) Repeal.--Section 301(b) of the Disaster Assistance Act of 1988
(7 U.S.C. 1464 note) is amended by striking paragraph (1).
(b) Conforming Repeal.--Section 420 of the Agricultural Act of 1949
(7 U.S.C. 1432) is repealed.
Subtitle D--Miscellaneous Program Changes
SEC. 1401. LIMITATIONS ON ASSISTANCE UNDER EMERGENCY LIVESTOCK FEED
ASSISTANCE PROGRAM.
Section 609 of the Emergency Livestock Feed Assistance Act of 1988
(7 U.S.C. 1471g) is amended by striking subsections (c) and (d) and
inserting the following new subsection:
``(c) No person may receive benefits under this title attributable
to lost production of a feed commodity due to a natural disaster if
crop insurance protection or noninsured crop disaster assistance for
the loss of feed produced on the farm is available to the person under
the Federal Crop Insurance Act (7 U.S.C. 1501 et seq.).''.
SEC. 1402. CONSERVATION RESERVE PROGRAM.
(a) Limitations on Acreage Enrollments.--
(1) Limitation.--Section 1231(d) of the Food Security Act
of 1985 (16 U.S.C. 3831(d)) is amended by striking ``38,000,000
acres'' and inserting ``36,400,000 acres''.
(2) Prohibition on 1997 increase.--Section 727 of the
Agriculture, Rural Development, Food and Drug Administration,
and Related Agencies Appropriations Act, 1996, is amended by
striking the proviso relating to enrollment of new acres in
1997.
(b) Optional Contract Termination by Producers.--Section 1235 of
such Act (16 U.S.C. 3835), is amended by adding at the end the
following new subsection:
``(e) Termination by Owner or Operator.--
``(1) Notice of termination.--An owner or operator of land
subject to a contract entered into under this subchapter may
terminate the contract by submitting to the Secretary written
notice of the intention of the owner or operator to terminate
the contract.
``(2) Effective date.--The contract termination shall take
effect 60 days after the date on which the owner or operator
submits the written notice under paragraph (1).
``(3) Pro-rated rental payment.--If a contract entered into
under this subchapter is terminated under this subsection
before the end of the fiscal year for which a rental payment is
due, the Secretary shall provide a prorated rental payment
covering the portion of the fiscal year during which the
contract was in effect.
``(4) Renewed enrollment.--The termination of a contract
entered into under this subchapter shall not affect the ability
of the owner or operator who requested such termination to
submit a subsequent bid to enroll the land that was subject to
the contract into the conservation reserve.
``(5) Conservation requirements.--If land that was subject
to a contract is returned to production of an agricultural
commodity, the Secretary may impose conservation requirements
under subtitle A on the use of the land that are similar to the
requirements imposed on other lands subject to such subtitle,
but in no case shall such requirements be more onerous that the
requirements imposed on other lands.''.
(c) Limitation on Rental Rates.--Section 1234(c) of such Act (16
U.S.C. 3834) is amended by adding at the end the following new
paragraph:
``(5) In the case of the extension of a contract, or a new contract
covering land which was previously enrolled in the conservation
reserve, annual rental payments under the new or extended contract may
not exceed 75 percent of the annual rental payment under the previous
contract.''.
SEC. 1403. CROP INSURANCE.
(a) Conversion of Catastrophic Risk Protection Program to Voluntary
Program.--Subsection (b)(7) of section 508 of the Federal Crop
Insurance Act (7 U.S.C. 1508) is amended--
(1) by redesignating subparagraph (B) as subparagraph (C);
and
(2) by inserting after subparagraph (A) the following new
subparagraph:
``(B) Exception to mandatory participation
requirement.--Notwithstanding subparagraph (A), a
producer may decline to obtain catastrophic risk
protection beginning with spring-planted 1996 crops and
in any subsequent crop year, yet remain eligible for
any market transition contract or marketing assistance
loan, the conservation reserve program, or any benefit
described in section 371 of the Consolidated Farm and
Rural Development Act, if the producer agrees in
writing to waive any eligibility for emergency crop
loss assistance in connection with losses to any crop
for which the producer declines to obtain catastrophic
risk protection.''.
(b) Delivery of Voluntary Catastrophic Protection.--Subsection
(b)(4) of such section is amended by adding at the end the following
new subparagraphs:
``(C) Elimination of secretarial option.--For crop
years beginning after the implementation of the
exception under paragraph (7)(B) to the mandatory
participation requirement, the option for delivery of
catastrophic risk protection provided in subparagraph
(A)(ii) shall not be available to the Secretary. All
risk protection policies written by the Department
prior to that date shall be transferred, including all
fees collected for the crop year in which the private
sector will assume the policies, in an orderly manner
to the private sector for performance of all service
and loss adjustment functions.
``(D) Guarantee of private sector service.--In full
consultation and cooperation with approved insurance
providers, the Corporation shall develop a plan to
ensure that each producer of an insured crop has the
opportunity to be serviced by an approved insurance
provider if insurance is available for that crop in
that county. Not later than May 1, 1996, the
Corporation shall submit to the Committee on
Agriculture of the House of Representatives and the
Committee on Agriculture, Nutrition, and Forestry of
the Senate the plan in the form it is to be implemented
by the Secretary.''.
(c) Establishment of the Office of Risk Management.--
(1) Establishment.--The Department of Agriculture
Reorganization Act of 1994 is amended by inserting after
section 226 (7 U.S.C. 6932) the following new section:
``SEC. 226A. OFFICE OF RISK MANAGEMENT.
``(a) Establishment.--Subject to subsection (e), the Secretary
shall establish and maintain in the Department an independent Office of
Risk Management.
``(b) Functions of the Office of Risk Management.--The Office of
Risk Management shall have jurisdiction over the following functions:
``(1) Supervision of the Federal Crop Insurance
Corporation.
``(2) Administration and oversight of all aspects,
including delivery through local offices of the Department, of
all programs authorized under the Federal Crop Insurance Act (7
U.S.C. 1501 et seq.).
``(3) Any pilot or other programs involving revenue
insurance, risk management savings accounts, or the use of the
futures market to manage risk and support farm income that may
be established under the Federal Crop Insurance Act or other
law.
``(4) Such other functions as the Secretary considers
appropriate.
``(c) Administrator.--
``(1) The Office of Risk Management shall be headed by an
Administrator who shall be appointed by the Secretary.
``(2) The Administrator of the Office of Risk Management
shall also serve as Manager of the Federal Crop Insurance
Corporation.
``(d) Resources.--
``(1) Functional coordination.--Certain functions of the
Office of Risk Management, such as human resources, public
affairs, and legislative affairs, may be provided by a
consolidation of such functions under the Under Secretary of
Agriculture for Farm and Foreign Agricultural Services.
``(2) Minimum provisions.--Notwithstanding paragraph (1) or
any other provision of law or order of the Secretary, the
Secretary shall provide the Office of Risk Management with
human and capital resources sufficient for the Office to carry
out its functions in a timely and efficient manner.
``(3) Fiscal year 1996 funding.--Not less than $88,500,000
of the appropriation provided for the salaries and expenses of
the Consolidated Farm Services Agency in the Agricultural,
Rural Development, Food and Drug Administration, and Related
Agencies Appropriations Act, 1996 shall be provided to the
Office of Risk Management for the salaries and expenses of the
Office.''.
(2) Conforming amendment.--Section 226(b) of such Act (7
U.S.C. 6932(b)) is amended by striking paragraph (2).
(d) Reconfiguration of Board of Directors.--Section 505 of the
Federal Crop Insurance Act (7 U.S.C. 1505) is amended to read as
follows:
``SEC. 505. BOARD OF DIRECTORS.
``(a) Authority.--The management of the Corporation shall be vested
in a Board of Directors subject to the general supervision of the
Secretary.
``(b) Membership.--
``(1) In general.--The Board shall consist of the Manager
of the Corporation, the Under Secretary of Agriculture for Farm
and Foreign Agricultural Services, one person who is an officer
or employee of an approved insurance provider, one person who
is a licensed crop insurance agent, one person experienced in
the reinsurance business who is not otherwise employed by the
Federal Government, and four active producers who are not
otherwise employed by the Federal Government. The Secretary
shall not be a member of the Board.
``(2) Producer members.--In appointing the four active
producers who are not otherwise employed by the Federal
Government, the Secretary shall ensure that three such members
are policyholders and are from different geographic areas of
the United States, in order that diverse agricultural interests
in the United States are at all times represented on the Board.
The Secretary shall ensure that the fourth active producer, who
may also be a policyholder, receives a significant portion of
crop income from crops covered by the noninsured crop disaster
assistance program established under section 519.
``(c) Appointment.--
``(1) Manager.--The Administrator of the Office of Risk
Management appointed by the Secretary under section 226A(c) of
the Department of Agriculture Reorganization Act of 1994 shall
serve as Manager of the Corporation.
``(2) Terms of other members.--Other than the Manager of
the Corporation and the Under Secretary of Agriculture for Farm
and Foreign Agricultural Services, the members of the Board
shall be appointed by the Secretary for a term of three years.
However, in the initial appointment of such members, the
Secretary shall appoint two members for one year, two members
for two years, and two members for three years in order to
provide greater continuity to the Board.
``(3) Succession.--A member of the Board appointed under
paragraph (2) may serve after the expiration of the term of
office of such member until the successor for such member has
taken office.
``(d) Quorum.--Five of the members in office shall constitute a
quorum for the transaction of the business of the Board.
``(e) Impairment of Powers.--The powers of the Board to execute the
functions of the Corporation shall be impaired at any time there are
not six members of the Board in office. Any impairment of the powers of
the Board shall also serve to impair the powers of the Manager to act
under any delegation of power provided under subsection (g).
``(f) Compensation.--
``(1) Employees of the department.--The members of the
Board who are employed in the Department shall receive no
additional compensation for their services as members, but may
be allowed necessary traveling and subsistence expenses when
engaged in business of the Corporation outside of the District
of Columbia.
``(2) Nonemployees of the federal government.--The members
of the Board who are not employed by the Federal Government
shall be paid such compensation for their services as members
as the Secretary shall determine, but such compensation shall
not exceed the daily equivalent of the rate prescribed for
positions a level V of the Executive Schedule under section
5316 of title 5, United States Code, when actually employed.
Such members may also receive actual necessary traveling and
subsistence expenses, or a per diem allowance in lieu of
subsistence expenses, as authorized by section 5703 of such
title for persons in Government service employed
intermittently, when on the business of the Corporation away
from their homes or regular places of business. Any such
compensation shall be paid from the insurance fund established
under section 516(c).
``(g) Chief Executive Officer.--The Manager of the Corporation
shall be its chief executive officer, with such power and authority as
may be conferred by the Board.''.
SEC. 1404. REPEAL OF FARMER OWNED RESERVE PROGRAM.
(a) Repeal.--Section 110 of the Agricultural Act of 1949 (7 U.S.C.
1445e) is repealed.
(b) Effect of Repeal on Existing Loans.--The repeal of section 110
of the Agricultural Act of 1949 by subsection (a) shall not affect the
validity or terms and conditions of any extended price support loan
provided under such section before the date of the enactment of this
Act.
SEC. 1405. REDUCTION IN FUNDING LEVELS FOR EXPORT ENHANCEMENT PROGRAM.
Section 301(e) of the Agricultural Trade Act of 1978 (7 U.S.C.
5651(e)) is amended by striking paragraph (1) and inserting the
following new paragraph:
``(1) In general.--To carry out the program established
under this section, the Commodity Credit Corporation shall make
available--
``(A) for each of the fiscal years 1991 through
1995, not more than $500,000,000 of the funds or
commodities of the Commodity Credit Corporation;
``(B) for each of the fiscal years 1996 and 1997,
not more than $400,000,000 of the funds or commodities
of the Commodity Credit Corporation;
``(C) for fiscal year 1998, not more than
$500,000,000 of the funds or commodities of the
Commodity Credit Corporation;
``(D) for fiscal year 1999, not more than
$550,000,000 of the funds or commodities of the
Commodity Credit Corporation;
``(E) for fiscal year 2000, not more than
$579,000,000 of the funds or commodities of the
Commodity Credit Corporation; and
``(F) for each of the fiscal years 2001 and 2002,
not more than $478,000,000 of the funds or commodities
of the Commodity Credit Corporation.''.
SEC. 1406. BUSINESS INTERRUPTION INSURANCE PROGRAM.
(a) Establishment of Program.--Not later than December 31, 1996,
the Secretary of Agriculture shall implement a program (to be known as
the ``Business Interruption Insurance Program''), under which the
producer of a program crop could elect to obtain revenue insurance
coverage to ensure that the producer receives an indemnity payment if
the producer suffers a loss of revenue. The nature and extent of the
program and the manner of determining the amount of an indemnity
payment shall be established by the Secretary.
(b) Report on Progress and Proposed Expansion.--Not later than
January 1, 1998, the Secretary shall submit to the Commission on the
21st Century Production Agriculture the data and results of the program
through October 1, 1997. In addition, the Secretary shall submit
information and recommendations to the Commission with respect to the
program that will serve as the basis for the Secretary to offer revenue
insurance to agricultural producers, at one or more levels of coverage,
that--
(1) is in addition to, or in lieu of, catastrophic and
higher levels of crop insurance;
(2) is offered through reinsurance arrangements with
private insurance companies;
(3) is actuarially sound; and
(4) requires the payment of premiums and administrative
fees by participating producers.
(c) Program Crop Defined.--For purposes of this section, the term
``program crop'' means a crop of wheat, corn, grain sorghums, oats,
barley, upland cotton, or rice.
Subtitle E--Commission on 21st Century Production Agriculture
SEC. 1501. ESTABLISHMENT.
There is hereby established a commission to be known as the
``Commission on 21st Century Production Agriculture'' (hereinafter in
this title referred to as the ``Commission'').
SEC. 1502. COMPOSITION.
(a) Membership and Appointment.--The Commission shall be composed
of 11 members, appointed as follows:
(1) Three members shall be appointed by the President.
(2) Four members shall be appointed by the Chairman of the
Committee on Agriculture of the House of Representatives in
consultation with the ranking minority member of the Committee.
(3) Four members shall be appointed by the Chairman of the
Committee on Agriculture, Nutrition, and Forestry of the Senate
in consultation with the ranking minority member of the
Committee.
(b) Qualifications.--At least one of the members appointed under
each of the paragraphs (1), (2), and (3) of subsection (a) shall be an
individual who is primarily involved in production agriculture. All
other members of the Commission shall be appointed from among
individuals having knowledge and experience in agricultural production,
marketing, finance, or trade.
(c) Term of Members; Vacancies.--Members of the Commission shall be
appointed for the life of the Commission. A vacancy on the Commission
shall not affect its powers, but shall be filled in the same manner as
the original appointment was made.
(d) Time for Appointment; First Meeting.--The members of the
Commission shall be appointed not later than October 1, 1997. The
Commission shall convene its first meeting to carry out its duties
under this title 30 days after six members of the Commission have been
appointed.
(e) Chairman.--The chairman of the Commission shall be designated
jointly by the Chairman of the Committee on Agriculture of the House of
Representatives and the Chairman of the Committee on Agriculture,
Nutrition, and Forestry of the Senate from among the members of the
Commission.
SEC. 1503. COMPREHENSIVE REVIEW OF PAST AND FUTURE OF PRODUCTION
AGRICULTURE.
(a) Initial Review.--The Commission shall conduct a comprehensive
review of changes in the condition of production agriculture in the
United States since the date of the enactment of this Act and the
extent to which such changes are the result of the amendments made by
this Act. The review shall include the following:
(1) An assessment of the initial success of market
transition contracts under section 102 of the Agricultural Act
of 1949 in supporting the economic viability of farming in the
United States.
(2) An assessment of the food security situation in the
United States in the areas of trade, consumer prices,
international competitiveness of United States production
agriculture, food supplies, and humanitarian relief.
(3) An assessment of the changes in farmland values and
agricultural producer incomes since the date of the enactment
of this Act.
(4) An assessment of the extent to which regulatory relief
for agricultural producers has been enacted and implemented,
including the application of cost/benefit principles in the
issuance of agricultural regulations.
(5) An assessment of the extent to which tax relief for
agricultural producers has been enacted in the form of capital
gains tax reductions, estate tax exemptions, and mechanisms to
average tax loads over high and low income years.
(6) An assessment of the effect of any Government
interference in agricultural export markets, such as the
imposition of trade embargoes, and the degree of implementation
and success of international trade agreements.
(7) An assessment of the likely affect of the sale, lease,
or transfer of farm poundage quota for peanuts across State
lines.
(b) Subsequent Review.--The Commission shall conduct a
comprehensive review of the future of production agriculture in the
United States and the appropriate role of the Federal Government in
support of production agriculture. The review shall include the
following:
(1) An assessment of changes in the condition of production
agriculture in the United States since the initial review
conducted under subsection (a).
(2) Identification of the appropriate future relationship
of the Federal Government with production agriculture after
2002.
(3) An assessment of the personnel and infrastructure
requirements of the Department of Agriculture necessary to
support the future relationship of the Federal Government with
production agriculture.
(c) Recommendations.--In carrying out the subsequent review under
subsection (b), the Commission shall develop specific recommendations
for legislation to achieve the appropriate future relationship of the
Federal Government with production agriculture identified under
subsection (a)(2).
SEC. 1504. REPORTS.
(a) Report on Initial Review.--Not later than June 1, 1998, the
Commission shall submit to the President, the Committee on Agriculture
of the House of Representatives, and the Committee on Agriculture,
Nutrition, and Forestry of the Senate a report containing the results
of the initial review conducted under section 1503(a).
(b) Report on Subsequent Review.--Not later than January 1, 2001,
the Commission shall submit to the President and the congressional
committees specified in subsection (a) a report containing the results
of the subsequent review conducted under section 1503(b).
SEC. 1505. POWERS.
(a) Hearings.--The Commission may, for the purpose of carrying out
this title, conduct such hearings, sit and act at such times, take such
testimony, and receive such evidence, as the Commission considers
appropriate.
(b) Assistance From Other Agencies.--The Commission may secure
directly from any department or agency of the Federal Government such
information as may be necessary for the Commission to carry out its
duties under this title. Upon request of the chairman of the
Commission, the head of the department or agency shall, to the extent
permitted by law, furnish such information to the Commission.
(c) Mail.--The Commission may use the United States mails in the
same manner and under the same conditions as the departments and
agencies of the Federal Government.
(d) Assistance From Secretary.--The Secretary of Agriculture shall
provide to the Commission appropriate office space and such reasonable
administrative and support services as the Commission may request.
SEC. 1506. COMMISSION PROCEDURES.
(a) Meetings.--The Commission shall meet on a regular basis (as
determined by the chairman) and at the call of the chairman or a
majority of its members.
(b) Quorum.--A majority of the members of the Commission shall
constitute a quorum for the transaction of business.
SEC. 1507. PERSONNEL MATTERS.
(a) Compensation.--Each member of the Commission shall serve
without compensation, but shall be allowed travel expenses including
per diem in lieu of subsistence, as authorized by section 5703 of title
5, United States Code, when engaged in the performance of Commission
duties.
(b) Staff.--The Commission shall appoint a staff director, who
shall be paid at a rate not to exceed the maximum rate of basic pay
under section 5376 of title 5, United States Code, and such
professional and clerical personnel as may be reasonable and necessary
to enable the Commission to carry out its duties under this title
without regard to the provisions of title 5, United States Code,
governing appointments in the competitive service, and without regard
to the provisions of chapter 51 and subchapter III of chapter 53 of
such title, or any other provision of law, relating to the number,
classification, and General Schedule rates. No employee appointed under
this subsection (other than the staff director) may be compensated at a
rate to exceed the maximum rate applicable to level GS-15 of the
General Schedule.
(c) Detailed Personnel.--Upon request of the chairman of the
Commission, the head of any department or agency of the Federal
Government is authorized to detail, without reimbursement, any
personnel of such department or agency to the Commission to assist the
Commission in carrying out its duties under this section. The detail of
any such personnel may not result in the interruption or loss of civil
service status or privilege of such personnel.
SEC. 1508. TERMINATION OF COMMISSION.
The Commission shall terminate upon submission of the final report
required by section 1504.
TITLE II--COMMITTEE ON BANKING AND FINANCIAL SERVICES
SEC. 2001. TABLE OF CONTENTS.
The table of contents for this title is as follows:
Subtitle A--Housing Provisions
Sec. 2101. Termination of RTC and FDIC affordable housing programs.
Sec. 2102. Foreclosure avoidance and borrower assistance.
Sec. 2103. Reform of HUD-owned multifamily property disposition
program.
Sec. 2104. Recapture of rural housing loan subsidies by Rural Housing
and Community Development Service.
Sec. 2105. Reduction of section 8 annual adjustment factors for units
without tenant turnover.
Subtitle B--Thrift Charter Conversion
Sec. 2200. Short title.
Chapter 1--Bank Insurance Fund and Savings Association Insurance Fund
Sec. 2201. Special assessment.
Sec. 2202. Assessments on insured depository institutions.
Sec. 2203. Merger of Bank Insurance Fund and Savings Association
Insurance Fund after recapitalization of
SAIF.
Sec. 2204. Refund of amounts in deposit insurance fund in excess of
designated reserve amount.
Sec. 2205. Assessments authorized only if needed to maintain the
reserve ratio of a deposit insurance fund.
Chapter 2--Status of Banks and Savings Associations
Sec. 2221. Termination of Federal savings associations; treatment of
State savings associations as banks for
purposes of Federal banking law.
Sec. 2222. Treatment of certain activities and affiliations of bank
holding companies resulting from this Act.
Sec. 2223. Transition provisions for activities of savings associations
which convert into or become treated as
banks.
Sec. 2224. Registration of bank holding companies resulting from
conversions of savings associations to
banks or treatment of savings associations
as banks.
Sec. 2225. Additional transition provisions and special rules.
Sec. 2226. Technical and conforming amendments.
Sec. 2227. References to savings associations and State banks in
Federal law.
Sec. 2228. Repeal of Home Owners' Loan Act.
Sec. 2229. Effective date; definitions.
Chapter 3--Transfer of Functions, Personnel, and Property
Sec. 2241. Office of Thrift Supervision abolished.
Sec. 2242. Determination of transferred functions and employees.
Sec. 2243. Savings provisions.
Sec. 2244. References in Federal law to Director of the Office of
Thrift Supervision.
Sec. 2245. Reconfiguration of board of directors of FDIC as a result of
removal of Director of the Office of Thrift
Supervision.
Subtitle C--Community Reinvestment Act Amendments
Sec. 2301. Expression of congressional intent.
Sec. 2302. Community Reinvestment Act exemption.
Sec. 2303. Self-certification of CRA compliance.
Sec. 2304. Community input and conclusive rating.
Sec. 2305. Special purpose financial institutions.
Sec. 2306. Increased incentives for lending to low- and moderate-income
communities.
Sec. 2307. Prohibition on additional reporting under CRA.
Sec. 2308. Technical amendment.
Sec. 2309. Duplicative reporting.
Sec. 2310. CRA congressional oversight.
Sec. 2311. Consultation among examiners.
Sec. 2312. Limitation on regulations.
Subtitle D--Phase-Down of Oversight Board
Sec. 2401. Termination of authority of Oversight Board to employ staff.
Subtitle A--Housing Provisions
SEC. 2101. TERMINATION OF RTC AND FDIC AFFORDABLE HOUSING PROGRAMS.
(a) Repeal of Unified Program and Transfer of RTC Windup Authority
to HUD.--Section 21A(c) of the Federal Home Loan Bank Act (12 U.S.C.
1441a(c)) is amended by striking paragraph (17) and inserting the
following new paragraph:
``(17) Transfer of authority.--The Secretary shall assume,
not later than December 31, 1995, and thereafter shall carry
out, any remaining authority and responsibilities of the
Corporation to recapture excess proceeds from resale of
properties and to monitor and enforce low-income occupancy
requirements or rent limitations under this subsection and
shall assume any direct or contingent liability of the
Corporation to carry out such authority and
responsibilities.''.
(b) Termination of RTC Affordable Housing Program.--Section 21A(c)
of the Federal Home Loan Bank Act (12 U.S.C. 1441a(c)) is amended by
adding at the end the following new paragraph:
``(18) Termination.--
``(A) In general.--On and after the date of the
enactment of the Seven-Year Balanced Budget
Reconciliation Act of 1995, the provisions of this
subsection (other than paragraph (17)) shall not apply
with respect to any eligible residential property or
eligible condominium property.
``(B) Savings provision.--Notwithstanding
subparagraph (A), the provisions of this subsection
shall continue to apply on and after such date of
enactment to any eligible residential property or
eligible condominium property that--
``(i) has been sold or otherwise disposed
of by the Corporation before such date of
enactment; or
``(ii) is subject to a contract of sale or
other disposition entered into before such date
of enactment.''.
(c) Termination of Affordable Housing Advisory Board.--Section
14(b)(9) of the Resolution Trust Corporation Completion Act (12 U.S.C.
1831q note) is amended by striking ``September 30, 1998'' and inserting
``September 30, 1995''.
(d) Repeal of FDIC Program and Transfer of Windup Authority to
HUD.--
(1) Repeal.--Section 40 of the Federal Deposit Insurance
Act (12 U.S.C. 1831q) is hereby repealed.
(2) Transfer of windup authority.--Notwithstanding
paragraph (1)--
(A) effective December 31, 1995, the Secretary
shall carry out any remaining authority and
responsibilities of the Federal Deposit Insurance
Corporation under section 40 of the Federal Deposit
Insurance Act to recapture excess proceeds from resale
of properties and to monitor and enforce low-income
occupancy requirements or rent limitations under such
section and shall assume any direct or contingent
liability of the Corporation to carry out such
authority and responsibilities; and
(B) the Federal Deposit Insurance Corporation shall
consummate any sales of property under section 40 of
such Act that were pending under contracts of sale on
September 30, 1995.
(e) FDIC Disposition of Assets as Conservator or Receiver.--Section
11(d)(13)(E) of the Federal Deposit Insurance Act (12 U.S.C.
1821(d)(13)(E)) is amended--
(1) in clause (iii), by inserting ``and'' after the
semicolon;
(2) in clause (iv), by striking ``; and'' and inserting a
period; and
(3) by striking clause (v).
(f) Disposition of FDIC Assets.--Section 13(d)(3)(D) of the Federal
Deposit Insurance Act (12 U.S.C. 1823(d)(3)(D)) is amended--
(1) in clause (iii), by inserting ``and'' after the
semicolon;
(2) in clause (iv), by striking ``; and'' and inserting a
period; and
(3) by striking clause (v).
SEC. 2102. FORECLOSURE AVOIDANCE AND BORROWER ASSISTANCE.
(a) Foreclosure Avoidance.--The last sentence of section 204(a) of
the National Housing Act (12 U.S.C. 1710(a)) is amended by inserting
before the period the following: ``: And provided further, That the
Secretary may pay insurance benefits to the mortgagee to recompense the
mortgagee for its actions to provide an alternative to foreclosure of a
mortgage that is in default, which actions may include such actions as
special forbearance, loan modification, and deeds in lieu of
foreclosure, all upon such terms and conditions as the mortgagee shall
determine in the mortgagee's sole discretion within guidelines provided
by the Secretary, but which may not include assignment of a mortgage to
the Secretary: And provided further, That for purposes of the preceding
proviso, no action authorized by the Secretary and no action taken, nor
any failure to act, by the Secretary or the mortgagee shall be subject
to judicial review''.
(b) Authority to Assist Mortgagors in Default.--Section 230 of the
National Housing Act (12 U.S.C. 1715u) is amended to read as follows:
``authority to assist mortgagors in default
``Sec. 230. (a) Payment of Partial Claim.--The Secretary may
establish a program for payment of a partial insurance claim to a
mortgagee that agrees to apply the claim amount to payment of a
mortgage on a 1- to 4-family residence that is in default. Any such
payment under such program to the mortgagee shall be made in the
Secretary's sole discretion and on terms and conditions acceptable to
the Secretary, except that--
``(1) the amount of the payment shall be in an amount
determined by the Secretary, which shall not exceed an amount
equivalent to 12 monthly mortgage payments and any costs
related to the default that are approved by the Secretary; and
``(2) the mortgagor shall agree to repay the amount of the
insurance claim to the Secretary upon terms and conditions
acceptable to the Secretary.
The Secretary may pay the mortgagee, from the appropriate insurance
fund, in connection with any activities that the mortgagee is required
to undertake concerning repayment by the mortgagor of the amount owed
to the Secretary.
``(b) Assignment.--
``(1) Program authority.--The Secretary may establish a
program for assignment to the Secretary, upon request of the
mortgagee, of a mortgage on a 1- to 4-family residence insured
under this Act.
``(2) Program requirements.--The Secretary may accept
assignment of a mortgage under a program under this subsection
only if--
``(A) the mortgage was in default;
``(B) the mortgagee has modified the mortgage to
cure the default and provide for mortgage payments
within the reasonable ability of the mortgagor to pay
at interest rates not exceeding current market interest
rates; and
``(C) the Secretary arranges for servicing of the
assigned mortgage by a mortgagee (which may include the
assigning mortgagee) through procedures that the
Secretary has determined to be in the best interests of
the appropriate insurance fund.
``(3) Payment of insurance benefits.--Upon accepting
assignment of a mortgage under the program under this
subsection, the Secretary may pay insurance benefits to the
mortgagee from the appropriate insurance fund in an amount that
the Secretary determines to be appropriate, but which may not
exceed the amount necessary to compensate the mortgagee for the
assignment and any losses and expenses resulting from the
mortgage modification.
``(c) Prohibition of Judicial Review.--No decision by the Secretary
to exercise or forego exercising any authority under this section shall
be subject to judicial review.''.
(c) Savings Provision.--Any mortgage for which the mortgagor has
applied to the Secretary of Housing and Urban Development, before the
date of the enactment of this Act, for assignment pursuant to section
230(b) of the National Housing Act shall continue to be governed by the
provisions of such section, as in effect immediately before such date
of enactment.
(d) Applicability of Other Laws.--No provision of the National
Housing Act or any other law shall be construed to require the
Secretary of Housing and Urban Development to provide an alternative to
foreclosure for mortgagees with mortgages on 1- to 4-family residences
insured by the Secretary under the National Housing Act, or to accept
assignments of such mortgages.
SEC. 2103. REFORM OF HUD-OWNED MULTIFAMILY PROPERTY DISPOSITION
PROGRAM.
(a) In General.--Effective October 1, 1995, section 203 of the
Housing and Community Development Amendments of 1978 (12 U.S.C. 1701z-
11) is amended to read as follows:
``SEC. 203. MANAGEMENT AND DISPOSITION OF HUD-OWNED MULTIFAMILY HOUSING
PROJECTS.
``(a) In General.--The Secretary of Housing and Urban Development
may manage and dispose of (1) multifamily housing projects that are
owned by the Secretary or that are subject to mortgages held by the
Secretary, and (2) mortgages on multifamily housing projects that are
held by the Secretary, without regard to any other provision of law.
``(b) Authority to Delegate.--The Secretary of Housing and Urban
Development may delegate to one or more entities the authority to carry
out some or all of the functions and responsibilities of the Secretary
in connection with the foreclosure of mortgages on multifamily housing
projects held by the Secretary.
``(c) Definition.--For purposes of this section, the term
`multifamily housing project' means any multifamily rental housing
project which is, or prior to acquisition by the Secretary was,
assisted or insured under the National Housing Act, or was subject to a
loan under section 202 of the Housing Act of 1959.''.
(b) Conforming Amendments.--
(1) Nondiscrimination against certificate and voucher
holders.--Section 183(c) of the Housing and Community
Development Act of 1987 (42 U.S.C. 1437f note) is amended by
striking ``section 203(i)(2) of the Housing and Community
Development Amendments of 1978, as amended by section 181(h) of
this Act'' and inserting ``section 203(b) of the Housing and
Community Development Amendments of 1978 (as in effect before
October 1, 1995)''.
(2) LIHPRH act of 1990.--Section 212(c) of the Low-Income
Housing Preservation and Resident Homeownership Act of 1990 (12
U.S.C. 4102(c)) is amended by striking the last sentence.
(3) Hope homeownership program.--Section 427 of the
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.
12877) is amended by striking ``subject to--'' and all that
follows and inserting ``subject to the Low-Income Housing
Preservation and Resident Homeownership Act of 1990.''.
(4) FHA multifamily housing mortgage insurance.--Section
207(k) of the National Housing Act (12 U.S.C. 1713(k)) is
amended by striking the third sentence.
(5) Multifamily mortgage foreclosure act of 1981.--Section
367(b)(2) of the Multifamily Mortgage Foreclosure Act of 1981
(12 U.S.C.3706(b)(2)) is amended--
(A) by striking subparagraph (B); and
(B) by striking ``(A)''.
(6) Preventing mortgage defaults on insured multifamily
projects.--Section 103(h)(2)(B) of the Multifamily Housing
Property Disposition Reform Act of 1994 (12 U.S.C. 1715z-1a
note) is amended by inserting ``(as in effect before October 1,
1995)'' after ``1978''.
SEC. 2104. RECAPTURE OF RURAL HOUSING LOAN SUBSIDIES BY RURAL HOUSING
AND COMMUNITY DEVELOPMENT SERVICE.
The first sentence of section 521(a)(1)(D)(i) of the Housing Act of
1949 (42 U.S.C. 1490a(a)(1)(D)(i)) is amended by inserting ``upon the
repayment of any loan made under this title or'' after ``assistance
rendered''.
SEC. 2105. REDUCTION OF SECTION 8 ANNUAL ADJUSTMENT FACTORS FOR UNITS
WITHOUT TENANT TURNOVER.
Paragraph (2)(A) of section 8(c) of the United States Housing Act
of 1937 (42 U.S.C. 1437f(c)(2)(A)) is amended by striking the last
sentence.
Subtitle B--Thrift Charter Conversion
SEC. 2200. SHORT TITLE.
This subtitle may be cited as the ``Thrift Charter Conversion Act
of 1995''.
CHAPTER 1--BANK INSURANCE FUND AND SAVINGS ASSOCIATION INSURANCE FUND
SEC. 2201. SPECIAL ASSESSMENT.
Section 7(b)(6) of the Federal Deposit Insurance Act (12 U.S.C.
1817(b)(6)) is amended--
(1) by redesignating clauses (i), (ii), and (iii) of
subparagraph (A) as subclauses (I), (II), and (III),
respectively;
(2) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively;
(3) by moving the left margin of such clauses and
subclauses (as so redesignated) 2 ems to the right;
(4) by striking ``special assessments.--In addition to''
and inserting ``special assessments.--
``(A) In general.--In addition to''; and
(5) by adding at the end the following new subparagraphs:
``(B) Single additional special assessment with
respect to certain accounts.--
``(i) In general.--The Corporation shall
impose, on the basis of such factors as the
Board of Directors considers to be appropriate,
a single special assessment on the institutions
described in the following subclauses (other
than institutions exempt under subparagraph
(C)):
``(I) Each Savings Association
Insurance Fund member (including any
Savings Association Insurance Fund
member referred to in section
5(d)(2)(G)).
``(II) Each Bank Insurance Fund
member which has deposits which are
treated, under section 5(d)(3), as
deposits which are insured by the
Savings Association Insurance Fund.
``(ii) Amount of assessment.--The
assessment imposed under clause (i) shall be in
an amount equal to such percentage of the
Savings Association Insurance Fund assessment
base (of the institutions subject to such
assessment) as of March 31, 1995, as the Board
of Directors determines, in the Board of
Directors' discretion, to be necessary in order
for the reserve ratio of the Savings
Association Insurance Fund to meet the
designated reserve ratio on the 1st business
day of January, 1996.
``(iii) Deposit of assessment.--
Notwithstanding any other provision of law, the
proceeds of any assessment imposed under clause
(i) shall be deposited in the Savings
Association Insurance Fund.
``(iv) Date payment due.--The special
assessment imposed under this subparagraph
shall be--
``(I) due on the 1st business day
of January, 1996; and
``(II) paid to the Corporation on
the later of the due date or such other
date as the Corporation may prescribe
which may not be later than the end of
the 60-day period beginning on the date
of the Thrift Charter Conversion Act of
1995.
``(v) Savings association insurance fund
assessment base defined.--For purposes of this
subparagraph, the term Savings Association
Insurance Fund assessment base means--
``(I) the assessment base of
Savings Association Insurance Fund
members on which assessments are
imposed under the risk-based assessment
system established pursuant to
paragraph (1); and
``(II) in the case of an
institution described in clause
(i)(II), the adjusted attributable
deposit amount determined under
subparagraph (C) of section 5(d)(3) for
purposes of subparagraph (B)(i) of such
section.
``(C) Special rules for certain exempt
institutions.--
``(i) In general.--The Board of Directors
may exempt any weak insured depository
institution from the payment of the assessment
imposed under subparagraph (B)(i) if the
exemption would reduce risk to the Savings
Association Insurance Fund.
``(ii) Continuation of assessment rates
applicable as of june 30, 1995.--
Notwithstanding any other provision of this
subsection or any determination by
the Corporation pursuant to paragraph (2), the semiannual assessment
rate applicable under paragraph (2) during the period beginning on
January 1, 1996, and ending on December 31, 1999, with respect to any
insured depository institution which receives an exemption under clause
(i) shall be the semiannual assessment rate which would be applicable
to such institution under paragraph (2) if such assessment rate were
calculated in the manner in which semiannual assessment rates for
Savings Association Insurance Fund members were determined by the
Corporation under such paragraph as of June 30, 1995.
``(iii) Special rule for oakar banks.--If
an insured depository institution to which
clause (ii) applies is an institution described
in subparagraph (B)(i)(II), section 5(d)(3) (as
in effect on September 13, 1995) shall continue
to apply with respect to such institution for
purposes of clause (ii) without regard to the
repeal of such section by section 2202(c) of
the Thrift Charter Conversion Act of 1995.
``(iv) Deposit of assessment.--Assessments
imposed under paragraph (2) in accordance with
clause (i) on depository institutions to which
such clause applies shall be deposited--
``(I) in the Savings Association
Insurance Fund until such fund is
merged into the deposit insurance fund
pursuant to section 2203(a)(2) of the
Thrift Charter Conversion Act of 1995;
and
``(II) after such merger, in the
deposit insurance fund.
``(v) Guidelines.--
``(I) Guidelines required.--Not
later than 30 days after the date of
the enactment of the Thrift Charter
Conversion Act of 1995, the Board of
Directors shall prescribe guidelines
containing the criteria to be used by
the Board of Directors in making any
determination under clause (i).
``(II) Publication.--The guidelines
prescribed under subclause (I) shall be
published in the Federal Register.
``(D) Pro rata payment of special assessment by
exempt institutions authorized.--In the case of any
depository institution which receives an exemption
under subparagraph (C)(i) from the special assessment
imposed under subparagraph (B) and any successor to
such institution, subparagraph (C)(ii) shall cease to
apply with respect to such institution as of the date
on which the institution makes a payment to the
Corporation, on such terms as the Board of Directors
may prescribe, in an amount equal to the product of--
``(i) 12.5 percent of the product of--
``(I) the Savings Association
Insurance Fund assessment base of the
institution which would have been used
in the calculation of the amount of
such special assessment if the
institution had not received the
exemption from such assessment; and
``(II) the percentage rate
calculated by the Board of Directors
under subparagraph (B)(ii) for use in
determining the amount of the special
assessment for depository institutions
which did not receive an exemption
under subparagraph (C); and
``(ii) the whole number of full semiannual
periods which begin after the date of such
payment and end before January 1, 2000.
``(E) Assessment for certain deposits.--
``(i) In general.--Notwithstanding any
other provision of law, in carrying out the
special assessment under subparagraph (B), the
Corporation may set assessment rates on the
basis of the factors described in clause (iii)
for deposits treated under section 5(d)(3) as
deposits insured by the Savings Association
Insurance Fund.
``(ii) Minimum rate.--Notwithstanding
clause (i), any rate assessed under such clause
may not be less than \2/3\ of the assessment
rate imposed under subparagraph (B).
``(iii) Factors.--In setting any assessment
rate under clause (i), the Corporation shall
consider the following factors:
``(I) The extent to which deposits
treated under section 5(d)(3) as
deposits insured by the Savings
Association Insurance Fund do not
reflect the actual amount of deposits
insured by such fund because of the
growth attribution rule contained in
clause (iii) of such section.
``(II) The ability of an insured
depository institution to demonstrate
with deposit data the amount of actual
deposits which should be treated as
deposits insured by the Savings
Association Insurance Fund
notwithstanding the growth attribution
rule referred to in subclause (I).
``(iv) No net budget effect.--
Notwithstanding any other provision of this
subparagraph, the Corporation shall not set any
assessment rate under clause (i) that would result in an increased
budget outlay or a decrease in offsetting receipts under this
paragraph.''.
SEC. 2202. ASSESSMENTS ON INSURED DEPOSITORY INSTITUTIONS.
(a) Financing Corporation Assessments on all FDIC-Insured
Depository Institutions.--Section 21(f) of the Federal Home Loan Bank
Act (12 U.S.C. 1441(f)) is amended--
(1) in the portion of paragraph (2) which precedes
subparagraph (A)--
(A) by striking ``each Savings Association
Insurance Fund member'' and inserting ``each insured
depository institution (as defined in section 3(c)(2)
of the Federal Deposit Insurance Act)''; and
(B) by striking ``such members'' and inserting
``such institutions''; and
(2) by striking ``, except that--'' and all that follows
through the end of the paragraph and inserting ``, except that
the Financing Corporation shall have first priority to make the
assessment.''.
(b) Assessment Rates for SAIF Members May Not Be Less Than
Assessment Rates for BIF Members.--Section 7(b)(2)(F) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(b)(2)(F)) is amended--
(1) by striking ``and'' at the end of clause (i);
(2) by striking the period at the end of clause (ii) and
inserting ``; and''; and
(3) by adding at the end the following new clause:
``(iii) notwithstanding any other provision
of this subsection, assessment rates for
Savings Association Insurance Fund members may
not be less than assessment rates for Bank
Insurance Fund members.''.
(c) Repeal of Exit Moratorium and Oakar Bank Provisions.--Effective
January 1, 1998, section 5(d) of the Federal Deposit Insurance Act (12
U.S.C. 1815(d)) is amended by striking paragraphs (2) and (3).
(d) Technical and Conforming Amendments.--
(1) Section 7(b)(2)(D) of the Federal Deposit Insurance Act
(12 U.S.C. 1817(b)(2)(D)) is amended by striking ``Savings
Association Insurance Fund members'' and inserting ``members of
a deposit insurance fund''.
(2) Section 21(k) of the Federal Home Loan Bank Act (12
U.S.C. 1441(k)) is amended--
(A) by striking paragraph (1); and
(B) by redesignating paragraphs (2) and (3) as
paragraphs (1) and (2), respectively.
(e) Effective Date.--The amendments made by subsections (a), (b),
and (d) shall take effect on January 1, 1996.
SEC. 2203. MERGER OF BANK INSURANCE FUND AND SAVINGS ASSOCIATION
INSURANCE FUND AFTER RECAPITALIZATION OF SAIF.
(a) Establishment of Deposit Insurance Fund.--
(1) In general.--Effective January 1, 1998, section
11(a)(5) of the Federal Deposit Insurance Act (12 U.S.C.
1821(a)(5)) is amended to read as follows:
``(5) Deposit insurance fund.--
``(A) Establishment.--There is established a fund
to be known as the deposit insurance fund which shall--
``(i) be maintained and administered by the
Corporation; and
``(ii) initially consist of the assets and
liabilities of the Bank Insurance Fund and
Savings Association Insurance Fund which have
been merged by the Corporation into the deposit
insurance fund pursuant to section 2203(a)(2)
of the Thrift Charter Conversion Act of 1995,
other than any assets of the Savings
Association Insurance Fund which have been
deposited in the special reserve of the deposit
insurance fund pursuant to section 2203(b)(2)
of such Act.
``(B) Uses.--The deposit insurance fund shall be
available to the Corporation for use in carrying out
the insurance purposes of the Corporation in accordance
with this Act with respect to insured depository
institutions.
``(C) Deposits.--All amounts assessed against
insured depository institutions by the Corporation
shall be deposited into the deposit insurance fund.''.
(2) Merger by corporation.--Except with respect to any
assets of the Savings Association Insurance Fund which are
required to be deposited in the special reserve of the deposit
insurance fund pursuant to subsection (b)(2), the Corporation
shall merge the Bank Insurance Fund and the Savings Association
Insurance Fund on January 1, 1998, into the deposit insurance
fund established by the amendment made by paragraph (1).
(b) Establishment of Special Reserve of the Deposit Insurance
Fund.--
(1) In general.--Effective January 1, 1998, section
11(a)(6) of the Federal Deposit Insurance Act (12 U.S.C.
1821(a)(6)) is amended to read as follows:
``(6) Special reserve of the deposit insurance fund.--
``(A) In general.--There is established a fund to
be known as the special reserve of the deposit
insurance fund which shall--
``(i) be maintained and administered by the
Corporation; and
``(ii) initially consist of amounts
deposited in the special reserve pursuant to
section 2203(b)(2) of the Thrift Charter
Conversion Act of 1995.
``(B) Emergency use of special reserve.--
``(i) Use authorized.--Subject to clause
(ii) and notwithstanding subparagraph (C), the
Corporation may, in the sole discretion of the
Board of Directors, transfer amounts from the
special reserve for deposit in the deposit insurance fund for use in
accordance with paragraph (5)(B).
``(ii) Conditions on transfer.--The Board
of Directors may authorize a transfer under
clause (i) only if--
``(I) the Board of Directors
determines that the reserve ratio of
the deposit insurance fund is less than
50 percent of the designated reserve
ratio; and
``(II) the Board of Directors finds
that the reserve ratio of the deposit
insurance will likely be less than the
designated reserve ratio of the fund
for each of the 4 calendar quarters
beginning after the date of such
determination.
``(C) No refunds or other uses authorized.--Except
as provided in subparagraph (B), the Corporation may
not make any payment from the special reserve, make any
refund or provide any credit to any insured depository
institution with respect to any amount in the special
reserve, or use any amount in the special reserve for
any other purpose (including the use of any such amount
as security for the repayment of any obligation of the
Corporation).
``(D) Exclusion of special reserve in calculating
the reserve ratio.--No amount in the special reserve
may be taken into account in calculating the reserve
ratio of the deposit insurance fund under section 7.''.
(2) Transfer and deposit by corporation.--If, at the time
of the merger of the Bank Insurance Fund and the Savings
Association Insurance Fund pursuant to subsection (a)(2), the
reserve ratio of the Savings Association Insurance Fund exceeds
the designated reserve ratio, the Corporation shall transfer
from such fund to the special reserve of the deposit insurance
fund established by the amendment made by paragraph (1) an
amount equal to the amount which causes the reserve ratio of
the Savings Association Insurance Fund to exceed the designated
reserve ratio.
(c) Technical and Conforming Amendments.--
(1) Section 3(y) of the Federal Deposit Insurance Act (12
U.S.C. 1813(y)) is amended by striking ``the Bank Insurance
Fund or the Savings Association Insurance Fund, as
appropriate'' and inserting ``the deposit insurance fund
established under section 11(a)(5)''.
(2) Section 11(a) of the Federal Deposit Insurance Act (12
U.S.C. 1821(a)) is amended by striking paragraphs (4)(A) and
(7).
(3) Section 5(d)(1) of the Federal Deposit Insurance Act
(12 U.S.C. 1815(d)(1)) is amended--
(A) in subparagraph (A), by striking ``reserve
ratios'' and all that follows through the period and
inserting ``the reserve ratio of the deposit insurance
fund.'';
(B) by striking subparagraph (B); and
(C) by redesignating subparagraph (C) as
subparagraph (B).
(4) Section 7 of the Federal Deposit Insurance Act (12
U.S.C. 1817) is amended by striking subsection (l).
(5) Section 7(b)(2) of the Federal Deposit Insurance Act
(12 U.S.C. 1817(b)(2)) is amended--
(A) by striking subparagraphs (B), (F), and (G);
(B) in clauses (i) and (iv) of subparagraph (A), by
striking ``each deposit insurance fund'' and inserting
``the deposit insurance fund'';
(C) in subparagraph (A)(iii), by striking ``a
deposit insurance fund'' and inserting ``the deposit
insurance fund''; and
(D) by inserting after subparagraph (E) the
following new subparagraph:
``(F) Reserve ratio defined.--For purposes of this
subsection, the term `reserve ratio' means the ratio of
the net worth of the deposit insurance fund to the
aggregate estimated insured deposits held in all
insured depository institutions.''.
(6) Section 7(b)(3) of the Federal Deposit Insurance Act
(12 U.S.C. 1817(b)(3)) is amended--
(A) in subparagraph (A) by striking ``any deposit
insurance fund'' and inserting ``the deposit insurance
fund''; and
(B) by striking subparagraphs (C) and (D).
(7) Subparagraph (A) of section 7(b)(6) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(b)(6)) (as so
redesignated by section 2201 of this subtitle) is amended--
(A) in clause (i)--
(i) by inserting ``or'' after the semicolon
at the end of subclause (I);
(ii) by striking subclause (II); and
(iii) by striking ``; and'' at the end of
subclause (III) and inserting a period; and
(B) by striking clause (ii).
(8) Section 11(a)(4)(B) of the Federal Deposit Insurance
Act (12 U.S.C. 1821(a)(4)(B)) is amended by striking ``Bank
Insurance Fund and the Savings Association Insurance Fund'' and
inserting ``deposit insurance fund''.
(9) Paragraph (1) of section 11(f) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(f)) is amended by striking
``depositor, except that--'' and all that follows through the
period at the end of the paragraph and inserting
``depositor.''.
(10) Section 11(i)(3) of the Federal Deposit Insurance Act
(12 U.S.C. 1821(i)(3)) is amended--
(A) by striking subparagraph (B); and
(B) in subparagraph (C), by striking
``subparagraphs (A) and (B)'' and inserting
``subparagraph (A)''.
(11) Section 11A(a)(3) of the Federal Deposit Insurance Act
(12 U.S.C. 1821a(a)(3)) is amended by striking ``Bank Insurance
Fund, the Savings Association Insurance Fund,'' and inserting
``deposit insurance fund''.
(12) Section 11A(f) of the Federal Deposit Insurance Act
(12 U.S.C. 1821a(f)) is amended by striking ``Savings
Association Insurance Fund'' and inserting ``deposit insurance
fund''.
(13) Section 13(a)(1) of the Federal Deposit Insurance Act
(12 U.S.C. 1823(a)(1)) is amended by striking ``Bank Insurance
Fund, the Savings Association Insurance Fund,'' and inserting
``deposit insurance fund, the special reserve of the deposit
insurance fund,''.
(14) Section 13(c)(4)(G)(ii) of the Federal Deposit
Insurance Act (12 U.S.C. 1823(c)(4)(G)(ii)) is amended--
(A) by striking ``appropriate insurance fund'' and
inserting ``deposit insurance fund'';
(B) by striking ``the members of the insurance fund
(of which such institution is a member)'' and inserting
``insured depository institutions'';
(C) by striking ``each member's'' and inserting
``each insured depository institution's''; and
(D) by striking ``the member's'' each place such
term appears and inserting ``the institution's''.
(15) Section 13(c) of the Federal Deposit Insurance Act (12
U.S.C. 1823(c)) is amended by striking paragraph (11).
(16) Section 13(h) of the Federal Deposit Insurance Act (12
U.S.C. 1823(h)) is amended by striking ``Bank Insurance Fund''
and inserting ``deposit insurance fund''.
(17) Section 14(a) of the Federal Deposit Insurance Act (12
U.S.C. 1824(a)) is amended--
(A) by striking ``Bank Insurance Fund or the
Savings Association Insurance Fund'' and inserting
``deposit insurance fund''; and
(B) by striking ``each such fund'' and inserting
``the fund''.
(18) Section 14(b) of the Federal Deposit Insurance Act (12
U.S.C. 1824(b)) is amended by striking ``Bank Insurance Fund or
Savings Association Insurance Fund'' and inserting ``deposit
insurance fund''.
(19) Section 14(c) of the Federal Deposit Insurance Act (12
U.S.C. 1824(c)) is amended by striking paragraph (3).
(20) Section 14 of the Federal Deposit Insurance Act (12
U.S.C. 1824) is amended by striking subsection (d).
(21) Section 15(c)(5) of the Federal Deposit Insurance Act
(12 U.S.C. 1825(c)(5)) is amended--
(A) by striking ``Bank Insurance Fund or Savings
Association Insurance Fund, respectively,'' and
inserting ``deposit insurance fund'';
(B) by striking ``Bank Insurance Fund or Savings
Association Insurance Fund, respectively;'' and
inserting ``deposit insurance fund;''; and
(C) by striking ``Bank Insurance Fund or the
Savings Association Insurance Fund, respectively,'' and
inserting ``deposit insurance fund,''.
(22) Section 17(a)(1) of the Federal Deposit Insurance Act
(12 U.S.C. 1827(a)(1)) is amended by striking ``Bank Insurance
Fund, the Savings Association Insurance Fund,'' each place such
term appears and inserting ``deposit insurance fund''.
(23) Section 17(d) of the Federal Deposit Insurance Act (12
U.S.C. 1827(d)) is amended by striking ``Bank Insurance Fund,
the Savings Association Insurance Fund,'' each place such term
appears and inserting ``deposit insurance fund''.
(24) The heading for section 17(a) of the Federal Deposit
Insurance Act (12 U.S.C. 1827(a)) is amended by striking ``BIF,
SAIF,'' and inserting ``the Deposit Insurance Fund''.
(25) Subsections (a)(1) and (d)(1)(A) of section 24 of the
Federal Deposit Insurance Act (12 U.S.C. 1831a) are each
amended by striking ``appropriate''.
(26) Section 24(e)(2) of the Federal Deposit Insurance Act
(12 U.S.C. 1831a(e)(2)) is amended--
(A) in subparagraph (A), by striking ``of which
such banks are members''; and
(B) in subparagraph (B)(ii), by striking ``of which
such bank is a member''.
(27) Section 24(f)(6)(B) of the Federal Deposit Insurance
Act (12 U.S.C. 1831a(f)(6)(B)) is amended by striking ``of
which such bank is a member''.
(28) Section 31 of the Federal Deposit Insurance Act (12
U.S.C. 1831h) is hereby repealed.
(29) Section 36(i)(3) of the Federal Deposit Insurance Act
(12 U.S.C. 1831m(i)(3)) is amended by striking ``affected''.
(30) Section 38 of the Federal Deposit Insurance Act (12
U.S.C. 1831o) is amended by striking subsection (o).
(31) Section 21B(f)(2)(C)(ii) of the Federal Home Loan Bank
Act (12 U.S.C. 1441b(f)(2)(C)(ii)) is amended to read as
follows:
``(C) Payments by federal home loan
banks.--To the extent the amounts available
pursuant to subparagraphs (A) and (B) are
insufficient to cover the amount of interest
payments, each Federal home loan bank shall pay
to the Funding Corporation each calendar year
an amount equal to 23.7 percent of the bank's
net earnings for the year for which such amount
is required to be paid.''.
(d) Effective Date of Amendments.--The amendments made by
subsection (c) shall take effect on January 1, 1998.
SEC. 2204. REFUND OF AMOUNTS IN DEPOSIT INSURANCE FUND IN EXCESS OF
DESIGNATED RESERVE AMOUNT.
Subsection (e) of section 7 of the Federal Deposit Insurance Act
(12 U.S.C. 1817(e)) is amended to read as follows:
``(e) Refunds.--
``(1) Overpayments.--In the case of any payment of an
assessment by an insured depository institution in excess of
the amount due to the Corporation, the Corporation may--
``(A) refund the amount of the excess payment to
the insured depository institution; or
``(B) credit such excess amount toward the payment
of subsequent semiannual assessments until such credit
is exhausted.
``(2) Balance in insurance fund in excess of designated
reserve.--
``(A) In general.--Subject to subparagraph (B), if
as of the end of any semiannual period the amount of
the actual reserves in--
``(i) the Bank Insurance Fund (until the
merger of such fund into the deposit insurance
fund pursuant to section 2203(a)(2) of the
Thrift Charter Conversion Act of 1995); or
``(ii) the deposit insurance fund (after
the establishment of such fund under section
2203(a)(1) of such Act),
exceeds the balance required to meet the designated
reserve ratio applicable with respect to such fund,
such excess amount shall be refunded to members of the fund by the
Corporation on such basis as the Board of Directors determines to be
appropriate, taking into account the factors considered under the risk-
based assessment system.
``(B) Refund not to exceed previous semiannual
assessment.--The amount of any refund under this
paragraph to any member of a deposit insurance fund for
any semiannual period may not exceed the total amount
of assessments paid by such member to the insurance
fund with respect to such period.''.
SEC. 2205. ASSESSMENTS AUTHORIZED ONLY IF NEEDED TO MAINTAIN THE
RESERVE RATIO OF A DEPOSIT INSURANCE FUND.
(a) In General.--Section 7(b)(2)(A)(i) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(b)(2)(A)(i)) is amended in the portion of
such section preceding subclause (I) by inserting ``when necessary, and
only to the extent necessary'' after ``insured depository
institutions''.
(b) Limitation on Assessment.--Section 7(b)(2)(A)(iii) of the
Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)(iii)) is amended
to read as follows:
``(iii) Limitation on assessment.--The
Board of Directors shall not set semiannual
assessments with respect to a deposit insurance
fund in excess of the amount needed--
``(I) to maintain the reserve ratio
of the fund at the designated reserve
ratio; or
``(II) if the reserve ratio is less
than the designated reserve ratio, to
increase the reserve ratio to the
designated reserve ratio.''.
CHAPTER 2--STATUS OF BANKS AND SAVINGS ASSOCIATIONS
SEC. 2221. TERMINATION OF FEDERAL SAVINGS ASSOCIATIONS; TREATMENT OF
STATE SAVINGS ASSOCIATIONS AS BANKS FOR PURPOSES OF
FEDERAL BANKING LAW.
(a) Termination of Federal Savings Association Charters.--
(1) In general.--Each Federal savings association shall--
(A) convert to a national bank charter;
(B) convert to a State depository institution
charter; or
(C) surrender the charter of such savings
association and liquidate the institution.
(2) Conversion to national bank by operation of law.--If
any Federal savings association has not taken any action
required under paragraph (1) as of January 1, 1998, the savings
association shall--
(A) become a national bank on such date by
operation of law;
(B) immediately file articles of association and an
organizational certificate with the Comptroller of the
Currency in accordance with sections 5133, 5134, and
5135 of the Revised Statutes of the United States; and
(C) cease to exist as a Federal savings association
as of such date.
(3) Prohibition on new charters of federal savings
associations.--The Director of the Office of Thrift Supervision
may not grant any charter for a Federal savings association for
which an application was received after the date of the
enactment of this Act.
(b) Treatment of State Savings Associations as Banks For Purposes
of Federal Banking Law.--
(1) Amendments to federal deposit insurance act.--Section 3
of the Federal Deposit Insurance Act (12 U.S.C. 1813) is
amended--
(A) by striking paragraph (2) of subsection (a) and
inserting the following new paragraph:
``(2) State bank.--
``(A) In general.--The term `State bank' means any
bank, banking association, trust company, savings bank,
industrial bank (or similar depository institution
which the Board of Directors finds to be operating
substantially in the same manner as an industrial
bank), building and loan association, savings and loan
association, homestead association, cooperative bank,
or other banking institution--
``(i) which is engaged in the business of
receiving deposits, other than trust funds (as
defined in this section); and
``(ii) which--
``(I) is incorporated under the
laws of any State;
``(II) is organized and operating
according to the laws of the State in
which such institution is chartered or
organized; or
``(III) is operating under the Code
of Law for the District of Columbia
(except a national bank).
``(B) Certain insured banks included.--The term
`State bank' includes any cooperative bank or other
unincorporated bank the deposits of which were insured
by the Corporation on the day before the date of the
enactment of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989.
``(C) Certain uninsured banks excluded.--The term
`State bank' does not include any cooperative bank or
other unincorporated bank the deposits of which were
not insured by the Corporation on the day before the
date of the enactment of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989.''; and
(B) in subsection (q)--
(i) by inserting ``and'' after the
semicolon at the end of paragraph (2);
(ii) by striking ``; and'' at the end of
paragraph (3) and inserting a period; and
(iii) by striking paragraph (4).
(2) Amendments to the bank holding company act of 1956.--
Section 2 of the Bank Holding Company Act of 1956 (12 U.S.C.
1841) is amended--
(A) by striking subparagraph (E) of subsection
(a)(5); and
(B) by striking subparagraphs (B) and (J) of
subsection (c)(2).
(3) Amendments to the federal reserve act.--The 2d and 3d
paragraphs of the 1st section of the Federal Reserve Act (12
U.S.C. 221) are each amended by inserting ``(as defined in
section 3(a)(2) of the Federal Deposit Insurance Act)'' after
``State bank''.
SEC. 2222. TREATMENT OF CERTAIN ACTIVITIES AND AFFILIATIONS OF BANK
HOLDING COMPANIES RESULTING FROM THIS ACT.
Section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 1843)
is amended by adding at the end the following new subsection:
``(k) Treatment of Companies Resulting From Savings and Loan
Holding Companies.--
``(1) In general.--Notwithstanding any other provision of
this section (other than paragraph (5)) or any other provision
of Federal law including sections 20 and 32 of the Banking Act
of 1933, a qualified bank holding company may, after such
company becomes a bank holding company--
``(A) maintain or enter into any nonbanking
affiliation which such company was authorized to
maintain or enter into as of September 22, 1995, or was
authorized to maintain following a merger of insured
depository institution subsidiaries pursuant to an
application filed no later than such date; and
``(B) engage, directly or through any affiliate
described in subparagraph (A) which is not a bank, in
any activity in which such company or any affiliate
described in subparagraph (A) was authorized to engage
as of September 22, 1995, or in which such company was
authorized to engage following a merger of insured
depository institution subsidiaries pursuant to an
application filed no later than such date,
if the requirements of paragraph (4) are met.
``(2) Qualified bank holding company defined.--For purposes
of this subsection, the term `qualified bank holding company'
means--
``(A) any company which--
``(i) as of September 13, 1995, is a
savings and loan holding company and is not a
bank holding company; and
``(ii) becomes a bank holding company after
such date; and
``(B) any bank holding company which as of
September 13, 1995--
``(i) is a savings and loan holding
company; and
``(ii) is exempt from this section pursuant
to an order issued by the Board under
subsection (d).
``(3) No loss of subsection (d) exemption.--No qualified
bank holding company described in paragraph (2)(B) shall lose
the grounds for the exemption under subsection (d) because a
savings association which such company controlled, directly or
indirectly, as of September 13, 1995, becomes a bank after such
date so long as such bank continues to meet the requirements of
subparagraphs (A) and (B) of paragraph (4).
``(4) Prerequisites for continuation of grandfathered
activities and affiliations.--This subsection shall cease to
apply with respect to a qualified bank holding company if, at
any time after such company first meets the definition of a
qualified bank holding company--
``(A) any insured depository institution controlled
by such company which, as of the day before the company
first meets the definition of a qualified bank holding
company, was subject to the requirements contained in
section 10(m) of the Home Owners' Loan Act, as in
effect on such date, (and regulations in effect on such
date under such section) for treatment as a qualified
thrift lender under such section fails to meet such
requirements;
``(B) any insured depository institution controlled
by such company fails to comply with any limitation or
restriction on the type or amounts of loans or
investments of the institution to which such
institution was subject as of the date of the enactment
of the Thrift Charter Conversion Act of 1995; or
``(C) the company or any subsidiary of the company
acquires more than 5 percent of the shares or assets of
any bank or insured institution after September 13,
1995.
``(5) Nontransferable.--This subsection shall not apply
with respect to any qualified bank holding company if, after
September 13, 1995, any person acquires, directly or
indirectly, control of the company or the company is the
subject of any merger, consolidation, or other similar
transaction.
``(6) Prohibition on certain insured depository
institutions identifying themselves as national banks.--
``(A) In general.--Notwithstanding the requirement
of section 5134 of the Revised Statutes of the United
States--
``(i) the name of an insured depository
institution subsidiary of a qualified bank
holding company which--
``(I) as of the date of the
enactment of the Thrift Charter
Conversion Act of 1995, is a savings
and loan holding company described in
section 10(c)(3) of the Home Owners'
Loan Act (as in effect on such date);
and
``(II) is subject to the
restrictions contained in paragraph
(3),
may not include the term `national'; and
``(ii) such insured depository institution
may not be identified as a national bank on any
sign displayed by the institution or in any
advertisement or other publication of the
institution.
``(B) Depository institution not liable for
fraudulent misrepresentation for not representing
itself as a national bank.--An insured depository
institution which is subject to subparagraph (A) shall
not be liable for any civil or criminal penalty under
any Federal or State consumer protection law, or in any
criminal or civil action, for fraudulently
misrepresenting the nature of the charter of the
institution, for falsely advertising the status of the
institution, for making a false statement with respect
to the status of the institution, or for any similar
offense by reason of the institution's compliance with
such subparagraph.
``(7) Enforcement.--In addition to any other power of the
Board, the Board may enforce compliance with the provisions of
this subsection with respect to any qualified bank holding
company and any bank controlled by such company under section 8
of the Federal Deposit Insurance Act.''.
SEC. 2223. TRANSITION PROVISIONS FOR ACTIVITIES OF SAVINGS ASSOCIATIONS
WHICH CONVERT INTO OR BECOME TREATED AS BANKS.
Notwithstanding any other provision of Federal law, any insured
depository institution which, as of September 13, 1995, is a savings
association (as defined in section 3(b) of the Federal Deposit
Insurance Act (as in effect on such date)) and after such date converts
to a national or State bank charter or becomes treated as a State bank
pursuant to the amendment made by section 2221(b) may continue to
engage, directly or indirectly, in any activity in which such
institution was lawfully engaged as of such date during the 5-year
period beginning on the effective date of such conversion or the
effective date of such amendments, as the case may be.
SEC. 2224. REGISTRATION OF BANK HOLDING COMPANIES RESULTING FROM
CONVERSIONS OF SAVINGS ASSOCIATIONS TO BANKS OR TREATMENT
OF SAVINGS ASSOCIATIONS AS BANKS.
Section 3 of the Bank Holding Company Act of 1956 (12 U.S.C. 1842)
is amended by adding at the end the following new subsections:
``(h) Registration of Certain Bank Holding Companies.--A company
which, as of September 13, 1995, is a savings and loan holding company
(as defined in section 10(a)(1)(D) of Home Owners' Loan Act (as in
effect on such date)) and is not a bank holding company shall not be
required to obtain the approval of the Board under subsection (a) to
become a bank holding company after September 13, 1995, as a result of
the conversion of any insured depository institution subsidiary of such
company into a bank or by virtue of the treatment of any insured
depository institution subsidiary of such company as a bank pursuant to
the amendments made by the Thrift Charter Conversion Act of 1995, if
such company--
``(1) registers as a bank holding company with the Board in
accordance with section 5(a); and
``(2) does not acquire, directly or indirectly, ownership
or control of any additional insured depository institution or
other company in connection with such conversion or treatment.
``(i) Regulation of Qualified Bank Holding Companies.--The Board
shall regulate qualified bank holding companies (as defined in section
4(k)(2)) in a manner consistent with--
``(1) the regulation of such companies by the Director of
the Office of Thrift Supervision before the date of the
enactment of the Thrift Charter Conversion Act of 1995; and
``(2) the safety and soundness of insured depository
institution subsidiaries of such companies.''.
SEC. 2225. ADDITIONAL TRANSITION PROVISIONS AND SPECIAL RULES.
(a) Mutual National Banks Authorized; Conversion of Mutual Savings
Associations Into National Banks.--
(1) In general.--Chapter one of title LXII of the Revised
Statutes of the United States (12 U.S.C. 21 et seq.) is amended
by inserting after section 5133 the following new section:
``SEC. 5133A. MUTUAL NATIONAL BANKS.
``(a) In General.--Notwithstanding the paragraph designated the
``Third'' of section 5134, the Comptroller of the Currency may charter
national banks organized in the mutual form either de novo or through a
conversion of any stock national or State bank (as defined in section 3
of the Federal Deposit Insurance Act) or any State mutual bank or
credit union, subject to regulations prescribed by the Comptroller of
the Currency in accordance with this section.
``(b) Regulations.--
``(1) Transition rules.--National banks organized in the
mutual form shall be subject to the regulations of the Director
of the Office of Thrift Supervision governing corporate
organization, governance, and conversion of mutual
institutions, as in effect on September 13, 1995, including
parts 543, 544, 546, 563b, and 563c of chapter V of title 12 of
the Code of Federal Regulations (as in effect on such date),
during the 3-year period beginning on the date of the enactment
of the Thrift Charter Conversion Act of 1995.
``(2) Regulations of the comptroller.--The Comptroller of
the Currency shall prescribe appropriate regulations for
national banks organized in the mutual form, effective as of
the end of the 3-year period referred to in paragraph (1).
``(3) Applicability of capital stock requirements.--The
Comptroller of the Currency shall prescribe regulations
regarding the manner in which requirements of title LXII of the
Revised Statutes of the United States with respect to capital
stock, and limitations imposed on national banks under such
title based on capital stock, shall apply to national banks
organized in mutual form pursuant to subsection (a).
``(c) Conversions.--
``(1) Conversion to stock national bank.--Subject to
subsection (b)(1) and, after the end of the 3-year period
referred to in such subsection, such regulations as the
Comptroller of the Currency may prescribe for the protection of
depositors' rights and for any other purpose the Comptroller of
the Currency may consider appropriate, any national bank which
is organized in mutual form pursuant to paragraph (1) may
reorganize as a stock national bank.
``(2) Conversions to state banks.--Any national mutual bank
may convert to a State bank charter in accordance with
regulations prescribed by the Comptroller of the Currency and
applicable State law.''.
(2) Mutual bank holding companies.--Subsection (g) of
section 3 of the Bank Holding Company Act of 1956 (12 U.S.C.
1842(g)) is amended to read as follows:
``(g) Mutual Bank Holding Companies.--
``(1) In general.--A national mutual bank may reorganize so
as to become a holding company by--
``(A) chartering an interim national bank, the
stock of which is to be wholly owned, except as
otherwise provided in this section, by the national
mutual bank; and
``(B) transferring the substantial part of the
national mutual bank's assets and liabilities,
including all of the bank's insured liabilities, to the
interim national bank.
``(2) Directors and certain account holders' approval of
plan required.--A reorganization is not authorized under this
subsection unless--
``(A) a plan providing for such reorganization has
been approved by a majority of the board of directors
of the national mutual bank; and
``(B) in the case of a national mutual bank in
which holders of accounts and obligors exercise voting
rights, such plan has been submitted to and approved by
a majority of such individuals at a meeting held at the
call of the directors in accordance with the procedures
prescribed by the bank's charter and bylaws.
``(3) Notice to the board; disapproval period.--
``(A) Notice required.--
``(i) In general.--At least 60 days before
taking any action described in paragraph (1), a
national mutual bank seeking to establish a
mutual holding company shall provide written
notice to the Board.
``(ii) Contents of notice.--The notice
shall contain such relevant information as the
Board shall require by regulation or by
specific request in connection with any
particular notice.
``(B) Transaction allowed if not disapproved.--
Unless the Board within such 60-day notice period
disapproves the proposed holding company formation, or
extends for another 30 days the period during which
such disapproval may be issued, the national mutual
bank providing such notice may proceed with the
transaction, if the requirements of paragraph (2) have
been met.
``(C) Grounds for disapproval.--The Board may
disapprove any proposed holding company formation only
if--
``(i) such disapproval is necessary to
prevent unsafe or unsound practices;
``(ii) the financial or management
resources of the national mutual bank involved
warrant disapproval;
``(iii) the national mutual bank fails to
furnish the information required under
subparagraph (A); or
``(iv) the national mutual bank fails to
comply with the requirement of paragraph (2).
``(D) Retention of capital assets.--In connection
with the transaction described in paragraph (1), a
national mutual bank may, subject to the approval of
the Board, retain capital assets at the holding company
level to the extent that the capital retained at the
holding company is in excess of the amount of capital
required in order for the interim national bank to meet
all relevant capital standards established by the
Comptroller of the Currency for national banks.
``(4) Ownership.--
``(A) In general.--Persons having ownership rights
in the national mutual bank under section 5133A of the
Revised Statutes of the United States (including
paragraph 575.5 of chapter V of title 12 of the Code of
Federal Regulations, as in effect on September 13,
1995, and applicable to national mutual banks pursuant
to such section) or State law shall have the same
ownership rights with respect to the mutual holding
company.
``(B) Holders of certain accounts.--Holders of
savings, demand, or other accounts of--
``(i) a national bank chartered as part of
a transaction described in paragraph (1); or
``(ii) a mutual bank acquired pursuant to
paragraph (5)(B),
shall have the same ownership rights with respect to
the mutual holding company as persons described in
subparagraph (A) of this paragraph.
``(5) Permitted activities.--A mutual holding company may
engage only in the following activities:
``(A) Investing in the stock of a national or State
bank.
``(B) Acquiring a mutual bank through the merger of
such bank into a national bank subsidiary of such
holding company or an interim national bank subsidiary
of such holding company.
``(C) Subject to paragraph (6), merging with or
acquiring another holding company, one of whose
subsidiaries is a national mutual bank.
``(D) Investing in a corporation the capital stock
of which is available for purchase by a national mutual
bank under Federal law or under the law of any State
where the home office of any subsidiary bank is
located.
``(E) Engaging in the activities permitted under
section 4(c).
``(6) Limitations on certain activities of acquired holding
companies.--
``(A) New activities.--If a mutual holding company
acquires or merges with another holding company under
paragraph (5)(C), the holding company acquired or the
holding company resulting from such merger or
acquisition may only invest in assets and engage in
activities which are authorized under paragraph (5).
``(B) Grace period for divesting prohibited assets
or discontinuing prohibited activities.--Not later than
2 years following a merger or acquisition described in
paragraph (5)(C), the acquired holding company or the
holding company resulting from such merger or
acquisition shall--
``(i) dispose of any asset which is an
asset in which a mutual holding company may not
invest under paragraph (5); and
``(ii) cease any activity which is an
activity in which a mutual holding company may
not engage under paragraph (5).
``(7) Chartering and other requirements.--
``(A) In general.--A mutual holding company shall
be chartered by the Board and shall be subject to such
regulations as the Board may prescribe.
``(B) Other requirements.--Unless the context
otherwise requires, a mutual holding company shall be
subject to the other requirements of this Act regarding
regulation of holding companies.
``(8) Capital improvement.--
``(A) Pledge of stock of savings association
subsidiary.--This section shall not prohibit a mutual
holding company from pledging all or a portion of the
stock of a national bank chartered as part of a
transaction described in paragraph (1) to raise capital
for such bank.
``(B) Issuance of nonvoting shares.--No provision
of this Act shall be construed as prohibiting a
national bank chartered as part of a transaction
described in paragraph (1) from issuing any nonvoting
shares or less than 50 percent of the voting shares of
such bank to any person other than the mutual holding
company.
``(9) Insolvency and liquidation.--
``(A) In general.--Notwithstanding any provision of
law, upon--
``(i) the default of any national bank--
``(I) the stock of which is owned
by any mutual holding company; and
``(II) which was chartered in a
transaction described in paragraph (1);
``(ii) the default of a mutual holding
company; or
``(iii) a foreclosure on a pledge by a
mutual holding company described in paragraph
(8)(A),
a trustee shall be appointed receiver of such mutual
holding company and such trustee shall have the
authority to liquidate the assets of, and satisfy the
liabilities of, such mutual holding company pursuant to
title 11, United States Code.
``(B) Distribution of net proceeds.--Except as
provided in subparagraph (C), the net proceeds of any
liquidation of any mutual holding company pursuant to
subparagraph (A) shall be transferred to persons who
hold ownership interests in such mutual holding
company.
``(C) Recovery by corporation.--If the Corporation
incurs a loss as a result of the default of any savings
association subsidiary of a mutual holding company
which is liquidated pursuant to subparagraph (A), the
Corporation shall succeed to the ownership interests of
the depositors of such savings association in the
mutual holding company, to the extent of the
Corporation's loss.
``(10) State mutual bank holding company.--
``(A) In general.--Notwithstanding any provision of
Federal law, a State bank operating in mutual form may
reorganize so as to form a holding company under State
law.
``(B) Regulation of state mutual holding company.--
A corporation organized as a holding company in
accordance with subparagraph (A) shall be regulated on
the same terms and be subject to the same limitations
as any other holding company which controls a bank.
``(11) Regulations.--
``(A) Transition rules.--Mutual bank holding
companies organized under this subsection shall be
subject to the regulations of the Director of the
Office of Thrift Supervision governing corporate
organization, governance, and conversion of mutual
institutions, as in effect on September 13, 1995,
including part 575 of chapter V of title 12 of the Code
of Federal Regulations (as in effect on such date),
during the 3-year period beginning on the date of the
enactment of the Thrift Charter Conversion Act of 1995.
``(B) Regulations of the board.--The Board shall
prescribe appropriate regulations for mutual holding
companies, effective at the end of the 3-year period
referred to in subparagraph (A).
``(12) Definitions.--For purposes of this subsection--
``(A) Mutual holding company.--The term `mutual
holding company' means a corporation organized as a
holding company under this subsection.
``(B) Default.--The term `default' means an
adjudication or other official determination of a court
of competent jurisdiction or other public authority
pursuant to which a conservator, receiver, or other
legal custodian is appointed.
``(C) National mutual bank.--The term `national
mutual bank' means a national bank organized in mutual
form under section 5133A of the Revised Statutes of the
United States.''.
(3) Limitation on federal regulation of state banks.--
Except as otherwise provided in Federal law, the Comptroller of
the Currency, Board of Governors of the Federal Reserve System,
and Federal Deposit Insurance Corporation may not adopt or
enforce any regulation which contravenes the corporate
governance rules prescribed by State law or regulation for
State banks unless the Comptroller, Board, or Corporation finds
that such Federal regulation is necessary to assure the safety
and soundness of such State banks.
(4) Conversions of mutual savings associations to mutual
national banks by operation of law.--Notwithstanding any other
provision of Federal or State law, any savings association (as
defined in section 3 of the Federal Deposit Insurance Act (as
in effect on September 13, 1995)) which is organized in mutual
form as of the date of the enactment of this Act may become a
national mutual bank by operation of law if the association--
(A) files the articles of association and
organization certificate with the Comptroller of the
Currency before January 1, 1998, in accordance with
chapter one of title LXII of the Revised Statutes of
the United States; and
(B) provides such other document or information as
the Comptroller of the Currency may prescribe in
regulations consistent with this section and section
5133A of the Revised Statutes of the United States (as
added by paragraph (1) of this subsection).
(5) Clerical amendment.--The table of sections for chapter
one of title LXII of the Revised Statutes of the United States
(12 U.S.C. 21 et seq.) is amended by inserting after the item
relating to section 5133 the following new item:
``5133A. Mutual national banks.''.
(b) Membership in Federal Home Loan Banks.--Any insured depository
institution which--
(1) as of the date of the enactment of this Act, is a
Federal savings association which, pursuant to section 6(e) of
the Federal Home Loan Bank Act, may not voluntarily withdraw
from membership in a Federal home loan bank; and
(2) after such date converts from a Federal savings
association to a national bank,
shall continue to be subject to the prohibition under such section on
voluntary withdrawal from such membership as though such bank were
still a Federal savings association until the bank ceases to be a
national bank.
(c) Branches.--
(1) In general.--Notwithstanding any provision of the
Federal Deposit Insurance Act, the Bank Holding Company Act of
1956, or any other Federal or State law, any depository
institution which--
(A) as of the date of the enactment of this Act, is
a savings association; and
(B) becomes a bank before January 1, 1998, or,
pursuant to the amendments made by this subsection, is
treated as a bank as of such date under the Federal
Deposit Insurance Act,
and any depository institution or bank holding company which
acquires such depository institution, may continue, after the
depository institution becomes or commences to be treated as a
bank, to operate any branch which the savings association
operated as a branch on September 13, 1995.
(2) No additional branches.--Paragraph (1) shall not be
construed as authorizing the establishment, acquisition, or
operation of any additional branch of a depository institution
in any State by virtue of the operation by such institution of
a branch in such State pursuant to such paragraph except to the
extent such establishment, acquisition, or operation is
permitted under the Federal Deposit Insurance Act, Bank Holding
Company Act of 1956, and any other applicable Federal or State
law without regard to such branch.
(d) Transition Provision Relating to Limitations on Loans to 1
Borrower.--Section 5200 of the Revised Statutes of the United States
(12 U.S.C. 84) is amended by adding at the end the following new
subsection:
``(e) Transition Provision for Savings Associations Converting to
National Banks.--In the case of any depository institution which, as of
September 13, 1995, is a savings association (as defined in section
3(b) of the Federal Deposit Insurance Act (as in effect on such date))
and becomes a national bank on or before January 1, 1998, any loan, or
legally binding commitment to make a loan, made or entered into by such
institution which is outstanding on the date the institution becomes a
national bank may continue to be held without regard to any limitation
contained in this section during the 3-year period beginning on such
date.''.
SEC. 2226. TECHNICAL AND CONFORMING AMENDMENTS.
(a) Amendments to the Federal Deposit Insurance Act.--
(1) Section 3(z) of the Federal Deposit Insurance Act (12
U.S.C. 1813(z)) is amended by striking ``the Director of the
Office of Thrift Supervision,''.
(2) Section 8(b) of the Federal Deposit Insurance Act (12
U.S.C. 1818(b)) is amended by striking paragraph (9).
(3) Section 13 of the Federal Deposit Insurance Act (12
U.S.C. 1823) is amended by striking subsection (k).
(4) Subsections (c)(2) and (i)(2) of section 18 of the
Federal Deposit Insurance Act (12 U.S.C. 1828) are each
amended--
(A) in subparagraph (B), by inserting ``and'' after
the semicolon;
(B) in subparagraph (C), by striking ``; and'' and
inserting a period; and
(C) by striking subparagraph (D).
(5) Section 18 of the Federal Deposit Insurance Act (12
U.S.C. 1828) is amended by striking subsection (m).
(6) The Federal Deposit Insurance Act (12 U.S.C. 1811 et
seq.) is amended by striking section 28.
(b) Amendments to the Bank Holding Company Act of 1956.--
(1) Section 2 of the Bank Holding Company Act of 1956 (12
U.S.C. 1841) is amended by striking subsections (i) and (j).
(2) Section 4(c)(8) of the Bank Holding Company Act of 1956
(12 U.S.C. 1843(c)(8)) is amended by striking the sentence
preceding the penultimate sentence.
(3) Section 4(f) of the Bank Holding Company Act of 1956
(12 U.S.C. 1843(f)) is amended--
(A) in paragraph (2)(A)(i), by striking ``or an
insured institution'' and all that follows through ``of
this subsection)'';
(B) in paragraph (2)(A)(ii)--
(i) by striking ``or a savings
association'' where such term appears in the
portion of such paragraph which precedes
subclause (I);
(ii) by inserting ``and'' at the end of
subclause (VI);
(iii) by striking subclauses (VIII), (IX),
and (X); and
(iv) by striking ``(V), and (VIII)'', where
such term appears in the portion of such
paragraph which appears after the end of
subclause (VII), and inserting ``and (V)''; and
(C) by striking paragraphs (10), (11), (12), and
(13).
(4) Section 4(i) of the Bank Holding Company Act of 1956
(12 U.S.C. 1843(i)) is amended--
(A) by striking paragraphs (1) and (2); and
(B) in paragraph (3)(A), by striking ``any Federal
savings association'' and all that follows through the
period at the end of such paragraph and inserting
``such association was authorized to engage under this
section as of September 15, 1995.''.
(c) Other Technical and Conforming Amendments.--
(1) Section 804(a) of the Alternative Mortgage Transaction
Parity Act of 1982 (12 U.S.C. 3803) is amended--
(A) in the portion of such subsection which
precedes paragraph (1)--
(i) by striking ``, and other nonfederally
chartered housing creditors,''; and
(ii) by inserting ``and in order to permit
other nonfederally chartered housing creditors
to make, purchase, and enforce alternative
mortgage transactions,'' after ``enforcing
alternative mortgage transactions, ''; and
(B) in paragraph (1), by inserting ``(as such term
is defined in section 3(a) of the Federal Deposit
Insurance Act)'' after ``with respect to banks''.
(2) Section 205 of the Depository Institution Management
Interlocks Act (12 U.S.C. 3204) is amended--
(A) in the portion of paragraph (8)(A) which
precedes clause (i), by striking ``A diversified
savings'' and all that follows through ``with respect
to'' and inserting ``A depository institution holding
company which, as of September 13, 1995, and at all
times thereafter, is a diversified savings and loan
holding company (as defined in section 10(1)(F) of Home
Owners' Loan Act, as such section is in effect on such
date) with respect to''; and
(B) by striking paragraph (9).
(3) Section 19(b)(1)(A) of the Federal Reserve Act (12
U.S.C. 461(b)(1)(A)) is amended--
(A) by inserting ``and'' after the semicolon at the
end of clause (v); and
(B) by striking clause (vi).
(4) Subparagraphs (A), (B), (C) of section 10(e)(5) of the
Federal Home Loan Bank Act (12 U.S.C. 1430(e)(5)) are each
amended by inserting before the period at the end ``(as such
section is in effect on September 13, 1995)''.
SEC. 2227. REFERENCES TO SAVINGS ASSOCIATIONS AND STATE BANKS IN
FEDERAL LAW.
Effective January 1, 1998, any reference in any Federal banking law
to--
(1) the term ``savings association'' shall be deemed to be
a reference to a bank as defined in section 3(a) of the Federal
Deposit Insurance Act; and
(2) the term ``State bank'' shall be deemed to include any
depository institution included in the definition of such term
in section 3(a)(2) of such Act.
SEC. 2228. REPEAL OF HOME OWNERS' LOAN ACT.
Effective January 1, 1998, the Home Owners' Loan Act (12 U.S.C.
1461 et seq.) is hereby repealed.
SEC. 2229. EFFECTIVE DATE; DEFINITIONS.
(a) Effective Date of Amendments.--The amendments made by this
chapter shall take effect on January 1, 1998.
(b) Definitions.--For purposes of this chapter, the terms
``appropriate Federal banking agency'', ``bank holding company'',
``depository institution'', ``Federal savings association'', ``insured
depository institution'', ``savings association'', and ``State bank''
have the same meanings as in section 3 of the Federal Deposit Insurance
Act (as in effect on the date of the enactment of this Act).
CHAPTER 3--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY
SEC. 2241. OFFICE OF THRIFT SUPERVISION ABOLISHED.
Effective January 1, 1998, the Office of Thrift Supervision and the
position of Director of the Office of Thrift Supervision are hereby
abolished.
SEC. 2242. DETERMINATION OF TRANSFERRED FUNCTIONS AND EMPLOYEES.
(a) All Office of Thrift Supervision Employees Shall Be
Transferred.--All employees of the Office of Thrift Supervision shall
be identified for transfer under subsection (b) to the Office of the
Comptroller of the Currency, the Federal Deposit Insurance Corporation,
or the Board of Governors of the Federal Reserve System.
(b) Functions and Employees Transferred.--
(1) In general.--The Director of the Office of Thrift
Supervision, the Comptroller of the Currency, the Chairperson
of the Federal Deposit Insurance Corporation, and the Chairman
of the Board of Governors of the Federal Reserve System shall
jointly determine the functions or activities of the Office of
Thrift Supervision, and the number of employees of such Office
necessary to perform or support such functions or activities,
which are transferred from the Office to the Office of the
Comptroller of the Currency, the Federal Deposit Insurance
Corporation, or the Board of Governors of the Federal Reserve System,
as the case may be.
(2) Allocation of employees.--The Comptroller of the
Currency, the Chairperson of the Federal Deposit Insurance
Corporation, and the Chairman of the Board of Governors of the
Federal Reserve System shall allocate the employees of the
Office of Thrift Supervision consistent with the number
determined pursuant to paragraph (1) in a manner which such
Comptroller, Chairperson, and Chairman, in their sole
discretion, deem equitable, except that, within work units, the
agency preferences of individual employees shall be
accommodated as far as possible.
(c) Disposition of Affairs.--
(1) In general.--In winding up the affairs of the Office of
Thrift Supervision, the Director of the Office of Thrift
Supervision shall consult and cooperate with the Comptroller of
the Currency, the Federal Deposit Insurance Corporation, and
the Board of Governors of the Federal Reserve System, as the
case may be, to facilitate the orderly transfer of the
functions to such Comptroller, Corporation, or Board.
(2) Continuing authority of director of the office of
thrift supervision.--Except as provided in paragraph (1), no
provision of this subtitle shall be construed as affecting the
authority vested in the Director of the Office of Thrift
Supervision before the date of enactment of this Act which is
necessary to carry out the duties of the position until the
date upon which the position of Director of the Office of
Thrift Supervision is abolished.
(3) Continuation of agency services.--Any agency,
department, or other instrumentality of the United States, or
any successor to any such agency, department, or
instrumentality, which was providing support services to the
Director of the Office of Thrift Supervision on the day before
the date such position is abolished shall--
(A) continue to provide such services on a
reimbursable basis, in accordance with the terms of the
arrangement pursuant to which such services were
provided until the arrangement is modified or
terminated in accordance with such terms, except that
effective January 1, 1998, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, or
the Board of Governors of the Federal Reserve System,
as the case may be, shall be substituted for the
Director of the Office of Thrift Supervision as a party
to the arrangement; and
(B) consult with the Comptroller, the Corporation,
or the Board to coordinate and facilitate a prompt and
reasonable transition.
(d) Transfer of Property.--Effective January 1, 1998, all property
of the Office of Thrift Supervision shall be transferred to the
Comptroller of the Currency, the Federal Deposit Insurance Corporation,
or the Board of Governors of the Federal Reserve System, as determined
in accordance with subsections (a) and (b).
SEC. 2243. SAVINGS PROVISIONS.
(a) Existing Rights, Duties, and Obligations Not Affected.--No
provision of this title shall be construed as affecting the validity of
any right, duty, or obligation of the United States, the Director of
the Office of Thrift Supervision, or any person, which existed on the
day before the date upon which the position of Director of the Office
of Thrift Supervision and the Office of Thrift Supervision are
abolished.
(b) Continuation of Suits.--No action or other proceeding commenced
by or against the Director of the Office of Thrift Supervision shall
abate by reason of enactment of this Act, except that, effective
January 1, 1998, the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, or the Board of Governors of the Federal Reserve
System, as the case may be, shall be substituted as a party to any such
action or proceeding.
(c) Continuation of Administrative Rules.--All orders, resolutions,
determinations, regulations, interpretative rules, other
interpretations, guidelines, procedures, supervisory and enforcement
actions, and other advisory material (other than any regulation
implementing or prescribed pursuant to section 3(f) of the Home Owners'
Loan Act (as in effect on September 13, 1995)) which--
(1) have been issued, made, prescribed, or permitted to
become effective by the Office of Thrift Supervision, and
(2) are in effect on December 31, 1996, (or become
effective after such date pursuant to the terms of the order,
resolution, determination, rule, other interpretation,
guideline, procedure, supervisory or enforcement action, and
other advisory material, as in effect on such date), shall--
(A) continue in effect according to the terms of
such orders, resolutions, determinations, regulations,
interpretative rules, other interpretations,
guidelines, procedures, supervisory or enforcement
actions, or other advisory material;
(B) be administered by the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, or
the Board of Governors of the Federal Reserve System;
and
(C) be enforceable by or against the Comptroller of
the Currency, the Federal Deposit Insurance
Corporation, or the Board of Governors of the Federal
Reserve System until modified, terminated, set aside,
or superseded in accordance with applicable law by the
Comptroller, Corporation, or Board, by any court of
competent jurisdiction, or by operation of law.
(d) Treatment of References in Adjustable Rate Mortgages Issued
Before FIRREA.--For purposes of section 402(e) of Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
1437 note), any reference in such section to--
(A) the Director of the Office of Thrift
Supervision shall be deemed to be a reference to the
Secretary of the Treasury; and
(B) a Savings Association Insurance Fund member
shall be deemed to be a reference to an insured
depository institution (as defined in section 3 of the Federal Deposit
Insurance Act).
(e) Treatment of References in Adjustable Rate Mortgage Instruments
Issued After FIRREA.--
(1) In general.--For purposes of adjustable rate mortgage
instruments that are in effect as of the date of enactment of
this Act, any reference in the instrument to the Director of
the Office of Thrift Supervision or Savings Association
Insurance Fund members shall be treated as a reference to the
Secretary of the Treasury or insured depository institutions
(as defined in section 3 of the Federal Deposit Insurance Act),
as appropriate.
(2) Substitution for indexes.--If any index used to
calculate the applicable interest rate on any adjustable rate
mortgage instrument is no longer calculated and made available
as a direct or indirect result of the enactment of this Act,
any index--
(A) made available by the Secretary of the
Treasury; or
(B) determined by the Secretary of the Treasury,
pursuant to paragraph (4), to be substantially similar
to the index which is no longer calculated or made
available,
may be substituted by the holder of any such adjustable rate
mortgage instrument upon notice to the borrower.
(3) Agency action required to provide continued
availability of indexes.--Promptly after the enactment of this
subsection, the Secretary of the Treasury, the Chairperson of
the Federal Deposit Insurance Corporation, and the Comptroller
of the Currency shall take such action as may be necessary to
assure that the indexes prepared by the Director of the Office
of Thrift Supervision immediately prior to the enactment of
this subsection and used to calculate the interest rate on
adjustable rate mortgage instruments continue to be available.
(4) Requirements relating to substitute indexes.--If any
agency can no longer make available an index pursuant to
paragraph (3), an index that is substantially similar to such
index may be substituted for such index for purposes of
paragraph (2) if the Secretary of the Treasury determines,
after notice and opportunity for comment, that--
(A) the new index is based upon data substantially
similar to that of the original index; and
(B) the substitution of the new index will result
in an interest rate substantially similar to the rate
in effect at the time the original index became
unavailable.
SEC. 2244. REFERENCES IN FEDERAL LAW TO DIRECTOR OF THE OFFICE OF
THRIFT SUPERVISION.
Effective January 1, 1998, any reference in any Federal law to the
Director of the Office of Thrift Supervision or the Office of Thrift
Supervision shall be deemed to be a reference to the appropriate
Federal banking agency (as defined in section 3(q) of the Federal
Deposit Insurance Act).
SEC. 2245. RECONFIGURATION OF BOARD OF DIRECTORS OF FDIC AS A RESULT OF
REMOVAL OF DIRECTOR OF THE OFFICE OF THRIFT SUPERVISION.
(a) In General.--Section 2(a)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1812(a)(1)) is amended to read as follows:
``(1) In general.--The management of the Corporation shall
be vested in a Board of Directors consisting of 3 members--
``(A) 1 of whom shall be the Comptroller of the
Currency; and
``(B) 2 of whom shall be appointed by the
President, by and with the advice and consent of the
Senate, from among individuals who are citizens of the
United States.''.
(b) Technical and Conforming Amendments.--
(1) Section 2(a)(2) of the Federal Deposit Insurance Act
(12 U.S.C. 1812(a)(2)) is amended--
(A) by striking ``February 28, 1993'' and inserting
``January 1, 1998''; and
(B) by striking ``3'' and inserting ``2''.
(2) Section 2(d)(2) of the Federal Deposit Insurance Act
(12 U.S.C. 1812(d)(2)) is amended--
(A) by striking ``or the office of Director of the
Office of Thrift Supervision'';
(B) by striking ``or such Director'';
(C) by striking ``or the Acting Director of the
Office of Thrift Supervision, as the case may be''; and
(D) by striking ``or Director''.
(c) Effective Date.--The amendments made by subsections (a) and (b)
shall take effect on January 1, 1998.
(d) Designation of Abolished Position.--Unless there is a vacancy
in the position of an appointed member of the Board of Directors as of
January 1, 1998, the President, consistent with the requirements of
section 2(a)(2) of the Federal Deposit Insurance Act, shall designate
which of the 3 positions of appointed member of such Board of Directors
shall be abolished pursuant to the amendment made by subsection (a).
Subtitle C--Community Reinvestment Act Amendments
SEC. 2301. EXPRESSION OF CONGRESSIONAL INTENT.
Subsection (b) of section 802 of the Community Reinvestment Act of
1977 (12 U.S.C. 2901) is amended to read as follows:
``(b) It is the purpose of this title to require each appropriate
Federal financial supervisory agency to use its authority, when
examining financial institutions, to encourage such institutions to
help meet the credit needs of the local communities in which they are
chartered consistent with the safe and sound operation of such
institutions. When examining financial institutions, a supervisory
agency shall not impose additional burden, recordkeeping, or reporting
upon such institutions.''.
SEC. 2302. COMMUNITY REINVESTMENT ACT EXEMPTION.
The Community Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.) is
amended by adding at the end the following new section:
``SEC. 809. TREATMENT OF SMALL FINANCIAL INSTITUTIONS.
``(a) In General.--In lieu of being evaluated under section 806A
and receiving a written evaluation under section 807, an eligible
regulated financial institution shall make a notice, signed by the
president, available to the public that--
``(1) lists the type of credit and services that the
institution provides to help meet the credit needs of the local
community; and
``(2) states that the institution helps meet the credit
needs of the local communities in which the institution
operates, including low- and moderate-income neighborhoods.
``(b) Eligible regulated financial institutions.--
``(1) In general.--A regulated financial institution shall
be eligible for purposes of subsection (a) if the institution
and any bank holding company which controls such institution
have aggregate assets of not more than $100,000,000.
``(2) Annual adjustment.--The dollar amount in paragraph
(1) shall be adjusted annually after December 31, 1994, by the
annual percentage increase in the Consumer Price Index for
Urban Wage Earners and Clerical Workers published by the Bureau
of Labor Statistics.
``(c) Exemption From Other Requirements.--A regulated financial
institution which has complied with the notice requirements of
subsection (a) shall not be subject to section 804 and any regulations
prescribed under section 806.''.
SEC. 2303. SELF-CERTIFICATION OF CRA COMPLIANCE.
Section 804 of the Community Reinvestment Act of 1977 (12 U.S.C.
2903) is amended by adding at the end the following new subsection (c):
``(c) Self-Certification of CRA Compliance.--
``(1) Certification.--In lieu of being evaluated under
section 806A and receiving a written evaluation under section
807, a qualifying financial institution may elect to self-
certify to the appropriate Federal financial supervisory agency
that such institution is in compliance with the goals of this
title.
``(2) Qualifying institution.--
``(A) In general.--For purposes of paragraph (1),
the term `qualifying institution' means a financial
institution which--
``(i) has not more than $250 million in
assets;
``(ii) has not been found to have engaged
in a pattern or practice of illegal
discrimination under the Fair Housing Act or
the Equal Credit Opportunity Act for the
preceding 5-year calendar period; and
``(iii) received rating under section
807(b)(2) of `satisfactory' or `outstanding' in
the most recent evaluation of such institution
under this title.
``(B) Annual adjustment.--The dollar amount in
subparagraph (A) shall be adjusted annually after
December 31, 1994, by the annual percentage increase in
the Consumer Price Index for Urban Wage Earners and
Clerical Workers published by the Bureau of Labor
Statistics.
``(3) Public notice.--
``(A) In general.--A qualifying institution shall
maintain in every branch a public notice stating that--
``(i) the institution has self-certified
that the institution is satisfactorily helping
to meet the credit needs of its community;
``(ii) the institution maintains--
``(I) at the main office of such
institution, a public file which
contains a copy of the self-
certification to the appropriate
Federal financial supervisory agency;
and
``(II) a map delineating the
community served by the institution;
``(iii) a list of the types of credit and
services that the institution provides to the
community served by the institution;
``(iv) such other information that the
institution believes demonstrates the
institution's record of helping to meet the
credit needs of its community; and
``(v) every public comment or letter to the
institution (and any response by the
institution) received within the previous 2-
year period about the record of the institution
of helping to meet the credit needs of its
community.
``(B) Public file.--A qualifying institution shall
maintain a public file containing the contents
described in this paragraph at the institution's main
office.
``(4) Rating.--
``(A) In general.--A qualifying institution shall
be deemed to have a rating of a `satisfactory record of
meeting community credit needs' for the purposes of
this section and section 806A(c).
``(B) Publication.--Each Federal financial
supervisory agency shall publish in the Federal
Register once each month a list of institutions that
have self-certified during the previous month.
``(C) Publication constitutes disclosure.--
Publication of the name of the institution in the
Federal Register as having self-certified shall
constitute disclosure of the rating of the institution
to the public for purposes of sections 806A and 807.
``(5) Regulatory review.--
``(A) Assessment.--During each examination for
safety and soundness, a qualifying institution's
supervisory agency shall, as part of the agency's
review of the institution's loans, assess whether the
institution's basis for its self-certification is
reasonable based on the public notice and the
information contained in the public file pursuant to
paragraph (3).
``(B) Examination if self-certification is not
reasonable.--If the agency determines that the
institution's basis for the institution's self-
certification is not reasonable, the agency shall
schedule an examination of the institution for the
purpose of assessing the institution's record of
helping to meet the credit needs of its community.
``(C) Revocation of self-certification.--If an
assessment pursuant to subparagraph (B) results in a
less than `satisfactory' rating, the agency shall
revoke the institution's self-certification and
substitute a written evaluation as provided under
section 807.
``(D) Period of ineligibility for self-
certification.--An institution whose self-certification
has been revoked may not self-certify pursuant to this
subsection during the 5 years succeeding the year in
which the self-certification is revoked.
``(E) Subsequent eligibility.--After the end of the
period of ineligibility described in subparagraph (D),
an institution which meets the requirements for self-
certification may elect to self-certify.
``(6) Prohibition on additional requirements.--No
appropriate Federal financial supervisory agency may impose any
additional requirements, whether by regulation or otherwise,
relating to the self-certification procedure under this
subsection.''.
SEC. 2304. COMMUNITY INPUT AND CONCLUSIVE RATING.
(a) Conforming Amendment.--Section 804(a) of the Community
Reinvestment Act of 1977 (12 U.S.C. 2903) is amended by inserting
``conducted in accordance with section 806A,'' after ``financial
institution,''.
(b) Community Input and Conclusive Rating.--The Community
Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.) is amended by
inserting after section 806 the following new section:
``SEC. 806A. COMMUNITY INPUT AND CONCLUSIVE RATING.
``(a) Publication of Exam Schedule and Opportunity for Comment.--
``(1) Publication of notice.--Each appropriate Federal
financial supervisory agency shall--
``(A) publish in the Federal Register, 30 days
before the beginning of a calendar quarter, a listing
of institutions scheduled for evaluation for compliance
with this title during such calendar quarter; and
``(B) provide opportunity for written comments from
the community on the performance, under this title, of
each institution scheduled for evaluation.
``(2) Comment period.--Written comments may not be
submitted to an appropriate Federal financial supervisory
agency pursuant to paragraph (1) after the end of the 30-day
period beginning on the first day of the calendar quarter.
``(3) Copy of comments.--The agency shall provide a copy of
such comments to the institution.
``(b) Evaluation.--The appropriate Federal financial supervisory
agency shall--
``(1) evaluate the institution in accordance with the
standards contained in section 804; and
``(2) prepare and publish a written evaluation of the
institution as required under section 807.
``(c) Reconsideration of Rating.--
``(1) Request for reconsideration.--A reconsideration of an
institution's rating referred to in section 807(b)(1)(C), may
be requested within 30 days of the rating's disclosure to the
public.
``(2) Procedures for request.--Any such request shall be
made in writing and filed with the appropriate Federal
financial supervisory agency, and may be filed by the
institution or a member of the community.
``(3) Basis for request.--Any request for reconsideration
under this subsection shall be based on significant issues of a
substantive nature which are relevant to the delineated
community of the institution and, in the case of a request by a
member of the community, shall be limited to issues previously
raised in comments submitted pursuant to subsection (a).
``(4) Completion of review.--The appropriate Federal
financial supervisory agency shall complete any requested
reconsideration within 30 days of the filing of the request.
``(d) Conclusive Rating.--
``(1) In general.--An institution's rating shall become
conclusive on the later of--
``(A) 30 days after the rating is disclosed to the
public; or
``(B) the completion of any requested
reconsideration by the Federal financial supervisory
agency.
``(2) Rating conclusive of meeting community credit
needs.--An institution's rating shall be the conclusive
assessment of the institution's record of meeting the credit
needs of its community for purposes of section 804 until the
institution's next rating, developed pursuant to an
examination, becomes conclusive.
``(3) Safe harbor.--Institutions which have received a
`satisfactory' or `outstanding' rating shall be deemed to have
met the purposes of section 804.
``(4) Rule of construction.--Notwithstanding any other
provision of law, no provision of this section shall be
construed as granting a cause of action to any person.''.
(c) Overall Evaluation of Institution.--Paragraph (2) of section
804(a) of the Community Reinvestment Act of 1977 (12 U.S.C. 2903(a)) is
amended to read as follows:
``(2) take such record into account in the overall
evaluation of the condition of the institution by the
appropriate Federal financial supervisory agency.''.
SEC. 2305. SPECIAL PURPOSE FINANCIAL INSTITUTIONS.
(a) In General.--Section 804 of the Community Reinvestment Act of
1977 (12 U.S.C. 2903) is amended by inserting after subsection (c) (as
added by section 2303 of this subtitle) the following new subsection:
``(d) Special Purpose Institutions.--
``(1) In general.--In conducting assessments pursuant to
this section at any special purpose institution, the
appropriate Federal financial supervisory agency shall--
``(A) consider the nature of business such
institution is involved in; and
``(B) assess and take into account the record of
the institution commensurate with the amount of
deposits (as defined in section 3(1) of the Federal
Deposit Insurance Act) received by such institution.
``(2) Standards.--Each appropriate Federal financial
supervisory agency shall develop standards under which special
purpose institutions may be deemed to have complied with the
requirements of this title which are consistent with the
specific nature of such businesses.''.
(b) Special Purpose Institution Defined.--Section 803 of the
Community Reinvestment Act of 1977 (12 U.S.C. 2902) is amended by
adding at the end the following new paragraph:
``(5) Special purpose institutions.--The term `special
purpose institution' means a financial institution that does
not generally accept deposits from the public in amounts of
less than $100,000, such as wholesale, credit card, and trust
institutions.''.
SEC. 2306. INCREASED INCENTIVES FOR LENDING TO LOW- AND MODERATE-INCOME
COMMUNITIES.
(a) In General.--Section 804(b) of the Community Reinvestment Act
of 1977 (12 U.S.C. 2903(b)) is amended to read as follows:
``(b) Positive Consideration of Certain Loans and Investments.--In
assessing and taking into account the records of a regulated financial
institution under subsection (a), the appropriate Federal financial
supervisory agency shall--
``(1) consider as a positive factor, consistent with the
safe and sound operation of the institution, the institution's
investment in or loan to--
``(A) any minority depository institution or
women's depository institution (as such terms are
defined in section 808(b)) or any low-income credit
union;
``(B) any joint venture or other entity or project
which promotes the public welfare in any distressed
community (as defined by such agency) whether or not
the distressed community is located in the local
community in which the regulated financial institution
is chartered to do business; and
``(C) targeted low- and moderate-income
communities, including real property loans to such
communities; and
``(2) consider equally with other factors capital
investment, loan participation, and other ventures undertaken
by the institution in cooperation with--
``(A) minority- and women-owned financial
institutions and low-income credit unions to the extent
that these activities help meet the credit needs of the
local communities in which such institutions are
chartered; and
``(B) community development corporations in
extending credit and other financial services
principally to low- and moderate-income persons and
small businesses to the extent that such community
development corporations help meet the credit needs of
the local communities served by the majority-owned
institution.''.
(b) Amendment to Definitions.--Section 803 of the Community
Reinvestment Act of 1977 (12 U.S.C. 2902) is amended by inserting after
paragraph (5) (as added by section 2305(b) of this subtitle) the
following new paragraph:
``(6) State bank supervisor.--The term `State bank
supervisor' has the same meaning as in section 3(r) of the
Federal Deposit Insurance Act.''.
(c) Technical Correction.--The 1st of the 2 paragraphs designated
as paragraph (2) of section 803 of the Community Reinvestment Act of
1977 (12 U.S.C. 2902) is amended to read as follows:
``(D) the Director of the Office of Thrift
Supervision with respect to any savings association
(the deposits of which are insured by the Federal
Deposit Insurance Corporation) and any savings and loan
holding company (other than a company which is a bank
holding company);''.
SEC. 2307. PROHIBITION ON ADDITIONAL REPORTING UNDER CRA.
Section 806 of the Community Reinvestment Act of 1977 (12 U.S.C.
2905) is amended to read as follows:
``SEC. 806. REGULATIONS.
``(a) In General.--
``(1) Publication requirement.--Regulations to carry out
the purposes of this title shall be published by each
appropriate Federal financial supervisory agency.
``(2) Prohibition on additional recordkeeping.--Regulations
prescribed and policy statements, commentary, examiner
guidance, or other supervisory material issued under this title
shall not impose any additional recordkeeping on a financial
institution.
``(3) Prohibition on loan data collection.--No loan data
may be required to be collected and reported by a financial
institution and no such data may be made public by any Federal
financial supervisory agency under this title.''.
SEC. 2308. TECHNICAL AMENDMENT.
Section 807(b)(1)(B) of the Community Reinvestment Act (12 U.S.C.
2906) is amended by striking ``The information'' and inserting ``In the
case of a regulated financial institution that maintains domestic
branches in 2 or more States, the information''.
SEC. 2309. DUPLICATIVE REPORTING.
Section 10(g) of the Federal Home Loan Bank Act (12 U.S.C. 1430(g))
is amended by adding at the end the following new paragraph (3):
``(3) Special rule.--This subsection shall not apply to
members receiving a grade of `outstanding' or `satisfactory'
under section 807 of the Community Reinvestment Act of 1977.''.
SEC. 2310. CRA CONGRESSIONAL OVERSIGHT.
(a) Sense of Congress Relating to Aggressive Oversight.--It is the
sense of the Congress that the appropriate committees of the House of
Representatives and the Senate should exercise aggressive oversight of
the adoption and implementation of any regulation by any appropriate
Federal financial supervisory agency under the Community Reinvestment
Act of 1977 after the date of the enactment of this Act.
(b) Agency Reports Required.--
(1) In general.--Each appropriate Federal financial
supervisory agency shall submit a report to the Congress by
December 31, 1996, and by December 31, 1997, on the
implementation of all regulations prescribed by such agency
under the Community Reinvestment Act of 1977 after the date of
the enactment of this Act.
(2) Requirements relating to preparation of reports.--In
preparing each report required under paragraph (1), each
appropriate Federal financial supervisory agency shall--
(A) solicit and include comments from regulated
financial institutions with respect to the regulations
which are the subject of the report; and
(B) include quantifiable measures of the cost
savings achieved under the regulations which are the
subject of the report and the effectiveness of such
regulations in achieving the purposes of the Community
Reinvestment Act of 1977.
(3) Definitions.--For purposes of this section, the terms
``appropriate Federal financial supervisory agency'' and
``regulated financial institution'' have the same meanings as
in section 803 of the Community Reinvestment Act of 1977.
SEC. 2311. CONSULTATION AMONG EXAMINERS.
Section 10 of the Federal Deposit Insurance Act (12 U.S.C. 1820) is
amended by adding at the end the following new subsection:
``(j) Consultation Among Examiners.--
``(1) In general.--Each appropriate Federal banking agency
shall take such action as may be necessary to ensure that
examiners employed by the agency--
``(A) consult on examination activities with
respect to any depository institution; and
``(B) achieve an agreement and resolve any
inconsistencies on the recommendations to be given to
such institution as a consequence of any examinations.
``(2) Examiner-in-charge.--Each agency shall consider
appointing an examiner-in-charge with respect to a depository
institution to ensure consultation on examination activities
among all of the agency's examiners involved in examinations of
such institution.''.
SEC. 2312. LIMITATION ON REGULATIONS.
Section 806 of the Community Reinvestment Act of 1977 (12 U.S.C.
2905) (as amended by section 2307) is amended by adding at the end the
following new subsections:
``(b) Limitation on Regulations.--No regulation may be prescribed
under this title by any Federal agency which would--
``(1) require any regulated financial institution to--
``(A) make any loan or enter into any other
agreement on the basis of any discriminatory criteria
prohibited under any law of the United States; or
``(B) make any loan to, or enter into any other
agreement with, any uncreditworthy person that would
jeopardize the safety and soundness of such
institution; or
``(2) prevent or hinder in any way a financial
institution's full responsibility to provide credit to all
segments of the community.
``(c) Encourage Loans to Creditworthy Borrowers.--Regulations
prescribed under this title shall encourage regulated financial
institutions to make loans and extend credit to all creditworthy
persons, consistent with safety and soundness.''.
Subtitle D--Phase-Down of Oversight Board
SEC. 2401. TERMINATION OF AUTHORITY OF OVERSIGHT BOARD TO EMPLOY STAFF.
(a) In General.--Section 21A(a) of the Federal Home Loan Bank Act
(12 U.S.C. 1441a(a)) is amended by adding at the end the following new
paragraph:
``(17) Phased-down operation of oversight board following
termination of corporation.--
``(A) Termination of authority to employ staff.--
Except as provided in subparagraph (B), the authority
of the Thrift Depositor Protection Oversight Board
under paragraph (5) to establish officer and employee
positions, to compensate officers and employees of the
Board, to provide other benefits for officers and
employees of the Board, and to utilize staff of any
other department or agency shall terminate as of
December 31, 1995.
``(B) Limited authority for detailing staff from
other agencies.--If the Thrift Depositor Protection
Oversight Board determines that any staff is required
to carry out the functions of the Board after the
authority to employ staff terminates under subparagraph
(A), the Board shall--
``(i) utilize employees of any other
department or agency in accordance with
paragraph (5)(F) to carry out the staff
functions which have been determined to be
necessary; and
``(i) submit a report to the Congress
containing--
``(I) the number of staff positions
which the Board has determined are
necessary to carry out the Board's
functions after the termination of the
Corporation;
``(II) a justification for such
determination; and
``(III) an estimate of the length
of the period for which such staff
positions will be required.''.
(b) Technical and Conforming Amendments.--
(1) Subparagraphs (B), (C), (D), and (E) of section
21A(a)(5) of the Federal Home Loan Bank Act (12 U.S.C.
1441a(a)(5)) are each amended by inserting ``subject to
paragraph (17)(A),'' after the closing parenthesis of the
subparagraph designation.
(2) Section 21A(a)(5)(F) of the Federal Home Loan Bank Act
(12 U.S.C. 1441a(a)(5)(F)) is amended by inserting ``subject to
subparagraphs (A) and (B) of paragraph (17) and'' after
``(F)''.
TITLE III--COMMITTEE ON COMMERCE
Subtitle A--Communications
CHAPTER 1--SPECTRUM AUCTIONS
SEC. 3001. SPECTRUM AUCTIONS.
(a) Extension and Expansion of Auction Authority.--
(1) Amendments.--Section 309(j) of the Communications Act
of 1934 (47 U.S.C. 309(j)) is amended--
(A) by striking paragraphs (1) and (2) and
inserting in lieu thereof the following:
``(1) General authority.--If, consistent with the
obligations described in paragraph (6)(E), mutually exclusive
applications are accepted for any initial license or
construction permit which will involve an exclusive use of the
electromagnetic spectrum, then the Commission shall grant such
license or permit to a qualified applicant through a system of
competitive bidding that meets the requirements of this
subsection.
``(2) Exemptions.--The competitive bidding authority
granted by this subsection shall not apply to licenses or
construction permits issued by the Commission--
``(A) that, as the result of the Commission
carrying out the obligations described in paragraph
(6)(E), are not mutually exclusive;
``(B) for public safety radio services, including
non-Government uses that protect the safety of life,
health, and property and that are not made commercially
available to the public; or
``(C) for initial licenses or construction permits
for new terrestrial digital television services
assigned by the Commission to existing terrestrial
broadcast licensees to replace their current television
licenses.''; and
(B) by striking ``1998'' in paragraph (11) and
inserting ``2002''.
(2) Conforming amendment.--Subsection (i) of section 309 of
such Act is repealed.
(3) Effective date.--The amendment made by paragraph (1)(A)
shall not apply with respect to any license or permit for which
the Federal Communications Commission has accepted mutually
exclusive applications on or before the date of enactment of
this Act.
(b) Commission Obligation To Make Additional Spectrum Available by
Auction.--
(1) In general.--The Federal Communications Commission
shall complete all actions necessary to permit the assignment,
by September 30, 2002, by competitive bidding pursuant to
section 309(j) of the Communications Act of 1934 (47 U.S.C.
309(j)) of licenses for the use of bands of frequencies that--
(A) individually span not less than 25 megahertz,
unless a combination of smaller bands can,
notwithstanding the provisions of paragraph (7) of such
section, reasonably be expected to produce greater
receipts;
(B) in the aggregate span not less than 100
megahertz;
(C) are located below 3 gigahertz; and
(D) have not, as of the date of enactment of this
Act--
(i) been designated by Commission
regulation for assignment pursuant to such
section; or
(ii) been identified by the Secretary of
Commerce pursuant to section 113 of the
National Telecommunications and Information
Administration Organization Act.
The Commission shall conduct the competitive bidding
for not less than one-half of such aggregate spectrum
by September 30, 2000.
(2) Criteria for reassignment.--In making available bands
of frequencies for competitive bidding pursuant to paragraph
(1), the Commission shall--
(A) seek to promote the most efficient use of the
spectrum;
(B) take into account the cost to incumbent
licensees of relocating existing uses to other bands of
frequencies or other means of communication;
(C) take into account the needs of public safety
radio services; and
(D) comply with the requirements of international
agreements concerning spectrum allocations.
(3) Notification to ntia.--The Commission shall notify the
Secretary of Commerce if--
(A) the Commission is not able to provide for the
effective relocation of incumbent licensees to bands of
frequencies that are available to the Commission for
assignment; and
(B) the Commission has identified bands of
frequencies that are--
(i) suitable for the relocation of such
licensees; and
(ii) allocated for Federal Government use,
but that could be reallocated pursuant to part
B of the National Telecommunications and
Information Administration Organization Act (as
amended by this Act).
(c) Identification and Reallocation of Frequencies.--The National
Telecommunications and Information Administration Organization Act (47
U.S.C. 901 et seq.) is amended--
(1) in section 113, by adding at the end the following new
subsection:
``(f) Additional Reallocation Report.--If the Secretary receives a
notice from the Commission pursuant to section 3001(b)(3) of the Seven-
Year Balanced Budget Reconciliation Act of 1995, the Secretary shall
prepare and submit to the President and the Congress a report
recommending for reallocation for use other than by Federal Government
stations under section 305 of the 1934 Act (47 U.S.C. 305), bands of
frequencies that are suitable for the uses identified in the
Commission's notice.'';
(2) in section 114(a)(1), by striking ``(a) or (d)(1)'' and
inserting ``(a), (d)(1), or (f)''.
(d) Completion of C-Block PCS Auction.--The Federal Communications
Commission shall commence the Broadband Personal Communications
Services C-Block auction described in the Commission's Sixth Report and
Order in DP Docket 93-253 (FCC 93-510, released July 18, 1995) not
later than December 4, 1995. The Commission's competitive bidding rules
governing such auction, as set forth in such Sixth Report and Order,
are hereby ratified and adopted as a matter of Federal law.
(e) Modification of Auction Policy To Preserve Auction Value of
Spectrum.--The voluntary negotiation period for relocating fixed
microwave licensees to frequency bands other than those allocated for
licensed emerging technology services (including licensed personal
communications services), established by the Commission's Third Report
and Order in ET Docket No. 92-9, shall expire one year after the date
of acceptance by the Commission of applications for such licensed
emerging technology services. The mandatory negotiation period for
relocating fixed microwave licensees to frequency bands other than
those allocated for licensed emerging technology services (including
licensed personal communications services), established in such Third
Report and Order, shall expire two years after the date of acceptance
by the Commission of applications for such licensed emerging technology
services.
(f) Identification and Reallocation of Auctionable Frequencies.--
The National Telecommunications and Information Administration
Organization Act (47 U.S.C. 901 et seq.) is amended--
(1) in section 113(b)--
(A) by striking the heading of paragraph (1) and
inserting ``Initial reallocation report'';
(B) by inserting ``in the first report required by
subsection (a)'' after ``recommend for reallocation''
in paragraph (1);
(C) by inserting ``or (3)'' after ``paragraph (1)''
each place it appears in paragraph (2); and
(D) by inserting after paragraph (2) the following
new paragraph:
``(3) Second reallocation report.--In accordance with the
provisions of this section, the Secretary shall recommend for
reallocation in the second report required by subsection (a),
for use other than by Federal Government stations under section
305 of the 1934 Act (47 U.S.C. 305), a single frequency band
that spans not less than an additional 20 megahertz, that is
located below 3 gigahertz, and that meets the criteria
specified in paragraphs (1) through (5) of subsection (a).'';
and
(2) in section 115--
(A) in subsection (b), by striking ``the report
required by section 113(a)'' and inserting ``the
initial reallocation report required by section
113(a)''; and
(B) by adding at the end the following new
subsection:
``(c) Allocation and Assignment of Frequencies Identified in the
Second Reallocation Report.--With respect to the frequencies made
available for reallocation pursuant to section 113(b)(3), the
Commission shall, not later than 1 year after receipt of the second
reallocation report required by such section, 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
propose the immediate allocation and assignment of all such frequencies
in accordance with section 309(j).''.
CHAPTER 2--FEDERAL COMMUNICATIONS COMMISSION AUTHORIZATION
SEC. 3011. SHORT TITLE.
This chapter may be cited as the ``Federal Communications
Commission Authorization Act of 1995''.
SEC. 3012. EXTENSION OF AUTHORITY.
(a) Authorization of Appropriations.--Section 6 of the
Communications Act of 1934 (47 U.S.C. 156) is amended to read as
follows:
``SEC. 6. AUTHORIZATION OF APPROPRIATIONS.
``There are authorized to be appropriated for the administration of
this Act by the Commission $186,000,000 for fiscal year 1996, together
with such sums as may be necessary for increases resulting from
adjustments in salary, pay, retirement, other employee benefits
required by law, and other nondiscretionary costs, for fiscal year
1996. Of the sum appropriated in each fiscal year under this section, a
portion, in an amount determined under sections 8(b) and 9(b), shall be
derived from fees authorized by sections 8 and 9.''.
(b) Travel and Reimbursement Program.--Section 4(g)(2) of the
Communications Act of 1934 (47 U.S.C. 154(g)(2)) is amended to read as
follows:
``(2) The Commission shall submit to the appropriate committees of
Congress, and publish in the Federal Register, semiannual reports
specifying the reimbursements which the Commission has accepted under
section 1353 of title 31, United States Code.''.
(c) Communications Support From Older Americans.--Section 6(a) of
the Federal Communications Commission Authorization Act of 1988 (47
U.S.C. 154 note) is amended by striking ``fiscal years 1992 and 1993''
and inserting ``fiscal year 1996''.
SEC. 3013. APPLICATION FEES.
(a) Adjustment of Application Fee Schedule.--Section 8(b) of the
Communications Act of 1934 (47 U.S.C. 158(b)) is amended to read as
follows:
``(b)(1) For fiscal year 1996 and each fiscal year thereafter, the
Commission shall, by regulation, modify the application fees by
proportionate increases or decreases so as to result in estimated total
collections for the fiscal year equal to--
``(A) $40,000,000; plus
``(B) an additional amount, specified in an appropriation
Act for the Commission for that fiscal year to be collected and
credited to such appropriation, not to exceed the amount by
which the necessary expenses for the costs described in
paragraph (5) exceeds $40,000,000.
``(2) In making adjustments pursuant to this paragraph the
Commission may round such fees to the nearest $5.00 in the case of fees
under $100, or to the nearest $20 in the case of fees of $100 or more.
The Commission shall transmit to the Congress notification of any
adjustment made pursuant to this paragraph immediately upon the
adoption of such adjustment.
``(3) The Commission is authorized to continue to collect fees at
the prior year's rate until the effective date of fee adjustments or
amendments made pursuant to paragraphs (1) and (4).
``(4) The Commission shall, by regulation, add, delete, or
reclassify services, categories, applications, or other filings subject
to application fees to reflect additions, deletions, or changes in the
nature of its services or authorization of service processes as a
consequence of Commission rulemaking proceedings or changes in law.
``(5) Any modified fees established under paragraph (4) shall be
derived by determining the full-time equivalent number of employees
performing application activities, adjusted to take into account other
expenses that are reasonably related to the cost of processing the
application or filing, including all executive and legal costs incurred
by the Commission in the discharge of these functions, and other
factors that the Commission determines are necessary in the public
interest. The Commission shall--
``(A) transmit to the Congress notification of any proposed
modification made pursuant to this paragraph immediately upon
adoption of such proposal; and
``(B) transmit to the Congress notification of any
modification made pursuant to this paragraph immediately upon
adoption of such modification.
``(6) Increases or decreases in application fees made pursuant to
this subsection shall not be subject to judicial review.''.
(b) Treatment of Additional Collections.--Section 8(e) of such Act
is amended to read as follows:
``(e) Of the moneys received from fees authorized under this
section--
``(1) $40,000,000 shall be deposited in the general fund of
the Treasury to reimburse the United States for amounts
appropriated for use by the Commission in carrying out its
functions under this Act; and
``(2) the remainder shall be deposited as an offsetting
collection in, and credited to, the account providing
appropriations to carry out the functions of the Commission.''.
(c) Schedule of Application Fees for PCS.--The schedule of
application fees in section 8(g) of such Act is amended by adding, at
the end of the portion under the heading ``common carrier services'',
the following new item:
``23. Personal communications services
``a. Initial or new application.................... 230.00
``b. Amendment to pending application.............. 35.00
``c. Application for assignment or transfer of 230.00
control.
``d. Application for renewal of license............ 35.00
``e. Request for special temporary authority....... 200.00
``f. Notification of completion of construction.... 35.00
``g. Request to combine service areas.............. 50.00''.
(d) Vanity Call Signs.--
(1) Lifetime license fees.--
(A) Amendment.--The schedule of application fees in
section 8(g) of such Act is further amended by adding,
at the end of the portion under the heading ``private
radio services'', the following new item:
``11. Amateur vanity call signs.......... 150.00''.
(B) Treatment of receipts.--Moneys received from
fees established under the amendment made by this
subsection shall be deposited as an offsetting
collection in, and credited to, the account providing
appropriations to carry out the functions of the
Commission.
(2) Termination of annual regulatory fees.--The schedule of
regulatory fees in section 9(g) of such Act (47 U.S.C. 159(g))
is amended by striking the following item from the fees
applicable to the Private Radio Bureau:
``Amateur vanity call-signs.................... 7''.
SEC. 3014. REGULATORY FEES.
(a) Executive and Legal Costs.--Section 9(a)(1) of the
Communications Act of 1934 (47 U.S.C. 159(a)(1)) is amended by
inserting before the period at the end the following: ``, and all
executive and legal costs incurred by the Commission in the discharge
of these functions''.
(b) Establishment and Adjustment.--Section 9(b) of such Act is
amended--
(1) in paragraph (4)(B), by striking ``90 days'' and
inserting ``45 days''; and
(2) by adding at the end the following new paragraph:
``(5) Effective date of adjustments.--The Commission is
authorized to continue to collect fees at the prior year's rate
until the effective date of fee adjustments or amendments made
pursuant to paragraph (2) or (3).''.
(c) Regulatory Fees for Satellite TV Operations.--The schedule of
regulatory fees in section 9(g) of such Act is amended, in the fees
applicable to the Mass Media Bureau, by inserting after each of the
items pertaining to construction permits in the fees applicable to VHF
commercial and UHF commercial TV the following new item:
``Terrestrial television satellite operations.................. 500''.
(d) Governmental Entities Use for Common Carrier Purposes.--Section
9(h) of such Act is amended by adding at the end the following new
sentence: ``The exceptions provided by this subsection for governmental
entities shall not be applicable to any services that are provided on a
commercial basis in competition with another carrier.''.
(e) Information Required in Connection With Adjustment of
Regulatory Fees.--Title I of such Act is amended--
(1) in section 9, by striking subsection (i); and
(2) by inserting after section 9 the following new section:
``SEC. 10. ACCOUNTING SYSTEM AND ADJUSTMENT INFORMATION.
``(a) Accounting System Required.--The Commission shall develop
accounting systems for the purposes of making the adjustments
authorized by sections 8 and 9. The Commission shall annually prepare
and submit to the Congress an analysis of such systems and shall
annually afford interested persons the opportunity to submit comments
concerning the allocation of the costs of performing the functions
described in section 8(a)(5) and 9(a)(1) in making such adjustments in
the schedules required by sections 8 and 9.
``(b) Information Required in Connection with Adjustment of
Application and Regulatory Fees.--
``(1) Schedule of requested amounts.--No later than May 1
of each calendar year, the Commission shall prepare and
transmit to the Committees of Congress responsible for the
Commission's authorization and appropriations a detailed
schedule of the amounts requested by the President's budget to
be appropriated for the ensuing fiscal year for the activities
described in sections 8(a)(5) and 9(a)(1), allocated by
bureaus, divisions, and offices of the Commission.
``(2) Explanatory statement.--If the Commission anticipates
increases in the application fees or regulatory fees applicable
to any applicant, licensee, or unit subject to payment of fees,
the Commission shall submit to the Congress by May 1 of such
calendar year a statement explaining the relationship between
any such increases and either (A) increases in the amounts
requested to be appropriated for Commission activities in
connection with such applicants, licensees, or units subject to
payment of fees, or (B) additional activities to be performed
with respect to such applicants, licensees, or units.
``(3) Definition.--For purposes of this subsection, the
term `amount requested by the President's budget' shall include
any adjustments to such requests that are made by May 1 of such
calendar year. If any such adjustment is made after May 1, the
Commission shall provide such Committees with updated schedules
and statements containing the information required by this
subsection within 10 days after the date of any such
adjustment.''.
SEC. 3015. INSPECTION OF SHIP RADIO STATIONS.
(a) Authority To Designate Entities To Inspect.--Section 4(f)(3) of
the Communications Act of 1934 (47 U.S.C. 154(f)(3)) is amended by
inserting before the period at the end the following: ``: And provided
further, That, in the alternative, an entity designated by the
Commission may make the inspections referred to in this paragraph''.
(b) Conduct of Inspections.--Section 362(b) of such Act (47 U.S.C.
362(b)) is amended to read as follows:
``(b) Every ship of the United States that is subject to this part
shall have the equipment and apparatus prescribed therein inspected at
least once each year by the Commission or an entity designated by the
Commission. If, after such inspection, the Commission is satisfied that
all relevant provisions of this Act and the station license have been
complied with, the fact shall be certified to on the station license by
the Commission. The Commission shall make such additional inspections
at frequent intervals as the Commission determines may be necessary to
ensure compliance with the requirements of this Act. The Commission
may, upon a finding that the public interest could be served thereby--
``(1) waive the annual inspection required under this
section for a period of up to 90 days for the sole purpose of
enabling a vessel to complete its voyage and proceed to a port
in the United States where an inspection can be held; or
``(2) waive the annual inspection required under this
section for a vessel that is in compliance with the radio
provisions of the Safety Convention and that is operating
solely in waters beyond the jurisdiction of the United States,
provided that such inspection shall be performed within 30 days
of such vessel's return to the United States.''.
(c) Inspection by Other Entities.--Section 385 of such Act (47
U.S.C. 385) is amended by inserting ``or an entity designated by the
Commission'' after ``The Commission''.
SEC. 3016. EXPEDITED ITFS PROCESSING.
Section 5(c)(1) of the Communications Act of 1934 (47 U.S.C.
155(c)(1)) is amended by striking the last sentence and inserting the
following: ``Except for cases involving the authorization of service in
the Instructional Television Fixed Service, or as otherwise provided in
this Act, nothing in this paragraph shall authorize the Commission to
provide for the conduct, by any person or persons other than persons
referred to in paragraph (2) or (3) of section 556(b) of title 5,
United States Code, of any hearing to which such section applies.''.
SEC. 3017. TARIFF REJECTION AUTHORITY.
Section 203(d) of the Communications Act of 1934 (47 U.S.C. 203(d))
is amended by inserting after the first sentence the following new
sentences: ``The Commission may, after affording interested parties an
opportunity to comment, reject a proposed tariff filing in whole or in
part, if the filing or any part thereof is patently unlawful. In
evaluating whether a proposed tariff filing is patently unlawful, the
Commission may consider additional information filed by the carrier or
any interested party and shall presume the facts alleged by the carrier
to be true.''.
SEC. 3018. REFUND AUTHORITY.
Title II of the Communications Act of 1934 (47 U.S.C. 201 et seq.)
is amended by adding at the end thereof the following new section:
``SEC. 230. REFUND AUTHORITY.
``In addition to any other provision of this Act under which the
Commission may order refunds, the Commission may require by order the
refund of such portion of any charge by any carrier or carriers as
results from a violation of section 220 (a), (b), or (d) or 221 (c) or
(d) or of any of the rules promulgated pursuant to such sections or
pursuant to section 215, 218, or 219. Such refunds shall be ordered
only to the extent that the Commission or a court finds that such
violation resulted in unlawful charges and shall be made to such
persons or classes of persons as the Commission determines reasonably
represent the persons from whom amounts were improperly received by
reason of such violation. No refunds shall be required under this
section unless--
``(1) the Commission issues an order advising the carrier
of its potential refund liability and provides the carrier with
an opportunity to file written comments as to why refunds
should not be required; and
``(2) such order is issued not later than 5 years after the
date the charge was paid.
In the case of a continuing violation, a violation shall be considered
to occur on each date that the violation is repeated.''.
SEC. 3019. LICENSING OF AVIATION AND MARITIME SERVICES BY RULE.
Section 307(e) of the Communications Act of 1934 (47 U.S.C. 307(e))
is amended to read as follows:
``(e)(1) Notwithstanding any license requirement established in
this Act, if the Commission determines that such authorization serves
the public interest, convenience, and necessity, the Commission may by
rule authorize the operation of radio stations without individual
licenses in the following radio services: (A) the aviation radio
service for aircraft stations operated on domestic flights when such
aircraft are not otherwise required to carry a radio station; and (B)
the maritime radio service for ship stations navigated on domestic
voyages when such ships are not otherwise required to carry a radio
station.
``(2) Any radio station operator who is authorized by the
Commission to operate without an individual license shall comply with
all other provisions of this Act and with rules prescribed by the
Commission under this Act.
``(3) For purposes of this subsection, the terms `aircraft station'
and `ship station' shall have the meanings given them by the Commission
by rule.''.
SEC. 3020. AUCTION TECHNICAL AMENDMENTS.
(a) Funding Availability.--Section 309(j)(8)(B) of the
Communications Act of 1934 (47 U.S.C. 309(j)(8)(B)) is amended by
adding at the end the following new sentence: ``Such offsetting
collections are authorized to remain available until expended.''.
(b) Escrow of Deposits.--Section 309(j)(8) of such Act is further
amended by adding at the end the following new subparagraph:
``(C) Escrow of deposit.--The Commission is
authorized, based on the competitive bidding
methodology selected, to provide for the deposit of
moneys for bids in an interest-bearing account until
such time as the Commission accepts a deposit from the
high bidder. All interest earned on bid moneys received
from the winning bidder shall be deposited into the
general fund of the Treasury. All interest earned on
bid moneys deposited from unsuccessful bidders, less
any applicable fees and penalties, shall be paid to
those bidders.''.
SEC. 3021. FORFEITURES FOR VIOLATIONS IMPERILING SAFETY OF LIFE.
(a) Administrative Sanctions.--Section 312(a) of the Communications
Act of 1934 (47 U.S.C. 312(a)) is amended--
(1) by striking ``or'' at the end of paragraph (6);
(2) by striking the period at the end of paragraph (7) and
inserting ``; or''; and
(3) by adding at the end the following new paragraph:
``(8) for failure to comply with any requirement of this
Act or the Commission's rules that imperils the safety of
life.''.
(b) Forfeitures.--Section 503(b)(1) of such Act (47 U.S.C.
503(b)(1)) is amended--
(1) by striking ``or'' at the end of subparagraph (C);
(2) by striking the semicolon at the end of subparagraph
(D) and inserting ``; or''; and
(3) by adding after subparagraph (D) the following new
subparagraph:
``(E) failed to comply with any requirement of this Act or
the Commission's rules that imperils the safety of life;''.
SEC. 3022. USE OF EXPERTS AND CONSULTANTS.
Section 4(f)(1) of the Communications Act of 1934 (47 U.S.C. 154)
is amended by adding at the end thereof the following: ``The Commission
may also procure the services of experts and consultants in accordance
with section 3109 of title 5, United States Code, relating to
appointments in the Federal Service, at rates of compensation for
individuals not to exceed the daily rate equivalent to the maximum rate
payable for senior-level positions under section 5276 of title 5,
United States Code.''.
SEC. 3023. STATUTE OF LIMITATIONS FOR FORFEITURE PROCEEDINGS AGAINST
COMMON CARRIERS.
Section 503(b)(6) of the Communications Act of 1934 (47 U.S.C.
503(b)(6)) is amended--
(1) by striking ``or'' at the end of subparagraph (A);
(2) by inserting ``and is not a common carrier'' after
``title III of this Act'' in subparagraph (B);
(3) by redesignating subparagraph (B) as subparagraph (C);
and
(4) by inserting after subparagraph (A) the following new
subparagraph:
``(B) such person is a common carrier and the required
notice of apparent liability is issued more than 5 years after
the date the violation charged occurred; or''.
SEC. 3024. UTILIZATION OF FM BAND FOR ASSISTIVE DEVICES FOR HEARING
IMPAIRED INDIVIDUALS.
Within 6 months after the date of enactment of this Act, the
Federal Communications Commission shall report to the Congress on the
existing and future use of the FM band to facilitate the use of
auditory assistive devices for individuals with hearing impairments. In
preparing such report, the Commission shall consider--
(1) the potential for utilizing FM band auditory assistive
devices to comply with the American with Disabilities Act;
(2) the impact on such compliance of the vulnerability of
such devices to harmful interference from radio licensees; and
(3) alternative frequency allocations that could facilitate
such compliance.
SEC. 3025. TECHNICAL AMENDMENT.
Section 302(d)(1) of the Communications Act of 1934 (47 U.S.C.
309(d)(1)) is amended--
(1) in subparagraph (A), by striking ``allocated to the
domestic cellular radio telecommunications service'' and
inserting ``utilized to provide commercial mobile service (as
defined in section 332(d))''; and
(2) in subparagraph (C), by striking ``cellular'' and
inserting ``commercial mobile service''.
Subtitle B--Nuclear Regulatory Commission Annual Charge
SEC. 3031. NUCLEAR REGULATORY COMMISSION ANNUAL CHARGES.
Section 6101(a)(3) of the Omnibus Budget Reconciliation Act of 1990
(42 U.S.C. 2214(a)(3)) is amended by striking ``September 30, 1998''
and inserting ``September 30, 2002''.
Subtitle C--United States Enrichment Corporation
SEC. 3035. SHORT TITLE AND REFERENCE.
(a) Short Title.--This subtitle may be cited as the ``USEC
Privatization Act''.
(b) Reference.--Except as otherwise expressly provided, whenever in
this subtitle an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provision of the
Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.).
SEC. 3036. PRODUCTION FACILITY.
Paragraph v. of section 11 (42 U.S.C. 2014 v.) is amended by
striking ``or the construction and operation of a uranium enrichment
production facility using Atomic Vapor Laser Isotope Separation
technology''.
SEC. 3037. DEFINITIONS.
Section 1201 (42 U.S.C. 2297) is amended--
(1) in paragraph (4), by inserting before the period the
following: ``and any successor corporation established through
privatization of the Corporation'';
(2) by redesignating paragraphs (10) through (13) as
paragraphs (14) through (17), respectively, and by inserting
after paragraph (9) the following new paragraphs:
``(10) The term `low-level radioactive waste' has the
meaning given such term in section 102(9) of the Low-Level
Radioactive Waste Policy Amendments Act of 1985 (42 U.S.C.
2021b(9)).
``(11) The term `mixed waste' has the meaning given such
term in section 1004(41) of the Solid Waste Disposal Act (42
U.S.C. 6903(41)).
``(12) The term `privatization' means the transfer of
ownership of the Corporation to private investors pursuant to
chapter 25.
``(13) The term `privatization date' means the date on
which 100 percent of ownership of the Corporation has been
transferred to private investors.'';
(3) by inserting after paragraph (17) (as redesignated) the
following new paragraph:
``(18) The term `transition date' means July 1, 1993.'';
(4) by redesignating the unredesignated paragraph (14) as
paragraph (19); and
(5) by adding the following new paragraphs after paragraph
(19):
``(20) The term `gaseous diffusion plants' means the
Paducah Gaseous Diffusion Plant at Paducah, Kentucky and the
Portsmouth Gaseous Diffusion Plant at Piketon, Ohio.
``(21) The term `private corporation' means the corporation
established under section 1503.
``(22) The term `Russian HEU agreement' means the Agreement
Between the Government of the United States of America and the
Government of the Russian Federation Concerning the Disposition
of Highly Enriched Uranium Extracted from Nuclear Weapons,
dated February 18, 1993.
``(23) The term `Suspension Agreement' means the Agreement
to Suspend the Antidumping Investigation on Uranium from the
Russian Federation, as amended.''.
SEC. 3038. EMPLOYEES OF THE CORPORATION.
(a) Paragraphs (1) and (2).--Section 1305(e) (42 U.S.C. 2297b-4(e))
is amended by striking paragraphs (1) and (2) and inserting in thereof
the following:
``(1) In general.--
``(A) Privatization shall not diminish the accrued,
vested pension benefits of employees of the
Corporation's operating contractor at the two gaseous
diffusion plants.
``(B) In the event that the private corporation
terminates or changes the contractor at either or both
of the gaseous diffusion plants, the plan sponsor or
other appropriate fiduciary of the pension plan
covering employees of the prior operating contractor
shall arrange for the transfer of all plan assets and
liabilities relating to accrued pension benefits of
such plan's participants and beneficiaries from such
plan to a pension plan sponsored by the new contractor
or the private corporation, as the case may be.
``(C) Any employer (including the private
corporation or any contractor of the private
corporation) at a gaseous diffusion plant shall abide
by the terms of any unexpired collective bargaining
agreement covering employees in bargaining units at the
plant and in effect on the privatization date until the
expiration of the agreement.
``(D) In the event of a plant closing or mass
layoff (as such terms are defined in section 2101(a)
(2) and (3) of title 29, United States Code) at either
of the gaseous diffusion plants, the Secretary of
Energy shall treat such plant as a Department of Energy
defense nuclear facility and any person employed by an
operating contractor on the privatization date at
either plant as a Department of Energy employee for
purposes of sections 3161 through 3163 of the National
Defense Authorization Act for Fiscal Year 1993 (42
U.S.C. 7274h-7274j).
``(E) The Department of Energy and the private
corporation shall continue to fund postretirement
health benefits for persons employed by an operating
contractor at either of the gaseous diffusion plants at substantially
the same level of coverage as eligible retirees are entitled to receive
on the privatization date, consistent with clauses (i) through (iii),
except that the Department of Energy, the private corporations and the
operating contractor shall have the right to implement cost-saving
measures, including (but not limited to) preferred provider
organizations, managed care programs, mandatory second opinions before
surgery or other medical procedures, and mandatory use of generic
drugs, that do not materially diminish the overall quality of the
medical care provided--
``(i) persons eligible for this coverage
shall be limited to persons who retired from
active employment at one of the gaseous
diffusion plants as of the privatization date,
as vested participants in a pension plan
maintained either by the Corporation's
operating contractor or by a contractor
employed prior to July 1, 1993, by the
Department of Energy to operate either of the
gaseous diffusion plants and persons who, as of
the privatization date, are employed by the
Corporation's operating contractor and are
vested participants in a pension plan
maintained either by the Corporation's
operating contractor or by a contractor
employed prior to July 1, 1993, by the
Department of Energy to operate either of the
gaseous diffusion plants;
``(ii) for persons who retired from
employment with an operating contractor prior
to July 1, 1993, the Department of Energy shall
fund the entire cost of postretirement health
benefits; and
``(iii) for persons who retire from
employment with an operating contractor after
July 1, 1993, the Department of Energy and the
private corporation shall fund the cost of
postretirement health benefits in proportion to
the retired persons' years and months of
service at a gaseous diffusion plant under
their respective management.''.
(b) Paragraph (4).--Paragraph (4) of section 1305(e) (42 U.S.C.
2297b-4(e)(4)) is amended--
(1) by striking ``and detailees'' in the heading;
(2) by striking the first sentence;
(3) in the second sentence, by inserting ``from other
Federal employment'' after ``transfer to the Corporation''; and
(4) by striking the last sentence.
SEC. 3039. MARKETING AND CONTRACTING AUTHORITY.
(a) Marketing Authority.--Section 1401(a) (42 U.S.C. 2297c(a)) is
amended effective on the privatization date (as defined in section
1201(13) of the Atomic Energy Act of 1954)--
(1) by amending the subsection heading to read ``Marketing
Authority.--''; and
(2) by striking the first sentence.
(b) Transfer of Contracts.--Section 1401(b) (42 U.S.C. 2297c(b)) is
amended--
(1) in paragraph (2)(B), by adding at the end the
following: ``The privatization of the Corporation shall not
affect the terms of, or the rights or obligations of the
parties to, any such power purchase contract.''; and
(2) by adding at the end the following:
``(3) Effect of transfer.--
``(A) As a result of the transfer pursuant to
paragraph (1), all rights, privileges, and benefits
under such contracts, agreements, and leases, including
the right to amend, modify, extend, revise, or
terminate any of such contracts, agreements, or leases
were irrevocably assigned to the Corporation for its
exclusive benefit.
``(B) Notwithstanding the transfer pursuant to
paragraph (1), the United States shall remain obligated
to the parties to the contracts, agreements, and leases
transferred pursuant to paragraph (1) for the
performance of the obligations of the United States
thereunder during the term thereof. The Corporation
shall reimburse the United States for any amount paid
by the United States in respect of such obligations
arising after the privatization date to the extent such
amount is a legal and valid obligation of the
Corporation then due.
``(C) After the privatization date, upon any
material amendment, modification, extension, revision,
replacement, or termination of any contract, agreement,
or lease transferred under paragraph (1), the United
States shall be released from further obligation under
such contract, agreement, or lease, except that such
action shall not release the United States from
obligations arising under such contract, agreement, or
lease prior to such time.''.
(c) Pricing.--Section 1402 (42 U.S.C. 2297c-1) is amended to read
as follows:
``SEC. 1402. PRICING.
``The Corporation shall establish prices for its products,
materials, and services provided to customers on a basis that will
allow it to attain the normal business objectives of a profitmaking
corporation.''.
(d) Leasing of Gaseous Diffusion Facilities of Department.--
Effective on the privatization date (as defined in section 1201(13) of
the Atomic Energy Act of 1954), section 1403 (42 U.S.C. 2297c-2) is
amended by adding at the end the following:
``(h) Low-Level Radioactive Waste and Mixed Waste.--
``(1) Responsibility of the department; costs.--
``(A) With respect to low-level radioactive waste
and mixed waste generated by the Corporation as a
result of the operation of the facilities and related
property leased by the Corporation pursuant to
subsection (a) or as a result of treatment of such
wastes at a location other than the facilities and
related property leased by the Corporation pursuant to
subsection (a) the Department, at the request of the Corporation,
shall--
``(i) accept for treatment or disposal of
all such wastes for which treatment or disposal
technologies and capacities exist, whether
within the Department or elsewhere; and
``(ii) accept for storage (or ultimately
treatment or disposal) all such wastes for
which treatment and disposal technologies or
capacities do not exist, pending development of
such technologies or availability of such
capacities for such wastes.
``(B) All low-level wastes and mixed wastes that
the Department accepts for treatment, storage, or
disposal pursuant to subparagraph (A) shall, for the
purpose of any permits, licenses, authorizations,
agreements, or orders involving the Department and
other Federal agencies or State or local governments,
be deemed to be generated by the Department and the
Department shall handle such wastes in accordance with
any such permits, licenses, authorizations, agreements,
or orders. The Department shall obtain any additional
permits, licenses, or authorizations necessary to
handle such wastes, shall amend any such agreements or
orders as necessary to handle such wastes, and shall
handle such wastes in accordance therewith.
``(C) The Corporation shall reimburse the
Department for the treatment, storage, or disposal of
low-level radioactive waste or mixed waste pursuant to
subparagraph (A) in an amount equal to the Department's
costs but in no event greater than an amount equal to
that which would be charged by commercial, State,
regional, or interstate compact entities for treatment,
storage, or disposal of such waste.
``(2) Agreements with other persons.--The Corporation may
also enter into agreements for the treatment, storage, or
disposal of low-level radioactive waste and mixed waste
generated by the Corporation as a result of the operation of
the facilities and related property leased by the Corporation
pursuant to subsection (a) with any person other than the
Department that is authorized by applicable laws and
regulations to treat, store, or dispose of such wastes.''.
(e) Liabilities.--
(1) Subsection (a) of section 1406 (42 U.S.C. 2297c-5(a))
is amended--
(A) by inserting ``and Privatization'' after
``Transition'' in the heading; and
(B) by adding at the end the following: ``As of the
privatization date, all liabilities attributable to the
operation of the Corporation from the transition date
to the privatization date shall be direct liabilities
of the United States.''.
(2) Subsection (b) of section 1406 (42 U.S.C. 2297c-5(b))
is amended--
(A) by inserting ``and Privatization'' after
``Transition'' in the heading; and
(B) by adding at the end the following: ``As of the
privatization date, any judgment entered against the
Corporation imposing liability arising out of the
operation of the Corporation from the transition date
to the privatization date shall be considered a
judgment against the United States.''.
(3) Subsection (d) of section 1406 (42 U.S.C. 2297c-5(d))
is amended--
(A) by inserting ``and Privatization'' after
``Transition'' in the heading; and
(B) by striking ``the transition date'' and
inserting ``the privatization date (or, in the event
the privatization date does not occur, the transition
date)''.
(f) Transfer of Uranium.--
(1) Amendment.--Title II (42 U.S.C. 2297 et seq.) is
amended by redesignating section 1408 as section 1409 and by
inserting after section 1407 the following:
``SEC. 1408. URANIUM TRANSFERS AND SALES.
``(a) Transfers and Sales by the Secretary.--The Secretary shall
not provide enrichment services or transfer or sell any uranium
(including natural or enriched uranium in any form) to any person
except as provided in this section.
``(b) Russian Heu.--
``(1) Tranfers.--Prior to December 31, 1996, the United
States Executive Agent under the Russian HEU Agreement shall
transfer to the Secretary without charge an amount of uranium
hexafluoride equivalent to the natural uranium component of
low-enriched uranium derived from at least 18 metric tons of
highly enriched uranium purchased from the Russian Executive
Agent under the Russian HEU Agreement. The quantity of such
uranium hexafluoride delivered to the Secretary shall be based
on a tails assay of 0.30 U235. Title to uranium hexafluoride
delivered to the Secretary pursuant to this paragraph shall
transfer to the Secretary upon delivery of such material to the
Secretary. Uranium hexafluoride delivered to the Secretary
pursuant to this paragraph shall be deemed to be of Russian
origin.
``(2) Contracts.--Within 7 years of the date of enactment
of the USEC Privatization Act, the Secretary shall enter into
contracts to sell the uranium hexafluoride transferred to the
Secretary pursuant to paragraph (1). Such uranium hexafluoride
shall be sold--
``(A) at any time for use in the United States for
the purpose of overfeeding;
``(B) at any time for use outside the United
States; and
``(C) for consumption by end users in the United
States not prior to January 1, 2002, in volumes not to
exceed 3 million pounds U3O8 equivalent per year.
``(3) Uranium hexafluoride.--With respect to all low-
enriched uranium that is delivered to the United States
Executive Agent under the Russian HEU Agreement after January
1, 1997, the United States Executive Agent shall, upon request
of the Russian Executive Agent, deliver to the Russian
Executive Agent an amount of uranium hexafluoride equivalent to
the natural uranium component of such low-enriched uranium
simultaneously with the delivery of such low-enriched uranium.
The quantity of such uranium hexafluoride delivered to the
Russian Executive Agent shall be based on a tails assay of 0.30
U235. Title to uranium hexafluoride delivered to the Russian
Executive Agent pursuant to this paragraph shall transfer to
the Russian Executive Agent upon delivery of such material to
the Russian Executive Agent at a North American facility
designated by the Russian Executive Agent. Uranium hexafluoride
delivered to the Russian Executive Agent pursuant to this
paragraph shall be deemed to be of Russian origin. Such uranium
hexafluoride may be sold to any person or entity consistent
with the limitations on delivery to end users set forth in this
subsection. Nothing in this subsection shall restrict the sale
of the conversion component of such uranium hexafluoride.
``(4) Independent party.--In the event that the Russian
Executive Agent does not request delivery of the natural
uranium component of any low-enriched uranium, as contemplated
in paragraph (3), within 90 days of the date such low-enriched
uranium is delivered to the United States Executive Agent, then
the United States Executive Agent shall engage an independent
party through a competitive selection process to auction an
amount of uranium hexafluoride equivalent to the natural
uranium component of such low-enriched uranium. Such
independent party shall sell such uranium hexafluoride to any
person or entity consistent with the limitations set forth in
this subsection. The independent entity shall pay to the
Russian Executive Agent the proceeds of any such auction less
all transaction and other administrative costs. The quantity of
such uranium hexafluoride auctioned shall be based on a tails
assay of 0.30 U235. Title to uranium hexafluoride auctioned
pursuant to this paragraph shall transfer to the buyer of such
material upon delivery of such material to the buyer. Uranium
hexafluoride auctioned pursuant to this paragraph shall be
deemed to be of Russian origin.
``(5) Consumption.--Except as provided in paragraphs (6)
and (7), uranium hexafluoride delivered to the Secretary under
paragraph (1) or the Russian Executive Agent under paragraph
(3) or auctioned pursuant to paragraph (4), may not be
delivered for consumption by end users in the United States
prior to January 1, 1998 and thereafter only in accordance with
the following schedule:
Annual Maximum Deliveries to End
Users
``Year (millions lbs. U<INF>3O<INF>8
equivalent)
1998-..........................
2 million lbs. U<INF>3O<INF>8
equivalent
1999-..........................
4 million lbs. U<INF>3O<INF>8
equivalent
2000-..........................
6 million lbs. U<INF>3O<INF>8
equivalent
2001-..........................
8 million lbs. U<INF>3O<INF>8
equivalent
2002-..........................
10 million lbs. U<INF>3O<INF>8
equivalent
2003-..........................
12 million lbs. U<INF>3O<INF>8
equivalent
2004-..........................
14 million lbs. U<INF>3O<INF>8
equivalent
2005 and each year thereafter..
16 million lbs. U<INF>3O<INF>8
equivalent
``(6) Matched sales.--Uranium hexafluoride delivered to the
Secretary under paragraph (1) or the Russian Executive Agent
under paragraph (3) or auctioned pursuant to paragraph (4) may
be sold at any time as Russian-origin natural uranium in a sale
with an equal portion of U.S.-origin natural uranium pursuant
to the Suspension Agreement and in such case shall not be
counted against the annual maximum deliveries set forth in
paragraph (5).
``(7) Overfeeding.--Uranium hexafluoride delivered to the
Secretary under paragraph (1) or the Russian Executive Agent
under paragraph (3) or auctioned pursuant to paragraph (4) may
be sold at any time for use in the United States for the
purpose of overfeeding in the operations of enrichment
facilities.
``(c) Transfers to the Corporation.--(1) Before the privatization
date, the Secretary may transfer to the Corporation without charge the
low enriched uranium from up to 50 metric tons of highly enriched
uranium and up to 7,000 metric tons of natural uranium, subject to the
restrictions in subsection (b)(2).
``(2) The Corporation (or its successor) may not deliver for
commercial end use--
``(A) any of the natural uranium transferred under this
subsection before January 1, 1998;
``(B) more than 10 percent of the natural uranium (by
uranium hexafluoride equivalent content) transferred under this
subsection or more than 4 million pounds, whichever is less, in
any calendar year after 1997; or
``(C) more than 800,000 separative work units of low-
enriched uranium transferred under this subsection in any
calendar year.
``(d) Inventory Sales.--(1) In addition to the transfers authorized
under subsection (b), the Secretary may, from time to time, sell
natural and low-enriched uranium (including low-enriched uranium
derived from highly enriched uranium) from the Department of Energy s
stockpile.
``(2) Except as provided in subsections (b) and (d), no sale or
transfer of natural or low-enriched uranium shall be made unless--
``(A) the President determines that the material is not
necessary to national security needs,
``(B) the Secretary determines that the sale of the
material will not have an adverse impact on the domestic
uranium mining and enrichment industries, taking into account
the sales of uranium under the Russian HEU Agreement and the
Suspension Agreement, and
``(C) the price paid to the Secretary will not be less than
the fair market value of the material.
``(e) Government Transfers.--Notwithstanding subsection (c), the
Secretary may transfer or sell low-enriched uranium--
``(1) to a federal agency if the material is transferred
for the use of the receiving agency without any resale or
transfer to another entity and the material does not meet commercial
specifications;
``(2) to any person for national security purposes, as
determined by the Secretary; or
``(3) to any state or local agency or nonprofit,
charitable, or educational institution for use other than the
generation of electricity for commercial use.''.
(2) Conforming amendment.--The table of contents for
chapter 24 is amended by redesignating the item relating to
section 1408 as the item relating to section 1409 and by
inserting after the item for section 1407 the following:
``Sec. 1408. Uranium transfers and sales.''.
SEC. 3040. PRIVATIZATION OF THE CORPORATION.
(a) Establishment of Private Corporation.--Chapter 25 (42 U.S.C.
2297d et seq.) is amended by adding at the end the following new
section:
``SEC. 1503. ESTABLISHMENT OF PRIVATE CORPORATION.
``(a) Establishment.--
``(1) In general.--In order to facilitate privatization,
the Corporation may provide for the establishment of a private
corporation organized under the laws of any of the several
States. Such corporation shall have among its purposes the
following:
``(A) To help maintain a reliable and economical
domestic source of uranium enrichment services.
``(B) To undertake any and all activities as
provided in its corporate charter.
``(2) Authorities.--The corporation established pursuant to
paragraph (1) shall be authorized to--
``(A) enrich uranium, provide for uranium to be
enriched by others, or acquire enriched uranium
(including low-enriched uranium derived from highly
enriched uranium);
``(B) conduct, or provide for conducting, those
research and development activities related to uranium
enrichment and related processes and activities the
corporation considers necessary or advisable to
maintain itself as a commercial enterprise operating on
a profitable and efficient basis;
``(C) enter into transactions regarding uranium,
enriched uranium, or depleted uranium with--
``(i) persons licensed under section 53,
63, 103, or 104 in accordance with the licenses
held by those persons;
``(ii) persons in accordance with, and
within the period of, an agreement for
cooperation arranged under section 123; or
``(iii) persons otherwise authorized by law
to enter into such transactions;
``(D) enter into contracts with persons licensed
under section 53, 63, 103, or 104, for as long as the
corporation considers necessary or desirable, to
provide uranium or uranium enrichment and related
services;
``(E) enter into contracts to provide uranium or
uranium enrichment and related services in accordance
with, and within the period of, an agreement for
cooperation arranged under section 123 or as otherwise
authorized by law; and
``(F) take any and all such other actions as are
permitted by the law of the jurisdiction of
incorporation of the corporation.
``(3) Transfer of assets.--For purposes of implementing the
privatization, the Corporation may transfer some or all of its
assets and obligations to the corporation established pursuant
to this section, including--
``(A) all of the Corporation's assets and
obligations, including all of the Corporation's rights,
duties, and obligations accruing subsequent to the
privatization date under contracts, agreements, and
leases entered into by the Corporation before the
privatization date, including all uranium enrichment
contracts and power purchase contracts;
``(B) all funds in accounts of the Corporation held
by the Treasury or on deposit with any bank or other
financial institution;
``(C) all of the Corporation's rights, duties, and
obligations, accruing subsequent to the privatization
date, under the power purchase contracts covered by
section 1401(b)(2)(B);
``(D) all of the Corporation's rights, duties, and
obligations, accruing subsequent to the privatization
date, under the lease agreement between the Department
and the Corporation executed by the Department and the
Corporation pursuant to section 1403; and
``(E) all of the Corporation's records, including
all of the papers and other documentary materials,
regardless of physical form or characteristics, made or
received by the Corporation.
``(4) Merger or consolidation.--For purposes of
implementing the privatization, the Corporation may merge or
consolidate with the corporation established pursuant to
subsection (a)(1) if such action is contemplated by the plan for
privatization approved by the President under section 1502(b). The
Board shall have exclusive authority to approve such merger or
consolidation and to take all further actions necessary to consummate
such merger or consolidation, and no action by or in respect of
shareholders shall be required. The merger or consolidation shall be
effected in accordance with, and have the effects of a merger or
consolidation under, the laws of the jurisdiction of incorporation of
the surviving corporation, and all rights and benefits provided under
this title to the Corporation shall apply to the surviving corporation
as if it were the Corporation.
``(b) OSHA Requirements.--For purposes of the regulation of
radiological and nonradiological hazards under the Occupational Safety
and Health Act of 1970, the corporation established pursuant to
subsection (a)(1) shall be treated in the same manner as other
employers licensed by the Nuclear Regulatory Commission. Any
interagency agreement entered into between the Nuclear Regulatory
Commission and the Occupational Safety and Health Administration
governing the scope of their respective regulatory authorities shall
apply to the corporation as if the corporation were a Nuclear
Regulatory Commission licensee.
``(c) Legal Status of Private Corporation.--
``(1) Not federal agency.--The Corporation established
pursuant to subsection (a)(1) shall not be an agency,
instrumentality, or establishment of the United States
Government and shall not be a Government corporation or
Government-controlled corporation.
``(2) No recourse against united states.--Obligations of
the Corporation established pursuant to subsection (a)(1) shall
not be obligations of, or guaranteed as to principal or
interest by, the Corporation or the United States, and the
obligations shall so plainly state.
``(3) No claims court jurisdiction.--No action under
section 1491 of title 28, United States Code, shall be
allowable against the United States based on the actions of the
Corporation established pursuant to subsection (a)(1).
``(d) Board of Director's Election After Public Offering.--In the
event that the privatization is implemented by means of a public
offering, an election of the members of the board of directors of the
Corporation by the shareholders shall be conducted before the end of
the 1-year period beginning the date shares are first offered to the
public pursuant to such public offering.
``(e) Adequate Proceeds.--The Secretary of Energy shall not allow
the privatization of the Corporation unless before the sale date the
Secretary determines that the estimated sum of the gross proceeds from
the sale of the Corporation will be an adequate amount.''.
(b) Ownership Limitations.--Chapter 25 (as amended by subsection
(a)) is amended by adding at the end the following new section:
``SEC. 1504. OWNERSHIP LIMITATIONS.
``(a) Securities Limitation.--In the event that the privatization
is implemented by means of a public offering, during a period of 3
years beginning on the privatization date, no person, directly or
indirectly, may acquire or hold securities representing more than 10
percent of the total votes of all outstanding voting securities of the
Corporation.
``(b) Application.--Subsection (a) shall not apply--
``(1) to any employee stock ownership plan of the
Corporation,
``(2) to underwriting syndicates holding shares for resale,
or
``(3) in the case of shares beneficially held for others,
to commercial banks, broker-dealers, clearing corporations, or
other nominees.
``(c) Acquisitions.--No director, officer, or employee of the
Corporation may acquire any securities, or any right to acquire
securities, of the Corporation--
``(1) in the public offering of securities of the
Corporation in the implementation of the privatization,
``(2) pursuant to any agreement, arrangement, or
understanding entered into before the privatization date, or
``(3) before the election of directors of the Corporation
under section 1503(d) on any terms more favorable than those
offered to the general public.''.
(c) Exemption From Liability.--Chapter 25 (as amended by subsection
(b)) is amended by adding at the end the following new section:
``SEC. 1505. EXEMPTION FROM LIABILITY.
``(a) In General.--No director, officer, employee, or agent of the
Corporation shall be liable, for money damages or otherwise, to any
party if, with respect to the subject matter of the action, suit, or
proceeding, such person was fulfilling a duty, in connection with any
action taken in connection with the privatization, which such person in
good faith reasonably believed to be required by law or vested in such
person.
``(b) Exception.--The privatization shall be subject to the
Securities Act of 1933 and the Securities Exchange Act of 1934. The
exemption set forth in subsection (a) shall not apply to claims arising
under such Acts or under the Constitution or laws of any State,
territory, or possession of the United States relating to transactions
in securities, which claims are in connection with a public offering
implementing the privatization.
``(c) Securities Laws Applicable.--Any offering or sale of
securities by the Corporation established pursuant to section
1503(a)(1) shall be subject to the Securities Act of 1933, the
Securities Exchange Act of 1934 and the provisions of the Constitution
and laws of any State, territory, or possession of the United States
relating to transactions in securities.''.
(d) Resolution of Certain Issues.--Chapter 25 (as amended by
subsection (c)) is amended by adding at the end the following new
section:
``SEC. 1506. RESOLUTION OF CERTAIN ISSUES.
``(a) Corporation Actions.--Notwithstanding any provision of any
agreement to which the Corporation is a party, the Corporation shall
not be considered to be in breach, default, or violation of any such
agreement because of any provision of this chapter or any action the
Corporation is required to take under this chapter.
``(b) Right To Sue Withdrawn.--The United States hereby withdraws
any stated or implied consent for the United States, or any agent or
officer of the United States, to be sued by any person for any legal,
equitable, or other relief with respect to any claim arising out of, or
resulting from, acts or omissions under this chapter.''.
(e) Conforming Amendment.--The table of contents for chapter 25 is
amended by inserting after the item for section 1502 the following:
``Sec. 1503. Establishment of Private Corporation.
``Sec. 1504. Ownership Limitations.
``Sec. 1505. Exemption from Liability.
``Sec. 1506. Resolution of Certain Issues.''.
(f) Section 193 (42 U.S.C. 2243) is amended by adding at the end
the following:
``(f) Limitation.--If the privatization of the United States
Enrichment Corporation results in the Corporation being--
``(1) owned, controlled, or dominated by a foreign
corporation or a foreign government, or
``(2) otherwise inimical to the common defense or security
of the United States,
any license held by the Corporation under sections 53 and 63 shall be
terminated.''.
(g) Period for Congressional Review.--Section 1502(d) (42 U.S.C.
2297d-1(d)) is amended by striking ``less than 60 days after
notification of the Congress'' and inserting ``less than 60 days after
the date of the report to Congress by the Comptroller General under
subsection (c)''.
SEC. 3041. PERIODIC CERTIFICATION OF COMPLIANCE.
Section 1701(c)(2) (42 U.S.C. 2297f(c)(2)) is amended by striking
``Annual application for certificate of compliance.--The Corporation
shall apply at least annually to the Nuclear Regulatory Commission for
a certificate of compliance under paragraph (1).'' and inserting
``Periodic application for certificate of compliance.--The Corporation
shall apply to the Nuclear Regulatory Commission for a certificate of
compliance under paragraph (1) periodically, as determined by the
Nuclear Regulatory Commission, but not less than every 5 years.''.
SEC. 3042. LICENSING OF OTHER TECHNOLOGIES.
Subsection (a) of section 1702 (42 U.S.C. 2297f-1(a)) is amended by
striking ``other than'' and inserting ``including''.
SEC. 3043. CONFORMING AMENDMENTS.
(a) Repeals in Atomic Energy Act of 1954 as of the Privatization
Date.--
(1) Repeals.--As of the privatization date (as defined in
section 1201(13) of the Atomic Energy Act of 1954), the
following sections (as in effect on such privatization date) of
the Atomic Energy Act of 1954 are repealed:
(A) Section 1202.
(B) Sections 1301 through 1304.
(C) Sections 1306 through 1316.
(D) Sections 1404 and 1405.
(E) Section 1601.
(F) Sections 1603 through 1607.
(2) Conforming amendment.--The table of contents of such
Act is amended by repealing the items referring to sections
repealed by paragraph (1).
(b) Statutory Modifications.--As of such privatization date, the
following shall take effect:
(1) For purposes of title I of the Atomic Energy Act of
1954, all references in such Act to the ``United States
Enrichment Corporation'' shall be deemed to be references to
the corporation established pursuant to section 1503 of the
Atomic Energy Act of 1954 (as added by section 3036(a)).
(2) Section 1018(1) of the Energy Policy Act of 1992 (42
U.S.C. 2296b-7(1)) is amended by striking ``the United States''
and all that follows through the period and inserting ``the
corporation referred to in section 1201(4) of the Atomic Energy
Act of 1954.''.
(3) Section 9101(3) of title 31, United States Code, is
amended by striking subparagraph (N), as added by section
902(b) of Public Law 102-486.
(c) Revision of Section 1305.--As of such privatization date,
section 1305 of the Atomic Energy Act of 1954 (42 U.S.C 2297b-4) is
amended--
(1) by repealing subsections (a), (b), (c), and (d), and
(2) in subsection (e)--
(A) by striking the subsection designation and
heading,
(B) by redesignating paragraph (1) (as added by
section 3038(a)) as subsection (a), striking ``In
general.--'' and inserting ``In General.--'',
redesignating subparagraphs (A) through (E) as
paragraphs (1) through (5) (redesignating in such
paragraph, clauses (i) through (iii) as subparagraphs
(A) through (C)), striking ``clauses (i) through
(iii)'' in paragraph (5) and inserting ``subparagraphs
(A) through (C)'', and by moving the margins 2-ems to
the left,
(C) by striking paragraph (3), and
(D) by redesignating paragraph (4) (as amended by
section 3038(b)) as subsection (b), and by moving the
margins 2-ems to the left.
Subtitle D--Waste Isolation Pilot Project
SEC. 3045. SHORT TITLE AND REFERENCE.
(a) Short Title.--This subtitle may be cited as the ``Waste
Isolation Pilot Plant Land Withdrawal Amendment Act''.
(b) Reference.--Except as otherwise expressly provided, whenever in
this subtitle an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provision of the
Waste Isolation Pilot Plant Land Withdrawal Act (Public Law 102-579).
SEC. 3046. DEFINITIONS.
Paragraphs (18) and (19) of section 2 are repealed.
SEC. 3047. TEST PHASE AND RETRIEVAL PLANS.
Section 5 is repealed.
SEC. 3048. TEST PHASE ACTIVITIES.
Section 6 is amended--
(1) by repealing subsections (a) and (b),
(2) by repealing paragraph (1) of subsection (c),
(3) by repealing subparagraph (A) of paragraph (2) of
subsection (c),
(4) by redesignating subsection (c) as subsection (a), by
striking the subsection heading and the matter before paragraph
(1) and inserting ``Study.--The following study shall be
conducted:'', by striking ``(2) Remote-handled waste.--'', by
striking ``(B) Study.--'', and by redesignating clauses (i),
(ii), and (iii) as paragraphs (1), (2), and (3), respectively,
and moving them 4-ems to the left, and
(5) by redesignating subsection (d) as subsection (b).
SEC. 3049. DISPOSAL OPERATIONS.
Section 7(b) is repealed.
SEC. 3050. ENVIRONMENTAL PROTECTION AGENCY DISPOSAL REGULATIONS.
(a) Section 8(d)(1).--Section 8(d)(1) is amended by striking
subparagraphs (B), (C), and (D) and by adding after subparagraph (A)
the following:
``(B) Comments of administrator.--Within 2 months
of receipt of the application under subparagraph (A),
the Administrator shall provide the Secretary with any
comments on the Secretary's application. Within one
month of the receipt of such comments, the Secretary
shall, to the extent practicable, incorporate the
Administrator's comments in the Secretary's
application. The comments of the Administrator provided
to the Secretary should also be transmitted to the
appropriate committees of jurisdiction in the House of
Representatives and the Senate.''.
(b) Section 8(d) (2), (3).--Section 8(d) is amended by striking
paragraphs (2) and (3), by striking ``(1) Compliance with disposal
regulations.--'', and by redesignating subparagraphs (A) and (B) of
paragraph (1), as amended by subsection (a), as paragraphs (1) and (2),
respectively, and moving them 2-ems to the left.
(c) Section 8(f).--Subsection (f) of section 8 is amended--
(1) by amending the subsection heading to read ``Periodic
Review'', and
(2) by amending paragraph (2) to read as follows:
``(2) Review by the administrator.--The Administrator
shall, not later than 6 months after receiving a submission
under paragraph (1), comment on whether or not the WIPP
facility continues to be in compliance with the final
disposition regulations.''.
(d) Section 8(g).--Section 8(g) is amended to read as follows:
``(g) Engineered and Natural Barriers, Etc.--The Secretary should
determine whether or not engineered barriers or natural barriers, or
both, will be required at WIPP consistent with regulations published as
part 191 of 40 C.F.R.''.
SEC. 3051. COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS.
(a) Section 9(a)(1).--Section 9(a)(1) is amended by adding after
and below subparagraph (H) the following:
``With respect to transuranic mixed waste designated by the
Secretary for disposal at WIPP, such waste is exempt from the
land disposal restrictions published at part 268 of 40 C.F.R.
because compliance with the environmental radiation protection
standards published at part 191 of 40 C.F.R. renders compliance
with the land disposal restrictions unnecessary to achieve
desired environmental protection and a no migration variance is
not required for disposal of transuranic mixed waste at
WIPP.''.
(b) Section 9(b).--Subsection (b) of section 9 is repealed.
(c) Sections 9(c), (d).--Subsections (c) and (d) of section 9 are
repealed.
SEC. 3052. RETRIEVABILITY.
Section 10 is amended to read as follows:
``SEC. 10. TRANSURANIC WASTE.
``It is the intent of Congress that a decision will be made by the
Secretary with respect to the disposal of transuranic waste no later
than March 31, 1997.''.
SEC. 3053. DECOMMISSIONING OF WIPP.
Section 13 is amended--
(1) by repealing subsection (a), and
(2) in subsection (b), by striking ``(b) Management Plan
for the Withdrawal After Decommissioning.--Within 5 years after
the date of the enactment of this Act, the'' and inserting
``The''.
SEC. 3054. ECONOMIC ASSISTANCE AND MISCELLANEOUS PAYMENTS.
Section 15(a) is amended--
(1) by striking ``to the Secretary for payments to the
State $20,000,000 for each of the 15 fiscal years beginning
with the fiscal year in which the transport of transuranic
waste to WIPP is initiated'' and inserting ``to the State
$20,000,000 for each of the 15 fiscal years beginning with the
date of the enactment of the Waste Isolation Pilot Plant Land
Withdrawal Amendment Act'', and
(2) by adding at the end the following: ``An appropriation
to the State shall be in addition to any appropriation for
WIPP.''.
SEC. 3055. NON-DEFENSE WASTE.
Section 7(a) is amended by redesignating paragraph (3) as paragraph
(4) and by inserting after paragraph (2) the following:
``(3) Nondefense waste.--Within the capacity prescribed by
paragraph (4), WIPP may receive transuranic waste from the
Secretary which did not result from a defense activity.''.
Subtitle E--Strategic Petroleum Reserve
SEC. 3071. LEASE OF EXCESS STRATEGIC PETROLEUM RESERVE CAPACITY.
(a) Amendment.--Part B of title I of the Energy Policy and
Conservation Act (42 U.S.C. 151 et seq.) is amended by adding at the
end the following new section:
``use of underutilized facilities
``Sec. 168. (a) Authority.--Notwithstanding any other provision of
this title, the Secretary, by lease or otherwise, for any term and
under such other conditions as the Secretary considers necessary or
appropriate, may store in underutilized Strategic Petroleum Reserve
facilities petroleum product owned by a foreign government or its
representative.
``(b) Conditions of Withdrawal.--The lessee or occupier of
facilities under subsection (a) may not withdraw petroleum product from
those facilities more frequently than once every 5 years, unless an
earlier drawdown is required to comply with the terms of the
International Energy Agreement or to respond to a national energy
emergency involving the disruption of more than 5 percent of the
lessee's or occupier's imports.
``(c) Priority Access.--When a drawdown of the reserve is ordered
pursuant to section 161, the United States shall have priority access,
over a lessee or occupier of facilities under subsection (a), to
distribution facilities, including pipelines and terminals.
``(d) Status of Stored Petroleum Product.--Petroleum product stored
under this section is not part of the Reserve, and may be exported from
the United States.''.
(b) Table of Contents Amendment.--The table of contents of part B
of title I of the Energy Policy and Conservation Act is amended by
adding at the end the following new item:
``Sec. 168. Use of underutilized facilities.''.
TITLE IV--COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES
SEC. 4000. TABLE OF CONTENTS.
The table of contents for this title is as follows:
TITLE IV--ECONOMIC AND EDUCATIONAL OPPORTUNITIES
Subtitle A--Higher Education
Sec. 4001. Short title; effective date.
Sec. 4002. Termination of direct lending.
Sec. 4003. Elimination of grace period interest subsidies.
Sec. 4004. Plus program reductions.
Sec. 4005. Loan transfer fee.
Sec. 4006. Lender fees to guaranty agencies.
Sec. 4007. Additional loan program changes.
Sec. 4008. Use of reserve funds to purchase defaulted loans.
Sec. 4009. Extension of period a guaranty agency must hold a defaulted
loan.
Sec. 4010. Privatization of College Construction Loan Insurance
Association.
Sec. 4011. Eligible institution.
Sec. 4012. Extension of program duration.
Subtitle B--Service Contract Repeal
Sec. 4101. Service Contract Act of 1965.
Subtitle C--Provisions Relating to the Employee Retirement Income
Security Act of 1974
Sec. 4201. Waiver of minimum period for joint and survivor annuity
explanation before annuity starting date.
Subtitle A--Higher Education
SEC. 4001. SHORT TITLE; EFFECTIVE DATE.
(a) Short Title.--This subtitle may be cited as the ``Higher
Education Program Efficiency Act of 1995''.
(b) Effective Date.--Except as otherwise provided therein, the
amendments made by this subtitle shall take effect on January 1, 1996.
SEC. 4002. TERMINATION OF DIRECT LENDING.
(a) Termination of Authority.--
(1) Program authority.--Section 451(a) of the Higher
Education Act of 1965 (20 U.S.C. 1087a(a)) is amended by
inserting ``and ending June 30, 1996'' after ``period beginning
July 1, 1994''.
(2) Termination of funding.--Section 452 of such Act (20
U.S.C. 1087b) is amended by adding at the end the following new
subsection:
``(e) Termination of Funding.--The Secretary shall not provide
funds under this section for loans for any academic year beginning on
or after July 1, 1996. The Secretary shall not pay any fees pursuant to
subsection (b) of this section on or after January 1, 1996.''.
(3) Termination of authority to enter new agreements.--
Section 453(a) of such Act (20 U.S.C. 1087c(a)) is amended--
(A) in paragraph (1), by inserting ``and ending
before July 1, 1996'' after ``academic years beginning
on or after July 1, 1994'';
(B) in paragraph (2)--
(i) by inserting ``and'' after the
semicolon at the end of subparagraph (A);
(ii) by striking the semicolon at the end
of subparagraph (B) and inserting a period; and
(iii) by striking subparagraphs (C) and
(D); and
(C) by striking paragraph (3) and redesignating
paragraph (4) as paragraph (3).
(b) Administrative Cost Amendments.--Section 458 of such Act (20
U.S.C. 1087h) of such Act is amended--
(1) by striking subsection (d);
(2) by redesignating subsections (b) and (c) as subsections
(f) and (g), respectively; and
(3) by striking subsection (a) and inserting the following:
``(a) In General.--
``(1) Direct administrative costs.--Each fiscal year there
shall be available to the Secretary of Education, from funds
not otherwise appropriated, funds to be obligated for the
subsidy costs of direct administrative costs under this part,
subject to subsection (b) of this section.
``(2) Indirect administrative costs.--There shall also be
available from funds available from funds not otherwise
appropriated, funds to be obligated for indirect administrative
costs under this part and part B, subject to subsection (c) of
this section, not to exceed (from such funds not otherwise
appropriated) $260,000,000 in fiscal year 1994, $345,000,000 in
fiscal year 1995, $110,000,000 in fiscal year 1996 (of which
$40,000,000 shall be available for administrative cost
allowances for guaranty agencies for October through December
of 1995), and $70,000,000 in each of the fiscal years 1997
through 2002.
``(3) Reduction.--The amount authorized to be made
available for fiscal year 1997 under paragraph (2) shall be
reduced by the amount of any unobligated unexpended funds
available to carry out this subsection for any fiscal year
prior to fiscal year 1996.
``(b) Subsidy Costs.--For purposes of this section, `subsidy cost'
means the estimated long-term cost to the Federal Government of direct
administrative expenses calculated on a net present value basis.
``(c) Direct Administrative Expenses.--For purposes of this
section, `direct administrative expenses' shall consist of the cost
of--
``(1) activities related to credit extension, loan
origination, loan servicing, management of contractors, and
payments to contractors, other government entities, and program
participants;
``(2) collection of delinquent loans; and
``(3) write-off and closeout of loans.
``(d) Indirect Administrative Expenses.--For purposes of this
section, `indirect administrative expenses' shall consist of the cost
of--
``(1) personnel engaged in developing program regulations,
policy, and administrative guidelines;
``(2) audits of institutions and contractors;
``(3) program reviews; and
``(4) other oversight of the program.
``(e) Limitation on Part D Expenditures.--For any fiscal year,
expenditures for indirect administrative expenses and for loan
servicing for loans made pursuant to this part shall not exceed 30
percent of funds available pursuant to paragraph (2) for such fiscal
year.''.
(c) Elimination of Transition to Direct Loans.--Such Act is further
amended--
(1) in section 422(c)(7) (20 U.S.C. 1072(c)(7))--
(A) by striking ``during the transition'' and all
that follows through ``part D of this title'' in
subparagraph (A); and
(B) by striking ``section 428(c)(10)(F)(v)'' in
subparagraph (B) and inserting ``section
428(c)(9)(F)(v)'';
(2) in section 428(c)(8) (20 U.S.C. 1078(c)(8)), by
striking subparagraph (B) and inserting the following:
``(B) Prior to making such determination for any guaranty
agency, the Secretary shall, in consultation with the guaranty
agency, develop criteria to determine whether such guaranty
agency has made adequate collection efforts. In determining
whether a guaranty agency's collection efforts have met such
criteria, the Secretary shall consider the agency's record of
success in collecting on defaulted loans, the age of the loans,
and the amount of recent payments received on the loans.'';
(3) in section 428(c)(9)(E)--
(A) by inserting ``or'' after the semicolon at the
end of clause (iv);
(B) by striking ``; or'' at the end of clause (v)
and inserting a period; and
(C) by striking clause (vi);
(4) in clause (vii) of section 428(c)(9)(F)--
(A) by inserting ``and'' before ``to avoid
disruption''; and
(B) by striking ``, and to ensure an orderly
transition'' and all that follows through the end of
such clause and inserting a period;
(5) in section 428(c)(9)(K), by striking ``the progress of
the transition from the loan programs under this part to'' and
inserting ``the integrity and administration of'';
(6) in section 428(e)(1)(B)(ii), by striking ``during the
transition'' and all that follows through ``part D of this
title'';
(7) in section 428(e)(3), by striking ``of transition'';
(8) in section 428(j)(3)--
(A) by striking ``during transition to direct
lending''; and
(B) by striking ``during the transition'' and all
that follows through ``part D of this title,'' in
subparagraph (A) and inserting a comma;
(9) in section 453(c)(2) (20 U.S.C. 1087c(c)(2)), by
striking ``Transition'' and inserting ``Institutional'';
(10) in section 453(c), by striking paragraph (3); and
(11) in section 456(b) (20 U.S.C. 1087f(b))--
(A) by inserting ``and'' after the semicolon at the
end of paragraph (3);
(B) by striking paragraph (4);
(C) by redesignating paragraph (5) as paragraph
(4); and
(D) in such paragraph (4) (as redesignated), by
striking ``successful operation'' and inserting
``integrity and efficiency''.
(d) Additional Conforming Amendments.--
(1) Ability of part d borrowers to obtain federal stafford
consolidation loans.--Section 428C(a)(4) of such Act (20 U.S.C.
1078-3(a)(4)) is amended--
(A) by redesignating subparagraphs (C) and (D) as
subparagraphs (D) and (E); and
(B) by inserting after subparagraph (B) the
following new subparagraph:
``(C) made under part D of this title;''.
(2) Conforming amendments.--Section 428C(b) of such Act (20
U.S.C. 1078-3(b)) is amended by striking paragraph (5).
SEC. 4003. ELIMINATION OF GRACE PERIOD INTEREST SUBSIDIES.
Section 428(a)(3) of the Higher Education Act of 1965 (20 U.S.C.
1078(a)(3)) is amended by adding at the end the following new
subparagraph:
``(C) Notwithstanding subparagraph (A), no portion of the
interest which accrues after the student ceases to carry at an
eligible institution at least one-half the normal full-time
academic workload (as determined by the institution) and prior
to the beginning of the repayment period of the loan shall be
paid by the Secretary under this subsection on any loan made on
or after January 1, 1996. Interest on the unpaid principal
amount of any such loan during the interval described in the
preceding sentence shall, at the option of the borrower--
``(i) be paid monthly or quarterly, or
``(ii) be added by the lender to the principal
amount of the loan at the commencement of the repayment
period.''.
SEC. 4004. PLUS PROGRAM REDUCTIONS.
(a) Loan Limits.--Section 428B(b) of the Higher Education Act of
1965 (20 U.S.C. 1078-2(b)) is amended--
(1) by striking ``(b) Limitation Based on Need.--'' and
inserting the following:
``(b) Annual Limits.--
``(1) Limitation based on need.--'';
(2) by inserting before the last sentence thereof the
following:
``(3) Limitation computed on basis of actual payments.--'';
and
(3) by inserting before paragraph (3) (as designated by the
amendment made by paragraph (2) of this subsection) the
following new paragraph:
``(2) Dollar limitation.--Subject to paragraph (1), the
maximum amount parents may borrow for one student in any
academic year or its equivalent (as defined by regulations of
the Secretary) is $15,000.''.
(b) Interest Rebate.--Section 428B of such Act is further amended
by adding at the end the following new subsection:
``(f) Interest Rebate.--
``(1) Rebate required.--Each holder of a loan under this
section made on or after the date of enactment of this
subsection, shall pay, on June 30 and December 31 of each year,
to the Secretary a rebate of subsidies in an amount equal to
0.8 percent of the outstanding principal balance of loans held
on such date. Payment of such rebate shall be made not later
than 60 days after each such date.
``(2) Deposit of rebates.--The Secretary shall deposit all
fees collected pursuant to paragraph (1) into the insurance
fund established in section 431.''.
(c) Plus Loans Interest Rates.--Section 427A(c)(4) of such Act (20
U.S.C. 1077a(c)(4)) is amended by adding at the end the following new
subparagraph:
``(F) Notwithstanding subparagraphs (A), (D), and (E), for
any loan made pursuant to section 428B for which the first
disbursement is made on or after January 1, 1996--
``(i) subparagraph (B) shall be applied by
substituting `4.0' for `3.25'; and
``(ii) the interest rate shall not exceed 11
percent.''.
(d) Conforming Amendment.--Section 427A(h) of such Act (20 U.S.C.
1077a(h)) is amended--
(1) by striking paragraph (2); and
(2) by redesignating paragraph (3) as paragraph (2).
SEC. 4005. LOAN TRANSFER FEE.
Section 428(b)(2) of the Higher Education Act of 1965 (20 U.S.C.
1078(b)(2)) is amended--
(1) by striking ``and'' at the end of subparagraph (E);
(2) by striking the period at the end of subparagraph (F)
and inserting ``; and''; and
(3) by adding at the end thereof the following new
subparagraph:
``(G) provide that, if a lender or holder, on or
after January 1, 1996, sells, transfers, or assigns a
loan under this part, then the transferee shall pay to
the Secretary a transfer fee in an amount equal to 0.20
percent of the principal of the loan, which transfer
fee shall be deposited into the insurance fund
established in section 431, except that the provisions
of this subparagraph shall not apply to any such sale,
transfer, or assignment by a lender or holder to such
lender's or holder's affiliate or pursuant to a merger
or other consolidation transaction.''.
SEC. 4006. LENDER FEES TO GUARANTY AGENCIES.
Subsection (f) of section 428 of the Higher Education Act of 1965
(20 U.S.C. 1078(f)) is amended to read as follows:
``(f) Payments of Certain Costs.--
``(1) Payments from lenders.--With respect to any loan
under this part for which the first disbursement is made on or
after January 1, 1996, the originating lender shall remit to
the guaranty agency which guarantees the loan, a fee equal to
0.70 percent of the principal amount of the loan.
``(2) Use of payments.--Payments made pursuant to paragraph
(1) shall be used for the purposes of--
``(A) the administrative costs of collections of
loans;
``(B) the administrative costs of preclaim
assistance and other predefault activities;
``(C) the administrative costs of monitoring the
enrollment and repayment status of students; and
``(D) other such costs related to the student loan
insurance program.
``(3) Timing of payments.--Payments made pursuant to
paragraph (1) shall be made at the time insurance premiums on
such loans are paid to the guaranty agency.
``(4) Prohibition on pass-through.--No part of any payments
required by this section shall be assessed or collected,
directly or indirectly, from any borrower under this part.''.
SEC. 4007. ADDITIONAL LOAN PROGRAM CHANGES.
(a) Reserve Funds.--
(1) Amendments to section 422.--Section 422 of the Higher
Education Act of 1965 (20 U.S.C. 1072) is amended--
(A) in the last sentence of subsection (a)(2), by
striking ``Except as provided in section 428(c)(10)(E)
or (F), such unencumbered'' and inserting ``Such'';
(B) in subsection (g)(1), by striking ``or the
program authorized by part D of this title'' each place
it appears;
(C) in subsection (g)(1)(D), by striking ``(A) or
(B)'' and inserting ``(A), (B), or (C)''; and
(D) in subsection (g), by striking paragraph (4)
and inserting the following:
``(4) Disposition of funds returned to or recovered by the
secretary.--Any funds that are returned to or otherwise
recovered by the Secretary pursuant to this subsection shall be
returned to the Treasury of the United States for purposes of
reducing the Federal debt and shall be deposited into the
special account under section 3113(d) of title 31, United
States Code.''.
(2) Amendments to section 428.--Section 428(c)(9)(A) of
such Act (20 U.S.C. 1078(c)(9)(A)) is amended--
(A) by inserting ``and'' after the semicolon at the
end of clause (i);
(B) by striking ``; and'' at the end of clause (ii)
and inserting a period; and
(C) by striking clause (iii).
(b) Application for Part B Loans Using Free Federal Application.--
(1) Single form required.--Section 483(a) of such Act (20
U.S.C. 1090(a)) is amended--
(A) in paragraph (1)--
(i) by inserting ``B,'' after ``assistance
under parts A,'';
(ii) by striking ``and to determine the
need of a student for the purpose of part B of
this title''; and
(iii) by striking the last sentence and
inserting the following: ``Such form may be in
an electronic or any other format (subject to
section 485B) in order to facilitate use by
borrowers and institutions.''; and
(B) in paragraph (3), by striking ``and States
shall receive,'' and inserting ``, any guaranty agency
authorized by any such institution, and States shall
receive, at their request and''.
(2) Use of electronic forms.--Section 483(a) of such Act is
further amended by adding the following new paragraph after
paragraph (4):
``(5) Electronic forms.--(A) The Secretary, in cooperation
with representatives of institutions of higher education,
eligible lenders, and guaranty agencies, shall prescribe an
electronic version of the form described in subsection (a)(1).
Such electronic form shall not require signatures to be
collected at the time such form is submitted if the data
contained in the electronic form is certified in one or more
separate writings. The Secretary shall prescribe the initial
electronic form not later than 90 days after the date of
enactment of this paragraph.
``(B) Nothing in this Act shall preclude the use of the
electronic form prescribed under subparagraph (A) through
software developed, produced, distributed (including by
diskette, modem or network communication, or otherwise) or
collected by eligible lenders, guaranty agencies, eligible
institutions, or consortia thereof. Such organization or
consortium shall submit such electronic form to the Secretary
for review prior to its use. If such electronic form is
inconsistent with the provisions of this part, the Secretary shall
notify the submitting organization or consortium of his objection
within 30 days of such submission, and shall specifically identify the
necessary changes. In the absence of such an objection the organization
or consortium may use the electronic form as submitted. No fee may be
charged in connection with use of the electronic form, or of any other
electronic forms used in conjunction with such form in applying for
Federal or State student financial assistance.''.
(c) Amendments to Eligible Lender Definition.--Section 435(d)(1) of
such Act (20 U.S.C. 1085) is amended--
(1) by inserting before the semicolon at the end of
subparagraph (A) the following: ``; and in determining whether
the making or holding of loans to students and parents under
this part is the primary consumer credit function of the
eligible lender, loans made or held as trustee or in a trust
capacity for the benefit of a third party shall not be
considered'';
(2) by striking ``and'' at the end of subparagraph (I);
(3) in subparagraph (J), by striking the period and
inserting ``; and''; and
(4) by adding at the end the following new subparagraph:
``(K) a wholly owned subsidiary of a publicly-held
holding company which, as of the date of enactment of
this subparagraph, through one or more subsidiaries (i)
acts as a finance company, and (ii) participates in the
program authorized by this part pursuant to
subparagraph (C).''.
(d) Additional Amendments to Section 428.--
(1) Amendments.--Section 428 of such Act is further
amended--
(A) in subsection (b)(1)(G), by striking ``98
percent'' and inserting ``95 percent'';
(B) in subsection (b)(1)(X), by striking ``section
428(c)(10)'' and inserting ``section 428(c)(9)'';
(C) in subsection (c)(1)(A), by striking ``98
percent'' and inserting ``96 percent'';
(D) in subsection (c)(1)(B)(i), by striking ``88
percent'' and inserting ``86 percent'';
(E) in subsection (c)(1)(B)(ii), by striking ``78
percent'' and inserting ``76 percent'';
(F) in subsection (c)(9)(C)(ii), by striking ``80
percent'' and inserting ``76 percent'';
(G) in subsection (c)(9)(I) by inserting ``on the
record'' after ``for a hearing'';
(H) in subsection (j)(2)(A), by striking ``60'' and
inserting ``15'';
(I) in subsection (j)(2)(B), by striking ``two
rejections'' and inserting ``one rejection''; and
(J) in subsection (l)--
(i) by striking paragraph (2); and
(ii) by striking ``(1) Assistance
required.--''.
(2) Effective date.--The amendments made by subparagraphs
(A) and (C) through (F) of paragraph (1) of this subsection
shall apply to loans on which the first disbursement of
principal is made on or after January 1, 1996.
(e) Reinsurance Percentage Under Section 428I.--Section 428I of
such Act (20 U.S.C. 1078-9) is amended in subsection (b)(1)--
(1) by striking ``100 percent'' in the heading and
inserting ``95 percent''; and
(2) by striking ``100 percent'' and inserting ``95
percent''.
(f) Loan Fees From Lenders.--Section 438(d)(2) of such Act (20
U.S.C. 1087-1(d)(2)) is amended to read as follows:
``(2) Amount of loan fees.--The amount of the loan fee
which shall be deducted under paragraph (1) shall be--
``(A) 0.50 percent of the principal amount of the
loan, for any loan under this part for which the first
disbursement was made on or after October 1, 1993, and
before January 1, 1996; or
``(B) 0.30 percent of the principal amount of the
loan, for any loan under this part for which the first
disbursement was made on or after January 1, 1996.''.
(g) Small Lender Audit Exemption.--Section 428(b)(1)(U)(iii) of
such Act (20 U.S.C. 1078(b)(1)(U)(iii)) is amended--
(1) by inserting ``in the case of any lender that
originates or holds more than $5,000,000 in principal on loans
made under this title in any fiscal year,'' before ``for (I)'';
(2) by inserting ``such'' before ``lender at least once'';
(3) by inserting ``such'' before ``a lender that is
audited''; and
(4) by striking ``if the lender'' and inserting ``if such
lender''.
SEC. 4008. USE OF RESERVE FUNDS TO PURCHASE DEFAULTED LOANS.
Section 422 of the Higher Education Act of 1965 (20 U.S.C. 1072) is
amended by adding at the end the following new subsection:
``(h) Use of Reserve Funds to Purchase Defaulted Loans.--
``(1) In general.--Except as provided in paragraph (2), a
guaranty agency shall use not less than 50 percent of such
agency's reserve funds to purchase and hold defaulted loans
that are guaranteed by such agency and for which a claim for
insurance is filed with such agency by an eligible lender after
the date of enactment of this subsection. The amount of such
purchases shall be considered as reserve funds under this
section and used in the calculation of the minimum reserve
level under section 428(c)(9).
``(2) Special rule.--A guaranty agency shall not be
required to use its reserve funds to purchase and hold
defaulted loans in accordance with paragraph (1) to the extent that--
``(A) the dollar volume of insurance claims filed
with such agency does not amount to 50 percent of such
agency's available reserve funds; or
``(B) such use is prohibited by State law; or
``(C) such use will compromise the ability of the
guaranty agency to pay program expenses.''.
SEC. 4009. EXTENSION OF PERIOD A GUARANTY AGENCY MUST HOLD A DEFAULTED
LOAN.
(a) Exemption for Extended Holding Period.--The last sentence of
section 428(c)(1)(A) of the Higher Education Act of 1965 (20 U.S.C.
1078(c)(1)(A)) is amended by striking out ``A guaranty agency'' and
inserting ``Except as provided in section 428K, a guaranty agency''.
(b) New Extended Holding Period Program.--Part B of title IV of
such Act (20 U.S.C. 1071 et seq.) is amended by inserting after section
428J the following new section:
``SEC. 428K. GUARANTOR PURCHASE OF CLAIMS WITH RESERVE FUNDS.
``(a) Loans Subject to Extended Holding Period.--Except as provided
in subsection (b), a guaranty agency shall file a claim for
reimbursement with respect to losses (resulting from the default of a
student borrower) subject to reimbursement by the Secretary pursuant to
section 428(c)(1) not less than 180 days nor more than 225 days after
the guaranty agency discharges such agency's insurance obligation on a
loan insured under this part. Such claim shall include losses on the
unpaid principal and accrued interest of any such loan, including
interest accrued from the date of such discharge to the date such
agency files the claim for reimbursement from the Secretary.
``(b) Loans Excluded From Extended Holding.--A guaranty agency may
file a claim with respect to losses subject to reimbursement by the
Secretary pursuant to section 428(c)(1) prior to 180 days after the
date the guaranty agency discharges such agency's insurance obligation
on a loan insured under this part, if--
``(1) such agency used 50 percent or more of such agency's
reserve funds to purchase or hold loans in accordance with
section 422(h);
``(2) such claim is based on an inability to locate the
borrower and the guaranty agency certifies to the Secretary
that--
``(A) diligent attempts were made to locate the
borrower through the use of reasonable skip-tracing
techniques in accordance with section 428(c)(2)(G); and
``(B) such skip-tracing attempts to locate the
borrower were unsuccessful; or
``(3) the guaranty agency determines that the borrower is
unlikely to possess the financial resources to begin repaying
the loan prior to 180 days after default by the borrower.
``(c) Guaranty Agency Efforts During Extended Holding Period.--A
guaranty agency shall attempt to bring a loan described in subsection
(a) into repayment status prior to 180 days after the date the guaranty
agency discharges its insurance obligation on the loan, so that no
claim for reimbursement by the Secretary is necessary. Upon securing
payment satisfactory to the guaranty agency during the 180-day period,
such agency shall, if practicable, sell such loan to an eligible
lender. Such loan shall not be sold to an eligible lender that the
guaranty agency determines has substantially failed to exercise the due
diligence required of lenders under this part.
``(d) Regulation Prohibited.--The Secretary shall not regulate the
collection activities of a guaranty agency with respect to a loan
described in subsection (a) for which reinsurance has not been paid
under section 428(c)(1).''.
SEC. 4010. PRIVATIZATION OF COLLEGE CONSTRUCTION LOAN INSURANCE
ASSOCIATION.
(a) Repeal of Statutory Restrictions.--Part D of title VII of the
Higher Education Act of 1965 (20 U.S.C. 1132f et seq.) is repealed.
(b) Status of the Corporation.--
(1) Status of the corporation.--The Corporation shall not
be an agency, instrumentality, or establishment of the United
States Government and shall not be a ``Government corporation''
nor a ``Government controlled corporation'' as defined in
section 103 of title 5, United States Code. No action under
section 1491 of title 28, United States Code (commonly known as
the Tucker Act), shall be allowable against the United States
based on the actions of the Corporation.
(2) Corporate powers.--The Corporation shall have the power
to engage in any business or other activities for which
corporations may be organized under the laws of any State of
the United States or the District of Columbia. The Corporation
shall have the power to enter into contracts, to execute
instruments, to incur liabilities, to provide products and
services, and to do all things as are necessary or incidental
to the proper management of its affairs and the efficient
operation of a private, for-profit business.
(3) Limitation on ownership of stock.--Except as provided
in subsection (d)(2) of this section, no stock of the
Corporation may be sold or issued to an agency,
instrumentality, or establishment of the United States
Government, to a Government corporation or a Government
controlled corporation (as such terms are defined in section
103 of title 5, United States Code), or to a Government
sponsored enterprise (as such term is defined in section 622 of
title 2, United States Code). The Student Loan Marketing
Association shall not own any stock of the Corporation, except
that it may retain the stock it owns on the date of enactment.
The Student Loan Marketing Association shall not control the
operation of the Corporation, except that the Student Loan
Marketing Association may participate in the election of
directors as a shareholder, and may continue to exercise its
right to appoint directors under section 754 of the Higher
Education Act of 1965 as long as that section is in effect. The
Student Loan Marketing Association shall not provide financial
support or guarantees to the Corporation. Notwithstanding the
prohibitions in this subsection, the United States may pursue
any remedy against a holder of the Corporation's stock to which
it would otherwise be entitled.
(c) Related Privatization Requirements.--
(1) Notice requirements.--During the 5-year period
following the date of the enactment of this Act, the
Corporation shall include in any document offering the
Corporation's securities, in any contracts for insurance,
guarantee, or reinsurance of obligations, and in any
advertisement or promotional material, a statement that--
(A) the Corporation is not a Government-sponsored
enterprise or instrumentality of the United States; and
(B) the Corporation's obligations are not
guaranteed by the full faith and credit of the United
States.
(2) Corporate charter.--The Corporation's charter shall be
amended as necessary and without delay to conform the
requirements of this Act.
(3) Corporate name.--The name of the Corporation, or of any
direct or indirect subsidiary thereof, may not contain the term
``College Construction Loan Insurance Association''.
(4) Articles of incorporation.--The Corporation shall amend
its articles of incorporation without delay to reflect that one
of the purposes of the Corporation shall be to guarantee,
insure and reinsure bonds, leases, and other evidences of debt
of educational institutions, including Historically Black
Colleges and Universities and other academic institutions which
are ranked in the lower investment grade category using a
nationally recognized credit rating system.
(5) Transition requirements.--
(A) Requirements until stock sale.--Notwithstanding
subsection (a), the requirements of section 754 of the
Higher Education Act of 1965 (20 U.S.C. 1132f-3), as in
existence as of the day before enactment of this Act,
shall continue to be effective until the day
immediately following the date of closing of the
purchase of the Secretary's stock (or the date of
closing of the final purchase, in the case of multiple
transactions) pursuant to subsection (d) of this
section.
(B) Reports after stock sale.--The Corporation
shall, not later than March 30 of the first full
calendar year immediately following the sale pursuant
to subsection (d), and each of the 2 succeeding years,
submit to the Secretary of Education a report
describing the Corporation's efforts to assist in the
financing of education facilities projects, including
projects for elementary, secondary, and postsecondary
educational institution infrastructure, and detailing,
on a project-by-project basis, the Corporation's
business dealings with educational institutions that
are rated by a nationally recognized statistical rating
organization at or below the organization's third
highest ratings.
(d) Sale of Federally Owned Stock.--
(1) Sale of stock required.--The Secretary of the Treasury
shall make every effort to sell, pursuant to section 324 of
title 31, United States Code, the stock of the Corporation
owned by the Secretary of Education not later than 6 months
after the date of the enactment of this Act.
(2) Purchase by the corporation.--In the event that the
Secretary of the Treasury is unable to sell the stock, or any
portion thereof, at a price acceptable to the Secretary of
Education and the Secretary of the Treasury, the Corporation
shall purchase, within the period specified in paragraph (1),
such stock at a price determined by the Secretary of the
Treasury and acceptable to the Corporation based on independent
appraisal by one or more nationally recognized financial firms,
except that such price shall not exceed the value of the
Secretary's stock as determined by the Congressional Budget
Office in House Report 104-153, dated June 22, 1995. Such firms
shall be selected by the Secretary of the Treasury in
consultation with the Secretary of Education and the
Corporation.
(e) Assistance by the Corporation.--The Corporation shall provide
such assistance as the Secretary of the Treasury and the Secretary of
Education may require to facilitate the sale of the stock under this
section.
(f) Definition.--As used in this section, the term ``Corporation''
means the Corporation established pursuant to the provision of law
repealed by subsection (a).
SEC. 4011. ELIGIBLE INSTITUTION.
(a) Amendments.--Section 481(b) of the Higher Education Act of 1965
(20 U.S.C. 1088(b)) is amended--
(1) by inserting before the period at the end of the first
sentence the following: ``on the basis of a review by the
institution's independent auditor using generally accepted
accounting principles''; and
(2) by inserting after the end of such first sentence the
following new sentences: ``For the purposes of clause (6),
revenues from sources that are not derived from funds provided
under this title include revenues from programs of education or
training that do not meet the definition of an eligible program
in subsection (e), but are provided on a contractual basis
under Federal, State, or local training programs, or to
business and industry. For the purposes of determining whether
an institution meets the requirements of clause (6), the
Secretary shall not consider the financial information of any
institution for a fiscal year began on or before April 30,
1994.''.
(b) Effective Date.--Notwithstanding section 713 of this Act, the
amendments made by subsection (a) shall apply to any determination made
on or after July 1, 1994, by the Secretary of Education pursuant to
section 481(b)(6) of the Higher Education Act of 1965.
SEC. 4012. EXTENSION OF PROGRAM DURATION.
Part B of title IV of the Higher Education Act of 1965 is amended--
(1) in section 424(a) (20 U.S.C. 1074(a)), by striking
``1998'' and inserting ``2002'';
(2) in section 428(a)(5) (20 U.S.C. 1078(a)(5))--
(A) by striking ``2002'' and inserting ``2006'';
and
(B) by striking ``1998'' and inserting ``2002'';
and
(3) in section 428C(e) (20 U.S.C. 1078-3(e)), by striking
the first sentence and inserting ``The authority to make loans
under this section expires at the close of September 30,
2002.''.
Subtitle B--Service Contract Repeal
SEC. 4101. SERVICE CONTRACT ACT OF 1965.
(a) Repeal.--The Service Contract Act of 1965 (41 U.S.C. 351 et
seq.) is repealed.
(b) Application.--The amendment made by subsection (a) shall not
apply to a contract which was entered into before the 45th day after
the date of the enactment of this Act and to which the Service Contract
Act of 1965 applied.
Subtitle C--Provisions Relating to the Employee Retirement Income
Security Act of 1974
SEC. 4201. WAIVER OF MINIMUM PERIOD FOR JOINT AND SURVIVOR ANNUITY
EXPLANATION BEFORE ANNUITY STARTING DATE.
(a) General Rule.--For purposes of section 205(c)(3)(A) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1055(c)(3)(A)), the minimum period prescribed by the Secretary of the
Treasury between the date that the explanation referred to in such
section is provided and the annuity starting date shall not apply if
waived by the participant and, if applicable, the participant's spouse.
(b) Effective Date.--Subsection (a) shall apply to plan years
beginning after December 31, 1995.
TITLE V--COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
SEC. 5001. EXTENSION OF DELAY IN COST-OF-LIVING ADJUSTMENTS IN FEDERAL
EMPLOYEE RETIREMENT BENEFITS THROUGH FISCAL YEAR 2002.
Section 11001(a) of the Omnibus Budget Reconciliation Act of 1993
(Public Law 103-66; 107 Stat. 408) is amended in the matter preceding
paragraph (1) by striking out ``or 1996,'' and inserting in lieu
thereof ``1996, 1997, 1998, 1999, 2000, 2001, or 2002,''.
SEC. 5002. INCREASED CONTRIBUTIONS TO FEDERAL CIVILIAN RETIREMENT
SYSTEMS.
(a) Civil Service Retirement System.--
(1) Deductions.--The first sentence of section 8334(a)(1)
of title 5, United States Code, is amended to read as follows:
``The employing agency shall deduct and withhold from the basic
pay of an employee, Member, Congressional employee, law
enforcement officer, firefighter, bankruptcy judge, judge of
the United States Court of Appeals for the Armed Forces, United
States magistrate, Claims Court judge, or member of the Capitol
Police, as the case may be, the percentage of basic pay
applicable under subsection (c).''.
(2) Agency contributions.--
(A) Increase in agency contributions during
calendar years 1996 through 2002.--Section 8334(a)(1)
of title 5, United States Code (as amended by this
section) is further amended--
(i) by inserting ``(A)'' after ``(1)''; and
(ii) by adding at the end thereof the
following new subparagraph:
``(B)(i) Notwithstanding subparagraph (A), the
agency contribution under the second sentence of such
subparagraph, during the period beginning on January 1,
1996, through December 31, 2002--
``(I) for each employing agency (other than
the United States Postal Service) shall be 8.5
percent of the basic pay of an employee,
Congressional employee, and a Member of
Congress, 9 percent of the basic pay of a law
enforcement officer, a member of the Capitol
Police, and a firefighter, and 9.5 percent of
the basic pay of a Claims Court judge, a United
States magistrate, a judge of the United States
Court of Appeals for the Armed Services, and a
bankruptcy judge, as the case may be; and
``(II) for the United States Postal Service
shall be 7 percent of the basic pay of an
employee and 9 percent of the basic pay of a
law enforcement officer.''.
(B) No reduction in agency contributions by the
postal service.--Agency contributions by the United
States Postal Service under section 8348(h) of title 5,
United States Code--
(i) shall not be reduced as a result of the
amendments made under paragraph (3) of this
subsection; and
(ii) shall be computed as though such
amendments had not been enacted.
(3) Individual deductions, withholdings, and deposits.--The
table under section 8334(c) of title 5, United States Code, is
amended--
(A) in the matter relating to an employee by
striking out
``7.................... After December 31, 1969.''
and inserting in lieu thereof the following:
``7.................... January 1, 1970, to December 31, 1995.
7.25.................. January 1, 1996, to December 31, 1996.
7.4................... January 1, 1997, to December 31, 1997.
7.5................... January 1, 1998, to December 31, 2002.
7..................... After December 31, 2002.'';
(B) in the matter relating to a Member or employee
for Congressional employee service by striking out
``7\1/2\............... After December 31, 1969.''
and inserting in lieu thereof the following:
``7.5.................. January 1, 1970, to December 31, 1995.
7.25.................. January 1, 1996, to December 31, 1996.
7.4................... January 1, 1997, to December 31, 1997.
7.5................... January 1, 1998, to December 31, 2002.
7..................... After December 31, 2002.'';
(C) in the matter relating to a Member for Member
service by striking out
``8.................... After December 31, 1969.''
and inserting in lieu thereof the following:
``8.................... January 1, 1970, to December 31, 1995.
7.25.................. January 1, 1996, to December 31, 1996.
7.4................... January 1, 1997, to December 31, 1997.
7.5................... January 1, 1998, to December 31, 2002.
7..................... After December 31, 2002.'';
(D) in the matter relating to a law enforcement
officer for law enforcement service and firefighter for
firefighter service by striking out
``7\1/2\............... After December 31, 1974.''
and inserting in lieu thereof the following:
``7.5.................. January 1, 1975, to December 31, 1995.
7.75.................. January 1, 1996, to December 31, 1996.
7.9................... January 1, 1997, to December 31, 1997.
8..................... January 1, 1998, to December 31, 2002.
7.5................... After December 31, 2002.'';
(E) in the matter relating to a bankruptcy judge by
striking out
``8.................... After December 31, 1983.''
and inserting in lieu thereof the following:
``8.................... January 1, 1984, to December 31, 1995.
8.25.................. January 1, 1996, to December 31, 1996.
8.4................... January 1, 1997, to December 31, 1997.
8.5................... January 1, 1998, to December 31, 2002.
8..................... After December 31, 2002.'';
(F) in the matter relating to a judge of the United
States Court of Appeals for the Armed Forces for
service as a judge of that court by striking out
``8.................... On and after the date of the enactment of the
Department of Defense Authorization Act,
1984.''
and inserting in lieu thereof the following:
``8.................... The date of the enactment of the Department
of Defense Authorization Act, 1984, to
December 31, 1995.
8.25.................. January 1, 1996, to December 31, 1996.
8.4................... January 1, 1997, to December 31, 1997.
8.5................... January 1, 1998, to December 31, 2002.
8..................... After December 31, 2002.'';
(G) in the matter relating to a United States
magistrate by striking out
``8.................... After September 30, 1987.''
and inserting in lieu thereof the following:
``8.................... October 1, 1987, to December 31, 1995.
8.25.................. January 1, 1996, to December 31, 1996.
8.4................... January 1, 1997, to December 31, 1997.
8.5................... January 1, 1998, to December 31, 2002.
8..................... After December 31, 2002.'';
(H) in the matter relating to a Claims Court judge
by striking out
``8.................... After September 30, 1988.''
and inserting in lieu thereof the following:
``8.................... October 1, 1988, to December 31, 1995.
8.25.................. January 1, 1996, to December 31, 1996.
8.4................... January 1, 1997, to December 31, 1997.
8.5................... January 1, 1998, to December 31, 2002.
8..................... After December 31, 2002.'';
and
(I) by inserting after the matter relating to a
Claims Court judge the following:
``Member of the Capitol Police.......... 2.5.................... August 1, 1920, to June 30, 1926.
``3.5.................. July 1, 1926, to June 30, 1942.
``5.................... July 1, 1942, to June 30, 1948.
``6.................... July 1, 1948, to October 31, 1956.
``6.5.................. November 1, 1956, to December 31, 1969.
``7.5.................. January 1, 1970, to December 31, 1995.
``7.75................. January 1, 1996, to December 31, 1996.
``7.9.................. January 1, 1997, to December 31, 1997.
``8.................... January 1, 1998, to December 31, 2002.
``7.5.................. After December 31, 2002.''.
(4) Other service.--
(A) Military service.--Section 8334(j) of title 5,
United States Code, is amended--
(i) in paragraph (1)(A) by inserting ``and
subject to paragraph (5),'' after ``Except as
provided in subparagraph (B),''; and
(ii) by adding at the end thereof the
following new paragraph:
``(5) Effective with respect to any period of military service
after December 31, 1995, the percentage of basic pay under section 204
of title 37 payable under paragraph (1) shall be equal to the same
percentage as would be applicable under section 8334(c) for that same
period for service as an employee, subject to paragraph (1)(B).''.
(B) Volunteer service.--Section 8334(l) of title 5,
United States Code, is amended--
(i) in paragraph (1) by adding at the end
thereof the following: ``This paragraph shall
be subject to paragraph (4).''; and
(ii) by adding at the end thereof the
following new paragraph:
``(4) Effective with respect to any period of service after
December 31, 1995, the percentage of the readjustment allowance or
stipend (as the case may be) payable under paragraph (1) shall be equal
to the same percentage as would be applicable under section 8334(c) for
that same period for service as an employee.''.
(b) Federal Employees Retirement System.--
(1) Individual deductions and withholdings.--
(A) In general.--Section 8422(a) of title 5, United
States Code, is amended by striking out paragraph (2)
and inserting in lieu thereof the following:
``(2) The percentage to be deducted and withheld from basic pay for
any pay period shall be equal to--
``(A) the applicable percentage under paragraph (3), minus
``(B) the percentage then in effect under section 3101(a)
of the Internal Revenue Code of 1986 (relating to rate of tax
for old-age, survivors, and disability insurance).
``(3) The applicable percentage under this paragraph, for civilian
service shall be as follows:
``Percentage of basic
pay Service period
Employee................................ 7...................... Before January 1, 1996.
7.25................... January 1, 1996, to December 31, 1996.
7.4.................... January 1, 1997, to December 31, 1997.
7.5.................... January 1, 1998, to December 31, 2002.
7...................... After December 31, 2002.
Congressional employee................. 7.5.................... Before January 1, 1996.
7.25................... January 1, 1996, to December 31, 1996.
7.4.................... January 1, 1997, to December 31, 1997.
7.5.................... January 1, 1998, to December 31, 2002.
7...................... After December 31, 2002.
Member................................. 7.5.................... Before January 1, 1996.
7.25................... January 1, 1996, to December 31, 1996.
7.4.................... January 1, 1997, to December 31, 1997.
7.5.................... January 1, 1998, to December 31, 2002.
7...................... After December 31, 2002.
Law enforcement officer, firefighter, 7.5.................... Before January 1, 1996.
member of the Capitol Police, or air
traffic controller.
7.75................... January 1, 1996, to December 31, 1996.
7.9.................... January 1, 1997, to December 31, 1997.
8...................... January 1, 1998, to December 31, 2002.
7.5.................... After December 31, 2002.''
(B) Military service.--Section 8422(e) of title 5,
United States Code, is amended--
(i) in paragraph (1)(A) by inserting ``and
subject to paragraph (6),'' after ``Except as
provided in subparagraph (B),''; and
(ii) by adding at the end thereof the
following:
``(6) The percentage of basic pay under section 204 of
title 37 payable under paragraph (1), with respect to any
period of military service performed during--
``(A) January 1, 1996, through December 31, 1996,
shall be 3.25 percent;
``(B) January 1, 1997, through December 31, 1997,
shall be 3.4 percent; and
``(C) January 1, 1998, through December 31, 2002,
shall be 3.5 percent.''.
(C) Volunteer service.--Section 8422(f) of title 5,
United States Code, is amended--
(i) in paragraph (1) by adding at the end
thereof the following: ``This paragraph shall
be subject to paragraph (4).''; and
(ii) by adding at the end the following:
``(4) The percentage of the readjustment allowance or
stipend (as the case may be) payable under paragraph (1), with
respect to any period of volunteer service performed during--
``(A) January 1, 1996, through December 31, 1996,
shall be 3.25 percent;
``(B) January 1, 1997, through December 31, 1997,
shall be 3.4 percent; and
``(C) January 1, 1998, through December 31, 2002,
shall be 3.5 percent.''.
(2) No reduction in agency contributions.--Agency
contributions under section 8423 (a) and (b) of title 5, United
States Code, shall not be reduced as a result of the amendments
made under paragraph (1) of this subsection.
(c) Effective Date.--The amendments made by this section shall take
effect on the first day of the first applicable pay period beginning on
or after January 1, 1996.
SEC. 5003. FEDERAL RETIREMENT PROVISIONS RELATING TO MEMBERS OF
CONGRESS AND CONGRESSIONAL EMPLOYEES.
(a) Relating to the Years of Service as a Member of Congress and
Congressional Employees for Purposes of Computing an Annuity.--
(1) CSRS.--Section 8339 of title 5, United States Code, is
amended--
(A) in subsection (a) by inserting ``or Member''
after ``employee''; and
(B) by striking out subsections (b) and (c).
(2) FERS.--Section 8415 of title 5, United States Code, is
amended--
(A) by striking out subsections (b) and (c);
(B) in subsections (a) and (g) by inserting ``or
Member'' after ``employee'' each place it appears; and
(C) in subsection (g)(2) by striking out
``Congressional employee''.
(3) Capitol police.--Section 8339(q) of title 5, United
States Code, is amended--
(A) by striking ``subsection (b),'' and inserting
``subsection (b) (as last in effect),''; and
(B) by striking ``subsection (b)(2),'' and
inserting ``subsection (b)(2) (as last in effect),''.
(b) Administrative Regulations.--The Secretary of the Senate and
the Clerk of the House of Representatives, in consultation with the
Office of Personnel Management, may prescribe regulations to carry out
the provisions of this section and the amendments made by this section
for applicable employees and Members of Congress.
(c) Effective Dates.--
(1) Years of service; annuity computation.--(A) The
amendments made by subsection (a) shall take effect on the date
of the enactment of this Act and shall apply only with respect
to the computation of an annuity relating to--
(i) the service of a Member of Congress as a Member
or as a Congressional employee performed on or after
January 1, 1996; and
(ii) the service of a Congressional employee as a
Congressional employee performed on or after January 1,
1996.
(B) An annuity shall be computed as though the amendments
made under subsection (a) had not been enacted with respect
to--
(i) the service of a Member of Congress as a Member
or a Congressional employee or military service
performed before January 1, 1996; and
(ii) the service of a Congressional employee as a
Congressional employee or military service performed
before January 1, 1996.
(2) Regulations.--The provisions of subsection (b) shall
take effect on the date of the enactment of this Act.
SEC. 5004. FEDERAL EMPLOYEES RETIREMENT SECURITY COMMISSION.
(a) Establishment.--There shall be established in the legislative
branch a commission to be known as the ``Federal Employees Retirement
Security Commission'' (hereinafter in this section referred to as the
``Commission'').
(b) Members.--
(1) Appointment.--The Commission shall be composed of 7
members, to be appointed within 30 days after the date of the
enactment of this Act, as follows:
(A) 2 members appointed by the Speaker of the House
of Representatives.
(B) 2 members appointed by the majority leader of
the Senate.
(C) 1 member appointed by the minority leader of
the House of Representatives.
(D) 1 member appointed by the minority leader of
the Senate.
(E) 1 member appointed by the President.
(2) Chairman; vice chairman.--The members of the Commission
shall select 1 of the members to be the Chairman and another to
be the Vice Chairman of the Commission.
(3) Terms.--Each member shall be appointed for the life of
the Commission.
(4) Pay and travel expenses.--
(A) Pay generally.--Each member, other than the
Chairman, shall be paid at a rate not to exceed the
daily equivalent of the annual rate of basic pay
payable for level IV of the Executive Schedule under
section 5315 of title 5, United States Code, for each
day (including travel time) during which such member is
engaged in the actual performance of duties vested in
the Commission.
(B) Pay for the chairman.--The Chairman shall be
paid, for each day referred to in subparagraph (A), at
a rate not to exceed the daily equivalent of the annual
rate of basic pay payable for level III of the
Executive Schedule under section 5314 of title 5,
United States Code.
(C) Travel expenses.--Each member of the Commission
shall, subject to the availability of appropriations
and in such amounts as may be provided by such Act, be
allowed travel expenses in the same manner as any
individual employed intermittently by the Government is
allowed travel expenses under section 5703 of title 5,
United States Code.
(D) Government employees and members of congress.--
Notwithstanding any other provision of this paragraph,
members of the Commission who are full-time officers or
employees of the United States or Members of Congress
may not receive additional pay, allowances, or benefits
by reason of their service on the Commission, except
for travel expenses under subparagraph (C).
(5) Vacancies.--A vacancy in the Commission shall be filled
in the manner in which the original appointment was made.
(c) Meetings.--
(1) Open meetings.--Each meeting of the Commission, other
than meetings in which classified information is to be
discussed, shall be open to the public.
(2) Access by request.--
(A) In general.--All the proceedings, information,
and deliberations of the Commission shall be open, upon
request, to the Chairman and the ranking minority party
member of the respective committees under subparagraph
(B) or such chairmen or ranking minority party members
of subcommittees of any such committee as may be
designated by the Chairman or ranking minority party
member, respectively, of such committee.
(B) Identification of committees.--The committees
under this subparagraph are as follows:
(i) The Committee on Government Reform and
Oversight of the House of Representatives.
(ii) The Committee on National Security of
the House of Representatives.
(iii) The Committee on Governmental Affairs
of the Senate.
(iv) The Committee on Armed Services of the
Senate.
(3) First meeting.--The Commission shall hold its first
meeting within 60 days after the date of the enactment of this
Act.
(d) Director; Staff.--
(1) Director.--The Commission shall have a Director, who--
(A) shall be appointed by the Commission; and
(B) shall be paid at a rate not to exceed the rate
of basic pay payable for level IV of the Executive
Schedule under section 5315 of title 5, United States
Code.
(2) Staff.--
(A) Appointments; pay.--The Director, with the
approval of the Commission, may appoint and fix the pay
of additional personnel, except that no individual so
appointed may receive pay at a rate in excess of the
maximum rate of basic pay payable under section 5376 of
title 5, United States Code, for positions classified
above GS-15 of the General Schedule.
(B) Details from congressional committees and
offices.--Upon the request of the Director, the
chairman of any standing committee or other committee
of either House or both Houses of the Congress, or the
head of any other congressional office, may detail any
of the personnel of that committee or office to the
Commission to assist the Commission in carrying out its
duties under this Act.
(C) Assistance from gao.--The Comptroller General
of the United States shall provide assistance,
including the detailing of employees, to the Commission
in accordance with an agreement entered into with the
Commission.
(e) Duties.--
(1) In general.--The Commission shall study and, within 7
months after the date of the enactment of this Act, submit to
the Congress a written report on--
(A) the financial soundness of the retirement
systems for Government employees (including employees
of nonappropriated fund instrumentalities) and members
of the uniformed services;
(B) the cost and level of benefits provided by the
Civil Service Retirement System, the Federal Employees'
Retirement System, and the other retirement systems
under subparagraph (A), as compared with the cost and
level of benefits of retirement systems prevalent in
the private sector;
(C) the appropriate level and design of benefits of
an alternative retirement system and modifications of
existing systems to achieve the objectives described in
paragraph (2); and
(D) the cost and suitability of benefits provided
by the military retirement system, and their
appropriateness in light of current and projected military readiness
requirements.
(2) Considerations.--The considerations described in this
paragraph are as follows:
(A) Portability of benefits, consistent with the
greater mobility anticipated with respect to the
workforce of the 21st century.
(B) Financial soundness, consistent with the
requirements of the Employee Retirement Income Security
Act of 1974 and the requirements that must be met in
order to qualify to be insured by the Pension Benefit
Guarantee Corporation.
(C) The Government's presence in a wide range of
occupations and local labor markets, and the need for
retirement benefits to be representative of the level
of benefits received by most Americans in the private
sector in order to allow the Government to recruit and
retain a qualified workforce.
(D) Total compensation trends in the private
sector, including the use of cafeteria plans.
(3) Contents.--The Commission's report shall contain a
detailed statement of the findings and conclusions of the
Commission, together with its recommendations for any
legislation that the Commission considers appropriate.
(f) Other Authority.--
(1) Experts and consultants.--The Commission may procure by
contract, to the extent funds are available, the temporary or
intermittent services of experts or consultants subject to the
same terms and conditions as would apply under section 3109 of
title 5, United States Code, in the case of an Executive
agency.
(2) Leases.--The Commission may lease space and acquire
personal property to the extent funds are available.
(g) Funding.--There are authorized to be appropriated to the
Commission such funds as are necessary to carry out its duties under
this Act. Such funds shall remain available until expended.
(h) Termination.--The Commission shall cease to exist 30 days after
submitting its report to the Congress under subsection (e).
SEC. 5005. REPEAL OF AUTHORIZATION OF TRANSITIONAL APPROPRIATIONS FOR
THE UNITED STATES POSTAL SERVICE.
(a) Repeal.--
(1) In general.--Section 2004 of title 39, United States
Code, is repealed.
(2) Technical and conforming amendments.--
(A) The table of sections for chapter 20 of such
title is amended by repealing the item relating to
section 2004.
(B) Section 2003(e)(2) of such title is amended by
striking ``sections 2401 and 2004'' each place it
appears and inserting ``section 2401''.
(b) Clarification That Liabilities Formerly Paid Pursuant to
Section 2004 Remain Liabilities Payable by the Postal Service.--Section
2003 of title 39, United States Code, is amended by adding at the end
the following:
``(h) Liabilities of the former Post Office Department to the
Employees' Compensation Fund (appropriations for which were authorized
by former section 2004, as in effect before the effective date of this
subsection) shall be liabilities of the Postal Service payable out of
the Fund.''.
(c) Effective Date.--
(1) In general.--This section and the amendments made by
this section shall be effective as of October 1, 1995.
(2) Provisions relating to payments for fiscal year 1996.--
(A) Amounts not yet paid.--No payment may be made
to the Postal Service Fund, on or after the date of the
enactment of this Act, pursuant to any appropriation
for fiscal year 1996 authorized by section 2004 of
title 39, United States Code (as in effect before the
effective date of this section).
(B) Amounts paid.--If any payment to the Postal
Service Fund is or has been made pursuant to an
appropriation for fiscal year 1996 authorized by such
section 2004, then an amount equal to the amount of
such payment shall be paid from such Fund into the
Treasury as miscellaneous receipts.
SEC. 5006. AVAILABILITY OF SURPLUS PROPERTY FOR HOMELESS ASSISTANCE.
(a) Repeal.--(1) Title V of the Stewart B. McKinney Homeless
Assistance Act (42 U.S.C. 11411 et seq.) is repealed.
(2) The table of contents in section 101(b) of that Act is amended
by striking the items relating to title V.
(3) This subsection shall be effective October 1, 1995.
(b) Authority To Transfer Surplus Real Property for Housing Use.--
Section 203 of the Federal Property and Administrative Services Act of
1949 (40 U.S.C. 484) is amended by adding at the end the following:
``(r) Under such regulations as the Administrator may prescribe,
and in consultation with appropriate local governmental authorities,
the Administrator may transfer to any nonprofit organization which
exists for the primary purpose of providing housing or housing
assistance for homeless individuals or families, such surplus real
property, including buildings, fixtures, and equipment situated
thereon, as is needed for housing use.
``(s)(1) Under such regulations as the Administrator may prescribe,
and in consultation with appropriate local governmental authorities,
the Administrator may transfer to any non-profit organization which
exists for the primary purpose of providing housing or housing
assistance for low-income individuals or families such surplus real
property, including buildings, fixtures, and equipment situated
thereon, as is needed for housing use.
``(2) In making transfers under this subsection, the Administrator
shall take such actions, which may include grant agreements with an
organization receiving a grant, as may be necessary to ensure that--
``(A) assistance provided under this subsection is used to
facilitate and encourage homeownership opportunities through
the construction of self-help housing, under terms which
require that the person receiving the assistance contribute a
significant amount of labor toward the construction; and
``(B) the dwellings constructed with property transferred
under this subsection shall be quality dwellings that comply
with local building and safety codes and standards and shall be
available at prices below the prevailing market prices.''.
TITLE VI--COMMITTEE ON INTERNATIONAL RELATIONS
Subtitle A--Recovery Of Costs Of Certain Health Care Services
SEC. 6001. RECOVERY OF COSTS OF HEALTH CARE SERVICES FOR PERSONNEL OF
THE FOREIGN SERVICE OF THE UNITED STATES AND OTHER
ELIGIBLE INDIVIDUALS.
(a) Authorities.--Section 904 of the Foreign Service Act of 1980
(22 U.S.C. 4084) is amended--
(1) in subsection (a) by--
(A) striking ``and'' before ``members of the
families of such members and employees''; and
(B) by inserting immediately before the period ``,
and for care provided abroad) such other persons as are
designated by the Secretary of State, except that such
persons shall be considered persons other than covered
beneficiaries for purposes of subsections (g) and
(h)'';
(2) in subsection (d) by inserting ``, subject to the
provisions of subsections (g) and (h)'' after ``treatment'';
and
(3) by adding the following new subsections:
``(g)(1) In the case of a person who is a covered beneficiary, the
Secretary of State is authorized to collect from a third-party payer
the reasonable costs incurred by the Department of State on behalf of
such person for health care services to the same extent that the
covered beneficiary would be eligible to receive reimbursement or
indemnification from the third-party payer for such costs.
``(2) If the insurance policy, plan, contract, or similar agreement
of that third-party payer includes a requirement for a deductible or
copayment by the beneficiary of the plan, then the Secretary of State
may collect from the third-party payer only the reasonable costs of the
care provided less the deductible or copayment amount.
``(3) A covered beneficiary shall not be required to pay any
deductible or copayment for health care services under this subsection.
``(4) No provision of any insurance, medical service, or health
plan contract or agreement having the effect of excluding from coverage
or limiting payment of charges for care in the following circumstances
shall operate to prevent collection by the Secretary of State under
paragraph (1)--
``(A) care provided directly or indirectly by a
governmental entity;
``(B) care provided to an individual who has not paid a
required deductible or copayment; or
``(C) care provided by a provider with which the third-
party payer has no participation agreement.
``(5) No law of any State, or of any political subdivision of a
State, and no provision of any contract or agreement shall operate to
prevent or hinder recovery or collection by the United States under
this section.
``(6) As to the authority provided in paragraph (1) of this
subsection--
``(A) the United States shall be subrogated to any right or
claim that the covered beneficiary may have against a third-
party payer;
``(B) the United States may institute and prosecute legal
proceedings against a third-party payer to enforce a right of
the United States under this subsection; and
``(C) the Secretary may compromise, settle, or waive a
claim of the United States under this subsection.
``(7) The Secretary shall prescribe regulations for the
administration of this subsection and subsection (h). Such regulations
shall provide for computation of the reasonable cost of health care
services.
``(8) Regulations prescribed under this subsection shall provide
that medical records of a covered beneficiary receiving health care
under this subsection shall be made available for inspection and review
by representatives of the payer from which collection by the United
States is sought for the sole purpose of permitting the third party to
verify--
``(A) that the care or services for which recovery or
collection is sought were furnished to the covered beneficiary;
and
``(B) that the provisions of such care or services to the
covered beneficiary meets criteria generally applicable under
the health plan contract involved, except that this paragraph
shall be subject to the provisions of paragraphs (2) and (4).
``(9) Amounts collected under this subsection or under subsection
(h) from a third party payer or from any other payer shall be deposited
in the Treasury as a miscellaneous offsetting receipt.
``(10) For purposes of this section--
``(A) the term `covered beneficiary' means an individual
eligible to receive health care under this section whose health
care costs are to be paid by a third-party payer under a
contractual agreement with such payer;
``(B) the term `services', as used in `health care
services' includes products; and
``(C) the term `third-party payer' means an entity that
provides a fee-for-service insurance policy, contract, or
similar agreement through the Federal Employees Health Benefit
program, under which the expenses of health care services for
individuals are paid.
``(h) In the case of a person, other than a covered beneficiary,
who receives health care services pursuant to this section, the
Secretary of State is authorized to collect from such person the
reasonable costs of health care services incurred by the Department of
State on behalf of such person. The United States shall have the same
rights against persons subject to the provisions of this subsection as
against third-party payers covered by subsection (g).''.
(b) Effective Date.--The authorities of this section shall be
effective beginning on the date of the enactment of this Act.
Subtitle B--Enactment Into Law of Division A of H.R. 1561
SEC. 6101. ENACTMENT INTO LAW OF DIVISION A OF H.R. 1561.
Division A of H.R. 1561, as passed the House of Representatives on
June 8, 1995 (relating to consolidation of foreign affairs agencies),
is hereby enacted into law.
Subtitle C--Cuban Liberty and Democratic Solidarity (LIBER- TAD) Act of
1995
SEC. 6201. SHORT TITLE.
This subtitle may be cited as the ``Cuban Liberty and Democratic
Solidarity (LIBERTAD) Act of 1995''.
SEC. 6202. FINDINGS.
The Congress makes the following findings:
(1) The economy of Cuba has experienced a decline of at
least 60 percent in the last 5 years as a result of--
(A) the end of its subsidization by the former
Soviet Union of between 5 billion and 6 billion dollars
annually;
(B) 36 years of Communist tyranny and economic
mismanagement by the Castro government;
(C) the extreme decline in trade between Cuba and
the countries of the former Soviet bloc; and
(D) the stated policy of the Russian Government and
the countries of the former Soviet bloc to conduct
economic relations with Cuba on strictly commercial
terms.
(2) At the same time, the welfare and health of the Cuban
people have substantially deteriorated as a result of this
economic decline and the refusal of the Castro regime to permit
free and fair democratic elections in Cuba.
(3) The Castro regime has made it abundantly clear that it
will not engage in any substantive political reforms that would
lead to democracy, a market economy, or an economic recovery.
(4) The repression of the Cuban people, including a ban on
free and fair democratic elections, and continuing violations
of fundamental human rights have isolated the Cuban regime as
the only completely nondemocratic government in the Western
Hemisphere.
(5) As long as free elections are not held in Cuba, the
economic condition of the country and the welfare of the Cuban
people will not improve in any significant way.
(6) The totalitarian nature of the Castro regime has
deprived the Cuban people of any peaceful means to improve
their condition and has led thousands of Cuban citizens to risk
or lose their lives in dangerous attempts to escape from Cuba
to freedom.
(7) Radio Marti and Television Marti have both been
effective vehicles for providing the people of Cuba with news
and information and have helped to bolster the morale of the
people of Cuba living under tyranny.
(8) The consistent policy of the United States towards Cuba
since the beginning of the Castro regime, carried out by both
Democratic and Republican administrations, has sought to keep
faith with the people of Cuba, and has been effective in
sanctioning the totalitarian Castro regime.
(9) The United States has shown a deep commitment, and
considers it a moral obligation, to promote and protect human
rights and fundamental freedoms as expressed in the Charter of
the United Nations and in the Universal Declaration of Human
Rights.
(10) The Congress has historically and consistently
manifested its solidarity and the solidarity of the American
people with the democratic aspirations of the Cuban people.
(11) The Cuban Democracy Act of 1992 calls upon the
President to encourage the governments of countries that
conduct trade with Cuba to restrict their trade and credit
relations with Cuba in a manner consistent with the purposes of
that Act.
(12) The 1992 FREEDOM Support Act requires that the
President, in providing economic assistance to Russia and the
emerging Eurasian democracies, take into account the extent to
which they are acting to ``terminate support for the communist
regime in Cuba, including removal of troops, closing military
facilities, and ceasing trade subsidies and economic, nuclear,
and other assistance''.
(13) The Cuban Government engages in the illegal
international narcotics trade and harbors fugitives from
justice in the United States.
(14) The Castro government threatens international peace
and security by engaging in acts of armed subversion and
terrorism such as the training and supplying of groups
dedicated to international violence.
(15) The Castro government has utilized from its inception
and continues to utilize torture in various forms (including by
psychiatry), as well as execution, exile, confiscation,
political imprisonment, and other forms of terror and
repression, as means of retaining power.
(16) Fidel Castro has defined democratic pluralism as
``pluralistic garbage'' and continues to make clear that he has
no intention of tolerating the democratization of Cuban
society.
(17) The Castro government holds innocent Cubans hostage in
Cuba by no fault of the hostages themselves solely because
relatives have escaped the country.
(18) Although a signatory state to the 1928 Inter-American
Convention on Asylum and the International Covenant on Civil
and Political Rights (which protects the right to leave one's
own country), Cuba nevertheless surrounds embassies in its
capital by armed forces to thwart the right of its citizens to
seek asylum and systematically denies that right to the Cuban
people, punishing them by imprisonment for seeking to leave the
country and killing them for attempting to do so (as
demonstrated in the case of the confirmed murder of over 40
men, women, and children who were seeking to leave Cuba on July
13, 1994).
(19) The Castro government continues to utilize blackmail,
such as the immigration crisis with which it threatened the
United States in the summer of 1994, and other unacceptable and
illegal forms of conduct to influence the actions of sovereign
states in the Western Hemisphere in violation of the Charter of
the Organization of American States and other international
agreements and international law.
(20) The United Nations Commission on Human Rights has
repeatedly reported on the unacceptable human rights situation
in Cuba and has taken the extraordinary step of appointing a
Special Rapporteur.
(21) The Cuban Government has consistently refused access
to the Special Rapporteur and formally expressed its decision
not to ``implement so much as one comma'' of the United Nations
Resolutions appointing the Rapporteur.
(22) The United Nations General Assembly passed Resolution
1992/70 on December 4, 1992, Resolution 1993/48/142 on December
20, 1993, and Resolution 1994/49/544 on October 19, 1994,
referencing the Special Rapporteur's reports to the United
Nations and condemning ``violations of human rights and
fundamental freedoms'' in Cuba.
(23) Article 39 of Chapter VII of the United Nations
Charter provides that the United Nations Security Council
``shall determine the existence of any threat to the peace,
breach of the peace, or act of aggression and shall make
recommendations, or decide what measures shall be taken . . .,
to maintain or restore international peace and security.''.
(24) The United Nations has determined that massive and
systematic violations of human rights may constitute a ``threat
to peace'' under Article 39 and has imposed sanctions due to
such violations of human rights in the cases of Rhodesia, South
Africa, Iraq, and the former Yugoslavia.
(25) In the case of Haiti, a neighbor of Cuba not as close
to the United States as Cuba, the United States led an effort
to obtain and did obtain a United Nations Security Council
embargo and blockade against that country due to the existence
of a military dictatorship in power less than 3 years.
(26) United Nations Security Council Resolution 940 of July
31, 1994, subsequently authorized the use of ``all necessary
means'' to restore the ``democratically elected government of
Haiti'', and the democratically elected government of Haiti was
restored to power on October 15, 1994.
(27) The Cuban people deserve to be assisted in a decisive
manner to end the tyranny that has oppressed them for 36 years
and the continued failure to do so constitutes ethically
improper conduct by the international community.
(28) For the past 36 years, the Cuban Government has posed
and continues to pose a national security threat to the United
States.
SEC. 6203. PURPOSES.
The purposes of this subtitle are as follows:
(1) To assist the Cuban people in regaining their freedom
and prosperity, as well as in joining the community of
democracies that are flourishing in the Western Hemisphere.
(2) To seek international sanctions against the Castro
government in Cuba.
(3) To encourage the holding of free and fair democratic
elections in Cuba, conducted under the supervision of
internationally recognized observers.
(4) To develop a plan for furnishing assistance to a
transition government and, subsequently, to a democratically
elected government when such governments meet the eligibility
requirements of this subtitle.
(5) To protect property rights abroad of United States
nationals.
(6) To provide for the continued national security of the
United States in the face of continuing threats from the Castro
government of terrorism, theft of property from United States
nationals, and domestic repression from which refugees flee to
United States shores.
SEC. 6204. DEFINITIONS.
As used in this subtitle, the following terms have the following
meanings:
(1) Appropriate congressional committees.--The term
``appropriate congressional committees'' means the Committee on
International Relations, the Committee on Ways and Means, and
the Committee on Appropriations of the House of Representatives
and the Committee on Foreign Relations, the Committee on
Finance, and the Committee on Appropriations of the Senate.
(2) Commercial activity.--The term ``commercial activity''
has the meaning given that term in section 1603(d) of title 28,
United States Code.
(3) Confiscated.--As used in parts 1 and 3, the term
``confiscated'' refers to--
(A) the nationalization, expropriation, or other
seizure by the Cuban Government of ownership or control
of property, on or after January 1, 1959--
(i) without the property having been
returned or adequate and effective compensation
provided; or
(ii) without the claim to the property
having been settled pursuant to an
international claims settlement agreement or
other mutually accepted settlement procedure;
and
(B) the repudiation by the Cuban Government of, the
default by the Cuban Government on, or the failure by
the Cuban Government to pay, on or after January 1, 1959--
(i) a debt of any enterprise which has been
nationalized, expropriated, or otherwise taken
by the Cuban Government;
(ii) a debt which is a charge on property
nationalized, expropriated, or otherwise taken
by the Cuban Government; or
(iii) a debt which was incurred by the
Cuban Government in satisfaction or settlement
of a confiscated property claim.
(4) Cuban government.--(A) The term ``Cuban Government''
includes the government of any political subdivision of Cuba,
and any agency or instrumentality of the Government of Cuba.
(B) For purposes of subparagraph (A), the term ``agency or
instrumentality of the Government of Cuba'' means an agency or
instrumentality of a foreign state as defined in section
1603(b) of title 28, United States Code, with ``Cuba''
substituted for ``a foreign state'' each place it appears in
such section.
(5) Democratically elected government in cuba.--The term
``democratically elected government in Cuba'' means a
government determined by the President to have met the
requirements of section 206.
(6) Economic embargo of cuba.--The term ``economic embargo
of Cuba'' refers to the economic embargo imposed against Cuba
pursuant to section 620(a) of the Foreign Assistance Act of
1961 (22 U.S.C. 2370(a)), section 5(b) of the Trading With the
Enemy Act (50 U.S.C. App. 5(b)), the International Emergency
Economic Powers Act (50 U.S.C. 1701 and following), and the
Export Administration Act of 1979 (50 U.S.C. App. 2401 and
following), as modified by the Cuban Democracy Act of 1992 (22
U.S.C. 6001 and following).
(7) Foreign national.--The term ``foreign national''
means--
(A) an alien; or
(B) any corporation, trust, partnership, or other
juridical entity not organized under the laws of the
United States, or of any State, the District of
Columbia, the Commonwealth of Puerto Rico, or any other
territory or possession of the United States.
(8) Knowingly.--The term ``knowingly'' means with knowledge
or having reason to know.
(9) Property.--(A) The term ``property'' means any property
(including patents, copyrights, trademarks, and any other form
of intellectual property), whether real, personal, or mixed,
and any present, future, or contingent right, security, or
other interest therein, including any leasehold interest.
(B) For purposes of part 3 of this subtitle, the term
``property'' shall not include real property used for
residential purposes unless, as of the date of the enactment of
this Act--
(i) the claim to the property is owned by a United
States national and the claim has been certified under
title V of the International Claims Settlement Act of
1949; or
(ii) the property is occupied by a member or
official of the Cuban Government or the ruling
political party in Cuba.
(10) Traffics.--(A) As used in part 3, a person or entity
``traffics'' in property if that person or entity knowingly and
intentionally--
(i) sells, transfers, distributes, dispenses,
brokers, manages, or otherwise disposes of confiscated
property, or purchases, leases, receives, possesses,
obtains control of, manages, uses, or otherwise
acquires or holds an interest in confiscated property,
(ii) engages in a commercial activity using or
otherwise benefiting from confiscated property, or
(iii) causes, directs, participates in, or profits
from, trafficking (as described in clauses (i) and
(ii)) by another person, or otherwise engages in
trafficking (as described in clauses (i) and (ii))
through another person,
without the authorization of the United States national who
holds a claim to the property.
(B) The term ``traffics'' does not include--
(i) the delivery of international telecommunication
signals to Cuba that are authorized by section 1705(e)
of the Cuban Democracy Act of 1992 (22 U.S.C. 6004(e));
or
(ii) the trading or holding of securities publicly
traded or held, unless the trading is with or by a
person determined by the Secretary of the Treasury to
be a specially designated national.
(11) Transition government in cuba.--The term ``transition
government in Cuba'' means a government determined by the
President to have met the requirements of section 6235.
(12) United states national.--The term ``United States
national'' means--
(A) any United States citizen; or
(B) any other legal entity which is organized under
the laws of the United States, or of any State, the
District of Columbia, the Commonwealth of Puerto Rico,
or any other territory or possession of the United
States, and which has its principal place of business in the United
States.
PART 1--SEEKING SANCTIONS AGAINST THE CASTRO GOVERNMENT
SEC. 6211. STATEMENT OF POLICY.
It is the sense of the Congress that--
(1) the acts of the Castro government, including its
massive, systematic, and extraordinary violations of human
rights, are a threat to international peace;
(2) the President should advocate, and should instruct the
United States Permanent Representative to the United Nations to
propose and seek, within the Security Council, a mandatory
international embargo against the totalitarian Cuban Government
pursuant to chapter VII of the Charter of the United Nations,
which is similar to measures taken by United States
representatives with respect to Haiti; and
(3) any resumption or commencement of efforts by any state
to make operational the nuclear facility at Cienfuegos, Cuba,
will have a detrimental impact on United States assistance to
and relations with that state.
SEC. 6212. ENFORCEMENT OF THE ECONOMIC EMBARGO OF CUBA.
(a) Policy.--(1) The Congress hereby reaffirms section 1704(a) of
the Cuban Democracy Act of 1992 that states the President should
encourage foreign countries to restrict trade and credit relations with
Cuba.
(2) The Congress further urges the President to take immediate
steps to apply the sanctions described in section 1704(b) of that Act
against countries assisting Cuba.
(b) Diplomatic Efforts.--The Secretary of State shall ensure that
United States diplomatic personnel abroad understand and, in their
contacts with foreign officials, are communicating the reasons for the
United States economic embargo of Cuba, and are urging foreign
governments to cooperate more effectively with the embargo.
(c) Existing Regulations.--The President should instruct the
Secretary of the Treasury and the Attorney General to enforce fully the
Cuban Assets Control Regulations set forth in part 515 of title 31,
Code of Federal Regulations.
(d) Trading With the Enemy Act.--
(1) Civil penalties.--Subsection (b) of section 16 of the
Trading With the Enemy Act (50 U.S.C. App. 16(b)) is amended to
read as follows:
``(b)(1) A civil penalty of not to exceed $50,000 may be imposed by
the Secretary of the Treasury on any person who violates any license,
order, rule, or regulation issued in compliance with the provisions of
this Act.
``(2) Any property, funds, securities, papers, or other articles or
documents, or any vessel, together with its tackle, apparel, furniture,
and equipment, that is the subject of a violation under paragraph (1)
shall, at the discretion of the Secretary of the Treasury, be forfeited
to the United States Government.
``(3) The penalties provided under this subsection may not be
imposed for--
``(A) news gathering, research, or the export or import of,
or transmission of, information or informational materials; or
``(B) clearly defined educational or religious activities,
or activities of recognized human rights organizations, that
are reasonably limited in frequency, duration, and number of
participants.
``(4) The penalties provided under this subsection may be imposed
only on the record after opportunity for an agency hearing in
accordance with sections 554 through 557 of title 5, United States
Code, with the right to prehearing discovery.
``(5) Judicial review of any penalty imposed under this subsection
may be had to the extent provided in section 702 of title 5, United
States Code.''.
(2) Forfeiture of property used in violation.--Section 16
of the Trading With the Enemy Act is further amended by
striking subsection (c).
(3) Clerical amendment.--Section 16 of the Trading With the
Enemy Act is further amended by inserting ``Sec. 16.'' before
``(a)''.
(e) Coverage of Debt-for-Equity Swaps by Economic Embargo of
Cuba.--Section 1704(b)(2) of the Cuban Democracy Act of 1992 (22 U.S.C.
6003(b)(2)) is amended--
(1) by striking ``and'' at the end of subparagraph (A);
(2) by redesignating subparagraph (B) as subparagraph (C);
and
(3) by inserting after subparagraph (A) the following new
subparagraph:
``(B) includes an exchange, reduction, or
forgiveness of Cuban debt owed to a foreign country in
return for a grant of an equity interest in a property,
investment, or operation of the Government of Cuba
(including the government of any political subdivision
of Cuba, and any agency or instrumentality of the
Government of Cuba) or of a Cuban national; and''; and
(4) by adding at the end the following flush sentence:
``As used in this paragraph, the term `agency or
instrumentality of the Government of Cuba' means an agency or
instrumentality of a foreign state as defined in section
1603(b) of title 28, United States Code, with `Cuba'
substituted for `a foreign state' each place it appears in such
section.''.
SEC. 6213. PROHIBITION AGAINST INDIRECT FINANCING OF THE CASTRO
DICTATORSHIP.
(a) Prohibition.--Notwithstanding any other provision of law, no
loan, credit, or other financing may be extended knowingly by a United
States national, permanent resident alien, or United States agency, to
a foreign national, United States national, or permanent resident
alien, in order to finance transactions involving any confiscated
property the claim to which is owned by a United States national as of
the date of the enactment of this Act.
(b) Termination of Prohibition.--The prohibition of subsection (a)
shall cease to apply on the date on which the economic embargo of Cuba
terminates under section 6235.
(c) Penalties.--Violations of subsection (a) shall be punishable by
the same penalties as are applicable to violations of the Cuban Assets
Control Regulations set forth in part 515 of title 31, Code of Federal
Regulations.
(d) Definitions.--As used in this section--
(1) the term ``permanent resident alien'' means an alien
admitted for permanent residence into the United States; and
(2) the term ``United States agency'' has the meaning given
the term ``agency'' in section 551(1) of title 5, United States
Code.
SEC. 6214. UNITED STATES OPPOSITION TO CUBAN MEMBERSHIP IN
INTERNATIONAL FINANCIAL INSTITUTIONS.
(a) Opposition to Cuban Membership in International Financial
Institutions.--(1) Until such time as the President determines that a
transition government in Cuba is in power, the Secretary of the
Treasury should instruct the United States executive director to each
international financial institution to use the voice and vote of the
United States to oppose the admission of Cuba as a member of such
institution.
(2) Once a transition government in Cuba is in power, the President
is encouraged to take steps to support the processing of Cuba's
application for membership in any financial institution subject to the
membership taking effect at such time as the President deems most
likely to facilitate the transition to a democratically elected
government in Cuba.
(b) Reduction in United States Payments to International Financial
Institutions.--If any international financial institution approves a
loan or other assistance to the Cuban Government over the opposition of
the United States, then the Secretary of the Treasury shall withhold
from payment to that institution an amount equal to the amount of the
loan or other assistance to the Cuban Government, with respect to each
of the following types of payment:
(1) The paid-in portion of the increase in capital stock of
the institution.
(2) The callable portion of the increase in capital stock
of the institution.
(c) Definition.--For purposes of this section, the term
``international financial institution'' means the International
Monetary Fund, the International Bank for Reconstruction and
Development, the International Development Association, the
International Finance Corporation, the Multilateral Investment Guaranty
Agency, and the Inter-American Development Bank.
SEC. 6215. UNITED STATES OPPOSITION TO ENDING THE SUSPENSION OF THE
GOVERNMENT OF CUBA FROM THE ORGANIZATION OF AMERICAN
STATES.
The President should instruct the United States Permanent
Representative to the Organization of American States to use the voice
and vote of the United States to oppose ending the suspension of the
Government of Cuba from the Organization until the President determines
under section 6233(c)(3) that a democratically elected government in
Cuba is in power.
SEC. 6216. ASSISTANCE BY THE INDEPENDENT STATES OF THE FORMER SOVIET
UNION FOR THE CUBAN GOVERNMENT.
(a) Reporting Requirement.--Not later than 90 days after the date
of the enactment of this Act, the President shall submit to the
appropriate congressional committees a report detailing progress
towards the withdrawal of personnel of any independent state of the
former Soviet Union (within the meaning of section 3 of the FREEDOM
Support Act (22 U.S.C. 5801)), including advisers, technicians, and
military personnel, from the Cienfuegos nuclear facility in Cuba.
(b) Criteria for Assistance.--Section 498A(a)(11) of the Foreign
Assistance Act of 1961 (22 U.S.C. 2295a(a)(11)) is amended by striking
``of military facilities'' and inserting ``military and intelligence
facilities, including the military and intelligence facilities at
Lourdes and Cienfuegos''.
(c) Ineligibility for Assistance.--(1) Section 498A(b) of that Act
(22 U.S.C. 2295a(b)) is amended--
(A) by striking ``or'' at the end of paragraph (4);
(B) by redesignating paragraph (5) as paragraph (6); and
(C) by inserting after paragraph (4) the following:
``(5) for the government of any independent state effective
30 days after the President has determined and certified to the
appropriate congressional committees (and Congress has not
enacted legislation disapproving the determination within that
30-day period) that such government is providing assistance
for, or engaging in nonmarket based trade (as defined in
section 498B(k)(3)) with, the Cuban Government; or''.
(2) Subsection (k) of section 498B of that Act (22 U.S.C.
2295b(k)), is amended by adding at the end the following:
``(3) Nonmarket based trade.--As used in section
498A(b)(5), the term `nonmarket based trade' includes exports,
imports, exchanges, or other arrangements that are provided for goods
and services (including oil and other petroleum products) on terms more
favorable than those generally available in applicable markets or for
comparable commodities, including--
``(A) exports to the Cuban Government on terms that
involve a grant, concessional price, guaranty,
insurance, or subsidy;
``(B) imports from the Cuban Government at
preferential tariff rates;
``(C) exchange arrangements that include advance
delivery of commodities, arrangements in which the
Cuban Government is not held accountable for
unfulfilled exchange contracts, and arrangements under
which Cuba does not pay appropriate transportation,
insurance, or finance costs; and
``(D) the exchange, reduction, or forgiveness of
Cuban debt in return for a grant by the Cuban
Government of an equity interest in a property,
investment, or operation of the Cuban Government or of
a Cuban national.
``(4) Cuban government.--(A) The term `Cuban Government'
includes the government of any political subdivision of Cuba,
and any agency or instrumentality of the Government of Cuba.
``(B) For purposes of subparagraph (A), the term `agency or
instrumentality of the Government of Cuba' means an agency or
instrumentality of a foreign state as defined in section
1603(b) of title 28, United States Code, with `Cuba'
substituted for `a foreign state' each place it appears in such
section.''.
(d) Facilities at Lourdes, Cuba.--(1) The Congress expresses its
strong disapproval of the extension by Russia of credits equivalent to
approximately $200,000,000 in support of the intelligence facility at
Lourdes, Cuba, in November 1994.
(2) Section 498A of the Foreign Assistance Act of 1961 (22 U.S.C.
2295a) is amended by adding at the end the following new subsection:
``(d) Reduction in Assistance for Support of Intelligence
Facilities in Cuba.--(1) Notwithstanding any other provision of law,
the President shall withhold from assistance provided, on or after the
date of the enactment of this subsection, for an independent state of
the former Soviet Union under this chapter an amount equal to the sum
of assistance and credits, if any, provided on or after such date by
such state in support of intelligence facilities in Cuba, including the
intelligence facility at Lourdes, Cuba.
``(2)(A) The President may waive the requirement of paragraph (1)
to withhold assistance if the President certifies to the appropriate
congressional committees that the provision of such assistance is
important to the national security of the United States, and, in the
case of such a certification made with respect to Russia, if the
President certifies that the Russian Government has assured the United
States Government that the Russian Government is not sharing
intelligence data collected at the Lourdes facility with officials or
agents of the Cuban Government.
``(B) At the time of a certification made with respect to Russia
pursuant to subparagraph (A), the President shall also submit to the
appropriate congressional committees a report describing the
intelligence activities of Russia in Cuba, including the purposes for
which the Lourdes facility is used by the Russian Government and the
extent to which the Russian Government provides payment or government
credits to the Cuban Government for the continued use of the Lourdes
facility.
``(C) The report required by subparagraph (B) may be submitted in
classified form.
``(D) For purposes of this paragraph, the term `appropriate
congressional committees' includes the Permanent Select Committee on
Intelligence of the House of Representatives and the Select Committee
on Intelligence of the Senate.
``(3) The requirement of paragraph (1) to withhold assistance shall
not apply with respect to--
``(A) assistance to meet urgent humanitarian needs,
including disaster and refugee relief;
``(B) democratic political reform and rule of law
activities;
``(C) technical assistance for safety upgrades of civilian
nuclear power plants;
``(D) the creation of private sector and nongovernmental
organizations that are independent of government control;
``(E) the development of a free market economic system; and
``(F) assistance for the purposes described in the
Cooperative Threat Reduction Act of 1993 (title XII of Public
Law 103-160).''.
SEC. 6217. TELEVISION BROADCASTING TO CUBA.
(a) Conversion to UHF.--The Director of the United States
Information Agency shall implement a conversion of television
broadcasting to Cuba under the Television Marti Service to ultra high
frequency (UHF) broadcasting.
(b) Periodic Reports.--Not later than 45 days after the date of the
enactment of this Act, and every three months thereafter until the
conversion described in subsection (a) is fully implemented, the
Director of the United States Information Agency shall submit a report
to the appropriate congressional committees on the progress made in
carrying out subsection (a).
(c) Termination of Broadcasting Authorities.--Upon transmittal of a
determination under section 6233(c)(3), the Television Broadcasting to
Cuba Act (22 U.S.C. 1465aa and following) and the Radio Broadcasting to
Cuba Act (22 U.S.C. 1465 and following) are repealed.
SEC. 6218. REPORTS ON ASSISTANCE AND COMMERCE RECEIVED BY CUBA FROM
OTHER FOREIGN COUNTRIES.
(a) Reports Required.--Not later than 90 days after the date of the
enactment of this Act, and every year thereafter, the President shall
submit a report to the appropriate congressional committees on
assistance and commerce received by Cuba from other foreign countries
during the preceding 12-month period.
(b) Contents of Reports.--Each report required by subsection (a)
shall, for the period covered by the report, contain the following, to
the extent such information is known:
(1) A description of all bilateral assistance provided to
Cuba by other foreign countries, including humanitarian
assistance.
(2) A description of Cuba's commerce with foreign
countries, including an identification of Cuba's trading
partners and the extent of such trade.
(3) A description of the joint ventures completed, or under
consideration, by foreign nationals involving facilities in
Cuba, including an identification of the location of the
facilities involved and a description of the terms of agreement
of the joint ventures and the names of the parties that are
involved.
(4) A determination whether or not any of the facilities
described in paragraph (3) is the subject of a claim by a
United States national.
(5) A determination of the amount of Cuban debt owed to
each foreign country, including--
(A) the amount of debt exchanged, forgiven, or
reduced under the terms of each investment or operation
in Cuba involving foreign nationals; and
(B) the amount of debt owed to the foreign country
that has been exchanged, reduced, or forgiven in return
for a grant by the Cuban Government of an equity
interest in a property, investment, or operation of the
Cuban Government or of a Cuban national.
(6) A description of the steps taken to ensure that raw
materials and semifinished or finished goods produced by
facilities in Cuba involving foreign nationals do not enter the
United States market, either directly or through third
countries or parties.
(7) An identification of countries that purchase, or have
purchased, arms or military supplies from the Cuban Government
or that otherwise have entered into agreements with the Cuban
Government that have a military application, including--
(A) a description of the military supplies,
equipment, or other materiel sold, bartered, or
exchanged between the Cuban Government and such
countries;
(B) a listing of the goods, services, credits, or
other consideration received by the Cuban Government in
exchange for military supplies, equipment, or materiel;
and
(C) the terms or conditions of any such agreement.
SEC. 6219. AUTHORIZATION OF SUPPORT FOR DEMOCRATIC AND HUMAN RIGHTS
GROUPS AND INTERNATIONAL OBSERVERS.
(a) Authorization.--Notwithstanding any other provision of law,
except for section 634A of the Foreign Assistance Act of 1961 (22
U.S.C. 2394-1) and comparable notification requirements contained in
any Act making appropriations for foreign operations, export financing,
and related programs, the President is authorized to furnish assistance
and provide other support for individuals and independent
nongovernmental organizations to support democracy-building efforts for
Cuba, including the following:
(1) Published and informational matter, such as books,
videos, and cassettes, on transitions to democracy, human
rights, and market economies, to be made available to
independent democratic groups in Cuba.
(2) Humanitarian assistance to victims of political
repression, and their families.
(3) Support for democratic and human rights groups in Cuba.
(4) Support for visits and permanent deployment of
independent international human rights monitors in Cuba.
(b) OAS Emergency Fund.--(1) The President shall take the necessary
steps to encourage the Organization of American States to create a
special emergency fund for the explicit purpose of deploying human
rights observers, election support, and election observation in Cuba.
(2) The President should instruct the United States Permanent
Representative to the Organization of American States to encourage
other member states of the Organization to join in calling for the
Cuban Government to allow the immediate deployment of independent human
rights monitors of the Organization throughout Cuba and on-site visits
to Cuba by the Inter-American Commission on Human Rights.
(3) Notwithstanding section 307 of the Foreign Assistance Act of
1961 (22 U.S.C. 2227) or any other provision of law limiting the United
States proportionate share of assistance to Cuba by any international
organization, the President should provide not less than $5,000,000 of
the voluntary contributions of the United States to the Organization of
American States as of the date of the enactment of this Act solely for
the purposes of the special fund referred to in paragraph (1).
SEC. 6220. WITHHOLDING OF FOREIGN ASSISTANCE FROM COUNTRIES SUPPORTING
NUCLEAR PLANT IN CUBA.
(a) Findings.--The Congress makes the following findings:
(1) President Clinton stated in April 1993 that ``the
United States opposes the construction of the Juragua nuclear
power plant because of our concerns about Cuba's ability to
ensure the safe operation of the facility and because of Cuba's
refusal to sign the Nuclear Non-Proliferation Treaty or ratify
the Treaty of Tlatelolco.''.
(2) Cuba has not signed the Treaty on the Non-Proliferation
of Nuclear Weapons or ratified the Treaty of Tlatelolco, the
latter of which establishes Latin America and the Caribbean as
a nuclear weapons-free zone.
(3) The State Department, the Nuclear Regulatory
Commission, and the Department of Energy have expressed
concerns about the construction and operation of Cuba's nuclear
reactors.
(4) In a September 1992 report to Congress, the General
Accounting Office outlined concerns among nuclear energy
experts about deficiencies in the nuclear plant project in
Juragua, near Cienfuegos, Cuba, including--
(A) a lack in Cuba of a nuclear regulatory
structure;
(B) the absence in Cuba of an adequate
infrastructure to ensure the plant's safe operation and
requisite maintenance;
(C) the inadequacy of training of plant operators;
(D) reports by a former technician from Cuba who,
by examining with x-rays weld sites believed to be part
of the auxiliary plumbing system for the plant, found
that 10 to 15 percent of those sites were defective;
(E) since September 5, 1992, when construction on
the plant was halted, the prolonged exposure to the
elements, including corrosive salt water vapor, of the
primary reactor components; and
(F) the possible inadequacy of the upper portion of
the reactors' dome retention capability to withstand
only 7 pounds of pressure per square inch, given that
normal atmospheric pressure is 32 pounds per square
inch and United States reactors are designed to
accommodate pressures of 50 pounds per square inch.
(5) The United States Geological Survey claims that it had
difficulty determining answers to specific questions regarding
earthquake activity in the area near Cienfuegos because the
Cuban Government was not forthcoming with information.
(6) The Geological Survey has indicated that the Caribbean
plate, a geological formation near the south coast of Cuba, may
pose seismic risks to Cuba and the site of the power plant, and
may produce large to moderate earthquakes.
(7) On May 25, 1992, the Caribbean plate produced an
earthquake numbering 7.0 on the Richter scale.
(8) According to a study by the National Oceanic and
Atmospheric Administration, summer winds could carry
radioactive pollutants from a nuclear accident at the power
plant throughout all of Florida and parts of the States on the
gulf coast as far as Texas, and northern winds could carry the
pollutants as far northeast as Virginia and Washington, D.C.
(9) The Cuban Government, under dictator Fidel Castro, in
1962 advocated the Soviets' launching of nuclear missiles to
the United States, which represented a direct and dangerous
provocation of the United States and brought the world to the
brink of a nuclear conflict.
(10) Fidel Castro over the years has consistently issued
threats against the United States Government, most recently
that he would unleash another perilous mass migration from Cuba
upon the enactment of this Act.
(11) Despite the various concerns about the plant's safety
and operational problems, a feasibility study is being
conducted that would establish a support group to include
Russia, Cuba, and third countries with the objective of
completing and operating the plant.
(b) Withholding of Foreign Assistance.--
(1) In general.--Notwithstanding any other provision of
law, the President shall withhold from assistance allocated, on
or after the date of the enactment of this Act, for any country
an amount equal to the sum of assistance and credits, if any,
provided on or after such date of enactment by that country or
any entity in that country in support of the completion of the
Cuban nuclear facility at Juragua, near Cienfuegos, Cuba.
(2) Exceptions.--The requirement of paragraph (1) to
withhold assistance shall not apply with respect to--
(A) assistance to meet urgent humanitarian needs,
including disaster and refugee relief;
(B) democratic political reform and rule of law
activities;
(C) the creation of private sector and
nongovernmental organizations that are independent of
government control;
(D) the development of a free market economic
system; and
(E) assistance for the purposes described in the
Cooperative Threat Reduction Act of 1993 (title XII of
Public Law 103-160).
(3) Definition.--As used in paragraph (1), the term
``assistance'' means assistance under the Foreign Assistance
Act of 1961, credits, sales, and guarantees of extensions of
credit under the Arms Export Control Act, assistance under
titles I and III of the Agricultural Trade Development and
Assistance Act of 1954, assistance under the FREEDOM Support
Act of 1992, and any other program of assistance or credits
provided by the United States to other countries under other
provisions of law, except that the term ``assistance'' does not
include humanitarian assistance, including disaster relief
assistance.
SEC. 6221. EXPULSION OF CRIMINALS FROM CUBA.
The President shall instruct all United States Government officials
who engage in official conduct with the Cuban Government to raise on a
regular basis the extradition of or rendering to the United States all
persons residing in Cuba who are sought by the United States Department
of Justice for crimes committed in the United States.
PART 2--ASSISTANCE TO A FREE AND INDEPENDENT CUBA
SEC. 6231. POLICY TOWARD A TRANSITION GOVERNMENT AND A DEMOCRATICALLY
ELECTED GOVERNMENT IN CUBA.
The policy of the United States is as follows:
(1) To support the self-determination of the Cuban people.
(2) To recognize that the self-determination of the Cuban
people is a sovereign and national right of the citizens of
Cuba which must be exercised free of interference by the
government of any other country.
(3) To encourage the Cuban people to empower themselves
with a government which reflects the self-determination of the
Cuban people.
(4) To recognize the potential for a difficult transition
from the current regime in Cuba that may result from the
initiatives taken by the Cuban people for self-determination in
response to the intransigence of the Castro regime in not
allowing any substantive political or economic reforms, and to
be prepared to provide the Cuban people with humanitarian,
developmental, and other economic assistance.
(5) In solidarity with the Cuban people, to provide
appropriate forms of assistance--
(A) to a transition government in Cuba;
(B) to facilitate the rapid movement from such a
transition government to a democratically elected
government in Cuba that results from an expression of
the self-determination of the Cuban people; and
(C) to support such a democratically elected
government.
(6) Through such assistance, to facilitate a peaceful
transition to representative democracy and a market economy in
Cuba and to consolidate democracy in Cuba.
(7) To deliver such assistance to the Cuban people only
through a transition government in Cuba, through a
democratically elected government in Cuba, through United
States Government organizations, or through United States,
international, or indigenous nongovernmental organizations.
(8) To encourage other countries and multilateral
organizations to provide similar assistance, and to work
cooperatively with such countries and organizations to
coordinate such assistance.
(9) To ensure that appropriate assistance is rapidly
provided and distributed to the people of Cuba upon the
institution of a transition government in Cuba.
(10) Not to provide favorable treatment or influence on
behalf of any individual or entity in the selection by the
Cuban people of their future government.
(11) To assist a transition government in Cuba and a
democratically elected government in Cuba to prepare the Cuban
military forces for an appropriate role in a democracy.
(12) To be prepared to enter into negotiations with a
democratically elected government in Cuba either to return the
United States Naval Base at Guantanamo to Cuba or to
renegotiate the present agreement under mutually agreeable
terms.
(13) To consider the restoration of diplomatic recognition
and support the reintegration of the Cuban Government into
Inter-American organizations when the President determines that
there exists a democratically elected government in Cuba.
(14) To take steps to remove the economic embargo of Cuba
when the President determines that a transition to a
democratically elected government in Cuba has begun.
(15) To assist a democratically elected government in Cuba
to strengthen and stabilize its national currency.
(16) To pursue trade relations with a free, democratic, and
independent Cuba.
SEC. 6232. ASSISTANCE FOR THE CUBAN PEOPLE.
(a) Authorization.--
(1) In general.--The President shall develop a plan for
providing economic assistance to Cuba at such time as the
President determines that a transition government or a
democratically elected government in Cuba (as determined under
section 6233(c)) is in power.
(2) Effect on other laws.--Assistance may be provided under
this section subject to an authorization of appropriations and
subject to the availability of appropriations.
(b) Plan for Assistance.--
(1) Development of plan.--The President shall develop a
plan for providing assistance under this section--
(A) to Cuba when a transition government in Cuba is
in power; and
(B) to Cuba when a democratically elected
government in Cuba is in power.
(2) Types of assistance.--Assistance under the plan
developed under paragraph (1) may, subject to an authorization
of appropriations and subject to the availability of
appropriations, include the following:
(A) Transition government.--(i) Except as provided
in clause (ii), assistance to Cuba under a transition
government shall, subject to an authorization of
appropriations and subject to the availability of
appropriations, be limited to--
(I) such food, medicine, medical supplies
and equipment, and assistance to meet emergency
energy needs, as is necessary to meet the basic
human needs of the Cuban people; and
(II) assistance described in subparagraph
(C).
(ii) Assistance provided only after the President
certifies to the appropriate congressional committees,
in accordance with procedures applicable to
reprogramming notifications under section 634A of the
Foreign Assistance Act of 1961, that such assistance is
essential to the successful completion of the
transition to democracy.
(iii) Only after a transition government in Cuba is
in power, remittances by individuals to their relatives
of cash or goods, as well as freedom to travel to visit
them without any restrictions, shall be permitted.
(B) Democratically elected government.--Assistance
to a democratically elected government in Cuba may,
subject to an authorization of appropriations and
subject to the availability of appropriations, consist
of additional economic assistance, together with
assistance described in subparagraph (C). Such economic
assistance may include--
(i) assistance under chapter 1 of part I
(relating to development assistance), and
chapter 4 of part II (relating to the economic
support fund), of the Foreign Assistance Act of
1961;
(ii) assistance under the Agricultural
Trade Development and Assistance Act of 1954;
(iii) financing, guarantees, and other
forms of assistance provided by the Export-
Import Bank of the United States;
(iv) financial support provided by the
Overseas Private Investment Corporation for
investment projects in Cuba;
(v) assistance provided by the Trade and
Development Agency;
(vi) Peace Corps programs; and
(vii) other appropriate assistance to carry
out the policy of section 6231.
(C) Military adjustment assistance.--Assistance to
a transition government in Cuba and to a democratically
elected government in Cuba shall also include assistance in preparing
the Cuban military forces to adjust to an appropriate role in a
democracy.
(c) Strategy for Distribution.--The plan developed under subsection
(b) shall include a strategy for distributing assistance under the
plan.
(d) Distribution.--Assistance under the plan developed under
subsection (b) shall be provided through United States Government
organizations and nongovernmental organizations and private and
voluntary organizations, whether within or outside the United States,
including humanitarian, educational, labor, and private sector
organizations.
(e) International Efforts.--The President shall take the necessary
steps--
(1) to seek to obtain the agreement of other countries and
of international financial institutions and multilateral
organizations to provide to a transition government in Cuba,
and to a democratically elected government in Cuba, assistance
comparable to that provided by the United States under this
subtitle; and
(2) to work with such countries, institutions, and
organizations to coordinate all such assistance programs.
(f) Communication With the Cuban People.--The President shall take
the necessary steps to communicate to the Cuban people the plan for
assistance developed under this section.
(g) Report to Congress.--Not later than 180 days after the date of
the enactment of this Act, the President shall transmit to the
appropriate congressional committees a report describing in detail the
plan developed under this section.
(h) Trade and Investment Relations.--
(1) Report to congress.--The President, following the
transmittal to the Congress of a determination under section
6233(c)(3) that a democratically elected government in Cuba is
in power, shall submit to the appropriate congressional
committees a report that describes--
(A) acts, policies, and practices that constitute
significant barriers to, or distortions of, United
States trade in goods or services or foreign direct
investment with respect to Cuba;
(B) policy objectives of the United States
regarding trade relations with a democratically elected
government in Cuba, and the reasons therefor, including
possible--
(i) reciprocal extension of
nondiscriminatory trade treatment (most-
favored- nation treatment);
(ii) designation of Cuba as a beneficiary
developing country under title V of the Trade
Act of 1974 (relating to the Generalized System
of Preferences) or as a beneficiary country
under the Caribbean Basin Economic Recovery
Act, and the implications of such designation
with respect to trade with any other country
that is such a beneficiary developing country
or beneficiary country or is a party to the North American Free Trade
Agreement; and
(iii) negotiations regarding free trade,
including the accession of Cuba to the North
American Free Trade Agreement;
(C) specific trade negotiating objectives of the
United States with respect to Cuba, including the
objectives described in section 108(b)(5) of the North
American Free Trade Agreement Implementation Act (19
U.S.C. 3317(b)(5)); and
(D) actions proposed or anticipated to be
undertaken, and any proposed legislation necessary or
appropriate, to achieve any of such policy and
negotiating objectives.
(2) Consultations.--The President shall consult with the
appropriate congressional committees and shall seek advice from
the appropriate advisory committees established under section
135 of the Trade Act of 1974 regarding the policy and
negotiating objectives and the legislative proposals described
in paragraph (1).
SEC. 6233. COORDINATION OF ASSISTANCE PROGRAM; IMPLEMENTATION AND
REPORTS TO CONGRESS; REPROGRAMMING.
(a) Coordinating Official.--The President shall designate a
coordinating official who shall be responsible for--
(1) implementing the strategy for distributing assistance
described in section 6232(b);
(2) ensuring the speedy and efficient distribution of such
assistance; and
(3) ensuring coordination among, and appropriate oversight
by, the agencies of the United States that provide assistance
described in section 6232(b), including resolving any disputes
among such agencies.
(b) United States-Cuba Council.--Upon making a determination under
subsection (c)(3) that a democratically elected government in Cuba is
in power, the President, after consultation with the coordinating
official, is authorized to designate a United States-Cuba council--
(1) to ensure coordination between the United States
Government and the private sector in responding to change in
Cuba, and in promoting market-based development in Cuba; and
(2) to establish periodic meetings between representatives
of the United States and Cuban private sectors for the purpose
of facilitating bilateral trade.
(c) Implementation of Plan; Reports to Congress.--
(1) Implementation with respect to transition government.--
Upon making a determination that a transition government in
Cuba is in power, the President shall transmit that
determination to the appropriate congressional committees and
shall, subject to an authorization of appropriations and
subject to the availability of appropriations, commence the
delivery and distribution of assistance to such transition
government under the plan developed under section 6232(b).
(2) Reports to congress.--(A) The President shall transmit
to the appropriate congressional committees a report setting
forth the strategy for providing assistance described in
section 6232(b)(2) (A) and (C) to the transition government in
Cuba under the plan of assistance developed under section
6232(b), the types of such assistance, and the extent to which
such assistance has been distributed in accordance with the
plan.
(B) The President shall transmit the report not later than
90 days after making the determination referred to in paragraph
(1), except that the President shall transmit the report in
preliminary form not later than 15 days after making that
determination.
(3) Implementation with respect to democratically elected
government.--The President shall, upon determining that a
democratically elected government in Cuba is in power, submit
that determination to the appropriate congressional committees
and shall, subject to an authorization of appropriations and
subject to the availability of appropriations, commence the
delivery and distribution of assistance to such democratically
elected government under the plan developed under section
6232(b).
(4) Annual reports to congress.--Not later than 60 days
after the end of each fiscal year, the President shall transmit
to the appropriate congressional committees a report on the
assistance provided under the plan developed under section
6232(b), including a description of each type of assistance,
the amounts expended for such assistance, and a description of
the assistance to be provided under the plan in the current
fiscal year.
(d) Reprogramming.--Any changes in the assistance to be provided
under the plan developed under section 6232(b) may not be made unless
the President notifies the appropriate congressional committees at
least 15 days in advance in accordance with the procedures applicable
to reprogramming notifications under section 634A of the Foreign
Assistance Act of 1961 (22 U.S.C. 2394-1).
SEC. 6234. TERMINATION OF THE ECONOMIC EMBARGO OF CUBA.
(a) Presidential Actions.--Upon submitting a determination to the
appropriate congressional committees under section 6233(c)(1) that a
transition government in Cuba is in power, the President, after
consulting with the Congress, is authorized to take steps to suspend
the economic embargo of Cuba to the extent that such action contributes
to a stable foundation for a democratically elected government in Cuba.
(b) Suspension of Certain Provisions of Law.--In carrying out
subsection (a), the President may suspend the enforcement of--
(1) section 620(a) of the Foreign Assistance Act of 1961
(22 U.S.C. 2370(a));
(2) section 620(f) of the Foreign Assistance Act of 1961
(22 U.S.C. 2370(f)) with regard to the ``Republic of Cuba'';
(3) sections 1704, 1705(d), and 1706 of the Cuban Democracy
Act (22 U.S.C. 6003, 6004(d), 6005);
(4) section 902(c) of the Food Security Act of 1985; and
(5) the prohibitions on transactions described in part 515
of title 31, Code of Federal Regulations.
(c) Additional Presidential Actions.--Upon submitting a
determination to the appropriate congressional committees under section
6233(c)(3) that a democratically elected government in Cuba is in
power, the President shall take steps to terminate the economic embargo
of Cuba.
(d) Conforming Amendments.--On the date on which the President
submits a determination under section 6233(c)(3)--
(1) section 620(a) of the Foreign Assistance Act of 1961
(22 U.S.C. 2370(a)) is repealed;
(2) section 620(f) of the Foreign Assistance Act of 1961
(22 U.S.C. 2370(f)) is amended by striking ``Republic of
Cuba'';
(3) sections 1704, 1705(d), and 1706 of the Cuban Democracy
Act of 1992 (22 U.S.C. 6003, 6004(d), and 6005) are repealed;
and
(4) section 902(c) of the Food Security Act of 1985 is
repealed.
(e) Review of Suspension of Economic Embargo.--
(1) Review.--If the President takes action under subsection
(a) to suspend the economic embargo of Cuba, the President
shall immediately so notify the Congress. The President shall
report to the Congress no less frequently than every 6 months
thereafter, until he submits a determination under section
6233(c)(3) that a democratically elected government in Cuba is
in power, on the progress being made by Cuba toward the
establishment of such a democratically elected government. The
action of the President under subsection (a) shall cease to be
effective upon the enactment of a joint resolution described in
paragraph (2).
(2) Joint resolutions.--For purposes of this subsection,
the term ``joint resolution'' means only a joint resolution of
the 2 Houses of Congress, the matter after the resolving clause
of which is as follows: ``That the Congress disapproves the
action of the President under section 6234(a) of the Cuban
Liberty and Democratic Solidarity (LIBERTAD) Act of 1995 to
suspend the economic embargo of Cuba, notice of which was
submitted to the Congress on ____.'', with the blank space
being filled with the appropriate date.
(3) Referral to committees.--Joint resolutions introduced
in the House of Representatives shall be referred to the
Committee on International Relations and joint resolutions
introduced in the Senate shall be referred to the Committee on
Foreign Relations.
(4) Procedures.--(A) Any joint resolution shall be
considered in the Senate in accordance with the provisions of
section 601(b) of the International Security Assistance and
Arms Export Control Act of 1976.
(B) For the purpose of expediting the consideration and
enactment of joint resolutions, a motion to proceed to the
consideration of any joint resolution after it has been
reported by the appropriate committee shall be treated as
highly privileged in the House of Representatives.
(C) Not more than 1 joint resolution may be considered in
the House of Representatives and the Senate in the 6-month
period beginning on the date on which the President notifies
the Congress under paragraph (1) of the action taken under
subsection (a), and in each 6-month period thereafter.
SEC. 6235. REQUIREMENTS FOR A TRANSITION GOVERNMENT.
For purposes of this subtitle, a transition government in Cuba is a
government in Cuba which--
(1) is demonstrably in transition from communist
totalitarian dictatorship to representative democracy;
(2) has recognized the right to independent political
activity and association;
(3) has released all political prisoners and allowed for
investigations of Cuban prisons by appropriate international
human rights organizations;
(4) has ceased any interference with Radio or Television
Marti broadcasts;
(5) makes public commitments to and is making demonstrable
progress in--
(A) establishing an independent judiciary;
(B) dissolving the present Department of State
Security in the Cuban Ministry of the Interior,
including the Committees for the Defense of the
Revolution and the Rapid Response Brigades;
(C) respecting internationally recognized human
rights and basic freedoms as set forth in the Universal
Declaration of Human Rights, to which Cuba is a
signatory nation;
(D) effectively guaranteeing the rights of free
speech and freedom of the press;
(E) organizing free and fair elections for a new
government--
(i) to be held in a timely manner within a
period not to exceed 1 year after the
transition government assumes power;
(ii) with the participation of multiple
independent political parties that have full
access to the media on an equal basis,
including (in the case of radio, television, or
other telecommunications media) in terms of
allotments of time for such access and the
times of day such allotments are given; and
(iii) to be conducted under the supervision
of internationally recognized observers, such
as the Organization of American States, the
United Nations, and other elections monitors;
(F) assuring the right to private property;
(G) taking appropriate steps to return to United
States citizens (and entities which are 50 percent or
more beneficially owned by United States citizens)
property taken by the Cuban Government from such
citizens and entities on or after January 1, 1959, or
to provide equitable compensation to such citizens and
entities for such property;
(H) granting permits to privately owned
telecommunications and media companies to operate in
Cuba; and
(I) allowing the establishment of independent trade
unions as set forth in conventions 87 and 98 of the
International Labor Organization, and allowing the
establishment of independent social, economic, and
political associations;
(6) does not include Fidel Castro or Raul Castro;
(7) has given adequate assurances that it will allow the
speedy and efficient distribution of assistance to the Cuban
people;
(8) permits the deployment throughout Cuba of independent
and unfettered international human rights monitors; and
(9) has extradited or otherwise rendered to the United
States all persons sought by the United States Department of
Justice for crimes committed in the United States.
SEC. 6236. REQUIREMENTS FOR A DEMOCRATICALLY ELECTED GOVERNMENT.
For purposes of this subtitle, a democratically elected government
in Cuba, in addition to continuing to comply with the requirements of
section 6235, is a government in Cuba which--
(1) results from free and fair elections conducted under
the supervision of internationally recognized observers;
(2) has permitted opposition parties ample time to organize
and campaign for such elections, and has permitted full access
to the media to all candidates in the elections;
(3) is showing respect for the basic civil liberties and
human rights of the citizens of Cuba;
(4) has made demonstrable progress in establishing an
independent judiciary;
(5) is substantially moving toward a market-oriented
economic system;
(6) is committed to making constitutional changes that
would ensure regular free and fair elections that meet the
requirements of paragraph (2); and
(7) has made demonstrable progress in returning to United
States citizens (and entities which are 50 percent or more
beneficially owned by United States citizens) property taken by
the Cuban Government from such citizens and entities on or
after January 1, 1959, or providing full compensation for such
property in accordance with international law standards and
practice.
PART 3--PROTECTION OF PROPERTY RIGHTS OF UNITED STATES NATIONALS
AGAINST CONFISCATORY TAKINGS BY THE CASTRO REGIME
SEC. 6251. STATEMENT OF POLICY.
The Congress makes the following findings:
(1) The right of individuals to hold and enjoy property is
a fundamental right recognized by the United States
Constitution and international human rights law, including the
Universal Declaration of Human Rights.
(2) The illegal confiscation or taking of property by
governments, and the acquiescence of governments in the
confiscation of property by their citizens, undermines the
comity among nations, the free flow of commerce, and economic
development.
(3) It is in the interest of all nations to respect equally
the property rights of their citizens and nationals of other
countries.
(4) Nations that provide an effective mechanism for prompt,
adequate, and fair compensation for the confiscation of private
property will continue to have the support of the United
States.
(5) The United States Government has an obligation to its
citizens to provide protection against illegal confiscation by
foreign nations and their citizens, including the provision of
private remedies.
(6) Nations that illegally confiscate private property
should not be immune to another nation's laws whose purpose is
to protect against the confiscation of lawfully acquired
property by its citizens.
(7) Trafficking in illegally acquired property is a crime
under the laws of the United States and other nations, yet this
same activity is allowed under international law.
(8) International law, by not providing effective remedies,
condones the illegal confiscation of property and allows for
the unjust enrichment from the use of confiscated property by
governments and private entities at the expense of those who
hold legal claim to the property.
(9) The development of an international mechanism
sanctioning those governments and private entities that
confiscate and unjustly use private property so confiscated
should be a priority objective of United States foreign policy.
SEC. 6252. LIABILITY FOR TRAFFICKING IN PROPERTY CONFISCATED FROM
UNITED STATES NATIONALS.
(a) Civil Remedy.--
(1) Liability for trafficking.--(A) Except as provided in
paragraphs (3) and (4), any person, including any agency or
instrumentality of a foreign state in the conduct of a
commercial activity, that, after the end of the 6-month period
beginning on the date of the enactment of this Act, traffics in
confiscated property shall be liable to any United States
national who owns the claim to such property for money damages
in an amount equal to the sum of--
(i) the amount which is the greater of--
(I) the amount, if any, certified to the
claimant by the Foreign Claims Settlement
Commission under the International Claims
Settlement Act of 1949, plus interest;
(II) the amount determined under section
6253(a)(2), plus interest; or
(III) the fair market value of that
property, calculated as being the then current
value of the property, or the value of the
property when confiscated plus interest,
whichever is greater; and
(ii) reasonable costs and attorneys' fees.
(B) Interest under subparagraph (A)(i) shall be at the rate
set forth in section 1961 of title 28, United States Code,
computed by the court from the date of the confiscation of the
property involved to the date on which the action is brought
under this subsection.
(2) Presumption in favor of certified claims.--There shall
be a presumption that the amount for which a person, including
any agency or instrumentality of a foreign state in the conduct
of a commercial activity, is liable under clause (i) of
paragraph (1)(A) is the amount that is certified under
subclause (I) of that clause. The presumption shall be
rebuttable by clear and convincing evidence that the amount
described in subclause (II) or (III) of that clause is the
appropriate amount of liability under that clause.
(3) Increased liability for prior notice.--Except as
provided in paragraph (4), any person, including any agency or
instrumentality of a foreign state in the conduct of a
commercial activity, that traffics in confiscated property
after having received--
(A) notice of a claim to ownership of the property
by a United States national who owns a claim to the
confiscated property, and
(B) notice of the provisions of this section,
shall be liable to that United States national for money
damages in an amount which is the sum of the amount equal to
the amount determined under paragraph (1)(A)(ii) plus triple
the amount determined applicable under subclause (I), (II), or
(III) of paragraph (1)(A)(i).
(4) Applicability.--(A) Except as otherwise provided in
this paragraph, actions may be brought under paragraph (1) with
respect to property confiscated before, on, or after the date
of the enactment of this Act.
(B) In the case of property confiscated before the date of
the enactment of this Act, no United States national may bring
an action under this section unless such national acquired
ownership of the claim to the confiscated property before such
date.
(C) In the case of property confiscated on or after the
date of the enactment of this Act, no United States national
who acquired ownership of a claim to confiscated property by
assignment for value after such date of enactment may bring an
action on the claim under this section.
(5) Treatment of certain actions.--(A) In the case of any
action brought under this section by a United States national
who was eligible to file the underlying claim in the action
with the Foreign Claims Settlement Commission under title V of
the International Claims Settlement Act of 1949 but did not so
file the claim, the court may hear the case only if the court
determines that the United States national had good cause for
not filing the claim.
(B) In the case of any action brought under this section by
a United States national whose claim in the action was timely
filed with the Foreign Claims Settlement Commission under title
V of the International Claims Settlement Act of 1949 but was
denied by the Commission, the court may assess the basis for
the denial and may accept the findings of the Commission on the
claim as conclusive in the action under this section unless
good cause justifies another result.
(6) Inapplicability of act of state doctrine.--No court of
the United States shall decline, based upon the act of state
doctrine, to make a determination on the merits in an action
brought under paragraph (1).
(b) Definition.--As used in this subsection, the term ``agency or
instrumentality of a foreign state'' has the meaning given that term in
section 1603(b) of title 28, United States Code.
(c) Jurisdiction.--
(1) In general.--Chapter 85 of title 28, United States
Code, is amended by inserting after section 1331 the following
new section:
``Sec. 1331a. Civil actions involving confiscated property
``The district courts shall have exclusive jurisdiction of any
action brought under section 6252 of the Cuban Liberty and Democratic
Solidarity (LIBERTAD) Act of 1995, regardless of the amount in
controversy.''.
(2) Conforming amendment.--The table of sections for
chapter 85 of title 28, United States Code, is amended by
inserting after the item relating to section 1331 the
following:
``1331a. Civil actions involving confiscated property.''.
(d) Certain Property Immune From Execution.--Section 1611 of title
28, United States Code, is amended by adding at the end the following:
``(c) Notwithstanding the provisions of section 1610 of this
chapter, the property of a foreign state shall be immune from
attachment and from execution in an action brought under section 6252
of the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1995
to the extent the property is a facility or installation used by an
accredited diplomatic mission for official purposes.''.
(e) Election of Remedies.--
(1) Election.--Subject to paragraph (2)--
(A) any United States national that brings an
action under this section may not bring any other civil
action or proceeding under the common law, Federal law,
or the law of any of the several States, the District
of Columbia, or any territory or possession of the
United States, that seeks monetary or nonmonetary
compensation by reason of the same subject matter; and
(B) any person who brings, under the common law or
any provision of law other than this section, a civil
action or proceeding for monetary or nonmonetary
compensation arising out of a claim for which an action
would otherwise be cognizable under this section may
not bring an action under this section on that claim.
(2) Treatment of certified claimants.--In the case of any
United States national that brings an action under this section
based on a claim certified under title V of the International
Claims Settlement Act of 1949--
(A) if the recovery in the action is equal to or
greater than the amount of the certified claim, the
United States national may not receive payment on the
claim under any agreement entered into between the
United States and Cuba settling claims covered by such
title, and such national shall be deemed to have
discharged the United States from any further
responsibility to represent the United States national
with respect to that claim;
(B) if the recovery in the action is less than the
amount of the certified claim, the United States
national may receive payment under a claims agreement
described in subparagraph (A) but only to the extent of
the difference between the amount of the recovery and
the amount of the certified claim; and
(C) if there is no recovery in the action, the
United States national may receive payment on the
certified claim under a claims agreement described in
subparagraph (A) to the same extent as any certified
claimant who does not bring an action under this
section.
(f) Deposit of Excess Payments by Cuba Under Claims Agreement.--Any
amounts paid by Cuba under any agreement entered into between the
United States and Cuba settling certified claims under title V of the
International Claims Settlement Act of 1949 that are in excess of the
payments made on such certified claims after the application of
subsection (e) shall be deposited into the United States Treasury.
(g) Termination of Rights.--
(1) In general.--All rights created under this section to
bring an action for money damages with respect to property
confiscated before the date of the enactment of this Act shall
cease upon the transmittal to the Congress of a determination
of the President under section 6233(c)(3).
(2) Pending suits.--The termination of rights under
paragraph (1) shall not affect suits commenced before the date
of such termination, and in all such suits, proceedings shall
be had, appeals taken, and judgments rendered in the same
manner and with the same effect as if this subsection had not
been enacted.
SEC. 6253. DETERMINATION OF CLAIMS TO CONFISCATED PROPERTY.
(a) Evidence of Ownership.--
(1) Conclusiveness of certified claims.--In any action
brought under this part, the courts shall accept as conclusive
proof of ownership a certification of a claim to ownership that
has been made by the Foreign Claims Settlement Commission
pursuant to title V of the International Claims Settlement Act
of 1949 (22 U.S.C. 1643 and following).
(2) Claims not certified.--In the case of a claim that has
not been certified by the Foreign Claims Settlement Commission
before the enactment of this Act, a court may appoint a special
master, including the Foreign Claims Settlement Commission, to
make determinations regarding the amount and validity of claims
to ownership of confiscated property. Such determinations are
only for evidentiary purposes in civil actions brought under
this part and do not constitute certifications pursuant to
title V of the International Claims Settlement Act of 1949.
(3) Effect of determinations of foreign entities.--In
determining ownership, courts shall not accept as conclusive
evidence of ownership any findings, orders, judgments, or
decrees from administrative agencies or courts of foreign
countries or international organizations that invalidate the
claim held by a United States national, unless the invalidation
was found pursuant to binding international arbitration to
which United States national submitted the claim.
(b) Amendment of the International Claims Settlement Act of 1949.--
Title V of the International Claims Settlement Act of 1949 (22 U.S.C.
1643 and following) is amended by adding at the end the following new
section:
``evaluation of ownership claims referred by district courts of the
united states
``Sec. 514. Notwithstanding any other provision of this title and
only for purposes of section 6252 the Cuban Liberty and Solidarity
(LIBERTAD) Act, a United States district court, for fact-finding
purposes, may refer to the Commission, and the Commission may
determine, questions of the amount and ownership of a claim by a United
States national (as defined in section 6204 of the Cuban Liberty and
Solidarity (LIBERTAD) Act) resulting from the confiscation of property
by the Government of Cuba described in section 503(a), whether or not
the United States national qualified as a national of the United States
(as defined in section 502(1)) at the time of the action by the
Government of Cuba.''.
(c) Rule of Construction.--Nothing in this subtitle or section 514
of the International Claims Settlement Act of 1949, as added by
subsection (b), shall be construed--
(1) to require or otherwise authorize the claims of Cuban
nationals who became United States citizens after their
property was confiscated to be included in the claims certified
to the Secretary of State by the Foreign Claims Settlement
Commission for purposes of future negotiation and espousal of
claims with a friendly government in Cuba when diplomatic
relations are restored; or
(2) as superseding, amending, or otherwise altering
certifications that have been made pursuant to title V of the
International Claims Settlement Act of 1949 before the
enactment of this Act.
SEC. 6254. EXCLUSIVITY OF FOREIGN CLAIMS SETTLEMENT COMMISSION
CERTIFICATION PROCEDURE.
Title V of the International Claims Settlement Act of 1949 (22
U.S.C. 1643 and following), as amended by section 6253, is further
amended by adding at the end the following new section:
``exclusivity of foreign claims settlement commission certification
procedure
``Sec. 515. (a) Subject to subsection (b), neither any national of
the United States who was eligible to file a claim under section 503
but did not timely file such claim under that section, nor any national
of the United States (on the date of the enactment of this section) who
was not eligible to file a claim under that section, nor any national
of Cuba, including any agency, instrumentality, subdivision, or
enterprise of the Government of Cuba or any local government of Cuba in
place on the date of the enactment of this section, nor any successor
thereto, whether or not recognized by the United States, shall have a
claim to, participate in, or otherwise have an interest in, the
compensation proceeds or other nonmonetary compensation paid or
allocated to a national of the United States by virtue of a claim
certified by the Commission under section 507, nor shall any court of
the United States or any State court have jurisdiction to adjudicate
any such claim.
``(b) Nothing in subsection (a) shall be construed to detract from
or otherwise affect any rights in the shares of the capital stock of
nationals of the United States owning claims certified by the
Commission under section 507.''.
PART 4--EXCLUSION OF CERTAIN ALIENS
SEC. 6271. EXCLUSION FROM THE UNITED STATES OF ALIENS WHO HAVE
CONFISCATED PROPERTY OF UNITED STATES NATIONALS OR WHO
TRAFFIC IN SUCH PROPERTY.
(a) Grounds for Exclusion.--The Secretary of State, in consultation
with the Attorney General, shall exclude from the United States any
alien who the Secretary of State determines is a person who--
(1) has confiscated, or has directed or overseen the
confiscation of, property a claim to which is owned by a United
States national, or converts or has converted for personal gain
confiscated property, a claim to which is owned by a United
States national;
(2) traffics in confiscated property, a claim to which is
owned by a United States national;
(3) is a corporate officer, principal, or shareholder with
a controlling interest of an entity which has been involved in
the confiscation of property or trafficking in confiscated
property, a claim to which is owned by a United States
national; or
(4) is a spouse, minor child, or agent of a person
excludable under paragraph (1), (2), or (3).
(b) Definitions.--As used in this section, the following terms have
the following meanings:
(1) Confiscated; confiscation.--The terms ``confiscated''
and ``confiscation'' refer to--
(A) the nationalization, expropriation, or other
seizure by foreign governmental authority of ownership
or control of property on or after January 1, 1959--
(i) without the property having been
returned or adequate and effective compensation
provided; or
(ii) without the claim to the property
having been settled pursuant to an
international claims settlement agreement or
other mutually accepted settlement procedure;
and
(B) the repudiation by foreign governmental
authority of, the default by foreign governmental
authority on, or the failure by foreign governmental
authority to pay, on or after January 1, 1959--
(i) a debt of any enterprise which has been
nationalized, expropriated, or otherwise taken
by foreign governmental authority;
(ii) a debt which is a charge on property
nationalized, expropriated, or otherwise taken
by foreign governmental authority; or
(iii) a debt which was incurred by foreign
governmental authority in satisfaction or
settlement of a confiscated property claim.
(2) Property.--The term ``property'' does not include
claims arising from a territory in dispute as a result of war
between United Nations member states in which the ultimate
resolution of the disputed territory has not been resolved.
(3) Traffics.--(A) A person or entity ``traffics'' in
property if that person or entity knowingly and intentionally--
(i) sells, transfers, distributes, dispenses,
brokers, manages, or otherwise disposes of confiscated
property, or purchases, leases, receives, possesses,
obtains control of, manages, uses, or otherwise
acquires or holds an interest in confiscated property,
(ii) engages in a commercial activity using or
otherwise benefiting from confiscated property, or
(iii) causes, directs, participates in, or profits
from, trafficking (as described in clauses (i) and
(ii)) by another person, or otherwise engages in
trafficking (as described in clauses (i) and (ii))
through another person,
without the authorization of the United States national who
holds a claim to the property.
(B) The term ``traffics'' does not include--
(i) the delivery of international telecommunication
signals to Cuba that are authorized by section 1705(e)
of the Cuban Democracy Act of 1992 (22 U.S.C. 6004(e));
or
(ii) the trading or holding of securities publicly
traded or held, unless the trading is with or by a
person determined by the Secretary of the Treasury to
be a specially designated national.
(c) National Interest Exemption.--This section shall not apply
where the Secretary of State finds, on a case-by-case basis, that
making a determination under subsection (a) would be contrary to the
national interest of the United States.
(d) Effective Date.--
(1) In general.--This section applies to aliens seeking to
enter the United States on or after the date of the enactment
of this Act.
(2) Trafficking.--This section applies only with respect to
acts within the meaning of ``traffics'' that occur on or after
the date of the enactment of this Act.
TITLE VII--COMMITTEE ON THE JUDICIARY
SEC. 7001. 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 ``1998'' and inserting
``2002'';
(2) in subsection (b)(2) by striking ``1998'' and inserting
``2002''; and
(3) in subsection (c)--
(A) by striking ``through 1998'' and inserting
``through 2002''; and
(B) by adding at the end the following:
``(9) $119,000,000 in fiscal year 1999.
``(10) $119,000,000 in fiscal year 2000.
``(11) $119,000,000 in fiscal year 2001.
``(12) $119,000,000 in fiscal year 2002.''.
SEC. 7002. CIVIL MONETARY PENALTY SURCHARGE AND TELECOMMUNICATIONS
CARRIER COMPLIANCE PAYMENTS.
Public Law 103-414 is amended by adding at the end the following:
``TITLE IV--CIVIL MONETARY PENALTY SURCHARGE AND TELECOMMUNICATIONS
CARRIER COMPLIANCE PAYMENTS
``SEC. 401. CIVIL MONETARY PENALTY SURCHARGE.
``(a) Imposition.--Notwithstanding any other provision of law, and
subject to section 402(c) of this title, a surcharge of 40 percent of
the principal amount of a civil monetary penalty shall be added to each
civil monetary penalty at the time it is assessed by the United States
or an agency thereof.
``(b) Application of Payments.--Payments relating to a civil
monetary penalty shall be applied in the following order: (1) to costs;
(2) to principal; (3) to surcharges required by subsection (a) of this
section; and (4) to interest.
``(c) Effective Dates.--(1) A surcharge under subsection (a) of
this section shall be added to all civil monetary penalties assessed on
or after October 1, 1995, or the date of enactment of this title,
whichever is later.
``(2) The authority to add a surcharge under this section shall
terminate on October 1, 1998.
``(d) Limitation.--The provisions of this section shall not apply
to any civil monetary penalty assessed under title 26, United States
Code.
``SEC. 402. DEPARTMENT OF JUSTICE TELECOMMUNICATIONS CARRIER COMPLIANCE
FUND.
``(a) Establishment of Fund.--There is hereby established in the
United States Treasury a fund to be known as the Department of Justice
Telecommunications Carrier Compliance Fund (hereinafter referred to as
`the Fund'), which shall be available to the Attorney General to the
extent and in the amounts authorized by subsection (c) of this section
to make payments to telecommunications carriers, as authorized by
section 109 of the Communications Assistance for Law Enforcement Act.
``(b) Offsetting Collections.--Notwithstanding section 3302 of
title 31, United States Code, the Attorney General may credit
surcharges added pursuant to section 401 of this title to the Fund as
offsetting collections.
``(c) Requirements for Appropriations Offset.--(1) Surcharges added
pursuant to section 401 of this title are authorized only to the extent
and in the amounts provided for in advance in appropriations acts.
``(2)(A)(i) Subject to the requirements of this subparagraph,
collections credited to the Fund are authorized to be appropriated in
amounts of $56,000,000 for fiscal year 1996, and $112,000,000 for each
of fiscal years 1997 and 1998.
``(ii) Notwithstanding clause (i), the maximum amount authorized to
be appropriated for any such fiscal year shall equal the amount that
the Office of Management and Budget estimates will be credited to the
Fund during that year.
``(B) Amounts described in subparagraph (A) of this paragraph are
authorized to be appropriated without fiscal year limitation.
``(d) Termination.--(1) The Attorney General may terminate the Fund
at such time as the Attorney General determines that the Fund is no
longer necessary.
``(2) Any balance in the Fund at the time of its termination shall
be deposited in the general fund of the Treasury.
``(3) A decision of the Attorney General to terminate the Fund
shall not be subject to judicial review.
``SEC. 403. DEFINITIONS.
``For purposes of this title, the terms `agency' and `civil
monetary penalty' have the meanings given to them by section 3 of the
Federal Civil Penalties Inflation Adjustment Act of 1990, Public Law
101-410, October 5, 1990, 104 Stat. 890 (28 U.S.C. 2461 note).''.
TITLE VIII--COMMITTEE ON NATIONAL SECURITY
Subtitle A--Military Retired Pay
SEC. 8001. ELIMINATION OF DISPARITY BETWEEN EFFECTIVE DATES FOR
MILITARY AND CIVILIAN RETIREE COST-OF-LIVING ADJUSTMENTS
FOR FISCAL YEARS 1996, 1997, AND 1998.
(a) Conformance With Schedule for Civil Service COLAs.--
Subparagraph (B) of section 1401a(b)(2) of title 10, United States
Code, is amended--
(1) by striking out ``through 1998'' the first place it
appears and all that follows through ``In the case of'' the
second place it appears and inserting in lieu thereof ``through
1996.--In the case of'';
(2) by striking ``of 1994, 1995, 1996, or 1997'' and
inserting in lieu thereof ``of 1993, 1994, or 1995''; and
(3) by striking out ``September'' and inserting in lieu
thereof ``March''.
(b) Repeal of Prior Conditional Enactment.--Section 8114A(b) of
Public Law 103-335 (108 Stat. 2648) is repealed.
Subtitle B--Naval Petroleum Reserves
SEC. 8011. SALE OF NAVAL PETROLEUM RESERVES.
(a) Sale of Reserves Required.--Chapter 641 of title 10, United
States Code, is amended by inserting after section 7421 the following
new section:
``Sec. 7421a. Sale of naval petroleum reserves
``(a) Sale Required.--(1) Notwithstanding any other provision of
this chapter, the Secretary shall sell all right, title, and interest
of the United States in and to the lands owned or controlled by the
United States inside the naval petroleum and oil shale reserves
established by this chapter. In the case of Naval Petroleum Reserve
Numbered 1, the lands to be sold shall include sections 16 and 36 of
township 30 south, range 23 east, Mount Diablo Principal Meridian,
California.
``(2) Not later than September 30, 1996, the Secretary shall enter
into one or more contracts for the sale of all of the interest of the
United States in the naval petroleum reserves.
``(b) Timing and Administration of Sale.--(1) Not later than
January 1, 1996, the Secretary shall retain the services of five
independent experts in the valuation of oil and gas fields to conduct
separate assessments, in a manner consistent with commercial practices,
of the fair market value of the interest of the United States in each
naval petroleum reserve. In making their assessments for each naval
petroleum reserve, the independent experts shall consider (among other
factors) all equipment and facilities to be included in the sale, the
net present value of the reserve, and the net present value of the
anticipated revenue stream that the Secretary determines the Treasury
would receive from the reserve if it were not sold, adjusted for any
anticipated increases in tax revenues that would result if it were
sold. The independent experts shall complete their assessments not
later than June 1, 1996. In setting the minimum acceptable price for
each naval petroleum reserve, the Secretary shall consider the average
of the five assessments regarding the reserve or, if more advantageous
to the Government, the average of three assessments after excluding the
high and low assessments.
``(2) Not later than March 1, 1996, the Secretary shall retain the
services of an investment banker to independently administer, in a
manner consistent with commercial practices and in a manner that
maximizes sale proceeds to the Government, the sale of the naval
petroleum reserves under this section. The Secretary may enter into the
contracts required under this paragraph and paragraph (1) on a
noncompetitive basis.
``(3) Not later than June 1, 1996, the sales administrator selected
under paragraph (2) shall complete a draft contract for the sale of
each naval petroleum reserve, which shall accompany the invitation for
bids and describe the terms and provisions of the sale of the interest
of the United States in the reserve. Each draft contract shall identify
all equipment and facilities to be included in the sales. Each draft
contract, including the terms and provisions of the sale of the
interest of the United States in the naval petroleum reserves, shall be
subject to review and approval by the Secretary, the Secretary of the
Treasury, and the Director of the Office of Management and Budget.
``(4) Not later than July 1, 1996, the Secretary shall publish an
invitation for bids for the purchase of the naval petroleum reserves.
``(5) Not later than September 1, 1996, the Secretary shall accept
the highest responsible offer for purchase of the interest of the
United States in the naval petroleum reserves, or a particular reserve,
that meets or exceeds the minimum acceptable price determined under
paragraph (1). The Secretary may accept an offer for only a portion of
a reserve so long as the entire reserve is still sold under this
section at a price that meets or exceeds the minimum acceptable price.
``(c) Future Liabilities.--To effectuate the sale of the interest
of the United States in a naval petroleum reserve, the Secretary may
extend such indemnities and warranties as the Secretary considers
reasonable and necessary to protect the purchaser from claims arising
from the ownership in the reserve by the United States.
``(d) Special Rules Preparatory to Sale of Naval Petroleum Reserve
Numbered 1.--(1) Not later than June 1, 1996, the Secretary shall
finalize equity interests of the known oil and gas zones in Naval
Petroleum Reserve Numbered 1 in the manner provided by this subsection.
``(2) The Secretary shall retain the services of an independent
petroleum engineer, mutually acceptable to the equity owners, who shall
prepare a recommendation on final equity figures. The Secretary may
accept the recommendation of the independent petroleum engineer for
final equity in each known oil and gas zone and establish final equity
interest in the Naval Petroleum Reserve Numbered 1 in accordance with
such recommendation, or the Secretary may use such other method to
establish final equity interest in that reserve as the Secretary
considers appropriate. The Secretary may enter into the contract
required under this paragraph on a noncompetitive basis.
``(3) If, on the effective date of this section, there is an
ongoing equity redetermination dispute between the equity owners under
section 9(b) of the unit plan contract, such dispute shall be resolved
in the manner provided in the unit plan contract not later than June 1,
1996. Such resolution shall be considered final for all purposes under
this section.
``(4) In this section, the term `unit plan contract' means the unit
plan contract between equity owners of the lands within the boundaries
of Naval Petroleum Reserve Numbered 1 (Elk Hills) entered into on June
19, 1944.
``(e) Production Allocation Regarding Naval Petroleum Reserve
Numbered 1.--(1) As part of the contract for purchase of Naval
Petroleum Reserve Numbered 1, the purchaser of the interest of the
United States in that reserve shall agree to make up to 25 percent of
the purchaser's share of annual petroleum production from the purchased
lands available for sale to small refiners, which do not have their own
adequate sources of supply of petroleum, for processing or use only in
their own refineries. None of the reserved production sold to small
refiners may be resold in kind. The purchaser of that reserve may
reduce the quantity of petroleum reserved under this subsection in the
event of an insufficient number of qualified bids. The seller of this
petroleum production has the right to refuse bids that are less than
the prevailing market price of comparable oil.
``(2) The purchaser of Naval Petroleum Reserve Numbered 1 shall
also agree to ensure that the terms of every sale of the purchaser's
share of annual petroleum production from the purchased lands shall be
so structured as to give full and equal opportunity for the acquisition
of petroleum by all interested persons, including major and independent
oil producers and refiners alike.
``(f) Maintaining Production Pending Sale of Naval Petroleum
Reserve Numbered 1.--Until the sale of Naval Petroleum Reserve Numbered
1 is completed under this section, the Secretary shall continue to
produce that reserve at the maximum daily oil or gas rate from a
reservoir, which will permit maximum economic development of the
reservoir consistent with sound oil field engineering practices in
accordance with section 3 of the unit plan contract. The definition of
maximum efficient rate in section 7420(6) of this title shall not apply
to Naval Petroleum Reserve Numbered 1.
``(g) Effect on Existing Contracts.--(1) In the case of any
contract, in effect on the effective date of this section, for the
purchase of production from any part of the United States' share of the
naval petroleum reserves, the sale of the interest of the United States
in the reserves shall be subject to the contract for a period of three
months after the closing date of the sale or until termination of the
contract, whichever occurs first. The term of any contract entered into
after the effective date of this section for the purchase of such
production shall not exceed the anticipated closing date for the sale
of the reserve.
``(2) In the case of Naval Petroleum Reserve Numbered 1, the
Secretary shall exercise the termination procedures provided in the
contract between the United States and Bechtel Petroleum Operation,
Inc., Contract Number DE-ACO1-85FE60520 so that the contract terminates
not later than the date of closing of the sale of that reserve.
``(3) In the case of Naval Petroleum Reserve Numbered 1, the
Secretary shall exercise the termination procedures provided in the
unit plan contract so that the unit plan contract terminates not later
than the date of closing of the sale of that reserve.
``(h) Offer of Settlement of State of California Claims Regarding
Naval Petroleum Reserve Numbered 1.--(1) In connection with the sale of
Naval Petroleum Reserve Numbered 1, the Secretary shall offer to settle
all claims against the United States by the State of California and the
Teachers' Retirement Fund of the State of California with respect to
lands within that reserve, including sections 16 and 36 of township 30
south, range 23 east, Mount Diablo Principal Meridian, California, or
production or proceeds of sale from that reserve. Subject to paragraph
(2), the Secretary shall offer in settlement of such claims--
``(A) a payment from funds provided for this purpose in
advance in appropriation Acts;
``(B) a grant of land pursuant to sections 2275 and 2276 of
the Revised Statutes of the United States (43 U.S.C. 851 and
852) so long as such land is not generating revenue for the
United States;
``(C) any other option that would not be inconsistent with
the Congressional Budget Act of 1974 (2 U.S.C. 621 et seq.); or
``(D) any combination of subparagraphs (A), (B), and (C).
``(2) The value of any payment, grant, or option (or combination
thereof) offered as settlement under paragraph (1) may not exceed an
amount equal to seven percent of the proceeds from the sale of Naval
Petroleum Reserve Numbered 1, after deducting the costs incurred to
conduct the sale of that reserve.
``(3) Acceptance of the settlement offered under paragraph (1)
shall be subject to the condition that all claims against the United
States by the State of California or the Teachers' Retirement Fund of
the State of California are released with respect to lands within the
Naval Petroleum Reserve Numbered 1, including sections 16 and 36 of
township 30 south, range 23 east, Mount Diablo Principal Meridian,
California, or production or proceeds of sale from that reserve. The
Secretary may specify the manner in which the release of such claims
shall be evidenced.
``(i) Effect on Antitrust Laws.--Nothing in this section shall be
construed to alter the application of the antitrust laws of the United
States to the purchaser of a naval petroleum reserve or to the lands in
the naval petroleum reserves subject to sale under this section upon
the completion of the sale.
``(j) Preservation of Private Right, Title, and Interest.--Nothing
in this section shall be construed to adversely affect the ownership
interest of any other entity having any right, title, and interest in
and to lands within the boundaries of the naval petroleum reserves.
``(k) Congressional Notification.--Section 7431 of this title shall
not apply to the sale of the naval petroleum reserves under this
section. However, the Secretary may not enter into a contract for the
sale of a naval petroleum reserve until the end of the 15-day period
beginning on the date on which the Secretary notifies the Committee on
Armed Services of the Senate and the Committee on National Security and
the Committee on Commerce of the House of Representatives that the
Secretary has accepted an offer under subsection (b)(5) for the sale of
that reserve.''.
(b) Clerical Amendment.--The table of sections at the beginning of
such chapter is amended by inserting after the item relating to section
7421 the following new item:
``7421a. Sale of naval petroleum reserves.''.
Subtitle C--National Defense Stockpile
SEC. 8021. DISPOSAL OF CERTAIN MATERIALS IN NATIONAL DEFENSE STOCKPILE
FOR DEFICIT REDUCTION.
(a) Disposals Required.--(1) During fiscal year 1996, the President
shall dispose of all cobalt contained in the National Defense Stockpile
that, as of the date of the enactment of this Act, is authorized for
disposal under any law (other than this Act).
(2) In addition to the disposal of cobalt under paragraph (1), the
President shall dispose of additional quantities of cobalt and
quantities of aluminum, ferro columbium, germanium, palladium,
platinum, and rubber contained in the National Defense Stockpile so as
to result in receipts to the United States in amounts equal to--
(A) $21,000,000 during the fiscal year ending September 30,
1996;
(B) $338,000,000 during the five-fiscal year period ending
on September 30, 2000; and
(C) $649,000,000 during the seven-fiscal year period ending
on September 30, 2002.
(3) The President is not required to include the disposal of the
materials identified in paragraph (2) in an annual materials plan for
the National Defense Stockpile. Disposals made under this section may
be made without consideration of the requirements of an annual
materials plan.
(b) Limitation on Disposal Quantity.--The total quantities of
materials authorized for disposal by the President under subsection
(a)(2) may not exceed the amounts set forth in the following table:
Authorized Stockpile Disposals
------------------------------------------------------------------------
Material for disposal Quantity
------------------------------------------------------------------------
Aluminum.................................. 62,881 short tons
Cobalt.................................... 42,482,323 pounds contained
Ferro Columbium........................... 930,911 pounds contained
Germanium................................. 68,207 kilograms
Palladium................................. 1,264,601 troy ounces
Platinum.................................. 452,641 troy ounces
Rubber.................................... 125,138 long tons
------------------------------------------------------------------------
(c) Deposit of Receipts.--Notwithstanding section 9 of the
Strategic and Critical Materials Stock Piling Act (50 U.S.C. 98h),
funds received as a result of the disposal of materials under
subsection (a)(2) shall be deposited into the general fund of the
Treasury for the purpose of deficit reduction.
(d) Relationship to Other Disposal Authority.--The disposal
authority provided in subsection (a)(2) is new disposal authority and
is in addition to, and shall not affect, any other disposal authority
provided by law regarding the materials specified in such subsection.
(e) Termination of Disposal Authority.--The President may not use
the disposal authority provided in subsection (a)(2) after the date on
which the total amount of receipts specified in subparagraph (C) of
such subsection is achieved.
(f) Definition.--The term ``National Defense Stockpile'' means the
National Defense Stockpile provided for in section 4 of the Strategic
and Critical Materials Stock Piling Act (50 U.S.C. 98c).
TITLE IX--COMMITTEE ON RESOURCES
SEC. 9000. TABLE OF CONTENTS.
The table of contents for this title is as follows:
TITLE IX--COMMITTEE ON RESOURCES
Sec. 9000. Table of contents.
Subtitle A--Alaska and Helium Privatization
Part 1--Alaska
Sec. 9001. Exports of Alaskan North Slope oil.
Sec. 9002. Arctic Coastal Plain leasing and revenue.
Sec. 9003. Alaska Power Administration sale.
Part 2--Helium Privatization
Sec. 9011. Short title.
Sec. 9012. Amendment of Helium Act.
Sec. 9013. Authority of Secretary.
Sec. 9014. Sale of crude helium.
Sec. 9015. Elimination of stockpile.
Sec. 9016. Repeal of authority to borrow.
Sec. 9017. Reports.
Sec. 9018. Land conveyance in Potter County, Texas.
Subtitle B--Water and Power
Part 1--Power Marketing Administrations
Sec. 9201. Short title.
Sec. 9202. Evaluation of sales of Southeastern, Southwestern, and
Western Area Power Administration
facilities.
Sec. 9203. Bonneville Power Administration appropriations refinancing.
Part 2--Reclamation
Sec. 9211. Prepayment of certain repayment contracts between the United
States and the Central Utah Water
Conservancy District.
Sec. 9212. Treatment of city of Folsom as a Central Valley Project
contractor.
Sec. 9213. Sly Park.
Sec. 9214. Hetch Hetchy Dam.
Subtitle C--National Parks, Forests, and Public Lands
Part 1--Concession Reform
Sec. 9301. Short title.
Sec. 9302. Purpose.
Sec. 9303. Definitions.
Sec. 9304. Nature and types of concession authorizations.
Sec. 9305. Competitive selection process for concession service
agreements.
Sec. 9306. Concessioner evaluations.
Sec. 9307. Capital improvements.
Sec. 9308. Duration of concession authorization.
Sec. 9309. Rates and charges to the public.
Sec. 9310. Transferability of concession authorizations.
Sec. 9311. Fees charged by the United States for concession
authorizations.
Sec. 9312. Disposition of fees.
Sec. 9313. Dispute resolution.
Sec. 9314. Recordkeeping.
Sec. 9315. Application of general governmental acquisition
requirements.
Sec. 9316. Rules of construction.
Sec. 9317. Regulations.
Sec. 9318. Relationship to other existing laws.
Part 2--National Forest Ski Areas
Sec. 9321. Privatization of Forest Service ski areas.
Sec. 9322. Ski area permit fees and withdrawal of ski areas from
operation of mining laws.
Part 3--Domestic Livestock Grazing
Sec. 9331. Applicable regulations.
Sec. 9332. Fees and charges.
Sec. 9333. Animal unit month.
Sec. 9334. Term of grazing permits or grazing leases.
Sec. 9335. Conformance with land use plan.
Sec. 9336. Effective date.
Part 4--Regional Disposal Facility of Southwestern Low Level
Radioactive Waste Disposal Compact
Sec. 9341. Conveyance of property.
Sec. 9342. Conveyance of easements.
Subtitle D--Territories
Part 1--Commonwealth of the Northern Mariana Islands
Sec. 9401. Termination of annual direct grant assistance.
Part 2--Territorial Administrative Cessation Act
Sec. 9421. Short title.
Sec. 9422. Congressional findings.
Sec. 9423. Elimination of Office of Territorial and International
Affairs.
Sec. 9424. Certain activities not funded.
Subtitle E--Minerals
Part 1--Hardrock Mining
Sec. 9501. Findings and purpose.
Sec. 9502. Patents under the general mining law.
Sec. 9503. Royalty under the general mining law.
Sec. 9504. Mineral materials.
Sec. 9505. Claim maintenance requirements.
Part 2--Federal Oil and Gas Royalties
Sec. 9511. Short title.
Sec. 9512. Definitions.
Sec. 9513. Limitation periods.
Sec. 9514. Adjustment and refunds.
Sec. 9515. Required recordkeeping.
Sec. 9516. Royalty interest, penalties, and payments.
Sec. 9517. Limitation on assessments.
Sec. 9518. Alternatives for marginal properties.
Sec. 9519. Royalty in kind.
Sec. 9520. Royalty simplification and cost-effective audit and
collection requirements.
Sec. 9521. Repeals.
Sec. 9522. Delegation to States.
Sec. 9523. Performance standard.
Sec. 9524. Indian lands.
Sec. 9525. Private lands.
Sec. 9526. Effective date.
Subtitle F--Indian Gaming
Sec. 9601. Indian gaming.
Subtitle G--Consultation
Sec. 9701. Consultation.
Subtitle H--Mapping
Sec. 9801. Short title.
Sec. 9802. Surveying and mapping contracting program.
Sec. 9803. Inventory of activities.
Sec. 9804. Plan to increase use of contracts.
Sec. 9805. Reports.
Sec. 9806. Definitions.
Subtitle A--Alaska and Helium Privatization
PART 1--ALASKA
SEC. 9001. EXPORTS OF ALASKAN NORTH SLOPE OIL.
(a) Amendment of Mineral Leasing Act.--Section 28(s) of the Mineral
Leasing Act (30 U.S.C. 185(s)) is amended to read as follows:
``exports of alaskan north slope oil
``(s)(1) Subject to paragraphs (2) through (6) of this subsection
and notwithstanding any other provision of this Act or any other
provision of law (including any regulation) applicable to the export of
oil transported by pipeline over right-of-way granted pursuant to
section 203 of the Trans-Alaska Pipeline Authorization Act (43 U.S.C.
1652), such oil may be exported unless the President finds that
exportation of this oil is not in the national interest. The President
shall make his national interest determination within 5 months after
the date of enactment of this subsection. In evaluating whether exports
of this oil are in the national interest, the President shall at a
minimum consider--
``(A) whether exports of this oil would diminish the total
quantity or quality of petroleum available to the United
States;
``(B) the results of an appropriate environmental review,
including consideration of appropriate measures to mitigate any
potential adverse effects of exports of this oil on the
environment, which shall be completed within four months of the
date of the enactment of this subsection; and
``(C) whether exports of this oil are likely to cause
sustained material oil supply shortages or sustained oil prices
significantly above world market levels that would cause
sustained material adverse employment effects in the United
States or that would cause substantial harm to consumers,
including in noncontiguous States and Pacific territories.
If the President determines that exports of this oil are in the
national interest, he may impose such terms and conditions (other than
a volume limitation) as are necessary or appropriate to ensure that
such exports are consistent with the national interest.
``(2) Except in the case of oil exported to a country with which
the United States entered into a bilateral international oil supply
agreement before November 26, 1979, or to a country pursuant to the
International Emergency Oil Sharing Plan of the International Energy
Agency, any oil transported by pipeline over right-of-way granted
pursuant to section 203 of the Trans-Alaska Pipeline Authorization Act
(43 U.S.C. 1652) shall, when exported, be transported by a vessel
documented under the laws of the United States and owned by a citizen
of the United States (as determined in accordance with section 2 of the
Shipping Act, 1916 (46 U.S.C. App. 802)).
``(3) Nothing in this subsection shall restrict the authority of
the President under the Constitution, the International Emergency
Economic Powers Act (50 U.S.C. 1701 et seq.), or the National
Emergencies Act (50 U.S.C. 1601 et seq.) to prohibit exports of this
oil or under Part B of title II of the Energy Policy and Conservation
Act (42 U.S.C. 6271-76).
``(4) The Secretary of Commerce shall issue any rules necessary for
implementation of the President's national interest determination,
including any licensing requirements and conditions, within 30 days of
the date of such determination by the President. The Secretary of
Commerce shall consult with the Secretary of Energy in administering
the provisions of this subsection.
``(5) If the Secretary of Commerce finds that exporting oil under
authority of this subsection has caused sustained material oil supply
shortages or sustained oil prices significantly above world market
levels and further finds that these supply shortages or price increases
have caused or are likely to cause sustained material adverse
employment effects in the United States, the Secretary of Commerce, in
consultation with the Secretary of Energy, shall recommend, and the
President may take, appropriate action concerning exports of this oil,
which may include modifying or revoking authority to export such oil.
``(6) Administrative action under this subsection is not subject to
sections 551 and 553 through 559 of title 5, United States Code.''.
(b) GAO Report.--
(1) Review.--The Comptroller General of the United States
shall conduct a review of energy production in California and
Alaska and the effects of Alaskan North Slope oil exports, if
any, on consumers, independent refiners, and shipbuilding and
ship repair yards on the West Coast and in Hawaii. The
Comptroller General shall commence this review 2 years after
the date of enactment of this Act and, within 6 months after
commencing the review, shall provide a report to the Committee
on Resources and the Committee on Commerce of the House of
Representatives and the Committee on Energy and Natural
Resources of the Senate.
(2) Contents of report.--The report shall contain a
statement of the principal findings of the review and
recommendations for Congress and the President to address job
loss in the shipbuilding and ship repair industry on the West
Coast, as well as adverse impacts on consumers and refiners on
the West Coast and in Hawaii, that the Comptroller General
attributes to Alaska North Slope oil exports.
SEC. 9002. ARCTIC COASTAL PLAIN LEASING AND REVENUE.
(a) Purpose.--It is the purpose of this section to reduce the
Federal deficit by an estimated $1,300,000,000 over the next 5 years.
This revenue will be derived from competitive bonus bids for oil and
gas leases in the Coastal Plain area of Alaska's North Slope.
(b) Definitions.--For the purposes of this section:
(1) The term ``Secretary'' means the Secretary of the
Interior.
(2) The term ``Coastal Plain'' means that portion of the
Arctic National Wildlife Refuge identified in section
1002(b)(1) of the Alaska National Interest Lands Conservation
Act of 1980 (Public Law 96-487; 16 U.S.C. 3142(b)(1))
consisting of approximately 1,549,000 acres.
(c) Compatibility.--Congress hereby determines that the oil and gas
leasing program and activities authorized by this section in the
Coastal Plain are compatible with the purposes for which the Arctic
National Wildlife Refuge was established, and that no further findings
or decisions are required to implement this determination.
(d) Authorization.--(1) Congress hereby authorizes and directs the
Secretary to establish and promptly implement a program to assure the
expeditious competitive leasing exploration, development, production,
and transportation of the oil and gas resources of the Coastal Plain.
Regulations to implement this program and to govern oil and gas
leasing, exploration, development and production shall be promulgated
by the Secretary within 6 months of the date of enactment of this
section.
(2) The Coastal Plain leasing program required by paragraph (1)
shall include the following:
(A) The first lease sale of not less than 200,000 acres
shall be conducted within 12 months of the date of enactment of
this section.
(B) The lease sales shall be based upon an industry
nomination process.
(C) The Secretary is directed to grant to the highest
responsible qualified bidder or bidders by competitive bidding,
under regulations promulgated in advance, any oil and gas lease
on unleased Federal lands within the Coastal Plain. These
regulations may provide for the deposit of cash bids in an
interest-bearing account until the Secretary accepts the bids,
with interest earned paid to the General Treasury for bids that
are accepted, and to the unsuccessful bidders for bids that are
rejected.
(D) Royalty payments shall not be less than 12\1/2\
percent, and rental payments shall be prescribed by the
Secretary.
(E) The Attorney General of the United States and the
Federal Trade Commission may conduct such review of lease terms
and lease sale activities as are necessary to ensure compliance
with the antitrust laws.
(F) The size of lease tracts may be up to 11,520 acres but
not less than 2,560 acres, as determined by the Secretary,
except that the Secretary may lease smaller tracts if he
determines smaller tracts are necessary to promote a more
competitive leasing program or are necessary in certain
locations to mitigate reasonably foreseeable impacts on the
environment.
(G) Each lease shall be issued for an initial period of up
to 10 years and shall be extended as long as oil or gas is
produced in paying quantities from the lease or unit area to
which the lease is committed or as drilling or reworking
operations as approved by the Secretary are conducted thereon.
(H) The Secretary is authorized and directed to promulgate
regulations and to include terms in leases to ensure that--
(i) activities are conducted pursuant to an
approved exploration or development plan;
(ii) lessees secure an appropriate performance bond
to cover activities;
(iii) provision is made for the suspension,
cancellation, assignment, relinquishment and
unitization of leases; and
(iv) the Secretary has access to lease information
and that confidential, privileged or proprietary
information furnished by lessees is adequately
protected.
(e) Judicial Review.--Any complaint filed seeking judicial review
of an action of the Secretary in promulgating any regulation under this
section may be filed only in the United States Court of Appeals for the
District of Columbia, and such complaint shall be filed within 90 days
from the date of such promulgation, or after such date if such
complaint is based solely on grounds arising after such 90th day, in
which case the complaint must be filed within 90 days after the
complainant knew or reasonably should have known of the grounds for the
complaint. Any complaint seeking judicial review of any other actions
of the Secretary under this section may be filed in any appropriate
district court of the United States, and such complaint must be filed
within 90 days from the date of the action being challenged, or after
such date if such complaint is based solely on grounds arising after
such 90th day, in which case the complaint must be filed within 90 days
after the complainant knew or reasonably should have known of the
grounds for the complaint.
(f) Administration.--(1) Section 1003 of the Alaska National
Interest Lands Conservation Act of 1980 (94 Stat. 2452; 16 U.S.C. 3143)
is repealed.
(2) This section shall be considered the primary land management
authorization for all activities associated with exploration,
development, and production from the Coastal Plain. No land management
review, determination, or other action shall be required except as
specifically authorized by this section.
(g) Protection of Fish and Wildlife Resources and Other
Environmental Values.--(1) Before conducting a competitive oil and gas
lease sale under this section, the Secretary shall promulgate, within 6
months, as provided in subsection (d)(1), such rules and regulations as
are necessary to ensure that oil and gas exploration, development,
production, and transportation activities undertaken in the Coastal
Plain achieve the reasonable protection of the fish and wildlife
resources, environment and subsistence uses of the Coastal Plain.
(2) The Secretary shall administer the provisions of this section
through regulations and lease terms that the Secretary determines to be
necessary to mitigate reasonably foreseeable and significantly adverse
effects on the fish and wildlife, surface resources and subsistence
resources of the Coastal Plain.
(3)(A) The Secretary, after consultation with the State of Alaska,
the city of Kaktovik, Alaska, and the North Slope Borough, is
authorized to close to leasing and designate up to 30,000 acres of the
Coastal Plain as Special Areas if the Secretary determines that these
lands are of such unique character and interest so as to require
special management and regulatory protection. The Secretary shall
notify the Committee on Energy and Natural Resources of the Senate and
the Committee on Resources of the House of Representatives 90 days in
advance of making such designations. The Secretary may permit leasing
of all or portions of any lands within the Coastal Plain designated as
Special Areas by setting lease terms that limit or condition surface
use and occupancy by lessees of such lands but permit the use of
horizontal drilling technology from sites on leases located outside the
designated Special Areas.
(B) Notwithstanding any other provision of law or any international
agreement to which the United States is a party, the Secretary's sole
authority to close lands within the Coastal Plain to oil and gas
leasing and to exploration, development, and production as provided for
in this part is set forth in subparagraph (A).
(4) The Secretary shall, in consultation with the State of Alaska,
the city of Kaktovik, Alaska, and the North Slope Borough, develop
guidelines to encourage the siting of facilities having common use
characteristics (service bases, ports and docks, airports, major
pipelines and roads) in a manner which leads to facility consolidation,
avoids unnecessary duplication, utilizes existing facilities, minimizes
impacts on fish, wildlife, habitat and the subsistence activities of
residents of Native communities, and avoids disruption of the lives of
the residents of the Village of Kaktovik and other communities.
(5) Notwithstanding title XI of the Alaska National Interest Lands
Conservation Act of 1980 (94 Stat. 2457; 16 U.S.C. 3161 et seq.), the
Secretary is authorized and directed to grant, under sections 28(a)
through (t) and (v) through (y) of the Mineral Leasing Act (30 U.S.C.
185), rights-of-way and easements across the Coastal Plain for the
purposes of this section, for pipeline construction, and the
transportation of oil and gas and related purposes.
(6) The Secretary is authorized to close, on a seasonal basis,
portions of the Coastal Plain to exploratory drilling activities as
necessary to protect caribou calving areas and other species of fish
and wildlife.
(h) Application of Environmental Laws.--The ``Final Legislative
Environmental Impact Statement'' (April 1987) prepared pursuant to
section 1002 of the Alaska National Interest Lands Conservation Act of
1980 (94 Stat. 2449; 16 U.S.C. 3142) and section 102(2)(C) of the
National Environmental Policy Act of 1969 (89 Stat. 424; 42 U.S.C.
4332(2)(C)) is hereby determined to be adequate and legally sufficient
for all actions authorized pursuant to this section, including all
phases of oil and gas leasing, exploration, development, production,
transportation and related activities, including the granting of
rights-of-way, use permits and other authorizations.
(i) New Revenues.--(1) Notwithstanding any other provision of law,
all revenues received from competitive bids, sales, bonuses, royalties,
rents, fees, interest or other income derived from the leasing of oil
and gas resources within the Coastal Plain shall be deposited into the
Treasury of the United States: Provided, That 50 percent of all such
Coastal Plain revenues shall be paid by the Secretary of the Treasury
semiannually, on March 30th and on September 30th of each year, to the
State of Alaska.
(2) On March 1st of each year following the date of enactment of
this section, the Secretary shall prepare and submit to the Congress an
annual report on the revenues derived and on the leasing program
authorized by this section.
(j) Conveyance.--Notwithstanding the provisions of section
1302(h)(2) of the Alaska National Interest Lands Conservation Act (16
U.S.C. 3192(h)(2)), the Secretary is authorized and directed to convey
(1) to the Kaktovik Inupiat Corporation the surface estate of the lands
described in paragraph 2 of Public Land Order 6959, to the extent
necessary to fulfill the corporation's entitlement under section 12 of
the Alaska Native Claims Settlement Act (43 U.S.C. 1611), and (2) to
the Arctic Slope Regional Corporation the subsurface estate beneath
such surface estate pursuant to the August 9, 1983, agreement between
the Arctic Slope Regional Corporation and the United States of America.
(k) Penalty.--Any person, including any Federal official, who fails
to comply with any provision or mandate of this section, a lease term,
or a regulation promulgated under this section, after notice of such
failure and expiration of a reasonable period for corrective action,
shall be liable, after hearing, for a civil penalty of not more than
$10,000 for each day of the continuance of such failure.
(l) Community Assistance.--There is hereby established a Community
Assistance Fund in the Treasury which shall be maintained at a level of
$5,000,000 annually from the Federal share of Coastal Plain revenues
and shall be available to the Secretary for the purposes of this
section. Organized boroughs, other municipal subdivisions of the State
of Alaska, and recognized Indian Reorganization Act entities which are
impacted by activities authorized under this section shall be eligible,
on application to the Secretary, for local assistance from the
Community Assistance Fund for needed social services and to provide
public services and facilities required in connection with supporting
exploration and development of the Coastal Plain.
(m) Employment and Contracting.--As a condition of any leases,
permits, or other Federal authorizations granted or issued pursuant to
this section, a recipient of those leases, permits, or authorizations
shall be required to use its best efforts to assure that the lessee and
its agents and contractors provide a fair share of employment and
contracting for Alaska Natives and Alaska Native Corporations from
throughout the State.
(n) Use of ANWR Revenues.--
(1) Establishment of endowment.--There is hereby
established in the general fund of the Treasury a separate
account which shall be known as the National Endowment for Fish
and Wildlife.
(2) Contents.--(A) Except as provided in subparagraph (B),
the Endowment shall consist of revenues received from the
following sources:
(i) Gifts, devises, and bequests to the Endowment.
(ii) Amounts appropriated by the Congress to the
Endowment.
(iii) Any revenues deposited into the Treasury of
the United States under subsection (i), from the
Federal share of revenues derived from oil and gas
leasing within the Coastal Plain, that exceed
$1,300,000,000.
(B) After the Endowment has reached a level of $250,000,000
in principal, further payments to the Endowment shall consist
only of the following:
(i) Gifts, devises, and bequests to the Endowment.
(ii) Amounts appropriated by the Congress to the
Endowment.
(iii) 5 percent of the Federal royalties derived
from commercial production of oil and gas on Federal
leases on the Coastal Plain.
(3) Establishment of fish and wildlife conservation
commission.--(A) To carry out the purposes of this subsection,
there is hereby established a commission to be known as the
Fish and Wildlife Conservation Commission.
(B) The Commission shall consist of--
(i) the Secretary of the Interior, who shall be the
chairman,
(ii) 3 Members of the Senate selected by the
President of the Senate, and
(iii) 3 Members of the House of Representatives
selected by the Speaker.
(C) At least 1 member of the Commission selected from each
House of Congress shall be a member of the minority party in
that House.
(D) Any Member of the House of Representatives who is a
member of the Commission, if reelected to the succeeding
Congress, may serve on the Commission notwithstanding the
expiration of a Congress.
(E) Any vacancy on the Commission shall be filled in the
same manner as the original appointment.
(4) Expenditures by commission.--(A) The Fish and Wildlife
Commission may make expenditures from the Endowment for the
following fish and wildlife conservation purposes:
(i) Acquisition of important habitat lands for
endangered species or threatened species from owners of
private property. Such lands may be acquired solely on
a willing seller basis and shall be managed by the
Secretary of the Interior for the conservation of such
species pursuant to the terms of section 5 of the
Endangered Species Act of 1973 (16 U.S.C. 1534).
(ii) Provision of funding for purposes authorized
under the Endangered Species Act of 1973.
(iii) Provision of funds to the North American
Wetlands Conservation Fund pursuant to the North
American Wetlands Conservation Act (16 U.S.C. 4401 et
seq.).
(B) The amount expended under subparagraph (A)(iii) each
fiscal year shall equal or exceed 25 percent of the total
expenditures from the Endowment in that fiscal year.
(C) The Secretary of the Interior may not recommend any
lands or interest in lands for purchase or other forms of
acquisition using funds made available under the terms of this
section unless the Secretary of the Interior--
(i) has determined that such lands are necessary
for the conservation of endangered species or other
fish and wildlife; and
(ii) has consulted with the county or other unit of
local government in which such lands are located and
with the Governor of the State concerned.
(D) Land or an interest in land may not be acquired with
moneys from the Endowment unless--
(i) the acquisition thereof has been approved by
the Governor of the State in which the land is located;
and
(ii) the owner of the land or interest has offered
the land or interest for acquisition under this
subsection and consented to the acquisition.
(5) Annual report.--The Commission shall, through its
chairman, annually report in detail to the Congress, by not
later than the first Monday in December, regarding the
operations of the Commission during the preceding fiscal year.
(6) State law.--The jurisdiction of any State, both civil
and criminal, over persons upon areas acquired under this
subsection shall not be changed or otherwise affected by reason
of the acquisition and administration of the areas by the
United States as endangered species habitat. Nothing in this subsection
is intended to interfere with the operation of the game laws of the
States.
(7) Administration of areas acquired.--Areas of lands,
waters, or interest therein acquired or reserved pursuant to
this subsection shall, unless otherwise provided by law, be
administered by the Secretary of the Interior under rules and
regulations prescribed by the Secretary to conserve and protect
endangered species in accordance with the Endangered Species
Act of 1973, or to restore or develop adequate wildlife
habitat.
(8) Definitions.--In this subsection:
(A) The term ``Commission'' means the Fish and
Wildlife Conservation Commission established by this
subsection.
(B) The term ``Endowment'' means the National
Endowment for Fish and Wildlife established by this
subsection.
(9) Conforming amendment.--Section 7 of the North American
Wetlands Conservation Act of 1989 (16 U.S.C. 4406) is amended
by adding at the end the following:
``(e) Fish and Wildlife Commission Funding.--In addition to the
amounts made available under subsections (a), (b), and (c) of this
section, the Council may receive funds from the Fish and Wildlife
Commission to carry out the purposes of this Act. Use of such funds
shall not be subject to the cost allocation requirements of section 8
of this Act.''.
SEC. 9003. ALASKA POWER ADMINISTRATION SALE.
(a) Definitions.--For purposes of this section:
(1) The term ``Eklutna assets'' means the Eklutna
Hydroelectric Project and related assets as described in
section 4 and Exhibit A of the Eklutna Purchase Agreement.
(2) The term ``Eklutna Purchase Agreement'' means the
August 2, 1989, Eklutna Purchase Agreement between the Alaska
Power Administration of the Department of Energy and the
Eklutna Purchasers, together with any amendments thereto which
were adopted before the enactment of this section.
(3) The term ``Eklutna Purchasers'' means the Municipality
of Anchorage doing business as Municipal Light and Power, the
Chugach Electric Association, Inc. and the Matanuska Electric
Association, Inc.
(4) The term ``Secretary'' means the Secretary of Energy
except where otherwise specified.
(5) The term ``Snettishan assets'' means the Snettisham
Hydroelectric Project and related assets as described in
section 4 and Exhibit A of the Snettisham Purchase Agreement.
(6) The term ``Snettisham Purchase Agreement'' means the
February 10, 1989, Snettisham Purchase Agreement between the
Alaska Power Administration of the Department of Energy and the
Alaska Power Authority and its successors in interest, together
with any amendments thereto which were adopted before the
enactment of this section.
(b) Sale of Snettisham and Eklunta Assets.--
(1) Snettisham.--The Secretary is authorized and directed
to sell and transfer the Snettisham assets to the State of
Alaska in accordance with the terms of this section and the
Snettisham Purchase Agreement.
(2) Eklutna.--The Secretary is authorized and directed to
sell and transfer the Eklutna assets to the Eklutna Purchasers
in accordance with the terms of this section and the Eklutna
Purchase Agreement.
(3) Cooperation of other agencies.--Other departments,
agencies, and instrumentalities of the United States shall
cooperate with the Secretary in implementing the sales and
transfers under this section.
(4) Authorization of appropriations; contributed funds.--
(A) There are authorized to be appropriated such sums as may be
necessary to prepare, survey, or acquire Snettisham and Eklutna
assets for sale and transfer under this section. Such
preparations and acquisitions shall provide sufficient title in
the assets to ensure beneficial use, enjoyment, and occupancy
thereof to the purchasers.
(B) Notwithstanding any other provision of law, the Alaska
Power Administration is authorized to receive, administer, and
expend such contributed funds as may be provided by the Eklutna
Purchasers or customers or the Snettisham Purchasers or
customers for the purposes of upgrading, improving,
maintaining, or administering Eklutna or Snettisham. Upon the
termination of the Alaska Power Administration required under
subsection (d), the Secretary of Energy shall administer and
expend any remaining balances of such contributed funds for the
purposes intended by the contributors.
(C) The Secretary is directed to use up to $5,000,000 from
unobligated balances available to the Department of Energy to
fund any sale preparation costs for the sales under this
section, and shall provide an accounting of all sale
preparation costs to the Committee on Resources of the House of
Representatives and to the Committee on Energy and Natural
Resources of the Senate within 60 days after completion of the
sale.
(c) General Provisions.--
(1) Rights-of-way and other lands for the eklutna
project.--With respect to Eklutna lands described in Exhibit A
of the Eklutna Purchase Agreement:
(A) The Secretary of the Interior shall issue
rights-of-way to the Alaska Power Administration for
subsequent reassignment to the Eklutna Purchasers at no
cost to the Eklutna Purchasers.
(B) Such rights-of-way shall remain effective for a
period equal to the life of the Eklutna hydroelectric
project as extended by improvements, repairs, renewals,
or replacements.
(C) Such rights-of-way shall be sufficient for the
operation, maintenance, repair, and replacement of, and
access to, the facilities of the Eklutna hydroelectric
project located on military lands and lands managed by
the Bureau of Land Management, including land selected
by, but not yet conveyed to, the State of Alaska.
(D) If the Eklutna Purchasers subsequently sell or
transfer the Eklutna hydroelectric project to private
ownership, the Bureau of Land Management may assess
reasonable and customary fees for continued use of the
rights-of-way on lands managed by the Bureau of Land
Management and military lands in accordance with
applicable law.
(E) The Secretary shall transfer fee title to lands
at Anchorage Substation to the Eklutna Purchasers at no
additional cost if the Secretary of the Interior
determines that pending claims to and selections of
those lands are invalid or relinquished.
(F) With respect only to the Eklutna lands
identified in Exhibit A of the Eklutna Purchase
Agreement, the State of Alaska may select, and the
Secretary of the Interior shall convey, to the State,
improved lands under the selection entitlements in
section 6 of the Alaska Statehood Act (Public Law 85-
508; 72 Stat. 339) and the North Anchorage Land
Agreement of January 31, 1983. The conveyance of such
lands is subject to the rights-of-way provided to the
Eklutna Purchasers under subparagraph (A).
(2) Lands for the snettisham project.--With respect to the
Snettisham lands identified in Exhibit A of the Snettisham
Purchase Agreement, the State of Alaska may select, and the
Secretary of the Interior shall convey to the State, improved
lands under the selection entitlement in section 6 of the
Alaska Statehood Act (Public Law 85-508; 72 Stat. 339).
(3) Effect on state selections.--Notwithstanding the
expiration of the right of the State of Alaska to make
selections under section 6 of the Alaska Statehood Act (Public
Law 85-508; 72 Stat. 339), the State of Alaska may select lands
authorized for selection under this section or any Purchase
Agreement incorporated into or ratified by this section. The
State shall complete such selections within one year after the
date of the enactment of this section. The Secretary of the
Interior shall convey lands selected by the State under this
section notwithstanding the limitation contained in section
6(b) of the Alaska Statehood Act (Public Law 85-508; 72 Stat.
339) regarding the occupancy, appropriation, or reservation of
selected lands. Nothing in this subsection shall be construed
to authorize the Secretary of the Interior to convey to the
State of Alaska a total acreage of selected lands in excess of
the total acreage which could be transferred to the State of
Alaska pursuant to the Alaska Statehood Act (Public Law 85-508;
72 Stat. 339), and other applicable law.
(4) Repeal of act of august 9, 1955.--The Act of August 9,
1955 (69 Stat. 618), concerning water resources investigations
in Alaska, is repealed.
(5) Treatment of asset sale.--The sales of assets under
this section shall not be considered a disposal of Federal
surplus property under the Federal Property and Administrative
Services Act of 1949 (40 U.S.C. 484) or the Surplus Property
Act of 1944 (50 U.S.C. App. 1622).
(6) Application of certain laws.--(A) The Act of July 31,
1950 (64 Stat. 382), shall cease to apply on the date, as
determined by the Secretary, when all Eklutna assets have been
conveyed to the Eklutna Purchasers.
(B) Section 204 of the Flood Control Act of 1962 (Public
Law 87-874; 76 Stat. 1193) shall cease to apply effective on
the date, as determined by the Secretary, when all Snettisham
assets have been conveyed to the State of Alaska.
(d) Termination of Alaska Power Administration.--
(1) Termination of alaska power administation.--Not later
than one year after both of the sales authorized in this
section have occurred, as measured by the Transaction Dates
stipulated in the Purchase Agreements, the Secretary shall--
(A) complete the business of, and close out, the
Alaska Power Administration;
(B) prepare and submit to Congress a report
documenting the sales; and
(C) return unobligated balances of funds
appropriated for the Alaska Power Administration to the
Treasury of the United States.
(2) DOE organization act.--Section 302(a) of the Department
of Energy Organization Act (42 U.S.C. 7152(a)) is amended as
follows:
(A) In paragraph (1)--
(i) by striking out subparagraph (C); and
(ii) by redesignating subparagraphs (D),
(E), and (F) as subparagraphs (C), (D), and (E)
respectively.
(B) In paragraph (2), by striking out ``the
Bonneville Power Administration, and the Alaska Power
Administration'' and inserting in lieu thereof ``and
the Bonneville Power Administration''.
The amendments made by this paragraph shall take effect on the
date on which the Secretary submits the report referred to in
subparagraph (B) of paragraph (1).
(e) Proceeds.--The proceeds from the sale of Snettisham and Eklutna
assets under this section shall be credited to miscellaneous receipts
in the Treasury.
(f) Section 147(d) of Internal Revenue Code.--For purposes of
section 147(d) of the Internal Revenue Code of 1986, the ``first use''
of Snettisham shall be considered to occur pursuant to acquistion of
the property by or on behalf of the State of Alaska.
PART 2--HELIUM PRIVATIZATION
SEC. 9011. SHORT TITLE.
This part may be cited as the ``Helium Privatization Act of 1995''.
SEC. 9012. AMENDMENT OF HELIUM ACT.
Except as otherwise expressly provided, whenever in this part an
amendment or repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the reference shall be considered to
be made to a section or other provision of the Helium Act (50 U.S.C.
167 to 167n).
SEC. 9013. AUTHORITY OF SECRETARY.
Sections 3, 4, and 5 are amended to read as follows:
``SEC. 3. AUTHORITY OF SECRETARY.
``(a) Extraction and Disposal of Helium on Federal Lands.--(1) The
Secretary may enter into agreements with private parties for the
recovery and disposal of helium on Federal lands upon such terms and
conditions as he deems fair, reasonable and necessary. The Secretary
may grant leasehold rights to any such helium. The Secretary may not
enter into any agreement by which the Secretary sells such helium other
than to a private party with whom the Secretary has an agreement for
recovery and disposal of helium. Such agreements may be subject to such
rules and regulations as may be prescribed by the Secretary.
``(2) Any agreement under this subsection shall be subject to the
existing rights of any affected Federal oil and gas lessee. Each such
agreement (and any extension or renewal thereof) shall contain such
terms and conditions as deemed appropriate by the Secretary.
``(3) This subsection shall not in any manner affect or diminish
the rights and obligations of the Secretary and private parties under
agreements to dispose of helium produced from Federal lands in
existence at the enactment of the Helium Privatization Act of 1995
except to the extent that such agreements are renewed or extended after
such date.
``(b) Storage, Transportation, and Sale.--The Secretary is
authorized to store, transport, and sell helium only in accordance with
this Act.
``(c) Monitoring and Reporting.--The Secretary is authorized to
monitor helium production and helium reserves in the United States and
to periodically prepare reports regarding the amounts of helium
produced and the quantity of crude helium in storage in the United
States.
``SEC. 4. STORAGE, TRANSPORTATION, AND WITHDRAWAL OF CRUDE HELIUM.
``(a) Storage, Transportation, and Withdrawal.--The Secretary is
authorized to store and transport crude helium and to maintain and
operate existing crude helium storage at the Bureau of Mines Cliffside
Field, together with related helium transportation and withdrawal
facilities.
``(b) Cessation of Production, Refining, and Marketing.--Effective
18 months after the date of enactment of the Helium Privatization Act
of 1995, the Secretary shall cease producing, refining and marketing
refined helium and shall cease carrying out all other activities
relating to helium which the Secretary was authorized to carry out
under this Act before the date of enactment of the Helium Privatization
Act of 1995, except those activities described in subsection (a). The
amount of helium reserves owned by the United States and stored in the
Bureau of Mines Cliffside Field at such date of cessation, less
600,000,000 cubic feet, shall be the helium reserves owned by the
United States required to be sold pursuant to section 8(b) hereof.
``(c) Disposal of Facilities.--(1) Within two years after the date
on which the Secretary ceases producing, refining and marketing refined
helium and ceases all other activities relating to helium in accordance
with subsection (b), the Secretary shall dispose of all facilities,
equipment, and other real and personal property, together with all
interests therein, held by the United States for the purpose of
producing, refining and marketing refined helium. The disposal of such
property shall be in accordance with the provisions of law governing
the disposal of excess or surplus properties of the United States.
``(2) All proceeds accruing to the United States by reason of the
sale or other disposal of such property shall be treated as moneys
received under this chapter for purposes of section 6(f). All costs
associated with such sale and disposal (including costs associated with
termination of personnel) and with the cessation of activities under
subsection (b) shall be paid from amounts available in the helium
production fund established under section 6(f).
``(3) Paragraph (1) shall not apply to any facilities, equipment,
or other real or personal property, or any interest therein, necessary
for the storage and transportation of crude helium or any equipment
needed to maintain the purity, quality control, and quality assurance
of helium in the reserve.
``(d) Existing Contracts.--All contracts which were entered into by
any person with the Secretary for the purchase by such person from the
Secretary of refined helium and which are in effect on the date of the
enactment of the Helium Privatization Act of 1995 shall remain in force
and effect until the date on which the facilities referred to in
subsection (c) are disposed of. Any costs associated with the
termination of such contracts shall be paid from the helium production
fund established under section 6(f).
``SEC. 5. FEES FOR STORAGE, TRANSPORTATION AND WITHDRAWAL.
``Whenever the Secretary provides helium storage, withdrawal, or
transportation services to any person, the Secretary is authorized and
directed to impose fees on such person to reimburse the Secretary for
the full costs of providing such storage, transportation, and
withdrawal. All such fees received by the Secretary shall be treated as
moneys received under this Act for purposes of section 6(f).''.
SEC. 9014. SALE OF CRUDE HELIUM.
Section 6 is amended as follows:
(1) Subsection (a) is amended by striking out ``from the
Secretary'' and inserting ``from persons who have entered into
enforceable contracts to purchase an equivalent amount of crude
helium from the Secretary''.
(2) Subsection (b) is amended by inserting ``crude'' before
``helium'' and by adding the following at the end thereof:
``Except as may be required by reason of subsection (a), the
Secretary shall not make sales of crude helium under this
section in such amounts as will disrupt the market price of
crude helium.''.
(3) Subsection (c) is amended by inserting ``crude'' before
``helium'' the first place it appears and by striking
``together with interest as provided in subsection (d) of this
section'' and all that follows down through the period at the
end of such subsection and inserting the following:
``all funds required to be repaid to the United States as of October 1,
1995, under this section (hereinafter referred to as `repayable
amounts'). The price at which crude helium is sold by the Secretary
shall not be less than the amount determined by the Secretary as
follows:
``(1) Divide the outstanding amount of such repayable
amounts by the volume (in mcf) of crude helium owned by the
United States and stored in the Bureau of Mines Cliffside Field
at the time of the sale concerned.
``(2) Adjust the amount determined under paragraph (1) by
the Consumer Price Index for years beginning after December 31,
1995.''.
(4) Subsection (d) is amended to read as follows:
``(d) Extraction of Helium From Deposits on Federal Lands.--All
moneys received by the Secretary from the sale or disposition of helium
on Federal lands shall be paid to the Treasury and credited against the
amounts required to be repaid to the Treasury under subsection (c) of
this section.''.
(5) Subsection (e) is repealed.
(6) Subsection (f) is amended by inserting ``(1)'' after
``(f)'' and by adding the following at the end thereof:
``(2) Within 7 days after the commencement of each fiscal year
after the disposal of the facilities referred to in section 4(c), all
amounts in such fund in excess of $2,000,000 (or such lesser sum as the
Secretary deems necessary to carry out this Act during such fiscal
year) shall be paid to the Treasury and credited as provided in
paragraph (1). Upon repayment of all amounts referred to in subsection
(c), the fund established under this section shall be terminated and
all moneys received under this Act shall be deposited in the Treasury
as General Revenues.''.
SEC. 9015. ELIMINATION OF STOCKPILE.
Section 8 is amended to read as follows:
``SEC. 8. ELIMINATION OF STOCKPILE.
``(a) Review of Reserves.--The Secretary shall review annually the
known helium reserves in the United States and make a determination as
to the expected life of the domestic helium reserves (other than
Federally owned helium stored at the Cliffside Reservoir) at that time.
``(b) Stockpile Sales.--Not later than January 1, 2005, the
Secretary shall commence offering for sale crude helium from helium
reserves owned by the United States in such minimum annual amounts as
would be necessary to dispose of all such helium reserves in excess of
600,000,000 cubic feet (mcf) on a straight-line basis between such date
and January 1, 2015: Provided, That the minimum price for all such
sales, as determined by the Secretary in consultation with the helium
industry, shall be such as will ensure repayment of the amounts
required to be repaid to the Treasury under section 6(c), and provided
further that the minimum annual sales requirement may be deferred only
if, and to the extent that, the Secretary is unable to arrange sales at
the minimum price. The sales shall be at such times during each year
and in such lots as the Secretary determines, in consultation with the
helium industry, are necessary to carry out this subsection with
minimum market disruption.
``(c) Discovery of Additional Reserves.--The discovery of
additional helium reserves shall not affect the duty of the Secretary
to make sales of helium as provided in subsection (b), as the case may
be.''.
SEC. 9016. REPEAL OF AUTHORITY TO BORROW.
Sections 12 and 15 are repealed.
SEC. 9017. REPORTS.
Section 16 is amended by redesignating existing section 16 as
section 16(a) and inserting the following at the end thereof:
``(b)(1) The Inspector General of the Department of the Interior
shall cause to be prepared, not later than March 31 following each
fiscal year commencing with the date of enactment of the Helium
Privatization Act of 1995, annual financial statements for the Helium
Operations of the Bureau of Mines. The Director of the Bureau of Mines
shall cooperate with the Inspector General in fulfilling this
requirement, and shall provide him with such personnel and accounting
assistance as may be necessary for that purpose. The financial
statements shall be audited by the General Accounting Office, and a
report on such audit shall be delivered by the General Accounting
Office to the Secretary of the Interior and Congress, not later than
June 30 following the end of the fiscal year for which they are
prepared. The audit shall be prepared in accordance with generally
accepted government auditing standards.
``(2) The financial statements shall be comprised of the following:
``(A) A balance sheet reflecting the overall financial
position of the Helium Operations, including assets and
liabilities thereof;
``(B) the Statement of Operations, reflecting the fiscal
period results of the Helium Operations;
``(C) a statement cash flows or changes in financial
position of the Helium Operations; and
``(D) a reconciliation of budget reports of the Helium
Operations.
``(3) The Statement of Operations shall include but not be limited
to the revenues from, and costs of, sales of crude helium, the storage
and transportation of crude helium, the production, refining and
marketing of refined helium, and the maintenance and operation of
helium storage facilities at the Bureau of Mines Cliffside Field. The
term `revenues' for this purpose shall exclude (A) royalties paid to
the United States for production of helium or other extraction of
resources, except to the extent that the Helium Operations incur direct
costs in connection therewith, and (B) proceeds from sales of assets
other than inventory. The term `expenses' shall include, but not be
limited to (i) all labor costs of the Bureau of Mines Helium
Operations, and of the Department of the Interior in connection
therewith, and (ii) for financial reporting purposes but not in
connection with the determination of sales prices in section 6(c), all
current-period interest on outstanding repayable amounts (as described
in section 6(c)) calculated at the same rates as such interest was
calculated prior to the enactment of the Helium Privatization Act of
1995.
``(4) The balance sheet shall include, but not be limited to, on
the asset side, the present discounted market value of crude helium
reserves; and on the liability side, the accrued liability for
principal and interest on debt to the United States. For financial
reporting purposes but not in connection with the determination of
sales prices in section 6(c), the balance sheet shall also include
accrued but unpaid interest on outstanding repayable amounts (as
described in section 6(c)) through the date of the report, calculated
at the same rates as such interest was calculated prior to the
enactment of the Helium Privatization Act of 1995.''.
SEC. 9018. LAND CONVEYANCE IN POTTER COUNTY, TEXAS.
(a) In General.--The Secretary of the Interior shall transfer all
right, title, and interest of the United States in and to the parcel of
land described in subsection (b) to the Texas Plains Girl Scout Council
for consideration of $1, reserving to the United States such easements
as may be necessary for pipeline rights-of-way.
(b) Land Description.--The parcel of land referred to in subsection
(a) is all those certain lots, tracts or parcels of land lying and
being situated in the County of Potter and State of Texas, and being
the East Three Hundred Thirty-One (E331) acres out of Section Seventy-
eight (78) in Block Nine (9), B.S. & F. Survey, (sometimes known as the
G. D. Landis pasture) Potter County, Texas, located by certificate No.
1/39 and evidenced by letters patents Nos. 411 and 412 issued by the
State of Texas under date of November 23, 1937, and of record in Vol.
66A of the Patent Records of the State of Texas. The metes and bounds
description of such lands is as follows:
(1) First tract.--One Hundred Seventy-one (171) acres of
land known as the North part of the East part of said survey
Seventy-eight (78) aforesaid, described by metes and bounds as
follows:
Beginning at a stone 20 x 12 x 3 inches marked X, set
by W. D. Twichell in 1905, for the Northeast corner of
this survey and the Northwest corner of Section 59;
Thence, South 0 degrees 12 minutes East with the West
line of said Section 59, 999.4 varas to the Northeast
corner of the South 160 acres of East half of Section
78;
Thence, North 89 degrees 47 minutes West with the North
line of the South 150 acres of the East half, 956.8
varas to a point in the East line of the West half
Section 78;
Thence North 0 degrees 10 minutes West with the East
line of the West half 999.4 varas to a stone 18 x 14 x
3 inches in the middle of the South line of Section 79;
Thence South 89 degrees 47 minutes East 965 varas to
the place of beginning.
(2) Second tract.--One Hundred Sixty (160) acres of land
known as the South part of the East part of said survey No.
Seventy-eight (78) described by metes and bounds as follows:
Beginning at the Southwest corner of Section 59, a
stone marked X and a pile of stones;
Thence North 89 degrees 47 minutes West with the North
line of Section 77, 966.5 varas to the Southeast corner
of the West half of Section 78; Thence North 0 degrees
10 minutes West with the East line of the West half of
Section 78;
Thence South 89 degrees 47 minutes East 965.8 varas to
a point in the East line of Section 78;
Thence South 0 degrees 12 minutes East 934.6 varas to
the place of beginning.
Containing an area of 331 acres, more or less.
Subtitle B--Water and Power
PART 1--POWER MARKETING ADMINISTRATIONS
SEC. 9201. SHORT TITLE.
This part may be cited as the ``Power Administration Act''.
SEC. 9202. EVALUATION OF SALES OF SOUTHEASTERN, SOUTHWESTERN, AND
WESTERN AREA POWER ADMINISTRATION FACILITIES.
(a) Repeals.--The following provisions are repealed:
(1) Section 505 of Public Law 102-377, the Fiscal Year 1993
Energy and Water Development Appropriations Act.
(2) Section 208 of Public Law 99-349, the Urgent
Supplemental Appropriations Act, 1986.
(3) Section 510 of Public Law 101-514, the Fiscal Year 1991
Energy and Water Development appropriations Act.
(b) Evaluation of Issues.--(1) The Secretary of Energy, the
Secretary of the Interior, and the Secretary of the Army shall enter
into arrangements with an experienced private sector firm to serve as
advisor to the Secretaries with respect to the sale of the facilities
used to generate and transmit the electric power marketed by the
Southeastern Power Administration, the Southwestern Power
Administration and the Western Area Power Administration, including all
transmission and related structures, equipment, facilities and all
real, tangible and intangible property (including rights-of-way) which
are used in connection with, and necessary for, the operation of such
power generation and transmission facilities.
(2) Prior to December 31, 1996, the advisor shall provide to the
Secretaries and the Congress a report identifying all recipients of
water and power from such facilities, all relevant contracts, debt
obligations, equity interests, and other binding agreements which apply
to the facilities concerned and to the sale of electric power from such
facilities, all assets tangible or intangible, all applicable
requirements relating to environmental mitigation, Indian trust
responsibilities, land ownership or use rights relevant to the proposed
transfers which could terminate based on a transfer out of Federal
ownership, and navigational requirements which affect the operation of
such facilities.
(3) In conducting the evaluation, the Secretaries and the advisor
should also recognize that many of the dams and reservoirs associated
with the generation of electric power marketed by the Power Marketing
Administrations are first and foremost water supply, flood control, or
navigation projects. In general, power generation is incidental to
these primary purposes. In addition, there are also secondary purposes
such as recreation and environmental values which are served by these
facilities as well as the power production. The evaluation should
assume that such facilities will continue to be operated in a manner
consistent with their current, primary purposes and the evaluation
directed by this section shall not assume any changes in the other
current operational objectives of the facilities.
(4) Such evaluation shall also include an evaluation of the tax
consequences, and the revenue impacts of such consequences for the
United States, of possible arrangements for the sale of generation and
transmission facilities to potential transferees identified by the
advisor. The report shall also investigate alternative groupings of
such generation and transmission facilities for purposes of sale in
order to determine which groupings would be most desirable for purposes
of effectuating such sales. Proposed transfers should be structured by
watershed or by project unless the advisor can provide satisfactory
information to the Secretaries that another alternative should be used.
Asset groupings shall specifically be designed to avoid the sale of the
most valuable assets while the Federal government would be forced to
retain the less valuable assets.
SEC. 9203. BONNEVILLE POWER ADMINISTRATION APPROPRIATIONS REFINANCING.
(a) Definitions.--For the purposes of this section:
(1) The term ``Administrator'' means the Administrator of
the Bonneville Power Administration.
(2) The term ``capital investment'' means a capitalized
cost funded by Federal appropriations that--
(A) is for a project, facility, or separable unit
or feature of a project or facility;
(B) is a cost for which the Administrator is
required by law to establish rates to repay to the
United States Treasury through the sale of electric
power, transmission, or other services;
(C) excludes a Federal irrigation investment; and
(D) excludes an investment financed by the current
revenues of the Administrator or by bonds issued and
sold, or authorized to be issued and sold, by the
Administrator under section 13 of the Federal Columbia
River Transmission System Act (16 U.S.C. 838(k)).
(3) The term ``new capital investment'' means a capital
investment for a project, facility, or separable unit or
feature of a project or facility, placed in service after
September 30, 1995.
(4) The term ``old capital investment'' means a capital
investment whose capitalized cost--
(A) was incurred, but not repaid, before October 1,
1995; and
(B) was for a project, facility, or separable unit
or feature of a project or facility, placed in service
before October 1, 1995.
(5) The term ``repayment date'' means the end of the period
within which the Administrator's rates are to assure the
repayment of the principal amount of a capital investment.
(6) The term ``Treasury rate'' means--
(A) for an old capital investment, a rate
determined by the Secretary of the Treasury, taking
into consideration prevailing market yields, during the
month preceding October 1, 1995, on outstanding
interest-bearing obligations of the United States with
periods to maturity comparable to the period between
October 1, 1995, and the repayment date for the old
capital investment; and
(B) for a new capital investment, a rate determined
by the Secretary of the Treasury, taking into
consideration prevailing market yields, during the
month preceding the beginning of the fiscal year in
which the related project, facility, or separable unit
or feature is placed in service, on outstanding
interest-bearing obligations of the United States with periods to
maturity comparable to the period between the beginning of the fiscal
year and the repayment date for the new capital investment.
(b) New Principal Amounts.--(1) Effective October 1, 1995, an old
capital investment shall have a new principal amount that is the sum
of--
(A) the present value of the old payment amounts for the
old capital investment, calculated using a discount rate equal
to the Treasury rate for the old capital investment; and
(B) an amount equal to $100,000,000 multiplied by a
fraction whose numerator is the principal amount of the old
payment amounts for the old capital investment and whose
denominator is the sum of the principal amounts of the old
payment amounts for all old capital investments.
(2) With the approval of the Secretary of the Treasury based solely
on consistency with this Act, the Administrator shall determine the new
principal amounts under paragraph (1) and the assignment of interest
rates to the new principal amounts under subsection (c).
(3) For the purposes of this section, ``old payment amounts''
means, for an old capital investment, the annual interest and principal
that the Administrator would have paid to the United States Treasury
from October 1, 1995, if this section were not enacted, assuming that--
(A) the principal were repaid--
(i) on the repayment date the Administrator
assigned before October 1, 1993, to the old capital
investment, or
(ii) with respect to an old capital investment for
which the Administrator has not assigned a repayment
date before October 1, 1993, on a repayment date the
Administrator shall assign to the old capital
investment in accordance with paragraph 10(d)(1) of the
version of Department of Energy Order RA 6120.2 in
effect on October 1, 1993; and
(B) interest were paid--
(i) at the interest rate the Administrator assigned
before October 1, 1993, to the old capital investment,
or
(ii) with respect to an old capital investment for
which the Administrator has not assigned an interest
rate before October 1, 1993, at a rate determined by
the Secretary of the Treasury, taking into
consideration prevailing market yields, during the
month preceding the beginning of the fiscal year in
which the related project, facility, or separable unit
or feature is placed in service, on outstanding
interest-bearing obligations of the United States with
periods to maturity comparable to the period between
the beginning of the fiscal year and the repayment date
for the old capital investment.
(c) Interest Rate for New Principal Amounts.--As of October 1,
1995, the unpaid balance on the new principal amount established for an
old capital investment under subsection (b) shall bear interest
annually at the Treasury rate for the old capital investment until the
earlier of the date that the new principal amount is repaid or the
repayment date for the new principal amount.
(d) Repayment Dates.--As of October 1, 1995, the repayment date for
the new principal amount established for an old capital investment
under subsection (b) shall be no earlier than the repayment date for
the old capital investment assumed in subsection (b)(3)(A).
(e) Prepayment Limitations.--During the period October 1, 1995,
through September 30, 2000, the total new principal amounts of old
capital investments, as established under subsection (b), that the
Administrator may pay before their respective repayment dates shall not
exceed $100,000,000.
(f) Interest Rates for New Capital Investments During
Construction.--(1) The principal amount of a new capital investment
includes interest in each fiscal year of construction of the related
project, facility, or separable unit or feature at a rate equal to the
one-year rate for the fiscal year on the sum of--
(A) construction expenditures that were made from the date
construction commenced through the end of the fiscal year, and
(B) accrued interest during construction.
(2) The Administrator shall not be required to pay, during
construction of the project, facility, or separable unit or feature,
the interest calculated, accrued, and capitalized under paragraph (1).
(3) For the purposes of this subsection, ``one-year rate'' for a
fiscal year means a rate determined by the Secretary of the Treasury,
taking into consideration prevailing market yields, during the month
preceding the beginning of the fiscal year, on outstanding interest-
bearing obligations of the United States with periods to maturity of
approximately one year.
(g) Interest Rates for New Capital Investments.--The unpaid balance
on the principal amount of a new capital investment bears interest at
the Treasury rate for the new capital investment from the date the
related project, facility, or separable unit or feature is placed in
service until the earlier of the date the new capital investment is
repaid or the repayment date for the new capital investment.
(h) Credits to Administrator's Payments to the United States
Treasury.--The Confederated Tribe of the Colville Reservation Grand
Coulee Dam Settlement Act (Public Law 103-436) is amended by striking
section 6 and inserting the following:
``SEC. 6. CREDITS TO ADMINISTRATOR'S PAYMENTS TO THE UNITED STATES
TREASURY.
``(a) In General.--So long as the Adminisatrator makes annual
payments to the tribes under the settlement agreement, the
Administrator shall apply against amounts otherwise payable by the
Administrator to the United States Treasury a credit that reduces the
Administrator's payment in the amount and for each fiscal year as
follows: $15,250,000 in fiscal year 1996; $15,860,000 in fiscal year
1997; $16,490,000 in fiscal year 1998; $17,150,000 in fiscal year 1999;
$17,840,000 in fiscal year 2000; and $4,100,000 in each succeeding
fiscal year.
``(b) Definitions.--For the purposes of this section--
``(1) the term `settlement agreement' means that settlement
agreement between the United States of America and the
Confederated Tribes of the Colville Reservation signed by the
Tribes on April 16, 1994, and by the United States of America
on April 21, 1994, which settlement agreement resolves claims
of the Tribes in Docket 181-D of the Indian Claims Commission,
which docket has been transferred to the United States Court of
Federal Claims; and
``(2) the term `Tribes' means the Confederated Tribes of
the Colville Reservation, a Federally recognized Indian
Tribe.''.
(i) Contract Provisions.--In each contract of the Administrator
that provides for the Administrator to sell electric power,
transmission, or related services, and that is in effect after
September 30, 1995, the Administrator shall offer to include, or as the
case may be, shall offer to amend to include, provisions specifying
that after September 30, 1995--
(1) the Administrator shall establish rates and charges on
the basis that--
(A) the principal amount of an old capital
investment shall be no greater than the new principal
amount established under subsection (b);
(B) the interest rate applicable to the unpaid
balance of the new principal amount of an old capital
investment shall be no greater than the interest rate
established under subsection (c);
(C) any payment of principal of an old capital
investment shall reduce the outstanding principal
balance of the old capital investment in the amount of
the payment at the time the payment is tendered; and
(D) any payment of interest on the unpaid balance
of the new principal amount of an old capital
investment shall be a credit against the appropriate
interest account in the amount of the payment at the
time the payment is tendered;
(2) apart from charges necessary to repay the new principal
amount of an old capital investment as established under
subsection (b), and to pay the interest on the principal amount
under subsection (c), no amount may be charged for return to
the United States Treasury as repayment for or return on an old
capital investment, whether by way of rate, rent, lease
payment, assessment, user charge, or any other fee;
(3) amounts provided under section 1304 of title 31, United
States Code, shall be available to pay, and shall be the sole
source for payment of, a judgment against or settlement by the
Administrator or the United States on a claim for a breach of
the contract provisions required by this Act; and
(4) the contract provisions specified in this Act shall
not--
(A) preclude the Administrator from recovering,
through rates or other means, any tax that is generally
imposed on electric utilities in the United States, or
(B) affect the Administrator's authority under
applicable law, including section 7(g) of the Pacific
Northwest Electric Power Planning and Conservation Act
(16 U.S.C. 839e(g)), to--
(i) allocate costs and benefits, including
but not limited to fish and wildlife costs, to
rates or resources, or
(ii) design rates.
(j) Savings Provisions.--(1) This section does not affect the
obligation of the Administrator to repay the principal associated with
each capital investment, and to pay interest on the principal, only
from the ``Administrator's net proceeds,'' as defined in section 13 of
the Federal Columbia River Transmission System Act (16 U.S.C. 838k(b)).
(2) Except as provided in subsection (e) of this section, this
section does not affect the authority of the Administrator to pay all
or a portion of the principal amount associated with a capital
investment before the repayment date for the principal amount.
(k) DOE Study.--(1) The Administrator shall undertake a study to
determine the effect that increases in the rates for electric power
sales made by the Administrator may have on the customer base of the
Bonneville Power Administration. Such study shall identify other
sources of electric power that may be available to customers of the
Bonneville Power Administration and shall estimate the level at which
higher rates for power sales by the Administration may result in the
loss of customers by the Administration.
(2) The Administrator shall undertake a study to determine the
total prior costs incurred by the Bonneville Power Administration for
compliance with the provisions of the Endangered Species Act of 1973
and the total future costs anticipated to be incurred by the
Administration for compliance with such provisions.
(3) The Administrator shall submit the results of the studies
undertaken under this section to the Congress within 180 days after the
date of the enactment of this Act.
PART 2--RECLAMATION
SEC. 9211. PREPAYMENT OF CERTAIN REPAYMENT CONTRACTS BETWEEN THE UNITED
STATES AND THE CENTRAL UTAH WATER CONSERVANCY DISTRICT.
The second sentence of section 210 of the Central Utah Project
Completion Act (106 Stat. 4624) is amended to read as follows: ``The
Secretary of the Interior shall allow for prepayment of the repayment
contract between the United States and the Central Utah Water
Conservancy District dated December 28, 1965, and supplemented on
November 26, 1985, providing for repayment of the municipal and
industrial water delivery facilities for which repayment is provided
pursuant to such contract, under such terms and conditions as the
Secretary deems appropriate to protect the interest of the United
States, which shall be similar to the terms and conditions contained in
the supplemental contract that provided for the prepayment of the
Jordan Aqueduct dated October 28, 1993. The District shall exercise its
right to prepayment pursuant to this section by the end of fiscal year
2002.''.
SEC. 9212. TREATMENT OF CITY OF FOLSOM AS A CENTRAL VALLEY PROJECT
CONTRACTOR.
For the purposes of being considered eligible to be a transferee of
Central Valley Project water to be used for municipal and industrial
purposes, the city of Folsom, California, shall be treated as a Central
Valley Project contractor as of November 1, 1990.
SEC. 9213. SLY PARK.
(a) Short Title.--This section may be cited as the ``Sly Park Unit
Conveyance Act''.
(b) Definitions.--For purposes of this section:
(1) The term ``El Dorado Irrigation District'' or
``District'' means a political subdivision of the State of
California duly organized, existing, and acting pursuant to the
laws thereof with its principal place of business in the city
of Placerville, El Dorado County, California.
(2) The term ``Secretary'' means the Secretary of the
Interior.
(3) The term ``Sly Park Unit'' means the Sly Park Dam and
Reservoir, Camp Creek Diversion Dam and Tunnel and conduits and
canals as authorized under the American River Act of October
14, 1949 (63 Stat. 852), together with all other facilities
owned by the United States including those used to convey and
store water delivered from Sly Park, as well as all recreation
facilities associated thereto.
(c) Sale of the Sly Park Unit.--
(1) In general.--The Secretary shall, within one year after
the date of enactment of this Act, sell and convey to the El
Dorado Irrigation District the Sly Park Unit. Within such one-
year period, the Secretary shall also transfer and assign the
water rights relating to the Sly Park Unit held in trust by the
Secretary for diversion and storage under California State
permits numbered 2631, 5645A, 10473, and 10474 to the El Dorado
Irrigation District.
(2) Sale price.--The sale price shall not exceed--
(A) the construction costs ($30,926,230), as
included in the accounts of the Secretary, plus
(B) interest on the construction costs allocated to
domestic use, at the authorized rate included in
enactment of the Act of October 14, 1949 (63 Stat.
852), up to an agreed upon date, less
(C) all revenues to date as collected under the
terms of the contract between the United States and the
El Dorado Irrigation District, estimated at $9,146,885.
(3) Terms of payment.--The Secretary shall provide for a
payment of the purchase price under paragraph (2) on terms not
to exceed 20 years. The interest rate to be paid by the
District shall be the authorized rate included in the Act of
October 14, 1949 (63 Stat. 852). Section 213(c) of the
Reclamation Reform Act of 1982 (43 U.S.C. 390mm(c)) shall not
apply to the purchase of the Sly Park Unit under this section.
(4) Conveyance.--Upon signing the agreement to carry out
the sale required by this section, the Secretary shall convey
and assign to the El Dorado Irrigation District all right,
title, and interest of the United States in and to the Sly Park
Unit.
(5) No additional environmental impact.--The Congress
specifically finds that (A) the sale, conveyance and assignment
of the Sly Park Unit and water rights under this section
involves the transfer of the ownership and operation of an
existing ongoing water project, (B) the Sly Park Unit
operation, facilities and water rights have been, and after the
sale and transfer will continue to be, committed to maximum
reasonable and beneficial use for existing services, and (C)
the sale, conveyance and assignment of the Sly Park Unit and
water rights does not involve any additional growth or
expansion of the project or other environmental impacts.
Consequently, the sale, conveyance and assignment of the Sly
Park Unit and water rights shall not be subject to
environmental review pursuant to the National Environmental
Policy Act of 1969 (42 U.S.C. 4332) or endangered species
review or consultation pursuant to section 7 of the Endangered
Species Act of 1973 (16 U.S.C. 1536).
SEC. 9214. HETCH HETCHY DAM.
Section 7 of the Act of December 19, 1913 (38 Stat. 242), is
amended--
(1) by striking ``$30,000'' in the first sentence and
inserting ``$8,000,000'', and
(2) by amending the second and third sentences to read as
follows: ``These funds shall be placed in a separate fund by
the United States and, notwithstanding any other provision of
law, shall not be available for obligation or expenditure until
appropriated by the Congress. The highest priority use of the
funds shall be for annual operation of Yosemite National Park,
with the remainder of any funds to be used to fund operations
of other national parks in the State of California.''.
Subtitle C--National Parks, Forests, and Public Lands
PART 1--CONCESSION REFORM
SEC. 9301. SHORT TITLE.
This part may be cited as the ``Visitor Facilities and Services
Enhancement Act of 1995''.
SEC. 9302. PURPOSE.
The purpose of this part is to ensure that quality visitor
facilities and services are provided by the Federal land management
agencies (Forest Service, United States Fish and Wildlife Service,
National Park Service, Bureau of Land Management, Bureau of Reclamation
and United States Army Corps of Engineers). Each Federal land
management agency shall implement a program to encourage appropriate
development and operation of services and facilities for the
accommodation of visitors. The program implemented by each such agency
shall consist of actions which--
(1) recognize the importance of the private sector in
providing a quality visitor experience on Federal lands by
encouraging private sector investments for facilities and
services on Federal lands under a fair and competitive process;
(2) establish the basis for an effective relationship
between the land management agencies and private businesses
operating on public lands and waters in efforts to serve the
public and to protect the resources of these areas;
(3) measure quality and value of services provided by
concessioners and provide incentives for consistent excellence.
(4) ensure a fair return to the Federal Government; and
(5) are consistent among the various agencies to the extent
practicable in order to increase efficiency of the Federal
Government and simplify requirements for concessioners.
SEC. 9303. DEFINITIONS.
For the purposes of this part:
(1) The term ``adjusted gross receipts'' means gross
receipts less revenue derived from goods and services provided
on other than Federal lands or conveyed to units of Government
for hunting or fishing licenses or for entrance or recreation
fees, or from such other exclusions as the Secretary concerned
might apply.
(2) The term ``agency head'' means the head of an agency or
his or her designated representative.
(3) The term ``concessioner'' means a person or other
entity acting under a concession authorization which provides
public services, facilities, or activities on Federal lands or
waters pursuant to a concession services agreement or
concession license.
(4) The term ``concession license'' means a written
contract between the agency head and the concessioner which
sets forth the terms and conditions under which the
concessioner is authorized to provide recreation services or
activities on a limited basis as well as the rights and
obligations of the Federal Government.
(5) The term ``concession service agreement'' means a
written contract between the agency head and the concessioner
which sets forth the terms and conditions under which the
concessioner is authorized to provide visitor services,
facilities, or activities as well as the rights and obligations
of the Federal Government.
(6) The term ``gross receipts'' means revenue from goods or
services provided by concession services, facilities, or
activities on Federal lands and waters.
(7) The term ``performance incentive'' means a credit based
on past performance toward the score awarded by the Secretary
to a concessioner's proposal submitted in response to a
solicitation for the reissuance of such contract.
(8) The term ``proposal'' means the complete submission for
a concession service agreement offered in response to the
solicitation for such concession service agreement.
(9) The term ``prospectus'' means a document or documents
issued by the Secretary concerned and included with a
solicitation which sets forth the minimum requirements for the
award of a concession service agreement.
(10) The term ``Secretary concerned'' means--
(A) the Secretary of the Interior with respect to
the United States Fish and Wildlife Service, National
Park Service, Bureau of Land Management, and Bureau of
Reclamation;
(B) the Secretary of Agriculture with respect to
the Forest Service; and
(C) the Secretary of the Army with respect to the
United States Army Corps of Engineers.
(11) The term ``solicitation'' means a request by the
Secretary concerned for proposals in response to a prospectus.
SEC. 9304. NATURE AND TYPES OF CONCESSION AUTHORIZATIONS.
(a) In General.--The Secretary concerned may enter into concession
authorizations, as follows:
(1) Concession services agreement.--A concession service
agreement shall be entered into for all concessions where the
Secretary concerned makes a finding that the provision of
concession services is in the interest of the Federal
Government and issues either a competitive offering for
concession services, facilities or activities or a
noncompetitive offering for such services, facilities, or
activities based on a finding that due to special circumstances
it is not in the public interest of the United States to award
a concession service agreement on a competitive basis. Where
the concessioner develops or uses fixed facilities on Federal
lands, the Secretary concerned shall issue a lease.
(2) Concession license.--Whenever the Secretary concerned
makes a finding that public enjoyment of Federal lands would be
enhanced through the provision of concession services and that
there exists no need to limit the number of concessioners
providing such services, he shall consider entering into a
concession license with a qualified concessioner. Activities
covered under a concession license would typically be one-time,
intermittent, or infrequently scheduled. The Secretary
concerned may not limit the number of concession licenses
issued for the same types of activities in a particular
geographic area. The Secretary concerned shall monitor such
concession licenses to determine whether issuance of a
concession service agreement would be a more appropriate
authorization.
(3) Lands under multiple jurisdictions.--The Secretaries of
the Departments concerned shall designate an agency to be the
lead agency concerning concessions which conduct a single
operation on lands or waters under the jurisdiction of more
than one agency. Unless otherwise agreed to by each such
Secretary concerned, the lead agency shall be that agency under
whose jurisdiction the concessioner generates the greatest
amount of gross receipts. The agency so designated shall issue
a single authorization and collect a single fee under
paragraphs (1) and (2) for such operation. Such authorization
shall provide for use in a manner consistent with the plans and
policies for each agency.
(b) Leases of Areas to States and State Third Party Agreement Not
Covered.--This part does not apply to leases or licenses of entire
areas to States or other political subdivisions or to any third party
agreement issued by any such State or political subdivisions with
respect to such entire area.
SEC. 9305. COMPETITIVE SELECTION PROCESS FOR CONCESSION SERVICE
AGREEMENTS.
(a) Award to Best Proposal.--The Secretary shall enter into, and
reissue, a concession service agreement with the person whom the
Secretary determines in accordance with this section submits the best
proposal through a competitive process as defined in this section.
(b) Solicitation and Prospectus.--The Secretary concerned shall
prepare a solicitation and prospectus which describes the concession
service opportunity and shall publish, in appropriate locations,
announcements of the availability of the solicitation, prospectus, and
the concession service opportunity. The solicitation shall include (but
need not be limited to) the following:
(1) A description of the services and facilities to be
provided by the concessioner.
(2) The level of capital investment required by the
concessioner (if any).
(3) Terms and conditions of the concession service
agreement.
(4) Minimum facilities and services to be provided by the
Secretary to the concessioner and the public.
(5) Minimum fees to the United States.
(c) Factors and Minimum Standards in Determining Best Proposal.--
The prospectus shall assign a weight to each factor indentified therein
related to the importance of such factor in the selection process.
Points shall be awarded for each such factor, based on the relative
strength of the proposal concerning that factor. In determining the
best proposal, the Secretary concerned shall take into consideration
(but shall not be limited to) the following, including whether the
proposal meets the minimum requirements (if any) of the Secretary for
each of the following:
(1) Responsiveness to the prospectus.
(2) Quality of visitor services taking into account the
nature of equipment and facilities to be provided.
(3) Experience and performance in providing similar
services. This factor shall account for not less than 20
percent of the maximum points available under any prospectus.
Where the Secretary concerned determines it to be warranted to
provide for a high quality visitor experience, the prospectus
for a concession service agreement shall provide greater weight
to this factor based on such aspects of the concession service
agreement as scope or size, complexity, nature of technical
skills required, and site-specific knowledge of the area. The
similarity of the qualifying experience outlined in the
proposal to the nature of the services required under the
concession service agreement and the length of such qualifying
experience shall be the basis for awarding points for this
factor.
(4) Record of resource protection (as appropriate for
services and activities with potential to impact natural or
cultural resources).
(5) Financial capability.
(6) Fees to the United States.
(d) Selection Process.--The process for selecting the best proposal
shall consist of the following:
(1) First, the Secretary concerned shall identify those
proposals which meet the minimum standards (if any) for the
factors identified under subsection (c).
(2) Second, the Secretary concerned shall evaluate all
proposals identified under paragraph (1), considering all
factors identified under subsection (c), as well as performance
incentives earned under section 9306(c) and renewal penalties
incurred under section 9306(d).
(3) Third, the Secretary concerned shall offer the
concession service agreement to the best qualified applicant as
determined by the evaluation under paragraph (2).
(e) Inapplicability of NEPA to Temporary Extensions and Similar
Reissuance of Concessions Agreements.--The temporary extension of a
concession authorization, or reissuance of a concession authorization
to provide concession services similar in nature and amount to
concession services provided under the previous authorization, is
hereby determined to be a categorical exclusion as provided for under
the National Environmental Policy Act of 1969 (42 U.S.C. 4331 et seq.).
(f) Provision for Additional Related Services.--The Secretary
concerned may modify the concession service agreement to allow
concessioners to provide services closely related to such agreement, if
the Secretary concerned determines that such changes would enhance the
safety or enjoyment of visitors and would not unduly restrict the award
of future concession service agreements.
SEC. 9306. CONCESSIONER EVALUATIONS.
(a) In General.--The Secretary concerned shall develop a program of
evaluations of the concessioners operating under a concession service
agreement who are providing visitor services in areas under the
jurisdiction of the Secretary. The evaluations shall be on an annual
basis over the duration of the concession service agreement. In
developing the evaluation program, the Secretary concerned shall seek
broad public input from concessioners, State agencies, and other
interested persons. The evaluation program shall--
(1) include the four program areas of: quality of visitor
services provided; resource protection (as applicable);
financial performance; and compliance with concession service
agreement provisions and pertinent laws and regulations;
(2) define three levels of performance--
(A) good, which shall be defined as a level of
performance which exceeds the requirements outlined in
the prospectus, but which is attainable;
(B) satisfactory, which shall be defined as meeting
the requirements as contained in the prospectus; and
(C) unsatisfactory, which shall be defined as not
meeting the requirements contained in the prospectus;
(3) be based on criteria which--
(A) are objective, measurable, and attainable; and
(B) shall include as applicable general standards
for all concession operations, industry-specific
standards, and standards developed by the Secretary
concerned in consultation with the concessioner for
each concession service agreement;
(4) be designed in such a manner that the annual evaluation
represents the overall performance of the concessioner without
undue weight to matters of limited importance; and
(5) take into account factors beyond the control of the
concessioner, such as general market and other economic
fluctuations, as well as weather and other natural phenomena,
so that such factors may not be used as a justification for
denial of performance incentives.
(b) Annual Evaluations.--
(1) Requirements.--The Secretary concerned shall at least
semiannually review the performance of each concessioner and
shall assign an overall rating for each concessioner for each
year. The procedure for any performance evaluation shall be
provided to the concessioner prior to the beginning of any
evaluation period. Such procedure shall provide for adequate
notification of the concessioner prior to any on-site
evaluation and permit a representative of the concessioner to
observe the evaluation. The concessioner shall be entitled to a
complete explanation of any rating given. If the Secretary's
performance evaluation for any year results in an
unsatisfactory rating of the concessioner, the Secretary
concerned shall so notify the concessioner, in writing. Such
notification shall identify the nature of conditions which
require corrective action and shall provide the concessioner
with a list of corrective actions necessary to meet the
standards.
(2) Suspension, revocation, and termination of
authorization.--The Secretary concerned may suspend, revoke, or
terminate a concession authorization if the concessioner fails
to correct the conditions identified by the Secretary within
the limitations established by the Secretary at the time notice
of the unsatisfactory rating is provided to the concessioner.
The Secretary may immediately suspend or revoke a concession
authorization where necessary to protect the public health or
welfare.
(c) Performance incentives.--
(1) In evaluating the performance of a concessioner, the
incumbent concessioner is entitled to a performance incentive
of--
(A) one percent of the maximum points available
under such evaluations for performance in each year in
which the concessioner's annual performance is rated
good, as specified in subsection (a)(2)(A), and
(B) a one-time three year merit term extension upon
a finding that a concessioner has been rated as good in
each annual performance evaluation through the term of
the concession service agreement.
(2) A performance incentive awarded under paragraph (1)(A)
may not exceed 10 percent of the maximum points available under
such evaluations over the life of the concession service
agreement.
(d) Renewal penalty.--In evaluating the performance of a
concessioner, a concessioner shall be penalized one percent of the
maximum points available under such evaluation for performance in each
year in which the concessioner's annual performance is found to be
unsatisfactory.
SEC. 9307. CAPITAL IMPROVEMENTS.
(a) Private Sector Development.--It is the policy of the United
States to encourage the private sector to develop, own, and maintain to
the extent possible such public recreation facilities which would
enhance public use and enjoyment of Federal lands as are contained in
approved plans developed by the Secretary concerned. Under the terms of
this part, concessioners may only construct or finance construction
under terms of section 9312 such public facilities on Federal lands as
are to be used by the concessioner under the terms of their concession
service agreement or facilities which are necessary for the
concessioner to administer such public facilities on Federal lands.
(b) Investment Interest.--
(1) In general.--A concessioner, who is required or
authorized under a concession service agreement pursuant to
this part to acquire or construct any structure, improvement,
or fixture pursuant to such agreement on Federal lands shall
have an investment interest therein, to the extent provided by
the agreement and this part. Such investment interest shall not
be extinguished by the expiration of such agreement. Such
investment interest may be assigned, transferred, encumbered or
relinquished.
(2) Limitation.--Such investment interest shall not be
construed to include or imply any authority, privilege, or
right to operate or engage in any business or other activity,
and the use of any improvement in which the concessioner has an
investment interest shall be wholly subject to the applicable
provisions of the concession service agreement and of laws and
regulations relating to the area.
(3) Federal property.--The agreement shall specify which
new improvements required under terms of the concession service
agreement, if any, shall become the property of the Federal
Government at the end of the agreement. No concession service
agreement shall provide for a concessioner to obtain an
investment interest in any building which is wholly owned by
the Federal Government. Title to the land on which such
structure, improvement, or fixture is placed shall remain in
the United States.
(c) Sale of Assets.--If the existing concessioner is not selected
as the best qualified applicant at the time of reissuance of a
concession service agreement, the Secretary concerned shall require the
new concessioner to buy the investment interest of the existing
concessioner.
(d) Closure of Concessioner Facilities.--In the event of a decision
by the Secretary concerned, that the public interest, by reason of
public and safety considerations or for other reasons beyond the
control of the concessioner, requires the discontinuation or closure of
facilities in which the concessioner has an investment interest, the
Secretary shall compensate the concessioner in the amount equal to the
value of the investment interest.
(e) Determination of Value of Investment Interest.--For purposes of
this part, the investment interest of any capital improvement at the
end of the concession service agreement period is the actual cost of
construction of such capital improvement adjusted from the completion
of such construction by changes in the Consumer Price Index (selected
in the same manner as such Index is selected under section 9311(c)(2))
less depreciation evidenced by the condition and prospective
serviceability in comparison with a new unit of like kind, but not to
exceed fair market value. Such value shall be determined by appraisal
and included in any prospectus.
SEC. 9308. DURATION OF CONCESSION AUTHORIZATION.
(a) Concession Service Agreement.--The standard term of a
concession service agreement shall be ten years. The Secretary
concerned may issue a concession service agreement for less than ten
years if he determines (in his discretion) that the average annual
gross receipts over the life of the concession service agreement would
be less than $100,000. The Secretary concerned may not issue a
concession service agreement for less than five years. The Secretary
concerned shall issue a concession service agreement for longer than
ten years if the Secretary determines (in his discretion) that such
longer term is in the public interest or necessary due to the extent of
investment and associated financing requirements and to meet the
obligations assumed. The term for a concession service agreement may
not exceed 30 years.
(b) Concession License.--The term for a concession license may not
exceed two years.
(c) Temporary Extension.--The Secretary may agree to temporary
extensions of concession service agreements for up to two years on a
noncompetitive basis to avoid interruption of services to the public.
SEC. 9309. RATES AND CHARGES TO THE PUBLIC.
In general, rates and charges to the public shall be set by the
concessioner. For concession service agreements only, a concessioner's
rates and charges to the public shall be subject to the approval of the
Secretary concerned in those instances where the Secretary determines
that sufficient competition for such facilities and services does not
exist within or in close proximity to the area in which the
concessioner operates. In those instances, the concession service
agreement shall state that the reasonableness of the concessioner's
rates and charges to the public shall be reviewed and approved by the
Secretary concerned primarily by comparison with those rates and
charges for facilities and services of comparable character under
similar conditions, with due consideration for length of season,
seasonal variations, average percentage of occupancy, accessibility,
availability and costs of labor and materials, type of patronage, and
other factors deemed significant by the Secretary concerned. Such
review shall be completed within 90 days of receipt of all necessary
information, or the requirement for the Secretary's approval shall be
waived and such rates and charges as proposed by the concessioner
considered to be approved for immediate use.
SEC. 9310. TRANSFERABILITY OF CONCESSION AUTHORIZATIONS.
(a) Concession Service Agreements.--
(1) Approval required.--A concession service agreement is
transferable or assignable only upon the approval of the
Secretary concerned, which approval may not be unreasonably
withheld or delayed. The Secretary may not approve any such
transfer or assignment if the Secretary determines that the
prospective concessioner is or is likely to be unable to
completely satisfy all of the material requirements, terms, and
conditions of the agreement or that the terms of the transfer
or assignment would preclude providing appropriate facilities
or services to the public at reasonable rates.
(2) Consideration period.--If the Secretary fails to
approve or disapprove a transfer or assignment under paragraph
(1) within 90 days after the date on which the Secretary
receives all necessary information requested by the Secretary
with respect to such transfer, the transfer or assignment shall
be deemed approved.
(3) No modification of terms and conditions.--The terms and
conditions of the concessions service agreement shall not be
subject to modification by reason of any transfer or assignment
under this section.
(4) Performance incentive.--Upon approval of the sale or
transfer, the prospective concessioner shall be entitled to the
benefit of performance incentives earned by the previous
concessioner.
(b) Concession License.--A concession license may not be
transferred.
SEC. 9311. FEES CHARGED BY THE UNITED STATES FOR CONCESSION
AUTHORIZATIONS.
(a) In General.--The Secretary concerned shall charge a fee for the
privilege of providing concession services pursuant to this part. The
fee for any concession service agreement may include any of the
following:
(1) An annual cash payment for the privilege of providing
concession services.
(2) The amount required for capital improvements required
pursuant to section 9307(a).
(3) Fees for rental or lease of Government-owned facilities
or lands occupied by the concessioner.
(4) Expenditures for maintenance of or improvements to
Government-owned facilities occupied by the concessioner.
(b) Establishment of Amount.--
(1) Minimum acceptable fee.--The Secretary concerned shall
establish a minimum fee for each applicable category specified
in paragraphs (1) through (4) of subsection (a) which is
acceptable to the Secretary under this section and shall
include the minimum fee in the prospectus under section 9305.
This fee shall be based on historical data, where available, as
well as industry-specific and other market data available to
the Secretary concerned.
(2) Final fee.--Except as provided by paragraph (3), the
final fee shall be the amount bid by the selected applicant
under section 9305.
(3) Substantially similar services in a specific geographic
area.--Where the Secretary concerned simultaneously offers
authorizations for more than one river runner, outfitter, or
guide concession operation to provide substantially similar
services in a defined geographic area, the concession fee for
all such concessioners shall be specified by the Secretary
concerned in the prospectus. The Secretary concerned shall base
the fee on historical data, where available, as well as on
industry-specific and other market data available to the
Secretary concerned or may establish a charge per user day.
(c) Adjustment of Fees.--
(1) In general.--The amount of any fee for the term of the
concession service agreement shall be set at the beginning of
the concession authorization and may only be modified on the
basis of inflation, if the annual payment is not determined by
a percentage of adjusted gross receipts (as measured by changes
in the Consumer Price Index), to reflect substantial changes
from the conditions specified in the prospectus, or in the
event of an unforeseen disaster.
(2) CPI.--For the purposes of adjustments for inflation
under paragraph (1), the Federal agencies shall select a
Consumer Price Index published by the Bureau of Labor
Statistics and shall use such index in a consistent manner.
(d) Concession License Fee.--The fee for a concession license shall
at least cover the program administrative costs and may not be changed
over the term of the license.
SEC. 9312. DISPOSITION OF FEES.
(a) Concession Improvement Account.--
(1) In general.--The Secretary concerned shall, whenever
the concession service agreement requires or authorizes the
concessioner to make capital improvements or occupy Government-
owned facilities, require the concessioner to establish a
concession improvement account. The concessioner shall deposit
into this account--
(A) all funds for capital improvements as specified
in the concession service agreement;
(B) all funds for maintenance of or improvements to
Government-owned facilities occupied by the
concessioner; and
(C) all amounts received from the Secretary
concerned pursuant to subsection (b).
(2) Terms and conditions.--The account shall be maintained
by the concessioner in an interest bearing account in a
Federally insured financial institution. The concessioner shall
maintain the account separately from any other funds or
accounts and shall not commingle the monies in the account with
any other moneys. The Secretary concerned may establish such
other terms, conditions, or requirements as the Secretary
determines to be necessary to ensure the financial integrity of
the account.
(3) Disbursements.--The concessioner shall make
disbursements from the account for improvements and other
activities, only as specified in the concession service
agreement and subsection (b)(2)(C).
(4) Records.--The concessioner shall maintain proper
records for all disbursements made from the account. Such
records shall include (but not be limited to) invoices, bank
statements, canceled checks, and such other information as the
Secretary concerned determines to be necessary.
(5) Annual financial statement.--The concessioner shall
annually submit to the Secretary concerned a statement
reflecting total activity in the account for the preceding
financial year. The statement shall reflect monthly deposits,
expenditures by project, interest earned, and such other
information as the Secretary concerned requires.
(6) Transfer of remaining balance.--Upon the termination of
a concession authorization, or upon the transfer of a
concession service agreement, any remaining balance in the
account shall be transferred by the concessioner to the
successor concessioner, to be used solely as set forth in this
subsection. In the event there is no successor concessioner,
the account balance shall be deposited in the Treasury as
miscellaneous receipts.
(b) Amounts Received Relating to Privilege of Providing Concession
Services and Rental of Government-owned Facilities.--
(1) Deposit into treasury.--The Secretary concerned shall
deposit into the Treasury of the United States as miscellaneous
receipts amounts received for a fiscal year for the privilege
of providing concession services and the rental of Government-
owned facilities up to the amount specified in the table in
paragraph (3) for the National Park Service for that fiscal
year. For the other agencies covered under this part, the
Secretary concerned shall develop a schedule of anticipated
receipts to be deposited to the Treasury and submit such
schedule to the appropriate Congressional committees within 18
months of the date of enactment of this Act. Nothing in this
part shall be construed to modify any provision of law relating
to sharing of Federal receipts with any other level of
Government.
(2) Deposit into concession improvement accounts.--(A)
Amounts received by the Secretary concerned for a fiscal year
for the privilege of providing concession services and the use
of Government-owned facilities which exceed the amount
specified in the table in paragraph (3) for that fiscal year
shall be available for deposit in the succeeding fiscal year
into concession improvement accounts.
(B) Of the amounts available for deposit into concession
improvement accounts, the Secretary shall make available to
each concessioner a percentage of such excess amounts which
bears the same ratio as the amount paid by the concessioner to
the Secretary concerned for a fiscal year for the privilege of
providing concession services and the use of Government-owned
facilities bears to the total amount paid to the Secretary concerned by
all concessioners for that fiscal year for such privilege on an agency-
wide basis.
(C) Amounts made available to a concessioner under this
paragraph may be used only for expenditures on visitor services
and facilities at the area at which the funds were generated.
(3) Deposit into concession improvement accounts.--The
table referred to in paragraph (2), expressed by fiscal year on
an agency basis, is as follows:
National Park Service
Fiscal year:
Amount:
1997......................... $15,800,000
1998......................... $21,100,000
1999......................... $26,700,000
2000......................... $32,300,000
2001......................... $38,200,000
2002......................... $44,400,000.
(c) Audit Requirement.--Beginning with fiscal year 1998, the
Inspector General of the Department concerned shall conduct a biennial
audit of concession fees generated pursuant to this part. The Inspector
General shall make a determination as to whether concession fees are
being collected and expended in accordance with this part and shall
submit copies of each audit to the Committee on Resources of the House
of Representatives and the Committee on Energy and Natural Resources of
the Senate.
SEC. 9313. DISPUTE RESOLUTION.
(a) Board of Contract Appeals.--The Board of Contract Appeals
within each Department shall adjudicate disputes between the Federal
Government and concessioners arising under this part, including
disputes regarding the revocation, suspension, or termination of a
concession authorization, transfers of concession service agreements,
and performance evaluations of concessions. Such disputes shall be
subject to the Contract Disputes Act of 1978 (41 U.S.C. 601 et seq.).
The expiration of a concession authorization shall not be subject to
appeal to the Board.
(b) Administrative Review.--Appeals of decisions may be taken to
the Board of Contract Appeals after one level of review of decisions
made within an agency.
(c) Expedited Procedure.--Appeals of decisions to suspend, revoke,
or terminate a concession authorization shall be considered under an
expedited procedure, as provided by the Secretary concerned by
regulation.
(d) Judicial Review.--
(1) In general.--A person may seek judicial review of
decisions made by the Board. Such review shall be conducted by
the court with jurisdiction on a de novo basis.
(2) Concession service agreements.--Judicial review of
decisions rendered by the Board regarding concession service
agreements shall be to the United States Court of Federal
Claims in accordance with section 1491 of title 28, United
States Code (commonly referred to as the ``Tucker Act'').
(3) Concession licenses.--Judicial review of decisions
rendered by the Board regarding concession licenses shall be to
the appropriate Federal District Court.
(d) Inapplicability of Certain Provisions.--Disputes arising under
this part shall not be subject to the jurisdiction of the General
Accounting Office to review bid protests under the Competition in
Contracting Act of 1984.
SEC. 9314. RECORDKEEPING.
(a) Maintenance and Access.--Each concessioner shall keep such
records as the Secretary concerned may prescribe to enable the
Secretary to determine that all terms of the concession authorization
have been and are being faithfully performed, and the Secretary and his
duly authorized representatives shall, for the purpose of audit and
examination, have access at reasonable times and locations to such
records and to other books, documents, and papers of the concessioner
pertinent to the concession authorization and all the terms and
conditions thereof.
(b) Access by Comptroller General.--The Comptroller General of the
United States or any of his duly authorized representatives shall,
until the expiration of five calendar years after the close of the
business year of each concessioner have access to and the right to
examine any pertinent books, documents, papers, and records of the
concessioner related to the concession authorization involved.
SEC. 9315. APPLICATION OF GENERAL GOVERNMENTAL ACQUISITION
REQUIREMENTS.
The following laws and regulations shall not apply to concession
service agreements and concession licenses under this part:
(1) Title III of the Federal Property and Administrative
Services Act of 1949 (41 U.S.C. 251-266).
(2) The Office of Federal Procurement Policy Act (41 U.S.C.
401 et seq.).
(3) The Federal Acquisition Streamlining Act of 1994
(Public Law 103-355).
(4) The Brooks Automatic Data Processing Act (40 U.S.C.
759).
(5) Chapters 137 and 141 of title 10, United States Code.
(6) The Federal Acquisition Regulation and any laws not
listed in paragraphs (1) through (5) providing authority to
promulgate regulations in the Federal Acquisition Regulation.
(7) The Act of June 20, 1936 (20 U.S.C. 107; commonly
referred to as the ``Randolph-Sheppard Act'') and the Service
Contract Act of 1965 (41 U.S.C. 351 et seq.).
SEC. 9316. RULES OF CONSTRUCTION.
Concession programs of an agency on Federal lands and waters
subject to this part shall be fully consistent with the agency's
mission and laws applicable to the agency. Nothing in this part shall
be construed as limiting or restricting any right, title, or interest
of the United States in any land or resources.
SEC. 9317. REGULATIONS.
(a) In General.--Pursuant to enactment of this part, no new
concession authorization may be issued, nor may any existing concession
authorization remain in effect after two years after the date of the
enactment of this Act, unless regulations fully implementing this part
are in effect. During such two-year period, the Secretary may only
extend an existing concession authorization for a period ending at the
end of such two-year period. Such extensions shall be made in
accordance with the applicable provisions of law specified in section
9318, as such provisions were in effect on the day before the date of
the enactment of this Act. The Secretary of the Interior, Secretary of
Agriculture, and Secretary of the Army shall develop a single set of
regulations which specify a uniform set of recordkeeping requirements
for all concessioners with respect to implementation of this part.
(b) Qualifications of Agency Personnel Assigned Concession
Management Duties.--The Secretary, by regulation under subsection (a)
and taking into account the provisions of this part, shall specify the
minimum training and qualifications required for agency personnel
assigned predominantly to concession management duties, including (but
not limited to) competency in business management, public health and
safety, and the delivery of quality customer services.
SEC. 9318. RELATIONSHIP TO OTHER EXISTING LAWS.
(a) Repeals.--
(1) The Act entitled ``An Act relating to the establishment
of concession policies in the areas administered by the
National Park Service and for other purposes'' (16 U.S.C. 20-
20g) approved October 9, 1965, is repealed.
(2) The last paragraph under the heading ``forest service''
in the Act of March 4, 1915 (38 Stat. 1101), as amended by the
Act of July 28, 1956 (chap. 771; 70 Stat. 708) (16 U.S.C. 497),
is repealed.
(3) Section 7 of the Act of April 24, 1950 (16 U.S.C. 580d)
is repealed.
(b) Superseded Provisions.--The provisions of this part shall
supersede the provisions of the following Acts as they pertain to
concessions management:
(1) The Federal Land Policy and Management Act of 1976
(Oct. 21, 1976).
(2) Public Law 87-714 (16 U.S.C. 460k et seq.; commonly
known as the ``Refuge Recreation Act'').
(3) The National Wildlife Refuge System Administration Act
of 1966 (16 U.S.C. 668dd).
(c) Conforming Amendment.--The fourth sentence of section 3 of the
Act of August 25, 1916 (16 U.S.C. 3; 39 Stat. 535), is amended by
striking all through ``no natural'' and inserting in lieu thereof ``No
natural''.
(d) Modified Provisions.--The second sentence of section 4 of the
Act entitled ``An Act authorizing the construction of certain public
works on rivers and harbors for flood control, and for other purposes''
(16 U.S.C. 460d) is amended by inserting ``, except for commercial
concessions purposes'' the first place it appears after ``public
interest''.
(e) Savings.--
(1) In general.--The repeal of any provision, the
superseding of any provision, and the amendment of any
provision, of an Act referred to in subsections (a), (b), or
(c) shall not affect the validity of any authorizations entered
into under any such Act. The provisions of this part shall
apply to any such authorizations, except to the extent such
provisions are inconsistent with the express terms and
conditions of such authorizations.
(2) Right of renewal.--The right of renewal explicitly
provided for by any concession contract under any such
provision shall be preserved for a single renewal of a contract
following the enactment of, or concession authorization under,
this part.
(3) Value of capital improvements or possessory interest.--
Nothing in this part shall be construed to change the value of
existing capital improvements or possessory interest as
identified in concession contracts entered into before the
enactment of this Act.
(4) ANILCA.--Nothing in this part shall be construed to
amend, supersede or otherwise affect any provision of the
Alaska National Interest Lands Conservation Act (16 U.S.C. 3101
et seq.) relating to revenue-producing visitor services.
(5) Ski area permits.--No provision of this part shall
apply to any ski area permittee operating on lands administered
by the Forest Service.
(6) Procedures for considering existing concessioners in
reissuance of contracts.--In the case of any concession
contract which has expired prior to the date of the enactment
of this Act, or within five years after the date of the
enactment of this Act, the incumbent concessioner shall be
entitled to a one-time bonus of five percent of the maximum
points available in the reissuance of a previous concession
authorization. For any concession contract entered into prior
to the date of enactment of this Act, which is projected to
terminate five years or later after the enactment of this Act,
any concessioner shall be entitled to a performance incentive
as outlined in this part. The concessioner shall be entitled to
an evaluation for the purposes of section 9306 of good for each
year in which the Secretary concerned does not complete an
evaluation as provided for in this part.
PART 2--NATIONAL FOREST SKI AREAS
SEC. 9321. PRIVATIZATION OF FOREST SERVICE SKI AREAS.
(a) Authorization To Sell.--
(1) In general.--Not later than five years after the date
of enactment of this part, the Secretary of Agriculture shall
offer to sell not less than 40 ski areas to the qualifying ski
area operator. Any such sale shall provide for continuation of
public access for diverse recreational uses. The Secretary
shall offer such areas for sale only after consultation with
State and local governments. Any such sale shall be at fair
market value and, subject to valid existing rights, shall
transfer all right, title, and interest of the United States in
and to the lands. In any such sale, the Secretary shall
establish the minimum acceptable bid based on the appraised
fair market value of such lands.
(2) Qualifying lands.--For the purposes of subsection (a),
lands are qualifying concession lands if such lands are--
(A) subject to a lease on the date of the enactment
of this Act for use as a ski area with improvements
with a fair market value greater than $2,000,000; and
(B) located either adjacent to the boundary of the
Federal lands or adjacent to other significant private
inholdings.
(b) Appraisal.--
(1) In general.--The Secretary shall provide for an
independent appraisal of the lands and interests therein to be
transferred pursuant to subsection (a). The appraiser shall--
(A) utilize nationally recognized appraisal
standards, including to the extent appropriate the
uniform appraisal standards for Federal land
acquisition; and
(B) not include the value of any improvement placed
on the lands by the concessioner.
(2) Appraisal report.--The appraiser shall submit a
detailed report to the Secretary.
(c) Additional Lands.--In addition to the national forest ski area,
the Secretary may transfer by sale or exchange additional National
Forest System lands for the purpose of adding such lands to and
operating them as part of a ski area sold under subsection (a). The
transfer of additional lands under this subsection shall be in
accordance with this part and the laws generally applicable to the
National Forest System.
(d) Use of Proceeds by the Appropriate Secretary.--The Secretary
may retain 50 percent of the funds generated through sales under this
section to acquire other high priority lands identified for acquisition
in any forest land and resource management plan. The remaining 50
percent of such amount shall be deposited in the Treasury as
miscellaneous receipts.
SEC. 9322. SKI AREA PERMIT FEES AND WITHDRAWAL OF SKI AREAS FROM
OPERATION OF MINING LAWS.
The National Forest Ski Area Permit Act of 1986 (16 U.S.C. 497b) is
amended by adding at the end the following new sections:
``SEC. 4. SKI AREA PERMIT FEES.
``(a) Ski Area Permit Fee.--
``(1) In general.--Except as provided by paragraph (2),
after the date of the enactment of this section, the fee for
all ski area permits on National Forest System lands shall be
calculated, charged, and paid only as set forth in subsection
(b).
``(2) Exception.--Paragraph (1) does not apply to any ski
area where the existing permit in effect on the date of
enactment of this section specifies a different method to
calculate the fee. In any such situation the terms of such
permit shall prevail, unless the permit holder notifies the
Forest Service that the permit holder agrees to adopt the
method of fee calculation specified in this section. The Forest
Service should encourage such permit holders to consider
adopting the new method of fee calculation in order to reduce
its administrative costs.
``(b) Method of Calculation.--
``(1) Determination of adjusted gross revenue subject to
fee.--The Secretary of Agriculture shall calculate the ski area
permit fee to be charged a ski area permittee by first
determining the permittee's adjusted gross revenue to be
subject to the permit fee. The permittee's adjusted gross
revenue is equal to the sum of the following:
``(A) The permittee's gross revenues from alpine
lift ticket and alpine season pass sales plus revenue
from alpine ski school operations, with such total
multiplied by the permittee's slope transport feet
percentage on National Forest System lands.
``(B) The permittee's gross revenues from nordic
ski use pass sales and nordic ski school operations,
with such total multiplied by the permittee's
percentage of nordic trails on National Forest System lands.
``(C) The permittee's gross revenues from ancillary
facilities physically located on National Forest System
lands, including all permittee or subpermittee lodging,
food service, rental shops, parking, and other
ancillary operations.
``(2) Determination of ski area permit fee.--The Secretary
shall determine the ski area permit fee to be charged a ski
area permittee by multiplying adjusted gross revenue determined
under paragraph (1) for the permittee by the following
percentages for each revenue bracket and adding the total for
each revenue bracket:
``(A) 1.5 percent of all adjusted gross revenue
below $3,000,000.
``(B) 2.5 percent for adjusted gross revenue
between $3,000,000 and $15,000,000.
``(C) 2.75 percent for adjusted gross revenue
between $15,000,000 and $50,000,000.
``(D) 4.0 percent for the amount of adjusted gross
revenue that exceeds $50,000,000.
``(3) Slope transport feet percentage.--In cases where ski
areas are only partially located on National Forest System
lands, the slope transport feet percentage on national forest
land referred to in paragraph (1) shall be calculated as
generally described in the Forest Service Manual in effect as
of January 1, 1992.
``(4) Annual adjustment of adjusted gross revenue.--In
order to insure that the ski area permit fee set forth in this
subsection remains fair and equitable to both the United States
and ski area permittees, the Secretary shall adjust, on an
annual basis, the adjusted gross revenue figures for each
revenue bracket in subparagraphs (A) through (D) of paragraph
(2) by the percent increase or decrease in the national
Consumer Price Index for the preceding calendar year.
``(c) Minimum Fee.--In cases where an area of National Forest
System land is under a ski area permit but the permittee does not have
revenue or sales qualifying for fee payment pursuant to subsection (a),
the permittee shall pay an annual minimum fee of $2 for each acre of
National Forest System land under permit. Rental fees imposed under
this subsection shall be paid at the time specified in subsection (d).
``(d) Time for Payment.--The fee set forth in subsection (b) shall
be due on June 1 of each year and shall be paid or prepaid by the
permittee on a monthly, quarterly, annual, or other schedule as
determined appropriate by the Secretary in consultation with the
permittee. It is the intention of Congress that unless mutually agreed
otherwise by the Secretary and the permittee, the payment or prepayment
schedule shall conform to the permittee's schedule in effect prior to
the enactment of this section. To simplify bookkeeping and fee
calculation burdens on the permittee and the Forest Service, the
Secretary shall each year provide the permittee with a standardized
form and worksheets (including annual fee calculations brackets and
rates) to be utilized for fee calculation and submitted with the fee
payment. Information provided on such forms shall be compiled by the
Secretary annually and kept in the Office of the Chief, United States
Forest Service.
``(e) Definitions.--To simplify bookkeeping and administrative
burdens on ski area permittees and the Forest Service, as used in this
section, the terms `revenue' and `sales' mean actual income from sales.
Such terms do not include sales of operating equipment, refunds, rent
paid to the permittee by sublessees, sponsor contributions to special
events or any amounts attributable to employee gratuities, discounts,
complimentary lift tickets, or other goods or services (except for
bartered goods) for which the permittee does not receive money.
``(f) Effective Date for Fees.--The ski area permit fees as
provided under this section shall become effective on July 1, 1996, and
cover receipts retroactive to July 1, 1995. If a ski area permittee has
paid fees for the 12-month period ending on June 30, 1996, under the
graduated rate fee system formula in effect prior to the date of the
enactment of this section, such fees shall be credited toward the new
ski area permit fee due for that period under this section.
``(g) Report on Fair Market Value.--No later than five years after
the date of enactment of this section and every 10 years thereafter,
the Secretary shall submit to the Committee on Energy and Natural
Resources of the United States Senate and the Committees of Agriculture
and Resources of the United States House of Representatives a report
analyzing whether the ski area permit fee system legislated by this
section is returning a fair market value rental to the United States
together with any recommendations the Secretary may have for
modifications in the system.
``(h) Transition Period.--Where the new fee provided for in this
section results in an increase in permit fee greater than one percent
of the permittee's adjusted gross revenue (as defined in subsection
(b)(1)), the new fee shall be phased in over a three year period in a
manner providing for increases of approximately equal increments.
``(i) Applicability of NEPA to Reissuance of Ski Area Permits.--The
reissuance of a ski area permit to provide activities similar in nature
and amount to the activities provided under the previous permit is
hereby determined to be a categorical exclusion as provided for under
the National Environmental Policy Act of 1969 (42 U.S.C. 4331 et seq.).
``SEC. 5. WITHDRAWAL OF SKI AREAS FROM OPERATION OF MINING LAWS.
``Subject to valid existing rights, all lands located within the
boundaries of ski area permits issued prior to, on, or after the date
of the enactment of this section pursuant to the authority of the Act
of March 4, 1915 (16 U.S.C. 497), the Act of June 4, 1897 (16 U.S.C.
473 et seq.), or section 3 of this Act are hereby and henceforth
automatically withdrawn from all forms of appropriation under the
mining laws and from disposition under all laws pertaining to mineral
and geothermal leasing. Such withdrawal shall continue for the full
term of the permit and any modification, reissuance, or renewal of the
permit. Such withdrawal shall be canceled automatically upon expiration
or other termination of the permit unless, at the request of the
Secretary of Agriculture, the Secretary of the Interior determines to
continue the withdrawal. Upon cancellation of the withdrawal, the land
shall be automatically restored to all appropriation not otherwise
restricted under the public land laws.''.
PART 3--DOMESTIC LIVESTOCK GRAZING
SEC. 9331. APPLICABLE REGULATIONS.
(a) BLM Lands.--Except as otherwise provided by this part, grazing
of domestic livestock on lands administered by the Bureau of Land
Management shall be in accordance with part 1780 and part 4100 of title
43, Code of Federal Regulations, as in effect on January 1, 1995.
(b) Forest Service Lands.--Except as otherwise provided by this
part, grazing of domestic livestock on lands administered by the Forest
Service shall, to the extent possible, be in accordance with
regulations, which the Secretary of Agriculture shall promulgate, which
are substantially similar to the regulations referred to in subsection
(a). Regulations promulgated under this subsection may differ from the
regulations referred to in subsection (a) to the extent necessary to
conform to the laws governing the National Forest System (other than
this part).
(c) Federal Lands.--For the purposes of this part, the term
``Federal lands'' means lands administered by the Bureau of Land
Management and lands administered by the Forest Service.
SEC. 9332. FEES AND CHARGES.
(a) Basic Fee.--The basic fee for each animal unit month in a
grazing fee year to be determined by the Bureau of Land Management and
the Forest Service shall be equal to the 3-year average of the total
gross value of production for beef cattle, as compiled by the Economic
Research Service of the Department of Agriculture in accordance with
subsection (b) on the basis of economic data published by the Service
in the Economic Indicators of the Farm Sector: Cost of Production--
Major Field Crops & Livestock and Dairy for the 3 years preceding the
grazing fee year, multiplied by the 10 year average of the United
States Treasury Securities 6-month bill ``new issue'' rate and divided
by 12.
(b) Criteria.--The Economic Research Service of the Department of
Agriculture shall continue to compile the gross production value of
production of beef cattle as reported in a dollar per bred cow basis in
the ``U.S. Cow-Calf Production Cash Costs and Returns''.
(c) Surcharge.--
(1) In general.--A surcharge shall be added to the grazing
fee billings for authorized grazing of livestock owned by
persons other than the permittee or lessee except where--
(A) such use is made by livestock owned by a
spouse, child, or grandchild or their respective spouse
of the permittee and lessee; or
(B) the permittee or lessee is unable to make full
grazing use, as authorized by a grazing permit or
lease, due to the infirmed condition or death of the
permittee or lessee.
(2) Treatment as additional fee.--The surcharge shall be
over and above any other fees that may be charged for using
public land forage.
(3) Prior payment required.--Surcharges shall be paid prior
to grazing use.
(4) Amount.--The surcharge for authorized pasturing of
livestock owned by persons other than the permittee or lessee
shall be equal to 25 percent of the difference between the
current year's Federal grazing fee and the prior year's private
grazing land lease rate per AUM for the appropriate State as
compiled by the National Agricultural Statistics Service.
(5) In general.--The Bureau of Land Management and the
Forest Service shall make a determination under subsection (a)
based on the following information gathered by the National
Agriculture Statistics Service of the Department of Agriculture
with respect to the largest single grazing lease of each
grazing operator (in terms of dollars):
(A) Whether the operator charged--
(i) per acre;
(ii) per head per month;
(iii) per pound of gain;
(iv) per hundredweight of gain; or
(v) by another measure, and the rate
charged.
(B)(i) The estimated average pounds gained per
season for the grazing lease.
(ii) The total dollar amount estimated to be
realized from the grazing lease.
(iii) Grazing lease acreage.
(iv) The State and county where the grazing lease
is located.
(C) The classes of livestock grazed.
(D) The term of the grazing lease.
(E)(i) Whether grazing lease payments are paid if
no grazing occurred.
(ii) Whether the grazing lease contains a take or
pay provision.
(F) Additional information on whether the following
are provided by the landlord on a 5-year basis:
(i) Fencing maintenance.
(ii) Animal management and oversight.
(iii) Water maintenance.
(iv) Salt and minerals.
(v) Other service (specified).
(vi) No services.
(vii) Hunting.
(viii) Fishing.
(ix) Other (specified).
(x) None.
(6) Private native rangeland.--For the purpose of
determining rates for grazing leases of private native
rangeland, rates for irrigated pasture, crop aftermath, and
dryland winter wheat shall be excluded.
SEC. 9333. ANIMAL UNIT MONTH.
(a) Definition of Animal Unit Month.--The term ``animal unit
month'' means 1 month's use and occupancy of range by--
(1) 1 cow, bull, steer, heifer, horse, burro, or mule, 7
sheep, or 7 goats, each of which is 6 months of age or older on
the date on which the animal begins grazing on Federal land;
(2) any such animal regardless of age if the animal is
weaned on the date on which the animal begins grazing on
Federal land; and
(3) any such animal that will become 12 months of age
during the period of use authorized under a grazing permit or
grazing lease.
(b) Livestock Not Counted.--There shall not be counted as an animal
unit month the use of Federal land for grazing by an animal that is
less than 6 months of age on the date on which the animal begins
grazing on Federal land and is the natural progeny of an animal on
which a grazing fee is paid if the animal is removed from the Federal
land before becoming 12 months of age.
SEC. 9334. TERM OF GRAZING PERMITS OR GRAZING LEASES.
A grazing permit or grazing lease shall be issued for a term of 15
years unless--
(1) the land is pending disposal;
(2) the land will be devoted to a public purpose that
precludes grazing prior to the end of 15 years; or
(3) the Secretary determines that it would be in the best
interest of sound land management to specify a shorter term, if
the decision to specify a shorter term is supported by
appropriate and accepted resource analysis and evaluation.
SEC. 9335. CONFORMANCE WITH LAND USE PLAN.
Livestock grazing activities and management actions approved by the
Secretary of the Interior or the Secretary of Agriculture, as the case
may be--
(1) may include any such activities as are not clearly
prohibited by a land use plan; and
(2) shall not require any consideration under the National
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) in
addition to the studies supporting the land use plan.
SEC. 9336. EFFECTIVE DATE.
This part shall apply to grazing on Federal lands on and after the
date of the enactment of this Act.
PART 4--REGIONAL DISPOSAL FACILITY OF SOUTHWESTERN LOW LEVEL
RADIOACTIVE WASTE DISPOSAL COMPACT
SEC. 9341. CONVEYANCE OF PROPERTY.
(a) Conveyance.--Upon the tendering of $500,000 on behalf of the
State of California and the release of the United States by the State
of California from any liability for claims relating to the property
described in subsection (b), all right, title and interest of the
United States in and to said lands and improvements thereon are
conveyed to the Department of Health Services of the State of
California: Provided, That the property shall revert to the United
States if the property is not used as a low-level radioactive waste
disposal facility.
(b) Description.--The lands conveyed are those depicted on a map
designated USGS 7.5 minute quadrangle, west of Flattop Mtn, CA 1984,
entitled ``Location Map for Ward Valley Site'', located in San
Bernardino Meridian, Township 9 North, Range 19 East.
(c) Title.--The Secretary of the Interior shall issue evidence of
title pursuant to this Act notwithstanding any other provision of law.
The Southwestern Low-Level Radioactive Waste Disposal Compact's Ward
Valley regional disposal facility and transfer of the land are in
compliance with any applicable provisions of section 7 of Endangered
Species Act of 1973 (16 U.S.C. 1536) and the National Environmental
Policy Act of 1969 (42 U.S.C. 4332).
(d) Deposit of Funds.--Sums received pursuant to subsection (a)
shall be deposited as miscellaneous receipts in the Treasury of the
United States.
(e) Expiration of Authority.--This authority expires October 1,
2010.
SEC. 9342. CONVEYANCE OF EASEMENTS.
Concurrent with the conveyance property described in section
9341(b) to the Department of Health Services of the State of
California, all necessary easements for utilities and ingress and
egress to said lands described in section 9341(b) of this Act and the
right to improve those easements, are also conveyed to the Department
of Health Services of the State of California: Provided, That the
Department of Health Services right-of-way easements revert to the
United States if the lands referenced in section 9341 are not licensed
and used as a low-level radioactive waste disposal facility.
Subtitle D--Territories
PART 1--COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS
SEC. 9401. TERMINATION OF ANNUAL DIRECT GRANT ASSISTANCE.
(a) Termination.--Pursuant to section 704(d) of the Covenant to
Establish a Commonwealth of the Northern Mariana Islands in Political
Union with the United States of America (48 U.S.C. 1681 note), the
annual payments under section 702 of the Covenant shall terminate as of
September 30, 1995.
(b) Repeal.--Sections 3 and 4 of the Act of March 24, 1976 (Public
Law 94-241; 48 U.S.C. 1681 note), as amended, are repealed, effective
October 1, 1995.
(c) Removal of Authority To Obligate Certain Funds.--Amounts
appropriated under title VII of the Covenant to Establish a
Commonwealth of the Northern Mariana Islands in Political Union with
the United States of America, and under sections 3 and 4 of Public Law
94-241 (48 U.S.C. 1681), which are not obligated as of the date of the
enactment of this Act may not be obligated after such date.
(d) Conforming Amendments.--Section 5 of such Act (48 U.S.C. 1681
note) is amended--
(1) by striking out ``agreement identified in section 3 of
this Act'' and inserting in lieu thereof ``Agreement of the
Special Representatives on Future United States Financial
Assistance for the Government of the Northern Mariana Islands,
executed July 10, 1985, between the special representative of
the President of the United States and the special
representatives of the Governor of the Northern Mariana
Islands''; and
(2) by striking out ``Committee on Interior and Insular
Affairs'' and inserting in lieu thereof ``Committee on
Resources''.
PART 2--TERRITORIAL ADMINISTRATIVE CESSATION ACT
SEC. 9421. SHORT TITLE.
This part may be cited as the ``Territorial Administrative
Cessation Act''.
SEC. 9422. CONGRESSIONAL FINDINGS.
The Congress finds that--
(1) each of the four political subdivisions of the United
Nations Trust Territory of the Pacific Islands, known as the
Japanese Mandated Islands, have successfully entered into
distinct self-governing entities, thereby culminating in the
final termination of the Trusteeship and the end of the
trusteeship responsibilities of the United States as
administering authority of the Trust Territory on October 1,
1994;
(2) the United States territories have developed
progressively increased local self-government over the past
five decades;
(3) the territories predominantly deal directly with
Federal agencies and departments, as a State would;
(4) the administering responsibilities of the Department of
the Interior with respect to the insular areas has declined
substantially during the past five decades; and
(5) Federal-territorial relations can be enhanced and
Federal fiscal conditions improved by the elimination of
unnecessary Federal bureaucracy.
SEC. 9423. ELIMINATION OF OFFICE OF TERRITORIAL AND INTERNATIONAL
AFFAIRS.
(a) In General.--The Office of Territorial and International
Affairs of the Department of the Interior, established pursuant to the
Order of the Secretary of the Interior 3046, of February 14, 1980, as
amended, is hereby abolished.
(b) Termination of Position of Assistant Secretary.--Section 5315
of title 5, United States Code, is amended by striking ``Assistant
Secretaries of the Interior (6)'' and inserting ``Assistant Secretaries
of the Interior (5)''.
(c) Effective Date.--Subsection (a) and the amendment made by
subsection (b) shall take effect on the first day of the first fiscal
year that begins after the date of the enactment of this Act.
SEC. 9424. CERTAIN ACTIVITIES NOT FUNDED.
Amounts may not be made available for the following program
activities for assistance to territories for fiscal years beginning
after September 30, 1995, as identified under the appropriations
account numbered 14-0412-0-1-808:
(1) technical assistance, item 00.12;
(2) maintenance assistance, item 00.14;
(3) disaster fund, item 00.17; and
(4) insular management controls, item 00.19.
Subtitle E--Minerals
PART 1--HARDROCK MINING
SEC. 9501. FINDINGS AND PURPOSE.
(a) Findings.--Congress finds and declares that--
(1) a secure and reliable supply of locatable minerals is
essential to the industrial base of the United States, national
security, and balance of trade;
(2) many of the deposits of locatable minerals that may be
commercially developed are on Federal lands as that term is
defined in this Act, and are difficult and expensive to
discover, mine, extract and process;
(3) the national need for locatable minerals will continue
to expand, and without a strong mining industry the demand for
the minerals will exceed domestic sources of supply;
(4) mining of locatable minerals is an extremely high-risk,
capital-intensive endeavor, which, to attract necessary
investment, requires certainty and predictability in access to
Federal lands in establishment of mining titles, and in the
rights of owners of mining claims or sites to develop minerals;
(5) the national interest is to foster and encourage
private enterprise in the development of a domestic minerals
industry to maintain and create high-paying jobs and the
various Federal, State, and local taxes paid by the mining
industry in the United States;
(6) changes in the general mining laws of the United States
to provide more direct economic return to the United States and
greater protection of public resources are desirable, so long
as these changes do not act as a disincentive to development of
minerals, adversely affect employment in the mining industry or
in industries that provide goods and services required for
mining activities, interfere with a secure and reliable
domestic supply of minerals, or adversely affect the balance of
trade of the United States; and
(7) mining claims, mill sites and tunnel sites located
under the general mining laws are property interests, and any
law or regulation that substantially impairs existing property
rights may expose the Federal Government to takings claims
under the fifth amendment to the United States Constitution.
(b) Purpose.--It is the purpose of this subtitle to--
(1) affirm and maintain the policy established in section 2
of the Mining and Minerals Policy Act of 1970;
(2) promote exploration for and the development of a secure
and reliable domestic source of locatable minerals;
(3) provide for increased Federal revenue from the location
and production of locatable minerals from Federal lands through
patent payments and royalties; and
(4) recognize that unpatented mining claims, mill sites and
tunnel sites are property rights in the fullest sense and
avoid, to the greatest extent possible, claims of takings of
existing property rights under the general mining laws that
could require compensation under the fifth amendment to the
United States Constitution.
SEC. 9502. PATENTS UNDER THE GENERAL MINING LAW.
(a) In General.--Any patent issued by the United States under the
general mining laws after the date of the enactment of this Act for any
interest in land covered by a mining claim or site under such laws
shall be issued only--
(1) upon payment by the owner of the mining claim or site
of the fair market value for the interest in the land owned by
the United States exclusive of, and without regard to, the
mineral deposits in the land or the use of such land for
mineral activities unless the requirements of subsection (b)
are met, and
(2) subject to a reservation by the United States of the
royalty provided in section 9503(a), unless the requirements in
subsection (b) are met.
(b) Patent Transition.--(1) Subsection (a) shall not apply to any
mining claim or site if--
(A) the claimant establishes that the claim or site
constituted a valid mining claim as of the date of the
enactment of this Act; and
(B) the claimant has filed a patent application or mineral
survey application prior to the date of the enactment of this
Act, or files such an application with the Bureau of Land
Management before the date 2 years after the date of the
enactment of this Act. A patent application or mineral survey
application referred to in this subparagraph shall be deemed
timely, notwithstanding that the application may be corrected
or supplemented and resubmitted thereafter.
(2) During the 2-year period in paragraph (1)(B), or while there is
pending a mineral survey or patent application to which this subsection
applies, an owner of the mining claim or site may continue work on a
mining claim or site directed toward establishment and confirmation of
entitlement to a patent, and may amend the application as necessary.
(3) Where access to any mining claim or site has been denied or
impeded by the action or inaction of any Federal official, agency, or
court during all or part of the 5-year period preceding the date of
enactment of this Act, including any mining claim or site within the
area described in section 106 of Public Law 103-433, and the mining
claim or site may require further exploration or development in order
for the claimant to file a patent application or a mineral survey
application and otherwise meet the requirements of paragraph (1), the
claimant may, within 1 year after the date of enactment of this Act,
submit a certified written statement to the Secretary describing the
access denial or impediment, and shall then have a period of 10 years
from the date of enactment of this Act or the termination of such
access denial or impediment, whichever occurs first, to conduct such
mineral exploration or development activities, file a patent
application or mineral survey application, and otherwise meet the
requirements of paragraph (1).
(c) Payment Plan.--(1) Any owner grossing less than $500,000
annually shall qualify for a payment plan. Upon completion of the
patent process, the owner of the mining claim may purchase the surface
estate under the following conditions:
(A) Payment to be amortized over 5 years with 5 equal
annual payments, including principal and interest.
(B) Interest shall be calculated per annum at a rate of 2
percent over the ``Treasury Current Value of Funds Rate'' on
the date of execution of the payment plan agreement.
(2) The purchaser shall be notified by certified mail after 60 days
of delinquent payments and have 90 days from receipt of notification to
correct the delinquency. Repossession shall be by and under the laws of
repossession, foreclosure, and replevin of the State wherein the land
is situated.
(d) Repeal of Patenting Moratorium; Processing of Patent
Applications.--Sections ____ and ____ of Public Law ____ are hereby
repealed. The Secretary of the Interior shall diligently process all
patent applications under the general mining laws pending on the date
of enactment and shall make determinations for all such applications
regarding patent issuance within 2 years.
SEC. 9503. ROYALTY UNDER THE GENERAL MINING LAW.
(a) In General.--The production and sale of locatable minerals
(including associated minerals) from any unpatented mining claim (other
than those from Federal lands to which subsection 9502(b) applies) or
any mining claim patented under section 9502(a) shall be subject to a
royalty of 3.5 percent on the net proceeds from such production mined
and sold from such claim.
(b) Royalty Exclusion.--(1) The royalty payable under this section
shall be waived for any person or corporation with annual net proceeds
from mineral production subject to subsection (a) of less than $50,000.
(2) Where mining operations subject to this section are conducted
in 2 or more places by 1 person or corporation, the operations shall be
considered a single operation the aggregate net proceeds from which
shall be subject to the $50,000 limitation set forth in this
subsection.
(3) No royalty shall be payable under this section with respect to
minerals processed at a facility by the same person or entity which
extracted the minerals if an urban development action grant has been
made under section 119 of the Housing and Community Development Act of
1974 with respect to any portion of such facility.
(4) The obligation to pay royalties under this section shall accrue
only upon the sale of locatable minerals or mineral products produced
from a mining claim subject to such royalty, and not upon the
stockpiling of the same for future processing.
(c) Definitions.--For the purposes of this subtitle:
(1) The term ``net proceeds'' means gross yield, less the
sum of the following deductions for costs incurred prior to
sale or value determination, and none other:
(A) The actual cost of extracting the locatable
mineral.
(B) The actual cost of transporting the locatable
mineral from the claim to the place or places of
reduction, beneficiation, refining, and sale.
(C) The actual cost of crushing, processing,
reduction, beneficiation, refining, and sale of the
locatable mineral.
(D) The actual cost of marketing and delivering the
locatable mineral and the conversion of the locatable
mineral into money.
(E) The actual cost of maintenance and repairs of--
(i) all machinery, equipment, apparatus,
and facilities used in the mine;
(ii) all crushing, milling, leaching,
refining, smelting, and reduction works,
plants, and facilities; and
(iii) all facilities and equipment for
transportation.
(F) The actual cost for support personnel and
support services at the mine site, including without
limitation, accounting, assaying, drafting and mapping,
computer services, surveying, housing, camp, and office
expenses, safety, and security.
(G) The actual cost of engineering, sampling, and
assaying pertaining to development and production.
(H) The actual cost of permitting, reclamation,
environmental compliance and monitoring.
(I) The actual cost of fire and other insurance on
the machinery, equipment, apparatus, works, plants, and
facilities mentioned in subparagraph (E).
(J) Depreciation of the original capitalized cost
of the machinery, equipment, apparatus, works, plants,
and facilities listed in subparagraph (E). The annual
depreciation charge shall consist of amortization of
the original cost in the manner consistent with the
Internal Revenue Code of 1986, as amended from time to
time. The probable life of the property represented by
the original cost must be considered in computing the
depreciation charge.
(K) All money expended for premiums for industrial
insurance, and the owner paid cost of hospital and
medical attention and accident benefits and group
insurance for all employees engaged in the production
or processing of locatable minerals.
(L) All money paid as contributions or payments
under State unemployment compensation law, all money
paid as contributions under the Federal Social Security
Act, and all money paid to State government in real
property taxes and severance or other taxes measured or
levied on production, or Federal excise tax payments
and payments as fees or charges for use of the Federal
lands from which the locatable minerals are produced.
(M) The actual cost of the developmental work in or
about the mine or upon a group of mines when operated
as a unit.
(2) The term ``gross yield'' shall having the following
meaning:
(A) In the case of sales of gold and silver ore,
concentrates or bullion, or the sales of other
locatable minerals in the form of ore or concentrates,
the term ``gross yield'' means the actual proceeds of
sale of such ore, concentrates or bullion.
(B) In the case of sales of beneficiated products
from locatable minerals other than those subject to
subparagraph (A) (including cathode, anode or copper
rod or wire, or other products fabricated from the
locatable minerals), the term ``gross yield'' means the
gross income from mining derived from the first
commercially marketable product determined in the same
manner as under section 613 of the Internal Revenue
Code of 1986.
(C) If ore, concentrates, beneficiated or
fabricated products, or locatable minerals are used or
consumed and are not sold in an arms length
transaction, the term ``gross yield'' means the
reasonable fair market value of the ore, concentrates,
beneficiated or fabricated products at the mine or
wellhead determined from the first applicable of the
following:
(i) Published or other competitive selling
prices of locatable minerals of like kind and
grade.
(ii) Any proceeds of sale.
(iii) Value received in exchange for any
thing or service.
(iv) The value of any locatable minerals in
kind or used or consumed in a manufacturing
process or in providing a service.
Without limiting the foregoing, the profits or losses
incurred in connection with forward sales, futures or
commodity options trading, metal loans, or any other
price hedging or speculative activity or arrangement
shall not be included in gross yield.
(3) The term ``Secretary'' means the Secretary of the
Interior.
(d) Limitations and Allocations of Net Proceeds, Gross Yield, and
Allowable Costs.--(1) The deductions listed in subsection (c)(1) are
intended to allow a reasonable allowance for overhead. Such deductions
shall not include any expenditures for salaries, or any portion of
salaries, of any person not actually engaged in--
(A) the working of the mine;
(B) the operating of the leach pads, ponds, plants, mills,
smelters, or reduction works;
(C) the operating of the facilities or equipment for
transportation; or
(D) superintending the management of any of those
operations described in subparagraphs (A) through (C).
(2) Ores or solutions of locatable minerals subject to the royalty
requirements of this section may be extracted from mines comprised of
mining claims and lands other than mining claims and ore or solutions
of locatable minerals subject to the royalty requirements of this
section may be commingled with ores or solutions from lands other than
mining claims. In any such case, for purposes of determining the amount
of royalties payable under this section--
(A) the operator shall first sample, weigh or measure, and
assay the same in accordance with accepted industry standards;
and
(B) gross yield, allowable costs and net proceeds for
royalty purposes shall be allocated in proportion to mineral
products recovered from the mining claims in accordance with
accepted industry standards.
(e) Liability for Royalty Payments.--The owner or co-owners of a
mining claim subject to a royalty under this section shall be liable
for such royalty to the extent of the interest in such claim owned. As
used in this subsection, the terms ``owner'' and ``co-owner'' mean the
person or persons owning the right to mine locatable minerals from such
claim and receiving the net proceeds of such sale. No person who makes
any royalty payment attributable to the interest of the owner or co-
owners liable therefor shall become liable to the United States for
such royalty as a result of making such payment on behalf of such owner
or co-owners.
(f) Time and Manner of Payment.--(1) Royalty payments for
production from any mining claim subject to the royalty payable under
this section shall be due to the United States at the end of the month
following the end of the calendar quarter in which the net proceeds
from the sale of such production are received by the owner or co-
owners. Royalty payments may be made based upon good faith estimates of
the gross yield, net proceeds and the quantity of ore, concentrates, or
other beneficiated or fabricated products of locatable minerals,
subject to adjustment when the actual annual gross yield, net proceeds
and quantity are determined by the owner of the mining claim or site or
co-owners.
(2) Each royalty payment or adjustment shall be accompanied by a
statement containing each of the following:
(A) The name and Bureau of Land Management serial number of
the mining claim or claims from which ores, concentrates,
solutions or beneficiated products of locatable minerals
subject to the royalty required in this section were produced
and sold for the period covered by such payment or adjustment.
(B) The estimated (or actual, if determined) quantity of
such ore, concentrates, solutions or beneficiated or fabricated
products produced and sold from such mining claim or claims for
such period.
(C) The estimated (or actual, if determined) gross yield
from the production and sale of such ore, concentrates,
solutions or beneficiated products for such period.
(D) The estimated (or actual, if determined) net proceeds
from the production and sale of such ores, concentrates,
solutions or beneficiated products for such period, including
an itemization of the applicable deductions described in
subsection (c)(1).
(E) The estimated (or actual, if determined) royalty due to
the United States, or adjustment due to the United States or
such owner or co-owners, for such period.
(3) In lieu of receiving a refund under subsection (h), the owner
or co-owners may elect to apply any adjustment due to such owner or co-
owners as an offset against royalties due from such owner or co-owners
to the United States under this Act, regardless of whether such
royalties are due for production and sale from the same mining claim or
claims.
(g) Recordkeeping and Reporting Requirements.--(1) An owner,
operator, or other person directly involved in the conduct of mineral
activities, transportation, purchase, or sale of locatable minerals,
concentrates, or products derived therefrom, subject to the royalty
under this section, through the point of royalty computation, shall
establish and maintain any records, make any reports, and provide any
information that the Secretary may reasonably require for the purposes
of implementing this section or determining compliance with regulations
or orders under this section. Upon the request of the Secretary when
conducting an audit or investigation pursuant to subsection (i), the
appropriate records, reports, or information required by this
subsection shall be made available for inspection and duplication by
the Secretary.
(2) Records required by the Secretary under this section shall be
maintained for 3 years after the records are generated unless the
Secretary notifies the record holder that he or she has initiated an
audit or investigation specifically identifying and involving such
records and that such records must be maintained for a longer period.
When an audit or investigation is under way, such records shall be
maintained until the earlier of the date that the Secretary releases
the record holder of the obligation to maintain such records or the
date that the limitations period applicable to such audit or
investigation under subsection (i) expires.
(h) Interest Assessments.--(1) If royalty payments under this
section are not received by the Secretary on the date that such
payments are due, or if such payments are less than the amount due, the
Secretary shall charge interest on such unpaid amount. Interest under
this subsection shall be computed at the rate published by the
Department of the Treasury as the ``Treasury Current Value of Funds
Rate.'' In the case of an underpayment or partial payment, interest
shall be computed and charged only on the amount of the deficiency and
not on the total amount, and only for the number of days such payment
is late. No other late payment or underpayment charge or penalty shall
be charged with respect to royalties under this section.
(2) In any case in which royalty payments are made in excess of the
amount due, or amounts are held by the Secretary pending the outcome of
any appeal in which the Secretary does not prevail, the Secretary shall
promptly refund such overpayments or pay such amounts to the person or
persons entitled thereto, together with interest thereon for the number
of days such overpayment or amounts were held by the Secretary, with
the addition of interest charged against the United States computed at
the rate published by the Department of the Treasury as the ``Treasury
Current Value of Funds Rate.''
(i) Audits, Payment Demands and Limitations.--(1) The Secretary may
conduct, after notice, any audit reasonably necessary and appropriate
to verify the payments required under this section.
(2) The Secretary shall send or issue any billing or demand letter
for royalty due on locatable minerals produced and sold from any mining
claim subject to royalty required by this section not later than 3
years after the date such royalty was due and must specifically
identify the production involved, the royalty allegedly due and the
basis for the claim. No action, proceeding or claim for royalty due on
locatable minerals produced and sold, or relating to such production,
may be brought by the United States, including but not limited to any
claim for additional royalties or claim of the right to offset the
amount of such additional royalties against amounts owed to any person
by the United States, unless judicial suit or administrative
proceedings are commenced to recover specific amounts claimed to be due
prior to the expiration of 3 years from the date such royalty is
alleged to have been due.
(j) Transitional Rules.--Any mining claim for which a patent is
issued pursuant to section 9502(b) shall not be subject to the
obligation to pay the royalty pursuant to this section. Royalty
payments for any claim processed under section 9502(b) shall be
suspended pending final determination of the right to patent. For any
such claim that is determined not to qualify for the issuance of a
patent under section 9502(b), royalties shall be payable under this
section on production after the date of enactment of this Act, plus
interest computed at the rate published by the Department of the
Treasury as the ``Treasury Current Value of Funds Rate'' on production
after such date of enactment and before the date of such determination.
(k) Disbursement of Revenues.--The receipts from royalties
collected under this section shall be disbursed as follows:
(1) Two-thirds of such receipts shall be paid into the
Treasury of the United States and deposited as miscellaneous
receipts.
(2) One-third of such receipts shall be paid by the
Secretary of the Treasury to the State in which the mining
claim from which production occurred is located.
(l) No Implied Covenants.--The owner of a mining claim subject to
the provisions of this title shall have no obligation, express or
implied, to explore for, develop, produce or market locatable minerals
as a result of the obligation to pay a royalty hereunder, and the
timing, nature, extent and manner of exploring, developing, mining and
marketing such locatable minerals shall be in the sole discretion of
the claim owner.
SEC. 9504. MINERAL MATERIALS.
(a) Determinations.--Section 3 of the Act of July 23, 1955 (30
U.S.C. 611), is amended as follows:
(1) Insert ``(a)'' before the first sentence.
(2) Add the following new subsection at the end thereof:
``(b)(1) Subject to valid existing rights, after the date of
enactment of this subsection, notwithstanding the reference to common
varieties in subsection (a) and to the exception to such term relating
to a deposit of materials with some property giving it distinct and
special value, all deposits of mineral materials referred to in such
subsection, including the block pumice referred to in such subsection,
shall be subject to disposal only under the terms and conditions of the
Materials Act of 1947.
``(2) For purposes of paragraph (1), the term `valid existing
rights' means that a mining claim located for any such mineral material
had some property giving it the distinct and special value referred to
in subsection (a), or as the case may be, met the definition of block
pumice referred to in such subsection, was properly located and
maintained under the general mining laws prior to the date of the
enactment of this subsection, and was supported by a discovery of a
valuable mineral deposit within the meaning of the general mining laws
as in effect immediately prior to such date of enactment and that such
claim continues to be valid under this Act.''.
(b) Identified Deposits.--In order to assure that the Secretary has
the authority to provide for the development of mineral materials
which, in order to justify the investment necessary for the development
of the appropriate mine, quarry or other workings and related
facilities, may require longer and more secure tenure than is provided
by sales contracts under the Act entitled ``An Act to provide for the
disposal of materials on the public lands of the United States'',
approved July 31, 1947 (30 U.S.C. 602), and in order to provide
flexibility with regard to the manner of disposition of mineral
materials section 2 of such Act is amended by adding at the end the
following:
``(b) Identified Deposits.--(1) Lands known to contain valuable
deposits of mineral materials subject to this Act and subsequent
amendments and not covered by any contract, permit, or lease under this
section shall also be subject to disposition by lease under this Act by
the Secretary of the Interior through advertisement, competitive
bidding, or such other methods as he may by general regulations adopt,
and in such reasonably compact areas as he shall fix.
``(2) All leases will be conditioned upon--
``(A) the payment by the lessee of such royalty as may be
fixed in the lease, not less than two percent of the quantity
or gross value of the output of mineral materials, and
``(B) the payment in advance of a rental of 25 cents per
acre for the first calendar year or fraction thereof; 50 cents
per acre for the second, third, fourth, and fifth years,
respectively; and $1 per acre per annum thereafter during the
continuance of the lease, such rental for that year being
credited against royalties accruing for that year.
``(3)(A) Any lease issued under this subsection shall be for a term
of 20 years and so long thereafter as the lessee complies with the
terms and conditions of the lease and upon the further condition that
at the end of each 20-year period succeeding the date of the lease such
reasonable adjustment of the terms and conditions thereof may be made
therein as may be prescribed by the Secretary of the Interior unless
otherwise provided by law at the expiration of such periods.
``(B) Leases shall be conditioned upon a minimum annual production
or the payment of a minimum royalty in lieu thereof, except when
production is interrupted by strikes, the elements, or casualties not
attributable to the lessee.
``(C) The Secretary of the Interior may permit suspension of
operations under any such leases when marketing conditions are such
that the leases cannot be operated except at a loss.
``(D) The Secretary upon application by the lessee prior to the
expiration of any existing lease in good standing shall amend such
lease to provide for the same tenure and to contain the same
conditions, including adjustment at the end of each 20-year period
succeeding the date of said lease, as provided for in this subsection.
``(c) Other Lands.--(1) The Secretary of the Interior is hereby
authorized, under such rules and regulations as he may prescribe, to
grant to any qualified applicant a prospecting permit which shall give
the exclusive right to prospect for mineral materials in lands
belonging to the United States which are not subject to subsection (b),
and are not covered by a contract, permit, or lease under this Act,
except that a prospecting permit shall not exceed a period of 2 years
and the area to be included in such a permit shall not exceed 2,560
acres of land in reasonably compact form.
``(2) The Secretary of the Interior shall reserve and may exercise
the authority to cancel any prospecting permit upon failure by the
permittee to exercise due diligence in the prosecution of the
prospecting work in accordance with the terms and conditions stated in
the permit, and shall insert in every such permit issued under the
provisions of this Act appropriate provisions for its cancellation by
him.
``(3) Upon showing to the satisfaction of the Secretary of the
Interior that valuable deposits of one of the mineral materials subject
to the Materials Act of 1947 have been discovered by the permittee
within the area covered by his permit, and that such land is valuable
therefor, the permittee shall be entitled to a lease for any or all of
the land embraced in the prospecting permit, at a royalty of not less
than two percent of the quantity or gross value of the output of the
mineral materials at the point of shipment to market, such lease to be
taken in compact form by legal subdivisions of the public land surveys,
or if the land be not surveyed, by survey executed at the cost of the
permittee in accordance with regulations prescribed by the Secretary of
the Interior.''.
(d) Mineral Materials Disposal Clarification.--Section 4 of the Act
of July 23, 1955 (30 U.S.C. 612), as amended as follows:
(1) In subsection (b) insert ``and mineral material'' after
``vegetative''.
(2) In subsection (c) insert ``and mineral material'' after
``vegetative''.
(e) Conforming Amendment.--Section 1 of the Act of July 31, 1947,
entitled ``An Act to provide for the disposal of materials on the
public lands of the United States'' (30 U.S.C. 601 and following) is
amended by striking ``common varieties of'' in the first sentence.
(f) Short Titles.--
(1) Surface resources.--The Act of July 23, 1955, is
amended by inserting after section 7 the following new section:
``Sec. 8. This Act may be cited as the `Surface Resources Act of
1955'.''.
(2) Mineral materials.--The Act of July 31, 1947, entitled
``An Act to provide for the disposal of materials on the public
lands of the United States'' (30 U.S.C. 601 and following) is
amended by inserting after section 4 the following new section:
``Sec. 5. This Act may be cited as the `Materials Act of 1947'.''.
(g) Repeals.--(1) Subject to valid existing rights, the Act of
August 4, 1892 (27 Stat. 348, 30 U.S.C. 161), commonly known as the
Building Stone Act, is hereby repealed.
(2) Subject to valid existing rights, the Act of January 31, 1901
(30 U.S.C. 162), commonly known as the Saline Placer Act, is hereby
repealed.
(h) Authorization for Disposal of Mineral Materials by Contract.--
Section 2(a) of the Act entitled ``An Act to provide for the disposal
of materials on the public lands of the United States'', approved July
31, 1947 (30 U.S.C. 602(a)), is amended--
(1) by striking the period at the end of paragraph (3) and
inserting ``or, if''; and
(2) by adding after paragraph (3) the following:
``(4) the material is a mineral material.''.
(i) Sodium.--Section 24 of the Mineral Leasing Act (30 U.S.C. 181
et seq.) is amended by inserting after ``2 per centum'' in each place
it appears the following: ``and not greater than five and one-half per
centum''. Any rate under section 24 of the Mineral Leasing Act (30
U.S.C. 181) in excess of five and one-half per centum shall not be
allowed unless the following conditions are met:
(1) the Secretary, in consultation with the Secretary of
Commerce and the United States Trade Representative, finds that
any increase in the royalty rate for sodium will not have an
adverse effect on the export of domestically produced soda ash;
(2) the Secretary reports this finding of no ``adverse
effect'' to Congress and recommends an additional proposed
royalty rate increase; and
(3) the Congress, within 360 days, approves the Secretary's
recommendation.
The Secretary shall, within 90 days, offer for competitive bid all
tracts for which there are applications pending on sodium leases.
SEC. 9505. CLAIM MAINTENANCE REQUIREMENTS.
(a) Maintenance Fees.--
(1) Annual maintenance fee.--After the date of enactment of
this Act, the owner of each unpatented mining claim or site
located pursuant to the general mining laws, whether located
before or after the enactment of this Act, shall pay to the
Secretary in advance on or before September 1 of each year,
until a patent has been issued therefor, an annual maintenance
fee per mining claim or site.
(2) Initial maintenance fee.--The owner of each unpatented
mining claim or site located after the date of enactment of
this Act pursuant to the general mining laws shall pay to the
Secretary, at the time the copy of the notice or certificate of
location is filed with the Bureau of Land Management pursuant
to section 314(b) of the Federal Land Policy and Management Act
of 1976 (43 U.S.C. 1744(b)), the location fee required under
subsection (i) of this section, in lieu of the annual
maintenance fee of $100 per mining claim or site for the
assessment year which includes the date of location of such
mining claim or site.
(3) Exemption.--The owner of any mining claim or site who
certifies in writing to the Secretary on or before the first
day of any assessment year that access to such mining claim or
site was denied or impeded during the prior assessment year by
the action or inaction of any local, State, or Federal
governmental officer, agency, or court, or by any Indian tribal
authority, shall be exempt from the annual maintenance fee
requirements of paragraph (1) for the assessment year following
the filing of the certification.
(4) Amount of annual maintenance fee.--For each assessment
year the annual maintenance fee payable under paragraph (1) for
a claim or site referred to in paragraph (1) shall be in the
amount specified in Table 1.
TABLE 1
------------------------------------------------------------------------
Amount of Fee Per Site
Assessment Year or Claim
------------------------------------------------------------------------
1 through 3.................................... $100 per year
4 through 5.................................... $150 per year
6 through 10................................... $200 per year
11 through 15.................................. $300 per year
16 and thereafter.............................. $500 per year
------------------------------------------------------------------------
For purposes of applying Table 1 in the case of claims filed before the
enactment of this Act, the portion of the assessment year in which this
Act is enacted shall be treated as the first assessment year.
(5) Effect of forfeiture.--No owner or co-owner of a mining
claim or site which has been forfeited because the maintenance
fee has not been paid and no person who is a related person of
any such owner or co-owner may relocate a new claim on any part
of lands located within the forfeited claim for a period of 18
months after the date of forfeiture.
(6) Deposit of fees.--The full amount of all fees paid
under this subsection shall be deposited in the General Fund of
the Treasury.
(b) Annual Labor.--(1) Amounts expended on activities that qualify
as annual labor under the general mining laws may be credited on a
dollar for dollar basis towards up to 75 percent of the annual
maintenance fee payable under this section for the following assessment
year.
(2) Subject to the 75 percent limit set forth in paragraph (1), the
excess of amounts expended for annual labor performed in any one year
over such 75 percent limit may be applied to the maintenance fee due in
subsequent years for a period of up to three years.
(3) In order to receive credit under this subsection for annual
labor work or excess annual labor, the description and value of the
work must be included in the statement required in subsection (e) and
the statement must be timely filed.
(4) Annual labor performed on an individual mining claim or site
within a group of contiguous claims may be credited towards the
aggregate amount of maintenance fees due on all of the contiguous
claims within that group.
(c) Work Qualifying as Annual Labor.--(1) Only work which directly
benefits or develops a mining claim or facilitates the extraction of
ore qualifies as annual labor. Acceptable labor and improvements
include any of the following:
(A) Drilling or excavating, including ore extraction.
(B) Mining costs directly associated with the production of
ore.
(C) Prospecting work which benefits the location or a
contiguous location.
(D) Development work toward an actual mine, such as shafts,
tunnels, crosscuts and drifts, settling ponds and dams.
(E) Bringing in water for direct mining or milling
purposes.
(F) Clearing of brush, timber, debris, or overburden where
necessary to facilitate the extraction or processing of
minerals.
(G) Construction of trails, roads, or landing strips
providing access to claims.
(H) Construction costs of worker housing, mills, and
equipment storage buildings where reasonably necessary for the
development of the location.
(I) Reasonable value of the use of equipment for
prospecting, mining, or development purposes on the location.
(J) Repairs of equipment used for prospecting, sampling, or
production of minerals provided that such equipment has been on
site during the assessment year.
(K) Cost of moving workers, materials, and equipment among
contiguous locations.
(L) Watchman services of a bona fide employed watchman on
the property where reasonably necessary to protect mining
equipment of substantial value.
(M) Activities covered under section 1 of the Act of
September 2, 1958 (30 U.S.C. 28-1), as amended.
(N) Reclamation conducted pursuant to State or Federal
surface management regulations.
(O) Other activities which the Secretary may determine
qualify as annual labor.
(2) The following activities do not qualify as annual labor:
(A) Work involved in maintaining the location such as
brushing and marking boundaries or replacing corner posts and
location notices.
(B) Transportation of workers to or from the location.
(C) Prospecting or exploration work not conducted within
the location or a contiguous location.
(d) Amendments of Public Law 85-876.--The Act of September 2, 1958
(Public Law 85-876; 30 U.S.C. 28-1), is amended as follows:
(1) Section 1 is amended by inserting ``mineral activities,
environmental baseline monitoring, and'' after ``without being
limited to'' and before ``geological, geochemical and
geophysical surveys'' and by striking ``Such'' at the beginning
of the last sentence and inserting ``Airborne''.
(2) Section 2(d) is amended by inserting ``environmental
baseline monitoring or'' after ``experience to conduct'' and
before ``geological, geochemical or geophysical surveys''.
(3) Section 2 is amended by adding at the end of the
following new subsection at the end thereof:
``(e) The term `environmental baseline monitoring' means activities
for collecting, reviewing and analyzing information concerning soil,
vegetation, wildlife, mineral, air, water, cultural, historical,
archaeological or other resources related to planning for or complying
with Federal and State environmental or permitting requirements
applicable to potential or proposed mineral activities on the
claim(s).''.
(e) Maintenance Fee Statement.--Each payment under subsection (a)
of this section shall be accompanied by a statement which reasonably
identifies the mining claim or site for which the maintenance fee is
being paid. The statement required under this subsection shall be in
lieu of any annual filing requirements for mining claims or sites,
under any other Federal law, but shall not supersede any such filing
requirement under applicable State law.
(f) Annual Labor Report.--When the value of annual labor is
credited towards part or all of the maintenance fee, subject to the 75-
percent limit set forth in subsection (b)(1), the following shall
apply:
(1) The maintenance fee statement required in subsection
(e) must also state the dates of performance of the labor,
describe the character and total value of the improvements made
or the labor performed, the amount of labor used as a credit
toward the maintenance fee for the current year, and the value
of excess labor performed in previous years which is to be
applied to the maintenance fee for the current year.
(2) Documentation which reasonably supports the activities
or improvements claimed must accompany the maintenance fee
statement. Such documentation may include, but is not limited
to, copies of maps showing sample locations, drill locations,
or survey data; environmental baseline data; reports on
geology, geochemistry, or geophysics by qualified experts;
drill results; or engineering reports by qualified engineers.
(3) All supporting material filed pursuant to paragraph (2)
shall remain confidential in accordance with section 552 of
title 5 of the United States Code as long as the location is
maintained and for a period of one year after the location is
abandoned, after which all data filed shall be considered
public information.
(g) Effect of Compliance as Against Subsequent Locators.--(1)
Except as provided in paragraph (2), after the date of enactment of
this Act, compliance with the requirements of this section shall, from
the time the location notice or certificate is posted on the land under
applicable State law, confer upon the owner of any unpatented mining
claim or site, whether located before or after the date of enactment of
this Act, an exclusive right of possession, as against subsequent
locators, of the land included in such mining claim or site under the
general mining laws. If more than one mining claim or site owned or
controlled by the same claim or site owner covers substantially the
same land, by reason of the location of one or more mining claims or
sites on such land, the amendment or relocation of any such mining
claim or site, or otherwise, such exclusive right of possession shall
extend to all such mining claims or sites, effective from the time the
location notice or certificate for the initial mining claim or site was
posted on such land under applicable State law. The order of location,
amendment, or relocation of any such mining claims or sites on such
land shall not affect the validity of any such mining claim or site.
Such owner of the mining claim or site shall not be required to be in
actual, physical occupation of such land and shall not be required to
exclude rival locators from such land. Such exclusive right of
possession shall be subject to applicable Federal law, including the
Multiple Mineral Development Act of 1954 (30 U.S.C. 521-31), the
Materials Act of 1947 (30 U.S.C. 601-604) and the Surface Resources Act
of 1955 (30 U.S.C. 611-15) to the extent applicable, and shall neither
enlarge nor diminish any rights of such owner of the mining claim or
site as against the United States in such land. This paragraph shall
supersede the common law doctrine of pedis possessio.
(2) Conflicts over the right of exclusive possession of land
included in any mining claim or site shall be determined in proceedings
between owners of mining claims or sites under the provisions of
section 910 of the Revised Statutes (30 U.S.C. 53) and other applicable
law, including but not limited to each of the following:
(A) Any conflict based upon circumstances existing as of
the date of enactment of this Act between mining claims or
sites located before the date of enactment of this Act, shall
be resolved under the law in effect on the day prior to the
date of enactment of this Act, including the common law
doctrine of pedis possessio.
(B) Any conflict arising on or after the date of enactment
of this Act between mining claims or sites located before, on
or after the date of enactment over whether either owner of the
mining claim or site has complied with the requirements of this
section, shall be resolved under this Act.
(h) Failure of Co-Owner To Contribute.--Upon the failure of any one
or more of several co-owners of any mining claim or site to contribute
such co-owner or owners' portion of any location or maintenance fee
payable under this section, any co-owner who has paid such fee may,
after the payment due date, serve the delinquent co-owner or owners
with notice of such failure in writing or, if such delinquent co-owner
or owners cannot be located after reasonable efforts, by publication in
a general circulation newspaper published in a location nearest the
mining claim or site at least once a week for at least 90 days. If at
the expiration of 90 days after such notice in writing or by
publication, any delinquent co-owner fails or refuses to contribute the
owed portion, such co-owner or owners' interest shall become the
property of the owner or co-owners who have paid the required fee.
(i) Location Fee.--The owner of each unpatented mining claim or
site located on or after the date of enactment of this Act pursuant to
the general mining laws shall pay to the Secretary, at the time the
notice or certificate of location is filed with the Bureau of Land
Management pursuant to subsection 314(b) of the Federal Land Policy and
Management Act of 1976 (43 U.S.C. 1744(b)), a location fee of $25.00
per mining claim or site. The full amount of all fees paid under this
subsection shall be deposited in the General Fund of the Treasury.
Effective on the date of the enactment of this Act, section 10102 of
the Omnibus Budget Reconciliation Act of 1993 (107 Stat. 406; 30 U.S.C.
28g) is repealed.
(j) Credit Against Maintenance Fee.--(1) Except as provided in
paragraph (2), the annual maintenance fee payable for any unpatented
mining claim or site for any assessment year shall be reduced by the
amount of royalty paid by such claimholder for such mining claim or
site, or for any contiguous mining claim or site, during the prior
assessment year.
(2) Royalties paid during any assessment year prior to the first
full assessment year commencing after the enactment of this Act shall
not reduce the amount of any maintenance fee.
(k) Oil Shale Claims Subject to Claim Maintenance Fee 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 paragraph
2511(e)(2) of the Energy Policy Act of 1992 (30 U.S.C. 242(e)(2)).
(l) Failure To Comply.--The failure of the owner of the mining
claim or site to pay any claim maintenance fee or location fee for a
mining claim or site on or before the date such payment is due under
this section shall constitute forfeiture of the mining claim or site
and such mining claim or site shall be null and void, effective as of
the day after the date such payment is due, except that if such
maintenance fee or location fee is paid or tendered on or before the
30th day after such payment was due under subsection of this section,
such mining claim or site shall not be forfeited or null or void, and
such maintenance fee or location fee shall be deemed timely paid.
(m) Amendment of FLPMA Filing Requirements.--(1) Section 314(a) of
the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1744(a))
is hereby repealed.
(2) Section 314(c) of the Federal Land Policy and Management Act of
1976 (43 U.S.C. 1744(c)) is amended to read as follows:
``(c) Failure To File as Constituting Forfeiture; Defective or
Untimely Filing.--The failure to timely file the copy of the notice or
certificate of location as required by subsection (b) shall constitute
forfeiture of the mining claim and such claim shall be null and void by
operation of law; except that it shall not be considered a failure to
file if the notice or certificate of location is defective or not
timely filed for record under other State or Federal laws permitting or
requiring the filing or recording thereof, or if the copy of the notice
or certificate is filed by or on behalf of some but not all of the
owners of the claim.''.
(n) Related Persons.--As used in this section, the term ``related
persons'' includes--
(1) the spouse and dependent children (as defined in
section 152 of the Internal Revenue Code of 1986), of the owner
of the mining claim or site; and
(2) a person controlled by, controlling, or under common
control with the owner of the mining claim or site.
(o) Repeal.--Section 10101 of the Omnibus Budget Reconciliation Act
of 1993 (107 Stat. 406; 30 U.S.C. 28g) is repealed, effective with
respect to assessment year commencing after the enactment of this Act.
(p) Periodic Review of Fee Structure.--Beginning in the year 2005
and at 10 year intervals thereafter, the Secretary shall review the
costs incurred by the Secretary to administer mining claims for
locatable minerals under the general mining laws and the structure and
level of maintenance and location fees received by the Secretary with
respect to such claims. The Secretary shall determine if the revenues
from such fees is adequate to cover such costs, taking inflation and
other appropriate factors into account. The Secretary shall submit the
results of each such review to the Congress, together with such
legislative recommendations as the Secretary deems appropriate.
PART 2--FEDERAL OIL AND GAS ROYALTIES
SEC. 9511. SHORT TITLE.
This part may be cited as the ``Federal Oil and Gas Royalty
Simplification and Fairness Act of 1995''.
SEC. 9512. DEFINITIONS.
(a) In General.--Section 3 of the Federal Oil and Gas Royalty
Management Act of 1982 (30 U.S.C. 1701 et seq.) is amended--
(1) by amending paragraph (7) to read as follows:
``(7) `lessee' means any person to whom the United States,
an Indian tribe, or an Indian allottee issues a lease or any
person to whom operating rights have been assigned;''; and
(2) by striking ``and'' at the end of paragraph (15), by
striking the period at the end of paragraph (16) and inserting
a semicolon, and by adding at the end the following:
``(17) `adjustment' means an amendment to a previously
filed report on an obligation, and any additional payment or
credit, if any, applicable thereto, to rectify an underpayment
or overpayment on a lease;
``(18) `administrative proceeding' means any agency process
in which a demand, decision or order issued by the Secretary is
subject to appeal or has been appealed;
``(19) `assessment' means any fee or charge levied or
imposed by the Secretary or the United States other than--
``(A) the principal amount of any royalty, minimum
royalty, rental, bonus, net profit share or proceed of
sale;
``(B) any interest; or
``(C) any civil or criminal penalty;
``(20) `commence' means--
``(A) with respect to a judicial proceeding, the
service of a complaint, petition, counterclaim,
crossclaim, or other pleading seeking affirmative
relief or seeking credit or recoupment; or
``(B) with respect to a demand, the receipt by the
Secretary or a lessee of the demand;
``(21) `credit' means the application of an overpayment (in
whole or in part) against an obligation which has become due to
discharge, cancel or reduce the obligation;
``(22) `demand' means--
``(A) an order to pay issued by the Secretary; or
``(B) a separate written request by a lessee which
asserts an obligation due the lessee,
but does not mean any royalty or production report, or any
information contained therein, required by the Secretary;
``(23) `obligation' means--
``(A) any duty of the Secretary or the United
States--
``(i) to take oil or gas royalty in kind;
or
``(ii) to pay, refund, offset, or credit
monies including but not limited to--
``(I) the principal amount of any
royalty, minimum royalty, rental,
bonus, net profit share or proceed of
sale; or
``(II) any interest;
``(B) any duty of a lessee--
``(i) to deliver oil or gas royalty in
kind; or
``(ii) to pay, offset or credit monies
including but not limited to--
``(I) the principal amount of any
royalty, minimum royalty, rental,
bonus, net profit share or proceed of
sale;
``(II) any interest;
``(III) any penalty; or
``(IV) any assessment,
which arises from or relates to any lease administered by the
Secretary for, or any mineral leasing law related to, the
exploration, production and development of oil or gas on
Federal lands or the Outer Continental Shelf;
``(24) `order to pay' means a written order issued by the
Secretary or the United States which--
``(A) asserts a definite and quantified obligation;
and
``(B) specifically identifies the obligation by
lease, production month and amount of such obligation
ordered to be paid, as well as the reason or reasons
such obligation is claimed to be due,
but such term does not include any other communication or
action by or on behalf of the Secretary or the United States;
``(25) `overpayment' means any payment by a lessee in
excess of an amount legally required to be paid on an
obligation and includes the portion of any estimated payment
for a production month that is in excess of the royalties due
for that month;
``(26) `payment' means satisfaction, in whole or in part,
of an obligation;
``(27) `penalty' means a statutorily authorized civil fine
levied or imposed by the Secretary or the United States for a
violation of this Act, any mineral leasing law, or a term or
provision of a lease administered by the Secretary;
``(28) `refund' means the return of an overpayment by the
Secretary or the United States by the drawing of funds from the
United States Treasury;
``(29) `State concerned' means, with respect to a lease, a
State which receives a portion of royalties under this Act from
such lease; and
``(30) `underpayment' means any payment or nonpayment by a
lessee that is less than the amount legally required to be paid
on an obligation.''.
(b) Lessee Liability.--Section 102(a) of the Federal Oil and Gas
Royalty Management Act of 1982 (30 U.S.C. 1712(a)) is amended to read
as follows:
``(a) A lessee who is required to make any royalty or other payment
under a lease or under the mineral leasing laws, shall make such
payments in the time and manner as may be specified by the Secretary. A
lessee may designate a person to act on the lessee's behalf and shall
notify the Secretary in writing of such designation. The person to whom
the United States issues a lease or the person by whom operating rights
are currently owned, but not both, shall remain primarily liable for
its obligations.''.
SEC. 9513. LIMITATION PERIODS.
(a) In General.--The Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1701 et seq.) is amended by adding after section 114
the following new section:
``SEC. 115. LIMITATION PERIODS AND AGENCY ACTIONS.
``(a) In General.--A judicial proceeding or demand which arises
from, or relates to an obligation, shall be commenced within six years
from the date on which the obligation becomes due and if not so
commenced shall be barred, except as otherwise provided by this
section.
``(b) Obligation Becomes Due.--
``(1) In general.--For purposes of this Act, an obligation
becomes due when the right to enforce the obligation is fixed.
``(2) Royalty obligations.--The right to enforce the
royalty obligation for a production month for a lease is fixed
for purposes of this Act on the last day of the calendar month
following the month in which oil or gas is produced.
``(c) Tolling of Limitation Period.--The running of the limitation
period under subsection (a) shall not be suspended, tolled, extended,
or enlarged for any obligation for any reason by any action, including
an action by the Secretary or the United States, other than the
following:
``(1) Tolling agreement.--A written agreement executed
during the limitation period between the Secretary and a lessee
which tolls the limitation period for the amount of time during
which the agreement is in effect.
``(2) Subpoena.--The issuance of a subpoena in accordance
with the provisions of section 107(c) shall toll the limitation
period with respect to the obligation which is the subject of a
subpoena only for the period beginning on the date the lessee
receives the subpoena and ending on the date on which (A) the
lessee has produced such subpoenaed records for the subject
obligation, (B) the Secretary receives written notice that the
subpoenaed records for the subject obligation are not in
existence or are not in the lessee's possession or control, or
(C) a court has determined in a final decision that such
records are not required to be produced, whichever occurs
first.
``(3) Fraud or concealment.--Any fraud or concealment by a
lessee in an attempt to defeat or evade an obligation in which
case the limitation period shall be tolled for the period of
such fraud or such concealment.
``(4) Tolling request.--A written tolling request from a
lessee based upon the lessee's representation that the lessee's
entitlement to an overpayment has not been finally determined.
The limitation period shall be tolled pursuant to this
paragraph from the date the Secretary receives the tolling
request until the earlier of the end of the requested period or
12 months after the date the Secretary receives the tolling
request, but is subject to successive 12-month renewals by the
lessee made prior to the expiration of the then applicable 12-
month period. The tolling request shall be sufficient if it
identifies--
``(A) the person who made the potential
overpayment;
``(B) the leases and production months involved in
the potential overpayment; and
``(C) the reasons the lessee believes that it may
later be entitled to a refund of the overpayment.
``(5) Order to perform a restructured accounting.--The
issuance of a notice under section 107(d)(4) that the lessee
has not adequately performed a restructured accounting shall
toll the limitation period with respect to the obligation which
is the subject of the notice only for the period beginning on
the date the lessee receives the notice and ending on the date
on which (A) the Secretary receives written notice the
accounting or other requirement has been performed, or (B) a
court has determined in a final decision that the lessee is not
required to perform the accounting, whichever occurs first.
``(d) Termination of Limitation Period.--The limitation period
shall be terminated in the event--
``(1) the Secretary has notified the lessee in writing that
a time period is closed to further audit; or
``(2) the Secretary and a lessee have so agreed in writing.
``(e) Final Agency Action.--
``(1) 3-year period.--The Secretary shall issue a final
decision in any administrative proceeding, including any
administrative proceedings pending on the date of enactment of
the Federal Oil and Gas Royalty Simplification and Fairness Act
of 1995, within three years from the date such proceeding was
initiated or three years from the date of such enactment,
whichever is later. The three-year period may be extended by
any period of time agreed upon in writing by the Secretary and
the lessee.
``(2) Effect of failure to issue decision.--
``(A) In general.--If no such decision has been
issued by the Secretary within the three-year period
referred to in paragraph (1)--
``(i) the Secretary shall be deemed to have
issued and granted a decision in favor of the
lessee or lessees as to any nonmonetary
obligation and any monetary obligation the
principal amount of which is less than $2,500;
and
``(ii) the Secretary shall be deemed to
have issued a final decision in favor of the
Secretary, which decision shall be deemed to
affirm those issues for which the agency
rendered a decision prior to the end of such
period, as to any monetary obligation the
principal amount of which is $2,500 or more,
and the lessee shall have a right to a de novo
judicial review of such deemed final decision.
``(B) No precedential effect on other
proceedings.--Deemed decisions under subparagraph (A)
shall have no precedential effect in any judicial or
administrative proceeding or for any other purpose.
``(f) Administrative Settlement.--During the pendency of any
administrative proceeding, the parties shall hold at least one
settlement consultation for the purpose of discussing disputed matters
between the parties. For purposes of settlement, the Secretary may take
such action as is appropriate to compromise and settle a disputed
obligation, including interest and allowing offsetting of obligations
among leases. The Secretary and the State concerned shall seek to
resolve disputes with a lessee in as expeditious a manner as possible,
through settlement negotiations and other alternative dispute
resolution processes methods. If any dispute involving an obligation
due is not resolved by the end of the six-year period beginning on the
date the obligation became due, the amount of interest otherwise
payable with respect to the obligation shall accrue after such six-year
period at the rate--
``(1) for purposes of section 111(h), reduced each year
thereafter by two additional percentage points from the rate in
effect under this subsection for the previous year (but not
less than zero); and
``(2) for purposes of section 111(a), reduced each year
thereafter by one additional percentage point from the rate in
effect under this subsection for the previous year (but not
less than zero).
``(g) Limitation on Certain Actions.--When an action on or
enforcement of an obligation under the mineral leasing laws is barred
under this section--
``(1) no other or further action regarding that obligation,
including (but not limited to) the issuance of any order,
request, demand or other communication seeking any document,
accounting, determination, calculation, recalculation, payment,
principal, interest, assessment, or penalty or the initiation,
pursuit or completion of an audit with respect to that
obligation may be taken; and
``(2) no other equitable or legal remedy, whether under
statute or common law, with respect to an action on or an
enforcement of said obligation may be pursued.
``(h) Judicial Review.--In the event a demand subject to this
section is timely commenced, a judicial proceeding challenging the
final agency action with respect to such demand shall be deemed timely
so long as such judicial proceeding is commenced within 180 days from
receipt of notice by the lessee of the final agency action.
``(i) Implementation of Final Decision.--In the event a judicial
proceeding or demand subject to this section is timely commenced and
thereafter the limitation period in this section lapses during the
pendency of such proceeding, any party to such proceeding shall not be
barred from taking such action as is required or necessary to implement
a final unappealable judicial or administrative decision, including any
action required or necessary to implement such decision by the recovery
or recoupment of an underpayment or overpayment by means of refund or
credit.
``(j) Stay of Payment Obligation Pending Review.--Any party ordered
by the Secretary or the United States to pay any obligation (other than
an assessment) shall be entitled to a stay of such payment without bond
or other surety instrument pending an administrative or judicial
proceeding if the party periodically demonstrates to the satisfaction
of the Secretary that such party is financially solvent or otherwise
able to pay the obligation. In the event the party is not able to so
demonstrate, the Secretary may require a bond or other surety
instrument satisfactory to cover the obligation. Any party ordered by
the Secretary to pay an assessment shall be entitled to a stay without
bond or other surety instrument.
``(k) Inapplicability of the Other Statutes of Limitation.--The
limitations set forth in sections 2401, 2415, 2416, and 2462 of title
28, United States Code, section 42 of the Mineral Leasing Act (30
U.S.C. 226-2) and section 3716 of title 31, United States Code, shall
not apply to any obligation to which this Act applies.''.
(b) Subpoena.--Section 107 of the Federal Oil and Gas Royalty
Management Act of 1982 (30 U.S.C. 1717) is amended by adding at the end
the following:
``(c) Rules Regarding Issuance of Subpoena Relating to Reporting
and Payment of an Obligation Due.--
``(1) In general.--A subpoena which requires a lessee to
produce records necessary to determine the proper reporting and
payment of an obligation due the Secretary may be issued under
this section only by an Assistant Secretary of the Interior and
an acting Assistant Secretary of the Interior who is a schedule
C employee (as defined by section 213.3301 of title 5, Code of
Federal Regulations) and may not be delegated.
``(2) Prior written request required.--A subpoena described
in paragraph (1) may only be issued against a lessee during the
limitation period provided in section 115 and only after the
Secretary has in writing requested the records from the lessee
related to the obligation which is the subject of the subpoena
and has determined that--
``(A) the lessee has failed to respond within a
reasonable period of time to the Secretary's written
request for such records necessary for an audit,
investigation or other inquiry made in accordance with
the Secretary's responsibilities under this Act;
``(B) the lessee has in writing denied the
Secretary's written request to produce such records in
the lessee's possession or control necessary for an
audit, investigation or other inquiry made in
accordance with the Secretary's responsibilities under
this Act; or
``(C) the lessee has unreasonably delayed in
producing records necessary for an audit, investigation
or other inquiry made in accordance with the
Secretary's responsibilities under this Act after the
Secretary's written request.
``(3) Reasonable period for compliance with written
request.--In seeking records, the Secretary shall afford the
lessee a reasonable period of time after a written request by
the Secretary in which to provide such records prior to the
issuance of any subpoena.''.
(c) Restructured Accounting.--Section 107 of the Federal Oil and
Gas Royalty Management Act of 1982 (30 U.S.C. 1717), as amended by
subsection (b) of this section, is amended by adding at the end the
following:
``(d) Restructured Accounting.--
``(1) In general.--The Secretary shall issue an order to
perform a restructured accounting when the Secretary determines
during an in-depth audit of a lessee that the lessee should
recalculate royalty due on an obligation based upon the
Secretary's finding that the lessee has made identified
underpayments or overpayments which are demonstrated by the
Secretary to be based upon repeated, systemic reporting errors
for a significant number of leases or a single lease for a
significant number of reporting months with the same type of
error which constitutes a pattern of violations and which are
likely to result in either significant underpayments or
overpayments.
``(2) Delegation.--The power of the Secretary to issue an
order to perform a restructured accounting may not be delegated
below the most senior career professional position having
responsibility for the royalty management program, which
position is currently designated as the `Associate Director for
Royalty Management'. An order to perform a restructured
accounting shall--
``(A) be issued within a reasonable period of time
from when the audit identifies the systemic, reporting
errors;
``(B) specify the reasons and factual bases for
such order; and
``(C) be specifically identified as an `order to
perform a restructured accounting'.
``(3) Order to perform.--An order to perform a restructured
accounting shall not include any other communication or action
by or on behalf of the Secretary or the United States.
``(4) Notice.--If a lessee fails to adequately perform a
restructured accounting pursuant to this subsection, a notice
shall be issued to the lessee that the restructured accounting
has not been adequately performed. Such notice may be issued
under this section only by an Assistant Secretary of the
Interior or an acting Assistant Secretary of the Interior who
is a schedule C employee (as defined by section 213.3301 of
title 5, Code of Federal Regulations) and may not be
delegated.''.
(d) State Suits.--Section 204 of the Federal Oil and Gas Royalty
Management Act of 1982 (30 U.S.C. 1751) is amended by adding at the end
the following:
``(d) With respect to an obligation, a State bringing an action
under this section shall enjoy no greater rights than the Secretary
enjoys under this Act.''.
(e) Clerical Amendment.--The table of contents in section 1 of such
Act (30 U.S.C. 1701) is amended by adding after the item relating to
section 114 the following new item:
``Sec. 115. Limitation periods and agency actions.''.
SEC. 9514. ADJUSTMENT AND REFUNDS.
(a) In General.--The Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1701 et seq.) is amended by adding after section 111
the following new section:
``SEC. 111A. ADJUSTMENTS AND REFUNDS.
``(a) Adjustments.--
``(1) If, during the adjustment period, a lessee determines
that an adjustment or refund request is necessary to correct an
underpayment or overpayment of an obligation, the lessee shall
make such adjustment or request a refund within a reasonable
period of time and only during the adjustment period. The
filing of a royalty report which reflects the underpayment or
overpayment of an obligation shall constitute prior written
notice to the Secretary of an adjustment.
``(2)(A) For any adjustment, the lessee shall calculate and
report the interest due attributable to such adjustment at the
same time the lessee adjusts the principal amount of the
subject obligation, except as provided by subparagraph (B).
``(B) In the case of a lessee on whom the Secretary
determines that subparagraph (A) would impose a hardship, the
Secretary shall calculate the interest due and notify the
lessee within a reasonable time of the amount of interest due,
unless such lessee elects to calculate and report interest in
accordance with subparagraph (A).
``(3) An adjustment or a request for a refund for an
obligation may be made after the adjustment period only upon
written notice to and approval by the Secretary during an audit
of the period which includes the production month for which the
adjustment is being made. If an overpayment is identified
during an audit, then the Secretary shall allow a credit or
refund in the amount of the overpayment.
``(4) For purposes of this section, the adjustment period
for any obligation shall be the five-year period following the
date on which an obligation became due. The adjustment period
shall be suspended, tolled, extended, enlarged, or terminated
by the same actions as the limitation period in section 115.
``(b) Refunds.--
``(1) In general.--A request for refund is sufficient if
it--
``(A) is made in writing to the Secretary and, for
purposes of section 115, is specifically identified as
a demand;
``(B) identifies the person entitled to such
refund;
``(C) provides the Secretary information that
reasonably enables the Secretary to identify the
overpayment for which such refund is sought; and
``(D) provides the reasons why the payment was an
overpayment.
``(2) Payment by secretary of the treasury.--The Secretary
shall certify the amount of the refund to be paid under
paragraph (1) to the Secretary of the Treasury who shall make
such refund. Such refund shall be paid from amounts received as
current receipts from sales, bonuses, royalties (including
interest charges collected under this section) and rentals of
the public lands and the Outer Continental Shelf under the
provisions of the Mineral Leasing Act and the Outer Continental
Shelf Lands Act, which are not payable to a State or the
Reclamation Fund. The portion of any such refund attributable
to any amounts previously disbursed to a State, the Reclamation
Fund, or any recipient prescribed by law shall be deducted from
the next disbursements to that recipient made under the
applicable law. Such amounts deducted from subsequent
disbursements shall be credited to miscellaneous receipts in
the Treasury.
``(3) Payment period.--A refund under this subsection shall
be paid or denied (with an explanation of the reasons for the
denial) within 120 days of the date on which the request for
refund is received by the Secretary. Such refund shall be
subject to later audit by the Secretary and subject to the
provisions of this Act.
``(4) Prohibition against reduction of refunds or
credits.--In no event shall the Secretary directly or
indirectly claim any amount or amounts against, or reduce any
refund or credit (or interest accrued thereon) by the amount of
any obligation the enforcement of which is barred by section
115.''.
(b) Clerical Amendment.--The table of contents in section 1 of such
Act (30 U.S.C. 1701) is amended by adding after the item relating to
section 111 the following new item:
``Sec. 111A. Adjustments and refunds.''.
SEC. 9515. REQUIRED RECORDKEEPING.
Section 103 of the Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1713(b)) is amended by adding at the end the following:
``(c) Records required by the Secretary for the purpose of
determining compliance with any applicable mineral leasing law, lease
provision, regulation or order with respect to oil and gas leases from
Federal lands or the Outer Continental Shelf shall be maintained for
the same period of time during which a judicial proceeding or demand
may be commenced under section 115(a). If a judicial proceeding or
demand is timely commenced, the record holder shall maintain such
records until the final nonappealable decision in such judicial
proceeding is made, or with respect to that demand is rendered, unless
the Secretary authorizes in writing an earlier release of the
requirement to maintain such records. Notwithstanding anything herein
to the contrary, under no circumstance shall a record holder be
required to maintain or produce any record relating to an obligation
for any time period which is barred by the applicable limitation in
section 115.''.
SEC. 9516. ROYALTY INTEREST, PENALTIES, AND PAYMENTS.
(a) Period.--Section 111(f) of the Federal Oil and Gas Royalty
Management Act of 1982 (30 U.S.C. 1721(f)) is amended to read as
follows:
``(f) Upon a determination that it will further the effective and
efficient performance of his duties and responsibilities, the Secretary
may waive or forego such interest in whole or in part. Interest shall
be charged under this section only for the number of days a payment is
late.''.
(b) Lessee Interest.--Section 111 of the Federal Oil and Gas
Royalty Management Act of 1982 (30 U.S.C. 1721) is amended by adding
after subsection (g) the following:
``(h) Interest shall be allowed and the Secretary shall pay or
credit such interest on any overpayment, with such interest to accrue
from the date such overpayment was made, at the rate obtained by
applying the provisions of subparagraphs (A) and (B) of section
6621(a)(1) of the Internal Revenue Code of 1986. Interest which has
accrued on any overpayment may be applied to reduce an underpayment.
This subsection applies to overpayments made later than six months
after the date of enactment of this subsection or September 1, 1996,
whichever is later. Such interest shall be paid from amounts received
as current receipts from sales, bonuses, royalties (including interest
charges collected under this section) and rentals of the public lands
and the Outer Continental Shelf under the provisions of the Mineral
Leasing Act, and the Outer Continental Shelf Lands Act, which are not
payable to a State or the Reclamation Fund. The portion of any such
interest payment attributable to any amounts previously disbursed to a
State, the Reclamation Fund, or any other recipient designated by law
shall be deducted from the next disbursements to that recipient made
under the applicable law. Such amounts deducted from subsequent
disbursements shall be credited to miscellaneous receipts in the
Treasury.''.
(c) Limitation on Interest.--Section 111 of such Act, as amended by
subsection (b) of this Act, is further amended by adding at the end the
following:
``(i) Upon a determination by the Secretary that an excessive
overpayment (based upon all obligations of a lessee for a given
reporting month) was made for the sole purpose of receiving interest,
interest shall not be paid on the excessive amount of such overpayment.
For purposes of this Act, an `excessive overpayment' shall be the
amount that any overpayment a lessee pays for a given reporting month
(excluding payments for demands for obligations as a result of judicial
or administrative proceedings for settlement agreements and for other
similar payments) for the aggregate of all of its Federal leases
exceeds 25 percent of the total royalties paid that month for those
leases.''.
(d) Estimated Payment.--Section 111 of such Act, as amended by
subsections (b) and (c) of this Act, is further amended by adding at
the end the following:
``(j) A lessee may make a payment for the approximate amount of
royalties (hereinafter in this subsection `estimated payment') that
would otherwise be due to the Secretary for such lease to avoid
underpayment or nonpayment interest charges. When an estimated payment
is made, actual royalties become due at the end of the month following
the period covered by the estimated payment. If the lessee makes a
payment for such actual royalties, the lessee may apply the estimated
payment to future royalties. Any estimated payment may be adjusted,
recouped, or reinstated at any time by the lessee.''.
(e) Volume Allocation of Oil and Gas Production.--Section 111 of
such Act (30 U.S.C. 1721), as amended by subsections (b) through (d) of
this Act, is amended by adding at the end the following:
``(k)(1) Except as otherwise provided by this subsection--
``(A) a lessee of a lease in a unit or communitization
agreement which contains only Federal leases with the same
royalty rate and funds distribution must report and pay
royalties on oil and gas production for each production month
based on the actual volume of production sold by or on behalf
of that lessee;
``(B) a lessee of a lease in any other unit or
communitization agreement must report and pay royalties on oil
and gas production for each production month based on the
volume of oil and gas produced from such agreement and
allocated to the lease in accordance with the terms of the
agreement; and
``(C) a lessee of a lease that is not contained in a unit
or communitization agreement must report and pay royalties on
oil and gas production for each production month based on the
actual volume of production sold by or on behalf of that
lessee.
``(2) This subsection applies only to requirements for reporting
and paying royalties. Nothing in this subsection is intended to alter a
lessee's liability for royalties on oil or gas production based on the
share of production allocated to the lease in accordance with the terms
of the lease, a unit or communitization agreement, or any other
agreement.
``(3) For any unit or communitization agreement, if all lessees
contractually agree to an alternative method of royalty reporting and
payment, the lessees may submit such alternative method to the
Secretary for approval and make payments in accordance with such
approved alternative method so long as such alternative method does not
reduce the amount of the royalty obligation.
``(4) The Secretary shall grant an exception from the reporting and
payment requirements for marginal properties by allowing for any
calendar year or portion thereof royalties to be paid each month based
on the volume of production sold. Interest shall not accrue on the
difference for the entire calendar year or portion thereof between the
amount of oil and gas actually sold and the share of production
allocated to the lease until the beginning of the month following
calendar year or portion thereof. Any additional royalties due or
overpaid royalties and associated interest shall be paid, refunded, or
credited within six months after the end of each calendar year in which
royalties are paid based on volumes of production sold. For the purpose
of this subsection, the term `marginal property' means a lease that
produces on average the combined equivalent of less than 15 barrels of
oil per day or 90 thousand cubic feet of gas per day, or a combination
thereof, determined by dividing the average daily production of
domestic crude oil and domestic natural gas from producing wells on
such lease by the number of such wells, unless the Secretary, together
with the State concerned, determines that a different production is
more appropriate.
``(5) Not later than two years after the date of the enactment of
this subsection, the Secretary shall issue any appropriate demand for
all outstanding royalty payment disputes regarding who is required to
report and pay royalties on production from units and communitization
agreements outstanding on the date of the enactment of this subsection,
and collect royalty amounts owed on such production.''.
(f) Production Allocation.--Section 111 of such Act (30 U.S.C.
1721), as amended by subsections (b) through (e) of this Act, is
amended by adding at the end the following:
``(l) The Secretary shall issue all determinations of allocations
of production for units and communitization agreements within 120 days
of a request for determination. If the Secretary fails to issue a
determination within such 120-day period, the Secretary shall waive
interest due on obligations subject to the determination until the end
of the month following the month in which the determination is made.''.
SEC. 9517. LIMITATION ON ASSESSMENTS.
Section 111 of the Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1721), as amended by section 9516, is further amended
by adding at the end the following:
``(m)(1) After the date of enactment of this subsection, the
Secretary shall not impose any assessment for any late payment or
underpayment. After the date of enactment of this subsection, the
Secretary may impose an assessment only for erroneous reports submitted
by lessees subject to the limitations of paragraph (2). Nothing in this
section shall prohibit the Secretary from imposing penalties or
interest under other sections of this Act for late payments or
underpayments.
``(2) No assessment for erroneous reports shall be imposed for 18
months following the date of enactment of this subsection, or until the
Secretary issues a final rule which provides for imposition of an
assessment only on a lessee who chronically submits erroneous reports
and which establishes what constitutes chronic errors for a lessee,
whichever is later. However, if the Secretary determines during that
18-month period that the reporting error rate for all reporters for all
Federal leases has increased by one-third for three consecutive report
months for either production reporting or royalty reporting over the 12
months preceding the date of enactment of this subsection, the
Secretary may impose an assessment for erroneous reports only for the
increased category of report under regulations in effect on the date of
enactment of this subsection.''.
SEC. 9518. ALTERNATIVES FOR MARGINAL PROPERTIES.
(a) In General.--The Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1701 et seq.), as amended by section 9513 of this Act,
is further amended by adding at the end the following:
``SEC. 116. ALTERNATIVES FOR MARGINAL PROPERTIES.
``(a) Selling the Revenue Stream.--
``(1) In general.--Notwithstanding the provisions of any
lease to the contrary, upon request of the lessee or a State
under section 205(g), the Secretary shall authorize a lessee
for a marginal property and for a lease, the administration of
which is not cost-effective for the Secretary to administer, to
make a prepayment in lieu of royalty payments under the lease
for the remainder of the lease term. For the purposes of this
section, the term `marginal property' has the same meaning
given such term in section 111(k)(4), unless the Secretary,
together with each State in which such marginal production
occurs, determines that a different definition of marginal
property better achieves the purpose of this section.
``(2) Marginal properties.--For marginal properties,
prepayments under paragraph (1) shall begin--
``(A) in the case of those properties producing on
average $500 or less per month in total royalties to
the United States, two years after the date of the
enactment of this section;
``(B) in the case of those properties producing on
average more than $500 but $1,000 or less per month in
total royalties to the United States, three years after
the date of the enactment of this section;
``(C) in the case of those properties producing on
average more than $1,000 but $1,500 or less per month
in total royalties to the United States, four years
after the date of the enactment of this section; and
``(D) in the case of those properties not described
in subparagraphs (A) through (C), five years after the
date of the enactment of this section.
``(3) Administration not cost-effective.--For a lease, the
administration of which is not cost-effective for the Secretary
to administer, prepayments under paragraph (1) shall begin on
the date of the enactment of this section.
``(4) Satisfaction of royalty obligation.--A lessee who
makes a prepayment under this section shall have satisfied in
full its obligation to pay royalty on production from the lease
or a portion of a lease and shall not be required to submit any
royalty reports to the Secretary. The prepayment shall be
shared by the Secretary with any State or other recipient to
the same extent as any royalty payment for such lease.
``(5) Valuation.--The prepayment authorized under this
section shall only occur if the Secretary, the State concerned,
and the lessee determine that such prepayment is based on the
present value of the projected remaining royalties from the
production from the lease, based on appropriate nominal
discount rate for a comparable term. Prior to accepting such
prepayment, the Secretary and State concerned shall agree that
such prepayment is in the best interest of the United States
and the State concerned.
``(b) Alternative Accounting and Auditing Requirements.--
``(1) In general.--Within one year after the date of the
enactment of this section, for the marginal properties
referenced in subsection (a)(1), the Secretary shall provide
accounting, reporting, and auditing relief that will encourage
lessees to continue to produce and develop such properties:
Provided, That such relief will only be available to lessees in
a State that concurs. Prior to granting such relief, the
Secretary and the State concerned shall agree that the type of
marginal wells and relief provided under this paragraph is in
the best interest of the United States and the State concerned.
``(2) Payment date.--For leases subject to this section,
the Secretary may allow royalties to be paid later than the
time specified in the lease.''.
(b) Clerical Amendment.--The table of contents in section 1 of such
Act (30 U.S.C. 1701) is amended by adding after the item relating to
section 115 the following new item:
``Sec. 116. Alternatives for marginal properties.''.
SEC. 9519. ROYALTY IN KIND.
(a) In General.--
(1) OCS.--Section 27(a)(1) of the Outer Continental Shelf
Lands Act (43 U.S.C. 1353(a)(1)) is amended by adding at the
end the following:
``Any royalty or net profit share of oil or gas accruing to the United
States under any such lease, at the Secretary's option, may be taken in
kind at or near the lease (unless the lease expressly provides for
delivery at a different location) upon prior written notice given
reasonably in advance by the Secretary to the lessee. Once the United
States has commenced taking royalty in kind, it shall continue to do so
until a reasonable time after the Secretary has provided written notice
reasonably in advance to the lessee that it will resume taking royalty
in value. Delivery of royalty in kind by the lessee shall satisfy in
full the lessee's royalty obligation. Once the oil or gas is delivered,
the lessee shall not be subject to the reporting and recordkeeping
requirements under section 103 for its share of oil and gas production
other than records necessary to verify the quantity of oil or gas
delivered.''.
(2) Onshore.--Section 36 of the Mineral Leasing Act (30
U.S.C. 192) is amended by adding at the end the following
undesignated paragraph:
``Notwithstanding the provisions of the previous paragraph, any
royalty or net profit share of oil or gas accruing to the United States
under any lease issued or maintained by the Secretary for the
exploration, production and development of oil and gas on Federal
lands, at the Secretary's option, may be taken in kind at or near the
lease (unless the lease expressly provides for delivery at a different
location) after prior written notice given reasonably in advance by the
Secretary to the lessee. Once the United States has commenced taking
royalty in kind, it shall continue to do so until a reasonable time
after the Secretary has provided written notice reasonably in advance
to the lessee that it will resume taking royalty in value. Delivery of
royalty in kind by the lessee shall satisfy in full the lessee's
royalty obligation. Once the oil or gas is delivered, the lessee shall
not be subject to the reporting and recordkeeping requirements under
section 103 for its share of oil and gas production other than records
necessary to verify the quantity of oil or gas delivered.''.
(b) Sale.--Sections 27(b)(1) and (c)(1) of the Outer Continental
Shelf Lands Act (43 U.S.C. 1353(c)(1)) are each amended by striking
``competitive bidding for not more than its regulated price, or, if no
regulated price applies, not less than its fair market value'' and
inserting ``competitive bidding or private sale''.
SEC. 9520. ROYALTY SIMPLIFICATION AND COST-EFFECTIVE AUDIT AND
COLLECTION REQUIREMENTS.
(a) In General.--Section 101 of the Federal Oil and Gas Royalty
Management Act of 1982 (30 U.S.C. 1711) is amended by adding at the end
the following:
``(d)(1) For the purpose of reducing costs and increasing net
royalties to the United States and the States, the Secretary, in
consultation with States concerned, shall, within one year after the
date of the enactment of this subsection, streamline and simplify
current royalty management requirements and practices, including
royalty reporting, instructions, audits and collections. This
streamlining and simplification shall specifically include--
``(A) elimination of all unnecessary royalty and production
reports;
``(B) modification and simplification of remaining reports
and associated instructions to eliminate redundant or
unnecessary reports and information that are provided or can be
obtained from other required reports, forms, computer databases
or government agencies;
``(C) elimination or modifications of accounting,
reporting, audit and collection requirements that are not cost-
effective, particularly those associated with de minimis
monetary amounts;
``(D) implementation of specific recommendations and
comments contained in Secretarial sponsored teams, rulemakings,
and studies or those participated in by the Secretary to the
extent these recommendations simplify and streamline royalty
management requirements without adversely affecting the
Secretary's ability to meet obligations under this Act or other
mineral leasing statutes;
``(E) recommendations and comments submitted by interested
parties to the extent these recommendations and comments
simplify and streamline royalty management requirements without
adversely affecting the Secretary's ability to meet obligations
under this Act or other mineral leasing statutes.
``(2) The Secretary shall submit to the Congress a progress report
on the implementation of this section within six months from date of
enactment of this Act, and a final report within 12 months from date of
enactment of this Act. These reports shall include--
``(A) a description of the extent to which the Secretary
has implemented the requirements in paragraph (1), including a
list of specific initiatives implemented;
``(B) a list and description of additional initiatives
identified by the Secretary to simplify and streamline royalty
management requirements and practices; and
``(C) cost savings of implemented initiatives including
impact on net-receipts sharing for States.
``(3) If the Secretary and the State concerned determines that the
cost of accounting and auditing for and collecting of any obligation
due for any oil and gas production exceeds the amount of the obligation
to be collected, the Secretary shall waive such obligation.
``(4) The Secretary and the State concerned shall not perform
accounting, reporting, or audit activities if the Secretary and the
State concerned determines that the cost of conducting the activity
exceeds the expected amount to be collected by the activity.
``(5) The Secretary and the State concerned shall develop a
reporting and audit strategy which eliminates multiple or redundant
reporting of information.''.
(b) Paperwork Reduction.--Section 107 of the Federal Oil and Gas
Royalty Management Act of 1982 (30 U.S.C. 1717), as amended by section
9513(b) and (c), is amended by adding at the end the following:
``(e) Paperwork Reduction.--Administrative actions and
investigations (including, but not limited to, accounting collection
and audits) under this Act involving obligations shall be subject to
section 3518(c)(1)(B) of title 44, United States Code.''.
SEC. 9521. REPEALS.
(a) FOGRMA.--Section 307 of the Federal Oil and Gas Royalty
Management Act of 1982 (30 U.S.C. 1755), is repealed. Section 1 of such
Act (relating to the table of contents) is amended by striking out the
item relating to section 307.
(b) OCSLA.--Effective on the date of the enactment of this Act,
section 10 of the Outer Continental Shelf Lands Act (43 U.S.C. 1339) is
repealed.
SEC. 9522. DELEGATION TO STATES.
(a) General Authority.--Section 205(a) of the Federal Oil and Gas
Royalty Management Act of 1982 (30 U.S.C. 1735(a)) is amended to read
as follows:
``(a) Upon written request of any State, the Secretary is
authorized to delegate, in accordance with the provisions of this
section, all or part of the authorities and responsibilities of the
Secretary under this Act to conduct inspections, such production and
royalty accounting duties and responsibilities as the Secretary
determines are legally delegable, all audit coverage, and
investigations to any State with respect to all Federal lands within
the State.''.
(b) Standardized Reporting.--Section 205(b) of such Act (30 U.S.C.
1735(b)) is amended--
(1) by striking ``and'' at the end of paragraph (2);
(2) by striking the comma at the end of paragraph (3) and
inserting ``; and''; and
(3) by inserting after paragraph (3) the following:
``(4) the State agrees to adopt Federal standardized
reporting for Federal royalty accounting and collection
purposes,''.
(c) Cost Effective Collection of De Minimis Royalty Amounts.--
Section 205 of such Act (30 U.S.C. 1735) is amended by adding at the
end the following:
``(g) Upon written request of any State, the Secretary is
authorized to delegate for any year the responsibility to collect
royalties from all Federal leases within the State if the average
amount per year of mineral revenues received by the State on all such
leases under all Federal mineral leasing laws for the previous five
years is less than $100,000. The State may also request that the
Secretary sell the revenue stream from all or part of the Federal
leases within the State in accordance with section 116 of the Federal
Oil and Gas Royalty Management Act of 1982, as added by section 9518 of
the Federal Oil and Gas Royalty Simplification and Fairness Act of
1995.''.
SEC. 9523. PERFORMANCE STANDARD.
Section 109 of the Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1719) is amended in subsections (c) and (d), by
striking ``knowingly or willfully'' and inserting ``by willful
misconduct or gross negligence'' each place it appears.
SEC. 9524. INDIAN LANDS.
The amendments made by this part shall not apply with respect to
Indian lands, and the provisions of the Federal Oil and Gas Royalty
Management Act of 1982 as in effect on the day before the date of
enactment of this Act shall continue to apply after such date with
respect to Indian lands.
SEC. 9525. PRIVATE LANDS.
This part shall not apply to any privately owned minerals.
SEC. 9526. EFFECTIVE DATE.
Except as provided by section 115(e), section 111(h), section
111(k)(5), and section 116 of the Federal Oil and Gas Royalty
Management Act of 1982 (as added by this part), this part, and the
amendments made by this part, shall apply with respect to the
production of oil and gas after the first day of the month following
the date of the enactment of this Act.
Subtitle F--Indian Gaming
SEC. 9601. INDIAN GAMING.
(a) Commission Funding.--Section 18(a) of the Indian Gaming
Regulatory Act (25 U.S.C. 2717(a)) is amended by striking out
``$1,500,000'' each place it appears and inserting in lieu thereof
``$2,500,000''.
(b) Authorization of Appropriations.--Section 19(a) of the Indian
Gaming Regulatory Act (25 U.S.C. 2718(a)) is amended by striking out
all after ``(a)'' and inserting in lieu thereof the following:
``Notwithstanding the provisions of section 18, no funds may be
authorized to be appropriated for the operation of the Commission.''.
Subtitle G--Consultation
SEC. 9701. CONSULTATION.
Section 7(d) of the Endangered Species Act of 1973 (16 U.S.C.
1536(d)) is amended to read as follows:
``(d) Limitation on Commitment of Resources.--After initiation of
consultation required under subsection (a)(2) of this section, the
Federal agency and the permit or license applicant shall not make any
irreversible or irretrievable commitment of resources with respect to
the agency action which has the effect of foreclosing the formulation
or implementation of any reasonable and prudent alternative measures
which would not violate subsection (a)(2) of this section. This
limitation on the commitment of resources is only applicable to
consultations regarding site-specific projects and activities, and
shall not apply to any consultation regarding an agency's periodic or
long-term planning activities, mission or policy statements,
programmatic documents, or general policies, regulations, or
activities, whether or not such consultation has previously been
initiated pursuant to a court order, and regardless of the date on
which consultation was ordered or initiated.''.
Subtitle H--Mapping
SEC. 9801. SHORT TITLE.
This subtitle may be cited as the ``Department of the Interior
Surveying and Mapping Efficiency and Economic Opportunity Act of
1995''.
SEC. 9802. SURVEYING AND MAPPING CONTRACTING PROGRAM.
In order to provide private firms, including small and small
disadvantaged businesses, ample opportunities to provide quality
services to the Department of the Interior (hereinafter referred to as
the ``Department''), the Secretary of the Interior (hereinafter
referred to as the ``Secretary'') shall conduct a surveying and mapping
contracting program.
SEC. 9803. INVENTORY OF ACTIVITIES.
(a) Publication of Inventory.--Not later than 90 days after the
date of enactment of this Act, the Secretary, in consultation with the
Administrator of the Office of Federal Procurement Policy, the
Administrator of the Small Business Administration and the trade
association of private surveying and mapping firms, shall publish an
inventory of surveying and mapping activities in the Department of the
Interior for the last fiscal year completed prior to the date of
enactment of this Act.
(b) Items Included.--The inventory shall include each of the
following:
(1) The total dollar value of surveying and mapping
activities in each agency of the Department.
(2) The total dollar value of surveying and mapping
activities in each agency of the Department performed by
contract with private sector firms.
(3) The total dollar value of surveying and mapping
activities in each agency of the Department performed by
personnel of the Department.
(4) The total dollar value of surveying and mapping
activities in each agency of the Department performed for any
other department or agency of the Federal Government.
(5) The total dollar value of surveying and mapping
activities in each agency of the Department performed for any
State or political subdivision thereof, or for any foreign
government.
(6) The total number of personnel involved in surveying and
mapping activities in each agency of the Department.
SEC. 9804. PLAN TO INCREASE USE OF CONTRACTS.
(a) Establishment.--Based on the inventory conducted pursuant to
section 9803 of this Act, not later than 180 days after the date of
enactment of this Act, the Secretary, in consultation with the
Administrator of the Office of Federal Procurement Policy, the
Administrator of the Small Business Administration and the trade
association of private surveying and mapping firms, shall develop and
implement a plan to increase the use of contracts with private firms
for surveying and mapping services.
(b) Items Included in Plan.--The plan established pursuant to
subsection (a) of this section shall include, but not be limited to
each of the following:
(1) A reduction of surveying and mapping activities by
personnel in the Department that duplicate capabilities
available by contract from the private sector.
(2) A reduction of acquisition and maintenance of surveying
and mapping equipment that duplicate capabilities and capital
investment already made by the private sector.
(3) The elimination of unfair Government competition in
activities in which the Department uses its personnel to
perform surveying and mapping for which it shares the cost
with, is reimbursed for, or makes a grant to any other agency
of the Federal Government, a State or political subdivision
thereof, or a foreign government, for such activities, when
such activities can be obtained by contract from the private
sector.
(4) The use of contracts to perform surveying and mapping
requirements of the Department created through attrition.
(5) The enhancement of the leadership role of the
Department of the Interior in--
(A) the preparation of standards and
specifications;
(B) research in surveying and mapping
instrumentation and procedures, and the prompt transfer
of technology to the private sector;
(C) providing technical guidance, coordination,
cost sharing, cooperative efforts and administration in
the use of Federal funds for surveying and mapping
activities, and the development of geographic
information systems, that are performed by the private
sector by the contract to Federal, State, and local
government agencies;
(D) establishing a schedule with quantifiable goals
for increasing the use of contracts with private sector
for current and future surveying and mapping
activities; and
(E) using Department personnel to perform only
those surveying and mapping activities that are
inherently governmental in nature, necessary to keep
current the skills of such personnel for evaluating
contractor performance and administering contracts, and
to perform basic research.
SEC. 9805. REPORTS.
The Secretary shall transmit to the Committee on Resources of the
House of Representatives and the Committee on Energy and Natural
Resources of the Senate a report on implementation of the program not
later than January 15 of each year.
SEC. 9806. DEFINITIONS.
As used in this subtitle:
(1) The term ``surveying and mapping'' means collecting,
storing, retrieving, or disseminating graphical or digital data
depicting natural or man-made physical features, phenomena and
boundaries of the earth and any information related thereto,
including but not limited to data shown on or in relation to
surveys, maps, and charts.
(2) The ``contract'' means an instrument to retain private
firms with licensed, certified, or otherwise qualified
professionals in such fields as surveying, photogrammetry,
cartography, and geodesy, which shall be awarded in accordance
with the selection procedures in title IX of the Federal
Property and Administrative Services Act of 1949 (40 U.S.C. 541
and following).
TITLE X--COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
Subtitle A--Water Resources
SEC. 10001. COMMERCIAL CONCESSIONS AT CORPS OF ENGINEERS PROJECTS.
Notwithstanding part 1 of subtitle C of title IX of this Act, the
Secretary of the Army shall not modify any concession service
agreement, concession license, or similar instrument (or any policy or
procedure relating to such agreement, license, or agreement) except to
the extent that such modification is permitted under laws in effect on
the day before the date of the enactment of this Act.
SEC. 10002. FEMA RADIOLOGICAL EMERGENCY PREPAREDNESS FEES.
(a) In General.--The Director of the Federal Emergency Management
Agency may assess and collect fees applicable to persons subject to
radiological emergency preparedness regulations issued by the Director.
(b) Requirements.--The assessment and collection of fees by the
Director under subsection (a) shall be fair and equitable and shall
reflect the full amount of costs to the Agency of providing
radiological emergency planning, preparedness, response, and associated
services. Such fees shall be assessed by the Director in a manner which
reflects the use of resources of the Agency for classes of regulated
persons and the administrative costs of collecting such fees.
(c) Amount of Fees.--The aggregate amount of fees assessed under
subsection (a) in a fiscal year shall approximate, but not be less
than, 100 percent of the amounts anticipated by the Director to be
obligated for the radiological emergency preparedness program of the
Agency for such fiscal year.
(d) Deposit of Fees in Treasury.--Fees received pursuant to
subsection (a) shall be deposited in the general fund of the Treasury
as offsetting receipts.
(e) Expiration of Authority.--The authority of the Director to
assess and collect fees under subsection (a) shall expire on September
30, 2002.
Subtitle B--Ocean Shipping Reform
SEC. 10201. SHORT TITLE.
This subtitle may be cited as the ``Ocean Shipping Reform Act of
1995''.
CHAPTER 1--OCEAN SHIPPING REFORM
SEC. 10211. PURPOSES.
Section 2 of the Shipping Act of 1984 (46 U.S.C. App. 1701) is
amended--
(1) by striking ``and'' at the end of paragraph (2);
(2) by striking the period at the end of paragraph (3) and
inserting ``; and''; and
(3) by adding at the end the following:
``(4) to permit carriers and shippers to develop
transportation arrangements to meet their specific needs.''.
SEC. 10212. DEFINITIONS.
Section 3 of the Shipping Act of 1984 (46 U.S.C. App. 1702) is
amended--
(1) effective January 1, 1997--
(A) by striking paragraph (9); and
(B) by redesignating paragraphs (10) through (19)
as paragraphs (9) through (18), respectively; and
(2) effective June 1, 1997--
(A) by striking paragraph (4);
(B) in paragraph (7) by striking ``a common
tariff;'' and inserting ``a common schedule of
transportation rates, charges, classifications, rules,
and practices;'';
(C) by striking paragraph (10) (as redesignated by
paragraph (1) of this section);
(D) by striking paragraph (13) (as redesignated by
paragraph (1) of this section);
(E) by striking paragraph (16) (as redesignated by
paragraph (1) of this section);
(F) by striking paragraph (18) (as redesignated by
paragraph (1) of this section) and inserting the
following:
``(18) `ocean freight forwarder' means a person that--
``(A)(i) in the United States, dispatches shipments
from the United States via a common carrier and books
or otherwise arranges space for those shipments on
behalf of shippers; or
``(ii) processes the documentation or performs
related activities incident to those shipments; or
``(B) acts as a common carrier that does not
operate the vessels by which the ocean transportation
is provided, and is a shipper in its relationship with
an ocean common carrier.'';
(G) by striking paragraph (21);
(H) in paragraph (23)--
(i) by striking ``or'' the second place it
appears and inserting a comma; and
(ii) by striking the period and inserting
``, a shippers' association, or an ocean
freight forwarder that accepts responsibility
for payment of the ocean freight.'';
(I) by striking paragraph (24) and inserting the
following:
``(24) `shippers' association' means a group of shippers
that consolidates or distributes freight, on a nonprofit basis
for the members of the group in order to secure carload,
truckload, or other volume rates or ocean transportation
contracts.''; and
(J) by inserting after paragraph (18) (as
redesignated by paragraph (1) of this section) the
following:
``(19) `ocean transportation contract' means a contract in
writing separate from the bill of lading or receipt between 1
or more common carriers or a conference and 1 or more shippers
to provide specified services under specified rates and
conditions.''.
SEC. 10213. AGREEMENTS WITHIN THE SCOPE OF THE ACT.
Effective June 1, 1997, section 4(a) of the Shipping Act of 1984
(46 U.S.C. App. 1703(a)) is amended--
(1) in paragraph (5) by striking ``non-vessel-operating
common carriers'' and inserting ``ocean freight forwarders'';
and
(2) by striking paragraph (7) and inserting the following:
``(7) discuss any matter related to ocean transportation
contracts, and enter ocean transportation contracts and
agreements related to those contracts.''.
SEC. 10214. AGREEMENTS.
Section 5 of the Shipping Act of 1984 (46 U.S.C. App. 1704) is
amended--
(1) effective January 1, 1997--
(A) in subsection (b)(4) by striking ``at the
request of any member, require an independent neutral
body to police fully'' and inserting ``state the
provisions, if any, for the policing of'';
(B) in subsection (b)(7) by striking ``and'' at the
end;
(C) in subsection (b)(8) by striking the period and
inserting ``; and''; and
(D) by adding at the end of subsection (b) the
following:
``(9) provide that a member of the conference may enter
individual and independent negotiations and may conclude
individual and independent service contracts under section 8 of
this Act.'';
(2) effective June 1, 1997--
(A) by striking subsection (b)(8) and inserting the
following:
``(8) provide that any member of the conference may take
independent action on any rate or service item agreed upon by
the conference for transportation provided under section 8(a)
of this Act upon not more than 3 business days' notice to the
conference, and that the conference will provide the new rate
or service item for use by that member, effective no later than
3 business days after receipt of that notice, and by any other
member that notifies the conference that it elects to adopt the
independent rate or service item on or after its effective
date, in lieu of the existing conference provision for that
rate or service item;'';
(B) in subsection (b)(9) by striking ``service''
and inserting ``ocean transportation'' and by striking
the period at the end and inserting ``; and'';
(C) by adding at the end of subsection (b) the
following:
``(10) prohibit the conference from--
``(A) prohibiting or restricting the members of the
conference from engaging in individual negotiations for
ocean transportation contracts under section 8(b) with
1 or more shippers; and
``(B) issuing mandatory rules or requirements
affecting ocean transportation contracts that may be
entered by 1 or more members of the conference, except
that a conference may require that a member of the
conference disclose the existence of an existing
individual ocean transportation contract or
negotiations on an ocean transportation contract, when
the conference enters negotiations on an ocean
transportation contract with the same shipper.''; and
(D) in subsection (e) by striking ``carrier that
are required to be set forth in a tariff,'' and
inserting ``carrier,''.
SEC. 10215. EXEMPTION FROM ANTITRUST LAWS.
Section 7 of the Shipping Act of 1984 (46 U.S.C. App. 1706) is
amended--
(1) by striking subsection (a)(6) and inserting the
following:
``(6) subject to section 20(e)(2) of this Act, any
agreement, modification, or cancellation, in effect before the
effective date of this Act and any tariff, rate, fare, charge,
classification, rule, or regulation explanatory thereof
implementing that agreement, modification, or cancellation.'';
and
(2) in subsection (c)(1) by striking ``agency'' and
inserting ``agency, department,''.
SEC. 10216. COMMON AND CONTRACT CARRIAGE.
(a) In General.--Effective June 1, 1997--
(1) section 502 of the High Seas Driftnet Fisheries
Enforcement Act (46 U.S.C. App. 1707a) is repealed; and
(2) section 8 of the Shipping Act of 1984 (46 U.S.C. App.
1707) is amended to read as follows:
``SEC. 8. COMMON AND CONTRACT CARRIAGE.
``(a) Common Carriage.--
``(1) A common carrier and a conference shall make
available a schedule of transportation rates which shall
include the rates, terms, and conditions for transportation
services not governed by an ocean transportation contract, and
shall provide the schedule of transportation rates, in writing,
upon the request of any person. A common carrier and a
conference may assess a reasonable charge for complying with a
request for a rate, term, and condition, except that the charge
may not exceed the cost of providing the information requested.
``(2) A dispute between a common carrier or conference and
a person as to the applicability of the rates, terms, and
conditions for ocean transportation services shall be decided
in an appropriate State or Federal court of competent
jurisdiction, unless the parties otherwise agree.
``(3) A claim concerning a rate for ocean transportation
services which involves false billing, false classification,
false weighing, false report of weight, or false measurement
shall be decided in an appropriate State or Federal court of
competent jurisdiction, unless the parties otherwise agree.
``(b) Contract Carriage.--
``(1) 1 or more common carriers or a conference may enter
into an ocean transportation contract with 1 or more shippers.
A common carrier may enter into ocean transportation contracts
without limitations concerning the number of ocean
transportation contracts or the amount of cargo or space
involved. The status of a common carrier as an ocean common
carrier is not affected by the number or terms of ocean transportation
contracts entered.
``(2) A party to an ocean transportation contract entered
under this section shall have no duty in connection with
services provided under the contract other than the duties
specified by the terms of the contract.
``(3)(A) An ocean transportation contract or the
transportation provided under that contract may not be
challenged in any court on the grounds that the contract
violates a provision of this Act.
``(B) The exclusive remedy for an alleged breach of an
ocean transportation contract is an action in an appropriate
State or Federal court of competent jurisdiction, unless the
parties otherwise agree.
``(4) The requirements and prohibitions concerning
contracting by conferences contained in sections 5(b) (9) and
(10) of this Act shall also apply to any agreement among one or
more ocean common carriers that is filed under section 5(a) of
this Act.''.
(b) Confidentiality of Contracts.--Effective January 1, 1998,
section 8(b) of the Shipping Act of 1984 (46 U.S.C. App. 1707(b)), as
amended by subsection (a) of this section, is amended by adding at the
end the following:
``(5) A contract entered under this section may be made on
a confidential basis, upon agreement of the parties. An ocean
common carrier that is a member of a conference agreement may
not be prohibited or restricted from agreeing with 1 or more
shippers that the parties to the contract will not disclose the
rates, services, terms, or conditions of that contract to any
other member of the agreement, to the conference, to any other
carrier, shipper, conference, or to any other third party.''.
SEC. 10217. PROHIBITED ACTS.
Section 10 of the Shipping Act of 1984 (46 U.S.C. App. 1709) is
amended--
(1) effective January 1, 1997, in subsection (b)--
(A) by striking paragraph (1) and inserting the
following:
``(1) except for service contracts, subject a person,
place, port, or shipper to unreasonable discrimination;''; and
(B) by striking paragraphs (2), (3), (4), and (8);
(2) effective June 1, 1997, by striking subsection (b) and
inserting the following:
``(b) Common Carriers.--No common carrier, either alone or in
conjunction with any other person, directly or indirectly, may--
``(1) except for ocean transportation contracts, subject a
person, place, port, or shipper to unreasonable discrimination;
``(2) retaliate against any shipper by refusing, or
threatening to refuse, cargo space accommodations when
available, or resort to other unfair or unjustly discriminatory
methods because the shipper has patronized another carrier or
has filed a complaint, or for any other reason;
``(3) employ any fighting ship;
``(4) subject any particular person, locality, class, or
type of shipper or description of traffic to an unreasonable
refusal to deal;
``(5) refuse to negotiate with a shippers' association;
``(6) knowingly and willfully accept cargo from or
transport cargo for the account of an ocean freight forwarder
that does not have a bond, insurance, or other surety as
required by section 19;
``(7) knowingly and willfully enter into an ocean
transportation contract with an ocean freight forwarder or in
which an ocean freight forwarder is listed as an affiliate that
does not have a bond, insurance, or other surety as required by
section 19; or
``(8)(A) knowingly disclose, offer, solicit, or receive any
information concerning the nature, kind, quantity, destination,
consignee, or routing of any property tendered or delivered to
a common carrier without the consent of the shipper or
consignee if that information--
``(i) may be used to the detriment or prejudice of
the shipper or consignee;
``(ii) may improperly disclose its business
transaction to a competitor; or
``(iii) may be used to the detriment or prejudice
of any common carrier;
except that nothing in this paragraph shall be construed to
prevent providing the information, in response to legal
process, to the United States, or to an independent neutral
body operating within the scope of its authority to fulfill the
policing obligations of the parties to an agreement effective
under this Act. Nor shall it be prohibited for any ocean common
carrier that is a party to a conference agreement approved
under this Act, or any receiver, trustee, lessee, agent, or
employee of that carrier, or any other person authorized by
that carrier to receive information, to give information to the
conference or any person, firm, corporation, or agency
designated by the conference or to prevent the conference or
its designee from soliciting or receiving information for the
purpose of determining whether a shipper or consignee has
breached an agreement with a conference or for the purpose of
determining whether a member of the conference has breached the
conference agreement or for the purpose of compiling statistics
of cargo movement, but the use of that information for any
other purpose prohibited by this Act or any other Act is
prohibited; and
``(B) after December 31, 1997, the rates, services, terms,
and conditions of an ocean transportation contract may not be
disclosed under this paragraph if the contract has been made on
a confidential basis under section 8(b) of this Act.
The exclusive remedy for a disclosure under this paragraph shall be an
action for breach of contract as provided in section 8(b)(3) of this
Act.'';
(3) effective June 1, 1997--
(A) by striking subsection (c)(1) and inserting the
following:
``(1) boycott, take any concerted action resulting
in an unreasonable refusal to deal, or implement a
policy or practice that results in an unreasonable
refusal to deal;'';
(B) in subsection (c)(5) by inserting ``as defined
in section 3(14)(A) of this Act'' after ``freight
forwarder''; and
(C) in subsection (c)(6) by striking ``a service
contract.'' and inserting ``an ocean transportation
contract.''; and
(4) effective June 1, 1997, in subsection (d)(3) by
striking ``subsection (b) (11), (12), and (16)'' and inserting
``paragraphs (1), (4), and (8) of subsection (b)''.
SEC. 10218. REPARATIONS.
Effective June 1, 1997, section 11(g) of the Shipping Act of 1984
(46 U.S.C. App. 1710(g)) is amended--
(1) by inserting ``or counter-complainant'' after
``complainant'' the second place it appears;
(2) by striking ``10(b) (5) or (7)'' and inserting ``10(b)
(2) or (3)''; and
(3) by striking the last sentence.
SEC. 10219. FOREIGN LAWS AND PRACTICES.
Effective on June 1, 1997, section 10002 of the Foreign Shipping
Practices Act of 1988 (46 U.S.C. App. 1710a) is amended--
(1) in subsection (a)(1)--
(A) by striking ```non-vessel-operating common
carrier',''; and
(B) by inserting ```ocean freight forwarder',''
after ```ocean common carrier','';
(2) in subsection (a)(4) by striking ``non-vessel-operating
common carrier operations,'';
(3) in subsection (e)(1) by striking subparagraphs (B),
(C), and (D) and inserting the following:
``(B) suspension, in whole or in part, of the right of an
ocean common carrier to operate under any agreement filed with
the Secretary, including agreements authorizing preferential
treatment at terminals, preferential terminal leases, space
chartering, or pooling of cargo or revenues with other ocean
common carriers; and
``(C) a fee, not to exceed $1,000,000 per voyage.''; and
(4) in subsection (h) by striking ``section 13(b)(5) of the
Shipping Act of 1984 (46 U.S.C. App. 1712(b)(5))'' and
inserting ``section 13(b)(2) of the Shipping Act of 1984 (46
U.S.C. App. 1712(b)(2))''.
SEC. 10220. PENALTIES.
Effective June 1, 1997, section 13 of the Shipping Act of 1984 (46
U.S.C. App. 1712) is amended--
(1) in subsection (b)--
(A) by striking paragraphs (1) and (3) and
redesignating paragraphs (2), (4), (5), and (6) as
paragraphs (1), (2), (3), and (4), respectively;
(B) by striking paragraph (1), as so redesignated,
and inserting the following:
``(1) If the Secretary finds, after notice and an
opportunity for a hearing, that a common carrier has failed to
supply information ordered to be produced or compelled by
subpoena under section 12 of this Act, the Secretary may
request that the Secretary of the Treasury refuse or revoke any
clearance required for a vessel operated by that common
carrier. Upon request by the Secretary, the Secretary of the
Treasury shall, with respect to the vessel concerned, refuse or
revoke any clearance required by section 4197 of the Revised
Statutes of the United States (46 U.S.C. App. 91).''; and
(C) in paragraph (3), as so redesignated, by
striking ``finds appropriate,'' and all that follows
through the period at the end and inserting ``finds
appropriate including the imposition of the penalties
authorized under paragraph (2).''; and
(2) in subsection (f)(1) by striking ``section 10 (a)(1),
(b)(1), or (b)(4)'' and inserting ``section 10(a)(1)''.
SEC. 10221. REPORTS.
(a) In General.--Effective January 1, 1997, section 15 of the
Shipping Act of 1984 (46 U.S.C. App. 1714) is amended--
(1) in the section heading by striking ``and
certificates'';
(2) by striking ``(a) Reports.--''; and
(3) by striking subsection (b).
(b) Clerical Amendment.--The table of contents contained in the
first section of such Act (46 U.S.C. App. 1701) is amended by striking
the item relating to section 15 and inserting the following:
``Sec. 15. Reports.''.
SEC. 10222. REGULATIONS.
Section 17 of the Shipping Act of 1984 (46 U.S.C. App. 1716) is
amended--
(1) by striking ``(a)''; and
(2) by striking subsection (b).
SEC. 10223. REPEAL.
(a) Repeal.--Section 18 of the Shipping Act of 1984 (46 U.S.C. App.
1717) is repealed.
(b) Clerical Amendment.--The table of contents contained in the
first section of such Act (46 U.S.C. App. 1701) is amended by striking
the item relating to section 18.
SEC. 10224. OCEAN FREIGHT FORWARDERS.
Effective June 1, 1997, section 19 of the Shipping Act of 1984 (46
U.S.C. App. 1718) is amended--
(1) by striking subsection (a) and inserting the following:
``(a) License.--No person in the United States may act as an ocean
freight forwarder unless that person holds a license issued by the
Commission. The Commission shall issue a forwarder's license to any
person that the Commission determines to be qualified by experience and
character to render forwarding services.'';
(2) by redesignating subsections (b), (c), and (d) as
subsections (c), (d), and (e), respectively;
(3) by inserting after subsection (a) the following:
``(b) Financial Responsibility.--
``(1) No person may act as an ocean freight forwarder
unless that person furnishes a bond, proof of insurance, or
other surety in a form and amount determined by the Commission
to insure financial responsibility that is issued by a surety
company found acceptable by the Secretary of the Treasury.
``(2) A bond, insurance, or other surety obtained pursuant
to this section shall be available to pay any judgment for
damages against an ocean freight forwarder arising from its
transportation-related activities under this Act or order for
reparation issued pursuant to section 11 or 14 of this Act.
``(3) An ocean freight forwarder not domiciled in the
United States shall designate a resident agent in the United
States for receipt of service of judicial and administrative
process, including subpoenas.'';
(4) in subsection (c), as redesignated by paragraph (2) of
this section, by striking ``a bond in accordance with
subsection (a)(2)'' and inserting ``a bond, proof of insurance,
or other surety in accordance with subsection (b)(1)''; and
(5) in subsection (e), as redesignated by paragraph (2) of
this section--
(A) by striking paragraph (3) and redesignating
paragraph (4) as paragraph (3); and
(B) by adding at the end the following:
``(4) No conference or group of 2 or more ocean common
carriers in the foreign commerce of the United States that is
authorized to agree upon the level of compensation paid to an
ocean freight forwarder, as defined in section 3(18)(A) of this
Act, may--
``(A) deny to any member of the conference or group
the right, upon notice of not more than 3 business
days, to take independent action on any level of
compensation paid to an ocean freight forwarder; or
``(B) agree to limit the payment of compensation to
an ocean freight forwarder, as defined in section
3(18)(A) of this Act, to less than 1.25 percent of the
aggregate of all rates and charges which are applicable
under a common schedule of transportation rates
provided under section 8(a) of this Act, and which are
assessed against the cargo on which the forwarding
services are provided.''.
SEC. 10225. EFFECTS ON CERTAIN AGREEMENTS AND CONTRACTS.
Section 20(e) of the Shipping Act of 1984 (46 U.S.C. App. 1719) is
amended to read as follows:
``(e) Savings Provisions.--
``(1) Each service contract entered into by a shipper and
an ocean common carrier or conference before the date of the
enactment of the Ocean Shipping Reform Act of 1995 may remain
in full force and effect according to its terms.
``(2) This Act and the amendments made by this Act shall
not affect any suit--
``(A) filed before the date of the enactment of the
Ocean Shipping Reform Act of 1995;
``(B) with respect to claims arising out of conduct
engaged in before the date of the enactment of the
Ocean Shipping Reform Act of 1995, filed within 1 year
after the date of the enactment of the Ocean Shipping
Reform Act of 1995;
``(C) with respect to claims arising out of conduct
engaged in after the date of the enactment of the Ocean
Shipping Reform Act of 1995 but before January 1, 1997,
pertaining to a violation of section 10(b) (1), (2),
(3), (4), or (8), as in effect before January 1, 1997,
filed by June 1, 1997;
``(D) with respect to claims pertaining to the
failure of a common carrier or conference to file its
tariffs or service contracts in accordance with this
Act in the period beginning January 1, 1997, and ending
June 1, 1997, filed by December 31, 1997; or
``(E) with respect to claims arising out of conduct
engaged in on or after the date of the enactment of the
Ocean Shipping Reform Act of 1995 but before June 1,
1997, filed by December 31, 1997.''.
SEC. 10226. REPEAL.
(a) Repeal.--Effective June 1, 1997, section 23 of the Shipping Act
of 1984 (46 U.S.C. App. 1721) is repealed.
(b) Clerical Amendment.--Effective June 1, 1997, the table of
contents contained in the first section of such Act (46 U.S.C. App.
1701) is amended by striking the item relating to section 23.
SEC. 10227. MARINE TERMINAL OPERATOR SCHEDULES.
(a) In General.--Effective June 1, 1997, the Shipping Act of 1984
(46 U.S.C. App. 1701 et seq.) is amended by adding at the end the
following:
``SEC. 24. MARINE TERMINAL OPERATOR SCHEDULES.
``A marine terminal operator shall make available to the public a
schedule of rates, regulations, and practices, including limitations of
liability, pertaining to receiving, delivering, handling, or storing
property at its marine terminal. The schedule shall be enforceable as
an implied contract, without proof of actual knowledge of its
provisions, for any activity by the marine terminal operator that is
taken to--
``(1) efficiently transfer property between transportation
modes;
``(2) protect property from damage or loss;
``(3) comply with any governmental requirement; or
``(4) store property in excess of the terms of any other
contract or agreement, if any, entered into by the marine
terminal operator.''.
(b) Clerical Amendment.--The table of contents contained in the
first section of such Act (46 U.S.C. App. 1701) is amended by adding at
the end the following:
``Sec. 24. Marine terminal operator schedules.''.
CHAPTER 2--CONTROLLED CARRIERS AMENDMENTS
SEC. 10231. CONTROLLED CARRIERS.
Effective June 1, 1997, section 9 of the Shipping Act of 1984 (46
U.S.C. App. 1708) is amended--
(1)(A) in the first sentence of subsection (a)--
(i) by striking ``in its tariffs or service
contracts filed with the Commission''; and
(ii) by striking ``in those tariffs or service
contracts''; and
(B) in the last sentence of subsection (a) by striking
``filed by a controlled carrier'';
(2) in paragraphs (1) and (2) of subsection (b) by striking
``filed'' and inserting ``published'';
(3) in subsection (c) by striking the first sentence;
(4) by striking subsection (d) and inserting the following:
``(d) Within 120 days of the receipt of information requested by
the Secretary under this section, the Secretary shall determine whether
the rates, charges, classifications, rules, or regulations of a
controlled carrier may be unjust and unreasonable. If so, the Secretary
shall issue an order to the controlled carrier to show cause why those
rates, charges, classifications, rules, or regulations should not be
approved. Pending a determination, the Secretary may suspend the rates,
charges, classifications, rules, or regulations at any time. No period
of suspension may be greater than 180 days. Whenever the Secretary has
suspended any rates, charges, classifications, rules, or regulations
under this subsection, the affected carrier may publish and, after
notification to the Secretary, assess new rates, charges,
classifications, rules, or regulations--except that the Secretary may
reject the new rates, charges, classifications, rules, or regulations
if the Secretary determines that they are unreasonable.'';
(5) in subsection (f) by striking ``This'' and inserting
``Subject to subsection (g), this''; and
(6) by adding at the end the following:
``(g) The rate standards, information submissions, remedies,
reviews, and penalties in this section shall also apply to ocean common
carriers that are not controlled, but who have been determined by the
Secretary to be structurally or financially affiliated with
nontransportation entities or organizations (government or private) in
such a way as to affect their pricing or marketplace behavior in an
unfair, predatory, or anticompetitive way that disadvantages an ocean
common carrier or carriers. The Secretary may make such determinations
upon request of any person or upon the Secretary's own motion, after
conducting an investigation and a public hearing.
``(h) The Secretary shall issue regulations by June 1, 1997, that
prescribe the procedures and requirements that would govern how price
and other information is to be submitted by controlled carriers and
carriers subject to determinations made under subsection (g) when such
information would be needed to determine whether prices charged by
these carriers are unfair, predatory, or anticompetitive.
``(i) In any instance where information provided to the Secretary
under this section does not result in an affirmative finding or
enforcement action by the Secretary that information may not be made
public and shall be exempt from disclosure under section 552 of title
5, United States Code, except as may be relevant to an administrative
or judicial action or proceeding. This section does not prevent
disclosure to either body of Congress or to a duly authorized committee
or subcommittee of Congress.''.
SEC. 10232. NEGOTIATING STRATEGY TO REDUCE GOVERNMENT OWNERSHIP AND
CONTROL OF COMMON CARRIERS.
Not later than January 1, 1997, the Secretary of Transportation
shall develop, submit to Congress, and begin implementing a negotiation
strategy to persuade foreign governments to divest themselves of
ownership and control of ocean common carriers (as that term is defined
in section 3(18) of the Shipping Act of 1984 (46 U.S.C. App. 1702).
SEC. 10233. ANNUAL REPORT BY THE SECRETARY.
Not later than September 30, 1998, and annually thereafter, the
Secretary shall report to Congress on the actions taken under the
Foreign Shipping Practices Act (46 U.S.C. App. 1708), section 9 of the
Shipping Act of 1984 (46 U.S.C. App. 1708), and section 10232 of this
Act and the effect on United States maritime employment of laws, rules,
regulations, policies, or practices of foreign governments, or any
practices of foreign carriers or other persons providing maritime or
maritime-related services in a foreign country that result in the
existence of conditions that adversely affect the operations of United
States carriers in United States oceanborne trade.
CHAPTER 3--ELIMINATION OF THE FEDERAL MARITIME COMMISSION
SEC. 10241. PLAN FOR AGENCY TERMINATION.
(a) In General.--No later than 30 days after the date of the
enactment of this Act, the Director of the Office of Management and
Budget, in consultation with the Secretary of Transportation, shall
submit to Congress a plan to eliminate the Federal Maritime Commission
no later than October 1, 1997. The plan shall include a timetable for
the transfer of remaining functions of the Federal Maritime Commission
to the Secretary of Transportation beginning as soon as feasible in
fiscal year 1996. The plan shall also address matters related to
personnel and other resources necessary for the Secretary of
Transportation to perform the remaining functions of the Federal
Maritime Commission.
(b) Implementation.--The Director of the Office of Management and
Budget shall implement the plan to eliminate the Federal Maritime
Commission submitted to Congress under subsection (a) beginning as soon
as feasible in fiscal year 1996.
(c) Authorization of Appropriations.--There are authorized to be
appropriated such sums as may be necessary to carry out this subtitle
and the amendments made by this subtitle.
Subtitle C--Midewin National Tallgrass Prairie
CHAPTER 1--GENERAL PROVISIONS
SEC. 10301. SHORT TITLE.
This subtitle may be cited as the ``Illinois Land Conservation Act
of 1995''.
SEC. 10302. DEFINITIONS.
For purposes of this subtitle, the following definitions apply:
(1) Administrator.--The term ``Administrator'' means the
Administrator of the United States Environmental Protection
Agency.
(2) Agricultural purposes.--The term ``agricultural
purposes'' means the use of land for row crops, pasture, hay,
and grazing.
(3) Arsenal.--The term ``Arsenal'' means the Joliet Army
Ammunition Plant located in the State of Illinois.
(4) CERCLA.--The term ``CERCLA'' means the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980
(42 U.S.C. 9601 et seq.).
(5) Defense environmental restoration program.--The term
``Defense Environmental Restoration Program'' means the program
of environmental restoration for defense installations
established by the Secretary of Defense under section 2701 of
title 10, United States Code.
(6) Environmental law.--The term ``environmental law''
means all applicable Federal, State, and local laws,
regulations, and requirements related to protection of human
health, natural and cultural resources, or the environment,
including CERCLA, the Solid Waste Disposal Act (42 U.S.C. 6901
et seq.), the Federal Water Pollution Control Act (33 U.S.C.
1251 et seq.), the Clean Air Act (42 U.S.C. 7401 et seq.), the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
136 et seq.), the Toxic Substances Control Act (15 U.S.C. 2601
et seq.), and the Safe Drinking Water Act (42 U.S.C. 300f et
seq.).
(7) Hazardous waste.--The term ``hazardous substance'' has
the meaning given such term by section 101(14) of CERCLA (42
U.S.C. 9601(14)).
(8) MNP.--The term ``MNP'' means the Midewin National
Tallgrass Prairie established pursuant to section 10314 and
managed as a part of the National Forest System.
(9) National cemetery.--The term ``national cemetery''
means a cemetery established and operated as part of the
National Cemetery System of the Department of Veterans Affairs
and subject to the provisions of chapter 24 of title 38, United
States Code.
(10) Person.--The term ``person'' has the meaning given
such term by section 101(21) of CERCLA (42 U.S.C. 9601(21)).
(11) Pollutant or contaminant.--The term ``pollutant or
contaminant'' has the meaning given such term by section
101(33) of CERCLA (42 U.S.C. 9601(33)).
(12) Release.--The term ``release'' has the meaning given
such term by section 101(22) of CERCLA (42 U.S.C. 9601(22)).
(13) Response action.--The term ``response action'' has the
meaning given the term ``response'' by section 101(25) of
CERCLA (42 U.S.C. 9601(25)).
CHAPTER 2--CONVERSION OF JOLIET ARMY AMMUNITION PLANT TO MIDEWIN
NATIONAL TALLGRASS PRAIRIE
SEC. 10311. PRINCIPLES OF TRANSFER.
(a) Land Use Plan.--The Congress ratifies in principle the
proposals generally identified by the land use plan which was developed
by the Joliet Arsenal Citizen Planning Commission and unanimously
approved on May 30, 1995.
(b) Transfer Without Reimbursement.--The area constituting the
Midewin National Tallgrass Prairie shall be transferred, without
reimbursement, to the Secretary of Agriculture.
(c) Management of MNP.--Management by the Secretary of Agriculture
of those portions of the Arsenal transferred to the Secretary under
this subtitle shall be in accordance with sections 10314 and 10315
regarding the Midewin National Tallgrass Prairie.
(d) Security Measures.--The Secretary of the Army and the Secretary
of Agriculture shall each provide and maintain physical and other
security measures on such portion of the Arsenal as is under the
administrative jurisdiction of such Secretary. Such security measures
(which may include fences and natural barriers) shall include measures
to prevent members of the public from gaining unauthorized access to
such portions of the Arsenal as are under the administrative
jurisdiction of such Secretary and that may endanger health or safety.
(e) Cooperative Agreements.--The Secretary of the Army, the
Secretary of Agriculture, and the Administrator are individually and
collectively authorized to enter into cooperative agreements and
memoranda of understanding among each other and with other affected
Federal agencies, State and local governments, private organizations,
and corporations to carry out the purposes for which the Midewin
National Tallgrass Prairie is established.
(f) Interim Activities of the Secretary of Agriculture.--Prior to
transfer and subject to such reasonable terms and conditions as the
Secretary of the Army may prescribe, the Secretary of Agriculture may
enter upon the Arsenal property for purposes related to planning,
resource inventory, fish and wildlife habitat manipulation (which may
include prescribed burning), and other such activities consistent with
the purposes for which the Midewin National Tallgrass Prairie is
established.
SEC. 10312. TRANSFER OF MANAGEMENT RESPONSIBILITIES AND JURISDICTION
OVER ARSENAL.
(a) Initial Transfer of Jurisdiction.--Within 6 months after the
date of the enactment of this Act, the Secretary of the Army shall
effect the transfer of those portions of the Arsenal property
identified for transfer to the Secretary of Agriculture pursuant to
subsection (d). The Secretary of the Army shall transfer to the
Secretary of Agriculture only those portions of the Arsenal for which
the Secretary of the Army and the Administrator concur that no further
action is required under any environmental law and which therefore have
been eliminated from the areas to be further studied pursuant to the
Defense Environmental Restoration Program for the Arsenal. Within 4
months after the date of the enactment of this Act, the Secretary of
the Army and the Administrator shall provide to the Secretary of
Agriculture all existing documentation supporting such finding and all
existing information relating to the environmental conditions of the
portions of the Arsenal to be transferred to the Secretary of
Agriculture pursuant to this subsection.
(b) Additional Transfers.--The Secretary of the Army shall transfer
to the Secretary of Agriculture in accordance with section 10316(c) any
portion of the property generally identified in subsection (d) and not
transferred under subsection (a) after the Secretary of the Army and
the Administrator concur that no further action is required at that
portion of property under any environmental law and that such portion
is therefore eliminated from the areas to be further studied pursuant
to the Defense Environmental Restoration Program for the Arsenal. At
least 2 months before any transfer under this subsection, the Secretary
of the Army and the Administrator shall provide to the Secretary of
Agriculture all existing documentation supporting such finding and all
existing information relating to the environmental conditions of the
portion of the Arsenal to be transferred. Transfer of jurisdiction
pursuant to this subsection may be accomplished on a parcel-by-parcel
basis.
(c) Effect on Continued Responsibilities and Liability of Secretary
of the Army.--Subsections (a) and (b), and their requirements, shall
not in any way affect the responsibilities and liabilities of the
Secretary of the Army specified in section 10313.
(d) Identification of Portions for Transfer for MNP.--The lands to
be transferred to the Secretary of Agriculture under subsections (a)
and (b) shall be identified on a map or maps which shall be agreed to
by the Secretary of the Army and the Secretary of Agriculture.
Generally, the land to be transferred to the Secretary of Agriculture
shall be all the real property and improvements comprising the Arsenal,
except for lands and facilities described in subsection (e) or
designated for transfer or disposal under section 10316 or chapter 3.
(e) Property Used for Environmental Cleanup.--
(1) Retention.--The Secretary of the Army shall retain
jurisdiction, authority, and control over real property at the
Arsenal to be used for--
(A) water treatment;
(B) the treatment, storage, or disposal of any
hazardous substance, pollutant or contaminant,
hazardous material, or petroleum products or their
derivatives;
(C) other purposes related to any response action
at the Arsenal; and
(D) other actions required at the Arsenal under any
environmental law to remediate contamination or
conditions of noncompliance with any environmental law.
(2) Conditions.--The Secretary of the Army shall consult
with the Secretary of Agriculture regarding the identification
and management of the real property retained under this
subsection and ensure that activities carried out on that
property are consistent, to the extent practicable, with the
purposes for which the Midewin National Tallgrass Prairie is
established, as specified in section 10314(c), and with the
other provisions of sections 10314 and 10315.
(3) Priority of response actions.--In the case of any
conflict between management of the property by the Secretary of
Agriculture and any response action, or any other action
required under any other environmental law, including actions
to remediate petroleum products of their derivatives, the
response action or other action shall take priority.
(f) Surveys.--All costs of necessary surveys for the transfer of
jurisdiction of Arsenal property from the Secretary of the Army to the
Secretary of Agriculture shall be borne by the Secretary of
Agriculture.
SEC. 10313. CONTINUATION OF RESPONSIBILITY AND LIABILITY OF SECRETARY
OF THE ARMY FOR ENVIRONMENTAL CLEANUP.
(a) Responsibility.--The liabilities and responsibilities of the
Secretary of the Army under any environmental law shall not transfer
under any circumstances to the Secretary of Agriculture as a result of
the property transfers made under section 10312 or section 10316, or as
a result of interim activities of the Secretary of Agriculture on
Arsenal property under section 10311(f). With respect to the real
property at the Arsenal, the Secretary of the Army shall remain liable
for and continue to carry out--
(1) all response actions required under CERCLA at or
related to the property;
(2) all remediation actions required under any other
environmental law at or related to the property; and
(3) all actions required under any other environmental law
to remediate petroleum products or their derivatives (including
motor oil and aviation fuel) at or related to the property.
(b) Liability.--
(1) In general.--Nothing in this Act shall be construed to
effect, modify, amend, repeal, alter, limit, or otherwise
change, directly or indirectly, the responsibilities or
liabilities under any environmental law of any person
(including the Secretary of Agriculture), except as provided in
paragraph (3) with respect to the Secretary of Agriculture.
(2) Liability of secretary of the army.--The Secretary of
the Army shall retain any obligation or other liability at the
Arsenal that the Secretary may have under CERCLA and other
environmental laws. Following transfer of any portions of the
Arsenal pursuant to this Act, the Secretary of the Army shall be
accorded all easements and access to such property as may be reasonably
required to carry out such obligation or satisfy such liability.
(3) Special rules for secretary of agriculture.--The
Secretary of Agriculture shall not be responsible or liable
under any environmental law for matters which are in any way
related directly or indirectly to activities of the Secretary
of the Army, or any party acting under the authority of the
Secretary in connection with the Defense Environmental
Restoration Program, at the Arsenal and which are for any of
the following:
(A) Costs of response actions required under CERCLA
at or related to the Arsenal.
(B) Costs, penalties, or fines related to
noncompliance with any environmental law at or related
to the Arsenal or related to the presence, release, or
threat of release of any hazardous substance,
pollutant, contaminant, hazardous waste or hazardous
material of any kind at or related to the Arsenal,
including contamination resulting from migration of
hazardous substances, pollutants, contaminants,
hazardous materials, or petroleum products or their
derivatives disposed during activities of the
Department of the Army.
(C) Costs of actions necessary to remedy such
noncompliance or other problem specified in
subparagraph (B).
(c) Payment of Response Action Costs.--Any Federal department or
agency that had or has operations at the Arsenal resulting in the
release or threatened release of hazardous substances, pollutants, or
contaminants shall pay the cost of related response actions, or related
actions under other environmental laws, including actions to remediate
petroleum products or their derivatives.
(d) Consultation.--The Secretary of Agriculture shall consult with
the Secretary of the Army with respect to the Secretary of
Agriculture's management of real property included in the Midewin
National Tallgrass Prairie subject to any response action or other
action at the Arsenal being carried out by or under the authority of
the Secretary of the Army under any environmental law. The Secretary of
Agriculture shall consult with the Secretary of the Army prior to
undertaking any activities on the Midewin National Tallgrass Prairie
that may disturb the property to ensure that such activities will not
exacerbate contamination problems or interfere with performance by the
Secretary of the Army of response actions at the property. In carrying
out response actions at the Arsenal, the Secretary of the Army shall
consult with the Secretary of Agriculture to ensure that such actions
are carried out in a manner consistent with the purposes for which the
Midewin National Tallgrass Prairie is established, as specified in
section 10314(c), and the other provisions of sections 10314 and 10315.
SEC. 10314. ESTABLISHMENT AND ADMINISTRATION OF MIDEWIN NATIONAL
TALLGRASS PRAIRIE.
(a) Establishment.--On the effective date of the initial transfer
of jurisdiction of portions of the Arsenal to the Secretary of
Agriculture under section 10312(a), the Secretary of Agriculture shall
establish the Midewin National Tallgrass Prairie. The MNP shall--
(1) be administered by the Secretary of Agriculture; and
(2) consist of the real property so transferred and such
other portions of the Arsenal subsequently transferred under
section 10312(b) or 10316.
(b) Administration.--
(1) In general.--The Secretary of Agriculture shall manage
the Midewin National Tallgrass Prairie as a part of the
National Forest System in accordance with this Act and the
laws, rules, and regulations pertaining to the National Forest
System, except that the Bankhead-Jones Farm Tenant Act of 1937
(7 U.S.C. 1010-1012) shall not apply to the MNP.
(2) Initial management activities.--In order to expedite
the administration and public use of the Midewin National
Tallgrass Prairie, the Secretary of Agriculture may conduct
management activities at the MNP to effectuate the purposes for
which the MNP is established, as specified in subsection (c),
in advance of the development of a land and resource management
plan for the MNP.
(3) Land and resource management plan.--In developing a
land and resource management plan for the Midewin National
Tallgrass Prairie, the Secretary of Agriculture shall consult
with the Illinois Department of Conservation and local
governments adjacent to the MNP and provide an opportunity for
public comment. Any parcel transferred to the Secretary of
Agriculture under this Act after the development of a land and
resource management plan for the MNP may be managed in
accordance with such plan without need for an amendment to the
plan.
(c) Purposes of the Midewin National Tallgrass Prairie.--The
Midewin National Tallgrass Prairie is established to be managed for
National Forest System purposes, including the following:
(1) To manage the land and water resources of the MNP in a
manner that will conserve and enhance the native populations
and habitats of fish, wildlife, and plants.
(2) To provide opportunities for scientific, environmental,
and land use education and research.
(3) To allow the continuation of agricultural uses of lands
within the MNP consistent with section 10315(b).
(4) To provide a variety of recreation opportunities that
are not inconsistent with the preceding purposes.
(d) Other Land Acquisition for MNP.--
(1) Land acquisition funds.--Notwithstanding section 7 of
the Land and Water Conservation Fund Act of 1965 (16 U.S.C.
460l-9), monies appropriated from the Land and Water
Conservation Fund established under section 2 of such Act (16
U.S.C. 460l-5) shall be available for acquisition of lands and
interests in land for inclusion in the Midewin National
Tallgrass Prairie.
(2) Acquisition of private lands.--Acquisition of private
lands for inclusion in the Midewin National Tallgrass Prairie
shall be on a willing seller basis only.
(e) Cooperation With States, Local Governments and Other
Entities.--In the management of the Midewin National Tallgrass Prairie,
the Secretary of Agriculture is authorized and encouraged to cooperate
with appropriate Federal, State, and local governmental agencies,
private organizations and corporations. Such cooperation may include
cooperative agreements as well as the exercise of the existing
authorities of the Secretary under the Cooperative Forestry Assistance
Act of 1978 and the Forest and Rangeland Renewable Resources Research
Act of 1978. The objects of such cooperation may include public
education, land and resource protection and cooperative management
among government, corporate, and private landowners in a manner which
furthers the purposes for which the Midewin National Tallgrass Prairie
is established.
SEC. 10315. SPECIAL MANAGEMENT REQUIREMENTS FOR MIDEWIN NATIONAL
TALLGRASS PRAIRIE.
(a) Prohibition Against the Construction of New Through Roads.--No
new construction of any highway, public road, or any part of the
interstate system, whether Federal, State, or local, shall be permitted
through or across any portion of the Midewin National Tallgrass
Prairie. Nothing herein shall preclude construction and maintenance of
roads for use within the MNP or the granting of authorizations for
utility rights-of-way under applicable Federal law or preclude such
access as is necessary. Nothing herein shall preclude necessary access
by the Secretary of the Army for purposes of restoration and cleanup as
provided in this subtitle.
(b) Agricultural Leases and Special Use Authorizations.--Within the
Midewin National Tallgrass Prairie, use of the lands for agricultural
purposes shall be permitted subject to the following terms and
conditions:
(1) If, at the time of transfer of jurisdiction under
section 10312, there exists any lease issued by the Department
of the Army, Department of Defense, or any other agency
thereof, for agricultural purposes upon the parcel transferred,
the Secretary of Agriculture, upon transfer of jurisdiction,
shall convert the lease to a special use authorization, the
terms of which shall be identical in substance to the lease
that existed prior to the transfer, including the expiration
date and any payments owed the United States.
(2) The Secretary of Agriculture may issue special use
authorizations to persons for use of the Midewin National
Tallgrass Prairie for agricultural purposes. Special use
authorizations issued pursuant to this paragraph shall include
terms and conditions as the Secretary of Agriculture may deem
appropriate.
(3) No agricultural special use authorization shall be
issued for agricultural purposes which has a term extending
beyond the date 20 years from the date of the enactment of this
Act, except that nothing in this Act shall preclude the
Secretary of Agriculture from issuing agricultural special use
authorizations or grazing permits which are effective after 20
years from the date of the enactment of this Act for purposes
primarily related to erosion control, provision for food and
habitat for fish and wildlife, or other resource management
activities consistent with the purposes of the Midewin National
Tallgrass Prairie.
(c) Treatment of Rental Fees.--Monies received pursuant to
subsection (b) shall be subject to distribution to the State of
Illinois and affected counties pursuant to the Acts of May 23, 1908,
and March 1, 1911 (16 U.S.C. 500). All such monies not distributed
pursuant to such Acts shall be deposited into the Treasury and shall
constitute a special fund, which shall be available to the Secretary of
Agriculture, in such amounts as are provided in advance in
appropriation Acts, to cover the cost to the United States of such
prairie-improvement work as the Secretary may direct. Any portion of
any deposit made to the fund which the Secretary determines to be in
excess of the cost of doing such work shall be transferred, upon such
determination, to miscellaneous receipts, Forest Service Fund, as a
National Forest receipt of the fiscal year in which such transfer is
made.
(d) User Fees.--The Secretary of Agriculture is authorized to
charge reasonable fees for the admission, occupancy, and use of the
Midewin National Tallgrass Prairie and may prescribe a fee schedule
providing for reduced, or a waiver of, fees for persons or groups
engaged in authorized activities including those providing volunteer
services, research, or education. The Secretary shall permit admission,
occupancy, and use at no additional charge for persons possessing a
valid Golden Eagle Passport or Golden Age Passport.
(e) Salvage of Improvements.--The Secretary of Agriculture may sell
for salvage value any facilities and improvements which have been
transferred to the Secretary pursuant to this subtitle.
(f) Treatment of User Fees and Salvage Receipts.--Monies collected
pursuant to subsections (d) and (e) shall be covered into the Treasury
and constitute a special fund to be known as the Midewin National
Tallgrass Prairie Restoration Fund. Deposits in the Midewin National
Tallgrass Prairie Restoration Fund shall be available to the Secretary
of Agriculture, in such amounts as are provided in advance in
appropriation Acts, for restoration and administration of the Midewin
National Tallgrass Prairie, including construction of a visitor and
education center, restoration of ecosystems, construction of
recreational facilities (such as trails), construction of
administrative offices, and operation and maintenance of the MNP.
SEC. 10316. SPECIAL DISPOSAL RULES FOR CERTAIN ARSENAL PARCELS INTENDED
FOR MNP.
(a) Description of Parcels.--Except as provided in subsection (b),
the following areas are designated for transfer or disposal pursuant to
subsection (c):
(1) Manufacturing Area--Study Area 1--Southern Ash Pile,
Study Area 2--Explosive Burning Ground, Study Area 3--Flashing
Grounds, Study Area 4--Lead Azide Area, Study Area 10--Toluene
Tank Farms, Study Area 11--Landfill, Study Area 12--Sellite
Manufacturing Area, Study Area 14--Former Pond Area, Study Area
15--Sewage Treatment Plant.
(2) Load Assemble Packing Area--Group 61: Study Area L1,
Explosive Burning Ground: Study Area L2, Demolition Area: Study
Area L3, Landfill Area: Study Area L4, Salvage Yard: Study Area
L5, Group 1: Study Area L7, Group 2: Study Area L8, Group 3:
Study Area L9, Group 3A: Study Area L10, Group 4: Study Area
L14, Group 5: Study Area L15, Group 8: Study Area L18, Group 9:
Study Area L19, Group 27: Study Area L23, Group 62: Study Area
L25, PVC Area: Study Area L33, including all associated
inventoried buildings and structures as identified in the
Joliet Army Ammunition Plant Plantwide Building and Structures
Report and the contaminate study sites for both the
Manufacturing and Load Assembly and Packing sides of the Joliet
Arsenal as delineated in the Dames and Moore Final Report,
Proposed Future Land Use Map, dated May 30, 1995.
(b) Exception.--The parcels described in subsection (a) shall not
include the property at the Arsenal designated for disposal under
chapter 3.
(c) Initial Offer to Secretary of Agriculture.--Within 6 months
after the construction and installation of any remedial design approved
by the Administrator and required for any lands described in subsection
(a), the Administrator shall provide to the Secretary of Agriculture
all existing information regarding the implementation of such remedy,
including information regarding its effectiveness. Within 3 months
after the Administrator provides such information to the Secretary of
Agriculture, the Secretary of the Army shall offer the Secretary of
Agriculture the option of accepting a transfer of the areas described
in subsection (a), without reimbursement, to be added to the Midewin
National Tallgrass Prairie and subject to the terms and conditions,
including the limitations on liability, contained in this subtitle. In
the event the Secretary of Agriculture declines such offer, the
property may be disposed of as the Secretary of the Army would
ordinarily dispose of such property under applicable provisions of law.
Any sale or other transfer of property conducted pursuant to this
subsection may be accomplished on a parcel-by-parcel basis.
CHAPTER 3--OTHER REAL PROPERTY DISPOSALS INVOLVING JOLIET ARMY
AMMUNITION PLANT
SEC. 10321. DISPOSAL OF CERTAIN REAL PROPERTY AT ARSENAL FOR A NATIONAL
CEMETERY.
(a) Transfer Required.--Subject to section 10331, the Secretary of
the Army shall transfer, without reimbursement, to the Secretary of
Veterans Affairs the parcel of real property at the Arsenal described
in subsection (b) for use as a national cemetery.
(b) Description of Property.--The real property to be transferred
under subsection (a) is a parcel of real property at the Arsenal
consisting of approximately 982 acres, the approximate legal
description of which includes part of sections 30 and 31 Jackson
Township, T34N R10E, and part of sections 25 and 36 Channahon Township,
T34N R9E, Will County, Illinois, as depicted in the Arsenal Land Use
Concept.
(c) Security Measures.--The Secretary of Veterans Affairs shall
provide and maintain physical and other security measures on the real
property transferred under subsection (a). Such security measures
(which may include fences and natural barriers) shall include measures
to prevent members of the public from gaining unauthorized access to
the portion of the Arsenal that is under the administrative
jurisdiction of the Secretary of Veterans Affairs and that may endanger
health or safety.
(d) Surveys.--All costs of necessary surveys for the transfer of
jurisdiction of Arsenal properties from the Secretary of the Army to
the Secretary of Veterans Affairs shall be borne solely by the
Secretary of Veterans Affairs.
SEC. 10322. DISPOSAL OF CERTAIN REAL PROPERTY AT ARSENAL FOR A COUNTY
LANDFILL.
(a) Transfer Required.--Subject to section 10331, the Secretary of
the Army shall transfer, without compensation, to Will County,
Illinois, all right, title, and interest of the United States in and to
the parcel of real property at the Arsenal described in subsection (b),
which shall be operated as a landfill by the County.
(b) Description of Property.--The real property to be transferred
under subsection (a) is a parcel of real property at the Arsenal
consisting of approximately 455 acres, the approximate legal
description of which includes part of sections 8 and 17, Florence
Township, T33N R10E, Will County, Illinois, as depicted in the Arsenal
Land Use Concept.
(c) Condition on Conveyance.--The conveyance shall be subject to
the condition that the Army (or its agents or assigns) may use the
landfill established on the real property transferred under subsection
(a) for the disposal of construction debris, refuse, and other
nonhazardous materials from the restoration and cleanup of the Arsenal
property as provided for in this Act. Such use shall be at no cost to
the Federal Government.
(d) Reversionary Interest.--During the 5-year period beginning on
the date the Secretary of the Army makes the conveyance under
subsection (a), if the Secretary of the Army determines that the
conveyed real property is not being operated as a landfill or that Will
County, Illinois, is in violation of the condition specified in
subsection (c), then, at the option of the United States, all right,
title, and interest in and to the property, including improvements
thereon, shall be subject to reversion to the United States. In the
event the United States exercises its option to cause the property to
revert, the United States shall have the right of immediate entry onto
the property. Any determination of the Secretary of the Army under this
subsection shall be made on the record after an opportunity for a
hearing.
(e) Surveys.--All costs of necessary surveys for the transfer of
real property under this section shall be borne by Will County,
Illinois.
(f) Additional Terms and Conditions.--The Secretary of the Army may
require such additional terms and conditions in connection with the
conveyance under this section as the Secretary of the Army considers
appropriate to protect the interests of the United States.
SEC. 10323. DISPOSAL OF CERTAIN REAL PROPERTY AT ARSENAL FOR ECONOMIC
DEVELOPMENT.
(a) Transfer Required.--Subject to section 10331, the Secretary of
the Army shall transfer to the State of Illinois, all right, title, and
interest of the United States in and to the parcel of real property at
the Arsenal described in subsection (b), which shall be used for
economic redevelopment to replace all or a part of the economic
activity lost at the Arsenal.
(b) Description of Property.--The real property to be transferred
under subsection (a) is a parcel of real property at the Arsenal
consisting of--
(1) approximately 1,900 acres, the approximate legal
description of which includes part of section 30, Jackson
Township, Township 34 North, Range 10 East, and sections or
parts of sections 24, 25, 26, 35, and 36, Township 34 North,
Range 9 East, in Channahon Township, an area of 9.77 acres
around the Des Plaines River Pump Station located in the
southeast quarter of section 15, Township 34 North, Range 9
East of the Third Principal Meridian, in Channahon Township,
and an area of 511 feet by 596 feet around the Kankakee River
Pump Station in the Northwest Quarter of section 5, Township 33
North, Range 9 East, east of the Third Principal Meridian in
Wilmington Township, containing 6.99 acres, located along the
easterly side of the Kankakee Cut-Off in Will County, Illinois,
as depicted in the Arsenal Re-Use Concept, and the connecting
piping to the northern industrial site, as described by the
United States Army Report of Availability, dated 13 December
1993; and
(2) approximately 1,100 acres, the approximate legal
description of which includes part of sections 16, 17, 18
Florence Township, Township 33 North, Range 10 East, Will
County, Illinois, as depicted in the Arsenal Land Use Concept.
(c) Consideration.--The transfer under subsection (a) shall be made
without consideration. However, the transfer shall be subject to the
condition that, if the State of Illinois reconveys all or any part of
the transferred property to a non-Federal entity, the State shall pay
to the United States an amount equal to the fair market value of the
reconveyed property. The Secretary of the Army shall determine the fair
market value of any property reconveyed by the State as of the time of
the reconveyance, excluding the value of improvements made to the
property by the State. The Secretary may treat a lease of the property
as a reconveyance if the Secretary determines that the lease was used
in an effort to avoid operation of this subsection. Amounts received
under this subsection shall be deposited in the general fund of the
Treasury for purposes of deficit reduction.
(d) Other Conditions of Conveyance.--
(1) Redevelopment authority.--The transfer under subsection
(a) shall be subject to the further condition that the Governor
of the State of Illinois establish a redevelopment authority to
be responsible for overseeing the economic redevelopment of the
transferred land.
(2) Time for establishment.--To satisfy the condition
specified in paragraph (1), the redevelopment authority shall
be established within 1 year after the date of the enactment of
this Act.
(e) Reversionary Interest.--During the 20-year period beginning on
the date the Secretary of the Army makes the transfer under subsection
(a), if the Secretary determines that a condition specified in
subsection (c) or (d) is not being satisfied or that the transferred
land is not being used for economic development purposes, then, at the
option of the United States, all right, title, and interest in and to
the property, including improvements thereon, shall be subject to
reversion to the United States. In the event the United States
exercises its option to cause the property to revert, the United States
shall have the right of immediate entry onto the property. Any
determination of the Secretary under this subsection shall be made on
the record after an opportunity for a hearing.
(f) Surveys.--All costs of necessary surveys for the transfer of
real property under this section shall be borne by the State of
Illinois.
(g) Additional Terms and Conditions.--The Secretary of the Army may
require such additional terms and conditions in connection with the
transfer under this section as the Secretary considers appropriate to
protect the interests of the United States.
CHAPTER 4--MISCELLANEOUS PROVISIONS
SEC. 10331. DEGREE OF ENVIRONMENTAL CLEANUP.
(a) In General.--Nothing in this Act shall be construed to restrict
or lessen the degree of cleanup at the Arsenal required to be carried
out under provisions of any environmental law.
(b) Response Action.--The establishment of the Midewin National
Tallgrass Prairie under chapter 2 and the additional real property
transfers and disposals required under chapter 3 shall not restrict or
lessen in any way any response action or degree of cleanup under CERCLA
or other environmental law, or any response action required under any
environmental law to remediate petroleum products or their derivatives
(including motor oil and aviation fuel), required to be carried out
under the authority of the Secretary of the Army at the Arsenal
and surrounding areas, except to the extent otherwise allowable under
such laws.
(c) Environmental Quality of Property.--Any contract for sale,
deed, or other transfer of real property under chapter 3 shall be
carried out in compliance with all applicable provisions of section
120(h) of CERCLA and other environmental laws.
Subtitle D--Miscellaneous Provisions
SEC. 10401. EXTENSION OF HIGHER VESSEL TONNAGE DUTIES.
(a) Extension of Duties.--Section 36 of the Act of August 5, 1909
(36 Stat. 111; 46 App. U.S.C. 121), is amended by striking ``for fiscal
years 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998,'' each place it
appears and inserting ``for fiscal years through fiscal year 2002,''.
(b) Conforming Amendment.--The Act entitled ``An Act concerning
tonnage duties on vessels entering otherwise than by sea'', approved
March 8, 1910 (36 Stat. 234; 46 App. U.S.C. 132), is amended by
striking ``for fiscal years 1991, 1992, 1993, 1994, 1995, 1996, 1997,
and 1998,'' and inserting ``for fiscal years through fiscal year
2002,''.
SEC. 10402. SALE OF GOVERNORS ISLAND, NEW YORK.
(a) In General.--Notwithstanding any other provision of law, the
Administrator of General Services shall dispose of by sale at fair
market value all rights, title, and interests of the United States in
and to the land of, and improvements to, Governors Island, New York.
(b) Right of First Refusal.--Before a sale is made under subsection
(a) to any other parties, the State of New York and the city of New
York shall be given the right of first refusal to purchase all or part
of Governors Island. Such right may be exercised by either the State of
New York or the city of New York or by both parties acting jointly.
(c) Proceeds.--Proceeds from the disposal of Governors Island under
subsection (a) shall be deposited in the general fund of the Treasury
and credited as miscellaneous receipts.
SEC. 10403. SALE OF AIR RIGHTS.
(a) In General.--Notwithstanding any other provision of law, the
Administrator of General Services shall sell, at fair market value and
in a manner to be determined by the Administrator, the air rights
adjacent to Washington Union Station described in subsection (b),
including air rights conveyed to the Administrator under subsection
(d). The Administrator shall complete the sale by such date as is
necessary to ensure that the proceeds from the sale will be deposited
in accordance with subsection (c).
(b) Description.--The air rights referred to in subsection (a)
total approximately 16.5 acres and are depicted on the plat map of the
District of Columbia as follows:
(1) Part of lot 172, square 720.
(2) Part of lots 172 and 823, square 720.
(3) Part of lot 811, square 717.
(c) Proceeds.--Before September 30, 1996, proceeds from the sale of
air rights under subsection (a) shall be deposited in the general fund
of the Treasury and credited as miscellaneous receipts.
(d) Conveyance of Amtrak Air Rights.--
(1) General rule.--As a condition of future Federal
financial assistance, Amtrak shall convey to the Administrator
of General Services on or before December 31, 1995, at no
charge, all of the air rights of Amtrak described in subsection
(b).
(2) Failure to comply.--If Amtrak does not meet the
condition established by paragraph (1), Amtrak shall be
prohibited from obligating Federal funds after March 1, 1996.
SEC. 10404. COLLECTION OF PARKING FEES.
(a) In General.--The Administrator of General Services shall issue
regulations requiring each Executive agency to collect fees for the use
of all parking facilities provided for the agency at Federal expense.
(b) Specific Requirements.--The regulations--
(1) shall include provisions under which any such user fee
shall be computed based on the fair market value of the use of
the parking facility involved; and
(2) shall take effect on or before the 90th day after the
date of enactment of this Act.
(c) Fees To Be Deposited in the Treasury.--All user fees collected
under this section shall be deposited in the Treasury of the United
States as miscellaneous receipts.
(d) Prohibition on Use of Federal Funds.--No Federal funds may be
used to pay any user fee collected under this section.
(e) Executive Agency Defined.--In this section, the term
``Executive agency'' has the meaning given such term by section 105 of
title 5, United States Code.
TITLE XI--COMMITTEE ON VETERANS' AFFAIRS
SEC. 11001. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This title may be cited as the ``Veterans
Reconciliation Act of 1995''.
(b) Table of Contents.--The contents of this title are as follows:
TITLE XI--COMMITTEE ON VETERANS' AFFAIRS
Sec. 11001. Short title; table of contents.
Subtitle A--Extension of Temporary Authorities
Sec. 11011. Authority to require that certain veterans agree to make
copayments in exchange for receiving
health-care benefits.
Sec. 11012. Medical care cost recovery authority.
Sec. 11013. Income verification authority.
Sec. 11014. Limitation on pension for certain recipients of medicaid-
covered nursing home care.
Sec. 11015. Home loan fees.
Sec. 11016. Procedures applicable to liquidation sales on defaulted
home loans guaranteed by the Department of
Veterans Affairs.
Subtitle B--Other Matters
Sec. 11021. Revision to prescription drug copayment.
Sec. 11022. Rounding down of cost-of-living adjustments in compensation
and DIC rates.
Sec. 11023. Revised standard for liability for injuries resulting from
Department of Veterans Affairs treatment.
Sec. 11024. Enhanced loan asset sale authority.
Sec. 11025. Withholding of payments and benefits.
Subtitle C--Health Care Eligibility Reform
Sec. 11031. Hospital care and medical services.
Sec. 11032. Extension of authority to priority health care for Persian
Gulf veterans.
Sec. 11033. Prosthetics.
Sec. 11034. Management of health care.
Sec. 11035. Improved efficiency in health care resource management.
Sec. 11036. Sharing agreements for specialized medical resources.
Sec. 11037. Personnel furnishing shared resources.
Subtitle A--Extension of Temporary Authorities
SEC. 11011. 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 Omnibus
Budget Reconciliation Act of 1990 (38 U.S.C. 1710 note) is amended by
striking out ``September 30, 1998'' and inserting in lieu thereof
``September 30, 2002''.
(b) Outpatient Medications.--Section 1722A(c) of title 38, United
States Code, is amended by striking out ``September 30, 1998'' and
inserting in lieu thereof ``September 30, 2002''.
SEC. 11012. MEDICAL CARE COST RECOVERY AUTHORITY.
Section 1729(a)(2)(E) of title 38, United States Code, is amended
by striking out ``before October 1, 1998,'' and inserting ``before
October 1, 2002,''.
SEC. 11013. INCOME VERIFICATION AUTHORITY.
Section 5317(g) of title 38, United States Code, is amended by
striking out ``September 30, 1998'' and inserting in lieu thereof
``September 30, 2002''.
SEC. 11014. LIMITATION ON PENSION FOR CERTAIN RECIPIENTS OF MEDICAID-
COVERED NURSING HOME CARE.
Section 5503(f)(7) of title 38, United States Code, is amended by
striking out ``September 30, 1998'' and inserting in lieu thereof
``September 30, 2002''.
SEC. 11015. HOME LOAN FEES.
Section 3729(a) of title 38, United States Code, is amended--
(1) in paragraph (4), by striking out ``October 1, 1998''
and inserting in lieu thereof ``October 1, 2002''; and
(2) in paragraph (5)(C), by striking out ``October 1,
1998'' and inserting in lieu thereof ``October 1, 2002''.
SEC. 11016. PROCEDURES APPLICABLE TO LIQUIDATION SALES ON DEFAULTED
HOME LOANS GUARANTEED BY THE DEPARTMENT OF VETERANS
AFFAIRS.
Section 3732(c)(11) of title 38, United States Code, is amended by
striking out ``October 1, 1998'' and inserting ``October 1, 2002''.
Subtitle B--Other Matters
SEC. 11021. REVISION TO PRESCRIPTION DRUG COPAYMENT.
(a) Increase in Amount of Copayment.--Section 1722A(a) of title 38,
United States Code, is amended--
(1) in paragraph (1), by striking out ``$2'' and inserting
in lieu thereof ``$3'';
(2) by striking out paragraph (2); and
(3) by redesignating paragraph (3) as paragraph (2).
(b) Recovery of Indebtedness.--(1) Section 5302 of such title is
amended by adding at the end the following new subsection:
``(f) The Secretary may not waive under this section the recovery
of any payment or the collection of any indebtedness owed under section
1722A of this title.''.
(2) The amendment made by paragraph (1) shall apply with respect to
amounts that become due to the United States under section 1722A of
title 38, United States Code, on or after the date of the enactment of
this Act.
SEC. 11022. ROUNDING DOWN OF COST-OF-LIVING ADJUSTMENTS IN COMPENSATION
AND DIC RATES.
(a) Fiscal Year 1996 COLA.--(1) Effective as of December 1, 1995,
the Secretary of Veterans Affairs shall recompute any increase in an
adjustment that is otherwise provided by law to be effective during
fiscal year 1996 in the rates of disability compensation and dependency
and indemnity compensation paid by the Secretary as such rates were in
effect on November 30, 1995. The recomputation shall provide for the
same percentage increase as provided under such law, but with amounts
so recomputed (if not a whole dollar amount) rounded down to the next
lower whole dollar amount (rather than to the nearest whole dollar
amount) and with each old-law DIC rate increased by the amount by which
the new-law DIC rate is increased (rather than by a uniform
percentage).
(2) For purposes of paragraph (1):
(A) The term ``old-law DIC rate'' means a dollar amount in
effect under section 1311(a)(3) of title 38, United States
Code.
(B) The term ``new-law DIC rate'' means the dollar amount
in effect under section 1311(a)(1) of title 38, United States
Code.
(b) Out-Year Compensation COLAs.--(1) Chapter 11 of title 38,
United States Code, is amended by inserting after section 1102 the
following new section:
``Sec. 1103. Cost-of-living adjustments
``(a) In the computation of cost-of-living adjustments for fiscal
years 1997 through 2002 in the rates of, and dollar limitations
applicable to, compensation payable under this chapter, such
adjustments shall be made by a uniform percentage that is no more than
the percentage equal to the social security increase for that fiscal
year, with all increased monthly rates and limitations (other than
increased rates or limitations equal to a whole dollar amount) rounded
down to the next lower whole dollar amount.
``(b) For purposes of this section, the term `social security
increase' means the percentage by which benefit amounts payable under
title II of the Social Security Act (42 U.S.C. 401 et seq.) are
increased for any fiscal year as a result of a determination under
section 215(i) of such Act (42 U.S.C. 415(i)).''.
(2) The table of sections at the beginning of such chapter is
amended by inserting after the item relating to section 1102 the
following new item:
``1103. Cost-of-living adjustments.''.
(c) Out-Year DIC COLAs.--(1) Chapter 13 of title 38, United States
Code, is amended by inserting after section 1302 the following new
section:
``Sec. 1303. Cost-of-living adjustments
``(a) In the computation of cost-of-living adjustments for fiscal
years 1997 through 2002 in the rates of dependency and indemnity
compensation payable under this chapter, such adjustments (except as
provided in subsection (b)) shall be made by a uniform percentage that
is no more than the percentage equal to the social security increase
for that fiscal year, with all increased monthly rates (other than
increased rates equal to a whole dollar amount) rounded down to the
next lower whole dollar amount.
``(b)(1) Cost-of-living adjustments for each of fiscal years 1997
through 2002 in old-law DIC rates shall be in a whole dollar amount
that is no greater than the amount by which the new-law DIC rate is
increased for that fiscal year as determined under subsection (a).
``(2) For purposes of paragraph (1):
``(A) The term `old-law DIC rates' means the dollar amounts
in effect under section 1311(a)(3) of this title.
``(B) The term `new-law DIC rate' means the dollar amount
in effect under section 1311(a)(1) of this title.
``(c) For purposes of this section, the term `social security
increase' means the percentage by which benefit amounts payable under
title II of the Social Security Act (42 U.S.C. 401 et seq.) are
increased for any fiscal year as a result of a determination under
section 215(i) of such Act (42 U.S.C. 415(i)).''.
(2) The table of sections at the beginning of such chapter is
amended by inserting after the item relating to section 1302 the
following new item:
``1303. Cost-of-living adjustments.''.
SEC. 11023. REVISED STANDARD FOR LIABILITY FOR INJURIES RESULTING FROM
DEPARTMENT OF VETERANS AFFAIRS TREATMENT.
(a) Revised Standard.--Section 1151 of title 38, United States
Code, is amended--
(1) by designating the second sentence as subsection (c);
(2) by striking out the first sentence and inserting in
lieu thereof the following:
``(a) Compensation under this chapter and dependency and indemnity
compensation under chapter 13 of this title shall be awarded for a
qualifying additional disability of a veteran or the qualifying death
of a veteran in the same manner as if such disability or death were
service-connected.
``(b)(1) For purposes of this section, a disability or death is a
qualifying additional disability or a qualifying death only if the
disability or death--
``(A) was caused by Department health care and was a
proximate result of--
``(i) negligence on the part of the Department in
furnishing the Department health care; or
``(ii) an event not reasonably foreseeable; or
``(B) was incurred as a proximate result of the provision
of training and rehabilitation services by the Secretary
(including by a service-provider used by the Secretary for such
purpose under section 3115 of this title) as part of an
approved rehabilitation program under chapter 31 of this title.
``(2) For purposes of this section, the term `Department health
care' means hospital care, medical or surgical treatment, or an
examination that is furnished under any law administered by the
Secretary to a veteran by a Department employee or in a Department
facility (as defined in section 1701(3)(A) of this title).
``(3) A disability or death of a veteran which is the result of the
veteran's willful misconduct is not a qualifying disability or death
for purposes of this section.''; and
(3) by adding at the end the following:
``(d) Effective with respect to injuries, aggravations of injuries,
and deaths occurring after September 30, 2002, a disability or death is
a qualifying additional disability or a qualifying death for purposes
of this section (notwithstanding the provisions of subsection (b)(1))
if the disability or death--
``(1) was the result of Department health care; or
``(2) was the result of the pursuit of a course of
vocational rehabilitation under chapter 31 of this title.''.
(b) Conforming Amendments.--Subsection (c) of such section, as
designated by subsection (a)(1), is amended--
(1) by striking out ``, aggravation,'' both places it
appears; and
(2) by striking out ``sentence'' and inserting in lieu
thereof ``subsection''.
(c) Effective Date.--The amendments made by this section shall
apply to any administrative or judicial determination of eligibility
for benefits under section 1151 of title 38, United States Code, based
on a claim that is received by the Secretary on or after October 1,
1995, including any such determination based on an original application
or an application seeking to reopen, revise, reconsider, or otherwise
readjudicate any claim for benefits under section 1151 of that title or
any predecessor provision of law.
SEC. 11024. ENHANCED LOAN ASSET SALE AUTHORITY.
Section 3720(h)(2) of title 38, United States Code, is amended by
striking out ``December 31, 1995'' and inserting in lieu thereof
``September 30, 1996''.
SEC. 11025. WITHHOLDING OF PAYMENTS AND BENEFITS.
(a) Notice Required in Lieu of Consent or Court Order.--Section
3726 of title 38, United States Code, is amended by striking out
``unless'' and all that follows and inserting in lieu thereof the
following: ``unless the Secretary provides such veteran or surviving
spouse with notice by certified mail with return receipt requested of
the authority of the Secretary to waive the payment of indebtedness
under section 5302(b) of this title. If the Secretary does not waive
the entire amount of the liability, the Secretary shall then determine
whether the veteran or surviving spouse should be released from
liability under section 3713(b) of this title. If the Secretary
determines that the veteran or surviving spouse should not be released
from liability, the Secretary shall notify the veteran or surviving
spouse of that determination and provide a notice of the procedure for
appealing that determination, unless the Secretary has previously made
such determination and notified the veteran or surviving spouse of the
procedure for appealing the determination.''.
(b) Conforming Amendment.--Section 5302(b) of such title is amended
by inserting ``with return receipt requested'' after ``certified
mail''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to any indebtedness to the United States arising
pursuant to chapter 37 of title 38, United States Code, before, on, or
after the date of the enactment of this Act.
Subtitle C--Health Care Eligibility Reform
SEC. 11031. HOSPITAL CARE AND MEDICAL SERVICES.
(a) Eligibility for Care.--Section 1710(a) of title 38, United
States Code, is amended by striking out paragraphs (1) and (2) and
inserting the following:
``(a)(1) The Secretary shall, to the extent and in the amount
provided in advance in appropriations Acts for these purposes, provide
hospital care and medical services, and may provide nursing home care,
which the Secretary determines is needed to any veteran--
``(A) with a compensable service-connected disability;
``(B) whose discharge or release from active military,
naval, or air service was for a compensable disability that was
incurred or aggravated in the line of duty;
``(C) who is in receipt of, or who, but for a suspension
pursuant to section 1151 of this title (or both a suspension
and the receipt of retired pay), would be entitled to
disability compensation, but only to the extent that such
veteran's continuing eligibility for such care is provided for
in the judgment or settlement provided for in such section;
``(D) who is a former prisoner of war;
``(E) of the Mexican border period or of World War I;
``(F) who was exposed to a toxic substance, radiation, or
environmental hazard, as provided in subsection (e); and
``(G) who is unable to defray the expenses of necessary
care as determined under section 1722(a) of this title.
``(2) In the case of a veteran who is not described in paragraph
(1), the Secretary may, to the extent resources and facilities are
available and subject to the provisions of subsection (f), furnish
hospital care, medical services, and nursing home care which the
Secretary determines is needed.''.
(b) Conforming Amendments.--(1) Section 1710(e) of such title is
amended--
(A) in paragraph (1), by striking out ``hospital care and
nursing home care'' in subparagraphs (A), (B), and (C) and
inserting in lieu thereof ``hospital care, medical services,
and nursing home care'';
(B) in paragraph (2), by inserting ``and medical services''
after ``Hospital and nursing home care''; and
(C) by striking out ``subsection (a)(1)(G) of this
section'' each place it appears and inserting in lieu thereof
``subsection (a)(1)(F)''.
(2) Chapter 17 of such title is amended--
(A) by redesignating subsection (g) of section 1710 as
subsection (h); and
(B) by transferring subsection (f) of section 1712 of such
title to section 1710 so as to appear after subsection (f),
redesignating such subsection as subsection (g), and amending
such subsection by striking out ``section 1710(a)(2) of this
title'' in paragraph (1) and inserting in lieu thereof
``subsection (a)(2) of this section''.
(3) Section 1712 of such title is amended--
(A) by striking out subsections (a) and (i); and
(B) by redesignating subsections (b), (c), (d), (h) and
(j), as subsections (a), (b), (c), (d), and (e), respectively.
SEC. 11032. EXTENSION OF AUTHORITY TO PRIORITY HEALTH CARE FOR PERSIAN
GULF VETERANS.
Section 1710(e)(3) of title 38, United States Code, is amended by
striking out ``December 31, 1995'' and inserting in lieu thereof
``December 31, 1998''.
SEC. 11033. PROSTHETICS.
(a) Eligibility for Prosthetics.--Section 1701(6)(A)(i) of title
38, United States Code, is amended--
(1) by striking out ``(in the case of a person otherwise
receiving care or services under this chapter)'' and ``(except
under the conditions described in section 1712(a)(5)(A) of this
title),'';
(2) by inserting ``(in the case of a person otherwise
receiving care or services under this chapter)'' before
``wheelchairs,''; and
(3) by inserting ``except that the Secretary may not
furnish sensori-neural aids other than in accordance with
guidelines which the Secretary shall prescribe,'' after
``reasonable and necessary,''.
(b) Regulations.--Not later than 30 days after the date of the
enactment of this Act, the Secretary of Veterans Affairs shall
prescribe the guidelines required by the amendments made by subsection
(a) and shall furnish a copy of those guidelines to the Committees on
Veterans' Affairs of the Senate and House of Representatives.
SEC. 11034. MANAGEMENT OF HEALTH CARE.
(a) In General.--(1) Chapter 17 of title 38, United States Code, is
amended by inserting after section 1704 the following new sections:
``Sec. 1705. Management of health care: patient enrollment system
``(a) In managing the provision of hospital care and medical
services under section 1710(a)(1) of this title, the Secretary, in
accordance with regulations the Secretary shall prescribe, shall
establish and operate a system of annual patient enrollment. The
Secretary shall manage the enrollment of veterans in accordance with
the following priorities, in the order listed:
``(1) Veterans with service-connected disabilities rated 30
percent or greater.
``(2) Veterans who are former prisoners of war and veterans
with service connected disabilities rated 10 percent or 20
percent.
``(3) Veterans who are in receipt of increased pension
based on a need of regular aid and attendance or by reason of
being permanently housebound and other veterans who are
catastrophically disabled.
``(4) Veterans not covered by paragraphs (1) through (3)
who are unable to defray the expenses of necessary care as
determined under section 1722(a) of this title.
``(5) All other veterans eligible for hospital care,
medical services, and nursing home care under section
1710(a)(1) of this title.
``(b) In the design of an enrollment system under subsection (a),
the Secretary--
``(1) shall ensure that the system will be managed in a
manner to ensure that the provision of care to enrollees is
timely and acceptable in quality;
``(2) may establish additional priorities within each
priority group specified in subsection (a), as the Secretary
determines necessary; and
``(3) may provide for exceptions to the specified
priorities where dictated by compelling medical reasons.
``Sec. 1706. Management of health care: other requirements
``(a) In managing the provision of hospital care and medical
services under section 1710(a) of this title, the Secretary shall, to
the extent feasible, design, establish and manage health care programs
in such a manner as to promote cost-effective delivery of health care
services in the most clinically appropriate setting.
``(b) In managing the provision of hospital care and medical
services under section 1710(a) of this title, the Secretary--
``(1) may contract for hospital care and medical services
when Department facilities are not capable of furnishing such
care and services economically, and
``(2) shall make such rules and regulations regarding
acquisition procedures or policies as the Secretary considers
appropriate to provide such needed care and services.
``(c) In managing the provision of hospital care and medical
services under section 1710(a) of this title, the Secretary shall
ensure that the Department maintains its capacity to provide for the
specialized treatment and rehabilitative needs of disabled veterans
described in section 1710(a) of this title (including veterans with
spinal cord dysfunction, blindness, amputations, and mental illness)
within distinct programs or facilities of the Department that are
dedicated to the specialized needs of those veterans in a manner that
(1) affords those veterans reasonable access to care and services for
those specialized needs, and (2) ensures that overall capacity of the
Department to provide such services is not reduced below the capacity
of the Department, nationwide, to provide those services, as of the
date of the enactment of this section.
``(d) In managing the provision of hospital care and medical
services under section 1710(a) of this title, the Secretary shall
ensure that any veteran with a service-connected disability is provided
all benefits under this chapter for which that veteran was eligible
before the date of the enactment of this section.''.
(2) The table of sections at the beginning of chapter 17 of such
title is amended by inserting after the item relating to section 1704
the following new items:
``1705. Management of health care: patient enrollment system.
``1706. Management of health care: other requirements.''.
(b) Conforming Amendments to Section 1703.--(1) Section 1703 of
such title is amended--
(A) by striking out subsections (a) and (b); and
(B) in subsection (c) by--
(i) striking out ``(c)'', and
(ii) striking out ``this section, sections'' and
inserting in lieu thereof ``sections 1710,''.
(2)(A) The heading of such section is amended to read as follows:
``Sec. 1703. Annual report on furnishing of care and services by
contract''.
(B) The item relating to such section in the table of sections at
the beginning of chapter 17 of such title is amended to read as
follows:
``1703. Annual report on furnishing of care and services by
contract.''.
SEC. 11035. IMPROVED EFFICIENCY IN HEALTH CARE RESOURCE MANAGEMENT.
(a) Repeal of Sunset Provision.--Section 204 of the Veterans Health
Care Act of 1992 (Public Law 102-585; 106 Stat. 4950) is repealed.
(b) Cost Recovery.--Title II of such Act is further amended by
adding at the end the following new section:
``SEC. 207. AUTHORITY TO BILL HEALTH-PLAN CONTRACTS.
``(a) Right To Recover.--In the case of a primary beneficiary (as
described in section 201(2)(B)) who has coverage under a health-plan
contract, as defined in section 1729(i)(1)(A) of title 38, United
States Code, and who is furnished care or services by a Department
medical facility pursuant to this title, the United States shall have
the right to recover or collect charges for such care or services from
such health-plan contract to the extent that the beneficiary (or the
provider of the care or services) would be eligible to receive payment
for such care or services from such health-plan contract if the care or
services had not been furnished by a department or agency of the United
States. Any funds received from such health-plan contract shall be
credited to funds that have been allotted to the facility that
furnished the care or services.
``(b) Enforcement.--The right of the United States to recover under
such a beneficiary's health-plan contract shall be enforceable in the
same manner as that provided by subsections (a)(3), (b), (c)(1), (d),
(f), (h), and (i) of section 1729 of title 38, United States Code.''.
SEC. 11036. SHARING AGREEMENTS FOR SPECIALIZED MEDICAL RESOURCES.
(a) Repeal of Section 8151.--(1) Subchapter IV of chapter 81 of
title 38, United States Code, is amended--
(A) by striking out section 8151; and
(B) by redesignating sections 8152, 8153, 8154, 8155, 8156,
8157, and 8158 as sections 8151, 8152, 8153, 8154, 8155, 8156,
and 8157, respectively.
(2) The table of sections at the beginning of chapter 81 is
amended--
(A) by striking out the item relating to section 8151; and
(B) by revising the items relating to sections 8152, 8153,
8154, 8155, 8156, 8157, and 8158 to reflect the redesignations
by paragraph (1)(B).
(b) Revised Authority for Sharing Agreements.--Section 8152 of such
title, as redesignated by subsection (a)(1)(B), is amended--
(1) in subsection (a)(1)(A)--
(A) by striking out ``specialized medical
resources'' and inserting in lieu thereof ``health-care
resources''; and
(B) by striking out ``other'' and all that follows
through ``medical schools'' and inserting in lieu
thereof ``any medical school, health-care provider,
health-care plan, insurer, or other entity or
individual'';
(2) in subsection (a)(2) by striking out ``only'' and all
that follows through ``are not'' and inserting in lieu thereof
``if such resources are not, or would not be,'';
(3) in subsection (b), by striking out ``reciprocal
reimbursement'' in the first sentence and all that follows
through the period at the end of that sentence and inserting in
lieu thereof ``payment to the Department in accordance with
procedures that provide appropriate flexibility to negotiate
payment which is in the best interest of the Government.'';
(4) in subsection (d), by striking out ``preclude such
payment, in accordance with--'' and all that follows through
``to such facility therefor'' and inserting in lieu thereof
``preclude such payment to such facility for such care or
services'';
(5) by redesignating subsection (e) as subsection (f); and
(6) by inserting after subsection (d) the following new
subsection (e):
``(e) The Secretary may make an arrangement that authorizes the
furnishing of services by the Secretary under this section to
individuals who are not veterans only if the Secretary determines--
``(1) that such an arrangement will not result in the
denial of, or a delay in providing access to, care to any
veteran at that facility; and
``(2) that such an arrangement--
``(A) is necessary to maintain an acceptable level
and quality of service to veterans at that facility; or
``(B) will result in the improvement of services to
eligible veterans at that facility.''.
(c) Cross-Reference Amendments.--(1) Section 8110(c)(3)(A) of such
title is amended by striking out ``8153'' and inserting in lieu thereof
``8152''.
(2) Subsection (b) of section 8154 of such title (as redesignated
by subsection (a)(1)(B)) is amended by striking out ``section 8154''
and inserting in lieu thereof ``section 8153''.
(3) Section 8156 of such title (as redesignated by subsection
(a)(1)(B)) is amended--
(A) in subsection (a), by striking out ``section 8153(a)''
and inserting in lieu thereof ``section 8152(a)''; and
(B) in subsection (b)(3), by striking out ``section 8153''
and inserting in lieu thereof ``section 8152''.
(4) Subsection (a) of section 8157 of such title (as redesignated
by subsection (a)(1)(B)) is amended--
(A) in the matter preceding paragraph (1), by striking out
``section 8157'' and ``section 8153(a)'' and inserting in lieu
thereof ``section 8156'' and ``section 8152(a)'', respectively;
and
(B) in paragraph (1), by striking out ``section
8157(b)(4)'' and inserting in lieu thereof ``section
8156(b)(4)''.
SEC. 11037. PERSONNEL FURNISHING SHARED RESOURCES.
Section 712(b)(2) of title 38, United States Code, is amended--
(1) by striking out ``the sum of--'' and inserting in lieu
thereof ``the sum of the following:'';
(2) by capitalizing the first letter of the first word of
each of subparagraphs (A) and (B);
(3) by striking out ``; and'' at the end of subparagraph
(A) and inserting in lieu thereof a period; and
(4) by adding at the end the following:
``(C) The number of such positions in the
Department during that fiscal year held by persons
involved in providing health-care resources under
section 8111 or 8152 of this title.''.
TITLE XII--TRADE
Subtitle A--Technical Corrections and Miscellaneous Trade Provisions
SEC. 12001. PAYMENT OF DUTIES AND FEES.
(a) Interest Accrual.--Section 505(c) of the Tariff Act of 1930 (19
U.S.C. 1505(c)) is amended in the second sentence by inserting after
``duties, fees, and interest'' the following: ``or, in a case in which
a claim is made under section 520(d), from the date on which such claim
is made,''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to claims made pursuant to section 520(d) of the Tariff Act of
1930 on or after April 25, 1995.
SEC. 12002. OTHER TECHNICAL AND CONFORMING AMENDMENTS.
(a) Examination of Books and Witnesses.--Section 509(a)(2) of the
Tariff Act of 1930 (19 U.S.C. 1509(a)(2)) is amended by striking
``(c)(1)(A)'' and inserting ``(d)(1)(A)''.
(b) Requirement for Certificate for Importation of Alcoholic
Liquors in Small Vessels.--Section 7 of the Act of August 5, 1935 (19
U.S.C. 1707; 49 Stat. 520), is repealed.
(c) Manifests.--Section 431(c)(1) of the Tariff Act of 1930 (19
U.S.C. 1431(c)(1)) is amended in the matter preceding subparagraph (A)
by striking ``such manifest'' and inserting ``a vessel manifest''.
(d) Documentation for Entry of Merchandise.--Section 484(a)(1) of
the Tariff Act of 1930 (19 U.S.C. 1484(a)(1)) is amended in the matter
preceding subparagraph (A) by striking ``553, and 336(j)'' and
inserting ``and 553''.
(e) Penalties for Certain Violations.--Section 592 of the Tariff
Act of 1930 (19 U.S.C. 1592) is amended--
(1) in subsection (a)(1), by striking ``lawful duty'' and
inserting ``lawful duty, tax, or fee''; and
(2) in subsections (b)(1)(A)(vi), (c)(2)(A)(ii),
(c)(3)(A)(ii), (c)(4)(A)(i), and (c)(4)(B) by striking ``lawful
duties'' each place it appears and inserting ``lawful duties,
taxes, and fees''.
(f) Deprivation of Lawful Duties, Taxes, or Fees.--Section 592(d)
of the Tariff Act of 1930 (19 U.S.C. 1592(d)) is amended by striking
``or fees be restored'' and inserting ``and fees be restored''.
(g) Reconciliation Treated as Entry for Recordkeeping.--
(1) Section 401(s) of the Tariff Act of 1930 (19 U.S.C.
1401(s)) is amended by inserting ``recordkeeping,'' after
``reliquidation,''.
(2) Section 508(c)(1) of such Act (19 U.S.C. 1508(c)(1)) is
amended by inserting ``, filing of a reconciliation,'' after
``entry''.
(h) Extension of Liquidation.--Section 504(d) of the Tariff Act of
1930 (19 U.S.C. 1504(d)) is amended by inserting ``, unless liquidation
is extended under subsection (b),'' after ``shall liquidate the
entry''.
(i) Exemption From Duty for Personal and Household Goods
Accompanying Returning Residents.--Section 321(a)(2)(B) of the Tariff
Act of 1930 (19 U.S.C. 1321(a)(2)(B)) is amended by inserting ``,
9804.00.65,'' after ``9804.00.30''.
(j) Debt Collection.--Section 631(a) of the Tariff Act of 1930 (19
U.S.C. 1631(a)) is amended--
(1) by inserting after ``law,'' the following: ``including
section 3302 of title 31, United States Code, and subchapters I
and II of chapter 37 of such title,''; and
(2) by inserting ``and the expenses associated with
recovering such indebtedness,'' after ``Government,''.
(k) Examination of Books and Witnesses.--Section 509(b) of the
Tariff Act of 1930 (19 U.S.C. 1509(b)) is amended in paragraphs (3) and
(4) by striking ``appropriate regional commissioner'' and inserting
``officer designated pursuant to regulations''.
(l) Review of Protests.--Section 515(d) of the Tariff Act of 1930
(19 U.S.C. 1515(d)) is amended by striking ``district director'' and
inserting ``port director''.
(m) Effective Date.--The amendments made by this section apply as
of December 8, 1993.
SEC. 12003. CLARIFICATION REGARDING THE APPLICATION OF CUSTOMS USER
FEES.
(a) In General.--Subparagraph (D) of section 13031(b)(8) of the
Consolidated Omnibus Budget Reconciliation Act of 1985 (19 U.S.C.
58c(b)(8)(D)) is amended--
(1) in clause (iv)--
(A) by striking ``subparagraph 9802.00.80 of such
Schedules'' and inserting ``heading 9802.00.80 of such
Schedule''; and
(B) by striking ``and'' at the end of clause (iv);
(2) by striking the period at the end of clause (v) and
inserting ``; and''; and
(3) by inserting after clause (v) the following new clause:
``(vi) in the case of merchandise entered from a foreign
trade zone (other than merchandise to which clause (v)
applies), be applied only to the value of the privileged or
nonprivileged foreign status merchandise under section 3 of the
Act of June 18, 1934 (commonly known as the Foreign Trade Zones
Act, 19 U.S.C. 81c).''.
(b) Effective Date.--The amendments made by subsection (a) apply
to--
(1) any entry made from a foreign trade zone on or after
the 15th day after the date of the enactment of this Act; and
(2) any entry made from a foreign trade zone after November
30, 1986, and before such 15th day if liquidation of the entry
was not final before such 15th day.
(c) Application of Fees to Certain Agricultural Products.--The
amendment made by section 111(b)(2)(D)(iv) of the Customs and Trade Act
of 1990 shall apply to--
(1) any entry made from a foreign trade zone on or after
the 15th day after the date of the enactment of this Act; and
(2) any entry made from a foreign trade zone after November
30, 1986, and before such 15th day if the liquidation of the
entry was not final before such 15th day.
SEC. 12004. TECHNICAL AMENDMENT TO THE CUSTOMS AND TRADE ACT OF 1990.
Subsection (b) of section 484H of the Customs and Trade Act of 1990
(19 U.S.C. 1553 note) is amended by striking ``, or withdrawn from
warehouse for consumption,'' and inserting ``for transportation in
bond''.
SEC. 12005. TECHNICAL AMENDMENTS REGARDING CERTAIN BENEFICIARY
COUNTRIES.
(a) Caribbean Basin Economic Recovery Act.--Section 213(h)(1) of
the Caribbean Basin Economic Recovery Act (19 U.S.C. 2703(h)(1)) is
amended by adding at the end thereof the following flush sentence:
``The duty reductions provided for under this paragraph shall not apply
to textile and apparel articles which are subject to textile
agreements.''.
(b) Andean Trade Preference Act.--Section 204(c)(1) of the Andean
Trade Preference Act (19 U.S.C. 3203(c)(1)) is amended by adding at the
end thereof the following flush sentence:
``The duty reductions provided for under this paragraph shall not apply
to textile and apparel articles which are subject to textile
agreements.''.
(c) Effective Date.--The amendments made by this section apply with
respect to--
(1) articles entered, or withdrawn from warehouse for
consumption, on or after the 15th day after the date of the
enactment of this Act, and
(2) articles entered after December 31, 1991, and before
such 15th day, if the liquidation of the entry of such articles
was not final before such 15th day.
SEC. 12006. CLARIFICATION OF FEES FOR CERTAIN CUSTOMS SERVICES.
(a) In General.--Section 13031(b)(9)(A) of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (19 U.S.C. 58c(b)(9)(A)) is amended--
(1) by striking ``centralized hub facility or'' in clause
(i); and
(2) in clause (ii)--
(A) by striking ``facility--'' and inserting
``facility or centralized hub facility--'',
(B) by striking ``customs inspectional'' in
subclause (I), and
(C) by striking ``at the facility'' in subclause
(I) and inserting ``for the facility''.
(b) Definitions.--Section 13031(b)(9)(B)(i) of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 58c(b)(9)(B)(i))
is amended--
(1) by striking ``, as in effect on July 30, 1990'', and
(2) by adding at the end thereof the following new
sentence: ``Nothing in this paragraph shall be construed as
prohibiting the Secretary of the Treasury from processing
merchandise that is informally entered or released at any
centralized hub facility or express consignment carrier
facility during the normal operating hours of the Customs
Service, subject to reimbursement and payment under
subparagraph (A).''.
(c) Citation.--Section 13031(b)(9)(B)(ii) of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 58c(b)(9)(B)(ii))
is amended by striking ``section 236 of the Tariff and Trade Act of
1984'' and inserting ``section 236 of the Trade and Tariff Act of
1984''.
SEC. 12007. SPECIAL RULE FOR EXTENDING TIME FOR FILING DRAWBACK CLAIMS.
Section 313(r) of the Tariff Act of 1930 (19 U.S.C. 1313(r)) is
amended by adding at the end the following:
``(3)(A)(i) Subject to clause (ii), the Customs Service
may, notwithstanding the limitation set forth in paragraph (1),
extend the time for filing a drawback claim for a period not to
exceed 18 months, if--
``(I) the claimant establishes to the satisfaction
of the Customs Service that the claimant was unable to
file the drawback claim because of an event declared by
the President to be a major disaster on or after
January 1, 1994; and
``(II) the claimant files a request for such
extension with the Customs Service within one year from
the last day of the 3-year period referred to in
paragraph (1).
``(ii) In the case of a major disaster occurring on or
after January 1, 1994, and before the date of the enactment of
this paragraph--
``(I) the Customs Service may extend the time for
filing the drawback claim for a period not to exceed 1
year; and
``(II) the request under clause (i)(II) must be
filed not later than 1 year from the date of the
enactment of this paragraph.
``(B) If an extension is granted with respect to a request
filed under this paragraph, the periods of time for retaining
records set forth in subsection (t) of this section and section
508(c)(3) shall be extended for an additional 18 months or, in
a case to which subparagraph (A)(ii) applies, for a period not
to exceed 1 year from the date the claim is filed.
``(C) For purposes of this paragraph, the term `major
disaster' has the meaning given that term in section 102(2) of
the Robert T. Stafford Disaster Relief and Emergency Assistance
Act (42 U.S.C. 5122(2)).''.
SEC. 12008. TREATMENT OF CERTAIN ENTRIES.
(a) Liquidation or Reliquidation of Entries.--Notwithstanding
sections 514 and 520 of the Tariff Act of 1930 (19 U.S.C. 1514 and
1520), and any other provision of law, the United States Customs
Service shall liquidate or reliquidate those entry numbers made at New
York, New York, which are listed in subsection (c), in accordance with
the final results of the administrative review, covering the period
from May 1, 1984, through March 31, 1985, undertaken by the
International Trade Administration of the Department of Commerce for
such entries (case number A-580-008).
(b) Payment of Amounts Owed.--Any amounts owed by the United States
pursuant to the liquidation or reliquidation of an entry under
subsection (a) shall be paid by the Customs Service within 90 days
after such liquidation or reliquidation.
(c) Entry List.--The entries referred to in subsection (a) are the
following:
Entry Number Date of Entry
84-4426808............. August 29, 1984
84-4427823............. September 4, 1984
84-4077985............. July 25, 1984
84-4080859............. August 3, 1984
84-4080817............. August 3, 1984
84-4077723............. August 1, 1984
84-4075194............. July 10, 1984
84-4076481............. July 17, 1984
84-4080930............. August 9, 1984.
SEC. 12009. TEMPORARY DUTY SUSPENSION FOR PERSONAL EFFECTS OF
PARTICIPANTS IN CERTAIN WORLD ATHLETIC EVENTS.
(a) In General.--Subchapter II of chapter 99 of the Harmonized
Tariff Schedule of the United States is amended by inserting in
numerical sequence the following new heading:
`` 9902.98.05 Any of the
following
articles not
intended for
sale or
distribution to
the public:
personal
effects of
aliens who are
participants
in, officials
of, or
accredited
members of
delegations to,
the 1998
Goodwill Games,
and of persons
who are
immediate
family members
of or servants
to any of the
foregoing
persons;
equipment and
materials
imported in
connection with
the foregoing
event by or on
behalf of the
foregoing
persons or the
organizing
committee of
such event;
articles to be
used in
exhibitions
depicting the
culture of a
country
participating
in such event;
and, if
consistent with
the foregoing,
such other
articles as the
Secretary of
the Treasury
may allow...... Free No change Free On or before
2/1/99
''
(b) Taxes and Fees Not To Apply.--The articles described in heading
9902.98.05 of the Harmonized Tariff Schedule of the United States (as
added by subsection (a)) shall be free of taxes and fees which may be
otherwise applicable.
(c) Effective Date.--The amendment made by this section applies to
articles entered, or withdrawn from warehouse for consumption, on or
after the 15th day after the date of the enactment of this Act.
SEC. 12010. MISCELLANEOUS TECHNICAL CORRECTIONS.
(a) Drawback and Refunds.--Section 313(s)(2)(B) of the Tariff Act
of 1930 (19 U.S.C. 1313(s)(2)(B)) is amended by striking ``successor''
the first place it appears and inserting ``predecessor''.
(b) Trade Act of 1974.--Section 301(c)(4) of the Trade Act of 1974
(19 U.S.C. 2411(c)(4)) is amended by striking ``(1)(C)(iii)'' and
inserting ``(1)(D)(iii)''.
SEC. 12011. URUGUAY ROUND AGREEMENTS ACT.
Section 405(b) of the Uruguay Round Agreements Act (19 U.S.C.
3602(b)) is amended--
(1) in paragraph (1) by striking ``1(a)'' and inserting
``1(b)''; and
(2) in paragraph (2) by striking ``1(b)'' and inserting
``1(a)''.
SEC. 12012. FILING OF CERTIFICATIONS FOR CIVIL AIRCRAFT PARTS.
General Note 6 of the Harmonized Tariff Schedule of the United
States is amended--
(1) by inserting ``or electronic'' after ``shall file a
written''; and
(2) by striking ``with the appropriate customs officer''
and inserting ``with the United States Customs Service''.
SEC. 12013. EXEMPTION REGARDING CERTAIN VESSEL REPAIRS.
(a) Temporary Exemption Extended.--Section 484E(b)(2)(B) of the
Customs and Trade Act of 1990 (19 U.S.C. 1466 note) is amended by
striking ``December 31, 1992'' and inserting ``December 31, 1994''.
(b) Effective Date.--The amendment made by this section applies to
any entry made after December 31, 1992, and before January 1, 1995.
SEC. 12014. FEES FOR CERTAIN CUSTOMS SERVICES.
(a) In General.--Section 13031(a)(5) of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (19 U.S.C. 58c(a)(5)) is amended--
(1) in subparagraph (A), by inserting ``a place'' after
``aircraft from''; and
(2) in subparagraph (B), by striking ``subsection
(b)(1)(A)'' and inserting ``subsection (b)(1)(A)(i)''.
(b) Limitation on Fees.--Section 13031(b)(1) of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 58c(b)(1)) is
amended to read as follows:
``(b) Limitations on Fees.--(1)(A) No fee may be charged under
subsection (a) of this section for customs services provided in
connection with--
``(i) the arrival of any passenger whose journey--
``(I) originated in--
``(aa) Canada,
``(bb) Mexico,
``(cc) a territory or possession of the
United States, or
``(dd) any adjacent island (within the
meaning of section 101(b)(5) of the Immigration
and Nationality Act (8 U.S.C. 1101(b)(5))), or
``(II) originated in the United States and was
limited to--
``(aa) Canada,
``(bb) Mexico,
``(cc) territories and possessions of the
United States, and
``(dd) such adjacent islands;
``(ii) the arrival of any railroad car the journey of which
originates and terminates in the same country, but only if no
passengers board or disembark from the train and no cargo is
loaded or unloaded from such car while the car is within any
country other than the country in which such car originates and
terminates;
``(iii) the arrival of any ferry; or
``(iv) the arrival of any passenger on board a commercial
vessel traveling only between ports which are within the
customs territory of the United States.
``(B) The exemption provided for in subparagraph (A) shall not
apply in the case of the arrival of any passenger on board a commercial
vessel whose journey originates and terminates at the same place in the
United States if there are no intervening stops.
``(C) The exemption provided for in subparagraph (A)(i) shall not
apply to fiscal years 1994, 1995, 1996, and 1997.''.
(c) Fee Assessed Only Once.--Section 13031(b)(4) of the
Consolidated Omnibus Budget Reconciliation Act of 1985 (19 U.S.C.
58c(b)(4)) is amended--
(1) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively;
(2) by striking ``No fee'' and inserting ``(A) No fee'';
and
(3) by adding at the end the following new subparagraph:
``(B) In the case of a commercial vessel making a single voyage
involving 2 or more United States ports with respect to which the
passengers would otherwise be charged a fee pursuant to subsection
(a)(5), such fee shall be charged only 1 time for each passenger.''.
(d) Effective Date.--The amendments made by this section shall take
effect as if included in the amendments made by section 521 of the
North American Free Trade Agreement Implementation Act.
SEC. 12015. TECHNICAL CORRECTION TO CERTAIN CHEMICAL DESCRIPTION.
(a) Amendment to Subheading 2933.90.02.--The article description
for subheading 2933.90.02 of the Harmonized Tariff Schedule of the
United States is amended by striking ``(Quizalofop ethyl)''.
(b) Effective Date.--
(1) General rule.--The amendment made by this section
applies to articles entered, or withdrawn from warehouse for
consumption, on or after the 15th day after the date of the
enactment of this Act.
(2) Retroactive provision.--Notwithstanding section 514 of
the Tariff Act of 1930 or any other provision of law, upon
proper request (which includes sufficient information to
identify and locate the entry) filed with the Customs Service
on or before the date that is 180 days after the date of the
enactment of this Act, any entry, or withdrawal from warehouse
for consumption, of an article that occurred--
(A) after December 31, 1994, and before the date
that is 15 days after the date of the enactment of this
Act, and
(B) with respect to which there would have been no
duty or a lesser duty if the amendment made by
subsection (a) applied to such entry or withdrawal,
shall be liquidated or reliquidated as though such amendment
applied to such entry or withdrawal.
SEC. 12016. MARKING OF IMPORTED ARTICLES AND CONTAINERS.
(a) In General.--Section 304 of the Tariff Act of 1930 (19
U.S.C.1304) is amended--
(1) by redesignating subsections (f), (g), (h), and (i) as
subsections (i), (j), (k), and (l), respectively, and
(2) by inserting after subsection (e) the following new
subsections:
``(f) Marking of Metal Forgings.--The marking requirements of
subsections (a) and (b) shall not apply to--
``(1) metal forgings that--
``(A) are imported for processing into finished
hand tools in the United States, and
``(B) have not been improved in condition beyond
rough burring, trimming, grinding, turning, hammering,
chiseling, or filing; and
``(2) hand tools made from metal forgings described in
paragraph (1).
``(g) Marking of Certain Coffee and Tea Products.--The marking
requirements of subsections (a) and (b) shall not apply to articles
described in subheading 0901.21, 0901.22, 0902.10, 0902.20, 0902.30,
0902.40, 2101.10, or 2101.20 of the Harmonized Tariff Schedule of the
United States, as in effect on January 1, 1995.
``(h) Marking of Spices.--The marking requirements of subsections
(a) and (b) shall not apply to articles provided for under subheadings
0904.11, 0904.12, 0904.20, 0905.00, 0906.10, 0906.20, 0907.00, 0908.10,
0908.20, 0908.30, 0909.10, 0909.20, 0909.30, 0909.40, 0909.50, 0910.10,
0910.20, 0910.30, 0910.40, 0910.50, 0910.91, 0910.99, 1106.20, 1207.40,
1207.50, 1207.91, 1404.90, and 3302.10, and items classifiable in
categories 0712.90.60, 0712.90.8080, 1209.91.2000, 1211.90.2000,
1211.90.8040, 1211.90.8050, 1211.90.8090, 2006.00.3000, 2918.13.2000,
3203.00.8000, 3301.90.1010, 3301.90.1020, and 3301.90.1050 of the
Harmonized Tariff Schedule of the United States, as in effect on
January 1, 1995.''.
(b) Effective Date.--The amendments made by this section apply to
goods entered, or withdrawn from warehouse for consumption, on or after
the date of the enactment of this Act.
SEC. 12017. RELIQUIDATING ENTRY OF WARP KNITTING MACHINES.
Notwithstanding section 514 of the Tariff Act of 1930 (19 U.S.C.
1514) or any other provision of law, upon proper request filed with the
Customs Service before the 180th day after the date of the enactment of
this Act, the Secretary of the Treasury shall--
(1) liquidate or reliquidate as duty free Entry No. 100-
3022436-3, made on July 12, 1989, at the port of Charleston,
South Carolina; and
(2) refund any duties and interest paid with respect to
such entry.
SEC. 12018. IDENTIFICATION OF TRADE EXPANSION PRIORITIES.
Section 310(a)(1) of the Trade Act of 1974 (19 U.S.C. 2420(a)(1))
is amended by striking ``calendar year 1995'' and inserting ``each of
calendar years 1995 through 2000''.
Subtitle B--Generalized System of Preferences
SEC. 12101. SHORT TITLE.
This subtitle may be cited as the ``GSP Renewal Act of 1995''.
SEC. 12102. GENERALIZED SYSTEM OF PREFERENCES.
(a) In General.--Title V of the Trade Act of 1974 is amended to
read as follows:
``TITLE V--GENERALIZED SYSTEM OF PREFERENCES
``SEC. 501. AUTHORITY TO EXTEND PREFERENCES.
``The President may provide duty-free treatment for any eligible
article from any beneficiary developing country in accordance with the
provisions of this title. In taking any such action, the President
shall have due regard for--
``(1) the effect such action will have on furthering the
economic development of developing countries through the
expansion of their exports;
``(2) the extent to which other major developed countries
are undertaking a comparable effort to assist developing
countries by granting generalized preferences with respect to
imports of products of such countries;
``(3) the anticipated impact of such action on United
States producers of like or directly competitive products; and
``(4) the extent of the beneficiary developing country's
competitiveness with respect to eligible articles.
``SEC. 502. DESIGNATION OF BENEFICIARY DEVELOPING COUNTRIES.
``(a) Authority To Designate Countries.--
``(1) Beneficiary developing countries.--The President is
authorized to designate countries as beneficiary developing
countries for purposes of this title.
``(2) Least-developed beneficiary developing countries.--
The President is authorized to designate any beneficiary
developing country as a least-developed beneficiary developing
country for purposes of this title, based on the considerations
in section 501 and subsection (c) of this section.
``(b) Countries Ineligible for Country Designation.--
``(1) Specific countries.--The following countries may not
be designated as beneficiary developing countries for purposes
of this title:
``(A) Australia.
``(B) Canada.
``(C) European Union member states.
``(D) Iceland.
``(E) Japan.
``(F) Monaco.
``(G) New Zealand.
``(H) Norway.
``(I) Switzerland.
``(2) Other bases for ineligibility.--The President shall
not designate any country a beneficiary developing country
under this title if any of the following applies:
``(A) Such country is a Communist country, unless--
``(i) the products of such country receive
nondiscriminatory treatment,
``(ii) such country is a WTO Member (as
such term is defined in section 2 of the
Uruguay Round Agreements Act,) and a member of
the International Monetary Fund, and
``(iii) such country is not dominated or
controlled by international communism.
``(B) Such country is a party to an arrangement of
countries and participates in any action pursuant to
such arrangement, the effect of which is--
``(i) to withhold supplies of vital
commodity resources from international trade or
to raise the price of such commodities to an
unreasonable level, and
``(ii) to cause serious disruption of the
world economy.
``(C) Such country affords preferential treatment
to the products of a developed country, other than the
United States, which has, or is likely to have, a
significant adverse effect on United States commerce.
``(D)(i) Such country--
``(I) has nationalized, expropriated, or
otherwise seized ownership or control of
property, including patents, trademarks, or
copyrights, owned by a United States citizen or
by a corporation, partnership, or association
which is 50 percent or more beneficially owned
by United States citizens,
``(II) has taken steps to repudiate or
nullify an existing contract or agreement with
a United States citizen or a corporation,
partnership, or association which is 50 percent
or more beneficially owned by United States
citizens, the effect of which is to
nationalize, expropriate, or otherwise seize
ownership or control of property, including
patents, trademarks, or copyrights, so owned,
or
``(III) has imposed or enforced taxes or
other exactions, restrictive maintenance or
operational conditions, or other measures with respect to property,
including patents, trademarks, or copyrights, so owned, the effect of
which is to nationalize, expropriate, or otherwise seize ownership or
control of such property,
unless clause (ii) applies.
``(ii) This clause applies if the President
determines that--
``(I) prompt, adequate, and effective
compensation has been or is being made to the
citizen, corporation, partnership, or
association referred to in clause (i),
``(II) good faith negotiations to provide
prompt, adequate, and effective compensation
under the applicable provisions of
international law are in progress, or the
country described in clause (i) is otherwise
taking steps to discharge its obligations under
international law with respect to such citizen,
corporation, partnership, or association, or
``(III) a dispute involving such citizen,
corporation, partnership, or association over
compensation for such a seizure has been
submitted to arbitration under the provisions
of the Convention for the Settlement of
Investment Disputes, or in another mutually
agreed upon forum,
and the President promptly furnishes a copy of such
determination to the Senate and House of
Representatives.
``(E) Such country fails to act in good faith in
recognizing as binding or in enforcing arbitral awards
in favor of United States citizens or a corporation,
partnership, or association which is 50 percent or more
beneficially owned by United States citizens, which
have been made by arbitrators appointed for each case
or by permanent arbitral bodies to which the parties
involved have submitted their dispute.
``(F) Such country aids or abets, by granting
sanctuary from prosecution to, any individual or group
which has committed an act of international terrorism.
``(G) Such country has not taken or is not taking
steps to afford internationally recognized worker
rights to workers in the country (including any
designated zone in that country).
Subparagraphs (D), (E), (F), and (G) shall not prevent the
designation of any country as a beneficiary developing country
under this title if the President determines that such
designation will be in the national economic interest of the
United States and reports such determination to the Congress
with the reasons therefor.
``(c) Factors Affecting Country Designation.--In determining
whether to designate any country as a beneficiary developing country
under this title, the President shall take into account--
``(1) an expression by such country of its desire to be so
designated;
``(2) the level of economic development of such country,
including its per capita gross national product, the living
standards of its inhabitants, and any other economic factors
which the President deems appropriate;
``(3) the extent to which other major developed countries
are extending generalized preferential tariff treatment to such
country;
``(4) the extent to which such country has assured the
United States that it will provide equitable and reasonable
access to the markets and basic commodity resources of such
country and the extent to which such country has assured the
United States that it will refrain from engaging in
unreasonable export practices;
``(5) whether such country is providing adequate and
effective protection of intellectual property rights;
``(6) the extent to which such country has taken action
to--
``(A) reduce trade distorting investment practices
and policies (including export performance
requirements); and
``(B) reduce or eliminate barriers to trade in
services;
``(7) whether or not such country has taken or is taking
steps to afford to workers in that country (including any
designated zone in that country) internationally recognized
worker rights; and
``(8) the extent to which such country fails to cooperate
with the United States in preventing the proliferation of
nuclear weapons, nuclear weapons components, and nuclear
weapons delivery systems, or in preventing illegal drug
trafficking.
A country may be found to not provide adequate and effective protection
of intellectual property rights under paragraph (5) and section
503(d)(2)(B), notwithstanding the fact that it may be in compliance
with the specific obligations of the Agreement on Trade-Related Aspects
of Intellectual Property Rights referred to in section 101(d)(15) of
the Uruguay Round Agreements Act.
``(d) Withdrawal, Suspension, or Limitation of Country
Designation.--
``(1) In general.--The President may withdraw, suspend, or
limit the application of the duty-free treatment accorded under
this title with respect to any country. Except in exceptional
circumstances, the President, before taking any action under
this subsection, shall provide a period for the submission of
public comments on the matter under consideration, and in
taking any action under this subsection, the President shall
consider the factors set forth in section 501 and subsection
(c) of this section, and comments received from the public.
``(2) Changed circumstances.--The President shall, after
complying with the requirements of subsection (f)(2), withdraw
or suspend the designation of any country as a beneficiary
developing country if, after such designation, the President
determines that as the result of changed circumstances such
country would be barred from designation as a beneficiary
developing country under subsection (b)(2). Such country shall
cease to be a beneficiary developing country on the day on
which the President issues an Executive order or Presidential
proclamation revoking the designation of such country under
this title.
``(e) Mandatory Graduation of Beneficiary Developing Countries.--If
the President determines that a beneficiary developing country has
become a `high income' country, as defined by the official statistics
of the International Bank for Reconstruction and Development, then the
President shall terminate the designation of such country as a
beneficiary developing country for purposes of this title, effective on
January 1 of the second year following the year in which such
determination is made.
``(f) Congressional Notification.--
``(1) Notification of designation.--
``(A) In general.--Before the President designates
any country as a beneficiary developing country under
this title, the President shall notify the Congress of
the President's intention to make such designation,
together with the considerations entering into such decision.
``(B) Designation as least-developed beneficiary
developing country.--At least 60 days before the
President designates any country as a least-developed
beneficiary developing country, the President shall
notify the Congress of the President's intention to
make such designation.
``(2) Notification of termination.--If the President has
designated any country as a beneficiary developing country
under this title, the President shall not terminate such
designation unless, at least 60 days before such termination,
the President has notified the Congress and has notified such
country of the President's intention to terminate such
designation, together with the considerations entering into
such decision.
``SEC. 503. DESIGNATION OF ELIGIBLE ARTICLES.
``(a) Eligible Articles.--
``(1) Designation.--
``(A) In general.--Except as provided in subsection
(b), the President is authorized to designate articles
as eligible articles for all beneficiary developing
countries for purposes of this title by Executive order
or Presidential proclamation after receiving the advice
of the International Trade Commission in accordance
with subsection (e).
``(B) Least-developed beneficiary developing
countries.--Except as provided in subsection (b), the
President is authorized to designate additional
articles as eligible articles only for countries
designated as least-developed beneficiary developing
countries under section 502(a)(2) if, after receiving
the advice of the International Trade Commission in
accordance with subsection (e) of this section, the
President determines that such articles are not import-
sensitive in the context of imports from least-
developed beneficiary developing countries.
``(C) Three-year rule.--If, after receiving the
advice of the International Trade Commission under
subsection (e), an article has been formally considered
for designation as an eligible article under this title
and denied such designation, such article may not be
reconsidered for such designation for a period of three
years after such denial.
``(2) Rule of origin.--
``(A) General rule.--The duty-free treatment
provided under this title shall apply to any eligible
article which is the growth, product, or manufacture of
a beneficiary developing country if--
``(i) that article is imported directly
from a beneficiary developing country into the
customs territory of the United States; and
``(ii) the sum of--
``(I) the cost or value of the
materials produced in the beneficiary
developing country or any two or more
countries which are members of the same
association of countries which is
treated as one country under section
506(2), plus
``(II) the direct costs of
processing operations performed in such
beneficiary developing country or such
member countries,
is not less than 35 percent of the appraised
value of such article at the time it is
entered.
``(B) Exclusions.--An article shall not be treated
as the growth, product, or manufacture of a beneficiary
developing country by virtue of having merely
undergone--
``(i) simple combining or packaging
operations, or
``(ii) mere dilution with water or mere
dilution with another substance that does not
materially alter the characteristics of the
article.
``(3) Regulations.--The Secretary of the Treasury, after
consulting with the United States Trade Representative, shall
prescribe such regulations as may be necessary to carry out
paragraph (2), including, but not limited to, regulations
providing that, in order to be eligible for duty-free treatment
under this title, an article--
``(A) must be wholly the growth, product, or
manufacture of a beneficiary developing country, or
``(B) must be a new or different article of
commerce which has been grown, produced, or
manufactured in the beneficiary developing country.
``(b) Articles That May Not Be Designated As Eligible Articles.--
``(1) Import sensitive articles.--The President may not
designate any article as an eligible article under subsection
(a) if such article is within one of the following categories
of import-sensitive articles:
``(A) Textile and apparel articles which were not
eligible articles for purposes of this title on January
1, 1994, as this title was in effect on such date.
``(B) Import-sensitive electronic articles.
``(C) Import-sensitive steel articles.
``(D) Footwear, handbags, luggage, flat goods, work
gloves, and leather wearing apparel which were not
eligible articles for purposes of this title on January
1, 1995, as this title was in effect on such date.
``(E) Import-sensitive semimanufactured and
manufactured glass products.
``(F) Any other articles which the President
determines to be import-sensitive in the context of the
Generalized System of Preferences.
``(2) Articles against which other actions taken.--An
article shall not be an eligible article for purposes of this
title for any period during which such article is the subject
of any action proclaimed pursuant to section 203 of this Act
(19 U.S.C. 2253) or section 232 or 351 of the Trade Expansion
Act of 1962 (19 U.S.C. 1862, 1981).
``(3) Agricultural products.--No quantity of an
agricultural product subject to a tariff-rate quota that
exceeds the in-quota quantity shall be eligible for duty-free
treatment under this title.
``(c) Withdrawal, Suspension, or Limitation of Duty-Free Treatment;
Competitive Need Limitation.--
``(1) In general.--The President may withdraw, suspend, or
limit the application of the duty-free treatment accorded under
this title with respect to any article, except that no rate of
duty may be established with respect to any article pursuant to
this subsection other than the rate which would apply but for
this title. In taking any action under this subsection, the
President shall consider the factors set forth in sections 501
and 502(c).
``(2) Competitive need limitation.--
``(A) Basis for withdrawal of duty-free
treatment.--Except as provided in this paragraph and
subject to subsection (d), whenever the President
determines that a beneficiary developing country has
exported (directly or indirectly) to the United States
during any calendar year beginning after December 31,
1995--
``(i) a quantity of an eligible article
having an appraised value in excess of
$75,000,000, except that, in applying this
clause, the amount of $75,000,000 shall be
increased by $5,000,000 on January 1 of each
calendar year after calendar year 1995, or
``(ii) a quantity of an eligible article
equal to or exceeding 50 percent of the
appraised value of the total imports of that
article into the United States during the
calendar year,
then the President shall, not later than July 1 of the
next calendar year, terminate the duty-free treatment
for that article from that beneficiary developing
country.
``(B) Country defined.--For purposes of this
paragraph, the term `country' does not include an
association of countries which is treated as one
country under section 506(2), but does include a
country which is a member of any such association.
``(C) Redesignations.--A country which is no longer
treated as a beneficiary developing country with
respect to an eligible article by reason of
subparagraph (A) may be redesignated a beneficiary
developing country with respect to such article,
subject to the considerations set forth in sections 501
and 502, if imports of such article from such country
did not exceed the limitations in subparagraph (A)
during the preceding calendar year.
``(D) Least-developed beneficiary developing
countries.--Subparagraph (A) shall not apply to any
least-developed beneficiary developing country.
``(E) Articles not produced in the united states
excluded.--Subparagraph (A)(ii) shall not apply with
respect to any eligible article if a like or directly
competitive article was not produced in the United
States on January 1, 1995.
``(F) De minimis waivers.--The President may
disregard subparagraph (A)(ii) with respect to any
eligible article from any beneficiary developing
country if the appraised value of the total imports of
such article into the United States during calendar
year 1995 or any calendar year thereafter does not
exceed $13,000,000, except that, in applying this
subparagraph, the amount of $13,000,000 shall be
increased by $500,000 on January 1 of each calendar
year after calendar year 1995.
``(d) Waiver of Competitive Need Limitation.--
``(1) In general.--The President may waive the application
of subsection (c)(2) with respect to any eligible article of
any beneficiary developing country if, before July 1 of the
calendar year beginning after the calendar year for which a
determination described in subsection (c)(2)(A) was made with
respect to such eligible article, the President--
``(A) receives the advice of the International
Trade Commission under section 332 of the Tariff Act of
1930 on whether any industry in the United States is
likely to be adversely affected by such waiver,
``(B) determines, based on the considerations
described in sections 501 and 502(c) and the advice
described in subparagraph (A), that such waiver is in
the national economic interest of the United States,
and
``(C) publishes the determination described in
subparagraph (B) in the Federal Register.
``(2) Considerations by the president.--In making any
determination under paragraph (1), the President shall give
great weight to--
``(A) the extent to which the beneficiary
developing country has assured the United States that
such country will provide equitable and reasonable
access to the markets and basic commodity resources of
such country, and
``(B) the extent to which such country provides
adequate and effective protection of intellectual
property rights.
``(3) Effective period of waiver.--Any waiver granted under
this subsection shall remain in effect until the President
determines that such waiver is no longer warranted due to
changed circumstances.
``(e) International Trade Commission Advice.--Before designating
articles as eligible articles under section 503(a)(1), the President
shall publish and furnish the International Trade Commission with lists
of articles which may be considered for designation as eligible
articles for purposes of this title. The provisions of sections 131,
132, 133, and 134 shall be complied with as though action under section
501 and this section were action under section 123 to carry out a trade
agreement entered into under section 123.
``(f) Special Rule Concerning Puerto Rico.--No action under this
title may affect any tariff duty imposed by the Legislature of Puerto
Rico pursuant to section 319 of the Tariff Act of 1930 on coffee
imported into Puerto Rico.
``SEC. 504. REVIEW AND REPORTS TO CONGRESS.
``(a) Report on Operation of Title.--On or before July 31, 1997,
the President shall submit to the Congress a full and complete report
regarding the operation of this title.
``(b) Annual Reports on Worker Rights.--The President shall submit
an annual report to the Congress on the status of internationally
recognized worker rights within each beneficiary developing country.
``SEC. 505. DATE OF TERMINATION.
``No duty-free treatment provided under this title shall remain in
effect after December 31, 1997.
``SEC. 506. DEFINITIONS.
``For purposes of this title:
``(1) Beneficiary developing country.--The term
`beneficiary developing country' means any country with respect
to which there is in effect an Executive order or Presidential
proclamation by the President designating such country as a
beneficiary developing country for purposes of this title.
``(2) Country.--The term `country' means any foreign
country or territory, including any overseas dependent
territory or possession of a foreign country, or the Trust
Territory of the Pacific Islands. In the case of an association
of countries which is a free trade area or customs union, or
which is contributing to comprehensive regional economic
integration among its members through appropriate means,
including, but not limited to, the reduction of duties, the
President may by Executive order or Presidential proclamation
provide that all members of such association other than members
which are barred from designation under section 502(b) shall be
treated as one country for purposes of this title.
``(3) Entered.--The term `entered' means entered, or
withdrawn from warehouse for consumption, in the customs
territory of the United States.
``(4) Internationally recognized worker rights.--The term
`internationally recognized worker rights' includes--
``(A) the right of association;
``(B) the right to organize and bargain
collectively;
``(C) a prohibition on the use of any form of
forced or compulsory labor;
``(D) a minimum age for the employment of children;
and
``(E) acceptable conditions of work with respect to
minimum wages, hours of work, and occupational safety
and health.
``(5) Least-developed beneficiary developing country.--The
term `least-developed beneficiary developing country' means a
beneficiary developing country that is designated as a least-
developed beneficiary developing country under section
502(a)(2).''.
(b) Table of Contents.--The items relating to title V in the table
of contents of the Trade Act of 1974 are amended to read as follows:
``TITLE V--GENERALIZED SYSTEM OF PREFERENCES
``Sec. 501. Authority to extend preferences.
``Sec. 502. Designation of beneficiary developing countries.
``Sec. 503. Designation of eligible articles.
``Sec. 504. Review and reports to Congress.
``Sec. 505. Date of termination.
``Sec. 506. Definitions.''.
SEC. 12103. RETROACTIVE APPLICATION FOR CERTAIN LIQUIDATIONS AND
RELIQUIDATIONS.
(a) In General.--Notwithstanding section 514 of the Tariff Act of
1930 or any other provision of law and subject to subsection (b), the
entry--
(1) 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 31, 1995, and
(2) that was made after July 31, 1995, and before the date
of the enactment of this Act,
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 subsection, the term ``entry'' includes a withdrawal
from warehouse for consumption.
(b) Requests.--Liquidation or reliquidation may be made under
subsection (a) with respect to an entry only if a request therefor is
filed with the Customs Service, within 180 days after the date of the
enactment of this Act, that contains sufficient information to enable
the Customs Service--
(1) to locate the entry; or
(2) to reconstruct the entry if it cannot be located.
(c) Treatment of Certain Entries of Buffalo Leather.--
Notwithstanding section 514 of the Tariff Act of 1930 or any
other provision of law, buffalo leather, provided for under
subheading 4104.39.20 of the Harmonized Tariff Schedule of the
United States, that is a product of Thailand and entered into
the United States under entry numbers M42-1113868-8 and M42-
1113939-7, shall be liquidated or reliquidated, as appropriate,
as if entered on June 30, 1995.
SEC. 12104. CONFORMING AMENDMENTS.
(a) Trade Laws.--
(1) Section 1211(b) of the Omnibus Trade and
Competitiveness Act of 1988 (19 U.S.C. 3011(b)) is amended--
(A) in paragraph (1), by striking ``(19 U.S.C.
2463(a), 2464(c)(3))'' and inserting ``(as in effect on
the day before the date of the enactment of the GSP
Renewal Act of 1995)''; and
(B) in paragraph (2), by striking ``(19 U.S.C.
2464(c)(1))'' and inserting the following: ``(as in
effect on the day before the date of the enactment of
the GSP Renewal Act of 1995)''.
(2) Section 203(c)(7) of the Andean Trade Preference Act
(19 U.S.C. 3202(c)(7)) is amended by striking ``502(a)(4)'' and
inserting ``506(4)''.
(3) Section 212(b)(7) of the Caribbean Basin Economic
Recovery Act (19 U.S.C. 2702(b)(7)) is amended by striking
``502(a)(4)'' and inserting ``506(4)''.
(4) General note 3(a)(iv)(C) of the Harmonized Tariff
Schedule of the United States is amended by striking ``sections
503(b) and 504(c)'' and inserting ``subsections (a), (c), and
(d) of section 503''.
(b) Other Laws.--
(1) Section 871(f)(2)(B) of the Internal Revenue Code of
1986 is amended by striking ``within the meaning of section
502'' and inserting ``under title V''.
(2) Section 2202(8) of the Export Enhancement Act of 1988
(15 U.S.C. 4711(8)) is amended by striking ``502(a)(4)'' and
inserting ``506(4)''.
(3) Section 231A(a) of the Foreign Assistance Act of 1961
(22 U.S.C. 2191a(a)) is amended--
(A) in paragraph (1) by striking ``502(a)(4) of the
Trade Act of 1974 (19 U.S.C. 2462(a)(4))'' and
inserting ``506(4) of the Trade Act of 1974'';
(B) in paragraph (2) by striking ``505(c) of the
Trade Act of 1974 (19 U.S.C. 2465(c))'' and inserting
``504(b) of the Trade Act of 1974''; and
(C) in paragraph (4) by striking ``502(a)(4)'' and
inserting ``506(4)''.
Subtitle C--Trade Adjustment Assistance
SEC. 12201. MODIFICATION OF TRADE ADJUSTMENT ASSISTANCE.
(a) Requirement of Training.--(1) Section 231(c) of the Trade Act
of 1974 (19 U.S.C. 2291) is amended--
(A) in paragraph (1)(A) and (B) by striking ``it is not
feasible or appropriate to approve a training program'' and
inserting ``a training program is not available''; and
(B) in paragraph (2)(A) and (B) by striking ``it is
feasible or appropriate to approve a training program'' and
inserting ``a training program is available''.
(2) Section 233(b) of such Act (19 U.S.C. 2293(b)) is repealed.
(3) Paragraph (3) of section 250(d) of the Trade Act of 1974 (19
U.S.C. 2331(d)) is amended--
(A) by striking ``it is not feasible or appropriate to
approve a training program'' in subparagraph (A) and inserting
``a training program is not available'', and
(B) by striking ``notwithstanding the provisions of section
233(b),'' in subparagraph (B).
(b) Termination of Relocation Allowances.--(1) Section 238 of the
Trade Act of 1974 (19 U.S.C. 2298), and the item relating to that
section in the table of contents for that Act, are repealed.
(2) Section 250(d) of the Trade Act of 1974 (19 U.S.C. 2331(d)) is
amended by striking paragraph (5).
(c) Termination of Program.--Section 285(c) of the Trade Act of
1974 (19 U.S.C. 2271 preceding note) is amended--
(1) in paragraph (1), by striking ``1998'' and inserting
``2000''; and
(2) by amending paragraph (2) to read as follows:
``(2) No assistance, vouchers, allowances, or other payments may be
provided under subchapter D of chapter 2 after September 30, 1998.''.
(d) Extension of Authorization.--(1) Section 245(a) of the Trade
Act of 1974 (19 U.S.C. 2317(a)) is amended by striking ``and 1998'' and
inserting ``1998, 1999, and 2000''.
(2) Section 256(b) of the Trade Act of 1974 (19 U.S.C. 2346(a)) is
amended by striking ``and 1998'' and inserting ``1998, 1999, and
2000''.
(e) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall take effect on the date
of the enactment of this Act.
(2) Subsections (a) and (b).--The amendments made by
subsections (a) and (b) shall take effect on October 1, 1996.
TITLE XIII--COMMITTEE ON WAYS AND MEANS--REVENUE RECONCILIATION
SEC. 13001. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) Short Title.--This title may be cited as the ``Revenue
Reconciliation Act of 1995''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this title an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents for this title is as
follows:
TITLE XIII--COMMITTEE ON WAYS AND MEANS--REVENUE RECONCILIATION
Sec. 13001. Short title; amendment of 1986 Code.
Subtitle A--Extension of Expiring Provisions, Etc.
Part I--Extensions Through December 31, 1997
Sec. 13101. Work opportunity tax credit.
Sec. 13102. Employer-provided educational assistance programs.
Sec. 13103. Research credit.
Sec. 13104. Contributions of stock to private foundations.
Sec. 13105. Credit for clinical testing expenses.
Part II--Permanent Extension of FUTA Exemption for Alien Agricultural
Workers
Sec. 13106. FUTA exemption for alien agricultural workers.
Part III--Commercial Aviation Fuel
Sec. 13111. Delay of scheduled increase in tax on fuel used in
commercial aviation.
Part IV--Extension of Airport and Airway Trust Fund Excise Taxes
Sec. 13116. Extension of Airport and Airway Trust Fund excise taxes.
Subtitle B--Medical Savings Accounts
Sec. 13201. Medical savings accounts.
Subtitle C--Pickle-Johnson Taxpayer Bill of Rights 2
Part I--Taxpayer Advocate
Sec. 13301. Establishment of position of taxpayer advocate within
Internal Revenue Service.
Sec. 13302. Expansion of authority to issue taxpayer assistance orders.
Part II--Modifications to Installment Agreement Provisions
Sec. 13306. Notification of reasons for termination of installment
agreements.
Sec. 13307. Administrative review of termination of installment
agreement.
Part III--Abatement of Interest and Penalties
Sec. 13311. Expansion of authority to abate interest.
Sec. 13312. Review of IRS failure to abate interest.
Sec. 13313. Extension of interest-free period for payment of tax after
notice and demand.
Part IV--Joint Returns
Sec. 13316. Studies of joint return-related issues.
Sec. 13317. Joint return may be made after separate returns without
full payment of tax.
Sec. 13318. Disclosure of collection activities.
Part V--Collection Activities
Sec. 13321. Modifications to lien and levy provisions.
Sec. 13322. Offers-in-compromise.
Part VI--Information Returns
Sec. 13326. Civil damages for fraudulent filing of information returns.
Sec. 13327. Requirement to conduct reasonable investigations of
information returns.
Part VII--Awarding of Costs and Certain Fees
Sec. 13331. United States must establish that its position in
proceeding was substantially justified.
Sec. 13332. Increased limit on attorney fees.
Sec. 13333. Failure to agree to extension not taken into account.
Sec. 13334. Award of litigation costs permitted in declaratory judgment
proceedings.
Sec. 13335. Effective date.
Part VIII--Modification to Recovery of Civil Damages for Unauthorized
Collection Actions
Sec. 13336. Increase in limit on recovery of civil damages for
unauthorized collection actions.
Sec. 13337. Court discretion to reduce award for litigation costs for
failure to exhaust administrative remedies.
Part IX--Modifications to Penalty for Failure to Collect and Pay Over
Tax
Sec. 13341. Preliminary notice requirement.
Sec. 13342. Disclosure of certain information where more than 1 person
liable for penalty for failure to collect
and pay over tax.
Sec. 13343. Right of contribution where more than 1 person liable for
penalty for failure to collect and pay over
tax.
Sec. 13344. Volunteer board members of tax-exempt organizations exempt
from penalty for failure to collect and pay
over tax.
Part X--Modifications of Rules Relating to Summonses
Sec. 13346. Enrolled agents included as third-party recordkeepers.
Sec. 13347. Safeguards relating to designated summonses.
Sec. 13348. Annual report to Congress concerning designated summonses.
Part XI--Relief From Retroactive Application of Treasury Department
Regulations
Sec. 13351. Relief from retroactive application of Treasury Department
regulations.
Part XII--Miscellaneous Provisions
Sec. 13356. Report on pilot program for appeal of enforcement actions.
Sec. 13357. Phone number of person providing payee Statements required
to be shown on such Statement.
Sec. 13358. Required notice of certain payments.
Sec. 13359. Unauthorized enticement of information disclosure.
Sec. 13360. Annual reminders to taxpayers with outstanding delinquent
accounts.
Sec. 13361. 5-year extension of authority for undercover operations.
Sec. 13362. Disclosure of form 8300 information on cash transactions.
Sec. 13363. Disclosure of returns and return information to designee of
taxpayer.
Sec. 13364. Study of netting of interest on overpayments and
liabilities.
Sec. 13365. Credit for expenses of certain TCMP audits.
Sec. 13366. Expenses of detection of underpayments and fraud, etc.
Subtitle D--Additional Technical Corrections
Sec. 13401. Reporting of real estate transactions.
Sec. 13402. Clarification of denial of deduction for stock redemption
expenses.
Sec. 13403. Clarification of depreciation class for certain energy
property.
Sec. 13404. Clerical amendment to section 404.
Sec. 13405. Treatment of certain veterans' reemployment rights.
Subtitle E--Tax Information Sharing
Sec. 13501. Disclosure of return information for administration of
certain veterans programs.
Subtitle F--Revenue Increases
Part I--Provisions Relating to Businesses
Sec. 13601. Tax treatment of certain extraordinary dividends.
Sec. 13602. Registration of confidential corporate tax shelters.
Sec. 13603. Denial of deduction for interest on loans with respect to
company-owned insurance.
Sec. 13604. Termination of suspense accounts for family corporations
required to use accrual method of
accounting.
Sec. 13605. Termination of Puerto Rico and possession tax credit.
Sec. 13606. Depreciation under income forecast method.
Sec. 13607. Transfers of excess pension assets.
Part II--Legal Reforms
Sec. 13611. Repeal of exclusion for punitive damages and for damages
not attributable to physical injuries or
sickness.
Sec. 13612. Reporting of certain payments made to attorneys.
Part III--Treatment of Individuals Who Lose United States Citizenship
Sec. 13616. Revision of income, estate, and gift taxes on individuals
who lose United States citizenship.
Sec. 13617. Information on individuals losing United States
citizenship.
Sec. 13618. Report on tax compliance by United States citizens and
residents living abroad.
Part IV--Reforms Relating to Energy Provisions
Sec. 13621. Termination of credit for electricity produced from certain
renewable resources.
Sec. 13622. Exclusion for energy conservation subsidies limited to
subsidies with respect to dwelling units.
Part V--Reforms Relating to Nonrecognition Provisions
Sec. 13626. Basis adjustment to property held by corporation where
stock in corporation is replacement
property under involuntary conversion
rules.
Sec. 13627. Expansion of requirement that involuntarily converted
property be replaced with property acquired
from an unrelated person.
Sec. 13628. No rollover or exclusion of gain on sale of principal
residence which is attributable to
depreciation deductions.
Sec. 13629. Nonrecognition of gain on sale of principal residence by
noncitizens limited to new residences
located in the United States.
Part VI--Reforms Relating to Gaming Activities
Sec. 13631. Treatment of Indian gaming activities under unrelated
business income tax.
Sec. 13632. Repeal of targeted exemption from tax on unrelated trade or
business income from gambling in certain
States.
Sec. 13633. Extension of withholding to certain gambling winnings.
Part VII--Other Reforms
Sec. 13636. Sunset of low-income housing credit.
Sec. 13637. Repeal of credit for contributions to community development
corporations.
Sec. 13638. Repeal of diesel fuel tax rebate to purchasers of diesel-
powered automobiles and light trucks.
Sec. 13639. Application of failure-to-pay penalty to substitute
returns.
Sec. 13640. Repeal of special rule for rental use of vacation homes,
etc., for less than 15 days.
Sec. 13641. Election to cease status as qualified scholarship funding
corporation.
Sec. 13642. Certain amounts derived from foreign corporations treated
as unrelated business taxable income.
Part VIII--Excise Tax on Amounts of Private Excess Benefits
Sec. 13646. Excise taxes for failure by certain charitable
organizations to meet certain qualification
requirements.
Sec. 13647. Reporting of certain excise taxes and other information.
Sec. 13648. Exempt organizations required to provide copy of return.
Sec. 13649. Certain organizations required to disclose nonexempt
status.
Sec. 13650. Increase in penalties on exempt organizations for failure
to file complete and timely annual returns.
Sec. 13651. Studies.
Subtitle G--Reform of the Earned Income Tax Credit
Sec. 13701. Repeal of earned income credit for individuals without
qualifying children; modifications to
credit phaseout.
Sec. 13702. Modification of adjusted gross income used for phaseout.
Sec. 13703. Earned income tax credit denied to individuals not
authorized to be employed in the United
States.
Subtitle H--Increase in Public Debt Limit
Sec. 13801. Increase in public debt limit.
Subtitle I--Coal Industry Retiree Health Equity
Sec. 13901. Repeal of reachback provisions of coal industry health
benefit system.
Subtitle A--Extension of Expiring Provisions, Etc.
PART I--EXTENSIONS THROUGH DECEMBER 31, 1997
SEC. 13101. WORK OPPORTUNITY TAX CREDIT.
(a) Amount of Credit.--Subsection (a) of section 51 is amended by
striking ``40 percent'' and inserting ``35 percent''.
(b) Members of Targeted Groups.--Subsection (d) of section 51 is
amended to read as follows:
``(d) Members of Targeted Groups.--For purposes of this subpart--
``(1) In general.--An individual is a member of a targeted
group if such individual is--
``(A) a qualified AFDC recipient,
``(B) a qualified ex-felon,
``(C) a high-risk youth,
``(D) a vocational rehabilitation referral, or
``(E) a qualified summer youth employee.
``(2) Qualified afdc recipient.--
``(A) In general.--The term `qualified AFDC
recipient' means any individual who is certified by the
designated local agency as being a member of a family
receiving assistance under an AFDC program for at least
a 9-month period ending during the 9-month period
ending on the hiring date.
``(B) AFDC program.--For purposes of this
paragraph, the term `AFDC program' means any program
providing aid under a State plan approved under part A
of title IV of the Social Security Act (relating to aid
to families with dependent children) and any successor
of such program.
``(C) Special rules for veterans.--In the case of a
veteran, subparagraph (A) shall be applied by
substituting `12-month' for `9-month' the second place
it appears.
``(D) Veteran.--For purposes of subparagraph (C),
the term `veteran' means any individual who is
certified by the designated local agency as--
``(i)(I) having served on active duty
(other than active duty for training) in the
Armed Forces of the United States for a period
of more than 180 days, or
``(II) having been discharged or released
from active duty in the Armed Forces of the
United States for a service-connected
disability, and
``(ii) not having any day during the 60-day
period ending on the hiring date which was a
day of extended active duty in the Armed Forces
of the United States.
For purposes of clause (ii), the term `extended active
duty' means a period of more than 90 days during which
the individual was on active duty (other than active
duty for training).
``(3) Qualified ex-felon.--The term `qualified ex-felon'
means any individual who is certified by the designated local
agency--
``(A) as having been convicted of a felony under
any statute of the United States or any State,
``(B) as having a hiring date which is not more
than 1 year after the last date on which such
individual was so convicted or was released from
prison, and
``(C) as being a member of a family which had an
income during the 6 months immediately preceding the
earlier of the month in which such income determination
occurs or the month in which the hiring date occurs,
which, on an annual basis, would be 70 percent or less
of the Bureau of Labor Statistics lower living
standard.
Any determination under subparagraph (C) shall be valid for the
45-day period beginning on the date such determination is made.
``(4) High-risk youth.--
``(A) In general.--The term `high-risk youth' means
any individual who is certified by the designated local
agency--
``(i) as having attained age 18 but not age
25 on the hiring date, and
``(ii) as having his principal place of
abode within an empowerment zone or enterprise
community.
``(B) Youth must continue to reside in zone.--In
the case of a high-risk youth, the term `qualified
wages' shall not include wages paid or incurred for
services performed while such youth's principal place
of abode is outside an empowerment zone or enterprise
community.
``(5) Vocational rehabilitation referral.--The term
`vocational rehabilitation referral' means any individual who
is certified by the designated local agency as--
``(A) having a physical or mental disability which,
for such individual, constitutes or results in a
substantial handicap to employment, and
``(B) having been referred to the employer upon
completion of (or while receiving) rehabilitative
services pursuant to--
``(i) an individualized written
rehabilitation plan under a State plan for
vocational rehabilitation services approved
under the Rehabilitation Act of 1973, or
``(ii) a program of vocational
rehabilitation carried out under chapter 31 of
title 38, United States Code.
``(6) Qualified summer youth employee.--
``(A) In general.--The term `qualified summer youth
employee' means any individual--
``(i) who performs services for the
employer between May 1 and September 15,
``(ii) who is certified by the designated
local agency as having attained age 16 but not
18 on the hiring date (or if later, on May 1 of
the calendar year involved),
``(iii) who has not been an employee of the
employer during any period prior to the 90-day
period described in subparagraph (B)(i), and
``(iv) who is certified by the designated
local agency as having his principal place of
abode within an empowerment zone or enterprise
community.
``(B) Special rules for determining amount of
credit.--For purposes of applying this subpart to wages
paid or incurred to any qualified summer youth
employee--
``(i) subsection (b)(2) shall be applied by
substituting `any 90-day period between May 1
and September 15' for `the 1-year period
beginning with the day the individual begins
work for the employer', and
``(ii) subsection (b)(3) shall be applied
by substituting `$3,000' for `$6,000'.
The preceding sentence shall not apply to an individual
who, with respect to the same employer, is certified as
a member of another targeted group after such
individual has been a qualified summer youth employee.
``(C) Youth must continue to reside in zone.--
Paragraph (4)(B) shall apply for purposes of this
paragraph.
``(7) Hiring date.--The term `hiring date' means the day
the individual is hired by the employer.
``(8) Designated local agency.--The term `designated local
agency' means a State employment security agency established in
accordance with the Act of June 6, 1933, as amended (29 U.S.C.
49-49n).
``(9) Special rules for certifications.--
``(A) In general.--An individual shall not be
treated as a member of a targeted group unless--
``(i) on or before the day on which such
individual begins work for the employer, the
employer has received a certification from a
designated local agency that such individual is
a member of a targeted group, or
``(ii)(I) on or before the day the
individual is offered employment with the
employer, a pre-screening notice is completed
with respect to such individual, and
``(II) not later than the 14th day after
the individual begins work for the employer,
the employer submits such notice to the
designated local agency as part of a written
request for such a certification from such
agency.
For purposes of this paragraph, the term `pre-screening
notice' means a document (in such form as the Secretary
shall prescribe) which is signed by the employer and
the individual under penalties of perjury and which
contains information provided by the individual on the
basis of which the employer believes that the
individual is a member of a targeted group.
``(B) Incorrect certifications.--If--
``(i) an individual has been certified by a
designated local agency as a member of a
targeted group, and
``(ii) such certification is incorrect
because it was based on false information
provided by such individual,
the certification shall be revoked and wages paid by
the employer after the date on which notice of
revocation is received by the employer shall not be
treated as qualified wages.
``(C) Explanation of denial of request.--If a
designated local agency denies a request for
certification of membership in a targeted group, such
agency shall provide to the person making such request
a written explanation of the reasons for such denial.''
(c) Minimum Employment Period.--Paragraph (3) of section 51(i) is
amended to read as follows:
``(3) Individuals not meeting minimum employment period.--
No wages shall be taken into account under subsection (a) with
respect to any individual unless such individual either--
``(A) is employed by the employer at least 180 days
(20 days in the case of a qualified summer youth
employee), or
``(B) has completed at least 500 hours (120 hours
in the case of a qualified summer youth employee) of
services performed for the employer.''
(d) Definition of Wages.--Subsection (c) of section 51 is amended
by striking paragraph (3).
(e) Termination.--Paragraph (4) of section 51(c) is amended to read
as follows:
``(3) Termination.--The term `wages' shall not include any
amount paid or incurred to an individual who begins work for
the employer--
``(A) after December 31, 1994, and before January
1, 1996, or
``(B) after December 31, 1997.''
(f) Redesignation of Credit.--
(1) Sections 38(b)(2) and 51(a) are each amended by
striking ``targeted jobs credit'' and inserting ``work
opportunity credit''.
(2) The subpart heading for subpart F of part IV of
subchapter A of chapter 1 is amended by striking ``Targeted
Jobs Credit'' and inserting ``Work Opportunity Credit''.
(3) The table of subparts for such part IV is amended by
striking ``targeted jobs credit'' and inserting ``work
opportunity credit''.
(g) Business Awareness Program.--The Secretary of Labor shall
implement a program to encourage small businesses to use the services
of local agencies to identify individuals who qualify to be certified
as members of targeted groups (as defined in section 51 of the Internal
Revenue Code of 1986, as amended by this section). Such Secretary, and
the heads of other Federal agencies, shall make every effort to
encourage small businesses to benefit from the credit allowable under
such section by simplifying procedures to the extent possible.
(h) Technical Amendments.--
(1) Paragraph (1) of section 51(c) is amended by striking
``, subsection (d)(8)(D),''.
(2) Paragraph (3) of section 51(i) is amended by striking
``(d)(12)'' each place it appears and inserting ``(d)(6)''.
(i) Effective Date.--The amendments made by this section shall
apply to individuals who begin work for the employer after December 31,
1995.
SEC. 13102. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE PROGRAMS.
(a) Extension.--Subsection (d) of section 127 (relating to
educational assistance programs) is amended by striking ``December 31,
1994'' and inserting ``December 31, 1997''.
(b) Limitation to Education Below Graduate Level.--The last
sentence of section 127(c)(1) is amended by inserting before the period
``or at the graduate level''.
(c) Effective Dates.--
(1) Extension.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 1994.
(2) Limitation.--The amendment made by subsection (b) shall
apply to taxable years beginning after December 31, 1995.
SEC. 13103. RESEARCH CREDIT.
(a) In General.--Subsection (h) of section 41 (relating to credit
for research activities) is amended--
(1) by striking ``June 30, 1995'' each place it appears and
inserting ``December 31, 1997'', and
(2) by striking ``July 1, 1995'' each place it appears and
inserting ``January 1, 1998''.
(b) Base Amount for Start-up Companies.--Clause (i) of section
41(c)(3)(B) (relating to start-up companies) is amended to read as
follows:
``(i) Taxpayers to which subparagraph
applies.--The fixed-base percentage shall be
determined under this subparagraph if--
``(I) the first taxable year in
which a taxpayer had both gross
receipts and qualified research
expenses begins after December 31,
1983, or
``(II) there are fewer than 3
taxable years beginning after December
31, 1983, and before January 1, 1989,
in which the taxpayer had both gross
receipts and qualified research
expenses.''
(c) Election of Alternative Incremental Credit.--Subsection (c) of
section 41 is amended by redesignating paragraphs (4) and (5) as
paragraphs (5) and (6), respectively, and by inserting after paragraph
(3) the following new paragraph:
``(4) Election of alternative incremental credit.--
``(A) In general.--At the election of the taxpayer,
the credit determined under subsection (a)(1) shall be
equal to the sum of--
``(i) 1.65 percent of so much of the
qualified research expenses for the taxable
year as exceeds 1 percent of the average
described in subsection (c)(1)(B) but does not
exceed 1.5 percent of such average,
``(ii) 2.2 percent of so much of such
expenses as exceeds 1.5 percent of such average
but does not exceed 2 percent of such average,
and
``(iii) 2.75 percent of so much of such
expenses as exceeds 2 percent of such average.
``(B) Election.--An election under this paragraph
may be made only for the first taxable year of the
taxpayer beginning after June 30, 1995. Such an
election shall apply to the taxable year for which made
and all succeeding taxable years unless revoked with
the consent of the Secretary.''
(d) Increased Credit for Contract Research Expenses With Respect to
Certain Research Consortia.--Paragraph (3) of section 41(b) is amended
by adding at the end the following new subparagraph:
``(C) Amounts paid to certain research consortia.--
``(i) In general.--Subparagraph (A) shall
be applied by substituting `75 percent' for `65
percent' with respect to amounts paid or
incurred by the taxpayer to a qualified
research consortium for qualified research.
``(ii) Qualified research consortium.--The
term `qualified research consortium' means any
organization described in subsection (e)(6)(B)
if--
``(I) at least 15 unrelated
taxpayers paid (during the calendar
year in which the taxable year of the
taxpayer begins) amounts to such
organization for qualified research,
``(II) no 3 persons paid during
such calendar year more than 50 percent
of the total amounts paid during such
calendar year for qualified research,
and
``(III) no person contributed more
than 20 percent of such total amounts.
For purposes of subclause (I), all persons
treated as a single employer under subsection
(a) or (b) of section 52 shall be treated as
related taxpayers.''
(e) Conforming Amendment.--Subparagraph (D) of section 28(b)(1) is
amended by striking ``June 30, 1995'' and inserting ``December 31,
1997''.
(f) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
ending after June 30, 1995.
(2) Subsections (c) and (d).--The amendments made by
subsections (c) and (d) shall apply to taxable years beginning
after June 30, 1995.
SEC. 13104. CONTRIBUTIONS OF STOCK TO PRIVATE FOUNDATIONS.
(a) In General.--Subparagraph (D) of section 170(e)(5) is amended
by striking ``December 31, 1994'' and inserting ``December 31, 1997''.
(b) Effective Date.--The amendment made by this section shall apply
to contributions made after December 31, 1994.
SEC. 13105. CREDIT FOR CLINICAL TESTING EXPENSES.
(a) In General.--Subsection (e) of section 28 is amended by
striking ``December 31, 1994'' and inserting ``December 31, 1997''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years ending after December 31, 1994.
PART II--PERMANENT EXTENSION OF FUTA EXEMPTION FOR ALIEN AGRICULTURAL
WORKERS
SEC. 13106. FUTA EXEMPTION FOR ALIEN AGRICULTURAL WORKERS.
(a) In General.--Subparagraph (B) of section 3306(c)(1) (defining
employment) is amended by striking ``before January 1, 1995,''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to services performed after December 31, 1994.
PART III--COMMERCIAL AVIATION FUEL
SEC. 13111. DELAY OF SCHEDULED INCREASE IN TAX ON FUEL USED IN
COMMERCIAL AVIATION.
(a) 2-Year Delay.--Sections 4092(b)(2), 6421(f)(2)(B), and
6427(l)(4)(B) are each amended by striking ``September 30, 1995'' and
inserting ``September 30, 1997''.
(b) Conforming Amendment.--Section 13245 of the Omnibus Budget
Reconciliation Act of 1993 is hereby repealed.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
take effect on September 30, 1995.
(2) Cross reference.--
For refund of tax paid on commercial
aviation fuel before the date of the enactment of this Act, see section
6427(l) of the Internal Revenue Code of 1986.
(d) Floor Stocks Tax.--
(1) Imposition of tax.--In the case of commercial aviation
fuel which is held by any person on October 1, 1997, there is
hereby imposed a floor stocks tax equal to 4.3 cents per
gallon.
(2) Liability for tax and method of payment.--
(A) Liability for tax.--A person holding aviation
fuel on October 1, 1997, to which the tax imposed by
paragraph (1) applies shall be liable for such tax.
(B) Method of payment.--The tax imposed by
paragraph (1) shall be paid in such manner as the
Secretary shall prescribe.
(C) Time for payment.--The tax imposed by paragraph
(1) shall be paid on or before April 30, 1998.
(3) Definitions.--For purposes of this subsection--
(A) 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).
(B) 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, 1997, for sale or use in commercial aviation
(as defined in section 4092(b) of such Code).
(C) Secretary.--The term ``Secretary'' means the
Secretary of the Treasury or his delegate.
(4) Exception for exempt uses.--The tax imposed by
paragraph (1) 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 (other than
the rate imposed by section 4091(b)(2) of such Code) is
allowable for aviation fuel so used.
(5) Exception for certain amounts of fuel.--
(A) In general.--No tax shall be imposed by
paragraph (1) on aviation fuel held on October 1, 1997,
by any person if the aggregate amount 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 Secretary (at
the time and in the manner required by the Secretary)
such information as the Secretary 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).
(C) Controlled groups.--For purposes of this
paragraph--
(i) 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 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
Secretary, 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.
(6) Other laws applicable.--All provisions of law,
including penalties, applicable with respect to the taxes
imposed by section 4091 of such Code shall, insofar as
applicable and not inconsistent with the provisions of this
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 4091.
(f) Study.--The Secretary of the Treasury or his delegate shall, in
consultation with the Secretary of Transportation, conduct a study of
the Federal excise tax burdens on each of the various modes of
transportation and the benefits provided to each such mode from
revenues derived from such excise taxes. The results of such study
shall be submitted not later than June 30, 1996, to the Committee on
Ways and Means of the House of Representatives and the Committee on
Finance of the Senate.
PART IV--EXTENSION OF AIRPORT AND AIRWAY TRUST FUND EXCISE TAXES
SEC. 13116. EXTENSION OF AIRPORT AND AIRWAY TRUST FUND EXCISE TAXES.
(a) Fuel Tax.--
(1) Subparagraph (A) of section 4091(b)(3) is amended by
striking ``January 1, 1996'' and inserting ``October 1, 1996''.
(2) Paragraph (2) of section 4081(d), as amended by section
14721 of this Act, is amended by striking ``January 1, 1996''
and inserting ``October 1, 1996''.
(b) Ticket Taxes.--Sections 4261(g) and 4271(d) are each amended by
striking ``January 1, 1996'' and inserting ``October 1, 1996''.
(c) Transfer to Airport and Airway Trust Fund.--
(1) Subsection (b) of section 9502 is amended by striking
``January 1, 1996'' each place it appears and inserting
``October 1, 1996''.
(2) Paragraph (3) of section 9502(f) is amended by striking
``December 31, 1995'' and inserting ``September 30, 1996''.
Subtitle B--Medical Savings Accounts
SEC. 13201. MEDICAL SAVINGS ACCOUNTS.
(a) In General.--Part VII of subchapter B of chapter 1 (relating to
additional itemized deductions for individuals) is amended by
redesignating section 220 as section 221 and by inserting after section
219 the following new section:
``SEC. 220. MEDICAL SAVINGS ACCOUNTS.
``(a) Deduction Allowed.--In the case of an individual who is an
eligible individual for any month during the taxable year, there shall
be allowed as a deduction for the taxable year an amount equal to the
aggregate amount paid in cash during such taxable year by such
individual to a medical savings account of such individual.
``(b) Limitations.--
``(1) In general.--Except as otherwise provided in this
subsection, the amount allowable as a deduction under
subsection (a) to an individual for the taxable year shall not
exceed the lesser of--
``(A) $2,500, or
``(B) the deductible under the catastrophic health
plan covering such individual.
If the catastrophic health plan covering such individual
provides coverage for any other eligible individual who is the
spouse or any dependent (as defined in section 152) of the
taxpayer, subparagraph (A) shall be applied by substituting
`$5,000' for `$2,500'. The preceding sentence shall not apply
if the spouse or any dependent (as so defined) of such
individual is covered under any other catastrophic health plan.
``(2) Special rule for married individuals.--
``(A) In general.--This subsection shall be applied
separately for each married individual.
``(B) Special rule.--If individuals who are married
to each other are covered under the same catastrophic
health plan, then the amounts applicable under
subparagraphs (A) and (B) of paragraph (1) shall be
divided equally between them unless they agree on a
different division.
``(3) Coordination with exclusion for employer
contributions.--No deduction shall be allowed under this
section for any amount paid for any taxable year to a medical
savings account of an individual if--
``(A) any amount is paid to any medical savings
account of such individual which is excludable from
gross income under section 106(b) for such year, or
``(B) in a case described in paragraph (2), any
amount is paid to any medical savings account of either
spouse which is so excludable for such year.
``(4) Proration of limitation.--
``(A) In general.--The limitation under paragraph
(1) shall be the sum of the monthly limitations for
months during the taxable year that the individual is
an eligible individual if--
``(i) such individual is not an eligible
individual for all months of the taxable year,
``(ii) the deductible under the
catastrophic health plan covering such
individual is not the same throughout such
taxable year, or
``(iii) such limitation is determined using
the next to the last sentence of paragraph (1)
for some but not all months during such taxable
year.
``(B) Monthly limitation.--The monthly limitation
for any month shall be an amount equal to \1/12\ of the
limitation which would (but for this paragraph and
paragraph (3)) be determined under paragraph (1) if the
facts and circumstances as of the first day of such
month that such individual is covered under a
catastrophic health plan were true for the entire
taxable year.
``(5) Denial of deduction to dependents.--No deduction
shall be allowed under this section to any individual with
respect to whom a deduction under section 151 is allowable to
another taxpayer for a taxable year beginning in the calendar
year in which such individual's taxable year begins.
``(c) Definitions.--For purposes of this section--
``(1) Eligible individual.--
``(A) In general.--The term `eligible individual'
means, with respect to any month, any individual--
``(i) who is covered under a catastrophic
health plan at any time during such month, and
``(ii) who is not, while covered under a
catastrophic health plan, covered under any
health plan--
``(I) which is not a catastrophic
health plan, and
``(II) which provides coverage for
any benefit which is covered under the
catastrophic health plan.
``(B) Certain coverage disregarded.--Subparagraph
(A)(ii) shall be applied without regard to--
``(i) coverage for any benefit provided by
permitted insurance, and
``(ii) coverage (whether through insurance
or otherwise) for accidents, dental care,
vision care, or long-term care.
``(2) Catastrophic health plan.--The term `catastrophic
health plan' means any health plan which provides no
compensation for an individual's expenses covered by the plan
for any calendar year to the extent such expenses for such
calendar year do not exceed $1,500 ($3,000 if the catastrophic
health plan covering the taxpayer provides coverage for more
than 1 individual) or such higher amounts as may be specified
by the plan.
``(3) Permitted insurance.--The term `permitted insurance'
means--
``(A) Medicare supplemental insurance,
``(B) insurance if substantially all of the
coverage provided under such insurance relates to--
``(i) liabilities incurred under workers'
compensation laws,
``(ii) tort liabilities,
``(iii) liabilities relating to ownership
or use of property,
``(iv) credit insurance, or
``(v) such other similar liabilities as the
Secretary may specify by regulations,
``(C) insurance for a specified disease or illness,
and
``(D) insurance paying a fixed amount per day (or
other period) of hospitalization.
``(d) Medical Savings Account.--For purposes of this section--
``(1) Medical savings account.--The term `medical savings
account' means a trust created or organized in the United
States exclusively for the purpose of paying the qualified
medical expenses of the account holder, but only if the written
governing instrument creating the trust meets the following
requirements:
``(A) Except in the case of a rollover contribution
described in subsection (f)(4), no contribution will be
accepted unless it is in cash.
``(B) The trustee is a bank (as defined in section
408(n)), an insurance company (as defined in section
816), or another person who demonstrates to the
satisfaction of the Secretary that the manner in which
such person will administer the trust will be
consistent with the requirements of this section.
``(C) No part of the trust assets will be invested
in life insurance contracts.
``(D) The assets of the trust will not be
commingled with other property except in a common trust
fund or common investment fund.
``(E) The interest of an individual in the balance
in his account is nonforfeitable.
``(2) Qualified medical expenses.--
``(A) In general.--The term `qualified medical
expenses' means, with respect to an account holder,
amounts paid by such holder--
``(i) for medical care (as defined in
section 213(d)) for such individual, the spouse
of such individual, and any dependent (as
defined in section 152) of such individual, but
only to the extent such amounts are not
compensated for by insurance or otherwise, or
``(ii) for long-term care insurance for
such individual, spouse, or dependent.
``(B) Health insurance may not be purchased from
account.--Subparagraph (A)(i) shall not apply to any
payment for insurance.
``(3) Account holder.--The term `account holder' means the
individual on whose behalf the medical savings account was
established.
``(4) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
``(A) Section 219(d)(2) (relating to no deduction
for rollovers).
``(B) Section 219(f)(3) (relating to time when
contributions deemed made).
``(C) Except as provided in section 106(b), section
219(f)(5) (relating to employer payments).
``(D) Section 408(g) (relating to community
property laws).
``(E) Section 408(h) (relating to custodial
accounts).
``(e) Tax Treatment of Accounts.--
``(1) Account taxed as grantor trust.--
``(A) In general.--Except as provided in
subparagraph (B), the account holder of a medical
savings account shall be treated for purposes of this
title as the owner of such account and shall be subject
to tax thereon in accordance with subpart E of part I
of subchapter J of this chapter (relating to grantors
and others treated as substantial owners).
``(B) Treatment of capital losses.--With respect to
assets held in a medical savings account, any capital
loss for a taxable year from the sale or exchange of
such an asset shall be allowed only to the extent of
capital gains from such assets for such taxable year.
Any capital loss which is disallowed under the
preceding sentence shall be treated as a capital loss
from the sale or exchange of such an asset in the next
taxable year. For purposes of this subparagraph, all
medical savings accounts of the account holder shall be
treated as 1 account.
``(2) Account assets treated as distributed in the case of
prohibited transactions or account pledged as security for
loan.--Rules similar to the rules of paragraphs (2) and (4) of
section 408(e) shall apply to medical savings accounts, and any
amount treated as distributed under such rules shall be treated
as not used to pay qualified medical expenses.
``(3) Treatment of account after death of account holder.--
``(A) In general.--A trust shall not constitute a
medical savings account unless the written governing
instrument provides that, if the account holder dies
while there is a balance in the account, the entire
balance of the account holder will be distributed
within 5 years after the death of the account holder.
``(B) Exception where spouse becomes account
holder.--Subparagraph (A) shall not apply if the
account is payable to (or for the benefit of) the
surviving spouse of the decedent.
``(f) Tax Treatment of Distributions.--
``(1) Inclusion of amounts not used for qualified medical
expenses.--
``(A) In general.--No amount shall be included in
the gross income of the account holder by reason of a
payment or distribution from a medical savings account
which is used exclusively to pay the qualified medical
expenses of the account holder. Any amount paid or
distributed from a medical savings account which is not
so used shall be included in the gross income of such
holder to the extent such amount does not exceed the
excess of--
``(i) the aggregate contributions to such
account which were allowed as a deduction under
this section or which were excluded under
section 106(b), over
``(ii) the aggregate prior payments or
distributions from such account which were
includible in gross income under this
paragraph.
``(B) Special rules.--For purposes of subparagraph
(A)--
``(i) all medical savings accounts of the
account holder shall be treated as 1 account,
``(ii) all payments and distributions
during any taxable year shall be treated as 1
distribution, and
``(iii) any distribution of property shall
be taken into account at its fair market value
on the date of the distribution.
``(2) Penalty for distributions not used for qualified
medical expenses.--
``(A) In general.--The tax imposed by this chapter
for any taxable year in which there is a payment or
distribution from a medical savings account which is
not used exclusively to pay the qualified medical
expenses of the account holder shall be increased by 10
percent of the amount of such payment or distribution
which is includible in gross income under paragraph
(1).
``(B) Exceptions.--Subparagraph (A) shall not apply
if the payment or distribution is made on or after the
date the account holder--
``(i) attains age 59\1/2\,
``(ii) becomes disabled within the meaning
of section 72(m)(7), or
``(iii) dies.
``(3) Withdrawal of excess contributions.--Paragraph (1)
shall not apply to the distribution of any contribution paid
during a taxable year to a medical savings account if--
``(A) such distribution is received on or before
the day prescribed by law (including extensions of
time) for filing such individual's return for such
taxable year,
``(B) no deduction is allowed under this section
with respect to such contribution, and
``(C) such distribution is accompanied by the
amount of net income attributable to such contribution.
In the case of such a distribution, for purposes of section 61,
any net income described in subparagraph (C) shall be deemed to
have been earned and receivable in the taxable year in which
such contribution is made.
``(4) Rollovers.--Paragraph (1) shall not apply to any
amount paid or distributed out of a medical savings account to
the account holder if the entire amount received (including
money and any other property) is paid into another medical
savings account for the benefit of such holder not later than
the 60th day after the day on which he received the payment or
distribution.
``(5) Coordination with medical expense deduction.--For
purposes of section 213, any payment or distribution out of a
medical savings account for qualified medical expenses shall
not be treated as an expense paid for medical care to the
extent of the amount of such payment or distribution which is
excludable from gross income solely by reason of paragraph
(1)(A).
``(g) Cost-of-Living Adjustment.--
``(1) In general.--In the case of any taxable year
beginning in a calendar year after 1996, each dollar amount in
subsection (b)(1) or in subsection (c)(2) shall be increased by
an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the medical care cost adjustment for such
calendar year.
If any increase under the preceding sentence is not a multiple
of $50, such increase shall be rounded to the nearest multiple
of $50.
``(2) Medical care cost adjustment.--For purposes of
paragraph (1), the medical care cost adjustment for any
calendar year is the percentage (if any) by which--
``(A) the medical care component of the Consumer
Price Index (as defined in section 1(f)(5)) for August
of the preceding calendar year, exceeds
``(B) such component for August of 1995.
``(h) Reports.--The trustee of a medical savings account shall make
such reports regarding such account to the Secretary and to the account
holder with respect to contributions, distributions, and such other
matters as the Secretary may require under regulations. The reports
required by this subsection shall be filed at such time and in such
manner and furnished to such individuals at such time and in such
manner as may be required by those regulations.''
(b) Deduction Allowed Whether or Not Individual Itemizes Other
Deductions.--Subsection (a) of section 62 is amended by inserting after
paragraph (15) the following new paragraph:
``(16) Medical savings accounts.--The deduction allowed by
section 220.''
(c) Exclusions for Employer Contributions to Medical Savings
Accounts.--
(1) Exclusion from income tax.--The text of section 106
(relating to contributions by employer to accident and health
plans) is amended to read as follows:
``(a) General Rule.--Gross income of an employee does not include
employer-provided coverage under an accident or health plan.
``(b) Contributions to Medical Savings Accounts.--
``(1) In general.--In the case of an employee who is an
eligible individual, gross income does not include amounts
contributed by such employee's employer to any medical savings
account of such employee.
``(2) Coordination with deduction limitation.--The amount
excluded from the gross income of an employee under this
subsection for any taxable year shall not exceed the limitation
under section 220(b)(1) (determined without regard to this
subsection) which is applicable to such employee for such
taxable year.''
``(3) No constructive receipt.--No amount shall be included
in the gross income of any employee solely because the employee
may choose between the contributions referred to in paragraph
(1) and employer contributions to another health plan of the
employer.
``(4) Special rule for deduction of employer
contributions.--Any employer contribution to a medical savings
account, if otherwise allowable as a deduction under this
chapter, shall be allowed only for the taxable year in which
paid.
``(5) Definitions.--For purposes of this subsection, the
terms `eligible individual' and `medical savings account' have
the respective meanings given to such terms by section 220.''
(2) Exclusion from employment taxes.--
(A) Social security taxes.--
(i) Subsection (a) of section 3121 is
amended by striking ``or'' at the end of
paragraph (20), by striking the period at the
end of paragraph (21) and inserting ``; or'',
and by inserting after paragraph (21) the
following new paragraph:
``(22) any payment made to or for the benefit of an
employee if at the time of such payment it is reasonable to
believe that the employee will be able to exclude such payment
from income under section 106(b).''
(ii) Subsection (a) of section 209 of the
Social Security Act is amended by striking
``or'' at the end of paragraph (17), by
striking the period at the end of paragraph
(18) and inserting ``; or'', and by inserting
after paragraph (18) the following new
paragraph:
``(19) any payment made to or for the benefit of an
employee if at the time of such payment it is reasonable to
believe that the employee will be able to exclude such payment
from income under section 106(b) of the Internal Revenue Code
of 1986.''
(B) Railroad retirement tax.--Subsection (e) of
section 3231 is amended by adding at the end the
following new paragraph:
``(10) medical savings account contributions.--The term
`compensation' shall not include any payment made to or for the
benefit of an employee if at the time of such payment it is
reasonable to believe that the employee will be able to exclude
such payment from income under section 106(b).''
(C) Unemployment tax.--Subsection (b) of section
3306 is amended by striking ``or'' at the end of
paragraph (15), by striking the period at the end of
paragraph (16) and inserting ``; or'', and by inserting
after paragraph (16) the following new paragraph:
``(17) any payment made to or for the benefit of an
employee if at the time of such payment it is reasonable to
believe that the employee will be able to exclude such payment
from income under section 106(b).''
(D) Withholding tax.--Subsection (a) of section
3401 is amended by striking ``or'' at the end of
paragraph (19), by striking the period at the end of
paragraph (20) and inserting ``; or'', and by inserting
after paragraph (20) the following new paragraph:
``(21) any payment made to or for the benefit of an
employee if at the time of such payment it is reasonable to
believe that the employee will be able to exclude such payment
from income under section 106(b).''
(d) Medical Savings Account Contributions Not Available Under
Cafeteria Plans.--Subsection (f) of section 125 is amended by inserting
``106(b),'' before ``117''.
(e) Tax on Prohibited Transactions.--Section 4975 (relating to tax
on prohibited transactions) is amended--
(1) by adding at the end of subsection (c) the following
new paragraph:
``(4) Special rule for medical savings accounts.--An
individual for whose benefit a medical savings account (within
the meaning of section 220(d)) is established shall be exempt
from the tax imposed by this section with respect to any
transaction concerning such account (which would otherwise be
taxable under this section) if, with respect to such
transaction, the account ceases to be a medical savings account
by reason of the application of section 220(e)(2) to such
account.'', and
(2) by inserting ``or a medical savings account described
in section 220(d)'' in subsection (e)(1) after ``described in
section 408(a)''.
(f) Failure To Provide Reports on Medical Savings Accounts.--
Section 6693 (relating to failure to provide reports on individual
retirement accounts or annuities) is amended--
(1) by inserting ``or on medical savings accounts'' after
``annuities'' in the heading of such section, and
(2) by adding at the end of subsection (a) the following:
``The person required by section 220(h) to file a report
regarding a medical savings account at the time and in the
manner required by such section shall pay a penalty of $50 for
each failure to so file unless it is shown that such failure is
due to reasonable cause.''
(g) Clerical Amendments.--
(1) The table of sections for part VII of subchapter B of
chapter 1 is amended by striking the last item and inserting
the following:
``Sec. 220. Medical savings accounts.
``Sec. 221. Cross reference.''
(2) The table of sections for subchapter B of chapter 68 is
amended by inserting ``or on medical savings accounts'' after
``annuities'' in the item relating to section 6693.
(h) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
Subtitle C--Pickle-Johnson Taxpayer Bill of Rights 2
PART I--TAXPAYER ADVOCATE
SEC. 13301. ESTABLISHMENT OF POSITION OF TAXPAYER ADVOCATE WITHIN
INTERNAL REVENUE SERVICE.
(a) General Rule.--Section 7802 (relating to Commissioner of
Internal Revenue; Assistant Commissioner (Employee Plans and Exempt
Organizations)) is amended by adding at the end the following new
subsection:
``(d) Office of Taxpayer Advocate.--
``(1) In general.--There is established in the Internal
Revenue Service an office to be known as the `Office of the
Taxpayer Advocate'. Such office shall be under the supervision
and direction of an official to be known as the `Taxpayer
Advocate' who shall be appointed by and report directly to the
Commissioner of Internal Revenue. The Taxpayer Advocate shall
be entitled to compensation at the same rate as the highest
level official reporting directly to the Deputy Commissioner of
the Internal Revenue Service.
``(2) Functions of office.--
``(A) In general.--It shall be the function of the
Office of Taxpayer Advocate to--
``(i) assist taxpayers in resolving
problems with the Internal Revenue Service,
``(ii) identify areas in which taxpayers
have problems in dealings with the Internal
Revenue Service,
``(iii) to the extent possible, propose
changes in the administrative practices of the
Internal Revenue Service to mitigate problems
identified under clause (ii), and
``(iv) identify potential legislative
changes which may be appropriate to mitigate
such problems.
``(B) Annual reports.--
``(i) Objectives.--Not later than June 30
of each calendar year after 1995, the Taxpayer
Advocate shall report to the Committee on Ways
and Means of the House of Representatives and
the Committee on Finance of the Senate on the
objectives of the Taxpayer Advocate for the
fiscal year beginning in such calendar year.
Any such report shall contain full and
substantive analysis, in addition to
statistical information.
``(ii) Activities.--Not later than December
31 of each calendar year after 1995, the
Taxpayer Advocate shall report to the Committee
on Ways and Means of the House of
Representatives and the Committee on Finance of
the Senate on the activities of the Taxpayer
Advocate during the fiscal year ending during
such calendar year. Any such report shall
contain full and substantive analysis, in
addition to statistical information, and
shall--
``(I) identify the initiatives the
Taxpayer Advocate has taken on
improving taxpayer services and
Internal Revenue Service
responsiveness,
``(II) contain recommendations
received from individuals with the
authority to issue Taxpayer Assistance
Orders under section 7811,
``(III) contain a summary of at
least 20 of the most serious problems
encountered by taxpayers, including a
description of the nature of such
problems,
``(IV) contain an inventory of the
items described in subclauses (I),
(II), and (III) for which action has
been taken and the result of such
action,
``(V) contain an inventory of the
items described in subclauses (I),
(II), and (III) for which action
remains to be completed and the period
during which each item has remained on
such inventory,
``(VI) contain an inventory of the
items described in subclauses (II) and
(III) for which no action has been
taken, the period during which each
item has remained on such inventory,
the reasons for the inaction, and
identify any Internal Revenue Service
official who is responsible for such
inaction,
``(VII) identify any Taxpayer
Assistance Order which was not honored
by the Internal Revenue Service in a
timely manner, as specified under
section 7811(b),
``(VIII) contain recommendations
for such administrative and legislative
action as may be appropriate to resolve
problems encountered by taxpayers,
``(IX) describe the extent to which
regional problem resolution officers
participate in the selection and
evaluation of local problem resolution
officers, and
``(X) include such other
information as the Taxpayer Advocate
may deem advisable.
``(iii) Report to be submitted directly.--
Each report required under this subparagraph
shall be provided directly to the Committees
referred to in clauses (i) and (ii) without any
prior review or comment from the Commissioner,
the Secretary of the Treasury, any other officer or employee of the
Department of the Treasury, or the Office of Management and Budget.
``(3) Responsibilities of commissioner.--The Commissioner
of Internal Revenue shall establish procedures requiring a
formal response to all recommendations submitted to the
Commissioner by the Taxpayer Advocate within 3 months after
submission to the Commissioner.''
(b) Conforming Amendments.--
(1) Section 7811 (relating to Taxpayer Assistance Orders)
is amended--
(A) by striking ``the Office of Ombudsman'' in
subsection (a) and inserting ``the Office of the
Taxpayer Advocate'', and
(B) by striking ``Ombudsman'' each place it appears
(including in the headings of subsections (e) and (f))
and inserting ``Taxpayer Advocate''.
(2) The heading for section 7802 is amended to read as
follows:
``SEC. 7802. COMMISSIONER OF INTERNAL REVENUE; ASSISTANT COMMISSIONERS;
TAXPAYER ADVOCATE.''
(3) The table of sections for subchapter A of chapter 80 is
amended by striking the item relating to section 7802 and
inserting the following new item:
``Sec. 7802. Commissioner of Internal
Revenue; Assistant
Commissioners; Taxpayer
Advocate.''
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
SEC. 13302. EXPANSION OF AUTHORITY TO ISSUE TAXPAYER ASSISTANCE ORDERS.
(a) Terms of Orders.--Subsection (b) of section 7811 (relating to
terms of Taxpayer Assistance Orders) is amended--
(1) by inserting ``within a specified time period'' after
``the Secretary'', and
(2) by inserting ``take any action as permitted by law,''
after ``cease any action,''.
(b) Limitation on Authority To Modify or Rescind.--Section 7811(c)
(relating to authority to modify or rescind) is amended to read as
follows:
``(c) Authority To Modify or Rescind.--Any Taxpayer Assistance
Order issued by the Taxpayer Advocate under this section may be
modified or rescinded--
``(1) only by the Taxpayer Advocate, the Commissioner of
Internal Revenue, the Deputy Commissioner of Internal Revenue,
or a regional problem resolution officer, and
``(2) only if a written explanation of the reasons for the
modification or rescission is provided to the Taxpayer
Advocate.''
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
PART II--MODIFICATIONS TO INSTALLMENT AGREEMENT PROVISIONS
SEC. 13306. NOTIFICATION OF REASONS FOR TERMINATION OF INSTALLMENT
AGREEMENTS.
(a) Terminations.--Subsection (b) of section 6159 (relating to
extent to which agreements remain in effect) is amended by adding at
the end the following new paragraph:
``(5) Notice requirements.--The Secretary may not take any
action under paragraph (2), (3), or (4) unless--
``(A) a notice of such action is provided to the
taxpayer not later than the day 30 days before the date
of such action, and
``(B) such notice includes an explanation why the
Secretary intends to take such action.
The preceding sentence shall not apply in any case in which the
Secretary believes that collection of any tax to which an
agreement under this section relates is in jeopardy.''
(b) Conforming Amendment.--Paragraph (3) of section 6159(b) is
amended to read as follows:
``(3) Subsequent change in financial conditions.--If the
Secretary makes a determination that the financial condition of
a taxpayer with whom the Secretary has entered into an
agreement under subsection (a) has significantly changed, the
Secretary may alter, modify, or terminate such agreement.''
(c) Effective Date.--The amendments made by this section shall take
effect on the date 6 months after the date of the enactment of this
Act.
SEC. 13307. ADMINISTRATIVE REVIEW OF TERMINATION OF INSTALLMENT
AGREEMENT.
(a) General Rule.--Section 6159 (relating to agreements for payment
of tax liability in installments) is amended by adding at the end the
following new subsection:
``(c) Administrative Review.--The Secretary shall establish
procedures for an independent administrative review of terminations of
installment agreements under this section for taxpayers who request
such a review.''
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on January 1, 1996.
PART III--ABATEMENT OF INTEREST AND PENALTIES
SEC. 13311. EXPANSION OF AUTHORITY TO ABATE INTEREST.
(a) General Rule.--Paragraph (1) of section 6404(e) (relating to
abatement of interest in certain cases) is amended--
(1) by inserting ``unreasonable'' before ``error'' each
place it appears in subparagraphs (A) and (B), and
(2) by striking ``in performing a ministerial act'' each
place it appears and inserting ``in performing a ministerial or
managerial act''.
(b) Clerical Amendment.--The subsection heading for subsection (e)
of section 6404 is amended--
(1) by striking ``Assessments'' and inserting
``Abatement'', and
(2) by inserting ``Unreasonable'' before ``Errors''.
(c) Effective Date.--The amendments made by this section shall
apply to interest accruing with respect to deficiencies or payments for
taxable years beginning after the date of the enactment of this Act.
SEC. 13312. REVIEW OF IRS FAILURE TO ABATE INTEREST.
(a) In General.--Section 6404 is amended by adding at the end the
following new subsection:
``(g) Review of Denial of Request for Abatement of Interest.--The
Tax Court shall have jurisdiction over any action brought by a taxpayer
who meets the requirements referred to in section 7430(c)(4)(A)(iii) to
determine whether the Secretary's failure to abate interest under this
section was an abuse of discretion if such action is brought within 6
months after the date of the Secretary's final determination not to
abate such interest.''
(b) Effective Date.--The amendment made by this section shall apply
to requests for abatement after the date of the enactment of this Act.
SEC. 13313. EXTENSION OF INTEREST-FREE PERIOD FOR PAYMENT OF TAX AFTER
NOTICE AND DEMAND.
(a) General Rule.--Paragraph (3) of section 6601(e) (relating to
payments made within 10 days after notice and demand) is amended to
read as follows:
``(3) Payments made within specified period after notice
and demand.--If notice and demand is made for payment of any
amount and if such amount is paid within 21 calendar days (10
business days if the amount for which such notice and demand is
made equals or exceeds $100,000) after the date of such notice
and demand, interest under this section on the amount so paid
shall not be imposed for the period after the date of such
notice and demand.''
(b) Conforming Amendments.--
(1) Subparagraph (A) of section 6601(e)(2) is amended by
striking ``10 days from the date of notice and demand
therefor'' and inserting ``21 calendar days from the date of
notice and demand therefor (10 business days if the amount for
which such notice and demand is made equals or exceeds
$100,000)''.
(2) Paragraph (3) of section 6651(a) is amended by striking
``10 days of the date of the notice and demand therefor'' and
inserting ``21 calendar days from the date of notice and demand
therefor (10 business days if the amount for which such notice
and demand is made equals or exceeds $100,000)''.
(c) Effective Date.--The amendments made by this section shall
apply in the case of any notice and demand given after June 30, 1996.
PART IV--JOINT RETURNS
SEC. 13316. STUDIES OF JOINT RETURN-RELATED ISSUES.
The Secretary of the Treasury or his delegate and the Comptroller
General of the United States shall each conduct separate studies of--
(1) the effects of changing the liability for tax on a
joint return from being joint and several to being
proportionate to the tax attributable to each spouse,
(2) the effects of providing that, if a divorce decree
allocates liability for tax on a joint return filed before the
divorce, the Secretary may collect such liability only in
accordance with the decree,
(3) whether those provisions of the Internal Revenue Code
of 1986 intended to provide relief to innocent spouses provide
meaningful relief in all cases where such relief is
appropriate, and
(4) the effect of providing that community income (as
defined in section 66(d) of such Code) which, in accordance
with the rules contained in section 879(a) of such Code, would
be treated as the income of one spouse is exempt from a levy
for failure to pay any tax imposed by subtitle A by the other
spouse for a taxable year ending before their marriage.
The reports of such studies shall be submitted to the Committee on Ways
and Means of the House of Representatives and the Committee on Finance
of the Senate within 6 months after the date of the enactment of this
Act.
SEC. 13317. JOINT RETURN MAY BE MADE AFTER SEPARATE RETURNS WITHOUT
FULL PAYMENT OF TAX.
(a) General Rule.--Paragraph (2) of section 6013(b) (relating to
limitations on filing of joint return after filing separate returns) is
amended by striking subparagraph (A) and redesignating the following
subparagraphs accordingly.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 13318. DISCLOSURE OF COLLECTION ACTIVITIES.
Subsection (e) of section 6103 (relating to disclosure to persons
having material interest) is amended by adding at the end the following
new paragraph:
``(8) Disclosure of collection activities with respect to
joint return.--If any deficiency of tax with respect to a joint
return is assessed and the individuals filing such return are
no longer married or no longer reside in the same household,
upon request in writing by either of such individuals, the
Secretary shall disclose in writing to the individual making
the request whether the Secretary has attempted to collect such
deficiency from such other individual, the general nature of
such collection activities, and the amount collected.''
PART V--COLLECTION ACTIVITIES
SEC. 13321. MODIFICATIONS TO LIEN AND LEVY PROVISIONS.
(a) Withdrawal of Certain Notices.--Section 6323 (relating to
validity and priority against certain persons) is amended by adding at
the end the following new subsection:
``(j) Withdrawal of Notice in Certain Circumstances.--
``(1) In general.--The Secretary may withdraw a notice of a
lien filed under this section and this chapter shall be applied
as if the withdrawn notice had not been filed, if the Secretary
determines that--
``(A) the filing of such notice was premature or
otherwise not in accordance with administrative
procedures of the Secretary,
``(B) the taxpayer has entered into an agreement
under section 6159 to satisfy the tax liability for
which the lien was imposed by means of installment
payments, unless such agreement provides otherwise,
``(C) the withdrawal of such notice will facilitate
the collection of the tax liability, or
``(D) with the consent of the taxpayer or the
Taxpayer Advocate, the withdrawal of such notice would
be in the best interests of the taxpayer (as determined
by the Taxpayer Advocate) and the United States.
Any such withdrawal shall be made by filing notice at the same
office as the withdrawn notice. A copy of such notice of
withdrawal shall be provided to the taxpayer.
``(2) Notice to credit agencies, etc.--Upon written request
by the taxpayer with respect to whom a notice of a lien was
withdrawn under paragraph (1), the Secretary shall promptly
make reasonable efforts to notify credit reporting agencies,
and any financial institution or creditor whose name and
address is specified in such request, of the withdrawal of such
notice. Any such request shall be in such form as the Secretary
may prescribe.''
(b) Return of Levied Property in Certain Cases.--Section 6343
(relating to authority to release levy and return property) is amended
by adding at the end the following new subsection:
``(d) Return of Property in Certain Cases.--If--
``(1) any property has been levied upon, and
``(2) the Secretary determines that--
``(A) the levy on such property was premature or
otherwise not in accordance with administrative
procedures of the Secretary,
``(B) the taxpayer has entered into an agreement
under section 6159 to satisfy the tax liability for
which the levy was imposed by means of installment
payments, unless such agreement provides otherwise,
``(C) the return of such property will facilitate
the collection of the tax liability, or
``(D) with the consent of the taxpayer or the
Taxpayer Advocate, the return of such property would be
in the best interests of the taxpayer (as determined by
the Taxpayer Advocate) and the United States,
the provisions of subsection (b) shall apply in the same manner as if
such property had been wrongly levied upon, except that no interest
shall be allowed under subsection (c).''
(c) Modifications in Certain Levy Exemption Amounts.--
(1) Fuel, etc.--Paragraph (2) of section 6334(a) (relating
to fuel, provisions, furniture, and personal effects exempt
from levy) is amended--
(A) by striking ``If the taxpayer is the head of a
family, so'' and inserting ``So'',
(B) by striking ``his household'' and inserting
``the taxpayer's household'', and
(C) by striking ``$1,650 ($1,550 in the case of
levies issued during 1989)'' and inserting ``$2,500''.
(2) Inflation adjustment.--Section 6334 (relating to
property exempt from levy) is amended by adding at the end the
following new subsection:
``(f) Inflation Adjustment.--
``(1) In general.--In the case of any calendar year
beginning after 1996, each dollar amount referred to in
paragraphs (2) and (3) of subsection (a) shall be increased by
an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for such calendar year, by
substituting `calendar year 1995' for `calendar year
1992' in subparagraph (B) thereof.
``(2) Rounding.--If any dollar amount after being increased
under paragraph (1) is not a multiple of $10, such dollar
amount shall be rounded to the nearest multiple of $10.''
(3) Technical amendment.--Paragraph (3) of section 6334(a)
is amended by striking ``($1,050 in the case of levies issued
during 1989)''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall take effect on the date
of the enactment of this Act.
(2) Exempt amounts.--The amendments made by subsection (c)
shall take effect with respect to levies issued after December
31, 1995.
SEC. 13322. OFFERS-IN-COMPROMISE.
(a) Review Requirements.--Subsection (b) of section 7122 (relating
to records) is amended by striking ``$500.'' and inserting ``$100,000.
However, such compromise shall be subject to continuing quality review
by the Secretary.''
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
PART VI--INFORMATION RETURNS
SEC. 13326. CIVIL DAMAGES FOR FRAUDULENT FILING OF INFORMATION RETURNS.
(a) General Rule.--Subchapter B of chapter 76 (relating to
proceedings by taxpayers and third parties) is amended by redesignating
section 7434 as section 7435 and by inserting after section 7433 the
following new section:
``SEC. 7434. CIVIL DAMAGES FOR FRAUDULENT FILING OF INFORMATION
RETURNS.
``(a) In General.--If any person willfully files a fraudulent
information return with respect to payments purported to be made to any
other person, such other person may bring a civil action for damages
against the person so filing such return.
``(b) Damages.--In any action brought under subsection (a), upon a
finding of liability on the part of the defendant, the defendant shall
be liable to the plaintiff in an amount equal to the greater of $5,000
or the sum of--
``(1) any actual damages sustained by the plaintiff as a
proximate result of the filing of the fraudulent information
return (including any costs attributable to resolving
deficiencies asserted as a result of such filing),
``(2) the costs of the action, and
``(3) in the court's discretion, reasonable attorneys fees.
``(c) Period for Bringing Action.--Notwithstanding any other
provision of law, an action to enforce the liability created under this
section may be brought without regard to the amount in controversy and
may be brought only within the later of--
``(1) 6 years after the date of the filing of the
fraudulent information return, or
``(2) 1 year after the date such fraudulent information
return would have been discovered by exercise of reasonable
care.
``(d) Copy of Complaint Filed With IRS.--Any person bringing an
action under subsection (a) shall provide a copy of the complaint to
the Internal Revenue Service upon the filing of such complaint with the
court.
``(e) Finding of Court To Include Correct Amount of Payment.--The
decision of the court awarding damages in an action brought under
subsection (a) shall include a finding of the correct amount which
should have been reported in the information return.
``(f) Information Return.--For purposes of this section, the term
`information return' means any statement described in section
6724(d)(1)(A).''
(b) Clerical Amendment.--The table of sections for subchapter B of
chapter 76 is amended by striking the item relating to section 7434 and
inserting the following:
``Sec. 7434. Civil damages for fraudulent
filing of information returns.
``Sec. 7435. Cross references.''
(c) Effective Date.--The amendments made by this section shall
apply to fraudulent information returns filed after the date of the
enactment of this Act.
SEC. 13327. REQUIREMENT TO CONDUCT REASONABLE INVESTIGATIONS OF
INFORMATION RETURNS.
(a) General Rule.--Section 6201 (relating to assessment authority)
is amended by redesignating subsection (d) as subsection (e) and by
inserting after subsection (c) the following new subsection:
``(d) Required Reasonable Verification of Information Returns.--In
any court proceeding, if a taxpayer asserts a reasonable dispute with
respect to any item of income reported on an information return filed
with the Secretary under subpart B or C of part III of subchapter A of
chapter 61 by a third party and the taxpayer has fully cooperated with
the Secretary (including providing, within a reasonable period of time,
access to and inspection of all witnesses, information, and documents
within the control of the taxpayer as reasonably requested by the
Secretary), the Secretary shall have the burden of producing reasonable
and probative information concerning such deficiency in addition to
such information return.''
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act.
PART VII--AWARDING OF COSTS AND CERTAIN FEES
SEC. 13331. UNITED STATES MUST ESTABLISH THAT ITS POSITION IN
PROCEEDING WAS SUBSTANTIALLY JUSTIFIED.
(a) General Rule.--Subparagraph (A) of section 7430(c)(4) (defining
prevailing party) is amended by striking clause (i) and by
redesignating clauses (ii) and (iii) as clauses (i) and (ii),
respectively.
(b) Burden of Proof on United States.--Paragraph (4) of section
7430(c) is amended by redesignating subparagraph (B) as subparagraph
(C) and by inserting after subparagraph (A) the following new
subparagraph:
``(B) Exception if united states establishes that
its position was substantially justified.--
``(i) General rule.--A party shall not be
treated as the prevailing party in a proceeding
to which subsection (a) applies if the United
States establishes that the position of the
United States in the proceeding was
substantially justified.
``(ii) Presumption of no justification if
internal revenue service didn't follow certain
published guidance.--For purposes of clause
(i), the position of the United States shall be
presumed not to be substantially justified if
the Internal Revenue Service did not follow its
applicable published guidance in the
administrative proceeding. Such presumption may
be rebutted.
``(iii) Applicable published guidance.--For
purposes of clause (ii), the term `applicable
published guidance' means--
``(I) regulations, revenue rulings,
revenue procedures, information
releases, notices, and announcements,
and
``(II) any of the following which
are issued to the taxpayer: private
letter rulings, technical advice
memoranda, and determination letters.''
(c) Conforming Amendments.--
(1) Subparagraph (B) of section 7430(c)(2) is amended by
striking ``paragraph (4)(B)'' and inserting ``paragraph
(4)(C)''.
(2) Subparagraph (C) of section 7430(c)(4), as redesignated
by subsection (b), is amended by striking ``subparagraph (A)''
and inserting ``this paragraph''.
(3) Sections 6404(g) and 6656(c)(1), as amended by this
title, are each amended by striking ``section
7430(c)(4)(A)(iii)'' and inserting ``section
7430(c)(4)(A)(ii)''.
SEC. 13332. INCREASED LIMIT ON ATTORNEY FEES.
Paragraph (1) of section 7430(c) (defining reasonable litigation
costs) is amended--
(1) by striking ``$75'' in clause (iii) of subparagraph (B)
and inserting ``$110'',
(2) by striking ``an increase in the cost of living or'' in
clause (iii) of subparagraph (B), and
(3) by adding after clause (iii) the following:
``In the case of any calendar year beginning after 1996, the
dollar amount referred to in clause (iii) shall be increased by
an amount equal to such dollar amount multiplied by the cost-
of-living adjustment determined under section 1(f)(3) for such
calendar year, by substituting `calendar year 1995' for
`calendar year 1992' in subparagraph (B) thereof. If any dollar
amount after being increased under the preceding sentence is
not a multiple of $10, such dollar amount shall be rounded to
the nearest multiple of $10.''
SEC. 13333. FAILURE TO AGREE TO EXTENSION NOT TAKEN INTO ACCOUNT.
Paragraph (1) of section 7430(b) (relating to requirement that
administrative remedies be exhausted) is amended by adding at the end
the following new sentence: ``Any failure to agree to an extension of
the time for the assessment of any tax shall not be taken into account
for purposes of determining whether the prevailing party meets the
requirements of the preceding sentence.''
SEC. 13334. AWARD OF LITIGATION COSTS PERMITTED IN DECLARATORY JUDGMENT
PROCEEDINGS.
Subsection (b) of section 7430 is amended by striking paragraph (3)
and by redesignating paragraph (4) as paragraph (3).
SEC. 13335. EFFECTIVE DATE.
The amendments made by this part shall apply in the case of
proceedings commenced after the date of the enactment of this Act.
PART VIII--MODIFICATION TO RECOVERY OF CIVIL DAMAGES FOR UNAUTHORIZED
COLLECTION ACTIONS
SEC. 13336. INCREASE IN LIMIT ON RECOVERY OF CIVIL DAMAGES FOR
UNAUTHORIZED COLLECTION ACTIONS.
(a) General Rule.--Subsection (b) of section 7433 (relating to
damages) is amended by striking ``$100,000'' and inserting
``$1,000,000''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to actions by officers or employees of the Internal Revenue
Service after the date of the enactment of this Act.
SEC. 13337. COURT DISCRETION TO REDUCE AWARD FOR LITIGATION COSTS FOR
FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES.
(a) General Rule.--Paragraph (1) of section 7433(d) (relating to
civil damages for certain unauthorized collection actions) is amended
to read as follows:
``(1) Award for damages may be reduced if administrative
remedies not exhausted.--The amount of damages awarded under
subsection (b) may be reduced if the court determines that the
plaintiff has not exhausted the administrative remedies
available to such plaintiff within the Internal Revenue
Service.''
(b) Effective Date.--The amendment made by this section shall apply
in the case of proceedings commenced after the date of the enactment of
this Act.
PART IX--MODIFICATIONS TO PENALTY FOR FAILURE TO COLLECT AND PAY OVER
TAX
SEC. 13341. PRELIMINARY NOTICE REQUIREMENT.
(a) In General.--Section 6672 (relating to failure to collect and
pay over tax, or attempt to evade or defeat tax) is amended by
redesignating subsection (b) as subsection (c) and by inserting after
subsection (a) the following new subsection:
``(b) Preliminary Notice Requirement.--
``(1) In general.--No penalty shall be imposed under
subsection (a) unless the Secretary notifies the taxpayer in
writing by mail to an address as determined under section
6212(b) that the taxpayer shall be subject to an assessment of
such penalty.
``(2) Timing of notice.--The mailing of the notice
described in paragraph (1) shall precede any notice and demand
of any penalty under subsection (a) by at least 60 days.
``(3) Statute of limitations.--If a notice described in
paragraph (1) with respect to any penalty is mailed before the
expiration of the period provided by section 6501 for the
assessment of such penalty (determined without regard to this
paragraph), the period provided by such section for the
assessment of such penalty shall not expire before the later
of--
``(A) the date 90 days after the date on which such
notice was mailed, or
``(B) if there is a timely protest of the proposed
assessment, the date 30 days after the Secretary makes
a final administrative determination with respect to
such protest.
``(4) Exception for jeopardy.--This subsection shall not
apply if the Secretary finds that the collection of the penalty
is in jeopardy.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to proposed assessments made after June 30, 1996.
SEC. 13342. DISCLOSURE OF CERTAIN INFORMATION WHERE MORE THAN 1 PERSON
LIABLE FOR PENALTY FOR FAILURE TO COLLECT AND PAY OVER
TAX.
(a) In General.--Subsection (e) of section 6103 (relating to
disclosure to persons having material interest), as amended by section
13318, is amended by adding at the end the following new paragraph:
``(9) Disclosure of certain information where more than 1
person subject to penalty under section 6672.--If the Secretary
determines that a person is liable for a penalty under section
6672(a) with respect to any failure, upon request in writing of
such person, the Secretary shall disclose in writing to such
person--
``(A) the name of any other person whom the
Secretary has determined to be liable for such penalty
with respect to such failure, and
``(B) whether the Secretary has attempted to
collect such penalty from such other person, the
general nature of such collection activities, and the
amount collected.''
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act.
SEC. 13343. RIGHT OF CONTRIBUTION WHERE MORE THAN 1 PERSON LIABLE FOR
PENALTY FOR FAILURE TO COLLECT AND PAY OVER TAX.
(a) In General.--Section 6672 (relating to failure to collect and
pay over tax, or attempt to evade or defeat tax) is amended by adding
at the end the following new subsection:
``(d) Right of Contribution Where More Than 1 Person Liable for
Penalty.--If more than 1 person is liable for the penalty under
subsection (a) with respect to any tax, each person who paid such
penalty shall be entitled to recover from other persons who are liable
for such penalty an amount equal to the excess of the amount paid by
such person over such person's proportionate share of the penalty. Any
claim for such a recovery may be made only in a proceeding which is
separate from, and is not joined with--
``(1) an action for collection of such penalty brought by
the United States, or
``(2) a proceeding in which the United States files a
counterclaim or third-party complaint for the collection of
such penalty.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to penalties assessed after the date of the enactment of this
Act.
SEC. 13344. VOLUNTEER BOARD MEMBERS OF TAX-EXEMPT ORGANIZATIONS EXEMPT
FROM PENALTY FOR FAILURE TO COLLECT AND PAY OVER TAX.
(a) In General.--Section 6672 is amended by adding at the end the
following new subsection:
``(e) Exception for Voluntary Board Members of Tax-Exempt
Organizations.--No penalty shall be imposed by subsection (a) on any
unpaid, volunteer member of any board of trustees or directors of an
organization exempt from tax under subtitle A if such member--
``(1) is solely serving in an honorary capacity,
``(2) does not participate in the day-to-day or financial
operations of the organization, and
``(3) does not have actual knowledge of the failure on
which such penalty is imposed.
The preceding sentence shall not apply if it results in no person being
liable for the penalty imposed by subsection (a).''
(b) Public Information Requirements.--
(1) In general.--The Secretary of the Treasury or the
Secretary's delegate (hereafter in this subsection referred to
as the ``Secretary'') shall take such actions as may be
appropriate to ensure that employees are aware of their
responsibilities under the Federal tax depository system, the
circumstances under which employees may be liable for the
penalty imposed by section 6672 of the Internal Revenue Code of
1986, and the responsibility to promptly report to the Internal
Revenue Service any failure referred to in subsection (a) of
such section 6672. Such actions shall include--
(A) printing of a warning on deposit coupon
booklets and the appropriate tax returns that certain
employees may be liable for the penalty imposed by such
section 6672, and
(B) the development of a special information
packet.
(2) Development of explanatory materials.--The Secretary
shall develop materials explaining the circumstances under
which board members of tax-exempt organizations (including
voluntary and honorary members) may be subject to penalty under
section 6672 of such Code. Such materials shall be made
available to tax-exempt organizations.
(3) IRS instructions.--The Secretary shall clarify the
instructions to Internal Revenue Service employees on the
application of the penalty under section 6672 of such Code with
regard to voluntary members of boards of trustees or directors
of tax- exempt organizations.
PART X--MODIFICATIONS OF RULES RELATING TO SUMMONSES
SEC. 13346. ENROLLED AGENTS INCLUDED AS THIRD-PARTY RECORDKEEPERS.
(a) In General.--Paragraph (3) of section 7609(a) (relating to
third-party recordkeeper defined) is amended by striking ``and'' at the
end of subparagraph (G), by striking the period at the end of
subparagraph (H) and inserting ``; and'', and by adding at the end the
following the subparagraph:
``(I) any enrolled agent.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to summonses issued after the date of the enactment of this Act.
SEC. 13347. SAFEGUARDS RELATING TO DESIGNATED SUMMONSES.
(a) Standard of Review.--Subparagraph (A) of section 6503(j)(2)
(defining designated summons) is amended by redesignating clauses (i)
and (ii) as clauses (ii) and (iii), respectively, and by inserting
before clause (ii) (as so redesignated) the following new clause:
``(i) the issuance of such summons is
preceded by a review of such issuance by the
regional counsel of the Office of Chief Counsel
for the region in which the examination of the
corporation is being conducted,''.
(b) Limitation on Persons to Whom Designated Summons May Be
Issued.--Paragraph (1) of section 6503(j) is amended by striking ``with
respect to any return of tax by a corporation'' and inserting ``to a
corporation (or to any other person to whom the corporation has
transferred records) with respect to any return of tax by such
corporation for a taxable year (or other period) for which such
corporation is being examined under the coordinated examination program
(or any successor program) of the Internal Revenue Service''.
(c) Effective Date.--The amendments made by this section shall
apply to summonses issued after the date of the enactment of this Act.
SEC. 13348. ANNUAL REPORT TO CONGRESS CONCERNING DESIGNATED SUMMONSES.
Not later than December 31 of each calendar year after 1995, the
Secretary of the Treasury or his delegate shall report to the Committee
on Ways and Means of the House of Representatives and the Committee on
Finance of the Senate on the number of designated summonses (as defined
in section 6503(j) of the Internal Revenue Code of 1986) which were
issued during the preceding 12 months.
PART XI--RELIEF FROM RETROACTIVE APPLICATION OF TREASURY DEPARTMENT
REGULATIONS
SEC. 13351. RELIEF FROM RETROACTIVE APPLICATION OF TREASURY DEPARTMENT
REGULATIONS.
(a) In General.--Subsection (b) of section 7805 (relating to rules
and regulations) is amended to read as follows:
``(b) Retroactivity of Regulations.--
``(1) In general.--Except as otherwise provided in this
subsection, no temporary, proposed, or final regulation
relating to the internal revenue laws shall apply to any
taxable period ending before the earliest of the following
dates:
``(A) The date on which such regulation is filed
with the Federal Register.
``(B) In the case of any final regulation, the date
on which any proposed or temporary regulation to which
such final regulation relates was filed with the
Federal Register.
``(C) The date on which any notice substantially
describing the expected contents of any temporary,
proposed, or final regulation is issued to the public.
``(2) Exception for promptly issued regulations.--Paragraph
(1) shall not apply to regulations filed or issued within 12
months of the date of the enactment of the statutory provision
to which the regulation relates.
``(3) Prevention of abuse.--The Secretary may provide that
any regulation may take effect or apply retroactively to
prevent abuse.
``(4) Correction of procedural defects.--The Secretary may
provide that any regulation may apply retroactively to correct
a procedural defect in the issuance of any prior regulation.
``(5) Internal regulations.--The limitation of paragraph
(1) shall not apply to any regulation relating to internal
Treasury Department policies, practices, or procedures.
``(6) Congressional authorization.--The limitation of
paragraph (1) may be superseded by a legislative grant from
Congress authorizing the Secretary to prescribe the effective
date with respect to any regulation.
``(7) Election to apply retroactively.--Paragraph (1) shall
not apply to any regulation which the taxpayer elects to apply
before the dates specified in paragraph (1) but only if such
election applies to all regulations which were issued with such
regulation under the statutory provision to which such
regulation relates.
``(8) Application to rulings.--The Secretary may prescribe
the extent, if any, to which any ruling (including any judicial
decision or any administrative determination other than by
regulation) relating to the internal revenue laws shall be
applied without retroactive effect.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply with respect to regulations which relate to statutory provisions
enacted on or after the date of the enactment of this Act.
PART XII--MISCELLANEOUS PROVISIONS
SEC. 13356. REPORT ON PILOT PROGRAM FOR APPEAL OF ENFORCEMENT ACTIONS.
Not later than March 1, 1996, the Secretary of the Treasury or his
delegate shall submit to the Committee on Ways and Means of the House
of Representatives and the Committee on Finance of the Senate a report
on the pilot program for appeals of enforcement actions (including
lien, levy, and seizure actions) to the Appeals Division of the
Internal Revenue Service, together with such recommendations as he may
deem advisable.
SEC. 13357. PHONE NUMBER OF PERSON PROVIDING PAYEE STATEMENTS REQUIRED
TO BE SHOWN ON SUCH STATEMENT.
(a) General Rule.--The following provisions are each amended by
striking ``name and address'' and inserting ``name, address, and phone
number of the information contact'':
(1) Section 6041(d)(1).
(2) Section 6041A(e)(1).
(3) Section 6042(c)(1).
(4) Section 6044(e)(1).
(5) Section 6045(b)(1).
(6) Section 6049(c)(1)(A).
(7) Section 6050B(b)(1).
(8) Section 6050H(d)(1).
(9) Section 6050I(e)(1).
(10) Section 6050J(e).
(11) Section 6050K(b)(1).
(12) Section 6050N(b)(1).
(b) Effective Date.--The amendments made by subsection (a) shall
apply to statements required to be furnished after December 31, 1996
(determined without regard to any extension).
SEC. 13358. REQUIRED NOTICE OF CERTAIN PAYMENTS.
If any payment is received by the Secretary of the Treasury or his
delegate from any taxpayer and the Secretary cannot associate such
payment with such taxpayer, the Secretary shall make reasonable efforts
to notify the taxpayer of such inability within 60 days after the
receipt of such payment.
SEC. 13359. UNAUTHORIZED ENTICEMENT OF INFORMATION DISCLOSURE.
(a) In General.--Subchapter B of chapter 76 (relating to
proceedings by taxpayers and third parties), as amended by section
13316(a), is amended by redesignating section 7435 as section 7436 and
by inserting after section 7434 the following new section:
``SEC. 7435. CIVIL DAMAGES FOR UNAUTHORIZED ENTICEMENT OF INFORMATION
DISCLOSURE.
``(a) In General.--If any officer or employee of the United States
intentionally compromises the determination or collection of any tax
due from an attorney, certified public accountant, or enrolled agent
representing a taxpayer in exchange for information conveyed by the
taxpayer to the attorney, certified public accountant, or enrolled
agent for purposes of obtaining advice concerning the taxpayer's tax
liability, such taxpayer may bring a civil action for damages against
the United States in a district court of the United States. Such civil
action shall be the exclusive remedy for recovering damages resulting
from such actions.
``(b) Damages.--In any action brought under subsection (a), upon a
finding of liability on the part of the defendant, the defendant shall
be liable to the plaintiff in an amount equal to the lesser of $500,000
or the sum of--
``(1) actual, direct economic damages sustained by the
plaintiff as a proximate result of the information disclosure,
and
``(2) the costs of the action.
Damages shall not include the taxpayer's liability for any civil or
criminal penalties, or other losses attributable to incarceration or
the imposition of other criminal sanctions.
``(c) Payment Authority.--Claims pursuant to this section shall be
payable out of funds appropriated under section 1304 of title 31,
United States Code.
``(d) Period for Bringing Action.--Notwithstanding any other
provision of law, an action to enforce liability created under this
section may be brought without regard to the amount in controversy and
may be brought only within 2 years after the date the actions creating
such liability would have been discovered by exercise of reasonable
care.
``(e) Mandatory Stay.--Upon a certification by the Commissioner or
the Commissioner's delegate that there is an ongoing investigation or
prosecution of the taxpayer, the district court before which an action
under this section is pending, shall stay all proceedings with respect
to such action pending the conclusion of the investigation or
prosecution.
``(f) Crime-Fraud Exception.--Subsection (a) shall not apply to
information conveyed to an attorney, certified public accountant, or
enrolled agent for the purpose of perpetrating a fraud or crime.''
(b) Clerical Amendment.--The table of sections for subchapter B of
chapter 76, as amended by section 13316(b), is amended by striking the
item relating to section 7435 and by adding at the end the following
new items:
``Sec. 7435. Civil damages for
unauthorized enticement of
information disclosure.
``Sec. 7436. Cross references.''
(c) Effective Date.--The amendments made by this section shall
apply to actions after the date of the enactment of this Act.
SEC. 13360. ANNUAL REMINDERS TO TAXPAYERS WITH OUTSTANDING DELINQUENT
ACCOUNTS.
(a) In General.--Chapter 77 (relating to miscellaneous provisions)
is amended by adding at the end the following new section:
``SEC. 7524. ANNUAL NOTICE OF TAX DELINQUENCY.
``Not less often than annually, the Secretary shall send a written
notice to each taxpayer who has a tax delinquent account of the amount
of the tax delinquency as of the date of the notice.''
(b) Clerical Amendment.--The table of sections for chapter 77 is
amended by adding at the end the following new item:
``Sec. 7524. Annual notice of tax
delinquency.''
(c) Effective Date.--The amendments made by this section shall
apply to calendar years after 1995.
SEC. 13361. 5-YEAR EXTENSION OF AUTHORITY FOR UNDERCOVER OPERATIONS.
(a) In General.--Paragraph (3) of section 7601(c) of the Anti-Drug
Abuse Act of 1988 is amended by striking all that follows ``this Act''
and inserting a period.
(b) Restoration of Authority for 5 Years.--Subsection (c) of
section 7608 is amended by adding at the end the following new
paragraph:
``(6) Application of section.--The provisions of this
subsection--
``(A) shall apply after November 17, 1988, and
before January 1, 1990, and
``(B) shall apply after the date of the enactment
of this paragraph and before January 1, 2001.
All amounts expended pursuant to this subsection during the
period described in subparagraph (B) shall be recovered to the
extent possible, and deposited in the Treasury of the United
States as miscellaneous receipts, before January 1, 2001.''
(c) Enhanced Oversight.--
(1) Additional information required in reports to
congress.--Subparagraph (B) of section 7608(c)(4) is amended--
(A) by striking ``preceding the period'' in clause
(ii),
(B) by striking ``and'' at the end of clause (ii),
and
(C) by striking clause (iii) and inserting the
following:
``(iii) the number, by programs, of
undercover investigative operations closed in
the 1-year period for which such report is
submitted, and
``(iv) the following information with
respect to each undercover investigative
operation pending as of the end of the 1-year
period for which such report is submitted or
closed during such 1-year period--
``(I) the date the operation began
and the date of the certification
referred to in the last sentence of
paragraph (1),
``(II) the total expenditures under
the operation and the amount and use of
the proceeds from the operation,
``(III) a detailed description of
the operation including the potential
violation being investigated and
whether the operation is being
conducted under grand jury auspices,
and
``(IV) the results of the operation
including the results of criminal
proceedings.''
(2) Audits required without regard to amounts involved.--
Subparagraph (C) of section 7608(c)(5) is amended to read as
follows:
``(C) Undercover investigative operation.--The term
`undercover investigative operation' means any
undercover investigative operation of the Service;
except that, for purposes of subparagraphs (A) and (C)
of paragraph (4), such term only includes an operation
which is exempt from section 3302 or 9102 of title 31,
United States Code.''
(3) Effective date.--The amendments made by this subsection
shall take effect on the date of the enactment of this Act.
SEC. 13362. DISCLOSURE OF FORM 8300 INFORMATION ON CASH TRANSACTIONS.
(a) In General.--Subsection (l) of section 6103 (relating to
disclosure of returns and return information for purposes other than
tax administration) is amended by adding at the end the following new
paragraph:
``(15) Disclosure of returns filed under section 6050i.--
The Secretary may, upon written request, disclose to officers
and employees of--
``(A) any Federal agency,
``(B) any agency of a State or local government, or
``(C) any agency of the government of a foreign
country,
information contained on returns filed under section 6050I. Any
such disclosure shall be made on the same basis, and subject to
the same conditions, as apply to disclosures of information on
reports filed under section 5313 of title 31, United States
Code; except that no disclosure under this paragraph shall be
made for purposes of the administration of any tax law.''
(b) Conforming Amendments.--
(1) Subsection (i) of section 6103 is amended by striking
paragraph (8).
(2) Subparagraph (A) of section 6103(p)(3) is amended--
(A) by striking ``(7)(A)(ii), or (8)'' and
inserting ``or (7)(A)(ii)'', and
(B) by striking ``or (14)'' and inserting ``(14),
or (15)''.
(3) The material preceding subparagraph (A) of section
6103(p)(4) is amended--
(A) by striking ``(5), or (8)'' and inserting ``or
(5)'',
(B) by striking ``(i)(3)(B)(i), or (8)'' and
inserting ``(i)(3)(B)(i),'', and
(C) by striking ``or (12)'' and inserting ``(12),
or (15)''.
(4) Clause (ii) of section 6103(p)(4)(F) is amended--
(A) by striking ``(5), or (8)'' and inserting ``or
(5)'', and
(B) by striking ``or (14)'' and inserting ``(14),
or (15)''.
(5) Paragraph (2) of section 7213(a) is amended by striking
``or (12)'' and inserting ``(12), or (15)''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
SEC. 13363. DISCLOSURE OF RETURNS AND RETURN INFORMATION TO DESIGNEE OF
TAXPAYER.
Subsection (c) of section 6103 (relating to disclosure of returns
and return information to designee of taxpayer) is amended by striking
``written request for or consent to such disclosure'' and inserting
``request for or consent to such disclosure''.
SEC. 13364. STUDY OF NETTING OF INTEREST ON OVERPAYMENTS AND
LIABILITIES.
(a) In General.--The Secretary of the Treasury or his delegate
shall--
(1) conduct a study of the manner in which the Internal
Revenue Service has implemented the netting of interest on
overpayments and underpayments and of the policy and
administrative implications of global netting, and
(2) before submitting the report of such study, hold a
public hearing to receive comments on the matters included in
such study.
(b) Report.--The report of such study shall be submitted not later
than 6 months after the date of the enactment of this Act to the
Committee on Ways and Means of the House of Representatives and the
Committee on Finance of the Senate.
SEC. 13365. CREDIT FOR EXPENSES OF CERTAIN TCMP AUDITS.
(a) In General.--Subchapter B of chapter 65 is amended by adding at
the end the following new section:
``SEC. 6428. CREDIT FOR EXPENSES OF 1994 TCMP AUDITS.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by subtitle A an
amount equal to the qualified TCMP expenses paid or incurred by the
taxpayer during the taxable year.
``(b) Limitation.--The amount of the credit allowed by subsection
(a) shall not exceed $3,000 with respect to an audit.
``(c) Qualified TCMP Expenses.--For purposes of this section, the
term `qualified TCMP expenses' means amounts which would (but for
subsection (d)) be allowed as a deduction under section 162 or 212(3)
in connection with an audit under the Taxpayer Compliance Measurement
Program of the taxpayer's return of tax imposed by chapter 1 for any
taxable year beginning during 1994. Such term shall not include any
expense in connection with an audit of an estate, trust, partnership,
or S corporation.
``(d) Denial of Double Benefit.--No deduction shall be allowed
under chapter 1 for any amount for which a credit is allowed under this
section.
``(e) Credit Treated as Subpart C Credit.--For purposes of this
title, the credit allowed under subsection (a) shall be treated as a
credit allowed under subpart C of part IV of subchapter A of chapter
1.''
(b) Technical Amendments.--
(1) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting before the period ``, or
from section 6428 of such Code''.
(2) The table of sections for such subchapter B is amended
by adding at the end the following new item:
``Sec. 6428. Credit for expenses of 1994
TCMP audits.''
(d) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred after December 31, 1994, in taxable
years ending after such date.
SEC. 13366. EXPENSES OF DETECTION OF UNDERPAYMENTS AND FRAUD, ETC.
(a) In General.--Section 7623 (relating to expenses of deduction
and punishment of frauds) is amended to read as follows:
``SEC. 7623. EXPENSES OF DETECTION OF UNDERPAYMENTS AND FRAUD, ETC.
``The Secretary, under regulations prescribed by the Secretary, is
authorized to pay such sums as he deem necessary for--
``(1) detecting underpayments of tax, and
``(2) detecting and bringing to trial and punishment
persons guilty of violating the internal revenue laws or
conniving at the same,
in cases where such expenses are not otherwise provided for by law. Any
amount payable under the preceding sentence shall be paid from the
proceeds of amounts (other than interest) collected by reason of the
information provided, and any amount so collected shall be available
for such payments.''.
(b) Clerical Amendment.--The table of sections for subchapter B of
chapter 78 is amended by striking the item relating to section 7623 and
inserting the following new item:
``Sec. 7623. Expenses of detection of
underpayments and fraud,
etc.''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date which is 6 months after the enactment of this Act.
(d) Report.--The Secretary of the Treasury or his delegate shall
submit an annual report to the Committee on Ways and Means of the House
of Representatives and the Committee on Finance of the Senate on the
payments under section 7623 of the Internal Revenue Code of 1986 during
the year and on the amounts collected for which such payments were
made.
Subtitle D--Additional Technical Corrections
SEC. 13401. REPORTING OF REAL ESTATE TRANSACTIONS.
(a) In General.--Paragraph (3) of section 6045(e) (relating to
prohibition of separate charge for filing return) is amended by adding
at the end the following new sentence: ``Nothing in this paragraph
shall be construed to prohibit the real estate reporting person from
taking into account its cost of complying with such requirement in
establishing its charge (other than a separate charge for complying
with such requirement) to any customer for performing services in the
case of a real estate transaction.''
(b) Effective Date.--The amendment made by subsection (a) shall
take effect as if included in section 1015(e)(2)(A) of the Technical
and Miscellaneous Revenue Act of 1988.
SEC. 13402. CLARIFICATION OF DENIAL OF DEDUCTION FOR STOCK REDEMPTION
EXPENSES.
(a) In General.--Paragraph (1) of section 162(k) is amended by
striking ``the redemption of its stock'' and inserting ``the
reacquisition of its stock or of the stock of any related person (as
defined in section 465(b)(3)(C))''.
(b) Certain Deductions Permitted.--Subparagraph (A) of section
162(k)(2) is amended by striking ``or'' at the end of clause (i), by
redesignating clause (ii) as clause (iii), and by inserting after
clause (i) the following new clause:
``(ii) deduction for amounts which are
properly allocable to indebtedness and
amortized over the term of such indebtedness,
or''.
(c) Clerical Amendment.--The subsection heading for subsection (k)
of section 162 is amended by striking ``Redemption'' and inserting
``Reacquisition''.
(d) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to amounts paid or
incurred after September 13, 1995, in taxable years ending
after such date.
(2) Subsection (b).--The amendment made by subsection (b)
shall take effect as if included in the amendment made by
section 613 of the Tax Reform Act of 1986.
SEC. 13403. CLARIFICATION OF DEPRECIATION CLASS FOR CERTAIN ENERGY
PROPERTY.
(a) In General.--Subparagraph (B) of section 168(e)(3) (relating to
5-year property) is amended by adding at the end the following flush
sentence:
``Nothing in any provision of law shall be construed to
treat property as not being described in clause (vi)(I)
(or the corresponding provisions of prior law) by
reason of being public utility property (within the
meaning of section 48(a)(3)).''
(b) Effective Date.--The amendment made by subsection (a) shall
take effect as if included in the amendments made by section 11813 of
the Revenue Reconciliation Act of 1990.
SEC. 13404. CLERICAL AMENDMENT TO SECTION 404.
(a) In General.--Paragraph (1) of section 404(j) is amended by
striking ``(10)'' and inserting ``(9)''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect as if included in the amendments made by section
713(d)(4)(A) of the Deficit Reduction Act of 1984.
SEC. 13405. TREATMENT OF CERTAIN VETERANS' REEMPLOYMENT RIGHTS.
(a) In General.--Section 414 is amended by adding at the end the
following new subsection:
``(u) Special Rules Relating to Veterans' Reemployment Rights.--
``(1) Treatment of certain contributions made pursuant to
veterans' reemployment rights.--If any contribution is made by
an employer or an employee under an individual account plan
with respect to an employee, or by an employee to a defined
benefit pension plan that provides for employee contributions,
and such contribution is required by reason of such employee's
rights under chapter 43 of title 38, United States Code,
resulting from qualified military service, then--
``(A) such contribution shall not be subject to any
otherwise applicable limitation contained in section
402(g), 402(h), 403(b), 404(a), 404(h), 408, 415, or
457, and shall not be taken into account in applying
such limitations to other contributions or benefits
under such plan or any other plan, with respect to the
year in which the contribution is made,
``(B) such contribution shall be subject to the
limitations referred to in subparagraph (A) with
respect to the year to which the contribution relates
(in accordance with rules prescribed by the Secretary),
and
``(C) such plan shall not be treated as failing to
meet the requirements of section 401(a)(4), 401(a)(26),
401(k)(3), 401(m), 403(b)(12), 408(k)(3), 408(k)(6),
410(b), or 416 by reason of the making of such
contribution.
For purposes of the preceding sentence, any elective deferral
or employee contribution made under paragraph (2) shall be
treated as required by reason of the employee's rights under
such chapter.
``(2) Reemployment rights with respect to elective
deferrals.--
``(A) In general.--For purposes of this subchapter
and subchapter E, if an employee is entitled to the
benefits of chapter 43 of title 38, United States Code,
with respect to any plan which provides for elective
deferrals, the employer sponsoring the plan shall be
treated as meeting the requirements of such chapter 43
with respect to such elective deferrals only if such
employer--
``(i) permits such employee to make
additional elective deferrals under such plan
(in the amount determined under subparagraph
(B) or such lesser amount as is elected by the
employee) during the period which begins on the
date of the reemployment of such employee with
such employer and has the same length as the
lesser of--
``(I) the product of 3 and the
period of qualified military service
which resulted in such rights, and
``(II) 5 years, and
``(ii) makes a matching contribution with
respect to any additional elective deferral
made pursuant to clause (i) which would have
been required had such deferral actually been
made during the period of such qualified
military service.
``(B) Amount of makeup required.--The amount
determined under this subparagraph with respect to any
plan is the maximum amount of the elective deferrals
that the individual would have been permitted to make
under the plan in accordance with the limitations
referred to in paragraph (1)(A) during his period of
qualified military service if he had continued to be
employed by the employer during such period and
received compensation as determined under paragraph
(7). Proper adjustment shall be made to the amount
determined under the preceding sentence for any
elective deferrals actually made during the period of
such qualified military service.
``(C) Elective deferral.--For purposes of this
paragraph, the term `elective deferral' has the meaning
given such term by section 402(g)(3); except that such
term shall include any deferral of compensation under
an eligible deferred compensation plan (as defined in
section 457(b)).
``(D) After-tax employee contributions.--References
in subparagraphs (A) and (B) to elective deferrals
shall be treated as including references to other
employee contributions.
``(3) Certain retroactive adjustments not required.--For
purposes of this subchapter and subchapter E, no provision of
chapter 43 of title 38, United States Code, shall be construed
as requiring--
``(A) any crediting of earnings to an employee with
respect to any contribution before such contribution is
actually made, or
``(B) any allocation of any forfeiture with respect
to the period of qualified military service.
``(4) Loan repayment suspensions permitted.--If any plan
suspends the obligation to repay any loan made to an employee
from such plan for any part of any period during which such
employee is performing qualified military service, such
suspension shall not be taken into account for purposes of
section 72(p), 401(a), or 4975(d)(1).
``(5) Qualified military service.--For purposes of this
subsection, the term `qualified military service' means any
service in the uniformed services (as defined in chapter 43 of
title 38, United States Code) by any individual if such
individual is entitled to reemployment rights under such
chapter with respect to such service.
``(6) Individual account plan.--For purposes of this
subsection, the term `individual account plan' means any
defined contribution plan, any tax-sheltered annuity plan under
section 403(b), and any eligible deferred compensation plan (as
defined in section 457(b)).
``(7) Compensation.--For purposes of section 415(c)(3), an
employee who is in qualified military service shall be treated
as receiving compensation from the employer during such period
of qualified military service equal to--
``(A) the compensation the employee would have
received during such period if the employee were not in
qualified military service, determined based on the
rate of pay the employee would have received from the
employer but for absence during the period of qualified
military service, or
``(B) if the compensation of the employee was not
based on a fixed rate, the employee's average
compensation from the employer during the 12-month
period immediately preceding the qualified military
service (or, if shorter, the period of employment
immediately preceding the qualified military service).
``(8) Requirements for qualified retirement plan.--For
purposes of this subchapter and subchapter E, an employer
sponsoring a plan shall be treated as meeting the requirements
of chapter 43 of title 38, United States Code, only if each of
the following requirements is met:
``(A) An individual reemployed under such chapter
is treated with respect to such plan as not having
incurred a break in service with the employer
maintaining the plan by reason of such individual's
period of qualified military service.
``(B) Each period of qualified military service
served by an individual is, upon reemployment under
such chapter, deemed with respect to such plan to
constitute service with the employer maintaining the
plan for the purpose of determining the
nonforfeitability of the individual's accrued benefits
under such plan and for the purpose of determining the
accrual of benefits under such plan.
``(C) An individual reemployed under such chapter
is entitled to accrued benefits that are contingent on
the making of, or derived from, employee contributions
or elective deferrals only to the extent the individual
makes payment to the plan with respect to such
contributions or deferrals. No such payment may exceed
the amount the individual would have been permitted or
required to contribute had the individual remained
continuously employed by the employer throughout the
period of qualified military service. Any payment to
such plan shall be made during the period beginning
with the date of reemployment and whose duration is 3
times the period of the qualified military service (but
not greater than 5 years).
``(9) References.--For purposes of this section, any
reference to chapter 43 of title 38, United States Code, shall
be treated as a reference to such chapter as in effect on
December 12, 1994 (without regard to any subsequent
amendment).''
(b) Effective Date.--The amendments made by this section shall be
effective as of December 12, 1994.
Subtitle E--Tax Information Sharing
SEC. 13501. DISCLOSURE OF RETURN INFORMATION FOR ADMINISTRATION OF
CERTAIN VETERANS PROGRAMS.
(a) General Rule.--Subparagraph (D) of section 6103(l)(7) (relating
to disclosure of return information to Federal, State, and local
agencies administering certain programs) is amended by striking
``Clause (viii) shall not apply after September 30, 1998.''
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act.
Subtitle F--Revenue Increases
PART I--PROVISIONS RELATING TO BUSINESSES
SEC. 13601. TAX TREATMENT OF CERTAIN EXTRAORDINARY DIVIDENDS.
(a) Treatment of Extraordinary Dividends in Excess of Basis.--
Paragraph (2) of section 1059(a) (relating to corporate shareholder's
basis in stock reduced by nontaxed portion of extraordinary dividends)
is amended to read as follows:
``(2) Amounts in excess of basis.--If the nontaxed portion
of such dividends exceeds such basis, such excess shall be
treated as gain from the sale or exchange of such stock for the
taxable year in which the extraordinary dividend is received.''
(b) Treatment of Redemptions Where Options Involved.--Paragraph (1)
of section 1059(e) (relating to treatment of partial liquidations and
non-pro rata redemptions) is amended to read as follows:
``(1) Treatment of partial liquidations and certain
redemptions.--Except as otherwise provided in regulations--
``(A) Redemptions.--In the case of any redemption
of stock--
``(i) which is part of a partial
liquidation (within the meaning of section
302(e)) of the redeeming corporation,
``(ii) which is not pro rata as to all
shareholders, or
``(iii) which would not have been treated
(in whole or in part) as a dividend if any
options had not been taken into account under
section 318(a)(4),
any amount treated as a dividend with respect to such
redemption shall be treated as an extraordinary
dividend to which paragraphs (1) and (2) of subsection
(a) apply without regard to the period the taxpayer
held such stock. In the case of a redemption described
in clause (iii), only the basis in the stock redeemed
shall be taken into account under subsection (a).
``(B) Reorganizations, etc.--An exchange described
in section 356(a)(1) which is treated as a dividend
under section 356(a)(2) shall be treated as a
redemption of stock for purposes of applying
subparagraph (A).''
(c) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to distributions after May 3, 1995.
(2) Transition rule.--The amendments made by this section
shall not apply to any distribution made pursuant to the terms
of--
(A) a written binding contract in effect on May 3,
1995, and at all times thereafter before such
distribution, or
(B) a tender offer outstanding on May 3, 1995.
(3) Certain dividends not pursuant to certain
redemptions.--In determining whether the amendment made by
subsection (a) applies to any extraordinary dividend other than
a dividend treated as an extraordinary dividend under section
1059(e)(1) of the Internal Revenue Code of 1986 (as amended by
this Act), paragraphs (1) and (2) shall be applied by
substituting ``September 13, 1995'' for ``May 3, 1995''.
SEC. 13602. REGISTRATION OF CONFIDENTIAL CORPORATE TAX SHELTERS.
(a) In General.--Section 6111 (relating to registration of tax
shelters) is amended by redesignating subsections (d) and (e) as
subsections (e) and (f), respectively, and by inserting after
subsection (c) the following new subsection:
``(d) Certain Confidential Arrangements Treated as Tax Shelters.--
``(1) In general.--For purposes of this section, the term
`tax shelter' includes any entity, plan, arrangement, or
transaction--
``(A) a significant purpose of which is the
avoidance or evasion of Federal income tax for a
participant which is a corporation,
``(B) which is offered to any potential participant
under conditions of confidentiality, and
``(C) for which the tax shelter organizers may
receive fees in excess of $100,000 in the aggregate.
``(2) Conditions of confidentiality.--For purposes of
paragraph (1)(C), an offer is under conditions of
confidentiality if--
``(A) the potential participant to whom the offer
is made (or any other person acting on behalf of such
participant) has an understanding or agreement with or
for the benefit of any promoter of the tax shelter that
such participant (or other person) will limit
disclosure of the tax shelter or any significant tax
features of the tax shelter, or
``(B) any promoter of the tax shelter--
``(i) claims, knows, or has reason to know,
``(ii) knows or has reason to know that any
other person (other than the potential
participant) claims, or
``(iii) causes another person to claim,
that the tax shelter (or any aspect thereof) is
proprietary to any person other than the potential
participant or is otherwise protected from disclosure
to or use by others.
For purposes of this subsection, the term `promoter' means any
person who participates in the organization, management, or
sale of the tax shelter.
``(3) Persons other than organizer required to register in
certain cases.--
``(A) In general.--If--
``(i) the requirements of subsection (a)
are not met with respect to any tax shelter (as
defined in paragraph (1)) by any tax shelter
organizer, and
``(ii) no tax shelter organizer is a United
States person,
then each United States person who discussed
participation in such shelter shall register such
shelter under subsection (a).
``(B) Exception.--Subparagraph (A) shall not apply
to a United States person who discussed participation
in a tax shelter if--
``(i) such person notified the promoter in
writing (not later than the close of the day on
which such discussions began) that such person
would not participate in such shelter, and
``(ii) such person does not participate in
such shelter.
``(4) Offer to participate treated as offer for sale.--For
purposes of subsections (a) and (b), an offer to participate in
a tax shelter (as defined in paragraph (1)) shall be treated as
an offer for sale.''
(b) Penalty.--Subsection (a) of section 6707 (relating to failure
to furnish information regarding tax shelters) is amended by adding at
the end the following new paragraph:
``(3) Confidential arrangements.--
``(A) In general.--In the case of a tax shelter (as
defined in section 6111(d)), the penalty imposed under
paragraph (1) shall be an amount equal to the greater
of--
``(i) 50 percent of the fees paid to any
promoter of the tax shelter with respect to
offerings made before the date such shelter is
registered under section 6111, or
``(ii) $10,000.
Clause (i) shall be applied by substituting `75
percent' for `50 percent' in the case of an intentional
failure or act described in paragraph (1).
``(B) Special rule for participants required to
register shelter.--In the case of a person required to
register such a tax shelter by reason of section
6111(d)(3)--
``(i) such person shall be required to pay
the penalty under paragraph (1) only if such
person actually participated in such shelter,
``(ii) the amount of such penalty shall be
determined by taking into account under
subparagraph (A)(i) only the fees paid by such
person, and
``(iii) such penalty shall be in addition
to the penalty imposed on any other person for
failing to register such shelter.''
(c) Conforming Amendments.--
(1) Paragraph (2) of section 6707(a) is amended by striking
``The penalty'' and inserting ``Except as provided in paragraph
(3), the penalty''.
(2) Subparagraph (A) of section 6707(a)(1) is amended by
striking ``paragraph (2)'' and inserting ``paragraph (2) or
(3), as the case may be''.
(d) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to any tax shelter (as defined in section 6111(d) of the
Internal Revenue Code of 1986, as amended by this section)
interests in which are offered to potential participants after
the date of the enactment of this Act.
(2) Due date for registration.--The due date for
registering any tax shelter required to be registered by reason
of the amendments made by this section shall be not earlier
than the close of a reasonable period after the Secretary of
the Treasury prescribes guidance with respect to meeting such
requirements.
SEC. 13603. DENIAL OF DEDUCTION FOR INTEREST ON LOANS WITH RESPECT TO
COMPANY-OWNED INSURANCE.
(a) In General.--Paragraph (4) of section 264(a) is amended--
(1) by inserting ``or endowment or annuity contract'' after
``life insurance policies'', and
(2) by striking all that follows ``carried on by the
taxpayer'' and inserting a period.
(b) Phase-in of Disallowance.--Section 264 is amended by adding at
the end the following new subsection:
``(d) Phase-in of Disallowance Under Subsection (a)(4).--In the
case of calendar years after 1995 and before 2000--
``(1) In general.--The amount of interest paid or accrued
during any period in any such calendar year with respect to
qualified indebtedness which is disallowed by reason of the
amendment made by section 13603(a) of the Revenue
Reconciliation Act of 1995 (determined without regard to this
subsection) shall not exceed the applicable percentage of such
interest which is so disallowed.
``(2) Qualified indebtedness.--For purposes of paragraph
(1), the term `qualified indebtedness' means indebtedness
incurred before September 18, 1995, with respect to a life
insurance policy covering only the life of the individual who
was insured under such policy on such date. Any increase on or
after such date in the amount of such indebtedness shall be
treated as indebtedness incurred after such date.
``(3) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage shall be determined in
accordance with the following table:
``In the case of periods
The applicable
in calendar year:
percentage is:
1996................................. 20 percent
1997................................. 40 percent
1998................................. 60 percent
1999................................. 80 percent.''
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to interest paid or accrued after December 31, 1995.
(2) Exception.--The amendments made by this section shall
not apply to contracts purchased on or before June 20, 1986.
(d) 4-Year Spread of Income Inclusion on Surrender, Etc. of
Contracts.--
(1) In general.--In the case of indebtedness with respect
to any life insurance policy described in paragraph (4) of
section 264(a) of the Internal Revenue Code of 1986, if--
(A) the interest paid or accrued after December 31,
1995, on such indebtedness is not allowed as a
deduction under chapter 1 of such Code by reason of
such paragraph (4) (as amended by this section), and
(B) the entire amount of interest paid or accrued
on or before such date on such indebtedness was allowed
as a deduction under such chapter 1,
then (in lieu of any other inclusion in gross income) the
qualified amount with respect to such policy shall be
includible in gross income ratably over the 4 taxable years
beginning with the taxable year such amount would (but for this
paragraph) be includible.
(2) Qualified amount.--For purposes of paragraph (1), the
term ``qualified amount'' means, with respect to any policy,
the amount received under such policy--
(A) on the complete surrender, redemption, or
maturity of such policy during 1996, or
(B) in full discharge during 1996 of the obligation
under the policy which is in the nature of a refund of
the consideration paid for the policy,
but only to the extent such amount is includible in gross
income for the taxable year in which the event described in
subparagraph (A) or (B) occurs.
(3) Special rule.--A contract shall not be treated as
failing to meet the requirement of section 264(c)(1) of the
Internal Revenue Code of 1986 solely by reason of an occurrence
described in subparagraph (A) or (B) of paragraph (2) of this
subsection.
SEC. 13604. TERMINATION OF SUSPENSE ACCOUNTS FOR FAMILY CORPORATIONS
REQUIRED TO USE ACCRUAL METHOD OF ACCOUNTING.
(a) In General.--Subsection (i) of section 447 (relating to method
of accounting for corporations engaged in farming) is amended by adding
at the end the following new paragraph:
``(7) Termination.--
``(A) In general.--No suspense account may be
established under this subsection by any corporation
required by this section to change its method of
accounting for any taxable year ending after September
13, 1995.
``(B) 20-year phaseout of existing suspense
accounts.--Each suspense account under this subsection
shall be reduced (but not below zero) for each of the
first 20 taxable years beginning after September 13,
1995, by an amount equal to the applicable portion of
such account. Any reduction in a suspense account under
this paragraph shall be included in gross income for
the taxable year of the reduction. The amount of the
reduction required under this paragraph for any taxable
year shall be reduced (but not below zero) by the
amount of any reduction required for such taxable year
under any other provision of this subsection.
``(C) Applicable portion.--For purposes of
subparagraph (B), the term `applicable portion' means,
for any taxable year, the amount which would ratably
reduce the amount in the account (after taking into
account prior reductions) to zero over the period
consisting of such taxable year and the remaining
taxable years in such first 20 taxable years.''
(b) Effective Date.--The amendment made by this section shall apply
to taxable years ending after September 13, 1995.
SEC. 13605. TERMINATION OF PUERTO RICO AND POSSESSION TAX CREDIT.
(a) In General.--Section 936 is amended by adding at the end the
following new subsection:
``(j) Termination.--
``(1) In general.--This section shall not apply to any
taxable year beginning after December 31, 1995.
``(2) Exception for existing claimants.--
``(A) In general.--Paragraph (1) shall be applied
by substituting `2005' for `1995' in the case of an
existing credit claimant.
``(B) Exception terminates if new line of business
added.--If, after September 13, 1995, a corporation
which would (but for this subparagraph) be an existing
credit claimant adds a substantial new line of
business, such corporation shall cease to be treated as
an existing credit claimant as of the close of the
taxable year ending before the date of such addition.
``(C) Existing credit claimant.--For purposes of
this subsection, the term `existing credit claimant'
means any corporation which satisfied the conditions of
both subparagraph (A) and subparagraph (B) of
subsection (a)(2) for at least 1 base period year for
which such corporation elected the application of this section.
``(3) Limit on credit of existing claimants.--
``(A) In general.--In the case of an existing
credit claimant, the aggregate amount of income taken
into account under subsection (a)(1) for any taxable
year beginning after December 31, 1995 (hereinafter in
this subsection referred to as the `current year'),
shall not exceed the adjusted base period income of
such claimant.
``(B) Coordination with subsection (a)(4).--The
amount of income described in subsection (a)(1)(A)
which is taken into account in applying subsection
(a)(4) shall be such income as reduced under this
paragraph. In determining such reduction, any reduction
under subparagraph (A) in the amount which would
otherwise be taken into account under subsection (a)(1)
shall be allocated between the income described in
subparagraph (A) thereof and the income described in
subparagraph (B) thereof in proportion to the
respective amounts of such incomes.
``(4) Adjusted base period income.--For purposes of
paragraph (3)--
``(A) In general.--The term `adjusted base period
income' means the average of the inflation-adjusted
possession incomes of the corporation for each base
period year.
``(B) Inflation-adjusted possession income.--For
purposes of subparagraph (A), the inflation-adjusted
possession income of any corporation for any base
period year shall be an amount equal to the possession
income of such corporation for such base period year
multiplied by the inflation adjustment percentage for
such base period year.
``(C) Inflation adjustment percentage.--For
purposes of subparagraph (B), the inflation adjustment
percentage for any base period year means, with respect
to the current year, the percentage (if any) by which--
``(i) the CPI for last calendar year ending
before the beginning of the current year,
exceeds
``(ii) the CPI for last calendar year
ending before the beginning of the base period
year.
For purposes of the preceding sentence, the CPI for any
calendar year is the CPI (as defined in section
1(f)(5)) for such year under section 1(f)(4).
``(D) Increase in inflation adjustment percentage
for growth during base years.--The inflation adjustment
percentage (determined under subparagraph (C) without
regard to this subparagraph) for each of the 5 taxable
years referred to in paragraph (5)(A) shall be
increased by--
``(i) 5 percentage points in the case of a
taxable year ending during the 1-year period
ending on September 12, 1995;
``(ii) 10.25 percentage points in the case
of a taxable year ending during the 1-year
period ending on September 12, 1994;
``(iii) 15.76 percentage points in the case
of a taxable year ending during the 1-year
period ending on September 12, 1993;
``(iv) 21.55 percentage points in the case
of a taxable year ending during the 1-year
period ending on September 12, 1992; and
``(v) 27.63 percentage points in the case
of a taxable year ending during the 1-year
period ending on September 12, 1991.
``(5) Base period year.--For purposes of this subsection--
``(A) In general.--The term `base period year'
means each of 3 taxable years which are among the 5
most recent taxable years of the corporation ending
before September 13, 1995, determined by disregarding--
``(i) one taxable year for which the
corporation had the largest inflation-adjusted
possession income, and
``(ii) one taxable year for which the
corporation had the smallest inflation-adjusted
possession income.
``(B) Corporations not having significant
possession income throughout 5-year period.--
``(i) In general.--If a corporation does
not have significant possession income for each
of the most recent 5 taxable years ending
before September 13, 1995, then, in lieu of
applying subparagraph (A), the term `base period year' means only those
taxable years (of such 5 taxable years) for which the corporation has
significant possession income; except that, if such corporation has
significant possession income for 4 of such 5 taxable years, the rule
of subparagraph (A)(ii) shall apply.
``(ii) Special rule.--If there is no year
(of such 5 taxable years) for which a
corporation has significant possession income--
``(I) the term `base period year'
means the first taxable year ending on
or after September 13, 1995, but
``(II) the amount of possession
income for such year which is taken
into account under paragraph (4) shall
be the amount which would be determined
if such year were a short taxable year
ending on August 31, 1995.
``(iii) Significant possession income.--For
purposes of this subparagraph, the term
`significant possession income' means
possession income which exceeds 2 percent of
the possession income of the taxpayer for the
taxable year (of the period of 6 taxable years
ending with the first taxable year ending on or
after September 13, 1995) having the greatest
possession income.
``(C) Election to use one base period year.--
``(i) In general.--At the election of the
taxpayer, the term `base period year' means
only the last taxable year of the corporation
ending in calendar year 1992.
``(ii) Election.--An election under this
subparagraph by any possession corporation may
be made only for the corporation's first
taxable year beginning after December 31, 1995,
for which it is a possession corporation. The
rules of subclauses (II) and (III) of
subsection (a)(4)(B)(iii) shall apply to the
election under this subparagraph.
``(D) Acquisitions and dispositions.--Rules similar
to the rules of subparagraphs (A) and (B) of section
41(f)(3) shall apply for purposes of this subsection.
``(6) Possession income.--For purposes of this subsection,
the term `possession income' means the sum of the income
referred to in subsection (a)(1)(A) and the income referred to
in subsection (a)(1)(B). In no event shall possession income be
treated as being less than zero.
``(7) Short years.--If the current year or a base period
year is a short taxable year, the application of this
subsection shall be made with such annualizations as the
Secretary shall prescribe.''
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 1995.
SEC. 13606. DEPRECIATION UNDER INCOME FORECAST METHOD.
(a) General Rule.--Section 167 (relating to depreciation) is
amended by redesignating subsection (g) as subsection (h) and by
inserting after subsection (f) the following new subsection:
``(g) Depreciation Under Income Forecast Method.--
``(1) In general.--If the depreciation deduction allowable
under this section to any taxpayer with respect to any property
is determined under the income forecast method or any similar
method--
``(A) in determining the amount of the depreciation
deduction under such method, the estimated income from
the property shall include all estimated income from
use of the property,
``(B) the adjusted basis of the property shall only
include amounts with respect to which the requirements
of section 461(h) are satisfied,
``(C) the depreciation deduction under such method
for the 10th taxable year beginning after the taxable
year in which the property was placed in service shall
be equal to the adjusted basis of such property as of
the beginning of such 10th taxable year, and
``(D) such taxpayer shall pay (or be entitled to
receive) interest computed under the look-back method
of paragraph (2) for any recomputation year.
``(2) Look-back method.--The interest computed under the
look-back method of this paragraph for any recomputation year
shall be determined by--
``(A) first determining the depreciation deductions
under this section with respect to such property which
would have been allowable for prior taxable years if the determination
of the amounts so allowable had been made on the basis of the sum of
the following (instead of the estimated income with respect to such
property)--
``(i) the actual income from such property
for periods before the close of the
recomputation year, and
``(ii) an estimate of the future income
with respect to such property for periods after
the recomputation year,
``(B) second, determining (solely for purposes of
computing such interest) the overpayment or
underpayment of tax for each such prior taxable year
which would result solely from the application of
subparagraph (A), and
``(C) then using the adjusted overpayment rate (as
defined in section 460(b)(7)), compounded daily, on the
overpayment or underpayment determined under
subparagraph (B).
For purposes of the preceding sentence, any cost incurred after
the property is placed in service (which is not treated as a
separate property under paragraph (5)) shall be taken into
account by discounting (using the Federal mid-term rate
determined under section 1274(d) as of the time such cost is
incurred) such cost to its value as of the date the property is
placed in service. The taxpayer may elect with respect to any
property to have the preceding sentence not apply to such
property.
``(3) Exception from look-back method.--Paragraph (1)(D)
shall not apply with respect to any property which, when placed
in service by the taxpayer, had a basis of $100,000 or less.
``(4) Recomputation year.--For purposes of this subsection,
except as provided in regulations, the term `recomputation
year' means, with respect to any property, the third and the
10th taxable years beginning after the taxable year in which
the property was placed in service, unless the actual income
from the property for such third or 10th taxable year (as the
case may be) and each prior taxable year is within 10 percent
of the estimated income from the property for each such year
which was taken into account under paragraph (1)(A).
``(5) Special rules.--
``(A) Certain costs treated as separate property.--
For purposes of this section, the following costs shall
be treated as separate properties:
``(i) Any costs incurred with respect to
any property after the 10th taxable year
beginning after the taxable year in which the
property was placed in service.
``(ii) Any costs incurred after the
property is placed in service and before the
close of such 10th taxable year if such costs
are significant and give rise to a significant
increase in the income from the property which
was not included in the estimated income from
the property.
``(B) Syndication income from television series.--
In the case of property which is an episode in a
television series, estimated income from syndicating
such series shall not be required to be taken into
account under this subsection before the earlier of--
``(i) the 4th taxable year beginning after
the date the first episode in such series is
placed in service, or
``(ii) the earliest taxable year in which
the taxpayer had a reasonable expectation that
there would be a future syndication of such
series.
``(C) Collection of interest.--For purposes of
subtitle F (other than sections 6654 and 6655), any
interest required to be paid by the taxpayer under
paragraph (1) for any recomputation year shall be
treated as an increase in the tax imposed by this
chapter for such year.
``(D) Determinations.--For purposes of this
subsection, determinations of the amount of income from
any property shall be determined in the same manner as
for purposes of applying the income forecast method;
except that any income from the disposition of such
property shall be taken into account.
``(E) Treatment of pass-thru entities.--Rules
similar to the rules of section 460(b)(4) shall apply
for purposes of this subsection.''
(b) Effective Date.--
(1) In general.--The amendment made by subsection (a) shall
apply to property placed in service after September 13, 1995.
(2) Binding contracts.--The amendment made by subsection
(a) shall not apply to any property produced or acquired by the
taxpayer pursuant to a written contract which was binding on
September 13, 1995, and at all times thereafter before such
production or acquisition.
SEC. 13607. TRANSFERS OF EXCESS PENSION ASSETS.
(a) In General.--Section 420 (relating to transfers of excess
pension assets to retiree health accounts) is amended by adding at the
end the following new subsection:
``(f) Similar Rules To Apply to Other Transfers of Excess Plan
Assets.--
``(1) In general.--If there is a qualified unrestricted
transfer of any excess pension assets of a defined benefit plan
(other than a multiemployer plan) to an employer--
``(A) a trust which is part of such plan shall not
be treated as failing to meet the requirements of
section 401(a) solely by reason of such transfer (or
any other action authorized under this section), and
``(B) such transfer shall not be treated as a
prohibited transaction for purposes of section 4975.
The gross income of the employer shall include the amount of
any qualified transfer made during the taxable year.
``(2) Qualified unrestricted transfer.--For purposes of
this section--
``(A) In general.--The term `qualified unrestricted
transfer' means a transfer--
``(i) of excess pension assets of a defined
benefit plan to the employer, and
``(ii) with respect to which the
requirements of subsection (c)(2)(A) are met
(determined by treating such transfer as a
qualified transfer).
``(B) Coordination with transfers to retiree health
accounts.--Such term shall not include any qualified
transfer (as defined in subsection (b)).
``(C) Expiration.--No transfer in any taxable year
beginning after December 31, 2000, shall be treated as
a qualified unrestricted transfer.
``(3) Definition and special rule.--For purposes of this
subsection--
``(A) Excess pension assets.--The term `excess
pension assets' has the meaning given such term by
subsection (e)(2); except that the amount thereof shall
be the lesser of--
``(i) the amount determined as of the most
recent valuation date of the plan preceding the
transfer, or
``(ii) the amount determined as of January
1, 1995 (or, if January 1, 1995, is not a
valuation date, the most recent prior valuation
date).
``(B) Coordination with section 412.--In the case
of a qualified unrestricted transfer--
``(i) any assets transferred in a plan year
on or before the valuation date for such year
(and any income allocable thereto) shall, for
purposes of section 412, be treated as assets
in the plan as of the valuation date for such
year, and
``(ii) the plan shall be treated as having
a net experience loss under section
412(b)(2)(B)(iv) in an amount equal to the
amount of such transfer and for which
amortization charges begin for the first plan
year after the plan year in which such transfer
occurs, except that such section shall be
applied to such amount by substituting `10 plan
years' for `5 plan years'.
``(C) Treatment of transfers.--Except for purposes
of this section, a qualified unrestricted transfer
shall be treated as a qualified transfer to a health
benefits account.''
(b) Reversion Tax.--Section 4980 (relating to tax on reversion of
qualified plan assets to employers) is amended by adding at the end the
following new subsection:
``(e) Special Rules for Qualified Unrestricted Transfers Under
Section 420.--In the case of a qualified unrestricted transfer to which
section 420(f) applies--
``(1) no tax shall be imposed by subsection (a) if such
transfer occurs before July 1, 1996,
``(2) subsection (a) shall be applied by substituting `6.5
percent' for `20 percent' if such transfer occurs after June
30, 1996, and
``(3) subsection (d) shall not apply.''
(c) Effective Date.--The amendments made by this section shall take
effect on January 1, 1995.
PART II--LEGAL REFORMS
SEC. 13611. REPEAL OF EXCLUSION FOR PUNITIVE DAMAGES AND FOR DAMAGES
NOT ATTRIBUTABLE TO PHYSICAL INJURIES OR SICKNESS.
(a) In General.--Paragraph (2) of section 104(a) (relating to
compensation for injuries or sickness) is amended to read as follows:
``(2) the amount of any damages (other than punitive
damages) received (whether by suit or agreement and whether as
lump sums or as periodic payments) on account of personal
physical injuries or physical sickness;''.
(b) Emotional Distress as Such Treated as Not Physical Injury or
Physical Sickness.--Section 104(a) is amended by striking the last
sentence and inserting the following new sentence: ``For purposes of
paragraph (2), emotional distress shall not be treated as a physical
injury or physical sickness. The preceding sentence shall not apply to
an amount of damages not in excess of the amount paid for medical care
(described in subparagraph (A) or (B) of section 213(d)(1))
attributable to emotional distress.''
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to amounts received
after December 31, 1995, in taxable years ending after such
date.
(2) Exception.--The amendments made by this section shall
not apply to any amount received under a written binding
agreement, court decree, or mediation award in effect on (or
issued on or before) September 13, 1995.
SEC. 13612. REPORTING OF CERTAIN PAYMENTS MADE TO ATTORNEYS.
(a) In General.--Section 6045 (relating to returns of brokers) is
amended by adding at the end the following new subsection:
``(f) Return Required In The Case of Payments to Attorneys.--
``(1) In general.--Any person engaged in a trade or
business and making a payment (in the course of such trade or
business) to which this subsection applies shall file a return
under subsection (a) and a statement under subsection (b) with
respect to such payment.
``(2) Application of subsection.--
``(A) In general.--This subsection shall apply to
any payment to an attorney in connection with legal
services (whether or not such services are performed
for the payor).
``(B) Exception.--This subsection shall not apply
to the portion of any payment which is required to be
reported under section 6041(a) (or would be so required
but for the dollar limitation contained therein) or
section 6051.''
(b) Reporting of Attorneys Fees Payable to Corporations.--The
regulations providing an exception under section 6041 of the Internal
Revenue Code of 1986 for payments made to corporations shall not apply
to payments of attorneys fees.
(c) Effective Date.--The amendment made by subsection (a), and
subsection (b), shall apply to payments made after December 31, 1995.
PART III--TREATMENT OF INDIVIDUALS WHO LOSE UNITED STATES CITIZENSHIP
SEC. 13616. REVISION OF INCOME, ESTATE, AND GIFT TAXES ON INDIVIDUALS
WHO LOSE UNITED STATES CITIZENSHIP.
(a) In General.--Subsection (a) of section 877 is amended to read
as follows:
``(a) Treatment of Expatriates.--
``(1) In general.--Every nonresident alien individual who,
within the 10-year period immediately preceding the close of
the taxable year, lost United States citizenship, unless such
loss did not have for 1 of its principal purposes the avoidance
of taxes under this subtitle or subtitle B, shall be taxable
for such taxable year in the manner provided in subsection (b)
if the tax imposed pursuant to such subsection exceeds the tax
which, without regard to this section, is imposed pursuant to
section 871.
``(2) Certain individuals treated as having tax avoidance
purpose.--For purposes of paragraph (1), an individual shall be
treated as having a principal purpose to avoid such taxes if--
``(A) the average annual net income tax (as defined
in section 38(c)(1)) of such individual for the period
of 5 taxable years ending before the date of the loss
of United States citizenship is greater than $100,000,
or
``(B) the net worth of the individual as of such
date is $500,000 or more.
In the case of the loss of United States citizenship in any
calendar year after 1996, such $100,000 and $500,000 amounts
shall be increased by an amount equal to such dollar amount
multiplied by the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year by substituting `1994'
for `1992' in subparagraph (B) thereof. Any increase under the
preceding sentence shall be rounded to the nearest multiple of
$1,000.''
(b) Exceptions.--
(1) In general.--Section 877 is amended by striking
subsection (d), by redesignating subsection (c) as subsection
(d), and by inserting after subsection (b) the following new
subsection:
``(c) Tax Avoidance Not Presumed in Certain Cases.--
``(1) In general.--Subsection (a)(2) shall not apply to an
individual if--
``(A) such individual is described in a
subparagraph of paragraph (2) of this subsection, and
``(B) within the 1-year period beginning on the
date of the loss of United States citizenship, such
individual submits a ruling request for the Secretary's
determination as to whether such loss has for 1 of its
principal purposes the avoidance of taxes under this
subtitle or subtitle B.
``(2) Individuals described.--
``(A) Dual citizenship, etc.--An individual is
described in this subparagraph if--
``(i) the individual became at birth a
citizen of the United States and a citizen of
another country and continues to be a citizen
of such other country, or
``(ii) the individual becomes (not later
than the close of a reasonable period after
loss of United States citizenship) a citizen of
the country in which--
``(I) such individual was born,
``(II) if such individual is
married, such individual's spouse was
born, or
``(III) either of such individual's
parents were born.
``(B) Long-term foreign residents.--An individual
is described in this subparagraph if, for each year in
the 10-year period ending on the date of loss of United
States citizenship, the individual was present in the
United States for 30 days or less. The rule of section
7701(b)(3)(D)(ii) shall apply for purposes of this
subparagraph.
``(C) Renunciation upon reaching age of majority.--
An individual is described in this subparagraph if the
individual's loss of United States citizenship occurs
before such individual attains age 18\1/2\.
``(D) Individuals specified in regulations.--An
individual is described in this subparagraph if the
individual is described in a category of individuals
prescribed by regulation by the Secretary.''
(2) Technical amendment.--Paragraph (1) of section 877(b)
of such Code is amended by striking ``subsection (c)'' and
inserting ``subsection (d)''.
(c) Treatment of Property Disposed of in Nonrecognition
Transactions; Treatment of Distributions From Certain Controlled
Foreign Corporations.--Subsection (d) of section 877, as redesignated
by subsection (b), is amended to read as follows:
``(d) Special Rules for Source, Etc.--For purposes of subsection
(b)--
``(1) Source rules.--The following items of gross income
shall be treated as income from sources within the United
States:
``(A) Sale of property.--Gains on the sale or
exchange of property (other than stock or debt
obligations) located in the United States.
``(B) Stock or debt obligations.--Gains on the sale
or exchange of stock issued by a domestic corporation
or debt obligations of United States persons or of the
United States, a State or political subdivision
thereof, or the District of Columbia.
``(C) Income or gain derived from controlled
foreign corporation.--Any income or gain derived from
stock in a foreign corporation but only--
``(i) if the individual losing United
States citizenship owned (within the meaning of
section 958(a)), or is considered as owning (by
applying the ownership rules of section
958(b)), at any time during the 2-year period
ending on the date of the loss of United States
citizenship, more than 50 percent of--
``(I) the total combined voting
power of all classes of stock entitled
to vote of such corporation, or
``(II) the total value of the stock
of such corporation, and
``(ii) to the extent such income or gain
does not exceed the earnings and profits
attributable to such stock which were earned or
accumulated before the loss of citizenship and
during periods that the ownership requirements
of clause (i) are met.
``(2) Gain recognition on certain exchanges.--
``(A) In general.--In the case of any exchange of
property to which this paragraph applies,
notwithstanding any other provision of this title, such
property shall be treated as sold for its fair market
value on the date of such exchange, and any gain shall
be recognized for the taxable year which includes such
date.
``(B) Exchanges to which paragraph applies.--This
paragraph shall apply to any exchange during the 10-
year period described in subsection (a) if--
``(i) gain would not (but for this
paragraph) be recognized on such exchange in
whole or in part for purposes of this subtitle,
``(ii) income derived from such property
was from sources within the United States (or,
if no income was so derived, would have been
from such sources), and
``(iii) income derived from the property
acquired in the exchange would be from sources
outside the United States.
``(C) Exception.--Subparagraph (A) shall not apply
if the individual enters into an agreement with the
Secretary which specifies that any income or gain
derived from the property acquired in the exchange (or
any other property which has a basis determined in
whole or part by reference to such property) during
such 10-year period shall be treated as from sources
within the United States. If the property transferred
in the exchange is disposed of by the person acquiring
such property, such agreement shall terminate and any
gain which was not recognized by reason of such
agreement shall be recognized as of the date of such
disposition.
``(D) Secretary may extend period.--To the extent
provided in regulations prescribed by the Secretary,
subparagraph (B) shall be applied by substituting the
15-year period beginning 5 years before the loss of
United States citizenship for the 10-year period
referred to therein.
``(E) Secretary may require recognition of gain in
certain cases.--To the extent provided in regulations
prescribed by the Secretary--
``(i) the removal of appreciated tangible
personal property from the United States, and
``(ii) any other occurrence which (without
recognition of gain) results in a change in the
source of the income or gain from property from
sources within the United States to sources
outside the United States,
shall be treated as an exchange to which this paragraph
applies.
``(3) Substantial diminishing of risks of ownership.--For
purposes of determining whether this section applies to any
gain on the sale or exchange of any property, the running of
the 10-year period described in subsection (a) shall be
suspended for any period during which the individual's risk of
loss with respect to the property is substantially diminished
by--
``(A) the holding of a put with respect to such
property (or similar property),
``(B) the holding by another person of a right to
acquire the property, or
``(C) a short sale or any other transaction.''
(d) Credit for Foreign Taxes Imposed on United States Source
Income.--
(1) Subsection (b) of section 877 is amended by adding at
the end the following new sentence: ``The tax imposed solely by
reason of this section shall be reduced (but not below zero) by
the amount of any income, war profits, and excess profits taxes
(within the meaning of section 903) paid to any foreign country
or possession of the United States on any income of the
taxpayer on which tax is imposed solely by reason of this
section.''
(2) Subsection (a) of section 877, as amended by subsection
(a), is amended by inserting ``(after any reduction in such tax
under the last sentence of such subsection)'' after ``such
subsection''.
(e) Comparable Estate and Gift Tax Treatment.--
(1) Estate tax.--
(A) In general.--Subsection (a) of section 2107 is
amended to read as follows:
``(a) Treatment of Expatriates.--
``(1) Rate of tax.--A tax computed in accordance with the
table contained in section 2001 is hereby imposed on the
transfer of the taxable estate, determined as provided in
section 2106, of every decedent nonresident not a citizen of
the United States if, within the 10-year period ending with the
date of death, such decedent lost United States citizenship,
unless such loss did not have for 1 of its principal purposes
the avoidance of taxes under this subtitle or subtitle A.
``(2) Certain individuals treated as having tax avoidance
purpose.--
``(A) In general.--For purposes of paragraph (1),
an individual shall be treated as having a principal
purpose to avoid such taxes if such individual is so
treated under section 877(a)(2).
``(B) Exception.--Subparagraph (A) shall not apply
to a decedent meeting the requirements of section
877(c)(1).''
(B) Credit for foreign death taxes.--Subsection (c)
of section 2107 is amended by redesignating paragraph
(2) as paragraph (3) and by inserting after paragraph
(1) the following new paragraph:
``(2) Credit for foreign death taxes.--
``(A) In general.--The tax imposed by subsection
(a) shall be credited with the amount of any estate,
inheritance, legacy, or succession taxes actually paid
to any foreign country in respect of any property which
is included in the gross estate solely by reason of
subsection (b).
``(B) Limitation on credit.--The credit allowed by
subparagraph (A) for such taxes paid to a foreign
country shall not exceed the lesser of--
``(i) the amount which bears the same ratio
to the amount of such taxes actually paid to
such foreign country in respect of property
included in the gross estate as the value of
the property included in the gross estate
solely by reason of subsection (b) bears to the
value of all property subjected to such taxes
by such foreign country, or
``(ii) such property's proportionate share
of the excess of--
``(I) the tax imposed by subsection
(a), over
``(II) the tax which would be
imposed by section 2101 but for this
section.
``(C) Proportionate share.--For purposes of
subparagraph (B), a property's proportionate share is
the percentage which the value of the property which is
included in the gross estate solely by reason of
subsection (b) bears to the total value of the gross
estate.''
(C) Expansion of inclusion in gross estate of stock
of foreign corporations.--Paragraph (2) of section
2107(b) is amended by striking ``more than 50 percent
of'' and all that follows and inserting ``more than 50
percent of--
``(A) the total combined voting power of all
classes of stock entitled to vote of such corporation,
or
``(B) the total value of the stock of such
corporation,''.
(2) Gift tax.--
(A) In general.--Paragraph (3) of section 2501(a)
is amended to read as follows:
``(3) Exception.--
``(A) Certain individuals.--Paragraph (2) shall not
apply in the case of a donor who, within the 10-year
period ending with the date of transfer, lost United
States citizenship, unless such loss did not have for 1
of its principal purposes the avoidance of taxes under
this subtitle or subtitle A.
``(B) Certain individuals treated as having tax
avoidance purpose.--For purposes of subparagraph (A),
an individual shall be treated as having a principal
purpose to avoid such taxes if such individual is so
treated under section 877(a)(2).
``(C) Exception for certain individuals.--
Subparagraph (B) shall not apply to a decedent meeting
the requirements of section 877(c)(1).
``(D) Credit for foreign gift taxes.--The tax
imposed by this section solely by reason of this
paragraph shall be credited with the amount of any gift
tax actually paid to any foreign country in respect of
any gift which is taxable under this section solely by
reason of this paragraph.''
(f) Comparable Treatment of Lawful Permanent Residents Who Cease To
Be Taxed as Residents.--
(1) In general.--Section 877 is amended by redesignating
subsection (e) as subsection (f) and by inserting after
subsection (d) the following new subsection:
``(e) Comparable Treatment of Lawful Permanent Residents Who Cease
To Be Taxed as Residents.--
``(1) In general.--Any long-term resident of the United
States who--
``(A) ceases to be a lawful permanent resident of
the United States (within the meaning of section
7701(b)(6)), or
``(B) commences to be treated as a resident of a
foreign country under the provisions of a tax treaty
between the United States and the foreign country and
who does not waive the benefits of such treaty
applicable to residents of the foreign country,
shall be treated for purposes of this section and sections
2107, 2501, and 6039F in the same manner as if such resident
were a citizen of the United States who lost United States
citizenship on the date of such cessation or commencement.
``(2) Long-term resident.--For purposes of this subsection,
the term `long-term resident' means any individual (other than
a citizen of the United States) who is a lawful permanent
resident of the United States in at least 8 taxable years
during the period of 15 taxable years ending with the taxable
year during which the event described in subparagraph (A) or
(B) of paragraph (1) occurs. For purposes of the preceding
sentence, an individual shall not be treated as a lawful
permanent resident for any taxable year if such individual is
treated as a resident of a foreign country for the taxable year
under the provisions of a tax treaty between the United States
and the foreign country and does not waive the benefits of such
treaty applicable to residents of the foreign country.
``(3) Special rules.--
``(A) Exceptions not to apply.--Subsection (c)
shall not apply to an individual who is treated as
provided in paragraph (1).
``(B) Step-up in basis.--Solely for purposes of
determining any tax imposed by reason of this
subsection, property which was held by the long-term
resident on the date the individual first became a
resident of the United States shall be treated as
having a basis on such date of not less than the fair
market value of such property on such date. The
preceding sentence shall not apply if the individual
elects not to have such sentence apply. Such an
election, once made, shall be irrevocable.
``(4) Authority to exempt individuals.--This subsection
shall not apply to an individual who is described in a category
of individuals prescribed by regulation by the Secretary.
``(5) Regulations.--The Secretary shall prescribe such
regulations as may be appropriate to carry out this subsection,
including regulations providing for the application of this
subsection in cases where an alien individual becomes a
resident of the United States during the 10-year period after
being treated as provided in paragraph (1).''
(2) Conforming amendments.--
(A) Section 2107 is amended by striking subsection
(d), by redesignating subsection (e) as subsection (d),
and by inserting after subsection (d) (as so
redesignated) the following new subsection:
``(e) Cross Reference.--
``For comparable treatment of long-term
lawful permanent residents who ceased to be taxed as residents, see
section 877(e).''
(B) Paragraph (3) of section 2501(a) (as amended by
subsection (e)) is amended by adding at the end the
following new subparagraph:
``(E) Cross reference.--
``For comparable treatment of long-term
lawful permanent residents who ceased to be taxed as residents, see
section 877(e).''
(g) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to--
(A) individuals losing United States citizenship
(within the meaning of section 877 of the Internal
Revenue Code of 1986) on or after February 6, 1995, and
(B) long-term residents of the United States with
respect to whom an event described in subparagraph (A)
or (B) of section 877(e)(1) of such Code occurs on or
after June 13, 1995.
(2) Special rule.--
(A) In general.--In the case of an individual who
performed an act of expatriation specified in paragraph
(1), (2), (3), or (4) of section 349(a) of the
Immigration and Nationality Act (8 U.S.C. 1481(a)(1)-
(4)) before February 6, 1995, but who did not, on or
before such date, furnish to the United States
Department of State a signed statement of voluntary
relinquishment of United States nationality confirming
the performance of such act, the amendments made by
this section shall apply to such individual except
that--
(i) the 10-year period described in section
877(a) of such Code shall not expire before the
end of the 10-year period beginning on the date
such statement is so furnished, and
(ii) the 1-year period referred to in
section 877(c) of such Code, as amended by this
section, shall not expire before the date which
is 1 year after the date of the enactment of
this Act.
(B) Exception.--Subparagraph (A) shall not apply if
the individual establishes to the satisfaction of the
Secretary of the Treasury that such loss of United
States citizenship occurred before February 6, 1994.
SEC. 13617. INFORMATION ON INDIVIDUALS LOSING UNITED STATES
CITIZENSHIP.
(a) In General.--Subpart A of part III of subchapter A of chapter
61 is amended by inserting after section 6039E the following new
section:
``SEC. 6039F. INFORMATION ON INDIVIDUALS LOSING UNITED STATES
CITIZENSHIP.
``(a) In General.--Notwithstanding any other provision of law, any
individual who loses United States citizenship (within the meaning of
section 877(a)) shall provide a statement which includes the
information described in subsection (b). Such statement shall be--
``(1) provided not later than the earliest date of any act
referred to in subsection (c), and
``(2) provided to the person or court referred to in
subsection (c) with respect to such act.
``(b) Information To Be Provided.--Information required under
subsection (a) shall include--
``(1) the taxpayer's TIN,
``(2) the mailing address of such individual's principal
foreign residence,
``(3) the foreign country in which such individual is
residing,
``(4) the foreign country of which such individual is a
citizen,
``(5) in the case of an individual having a net worth of at
least the dollar amount applicable under section 877(a)(2)(B),
information detailing the assets and liabilities of such
individual, and
``(6) such other information as the Secretary may
prescribe.
``(c) Acts Described.--For purposes of this section, the acts
referred to in this subsection are--
``(1) the individual's renunciation of his United States
nationality before a diplomatic or consular officer of the
United States pursuant to paragraph (5) of section 349(a) of
the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
``(2) the individual's furnishing to the United States
Department of State a signed statement of voluntary
relinquishment of United States nationality confirming the
performance of an act of expatriation specified in paragraph
(1), (2), (3), or (4) of section 349(a) of the Immigration and
Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
``(3) the issuance by the United States Department of State
of a certificate of loss of nationality to the individual, or
``(4) the cancellation by a court of the United States of a
naturalized citizen's certificate of naturalization.
``(d) Penalty.--Any individual failing to provide a statement
required under subsection (a) shall be subject to a penalty for each
year (of the 10-year period beginning on the date of loss of United
States citizenship) during any portion of which such failure continues
in an amount equal to the greater of--
``(1) 5 percent of the tax required to be paid under
section 877 for the taxable year ending during such year, or
``(2) $1,000,
unless it is shown that such failure is due to reasonable cause and not
to willful neglect.
``(e) Information To Be Provided To Secretary.--Notwithstanding any
other provision of law--
``(1) any Federal agency or court which collects (or is
required to collect) the statement under subsection (a) shall
provide to the Secretary--
``(A) a copy of any such statement, and
``(B) the name (and any other identifying
information) of any individual refusing to comply with
the provisions of subsection (a),
``(2) the Secretary of State shall provide to the Secretary
a copy of each certificate as to the loss of American
nationality under section 358 of the Immigration and
Nationality Act which is approved by the Secretary of State,
and
``(3) the Federal agency primarily responsible for
administering the immigration laws shall provide to the
Secretary the name of each lawful permanent resident of the
United States (within the meaning of section 7701(b)(6)) whose
status as such has been revoked or has been administratively or
judicially determined to have been abandoned.
Notwithstanding any other provision of law, not later than 30 days
after the close of each calendar quarter, the Secretary shall publish
in the Federal Register the name of each individual losing United
States citizenship (within the meaning of section 877(a)) with respect
to whom the Secretary receives information under the preceding sentence
during such quarter.
``(f) Reporting by Long-Term Lawful Permanent Residents Who Cease
To Be Taxed as Residents.--In lieu of applying the last sentence of
subsection (a), any individual who is required to provide a statement
under this section by reason of section 877(e)(1) shall provide such
statement with the return of tax imposed by chapter 1 for the taxable
year during which the event described in such section occurs.
``(g) Exemption.--The Secretary may by regulations exempt any class
of individuals from the requirements of this section if he determines
that applying this section to such individuals is not necessary to
carry out the purposes of this section.''
(b) Clerical Amendment.--The table of sections for such subpart A
is amended by inserting after the item relating to section 6039E the
following new item:
``Sec. 6039F. Information on individuals
losing United States
citizenship.''
(c) Effective Date.--The amendments made by this section shall
apply to--
(1) individuals losing United States citizenship (within
the meaning of section 877 of the Internal Revenue Code of
1986) after the date of the enactment of this Act, and
(2) long-term residents of the United States with respect
to whom an event described in subparagraph (A) or (B) of
section 877(e)(1) of such Code occurs after such date.
SEC. 13618. REPORT ON TAX COMPLIANCE BY UNITED STATES CITIZENS AND
RESIDENTS LIVING ABROAD.
Not later than 90 days after the date of the enactment of this Act,
the Secretary of the Treasury shall prepare and submit to the Committee
on Ways and Means of the House of Representatives and the Committee on
Finance of the Senate a report--
(1) describing the compliance with subtitle A of the
Internal Revenue Code of 1986 by citizens and lawful permanent
residents of the United States (within the meaning of section
7701(b)(6) of such Code) residing outside the United States,
and
(2) recommending measures to improve such compliance
(including improved coordination between executive branch
agencies).
PART IV--REFORMS RELATING TO ENERGY PROVISIONS
SEC. 13621. TERMINATION OF CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN
RENEWABLE RESOURCES.
(a) Facilities Must Be Placed in Service Before September 14,
1995.--Paragraph (3) of section 45(c) (defining qualified facility) is
amended by striking ``July 1, 1999'' and inserting ``September 14,
1995''.
(b) Effective Date.--
(1) In general.--The amendment made by this section shall
apply to taxable years ending after September 13, 1995.
(2) Binding contracts.--The amendment made by this section
shall not apply to any facility--
(A) which is constructed or acquired by the
taxpayer pursuant to a written contract which was
binding on September 13, 1995, and at all times
thereafter before such construction or acquisition, and
(B) which is placed in service before September 14,
1996.
SEC. 13622. EXCLUSION FOR ENERGY CONSERVATION SUBSIDIES LIMITED TO
SUBSIDIES WITH RESPECT TO DWELLING UNITS.
(a) In General.--Paragraph (1) of section 136(c) (defining energy
conservation measure) is amended by striking ``energy demand--'' and
all that follows and inserting ``energy demand with respect to a
dwelling unit.''
(b) Conforming Amendments.--
(1) Subsection (a) of section 136 is amended to read as
follows:
``(a) Exclusion.--Gross income shall not include the value of any
subsidy provided (directly or indirectly) by a public utility to a
customer for the purchase or installation of any energy conservation
measure.''
(2) Paragraph (2) of section 136(c) is amended--
(A) by striking subparagraph (A) and by
redesignating subparagraphs (B) and (C) as
subparagraphs (A) and (B), respectively, and
(B) by striking ``and special rules'' in the
paragraph heading.
(c) Effective Date.--The amendments made by this section shall
apply to amounts received after September 13, 1995, unless received
pursuant to a written binding contract in effect on September 13, 1995,
and at all times thereafter.
PART V--REFORMS RELATING TO NONRECOGNITION PROVISIONS
SEC. 13626. BASIS ADJUSTMENT TO PROPERTY HELD BY CORPORATION WHERE
STOCK IN CORPORATION IS REPLACEMENT PROPERTY UNDER
INVOLUNTARY CONVERSION RULES.
(a) In General.--Subsection (b) of section 1033 is amended to read
as follows:
``(b) Basis of Property Acquired Through Involuntary Conversion.--
``(1) Conversions described in subsection (a)(1).--If the
property was acquired as the result of a compulsory or
involuntary conversion described in subsection (a)(1), the
basis shall be the same as in the case of the property so
converted--
``(A) decreased in the amount of any money received
by the taxpayer which was not expended in accordance
with the provisions of law (applicable to the year in
which such conversion was made) determining the taxable
status of the gain or loss upon such conversion, and
``(B) increased in the amount of gain or decreased
in the amount of loss to the taxpayer recognized upon
such conversion under the law applicable to the year in
which such conversion was made.
``(2) Conversions described in subsection (a)(2).--In the
case of property purchased by the taxpayer in a transaction
described in subsection (a)(2) which resulted in the
nonrecognition of any part of the gain realized as the result
of a compulsory or involuntary conversion, the basis shall be
the cost of such property decreased in the amount of the gain
not so recognized; and if the property purchased consists of
more than 1 piece of property, the basis determined under this
sentence shall be allocated to the purchased properties in
proportion to their respective costs.
``(3) Property held by corporation the stock of which is
replacement property.--
``(A) In general.--If the basis of stock in a
corporation is decreased under paragraph (2), an amount
equal to such decrease shall also be applied to reduce
the basis of property held by the corporation at the
time the taxpayer acquired control (as defined in
subsection (a)(2)(E)) of such corporation.
``(B) Limitation.--Subparagraph (A) shall not apply
to the extent that it would (but for this subparagraph)
require a reduction in the aggregate adjusted bases of
the property of the corporation below the taxpayer's
adjusted basis of the stock in the corporation
(determined immediately after such basis is decreased
under paragraph (2)).
``(C) Allocation of basis reduction.--The decrease
required under subparagraph (A) shall be allocated--
``(i) first to property which is similar or
related in service or use to the converted
property,
``(ii) second to depreciable property (as
defined in section 1017(b)(3)(B)) not described
in clause (i), and
``(iii) then to other property.
``(D) Special rules.--
``(i) Reduction not to exceed adjusted
basis of property.--No reduction in the basis
of any property under this paragraph shall
exceed the adjusted basis of such property
(determined without regard to such reduction).
``(ii) Allocation of reduction among
properties.--If more than 1 property is
described in a clause of subparagraph (C), the
reduction under this paragraph shall be
allocated among such property in proportion to
the adjusted bases of such property (determined
without regard to such reduction).''
(b) Effective Date.--The amendment made by this section shall apply
to involuntary conversions occurring after September 13, 1995.
SEC. 13627. EXPANSION OF REQUIREMENT THAT INVOLUNTARILY CONVERTED
PROPERTY BE REPLACED WITH PROPERTY ACQUIRED FROM AN
UNRELATED PERSON.
(a) In General.--Subsection (i) of section 1033 is amended to read
as follows:
``(i) Replacement Property Must Be Acquired From Unrelated Person
in Certain Cases.--
``(1) In general.--If the property which is involuntarily
converted is held by a taxpayer to which this subsection
applies, subsection (a) shall not apply if the replacement
property or stock is acquired from a related person. The
preceding sentence shall not apply to the extent that the
related person acquired the replacement property or stock from
an unrelated person during the period applicable under
subsection (a)(2)(B).
``(2) Taxpayers to which subsection applies.--This
subsection shall apply to--
``(A) a C corporation,
``(B) a partnership in which 1 or more C
corporations own, directly or indirectly (determined in
accordance with section 707(b)(3)), more than 50
percent of the capital interest, or profits interest,
in such partnership at the time of the involuntary
conversion, and
``(C) any other taxpayer if, with respect to
property which is involuntarily converted during the
taxable year, the aggregate of the amount of realized
gain on such property on which there is realized gain
exceeds $100,000.
In the case of a partnership, subparagraph (C) shall apply with
respect to the partnership and with respect to each partner. A
similar rule shall apply in the case of an S corporation and
its shareholders.
``(3) Related person.--For purposes of this subsection, a
person is related to another person if the person bears a
relationship to the other person described in section 267(b) or
707(b)(1).''
(b) Effective Date.--The amendment made by this section shall apply
to involuntary conversions occurring after September 13, 1995.
SEC. 13628. NO ROLLOVER OR EXCLUSION OF GAIN ON SALE OF PRINCIPAL
RESIDENCE WHICH IS ATTRIBUTABLE TO DEPRECIATION
DEDUCTIONS.
(a) In General.--Subsection (d) of section 1034 (relating to
limitations) is amended by adding at the end the following new
paragraph:
``(3) Recognition of gain attributable to depreciation.--
Subsection (a) shall not apply to so much of the gain from the
sale of any residence as does not exceed the portion of the
depreciation adjustments (as defined in section 1250(b)(3))
attributable to periods after December 31, 1995, in respect of
such residence.''
(b) Comparable Treatment Under 1-Time Exclusion of Gain on Sale of
Principal Residence.--Subsection (d) of section 121 is amended by
adding at the end the following new paragraph:
``(10) Recognition of gain attributable to depreciation.--
``(A) In general.--Subsection (a) shall not apply
to so much of the gain from the sale of any property as
does not exceed the portion of the depreciation
adjustments (as defined in section 1250(b)(3))
attributable to periods after December 31, 1995, in
respect of such property.
``(B) Coordination with paragraph (5).--If this
section does not apply to gain attributable to a
portion of a residence by reason of paragraph (5),
subparagraph (A) shall not apply to depreciation
adjustments attributable to such portion.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years ending after December 31, 1995.
SEC. 13629. NONRECOGNITION OF GAIN ON SALE OF PRINCIPAL RESIDENCE BY
NONCITIZENS LIMITED TO NEW RESIDENCES LOCATED IN THE
UNITED STATES.
(a) In General.--Subsection (d) of section 1034 (relating to
limitations) (as amended by section 13628) is amended by adding at the
end the following new paragraph:
``(4) New residence must be located in united states in
certain cases.--
``(A) In general.--In the case of a sale of an old
residence by a taxpayer--
``(i) who is not a citizen of the United
States at the time of sale, and
``(ii) who is not a citizen or resident of
the United States on the date which is 2 years
after the date of the sale of such old
residence,
subsection (a) shall apply only if the new residence is
located in the United States or a possession of the
United States.
``(B) Property held jointly by husband and wife.--
Subparagraph (A) shall not apply if--
``(i) the old residence is held by a
husband and wife as joint tenants, tenants by
the entirety, or community property,
``(ii) such husband and wife make a joint
return for the taxable year of the sale or
exchange, and
``(iii) one spouse is a citizen of the
United States at the time of sale.''
(b) Effective Date.--
(1) In general.--The amendment made by this section shall
apply to sales of old residences after December 31, 1995.
(2) Treatment of purchases of new residences.--The
amendment made by this section shall not apply to new
residences--
(A) purchased before September 13, 1995, or
(B) purchased on or after such date pursuant to a
binding contract in effect on such date and at all
times thereafter before such purchase.
(3) Certain rules to apply.--For purposes of this
subsection, the rules of paragraphs (1), (2), and (3) of
section 1034(c) of the Internal Revenue Code of 1986 shall
apply.
PART VI--REFORMS RELATING TO GAMING ACTIVITIES
SEC. 13631. TREATMENT OF INDIAN GAMING ACTIVITIES UNDER UNRELATED
BUSINESS INCOME TAX.
(a) In General.--Paragraph (2) of section 511(a) (relating to
imposition of tax on unrelated business income of charitable, etc.,
organizations) is amended by adding at the end the following new
subparagraph:
``(C) Gaming activities of indian tribes.--
``(i) In general.--The tax imposed by
paragraph (1) shall apply to any Indian tribal
organization; except that, notwithstanding any
other provision of this part, in the case of
such an organization, the term `unrelated trade
or business' means only a trade or business of
conducting any class II or class III gaming
activity (as defined in section 4 of the Indian
Gaming Regulatory Act (25 U.S.C. 2701 et seq.),
as in effect on the date of the enactment of
this subparagraph), including a gaming activity
described in section 513(a)(1).
``(ii) Indian tribal organization.--For
purposes of clause (i), the term `Indian tribal
organization' means any Indian tribe and any
organization which is immune or exempt from tax
under this subtitle solely by reason of being
owned or controlled by an Indian tribe.''
(b) Treatment of Amounts Paid for Charitable Purposes, Etc., By
Reason of State or Federal Law.--Subsection (b) of section 512 is
amended by adding at the end the following new paragraph:
``(17) In the case of an Indian tribal organization (as
defined in section 511(a)(3)), if, by reason of State or
Federal law or of a contract with the United States or with any
State or political subdivision thereof, such organization is
required to use any portion of the net proceeds of any gaming
activity for specified purposes, the deduction for so using
such proceeds shall be treated as allowed under section 170 for
purposes of applying paragraph (10). The preceding sentence
shall not apply to such proceeds which are paid as general
revenues to the United States or to any State or political
subdivision thereof.''
(c) Effective Date.--The amendments made by this section shall take
effect on January 1, 1996.
(d) Study of Gambling Conducted by Tax-Exempt Organizations.--The
Secretary of the Treasury or his delegate shall conduct a study on the
nature and extent of gaming activities conducted by organizations
exempt from tax under section 501(a) of the Internal Revenue Code of
1986, including an examination of--
(1) the types of gaming activities (including bingo, pull
tabs, and casino nights) engaged in by charities and other
nonprofit organizations and the frequency of such activities;
(2) the dollar volume of such gaming activities;
(3) the nature and extent of the involvement of for-profit
entities and private parties in the management or operation of
gaming activities of such organizations;
(4) competition between taxable gaming activities and
gaming activities that are exempt from Federal income tax; and
(5) an analysis of the present law tax treatment of gaming
activities of tax-exempt organizations.
The study may include any recommendations for change, including
examination of the South End decision and the special exception for
bingo games. The Secretary shall submit the results of the study to the
Committee on Ways and Means of the House of Representatives and the
Committee on Finance of the Senate not later than July 1, 1996.
SEC. 13632. REPEAL OF TARGETED EXEMPTION FROM TAX ON UNRELATED TRADE OR
BUSINESS INCOME FROM GAMBLING IN CERTAIN STATES.
(a) In General.--Section 311 of the Tax Reform Act of 1984 is
hereby repealed.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to games of chance conducted after December 31, 1995, in taxable
years ending after such date.
SEC. 13633. EXTENSION OF WITHHOLDING TO CERTAIN GAMBLING WINNINGS.
(a) Repeal of Exemption for Bingo and Keno.--Paragraph (5) of
section 3402(q) is amended to read as follows:
``(5) Exemption for slot machines.--The tax imposed under
paragraph (1) shall not apply to winnings from a slot
machine.''
(b) Threshold Amount.--Paragraph (3) of section 3402(q) is
amended--
(1) by striking ``(B) and (C)'' in subparagraph (A) and
inserting ``(B), (C), and (D)'', and
(2) by adding at the end the following new subparagraph:
``(D) Bingo and keno.--Proceeds of more than $5,000
from a wager placed in a bingo or keno game.''
(c) Effective Date.--The amendments made by this section shall take
effect on January 1, 1996.
PART VII--OTHER REFORMS
SEC. 13636. SUNSET OF LOW-INCOME HOUSING CREDIT.
(a) Repeal of Reallocation of Unused Credits Among States.--
Subparagraph (D) of section 42(h)(3) is amended by adding at the end
the following new clause:
``(v) Termination.--No amount may be
allocated under this paragraph for any calendar
year after 1995.''
(b) Termination.--Section 42 is amended by adding at the end the
following new subsection:
``(o) Termination.--
``(1) In general.--Except as provided in paragraph (2)--
``(A) clause (i) of subsection (h)(3)(C) shall not
apply to any amount allocated after December 31, 1997,
and
``(B) subsection (h)(4) shall not apply to any
building placed in service after such date.
``(2) Exception for bond-financed buildings in progress.--
For purposes of paragraph (1)(B), a building shall be treated
as placed in service before January 1, 1998, if--
``(A) the bonds with respect to such building are
issued before such date,
``(B) the taxpayer's basis in the project (of which
the building is a part) as of December 31, 1997, is
more than 10 percent of the taxpayer's reasonably
expected basis in such project as of December 31, 1999,
and
``(C) such building is placed in service before
January 1, 2000.''
SEC. 13637. REPEAL OF CREDIT FOR CONTRIBUTIONS TO COMMUNITY DEVELOPMENT
CORPORATIONS.
(a) In General.--Section 13311 of the Revenue Reconciliation Act of
1993 (relating to credit for contributions to certain community
development corporations) is hereby repealed.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to contributions made after the date of the enactment of this Act
(other than contributions made pursuant to a legally enforceable
agreement which is effect on the date of the enactment of this Act).
SEC. 13638. REPEAL OF DIESEL FUEL TAX REBATE TO PURCHASERS OF DIESEL-
POWERED AUTOMOBILES AND LIGHT TRUCKS.
(a) In General.--Section 6427 is amended by striking subsection
(g).
(b) Conforming Amendments.--
(1) Paragraph (3) of section 34(a) is amended to read as
follows:
``(3) under section 6427 with respect to fuels used for
nontaxable purposes or resold during the taxable year
(determined without regard to section 6427(k)).''
(2) Paragraphs (1) and (2)(A) of section 6427(i) are each
amended--
(A) by striking ``(g),'', and
(B) by striking ``(or a qualified diesel powered
highway vehicle purchased)'' each place it appears.
(c) Effective Date.--The amendments made by this section shall
apply to vehicles purchased after December 31, 1995.
SEC. 13639. APPLICATION OF FAILURE-TO-PAY PENALTY TO SUBSTITUTE
RETURNS.
(a) General Rule.--Section 6651 (relating to failure to file tax
return or to pay tax) is amended by adding at the end the following new
subsection:
``(g) Treatment of Returns Prepared by Secretary Under Section
6020(b).--In the case of any return made by the Secretary under section
6020(b)--
``(1) such return shall be disregarded for purposes of
determining the amount of the addition under paragraph (1) of
subsection (a), but
``(2) such return shall be treated as the return filed by
the taxpayer for purposes of determining the amount of the
addition under paragraphs (2) and (3) of subsection (a).''
(b) Effective Date.--The amendment made by subsection (a) shall
apply in the case of any return the due date for which (determined
without regard to extensions) is after the date of the enactment of
this Act.
SEC. 13640. REPEAL OF SPECIAL RULE FOR RENTAL USE OF VACATION HOMES,
ETC., FOR LESS THAN 15 DAYS.
(a) In General.--Section 280A (relating to disallowance of certain
expenses in connection with business use of home, rental of vacation
homes, etc.) is amended by striking subsection (g).
(b) No Basis Reduction Unless Depreciation Claimed.--Section 1016
is amended by redesignating subsection (e) as subsection (f) and by
inserting after subsection (d) the following new subsection:
``(e) Special Rule Where Rental Use of Vacation Home, Etc., for
Less Than 15 Days.--If a dwelling unit is used during the taxable year
by the taxpayer as a residence and such dwelling unit is actually
rented for less than 15 days during the taxable year, the reduction
under subsection (a)(2) by reason of such rental use in any taxable
year beginning after December 31, 1995, shall not exceed the
depreciation deduction allowed for such rental use.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
SEC. 13641. ELECTION TO CEASE STATUS AS QUALIFIED SCHOLARSHIP FUNDING
CORPORATION.
(a) In General.--Subsection (d) of section 150 (relating to
definitions and special rules) is amended by adding at the end thereof
the following new paragraph:
``(3) Election to cease status as qualified scholarship
funding corporation.--
``(A) In general.--Any qualified scholarship
funding bond, and qualified student loan bond,
outstanding on the date of the issuer's election under
this paragraph (and any bond (or series of bonds)
issued to refund such a bond) shall not fail to be a
tax-exempt bond solely because the issuer ceases to be
described in subparagraphs (A) and (B) of paragraph (2)
if the issuer meets the requirements of subparagraphs
(B) and (C) of this paragraph.
``(B) Assets and liabilities of issuer transferred
to taxable subsidiary.--The requirements of this
subparagraph are met by an issuer if--
``(i) all of the student loan notes of the
issuer and other assets pledged to secure the
repayment of qualified scholarship funding bond
indebtedness of the issuer are transferred to
another corporation within a reasonable period
after the election is made under this
paragraph;
``(ii) such transferee corporation assumes
or otherwise provides for the payment of all of
the qualified scholarship funding bond
indebtedness of the issuer within a reasonable
period after the election is made under this
paragraph;
``(iii) to the extent permitted by law,
such transferee corporation assumes all of the
responsibilities, and succeeds to all of the
rights, of the issuer under the issuer's
agreements with the Secretary of Education in
respect of student loans;
``(iv) immediately after such transfer, the
issuer, together with any other issuer which
has made an election under this paragraph in
respect of such transferee, hold all of the
senior stock in such transferee corporation;
and
``(v) such transferee corporation is not
exempt from tax under this chapter.
``(C) Issuer to operate as independent organization
described in section 501(c)(3).--The requirements of
this subparagraph are met by an issuer if, within a
reasonable period after the transfer referred to in
subparagraph (B)--
``(i) the issuer is described in section
501(c)(3) and exempt from tax under section
501(a);
``(ii) the issuer no longer is described in
subparagraphs (A) and (B) of paragraph (2); and
``(iii) at least 80 percent of the members
of the board of directors of the issuer are
independent members.
``(D) Senior stock.--For purposes of this
paragraph, the term `senior stock' means stock--
``(i) which participates pro rata and fully
in the equity value of the corporation with all
other common stock of the corporation but which
has the right to payment of liquidation
proceeds prior to payment of liquidation
proceeds in respect of other common stock of
the corporation;
``(ii) which has a fixed right upon
liquidation and upon redemption to an amount
equal to the greater of--
``(I) the fair market value of such
stock on the date of liquidation or
redemption (whichever is applicable);
or
``(II) the fair market value of all
assets transferred in exchange for such
stock and reduced by the amount of all
liabilities of the corporation which
has made an election under this
paragraph assumed by the transferee
corporation in such transfer;
``(iii) the holder of which has the right
to require the transferee corporation to redeem
on a date that is not later than 10 years after
the date on which an election under this
paragraph was made and pursuant to such
election such stock was issued; and
``(iv) in respect of which, during the time
such stock is outstanding, there is not
outstanding any equity interest in the
corporation having any liquidation, redemption
or dividend rights in the corporation which are
superior to those of such stock.
``(E) Independent member.--The term `independent
member' means a member of the board of directors of the
issuer who (except for services as a member of such
board) receives no compensation directly or
indirectly--
``(i) for services performed in connection
with such transferee corporation, or
``(ii) for services as a member of the
board of directors or as an officer of such
transferee corporation.
For purposes of clause (ii), the term `officer'
includes any individual having powers or
responsibilities similar to those of officers.
``(F) Coordination with certain private foundation
taxes.--For purposes of sections 4942 (relating to the
excise tax on a failure to distribute income) and 4943
(relating to the excise tax on excess business
holdings), the transferee corporation referred to in
subparagraph (B) shall be treated as a functionally
related business (within the meaning of section
4942(j)(4)) with respect to the issuer during the
period commencing with the date on which an election is
made under this paragraph and ending on the date that
is the earlier of--
``(i) the last day of the last taxable year
for which more than 50 percent of the gross
income of such transferee corporation is
derived from, or more than 50 percent of the
assets (by value) of such transferee
corporation consists of, student loan notes
incurred under the Higher Education Act of
1965; or
``(ii) the last day of the taxable year of
the issuer during which occurs the date which
is 10 years after the date on which the
election under this paragraph is made.
``(G) Election.--An election under this paragraph
may be revoked only with the consent of the
Secretary.''
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
SEC. 13642. CERTAIN AMOUNTS DERIVED FROM FOREIGN CORPORATIONS TREATED
AS UNRELATED BUSINESS TAXABLE INCOME.
(a) General Rule.--Subsection (b) of section 512 (relating to
modifications) is amended by adding at the end thereof the following
new paragraph:
``(18) Treatment of certain amounts derived from foreign
corporations.--
``(A) In general.--Notwithstanding paragraph (1),
any amount included in gross income under section
951(a)(1)(A) shall be included as an item of gross
income derived from an unrelated trade or business to
the extent the amount so included is attributable to
insurance income (as defined in section 953) which, if
derived directly by the organization, would be treated
as gross income from an unrelated trade or business.
There shall be allowed all deductions directly
connected with amounts included in gross income under
the preceding sentence.
``(B) Exception.--Subparagraph (A) shall not apply
to income attributable to a policy of insurance or
reinsurance with respect to which the person (directly
or indirectly) insured is--
``(i) such organization,
``(ii) an affiliate of such organization
which is exempt from tax under section 501(a),
or
``(iii) a director, officer, or employee of
such organization or affiliate but only if the
insurance covers solely risks associated with
the performance of services for the benefit of
such organization or affiliate.
``(C) Regulations.--The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this paragraph, including
regulations for the application of this paragraph in
the case of income paid through 1 or more entities or
between 2 or more chains of entities.''
(b) Effective Date.--The amendment made by this section shall apply
to amounts included in gross income in any taxable year beginning after
December 31, 1995.
PART VIII--EXCISE TAX ON AMOUNTS OF PRIVATE EXCESS BENEFITS
SEC. 13646. EXCISE TAXES FOR FAILURE BY CERTAIN CHARITABLE
ORGANIZATIONS TO MEET CERTAIN QUALIFICATION REQUIREMENTS.
(a) In General.--Chapter 42 (relating to private foundations and
certain other tax-exempt organizations) is amended by redesignating
subchapter D as subchapter E and by inserting after subchapter C the
following new subchapter:
``Subchapter D--Failure By Certain Charitable Organizations To Meet
Certain Qualification Requirements
``Sec. 4958. Taxes on excess benefit
transactions.
``SEC. 4958. TAXES ON EXCESS BENEFIT TRANSACTIONS.
``(a) Initial Taxes.--
``(1) On the disqualified person.--There is hereby imposed
on each excess benefit transaction a tax equal to 25 percent of
the excess benefit. The tax imposed by this paragraph shall be
paid by any disqualified person referred to in subsection
(f)(1) with respect to such transaction.
``(2) On the management.--In any case in which a tax is
imposed by paragraph (1), there is hereby imposed on the
participation of any organization manager in the excess benefit
transaction, knowing that it is such a transaction, a tax equal
to 10 percent of the excess benefit, unless such participation
is not willful and is due to reasonable cause. The tax imposed
by this paragraph shall be paid by any organization manager who
participated in the excess benefit transaction.
``(b) Additional Tax On the Disqualified Person.--In any case in
which an initial tax is imposed by subsection (a)(1) on an excess
benefit transaction and the excess benefit involved in such transaction
is not corrected within the taxable period, there is hereby imposed a
tax equal to 200 percent of the excess benefit involved. The tax
imposed by this subsection shall be paid by any disqualified person
referred to in subsection (f)(1) with respect to such transaction.
``(c) Excess Benefit Transaction; Excess Benefit.--For purposes of
this section--
``(1) Excess benefit transaction.--
``(A) In general.--The term `excess benefit
transaction' means any transaction in which an economic
benefit is provided by an applicable tax-exempt
organization directly or indirectly to or for the use
of any disqualified person if the value of the economic
benefit provided exceeds the value of the consideration
(including the performance of services) received for
providing such benefit. For purposes of the preceding
sentence, an economic benefit shall not be treated as
consideration for the performance of services unless
such organization clearly indicated its intent to so
treat such benefit.
``(B) Excess benefit.--The term `excess benefit'
means the excess referred to in subparagraph (A).
``(2) Authority to include certain other private
inurement.--To the extent provided in regulations prescribed by
the Secretary, the term `excess benefit transaction' includes
any transaction in which the amount of any economic benefit
provided to or for the use of a disqualified person is
determined in whole or in part by the revenues of 1 or more
activities of the organization but only if such transaction
results in inurement not permitted under paragraph (3) or (4)
of section 501(c), as the case may be. In the case of any such
transaction, the excess benefit shall be the amount of the
inurement not so permitted.
``(d) Special Rules.--For purposes of this section--
``(1) Joint and several liability.--If more than 1 person
is liable for any tax imposed by subsection (a) or subsection
(b), all such persons shall be jointly and severally liable for
such tax.
``(2) Limit for management.--With respect to any 1 excess
benefit transaction, the maximum amount of the tax imposed by
subsection (a)(2) shall not exceed $10,000.
``(e) Applicable Tax-Exempt Organization.--For purposes of this
subchapter, the term `applicable tax-exempt organization' means any
organization which (without regard to any excess benefit) would be
described in paragraph (3) or (4) of section 501(c) and exempt from tax
under section 501(a). Such term shall not include a private foundation
(as defined in section 509(a)).
``(f) Other Definitions.--For purposes of this section--
``(1) Disqualified person.--The term `disqualified person'
means, with respect to any transaction--
``(A) any person who was, at any time during the 5-
year period ending on the date of such transaction--
``(i) an organization manager, or
``(ii) an individual (other than an
organization manager) in a position to exercise
substantial influence over the affairs of the
organization,
``(B) a member of the family of an individual
described in subparagraph (A), and
``(C) a 35-percent controlled entity.
``(2) Organization manager.--The term `organization
manager' means, with respect to any applicable tax-exempt
organization, any officer, director, or trustee of such
organization (or any individual having powers or
responsibilities similar to those of officers, directors, or
trustees of the organization).
``(3) 35-percent controlled entity.--
``(A) In general.--The term `35-percent controlled
entity' means--
``(i) a corporation in which persons
described in subparagraph (A) or (B) of
paragraph (1) own more than 35 percent of the
total combined voting power,
``(ii) a partnership in which such persons
own more than 35 percent of the profits
interest, and
``(iii) a trust or estate in which such
persons own more than 35 percent of the
beneficial interest.
``(B) Constructive ownership rules.--Rules similar
to the rules of paragraphs (3) and (4) of section
4946(a) shall apply for purposes of this paragraph.
``(4) Family members.--The members of an individual's
family shall be determined under section 4946(d); except that
such members also shall include the brothers and sisters
(whether by the whole or half blood) of the individual and
their spouses.
``(5) Taxable period.--The term `taxable period' means,
with respect to any excess benefit transaction, the period
beginning with the date on which the transaction occurs and
ending on the earliest of--
``(A) the date of mailing a notice of deficiency
under section 6212 with respect to the tax imposed by
subsection (a)(1), or
``(B) the date on which the tax imposed by
subsection (a)(1) is assessed.
``(6) Correction.--The terms `correction' and `correct'
mean, with respect to any excess benefit transaction, undoing
the excess benefit to the extent possible, and where fully
undoing the excess benefit is not possible, such additional
corrective action as is prescribed by the Secretary by
regulations.
``(g) Treatment of Previously Exempt Organizations.--
``(1) In general.--For purposes of this section, the status
of any organization as an applicable tax-exempt organization
shall be terminated only if--
``(A)(i) such organization notifies the Secretary
(at such time and in such manner as the Secretary may
by regulations prescribe) of its intent to accomplish
such termination, or
``(ii) there is a final determination by the
Secretary that such status has terminated, and
``(B)(i) such organization pays the tax imposed by
paragraph (2) (or any portion not abated pursuant to
paragraph (3)), or
``(ii) the entire amount of such tax is abated
pursuant to paragraph (3).
``(2) Imposition of tax.--There is hereby imposed on each
organization referred to in paragraph (1) a tax equal to the
lesser of--
``(A) the amount which the organization
substantiates by adequate records or other
corroborating evidence as the aggregate tax benefit
resulting from its exemption from tax under section
501(a), or
``(B) the value of the net assets of such
organization.
``(3) Abatement of tax.--The Secretary may abate the unpaid
portion of the assessment of any tax imposed by paragraph (2),
or any liability in respect thereof, if the applicable tax-
exempt organization distributes all of its net assets to 1 or
more organizations each of which has been in existence, and
described in section 501(c)(3), for a continuous period of at
least 60 calendar months. If the distributing organization is
described in section 501(c)(4), the preceding sentence shall be
applied by treating the reference to section 501(c)(3) as
including a reference to section 501(c)(4).
``(4) Certain rules made applicable.--Rules similar to the
rules of subsections (d), (e), and (f) of section 507 shall
apply for purposes of this subsection.''
(b) Application of Private Inurement Rule to Tax-Exempt
Organizations Described in Section 501(c)(4).--Paragraph (4) of section
501(c) is amended by inserting ``(A)'' after ``(4)'' and by adding at
the end the following:
``(B) Subparagraph (A) shall not apply to an entity unless
no part of the net earnings of such entity inures to the
benefit of any private shareholder or individual.''
(c) Technical and Conforming Amendments.--
(1) Subsection (e) of section 4955 is amended--
(A) by striking ``Section 4945'' in the heading and
inserting ``Sections 4945 and 4958'', and
(B) by inserting before the period ``or an excess
benefit for purposes of section 4958''.
(2) Subsections (a), (b), and (c) of section 4963 are each
amended by inserting ``4958,'' after ``4955,''.
(3) Subsection (e) of section 6213 is amended by inserting
``4958 (relating to private excess benefit),'' before ``4971''.
(4) Paragraphs (2) and (3) of section 7422(g) are each
amended by inserting ``4958,'' after ``4955,''.
(5) Subsection (b) of section 7454 is amended by inserting
``or whether an organization manager (as defined in section
4958(f)(2)) has `knowingly' participated in an excess benefit
transaction (as defined in section 4958(c)),'' after ``section
4912(b),''.
(6) The table of subchapters for chapter 42 is amended by
striking the last item and inserting the following:
``Subchapter D. Failure by certain
charitable organizations to
meet certain qualification
requirements.
``Subchapter E. Abatement of first and
second tier taxes in certain
cases.''
(d) Effective Dates.--
(1) In general.--The amendments made by this section (other
than subsection (b)) shall apply to excess benefit transactions
occurring on or after September 14, 1995.
(2) Binding contracts for personal services.--The
amendments referred to in paragraph (1) shall not apply to any
transaction pursuant to any written contract for the
performance of personal services which was binding on September
13, 1995, and at all times thereafter before such transaction
occurred.
(3) Application of private inurement rule to tax-exempt
organizations described in section 501(c)(4).--
(A) In general.--The amendment made by subsection
(b) shall apply to inurement occurring on or after
September 14, 1995.
(B) Binding contracts.--The amendment made by
subsection (b) shall not apply to any inurement
occurring before January 1, 1997, pursuant to a written
contract which was binding on September 13, 1995, and
at all times thereafter before such inurement occurred.
SEC. 13647. REPORTING OF CERTAIN EXCISE TAXES AND OTHER INFORMATION.
(a) Reporting by Organizations Described in Section 501(c)(3).--
Subsection (b) of section 6033 (relating to certain organizations
described in section 501(c)(3)) is amended by striking ``and'' at the
end of paragraph (9), by redesignating paragraph (10) as paragraph
(14), and by inserting after paragraph (9) the following new
paragraphs:
``(10) the respective amounts (if any) of the taxes paid by
the organization during the taxable year under the following
provisions:
``(A) section 4911 (relating to tax on excess
expenditures to influence legislation),
``(B) section 4912 (relating to tax on
disqualifying lobbying expenditures of certain
organizations), and
``(C) section 4955 (relating to taxes on political
expenditures of section 501(c)(3) organizations),
``(11) the respective amounts (if any) of the taxes paid by
the organization or any disqualified person during the taxable
year under section 4958 (relating to taxes on private excess
benefit from certain charitable organizations),
``(12) such information as the Secretary may require with
respect to any excess benefit transaction (as defined in
section 4958),
``(13) the name of each disqualified person who receives an
economic benefit from an applicable tax-exempt organization (as
defined in section 4958(e)) and such other information as the
Secretary may prescribe with respect to such benefit, and''.
(b) Organizations Described in Section 501(c)(4).--Section 6033 is
amended by redesignating subsection (f) as subsection (g) and by
inserting after subsection (e) the following new subsection:
``(f) Certain Organizations Described in Section 501(c)(4).--Every
organization described in section 501(c)(4) which is subject to the
requirements of subsection (a) shall include on the return required
under subsection (a) the information referred to in paragraphs (10),
(11), (12) and (13) of subsection (b) with respect to such
organization.''
(c) Effective Date.--The amendments made by this section shall
apply to returns for taxable years beginning after the date of the
enactment of this Act.
SEC. 13648. EXEMPT ORGANIZATIONS REQUIRED TO PROVIDE COPY OF RETURN.
(a) General Rule.--
(1) Subparagraph (A) of section 6104(e)(1) (relating to
public inspection of annual returns) is amended to read as
follows:
``(A) In general.--During the 3-year period
beginning on the filing date--
``(i) a copy of the annual return filed
under section 6033 (relating to returns by
exempt organizations) by any organization to
which this paragraph applies shall be made
available by such organization for inspection
during regular business hours by any individual
at the principal office of such organization
and, if such organization regularly maintains 1
or more regional or district offices having 3
or more employees, at each such regional or
district office, and
``(ii) upon request of an individual made
at such principal office or such a regional or
district office, a copy of such annual return
shall be provided to such individual without
charge other than a reasonable fee for any
reproduction and mailing costs.
If the request under clause (ii) is made in person,
such copy shall be provided immediately and, if made
other than in person, shall be provided within 30
days.''
(2) Clause (ii) of section 6104(e)(2)(A) is amended by
inserting before the period at the end thereof the following:
``(and, upon request of an individual made at such principal
office or such a regional or district office, a copy of the
material required to be available for inspection under this
subparagraph shall be provided (in accordance with the last
sentence of paragraph (1)(A)) to such individual without charge
other than a reasonable fee for any reproduction and mailing
costs)''.
(3) Subsection (e) of section 6104 is amended by adding at
the end the following new paragraph:
``(3) Limitation.--Paragraph (1)(A)(ii) (and the
corresponding provision of paragraph (2)) shall not apply to
any request if the Secretary determines, upon application by an
organization, that such request is part of a harassment
campaign and that compliance with such request is not in the
public interest.''
(b) Advertisements Etc., Required To Disclose Availability of
Annual Return.--
(1) Paragraph (1) of section 6104(e) is amended by adding
at the end thereof the following new subparagraph:
``(E) Advertisements etc., required to disclose
availability of annual return.--In the case of an
organization required by subparagraph (A) to provide a
copy of its annual return under section 6033 upon
request to individuals, each written advertisement or
solicitation by (or on behalf of) such organization
shall contain an express statement (in a conspicuous
and easily recognizable format) that such return shall
be provided to individuals upon request.''
(2) Section 6716, as added by section 13649 of this title,
is amended--
(A) by striking ``section 6116'' each place it
appears and inserting ``section 6116 or section
6104(e)(1)(E)'',
(B) by striking ``$1,000'' in subsection (a) and
inserting ``$1,000 ($100 in the case of a failure to
meet the requirements of 6104(e)(1)(E))'', and
(C) by inserting before the period at the end of
the section heading ``; failure of certain exempt
organizations to disclose availability of annual
return''.
(3) Subparagraph (C) of section 6652(c)(1) is amended by
striking ``(e)(1)'' and inserting ``(e)(1) (other than
subparagraph (E))'', by striking ``$10'' and inserting ``$20'',
and by striking ``$5,000'' and inserting ``$10,000''.
(4) Subparagraph (D) of section 6652(c)(1) is amended by
striking ``$10'' and inserting ``$20''.
(5) The item relating to section 6716 in the table of
sections for part I of subchapter B of chapter 68 is amended by
inserting before the period ``; failure of certain exempt
organizations to disclose availability of annual return''.
(c) Increase in Penalty for Willful Failure To Allow Public
Inspection of Certain Returns, Etc.--Section 6685 is amended by
striking ``$1,000'' and inserting ``$5,000''.
(d) Copies of Returns of Exempt Organizations Available From
Secretary in Certain Cases.--Subsection (b) of section 6104 is amended
to read as follows:
``(b) Inspection of Annual Information Returns.--
``(1) In general.--The information required to be furnished
by sections 6033, 6034, and 6058, together with the names and
addresses of such organizations and trusts, shall be made
available to the public at such times and in such places as the
Secretary may prescribe. Nothing in this subsection shall
authorize the Secretary to disclose the name or address of any
contributor to any organization or trust (other than a private
foundation, as defined in section 509(a)) which is required to
furnish such information.
``(2) Copies provided of returns filed under section 6033
and applications filed under section 508 in certain cases.--The
Secretary shall provide copies of returns filed under section
6033 and applications for exemption filed under section 508 by
any organization to which subsection (d) or (e)(1) applies to
any person who agrees (subject to such conditions as the
Secretary shall prescribe)--
``(A) to accept broad categories of such returns
and applications, and
``(B) to provide electronic access to the provided
returns and applications on an electronic network
available to the general public.
Such copies shall be provided without charge if such person
agrees to provide such access without charge. Otherwise, the
Secretary may impose a reasonable fee for any reproduction and
mailing costs.
``(3) Returns and applications filed before 1996.--
Paragraph (2) shall apply to returns and applications filed
before January 1, 1996, only to the extent provided by the
Secretary.''
(e) Effective Date.--The amendments made by this section shall take
effect on January 1, 1996 (or, if later, the 90th day after the date of
the enactment of this Act).
SEC. 13649. CERTAIN ORGANIZATIONS REQUIRED TO DISCLOSE NONEXEMPT
STATUS.
(a) General Rule.--Subchapter B of chapter 61 (relating to
miscellaneous provisions) is amended by redesignating section 6116 as
section 6117 and by inserting after section 6115 the following new
section:
``SEC. 6116. CERTAIN ORGANIZATIONS REQUIRED TO DISCLOSE NONEXEMPT
STATUS.
``(a) In General.--If--
``(1) in an advertisement or solicitation by (or on behalf
of) an organization, such organization is referred to as being
nonprofit, and
``(2) such organization is not exempt from tax under
subtitle A,
such advertisement or solicitation shall contain an express statement
(in a conspicuous and easily recognizable format) that such
organization is not exempt from Federal income taxes.
``(b) Cross Reference.--
``For penalties for violation of
subsection (a), see section 6716.''
(b) Penalty.--Part I of subchapter B of chapter 68 is amended by
adding at the end thereof the following new section:
``SEC. 6716. FAILURE TO DISCLOSE NONEXEMPT STATUS.
``(a) Imposition of Penalty.--If there is a failure to meet the
requirements of section 6116 with respect to any advertisement or
solicitation by (or on behalf of) an organization, such organization
shall pay a penalty of $1,000 for each day on which such a failure
occurred. The maximum penalty imposed under this subsection on failures
by any organization during any calendar year shall not exceed $10,000.
``(b) Reasonable Cause Exemption.--No penalty shall be imposed
under this section with respect to any failure if it is shown that such
failure is due to reasonable cause.
``(c) $10,000 Limitation Not To Apply Where Intentional
Disregard.--If any failure to which subsection (a) applies is due to
intentional disregard of the requirements of section 6116--
``(1) the penalty under subsection (a) for the day on which
failure occurred shall be the greater of--
``(A) $1,000, or
``(B) 50 percent of the aggregate cost of the
advertisements and solicitations which occurred on such
day and with respect to which there was such failure,
``(2) the $10,000 limitation of subsection (a) shall not
apply to any penalty under subsection (a) for the day on which
such failure occurred, and
``(3) such penalty shall not be taken into account in
applying such limitation to other penalties under subsection
(a).
``(d) Day on Which Failure Occurs.--For purposes of this section,
rules similar to the rules of section 6710(d) shall apply in
determining the day on which any failure occurs.''
(c) Clerical Amendments.--
(1) The table of sections for subchapter B of chapter 61 is
amended by striking the item relating to section 6116 and
inserting the following:
``Sec. 6116. Certain organizations
required to disclose nonexempt
status.
``Sec. 6117. Cross reference.''
(2) The table of sections of part I of subchapter B of
chapter 68 is amended by adding at the end thereof the
following new item:
``Sec. 6716. Failure to disclose
nonexempt status.''
(d) Effective Date.--The amendments made by this section shall take
effect on January 1, 1996 (or, if later, the 90th day after the date of
the enactment of this Act).
SEC. 13650. INCREASE IN PENALTIES ON EXEMPT ORGANIZATIONS FOR FAILURE
TO FILE COMPLETE AND TIMELY ANNUAL RETURNS.
(a) In General.--Subparagraph (A) of section 6652(c)(1) (relating
to annual returns under section 6033) is amended by striking ``$10''
and inserting ``$20'' and by striking ``$5,000'' and inserting
``$10,000''.
(b) Larger Penalty on Organizations Having Gross Receipts in Excess
of $1,000,000.--Subparagraph (A) of section 6652(c)(1) is amended by
adding at the end the following new sentence: ``In the case of an
organization having gross receipts exceeding $1,000,000 for any year,
with respect to the return required under section 6033 for such year,
the first sentence of this subparagraph shall be applied by
substituting `$100' for `$20' and, in lieu of applying the second
sentence of this subparagraph, the maximum penalty under this
subparagraph shall not exceed $50,000.''
(c) Effective Date.--The amendments made by this section shall
apply to returns for taxable years ending on or after December 31,
1995.
SEC. 13651. STUDIES.
(a) In General.--The Secretary of the Treasury or his delegate
shall conduct a study of--
(1) whether the statutory prohibition on private inurement,
and the provisions of section 4958 of the Internal Revenue Code
of 1986 (as added by this part), should apply to other tax-
exempt organizations,
(2) whether State officials responsible for overseeing
charitable organizations should be provided with Federal tax
information in addition to the information available under
section 6103 of such Code for purposes of such oversight, and
(3) whether the return required to be filed by section 6033
of such Code should be modified to assure the return's utility
to such Secretary and to the public and to reduce any
unnecessary reporting burdens.
(b) Report.--Not later than January 1, 1997, the report of such
study shall be submitted to the Committee on Ways and Means of the
House of Representatives and the Committee on Finance of the Senate.
Subtitle G--Reform of the Earned Income Tax Credit
SEC. 13701. REPEAL OF EARNED INCOME CREDIT FOR INDIVIDUALS WITHOUT
QUALIFYING CHILDREN; MODIFICATIONS TO CREDIT PHASEOUT.
(a) Repeal of Credit for Individuals Without Children.--
Subparagraph (A) of section 32(c)(1) (defining eligible individual) is
amended to read as follows:
``(A) In general.--The term `eligible individual'
means any individual who has a qualifying child for the
taxable year.''
(b) Modifications to Phaseout.--
(1) Subsection (b) of section 32 is amended to read as
follows:
``(b) Percentages.--
``(1) In general.--The credit percentage and the phaseout
percentage shall be determined as follows:
``In the case of an eligible
individual with: The credit percentage is: The phaseout percentage is:
1 qualifying child................. 34.................................. 18
2 or more qualifying children...... 40.................................. 23
``(2) Amounts.--The earned income amount and the phaseout
amount shall be determined as follows:
``In the case of an eligible
individual with: The earned income amount is: The phaseout amount is:
1 qualifying child................. $6,340.............................. $11,630
2 or more qualifying children...... $8,910.............................. $11,630.''
(2) Subsection (j) of section 32 is amended--
(A) by striking ``subsection (b)(2)(A)'' and
inserting ``subsection (b)(2)'',
(B) by striking ``1994'' and inserting ``1996'',
and
(C) by striking ``1993'' and inserting ``1995''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
SEC. 13702. MODIFICATION OF ADJUSTED GROSS INCOME USED FOR PHASEOUT.
(a) In General.--Subsections (a)(2)(B), (c)(1)(C), and (f)(2)(B) of
section 32 are each amended by striking ``adjusted gross income'' each
place it appears and inserting ``modified adjusted gross income''.
(b) Modified Adjusted Gross Income.--Subsection (c) of section 32
is amended by adding at the end the following new paragraph:
``(5) Modified adjusted gross income.--For purposes of this
section, the term `modified adjusted gross income' means
adjusted gross income increased by--
``(A) any amount received as a pension or annuity,
and any distribution or payment received from an
individual retirement plan, by the taxpayer during the
taxable year to the extent not otherwise included in
gross income, and
``(B) the social security benefits (as defined in
section 86(d)) received by the taxpayer during the
taxable year to the extent not included in gross
income.
Any amount which is not includible in gross income by reason of
paragraph (3), (4), or (5) of section 408(d) or section 402(c),
403(a)(4), 403(b)(8), or 457(e)(10) shall be treated as not
described in subparagraph (A).''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
SEC. 13703. EARNED INCOME TAX CREDIT DENIED TO INDIVIDUALS NOT
AUTHORIZED TO BE EMPLOYED IN THE UNITED STATES.
(a) In General.--Section 32(c)(1) (relating to individuals eligible
to claim the earned income tax credit) is amended by adding at the end
the following new subparagraph:
``(F) Identification number requirement.--The term
`eligible individual' does not include any individual
who does not include on the return of tax for the
taxable year--
``(i) such individual's taxpayer
identification number, and
``(ii) if the individual is married (within
the meaning of section 7703), the taxpayer
identification number of such individual's
spouse.''
(b) Special Identification Number.--Section 32 is amended by adding
at the end the following new subsection:
``(l) Identification Numbers.--Solely for purposes of subsections
(c)(1)(F) and (c)(3)(D), a taxpayer identification number means a
social security number issued to an individual by the Social Security
Administration (other than a social security number issued pursuant to
clause (II) (or that portion of clause (III) that relates to clause
(II)) of section 205(c)(2)(B)(i) of the Social Security Act).''
(c) Extension of Procedures Applicable to Mathematical or Clerical
Errors.--Section 6213(g)(2) (relating to the definition of mathematical
or clerical errors) is amended by striking ``and' at the end of
subparagraph (D), by striking the period at the end of subparagraph (E)
and inserting a comma, and by inserting after subparagraph (E) the
following new subparagraphs:
``(F) an omission of a correct taxpayer
identification number required under section 32
(relating to the earned income tax credit) to be
included on a return, and
``(G) an entry on a return claiming the credit
under section 32 with respect to net earnings from
self-employment described in section 32(c)(2)(A) to the
extent the tax imposed by section 1401 (relating to
self-employment tax) on such net earnings has not been
paid.''
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
Subtitle H--Increase in Public Debt Limit
SEC. 13801. INCREASE IN PUBLIC DEBT LIMIT.
Subsection (b) of section 3101 of title 31, United States Code, is
amended by striking the dollar amount contained therein and inserting
``$5,500,000,000,000''.
Subtitle I--Coal Industry Retiree Health Equity
SEC. 13901. REPEAL OF REACHBACK PROVISIONS OF COAL INDUSTRY HEALTH
BENEFIT SYSTEM.
(a) Amendments Related to Definitions.--
(1) Agreements.--
(A) In general.--Paragraph (1) of section 9701(b)
(relating to agreements) is amended to read as follows:
``(1) Coal wage agreements.--
``(A) 1988 agreement.--The term `1988 agreement'
means the collective bargaining agreement between the
settlors which became effective on February 1, 1988.
``(B) Coal wage agreement.--The term `coal wage
agreement' means any predecessor to the 1988
agreement.''
(B) Conforming amendment.--Section 9701(b) is
amended by striking paragraph (3).
(2) Operators.--
(A) Signatory operator.--Paragraph (1) of section
9701(c) (relating to operators) is amended to read as
follows:
``(1) Signatory operator.--The term `signatory operator'
means a 1988 agreement operator.''
(B) 1988 agreement operator.--Paragraph (3) of
section 9701(c) is amended to read as follows:
``(3) 1988 agreement operator.--The term `1988 agreement
operator' means--
``(A) an operator which was a signatory to the 1988
agreement, or
``(B) a person in business which, during the term
of the 1988 agreement, was a signatory to an agreement
(other than the National Coal Mine Construction
Agreement and the Coal Haulers' Agreement) containing
pension and health care contribution and benefit
provisions which are the same as those contained in the
1988 agreement.
Such term shall not include any operator who was assessed, and
did pay the full amount of, contractual withdrawal liability to
the 1950 UMWA Benefit Plan, the 1974 UMWA Benefit Plan, or the
Combined Fund.''
(C) Last signatory operator.--Section 9701(c)(4) is
amended by inserting ``bituminous'' before ``coal''
each place it appears.
(b) Combined Benefit Fund.--Section 9702(b)(1) is amended to read
as follows:
``(b) Board of Trustees.--
``(1) In general.--For purposes of subsection (a), the
board of trustees for the Combined Fund shall be appointed as
follows:
``(A) two individuals who represent employers in
the coal mining industry shall be designated by the
BCOA;
``(B) two individuals designated by the United Mine
Workers of America; and
``(C) three persons selected by the persons
appointed under subparagraphs (A) and (B).''
(c) Assignment of Eligible Beneficiaries.--Subsection (a) of
section 9706 is amended by adding at the end the following new flush
sentence:
``For purposes of assessing premiums on or after October 1, 1995, under
this chapter, the Commissioner of Social Security shall, effective
October 1, 1995, revoke all assignments previously made (and shall make
no further assignments and shall terminate all unpaid liabilities for
any pending assignments) to all persons other than signatory operators
and shall deem each affected coal industry retiree who is an eligible
beneficiary to be an unassigned beneficiary under section 9706. The
preceding sentence shall not be construed to prevent any transfer, or
any treatment of a successor as an assigned operator, under subsection
(b)(2).''
(d) 1992 UMWA Benefit Plan.--Section 9712(d) is amended--
(1) by striking paragraph (3) and by redesignating
paragraphs (4), (5), and (6) as paragraphs (3), (4), and (5),
respectively, and
(2) by striking ``or last signatory operator described in
paragraph (3),'' in paragraph (3) (as redesignated under
paragraph (1)).
(e) Information Requirements.--
(1) In general.--Subsection (h) of section 9704 is amended
by adding at the end the following new paragraph:
``(2) Information to contributors.--
``(A) In general.--The trustees of the Combined
Fund shall, within 30 days of a written request, make
available to any person required to make contributions
to the Combined Fund, or their agent--
``(i) all documents which reflect its
financial and operational status, including
documents under which it is operated, and
``(ii) all documents prepared at the
request of the trustees or staff of the
Combined Fund which form the basis for any of
its actions or reports, including the
eligibility of participants in predecessor
plans.
``(B) Fees.--The trustees may charge reasonable
fees (not in excess of actual expenses) for providing
documents under this paragraph.''
(2) Conforming amendment.--Subsection (h) of section 9704
is amended by striking ``(h) Information.--The'' and inserting
the following:
``(h) Information.--
``(1) Information to secretary.--The''.
(f) Effective Date.--The amendments made by this section shall
apply to plan years beginning after September 30, 1995.
TITLE XIV--COMMITTEE ON WAYS AND MEANS--TAX SIMPLIFICATION
SEC. 14001. SHORT TITLE; AMENDMENT TO 1986 CODE.
(a) Short Title.--This title may be cited as the ``Tax
Simplification Act of 1995''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this title an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents for this title is as
follows:
TITLE XIV--COMMITTEE ON WAYS AND MEANS--TAX SIMPLIFICATION
Sec. 14001. Short title; amendment to 1986 Code.
Subtitle A--Provisions Relating to Individuals
Part I--Provisions Relating to Rollover of Gain on Sale of Principal
Residence
Sec. 14101. Multiple sales within rollover period.
Sec. 14102. Special rules in case of divorce.
Sec. 14103. One-time exclusion of gain from sale of principal residence
for certain spouses.
Part II--Other Provisions
Sec. 14111. Payment of tax by commercially acceptable means.
Sec. 14112. Simplified foreign tax credit limitation for individuals.
Sec. 14113. Treatment of personal transactions by individuals under
foreign currency rules.
Sec. 14114. Treatment of certain reimbursed expenses of rural mail
carriers.
Sec. 14115. Exclusion of combat pay from withholding limited to amount
excludable from gross income.
Sec. 14116. Treatment of traveling expenses of certain Federal
employees engaged in criminal
investigations.
Subtitle B--Pension Simplification
Part I--Simplified Distribution Rules
Sec. 14201. Repeal of 5-year income averaging for lump-sum
distributions.
Sec. 14202. Repeal of $5,000 exclusion of employees' death benefits.
Sec. 14203. Simplified method for taxing annuity distributions under
certain employer plans.
Sec. 14204. Required distributions.
Part II--Increased Access to Pension Plans
Sec. 14211. Modifications of simplified employee pensions.
Sec. 14212. State and local governments and tax-exempt organizations
eligible under section 401(k).
Part III--Nondiscrimination Provisions
Sec. 14221. Definition of highly compensated employees.
Sec. 14222. Repeal of family aggregation rules.
Sec. 14223. Modification of additional participation requirements.
Sec. 14224. Nondiscrimination rules for qualified cash or deferred
arrangements and matching contributions.
Part IV--Miscellaneous Simplification
Sec. 14231. Treatment of leased employees.
Sec. 14232. Plans covering self-employed individuals.
Sec. 14233. Elimination of special vesting rule for multiemployer
plans.
Sec. 14234. Distributions under rural cooperative plans.
Sec. 14235. Treatment of governmental plans under section 415.
Sec. 14236. Uniform retirement age.
Sec. 14237. Uniform penalty provisions to apply to certain pension
reporting requirements.
Sec. 14238. Contributions on behalf of disabled employees.
Sec. 14239. Treatment of deferred compensation plans of State and local
governments and tax-exempt organizations.
Sec. 14240. Trust requirement for deferred compensation plans of State
and local governments.
Sec. 14241. Transition rule for computing maximum benefits under
section 415 limitations.
Sec. 14242. Multiple salary reduction agreements permitted under
section 403(b).
Sec. 14243. Waiver of minimum period for joint and survivor annuity
explanation before annuity starting date.
Sec. 14244. Repeal of limitation in case of defined benefit plan and
defined contribution plan for same
employee.
Sec. 14245. Date for adoption of plan amendments.
Subtitle C--Treatment of Large Partnerships
Part I--General Provisions
Sec. 14301. Simplified flow-through for large partnerships.
Sec. 14302. Simplified audit procedures for large partnerships.
Sec. 14303. Due date for furnishing information to partners of large
partnerships.
Sec. 14304. Returns may be required on magnetic media.
Sec. 14305. Treatment of partnership items of individual retirement
accounts.
Sec. 14306. Effective date.
Part II--Provisions Related to Certain Partnership Proceedings
Sec. 14311. Treatment of partnership items in deficiency proceedings.
Sec. 14312. Partnership return to be determinative of audit procedures
to be followed.
Sec. 14313. Provisions relating to statute of limitations.
Sec. 14314. Expansion of small partnership exception.
Sec. 14315. Exclusion of partial settlements from 1-year limitation on
assessment.
Sec. 14316. Extension of time for filing a request for administrative
adjustment.
Sec. 14317. Availability of innocent spouse relief in context of
partnership proceedings.
Sec. 14318. Determination of penalties at partnership level.
Sec. 14319. Provisions relating to court jurisdiction, etc.
Sec. 14320. Treatment of premature petitions filed by notice partners
or 5-percent groups.
Sec. 14321. Bonds in case of appeals from certain proceeding.
Sec. 14322. Suspension of interest where delay in computational
adjustment resulting from certain
settlements.
Sec. 14323. Special rules for administrative adjustment requests with
respect to bad debts or worthless
securities.
Subtitle D--Foreign Provisions
Part I--Modifications to Treatment of Passive Foreign Investment
Companies
Sec. 14401. United States shareholders of controlled foreign
corporations not subject to PFIC inclusion.
Sec. 14402. Election of mark to market for marketable stock in passive
foreign investment company.
Sec. 14403. Modifications to definition of passive income.
Sec. 14404. Effective date.
Part II--Treatment of Controlled Foreign Corporations
Sec. 14411. Gain on certain stock sales by controlled foreign
corporations treated as dividends.
Sec. 14412. Miscellaneous modifications to subpart F.
Sec. 14413. Indirect foreign tax credit allowed for certain lower tier
companies.
Sec. 14414. Repeal of inclusion of certain earnings invested in excess
passive assets.
Part III--Other Provisions
Sec. 14421. Exchange rate used in translating foreign taxes.
Sec. 14422. Election to use simplified section 904 limitation for
alternative minimum tax.
Sec. 14423. Modification of section 1491.
Sec. 14424. Modification of section 367(b).
Sec. 14425. Increase in filing thresholds for returns as to
organization of foreign corporations and
acquisitions of stock in such corporations.
Sec. 14426. Application of uniform capitalization rules to foreign
persons.
Sec. 14427. Certain prizes and awards.
Sec. 14428. Treatment for estate tax purposes of short-term obligations
held by nonresident aliens.
Subtitle E--Other Income Tax Provisions
Part I--Provisions Relating to S Corporations
Sec. 14501. S corporations permitted to have 75 shareholders.
Sec. 14502. Electing small business trusts.
Sec. 14503. Expansion of post-death qualification for certain trusts.
Sec. 14504. Financial institutions permitted to hold safe harbor debt.
Sec. 14505. Rules relating to inadvertent terminations and invalid
elections.
Sec. 14506. Agreement to terminate year.
Sec. 14507. Expansion of post-termination transition period.
Sec. 14508. S corporations permitted to hold subsidiaries.
Sec. 14509. Treatment of distributions during loss years.
Sec. 14510. Treatment of S corporations under subchapter C.
Sec. 14511. Elimination of certain earnings and profits.
Sec. 14512. Carryover of disallowed losses and deductions under at-risk
rules allowed.
Sec. 14513. Adjustments to basis of inherited S stock to reflect
certain items of income.
Sec. 14514. S corporations eligible for rules applicable to real
property subdivided for sale by
noncorporate taxpayers.
Sec. 14515. Effective date.
Part II--Provisions Relating to Regulated Investment Companies
Sec. 14521. Repeal of 30-percent gross income limitation.
Part III--Provisions Relating to Real Estate Investment Trusts
Sec. 14531. Clarification of limitation on maximum number of
shareholders.
Sec. 14532. De minimis rule for tenant services income.
Sec. 14533. Attribution rules applicable to tenant ownership.
Sec. 14534. Credit for tax paid by REIT on retained capital gains.
Sec. 14535. Repeal of 30-percent gross income requirement.
Sec. 14536. Modification of earnings and profits rules for determining
whether REIT has earnings and profits from
non-REIT year.
Sec. 14537. Treatment of foreclosure property.
Sec. 14538. Payments under hedging instruments.
Sec. 14539. Excess noncash income.
Sec. 14540. Prohibited transaction safe harbor.
Sec. 14541. Shared appreciation mortgages.
Sec. 14542. Wholly owned subsidiaries.
Sec. 14543. Effective date.
Part IV--Accounting Provisions
Sec. 14551. Modifications to look-back method for long-term contracts.
Sec. 14552. Application of mark to market accounting method to traders
in securities.
Sec. 14553. Modification of ruling amounts for nuclear decommissioning
costs.
Sec. 14554. Election of alternative taxable years by partnerships and S
corporations.
Sec. 14555. Special rule for crop insurance proceeds and disaster
payments.
Part V--Tax-Exempt Bond Provisions
Sec. 14561. Repeal of $100,000 limitation on unspent proceeds under 1-
year exception from rebate.
Sec. 14562. Exception from rebate for earnings on bona fide debt
service fund under construction bond rules.
Sec. 14563. Repeal of debt service-based limitation on investment in
certain nonpurpose investments.
Sec. 14564. Repeal of expired provisions.
Sec. 14565. Effective dates.
Part VI--Insurance Provisions
Sec. 14571. Treatment of certain insurance contracts on retired lives.
Sec. 14572. Treatment of modified guaranteed contracts.
Sec. 14573. Minimum tax treatment of certain property and casualty
insurance companies.
Part VII--Other Provisions
Sec. 14581. Closing of partnership taxable year with respect to
deceased partner, etc.
Sec. 14582. Credit for Social Security taxes paid with respect to
employee cash tips.
Sec. 14583. Due date for first quarter estimated tax payments by
private foundations.
Sec. 14584. Treatment of dues paid to agricultural or horticultural
organizations.
Subtitle F--Estates and Trusts
Part I--Income Tax Provisions
Sec. 14601. Certain revocable trusts treated as part of estate.
Sec. 14602. Distributions during first 65 days of taxable year of
estate.
Sec. 14603. Separate share rules available to estates.
Sec. 14604. Executor of estate and beneficiaries treated as related
persons for disallowance of losses, etc.
Sec. 14605. Limitation on taxable year of estates.
Sec. 14606. Repeal of certain throwback rules applicable to domestic
trusts.
Sec. 14607. Treatment of funeral trusts.
Part II--Estate and Gift Tax Provisions
Sec. 14611. Clarification of waiver of certain rights of recovery.
Sec. 14612. Adjustments for gifts within 3 years of decedent's death.
Sec. 14613. Clarification of qualified terminable interest rules.
Sec. 14614. Transitional rule under section 2056A.
Sec. 14615. Opportunity to correct certain failures under section
2032A.
Sec. 14616. Unified credit of decedent increased by unified credit of
spouse used on split gift included in
decedent's gross estate.
Sec. 14617. Reformation of defective bequests, etc. to spouse of
decedent.
Sec. 14618. Gifts may not be revalued for estate tax purposes after
expiration of statute of limitations.
Sec. 14619. Clarifications relating to disclaimers.
Sec. 14620. Clarification of treatment of survivor annuities under
qualified terminable interest rules.
Sec. 14621. Treatment under qualified domestic trust rules of forms of
ownership which are not trusts.
Sec. 14622. Authority to waive requirement of United States trustee for
qualified domestic trusts.
Part III--Generation-Skipping Tax Provisions
Sec. 14631. Severing of trusts holding property having an inclusion
ratio of greater than zero.
Sec. 14632. Clarification of who is transferor where subsequent gift by
reason of power of appointment.
Sec. 14633. Taxable termination not to include direct skips.
Sec. 14634. Expansion of exception from generation-skipping transfer
tax for transfers to individuals with
deceased parents.
Subtitle G--Excise Tax Simplification
Part I--Provisions Related to Distilled Spirits, Wines, and Beer
Sec. 14701. Credit or refund for imported bottled distilled spirits
returned to distilled spirits plant.
Sec. 14702. Authority to cancel or credit export bonds without
submission of records.
Sec. 14703. Repeal of required maintenance of records on premises of
distilled spirits plant.
Sec. 14704. Fermented material from any brewery may be received at a
distilled spirits plant.
Sec. 14705. Repeal of requirement for wholesale dealers in liquors to
post sign.
Sec. 14706. Refund of tax on wine returned to bond not limited to
unmerchantable wine.
Sec. 14707. Use of additional ameliorating material in certain wines.
Sec. 14708. Domestically produced beer may be withdrawn free of tax for
use of foreign embassies, legations, etc.
Sec. 14709. Beer may be withdrawn free of tax for destruction.
Sec. 14710. Authority to allow drawback on exported beer without
submission of records.
Sec. 14711. Transfer to brewery of beer imported in bulk without
payment of tax.
Part II--Consolidation of Taxes on Aviation Gasoline
Sec. 14721. Consolidation of taxes on aviation gasoline.
Part III--Other Excise Tax Provisions
Sec. 14731. Authority to grant exemptions from registration
requirements.
Sec. 14732. Certain combinations not treated as manufacture under
retail sales tax on heavy trucks.
Sec. 14733. Exemption from diesel fuel dyeing requirements with respect
to certain States.
Sec. 14734. Repeal of expired provisions.
Subtitle H--Administrative Provisions
Part I--General Provisions
Sec. 14801. Repeal of authority to disclose whether prospective juror
has been audited.
Sec. 14802. Clarification of statute of limitations.
Sec. 14803. Certain notices disregarded under provision increasing
interest rate on large corporate
underpayments.
Sec. 14804. Clarification of authority to withhold Puerto Rico income
taxes from salaries of Federal employees.
Part II--Tax Court Procedures
Sec. 14811. Overpayment determinations of tax court.
Sec. 14812. Awarding of administrative costs.
Sec. 14813. Redetermination of interest pursuant to motion.
Sec. 14814. Application of net worth requirement for awards of
litigation costs.
Part III--Authority for Certain Cooperative Agreements
Sec. 14821. Cooperative agreements with State tax authorities.
Subtitle A--Provisions Relating to Individuals
PART I--PROVISIONS RELATING TO ROLLOVER OF GAIN ON SALE OF PRINCIPAL
RESIDENCE
SEC. 14101. MULTIPLE SALES WITHIN ROLLOVER PERIOD.
(a) General Rule.--
(1) Section 1034 (relating to rollover of gain on sale of
principal residence) is amended by striking subsection (d).
(2) Paragraph (4) of section 1034(c) is amended to read as
follows:
``(4) If the taxpayer, during the period described in
subsection (a), purchases more than 1 residence which is used
by him as his principal residence at some time within 2 years
after the date of the sale of the old residence, only the first
of such residences so used by him after the date of such sale
shall constitute the new residence.''
(3) Subsections (h)(1) and (k) of section 1034 are each
amended by striking ``(other than the 2 years referred to in
subsection (c)(4))''.
(b) Effective Date.--The amendments made by this section shall
apply to sales of old residences (within the meaning of section 1034 of
the Internal Revenue Code of 1986) after the date of the enactment of
this Act.
SEC. 14102. SPECIAL RULES IN CASE OF DIVORCE.
(a) In General.--Subsection (c) of section 1034 is amended by
adding at the end the following new paragraph:
``(5) If--
``(A) a residence is sold by an individual pursuant
to a divorce or marital separation, and
``(B) the taxpayer used such residence as his
principal residence at any time during the 2-year
period ending on the date of such sale,
for purposes of this section, such residence shall be treated
as the taxpayer's principal residence at the time of such
sale.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to sales of old residences (within the meaning of section 1034 of
the Internal Revenue Code of 1986) after the date of the enactment of
this Act.
SEC. 14103. ONE-TIME EXCLUSION OF GAIN FROM SALE OF PRINCIPAL RESIDENCE
FOR CERTAIN SPOUSES.
(a) In General.--Paragraph (2) of section 121(b) (relating to one-
time exclusion of gain from sale of principal residence by individual
who has attained age 55) is amended by adding at the end the following
new sentence: ``For purposes of applying the preceding sentence to
individuals who are married to each other, an election by one
individual with respect to a sale or exchange occurring before the
marriage shall be disregarded for purposes of permitting an election
with respect to property owned and used by the other individual as his
principal residence throughout the 3-year period ending on the date of
the marriage.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply for purposes of determining whether an election may be made under
section 121 of the Internal Revenue Code of 1986 with respect to a sale
or exchange occurring after September 13, 1995.
PART II--OTHER PROVISIONS
SEC. 14111. PAYMENT OF TAX BY COMMERCIALLY ACCEPTABLE MEANS.
(a) General Rule.--Section 6311 is amended to read as follows:
``SEC. 6311. PAYMENT OF TAX BY COMMERCIALLY ACCEPTABLE MEANS.
``(a) Authority To Receive.--It shall be lawful for the Secretary
to receive for internal revenue taxes (or in payment for internal
revenue stamps) any commercially acceptable means that the Secretary
deems appropriate to the extent and under the conditions provided in
regulations prescribed by the Secretary.
``(b) Ultimate Liability.--If a check, money order, or other method
of payment, including payment by credit card, debit card, or charge
card so received is not duly paid, or is paid and subsequently charged
back to the Secretary, the person by whom such check, or money order,
or other method of payment has been tendered shall remain liable for
the payment of the tax or for the stamps, and for all legal penalties
and additions, to the same extent as if such check, money order, or
other method of payment had not been tendered.
``(c) Liability of Banks and Others.--If any certified,
treasurer's, or cashier's check (or other guaranteed draft), or any
money order, or any other means of payment that has been guaranteed by
a financial institution (such as a credit card, debit card, or charge
card transaction which has been guaranteed expressly by a financial
institution) so received is not duly paid, the United States shall, in
addition to its right to exact payment from the party originally
indebted therefor, have a lien for--
``(1) the amount of such check (or draft) upon all assets
of the financial institution on which drawn,
``(2) the amount of such money order upon all the assets of
the issuer thereof, or
``(3) the guaranteed amount of any other transaction upon
all the assets of the institution making such guarantee,
and such amount shall be paid out of such assets in preference to any
other claims whatsoever against such financial institution, issuer, or
guaranteeing institution, except the necessary costs and expenses of
administration and the reimbursement of the United States for the
amount expended in the redemption of the circulating notes of such
financial institution.
``(d) Payment by Other Means.--
``(1) Authority to prescribe regulations.--The Secretary
shall prescribe such regulations as the Secretary deems
necessary to receive payment by commercially acceptable means,
including regulations that--
``(A) specify which methods of payment by
commercially acceptable means will be acceptable,
``(B) specify when payment by such means will be
considered received,
``(C) identify types of nontax matters related to
payment by such means that are to be resolved by
persons ultimately liable for payment and financial
intermediaries, without the involvement of the
Secretary, and
``(D) ensure that tax matters will be resolved by
the Secretary, without the involvement of financial
intermediaries.
``(2) Authority to enter into contracts.--Notwithstanding
section 3718(f) of title 31, United States Code, the Secretary
is authorized to enter into contracts to obtain services
related to receiving payment by other means where cost
beneficial to the Government. The Secretary may not pay any fee
or provide any other consideration under such contracts.
``(3) Special provisions for use of credit cards.--If use
of credit cards is accepted as a method of payment of taxes
pursuant to subsection (a)--
``(A) a payment of internal revenue taxes (or a
payment for internal revenue stamps) by a person by use
of a credit card shall not be subject to section 161 of
the Truth-in-Lending Act (15 U.S.C. 1666), or to any
similar provisions of State law, if the error alleged
by the person is an error relating to the underlying
tax liability, rather than an error relating to the
credit card account such as a computational error or
numerical transposition in the credit card transaction
or an issue as to whether the person authorized payment
by use of the credit card,
``(B) a payment of internal revenue taxes (or a
payment for internal revenue stamps) shall not be
subject to section 170 of the Truth-in-Lending Act (15
U.S.C. 1666i), or to any similar provisions of State
law,
``(C) a payment of internal revenue taxes (or a
payment for internal revenue stamps) by a person by use
of a debit card shall not be subject to section 908 of
the Electronic Fund Transfer Act (15 U.S.C. 1693f), or
to any similar provisions of State law, if the error
alleged by the person is an error relating to the
underlying tax liability, rather than an error relating
to the debit card account such as a computational error
or numerical transposition in the debit card
transaction or an issue as to whether the person
authorized payment by use of the debit card,
``(D) the term `creditor' under section 103(f) of
the Truth-in-Lending Act (15 U.S.C. 1602(f)) shall not
include the Secretary with respect to credit card
transactions in payment of internal revenue taxes (or
payment for internal revenue stamps), and
``(E) notwithstanding any other provision of law to
the contrary, in the case of payment made by credit
card or debit card transaction of an amount owed to a
person as the result of the correction of an error
under section 161 of the Truth-in-Lending Act (15
U.S.C. 1666) or section 908 of the Electronic Fund
Transfer Act (15 U.S.C. 1693f), the Secretary is
authorized to provide such amount to such person as a
credit to that person's credit card or debit
card account through the applicable credit card or debit card system.
``(e) Confidentiality of Information.--
``(1) In general.--Except as otherwise authorized by this
subsection, no person may use or disclose any information
relating to credit or debit card transactions obtained pursuant
to section 6103(k)(8) other than for purposes directly related
to the processing of such transactions, or the billing or
collection of amounts charged or debited pursuant thereto.
``(2) Exceptions.--
``(A) Debit or credit card issuers or others acting
on behalf of such issuers may also use and disclose
such information for purposes directly related to
servicing an issuer's accounts.
``(B) Debit or credit card issuers or others
directly involved in the processing of credit or debit
card transactions or the billing or collection of
amounts charged or debited thereto may also use and
disclose such information for purposes directly related
to--
``(i) statistical risk and profitability
assessment;
``(ii) transferring receivables, accounts,
or interest therein;
``(iii) auditing the account information;
``(iv) complying with Federal, State, or
local law; and
``(v) properly authorized civil, criminal,
or regulatory investigation by Federal, State,
or local authorities.
``(3) Procedures.--Use and disclosure of information under
this paragraph shall be made only to the extent authorized by
written procedures promulgated by the Secretary.
``(4) Cross reference.--
``For provision providing for civil
damages for violation of paragraph (1), see section 7431.''
(b) Clerical Amendment.--The table of sections for subchapter B of
chapter 64 is amended by striking the item relating to section 6311 and
inserting the following:
``Sec. 6311. Payment of tax by
commercially acceptable
means.''
(c) Amendments to Sections 6103 and 7431 With Respect to Disclosure
Authorization.--
(1) Subsection (k) of section 6103 (relating to
confidentiality and disclosure of returns and return
information) is amended by adding at the end the following new
paragraph:
``(8) Disclosure of information to administer section
6311.--The Secretary may disclose returns or return information
to financial institutions and others to the extent the
Secretary deems necessary for the administration of section
6311. Disclosures of information for purposes other than to
accept payments by checks or money orders shall be made only to
the extent authorized by written procedures promulgated by the
Secretary.''
(2) Section 7431 (relating to civil damages for
unauthorized disclosure of returns and return information) is
amended by adding at the end the following new subsection:
``(g) Special Rule for Information Obtained Under Section
6103(k)(8).--For purposes of this section, any reference to section
6103 shall be treated as including a reference to section 6311(e).''
(3) Section 6103(p)(3)(A) is amended by striking ``or (6)''
and inserting ``(6), or (8)''.
(d) Effective Date.--The amendments made by this section shall take
effect on the day 9 months after the date of the enactment of this Act.
SEC. 14112. SIMPLIFIED FOREIGN TAX CREDIT LIMITATION FOR INDIVIDUALS.
(a) General Rule.--Section 904 (relating to limitations on foreign
tax credit) is amended by redesignating subsection (j) as subsection
(k) and by inserting after subsection (i) the following new subsection:
``(j) Simplified Limitation for Certain Individuals.--
``(1) In general.--In the case of an individual to whom
this subsection applies for any taxable year, the limitation of
subsection (a) shall be the lesser of--
``(A) 25 percent of such individual's gross income
for the taxable year from sources without the United
States, or
``(B) the amount of the creditable foreign taxes
paid or accrued by the individual during the taxable
year (determined without regard to subsection (c)).
No taxes paid or accrued by the individual during such taxable
year may be deemed paid or accrued in any other taxable year
under subsection (c).
``(2) Individuals to whom subsection applies.--This
subsection shall apply to an individual for any taxable year
if--
``(A) the entire amount of such individual's gross
income for the taxable year from sources without the
United States consists of qualified passive income,
``(B) the amount of the creditable foreign taxes
paid or accrued by the individual during the taxable
year does not exceed $200 ($400 in the case of a joint
return), and
``(C) such individual elects to have this
subsection apply for the taxable year.
``(3) Definitions.--For purposes of this subsection--
``(A) Qualified passive income.--The term
`qualified passive income' means any item of gross
income if--
``(i) such item of income is passive income
(as defined in subsection (d)(2)(A) without
regard to clause (iii) thereof), and
``(ii) such item of income is shown on a
payee statement furnished to the individual.
``(B) Creditable foreign taxes.--The term
`creditable foreign taxes' means any taxes for which a
credit is allowable under section 901; except that such
term shall not include any tax unless such tax is shown
on a payee statement furnished to such individual.
``(C) Payee statement.--The term `payee statement'
has the meaning given to such term by section
6724(d)(2).
``(D) Estates and trusts not eligible.--This
subsection shall not apply to any estate or trust.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 1995.
SEC. 14113. TREATMENT OF PERSONAL TRANSACTIONS BY INDIVIDUALS UNDER
FOREIGN CURRENCY RULES.
(a) General Rule.--Subsection (e) of section 988 (relating to
application to individuals) is amended to read as follows:
``(e) Application to Individuals.--
``(1) In general.--The preceding provisions of this section
shall not apply to any section 988 transaction entered into by
an individual which is a personal transaction.
``(2) Exclusion for certain personal transactions.--If--
``(A) nonfunctional currency is disposed of by an
individual in any transaction, and
``(B) such transaction is a personal transaction,
no gain shall be recognized for purposes of this subtitle by
reason of changes in exchange rates after such currency was
acquired by such individual and before such disposition. The
preceding sentence shall not apply if the gain which would
otherwise be recognized exceeds $200.
``(3) Personal transactions.--For purposes of this
subsection, the term `personal transaction' means any
transaction entered into by an individual, except that such
term shall not include any transaction to the extent that
expenses properly allocable to such transaction meet the
requirements of section 162 or 212 (other than that part of
section 212 dealing with expenses incurred in connection with
taxes).''
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
SEC. 14114. TREATMENT OF CERTAIN REIMBURSED EXPENSES OF RURAL MAIL
CARRIERS.
(a) In General.--Section 162 (relating to trade or business
expenses) is amended by redesignating subsection (o) as subsection (p)
and by inserting after subsection (n) the following new subsection:
``(o) Treatment of Certain Reimbursed Expenses of Rural Mail
Carriers.--
``(1) General rule.--In the case of any employee of the
United States Postal Service who performs services involving
the collection and delivery of mail on a rural route and who
receives qualified reimbursements for the expenses incurred by
such employee for the use of a vehicle in performing such
services--
``(A) the amount allowable as a deduction under
this chapter for the use of a vehicle in performing
such services shall be equal to the amount of such
qualified reimbursements; and
``(B) such qualified reimbursements shall be
treated as paid under a reimbursement or other expense
allowance arrangement for purposes of section
62(a)(2)(A) (and section 62(c) shall not apply to such
qualified reimbursements).
``(2) Definition of qualified reimbursements.--For purposes
of this subsection, the term `qualified reimbursements' means
the amounts paid by the United States Postal Service to
employees as an equipment maintenance allowance under the 1991
collective bargaining agreement between the United States
Postal Service and the National Rural Letter Carriers'
Association. Amounts paid as an equipment maintenance allowance
by such Postal Service under later collective bargaining
agreements that supersede the 1991 agreement shall be
considered qualified reimbursements if such amounts do not
exceed the amounts that would have been paid under the 1991
agreement, adjusted for changes in the Consumer Price Index (as
defined in section 1(f)(5)) since 1991.''
(b) Technical Amendment.--Section 6008 of the Technical and
Miscellaneous Revenue Act of 1988 is hereby repealed.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
SEC. 14115. EXCLUSION OF COMBAT PAY FROM WITHHOLDING LIMITED TO AMOUNT
EXCLUDABLE FROM GROSS INCOME.
(a) In General.--Paragraph (1) of section 3401(a) (defining wages)
is amended by inserting before the semicolon the following: ``to the
extent remuneration for such service is excludable from gross income
under such section''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to remuneration paid after December 31, 1995.
SEC. 14116. TREATMENT OF TRAVELING EXPENSES OF CERTAIN FEDERAL
EMPLOYEES ENGAGED IN CRIMINAL INVESTIGATIONS.
(a) In General.--Subsection (a) of section 162 is amended by adding
at the end the following new sentence: ``The preceding sentence shall
not apply to any Federal employee during any period for which such
employee is certified by the Attorney General (or the designee thereof)
as traveling on behalf of the United States in temporary duty status to
investigate, or provide support services for the investigation of, a
Federal crime.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years ending after the date of the enactment of this
Act.
Subtitle B--Pension Simplification
PART I--SIMPLIFIED DISTRIBUTION RULES
SEC. 14201. REPEAL OF 5-YEAR INCOME AVERAGING FOR LUMP-SUM
DISTRIBUTIONS.
(a) In General.--Subsection (d) of section 402 (relating to
taxability of beneficiary of employees' trust) is amended by adding at
the end the following new paragraph:
``(8) Termination.--
``(A) In general.--Except as provided in
subparagraph (B), this subsection shall not apply to
any taxable year beginning after December 31, 1995.
``(B) Retention of certain transition rules.--
Subparagraph (A) shall not apply to any distribution
for which the taxpayer elects the benefits of section
1122 (h)(3) or (h)(5) of the Tax Reform Act of 1986.''
SEC. 14202. REPEAL OF $5,000 EXCLUSION OF EMPLOYEES' DEATH BENEFITS.
(a) In General.--Subsection (b) of section 101 is hereby repealed.
(b) Conforming Amendments.--
(1) Subsection (c) of section 101 is amended by striking
``subsection (a) or (b)'' and inserting ``subsection (a)''.
(2) Sections 406(e) and 407(e) are each amended by striking
paragraph (2) and by redesignating paragraph (3) as paragraph
(2).
(3) Section 7701(a)(20) is amended by striking ``, for the
purposes of applying the provisions of section 101(b) with
respect to employees' death benefits''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
SEC. 14203. SIMPLIFIED METHOD FOR TAXING ANNUITY DISTRIBUTIONS UNDER
CERTAIN EMPLOYER PLANS.
(a) General Rule.--Subsection (d) of section 72 (relating to
annuities; certain proceeds of endowment and life insurance contracts)
is amended to read as follows:
``(d) Special Rules for Qualified Employer Retirement Plans.--
``(1) Simplified method of taxing annuity payments.--
``(A) In general.--In the case of any amount
received as an annuity under a qualified employer
retirement plan--
``(i) subsection (b) shall not apply, and
``(ii) the investment in the contract shall
be recovered as provided in this paragraph.
``(B) Method of recovering investment in
contract.--
``(i) In general.--Gross income shall not
include so much of any monthly annuity payment
under a qualified employer retirement plan as
does not exceed the amount obtained by
dividing--
``(I) the investment in the
contract (as of the annuity starting
date), by
``(II) the number of anticipated
payments determined under the table
contained in clause (iii) (or, in the
case of a contract to which subsection
(c)(3)(B) applies, the number of
monthly annuity payments under such
contract).
``(ii) Certain rules made applicable.--
Rules similar to the rules of paragraphs (2)
and (3) of subsection (b) shall apply for
purposes of this paragraph.
``(iii) Number of anticipated payments.--
``If the age of the
primary annuitant on
The number
the annuity starting
of anticipated
date is:
payments is:
Not more than 55...... 300
More than 55 but not 260
more than 60.
More than 60 but not 240
more than 65.
More than 65 but not 170
more than 70.
More than 70.......... 120
``(C) Adjustment for refund feature not
applicable.--For purposes of this paragraph, investment
in the contract shall be determined under subsection
(c)(1) without regard to subsection (c)(2).
``(D) Special rule where lump sum paid in
connection with commencement of annuity payments.--If,
in connection with the commencement of annuity payments
under any qualified employer retirement plan, the
taxpayer receives a lump sum payment--
``(i) such payment shall be taxable under
subsection (e) as if received before the
annuity starting date, and
``(ii) the investment in the contract for
purposes of this paragraph shall be determined
as if such payment had been so received.
``(E) Exception.--This paragraph shall not apply in
any case where the primary annuitant has attained age
75 on the annuity starting date unless there are fewer
than 5 years of guaranteed payments under the annuity.
``(F) Adjustment where annuity payments not on
monthly basis.--In any case where the annuity payments
are not made on a monthly basis, appropriate
adjustments in the application of this paragraph shall
be made to take into account the period on the basis of
which such payments are made.
``(G) Qualified employer retirement plan.--For
purposes of this paragraph, the term `qualified
employer retirement plan' means any plan or contract
described in paragraph (1), (2), or (3) of section
4974(c).
``(2) Treatment of employee contributions under defined
contribution plans.--For purposes of this section, employee
contributions (and any income allocable thereto) under a
defined contribution plan may be treated as a separate
contract.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply in cases where the annuity starting date is after December 31,
1995.
SEC. 14204. REQUIRED DISTRIBUTIONS.
(a) In General.--Section 401(a)(9)(C) (defining required beginning
date) is amended to read as follows:
``(C) Required beginning date.--For purposes of
this paragraph--
``(i) In general.--The term `required
beginning date' means April 1 of the calendar
year following the later of--
``(I) the calendar year in which
the employee attains age 70\1/2\, or
``(II) the calendar year in which
the employee retires.
``(ii) Exception.--Subclause (II) of clause
(i) shall not apply--
``(I) except as provided in section
409(d), in the case of an employee who
is a 5-percent owner (as defined in
section 416) with respect to the plan
year ending in the calendar year in
which the employee attains age 70\1/2\, or
``(II) for purposes of section 408
(a)(6) or (b)(3).
``(iii) Actuarial adjustment.--In the case
of an employee to whom clause (i)(II) applies
who retires in a calendar year after the
calendar year in which the employee attains age
70\1/2\, the employee's accrued benefit shall
be actuarially increased to take into account
the period after age 70\1/2\ in which the
employee was not receiving any benefits under
the plan.
``(iv) Exception for governmental and
church plans.--Clauses (ii) and (iii) shall not
apply in the case of a governmental plan or
church plan. For purposes of this clause, the
term `church plan' means a plan maintained by a
church for church employees, and the term
`church' means any church (as defined in
section 3121(w)(3)(A)) or qualified church-
controlled organization (as defined in section
3121(w)(3)(B)).''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to years beginning after December 31, 1995.
PART II--INCREASED ACCESS TO PENSION PLANS
SEC. 14211. MODIFICATIONS OF SIMPLIFIED EMPLOYEE PENSIONS.
(a) Increase in Number of Allowable Participants for Salary
Reduction Arrangements.--Section 408(k)(6)(B) is amended by striking
``25'' each place it appears in the text and heading thereof and
inserting ``100''.
(b) Repeal of Participation Requirement.--
(1) In general.--Section 408(k)(6)(A) is amended by
striking clause (ii) and by redesignating clauses (iii) and
(iv) as clauses (ii) and (iii), respectively.
(2) Conforming amendments.--Clause (ii) of section
408(k)(6)(C) and clause (ii) of section 408(k)(6)(F) are each
amended by striking ``subparagraph (A)(iii)'' and inserting
``subparagraph (A)(ii)''.
(c) Alternative Test.--Clause (ii) of section 408(k)(6)(A), as
redesignated by subsection (b)(1), is amended by adding at the end the
following new flush sentence:
``The requirements of the preceding sentence
are met if the employer makes contributions to
the simplified employee pension meeting the
requirements of sections 401(k)(11) (B) or (C),
401(k)(11)(D), and 401(m)(10)(B).''
(d) Year for Computing Nonhighly Compensated Employee Percentage.--
Clause (ii) of section 408(k)(6)(A), as redesignated by subsection
(b)(1), is amended--
(1) by striking ``such year'' in subclause (I) and
inserting ``the preceding year'', and
(2) by adding at the end the following new flush sentence:
``In the case of the first plan year for which
an employer makes contributions to a simplified
employee pension, rules similar to the rules of
section 401(k)(3)(E) shall apply.''
(e) Effective Date.--The amendments made by this section shall
apply to years beginning after December 31, 1995.
SEC. 14212. STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT ORGANIZATIONS
ELIGIBLE UNDER SECTION 401(k).
(a) In General.--Subparagraph (B) of section 401(k)(4) is amended
to read as follows:
``(B) Eligibility of state and local governments
and tax-exempt organizations.--Any--
``(i) State or local government or
political subdivision thereof, or any agency or
instrumentality thereof, and
``(ii) any organization exempt from tax
under this subtitle,
may include a qualified cash or deferred arrangement as
part of a plan maintained by it unless the entity
maintains an eligible deferred compensation plan (as
defined in section 457(b)). This subparagraph shall not
apply to a rural cooperative plan.''
(b) Effective Date.--The amendment made by this section shall apply
to plan years beginning after December 31, 1996, but shall not apply to
any cash or deferred arrangement to which clause (i) or (ii) of section
1116(f)(2)(B) of the Tax Reform Act of 1986 applies.
PART III--NONDISCRIMINATION PROVISIONS
SEC. 14221. DEFINITION OF HIGHLY COMPENSATED EMPLOYEES.
(a) In General.--Paragraph (1) of section 414(q) (defining highly
compensated employee) is amended to read as follows:
``(1) In general.--The term `highly compensated employee'
means any employee who--
``(A) was a 5-percent owner at any time during the
year or the preceding year, or
``(B) had compensation for the preceding year from
the employer in excess of $80,000.
The Secretary shall adjust the $80,000 amount under
subparagraph (B) at the same time and in the same manner as
under section 415(d), except that the base period in applying
such section for purposes of this paragraph shall be the
calendar quarter ending September 30, 1995.''
(b) Conforming Amendments.--
(1)(A) Subsection (q) of section 414 is amended by striking
paragraphs (2), (4), (5), (8), and (12) and by redesignating
paragraphs (3), (6), (7), (9), (10), and (11) as paragraphs (2)
through (7), respectively.
(B) Section 129(d)(8)(B), 401(a)(5)(D)(ii), 408(k)(2)(C),
and 416(i)(1)(D) are each amended by striking ``section
414(q)(7)'' and inserting ``section 414(q)(4)''.
(C) Sections 401(a)(17) and 404(l) are each amended by
striking ``section 414(q)(6)'' and inserting ``section
414(q)(3)''.
(D) Section 416(i)(1)(A) is amended by striking ``section
414(q)(8)'' and inserting ``section 414(r)(9)''.
(2)(A) Section 414(r) is amended by adding at the end the
following new paragraph:
``(9) Excluded employees.--For purposes of paragraph
(2)(A), the following employees shall be excluded:
``(A) Employees who have not completed 6 months of
service.
``(B) Employees who normally work less than 17\1/2\
hours per week.
``(C) Employees who normally work not more than 6
months during any year.
``(D) Employees who have not attained the age of
21.
``(E) Except to the extent provided in regulations,
employees who are included in a unit of employees
covered by an agreement which the Secretary of Labor
finds to be a collective bargaining agreement between
employee representatives and the employer.
Except as provided by the Secretary, the employer may elect to
apply subparagraph (A), (B), (C), or (D) by substituting a
shorter period of service, smaller number of hours or months,
or lower age for the period of service, number of hours or
months, or age (as the case may be) specified in such
subparagraph.''
(B) Subparagraph (A) of section 414(r)(2) is amended by
striking ``subsection (q)(8)'' and inserting ``paragraph (9)''.
(3) Section 1114(c)(4) of the Tax Reform Act of 1986 is
amended by adding at the end the following new sentence: ``Any
reference in this paragraph to section 414(q) shall be treated
as a reference to such section as in effect before the Tax
Simplification Act of 1995''.
(c) Effective Date.--The amendments made by this section shall
apply to years beginning after December 31, 1995.
SEC. 14222. REPEAL OF FAMILY AGGREGATION RULES.
(a) In General.--Paragraph (6) of section 414(q) is hereby
repealed.
(b) Compensation Limit.--Subparagraph (A) of section 401(a)(17) is
amended by striking the last sentence.
(c) Deduction.--Subsection (l) of section 404 is amended by
striking the last sentence.
(d) Effective Date.--The amendments made by this section shall
apply to years beginning after December 31, 1995.
SEC. 14223. MODIFICATION OF ADDITIONAL PARTICIPATION REQUIREMENTS.
(a) General Rule.--Section 401(a)(26)(A) (relating to additional
participation requirements) is amended to read as follows:
``(A) In general.--In the case of a trust which is
a part of a defined benefit plan, such trust shall not
constitute a qualified trust under this subsection
unless on each day of the plan year such trust benefits
at least the lesser of--
``(i) 50 employees of the employer, or
``(ii) the greater of--
``(I) 40 percent of all employees
of the employer, or
``(II) 2 employees (or if there is
only 1 employee, such employee).''
(b) Separate Line of Business Test.--Section 401(a)(26)(G)
(relating to separate line of business) is amended by striking
``paragraph (7)'' and inserting ``paragraph (2)(A) or (7)''.
(c) Effective Date.--The amendment made by this section shall apply
to years beginning after December 31, 1995.
SEC. 14224. NONDISCRIMINATION RULES FOR QUALIFIED CASH OR DEFERRED
ARRANGEMENTS AND MATCHING CONTRIBUTIONS.
(a) Alternative Methods of Satisfying Section 401(k)
Nondiscrimination Tests.--Section 401(k) (relating to cash or deferred
arrangements) is amended by adding at the end the following new
paragraph:
``(11) Alternative methods of meeting nondiscrimination
requirements.--
``(A) In general.--A cash or deferred arrangement
shall be treated as meeting the requirements of
paragraph (3)(A)(ii) if such arrangement--
``(i) meets the contribution requirements
of subparagraph (B) or (C), and
``(ii) meets the notice requirements of
subparagraph (D).
``(B) Matching contributions.--
``(i) In general.--The requirements of this
subparagraph are met if, under the arrangement,
the employer makes matching contributions on
behalf of each employee who is not a highly
compensated employee in an amount equal to--
``(I) 100 percent of the elective
contributions of the employee to the
extent such elective contributions do
not exceed 3 percent of the employee's
compensation, and
``(II) 50 percent of the elective
contributions of the employee to the
extent that such elective contributions
exceed 3 percent but do not exceed 5
percent of the employee's compensation.
``(ii) Rate for highly compensated
employees.--The requirements of this
subparagraph are not met if, under the
arrangement, the matching contribution with
respect to any elective contribution of a
highly compensated employee at any level of
compensation is greater than that with respect
to an employee who is not a highly compensated
employee.
``(iii) Alternative plan designs.--If the
matching contribution with respect to any
elective contribution at any specific level of
compensation is not equal to the percentage
required under clause (i), an arrangement shall
not be treated as failing to meet the
requirements of clause (i) if--
``(I) the level of an employer's
matching contribution does not increase
as an employee's elective contributions
increase, and
``(II) the aggregate amount of
matching contributions with respect to
elective contributions not in excess of
such level of compensation is at least
equal to the amount of matching
contributions which would be made if
matching contributions were made on the
basis of the percentages described in
clause (i).
``(C) Nonelective contributions.--The requirements
of this subparagraph are met if, under the arrangement,
the employer is required, without regard to whether the
employee makes an elective contribution or employee
contribution, to make a contribution to a defined
contribution plan on behalf of each employee who is not
a highly compensated employee and who is eligible to
participate in the arrangement in an amount equal to at
least 3 percent of the employee's compensation.
``(D) Notice requirement.--An arrangement meets the
requirements of this paragraph if, under the
arrangement, each employee eligible to participate is,
within a reasonable period before any year, given
written notice of the employee's rights and obligations
under the arrangement which--
``(i) is sufficiently accurate and
comprehensive to apprise the employee of such
rights and obligations, and
``(ii) is written in a manner calculated to
be understood by the average employee eligible
to participate.
``(E) Other requirements.--
``(i) Withdrawal and vesting
restrictions.--An arrangement shall not be
treated as meeting the requirements of
subparagraph (B) or (C) unless the requirements
of subparagraphs (B) and (C) of paragraph (2)
are met with respect to all employer
contributions (including matching
contributions).
``(ii) Social security and similar
contributions not taken into account.--An
arrangement shall not be treated as meeting the
requirements of subparagraph (B) or (C) unless
such requirements are met without regard to
subsection (l), and, for purposes of subsection
(l), employer contributions under subparagraph
(B) or (C) shall not be taken into account.
``(F) Other plans.--An arrangement shall be treated
as meeting the requirements under subparagraph (A)(i)
if any other plan maintained by the employer meets such
requirements with respect to employees eligible under
the arrangement.''
(b) Alternative Methods of Satisfying Section 401(m)
Nondiscrimination Tests.--Section 401(m) (relating to nondiscrimination
test for matching contributions and employee contributions) is amended
by redesignating paragraph (10) as paragraph (11) and by adding after
paragraph (9) the following new paragraph:
``(10) Alternative method of satisfying tests.--
``(A) In general.--A defined contribution plan
shall be treated as meeting the requirements of
paragraph (2) with respect to matching contributions if
the plan--
``(i) meets the contribution requirements
of subparagraph (B) or (C) of subsection
(k)(11),
``(ii) meets the notice requirements of
subsection (k)(11)(D), and
``(iii) meets the requirements of
subparagraph (B).
``(B) Limitation on matching contributions.--The
requirements of this subparagraph are met if--
``(i) matching contributions on behalf of
any employee may not be made with respect to an
employee's contributions or elective deferrals
in excess of 6 percent of the employee's
compensation,
``(ii) the level of an employer's matching
contribution does not increase as an employee's
contributions or elective deferrals increase,
and
``(iii) the matching contribution with
respect to any highly compensated employee at a
specific level of compensation is not greater
than that with respect to an employee who is
not a highly compensated employee.''
(c) Year for Computing Nonhighly Compensated Employee Percentage.--
(1) Cash or deferred arrangements.--Clause (ii) of section
401(k)(3)(A) is amended--
(A) by striking ``such year'' and inserting ``the
plan year'', and
(B) by striking ``for such plan year'' and
inserting ``the preceding plan year''.
(2) Matching and employee contributions.--Section
401(m)(2)(A) is amended--
(A) by inserting ``for such plan year'' after
``highly compensated employees'', and
(B) by inserting ``for the preceding plan year''
after ``eligible employees'' each place it appears in
clause (i) and clause (ii).
(d) Special Rule for Determining Average Deferral Percentage for
First Plan Year, Etc.--
(1) Paragraph (3) of section 401(k) is amended by adding at
the end the following new subparagraph:
``(E) For purposes of this paragraph, in the case
of the first plan year of any plan, the amount taken
into account as the actual deferral percentage of
nonhighly compensated employees for the preceding plan
year shall be--
``(i) 3 percent, or
``(ii) if the employer makes an election
under this subclause, the actual deferral
percentage of nonhighly compensated employees
determined for such first plan year.''
(2) Paragraph (3) of section 401(m) is amended by adding at
the end the following: ``Rules similar to the rules of
subsection (k)(3)(E) shall apply for purposes of this
subsection.''
(e) Distribution of Excess Contributions.--
(1) Subparagraph (C) of section 401(k)(8) (relating to
arrangement not disqualified if excess contributions
distributed) is amended by striking ``on the basis of the
respective portions of the excess contributions attributable to
each of such employees'' and inserting ``on the basis of the
amount of contributions by, or on behalf of, each of such
employees''.
(2) Subparagraph (C) of section 401(m)(6) (relating to
method of distributing excess aggregate contributions) is
amended by striking ``on the basis of the respective portions
of such amounts attributable to each of such employees'' and
inserting ``on the basis of the amount of contributions on
behalf of, or by, each such employee''.
(f) Effective Date.--The amendments made by this section shall
apply to years beginning after December 31, 1995.
PART IV--MISCELLANEOUS SIMPLIFICATION
SEC. 14231. TREATMENT OF LEASED EMPLOYEES.
(a) General Rule.--Subparagraph (C) of section 414(n)(2) (defining
leased employee) is amended to read as follows:
``(C) such services are performed under significant
direction or control by the recipient.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to years beginning after December 31, 1995, but shall not apply
to any relationship determined under an Internal Revenue Service ruling
issued before the date of the enactment of this Act pursuant to section
414(n)(2)(C) of the Internal Revenue Code of 1986 (as in effect on the
day before such date) not to involve a leased employee.
SEC. 14232. PLANS COVERING SELF-EMPLOYED INDIVIDUALS.
(a) Aggregation Rules.--Section 401(d) (relating to additional
requirements for qualification of trusts and plans benefiting owner-
employees) is amended to read as follows:
``(d) Contribution Limit on Owner-Employees.--A trust forming part
of a pension or profit-sharing plan which provides contributions or
benefits for employees some or all of whom are owner-employees shall
constitute a qualified trust under this section only if, in addition to
meeting the requirements of subsection (a), the plan provides that
contributions on behalf of any owner-employee may be made only with
respect to the earned income of such owner-employee which is derived
from the trade or business with respect to which such plan is
established.''
(b) Effective Date.--The amendments made by this section shall
apply to years beginning after December 31, 1995.
SEC. 14233. ELIMINATION OF SPECIAL VESTING RULE FOR MULTIEMPLOYER
PLANS.
(a) In General.--Paragraph (2) of section 411(a) (relating to
minimum vesting standards) is amended--
(1) by striking ``subparagraph (A), (B), or (C)'' and
inserting ``subparagraph (A) or (B)''; and
(2) by striking subparagraph (C).
(b) Effective Date.--The amendments made by this section shall
apply to plan years beginning on or after the earlier of--
(1) the later of--
(A) January 1, 1996, or
(B) the date on which the last of the collective
bargaining agreements pursuant to which the plan is
maintained terminates (determined without regard to any
extension thereof after the date of the enactment of
this Act), or
(2) January 1, 1998.
Such amendments shall not apply to any individual who does not have
more than 1 hour of service under the plan on or after the 1st day of
the 1st plan year to which such amendments apply.
SEC. 14234. DISTRIBUTIONS UNDER RURAL COOPERATIVE PLANS.
(a) Distributions After Certain Age.--Section 401(k)(7) is amended
by adding at the end the following new subparagraph:
``(C) Special rule for certain distributions.--A
rural cooperative plan which includes a qualified cash
or deferred arrangement shall not be treated as
violating the requirements of section 401(a) merely by
reason of a distribution to a participant after
attainment of age 59\1/2\.''
(b) Effective Date.--The amendment made by this section shall apply
to distributions after December 31, 1995.
SEC. 14235. TREATMENT OF GOVERNMENTAL PLANS UNDER SECTION 415.
(a) Definition of Compensation.--Subsection (k) of section 415
(regarding limitations on benefits and contributions under qualified
plans) is amended by adding immediately after paragraph (2) the
following new paragraph:
``(3) Definition of compensation for governmental plans.--
For purposes of this section, in the case of a governmental
plan (as defined in section 414(d)), the term `compensation'
includes, in addition to the amounts described in subsection
(c)(3)--
``(A) any elective deferral (as defined in section
402(g)(3)), and
``(B) any amount which is contributed by the
employer at the election of the employee and which is
not includible in the gross income of an employee under
section 125 or 457.''
(b) Compensation Limit.--Subsection (b) of section 415 is amended
by adding immediately after paragraph (10) the following new paragraph:
``(11) Special limitation rule for governmental plans.--In
the case of a governmental plan (as defined in section 414(d)),
subparagraph (B) of paragraph (1) shall not apply.''
(c) Treatment of Certain Excess Benefit Plans.--
(1) In general.--Section 415 is amended by adding at the
end the following new subsection:
``(m) Treatment of Qualified Governmental Excess Benefit
Arrangements.--
``(1) Governmental plan not affected.--In determining
whether a governmental plan (as defined in section 414(d))
meets the requirements of this section, benefits provided under
a qualified governmental excess benefit arrangement shall not
be taken into account. Income accruing to a governmental plan
(or to a trust that is maintained solely for the purpose of
providing benefits under a qualified governmental excess
benefit arrangement) in respect of a qualified governmental
excess benefit arrangement shall constitute income derived from
the exercise of an essential governmental function upon which
such governmental plan (or trust) shall be exempt from tax
under section 115.
``(2) Taxation of participant.--For purposes of this
chapter--
``(A) the taxable year or years for which amounts
in respect of a qualified governmental excess benefit
arrangement are includible in gross income by a
participant, and
``(B) the treatment of such amounts when so
includible by the participant,
shall be determined as if such qualified governmental excess
benefit arrangement were treated as a plan for the deferral of
compensation which is maintained by a corporation not exempt
from tax under this chapter and which does not meet the
requirements for qualification under section 401.
``(3) Qualified governmental excess benefit arrangement.--
For purposes of this subsection, the term `qualified
governmental excess benefit arrangement' means a portion of a
governmental plan if--
``(A) such portion is maintained solely for the
purpose of providing to participants in the plan that
part of the participant's annual benefit otherwise
payable under the terms of the plan that exceeds the
limitations on benefits imposed by this section,
``(B) under such portion no election is provided at
any time to the participant (directly or indirectly) to
defer compensation, and
``(C) benefits described in subparagraph (A) are
not paid from a trust forming a part of such
governmental plan unless such trust is maintained
solely for the purpose of providing such benefits.''
(2) Coordination with section 457.--Subsection (e) of
section 457 is amended by adding at the end the following new
paragraph:
``(15) Treatment of qualified governmental excess benefit
arrangements.--Subsections (b)(2) and (c)(1) shall not apply to
any qualified governmental excess benefit arrangement (as
defined in section 415(m)(3)), and benefits provided under such an
arrangement shall not be taken into account in determining whether any
other plan is an eligible deferred compensation plan.''
(3) Conforming amendment.--Paragraph (2) of section 457(f)
is amended by striking ``and'' at the end of subparagraph (C),
by striking the period at the end of subparagraph (D) and
inserting ``, and'', and by inserting immediately thereafter
the following new subparagraph:
``(E) a qualified governmental excess benefit
arrangement described in section 415(m).''
(d) Exemption for Survivor and Disability Benefits.--Paragraph (2)
of section 415(b) is amended by adding at the end the following new
subparagraph:
``(I) Exemption for survivor and disability
benefits provided under governmental plans.--
Subparagraph (B) of paragraph (1), subparagraph (C) of
this paragraph, and paragraph (5) shall not apply to--
``(i) income received from a governmental
plan (as defined in section 414(d)) as a
pension, annuity, or similar allowance as the
result of the recipient becoming disabled by
reason of personal injuries or sickness, or
``(ii) amounts received from a governmental
plan by the beneficiaries, survivors, or the
estate of an employee as the result of the
death of the employee.''
(e) Revocation of Grandfather Election.--
(1) In general.--Subparagraph (C) of section 415(b)(10) is
amended by adding at the end the following new clause:
``(ii) Revocation of election.--An election
under clause (i) may be revoked not later than
the last day of the third plan year beginning
after the date of the enactment of this clause.
The revocation shall apply to all plan years to
which the election applied and to all
subsequent plan years. Any amount paid by a
plan in a taxable year ending after the
revocation shall be includible in income in
such taxable year under the rules of this
chapter in effect for such taxable year, except
that, for purposes of applying the limitations
imposed by this section, any portion of such
amount which is attributable to any taxable
year during which the election was in effect
shall be treated as received in such taxable
year.''
(2) Conforming amendment.--Subparagraph (C) of section
415(b)(10) is amended by striking ``This'' and inserting:
``(i) In general.--This''.
(f) Effective Date.--
(1) In general.--The amendments made by subsections (a),
(b), (c), and (d) shall apply to taxable years beginning on or
after the date of the enactment of this Act. The amendment made
by subsection (e) shall apply with respect to election
revocations adopted after the date of the enactment of this
Act.
(2) Treatment for years beginning before date of
enactment.--In the case of a governmental plan (as defined in
section 414(d) of the Internal Revenue Code of 1986), such plan
shall be treated as satisfying the requirements of section 415
of such Code for all taxable years beginning before the date of
the enactment of this Act.
SEC. 14236. UNIFORM RETIREMENT AGE.
(a) Discrimination Testing.--Paragraph (5) of section 401(a)
(relating to special rules relating to nondiscrimination requirements)
is amended by adding at the end the following new subparagraph:
``(F) Social security retirement age.--For purposes
of testing for discrimination under paragraph (4)--
``(i) the social security retirement age
(as defined in section 415(b)(8)) shall be
treated as a uniform retirement age, and
``(ii) subsidized early retirement benefits
and joint and survivor annuities shall not be
treated as being unavailable to employees on
the same terms merely because such benefits or
annuities are based in whole or in part on an
employee's social security retirement age (as
so defined).''
(b) Effective Date.--The amendment made by this section shall apply
to years beginning after December 31, 1995.
SEC. 14237. UNIFORM PENALTY PROVISIONS TO APPLY TO CERTAIN PENSION
REPORTING REQUIREMENTS.
(a) Penalties.--
(1) Statements.--Paragraph (1) of section 6724(d) 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 inserting after subparagraph (B)
the following new subparagraph:
``(C) any statement of the amount of payments to
another person required to be made to the Secretary
under--
``(i) section 408(i) (relating to reports
with respect to individual retirement accounts
or annuities), or
``(ii) section 6047(d) (relating to reports
by employers, plan administrators, etc.).''
(2) Reports.--Paragraph (2) of section 6724(d) is amended
by striking ``or'' at the end of subparagraph (S), by striking
the period at the end of subparagraph (T) and inserting a
comma, and by inserting after subparagraph (T) the following
new subparagraphs:
``(U) section 408(i) (relating to reports with
respect to individual retirement plans) to any person
other than the Secretary with respect to the amount of
payments made to such person, or
``(V) section 6047(d) (relating to reports by plan
administrators) to any person other than the Secretary
with respect to the amount of payments made to such person.''
(b) Modification of Reportable Designated Distributions.--
(1) Section 408.--Subsection (i) of section 408 (relating
to individual retirement account reports) is amended by
inserting ``aggregating $10 or more in any calendar year''
after ``distributions''.
(2) Section 6047.--Paragraph (1) of section 6047(d)
(relating to reports by employers, plan administrators, etc.)
is amended by adding at the end the following new sentence:
``No return or report may be required under the preceding
sentence with respect to distributions to any person during any
year unless such distributions aggregate $10 or more.''
(c) Qualifying Rollover Distributions.--Section 6652(i) is
amended--
(1) by striking ``the $10'' and inserting ``$100'', and
(2) by striking ``$5,000'' and inserting ``$50,000''.
(d) Conforming Amendments.--
(1) Paragraph (1) of section 6047(f) is amended to read as
follows:
``(1) For provisions relating to
penalties for failures to file returns and reports required under this
section, see sections 6652(e), 6721, and 6722.''
(2) Subsection (e) of section 6652 is amended by adding at
the end the following new sentence: ``This subsection shall not
apply to any return or statement which is an information return
described in section 6724(d)(1)(C)(ii) or a payee statement
described in section 6724(d)(2)(U).''
(3) Subsection (a) of section 6693 is amended by adding at
the end the following new sentence: ``This subsection shall not
apply to any report which is an information return described in
section 6724(d)(1)(C)(i) or a payee statement described in
section 6724(d)(2)(T).''
(e) Effective Date.--The amendments made by this section shall
apply to returns, reports, and other statements the due date for which
(determined without regard to extensions) is after December 31, 1995.
SEC. 14238. CONTRIBUTIONS ON BEHALF OF DISABLED EMPLOYEES.
(a) All Disabled Participants Receiving Contributions.--Section
415(c)(3)(C) is amended by adding at the end the following: ``If a
defined contribution plan provides for the continuation of
contributions on behalf of all participants described in clause (i) for
a fixed or determinable period, this subparagraph shall be applied
without regard to clauses (ii) and (iii).''
(b) Effective Date.--The amendment made by this section shall apply
to years beginning after December 31, 1995.
SEC. 14239. TREATMENT OF DEFERRED COMPENSATION PLANS OF STATE AND LOCAL
GOVERNMENTS AND TAX-EXEMPT ORGANIZATIONS.
(a) Special Rules for Plan Distributions.--Paragraph (9) of section
457(e) (relating to other definitions and special rules) is amended to
read as follows:
``(9) Benefits not treated as made available by reason of
certain elections, etc.--
``(A) Total amount payable is $3,500 or less.--The
total amount payable to a participant under the plan
shall not be treated as made available merely because
the participant may elect to receive such amount (or
the plan may distribute such amount without the
participant's consent) if--
``(i) such amount does not exceed $3,500,
and
``(ii) such amount may be distributed only
if--
``(I) no amount has been deferred
under the plan with respect to such
participant during the 2-year period
ending on the date of the distribution,
and
``(II) there has been no prior
distribution under the plan to such
participant to which this subparagraph
applied.
A plan shall not be treated as failing to meet the
distribution requirements of subsection (d) by reason
of a distribution to which this subparagraph applies.
``(B) Election to defer commencement of
distributions.--The total amount payable to a
participant under the plan shall not be treated as made
available merely because the participant may elect to
defer commencement of distributions under the plan if--
``(i) such election is made after amounts
may be available under the plan in accordance
with subsection (d)(1)(A) and before
commencement of such distributions, and
``(ii) the participant may make only 1 such
election.''
(b) Cost-of-Living Adjustment of Maximum Deferral Amount.--
Subsection (e) of section 457 is amended by adding at the end the
following new paragraph:
``(14) Cost-of-living adjustment of maximum deferral
amount.--The Secretary shall adjust the $7,500 amount specified
in subsections (b)(2) and (c)(1) at the same time and in the
same manner as under section 415(d) (determined without regard
to paragraph (4)), except that the base period in applying such
section for purposes of this paragraph shall be the calendar
quarter ending September 30, 1994.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
SEC. 14240. TRUST REQUIREMENT FOR DEFERRED COMPENSATION PLANS OF STATE
AND LOCAL GOVERNMENTS.
(a) In General.--Section 457 is amended by adding at the end the
following new subsection:
``(g) Governmental Plans Must Maintain Set Asides for Exclusive
Benefit of Participants.--
``(1) In general.--A plan maintained by an eligible
employer described in subsection (e)(1)(A) shall not be treated
as an eligible deferred compensation plan unless all assets and
income of the plan described in subsection (b)(6) are held in
trust for the exclusive benefit of participants and their
beneficiaries.
``(2) Taxability of trusts and participants.--For purposes
of this title--
``(A) a trust described in paragraph (1) shall be
treated as an organization exempt from taxation under
section 501(a), and
``(B) notwithstanding any other provision of this
title, amounts in the trust shall be includible in the
gross income of participants and beneficiaries only to
the extent, and at the time, provided in this section.
``(3) Custodial accounts and contracts.--For purposes of
this subsection, custodial accounts and contracts described in
section 401(f) shall be treated as trusts under rules similar
to the rules under section 401(f).''
(b) Conforming Amendment.--Paragraph (6) of section 457(b) is
amended by inserting ``except as provided in subsection (g),'' before
``which provides that''.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to assets and
income described in section 457(b)(6) of the Internal Revenue
Code of 1986 held by a plan on and after the date of the
enactment of this Act.
(2) Transition rule.--In the case of assets and income
described in paragraph (1) held by a plan before the 90th day
after the date of the enactment of this Act, a trust need not
be established by reason of the amendments made by this section
before such 90th day.
SEC. 14241. TRANSITION RULE FOR COMPUTING MAXIMUM BENEFITS UNDER
SECTION 415 LIMITATIONS.
(a) In General.--Subparagraph (A) of section 767(d)(3) of the
Uruguay Round Agreements Act is amended to read as follows:
``(A) Exception.--A plan that was adopted and in
effect before December 8, 1994, shall not be required
to apply the amendments made by subsection (b) with
respect to benefits accrued before the earlier of--
``(i) the later of the date a plan
amendment applying such amendment is adopted or
made effective, or
``(ii) the first day of the first
limitation year beginning after December 31,
1999.
Determinations under section 415(b)(2)(E) of the
Internal Revenue Code of 1986 shall be made with
respect to such benefits on the basis of such section
as in effect on December 7, 1994, and the provisions of
the plan as in effect on December 7, 1994, but only if
such provisions of the plan meet the requirements of
such section (as so in effect).''
(b) Effective Date.--The amendment made by this section shall take
effect as if included in the provisions of section 767 of the Uruguay
Round Agreements Act.
(c) Transitional Rule.--In the case of a plan that was adopted and
in effect before December 8, 1994, if--
(1) a plan amendment was adopted or made effective on or
before the date of the enactment of this Act applying the
amendments made by section 767(b) of the Uruguay Round
Agreements Act, and
(2) within 1 year after the date of the enactment of this
Act, a plan amendment is adopted which repeals the amendment
referred to in paragraph (1),
the amendment referred to in paragraph (1) shall not be taken into
account in applying section 767(d)(3)(A) of the Uruguay Round
Agreements Act, as amended by subsection (a).
SEC. 14242. MULTIPLE SALARY REDUCTION AGREEMENTS PERMITTED UNDER
SECTION 403(b).
(a) General Rule.--For purposes of section 403(b) of the Internal
Revenue Code of 1986, the frequency that an employee is permitted to
enter into a salary reduction agreement, the salary to which such an
agreement may apply, and the ability to revoke such an agreement shall
be determined under the rules applicable to cash or deferred elections
under section 401(k) of such Code.
(b) Effective Date.--Subsection (a) shall apply to taxable years
beginning after December 31, 1995.
SEC. 14243. WAIVER OF MINIMUM PERIOD FOR JOINT AND SURVIVOR ANNUITY
EXPLANATION BEFORE ANNUITY STARTING DATE.
(a) General Rule.--For purposes of section 417(a)(3)(A) of the
Internal Revenue Code of 1986 (relating to plan to provide written
explanations), the minimum period prescribed by the Secretary of the
Treasury between the date that the explanation referred to in such
section is provided and the annuity starting date shall not apply if
waived by the participant and, if applicable, the participant's spouse.
(b) Effective Date.--Subsection (a) shall apply to plan years
beginning after December 31, 1995.
SEC. 14244. REPEAL OF LIMITATION IN CASE OF DEFINED BENEFIT PLAN AND
DEFINED CONTRIBUTION PLAN FOR SAME EMPLOYEE.
(a) In General.--Section 415(e) is repealed.
(b) Conforming Amendments.--
(1) Subparagraph (B) of section 415(b)(5) is amended by
striking ``and subsection (e)''.
(2) Paragraph (1) of section 415(f) is amended by striking
``subsections (b), (c), and (e)'' and inserting ``subsections
(b) and (c)''.
(3) Subsection (g) of section 415 is amended by striking
``subsections (e) and (f)'' in the last sentence and inserting
``subsection (f)''.
(4) Clause (i) of section 415(k)(2)(A) is amended to read
as follows:
``(i) any contribution made directly by an
employee under such an arrangement shall not be
treated as an annual addition for purposes of
subsection (c), and''.
(5) Clause (ii) of section 415(k)(2)(A) is amended by
striking ``subsections (c) and (e)'' and inserting ``subsection
(c)''.
(6) Section 416 is amended by striking subsection (h).
(c) Effective Date.--The amendments made by this section shall
apply to limitation years beginning after December 31, 1996.
SEC. 14245. DATE FOR ADOPTION OF PLAN AMENDMENTS.
If any amendment made by this title requires an amendment to any
plan, such plan amendment shall not be required to be made before the
first day of the first plan year beginning on or after January 1, 1997,
if--
(1) during the period after such amendment takes effect and
before such first plan year, the plan is operated in accordance
with the requirements of such amendment, and
(2) such plan amendment applies retroactively to such
period.
Subtitle C--Treatment of Large Partnerships
PART I--GENERAL PROVISIONS
SEC. 14301. SIMPLIFIED FLOW-THROUGH FOR LARGE PARTNERSHIPS.
(a) General Rule.--Subchapter K (relating to partners and
partnerships) is amended by adding at the end the following new part:
``PART IV--SPECIAL RULES FOR LARGE PARTNERSHIPS
``Sec. 771. Application of subchapter to
large partnerships.
``Sec. 772. Simplified flow-through.
``Sec. 773. Computations at partnership
level.
``Sec. 774. Other modifications.
``Sec. 775. Large partnership defined.
``Sec. 776. Special rules for
partnerships holding oil and
gas properties.
``Sec. 777. Regulations.
``SEC. 771. APPLICATION OF SUBCHAPTER TO LARGE PARTNERSHIPS.
``The preceding provisions of this subchapter to the extent
inconsistent with the provisions of this part shall not apply to a
large partnership and its partners.
``SEC. 772. SIMPLIFIED FLOW-THROUGH.
``(a) General Rule.--In determining the income tax of a partner of
a large partnership, such partner shall take into account separately
such partner's distributive share of the partnership's--
``(1) taxable income or loss from passive loss limitation
activities,
``(2) taxable income or loss from other activities,
``(3) net capital gain (or net capital loss)--
``(A) to the extent allocable to passive loss
limitation activities, and
``(B) to the extent allocable to other activities,
``(4) tax-exempt interest,
``(5) applicable net AMT adjustment separately computed
for--
``(A) passive loss limitation activities, and
``(B) other activities,
``(6) general credits,
``(7) low-income housing credit determined under section
42,
``(8) rehabilitation credit determined under section 47,
``(9) foreign income taxes,
``(10) the credit allowable under section 29, and
``(11) other items to the extent that the Secretary
determines that the separate treatment of such items is
appropriate.
``(b) Separate Computations.--In determining the amounts required
under subsection (a) to be separately taken into account by any
partner, this section and section 773 shall be applied separately with
respect to such partner by taking into account such partner's
distributive share of the items of income, gain, loss, deduction, or
credit of the partnership.
``(c) Treatment at Partner Level.--
``(1) In general.--Except as provided in this subsection,
rules similar to the rules of section 702(b) shall apply to any
partner's distributive share of the amounts referred to in
subsection (a).
``(2) Income or loss from passive loss limitation
activities.--For purposes of this chapter, any partner's
distributive share of any income or loss described in
subsection (a)(1) shall be treated as an item of income or loss
(as the case may be) from the conduct of a trade or business
which is a single passive activity (as defined in section 469).
A similar rule shall apply to a partner's distributive share of
amounts referred to in paragraphs (3)(A) and (5)(A) of
subsection (a).
``(3) Income or loss from other activities.--
``(A) In general.--For purposes of this chapter,
any partner's distributive share of any income or loss
described in subsection (a)(2) shall be treated as an
item of income or expense (as the case may be) with
respect to property held for investment.
``(B) Deductions for loss not subject to section
67.--The deduction under section 212 for any loss
described in subparagraph (A) shall not be treated as a
miscellaneous itemized deduction for purposes of
section 67.
``(4) Treatment of net capital gain or loss.--For purposes
of this chapter, any partner's distributive share of any gain
or loss described in subsection (a)(3) shall be treated as a
long-term capital gain or loss, as the case may be.
``(5) Minimum tax treatment.--In determining the
alternative minimum taxable income of any partner, such
partner's distributive share of any applicable net AMT
adjustment shall be taken into account in lieu of making the
separate adjustments provided in sections 56, 57, and 58 with
respect to the items of the partnership. Except as provided in
regulations, the applicable net AMT adjustment shall be
treated, for purposes of section 53, as an adjustment or item
of tax preference not specified in section 53(d)(1)(B)(ii).
``(6) General credits.--A partner's distributive share of
the amount referred to in paragraph (6) of subsection (a) shall
be taken into account as a current year business credit.
``(d) Operating Rules.--For purposes of this section--
``(1) Passive loss limitation activity.--The term `passive
loss limitation activity' means--
``(A) any activity which involves the conduct of a
trade or business, and
``(B) any rental activity.
For purposes of the preceding sentence, the term `trade or
business' includes any activity treated as a trade or business
under paragraph (5) or (6) of section 469(c).
``(2) Tax-exempt interest.--The term `tax-exempt interest'
means interest excludable from gross income under section 103.
``(3) Applicable net amt adjustment.--
``(A) In general.--The applicable net AMT
adjustment is--
``(i) with respect to taxpayers other than
corporations, the net adjustment determined by
using the adjustments applicable to
individuals, and
``(ii) with respect to corporations, the
net adjustment determined by using the
adjustments applicable to corporations.
``(B) Net adjustment.--The term `net adjustment'
means the net adjustment in the items attributable to
passive loss activities or other activities (as the
case may be) which would result if such items were
determined with the adjustments of sections 56, 57, and
58.
``(4) Treatment of certain separately stated items.--
``(A) Exclusion for certain purposes.--In
determining the amounts referred to in paragraphs (1)
and (2) of subsection (a), any net capital gain or net
capital loss (as the case may be), and any item
referred to in subsection (a)(11), shall be excluded.
``(B) Allocation rules.--The net capital gain shall
be treated--
``(i) as allocable to passive loss
limitation activities to the extent the net
capital gain does not exceed the net capital
gain determined by only taking into account
gains and losses from sales and exchanges of
property used in connection with such
activities, and
``(ii) as allocable to other activities to
the extent such gain exceeds the amount
allocated under clause (i).
A similar rule shall apply for purposes of allocating
any net capital loss.
``(C) Net capital loss.--The term `net capital
loss' means the excess of the losses from sales or
exchanges of capital assets over the gains from sales
or exchange of capital assets.
``(5) General credits.--The term `general credits' means
any credit other than the low-income housing credit, the
rehabilitation credit, the foreign tax credit, and the credit
allowable under section 29.
``(6) Foreign income taxes.--The term `foreign income
taxes' means taxes described in section 901 which are paid or
accrued to foreign countries and to possessions of the United
States.
``(e) Special Rule for Unrelated Business Tax.--In the case of a
partner which is an organization subject to tax under section 511, such
partner's distributive share of any items shall be taken into account
separately to the extent necessary to comply with the provisions of
section 512(c)(1).
``(f) Special Rules for Applying Passive Loss Limitations.--If any
person holds an interest in a large partnership other than as a limited
partner--
``(1) paragraph (2) of subsection (c) shall not apply to
such partner, and
``(2) such partner's distributive share of the partnership
items allocable to passive loss limitation activities shall be
taken into account separately to the extent necessary to comply
with the provisions of section 469.
The preceding sentence shall not apply to any items allocable to an
interest held as a limited partner.
``SEC. 773. COMPUTATIONS AT PARTNERSHIP LEVEL.
``(a) General Rule.--
``(1) Taxable income.--The taxable income of a large
partnership shall be computed in the same manner as in the case
of an individual except that--
``(A) the items described in section 772(a) shall
be separately stated, and
``(B) the modifications of subsection (b) shall
apply.
``(2) Elections.--All elections affecting the computation
of the taxable income of a large partnership or the computation
of any credit of a large partnership shall be made by the
partnership; except that the election under section 901, and
any election under section 108, shall be made by each partner
separately.
``(3) Limitations, etc.--
``(A) In general.--Except as provided in
subparagraph (B), all limitations and other provisions
affecting the computation of the taxable income of a
large partnership or the computation of any credit of a
large partnership shall be applied at the partnership
level (and not at the partner level).
``(B) Certain limitations applied at partner
level.--The following provisions shall be applied at
the partner level (and not at the partnership level):
``(i) Section 68 (relating to overall
limitation on itemized deductions).
``(ii) Sections 49 and 465 (relating to at
risk limitations).
``(iii) Section 469 (relating to limitation
on passive activity losses and credits).
``(iv) Any other provision specified in
regulations.
``(4) Coordination with other provisions.--Paragraphs (2)
and (3) shall apply notwithstanding any other provision of this
chapter other than this part.
``(b) Modifications to Determination of Taxable Income.--In
determining the taxable income of a large partnership--
``(1) Certain deductions not allowed.--The following
deductions shall not be allowed:
``(A) The deduction for personal exemptions
provided in section 151.
``(B) The net operating loss deduction provided in
section 172.
``(C) The additional itemized deductions for
individuals provided in part VII of subchapter B (other
than section 212 thereof).
``(2) Charitable deductions.--In determining the amount
allowable under section 170, the limitation of section
170(b)(2) shall apply.
``(3) Coordination with section 67.--In lieu of applying
section 67, 70 percent of the amount of the miscellaneous
itemized deductions shall be disallowed.
``(c) Special Rules for Income From Discharge of Indebtedness.--If
a large partnership has income from the discharge of any indebtedness--
``(1) such income shall be excluded in determining the
amounts referred to in section 772(a), and
``(2) in determining the income tax of any partner of such
partnership--
``(A) such income shall be treated as an item
required to be separately taken into account under
section 772(a), and
``(B) the provisions of section 108 shall be
applied without regard to this part.
``SEC. 774. OTHER MODIFICATIONS.
``(a) Treatment of Certain Optional Adjustments, Etc.--In the case
of a large partnership--
``(1) computations under section 773 shall be made without
regard to any adjustment under section 743(b) or 108(b), but
``(2) a partner's distributive share of any amount referred
to in section 772(a) shall be appropriately adjusted to take
into account any adjustment under section 743(b) or 108(b) with
respect to such partner.
``(b) Credit Recapture Determined at Partnership Level.--
``(1) In general.--In the case of a large partnership--
``(A) any credit recapture shall be taken into
account by the partnership, and
``(B) the amount of such recapture shall be
determined as if the credit with respect to which the
recapture is made had been fully utilized to reduce
tax.
``(2) Method of taking recapture into account.--A large
partnership shall take into account a credit recapture by
reducing the amount of the appropriate current year credit to
the extent thereof, and if such recapture exceeds the amount of
such current year credit, the partnership shall be liable to
pay such excess.
``(3) Dispositions not to trigger recapture.--No credit
recapture shall be required by reason of any transfer of an
interest in a large partnership.
``(4) Credit recapture.--For purposes of this subsection,
the term `credit recapture' means any increase in tax under
section 42(j) or 50(a).
``(c) Partnership Not Terminated by Reason of Change in
Ownership.--Subparagraph (B) of section 708(b)(1) shall not apply to a
large partnership.
``(d) Partnership Entitled to Certain Credits.--The following shall
be allowed to a large partnership and shall not be taken into account
by the partners of such partnership:
``(1) The credit provided by section 34.
``(2) Any credit or refund under section 852(b)(3)(D).
``(e) Treatment of REMIC Residuals.--For purposes of applying
section 860E(e)(6) to any large partnership--
``(1) all interests in such partnership shall be treated as
held by disqualified organizations,
``(2) in lieu of applying subparagraph (C) of section
860E(e)(6), the amount subject to tax under section 860E(e)(6)
shall be excluded from the gross income of such partnership,
and
``(3) subparagraph (D) of section 860E(e)(6) shall not
apply.
``(f) Special Rules for Applying Certain Installment Sale Rules.--
In the case of a large partnership--
``(1) the provisions of sections 453(l)(3) and 453A shall
be applied at the partnership level, and
``(2) in determining the amount of interest payable under
such sections, such partnership shall be treated as subject to
tax under this chapter at the highest rate of tax in effect
under section 1 or 11.
``SEC. 775. LARGE PARTNERSHIP DEFINED.
``(a) General Rule.--For purposes of this part--
``(1) In general.--Except as otherwise provided in this
section or section 776, the term `large partnership' means,
with respect to any partnership taxable year, any partnership
if the number of persons who were partners in such partnership
in any preceding partnership taxable year beginning after
December 31, 1995, equaled or exceeded 250. To the extent
provided in regulations, a partnership shall cease to be
treated as a large partnership for any partnership taxable year
if in such taxable year fewer than 100 persons were partners in
such partnership.
``(2) Election for partnerships with at least 100
partners.--If a partnership makes an election under this
paragraph, paragraph (1) shall be applied by substituting `100'
for `250'. Such an election shall apply to the taxable year for
which made and all subsequent taxable years unless revoked with
the consent of the Secretary.
``(b) Special Rules for Certain Service Partnerships.--
``(1) Certain partners not counted.--For purposes of this
section, the term `partner' does not include any individual
performing substantial services in connection with the
activities of the partnership and holding an interest in such
partnership, or an individual who formerly performed
substantial services in connection with such activities and who
held an interest in such partnership at the time the individual
performed such services.
``(2) Exclusion.--For purposes of this part, the term
`large partnership' does not include any partnership if
substantially all the partners of such partnership--
``(A) are individuals performing substantial
services in connection with the activities of such
partnership or are personal service corporations (as
defined in section 269A(b)) the owner-employees (as
defined in section 269A(b)) of which perform such
substantial services,
``(B) are retired partners who had performed such
substantial services, or
``(C) are spouses of partners who are performing
(or had previously performed) such substantial
services.
``(3) Special rule for lower tier partnerships.--For
purposes of this subsection, the activities of a partnership
shall include the activities of any other partnership in which
the partnership owns directly an interest in the capital and
profits of at least 80 percent.
``(c) Exclusion of Commodity Pools.--For purposes of this part, the
term `large partnership' does not include any partnership the principal
activity of which is the buying and selling of commodities (not
described in section 1221(1)), or options, futures, or forwards with
respect to such commodities.
``(d) Secretary May Rely on Treatment on Return.--If, on the
partnership return of any partnership, such partnership is treated as a
large partnership, such treatment shall be binding on such partnership
and all partners of such partnership but not on the Secretary.
``SEC. 776. SPECIAL RULES FOR PARTNERSHIPS HOLDING OIL AND GAS
PROPERTIES.
``(a) Exception for Partnerships Holding Significant Oil and Gas
Properties.--
``(1) In general.--For purposes of this part, the term
`large partnership' shall not include any partnership if the
average percentage of assets (by value) held by such
partnership during the taxable year which are oil or gas
properties is at least 25 percent. For purposes of the
preceding sentence, any interest held by a partnership in
another partnership shall be disregarded, except that the
partnership shall be treated as holding its proportionate share
of the assets of such other partnership.
``(2) Election to waive exception.--Any partnership may
elect to have paragraph (1) not apply. Such an election shall
apply to the partnership taxable year for which made and all
subsequent partnership taxable years unless revoked with the
consent of the Secretary.
``(b) Special Rules Where Part Applies.--
``(1) Computation of percentage depletion.--In the case of
a large partnership, except as provided in paragraph (2)--
``(A) the allowance for depletion under section 611
with respect to any partnership oil or gas property
shall be computed at the partnership level without
regard to any provision of section 613A requiring such
allowance to be computed separately by each partner,
``(B) such allowance shall be determined without
regard to the provisions of section 613A(c) limiting
the amount of production for which percentage depletion
is allowable and without regard to paragraph (1) of
section 613A(d), and
``(C) paragraph (3) of section 705(a) shall not
apply.
``(2) Treatment of certain partners.--
``(A) In general.--In the case of a disqualified
person, the treatment under this chapter of such
person's distributive share of any item of income,
gain, loss, deduction, or credit attributable to any
partnership oil or gas property shall be determined
without regard to this part. Such person's distributive
share of any such items shall be excluded for purposes
of making determinations under sections 772 and 773.
``(B) Disqualified person.--For purposes of
subparagraph (A), the term `disqualified person' means,
with respect to any partnership taxable year--
``(i) any person referred to in paragraph
(2) or (4) of section 613A(d) for such person's
taxable year in which such partnership taxable
year ends, and
``(ii) any other person if such person's
average daily production of domestic crude oil
and natural gas for such person's taxable year
in which such partnership taxable year ends
exceeds 500 barrels.
``(C) Average daily production.--For purposes of
subparagraph (B), a person's average daily production
of domestic crude oil and natural gas for any taxable
year shall be computed as provided in section
613A(c)(2)--
``(i) by taking into account all production
of domestic crude oil and natural gas
(including such person's proportionate share of
any production of a partnership),
``(ii) by treating 6,000 cubic feet of
natural gas as a barrel of crude oil, and
``(iii) by treating as 1 person all persons
treated as 1 taxpayer under section 613A(c)(8)
or among whom allocations are required under
such section.
``SEC. 777. REGULATIONS.
``The Secretary shall prescribe such regulations as may be
appropriate to carry out the purposes of this part.''
(b) Clerical Amendment.--The table of parts for subchapter K of
chapter 1 is amended by adding at the end the following new item:
``Part IV. Special rules for large
partnerships.''
SEC. 14302. SIMPLIFIED AUDIT PROCEDURES FOR LARGE PARTNERSHIPS.
(a) General Rule.--Chapter 63 is amended by adding at the end the
following new subchapter:
``Subchapter D--Treatment of Large Partnerships
``Part I. Treatment of partnership items
and adjustments.
``Part II. Partnership level adjustments.
``Part III. Definitions and special
rules.
``PART I--TREATMENT OF PARTNERSHIP ITEMS AND ADJUSTMENTS
``Sec. 6240. Application of subchapter.
``Sec. 6241. Partner's return must be
consistent with partnership
return.
``Sec. 6242. Procedures for taking
partnership adjustments into
account.
``SEC. 6240. APPLICATION OF SUBCHAPTER.
``(a) General Rule.--This subchapter shall only apply to large
partnerships and partners in such partnerships.
``(b) Coordination With Other Partnership Audit Procedures.--
``(1) In general.--Subchapter C of this chapter shall not
apply to any large partnership other than in its capacity as a
partner in another partnership which is not a large
partnership.
``(2) Treatment where partner in other partnership.--If a
large partnership is a partner in another partnership which is
not a large partnership--
``(A) subchapter C of this chapter shall apply to
items of such large partnership which are partnership
items with respect to such other partnership, but
``(B) any adjustment under such subchapter C shall
be taken into account in the manner provided by section
6242.
``SEC. 6241. PARTNER'S RETURN MUST BE CONSISTENT WITH PARTNERSHIP
RETURN.
``(a) General Rule.--A partner of any large partnership shall, on
the partner's return, treat each partnership item attributable to such
partnership in a manner which is consistent with the treatment of such
partnership item on the partnership return.
``(b) Underpayment Due to Inconsistent Treatment Assessed as Math
Error.--Any underpayment of tax by a partner by reason of failing to
comply with the requirements of subsection (a) shall be assessed and
collected in the same manner as if such underpayment were on account of
a mathematical or clerical error appearing on the partner's return.
Paragraph (2) of section 6213(b) shall not apply to any assessment of
an underpayment referred to in the preceding sentence.
``(c) Adjustments Not To Affect Prior Year of Partners.--
``(1) In general.--Except as provided in paragraph (2),
subsections (a) and (b) shall apply without regard to any
adjustment to the partnership item under part II.
``(2) Certain changes in distributive share taken into
account by partner.--
``(A) In general.--To the extent that any
adjustment under part II involves a change under
section 704 in a partner's distributive share of the
amount of any partnership item shown on the partnership
return, such adjustment shall be taken into account in
applying this title to such partner for the partner's
taxable year for which such item was required to be
taken into account.
``(B) Coordination with deficiency procedures.--
``(i) In general.--Subchapter B shall not
apply to the assessment or collection of any
underpayment of tax attributable to an
adjustment referred to in subparagraph (A).
``(ii) Adjustment not precluded.--
Notwithstanding any other law or rule of law,
nothing in subchapter B (or in any proceeding
under subchapter B) shall preclude the
assessment or collection of any underpayment of
tax (or the allowance of any credit or refund
of any overpayment of tax) attributable to an
adjustment referred to in subparagraph (A) and
such assessment or collection or allowance (or
any notice thereof) shall not preclude any
notice, proceeding, or determination under
subchapter B.
``(C) Period of limitations.--The period for--
``(i) assessing any underpayment of tax, or
``(ii) filing a claim for credit or refund
of any overpayment of tax,
attributable to an adjustment referred to in
subparagraph (A) shall not expire before the close of
the period prescribed by section 6248 for making
adjustments with respect to the partnership taxable
year involved.
``(D) Tiered structures.--If the partner referred
to in subparagraph (A) is another partnership or an S
corporation, the rules of this paragraph shall also
apply to persons holding interests in such partnership
or S corporation (as the case may be); except that, if
such partner is a large partnership, the adjustment
referred to in subparagraph (A) shall be taken into
account in the manner provided by section 6242.
``(d) Addition to Tax for Failure To Comply With Section.--
``For addition to tax in case of
partner's disregard of requirements of this section, see part II of
subchapter A of chapter 68.
``SEC. 6242. PROCEDURES FOR TAKING PARTNERSHIP ADJUSTMENTS INTO
ACCOUNT.
``(a) Adjustments Flow Through to Partners for Year in Which
Adjustment Takes Effect.--
``(1) In general.--If any partnership adjustment with
respect to any partnership item takes effect (within the
meaning of subsection (d)(2)) during any partnership taxable
year and if an election under paragraph (2) does not apply to
such adjustment, such adjustment shall be taken into account in
determining the amount of such item for the partnership taxable year in
which such adjustment takes effect. In applying this title to any
person who is (directly or indirectly) a partner in such partnership
during such partnership taxable year, such adjustment shall be treated
as an item actually arising during such taxable year.
``(2) Partnership liable in certain cases.--If--
``(A) a partnership elects under this paragraph to
not take an adjustment into account under paragraph
(1),
``(B) a partnership does not make such an election
but in filing its return for any partnership taxable
year fails to take fully into account any partnership
adjustment as required under paragraph (1), or
``(C) any partnership adjustment involves a
reduction in a credit which exceeds the amount of such
credit determined for the partnership taxable year in
which the adjustment takes effect,
the partnership shall pay to the Secretary an amount determined
by applying the rules of subsection (b)(4) to the adjustments
not so taken into account and any excess referred to in
subparagraph (C). A partnership may make an election under
subparagraph (A) only if such partnership meets such
requirements as the Secretary may prescribe to assure payment
of such amount.
``(3) Offsetting adjustments taken into account.--If a
partnership adjustment requires another adjustment in a taxable
year after the adjusted year and before the partnership taxable
year in which such partnership adjustment takes effect, such
other adjustment shall be taken into account under this
subsection for the partnership taxable year in which such
partnership adjustment takes effect.
``(4) Coordination with part ii.--Amounts taken into
account under this subsection for any partnership taxable year
shall continue to be treated as adjustments for the adjusted
year for purposes of determining whether such amounts may be
readjusted under part II.
``(b) Partnership Liable for Interest and Penalties.--
``(1) In general.--If a partnership adjustment takes effect
during any partnership taxable year and such adjustment results
in an imputed underpayment for the adjusted year, the
partnership--
``(A) shall pay to the Secretary interest computed
under paragraph (2), and
``(B) shall be liable for any penalty, addition to
tax, or additional amount as provided in paragraph (3).
``(2) Determination of amount of interest.--The interest
computed under this paragraph with respect to any partnership
adjustment is the interest which would be determined under
chapter 67--
``(A) on the imputed underpayment determined under
paragraph (4) with respect to such adjustment,
``(B) for the period beginning on the day after the
return due date for the adjusted year and ending on the
return due date for the partnership taxable year in
which such adjustment takes effect (or, if earlier, in
the case of any adjustment to which subsection (a)(2)
applies, the date on which the payment under subsection
(a)(2) is made).
Proper adjustments in the amount determined under the preceding
sentence shall be made for adjustments required for partnership
taxable years after the adjusted year and before the year in
which the partnership adjustment takes effect by reason of such
partnership adjustment.
``(3) Penalties.--A partnership shall be liable for any
penalty, addition to tax, or additional amount for which it
would have been liable if such partnership had been an
individual subject to tax under chapter 1 for the adjusted year
and the imputed underpayment determined under paragraph (4)
were an actual underpayment (or understatement) for such year.
``(4) Imputed underpayment.--For purposes of this
subsection, the imputed underpayment determined under this
paragraph with respect to any partnership adjustment is the
underpayment (if any) which would result--
``(A) by netting all adjustments to items of
income, gain, loss, or deduction and by treating any
net increase in income as an underpayment equal to the
amount of such net increase multiplied by the highest
rate of tax in effect under section 1 or 11 for the
adjusted year, and
``(B) by taking adjustments to credits into account
as increases or decreases (whichever is appropriate) in
the amount of tax.
For purposes of the preceding sentence, any net decrease in a
loss shall be treated as an increase in income and a similar
rule shall apply to a net increase in a loss.
``(c) Administrative Provisions.--
``(1) In general.--Any payment required by subsection
(a)(2) or (b)(1)(A)--
``(A) shall be assessed and collected in the same
manner as if it were a tax imposed by subtitle C, and
``(B) shall be paid on or before the return due
date for the partnership taxable year in which the
partnership adjustment takes effect.
``(2) Interest.--For purposes of determining interest, any
payment required by subsection (a)(2) or (b)(1)(A) shall be
treated as an underpayment of tax.
``(3) Penalties.--
``(A) In general.--In the case of any failure by
any partnership to pay on the date prescribed therefor
any amount required by subsection (a)(2) or (b)(1)(A),
there is hereby imposed on such partnership a penalty
of 10 percent of the underpayment. For purposes of the
preceding sentence, the term `underpayment' means the
excess of any payment required under this section over
the amount (if any) paid on or before the date
prescribed therefor.
``(B) Accuracy-related and fraud penalties made
applicable.--For purposes of part II of subchapter A of
chapter 68, any payment required by subsection (a)(2)
shall be treated as an underpayment of tax.
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Partnership adjustment.--The term `partnership
adjustment' means any adjustment in the amount of any
partnership item of a large partnership.
``(2) When adjustment takes effect.--A partnership
adjustment takes effect--
``(A) in the case of an adjustment pursuant to the
decision of a court in a proceeding brought under part
II, when such decision becomes final,
``(B) in the case of an adjustment pursuant to any
administrative adjustment request under section 6251,
when such adjustment is allowed by the Secretary, or
``(C) in any other case, when such adjustment is
made.
``(3) Adjusted year.--The term `adjusted year' means the
partnership taxable year to which the item being adjusted
relates.
``(4) Return due date.--The term `return due date' means,
with respect to any taxable year, the date prescribed for
filing the partnership return for such taxable year (determined
without regard to extensions).
``(5) Adjustments involving changes in character.--Under
regulations, appropriate adjustments in the application of this
section shall be made for purposes of taking into account
partnership adjustments which involve a change in the character
of any item of income, gain, loss, or deduction.
``(e) Payments Nondeductible.--No deduction shall be allowed under
subtitle A for any payment required to be made by a large partnership
under this section.
``PART II--PARTNERSHIP LEVEL ADJUSTMENTS
``Subpart A. Adjustments by Secretary.
``Subpart B. Claims for adjustments by
partnership.
``Subpart A--Adjustments by Secretary
``Sec. 6245. Secretarial authority.
``Sec. 6246. Restrictions on partnership
adjustments.
``Sec. 6247. Judicial review of
partnership adjustment.
``Sec. 6248. Period of limitations for
making adjustments.
``SEC. 6245. SECRETARIAL AUTHORITY.
``(a) General Rule.--The Secretary is authorized and directed to
make adjustments at the partnership level in any partnership item to
the extent necessary to have such item be treated in the manner
required.
``(b) Notice of Partnership Adjustment.--
``(1) In general.--If the Secretary determines that a
partnership adjustment is required, the Secretary is authorized
to send notice of such adjustment to the partnership by
certified mail or registered mail. Such notice shall be
sufficient if mailed to the partnership at its last known
address even if the partnership has terminated its existence.
``(2) Further notices restricted.--If the Secretary mails a
notice of a partnership adjustment to any partnership for any
partnership taxable year and the partnership files a petition
under section 6247 with respect to such notice, in the absence
of a showing of fraud, malfeasance, or misrepresentation of a
material fact, the Secretary shall not mail another such notice
to such partnership with respect to such taxable year.
``(3) Authority to rescind notice with partnership
consent.--The Secretary may, with the consent of the
partnership, rescind any notice of a partnership adjustment
mailed to such partnership. Any notice so rescinded shall not
be treated as a notice of a partnership adjustment, for
purposes of this section, section 6246, and section 6247, and
the taxpayer shall have no right to bring a proceeding under
section 6247 with respect to such notice. Nothing in this
subsection shall affect any suspension of the running of any
period of limitations during any period during which the
rescinded notice was outstanding.
``SEC. 6246. RESTRICTIONS ON PARTNERSHIP ADJUSTMENTS.
``(a) General Rule.--Except as otherwise provided in this chapter,
no adjustment to any partnership item may be made (and no levy or
proceeding in any court for the collection of any amount resulting from
such adjustment may be made, begun or prosecuted) before--
``(1) the close of the 90th day after the day on which a
notice of a partnership adjustment was mailed to the
partnership, and
``(2) if a petition is filed under section 6247 with
respect to such notice, the decision of the court has become
final.
``(b) Premature Action May Be Enjoined.--Notwithstanding section
7421(a), any action which violates subsection (a) may be enjoined in
the proper court, including the Tax Court. The Tax Court shall have no
jurisdiction to enjoin any action under this subsection unless a timely
petition has been filed under section 6247 and then only in respect of
the adjustments that are the subject of such petition.
``(c) Exceptions to Restrictions on Adjustments.--
``(1) Adjustments arising out of math or clerical errors.--
``(A) In general.--If the partnership is notified
that, on account of a mathematical or clerical error
appearing on the partnership return, an adjustment to a
partnership item is required, rules similar to the
rules of paragraphs (1) and (2) of section 6213(b)
shall apply to such adjustment.
``(B) Special rule.--If a large partnership is a
partner in another large partnership, any adjustment on
account of such partnership's failure to comply with
the requirements of section 6241(a) with respect to its
interest in such other partnership shall be treated as
an adjustment referred to in subparagraph (A), except
that paragraph (2) of section 6213(b) shall not apply
to such adjustment.
``(2) Partnership may waive restrictions.--The partnership
shall at any time (whether or not a notice of partnership
adjustment has been issued) have the right, by a signed notice
in writing filed with the Secretary, to waive the restrictions
provided in subsection (a) on the making of any partnership
adjustment.
``(d) Limit Where No Proceeding Begun.--If no proceeding under
section 6247 is begun with respect to any notice of a partnership
adjustment during the 90-day period described in subsection (a), the
amount for which the partnership is liable under section 6242 (and any
increase in any partner's liability for tax under chapter 1 by reason
of any adjustment under section 6242(a)) shall not exceed the amount
determined in accordance with such notice.
``SEC. 6247. JUDICIAL REVIEW OF PARTNERSHIP ADJUSTMENT.
``(a) General Rule.--Within 90 days after the date on which a
notice of a partnership adjustment is mailed to the partnership with
respect to any partnership taxable year, the partnership may file a
petition for a readjustment of the partnership items for such taxable
year with--
``(1) the Tax Court,
``(2) the district court of the United States for the
district in which the partnership's principal place of business
is located, or
``(3) the Claims Court.
``(b) Jurisdictional Requirement for Bringing Action in District
Court or Claims Court.--
``(1) In general.--A readjustment petition under this
section may be filed in a district court of the United States
or the Claims Court only if the partnership filing the petition
deposits with the Secretary, on or before the date the petition
is filed, the amount for which the partnership would be liable
under section 6242(b) (as of the date of the filing of the
petition) if the partnership items were adjusted as provided by
the notice of partnership adjustment. The court may by order
provide that the jurisdictional requirements of this paragraph
are satisfied where there has been a good faith attempt to
satisfy such requirement and any shortfall of the amount
required to be deposited is timely corrected.
``(2) Interest payable.--Any amount deposited under
paragraph (1), while deposited, shall not be treated as a
payment of tax for purposes of this title (other than chapter
67).
``(c) Scope of Judicial Review.--A court with which a petition is
filed in accordance with this section shall have jurisdiction to
determine all partnership items of the partnership for the partnership
taxable year to which the notice of partnership adjustment relates and
the proper allocation of such items among the partners (and the
applicability of any penalty, addition to tax, or additional amount for
which the partnership may be liable under section 6242(b)).
``(d) Determination of Court Reviewable.--Any determination by a
court under this section shall have the force and effect of a decision
of the Tax Court or a final judgment or decree of the district court or
the Claims Court, as the case may be, and shall be reviewable as such.
The date of any such determination shall be treated as being the date
of the court's order entering the decision.
``(e) Effect of Decision Dismissing Action.--If an action brought
under this section is dismissed other than by reason of a rescission
under section 6245(b)(3), the decision of the court dismissing the
action shall be considered as its decision that the notice of
partnership adjustment is correct, and an appropriate order shall be
entered in the records of the court.
``SEC. 6248. PERIOD OF LIMITATIONS FOR MAKING ADJUSTMENTS.
``(a) General Rule.--Except as otherwise provided in this section,
no adjustment under this subpart to any partnership item for any
partnership taxable year may be made after the date which is 3 years
after the later of--
``(1) the date on which the partnership return for such
taxable year was filed, or
``(2) the last day for filing such return for such year
(determined without regard to extensions).
``(b) Extension by Agreement.--The period described in subsection
(a) (including an extension period under this subsection) may be
extended by an agreement entered into by the Secretary and the
partnership before the expiration of such period.
``(c) Special Rule in Case of Fraud, Etc.--
``(1) False return.--In the case of a false or fraudulent
partnership return with intent to evade tax, the adjustment may
be made at any time.
``(2) Substantial omission of income.--If any partnership
omits from gross income an amount properly includible therein
which is in excess of 25 percent of the amount of gross income stated
in its return, subsection (a) shall be applied by substituting `6
years' for `3 years'.
``(3) No return.--In the case of a failure by a partnership
to file a return for any taxable year, the adjustment may be
made at any time.
``(4) Return filed by secretary.--For purposes of this
section, a return executed by the Secretary under subsection
(b) of section 6020 on behalf of the partnership shall not be
treated as a return of the partnership.
``(d) Suspension When Secretary Mails Notice of Adjustment.--If
notice of a partnership adjustment with respect to any taxable year is
mailed to the partnership, the running of the period specified in
subsection (a) (as modified by the other provisions of this section)
shall be suspended--
``(1) for the period during which an action may be brought
under section 6247 (and, if a petition is filed under section
6247 with respect to such notice, until the decision of the
court becomes final), and
``(2) for 1 year thereafter.
``Subpart B--Claims for Adjustments by Partnership
``Sec. 6251. Administrative adjustment
requests.
``Sec. 6252. Judicial review where
administrative adjustment
request is not allowed in full.
``SEC. 6251. ADMINISTRATIVE ADJUSTMENT REQUESTS.
``(a) General Rule.--A partnership may file a request for an
administrative adjustment of partnership items for any partnership
taxable year at any time which is--
``(1) within 3 years after the later of--
``(A) the date on which the partnership return for
such year is filed, or
``(B) the last day for filing the partnership
return for such year (determined without regard to
extensions), and
``(2) before the mailing to the partnership of a notice of
a partnership adjustment with respect to such taxable year.
``(b) Secretarial Action.--If a partnership files an administrative
adjustment request under subsection (a), the Secretary may allow any
part of the requested adjustments.
``(c) Special Rule in Case of Extension Under Section 6248.--If the
period described in section 6248(a) is extended pursuant to an
agreement under section 6248(b), the period prescribed by subsection
(a)(1) shall not expire before the date 6 months after the expiration
of the extension under section 6248(b).
``SEC. 6252. JUDICIAL REVIEW WHERE ADMINISTRATIVE ADJUSTMENT REQUEST IS
NOT ALLOWED IN FULL.
``(a) In General.--If any part of an administrative adjustment
request filed under section 6251 is not allowed by the Secretary, the
partnership may file a petition for an adjustment with respect to the
partnership items to which such part of the request relates with--
``(1) the Tax Court,
``(2) the district court of the United States for the
district in which the principal place of business of the
partnership is located, or
``(3) the Claims Court.
``(b) Period for Filing Petition.--A petition may be filed under
subsection (a) with respect to partnership items for a partnership
taxable year only--
``(1) after the expiration of 6 months from the date of
filing of the request under section 6251, and
``(2) before the date which is 2 years after the date of
such request.
The 2-year period set forth in paragraph (2) shall be extended for such
period as may be agreed upon in writing by the partnership and the
Secretary.
``(c) Coordination With Subpart A.--
``(1) Notice of partnership adjustment before filing of
petition.--No petition may be filed under this section after
the Secretary mails to the partnership a notice of a
partnership adjustment for the partnership taxable year to
which the request under section 6251 relates.
``(2) Notice of partnership adjustment after filing but
before hearing of petition.--If the Secretary mails to the
partnership a notice of a partnership adjustment for the
partnership taxable year to which the request under section
6251 relates after the filing of a petition under this
subsection but before the hearing of such petition, such
petition shall be treated as an action brought under section
6247 with respect to such notice, except that subsection (b) of
section 6247 shall not apply.
``(3) Notice must be before expiration of statute of
limitations.--A notice of a partnership adjustment for the
partnership taxable year shall be taken into account under
paragraphs (1) and (2) only if such notice is mailed before the
expiration of the period prescribed by section 6248 for making
adjustments to partnership items for such taxable year.
``(d) Scope of Judicial Review.--Except in the case described in
paragraph (2) of subsection (c), a court with which a petition is filed
in accordance with this section shall have jurisdiction to determine
only those partnership items to which the part of the request under
section 6251 not allowed by the Secretary relates and those items with
respect to which the Secretary asserts adjustments as offsets to the
adjustments requested by the partnership.
``(e) Determination of Court Reviewable.--Any determination by a
court under this subsection shall have the force and effect of a
decision of the Tax Court or a final judgment or decree of the district
court or the Claims Court, as the case may be, and shall be reviewable
as such. The date of any such determination shall be treated as being
the date of the court's order entering the decision.
``PART III--DEFINITIONS AND SPECIAL RULES
``Sec. 6255. Definitions and special
rules.
``SEC. 6255. DEFINITIONS AND SPECIAL RULES.
``(a) Definitions.--For purposes of this subchapter--
``(1) Large partnership.--The term `large partnership' has
the meaning given to such term by section 775 without regard to
section 776(a).
``(2) Partnership item.--The term `partnership item' has
the meaning given to such term by section 6231(a)(3).
``(b) Partners Bound by Actions of Partnership, Etc.--
``(1) Designation of partner.--Each large partnership shall
designate (in the manner prescribed by the Secretary) a partner
(or other person) who shall have the sole authority to act on
behalf of such partnership under this subchapter. In any case
in which such a designation is not in effect, the Secretary may
select any partner as the partner with such authority.
``(2) Binding effect.--A large partnership and all partners
of such partnership shall be bound--
``(A) by actions taken under this subchapter by the
partnership, and
``(B) by any decision in a proceeding brought under
this subchapter.
``(c) Partnerships Having Principal Place of Business Outside the
United States.--For purposes of sections 6247 and 6252, a principal
place of business located outside the United States shall be treated as
located in the District of Columbia.
``(d) Treatment Where Partnership Ceases To Exist.--If a
partnership ceases to exist before a partnership adjustment under this
subchapter takes effect, such adjustment shall be taken into account by
the former partners of such partnership under regulations prescribed by
the Secretary.
``(e) Date Decision Becomes Final.--For purposes of this
subchapter, the principles of section 7481(a) shall be applied in
determining the date on which a decision of a district court or the
Claims Court becomes final.
``(f) Partnerships in Cases Under Title 11 of the United States
Code.--The running of any period of limitations provided in this
subchapter on making a partnership adjustment (or provided by section
6501 or 6502 on the assessment or collection of any amount required to
be paid under section 6242) shall, in a case under title 11 of the
United States Code, be suspended during the period during which the
Secretary is prohibited by reason of such case from making the
adjustment (or assessment or collection) and--
``(1) for adjustment or assessment, 60 days thereafter, and
``(2) for collection, 6 months thereafter.
``(g) Regulations.--The Secretary shall prescribe such regulations
as may be necessary to carry out the provisions of this subchapter,
including regulations--
``(1) to prevent abuse through manipulation of the
provisions of this subchapter, and
``(2) providing that this subchapter shall not apply to any
case described in section 6231(c)(1) (or the regulations
prescribed thereunder) where the application of this subchapter
to such a case would interfere with the effective and efficient
enforcement of this title.
In any case to which this subchapter does not apply by reason of
paragraph (2), rules similar to the rules of sections 6229(f) and
6255(f) shall apply.''
(b) Clerical Amendment.--The table of subchapters for chapter 63 is
amended by adding at the end the following new item:
``Subchapter D. Treatment of large partnerships.''
SEC. 14303. DUE DATE FOR FURNISHING INFORMATION TO PARTNERS OF LARGE
PARTNERSHIPS.
(a) General Rule.--Subsection (b) of section 6031 (relating to
copies to partners) is amended by adding at the end the following new
sentence: ``In the case of a large partnership (as defined in sections
775 and 776(a)), such information shall be furnished on or before the
first March 15 following the close of such taxable year.''
(b) Treatment as Information Return.--Section 6724 is amended by
adding at the end the following new subsection:
``(e) Special Rule for Certain Partnership Returns.--If any
partnership return under section 6031(a) is required under section
6011(e) to be filed on magnetic media or in other machine-readable
form, for purposes of this part, each schedule required to be included
with such return with respect to each partner shall be treated as a
separate information return.''
SEC. 14304. RETURNS MAY BE REQUIRED ON MAGNETIC MEDIA.
Paragraph (2) of section 6011(e) (relating to returns on magnetic
media) is amended by adding at the end the following new sentence:
``Notwithstanding the preceding sentence, the Secretary shall
require partnerships having more than 100 partners to file
returns on magnetic media.''
SEC. 14305. TREATMENT OF PARTNERSHIP ITEMS OF INDIVIDUAL RETIREMENT
ACCOUNTS.
Subsection (b) of section 6012 is amended by adding at the end the
following new paragraph:
``(6) IRA share of partnership income.--In the case of a
trust which is exempt from taxation under section 408(e), for
purposes of this section, the trust's distributive share of
items of gross income and gain of any partnership to which subchapter C
or D of chapter 63 applies shall be treated as equal to the trust's
distributive share of the taxable income of such partnership.''
SEC. 14306. EFFECTIVE DATE.
The amendments made by this part shall apply to partnership taxable
years beginning after December 31, 1995.
PART II--PROVISIONS RELATED TO CERTAIN PARTNERSHIP PROCEEDINGS
SEC. 14311. TREATMENT OF PARTNERSHIP ITEMS IN DEFICIENCY PROCEEDINGS.
(a) In General.--Subchapter C of chapter 63 is amended by adding at
the end the following new section:
``SEC. 6234. DECLARATORY JUDGMENT RELATING TO TREATMENT OF ITEMS OTHER
THAN PARTNERSHIP ITEMS WITH RESPECT TO AN OVERSHELTERED
RETURN.
``(a) General Rule.--If--
``(1) a taxpayer files an oversheltered return for a
taxable year,
``(2) the Secretary makes a determination with respect to
the treatment of items (other than partnership items) of such
taxpayer for such taxable year, and
``(3) the adjustments resulting from such determination do
not give rise to a deficiency (as defined in section 6211) but
would give rise to a deficiency if there were no net loss from
partnership items,
the Secretary is authorized to send a notice of adjustment reflecting
such determination to the taxpayer by certified or registered mail.
``(b) Oversheltered Return.--For purposes of this section, the term
`oversheltered return' means an income tax return which--
``(1) shows no taxable income for the taxable year, and
``(2) shows a net loss from partnership items.
``(c) Judicial Review in the Tax Court.--Within 90 days, or 150
days if the notice is addressed to a person outside the United States,
after the day on which the notice of adjustment authorized in
subsection (a) is mailed to the taxpayer, the taxpayer may file a
petition with the Tax Court for redetermination of the adjustments.
Upon the filing of such a petition, the Tax Court shall have
jurisdiction to make a declaration with respect to all items (other
than partnership items and affected items which require partner level
determinations as described in section 6230(a)(2)(A)(i)) for the
taxable year to which the notice of adjustment relates, in accordance
with the principles of section 6214(a). Any such declaration shall have
the force and effect of a decision of the Tax Court and shall be
reviewable as such.
``(d) Failure To File Petition.--
``(1) In general.--Except as provided in paragraph (2), if
the taxpayer does not file a petition with the Tax Court within
the time prescribed in subsection (c), the determination of the
Secretary set forth in the notice of adjustment that was mailed
to the taxpayer shall be deemed to be correct.
``(2) Exception.--Paragraph (1) shall not apply after the
date that the taxpayer--
``(A) files a petition with the Tax Court within
the time prescribed in subsection (c) with respect to a
subsequent notice of adjustment relating to the same
taxable year, or
``(B) files a claim for refund of an overpayment of
tax under section 6511 for the taxable year involved.
If a claim for refund is filed by the taxpayer, then solely for
purposes of determining (for the taxable year involved) the
amount of any computational adjustment in connection with a
partnership proceeding under this subchapter (other than under
this section) or the amount of any deficiency attributable to
affected items in a proceeding under section 6230(a)(2), the
items that are the subject of the notice of adjustment shall be
presumed to have been correctly reported on the taxpayer's
return during the pendency of the refund claim (and, if within
the time prescribed by section 6532 the taxpayer commences a
civil action for refund under section 7422, until the decision
in the refund action becomes final).
``(e) Limitations Period.--
``(1) In general.--Any notice to a taxpayer under
subsection (a) shall be mailed before the expiration of the
period prescribed by section 6501 (relating to the period of
limitations on assessment).
``(2) Suspension when secretary mails notice of
adjustment.--If the Secretary mails a notice of adjustment to
the taxpayer for a taxable year, the period of limitations on
the making of assessments shall be suspended for the period
during which the Secretary is prohibited from making the
assessment (and, in any event, if a proceeding in respect of
the notice of adjustment is placed on the docket of the Tax
Court, until the decision of the Tax Court becomes final), and
for 60 days thereafter.
``(3) Restrictions on assessment.--Except as otherwise
provided in section 6851, 6852, or 6861, no assessment of a
deficiency with respect to any tax imposed by subtitle A
attributable to any item (other than a partnership item or any
item affected by a partnership item) shall be made--
``(A) until the expiration of the applicable 90-day
or 150-day period set forth in subsection (c) for
filing a petition with the Tax Court, or
``(B) if a petition has been filed with the Tax
Court, until the decision of the Tax Court has become
final.
``(f) Further Notices of Adjustment Restricted.--If the Secretary
mails a notice of adjustment to the taxpayer for a taxable year and the
taxpayer files a petition with the Tax Court within the time prescribed
in subsection (c), the Secretary may not mail another such notice to
the taxpayer with respect to the same taxable year in the absence of a
showing of fraud, malfeasance, or misrepresentation of a material fact.
``(g) Coordination With Other Proceedings Under This Subchapter.--
``(1) In general.--The treatment of any item that has been
determined pursuant to subsection (c) or (d) shall be taken
into account in determining the amount of any computational
adjustment that is made in connection with a partnership
proceeding under this subchapter (other than under this
section), or the amount of any deficiency attributable to
affected items in a proceeding under section 6230(a)(2), for
the taxable year involved. Notwithstanding any other law or
rule of law pertaining to the period of limitations on the
making of assessments, for purposes of the preceding sentence,
any adjustment made in accordance with this section shall be
taken into account regardless of whether any assessment has
been made with respect to such adjustment.
``(2) Special rule in case of computational adjustment.--In
the case of a computational adjustment that is made in
connection with a partnership proceeding under this subchapter
(other than under this section), the provisions of paragraph
(1) shall apply only if the computational adjustment is made
within the period prescribed by section 6229 for assessing any
tax under subtitle A which is attributable to any partnership
item or affected item for the taxable year involved.
``(3) Conversion to deficiency proceeding.--If--
``(A) after the notice referred to in subsection
(a) is mailed to a taxpayer for a taxable year but
before the expiration of the period for filing a
petition with the Tax Court under subsection (c) (or,
if a petition is filed with the Tax Court, before the
Tax Court makes a declaration for that taxable year),
the treatment of any partnership item for the taxable
year is finally determined, or any such item ceases to
be a partnership item pursuant to section 6231(b), and
``(B) as a result of that final determination or
cessation, a deficiency can be determined with respect
to the items that are the subject of the notice of
adjustment,
the notice of adjustment shall be treated as a notice of
deficiency under section 6212 and any petition filed in respect
of the notice shall be treated as an action brought under
section 6213.
``(4) Finally determined.--For purposes of this subsection,
the treatment of partnership items shall be treated as finally
determined if--
``(A) the Secretary enters into a settlement
agreement (within the meaning of section 6224) with the
taxpayer regarding such items,
``(B) a notice of final partnership administrative
adjustment has been issued and--
``(i) no petition has been filed under
section 6226 and the time for doing so has
expired, or
``(ii) a petition has been filed under
section 6226 and the decision of the court has
become final, or
``(C) the period within which any tax attributable
to such items may be assessed against the taxpayer has
expired.
``(h) Special Rules if Secretary Incorrectly Determines Applicable
Procedure.--
``(1) Special rule if secretary erroneously mails notice of
adjustment.--If the Secretary erroneously determines that
subchapter B does not apply to a taxable year of a taxpayer and
consistent with that determination timely mails a notice of
adjustment to the taxpayer pursuant to subsection (a) of this
section, the notice of adjustment shall be treated as a notice
of deficiency under section 6212 and any petition that is filed
in respect of the notice shall be treated as an action brought
under section 6213.
``(2) Special rule if secretary erroneously mails notice of
deficiency.--If the Secretary erroneously determines that
subchapter B applies to a taxable year of a taxpayer and
consistent with that determination timely mails a notice of
deficiency to the taxpayer pursuant to section 6212, the notice
of deficiency shall be treated as a notice of adjustment under
subsection (a) and any petition that is filed in respect of the
notice shall be treated as an action brought under subsection
(c).''
(b) Treatment of Partnership Items in Deficiency Proceedings.--
Section 6211 (defining deficiency) is amended by adding at the end the
following new subsection:
``(c) Coordination With Subchapter C.--In determining the amount of
any deficiency for purposes of this subchapter, adjustments to
partnership items shall be made only as provided in subchapter C.''
(c) Clerical Amendment.--The table of sections for subchapter C of
chapter 63 is amended by adding at the end the following new item:
``Sec. 6234. Declaratory judgment
relating to treatment of items
other than partnership items
with respect to an
oversheltered return.''
(d) Effective Date.--The amendments made by this section shall
apply to partnership taxable years ending after the date of the
enactment of this Act.
SEC. 14312. PARTNERSHIP RETURN TO BE DETERMINATIVE OF AUDIT PROCEDURES
TO BE FOLLOWED.
(a) In General.--Section 6231 (relating to definitions and special
rules) is amended by adding at the end the following new subsection:
``(g) Partnership Return To Be Determinative of Whether Subchapter
Applies.--
``(1) Determination that subchapter applies.--If, on the
basis of a partnership return for a taxable year, the Secretary
reasonably determines that this subchapter applies to such
partnership for such year but such determination is erroneous,
then the provisions of this subchapter are hereby extended to
such partnership (and its items) for such taxable year and to
partners of such partnership.
``(2) Determination that subchapter does not apply.--If, on
the basis of a partnership return for a taxable year, the
Secretary reasonably determines that this subchapter does not
apply to such partnership for such year but such determination
is erroneous, then the provisions of this subchapter shall not
apply to such partnership (and its items) for such taxable year
or to partners of such partnership.''
(b) Effective Date.--The amendment made by this section shall apply
to partnership taxable years ending after the date of the enactment of
this Act.
SEC. 14313. PROVISIONS RELATING TO STATUTE OF LIMITATIONS.
(a) Suspension of Statute Where Untimely Petition Filed.--Paragraph
(1) of section 6229(d) (relating to suspension where Secretary makes
administrative adjustment) is amended by striking all that follows
``section 6226'' and inserting the following: ``(and, if a petition is
filed under section 6226 with respect to such administrative
adjustment, until the decision of the court becomes final), and''.
(b) Suspension of Statute During Bankruptcy Proceeding.--Section
6229 is amended by adding at the end the following new subsection:
``(h) Suspension During Pendency of Bankruptcy Proceeding.--If a
petition is filed naming a partner as a debtor in a bankruptcy
proceeding under title 11 of the United States Code, the running of the
period of limitations provided in this section with respect to such
partner shall be suspended--
``(1) for the period during which the Secretary is
prohibited by reason of such bankruptcy proceeding from making
an assessment, and
``(2) for 60 days thereafter.''
(c) Tax Matters Partner in Bankruptcy.--Section 6229(b) is amended
by redesignating paragraph (2) as paragraph (3) and by inserting after
paragraph (1) the following new paragraph:
``(2) Special rule with respect to debtors in title 11
cases.--Notwithstanding any other law or rule of law, if an
agreement is entered into under paragraph (1)(B) and the
agreement is signed by a person who would be the tax matters
partner but for the fact that, at the time that the agreement
is executed, the person is a debtor in a bankruptcy proceeding
under title 11 of the United States Code, such agreement shall
be binding on all partners in the partnership unless the
Secretary has been notified of the bankruptcy proceeding in
accordance with regulations prescribed by the Secretary.''
(d) Effective Dates.--
(1) Subsections (a) and (b).--The amendments made by
subsections (a) and (b) shall apply to partnership taxable
years with respect to which the period under section 6229 of
the Internal Revenue Code of 1986 for assessing tax has not
expired on or before the date of the enactment of this Act.
(2) Subsection (c).--The amendment made by subsection (c)
shall apply to agreements entered into after the date of the
enactment of this Act.
SEC. 14314. EXPANSION OF SMALL PARTNERSHIP EXCEPTION.
(a) In General.--Clause (i) of section 6231(a)(1)(B) (relating to
exception for small partnerships) is amended to read as follows:
``(i) In general.--The term `partnership'
shall not include any partnership having 10 or
fewer partners each of whom is an individual
(other than a nonresident alien), a C
corporation, or an estate of a deceased
partner. For purposes of the preceding
sentence, a husband and wife (and their
estates) shall be treated as 1 partner.''
(b) Effective Date.--The amendment made by this section shall apply
to partnership taxable years ending after the date of the enactment of
this Act.
SEC. 14315. EXCLUSION OF PARTIAL SETTLEMENTS FROM 1-YEAR LIMITATION ON
ASSESSMENT.
(a) In General.--Subsection (f) of section 6229 (relating to items
becoming nonpartnership items) is amended--
(1) by striking ``(f) Items Becoming Nonpartnership
Items.--If'' and inserting the following:
``(f) Special Rules.--
``(1) Items becoming nonpartnership items.--If'',
(2) by moving the text of such subsection 2 ems to the
right, and
(3) by adding at the end the following new paragraph:
``(2) Special rule for partial settlement agreements.--If a
partner enters into a settlement agreement with the Secretary
with respect to the treatment of some of the partnership items
in dispute for a partnership taxable year but other partnership
items for such year remain in dispute, the period of
limitations for assessing any tax attributable to the settled
items shall be determined as if such agreement had not been
entered into.''
(b) Effective Date.--The amendment made by this section shall apply
to settlements entered into after the date of the enactment of this
Act.
SEC. 14316. EXTENSION OF TIME FOR FILING A REQUEST FOR ADMINISTRATIVE
ADJUSTMENT.
(a) In General.--Section 6227 (relating to administrative
adjustment requests) is amended by redesignating subsections (b) and
(c) as subsections (c) and (d), respectively, and by inserting after
subsection (a) the following new subsection:
``(b) Special Rule in Case of Extension of Period of Limitations
Under Section 6229.--The period prescribed by subsection (a)(1) for
filing of a request for an administrative adjustment shall be
extended--
``(1) for the period within which an assessment may be made
pursuant to an agreement (or any extension thereof) under
section 6229(b), and
``(2) for 6 months thereafter.''
(b) Effective Date.--The amendment made by this section shall take
effect as if included in the amendments made by section 402 of the Tax
Equity and Fiscal Responsibility Act of 1982.
SEC. 14317. AVAILABILITY OF INNOCENT SPOUSE RELIEF IN CONTEXT OF
PARTNERSHIP PROCEEDINGS.
(a) In General.--Subsection (a) of section 6230 is amended by
adding at the end the following new paragraph:
``(3) Special rule in case of assertion by partner's spouse
of innocent spouse relief.--
``(A) Notwithstanding section 6404(b), if the
spouse of a partner asserts that section 6013(e)
applies with respect to a liability that is
attributable to any adjustment to a partnership item,
then such spouse may file with the Secretary within 60
days after the notice of computational adjustment is
mailed to the spouse a request for abatement of the
assessment specified in such notice. Upon receipt of
such request, the Secretary shall abate the assessment.
Any reassessment of the tax with respect to which an
abatement is made under this subparagraph shall be
subject to the deficiency procedures prescribed by
subchapter B. The period for making any such
reassessment shall not expire before the expiration of
60 days after the date of such abatement.
``(B) If the spouse files a petition with the Tax
Court pursuant to section 6213 with respect to the
request for abatement described in subparagraph (A),
the Tax Court shall only have jurisdiction pursuant to
this section to determine whether the requirements of
section 6013(e) have been satisfied. For purposes of
such determination, the treatment of partnership items
under the settlement, the final partnership
administrative adjustment, or the decision of the court
(whichever is appropriate) that gave rise to the
liability in question shall be conclusive.
``(C) Rules similar to the rules contained in
subparagraphs (B) and (C) of paragraph (2) shall apply
for purposes of this paragraph.''
(b) Claims for Refund.--Subsection (c) of section 6230 is amended
by adding at the end the following new paragraph:
``(5) Rules for seeking innocent spouse relief.--
``(A) In general.--The spouse of a partner may file
a claim for refund on the ground that the Secretary
failed to relieve the spouse under section 6013(e) from
a liability that is attributable to an adjustment to a
partnership item.
``(B) Time for filing claim.--Any claim under
subparagraph (A) shall be filed within 6 months after
the day on which the Secretary mails to the spouse the
notice of computational adjustment referred to in
subsection (a)(3)(A).
``(C) Suit if claim not allowed.--If the claim
under subparagraph (B) is not allowed, the spouse may
bring suit with respect to the claim within the period
specified in paragraph (3).
``(D) Prior determinations are binding.--For
purposes of any claim or suit under this paragraph, the
treatment of partnership items under the settlement,
the final partnership administrative adjustment, or the
decision of the court (whichever is appropriate) that
gave rise to the liability in question shall be
conclusive.''
(c) Technical Amendments.--
(1) Paragraph (1) of section 6230(a) is amended by striking
``paragraph (2)'' and inserting ``paragraph (2) or (3)''.
(2) Subsection (a) of section 6503 is amended by striking
``section 6230(a)(2)(A)'' and inserting ``paragraph (2)(A) or
(3) of section 6230(a)''.
(d) Effective Date.--The amendments made by this section shall take
effect as if included in the amendments made by section 402 of the Tax
Equity and Fiscal Responsibility Act of 1982.
SEC. 14318. DETERMINATION OF PENALTIES AT PARTNERSHIP LEVEL.
(a) In General.--Section 6221 (relating to tax treatment determined
at partnership level) is amended by striking ``item'' and inserting
``item (and the applicability of any penalty, addition to tax, or
additional amount which relates to an adjustment to a partnership
item)''.
(b) Conforming Amendments.--
(1) Subsection (f) of section 6226 is amended--
(A) by striking ``relates and'' and inserting
``relates,'', and
(B) by inserting before the period ``, and the
applicability of any penalty, addition to tax, or
additional amount which relates to an adjustment to a
partnership item''.
(2) Clause (i) of section 6230(a)(2)(A) is amended to read
as follows:
``(i) affected items which require partner
level determinations (other than penalties,
additions to tax, and additional amounts that
relate to adjustments to partnership items),
or''.
(3)(A) Subparagraph (A) of section 6230(a)(3), as added by
section 14317, is amended by inserting ``(including any
liability for any penalty, addition to tax, or additional
amount relating to such adjustment)'' after ``partnership
item''.
(B) Subparagraph (B) of such section is amended by
inserting ``(and the applicability of any penalties, additions
to tax, or additional amounts)'' after ``partnership items''.
(C) Subparagraph (A) of section 6230(c)(5), as added by
section 14317, is amended by inserting before the period
``(including any liability for any penalties, additions to tax,
or additional amounts relating to such adjustment)''.
(D) Subparagraph (D) of section 6230(c)(5), as added by
section 14317, is amended by inserting ``(and the applicability
of any penalties, additions to tax, or additional amounts)''
after ``partnership items''.
(4) Paragraph (1) of section 6230(c) is amended by striking
``or'' at the end of subparagraph (A), by striking the period
at the end of subparagraph (B) and inserting ``, or'', and by
adding at the end the following new subparagraph:
``(C) the Secretary erroneously imposed any
penalty, addition to tax, or additional amount which
relates to an adjustment to a partnership item.''
(5) So much of subparagraph (A) of section 6230(c)(2) as
precedes ``shall be filed'' is amended to read as follows:
``(A) Under paragraph (1) (a) or (c).--Any claim
under subparagraph (A) or (C) of paragraph (1)''.
(6) Paragraph (4) of section 6230(c) is amended by adding
at the end the following: ``In addition, the determination
under the final partnership administrative adjustment or under
the decision of the court (whichever is appropriate) concerning
the applicability of any penalty, addition to tax, or
additional amount which relates to an adjustment to a
partnership item shall also be conclusive. Notwithstanding the
preceding sentence, the partner shall be allowed to assert any
partner level defenses that may apply or to challenge the
amount of the computational adjustment.''
(c) Effective Date.--The amendments made by this section shall
apply to partnership taxable years ending after the date of the
enactment of this Act.
SEC. 14319. PROVISIONS RELATING TO COURT JURISDICTION, ETC.
(a) Tax Court Jurisdiction To Enjoin Premature Assessments of
Deficiencies Attributable to Partnership Items.--Subsection (b) of
section 6225 is amended by striking ``the proper court.'' and inserting
``the proper court, including the Tax Court. The Tax Court shall have
no jurisdiction to enjoin any action or proceeding under this
subsection unless a timely petition for a readjustment of the
partnership items for the taxable year has been filed and then only in
respect of the adjustments that are the subject of such petition.''
(b) Jurisdiction To Consider Statute of Limitations With Respect to
Partners.--Paragraph (1) of section 6226(d) is amended by adding at the
end the following new sentence:
``Notwithstanding subparagraph (B), any person treated under
subsection (c) as a party to an action shall be permitted to
participate in such action (or file a readjustment petition
under subsection (b) or paragraph (2) of this subsection)
solely for the purpose of asserting that the period of
limitations for assessing any tax attributable to partnership
items has expired with respect to such person, and the court
having jurisdiction of such action shall have jurisdiction to
consider such assertion.''
(c) Tax Court Jurisdiction To Determine Overpayments Attributable
to Affected Items.--
(1) Paragraph (6) of section 6230(d) is amended by striking
``(or an affected item)''.
(2) Paragraph (3) of section 6512(b) is amended by adding
at the end the following new sentence:
``In the case of a credit or refund relating to an affected
item (within the meaning of section 6231(a)(5)), the preceding
sentence shall be applied by substituting the periods under
sections 6229 and 6230(d) for the periods under section
6511(b)(2), (c), and (d).''
(d) Venue on Appeal.--
(1) Paragraph (1) of section 7482(b) is amended by striking
``or'' at the end of subparagraph (D), by striking the period
at the end of subparagraph (E) and inserting ``, or'', and by
inserting after subparagraph (E) the following new
subparagraph:
``(F) in the case of a petition under section
6234(c)--
``(i) the legal residence of the petitioner
if the petitioner is not a corporation, and
``(ii) the place or office applicable under
subparagraph (B) if the petitioner is a
corporation.''
(2) The last sentence of section 7482(b)(1) is amended by
striking ``or 6228(a)'' and inserting ``, 6228(a), or
6234(c)''.
(e) Other Provisions.--
(1) Subsection (c) of section 7459 is amended by striking
``or section 6228(a)'' and inserting ``, 6228(a), or 6234(c)''.
(2) Subsection (o) of section 6501 is amended by adding at
the end the following new paragraph:
``(3) For declaratory judgment relating to treatment of
items other than partnership items with respect to an
oversheltered return, see section 6234.''
(f) Effective Date.--The amendments made by this section shall
apply to partnership taxable years ending after the date of the
enactment of this Act.
SEC. 14320. TREATMENT OF PREMATURE PETITIONS FILED BY NOTICE PARTNERS
OR 5-PERCENT GROUPS.
(a) In General.--Subsection (b) of section 6226 (relating to
judicial review of final partnership administrative adjustments) is
amended by redesignating paragraph (5) as paragraph (6) and by
inserting after paragraph (4) the following new paragraph:
``(5) Treatment of premature petitions.--If--
``(A) a petition for a readjustment of partnership
items for the taxable year involved is filed by a
notice partner (or a 5-percent group) during the 90-day
period described in subsection (a), and
``(B) no action is brought under paragraph (1)
during the 60-day period described therein with respect
to such taxable year which is not dismissed,
such petition shall be treated for purposes of paragraph (1) as
filed on the last day of such 60-day period.''
(b) Effective Date.--The amendment made by this section shall apply
to petitions filed after the date of the enactment of this Act.
SEC. 14321. BONDS IN CASE OF APPEALS FROM CERTAIN PROCEEDING.
(a) In General.--Subsection (b) of section 7485 (relating to bonds
to stay assessment of collection) is amended--
(1) by inserting ``penalties,'' after ``any interest,'',
and
(2) by striking ``aggregate of such deficiencies'' and
inserting ``aggregate liability of the parties to the action''.
(b) Effective Date.--The amendment made by this section shall take
effect as if included in the amendments made by section 402 of the Tax
Equity and Fiscal Responsibility Act of 1982.
SEC. 14322. SUSPENSION OF INTEREST WHERE DELAY IN COMPUTATIONAL
ADJUSTMENT RESULTING FROM CERTAIN SETTLEMENTS.
(a) In General.--Subsection (c) of section 6601 (relating to
interest on underpayment, nonpayment, or extension of time for payment,
of tax) is amended by adding at the end the following new sentence:
``In the case of a settlement under section 6224(c) which results in
the conversion of partnership items to nonpartnership items pursuant to
section 6231(b)(1)(C), the preceding sentence shall apply to a
computational adjustment resulting from such settlement in the same
manner as if such adjustment were a deficiency and such settlement were
a waiver referred to in the preceding sentence.''
(b) Effective Date.--The amendment made by this section shall apply
to adjustments with respect to partnership taxable years beginning
after the date of the enactment of this Act.
SEC. 14323. SPECIAL RULES FOR ADMINISTRATIVE ADJUSTMENT REQUESTS WITH
RESPECT TO BAD DEBTS OR WORTHLESS SECURITIES.
(a) General Rule.--Section 6227 (relating to administrative
adjustment requests) is amended by adding at the end the following new
subsection:
``(e) Requests With Respect to Bad Debts or Worthless Securities.--
In the case of that portion of any request for an administrative
adjustment which relates to the deductibility by the partnership under
section 166 of a debt as a debt which became worthless, or under
section 165(g) of a loss from worthlessness of a security, the period
prescribed in subsection (a)(1) shall be 7 years from the last day for
filing the partnership return for the year with respect to which such
request is made (determined without regard to extensions).''
(b) Effective Date.--
(1) In general.--The amendment made by subsection (a) shall
take effect as if included in the amendments made by section
402 of the Tax Equity and Fiscal Responsibility Act of 1982.
(2) Treatment of requests filed before date of enactment.--
In the case of that portion of any request (filed before the
date of the enactment of this Act) for an administrative
adjustment which relates to the deductibility of a debt as a
debt which became worthless or the deductibility of a loss from
the worthlessness of a security--
(A) paragraph (2) of section 6227(a) of the
Internal Revenue Code of 1986 shall not apply,
(B) the period for filing a petition under section
6228 of the Internal Revenue Code of 1986 with respect
to such request shall not expire before the date 6
months after the date of the enactment of this Act, and
(C) such a petition may be filed without regard to
whether there was a notice of the beginning of an
administrative proceeding or a final partnership
administrative adjustment.
Subtitle D--Foreign Provisions
PART I--MODIFICATIONS TO TREATMENT OF PASSIVE FOREIGN INVESTMENT
COMPANIES
SEC. 14401. UNITED STATES SHAREHOLDERS OF CONTROLLED FOREIGN
CORPORATIONS NOT SUBJECT TO PFIC INCLUSION.
Section 1296 is amended by adding at the end the following new
subsection:
``(e) Exception for United States Shareholders of Controlled
Foreign Corporations.--
``(1) In general.--For purposes of this part, a corporation
shall not be treated with respect to a shareholder as a passive
foreign investment company during the qualified portion of such
shareholder's holding period with respect to stock in such
corporation.
``(2) Qualified portion.--For purposes of this subsection,
the term `qualified portion' means the portion of the
shareholder's holding period--
``(A) which is after December 31, 1995, and
``(B) during which the shareholder is a United
States shareholder (as defined in section 951(b)) of
the corporation and the corporation is a controlled
foreign corporation.
``(3) New holding period if qualified portion ends.--
``(A) In general.--Except as provided in
subparagraph (B), if the qualified portion of a
shareholder's holding period with respect to any stock
ends after December 31, 1995, solely for purposes of
this part, the shareholder's holding period with
respect to such stock shall be treated as beginning as
of the first day following such period.
``(B) Exception.--Subparagraph (A) shall not apply
if such stock was, with respect to such shareholder,
stock in a passive foreign investment company at any
time before the qualified portion of the shareholder's
holding period with respect to such stock and no
election under section 1298(b)(1) is made.''
SEC. 14402. ELECTION OF MARK TO MARKET FOR MARKETABLE STOCK IN PASSIVE
FOREIGN INVESTMENT COMPANY.
(a) In General.--Part VI of subchapter P of chapter 1 is amended by
redesignating subpart C as subpart D, by redesignating sections 1296
and 1297 as sections 1297 and 1298, respectively, and by inserting
after subpart B the following new subpart:
``Subpart C--Election of Mark to Market For Marketable Stock
``Sec. 1296. Election of mark to market
for marketable stock.
``SEC. 1296. ELECTION OF MARK TO MARKET FOR MARKETABLE STOCK.
``(a) General Rule.--In the case of marketable stock in a passive
foreign investment company which is owned (or treated under subsection
(g) as owned) by a United States person at the close of any taxable
year of such person, at the election of such person--
``(1) If the fair market value of such stock as of the
close of such taxable year exceeds its adjusted basis, such
United States person shall include in gross income for such
taxable year an amount equal to the amount of such excess.
``(2) If the adjusted basis of such stock exceeds the fair
market value of such stock as of the close of such taxable
year, such United States person shall be allowed a deduction
for such taxable year equal to the lesser of--
``(A) the amount of such excess, or
``(B) the unreversed inclusions with respect to
such stock.
``(b) Basis Adjustments.--
``(1) In general.--The adjusted basis of stock in a passive
foreign investment company--
``(A) shall be increased by the amount included in
the gross income of the United States person under
subsection (a)(1) with respect to such stock, and
``(B) shall be decreased by the amount allowed as a
deduction to the United States person under subsection
(a)(2) with respect to such stock.
``(2) Special rule for stock constructively owned.--In the
case of stock in a passive foreign investment company which the
United States person is treated as owning under subsection
(g)--
``(A) the adjustments under paragraph (1) shall
apply to such stock in the hands of the person actually
holding such stock but only for purposes of determining
the subsequent treatment under this chapter of the
United States person with respect to such stock, and
``(B) similar adjustments shall be made to the
adjusted basis of the property by reason of which the
United States person is treated as owning such stock.
``(c) Character and Source Rules.--
``(1) Ordinary treatment.--
``(A) Gain.--Any amount included in gross income
under subsection (a)(1), and any gain on the sale or
other disposition of marketable stock in a passive
foreign investment company (with respect to which an
election under this section is in effect), shall be
treated as ordinary income.
``(B) Loss.--Any--
``(i) amount allowed as a deduction under
subsection (a)(2), and
``(ii) loss on the sale or other
disposition of marketable stock in a passive
foreign investment company (with respect to
which an election under this section is in
effect) to the extent that the amount of such
loss does not exceed the unreversed inclusions
with respect to such stock,
shall be treated as an ordinary loss. The amount so
treated shall be treated as a deduction allowable in
computing adjusted gross income.
``(2) Source.--The source of any amount included in gross
income under subsection (a)(1) (or allowed as a deduction under
subsection (a)(2)) shall be determined in the same manner as if
such amount were gain or loss (as the case may be) from the
sale of stock in the passive foreign investment company.
``(d) Unreversed Inclusions.--For purposes of this section, the
term `unreversed inclusions' means, with respect to any stock in a
passive foreign investment company, the excess (if any) of--
``(1) the amount included in gross income of the taxpayer
under subsection (a)(1) with respect to such stock for prior
taxable years, over
``(2) the amount allowed as a deduction under subsection
(a)(2) with respect to such stock for prior taxable years.
The amount referred to in paragraph (1) shall include any amount which
would have been included in gross income under subsection (a)(1) with
respect to such stock for any prior taxable year but for section 1291.
``(e) Marketable Stock.--For purposes of this section--
``(1) In general.--The term `marketable stock' means--
``(A) any stock which is regularly traded on--
``(i) a national securities exchange which
is registered with the Securities and Exchange
Commission or the national market system
established pursuant to section 11A of the
Securities and Exchange Act of 1934, or
``(ii) any exchange or other market which
the Secretary determines has rules adequate to
carry out the purposes of this part,
``(B) to the extent provided in regulations, stock
in any foreign corporation which is comparable to a
regulated investment company and which offers for sale
or has outstanding any stock of which it is the issuer
and which is redeemable at its net asset value, and
``(C) to the extent provided in regulations, any
option on stock described in subparagraph (A) or (B).
``(2) Special rule for regulated investment companies.--In
the case of any regulated investment company which is offering
for sale or has outstanding any stock of which it is the issuer
and which is redeemable at its net asset value, all stock in a
passive foreign investment company which it owns directly or
indirectly shall be treated as marketable stock for purposes of
this section. Except as provided in regulations, similar
treatment as marketable stock shall apply in the case of any
other regulated investment company which publishes net asset
valuations at least annually.
``(f) Treatment of Controlled Foreign Corporations Which are
Shareholders in Passive Foreign Investment Companies.--In the case of a
foreign corporation which is a controlled foreign corporation and which
owns (or is treated under subsection (g) as owning) stock in a passive
foreign investment company--
``(1) this section (other than subsection (c)(2)) shall
apply to such foreign corporation in the same manner as if such
corporation were a United States person, and
``(2) for purposes of subpart F of part III of subchapter
N--
``(A) any amount included in gross income under
subsection (a)(1) shall be treated as foreign personal
holding company income described in section
954(c)(1)(A), and
``(B) any amount allowed as a deduction under
subsection (a)(2) shall be treated as a deduction
allocable to foreign personal holding company income so
described.
``(g) Stock Owned Through Certain Foreign Entities.--Except as
provided in regulations--
``(1) In general.--For purposes of this section, stock
owned, directly or indirectly, by or for a foreign partnership
or foreign trust or foreign estate shall be considered as being
owned proportionately by its partners or beneficiaries. Stock
considered to be owned by a person by reason of the application
of the preceding sentence shall, for purposes of applying such
sentence, be treated as actually owned by such person.
``(2) Treatment of certain dispositions.--In any case in
which a United States person is treated as owning stock in a
passive foreign investment company by reason of paragraph (1)--
``(A) any disposition by the United States person
or by any other person which results in the United
States person being treated as no longer owning such
stock, and
``(B) any disposition by the person owning such
stock,
shall be treated as a disposition by the United States person
of the stock in the passive foreign investment company.
``(h) Coordination With Section 851(b).--For purposes of paragraphs
(2) and (3) of section 851(b), any amount included in gross income
under subsection (a) shall be treated as a dividend.
``(i) Stock Acquired From a Decedent.--In the case of stock of a
passive foreign investment company which is acquired by bequest,
devise, or inheritance (or by the decedent's estate) and with respect
to which an election under this section was in effect as of the date of
the decedent's death, notwithstanding section 1014, the basis of such
stock in the hands of the person so acquiring it shall be the adjusted
basis of such stock in the hands of the decedent immediately before his
death (or, if lesser, the basis which would have been determined under
section 1014 without regard to this subsection).
``(j) Coordination With Section 1291 For First Year of Election.--
``(1) Taxpayers other than regulated investment
companies.--
``(A) In general.--If the taxpayer elects the
application of this section with respect to any
marketable stock in a corporation after the beginning
of the taxpayer's holding period in such stock, and if
the requirements of subparagraph (B) are not satisfied,
section 1291 shall apply to--
``(i) any distributions with respect to, or
disposition of, such stock in the first taxable
year of the taxpayer for which such election is
made, and
``(ii) any amount which, but for section
1291, would have been included in gross income
under subsection (a) with respect to such stock
for such taxable year in the same manner as if
such amount were gain on the disposition of
such stock.
``(B) Requirements.--The requirements of this
subparagraph are met if, with respect to each of such
corporation's taxable years for which such corporation
was a passive foreign investment company and which
begin after December 31, 1986, and included any portion
of the taxpayer's holding period in such stock, such
corporation was treated as a qualified electing fund
under this part with respect to the taxpayer.
``(2) Special rules for regulated investment companies.--
``(A) In general.--If a regulated investment
company elects the application of this section with
respect to any marketable stock in a corporation after
the beginning of the taxpayer's holding period in such
stock, then, with respect to such company's first
taxable year for which such company elects the
application of this section with respect to such
stock--
``(i) section 1291 shall not apply to such
stock with respect to any distribution or
disposition during, or amount included in gross
income under this section for, such first
taxable year, but
``(ii) such regulated investment company's
tax under this chapter for such first taxable
year shall be increased by the aggregate amount
of interest which would have been determined
under section 1291(c)(3) if section 1291 were
applied without regard to this subparagraph.
Clause (ii) shall not apply if for the preceding
taxable year the company elected to mark to market the
stock held by such company as of the last day of such
preceding taxable year.
``(B) Disallowance of deduction.--No deduction
shall be allowed to any regulated investment company
for the increase in tax under subparagraph (A)(ii).
``(k) Election.--This section shall apply to marketable stock in a
passive foreign investment company which is held by a United States
person only if such person elects to apply this section with respect to
such stock. Such an election shall apply to the taxable year for which
made and all subsequent taxable years unless--
``(1) such stock ceases to be marketable stock, or
``(2) the Secretary consents to the revocation of such
election.
``(l) Transition Rule for Individuals Becoming Subject to United
States Tax.--If any individual becomes a United States person in a
taxable year beginning after December 31, 1995, solely for purposes of
this section, the adjusted basis (before adjustments under subsection
(b)) of any marketable stock in a passive foreign investment company
owned by such individual on the first day of such taxable year shall be
treated as being the greater of its fair market value on such first day
or its adjusted basis on such first day.''
(b) Coordination With Interest Charge, Etc.--
(1) Paragraph (1) of section 1291(d) is amended by adding
at the end the following new flush sentence:
``Except as provided in section 1296(j), this section also
shall not apply if an election under section 1296(k) is in
effect for the taxpayer's taxable year.''
(2) The subsection heading for subsection (d) of section
1291 is amended by striking ``Subpart B'' and inserting
``Subparts B and C''.
(3) Subparagraph (A) of section 1291(a)(3) is amended to
read as follows:
``(A) Holding period.--The taxpayer's holding
period shall be determined under section 1223; except
that--
``(i) for purposes of applying this section
to an excess distribution, such holding period
shall be treated as ending on the date of such
distribution, and
``(ii) if section 1296 applied to such
stock with respect to the taxpayer for any
prior taxable year, such holding period shall
be treated as beginning on the first day of the
first taxable year beginning after the last
taxable year for which section 1296 so
applied.''
(c) Conforming Amendments.--
(1) Sections 532(b)(4) and 542(c)(10) are each amended by
striking ``section 1296'' and inserting ``section 1297''.
(2) Subsection (f) of section 551 is amended by striking
``section 1297(b)(5)'' and inserting ``section 1298(b)(5)''
(3) Subsections (a)(1) and (d) of section 1293 are each
amended by striking ``section 1297(a)'' and inserting ``section
1298(a)''.
(4) Paragraph (3) of section 1297(b), as redesignated by
subsection (a), is hereby repealed.
(5) The table of sections for subpart D of part VI of
subchapter P of chapter 1, as redesignated by subsection (a),
is amended to read as follows:
``Sec. 1297. Passive foreign investment
company.
``Sec. 1298. Special rules.''
(6) The table of subparts for part VI of subchapter P of
chapter 1 is amended by striking the last item and inserting
the following new items:
``Subpart C. Election of mark to market
for marketable stock.
``Subpart D. General provisions.''
(d) Clarification of Gain Recognition Election.--The last sentence
of section 1298(b)(1), as so redesignated, is amended by inserting
``(determined without regard to the preceding sentence)'' after
``investment company''.
SEC. 14403. MODIFICATIONS TO DEFINITION OF PASSIVE INCOME.
(a) Exception for Same Country Income Not To Apply.--Paragraph (1)
of section 1297(b) (defining passive income), as redesignated by
section 14402, is amended by inserting before the period ``without
regard to paragraph (3) thereof''.
(b) Passive Income Not To Include FSC Income.--Paragraph (2) of
section 1297(b), as so redesignated, is amended by striking ``or'' at
the end of subparagraph (B), by striking the period at the end of
subparagraph (C) and inserting ``, or'', and by inserting after
subparagraph (C) the following new subparagraph:
``(D) any foreign trade income of a FSC.''
SEC. 14404. EFFECTIVE DATE.
The amendments made by this part shall apply to--
(1) taxable years of United States persons beginning after
December 31, 1995, and
(2) taxable years of foreign corporations ending with or
within such taxable years of United States persons.
PART II--TREATMENT OF CONTROLLED FOREIGN CORPORATIONS
SEC. 14411. GAIN ON CERTAIN STOCK SALES BY CONTROLLED FOREIGN
CORPORATIONS TREATED AS DIVIDENDS.
(a) General Rule.--Section 964 (relating to miscellaneous
provisions) is amended by adding at the end the following new
subsection:
``(e) Gain on Certain Stock Sales by Controlled Foreign
Corporations Treated as Dividends.--
``(1) In general.--If a controlled foreign corporation
sells or exchanges stock in any other foreign corporation, gain
recognized on such sale or exchange shall be included in the
gross income of such controlled foreign corporation as a
dividend to the same extent that it would have been so included
under section 1248(a) if such controlled foreign corporation
were a United States person. For purposes of determining the
amount which would have been so includible, the determination
of whether such other foreign corporation was a controlled
foreign corporation shall be made without regard to the
preceding sentence.
``(2) Same country exception not applicable.--Clause (i) of
section 954(c)(3)(A) shall not apply to any amount treated as a
dividend by reason of paragraph (1).
``(3) Clarification of deemed sales.--For purposes of this
subsection, a controlled foreign corporation shall be treated
as having sold or exchanged any stock if, under any provision
of this subtitle, such controlled foreign corporation is
treated as having gain from the sale or exchange of such
stock.''
(b) Amendment of Section 904(d).--Clause (i) of section
904(d)(2)(E) is amended by striking ``and except as provided in
regulations, the taxpayer was a United States shareholder in such
corporation''.
(c) Effective Dates.--
(1) The amendment made by subsection (a) shall apply to
gain recognized on transactions occurring after the date of the
enactment of this Act.
(2) The amendment made by subsection (b) shall apply to
distributions after the date of the enactment of this Act.
SEC. 14412. MISCELLANEOUS MODIFICATIONS TO SUBPART F.
(a) Section 1248 Gain Taken Into Account in Determining Pro Rata
Share.--
(1) In general.--Paragraph (2) of section 951(a) (defining
pro rata share of subpart F income) is amended by adding at the
end the following new sentence: ``For purposes of subparagraph
(B), any gain included in the gross income of any person as a
dividend under section 1248 shall be treated as a distribution
received by such person with respect to the stock involved.''
(2) Effective date.--The amendment made by paragraph (1)
shall apply to dispositions after the date of the enactment of
this Act.
(b) Basis Adjustments in Stock Held by Foreign Corporation.--
(1) In general.--Section 961 (relating to adjustments to
basis of stock in controlled foreign corporations and of other
property) is amended by adding at the end the following new
subsection:
``(c) Basis Adjustments in Stock Held by Foreign Corporation.--
Under regulations prescribed by the Secretary, if a United States
shareholder is treated under section 958(a)(2) as owning any stock in a
controlled foreign corporation which is actually owned by another
controlled foreign corporation, adjustments similar to the adjustments
provided by subsections (a) and (b) shall be made to the basis of such
stock in the hands of such other controlled foreign corporation, but
only for the purposes of determining the amount included under section
951 in the gross income of such United States shareholder (or any other
United States shareholder who acquires from any person any portion of
the interest of such United States shareholder by reason of which such
shareholder was treated as owning such stock, but only to the extent of
such portion, and subject to such proof of identity of such interest as
the Secretary may prescribe by regulations).''
(2) Effective date.--The amendment made by paragraph (1)
shall apply for purposes of determining inclusions for taxable
years of United States shareholders beginning after December
31, 1995.
(c) Determination of Previously Taxed Income in Section 304
Distributions, Etc.--
(1) In general.--Section 959 (relating to exclusion from
gross income of previously taxed earnings and profits) is
amended by adding at the end the following new subsection:
``(g) Adjustments for Certain Transactions.--If by reason of--
``(1) a transaction to which section 304 applies,
``(2) the structure of a United States shareholder's
holdings in controlled foreign corporations, or
``(3) other circumstances,
there would be a multiple inclusion of any item in income (or an
inclusion or exclusion without an appropriate basis adjustment) by
reason of this subpart, the Secretary may prescribe regulations
providing such modifications in the application of this subpart as may
be necessary to eliminate such multiple inclusion or provide such basis
adjustment, as the case may be.''
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
(d) Clarification of Treatment of Branch Tax Exemptions or
Reductions.--
(1) In general.--Subsection (b) of section 952 is amended
by adding at the end the following new sentence: ``For purposes
of this subsection, any exemption (or reduction) with respect
to the tax imposed by section 884 shall not be taken into
account.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to taxable years beginning after December 31, 1986.
SEC. 14413. INDIRECT FOREIGN TAX CREDIT ALLOWED FOR CERTAIN LOWER TIER
COMPANIES.
(a) Section 902 Credit.--
(1) In general.--Subsection (b) of section 902 (relating to
deemed taxes increased in case of certain 2nd and 3rd tier
foreign corporations) is amended to read as follows:
``(b) Deemed Taxes Increased in Case of Certain Lower Tier
Corporations.--
``(1) In general.--If--
``(A) any foreign corporation is a member of a
qualified group, and
``(B) such foreign corporation owns 10 percent or
more of the voting stock of another member of such
group from which it receives dividends in any taxable
year,
such foreign corporation shall be deemed to have paid the same
proportion of such other member's post-1986 foreign income
taxes as would be determined under subsection (a) if such
foreign corporation were a domestic corporation.
``(2) Qualified group.--For purposes of paragraph (1), the
term `qualified group' means--
``(A) the foreign corporation described in
subsection (a), and
``(B) any other foreign corporation if--
``(i) the domestic corporation owns at
least 5 percent of the voting stock of such
other foreign corporation indirectly through a
chain of foreign corporations connected through
stock ownership of at least 10 percent of their
voting stock,
``(ii) the foreign corporation described in
subsection (a) is the first tier corporation in
such chain, and
``(iii) such other corporation is not below
the sixth tier in such chain.
The term `qualified group' shall not include any foreign
corporation below the third tier in the chain referred to in
clause (i) unless such foreign corporation is a controlled
foreign corporation (as defined in section 957) and the
domestic corporation is a United States shareholder (as defined
in section 951(b)) in such foreign corporation. Paragraph (1)
shall apply to those taxes paid by a member of the qualified
group below the third tier only with respect to periods during
which it was a controlled foreign corporation.''
(2) Conforming amendments.--
(A) Subparagraph (B) of section 902(c)(3) is
amended by adding ``or'' at the end of clause (i) and
by striking clauses (ii) and (iii) and inserting the
following new clause:
``(ii) the requirements of subsection
(b)(2) are met with respect to such foreign
corporation.''
(B) Subparagraph (B) of section 902(c)(4) is
amended by striking ``3rd foreign corporation'' and
inserting ``sixth tier foreign corporation''.
(C) The heading for paragraph (3) of section 902(c)
is amended by striking ``where domestic corporation
acquires 10 percent of foreign corporation'' and
inserting ``where foreign corporation first
qualifies''.
(D) Paragraph (3) of section 902(c) is amended by
striking ``ownership'' each place it appears.
(b) Section 960 Credit.--Paragraph (1) of section 960(a) (relating
to special rules for foreign tax credits) is amended to read as
follows:
``(1) Deemed paid credit.--For purposes of subpart A of
this part, if there is included under section 951(a) in the
gross income of a domestic corporation any amount attributable
to earnings and profits of a foreign corporation which is a
member of a qualified group (as defined in section 902(b)) with
respect to the domestic corporation, then, except to the extent
provided in regulations, section 902 shall be applied as if the
amount so included were a dividend paid by such foreign
corporation (determined by applying section 902(c) in
accordance with section 904(d)(3)(B)).''
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxes of foreign corporations for taxable years of
such corporations beginning after the date of enactment of this
Act.
(2) Special rule.--In the case of any chain of foreign
corporations described in clauses (i) and (ii) of section
902(b)(2)(B) of the Internal Revenue Code of 1986 (as amended
by this section), no liquidation, reorganization, or similar
transaction in a taxable year beginning after the date of the
enactment of this Act shall have the effect of permitting taxes
to be taken into account under section 902 of the Internal
Revenue Code of 1986 which could not have been taken into
account under such section but for such transaction.
SEC. 14414. REPEAL OF INCLUSION OF CERTAIN EARNINGS INVESTED IN EXCESS
PASSIVE ASSETS.
(a) In General.--
(1) Repeal of inclusion.--Paragraph (1) of section 951(a)
(relating to amounts included in gross income of United States
shareholders) is amended by striking subparagraph (C), by
striking ``; and'' at the end of subparagraph (B) and inserting
a period, and by adding ``and'' at the end of subparagraph (A).
(2) Repeal of inclusion amount.--Section 956A (relating to
earnings invested in excess passive assets) is repealed.
(b) Conforming Amendments.--
(1) Subparagraph (G) of section 904(d)(3) is amended by
striking ``subparagraph (B) or (C) of section 951(a)(1)'' and
inserting ``section 951(a)(1)(B)''.
(2) Paragraph (1) of section 956(b) is amended to read as
follows:
``(1) Applicable earnings.--For purposes of this section,
the term `applicable earnings' means, with respect to any
controlled foreign corporation, the sum of--
``(A) the amount (not including a deficit) referred
to in section 316(a)(1), and
``(B) the amount referred to in section 316(a)(2),
but reduced by distributions made during the taxable year.''
(3) Paragraph (3) of section 956(b) is amended to read as
follows:
``(3) Special rule where corporation ceases to be
controlled foreign corporation.--If any foreign corporation
ceases to be a controlled foreign corporation during any
taxable year--
``(A) 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 controlled
foreign corporation,
``(B) the average referred to in subsection
(a)(1)(A) for such taxable year shall be determined by
only taking into account quarters ending on or before
such last day, and
``(C) 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 amount so described which is allocable (on a pro
rata basis) to the part of such year during which the
corporation is a controlled foreign corporation.''
(4) Subsection (a) of section 959 (relating to exclusion
from gross income of previously taxed earnings and profits) is
amended by adding ``or'' at the end of paragraph (1), by
striking ``or'' at the end of paragraph (2), and by striking
paragraph (3).
(5) Subsection (a) of section 959 is amended by striking
``paragraphs (2) and (3)'' in the last sentence and inserting
``paragraph (2)''.
(6) Subsection (c) of section 959 is amended by adding at
the end the following flush sentence:
``References in this subsection to section 951(a)(1)(C) and subsection
(a)(3) shall be treated as references to such provisions as in effect
on the day before the date of the enactment of the Tax Simplification
Act of 1995.''
(7) Paragraph (1) of section 959(f) is amended to read as
follows:
``(1) In general.--For purposes of this section, amounts
that would be included under subparagraph (B) of section
951(a)(1) (determined without regard to this section) shall be
treated as attributable first to earnings described in
subsection (c)(2), and then to earnings described in subsection
(c)(3).''
(8) Paragraph (2) of section 959(f) is amended by striking
``subparagraphs (B) and (C) of section 951(a)(1)'' and
inserting ``section 951(a)(1)(B)''.
(9) Subsection (b) of section 989 is amended by striking
``subparagraph (B) or (C) of section 951(a)(1)'' and inserting
``section 951(a)(1)(B)''.
(10) Paragraph (9) of section 1298(b), as redesignated by
section 14402, is amended by striking ``subparagraph (B) or (C)
of section 951(a)(1)'' and inserting ``section 951(a)(1)(B)''.
(11) Subsections (d)(3)(B) and (e)(2)(B)(ii) of section
1298, as redesignated by section 14402, are each amended by
striking ``or section 956A''.
(c) Clerical Amendment.--The table of sections for subpart F of
part III of subchapter N of chapter 1 is amended by striking the item
relating to section 956A.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years of foreign corporations beginning after
September 30, 1995, and to taxable years of United States shareholders
within which or with which such taxable years of foreign corporations
end.
PART III--OTHER PROVISIONS
SEC. 14421. EXCHANGE RATE USED IN TRANSLATING FOREIGN TAXES.
(a) Accrued Taxes Translated by Using Average Rate for Year to
Which Taxes Relate.--
(1) In general.--Subsection (a) of section 986 (relating to
translation of foreign taxes) is amended to read as follows:
``(a) Foreign Income Taxes.--
``(1) Translation of accrued taxes.--
``(A) In general.--For purposes of determining the
amount of the foreign tax credit, in the case of a
taxpayer who takes foreign income taxes into account
when accrued, the amount of any foreign income taxes
(and any adjustment thereto) shall be translated into
dollars by using the average exchange rate for the
taxable year to which such taxes relate.
``(B) Exception for taxes not paid within following
2 years.--
``(i) Subparagraph (A) shall not apply to
any foreign income taxes paid after the date 2
years after the close of the taxable year to
which such taxes relate.
``(ii) Subparagraph (A) shall not apply to
taxes paid before the beginning of the taxable
year to which such taxes relate.
``(C) Exception for inflationary currencies.--
Subparagraph (A) shall not apply to any foreign income
taxes the liability for which is denominated in any
currency determined to be an inflationary currency
under regulations prescribed by the Secretary.
``(D) Cross reference.--
``For adjustments where tax is not paid
within 2 years, see section 905(c).
``(2) Translation of taxes to which paragraph (1) does not
apply.--For purposes of determining the amount of the foreign
tax credit, in the case of any foreign income taxes to which
subparagraph (A) of paragraph (1) does not apply--
``(A) such taxes shall be translated into dollars
using the exchange rates as of the time such taxes were
paid to the foreign country or possession of the United
States, and
``(B) any adjustment to the amount of such taxes
shall be translated into dollars using--
``(i) except as provided in clause (ii),
the exchange rate as of the time when such
adjustment is paid to the foreign country or
possession, or
``(ii) in the case of any refund or credit
of foreign income taxes, using the exchange
rate as of the time of the original payment of
such foreign income taxes.
``(3) Foreign income taxes.--For purposes of this
subsection, the term `foreign income taxes' means any income,
war profits, or excess profits taxes paid or accrued to any
foreign country or to any possession of the United States.''
(2) Adjustment when not paid within 2 years after year to
which taxes relate.--Subsection (c) of section 905 is amended
to read as follows:
``(c) Adjustments to Accrued Taxes.--
``(1) In general.--If--
``(A) accrued taxes when paid differ from the
amounts claimed as credits by the taxpayer,
``(B) accrued taxes are not paid before the date 2
years after the close of the taxable year to which such
taxes relate, or
``(C) any tax paid is refunded in whole or in part,
the taxpayer shall notify the Secretary, who shall redetermine
the amount of the tax for the year or years affected.
``(2) Special rule for taxes not paid within 2 years.--In
making the redetermination under paragraph (1), no credit shall
be allowed for accrued taxes not paid before the date referred
to in subparagraph (B) of paragraph (1). Any such taxes if
subsequently paid shall be taken into account for the taxable
year in which paid and no redetermination under this section
shall be made on account of such payment.
``(3) Adjustments.--The amount of tax due on any
redetermination under paragraph (1) (if any) shall be paid by
the taxpayer on notice and demand by the Secretary, and the
amount of tax overpaid (if any) shall be credited or refunded
to the taxpayer in accordance with subchapter B of chapter 66
(section 6511 et seq.).
``(4) Bond requirements.--In the case of any tax accrued
but not paid, the Secretary, as a condition precedent to the
allowance of the credit provided in this subpart, may require
the taxpayer to give a bond, with sureties satisfactory to and
approved by the Secretary, in such sum as the Secretary may
require, conditioned on the payment by the taxpayer of any
amount of tax found due on any such redetermination. Any such
bond shall contain such further conditions as the Secretary may
require.
``(5) Other special rules.--In any redetermination under
paragraph (1) by the Secretary of the amount of tax due from
the taxpayer for the year or years affected by a refund, the
amount of the taxes refunded for which credit has been allowed
under this section shall be reduced by the amount of any tax
described in section 901 imposed by the foreign country or
possession of the United States with respect to such refund;
but no credit under this subpart, or deduction under section
164, shall be allowed for any taxable year with respect to any
such tax imposed on the refund. No interest shall be assessed
or collected on any amount of tax due on any redetermination by
the Secretary, resulting from a refund to the taxpayer, for any
period before the receipt of such refund, except to the extent
interest was paid by the foreign country or possession of the
United States on such refund for such period.''
(b) Authority To Use Average Rates.--
(1) In general.--Subsection (a) of section 986 (as amended
by subsection (a)) is amended by redesignating paragraph (3) as
paragraph (4) and inserting after paragraph (2) the following
new paragraph:
``(3) Authority to permit use of average rates.--To the
extent prescribed in regulations, the average exchange rate for
the period (specified in such regulations) during which the
taxes or adjustment is paid may be used instead of the exchange
rate as of the time of such payment.''
(2) Determination of average rates.--Subsection (c) of
section 989 is amended by striking ``and'' at the end of
paragraph (4), by striking the period at the end of paragraph
(5) and inserting ``, and'', and by adding at the end the
following new paragraph:
``(6) setting forth procedures for determining the average
exchange rate for any period.''
(3) Conforming amendments.--Subsection (b) of section 989
is amended by striking ``weighted'' each place it appears.
(c) Effective Dates.--
(1) In general.--The amendments made by subsections (a)(1)
and (b) shall apply to taxes paid or accrued in taxable years
beginning after December 31, 1995.
(2) Subsection (a)(2).--The amendment made by subsection
(a)(2) shall apply to taxes which relate to taxable years
beginning after December 31, 1995.
SEC. 14422. ELECTION TO USE SIMPLIFIED SECTION 904 LIMITATION FOR
ALTERNATIVE MINIMUM TAX.
(a) General Rule.--Subsection (a) of section 59 (relating to
alternative minimum tax foreign tax credit) is amended by adding at the
end the following new paragraph:
``(3) Election to use simplified section 904 limitation.--
``(A) In general.--In determining the alternative
minimum tax foreign tax credit for any taxable year to
which an election under this paragraph applies--
``(i) subparagraph (B) of paragraph (1)
shall not apply, and
``(ii) the limitation of section 904 shall
be based on the proportion which--
``(I) the taxpayer's taxable income
(as determined for purposes of the
regular tax) from sources without the
United States (but not in excess of the
taxpayer's entire alternative minimum
taxable income), bears to
``(II) the taxpayer's entire
alternative minimum taxable income for
the taxable year.
``(B) Election.--
``(i) In general.--An election under this
paragraph may be made only for the taxpayer's
first taxable year which begins after December
31, 1995, and for which the taxpayer claims an
alternative minimum tax foreign tax credit.
``(ii) Election revocable only with
consent.--An election under this paragraph,
once made, shall apply to the taxable year for
which made and all subsequent taxable years
unless revoked with the consent of the
Secretary.''
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
SEC. 14423. MODIFICATION OF SECTION 1491.
(a) General Rule.--So much of chapter 5 (relating to tax on
transfers to avoid income tax) as precedes section 1492 is amended to
read as follows:
``CHAPTER 5--TREATMENT OF TRANSFERS TO AVOID INCOME TAX
``Sec. 1491. Recognition of gain.
``Sec. 1492. Exceptions.
``SEC. 1491. RECOGNITION OF GAIN.
``In the case of any transfer of property by a United States person
to a foreign corporation as paid-in surplus or as a contribution to
capital, to a foreign estate or trust, or to a foreign partnership, for
purposes of this subtitle (other than for purposes of section 679),
such transfer shall be treated as a sale or exchange for an amount
equal to the fair market value of the property transferred, and the
transferor shall recognize as gain the excess of--
``(1) the fair market value of the property so transferred,
over
``(2) the adjusted basis (for purposes of determining gain)
of such property in the hands of the transferor.''
(b) Conforming Amendments.--
(1) Section 1057 is hereby repealed.
(2) Section 1492 is amended to read as follows:
``SEC. 1492. EXCEPTIONS.
``The provisions of section 1491 shall not apply--
``(1) If the transferee is an organization exempt from
income tax under part I of subchapter F of chapter 1 (other
than an organization described in section 401(a)),
``(2) To a transfer described in section 367, or
``(3) To any other transfer, to the extent provided in
regulations in accordance with principles similar to the
principles of section 367 or otherwise consistent with the
purpose of section 1491.''
(3) Section 1494 is hereby repealed.
(4) Paragraph (8) of section 6501(c) is amended by
inserting ``or on any transfer by reason of section 1491''
after ``section 367''.
(5) Subsection (a) of section 6038B 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) makes any transfer described in section 1491,''.
(6) The table of sections for part IV of subchapter O of
chapter 1 is amended by striking the item relating to section
1057.
(7) The table of chapters for subtitle A is amended by
striking ``Tax on'' in the item relating to chapter 5 and
inserting ``Treatment of''.
(c) Effective Date.--The amendments made by this section shall
apply to transfers after December 31, 1995.
SEC. 14424. MODIFICATION OF SECTION 367(b).
(a) General Rule.--Paragraph (1) of section 367(b) is amended to
read as follows:
``(1) In general.--In the case of any transaction described
in section 332, 351, 354, 355, 356, or 361 in which the status
of a foreign corporation as a corporation is a general
condition for nonrecognition by 1 or more of the parties to the
transaction, income shall be required to be recognized to the
extent provided in regulations prescribed by the Secretary
which are necessary or appropriate to prevent the avoidance of
Federal income taxes. This subsection shall not apply to a
transaction in which the foreign corporation is not treated as
a corporation under subsection (a)(1).''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to transfers after December 31, 1995.
SEC. 14425. INCREASE IN FILING THRESHOLDS FOR RETURNS AS TO
ORGANIZATION OF FOREIGN CORPORATIONS AND ACQUISITIONS OF
STOCK IN SUCH CORPORATIONS.
(a) In General.--Subsection (a) of section 6046 (relating to
returns as to organization or reorganization of foreign corporations
and as to acquisitions of their stock) is amended to read as follows:
``(a) Requirement of return.--
``(1) In general.--A return complying with the requirements
of subsection (b) shall be made by--
``(A) each United States citizen or resident who
becomes an officer or director of a foreign corporation
if a United States person (as defined in section
7701(a)(30)) meets the stock ownership requirements of
paragraph (2) with respect to such corporation,
``(B) each United States person--
``(i) who acquires stock which, when added
to any stock owned on the date of such
acquisition, meets the stock ownership
requirements of paragraph (2) with respect to a
foreign corporation, or
``(ii) who acquires stock which, without
regard to stock owned on the date of such
acquisition, meets the stock ownership
requirements of paragraph (2) with respect to a
foreign corporation,
``(C) each person (not described in subparagraph
(B)) who is treated as a United States shareholder
under section 953(c) with respect to a foreign
corporation, and
``(D) each person who becomes a United States
person while meeting the stock ownership requirements
of paragraph (2) with respect to stock of a foreign
corporation.
In the case of a foreign corporation with respect to which any
person is treated as a United States shareholder under section
953(c), subparagraph (A) shall be treated as including a
reference to each United States person who is an officer or
director of such corporation.
``(2) Stock ownership requirements.--A person meets the
stock ownership requirements of this paragraph with respect to
any corporation if such person owns 10 percent or more of--
``(A) the total combined voting power of all
classes of stock of such corporation entitled to vote,
or
``(B) the total value of the stock of such
corporation.''
(b) Effective Date.--The amendment made by this section shall take
effect on January 1, 1996.
SEC. 14426. APPLICATION OF UNIFORM CAPITALIZATION RULES TO FOREIGN
PERSONS.
(a) In General.--Section 263A(c) (relating to exceptions) is
amended by adding at the end the following new paragraph:
``(7) Foreign persons.--This section shall apply to any
taxpayer who is not a United States person only for purposes
of--
``(A) tax liability with respect to income which is
effectively connected with the conduct of a trade or
business in the United States, and
``(B) tax liability of a United States shareholder
(as defined in section 951(b)) with respect to amounts
includible in gross income under section 951(a).''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 1995. Section 481
of the Internal Revenue Code of 1986 shall not apply to any change in a
method of accounting by reason of such amendment.
SEC. 14427. CERTAIN PRIZES AND AWARDS.
(a) In General.--Section 863 (relating to special rules for
determining source) is amended by adding at the end the following new
subsection:
``(f) Certain Prizes and Awards Associated With Amateur Sports
Competitions.--
``(1) In general.--A prize or award received by a
nonresident alien by reason of participating in an amateur
sports competition in the United States shall not be treated as
derived from sources within the United States if such alien
performs no services for such prize or award.
``(2) Amateur sports competition.--For purposes of
paragraph (1), the term `amateur sports competition' means any
competition in which the only prizes awarded by the sponsors of
the competition are of nominal value.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to prizes and awards granted after the date of the enactment of
this Act.
SEC. 14428. TREATMENT FOR ESTATE TAX PURPOSES OF SHORT-TERM OBLIGATIONS
HELD BY NONRESIDENT ALIENS.
(a) In General.--Subsection (b) of section 2105 is amended by
striking ``and'' at the end of paragraph (2), by striking the period at
the end of paragraph (3) and inserting ``, and'', and by inserting
after paragraph (3) the following new paragraph:
``(4) obligations which would be original issue discount
obligations as defined in section 871(g)(1) but for
subparagraph (B)(i) thereof, if any interest thereon (were such
interest received by the decedent at the time of his death)
would not be effectively connected with the conduct of a trade
or business within the United States.''
(b) Effective Date.--The amendment made by this section shall apply
to estates of decedents dying after the date of the enactment of this
Act.
Subtitle E--Other Income Tax Provisions
PART I--PROVISIONS RELATING TO S CORPORATIONS
SEC. 14501. S CORPORATIONS PERMITTED TO HAVE 75 SHAREHOLDERS.
Subparagraph (A) of section 1361(b)(1) (defining small business
corporation) is amended by striking ``35 shareholders'' and inserting
``75 shareholders''.
SEC. 14502. ELECTING SMALL BUSINESS TRUSTS.
(a) General Rule.--Subparagraph (A) of section 1361(c)(2) (relating
to certain trusts permitted as shareholders) is amended by inserting
after clause (iv) the following new clause:
``(v) An electing small business trust.''
(b) Current Beneficiaries Treated as Shareholders.--Subparagraph
(B) of section 1361(c)(2) is amended by adding at the end the following
new clause:
``(v) In the case of a trust described in
clause (v) of subparagraph (A), each potential
current beneficiary of such trust shall be
treated as a shareholder; except that, if for
any period there is no potential current
beneficiary of such trust, such trust shall be
treated as the shareholder during such
period.''
(c) Electing Small Business Trust Defined.--Section 1361 (defining
S corporation) is amended by adding at the end the following new
subsection:
``(e) Electing Small Business Trust Defined.--
``(1) Electing small business trust.--For purposes of this
section--
``(A) In general.--Except as provided in
subparagraph (B), the term `electing small business
trust' means any trust if--
``(i) such trust does not have as a
beneficiary any person other than (I) an
individual, (II) an estate, or (III) an
organization described in paragraph (2), (3),
(4), or (5) of section 170(c) which holds a
contingent interest and is not a potential
current beneficiary,
``(ii) no interest in such trust was
acquired by purchase, and
``(iii) an election under this subsection
applies to such trust.
``(B) Certain trusts not eligible.--The term
`electing small business trust' shall not include--
``(i) any qualified subchapter S trust (as
defined in subsection (d)(3)) if an election
under subsection (d)(2) applies to any
corporation the stock of which is held by such
trust, and
``(ii) any trust exempt from tax under this
subtitle.
``(C) Purchase.--For purposes of subparagraph (A),
the term `purchase' means any acquisition if the basis
of the property acquired is determined under section
1012.
``(2) Potential current beneficiary.--For purposes of this
section, the term `potential current beneficiary' means, with
respect to any period, any person who at any time during such
period is entitled to, or at the discretion of any person may
receive, a distribution from the principal or income of the
trust. If a trust disposes of all of the stock which it holds
in an S corporation, then, with respect to such corporation,
the term `potential current beneficiary' does not include any
person who first met the requirements of the preceding sentence
during the 60-day period ending on the date of such
disposition.
``(3) Election.--An election under this subsection shall be
made by the trustee. Any such election shall apply to the
taxable year of the trust for which made and all subsequent
taxable years of such trust unless revoked with the consent of
the Secretary.
``(4) Cross reference.--
``For special treatment of electing
small business trusts, see section 641(d).''
(d) Taxation of Electing Small Business Trusts.--Section 641
(relating to imposition of tax on trusts) is amended by adding at the
end the following new subsection:
``(d) Special Rules for Taxation of Electing Small Business
Trusts.--
``(1) In general.--For purposes of this chapter--
``(A) the portion of any electing small business
trust which consists of stock in 1 or more S
corporations shall be treated as a separate trust, and
``(B) the amount of the tax imposed by this chapter
on such separate trust shall be determined with the
modifications of paragraph (2).
``(2) Modifications.--For purposes of paragraph (1), the
modifications of this paragraph are the following:
``(A) Except as provided in section 1(h), the
amount of the tax imposed by section 1(e) shall be
determined by using the highest rate of tax set forth
in section 1(e).
``(B) The exemption amount under section 55(d)
shall be zero.
``(C) The only items of income, loss, deduction, or
credit to be taken into account are the following:
``(i) The items required to be taken into
account under section 1366.
``(ii) Any gain or loss from the
disposition of stock in an S corporation.
``(iii) To the extent provided in
regulations, State or local income taxes or
administrative expenses to the extent allocable
to items described in clauses (i) and (ii).
No deduction or credit shall be allowed for any amount
not described in this paragraph, and no item described
in this paragraph shall be apportioned to any
beneficiary.
``(D) No amount shall be allowed under paragraph
(1) or (2) of section 1211(b).
``(3) Treatment of remainder of trust and distributions.--
For purposes of determining--
``(A) the amount of the tax imposed by this chapter
on the portion of any electing small business trust not
treated as a separate trust under paragraph (1), and
``(B) the distributable net income of the entire
trust,
the items referred to in paragraph (2)(C) shall be excluded.
Except as provided in the preceding sentence, this subsection
shall not affect the taxation of any distribution from the
trust.
``(4) Treatment of unused deductions where termination of
separate trust.--If a portion of an electing small business
trust ceases to be treated as a separate trust under paragraph
(1), any carryover or excess deduction of the separate trust
which is referred to in section 642(h) shall be taken into
account by the entire trust.
``(5) Electing small business trust.--For purposes of this
subsection, the term `electing small business trust' has the
meaning given such term by section 1361(e)(1).''
(e) Technical Amendment.--Paragraph (1) of section 1366(a) is
amended by inserting ``, or of a trust or estate which terminates,''
after ``who dies''.
SEC. 14503. EXPANSION OF POST-DEATH QUALIFICATION FOR CERTAIN TRUSTS.
Subparagraph (A) of section 1361(c)(2) (relating to certain trusts
permitted as shareholders) is amended--
(1) by striking ``60-day period'' each place it appears in
clauses (ii) and (iii) and inserting ``2-year period'', and
(2) by striking the last sentence in clause (ii).
SEC. 14504. FINANCIAL INSTITUTIONS PERMITTED TO HOLD SAFE HARBOR DEBT.
Clause (iii) of section 1361(c)(5)(B) (defining straight debt) is
amended by striking ``or a trust described in paragraph (2)'' and
inserting ``a trust described in paragraph (2), or a person which is
actively and regularly engaged in the business of lending money.''
SEC. 14505. RULES RELATING TO INADVERTENT TERMINATIONS AND INVALID
ELECTIONS.
(a) General Rule.--Subsection (f) of section 1362 (relating to
inadvertent terminations) is amended to read as follows:
``(f) Inadvertent Invalid Elections or Terminations.--If--
``(1) an election under subsection (a) by any corporation--
``(A) was not effective for the taxable year for
which made (determined without regard to subsection
(b)(2)) by reason of a failure to meet the requirements
of section 1361(b) or to obtain shareholder consents,
or
``(B) was terminated under paragraph (2) of
subsection (d),
``(2) the Secretary determines that the circumstances
resulting in such ineffectiveness or termination were
inadvertent,
``(3) no later than a reasonable period of time after
discovery of the circumstances resulting in such
ineffectiveness or termination, steps were taken--
``(A) so that the corporation is a small business
corporation, or
``(B) to acquire the required shareholder consents,
and
``(4) the corporation, and each person who was a
shareholder in the corporation at any time during the period
specified pursuant to this subsection, agrees to make such
adjustments (consistent with the treatment of the corporation
as an S corporation) as may be required by the Secretary with
respect to such period,
then, notwithstanding the circumstances resulting in such
ineffectiveness or termination, such corporation shall be treated as an
S corporation during the period specified by the Secretary.''
(b) Late Elections.--Subsection (b) of section 1362 is amended by
adding at the end the following new paragraph:
``(5) Authority to treat late elections as timely.--If--
``(A) an election under subsection (a) is made for
any taxable year (determined without regard to
paragraph (3)) after the date prescribed by this
subsection for making such election for such taxable
year, and
``(B) the Secretary determines that there was
reasonable cause for the failure to timely make such
election,
the Secretary may treat such election as timely made for such
taxable year (and paragraph (3) shall not apply).''
(c) Effective Date.--The amendments made by subsection (a) and (b)
shall apply with respect to elections for taxable years beginning after
December 31, 1982.
SEC. 14506. AGREEMENT TO TERMINATE YEAR.
Paragraph (2) of section 1377(a) (relating to pro rata share) is
amended to read as follows:
``(2) Election to terminate year.--
``(A) In general.--Under regulations prescribed by
the Secretary, if any shareholder terminates the
shareholder's interest in the corporation during the
taxable year and all affected shareholders and the
corporation agree to the application of this paragraph,
paragraph (1) shall be applied to the affected
shareholders as if the taxable year consisted of 2
taxable years the first of which ends on the date of
the termination.
``(B) Affected shareholders.--For purposes of
subparagraph (A), the term `affected shareholders'
means the shareholder whose interest is terminated and
all shareholders to whom such shareholder has
transferred shares during the taxable year. If such
shareholder has transferred shares to the corporation,
the term `affected shareholders' shall include all
persons who are shareholders during the taxable year.''
SEC. 14507. EXPANSION OF POST-TERMINATION TRANSITION PERIOD.
(a) In General.--Paragraph (1) of section 1377(b) (relating to
post-termination transition period) is amended by striking ``and'' at
the end of subparagraph (A), by redesignating subparagraph (B) as
subparagraph (C), and by inserting after subparagraph (A) the following
new subparagraph:
``(B) the 120-day period beginning on the date of
any determination pursuant to an audit of the taxpayer
which follows the termination of the corporation's
election and which adjusts a subchapter S item of
income, loss, or deduction of the corporation arising
during the S period (as defined in section 1368(e)(2)),
and''.
(b) Determination Defined.--Paragraph (2) of section 1377(b) is
amended by striking subparagraphs (A) and (B), by redesignating
subparagraph (C) as subparagraph (B), and by inserting before
subparagraph (B) (as so redesignated) the following new subparagraph:
``(A) a determination as defined in section
1313(a), or''.
(c) Repeal of Special Audit Provisions for Subchapter S Items.--
(1) General rule.--Subchapter D of chapter 63 (relating to
tax treatment of subchapter S items) is hereby repealed.
(2) Consistent treatment required.--Section 6037 (relating
to return of S corporation) is amended by adding at the end the
following new subsection:
``(c) Shareholder's Return Must Be Consistent With Corporate Return
or Secretary Notified of Inconsistency.--
``(1) In general.--A shareholder of an S corporation shall,
on such shareholder's return, treat a subchapter S item in a
manner which is consistent with the treatment of such item on
the corporate return.
``(2) Notification of inconsistent treatment.--
``(A) In general.--In the case of any subchapter S
item, if--
``(i)(I) the corporation has filed a return
but the shareholder's treatment on his return
is (or may be) inconsistent with the treatment
of the item on the corporate return, or
``(II) the corporation has not filed a
return, and
``(ii) the shareholder files with the
Secretary a statement identifying the
inconsistency,
paragraph (1) shall not apply to such item.
``(B) Shareholder receiving incorrect
information.--A shareholder shall be treated as having
complied with clause (ii) of subparagraph (A) with
respect to a subchapter S item if the shareholder--
``(i) demonstrates to the satisfaction of
the Secretary that the treatment of the
subchapter S item on the shareholder's return
is consistent with the treatment of the item on
the schedule furnished to the shareholder by
the corporation, and
``(ii) elects to have this paragraph apply
with respect to that item.
``(3) Effect of failure to notify.--In any case--
``(A) described in subparagraph (A)(i)(I) of
paragraph (2), and
``(B) in which the shareholder does not comply with
subparagraph (A)(ii) of paragraph (2),
any adjustment required to make the treatment of the items by
such shareholder consistent with the treatment of the items on
the corporate return shall be treated as arising out of
mathematical or clerical errors and assessed according to
section 6213(b)(1). Paragraph (2) of section 6213(b) shall not
apply to any assessment referred to in the preceding sentence.
``(4) Subchapter s item.--For purposes of this subsection,
the term `subchapter S item' means any item of an S corporation
to the extent that regulations prescribed by the Secretary
provide that, for purposes of this subtitle, such item is more
appropriately determined at the corporation level than at the
shareholder level.
``(5) Addition to tax for failure to comply with section.--
``For addition to tax in the case of a
shareholder's negligence in connection with, or disregard of, the
requirements of this section, see part II of subchapter A of chapter
68.''
(3) Conforming amendments.--
(A) Section 1366 is amended by striking subsection
(g).
(B) Subsection (b) of section 6233 is amended to
read as follows:
``(b) Similar Rules in Certain Cases.--If a partnership return is
filed for any taxable year but it is determined that there is no entity
for such taxable year, to the extent provided in regulations, rules
similar to the rules of subsection (a) shall apply.''
(C) The table of subchapters for chapter 63 is
amended by striking the item relating to subchapter D.
SEC. 14508. S CORPORATIONS PERMITTED TO HOLD SUBSIDIARIES.
(a) In General.--Paragraph (2) of section 1361(b) (defining
ineligible corporation) is amended by striking subparagraph (A) and by
redesignating subparagraphs (B), (C), (D), and (E) as subparagraphs
(A), (B), (C), and (D), respectively.
(b) Treatment of Certain Wholly Owned S Corporation Subsidiaries.--
Section 1361(b) (defining small business corporation) is amended by
adding at the end the following new paragraph:
``(3) Treatment of certain wholly owned subsidiaries.--
``(A) In general.--For purposes of this title--
``(i) a corporation which is a qualified
subchapter S subsidiary shall not be treated as
a separate corporation, and
``(ii) all assets, liabilities, and items
of income, deduction, and credit of a qualified
subchapter S subsidiary shall be treated as
assets, liabilities, and such items (as the
case may be) of the S corporation.
``(B) Qualified subchapter s subsidiary.--For
purposes of this paragraph, the term `qualified
subchapter S subsidiary' means any domestic corporation
which is not an ineligible corporation (as defined in
paragraph (2)), if--
``(i) 100 percent of the stock of such
corporation is held by the S corporation, and
``(ii) the S corporation elects to treat
such corporation as a qualified subchapter S
subsidiary.
``(C) Treatment of terminations of qualified
subchapter s subsidiary status.--For purposes of this
title, if any corporation which was a qualified
subchapter S subsidiary ceases to meet the requirements
of subparagraph (B), such corporation shall be treated
as a new corporation acquiring all of its assets (and
assuming all of its liabilities) immediately before
such cessation from the S corporation in exchange for
its stock.''
(c) Certain Dividends Not Treated as Passive Investment Income.--
Paragraph (3) of section 1362(d) is amended by adding at the end the
following new subparagraph:
``(F) Treatment of certain dividends.--If an S
corporation holds stock in a C corporation meeting the
requirements of section 1504(a)(2), the term `passive
investment income' shall not include dividends from
such C corporation to the extent such dividends are
attributable to the earnings and profits of such C
corporation derived from the active conduct of a trade
or business.''
(d) Conforming Amendments.--
(1) Subsection (c) of section 1361 is amended by striking
paragraph (6).
(2) Subsection (b) of section 1504 (defining includible
corporation) is amended by adding at the end the following new
paragraph:
``(8) An S corporation.''
SEC. 14509. TREATMENT OF DISTRIBUTIONS DURING LOSS YEARS.
(a) Adjustments for Distributions Taken Into Account Before
Losses.--
(1) Subparagraph (A) of section 1366(d)(1) (relating to
losses and deductions cannot exceed shareholder's basis in
stock and debt) is amended by striking ``paragraph (1)'' and
inserting ``paragraphs (1) and (2)(A)''.
(2) Subsection (d) of section 1368 (relating to certain
adjustments taken into account) is amended by adding at the end
the following new sentence:
``In the case of any distribution made during any taxable year, the
adjusted basis of the stock shall be determined with regard to the
adjustments provided in paragraph (1) of section 1367(a) for the
taxable year.''
(b) Accumulated Adjustments Account.--Paragraph (1) of section
1368(e) (relating to accumulated adjustments account) is amended by
adding at the end the following new subparagraph:
``(C) Net loss for year disregarded.--
``(i) In general.--In applying this section to
distributions made during any taxable year, the amount
in the accumulated adjustments account as of the close
of such taxable year shall be determined without regard
to any net negative adjustment for such taxable year.
``(ii) Net negative adjustment.--For purposes of
clause (i), the term `net negative adjustment' means,
with respect to any taxable year, the excess (if any)
of--
``(I) the reductions in the account for the
taxable year (other than for distributions),
over
``(II) the increases in such account for
such taxable year.''
(c) Conforming Amendments.--Subparagraph (A) of section 1368(e)(1)
is amended--
(1) by striking ``as provided in subparagraph (B)'' and
inserting ``as otherwise provided in this paragraph'', and
(2) by striking ``section 1367(b)(2)(A)'' and inserting
``section 1367(a)(2)''.
SEC. 14510. TREATMENT OF S CORPORATIONS UNDER SUBCHAPTER C.
Subsection (a) of section 1371 (relating to application of
subchapter C rules) is amended to read as follows:
``(a) Application of Subchapter C Rules.--Except as otherwise
provided in this title, and except to the extent inconsistent with this
subchapter, subchapter C shall apply to an S corporation and its
shareholders.''
SEC. 14511. ELIMINATION OF CERTAIN EARNINGS AND PROFITS.
(a) In General.--If--
(1) a corporation was an electing small business
corporation under subchapter S of chapter 1 of the Internal
Revenue Code of 1986 for any taxable year beginning before
January 1, 1983, and
(2) such corporation is an S corporation under subchapter S
of chapter 1 of such Code for its first taxable year beginning
after December 31, 1995,
the amount of such corporation's accumulated earnings and profits (as
of the beginning of such first taxable year) shall be reduced by an
amount equal to the portion (if any) of such accumulated earnings and
profits which were accumulated in any taxable year beginning before
January 1, 1983, for which such corporation was an electing small
business corporation under such subchapter S.
(b) Conforming Amendments.--
(1) Paragraph (3) of section 1362(d) is amended--
(A) by striking ``Subchapter C'' in the paragraph
heading and inserting ``Accumulated'',
(B) by striking ``subchapter C'' in subparagraph
(A)(i)(I) and inserting ``accumulated'', and
(C) by striking subparagraph (B) and redesignating
the following subparagraphs accordingly.
(2)(A) Subsection (a) of section 1375 is amended by
striking ``subchapter C'' in paragraph (1) and inserting
``accumulated''.
(B) Paragraph (3) of section 1375(b) is amended to read as
follows:
``(3) Passive investment income, etc.--The terms `passive
investment income' and `gross receipts' have the same
respective meanings as when used in paragraph (3) of section
1362(d).''
(C) The section heading for section 1375 is amended by
striking ``subchapter c'' and inserting ``accumulated''.
(D) The table of sections for part III of subchapter S of
chapter 1 is amended by striking ``subchapter C'' in the item
relating to section 1375 and inserting ``accumulated''.
(3) Clause (i) of section 1042(c)(4)(A) is amended by
striking ``section 1362(d)(3)(D)'' and inserting ``section
1362(d)(3)(C)''.
SEC. 14512. CARRYOVER OF DISALLOWED LOSSES AND DEDUCTIONS UNDER AT-RISK
RULES ALLOWED.
Paragraph (3) of section 1366(d) (relating to carryover of
disallowed losses and deductions to post-termination transition period)
is amended by adding at the end the following new subparagraph:
``(D) At-risk limitations.--To the extent that any
increase in adjusted basis described in subparagraph
(B) would have increased the shareholder's amount at
risk under section 465 if such increase had occurred
on the day preceding the commencement of the post-termination
transition period, rules similar to the rules described in
subparagraphs (A) through (C) shall apply to any losses disallowed by
reason of section 465(a).''
SEC. 14513. ADJUSTMENTS TO BASIS OF INHERITED S STOCK TO REFLECT
CERTAIN ITEMS OF INCOME.
(a) In General.--Subsection (b) of section 1367 (relating to
adjustments to basis of stock of shareholders, etc.) is amended by
adding at the end the following new paragraph:
``(4) Adjustments in case of inherited stock.--
``(A) In general.--If any person acquires stock in
an S corporation by reason of the death of a decedent
or by bequest, devise, or inheritance, section 691
shall be applied with respect to any item of income of
the S corporation in the same manner as if the decedent
had held directly his pro rata share of such item.
``(B) Adjustments to basis.--The basis determined
under section 1014 of any stock in an S corporation
shall be reduced by the portion of the value of the
stock which is attributable to items constituting
income in respect of the decedent.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply in the case of decedents dying after the date of the enactment of
this Act.
SEC. 14514. S CORPORATIONS ELIGIBLE FOR RULES APPLICABLE TO REAL
PROPERTY SUBDIVIDED FOR SALE BY NONCORPORATE TAXPAYERS.
(a) In General.--Subsection (a) of section 1237 (relating to real
property subdivided for sale) is amended by striking ``other than a
corporation'' in the material preceding paragraph (1) and inserting
``other than a C corporation''.
(b) Conforming Amendment.--Subparagraph (A) of section 1237(a)(2)
is amended by inserting ``an S corporation which included the taxpayer
as a shareholder,'' after ``controlled by the taxpayer,''.
SEC. 14515. EFFECTIVE DATE.
(a) In General.--Except as otherwise provided in this part, the
amendments made by this part shall apply to taxable years beginning
after December 31, 1995.
(b) Treatment of Certain Elections Under Prior Law.--For purposes
of section 1362(g) of the Internal Revenue Code of 1986 (relating to
election after termination), any termination under section 1362(d) of
such Code in a taxable year beginning before January 1, 1996, shall not
be taken into account.
PART II--PROVISIONS RELATING TO REGULATED INVESTMENT COMPANIES
SEC. 14521. REPEAL OF 30-PERCENT GROSS INCOME LIMITATION.
(a) General Rule.--Subsection (b) of section 851 (relating to
limitations) is amended by striking paragraph (3), by adding ``and'' at
the end of paragraph (2), and by redesignating paragraph (4) as
paragraph (3).
(b) Technical Amendments.--
(1) The material following paragraph (3) of section 851(b)
(as redesignated by subsection (a)) is amended--
(A) by striking out ``paragraphs (2) and (3)'' and
inserting ``paragraph (2)'', and
(B) by striking out the last sentence thereof.
(2) Subsection (c) of section 851 is amended by striking
``subsection (b)(4)'' each place it appears (including the
heading) and inserting ``subsection (b)(3)''.
(3) Subsection (d) of section 851 is amended by striking
``subsections (b)(4)'' and inserting ``subsections (b)(3)''.
(4) Paragraph (1) of section 851(e) is amended by striking
``subsection (b)(4)'' and inserting ``subsection (b)(3)''.
(5) Paragraph (4) of section 851(e) is amended by striking
``subsections (b)(4)'' and inserting ``subsections (b)(3)''.
(6) Section 851 is amended by striking subsection (g) and
redesignating subsection (h) as subsection (g).
(7) Subsection (g) of section 851 (as redesignated by
paragraph (6)) is amended by striking paragraph (3).
(8) Section 817(h)(2) is amended--
(A) by striking ``851(b)(4)'' in subparagraph (A)
and inserting ``851(b)(3)'', and
(B) by striking ``851(b)(4)(A)(i)'' in subparagraph
(B) and inserting ``851(b)(3)(A)(i)''.
(9) Section 1092(f)(2) is amended by striking ``Except for
purposes of section 851(b)(3), the'' and inserting ``The''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.
PART III--PROVISIONS RELATING TO REAL ESTATE INVESTMENT TRUSTS
SEC. 14531. CLARIFICATION OF LIMITATION ON MAXIMUM NUMBER OF
SHAREHOLDERS.
(a) Rules Relating to Determination of Ownership.--
(1) Failure to issue shareholder demand letter not to
disqualify reit.--Section 857(a) (relating to requirements
applicable to real estate investment trusts) is amended by
striking paragraph (2) and by redesignating paragraph (3) as
paragraph (2).
(2) Shareholder demand letter requirement; penalty.--
Section 857 (relating to taxation of real estate investment
trusts and their beneficiaries) is amended by redesignating
subsection (f) as subsection (g) and by inserting after
subsection (e) the following new subsection:
``(f) Real Estate Investment Trusts To Ascertain Ownership.--
``(1) In general.--Each real estate investment trust shall
each taxable year comply with regulations prescribed by the
Secretary for the purposes of ascertaining the actual ownership
of the outstanding shares, or certificates of beneficial
interest, of such trust.
``(2) Failure to comply.--
``(A) In general.--If a real estate investment
trust fails to comply with the requirements of
paragraph (1) for a taxable year, such trust shall pay
(on notice and demand by the Secretary and in the same
manner as tax) a penalty of $25,000.
``(B) Intentional disregard.--If any failure under
paragraph (1) is due to intentional disregard of the
requirement under paragraph (1), the penalty under
subparagraph (A) shall be $50,000.
``(C) Failure to comply after notice.--The
Secretary may require a real estate investment trust to
take such actions as the Secretary determines
appropriate to ascertain actual ownership if the trust
fails to meet the requirements of paragraph (1). If the
trust fails to take such actions, the trust shall pay
(on notice and demand by the Secretary and in the same
manner as tax) an additional penalty equal to the
penalty determined under subparagraph (A) or (B),
whichever is applicable.
``(D) Reasonable cause.--No penalty shall be
imposed under this paragraph with respect to any
failure if it is shown that such failure is due to
reasonable cause and not to willful neglect.''
(b) Compliance With Closely Held Prohibition.--
(1) In general.--Section 856 (defining real estate
investment trust) is amended by adding at the end the following
new subsection:
``(k) Requirement That Entity Not Be Closely Held Treated as Met in
Certain Cases.--A corporation, trust, or association--
``(1) which for a taxable year meets the requirements of
section 857(f)(1), and
``(2) which does not know, or exercising reasonable
diligence would not have known, whether the entity failed to
meet the requirement of subsection (a)(6),
shall be treated as having met the requirement of subsection (a)(6) for
the taxable year.''
(2) Conforming amendment.--Paragraph (6) of section 856(a)
is amended by inserting ``subject to the provisions of
subsection (k),'' before ``which is not''.
SEC. 14532. DE MINIMIS RULE FOR TENANT SERVICES INCOME.
(a) In General.--Paragraph (2) of section 856(d) (defining rents
from real property) is amended by striking subparagraph (C) and the
last sentence and inserting:
``(C) any impermissible tenant service income (as
defined in paragraph (7)).''
(b) Impermissible Tenant Service Income.--Section 856(d) is amended
by adding at the end the following new paragraph:
``(7) Impermissible tenant service income.--For purposes of
paragraph (2)(C)--
``(A) In general.--The term `impermissible tenant
service income' means, with respect to any real or
personal property, any amount received or accrued
directly or indirectly by the real estate investment
trust for--
``(i) services furnished or rendered by the
trust to the tenants of such property, or
``(ii) managing or operating such property.
``(B) Disqualification of all amounts where more
than de minimis amount.--If the amount described in
subparagraph (A) with respect to a property for any
taxable year exceeds 1 percent of all amounts received
or accrued during such taxable year directly or
indirectly by the real estate investment trust with
respect to such property, the impermissible tenant
service income of the trust with respect to the
property shall include all such amounts.
``(C) Exceptions.--For purposes of subparagraph
(A)--
``(i) services furnished or rendered, or
management or operation provided, through an
independent contractor from whom the trust
itself does not derive or receive any income
shall not be treated as furnished, rendered, or
provided by the trust, and
``(ii) there shall not be taken into
account any amount which would be excluded from
unrelated business taxable income under section
512(b)(3) if received by an organization
described in section 511(a)(2).
``(D) Amount attributable to impermissible
services.--For purposes of subparagraph (A), the amount
treated as received for any service (or management or
operation) shall not be less than 150 percent of the
direct cost of the trust in furnishing or rendering the
service (or providing the management or operation).
``(E) Coordination with limitations.--For purposes
of paragraphs (2) and (3) of subsection (c), amounts
described in subparagraph (A) shall be included in the
gross income of the corporation, trust, or
association.''
SEC. 14533. ATTRIBUTION RULES APPLICABLE TO TENANT OWNERSHIP.
Section 856(d)(5) (relating to constructive ownership of stock) is
amended by adding at the end the following: ``For purposes of paragraph
(2)(B), section 318(a)(3)(A) shall be applied under the preceding
sentence in the case of a partnership by taking into account only
partners who own (directly or indirectly) 25 percent or more of the
capital interest, or the profits interest, in the partnership.''
SEC. 14534. CREDIT FOR TAX PAID BY REIT ON RETAINED CAPITAL GAINS.
(a) General Rule.--Paragraph (3) of section 857(b) (relating to
capital gains) is amended by redesignating subparagraph (D) as
subparagraph (E) and by inserting after subparagraph (C) the following
new subparagraph:
``(D) Treatment by shareholders of undistributed
capital gains.--
``(i) Every shareholder of a real estate
investment trust at the close of the trust's
taxable year shall include, in computing his
long-term capital gains in his return for his
taxable year in which the last day of the
trust's taxable year falls, such amount as the
trust shall designate in respect of such shares
in a written notice mailed to its shareholders
at any time prior to the expiration of 60 days
after the close of its taxable year (or mailed
to its shareholders or holders of beneficial
interests with its annual report for the
taxable year), but the amount so includible by
any shareholder shall not exceed that part of
the amount subjected to tax in subparagraph
(A)(ii) which he would have received if all of
such amount had been distributed as capital
gain dividends by the trust to the holders of
such shares at the close of its taxable year.
``(ii) For purposes of this title, every
such shareholder shall be deemed to have paid,
for his taxable year under clause (i), the tax
imposed by subparagraph (A)(ii) on the amounts
required by this subparagraph to be included in
respect of such shares in computing his long-
term capital gains for that year; and such
shareholders shall be allowed credit or refund
as the case may be, for the tax so deemed to
have been paid by him.
``(iii) The adjusted basis of such shares
in the hands of the holder shall be increased
with respect to the amounts required by this
subparagraph to be included in computing his
long-term capital gains, by the difference
between the amount of such includible gains and
the tax deemed paid by such shareholder in
respect of such shares under clause (ii).
``(iv) In the event of such designation,
the tax imposed by subparagraph (A)(ii) shall
be paid by the real estate investment trust
within 30 days after the close of its taxable
year.
``(v) The earnings and profits of such real
estate investment trust, and the earnings and
profits of any such shareholder which is a
corporation, shall be appropriately adjusted in
accordance with regulations prescribed by the
Secretary.
``(vi) As used in this subparagraph, the
terms `shares' and `shareholders' shall include
beneficial interests and holders of beneficial
interests, respectively.''
(b) Conforming Amendments.--
(1) Clause (i) of section 857(b)(7)(A) is amended by
striking ``subparagraph (B)'' and inserting ``subparagraph (B)
or (D)''.
(2) Clause (iii) of section 852(b)(3)(D) is amended by
striking ``by 65 percent'' and all that follows and inserting
``by the difference between the amount of such includible gains
and the tax deemed paid by such shareholder in respect of such
shares under clause (ii).''
SEC. 14535. REPEAL OF 30-PERCENT GROSS INCOME REQUIREMENT.
(a) General Rule.--Subsection (c) of section 856 (relating to
limitations) is amended--
(1) by adding ``and'' at the end of paragraph (3),
(2) by striking paragraphs (4) and (8), and
(3) by redesignating paragraphs (5), (6), and (7) as
paragraphs (4), (5), and (6), respectively.
(b) Conforming Amendments.--
(1) Subparagraph (G) of section 856(c)(5), as redesignated
by subsection (a), is amended by striking ``and such agreement
shall be treated as a security for purposes of paragraph
(4)(A)''.
(2) Paragraph (5) of section 857(b) is amended by striking
``section 856(c)(7)'' and inserting ``section 856(c)(6)''.
(3) Subparagraph (C) of section 857(b)(6) is amended by
striking ``section 856(c)(6)(B)'' and inserting ``section
856(c)(5)(B)''.
SEC. 14536. MODIFICATION OF EARNINGS AND PROFITS RULES FOR DETERMINING
WHETHER REIT HAS EARNINGS AND PROFITS FROM NON-REIT YEAR.
Subsection (d) of section 857 is amended by adding at the end the
following new paragraph:
``(3) Distributions to meet requirements of subsection
(a)(2)(B).--Any distribution which is made in order to comply
with the requirements of subsection (a)(2)(B)--
``(A) shall be treated for purposes of this
subsection and subsection (a)(2)(B) as made from the
earliest accumulated earnings and profits (other than
earnings and profits to which subsection (a)(2)(A)
applies) rather than the most recently accumulated
earnings and profits, and
``(B) to the extent treated under subparagraph (A)
as made from accumulated earnings and profits, shall
not be treated as a distribution for purposes of
subsection (b)(2)(B).''
SEC. 14537. TREATMENT OF FORECLOSURE PROPERTY.
(a) Grace Periods.--
(1) Initial period.--Paragraph (2) of section 856(e)
(relating to special rules for foreclosure property) is amended
by striking ``on the date which is 2 years after the date the
trust acquired such property'' and inserting ``as of the close
of the 3d taxable year following the taxable year in which the
trust acquired such property''.
(2) Extension.--Paragraph (3) of section 856(e) is
amended--
(A) by striking ``or more extensions'' and
inserting ``extension'', and
(B) by striking the last sentence and inserting:
``Any such extension shall not extend the grace period
beyond the close of the 3d taxable year following the
last taxable year in the period under paragraph (2).''
(b) Revocation of Election.--Paragraph (5) of section 856(e) is
amended by striking the last sentence and inserting: ``A real estate
investment trust may revoke any such election for a taxable year by
filing the revocation (in the manner provided by the Secretary) on or
before the due date (including any extension of time) for filing its
return of tax under this chapter for the taxable year. If a trust
revokes an election for any property, no election may be made by the
trust under this paragraph with respect to the property for any
subsequent taxable year.''
(c) Certain Activities Not To Disqualify Property.--Paragraph (4)
of section 856(e) is amended by adding at the end the following new
flush sentence:
``For purposes of subparagraph (C), property shall not be
treated as used in a trade or business by reason of any
activities of the real estate investment trust with respect to
such property to the extent that such activities would not
result in amounts received or accrued, directly or indirectly,
with respect to such property being treated as other than rents
from real property.''
SEC. 14538. PAYMENTS UNDER HEDGING INSTRUMENTS.
Section 856(c)(5)(G) (relating to treatment of certain interest
rate agreements), as redesignated by section 14535, is amended to read
as follows:
``(G) Treatment of certain hedging instruments.--
Except to the extent provided by regulations, any--
``(i) payment to a real estate investment
trust under an interest rate swap or cap
agreement, option, futures contract, forward
rate agreement, or any similar financial
instrument, entered into by the trust in a
transaction to reduce the interest rate risks
with respect to any indebtedness incurred or to
be incurred by the trust to acquire or carry
real estate assets, and
``(ii) gain from the sale or other
disposition of any such investment,
shall be treated as income qualifying under paragraph
(2).''
SEC. 14539. EXCESS NONCASH INCOME.
Section 857(e)(2) (relating to determination of amount of excess
noncash income) is amended--
(1) by striking subparagraph (B),
(2) by striking the period at the end of subparagraph (C)
and inserting a comma,
(3) by redesignating subparagraph (C) (as amended by
paragraph (2)) as subparagraph (B), and
(4) by adding at the end the following new subparagraphs:
``(C) the amount (if any) by which--
``(i) the amounts includible in gross
income with respect to instruments to which
section 860E(a) or 1272 applies, exceed
``(ii) the amount of money and the fair
market value of other property received during
the taxable year under such instruments, and
``(D) amounts includible in income by reason of
cancellation of indebtedness.''
SEC. 14540. PROHIBITED TRANSACTION SAFE HARBOR.
Clause (iii) of section 857(b)(6)(C) (relating to certain sales not
to constitute prohibited transactions) is amended by striking ``(other
than foreclosure property)'' in subclauses (I) and (II) and inserting
``(other than sales of foreclosure property or sales to which section
1033 applies)''.
SEC. 14541. SHARED APPRECIATION MORTGAGES.
(a) Bankruptcy Safe Harbor.--Section 856(j) (relating to treatment
of shared appreciation mortgages) is amended by redesignating paragraph
(4) as paragraph (5) and by inserting after paragraph (3) the following
new paragraph:
``(4) Coordination with 4-year holding period.--
``(A) In general.--For purposes of section
857(b)(6)(C), if a real estate investment trust is
treated as having sold secured property under paragraph
(3)(A), the trust shall be treated as having held such
property for at least 4 years if--
``(i) the secured property is sold or
otherwise disposed of pursuant to a case under
title 11 of the United States Code,
``(ii) the seller is under the jurisdiction
of the court in such case, and
``(iii) the disposition is required by the
court or is pursuant to a plan approved by the
court.
``(B) Exception.--Subparagraph (A) shall not apply
if--
``(i) the secured property was acquired by
the trust with the intent to evict or
foreclose, or
``(ii) the trust knew or had reason to know
that default on the obligation described in
paragraph (5)(A) would occur.''
(b) Clarification of Definition of Shared Appreciation Provision.--
Clause (ii) of section 856(j)(5)(A) is amended by inserting before the
period ``or appreciation in value as of any specified date''.
SEC. 14542. WHOLLY OWNED SUBSIDIARIES.
Section 856(i)(2) (defining qualified REIT subsidiary) is amended
by striking ``at all times during the period such corporation was in
existence''.
SEC. 14543. EFFECTIVE DATE.
The amendments made by this part shall apply to taxable years
beginning after the date of the enactment of this Act.
PART IV--ACCOUNTING PROVISIONS
SEC. 14551. MODIFICATIONS TO LOOK-BACK METHOD FOR LONG-TERM CONTRACTS.
(a) Look-Back Method Not To Apply in Certain Cases.--Subsection (b)
of section 460 (relating to percentage of completion method) is amended
by adding at the end the following new paragraph:
``(6) Election to have look-back method not apply in de
minimis cases.--
``(A) Amounts taken into account after completion
of contract.--Paragraph (1)(B) shall not apply with
respect to any taxable year (beginning after the
taxable year in which the contract is completed) if--
``(i) the cumulative taxable income (or
loss) under the contract as of the close of
such taxable year, is within
``(ii) 10 percent of the cumulative look-
back taxable income (or loss) under the
contract as of the close of the most recent
taxable year to which paragraph (1)(B) applied
(or would have applied but for subparagraph
(B)).
``(B) De minimis discrepancies.--Paragraph (1)(B)
shall not apply in any case to which it would otherwise
apply if--
``(i) the cumulative taxable income (or
loss) under the contract as of the close of
each prior contract year, is within
``(ii) 10 percent of the cumulative look-
back income (or loss) under the contract as of
the close of such prior contract year.
``(C) Definitions.--For purposes of this
paragraph--
``(i) Contract year.--The term `contract
year' means any taxable year for which income
is taken into account under the contract.
``(ii) Look-back income or loss.--The look-
back income (or loss) is the amount which would
be the taxable income (or loss) under the
contract if the allocation method set forth in
paragraph (2)(A) were used in determining
taxable income.
``(iii) Discounting not applicable.--The
amounts taken into account after the completion
of the contract shall be determined without
regard to any discounting under the 2nd
sentence of paragraph (2).
``(D) Contracts to which paragraph applies.--This
paragraph shall only apply if the taxpayer makes an
election under this subparagraph. Unless revoked with
the consent of the Secretary, such an election shall
apply to all long-term contracts completed during the
taxable year for which election is made or during any
subsequent taxable year.''
(b) Modification of Interest Rate.--
(1) In general.--Subparagraph (C) of section 460(b)(2) is
amended by striking ``the overpayment rate established by
section 6621'' and inserting ``the adjusted overpayment rate
(as defined in paragraph (7))''.
(2) Adjusted overpayment rate.--Subsection (b) of section
460 is amended by adding at the end the following new
paragraph:
``(7) Adjusted overpayment rate.--
``(A) In general.--The adjusted overpayment rate
for any interest accrual period is the overpayment rate
in effect under section 6621 for the calendar quarter
in which such interest accrual period begins.
``(B) Interest accrual period.--For purposes of
subparagraph (A), the term `interest accrual period'
means the period--
``(i) beginning on the day after the return
due date for any taxable year of the taxpayer,
and
``(ii) ending on the return due date for
the following taxable year.
For purposes of the preceding sentence, the term
`return due date' means the date prescribed for filing
the return of the tax imposed by this chapter
(determined without regard to extensions).''
(c) Effective Date.--The amendments made by this section shall
apply to contracts completed in taxable years ending after the date of
the enactment of this Act.
SEC. 14552. APPLICATION OF MARK TO MARKET ACCOUNTING METHOD TO TRADERS
IN SECURITIES.
(a) In General.--Section 475 (relating to mark to market accounting
method for dealers in securities) is amended by redesignating
subsection (e) as subsection (f) and by inserting after subsection (d)
the following new subsection:
``(e) Authority To Extend Method to Traders in Securities.--
``(1) In general.--A trader in securities may elect to have
the provisions of this section (other than subsection (d)(3))
apply to securities held by the trader. Such election may be
made only with the consent of the Secretary.
``(2) Trader in securities.--For purposes of this
subsection, the term `trader in securities' means a taxpayer
who is regularly engaged in trading securities.''
(b) Effective Date.--The amendments made by this section shall
apply to taxable years ending on and after December 31, 1995.
SEC. 14553. MODIFICATION OF RULING AMOUNTS FOR NUCLEAR DECOMMISSIONING
COSTS.
(a) In General.--Section 468A(d) (relating to ruling amount) is
amended by adding at the end the following new paragraph:
``(4) Nonsubstantial modifications.--A taxpayer may
modify a schedule of ruling amounts under paragraph (1)
without a review under paragraph (3) if such
modification does not substantially modify the ruling
amount. The taxpayer shall notify the Secretary of any
such modification.''
(b) Effective Date.--The amendment made by this section shall apply
to modifications after the date of the enactment of this Act.
SEC. 14554. ELECTION OF ALTERNATIVE TAXABLE YEARS BY PARTNERSHIPS AND S
CORPORATIONS.
(a) Repeal of Limitation on What Taxable Year May Be Elected.--
(1) In general.--Section 444(b) (relating to limitations on
taxable years which may be elected) is amended by adding at the
end the following new paragraph:
``(5) Limitations not to apply to certain partnerships and
s corporations.--
``(A) In general.--In the case of a partnership or
an S corporation, this subsection shall not apply to an
election under subsection (a) for a taxable year
beginning after December 31, 1996.
``(B) Special rule for existing elections.--
``(i) In general.--If a partnership or S
corporation has an election in effect for its
last taxable year beginning before January 1,
1997, the partnership or S corporation may
elect to have this paragraph apply beginning
with any taxable year beginning after December
31, 1996. Such an election may be made without
the consent of the Secretary and shall not be
treated as a termination of an election for
purposes of subsection (d).
``(ii) Treatment of required payments.--A
partnership or S corporation making an election
under clause (i) may elect to have its net
required payment balance (within the meaning of
section 7519(e)(4))--
``(I) credited against its first
estimated tax payment under section
6654A for its first full taxable year
for which such section applies, or
``(II) refunded to it at the time
provided in section 7519(c)(3).''
(2) Effect of election.--Paragraph (1) of section 444(c)
(relating to effect of election) is amended to read as follows:
``(1) in the case of a partnership or S corporation, such
entity shall--
``(A) make the payments required by section 7519,
or
``(B) if subsection (b)(5) applies to the election,
make the estimated tax payments described in section
6654A, and''.
(b) Estimated Tax for Partnerships and S Corporations Making
Taxable Year Elections.--Part I of subchapter A of chapter 68 (relating
to additions to tax and additional amounts) is amended by inserting
after section 6654 the following new section:
``SEC. 6654A. FAILURE BY ELECTING PARTNERSHIP OR S CORPORATION TO PAY
ESTIMATED TAX.
``(a) Penalty.--Except as otherwise provided in this section, in
the case of a partnership or S corporation with respect to which an
election to which section 444(b)(5) applies is in effect (hereafter
referred to as `the entity'), there is hereby imposed a penalty for
each quarter for which there is an underpayment in an amount determined
by applying--
``(1) the underpayment rate established under section 6621,
``(2) to the amount of the underpayment,
``(3) for the period of the underpayment.
``(b) Amount of Underpayment; Period of Underpayment.--For purposes
of subsection (a)--
``(1) Amount.--The amount of the underpayment shall be the
excess of--
``(A) the required installment, over
``(B) the amount (if any) of the installment paid
on or before the due date for the installment.
``(2) Period of underpayment.--The period of the
underpayment shall run from the due date for the installment to
the earlier of--
``(A) the first April 15 more than 3 months after
the close of the taxable year, or
``(B) with respect to any portion of the
underpayment, the date on which such portion is paid.
``(3) Order of crediting payments.--For purposes of
paragraph (2)(B), a payment of estimated tax shall be credited
against unpaid required installments in the order in which the
installments are required to be paid.
``(c) Required Installments.--For purposes of this section--
``(1) Number and dates.--An entity shall make 4 required
installments which shall be due on the 15th day of the 3d, 5th,
8th, and 12th months of the taxable year.
``(2) No required payments where entity's liability is less
than $5,000.--An entity shall not be required to make estimated
payments under this section for any taxable year for which (but
for this paragraph) its aggregate liability under this section
would be less than $5,000.
``(3) Amount.--The amount of each required installment
shall be 25 percent of the product of--
``(A) the entity's applicable income determined
under its applicable method for the quarter for which
the installment is being made, and
``(B) the applicable rate.
``(4) Applicable rate.--
``(A) In general.--The term `applicable rate' means
34 percent (39.6 percent in the case of an entity
described in subparagraph (B)).
``(B) High average income entity.--
``(i) In general.--An entity is described
in this subparagraph if--
``(I) the average applicable income
of 2-percent owners of the entity for
its base year is $250,000 or more, or
``(II) in the case of a
partnership, its applicable income for
the base year is $10,000,000 or more.
An entity shall not be treated as so described
if it has no base year.
``(ii) 2-percent owner.--The term `2-
percent owner' means--
``(I) in the case of a partnership,
any person who owns (or is considered
as owning within the meaning of section
318) on any day during the base year
more than 2 percent of the capital
interests of the partnerships, and
``(II) in the case of an S
corporation, a 2-percent shareholder
(as defined in section 1372(b)).
``(5) Adjustments under annualized income method.--An
entity using the annualized income method shall adjust its
required installment for any quarter to reflect any change in
its required installment for any prior quarter in the taxable
year which would have been required if the annualized
applicable income for the current quarter had been used for the
prior quarter.
``(d) Applicable Method.--For purposes of this section--
``(1) In general.--An entity shall determine its applicable
income on the basis of the 100-percent method.
``(2) Exceptions.--
``(A) Elections.--An entity may determine its
applicable income--
``(i) for all quarters in a taxable year on
the basis of the 110-percent method if it
elects such method on or before the due date
for the first quarterly installment, or
``(ii) for any quarter in a taxable year on
the basis of the annualized income method if it
elects such method on or before the due date
for the quarterly installment for such quarter.
An election under clause (ii) shall apply for the
quarter for which made and all subsequent quarters
during the taxable year.
``(B) Large increase in income.--If an entity's
applicable income for the taxable year exceeds its
applicable income for the base year by more than
$750,000, the entity may not use the 110-percent method
for the taxable year.
``(3) Methods.--
``(A) 100-percent method.--Under the 100-percent
method, an entity's applicable income shall be its
applicable income for the taxable year.
``(B) 110-percent method.--Under the 110-percent
method, an entity's applicable income shall be 110
percent of its applicable income for the base year.
``(C) Annualized income method.--Under the
annualized income method, the entity's applicable
income for purposes of determining the required
installment for any quarter shall be an amount equal to
the product of--
``(i) its applicable income for the period
consisting of the months in the taxable year
ending before the due date for the quarter, and
``(ii) a percentage equal to 12 divided by
the number of such months.
``(e) Applicable Income.--
``(1) In general.--For purposes of this section, the
applicable income for any taxable year shall be the net amount
(not less than zero) determined--
``(A) by taking into account the entity's items in
the manner and with the exceptions provided in section
703(a) or 1363(b), as the case may be, and
``(B) by making the further adjustments provided in
paragraphs (2), (3), (4), and (5) of this subsection.
``(2) Certain deductions allowed.--In determining
applicable income, the following amounts shall be allowed as
deductions:
``(A) The deduction allowable under section 170 for
charitable contributions of the entity.
``(B) The deduction allowable under section 901 for
taxes described in section 901(c) paid or accrued to
foreign countries or possessions of the United States.
``(3) Certain limitations disregarded.--For purposes of
paragraphs (1) and (2), any limitation on the amount of any
item which may be taken into account for purposes of computing
the taxable income of a partner or shareholder shall be
disregarded.
``(4) Guaranteed payments to partners not deducted.--In
determining applicable income, a guaranteed payment to a
partner shall not be treated as an item of deduction.
``(5) Disproportionate applicable payments during deferral
period.--
``(A) Deduction not allowed.--In determining
applicable income, no deduction shall be allowed for
disproportionate deferral period applicable payments.
``(B) Disproportionate deferral period applicable
payments.--For purposes of subparagraph (A), the term
`disproportionate deferral period applicable payments'
means the excess (if any) of--
``(i) the product of the deferral ratio and
the aggregate applicable payments made to
owners during the entity's entire taxable year,
over
``(ii) the aggregate applicable payments
made to owners during the deferral period.
``(C) Definitions.--For purposes of this
paragraph--
``(i) the term `applicable payments' has
the meaning given to such term by section
7519(d)(3), except that in the case of an S
corporation only payments to 2-percent
shareholders (as defined in section 1372(b))
shall be taken into account,
``(ii) the term `deferral period' means the
months in the period beginning with the first
day of the entity's taxable year and ending on
December 31, and
``(iii) the term `deferral ratio' means the
ratio which the number of months in the
deferral period bears to the total number of
months in the taxable year.
``(6) Special rule where c corporation for base year.--In
applying the 110-percent method, if an S corporation was a C
corporation for the base year, the S corporation's applicable
income shall be the taxable income of the C corporation for the
base year.
``(f) Coordination Between Entity and Owners.--
``(1) Treatment of payments of required installments.--
``(A) In general.--For purposes of this title, an
owner in an entity shall be treated as having paid, for
the owner's first taxable year ending with or after the
close of the entity's taxable year, an amount of tax
imposed by section 1 equal to the owner's allocable
share of the entity's payments of required installments
under this section (determined without regard to excess
payments described in subparagraph (C)(ii)(II) or
amounts the entity is treated as paying under paragraph
(2)).
``(B) Coordination with owner's estimated tax.--For
purposes of section 6654, an individual shall be
treated as having paid on the due date for the
estimated tax installment for each quarter of the
individual's taxable year described in subparagraph
(A)--
``(i) except as provided in clause (ii), 25
percent of the tax deemed paid under
subparagraph (A), or
``(ii) if the annualized income method was
used by the entity for any quarter of the
entity's taxable year described in subparagraph
(A), an amount for the corresponding quarter in
the individuals's taxable year equal to the
portion of such tax attributable to the
individual's allocable share of the entity's
applicable income for the entity's quarter.
In no event shall the aggregate estimated tax payments
treated as paid under this subparagraph exceed the
amount of tax determined under subparagraph (A).
``(C) Amounts determined on basis of return.--
``(i) In general.--The determination of the
amount of tax payments under subparagraph (A)
shall be made on the basis of amounts shown on
the entity's return for the taxable year.
``(ii) Reconciliation of differences.--If,
as of the first April 15 more than 3 months
after the close of the entity's taxable year,
the aggregate amounts paid as required
installments under this section are less or
more than the aggregate amounts described in
clause (i) shown on the entity's return of tax
for the taxable year, then--
``(I) subject to paragraph (2),
there is hereby imposed on the entity
under chapter 1 an additional tax equal
to the amount of the shortfall, the due
date for which is such April 15, or
``(II) the entity shall be treated
as having made a payment of tax under
chapter 1 on such April 15 in an amount
equal to the excess.
``(2) Treatment of payments by owners.--For purposes of
subsection (b)(2)(B) and paragraph (1)(C), an entity shall be
treated as paying any portion of an underpayment attributable
to an owner's allocable share of applicable income at the time
the tax imposed by chapter 1 on the owner with respect to such
income is paid.
``(3) Allocable share.--For purposes of this subsection--
``(A) In general.--An owner's allocable share of an
item for a taxable year shall be an amount which bears
the same ratio to the amount of such item as the
owner's applicable income for the taxable year bears to
the sum of the applicable incomes of all owners. For
purposes of this subparagraph, applicable income of an
owner shall be determined in the same manner as
subsection (e).
``(B) Application other than on taxable year
basis.--If--
``(i) the entity elects the annualized
income method for any quarter, subparagraph (A)
shall be applied on a quarter-by-quarter basis,
or
``(ii) there is an interim closing of the
books of an entity under this title,
subparagraph (A) shall be applied separately
for the periods before and after the closing.
``(g) Special Rules for Short Year Created by Election.--
``(1) Additional required installment.--If, by reason of an
election under this section, an entity has a taxable year of
less than 12 months, the entity shall make a required
installment under this section for such taxable year--
``(A) which shall be in an amount equal to the
applicable rate multiplied by the lesser of--
``(i) the entity's applicable income for
such taxable year as determined under
subsection (e), or
``(ii) 110 percent of the entity's
applicable income for the base year (as so
determined but ratably reduced to reflect the
period of such taxable year), and
``(B) the due date for which shall be the last day
for which an election under this section could be made
for the taxable year.
``(2) Treatment of losses.--Any net operating loss arising
in the taxable year described in paragraph (1) shall be treated
as arising one-third in such taxable year and each of the 2
following taxable years. This paragraph shall not apply to an
entity not in existence before such taxable year unless more
than one-half of the equity interests in the entity are held by
persons who owned another entity carrying on the same business
before such taxable year.
``(h) Other Definitions and Special Rules.--For purpose of this
section--
``(1) Base year.--The term `base year' means the most
recent preceding taxable year containing 12 months.
``(2) Equity interest.--The term `equity interest' means--
``(A) in the case of a partnership, the capital
interests, and
``(B) in the case of an S corporation, the shares
of stock in the corporation (whether voting or
nonvoting).
``(3) Owner.--The term `owner' means a partner in a
partnership or a shareholder in an S corporation, whichever is
applicable.
``(4) Common control.--
``(A) In general.--For purposes of subsections
(c)(2), (c)(4)(B), and (d)(2)(B), entities under common
control shall be treated as 1 entity.
``(B) Common control.--Entities shall be treated as
under common control under subparagraph (A) if they are
treated as a single employee under subsection (a) or
(b) of section 52.
``(5) Waiver.--No penalty shall be imposed under subsection
(a) with respect to any underpayment to the extent the
Secretary determines that by reason of casualty, disaster, or
other unusual circumstances the imposition of the penalty would
be against equity and good conscience.''
(c) Modification of Elections.--
(1) Time for making.--Paragraph (1) of section 444(d) is
amended by adding at the end the following new sentence: ``Such
election may be made at any time on or before the 15th day of
the 3d month of the first taxable year of 12 months under the
election.''
(2) Terminations.--Paragraph (2) of section 444(d) is
amended by striking subparagraph (B) and inserting:
``(B) Terminations.--
``(i) Revocation.--An election under
subsection (a) may be terminated by revocation
but only if owners of more than one-half of the
equity interests in the entity on the date of
the revocation consent to it.
``(ii) Entity terminations.--In the case of
a partnership or S corporation, an election
under subsection (a) terminates when the
partnership terminates under section 708(b)(1)
or the corporation ceases to be an S
corporation.
``(C) Subsequent elections.--If an election under
subsection (a) has been terminated, no such election
may be made with respect to such entity or any
successor entity for any taxable year before its 5th
taxable year beginning after the 1st taxable year for
which the termination was effective, unless the
Secretary consents to the election.''
(d) Conforming Amendments.--
(1) Section 6665(b) is amended--
(A) by inserting ``6654A,'' after ``6654,'', and
(B) by striking ``6654 or'' and inserting ``6654,
6654A, or''.
(2) The table of sections for part I of subchapter A of
chapter 68 is amended by inserting after the item relating to
section 6654 the following new item:
``Sec. 6654A. Failure by electing
partnership or S corporation to
pay estimated tax.''
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1996.
SEC. 14555. SPECIAL RULE FOR CROP INSURANCE PROCEEDS AND DISASTER
PAYMENTS.
(a) In General.--Section 451(d) of the Internal Revenue Code of
1986 (relating to special rule for crop insurance proceeds and disaster
payments) is amended to read as follows:
``(d) Special Rule for Crop Insurance Proceeds and Disaster
Payments.--
``(1) General rule.--In the case of any payment described
in paragraph (2), a taxpayer reporting on the cash receipts and
disbursements method of accounting--
``(A) may elect to treat any such payment received
in the taxable year of destruction or damage of crops
as having been received in the following taxable year
if the taxpayer establishes that, under the taxpayer's
practice, income from such crops involved would have
been reported in a following taxable year, or
``(B) may elect to treat any such payment received
in a taxable year following the taxable year of the
destruction or damage of crops as having been received
in the taxable year of destruction or damage, if the
taxpayer establishes that, under the taxpayer's
practice, income from such crops involved would have
been reported in the taxable year of destruction or
damage.
``(2) Payments described.--For purposes of this subsection,
a payment is described in this paragraph if such payment--
``(A) is insurance proceeds received on account of
destruction or damage to crops, or
``(B) is disaster assistance received under any
Federal law as a result of--
``(i) destruction or damage to crops caused
by drought, flood, or other natural disaster,
or
``(ii) inability to plant crops because of
such a disaster.''.
(b) Effective Date.--The amendment made by subsection (a) applies
to payments received after December 31, 1995, as a result of
destruction or damage occurring after such date.
PART V--TAX-EXEMPT BOND PROVISIONS
SEC. 14561. REPEAL OF $100,000 LIMITATION ON UNSPENT PROCEEDS UNDER 1-
YEAR EXCEPTION FROM REBATE.
Subclause (I) of section 148(f)(4)(B)(ii) (relating to additional
period for certain bonds) is amended by striking ``the lesser of 5
percent of the proceeds of the issue or $100,000'' and inserting ``5
percent of the proceeds of the issue''.
SEC. 14562. EXCEPTION FROM REBATE FOR EARNINGS ON BONA FIDE DEBT
SERVICE FUND UNDER CONSTRUCTION BOND RULES.
Subparagraph (C) of section 148(f)(4) is amended by adding at the
end the following new clause:
``(xvii) Treatment of bona fide debt
service funds.--If the spending requirements of
clause (ii) are met with respect to the
available construction proceeds of a
construction issue, then paragraph (2) shall
not apply to earnings on a bona fide debt
service fund for such issue.''
SEC. 14563. REPEAL OF DEBT SERVICE-BASED LIMITATION ON INVESTMENT IN
CERTAIN NONPURPOSE INVESTMENTS.
Subsection (d) of section 148 (relating to special rules for
reasonably required reserve or replacement fund) is amended by striking
paragraph (3).
SEC. 14564. REPEAL OF EXPIRED PROVISIONS.
(a) Paragraph (2) of section 148(c) is amended by striking
subparagraph (B) and by redesignating subparagraphs (C), (D), and (E)
as subparagraphs (B), (C), and (D), respectively.
(b) Paragraph (4) of section 148(f) is amended by striking
subparagraph (E).
SEC. 14565. EFFECTIVE DATES.
The amendments made by this part shall apply to bonds issued after
the date of the enactment of this Act.
PART VI--INSURANCE PROVISIONS
SEC. 14571. TREATMENT OF CERTAIN INSURANCE CONTRACTS ON RETIRED LIVES.
(a) General Rule.--
(1) Paragraph (2) of section 817(d) (defining variable
contract) is amended by striking ``or'' at the end of
subparagraph (A), by striking ``and'' at the end of
subparagraph (B) and inserting ``or'', and by inserting after
subparagraph (B) the following new subparagraph:
``(C) provides for funding of insurance on retired
lives as described in section 807(c)(6), and''.
(2) Paragraph (3) of section 817(d) is amended by striking
``or'' at the end of subparagraph (A), by striking the period
at the end of subparagraph (B) and inserting ``, or'', and by
inserting after subparagraph (B) the following new
subparagraph:
``(C) in the case of funds held under a contract
described in paragraph (2)(C), the amounts paid in, or
the amounts paid out, reflect the investment return and
the market value of the segregated asset account.''
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
SEC. 14572. TREATMENT OF MODIFIED GUARANTEED CONTRACTS.
(a) General Rule.--Subpart E of part I of subchapter L of chapter 1
(relating to definitions and special rules) is amended by inserting
after section 817 the following new section:
``SEC. 817A. SPECIAL RULES FOR MODIFIED GUARANTEED CONTRACTS.
``(a) Computation of Reserves.--In the case of a modified
guaranteed contract, clause (ii) of section 807(e)(1)(A) shall not
apply.
``(b) Segregated Assets Under Modified Guaranteed Contracts Marked
to Market.--
``(1) In general.--In the case of any life insurance
company, for purposes of this subtitle--
``(A) Any gain or loss with respect to a segregated
asset shall be treated as ordinary income or loss, as
the case may be.
``(B) If any segregated asset is held by such
company as of the close of any taxable year--
``(i) such company shall recognize gain or
loss as if such asset were sold for its fair
market value on the last business day of such
taxable year, and
``(ii) any such 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. The
Secretary may provide by regulations for the
application of this subparagraph at times other than
the times provided in this subparagraph.
``(2) Segregated asset.--For purposes of paragraph (1), the
term `segregated asset' means any asset held as part of a
segregated account referred to in subsection (d)(1) under a
modified guaranteed contract.
``(c) Special Rule in Computing Life Insurance Reserves.--For
purposes of applying section 816(b)(1)(A) to any modified guaranteed
contract, an assumed rate of interest shall include a rate of interest
determined, from time to time, with reference to a market rate of
interest.
``(d) Modified Guaranteed Contract Defined.--For purposes of this
section, the term `modified guaranteed contract' means a contract not
described in section 817--
``(1) all or part of the amounts received under which are
allocated to an account which, pursuant to State law or
regulation, is segregated from the general asset accounts of
the company and is valued from time to time with reference to
market values,
``(2) which--
``(A) provides for the payment of annuities,
``(B) is a life insurance contract, or
``(C) is a pension plan contract which is not a
life, accident, or health, property, casualty, or
liability contract,
``(3) for which reserves are valued at market for annual
statement purposes, and
``(4) which provides for a net surrender value or a
policyholder's fund (as defined in section 807(e)(1)).
If only a portion of a contract is not described in section 817, such
portion shall be treated for purposes of this section as a separate
contract.
``(e) Regulations.--The Secretary may prescribe regulations--
``(1) to provide for the treatment of market value
adjustments under sections 72, 7702, 7702A, and 807(e)(1)(B),
``(2) to determine the interest rates applicable under
sections 807(c)(3), 807(d)(2)(B), and 812 with respect to a
modified guaranteed contract annually, in a manner appropriate
for modified guaranteed contracts and, to the extent
appropriate for such a contract, to modify or waive the
applicability of section 811(d),
``(3) to provide rules to limit ordinary gain or loss
treatment to assets constituting reserves for modified
guaranteed contracts (and not other assets) of the company,
``(4) to provide appropriate treatment of transfers of
assets to and from the segregated account, and
``(5) as may be necessary or appropriate to carry out the
purposes of this section.''
(b) Clerical Amendment.--The table of sections for subpart E of
part I of subchapter L of chapter 1 is amended by inserting after the
item relating to section 817 the following new item:
``Sec. 817A. Special rules for modified
guaranteed contracts.''
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
(2) Treatment of net adjustments.--In the case of any
taxpayer required by the amendments made by this section to
change its calculation of reserves to take into account market
value adjustments and to mark segregated assets to market for
any taxable year--
(A) such changes shall be treated as a change in
method of accounting initiated by the taxpayer,
(B) such changes shall be treated as made with the
consent of the Secretary, and
(C) the adjustments required by reason of section
481 of the Internal Revenue Code of 1986 shall be taken
into account as ordinary income or loss by the taxpayer
for the taxpayer's first taxable year beginning after
December 31, 1995.
SEC. 14573. MINIMUM TAX TREATMENT OF CERTAIN PROPERTY AND CASUALTY
INSURANCE COMPANIES.
(a) In General.--Clause (i) of section 56(g)(4)(B) (relating to
inclusion of items included for purposes of computing earnings and
profits) is amended by adding at the end the following new sentence:
``In the case of any insurance company taxable under section 831(b),
this clause shall not apply to any amount not described in section
834(b).''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 1995.
PART VII--OTHER PROVISIONS
SEC. 14581. CLOSING OF PARTNERSHIP TAXABLE YEAR WITH RESPECT TO
DECEASED PARTNER, ETC.
(a) General Rule.--Subparagraph (A) of section 706(c)(2) (relating
to disposition of entire interest) is amended to read as follows:
``(A) Disposition of entire interest.--The taxable
year of a partnership shall close with respect to a
partner whose entire interest in the partnership
terminates (whether by reason of death, liquidation, or
otherwise).''
(b) Clerical Amendment.--The paragraph heading for paragraph (2) of
section 706(c) is amended to read as follows:
``(2) Treatment of dispositions.--''.
(c) Effective Date.--The amendments made by this section shall
apply to partnership taxable years beginning after December 31, 1995.
SEC. 14582. CREDIT FOR SOCIAL SECURITY TAXES PAID WITH RESPECT TO
EMPLOYEE CASH TIPS.
(a) Reporting Requirement Not Considered.--Subparagraph (A) of
section 45B(b)(1) (relating to excess employer social security tax) is
amended by inserting ``(without regard to whether such tips are
reported under section 6053)'' after ``section 3121(q)''.
(b) Taxes Paid.--Subsection (d) of section 13443 of the Revenue
Reconciliation Act of 1993 is amended by inserting ``, with respect to
services performed before, on, or after such date'' after ``1993''.
(c) Effective Date.--The amendments made by this section shall take
effect as if included in the amendments made by, and the provisions of,
section 13443 of the Revenue Reconciliation Act of 1993.
SEC. 14583. DUE DATE FOR FIRST QUARTER ESTIMATED TAX PAYMENTS BY
PRIVATE FOUNDATIONS.
(a) In General.--Paragraph (3) of section 6655(g) is amended by
inserting after subparagraph (C) the following new subparagraph:
``(D) In the case of any private foundation,
subsection (c)(2) shall be applied by substituting `May
15' for `April 15' ''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 1995.
SEC. 14584. TREATMENT OF DUES PAID TO AGRICULTURAL OR HORTICULTURAL
ORGANIZATIONS.
(a) General Rule.--Section 512 (defining unrelated business taxable
income) is amended by adding at the end thereof the following new
subsection:
``(d) Treatment of Dues of Agricultural or Horticultural
Organizations.--
``(1) In general.--If--
``(A) an agricultural or horticultural organization
described in section 501(c)(5) requires annual dues to
be paid in order to be a member of such organization,
and
``(B) the amount of such required annual dues does
not exceed $100,
in no event shall any portion of such dues be treated as
derived by such organization from an unrelated trade or
business by reason of any benefits or privileges to which
members of such organization are entitled.
``(2) Indexation of $100 amount.--In the case of any
taxable year beginning in a calendar year after 1995, the $100
amount in paragraph (1) shall be increased by an amount equal
to--
``(A) $100, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, by substituting `calendar year
1994' for `calendar year 1992' in subparagraph (B)
thereof.
``(3) Dues.--For purposes of this subsection, the term
`dues' includes any payment required to be made in order to be
recognized by the organization as a member of the
organization.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 1994.
Subtitle F--Estates and Trusts
PART I--INCOME TAX PROVISIONS
SEC. 14601. CERTAIN REVOCABLE TRUSTS TREATED AS PART OF ESTATE.
(a) In General.--Subpart A of part I of subchapter J (relating to
estates, trusts, beneficiaries, and decedents) is amended by adding at
the end the following new section:
``SEC. 646. CERTAIN REVOCABLE TRUSTS TREATED AS PART OF ESTATE.
``(a) General Rule.--For purposes of this subtitle, if both the
executor of an estate and the trustee of a qualified revocable trust
elect the treatment provided in this section, such trust shall be
treated and taxed as part of such estate (and not as a separate trust)
for all taxable years of the estate ending after the date of the
decedent's death and before the applicable date.
``(b) Definitions.--For purposes of subsection (a)--
``(1) Qualified revocable trust.--The term `qualified
revocable trust' means any trust all of which was treated under
section 676 as owned by the decedent of the estate referred to
in subsection (a).
``(2) Applicable date.--The term `applicable date' means--
``(A) if no return of tax imposed by chapter 11 is
required to be filed, the date which is 2 years after
the date of the decedent's death, and
``(B) if such a return is required to be filed, the
date which is 6 months after the date of the final
determination of the liability for tax imposed by
chapter 11.
``(c) Election.--The election under subsection (a) shall be made
not later than the time prescribed for filing the return of tax imposed
by this chapter for the first taxable year of the estate (determined
with regard to extensions) and, once made, shall be irrevocable.''
(b) Comparable Treatment Under Generation-Skipping Tax.--Paragraph
(1) of section 2652(b) is amended by adding at the end the following
new sentence: ``Such term shall not include any trust during any period
the trust is treated as part of an estate under section 646.''
(c) Clerical Amendment.--The table of sections for such subpart A
is amended by adding at the end the following new item:
``Sec. 646. Certain revocable trusts
treated as part of estate.''
(d) Effective Date.--The amendments made by this section shall
apply with respect to estates of decedents dying after the date of the
enactment of this Act.
SEC. 14602. DISTRIBUTIONS DURING FIRST 65 DAYS OF TAXABLE YEAR OF
ESTATE.
(a) In General.--Subsection (b) of section 663 (relating to
distributions in first 65 days of taxable year) is amended by inserting
``an estate or'' before ``a trust'' each place it appears.
(b) Conforming Amendment.--Paragraph (2) of section 663(b) is
amended by striking ``the fiduciary of such trust'' and inserting ``the
executor of such estate or the fiduciary of such trust (as the case may
be)''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 14603. SEPARATE SHARE RULES AVAILABLE TO ESTATES.
(a) In General.--Subsection (c) of section 663 (relating to
separate shares treated as separate trusts) is amended--
(1) by inserting before the last sentence the following new
sentence: ``Rules similar to the rules of the preceding
provisions of this subsection shall apply to treat
substantially separate and independent shares of different
beneficiaries in an estate having more than 1 beneficiary as
separate estates.'', and
(2) by inserting ``or estates'' after ``trusts'' in the
last sentence.
(b) Conforming Amendment.--The subsection heading of section 663(c)
is amended by inserting ``Estates or'' before ``Trusts''.
(c) Effective Date.--The amendments made by this section shall
apply to estates of decedents dying after the date of the enactment of
this Act.
SEC. 14604. EXECUTOR OF ESTATE AND BENEFICIARIES TREATED AS RELATED
PERSONS FOR DISALLOWANCE OF LOSSES, ETC.
(a) Disallowance of Losses.--Subsection (b) of section 267
(relating to losses, expenses, and interest with respect to
transactions between related taxpayers) is amended by striking ``or''
at the end of paragraph (11), by striking the period at the end of
paragraph (12) and inserting ``; or'', and by adding at the end the
following new paragraph:
``(13) Except in the case of a sale or exchange in
satisfaction of a pecuniary bequest, an executor of an estate
and a beneficiary of such estate.''
(b) Ordinary Income From Gain From Sale of Depreciable Property.--
Subsection (b) of section 1239 is amended by striking the period at the
end of paragraph (2) and inserting ``, and'' and by adding at the end
the following new paragraph:
``(3) except in the case of a sale or exchange in
satisfaction of a pecuniary bequest, an executor of an estate
and a beneficiary of such estate.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 14605. LIMITATION ON TAXABLE YEAR OF ESTATES.
(a) In General.--Section 645 (relating to taxable year of trusts)
is amended to read as follows:
``SEC. 645. TAXABLE YEAR OF ESTATES AND TRUSTS.
``(a) Estates.--For purposes of this subtitle, the taxable year of
an estate shall be a year ending on October 31, November 30, or
December 31.
``(b) Trusts.--
``(1) In general.--For purposes of this subtitle, the
taxable year of any trust shall be the calendar year.
``(2) Exception for trusts exempt from tax and charitable
trusts.--Paragraph (1) shall not apply to a trust exempt from
taxation under section 501(a) or to a trust described in
section 4947(a)(1).''
(b) Clerical Amendment.--The table of sections for subpart A of
part I of subchapter J of chapter 1 is amended by striking the item
relating to section 645 and inserting the following new item:
``Sec. 645. Taxable year of estates and
trusts.''
(c) Effective Date.--The amendments made by this section shall
apply to estates of decedents dying after the date of the enactment of
this Act.
SEC. 14606. REPEAL OF CERTAIN THROWBACK RULES APPLICABLE TO DOMESTIC
TRUSTS.
(a) Accumulation Distributions.--
(1) In general.--Section 665 is amended by adding at the
end the following new subsection:
``(f) Accumulation Distributions After 1995.--For purposes of this
subpart, in the case of a trust other than a foreign trust, any
distribution in any taxable year beginning after December 31, 1995,
shall be computed without regard to any undistributed net income.''
(2) Conforming amendment.--Subsection (b) of section 665 is
amended by inserting ``except as provided in subsection (f),''
after ``subpart,''
(b) Property Transferred to Trusts.--Subsection (e) of section 644
is amended by striking ``or'' at the end of paragraph (3), by striking
the period at the end of paragraph (4) and inserting ``, or '', and by
adding at the end the following new paragraph:
``(5) in the case of a trust other than a foreign trust,
any sale or exchange of property after December 31, 1995.''
(c) Effective Dates.--
(1) Accumulation distribution.--The amendments made by
subsection (a) shall apply to distributions in taxable years
beginning after December 31, 1995.
(2) Transferred property.--The amendments made by
subsection (b) shall apply to sales or exchanges after December
31, 1995.
SEC. 14607. TREATMENT OF FUNERAL TRUSTS.
(a) In General.--Subpart F of part I of subchapter J of chapter 1
is amended by adding at the end the following new section:
``SEC. 684. TREATMENT OF FUNERAL TRUSTS.
``(a) In General.--In the case of a qualified funeral trust--
``(1) subparts B, C, D, and E shall not apply, and
``(2) no deduction shall be allowed by section 642(b).
``(b) Qualified Funeral Trust.--For purposes of this subsection,
the term `qualified funeral trust' means any trust (other than a
foreign trust) if--
``(1) the trust arises as a result of a contract with a
person engaged in the trade or business of providing funeral or
burial services or property necessary to provide such services,
``(2) the sole purpose of the trust is to hold, invest, and
reinvest funds in the trust and to use such funds solely to
make payments for such services or property for the benefit of
the beneficiaries of the trust,
``(3) the only beneficiaries of such trust are individuals
who have entered into contracts described in paragraph (1) to
have such services or property provided at their death,
``(4) the only contributions to the trust are contributions
by or for the benefit of such beneficiaries,
``(5) the trustee elects the application of this
subsection, and
``(6) the trust would (but for the election described in
paragraph (5)) be treated as owned by the beneficiaries under
subpart E.
``(c) Dollar Limitation on Contributions.--
``(1) In general.--The term `qualified funeral trust' shall
not include any trust which accepts contributions by or for the
benefit of an individual in excess of $5,000.
``(2) Related trusts.--For purposes of paragraph (1), all
trusts having trustees which are related persons shall be
treated as 1 trust. For purposes of the preceding sentence,
persons are related if--
``(A) the relationship between such persons would
result in the disallowance of losses under section 267
or 707(b),
``(B) such persons are treated as a single employer
under subsection (a) or (b) of section 52, or
``(C) the Secretary determines that treating such
persons as related is necessary to prevent avoidance of
the purposes of this section.
``(3) Inflation adjustment.--In the case of any contract
referred to in subsection (b)(1) which is entered into during
any calendar year after 1996, the dollar amount referred to
paragraph (1) shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for such calendar year, by
substituting `calendar year 1995' for `calendar year
1992' in subparagraph (B) thereof.
If any dollar amount after being increased under the preceding
sentence is not a multiple of $100, such dollar amount shall be
rounded to the nearest multiple of $100.
``(d) Application of Rate Schedule.--Section 1(e) shall be applied
to each qualified funeral trust by treating each beneficiary's interest
in each such trust as a separate trust.
``(e) Treatment of Amounts Refunded to Beneficiary on
Cancellation.--No gain or loss shall be recognized to a beneficiary
described in subsection (b)(3) of any qualified funeral trust by reason
of any payment from such trust to such beneficiary by reason of
cancellation of a contract referred to in subsection (b)(1). If any
payment referred to in the preceding sentence consists of property
other than money, the basis of such property in the hands of such
beneficiary shall be the same as the trust's basis in such property
immediately before the payment.
``(f) Simplified Reporting.--The Secretary may prescribe rules for
simplified reporting of all trusts having a single trustee.''
(b) Clerical Amendment.--The table of sections for subpart F of
part I of subchapter J of chapter 1 is amended by adding at the end the
following new item:
``Sec. 684. Treatment of funeral
trusts.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
PART II--ESTATE AND GIFT TAX PROVISIONS
SEC. 14611. CLARIFICATION OF WAIVER OF CERTAIN RIGHTS OF RECOVERY.
(a) Amendment to Section 2207A.--Paragraph (2) of section 2207A(a)
(relating to right of recovery in the case of certain marital deduction
property) is amended to read as follows:
``(2) Decedent may otherwise direct.--Paragraph (1) shall
not apply with respect to any property to the extent that the
decedent in his will (or a revocable trust) specifically
indicates an intent to waive any right of recovery under this
subchapter with respect to such property.''
(b) Amendment to Section 2207B.--Paragraph (2) of section 2207B(a)
(relating to right of recovery where decedent retained interest) is
amended to read as follows:
``(2) Decedent may otherwise direct.--Paragraph (1) shall
not apply with respect to any property to the extent that the
decedent in his will (or a revocable trust) specifically
indicates an intent to waive any right of recovery under this
subchapter with respect to such property.''
(c) Effective Date.--The amendments made by this section shall
apply with respect to the estates of decedents dying after the date of
the enactment of this Act.
SEC. 14612. ADJUSTMENTS FOR GIFTS WITHIN 3 YEARS OF DECEDENT'S DEATH.
(a) General Rule.--Section 2035 is amended to read as follows:
``SEC. 2035. ADJUSTMENTS FOR CERTAIN GIFTS MADE WITHIN 3 YEARS OF
DECEDENT'S DEATH.
``(a) Inclusion of Certain Property in Gross Estate.--If--
``(1) the decedent made a transfer (by trust or otherwise)
of an interest in any property, or relinquished a power with
respect to any property, during the 3-year period ending on the
date of the decedent's death, and
``(2) the value of such property (or an interest therein)
would have been included in the decedent's gross estate under
section 2036, 2037, 2038, or 2042 if such transferred interest
or relinquished power had been retained by the decedent on the
date of his death,
the value of the gross estate shall include the value of any property
(or interest therein) which would have been so included.
``(b) Inclusion of Gift Tax on Gifts Made During 3 Years Before
Decedent's Death.--The amount of the gross estate (determined without
regard to this subsection) shall be increased by the amount of any tax
paid under chapter 12 by the decedent or his estate on any gift made by
the decedent or his spouse during the 3-year period ending on the date
of the decedent's death.
``(c) Other Rules Relating to Transfers Within 3 Years of Death.--
``(1) In general.--For purposes of--
``(A) section 303(b) (relating to distributions in
redemption of stock to pay death taxes),
``(B) section 2032A (relating to special valuation
of certain farms, etc., real property), and
``(C) subchapter C of chapter 64 (relating to lien
for taxes),
the value of the gross estate shall include the value of all
property to the extent of any interest therein of which the
decedent has at any time made a transfer, by trust or
otherwise, during the 3-year period ending on the date of the
decedent's death.
``(2) Coordination with section 6166.--An estate shall be
treated as meeting the 35 percent of adjusted gross estate
requirement of section 6166(a)(1) only if the estate meets such
requirement both with and without the application of paragraph
(1).
``(3) Marital and small transfers.--Paragraph (1) shall not
apply to any transfer (other than a transfer with respect to a
life insurance policy) made during a calendar year to any donee
if the decedent was not required by section 6019 (other than by
reason of section 6019(2)) to file any gift tax return for such
year with respect to transfers to such donee.
``(d) Exception.--Subsection (a) shall not apply to any bona fide
sale for an adequate and full consideration in money or money's worth.
``(e) Treatment of Certain Transfers From Revocable Trusts.--For
purposes of this section and section 2038, any transfer from any
portion of a trust during any period that such portion was treated
under section 676 as owned by the decedent shall be treated as a
transfer made directly by the decedent.''
(b) Clerical Amendment.--The table of sections for part III of
subchapter A of chapter 11 is amended by striking ``gifts'' in the item
relating to section 2035 and inserting ``certain gifts''.
(c) Effective Date.--The amendments made by this section shall
apply to the estates of decedents dying after the date of the enactment
of this Act.
SEC. 14613. CLARIFICATION OF QUALIFIED TERMINABLE INTEREST RULES.
(a) General Rule.--
(1) Estate tax.--Subparagraph (B) of section 2056(b)(7)
(defining qualified terminable interest property) is amended by
adding at the end the following new clause:
``(vi) Treatment of certain income
distributions.--An income interest shall not
fail to qualify as a qualified income interest
for life solely because income for the period
after the last distribution date and on or
before the date of the surviving spouse's death
is not required to be distributed to the
surviving spouse or to the estate of the
surviving spouse.''
(2) Gift tax.--Paragraph (3) of section 2523(f) is amended
by striking ``and (iv)'' and inserting ``(iv), and (vi)''.
(b) Clarification of Subsequent Inclusions.--Section 2044 is
amended by adding at the end the following new subsection:
``(d) Clarification of Inclusion of Certain Income.--The amount
included in the gross estate under subsection (a) shall include the
amount of any income from the property to which this section applies
for the period after the last distribution date and on or before the
date of the decedent's death if such income is not otherwise included
in the decedent's gross estate.''
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply with respect to the estates of decedents dying, and gifts
made, after the date of the enactment of this Act.
(2) Application of section 2044 to transfers before date of
enactment.--In the case of the estate of any decedent dying
after the date of the enactment of this Act, if there was a
transfer of property on or before such date--
(A) such property shall not be included in the
gross estate of the decedent under section 2044 of the
Internal Revenue Code of 1986 if no prior marital
deduction was allowed with respect to such a transfer
of such property to the decedent, but
(B) such property shall be so included if such a
deduction was allowed.
SEC. 14614. TRANSITIONAL RULE UNDER SECTION 2056A.
(a) General Rule.--In the case of any trust created under an
instrument executed before the date of the enactment of the Revenue
Reconciliation Act of 1990, such trust shall be treated as meeting the
requirements of paragraph (1) of section 2056A(a) of the Internal
Revenue Code of 1986 if the trust instrument requires that all trustees
of the trust be individual citizens of the United States or domestic
corporations.
(b) Effective Date.--The provisions of subsection (a) shall take
effect as if included in the provisions of section 11702(g) of the
Revenue Reconciliation Act of 1990.
SEC. 14615. OPPORTUNITY TO CORRECT CERTAIN FAILURES UNDER SECTION
2032A.
(a) General Rule.--Paragraph (3) of section 2032A(d) (relating to
modification of election and agreement to be permitted) is amended to
read as follows:
``(3) Modification of election and agreement to be
permitted.--The Secretary shall prescribe procedures which
provide that in any case in which the executor makes an
election under paragraph (1) (and submits the agreement
referred to in paragraph (2)) within the time prescribed
therefor, but--
``(A) the notice of election, as filed, does not
contain all required information, or
``(B) signatures of 1 or more persons required to
enter into the agreement described in paragraph (2) are
not included on the agreement as filed, or the
agreement does not contain all required information,
the executor will have a reasonable period of time (not
exceeding 90 days) after notification of such failures to
provide such information or signatures.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to the estates of decedents dying after the date of the enactment
of this Act.
SEC. 14616. UNIFIED CREDIT OF DECEDENT INCREASED BY UNIFIED CREDIT OF
SPOUSE USED ON SPLIT GIFT INCLUDED IN DECEDENT'S GROSS
ESTATE.
(a) In General.--Section 2010 (relating to unified credit against
estate tax) is amended by adding at the end the following new
subsection:
``(d) Treatment of Unified Credit Used By Spouse on Split-Gift
Included in Decedent's Gross Estate.--If--
``(1) the decedent was the donor of any gift one-half of
which was considered under section 2513 as made by the
decedent's spouse, and
``(2) the amount of such gift is includible in the gross
estate of the decedent by reason of section 2035, 2036, 2037,
or 2038,
the amount of the credit allowable by subsection (a) to the estate of
the decedent shall be increased by the amount of the unified credit
allowed against the tax imposed by section 2501 on the amount of such
gift considered under section 2513 as made by such spouse.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to gifts made after the date of the enactment of this Act.
SEC. 14617. REFORMATION OF DEFECTIVE BEQUESTS, ETC., TO SPOUSE OF
DECEDENT.
(a) In General.--Subsection (b) of section 2056 (relating to
bequests, etc., to surviving spouse) is amended by adding at the end
the following new paragraph:
``(11) Reformations permitted.--
``(A) In general.--In the case of any interest in
property with respect to which a deduction would be
allowable under subsection (a) but for a provision of
this subsection, if--
``(i) the surviving spouse is entitled to
all of the income from the property for life,
``(ii) no person other than such spouse is
entitled to any distribution of such property
during such spouse's life, and
``(iii) there is a change of a governing
instrument (by reformation, amendment,
construction, or otherwise) as of the
applicable date which results in the
satisfaction of the requirements of such
provision as of the date of the decedent's
death,
the determination of whether such deduction is
allowable shall be made as of the applicable date.
``(B) Special rule where timely commencement of
reformation.--Clauses (i) and (ii) of subparagraph (A)
shall not apply to any interest if, not later than the
date described in subparagraph (C)(i), a judicial
proceeding is commenced to change such interest into an
interest which satisfies the requirements of the
provision by reason of which (but for this paragraph) a
deduction would not be allowable under subsection (a)
for such interest.
``(C) Applicable date.--For purposes of
subparagraph (A), the term `applicable date' means--
``(i) the last date (including extensions)
for filing the return of tax imposed by this
chapter, or
``(ii) if a judicial proceeding is
commenced to comply with such provision, the
time when the changes pursuant to such
proceeding are made.
``(D) Special rule.--If the change referred to in
subparagraph (A)(iii) is to qualify the passage of the
interest under paragraph (7), subparagraph (A) shall
apply only if the election under subparagraph (B)
thereof is made.
``(E) Statute of limitations.--If a judicial
proceeding described in subparagraph (C)(ii) is
commenced with respect to any interest, the period for
assessing any deficiency of tax attributable to such
interest shall not expire before the date 1 year after
the date on which the Secretary is notified that such
provision has been complied with or that such
proceeding has been terminated.''
(b) Comparable Rule for Gift Tax.--Section 2523 (relating to gift
to spouse) is amended by adding at the end the following new
subsection:
``(j) Reformations permitted.--Rules similar to the rules of
section 2056(b)(11) shall apply for purposes of this section.''
(c) Effective Date.--The amendments made by this section shall
apply to estates of decedents dying, and gifts made, after the date of
the enactment of this Act.
SEC. 14618. GIFTS MAY NOT BE REVALUED FOR ESTATE TAX PURPOSES AFTER
EXPIRATION OF STATUTE OF LIMITATIONS.
(a) In General.--Section 2001 (relating to imposition and rate of
estate tax) is amended by adding at the end the following new
subsection:
``(f) Valuation of Gifts.--If--
``(1) the time has expired within which a tax may be
assessed under chapter 12 (or under corresponding provisions of
prior laws) on the transfer of property by gift made during a
preceding calendar period (as defined in section 2502(b)), and
``(2) the value of such gift is shown on the return for
such preceding calendar period or is disclosed in such return,
or in a statement attached to the return, in a manner adequate
to apprise the Secretary of the nature of such gift,
the value of such gift shall, for purposes of computing the tax under
this chapter, be the value of such gift as finally determined for
purposes of chapter 12.''
(b) Modification of Application of Statute of Limitations.--
Paragraph (9) of section 6501(c) is amended to read as follows:
``(9) Gift tax on certain gifts not shown on return.--If
any gift of property the value of which (or any increase in
taxable gifts required under section 2701(d)) is required to be
shown on a return of tax imposed by chapter 12 (without regard
to section 2503(b)), and is not shown on such return, any tax
imposed by chapter 12 on such gift may be assessed, or a
proceeding in court for the collection of such tax may be begun
without assessment, at any time. The preceding sentence shall
not apply to any item which is disclosed in such return, or in
a statement attached to the return, in a manner adequate to
apprise the Secretary of the nature of such item. The value of
any item which is so disclosed may not be redetermined by the
Secretary after the expiration of the period under subsection
(a).''
(c) Declaratory Judgment Procedure for Determining Value of Gift.--
(1) In general.--Part IV of subchapter C of chapter 76 is
amended by inserting after section 7476 the following new
section:
``SEC. 7477. DECLARATORY JUDGMENTS RELATING TO VALUE OF CERTAIN GIFTS.
``(a) Creation of Remedy.--In a case of an actual controversy
involving a determination by the Secretary of the value of any gift
shown on the return of tax imposed by chapter 12 or disclosed on such
return or in any statement attached to such return, upon the filing of
an appropriate pleading, the Tax Court may make a declaration of the
value of such gift. Any such declaration shall have the force and
effect of a decision of the Tax Court and shall be reviewable as such.
``(b) Limitations.--
``(1) Petitioner.--A pleading may be filed under this
section only by the donor.
``(2) Exhaustion of administrative remedies.--The court
shall not issue a declaratory judgment or decree under this
section in any proceeding unless it determines that the
petitioner has exhausted all available administrative remedies
within the Internal Revenue Service.
``(3) Time for bringing action.--If the Secretary sends by
certified or registered mail notice of his determination as
described in subsection (a) to the petitioner, no proceeding
may be initiated under this section unless the pleading is
filed before the 91st day after the date of such mailing.''
(2) Clerical amendment.--The table of sections for such
part IV is amended by inserting after the item relating to
section 7476 the following new item:
``Sec. 7477. Declaratory judgments
relating to value of certain
gifts.''
(d) Conforming Amendment.--Subsection (c) of section 2504 is
amended by striking ``, and if a tax under this chapter or under
corresponding provisions of prior laws has been assessed or paid for
such preceding calendar period''.
(e) Effective Dates.--
(1) In general.--The amendments made by subsections (a) and
(c) shall apply to gifts made after the date of the enactment
of this Act.
(2) Subsection (b).--The amendment made by subsection (b)
shall apply to gifts made in calendar years ending after the
date of the enactment of this Act.
SEC. 14619. CLARIFICATIONS RELATING TO DISCLAIMERS.
(a) Partial Transfer-Type Disclaimers Permitted.--Paragraph (3) of
section 2518(c) (relating to certain transfers treated as disclaimers)
is amended by inserting ``(or an undivided portion of such interest)''
after ``entire interest in the property''.
(b) Retention of Interest by Decedent's Spouse Permitted in
Transfer-Type Disclaimers.--Paragraph (3) of section 2518(c) is amended
by adding at the end the following new flush sentence:
``For purposes of the preceding sentence, a written transfer by
the spouse of the decedent of property to a trust shall not
fail to be treated as a transfer of such spouse's interest in
such property by reason of such spouse having an interest in
such trust.''
(c) Disclaimers Are Effective For Income Tax Purposes.--Subsection
(a) of section 2518 is amended by inserting ``and subtitle A'' after
``this subtitle'' each place it appears.
(d) Effective Date.--The amendments made by this section shall
apply to transfers creating an interest in the person disclaiming, and
disclaimers, made after the date of the enactment of this Act.
SEC. 14620. CLARIFICATION OF TREATMENT OF SURVIVOR ANNUITIES UNDER
QUALIFIED TERMINABLE INTEREST RULES.
(a) In General.--Subparagraph (C) of section 2056(b)(7) is amended
by inserting ``(or, in the case of an interest in an annuity arising
under the community property laws of a State, included in the gross
estate of the decedent under section 2033)'' after ``section 2039''.
(b) Effective Date.--The amendment made by this section shall apply
to estates of decedents dying after the date of the enactment of this
Act.
SEC. 14621. TREATMENT UNDER QUALIFIED DOMESTIC TRUST RULES OF FORMS OF
OWNERSHIP WHICH ARE NOT TRUSTS.
(a) In General.--Subsection (c) of section 2056A (defining
qualified domestic trust) is amended by adding at the end the following
new paragraph:
``(3) Trust.--To the extent provided in regulations
prescribed by the Secretary, the term `trust' includes other
arrangements which have substantially the same effect as a trust.''
(b) Effective Date.--The amendment made by this section shall apply
to estates of decedents dying after the date of the enactment of this
Act.
SEC. 14622. AUTHORITY TO WAIVE REQUIREMENT OF UNITED STATES TRUSTEE FOR
QUALIFIED DOMESTIC TRUSTS.
(a) In General.--Subparagraph (A) of section 2056A(a)(1) is amended
by inserting ``except as provided in regulations prescribed by the
Secretary,'' before ``requires''.
(b) Effective Date.--The amendment made by this section shall apply
to estates of decedents dying after the date of the enactment of this
Act.
PART III--GENERATION-SKIPPING TAX PROVISIONS
SEC. 14631. SEVERING OF TRUSTS HOLDING PROPERTY HAVING AN INCLUSION
RATIO OF GREATER THAN ZERO.
(a) In General.--Subsection (a) of section 2642 (relating to
inclusion ratio) is amended by adding at the end the following new
paragraph:
``(3) Severing of trusts holding property having an
inclusion ratio of greater than zero.--
``(A) In general.--If a trust holding property
having an inclusion ratio of greater than zero is
severed in a qualified severance, at the election of
the trustee of such trust, the trusts resulting from
such severance shall be treated as separate trusts for
purposes of this chapter.
``(B) Qualified severance.--For purposes of
subparagraph (A), the term `qualified severance' means
the creation of 2 trusts from a single trust if each
property held by the single trust was divided between
the 2 created trusts such that one trust received an
interest in each such property equal to the applicable
fraction of the single trust. Such term includes any
other severance permitted under regulations prescribed
by the Secretary.
``(C) Election.--The election under this paragraph
shall be made at the time prescribed by the Secretary.
Such an election, once made, shall be irrevocable.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to severances after the date of the enactment of this Act.
SEC. 14632. CLARIFICATION OF WHO IS TRANSFEROR WHERE SUBSEQUENT GIFT BY
REASON OF POWER OF APPOINTMENT.
(a) In General.--Paragraph (1) of section 2652(a) (defining
transferor) is amended by adding at the end the following new sentence:
``A transferor described in subparagraph (A) shall not be treated as
the transferor of any property if another individual is treated as the
transferor of such property under subparagraph (B) by reason of the
exercise, release, or lapse of a general power of appointment with
respect to such property.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to the exercise, release, or lapse of a general power of
appointment after the date of the enactment of this Act.
SEC. 14633. TAXABLE TERMINATION NOT TO INCLUDE DIRECT SKIPS.
(a) In General.--Paragraph (1) of section 2612(a) (defining taxable
termination) is amended by adding at the end the following new flush
sentence:
``Such term shall not include a direct skip.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to generation-skipping transfers (as defined in section 2611 of
the Internal Revenue Code of 1986) after the date of the enactment of
this Act.
SEC. 14634. EXPANSION OF EXCEPTION FROM GENERATION-SKIPPING TRANSFER
TAX FOR TRANSFERS TO INDIVIDUALS WITH DECEASED PARENTS.
(a) In General.--Section 2651 (relating to generation assignment)
is amended by redesignating subsection (e) as subsection (f), and by
inserting after subsection (d) the following new subsection:
``(e) Special Rule for Persons With a Deceased Parent.--
``(1) In general.--For purposes of determining whether any
transfer is a generation-skipping transfer, if--
``(A) an individual is a descendant of a parent of
the transferor (or the transferor's spouse or former
spouse), and
``(B) such individual's parent who is a lineal
descendant of the parent of the transferor (or the
transferor's spouse or former spouse) is dead at the
time the transfer (from which an interest of such
individual is established or derived) is subject to a
tax imposed by chapter 11 or 12 upon the transferor
(and if there shall be more than 1 such time, then at
the earliest such time),
such individual shall be treated as if such individual were a
member of the generation which is 1 generation below the lower
of the transferor's generation or the generation assignment of
the youngest living ancestor of such individual who is also a
descendant of the parent of the transferor (or the transferor's
spouse or former spouse), and the generation assignment of any
descendant of such individual shall be adjusted accordingly.
``(2) Limited application of subsection to collateral
heirs.--This subsection shall not apply with respect to a
transfer to any individual who is not a lineal descendant of
the transferor (or the transferor's spouse or former spouse)
if, at the time of the transfer, such transferor has any living
lineal descendant.''
(b) Conforming Amendments.--
(1) Section 2612(c) (defining direct skip) is amended by
striking paragraph (2) and by redesignating paragraph (3) as
paragraph (2).
(2) Section 2612(c)(2) (as so redesignated) is amended by
striking ``section 2651(e)(2)'' and inserting ``section
2651(f)(2)''.
(c) Effective Date.--The amendments made by this section shall
apply to terminations, distributions, and transfers occurring after the
date of the enactment of this Act.
Subtitle G--Excise Tax Simplification
PART I--PROVISIONS RELATED TO DISTILLED SPIRITS, WINES, AND BEER
SEC. 14701. CREDIT OR REFUND FOR IMPORTED BOTTLED DISTILLED SPIRITS
RETURNED TO DISTILLED SPIRITS PLANT.
(a) In General.--Paragraph (1) of section 5008(c) (relating to
distilled spirits returned to bonded premises) is amended by striking
``withdrawn from bonded premises on payment or determination of tax''
and inserting ``on which tax has been determined or paid''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect at the beginning of the first calendar quarter beginning
more than 180 days after the date of the enactment of this Act.
SEC. 14702. AUTHORITY TO CANCEL OR CREDIT EXPORT BONDS WITHOUT
SUBMISSION OF RECORDS.
(a) In General.--Subsection (c) of section 5175 (relating to export
bonds) is amended by striking ``on the submission of'' and all that
follows and inserting ``if there is such proof of exportation as the
Secretary may by regulations require.''
(b) Effective Date.--The amendment made by subsection (a) shall
take effect at the beginning of the first calendar quarter beginning
more than 180 days after the date of the enactment of this Act.
SEC. 14703. REPEAL OF REQUIRED MAINTENANCE OF RECORDS ON PREMISES OF
DISTILLED SPIRITS PLANT.
(a) In General.--Subsection (c) of section 5207 (relating to
records and reports) is amended by striking ``shall be kept on the
premises where the operations covered by the record are carried on
and''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect at the beginning of the first calendar quarter beginning
more than 180 days after the date of the enactment of this Act.
SEC. 14704. FERMENTED MATERIAL FROM ANY BREWERY MAY BE RECEIVED AT A
DISTILLED SPIRITS PLANT.
(a) In General.--Paragraph (2) of section 5222(b) (relating to
production, receipt, removal, and use of distilling materials) is
amended to read as follows:
``(2) beer conveyed without payment of tax from brewery
premises, beer which has been lawfully removed from brewery
premises upon determination of tax, or''.
(b) Clarification of Authority To Permit Removal of Beer Without
Payment of Tax for Use as Distilling Material.--Section 5053 (relating
to exemptions) is amended by redesignating subsection (f) as subsection
(i) and by inserting after subsection (e) the following new subsection:
``(f) Removal for Use as Distilling Material.--Subject to such
regulations as the Secretary may prescribe, beer may be removed from a
brewery without payment of tax to any distilled spirits plant for use
as distilling material.''
(c) Clarification of Refund and Credit of Tax.--Section 5056
(relating to refund and credit of tax, or relief from liability) is
amended--
(1) by redesignating subsection (c) as subsection (d) and
by inserting after subsection (b) the following new subsection:
``(c) Beer Received at a Distilled Spirits Plant.--Any tax paid by
any brewer on beer produced in the United States may be refunded or
credited to the brewer, without interest, or if the tax has not been
paid, the brewer may be relieved of liability therefor, under
regulations as the Secretary may prescribe, if such beer is received on
the bonded premises of a distilled spirits plant pursuant to the
provisions of section 5222(b)(2), for use in the production of
distilled spirits.'', and
(2) by striking ``or rendering unmerchantable'' in
subsection (d) (as so redesignated) and inserting ``rendering
unmerchantable, or receipt on the bonded premises of a
distilled spirits plant''.
(d) Effective Date.--The amendments made by this section shall take
effect at the beginning of the first calendar quarter beginning more
than 180 days after the date of the enactment of this Act.
SEC. 14705. REPEAL OF REQUIREMENT FOR WHOLESALE DEALERS IN LIQUORS TO
POST SIGN.
(a) In General.--Section 5115 (relating to sign required on
premises) is hereby repealed.
(b) Conforming Amendments.--
(1) Subsection (a) of section 5681 is amended by striking
``, and every wholesale dealer in liquors,'' and by striking
``section 5115(a) or''.
(2) Subsection (c) of section 5681 is amended--
(A) by striking ``or wholesale liquor
establishment, on which no sign required by section
5115(a) or'' and inserting ``on which no sign required
by'', and
(B) by striking ``or wholesale liquor
establishment, or who'' and inserting ``or who''.
(3) The table of sections for subpart D of part II of
subchapter A of chapter 51 is amended by striking the item
relating to section 5115.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
SEC. 14706. REFUND OF TAX ON WINE RETURNED TO BOND NOT LIMITED TO
UNMERCHANTABLE WINE.
(a) In General.--Subsection (a) of section 5044 (relating to refund
of tax on unmerchantable wine) is amended by striking ``as
unmerchantable''.
(b) Conforming Amendments.--
(1) Section 5361 is amended by striking ``unmerchantable''.
(2) The section heading for section 5044 is amended by
striking ``unmerchantable''.
(3) The item relating to section 5044 in the table of
sections for subpart C of part I of subchapter A of chapter 51
is amended by striking ``unmerchantable''.
(c) Effective Date.--The amendments made by this section shall take
effect at the beginning of the first calendar quarter beginning more
than 180 days after the date of the enactment of this Act.
SEC. 14707. USE OF ADDITIONAL AMELIORATING MATERIAL IN CERTAIN WINES.
(a) In General.--Subparagraph (D) of section 5384(b)(2) (relating
to ameliorated fruit and berry wines) is amended by striking
``loganberries, currants, or gooseberries,'' and inserting ``any fruit
or berry with a natural fixed acid of 20 parts per thousand or more
(before any correction of such fruit or berry)''.
(b) Effective Date.--The amendment made by this section shall take
effect at the beginning of the first calendar quarter beginning more
than 180 days after the date of the enactment of this Act.
SEC. 14708. DOMESTICALLY PRODUCED BEER MAY BE WITHDRAWN FREE OF TAX FOR
USE OF FOREIGN EMBASSIES, LEGATIONS, ETC.
(a) In General.--Section 5053 (relating to exemptions) is amended
by inserting after subsection (f) the following new subsection:
``(g) Removals for Use of Foreign Embassies, Legations, Etc.--
``(1) In general.--Subject to such regulations as the
Secretary may prescribe--
``(A) beer may be withdrawn from the brewery
without payment of tax for transfer to any customs
bonded warehouse for entry pending withdrawal therefrom
as provided in subparagraph (B), and
``(B) beer entered into any customs bonded
warehouse under subparagraph (A) may be withdrawn for
consumption in the United States by, and for the
official and family use of, such foreign governments,
organizations, and individuals as are entitled to
withdraw imported beer from such warehouses free of
tax.
Beer transferred to any customs bonded warehouse under
subparagraph (A) shall be entered, stored, and accounted for in
such warehouse under such regulations and bonds as the
Secretary may prescribe, and may be withdrawn therefrom by such
governments, organizations, and individuals free of tax under
the same conditions and procedures as imported beer.
``(2) Other rules to apply.--Rules similar to the rules of
paragraphs (2) and (3) of section 5362(e) of such section shall
apply for purposes of this subsection.''
(b) Effective Date.--The amendment made by subsection (a) shall
take effect at the beginning of the first calendar quarter beginning
more than 180 days after the date of the enactment of this Act.
SEC. 14709. BEER MAY BE WITHDRAWN FREE OF TAX FOR DESTRUCTION.
(a) In General.--Section 5053 is amended by inserting after
subsection (g) the following new subsection:
``(h) Removals for Destruction.--Subject to such regulations as the
Secretary may prescribe, beer may be removed from the brewery without
payment of tax for destruction.''
(b) Effective Date.--The amendment made by subsection (a) shall
take effect at the beginning of the first calendar quarter beginning
more than 180 days after the date of the enactment of this Act.
SEC. 14710. AUTHORITY TO ALLOW DRAWBACK ON EXPORTED BEER WITHOUT
SUBMISSION OF RECORDS.
(a) In General.--The first sentence of section 5055 (relating to
drawback of tax on beer) is amended by striking ``found to have been
paid'' and all that follows and inserting ``paid on such beer if there
is such proof of exportation as the Secretary may by regulations
require.''
(b) Effective Date.--The amendment made by subsection (a) shall
take effect at the beginning of the first calendar quarter beginning
more than 180 days after the date of the enactment of this Act.
SEC. 14711. TRANSFER TO BREWERY OF BEER IMPORTED IN BULK WITHOUT
PAYMENT OF TAX.
(a) In General.--Part II of subchapter G of chapter 51 is amended
by adding at the end the following new section:
``SEC. 5418. BEER IMPORTED IN BULK.
``Beer imported or brought into the United States in bulk
containers may, under such regulations as the Secretary may prescribe,
be withdrawn from customs custody and transferred in such bulk
containers to the premises of a brewery without payment of the internal
revenue tax imposed on such beer. The proprietor of a brewery to which
such beer is transferred shall become liable for the tax on the beer
withdrawn from customs custody under this section upon release of the
beer from customs custody, and the importer, or the person bringing
such beer into the United States, shall thereupon be relieved of the
liability for such tax.''
(b) Clerical Amendment.--The table of sections for such part II is
amended by adding at the end the following new item:
``Sec. 5418. Beer imported in bulk.''
(c) Effective Date.--The amendments made by this section shall take
effect at the beginning of the first calendar quarter beginning more
than 180 days after the date of the enactment of this Act.
PART II--CONSOLIDATION OF TAXES ON AVIATION GASOLINE
SEC. 14721. CONSOLIDATION OF TAXES ON AVIATION GASOLINE.
(a) In General.--Subparagraph (A) of section 4081(a)(2) (relating
to imposition of tax on gasoline and diesel fuel) is amended by
redesignating clause (ii) as clause (iii) and by striking clause (i)
and inserting the following:
``(i) in the case of gasoline other than
aviation gasoline, 18.3 cents per gallon,
``(ii) in the case of aviation gasoline,
19.3 cents per gallon, and''.
(b) Termination.--Subsection (d) of section 4081 is amended by
redesignating paragraph (2) as paragraph (3) and by inserting after
paragraph (1) the following new paragraph:
``(2) Aviation gasoline.--On and after January 1, 1996, the
rate specified in subsection (a)(2)(A)(ii) shall be 4.3 cents
per gallon.''
(c) Repeal of Retail Level Tax.--
(1) Subsection (c) of section 4041 is amended by striking
paragraphs (2) and (3) and by redesignating paragraphs (4) and
(5) as paragraphs (2) and (3), respectively.
(2) Paragraph (3) of section 4041(c), as redesignated by
paragraph (1), is amended by striking ``paragraphs (1) and
(2)'' and inserting ``paragraph (1)''.
(d) Conforming Amendments.--
(1) Paragraph (1) of section 4041(k) is amended by adding
``and'' at the end of subparagraph (A), by striking ``, and''
at the end of subparagraph (B) and inserting a period, and by
striking subparagraph (C).
(2) Paragraph (1) of section 4081(d) is amended by striking
``each rate of tax specified in subsection (a)(2)(A)'' and
inserting ``the rates of tax specified in clauses (i) and (iii)
of subsection (a)(2)(A)''.
(3) Sections 6421(f)(2)(A) and 9502(f)(1)(A) are each
amended by striking ``section 4041(c)(4)'' and inserting
``section 4041(c)(2)''.
(4) Paragraph (2) of section 9502(b) is amended by striking
``14 cents'' and inserting ``15 cents''.
(e) Effective Date.--The amendments made by this section shall take
effect on January 1, 1996.
(f) Floor Stocks Tax.--
(1) Imposition of tax.--In the case of aviation gasoline on
which tax was imposed under section 4081 of the Internal
Revenue Code of 1986 before January 1, 1996, and which is held
on such date by any person, there is hereby imposed a floor
stocks tax of 1 cent per gallon of such gasoline.
(2) Liability for tax and method of payment.--
(A) Liability for tax.--A person holding aviation
gasoline on January 1, 1996, to which the tax imposed
by paragraph (1) applies shall be liable for such tax.
(B) Method of payment.--The tax imposed by
paragraph (1) shall be paid in such manner as the
Secretary shall prescribe.
(C) Time for payment.--The tax imposed by paragraph
(1) shall be paid on or before June 30, 1996.
(3) Definitions.--For purposes of this subsection:
(A) Held by a person.--Gasoline shall be considered
as ``held by a person'' if title thereto has passed to
such person (whether or not delivery to the person has
been made).
(B) Secretary.--The term ``Secretary'' means the
Secretary of the Treasury or his delegate.
(4) Exception for exempt uses.--The tax imposed by
paragraph (1) shall not apply to gasoline held by any person
exclusively for any use to the extent a credit or refund of the
tax imposed by section 4081 of such Code is allowable for such
use.
(5) Exception for fuel held in aircraft tank.--No tax shall
be imposed by paragraph (1) on aviation gasoline held in the
tank of an aircraft.
(6) Exception for certain amounts of fuel.--
(A) In general.--No tax shall be imposed by
paragraph (1) on aviation gasoline held on January 1,
1996, by any person if the aggregate amount of aviation
gasoline held by such person on such date does not
exceed 6,000 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 Secretary 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.--
(i) Corporations.--In the case of a
controlled group, the 6,000 gallon amount in
subparagraph (A) shall be apportioned among the
component members of such group in such manner
as the Secretary shall by regulations
prescribe. For purposes of the preceding
sentence, the term ``controlled group'' has the
meaning given to such term by subsection (a) of
section 1563 of such Code; except that for such
purposes the phrase ``more than 50 percent''
shall be substituted for the phrase ``at least
80 percent'' each place it appears in such
subsection.
(ii) Nonincorporated persons under common
control.--Under regulations prescribed by the
Secretary, principles similar to the principles
of clause (i) shall apply to a group under
common control where 1 or more of the members
is not a corporation.
(7) Other laws applicable.--All 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
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.
PART III--OTHER EXCISE TAX PROVISIONS
SEC. 14731. AUTHORITY TO GRANT EXEMPTIONS FROM REGISTRATION
REQUIREMENTS.
(a) In General.--The first sentence of section 4222 (relating to
registration) is amended to read as follows: ``Except as provided in
subsection (b), section 4221 shall not apply with respect to the sale
of any article by or to any person who is required by the Secretary to
be registered under this section and who is not so registered.''
(b) Effective Date.--The amendment made by subsection (a) shall
apply to sales after the 180th day after the date of the enactment of
this Act.
SEC. 14732. CERTAIN COMBINATIONS NOT TREATED AS MANUFACTURE UNDER
RETAIL SALES TAX ON HEAVY TRUCKS.
(a) In General.--Paragraph (2) of section 4052(c) (relating to
certain combinations not treated as manufacture) is amended by striking
``or wood or metal floor'' and inserting ``wood or metal floor, or a
power take-off and dump body''.
(b) Removal of Fifth Wheel.--Paragraph (1) of section 4052(c) is
amended by inserting before the period ``or the removal of any coupling
device (including any fifth wheel)''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
SEC. 14733. EXEMPTION FROM DIESEL FUEL DYEING REQUIREMENTS WITH RESPECT
TO CERTAIN STATES.
(a) In General.--Section 4082 (relating to exemptions for diesel
fuel) is amended by redesignating subsections (c) and (d) as
subsections (d) and (e), respectively, and by inserting after
subsection (b) the following new subsection:
``(c) Exception to Dyeing Requirements.--Paragraph (2) of
subsection (a) shall not apply with respect to any diesel fuel--
``(1) removed, entered, or sold in a State for ultimate
sale or use in an area of such State which is exempted from the
fuel dyeing requirements under subsection (i) of section 211 of
the Clean Air Act (as in effect on the date of the enactment of
this subsection) by the Administrator of the Environmental
Protection Agency under paragraph (4) of such subsection, and
``(2) the use of which is certified pursuant to regulations
issued by the Secretary.''
(b) Effective Date.--The amendments made by this section shall take
effect on the first day of the first calendar quarter beginning after
the date of the enactment of this Act.
SEC. 14734. REPEAL OF EXPIRED PROVISIONS.
(a) Piggy-Back Trailers.--Section 4051 is amended by striking
subsection (d) and by redesignating subsection (e) as subsection (d).
(b) Deep Seabed Mining.--
(1) Subchapter F of chapter 36 (relating to tax on removal
of hard mineral resources from deep seabed) is hereby repealed.
(2) The table of subchapters for chapter 36 is amended by
striking the item relating to subchapter F.
Subtitle H--Administrative Provisions
PART I--GENERAL PROVISIONS
SEC. 14801. REPEAL OF AUTHORITY TO DISCLOSE WHETHER PROSPECTIVE JUROR
HAS BEEN AUDITED.
(a) In General.--Subsection (h) of section 6103 (relating to
disclosure to certain Federal officers and employees for purposes of
tax administration, etc.) is amended by striking paragraph (5) and by
redesignating paragraph (6) as paragraph (5).
(b) Conforming Amendment.--Paragraph (4) of section 6103(p) is
amended by striking ``(h)(6)'' each place it appears and inserting
``(h)(5)''.
(c) Effective Date.--The amendments made by this section shall
apply to judicial proceedings pending on, or commenced after, the date
of the enactment of this Act.
SEC. 14802. CLARIFICATION OF STATUTE OF LIMITATIONS.
(a) In General.--Subsection (a) of section 6501 (relating to
limitations on assessment and collection) is amended by adding at the
end the following new sentence: ``For purposes of this chapter, the
term `return' means the return required to be filed by the taxpayer
(and does not include a return of any person from whom the taxpayer has
received an item of income, gain, loss, deduction, or credit).''
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
SEC. 14803. CERTAIN NOTICES DISREGARDED UNDER PROVISION INCREASING
INTEREST RATE ON LARGE CORPORATE UNDERPAYMENTS.
(a) General Rule.--Subparagraph (B) of section 6621(c)(2) (defining
applicable date) is amended by adding at the end the following new
clause:
``(iii) Exception for letters or notices
involving small amounts.--For purposes of this
paragraph, any letter or notice shall be
disregarded if the amount of the deficiency or
proposed deficiency (or the assessment or
proposed assessment) set forth in such letter
or notice is not greater than $100,000
(determined by not taking into account any
interest, penalties, or additions to tax).''
(b) Effective Date.--The amendment made by subsection (a) shall
apply for purposes of determining interest for periods after December
31, 1995.
SEC. 14804. CLARIFICATION OF AUTHORITY TO WITHHOLD PUERTO RICO INCOME
TAXES FROM SALARIES OF FEDERAL EMPLOYEES.
(a) In General.--Subsection (c) of section 5517 of title 5, United
States Code, is amended by striking ``or territory or possession'' and
inserting ``, territory, possession, or commonwealth''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act.
PART II--TAX COURT PROCEDURES
SEC. 14811. OVERPAYMENT DETERMINATIONS OF TAX COURT.
(a) Appeal of Order.--Paragraph (2) of section 6512(b) (relating to
jurisdiction to enforce) is amended by adding at the end the following
new sentence: ``An order of the Tax Court disposing of a motion under
this paragraph shall be reviewable in the same manner as a decision of
the Tax Court, but only with respect to the matters determined in such
order.''
(b) Denial of Jurisdiction Regarding Certain Credits and
Reductions.--Subsection (b) of section 6512 (relating to overpayment
determined by Tax Court) is amended by adding at the end the following
new paragraph:
``(4) Denial of jurisdiction regarding certain credits and
reductions.--The Tax Court shall have no jurisdiction under
this subsection to restrain or review any credit or reduction
made by the Secretary under section 6402.''
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
SEC. 14812. AWARDING OF ADMINISTRATIVE COSTS.
(a) Right To Appeal Tax Court Decision.--Subsection (f) of section
7430 (relating to right of appeal) is amended by adding at the end the
following new paragraph:
``(3) Appeal of tax court decision.--An order of the Tax
Court disposing of a petition under paragraph (2) shall be
reviewable in the same manner as a decision of the Tax Court,
but only with respect to the matters determined in such
order.''
(b) Period for Applying to IRS for Costs.--Subsection (b) of
section 7430 (relating to limitations) is amended by adding at the end
the following new paragraph:
``(5) Period for applying to irs for administrative
costs.--An award may be made under subsection (a) by the
Internal Revenue Service for reasonable administrative costs
only if the prevailing party files an application with the
Internal Revenue Service for such costs before the 91st day
after the date on which the final decision of the Internal
Revenue Service as to the determination of the tax, interest,
or penalty is mailed to such party.''
(c) Period for Petitioning of Tax Court for Review of Denial of
Costs.--Paragraph (2) of section 7430(f) (relating to right of appeal)
is amended--
(1) by striking ``appeal to'' and inserting ``the filing of
a petition for review with'', and
(2) by adding at the end the following new sentence: ``If
the Secretary sends by certified or registered mail a notice of
such decision to the petitioner, no proceeding in the Tax Court
may be initiated under this paragraph unless such petition is
filed before the 91st day after the date of such mailing.''
(d) Effective Date.--The amendments made by this section shall
apply to civil actions or proceedings commenced after the date of the
enactment of this Act.
SEC. 14813. REDETERMINATION OF INTEREST PURSUANT TO MOTION.
(a) In General.--Paragraph (3) of section 7481(c) (relating to
jurisdiction over interest determinations) is amended by striking
``petition'' and inserting ``motion''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
SEC. 14814. APPLICATION OF NET WORTH REQUIREMENT FOR AWARDS OF
LITIGATION COSTS.
(a) In General.--Paragraph (4) of section 7430(c) (defining
prevailing party) is amended by adding at the end the following new
subparagraph:
``(C) Special rules for applying net worth
requirement.--In applying the requirements of section
2412(d)(2)(B) of title 28, United States Code, for
purposes of subparagraph (A)(iii) of this paragraph--
``(i) the net worth limitation in clause
(i) of such section shall apply to--
``(I) an estate but shall be
determined as of the date of the
decedent's death, and
``(II) a trust but shall be
determined as of the last day of the
taxable year involved in the
proceeding, and
``(ii) individuals filing a joint return
shall be treated as 1 individual for purposes
of clause (i) of such section, except in the
case of a spouse relieved of liability under
section 6013(e).''
(b) Effective Date.--The amendment made by this section shall apply
to proceedings commenced after the date of the enactment of this Act.
PART III--AUTHORITY FOR CERTAIN COOPERATIVE AGREEMENTS
SEC. 14821. COOPERATIVE AGREEMENTS WITH STATE TAX AUTHORITIES.
(a) General Rule.--Chapter 77 (relating to miscellaneous
provisions) is amended by adding at the end the following new section:
``SEC. 7524. COOPERATIVE AGREEMENTS WITH STATE TAX AUTHORITIES.
``(a) Authorization of Agreements.--The Secretary is hereby
authorized to enter into cooperative agreements with State tax
authorities for purposes of enhancing joint tax administration. Such
agreements may provide for--
``(1) joint filing of Federal and State income tax returns,
``(2) single processing of such returns,
``(3) joint collection of taxes (other than Federal income
taxes), and
``(4) such other provisions as may enhance joint tax
administration.
``(b) Services on Reimbursable Basis.--Any agreement under
subsection (a) may require reimbursement for services provided by
either party to the agreement.
``(c) Availability of Funds.--Any funds appropriated for purposes
of the administration of this title shall be available for purposes of
carrying out the Secretary's responsibility under an agreement entered
into under subsection (a). Any reimbursement received pursuant to such
an agreement shall be credited to the amount so appropriated.
``(d) State Tax Authority.--For purposes of this section, the term
`State tax authority' means agency, body, or commission referred to in
section 6103(d)(1).''
(b) Clerical Amendment.--The table of sections for chapter 77 is
amended by adding at the end the following new item:
``Sec. 7524. Cooperative agreements with
State tax authorities.''
TITLE XV--PRESERVING, PROTECTING, AND STRENGTHENING MEDICARE
H.R. 2425 as passed the House of Representatives is hereby enacted
into law.
TITLE XVI--TRANSFORMATION OF THE MEDICAID PROGRAM
SEC. 16000. SHORT TITLE.
This title may be cited as the ``Medicaid Transformation Act of
1995''.
SEC. 16001. TRANSFORMATION OF MEDICAID PROGRAM.
The Social Security Act is amended by adding at the end the
following new title:
``TITLE XXI--MEDIGRANT PROGRAM FOR LOW-INCOME INDIVIDUALS AND FAMILIES
``table of contents of title
``Sec. 2100. Purpose; State MediGrant plans.
``Part A--Objectives, Goals, and Performance Under State Plans
``Sec. 2101. Description of strategic objectives and performance goals.
``Sec. 2102. Annual reports.
``Sec. 2103. Periodic, independent evaluations.
``Sec. 2104. Description of process for MediGrant plan development.
``Sec. 2105. Consultation in MediGrant plan development.
``Sec. 2106. MediGrant Task Force.
``Part B--Eligibility, Benefits, and Set-asides
``Sec. 2111. General description of eligibility and benefits.
``Sec. 2112. Set-asides of funds for population groups.
``Sec. 2113. Premiums and cost-sharing.
``Sec. 2114. Description of process for developing capitation payment
rates.
``Sec. 2115. Preventing spousal impoverishment.
``Sec. 2116. Construction.
``Sec. 2117. Limitations on causes of action.
``Part C--Payments to States
``Sec. 2121. Allotment of funds among States.
``Sec. 2122. Payments to States.
``Sec. 2123. Limitation on use of funds; disallowance.
``Part D--Program Integrity and Quality
``Sec. 2131. Use of audits to achieve fiscal integrity.
``Sec. 2132. Fraud prevention program.
``Sec. 2133. Information concerning sanctions taken by State licensing
authorities against health care
practitioners and providers.
``Sec. 2134. State MediGrant fraud control units.
``Sec. 2135. Recoveries from third parties and others.
``Sec. 2136. Assignment of rights of payment.
``Sec. 2137. Quality assurance standards for nursing facilities.
``Sec. 2138. Other provisions promoting program integrity.
``Part E--Establishment and Amendment of State MediGrant Plans
``Sec. 2151. Submittal and approval of MediGrant plans.
``Sec. 2152. Submittal and approval of plan amendments.
``Sec. 2153. Process for State withdrawal from program.
``Sec. 2154. Sanctions for substantial noncompliance.
``Sec. 2155. Secretarial authority.
``Part F--General Provisions
``Sec. 2171. Definitions.
``Sec. 2172. Treatment of territories.
``Sec. 2173. Description of treatment of Indian Health Service
facilities.
``Sec. 2174. Application of certain general provisions.
``Sec. 2175. MediGrant master drug rebate agreements.
``SEC. 2100. PURPOSE; STATE MEDIGRANT PLANS.
``(a) Purpose.--The purpose of this title is to provide block
grants to States to enable them to provide medical assistance to low-
income individuals and families in a more effective, efficient, and
responsive manner.
``(b) State Plan Required.--A State is not eligible for payment
under section 2122 of this title unless the State has submitted to the
Secretary under part E a plan (in this title referred to as a
`MediGrant plan') that--
``(1) sets forth how the State intends to use the funds
provided under this title to provide medical assistance to
needy individuals and families consistent with the provisions
of this title, and
``(2) is approved under such part.
``(c) Continued Approval.--An approved MediGrant plan shall
continue in effect unless and until--
``(1) the State amends the plan under section 2152,
``(2) the State terminates participation under this title
under section 2153, or
``(3) the Secretary finds substantial noncompliance of the
plan with the requirements of this title under section 2154.
``(d) State Entitlement.--This title constitutes budget authority
in advance of appropriations Acts, and represents the obligation of the
Federal Government to provide for the payment to States of amounts
provided under part C.
``Part A--Objectives, Goals, and Performance Under State Plans
``SEC. 2101. DESCRIPTION OF STRATEGIC OBJECTIVES AND PERFORMANCE GOALS.
``(a) Description.--A MediGrant plan shall include a description of
the strategic objectives and performance goals the State has
established for providing health care services to low-income
populations under this title, including a general description of the
manner in which the plan is designed to meet these objectives and
goals.
``(b) Certain Objectives and Goals Required.--A MediGrant plan
shall include strategic objectives and performance goals relating to
rates of childhood immunizations and reductions in infant mortality and
morbidity.
``(c) Considerations.--In specifying these objectives and goals the
State may consider factors such as the following:
``(1) The State's priorities with respect to such areas as
providing assistance to low-income populations.
``(2) The State's priorities with respect to the general
public health and the health status of individuals eligible for
assistance under the MediGrant plan.
``(3) The State's financial resources, the particular
economic conditions in the State, and relative adequacy of the
health care infrastructure in different regions of the State.
``(d) Performance Measures.--To the extent practicable--
``(1) one or more performance goals shall be established by
the State for each strategic objective identified in the
MediGrant plan; and
``(2) the MediGrant plan shall describe, how program
performance will be--
``(A) measured through objective, independently
verifiable means, and
``(B) compared against performance goals, in order
to determine the State's performance under this title.
``(e) Period Covered.--
``(1) Strategic objectives.--The strategic objectives shall
cover a period of not less than 5 years and shall be updated
and revised at least every 3 years.
``(2) Performance goals.--The performance goals shall be
established for dates that are not more than 3 years apart.
``SEC. 2102. ANNUAL REPORTS.
``(a) In General.--In the case of a State with a MediGrant plan
that is in effect for part or all of a fiscal year, no later than March
31 following such fiscal year (or March 31, 1998, in the case of fiscal
year 1996) the State shall prepare and submit to the Secretary and the
Congress a report on program activities and performance under this
title for such fiscal year.
``(b) Contents.--Each annual report under this section for a fiscal
year shall include the following:
``(1) Expenditure and beneficiary summary.--
``(A) Initial summary.--For the report for fiscal
year 1997 (and, if applicable, fiscal year 1996), a
summary of all expenditures under the MediGrant plan
during the fiscal year (and during any portions of
fiscal year 1996 during which the MediGrant plan was in
effect under this title) as follows:
``(i) Aggregate medical assistance
expenditures, disaggregated to the extent
required to determine compliance with the set-
aside requirements of subsections (a) through
(c) section 2112 and to compute the case mix
index under section 2121(d)(3).
``(ii) For each general category of
eligible individuals (specified in subsection
(c)(1), aggregate medical assistance
expenditures and the total and average number
of eligible individuals under the MediGrant
plan.
``(iii) By each general category of
eligible individuals, total expenditures for
each of the categories of health care items and
services (specified in subsection (c)(2)) which
are covered under the MediGrant plan and
provided on a fee-for-service basis.
``(iv) By each general category of eligible
individuals, total expenditures for payments to
capitated health care organizations (as defined
in section 2114(c)(1)).
``(v) Total administrative expenditures.
``(B) Subsequent summaries.--For reports for each
succeeding fiscal year, a summary of--
``(i) all expenditures under the MediGrant
plan consistent with the reporting format
specified by the MediGrant Task Force under
section 2106(d)(1), and
``(ii) the total and average number of
eligible individuals under the MediGrant plan
for each general category of eligible
individuals.
``(2) Utilization summary.--
``(A) Initial summary.--For the report for fiscal
year 1997 (and, if applicable, fiscal year 1996),
summary statistics on the utilization of health care
services under the MediGrant plan during the year (and
during any portions of fiscal year 1996 during which
the MediGrant plan was in effect under this title) as
follows:
``(i) For each general category of eligible
individuals and for each of the categories of
health care items and services which are
covered under the MediGrant plan and provided
on a fee-for-service basis, the number and
percentage of persons who received such a type
of service or item during the period covered by
the report.
``(ii) Summary of health care utilization
data reported to the State by capitated health
care organizations.
``(B) Subsequent summaries.--For reports for each
succeeding fiscal year, summary statistics on the
utilization of health care services under the MediGrant
plan consistent with the reporting format specified by
the MediGrant Task Force under section 2106(d)(1).
``(3) Achievement of performance goals.--With respect to
each performance goal established under section 2101 and
applicable to the year involved--
``(A) a brief description of the goal;
``(B) data on the actual performance with respect
to the goal;
``(C) a review of the extent to which the goal was
achieved, based on such data; and
``(D) where a performance goal has not been met--
``(i) why the goal was not met, and
``(ii) actions to be taken in response to
such performance (including adjustments in
performance goals or program activities for
subsequent years).
``(4) Program evaluations.--A summary of the findings of
evaluations under section 2103 completed during the fiscal year
covered by the report.
``(5) Fraud and abuse and quality control activities.--A
general description of the State's activities under part D
to detect and deter fraud and abuse and to assure quality of services
provided under the program.
``(6) Plan administration.--
``(A) A description of the administrative roles and
responsibilities of entities in the State responsible
for administration of this title.
``(B) Organizational charts for each entity in the
State primarily responsible for activities under this
title.
``(C) A brief description of each interstate
compact (if any) the State has entered into with other
States with respect to activities under this title.
``(D) General citations to the State statutes and
administrative rules governing the State's activities
under this title.
``(7) Inpatient hospital payments.--With respect to
inpatient hospital services provided under the MediGrant plan
on a fee-for-service basis, a description of the average amount
paid per discharge in the fiscal year compared either to the
average charge for such services or to the State's estimate of
the average amount paid per discharge by commercial health
insurers in the State.
``(c) Definitions.--In this section:
``(1) Each of the following is a general category of
eligible individuals:
``(A) Children.
``(B) Blind or disabled adults under 65 years of
age.
``(C) Persons 65 years of age or older.
``(D) Other adults.
``(2) The health care items and services described in each
subparagraph of section 2171(a)(1) shall be considered a
separate category of health care items and services.
``SEC. 2103. PERIODIC, INDEPENDENT EVALUATIONS.
``(a) In General.--During fiscal year 1998 and every third fiscal
year thereafter, each State shall provide for an evaluation of the
operation of its MediGrant plan under this title.
``(b) Independent.--Each such evaluation with respect to an
activity under the MediGrant plan shall be conducted by an entity that
is neither responsible under State law for the submission of the State
plan (or part thereof) nor responsible for administering (or
supervising the administration of) the activity. If consistent with the
previous sentence, such an entity may be a college or university, a
State agency, a legislative branch agency in a State, or an independent
contractor.
``(c) Research Design.--Each such evaluation shall be conducted in
accordance with a research design that is based on generally accepted
models of survey design and sampling and statistical analysis.
``SEC. 2104. DESCRIPTION OF PROCESS FOR MEDIGRANT PLAN DEVELOPMENT.
``Each MediGrant plan shall include a description of the process
under which the plan shall be developed and implemented in the State
(consistent with section 2105).
``SEC. 2105. CONSULTATION IN MEDIGRANT PLAN DEVELOPMENT.
``(a) Public Notice Process.--
``(1) In general.--Before submitting a MediGrant plan or a
plan amendment described in paragraph (3) to the Secretary
under part E, a State shall provide--
``(A) public notice respecting the submittal of the
proposed plan or amendment, including a general
description of the plan or amendment;
``(B) a means for the public to inspect or obtain a
copy (at reasonable charge) of the proposed plan or
amendment; and
``(C) an opportunity for submittal and
consideration of public comments on the proposed plan
or amendment.
The previous sentence shall not apply to a revision of a
MediGrant plan (or revision of an amendment to a plan) made by
a State under section 2154(c)(1) or to a plan amendment
withdrawal described in section 2152(c)(4).
``(2) Contents of notice.--A notice under paragraph (1)(A)
for a proposed plan or amendment shall include a description
of--
``(A) the general purpose of the proposed plan or
amendment (including applicable effective dates),
``(B) where the public may inspect the proposed
plan or amendment,
``(C) how the public may obtain a copy of the
proposed plan or amendment and the applicable charge
(if any) for the copy, and
``(D) how the public may submit comments on the
proposed plan or amendment, including any deadlines
applicable to consideration of such comments.
``(3) Amendments described.--An amendment to a MediGrant
plan described in this paragraph is an amendment which makes a
material and substantial change in eligibility under the
MediGrant plan or the benefits provided under the plan.
``(4) Publication.--Notices under this subsection may be
published (as selected by the State) in one or more daily
newspapers of general circulation in the State or in any
publication used by the State to publish State statutes or
rules.
``(5) Comparable process.--A separate notice, or notices,
shall not be required under this subsection for a State if
notice of the MediGrant plan or an amendment to the plan will
be provided under a process specified in State law that is
substantially equivalent to the notice process specified in
this subsection.
``(b) Advisory Committee.--
``(1) In general.--Each State with a MediGrant plan shall
establish and maintain an advisory committee.
``(2) Consultation.--The State shall periodically consult
with the advisory committee in the development, revision, and
monitoring the performance of the MediGrant plan, including--
``(A) the development of strategic objectives and
performance goals under section 2101,
``(B) the annual report under section 2102, and
``(C) the research design under section 2103(c).
``(3) Geographic diversity.--The composition of the
advisory committee shall be chosen in a manner that assures
some representation on the advisory committee of the different
general geographic regions of the State. Nothing in the
previous sentence shall be construed as requiring proportional
representation of geographic areas in a State.
``(4) Construction.--Nothing in this title shall be
construed as preventing a State from establishing more than one
advisory committee, including specialized advisory committees
that represent the interests of specific population groups,
provider groups, or geographic areas.
``SEC. 2106. MEDIGRANT TASK FORCE.
``(a) In General.--The Secretary shall provide for the
establishment of a MediGrant Task Force (in this section referred to as
the `Task Force').
``(b) Composition.--The Task Force shall consist of 6 members
appointed by the chair of the National Governors Association and 6
members appointed by the vice chair of the National Governors
Association.
``(c) Advisory Group for Task Force.--The Secretary shall provide
for the establishment of an advisory group to assist the Task Force in
carrying out its duties under this section, consisting of one
representative appointed by each of the following associations:
``(1) National Committee for Quality Assurance.
``(2) Joint Commission for the Accreditation of Healthcare
Organizations.
``(3) Group Health Association of America.
``(4) American Managed Care and Review Association.
``(5) Association of State and Territorial Health Officers.
``(6) American Medical Association.
``(7) American Hospital Association.
``(8) American Dental Association.
``(9) American College of Gerontology.
``(10) American Health Care Association.
``(11) An association identified by the Secretary as
representing the interests of disabled individuals.
``(12) An association identified by the Secretary as
representing the interests of children.
``(13) An association identified by the Secretary as
representing the interests of the elderly.
``(14) An association identified by the Secretary as
representing the interests of mentally ill individuals.
Any reference in this subsection to a particular group shall be deemed
a reference to any successor to such group.
``(d) Duties.--
``(1) Format for expenditure and utilization summaries.--
The Task Force shall specify, by not later than December 31,
1996, the format of expenditure summaries and utilization
summaries required under section 2102. Such format may provide
for the reporting of different information from that required
under section 2102(a), but shall include the reporting of at
least the information described in section 2102(b)(1)(A)(i).
``(2) Models and suggestions.--The Task Force shall study
and report to Congress and the States, by not later than April
1, 1997, recommendations on the following:
``(A) Recommended models for strategic objectives
and performance goals for consideration by States in
the development of such objectives and goals under
section 2102, including alternative models for each of
the objectives and goals described in section 2101(b).
``(B) For each suggested model for a strategic
objective or performance goal suggested methodologies
for States to consider in measuring and verifying the
objective or goal.
``(C) An assessment of the potential usefulness to
States of quality assurance safeguards, utilization
data sets, and accreditation programs that are used or
under development in the private sector.
``(D) Recommended designs and evaluation
methodologies for consideration by States in providing
for independent evaluations under section 2103.
``(3) Construction.--Nothing in this subsection shall be
construed as requiring a State to adopt any of the strategic
objectives or performance goals suggested under paragraph (2).
``(e) Administrative Assistance.--Administrative support for the
Task Force shall be provided by the Agency for Health Care Policy and
Research (or, in the absence of such Agency, the Secretary).
``Part B--Eligibility, Benefits, and Set-asides
``SEC. 2111. GENERAL DESCRIPTION OF ELIGIBILITY AND BENEFITS.
``(a) In General.--Each MediGrant plan shall include a description
(consistent with this title) of the following:
``(1) Eligible population.--The population eligible for
medical assistance under the plan, including--
``(A) any limitations on categories of such
individuals;
``(B) any limitations as to the duration of
eligibility;
``(C) any eligibility standards relating to age,
income (including any standards relating to
spenddowns), residency, resources, disability status,
immigration status, or employment status of
individuals;
``(D) methods of establishing (and continuing)
eligibility and enrollment (including the methodology
for computing family income);
``(E) the eligibility standards in the plan that
protect the income and resources of a married
individual who is living in the community and whose
spouse is residing in an institution in order to
prevent the impoverishment of the community spouse; and
``(F) any other standards relating to eligibility
for medical assistance under the plan.
``(2) Scope of assistance.--The amount, duration, and scope
of health care services and items covered under the plan,
including differences among different eligible population
groups.
``(3) Delivery method.--The State's approach to delivery of
medical assistance, including a general description of--
``(A) the use (or intended use) of vouchers, fee-
for-service, or managed care arrangements (such as
capitated health care plans, case management, and case
coordination), and
``(B) utilization control systems.
``(4) Fee-for-service benefits.--To the extent that medical
assistance is furnished on a fee-for-service basis--
``(A) how the State determines the qualifications
of health care providers eligible to provide such
assistance, and
``(B) how the State determines rates of
reimbursement for providing such assistance.
``(5) Cost-sharing.--Beneficiary cost-sharing (if any),
including variations in such cost-sharing by population group
or type of service and financial responsibilities of parents of
recipients under 21 years of age and the spouses of recipients.
``(6) Utilization incentives.--Incentives or requirements
(if any) to encourage the appropriate utilization of services.
``(7) Treatment of health centers.--
``(A) In general.--In the case of a State in which
one or more health centers is located, the MediGrant
plan shall include a description of--
``(i) what provision (if any) has been made
for payment for items and services furnished by
health centers, and
``(ii) the manner in which medical
assistance for low-income eligible individuals
who received health care services at health
centers on or before the date of the enactment
of this title may be provided, as determined by
the State in consultation with the health
centers in the State.
``(B) Health center defined.--For purposes of
subparagraph (A), the term `health center' means an
entity that--
``(i) is receiving a grant under section
329, 330, 340, or 340A of the Public Health
Service Act; or
``(ii) based on the recommendation of the
Health Resources and Services Administration
within the Public Health Service, was
determined by the Secretary to meet the
requirements to receive such a grant.
``(8) Support for certain hospitals.--
``(A) In general.--With respect to hospitals
described in subparagraph (B) located in the State, the
MediGrant plan shall includes a description--
``(i) of the extent to which provisions
have been made for expenditures for items and
services furnished by such hospitals and
covered under the plan, and
``(ii) for individuals who (I) are enrolled
for benefits for covered services under the
MediGrant plan and (II) were previously
receiving benefits for such services under the
medicaid program by or through such hospitals,
where or how they will receive benefits for
such services under the MediGrant plan if the
MediGrant plan does not permit such individuals
to obtain benefits for those services by or
through such hospitals.
``(B) Hospitals described.--For purposes of
subparagraph (A), a hospital described in this
subparagraph is a subsection (d) hospital (as defined
in section 1886(d)(1)(B)) that is described in clauses
(i) and (ii) of section 340B(a)(4)(L) of the Public
Health Service Act.
``(b) Immunizations for Children.--The MediGrant plan shall provide
medical assistance for immunizations for children eligible for any
medical assistance under the MediGrant plan, in accordance with a
schedule for immunizations established by the Health Department of the
State in consultation with the individuals and entities in the State
responsible for the administration of the plan.
``(c) Equal Payment Rates for Rural Providers.--A State with a
MediGrant plan shall establish payment rates for all services of rural
providers that are comparable to the payment rates established for like
services of such type of providers not in rural areas; except that a
State may provide for incentive payments to attract and retain
providers to medically underserved areas.
``(d) Preexisting Condition Exclusions.--Notwithstanding any other
provision of this title--
``(1) a MediGrant plan may not deny or exclude coverage of
any item or service for an eligible individual for benefits
under the MediGrant plan for such item or service on the basis
of a preexisting condition; and
``(2) if a State contracts or makes other arrangements
(through the eligible individual or through another entity)
with a capitated health care organization, insurer, or other
entity, for the provision of items or services to eligible
individuals under the MediGrant plan and the State permits such
organization, insurer, or other entity to exclude coverage of a
covered item or service on the basis of a preexisting
condition, the State shall provide, through its MediGrant plan,
for such coverage (through direct payment or otherwise) for any
such covered item or service denied or excluded on the basis of
a preexisting condition.
``(e) Family Responsibility.--A MediGrant plan may not require an
adult child of moderate means (as determined by the Secretary) to
contribute to the cost of covered nursing facility services and other
long-term care services for the child's parent under the plan.
``SEC. 2112. SET-ASIDES OF FUNDS FOR POPULATION GROUPS.
``(a) For Targeted Low-Income Families.--
``(1) In general.--Subject to subsection (e), a MediGrant
plan shall provide that the amount of funds expended under the
plan for medical assistance for targeted low-income families
(as defined in paragraph (3)) for a fiscal year shall be not
less than the minimum low-income-family percentage specified in
paragraph (2) of the total funds expended under the plan for
all medical assistance for the fiscal year.
``(2) Minimum low-income-family percentage.--The minimum
low-income-family percentage specified in this paragraph for a
State is equal to 85 percent of the average percentage of the
expenditures under title XIX for medical assistance in the
State during Federal fiscal years 1992 through 1994 which were
attributable to expenditures for medical assistance for
mandated benefits (as defined in subsection (h)) furnished to
individuals--
``(A) who (at the time of furnishing the
assistance) were under 65 years of age,
``(B) whose coverage (at such time) under a State
plan under title XIX was required under Federal law,
and
``(C) whose eligibility for such coverage (at such
time) was not on a basis directly related to disability
status (including being blind).
``(3) Targeted low-income family defined.--In this
subsection, the term `targeted low-income family' means a
family (which may be an individual)--
``(A) which includes a child or a pregnant woman,
and
``(B) the income of which does not exceed 185
percent of the poverty line applicable to a family of
the size involved.
``(b) For Low-Income Elderly.--
``(1) Set-asides.--Subject to subsection (e)--
``(A) General set-aside.--A MediGrant plan shall
provide that the amount of funds expended under the
plan for medical assistance for eligible low-income
individuals 65 years of age or older for a fiscal year
shall be not less than the minimum low-income-elderly
percentage specified in paragraph (2)(A) of the total
funds expended under the plan for all medical
assistance for the fiscal year.
``(B) Set-aside for medicare premium assistance.--A
MediGrant plan shall provide that the amount of funds
expended under the plan for medical assistance for
medicare cost-sharing described in section 2171(c)(1)
for a fiscal year shall be not less than the minimum
medicare premium assistance percentage specified in
paragraph (2)(B) of the total funds expended under the
plan for all medical assistance for the fiscal year.
The MediGrant plan shall provide priority for such
making such assistance available for targeted low-
income elderly individuals (as defined in paragraph
(3)).
``(2) Minimum percentages.--
``(A) For general set-aside.--The minimum low-
income-elderly percentage specified in this
subparagraph for a State is equal to 85 percent of the
average percentage of the expenditures under title XIX
for medical assistance in the State during Federal
fiscal years 1992 through 1994 which was attributable
to expenditures for medical assistance for mandated
benefits furnished to individuals--
``(i) whose eligibility for such assistance
was based on their being 65 years of age or
older; and
``(ii)(I) whose coverage (at such time)
under a State plan under title XIX was required
under Federal law, or (II) who (at such time)
were residents of a nursing facility.
``(B) For set-aside for medicare premium
assistance.--The minimum medicare premium assistance
percentage specified in this subparagraph for a State
is equal to 90 percent of the average percentage of the
expenditures under title XIX for medical assistance in
the State during Federal fiscal years 1993 through 1995
which was attributable to expenditures for medical
assistance for medicare premiums described in section
1905(p)(3)(A) for individuals whose coverage (at such
time) for such assistance for such premiums under a
State plan under title XIX was required under Federal
law.
``(3) Targeted low-income elderly individual defined.--In
this subsection, the term `targeted low-income elderly
individual' means an individual who is 65 years of age or older
and whose income does not exceed 100 percent of the poverty
line applicable to a family of the size involved.
``(c) For Low-Income Disabled Persons.--
``(1) In general.--Subject to subsection (e), a MediGrant
plan shall provide that the percentage of funds expended under
the plan for medical assistance for eligible low-income
individuals who are under 65 years of age and are eligible for
such assistance on the basis of a disability (including being
blind) for a fiscal year is not less than the minimum low-
income-disabled percentage specified in paragraph (2) of the
total funds expended under the plan for medical assistance for
the fiscal year.
``(2) Minimum low-income-disabled percentage.--The minimum
low-income-disabled percentage specified in this paragraph for
a State is equal to 85 percent of the average percentage of the
expenditures under title XIX for medical assistance in the
State during Federal fiscal years 1992 through 1994 which was
attributable to expenditures for medical assistance for
mandated benefits furnished to individuals--
``(A) whose coverage (at such time) under a State
plan under title XIX was required under Federal law,
and
``(B) whose coverage (at such time) was on a basis
directly related to disability status (including being
blind).
``(d) Use of Residual Funds.--
``(1) In general.--Subject to limitations on payment under
section 2123, any funds not required to be expended under the
set-asides under the previous subsections may be expended under
the MediGrant plan for any of the following:
``(A) Additional medical assistance.--Medical
assistance for eligible low-income individuals (as
defined in section 2171(b)), in addition to any medical
assistance made available under a previous subsection.
``(B) Medically-related services.--Payment for
medically-related services (as defined in paragraph
(2)).
``(C) Administration.--Payment for the
administration of the MediGrant plan.
``(2) Medically-related services defined.--In this title,
the term `medically-related services' means services
reasonably related to, or in direct support of, the State's attainment
of one or more of the strategic objectives and performance goals
established under section 2101, but does not include items and services
included on the list under section 2171(a)(1) (relating to the
definition of medical assistance).
``(e) Exceptions to Minimum Set-Asides.--
``(1) Alternative minimum set-asides.--
``(A) In general.--A State may provide in its
MediGrant plan (through an amendment to the plan) for a
lower dollar amount of expenditures than the minimum
amounts specified in any (or all) of paragraphs (2) of
subsections (a), (b), and (c) if State determines (and
certifies to the Secretary) that--
``(i) the health care needs of the low-
income populations described in paragraph (1)
of the respective subsection who are eligible
for medical assistance under the plan during
the previous fiscal year (or medicare premium
assistance needs described in subsection
(b)(1)(B)) can be reasonably met without the
expenditure of the amounts otherwise required
to be expended, and
``(ii) the performance goals established
under section 2101 relating to the respective
population can reasonably be met with such
lower amount of funds expended.
``(B) Period of application.--The determination and
certification under subparagraph (A) shall be made for
such period as a State may request, but may not be made
for a period of more than 3 consecutive Federal fiscal
years (beginning with the first fiscal year for which
the lower amount is sought). A new determination and
certification must be made under such paragraph for any
subsequent period.
``(C) No exception permitted before fiscal year
1998.--This paragraph may not apply with respect to a
State for a fiscal year before fiscal year 1998.
``(2) Independent certification of compliance with goals.--
``(A) In general.--For purposes of section 2151(c),
a MediGrant plan shall not be considered to be in
substantial violation of the requirements of this
section if the amount of actual State expenditures
specified in any (or all) of paragraphs (1) of
subsections (a), (b), and (c) is lower than the minimum
amounts specified in any (or all) of paragraphs (2) of
subsections (a), (b), and (c) if an independent actuary
determines and certifies to the State that the
MediGrant plan is reasonably designed to result in a
level of expenditures which is consistent with the
requirements of such subsections.
``(B) Limit on variation.--Subparagraph (A) shall
not apply in the case of a MediGrant plan for which the
actual State expenditures described in any (or all) of
paragraphs (1) of subsections (a), (b), and (c) are
less than 95 percent of the expenditures which would be
made if the amount of State expenditures specified in
any (or all) of such paragraphs was equal to the
applicable minimum amount specified in any (or all) of
paragraphs (2) of subsections (a), (b), and (c).
``(3) Treatment of states with no optional benefits.--In
the case of a State for which all expenditures under title XIX
for medical assistance in the State during Federal fiscal years
1992 through 1994 were expenditures for medical assistance for
mandated benefits, `75 percent' shall be substituted for `85
percent' each place it appears in paragraphs (2) of subsections
(a), (b), and (c).
``(f) Computations.--
``(1) Minimum percentages.--States shall calculate the
minimum percentages under subsections (a)(2), (b)(2), and
(c)(2) in a reasonable manner consistent with reports submitted
to the Secretary for the fiscal years involved.
``(2) Exclusion of payments for certain aliens.--For
purposes of this section, medical assistance attributable to
the exception provided under section 1903(v)(2) shall not be
considered to be expenditures for medical assistance.
``(g) Benefits Included for Purposes of Computing Set-Asides.--In
this section, the term `mandated benefits'--
``(1) means medical assistance for items and services
described in section 1905(a) to the extent such assistance with
respect to such items and services was required to be provided
under title XIX,
``(2) includes medical assistance for medicare cost-sharing
only to the extent such assistance was required to be provided
under section 1902(a)(10)(E), and
``(3) does not include medical assistance attributable to
disproportionate share payment adjustments described in section
1923.
``SEC. 2113. PREMIUMS AND COST-SHARING.
``(a) In General.--Subject to subsection (b), if any charges are
imposed under the MediGrant plan for cost-sharing (as defined in
subsection (d)), such cost-sharing shall be pursuant to a public cost-
sharing schedule.
``(b) Limitation on Premium and Certain Cost-Sharing for Low-Income
Families Including Children or Pregnant Women.--
``(1) In general.--In the case of a family described in
paragraph (2)--
``(A) the plan shall not impose any premium, and
``(B) the plan shall not (except as provided in
subsection (c)(1)) impose any cost-sharing with respect
to primary and preventive care services (as defined by
the State) covered under the MediGrant plan for
children or pregnant women unless such cost-sharing is
nominal in nature.
``(2) Family described.--A family described in this
paragraph is a family (which may be an individual) which--
``(A) includes a child or a pregnant woman,
``(B) is made eligible for medical assistance under
the MediGrant plan, and
``(C) the income of which does not exceed 100
percent of the poverty line applicable to a family of
the size involved.
``(c) Certain Cost-Sharing Permitted.--Nothing in this section
shall be construed as preventing a MediGrant plan (consistent with
subsection (b))--
``(1) from imposing cost-sharing to discourage the
inappropriate use of emergency medical services (delivered
through a hospital emergency room, a medical transportation
provider, or otherwise);
``(2) from imposing premiums and cost-sharing
differentially in order to encourage the use of primary and
preventive care and discourage unnecessary or less economical
care;
``(3) from scaling cost-sharing in a manner that reflects
economic factors, employment status, and family size;
``(4) from scaling cost-sharing based on the availability
to the individual or family of other health insurance coverage;
or
``(5) from scaling cost-sharing based on participation in
employment training program, drug or alcohol abuse treatment,
counseling programs, or other programs promoting personal
responsibility.
``(d) Cost-Sharing Defined.--In this section, the term `cost-
sharing' includes copayments, deductibles, coinsurance, and other
charges for the provision of health care services.
``SEC. 2114. DESCRIPTION OF PROCESS FOR DEVELOPING CAPITATION PAYMENT
RATES.
``(a) In General.--If a State contracts (or intends to contract)
with a capitated health care organization (as defined in subsection
(c)(1)) under which the State makes a capitation payment (as defined in
subsection (c)(2)) to the organization for providing or arranging for
the provision of medical assistance under the MediGrant plan for a
group of services (including at least inpatient hospital services and
physicians' services), the plan shall include a description of the
following:
``(1) Use of actuarial science.--The extent and manner in
which the State uses actuarial science--
``(A) to analyze and project health care
expenditures and utilization for individuals enrolled
(or to be enrolled) in such an organization under the
MediGrant plan, and
``(B) to develop capitation payment rates,
including a brief description of the general
methodologies used by actuaries.
``(2) Qualifications of organizations.--The general
qualifications (including any accreditation, State licensure or
certification, or provider network standards) required by the
State for participation of capitated health care organizations
under the MediGrant plan.
``(3) Dissemination process.--The process used by the State
under subsection (b) and otherwise to disseminate, before
entering into contracts with capitated health care
organizations, actuarial information to such organizations on
the historical fee-for-service costs (or, if not available,
other recent financial data associated with providing covered
services) and utilization associated with individuals described
in paragraph (1)(A).
``(b) Public Notice and Comment.--Under the MediGrant plan the
State shall provide a process for providing, before the beginning of
each contract year--
``(1) public notice of--
``(A) the amounts of the capitation payments (if
any) made under the plan for the contract year
preceding the public notice, and
``(B)(i) the information described under subsection
(a)(1) with respect to capitation payments for the
contract year involved or (ii) the amounts of the
capitation payments the State expects to make for the
contract year involved,
unless such information is designated as proprietary and not
subject to public disclosure under State law; and
``(2) an opportunity for receiving public comment on the
amounts and information for which notice is provided under
paragraph (1).
``(c) Definitions.--In this title:
``(1) Capitated health care organization.--The term
`capitated health care organization' means a health maintenance
organization or any other entity (including a health insuring
organization, managed care organization, prepaid health plan,
integrated service network, or similar entity) which under
State law is permitted to accept capitation payments for
providing (or arranging for the provision of) a group of items
and services including at least inpatient hospital services and
physicians' services.
``(2) Capitation payment.--The term `capitation payment'
means, with respect to payment, payment on a prepaid capitation
basis or any other risk basis to an entity for the entity's
provision (or arranging for the provision) of a group of items
and services (including at least inpatient hospital services
and physicians' services).
``SEC. 2115. PREVENTING SPOUSAL IMPOVERISHMENT.
``(a) Special Treatment for Institutionalized Spouses.--
``(1) Supersedes other provisions.--In determining the
eligibility for medical assistance of an institutionalized
spouse (as defined in subsection (h)(1)), the provisions of
this section supersede any other provision of this title which
is inconsistent with them.
``(2) Does not affect certain determinations.--Except as
this section specifically provides, this section does not apply
to--
``(A) the determination of what constitutes income
or resources, or
``(B) the methodology and standards for determining
and evaluating income and resources.
``(3) No application in commonwealths and territories.--
This section shall only apply to a State that is one of the 50
States or the District of Columbia.
``(b) Rules for Treatment of Income.--
``(1) Separate treatment of income.--During any month in
which an institutionalized spouse is in the institution, except
as provided in paragraph (2), no income of the community spouse
shall be deemed available to the institutionalized spouse.
``(2) Attribution of income.--In determining the income of
an institutionalized spouse or community spouse for purposes of
the post-eligibility income determination described in
subsection (d), except as otherwise provided in this section
and regardless of any State laws relating to community property
or the division of marital property, the following rules apply:
``(A) Non-trust property.--Subject to subparagraphs
(C) and (D), in the case of income not from a trust,
unless the instrument providing the income otherwise
specifically provides--
``(i) if payment of income is made solely
in the name of the institutionalized spouse or
the community spouse, the income shall be
considered available only to that respective
spouse;
``(ii) if payment of income is made in the
names of the institutionalized spouse and the
community spouse, one-half of the income shall
be considered available to each of them; and
``(iii) if payment of income is made in the
names of the institutionalized spouse or the
community spouse, or both, and to another
person or persons, the income shall be
considered available to each spouse in
proportion to the spouse's interest (or, if
payment is made with respect to both spouses
and no such interest is specified, one-half of
the joint interest shall be considered
available to each spouse).
``(B) Trust property.--In the case of a trust--
``(i) except as provided in clause (ii),
income shall be attributed in accordance with
the provisions of this title, and
``(ii) income shall be considered available
to each spouse as provided in the trust, or, in
the absence of a specific provision in the
trust--
``(I) if payment of income is made
solely to the institutionalized spouse
or the community spouse, the income
shall be considered available only to
that respective spouse;
``(II) if payment of income is made
to both the institutionalized spouse
and the community spouse, one-half of
the income shall be considered
available to each of them; and
``(III) if payment of income is
made to the institutionalized spouse or
the community spouse, or both, and to
another person or persons, the income
shall be considered available to each
spouse in proportion to the spouse's
interest (or, if payment is made with
respect to both spouses and no such
interest is specified, one-half of the
joint interest shall be considered
available to each spouse).
``(C) Property with no instrument.--In the case of
income not from a trust in which there is no instrument
establishing ownership, subject to subparagraph (D),
one-half of the income shall be considered to be
available to the institutionalized spouse and one-half
to the community spouse.
``(D) Rebutting ownership.--The rules of
subparagraphs (A) and (C) are superseded to the extent
that an institutionalized spouse can establish, by a
preponderance of the evidence, that the ownership
interests in income are other than as provided under
such subparagraphs.
``(c) Rules for Treatment of Resources.--
``(1) Computation of spousal share at time of
institutionalization.--
``(A) Total joint resources.--There shall be
computed (as of the beginning of the first continuous
period of institutionalization of the institutionalized
spouse)--
``(i) the total value of the resources to
the extent either the institutionalized spouse
or the community spouse has an ownership
interest, and
``(ii) a spousal share which is equal to
\1/2\ of such total value.
``(B) Assessment.--At the request of an
institutionalized spouse or community spouse, at the
beginning of the first continuous period of
institutionalization of the institutionalized spouse
and upon the receipt of relevant documentation of
resources, the State shall promptly assess and document
the total value described in subparagraph (A)(i) and
shall provide a copy of such assessment and
documentation to each spouse and shall retain a copy of
the assessment for use under this section. If the
request is not part of an application for medical
assistance under this title, the State may, at its
option as a condition of providing the assessment,
require payment of a fee not exceeding the reasonable
expenses of providing and documenting the assessment.
At the time of providing the copy of the assessment,
the State shall include a notice indicating that the
spouse will have a right to a fair hearing under
subsection (e)(2).
``(2) Attribution of resources at time of initial
eligibility determination.--In determining the resources of an
institutionalized spouse at the time of application for medical
assistance under this title, regardless of any State laws
relating to community property or the division of marital
property--
``(A) except as provided in subparagraph (B), all
the resources held by either the institutionalized
spouse, community spouse, or both, shall be considered
to be available to the institutionalized spouse, and
``(B) resources shall be considered to be available
to an institutionalized spouse, but only to the extent
that the amount of such resources exceeds the amount
computed under subsection (f)(2)(A) (as of the time of
application for medical assistance).
``(3) Assignment of support rights.--The institutionalized
spouse shall not be ineligible by reason of resources
determined under paragraph (2) to be available for the cost of
care where--
``(A) the institutionalized spouse has assigned to
the State any rights to support from the community
spouse;
``(B) the institutionalized spouse lacks the
ability to execute an assignment due to physical or
mental impairment but the State has the right to bring
a support proceeding against a community spouse without
such assignment; or
``(C) the State determines that denial of
eligibility would work an undue hardship.
``(4) Separate treatment of resources after eligibility for
medical assistance established.--During the continuous period
in which an institutionalized spouse is in an institution and
after the month in which an institutionalized spouse is
determined to be eligible for medical assistance under this
title, no resources of the community spouse shall be deemed
available to the institutionalized spouse.
``(5) Resources defined.--In this section, the term
`resources' does not include--
``(A) resources excluded under subsection (a) or
(d) of section 1613, and
``(B) resources that would be excluded under
section 1613(a)(2)(A) but for the limitation on total
value described in such section.
``(d) Protecting Income for Community Spouse.--
``(1) Allowances to be offset from income of
institutionalized spouse.--After an institutionalized spouse is
determined or redetermined to be eligible for medical
assistance, in determining the amount of the spouse's income
that is to be applied monthly to payment for the costs of care
in the institution, there shall be deducted from the spouse's
monthly income the following amounts in the following order:
``(A) A personal needs allowance (described in
paragraph (6)(A)), in an amount not less than the
amount specified in paragraph (6)(C).
``(B) A community spouse monthly income allowance
(as defined in paragraph (2)), but only to the extent
income of the institutionalized spouse is made
available to (or for the benefit of) the community
spouse.
``(C) A family allowance, for each family member,
equal to at least \1/3\ of the amount by which the
amount described in paragraph (3)(A)(i) exceeds the
amount of the monthly income of that family member.
``(D) Amounts for incurred expenses for medical or
remedial care for the institutionalized spouse (as
provided under paragraph (7)).
In subparagraph (C), the term `family member' only includes
minor or dependent children, dependent parents, or dependent
siblings of the institutionalized or community spouse who are
residing with the community spouse.
``(2) Community spouse monthly income allowance defined.--
In this section (except as provided in paragraph (5)), the
`community spouse monthly income allowance' for a community
spouse is an amount by which--
``(A) except as provided in subsection (e), the
minimum monthly maintenance needs allowance
(established under and in accordance with paragraph
(3)) for the spouse, exceeds
``(B) the amount of monthly income otherwise
available to the community spouse (determined without
regard to such an allowance).
``(3) Establishment of minimum monthly maintenance needs
allowance.--
``(A) In general.--Each State shall establish a
minimum monthly maintenance needs allowance for each
community spouse which, subject to subparagraph (B), is
equal to or exceeds--
``(i) 150 percent of \1/12\ of the income
official poverty line (defined by the Office of
Management and Budget and revised annually in
accordance with section 673(2)) for a family
unit of 2 members; plus
``(ii) an excess shelter allowance (as
defined in paragraph (4)).
A revision of the official poverty line referred to in
clause (i) shall apply to medical assistance furnished
during and after the second calendar quarter that
begins after the date of publication of the revision.
``(B) Cap on minimum monthly maintenance needs
allowance.--The minimum monthly maintenance needs
allowance established under subparagraph (A) may not
exceed $1,500 (subject to adjustment under subsections
(e) and (g)).
``(4) Excess shelter allowance defined.--In paragraph
(3)(A)(ii), the term `excess shelter allowance' means, for a
community spouse, the amount by which the sum of--
``(A) the spouse's expenses for rent or mortgage
payment (including principal and interest), taxes and
insurance and, in the case of a condominium or
cooperative, required maintenance charge, for the
community spouse's principal residence, and
``(B) the standard utility allowance (used by the
State under section 5(e) of the Food Stamp Act of 1977)
or, if the State does not use such an allowance, the
spouse's actual utility expenses,
exceeds 30 percent of the amount described in paragraph
(3)(A)(i), except that, in the case of a condominium or
cooperative, for which a maintenance charge is included under
subparagraph (A), any allowance under subparagraph (B) shall be
reduced to the extent the maintenance charge includes utility
expenses.
``(5) Court ordered support.--If a court has entered an
order against an institutionalized spouse for monthly
income for the support of the community spouse, the community spouse
monthly income allowance for the spouse shall be not less than the
amount of the monthly income so ordered.
``(6) Personal needs allowance.--
``(A) In general.--The State MediGrant plan must
provide that, in the case of an institutionalized
individual or couple described in subparagraph (B), in
determining the amount of the individual's or couple's
income to be applied monthly to payment for the cost of
care in an institution, there shall be deducted from
the monthly income (in addition to other allowances
otherwise provided under the plan) a monthly personal
needs allowance--
``(i) which is reasonable in amount for
clothing and other personal needs of the
individual (or couple) while in an institution,
and
``(ii) which is not less (and may be
greater) than the minimum monthly personal
needs allowance described in subparagraph (C).
``(B) Institutionalized individual or couple
defined.--In this paragraph, the term
`institutionalized individual or couple' means an
individual or married couple--
``(i) who is an inpatient (or who are
inpatients) in a medical institution or nursing
facility for which payments are made under this
title throughout a month, and
``(ii) who is or are determined to be
eligible for medical assistance under the State
MediGrant plan.
``(C) Minimum allowance.--The minimum monthly
personal needs allowance described in this subparagraph
is $40 for an institutionalized individual and $80 for
an institutionalized couple (if both are aged, blind,
or disabled, and their incomes are considered available
to each other in determining eligibility).
``(7) Treatment of incurred expenses.--With respect to the
post-eligibility treatment of income under this section, there
shall be taken into account amounts for incurred expenses for
medical or remedial care that are not subject to payment by a
third party, including--
``(A) medicare and other health insurance premiums,
deductibles, or coinsurance, and
``(B) necessary medical or remedial care recognized
under State law but not covered under the State
MediGrant plan under this title, subject to reasonable
limits the State may establish on the amount of these
expenses.
``(e) Notice and Hearing.--
``(1) Notice.--Upon--
``(A) a determination of eligibility for medical
assistance of an institutionalized spouse, or
``(B) a request by either the institutionalized
spouse, or the community spouse, or a representative
acting on behalf of either spouse,
each State shall notify both spouses (in the case described in
subparagraph (A)) or the spouse making the request (in the case
described in subparagraph (B)) of the amount of the community
spouse monthly income allowance (described in subsection
(d)(1)(B)), of the amount of any family allowances (described
in subsection (d)(1)(C)), of the method for computing the
amount of the community spouse resources allowance permitted
under subsection (f), and of the spouse's right to a hearing
under the MediGrant plan respecting ownership or availability
of income or resources, and the determination of the community
spouse monthly income or resource allowance.
``(2) Results of hearing.--
``(A) Revision of minimum monthly maintenance needs
allowance.--If either such spouse establishes in a
hearing under this subsection that the community spouse
needs income, above the level otherwise provided by the
minimum monthly maintenance needs allowance, due to
exceptional circumstances resulting in significant
financial duress, there shall be substituted, for the
minimum monthly maintenance needs allowance in
subsection (d)(2)(A), an amount adequate to provide
such additional income as is necessary.
``(B) Revision of community spouse resource
allowance.--If either such spouse establishes in such a
hearing that the community spouse resource allowance
(in relation to the amount of income generated by such
an allowance) is inadequate to raise the community
spouse's income to the minimum monthly maintenance
needs allowance, there shall be substituted, for the
community spouse resource allowance under subsection
(f)(2), an amount adequate to provide such a minimum
monthly maintenance needs allowance.
``(f) Permitting Transfer of Resources to Community Spouse.--
``(1) In general.--An institutionalized spouse may, without
regard to any other provision of the MediGrant plan to
contrary, transfer an amount equal to the community spouse
resource allowance (as defined in paragraph (2)), but only to
the extent the resources of the institutionalized spouse are
transferred to (or for the sole benefit of) the community
spouse. The transfer under the preceding sentence shall be made
as soon as practicable after the date of the initial
determination of eligibility, taking into account such time as
may be necessary to obtain a court order under paragraph (3).
``(2) Community spouse resource allowance defined.--In
paragraph (1), the `community spouse resource allowance' for a
community spouse is an amount (if any) by which--
``(A) the greatest of--
``(i) $12,000 (subject to adjustment under
subsection (g)), or, if greater (but not to
exceed the amount specified in clause (ii)(II))
an amount specified under the State plan,
``(ii) the lesser of (I) the spousal share
computed under subsection (c)(1), or (II)
$60,000 (subject to adjustment under subsection
(g)),
``(iii) the amount established under
subsection (e)(2); or
``(iv) the amount transferred under a court
order under paragraph (3);
exceeds
``(B) the amount of the resources otherwise
available to the community spouse (determined without
regard to such an allowance).
``(g) Indexing Dollar Amounts.--For services furnished during a
calendar year after 1989, the dollar amounts specified in subsections
(d)(3)(C), (f)(2)(A)(i), and (f)(2)(A)(ii)(II) shall be increased by
the same percentage as the percentage increase in the consumer price
index for all urban consumers (all items; U.S. city average) between
September 1988 and the September before the calendar year involved.
``(h) Definitions.--In this section:
``(1) The term `institutionalized spouse' means an
individual--
``(A)(i) who is in a medical institution or nursing
facility, or
``(ii) at the option of the State (I) who would be
eligible under the MediGrant plan under this title if
they were in a medical institution, (II) with respect
to whom there has been a determination that but for the
provision of home or community-based services they
would require the level of care provided in a hospital,
nursing facility or intermediate care facility for the
mentally retarded the cost of which could be reimbursed
under the plan, and (III) who will receive home or
community-based services pursuant the plan, and
``(B) is married to a spouse who is not in a
medical institution or nursing facility;
but does not include any such individual who is not likely to
meet the requirements of subparagraph (A) for at least 30
consecutive days.
``(2) The term `community spouse' means the spouse of an
institutionalized spouse.
``SEC. 2116. CONSTRUCTION.
``(a) No Federal Entitlement.--Nothing in this title (including
section 2112) shall be construed as creating an entitlement under
Federal law in any individual or category of individuals for medical
assistance under a MediGrant plan.
``(b) State Flexibility in Benefits, Provider Payments,
Geographical Coverage Area, and Selection of Providers.--Nothing in
this title (other than section 2111(b)) shall be construed as requiring
a State--
``(1) to provide medical assistance for any particular
items or services;
``(2) subject to section 2111(c), to provide for any
payments with respect to any specific health care providers or
any level of payments for any services;
``(3) to provide for the same medical assistance in all
geographical areas or political subdivisions of the State;
``(4) to provide that the medical assistance made available
to any individual eligible for medical assistance must not be
less in amount, duration, or scope than the medical assistance
made available to any other such individual; or
``(5) to provide that any individual eligible for medical
assistance with respect to an item or service may choose to
obtain such assistance from any institution, agency, or person
qualified to provide the item or service.
``(c) State Flexibility With Respect to Managed Care.--Nothing in
this title shall be construed--
``(1) to limit a State's ability to contract with, on a
capitated basis or otherwise, health care plans or individual
health care providers for the provision or arrangement of
medical assistance;
``(2) to limit a State's ability to contract with health
care plans or other entities for case management services or
for coordination of medical assistance; or
``(3) to restrict a State from establishing capitation
rates on the basis of competition among health care plans or
negotiations between the State and one or more health care
plans.
``SEC. 2117. LIMITATIONS ON CAUSES OF ACTION.
``(a) In General.--Notwithstanding any other provision of this Act
(including section 1130A), no person (including an applicant,
beneficiary, provider, or health plan) shall have a cause of action
under Federal law against a State in relation to a State's compliance
(or failure to comply) with the provisions of this title or of a
MediGrant plan.
``(b) No Effect on State Law.--Nothing in subsection (a) may be
construed as affecting any actions brought under State law.
``Part C--Payments to States
``SEC. 2121. ALLOTMENT OF FUNDS AMONG STATES.
``(a) Allotments.--
``(1) Computation.--The Secretary shall provide for the
computation of State obligation and outlay allotments in
accordance with this section for each fiscal year beginning
with fiscal year 1996.
``(2) Limitation on obligations.--
``(A) In general.--Subject to subparagraph (B), the
Secretary shall not enter into obligations with any
State under this title for a fiscal year in excess of
the obligation allotment for that State for the fiscal
year under paragraph (4). The sum of such obligation
allotments for all States in any fiscal year (excluding
amounts carried over under subparagraph (B) and
excluding changes in allotments effected under
paragraph (4)(D)) shall not exceed the aggregate limit
on new obligation authority specified in paragraph (3)
for that fiscal year.
``(B) Adjustments.--
``(i) Carryover of allotment permitted.--If
the amount of obligations entered into under
this part with a State for quarters in a fiscal
year is less than the amount of the obligation
allotment under this section to the State for
the fiscal year, the amount of the difference shall be added to the
amount of the State obligation allotment otherwise provided under this
section for the succeeding fiscal year.
``(ii) Reduction for post-enactment new
obligations under title xix in fiscal year
1996.--The amount of the obligation allotment
otherwise provided under this section for
fiscal year 1996 for a State shall be reduced
by the amount of the obligations entered into
with respect to the State under section 1903(a)
after the date of the enactment of this Act.
``(3) Aggregate limit on new obligation authority.--
``(A) In general.--For purposes of this subsection,
subject to subparagraph (C), the `aggregate limit on
new obligation authority', for a fiscal year, is the
pool amount under subsection (b) for the fiscal year,
divided by the payout adjustment factor (described in
subparagraph (B)) for the fiscal year.
``(B) Payout adjustment factor.--For purposes of
this subsection, the `payout adjustment factor'--
``(i) for fiscal year 1996 is .950,
``(ii) for fiscal year 1997 is .986, and
``(iii) for a subsequent fiscal year is
.998.
``(C) Transitional adjustment for pre-enactment-
obligation outlays.--In order to account for pre-
enactment-obligation outlays described in paragraph
(4)(C)(iv), in determining the aggregate limit on new
obligation authority under subparagraph (A) for fiscal
year 1996, the pool amount for such fiscal year is
equal to--
``(i) the pool amount for such year,
reduced by
``(ii) $24.624 billion.
``(4) Obligation allotments.--
``(A) General rule for 50 states and the district
of columbia.--Except as provided in this paragraph, the
`obligation allotment' for any of the 50 States or the
District of Columbia for a fiscal year (beginning with
fiscal year 1997) is an amount that bears the same
ratio to the outlay allotment under subsection (c)(2)
for such State or District (not taking into account any
adjustment due to an election under paragraph (4)) for
the fiscal year as the ratio of--
``(i) the aggregate limit on new obligation
authority (less the total of the obligation
allotments under subparagraph (B)) for the
fiscal year, to
``(ii) the pool amount (less the sum of the
outlay allotments for the territories) for such
fiscal year.
``(B) Territories.--The obligation allotment for
each of the Commonwealths and territories for a fiscal
year is the outlay allotment for such Commonwealth or
territory (as determined under subsection (c)(5)) for
the fiscal year divided by the payout adjustment factor
for the fiscal year (as defined in paragraph (3)(B)).
``(C) Transitional rule for fiscal year 1996.--
``(i) In general.--The obligation amount
for fiscal year 1996 for any State (including
the District, a Commonwealth, or territory) is
determined according to the formula: A=(B-C)/D,
where--
``(I) `A' is the obligation amount
for such State;
``(II) `B' is the outlay allotment
of such State for fiscal year 1996, as
determined under subsection (c);
``(III) `C' is the amount of the
pre-enactment-obligation outlays (as
established for such State under clause
(ii)); and
``(IV) `D' is the payout adjustment
factor for such fiscal year (as defined
in paragraph (3)(B)).
``(ii) Pre-enactment-obligation outlay
amounts.--Within 30 days after the date of the
enactment of this title, the Secretary shall
estimate (based on the best data available) and
publish in the Federal Register the amount of
the pre-enactment-obligation outlays (as
defined in clause (iv)) for each State
(including the District, Commonwealths, and
territories). The total of such amounts shall
equal the dollar amount specified in paragraph
(3)(C)(ii).
``(iii) Agreement.--The submission of a
MediGrant plan by a State under this title is
deemed to constitute the State's acceptance of
the obligation allotment limitations under this
subsection (including the formula for computing
the amount of such obligation allotment).
``(iv) Pre-enactment-obligation outlays
defined.--In this subsection, the term `pre-
enactment-obligation outlays' means, for a
State, the outlays of the Federal Government
that result from obligations that have been
incurred under title XIX with respect to the
State before the date of the enactment of this
title, but for which payments to States have
not been made as of such date of enactment.
``(D) Adjustment to reflect adoption of alternative
growth formula.--Any State that has elected an
alternative growth formula under subsection (c)(4)
which increases or decreases the dollar amount of an
outlay allotment for a fiscal year is deemed to have
increased or decreased, respectively, its obligation
amount for such fiscal year by the amount of such
increase or decrease.
``(b) Pool of Available Funds.--
``(1) In general.--For purposes of this section, the `pool
amount' under this subsection for--
``(A) fiscal year 1996 is $95.673 billion;
``(B) fiscal year 1997 is $102.135 billion;
``(C) fiscal year 1998 is $106.221 billion;
``(D) fiscal year 1999 is $110.469 billion;
``(E) fiscal year 2000 is $114.888 billion;
``(F) fiscal year 2001 is $119.483 billion;
``(G) fiscal year 2002 is $124.263 billion; and
``(H) each subsequent fiscal year is the pool
amount under this paragraph for the previous fiscal
year increased by the lesser of 4 percent or the annual
percentage increase in the consumer price index for all
urban consumers (U.S. city average) for the 12-month
period ending in June before the beginning of that
subsequent fiscal year.
``(2) National medigrant growth percentage.--For purposes
of this section for a fiscal year (beginning with fiscal year
1997), the `national MediGrant growth percentage' is the
percentage by which--
``(A) the pool amount under paragraph (1) for the
fiscal year, exceeds
``(B) such pool amount for the previous fiscal
year.
``(c) State Outlay Allotments.--
``(1) Fiscal year 1996.--
``(A) In general.--For each of the 50 States and
the District of Columbia, the amount of the State
outlay allotment under this subsection for fiscal year
1996 is, subject to paragraph (4), equal to--
``(i) the total amount of Federal
expenditures made to the State under title XIX
for the 4 quarters in fiscal year 1994,
increased by
``(ii) the percentage by which (I)
$95,529,490,500 (which represents the total
amount of outlay allotments for such States and
District for fiscal year 1996), exceeds (II)
$83,213,431,458 (which represents Federal
medicaid expenditures for such States and
District for fiscal year 1994).
``(B) Computation of expenditures.--The amount of
Federal expenditures described in subparagraph (A)(i)
shall be computed, using data reported on the HCFA Form
64 as of September 1, 1995, based on--
``(i) the amount reported on line 11, or
``(ii) on the amount reported on line 6
multiplied by the ratio of (I) the sum of the
amounts so reported on line 11 of such Form for
fiscal year 1994 for the 50 States and the
District of Columbia, to (II) the sum of the
amounts so reported on line 6 of such Form for
fiscal year 1994 for such States and District,
whichever is greater.
``(C) Limitation on adjustment.--The amount
computed under subparagraph (B) shall not be subject to
adjustment (based on any subsequent disallowances or
otherwise).
``(2) Computation of state outlay allotments.--
``(A) In general.--Subject to the succeeding
provisions of this subsection, the amount of the State
outlay allotment under this subsection for one of the
50 States and the District of Columbia for a fiscal
year (beginning with fiscal year 1997) is equal to the
product of--
``(i) the needs-based amount determined
under subparagraph (B) for the State for the
fiscal year, and
``(ii) the scalar factor described in
subparagraph (C) for the fiscal year.
``(B) Needs-based amount.--The needs-based amount
under this subparagraph for a State for a fiscal year
is equal to the product of--
``(i) the State's aggregate expenditure
need for the fiscal year (as determined under
subsection (d)), and
``(ii) the State's old Federal medical
assistance percentage (as defined in section
2122(d)) for the previous fiscal year (or, in
the case of fiscal year 1997, the Federal
medical assistance percentage determined under
section 1905(b) for fiscal year 1996).
``(C) Scalar factor.--The scalar factor under this
subparagraph for a fiscal year is such proportion so
that, when it is applied under subparagraph (A)(ii) for
the fiscal year (taking into account the floors and
ceilings under paragraph (3)), the total of the outlay
allotments under this subsection for all the 50 States
and the District of Columbia for the fiscal year (not
taking into account any increase in an outlay allotment
for a fiscal year attributable to the election of an
alternative growth formula under paragraph (4)) is
equal to the amount by which (i) the pool amount for
the fiscal year (as determined under subsection (b)),
exceeds (ii) the sum of the outlay allotments provided
under paragraph (5) for the Commonwealths and
territories for the fiscal year.
``(3) Floors and ceilings.--
``(A) Floors.--In no case shall the amount of the
State outlay allotment under paragraph (2) for a fiscal
year be less than the following:
``(i) Floor based on previous year's outlay
allotment.--102 percent of the amount of the
State outlay allotment under this subsection
for the previous fiscal year.
``(ii) Floor based on outlay allotment
growth rate in first year.--Beginning with
fiscal year 1998, in the case of a State for
which the outlay allotment under this
subsection for fiscal year 1997 exceeded its
outlay allotment under this subsection for the
previous fiscal year by--
``(I) more than 125 percent of the
national MediGrant growth percentage
for fiscal year 1997, 104 percent of
the amount of the State outlay
allotment under this subsection for the
previous fiscal year; or
``(II) less than 125 percent (but
more than 75 percent) of the national
MediGrant growth percentage for fiscal
year 1997, 103 percent of the amount of
the State outlay allotment under this
subsection for the previous fiscal
year.
``(B) Ceiling.--
``(i) In general.--Subject to clause (ii),
in no case shall the amount of the State outlay
allotment under paragraph (2) for a fiscal year
be greater than the product of--
``(I) the State outlay allotment
under this subsection for the State for
the preceding fiscal year, and
``(II) 133 percent of the national
MediGrant growth percentage (as
determined under subsection (b)(2)) for
the fiscal year involved.
``(ii) Special rule.--For a fiscal year
after fiscal year 1997, in the case of a State
(among the 50 States and the District of
Columbia) that is one of the 10 States with the
lowest Federal MediGrant spending per resident-
in-poverty rates (as determined under clause
(iii)) for the fiscal year, the reference in
clause (i)(II) to `133 percent' is deemed a
reference to `150 percent'.
``(iii) Determination of federal medigrant
spending per resident-in-poverty rate.--For
purposes of clause (ii), the `Federal MediGrant
spending per resident-in-poverty rate' for a
State for a fiscal year is equal to--
``(I) the State's outlay allotment
under this subsection for the previous
fiscal year (determined without regard
to paragraph (4)), divided by
``(II) the average annual number of
residents of the State in poverty (as
defined in subsection (d)(2)) with
respect to the fiscal year.
``(4) Election of alternative growth formula.--
``(A) Election.--In order to reduce variations in
increases in outlay allotments over time, any of the 50
States or the District of Columbia may elect (by notice
provided to the Secretary by not later than April 1,
1996) to adopt an alternative growth rate formula under
this paragraph for the determination of the State's
outlay allotment in fiscal year 1996 and for the
increase in the amount of such allotment in subsequent
fiscal years.
``(B) Formula.--The alternative growth formula
under this paragraph may be any formula under which a
portion of the State outlay allotment for fiscal year
1996 under paragraph (1) is deferred and applied to
increase the amount of its outlay allotment for one or
more subsequent fiscal years, so long as the total
amount of such increases for all such subsequent fiscal
years does not exceed the amount of the outlay
allotment deferred from fiscal year 1996.
``(5) Commonwealths and territories.--The outlay allotment
for each of the Commonwealths and territories for a fiscal year
is the maximum amount that could have been certified under
section 1108(c) with respect to the Commonwealth or territory
for the fiscal year with respect to title XIX, if the national
MediGrant growth percentage (as determined under subsection
(b)(2)) for the fiscal year had been substituted (beginning
with fiscal year 1997) for the percentage increase referred to
in section 1108(c)(1)(B).
``(d) State Aggregate Expenditure Need Determined.--
``(1) In general.--For purposes of subsection (c), the
`State aggregate expenditure need' for a State for a fiscal
year is equal to the product of the following 4 factors:
``(A) Residents in poverty.--The average annual
number of residents in poverty of the State with
respect to the fiscal year (as determined under
paragraph (2)).
``(B) Case mix index.--The average of the case mix
indexes for the State (as determined under paragraph
(3)) for the 3 most recent fiscal years for which data
are available, but in no case less than .9 or greater
than 1.15.
``(C) Input cost index.--The average of the input
cost indexes for the State (as determined under
paragraph (4)) for the 3 most recent fiscal years for
which data are available.
``(D) National average spending per resident in
poverty.--The national average spending per resident in
poverty (as determined under paragraph (5)).
``(2) Residents in poverty.--In this section--
``(A) In general.--The term `average annual number
of residents in poverty' means, with respect to a State
and a fiscal year, the average annual number of
residents in poverty (as defined in subparagraph (B))
in the State (based on data made generally available by
the Bureau of the Census from the Current Population
Survey) for the most recent 3-calendar-year period
(ending before the fiscal year) for which such data are
available.
``(B) Resident in poverty defined.--The term
`resident in poverty' means an individual whose family
income does not exceed the poverty threshold (as such
terms are defined by the Office of Management and
Budget and are generally interpreted and applied by the
Bureau of the Census for the year involved).
``(3) Case mix index.--
``(A) In general.--In this subsection, the `case
mix index' for a State for a fiscal year is equal to--
``(i) the sum of--
``(I) the projected per recipient
expenditures with respect to elderly
individuals in the State for the fiscal
year (determined under subparagraph
(B)),
``(II) the projected per recipient
expenditures with respect to the blind
and disabled individuals in the State
for the fiscal year (determined under
subparagraph (C)), and
``(III) the projected per recipient
expenditures with respect to other
individuals in the State (determined
under subparagraph (D));
divided by--
``(ii) the national average spending per
recipient determined under subparagraph (E) for
the fiscal year involved.
``(B) Projected per recipient expenditures for the
elderly.--For purposes of subparagraph (A)(I)(i), the
`projected per recipient expenditures with respect to
elderly individuals' in a State for a fiscal year is
equal to the product of--
``(i) the national average per recipient
expenditures under this title in the 50 States
and the District of Columbia for the most
recent fiscal year for which data are available
for individuals who are 65 years of age or
older, and
``(ii) the proportion, of all individuals
who received medical assistance under this
title in the State in the most recent fiscal
year referred to in clause (i), that were
individuals described in such clause.
``(C) Projected per recipient expenditures for the
blind and disabled.--For purposes of subparagraph
(A)(i)(II), the `projected per recipient expenditures
with respect to blind and disabled individuals' in a
State for a fiscal year is equal to the product of--
``(i) the national average per recipient
expenditures under this title in the 50 States
and the District of Columbia for the most
recent fiscal year for which data are available
for individuals who are eligible for medical
assistance because they are blind or disabled
and under 65 years of age, and
``(ii) the proportion, of all individuals
who received medical assistance under this
title in the State in the most recent fiscal
year referred to in clause (i), that were
individuals described in such clause.
``(D) Projected per recipient expenditures for
other individuals.--For purposes of subparagraph
(A)(i)(III), the `projected per recipient expenditures
with respect to other individuals' in a State for a
fiscal year is equal to the product of--
``(i) the national average per recipient
expenditures under this title in the 50 States
and the District of Columbia for the most
recent fiscal year for which data are available
for individuals who are not described in
subparagraph (B)(i) or (C)(i), and
``(ii) the proportion, of all individuals
who received medical assistance under this
title in the State in the most recent fiscal
year referred to in clause (i), that were
individuals described in such clause.
``(E) National average spending per recipient.--For
purposes of this paragraph, the `national average
expenditures per recipient' for a fiscal year is equal
to the sum of--
``(i) the product of (I) the national
average described in subparagraph (B)(i), and
(II) the proportion, of all individuals who
received medical assistance under this title in
any of the 50 States or the District of
Columbia in the fiscal year referred to in such
subparagraph, who are described in such
subparagraph;
``(ii) the product of (I) the national
average described in subparagraph (C)(i), and
(II) the proportion, of all individuals who
received medical assistance under this title in
any of the 50 States or the District of
Columbia in the fiscal year referred to in such
subparagraph, who are described in such
subparagraph; and
``(iii) the product of (I) the national
average described in subparagraph (D)(i), and
(II) the proportion, of all individuals who
received medical assistance under this title in
any of the 50 States or the District of
Columbia in the fiscal year referred to in such
subparagraph, who are described in such
subparagraph.
``(F) Determination of national averages and
proportions.--
``(i) In general.--The national averages
per recipient and the proportions referred to
in clauses (i) and (ii), respectively, of
subparagraphs (B), (C), and (D) and
subparagraph (E) shall be determined by the
Secretary using the most recent data available.
``(ii) Use of medicaid data.--If for a
fiscal year there is inadequate data to compute
such averages and proportions based on
expenditures and numbers of individuals
receiving medical assistance under this title,
the Secretary may compute such averages based
on expenditures and numbers of such individuals
under title XIX for the most recent fiscal year
for which data are available and, for this
purpose--
``(I) any reference in subparagraph
(B)(i) to `individuals 65 years of age
or older' is deemed a reference to
`individuals whose eligibility for
medical assistance is based on being 65
years of age or older',
``(II) the reference in
subparagraph (C)(i) to `and under 65
years of age' shall be considered to be
deleted, and
``(III) individuals whose basis for
eligibility for medical assistance was
reported as unknown shall not be
counted as individuals under
subparagraph (D)(i).
``(4) Input cost index.--
``(A) In general.--In this section, the `input cost
index' for a State for a fiscal year is the sum of--
``(i) 0.15, and
``(ii) 0.85 multiplied by the ratio of (I)
the annual average wages for hospital employees
in the State for the fiscal year (as determined
under subparagraph (B)), to (II) the annual
average wages for hospital employees in the 50
States and the District of Columbia for such
year (as determined under such subparagraph).
``(B) Determination of annual average wages of
hospital employees.--The Secretary shall provide for
the determination of annual average wages for hospital
employees in a State and, collectively, in the 50
States and the District of Columbia for a fiscal year
based on the area wage index applicable to hospitals
under 1886(d)(2)(E) (or, if such index no longer
exists, a comparable index of hospital wages) for
discharges occurring during the fiscal year involved.
``(5) National average spending per resident in poverty.--
For purposes of this subsection, the `national average spending
per resident in poverty'--
``(A) for fiscal year 1997 is equal to--
``(i) the sum (for each of the 50 States
and the District of Columbia) of the total of
the Federal and State expenditures under title
XIX for calendar quarters in fiscal year 1994,
increased by the percentage specified in
subsection (c)(1)(A)(ii), divided by
``(ii) the sum of the number of residents
in poverty (as defined in paragraph (2)(A)) for
all of the 50 States and the District of
Columbia for fiscal year 1994;
``(B) for a succeeding fiscal year is equal to the
national average spending per resident in poverty under
this paragraph for the preceding fiscal year increased
by the national MediGrant growth percentage (as defined
in subsection (b)(2)) for the fiscal year involved.
``(e) Publication of Obligation and Outlay Allotments.--
``(1) Notice of preliminary allotments.--Not later than
April 1 before the beginning of each fiscal year (beginning
with fiscal year 1997), the Secretary shall initially compute,
after consultation with the Comptroller General, and publish in
the Federal Register notice of the proposed obligation and
outlay allotments for each State under this section (not taking
into account subsection (a)(2)(B)) for the fiscal year. The
Secretary shall include in the notice a description of the
methodology and data used in deriving such allotments for the
year.
``(2) Review by gao.--The Comptroller General shall submit
to Congress by not later than May 15 of each such fiscal year,
a report analyzing such allotments and the extent to which they
comply with the precise requirements of this section.
``(3) Notice of final allotments.--Not later than July 1
before the beginning of each such fiscal year, the Secretary,
taking into consideration the analysis contained in the report
of the Comptroller General under paragraph (2), shall compute
and publish in the Federal Register notice of the final
allotments under this section (both taking into account and not
taking into account subsection (a)(2)(B)) for the fiscal year.
The Secretary shall include in the notice a description of any
changes in such allotments from the initial allotments
published under paragraph (1) for the fiscal year and the
reasons for such changes. Once published under this paragraph,
the Secretary is not authorized to change such allotments.
``(4) GAO report on final allotments.--The Comptroller
General shall submit to Congress by not later than August 1 of
each such fiscal year, a report analyzing the final allotments
under paragraph (3) and the extent to which they comply with
the precise requirements of this section.
``SEC. 2122. PAYMENTS TO STATES.
``(a) Amount of Payment.--From the allotment of a State under
section 2121 for a fiscal year, subject to the succeeding provisions of
this title, the Secretary shall pay to each State which has a MediGrant
plan approved under part E, for each quarter in the fiscal year--
``(1) an amount equal to the applicable Federal medical
assistance percentage (as defined in subsection (c)) of the
total amount expended during such quarter as medical assistance
under the plan; plus
``(2) an amount equal to the applicable Federal medical
assistance percentage of the total amount expended during such
quarter for medically-related services (as defined in section
2112(e)(2)); plus
``(3) subject to section 2123(c)--
``(A) an amount equal to 90 percent of the amounts
expended during such quarter for the design,
development, and installation of information systems
and for providing incentives to promote the enforcement
of medical support orders, plus
``(B) an amount equal to 75 percent of the amounts
expended during such quarter for medical personnel,
administrative support of medical personnel, operation
and maintenance of information systems, modification of
information systems, quality assurance activities,
utilization review, medical and peer review, anti-fraud
activities, independent evaluations, coordination of
benefits, and meeting reporting requirements under this
title, plus
``(C) an amount equal to 50 percent of so much of
the remainder of the amounts expended during such
quarter as are expended by the State in the
administration of the State plan.
``(b) Payment Process.--
``(1) Quarterly estimates.--Prior to the beginning of each
quarter, the Secretary shall estimate the amount to which a
State will be entitled under subsection (a) for such quarter,
such estimates to be based on (A) a report filed by the State
containing its estimate of the total sum to be expended in such
quarter in accordance with the provisions of such subsections,
and stating the amount appropriated or made available by the
State and its political subdivisions for such expenditures in
such quarter, and if such amount is less than the State's
proportionate share of the total sum of such estimated
expenditures, the source or sources from which the difference
is expected to be derived, and (B) such other investigation as
the Secretary may find necessary.
``(2) Payment.--
``(A) In general.--The Secretary shall then pay to
the State, in such installments as the Secretary may
determine and in accordance with section 6503(a) of
title 31, United States Code, the amount so estimated,
reduced or increased to the extent of any overpayment
or underpayment which the Secretary determines was made
under this section (or section 1903) to such State for
any prior quarter and with respect to which adjustment
has not already been made under this subsection (or
under section 1903(d)).
``(B) Treatment as overpayments.--Expenditures for
which payments were made to the State under subsection
(a) shall be treated as an overpayment to the extent
that the State or local agency administering such plan
has been reimbursed for such expenditures by a third
party pursuant to the provisions of its plan in
compliance with section 2135.
``(C) Recovery of overpayments.--For purposes of
this subsection, when an overpayment is discovered,
which was made by a State to a person or other entity,
the State shall have a period of 60 days in which to
recover or attempt to recover such overpayment before
adjustment is made in the Federal payment to such State
on account of such overpayment. Except as otherwise
provided in subparagraph (D), the adjustment in the
Federal payment shall be made at the end of the 60
days, whether or not recovery was made.
``(D) No adjustment for uncollectables.--In any
case where the State is unable to recover a debt which
represents an overpayment (or any portion thereof) made
to a person or other entity on account of such debt
having been discharged in bankruptcy or otherwise being
uncollectable, no adjustment shall be made in the
Federal payment to such State on account of such
overpayment (or portion thereof).
``(3) Federal share of recoveries.--The pro rata share to
which the United States is equitably entitled, as determined by
the Secretary, of the net amount recovered during any quarter
by the State or any political subdivision thereof with respect
to medical assistance furnished under the State plan shall be
considered an overpayment to be adjusted under this subsection.
``(4) Timing of obligation of funds.--Upon the making of
any estimate by the Secretary under this subsection, any
appropriations available for payments under this section shall
be deemed obligated.
``(5) Disallowances.--In any case in which the Secretary
estimates that there has been an overpayment under this section
to a State on the basis of a claim by such State that has been
disallowed by the Secretary under section 1116(d), and such
State disputes such disallowance, the amount of the Federal
payment in controversy shall, at the option of the State, be
retained by such State or recovered by the Secretary pending a
final determination with respect to such payment amount. If
such final determination is to the effect that any amount was
properly disallowed, and the State chose to retain payment of
the amount in controversy, the Secretary shall offset, from any
subsequent payments made to such State under this title, an
amount equal to the proper amount of the disallowance plus
interest on such amount disallowed for the period beginning on
the date such amount was disallowed and ending on the date of
such final determination at a rate (determined by the
Secretary) based on the average of the bond equivalent of the
weekly 90-day treasury bill auction rates during such period.
``(c) Applicable Federal Medical Assistance Percentage Defined.--In
this section, except as provided in subsection (f), the term
`applicable Federal medical assistance percentage' means, with respect
to one of the 50 States or the District of Columbia, at the State's or
District's option--
``(1) the old Federal medical assistance percentage (as
determined in subsection (d)), or
``(2) the new Federal medical assistance percentage (as
determined under subsection (e)) or, if less, the old Federal
medical assistance percentage plus 10 percentage points.
``(d) Old Federal Medical Assistance Percentage.--
``(1) In general.--Except as provided in paragraph (2) and
subsection (f), the term `old Federal medical assistance
percentage' for any State is 100 percent less the State
percentage; and the State percentage is that percentage which
bears the same ratio to 45 percent as the square of the per
capita income of such State bears to the square of the per
capita income of the continental United States (including
Alaska) and Hawaii.
``(2) Limitation on range.--In no case shall the old
Federal medical assistance percentage be less than 50 percent
or more than 83 percent.
``(3) Promulgation.--The old Federal medical assistance
percentage for any State shall be determined and promulgated in
accordance with the provisions of section 1101(a)(8)(B).
``(e) New Federal Medical Assistance Percentage Defined.--
``(1) In general.--
``(A) Term defined.--Except as provided in
paragraph (3) and subsection (f), the term `new Federal
medical assistance percentage' means, for each of the
50 States and the District of Columbia, 100 percent
reduced by the product 0.39 and the ratio of--
``(i)(I) for each of the 50 States, the
total taxable resources (TTR) ratio of the
State specified in subparagraph (B), or
``(II) for the District of Columbia, the
per capita income ratio specified in
subparagraph (C),
to--
``(ii) the aggregate expenditure need ratio
of the State or District, as described in
subparagraph (D).
``(B) Total taxable resources (ttr) ratio.--For
purposes of subparagraph (A)(i)(I), the total taxable
resources (TTR) ratio for each of the 50 States is--
``(i) an amount equal to the most recent 3-
year average of the total taxable resources
(TTR) of the State, as determined by the
Secretary of the Treasury, divided by
``(ii) an amount equal to the sum of the 3-
year averages determined under clause (i) for
each of the 50 States.
``(C) Per capita income ratio.--For purposes of
subparagraph (A)(i)(II), the per capita income ratio of
the District of Columbia is--
``(i) an amount equal to the most recent 3-
year average of the total personal income of
the District of Columbia, as determined in
accordance with the provisions of section
1101(a)(8)(B), divided by
``(ii) an amount equal to the total
personal income of the continental United
States (including Alaska) and Hawaii, as
determined under section 1101(a)(8)(B).
``(D) Aggregate expenditure need ratio.--For
purposes of subparagraph (A), with respect to each of
the 50 States and the District of Columbia for a fiscal
year, the aggregate expenditure need ratio is--
``(i) the State aggregate expenditure need
(as defined in section 2121(d)) for the State
for the fiscal year, divided by
``(ii) the such of such State aggregate
expenditure needs for the 50 States and the
District of Columbia for the fiscal year.
``(2) Limitation on range.--Except as provided in
subsection (f), the new Federal medical assistance percentage
shall in no case be less than 40 percent or greater than 83
percent.
``(3) Promulgation.--The new Federal medical assistance
percentage for any State shall be promulgated in a timely
manner consistent with the promulgation of the old Federal
medical assistance percentage under section 1101(a)(8)(B).
``(f) Special Rules.--For purposes of this title--
``(1) Commonwealths and territories.--In the case of Puerto
Rico, the Virgin Islands, Guam, the Northern Mariana Islands,
and American Samoa, the old and new Federal medical assistance
percentages are 50 percent.
``(2) Indian health service facilities.--
``(A) In general.--The old and new Federal medical
assistance percentages shall be 100 percent with
respect to the amounts expended as medical assistance
for services which are received through a facility
described in subparagraph (B) of an Indian tribe or
tribal organization or through an Indian Health Service
facility whether operated by the Indian Health Service
or by an Indian tribe or tribal organization (as
defined in section 4 of the Indian Health Care
Improvement Act).
``(B) Facility described.--For purposes of
subparagraph (A), a facility described in this
subparagraph is a facility of an Indian tribe if--
``(i) the facility is located in a State
which, as of the date of the enactment of this
title, was not operating its State plan under
title XIX pursuant to a Statewide waiver
approved under section 1115,
``(ii) the facility is not an Indian Health
Service facility,
``(iii) the tribe owns at least 2 such
facilities, and
``(iv) the tribe has at least 50,000
members (as of the date of the enactment of
this title).
``(3) No state matching required for certain
expenditures.--In applying subsection (a)(1) with respect to
medical assistance provided to unlawful aliens pursuant to the
exception specified in section 2123(e)(2), payment shall be
made for the amount of such assistance without regard to any
need for a State match.
``SEC. 2123. LIMITATION ON USE OF FUNDS; DISALLOWANCE.
``(a) In General.--Funds provided to a State under this title shall
only be used to carry out the purposes of this title.
``(b) Disallowances for Excluded Providers.--
``(1) In general.--Payment shall not be made to a State
under this part for expenditures for items and services
furnished--
``(A) by a provider who was excluded from
participation under title V, XVIII, or XX or under this
title pursuant to section 1128, 1128A, 1156, or
1842(j)(2), or
``(B) under the medical direction or on the
prescription of a physician who was so excluded, if the
provider of the services knew or had reason to know of
the exclusion.
``(2) Exception for emergency services.--Paragraph (1)
shall not apply to emergency items or services, not including
hospital emergency room services.
``(c) Limitations.--
``(1) In general.--No Federal financial assistance is
available for expenditures under the MediGrant plan for--
``(A) medically-related services for a quarter to
the extent such expenditures exceed 5 percent of the
total expenditures under the plan for the quarter; or
``(B) total administrative expenses (other than
expenses described in paragraph (2) during the first 8
quarters in which the plan is in effect under this
title) for quarters in a fiscal year to the extent such
expenditures exceed the sum of $20,000,000 plus 10
percent of the total expenditures under the plan for
the year.
``(2) Administrative expenses not subject to limitation.--
The administrative expenses referred to in this paragraph are
expenditures under the MediGrant plan for the following
activities:
``(A) Quality assurance.
``(B) The development and operation of the
certification program for nursing facilities and
intermediate care facilities for the mentally retarded
under section 2137(a)(2).
``(C) Utilization review activities, including
medical activities and activities of peer review
organizations.
``(D) Inspection and oversight of providers and
capitated health care organizations.
``(E) Anti-fraud activities.
``(F) Independent evaluations.
``(G) Activities required to meet reporting
requirements under this title.
``(d) Treatment of Third Party Liability.--No payment shall be made
to a State under this part for expenditures for medical assistance
provided for an individual under its MediGrant plan to the extent that
a private insurer (as defined by the Secretary by 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) would have been obligated
to provide such assistance but for a provision of its insurance
contract which has the effect of limiting or excluding such obligation
because the individual is eligible for or is provided medical
assistance under the plan.
``(e) Limitation on Payments to Emergency Services for Nonlawful
Aliens.--
``(1) In general.--Notwithstanding the preceding provisions
of this section, except as provided in paragraph (2), no
payment may be made to a State under this part for medical
assistance furnished to an alien who is not lawfully admitted
for permanent residence or otherwise permanently residing in
the United States under color of law.
``(2) Exception for emergency services.--Payment may be
made under this section for care and services that are
furnished to an alien described in paragraph (1) only if--
``(A) such care and services are necessary for the
treatment of an emergency medical condition of the
alien,
``(B) such alien otherwise meets the eligibility
requirements for medical assistance under the MediGrant
plan (other than a requirement of the receipt of aid or
assistance under title IV, supplemental security income
benefits under title XVI, or a State supplementary
payment), and
``(C) such care and services are not related to an
organ transplant procedure.
``(3) Emergency medical condition defined.--For purposes of
this subsection, the term `emergency medical condition' means a
medical condition (including emergency labor and delivery)
manifesting itself by acute symptoms of sufficient severity
(including severe pain) such that the absence of immediate
medical attention could reasonably be expected to result in--
``(A) placing the patient's health in serious
jeopardy,
``(B) serious impairment to bodily functions, or
``(C) serious dysfunction of any bodily organ or
part.
``(f) Limitation on Payment for Certain Outpatient Prescription
Drugs.--
``(1) In general.--No payment may be made to a State under
this part for medical assistance for covered outpatient drugs
(as defined in section 2175(i)(2)) of a manufacturer provided
under the MediGrant plan unless the manufacturer (as defined in
section 2175(i)(4)) of the drug--
``(A) has entered into a MediGrant master rebate
agreement with the Secretary under section 2175; and
``(B) is complying with the provisions of section
8126 of title 38, United States Code, including the
requirement of entering into a master agreement with
the Secretary of Veterans Affairs under such section.
``(2) Construction.--Nothing in this subsection shall be
construed as requiring a State to participate in the MediGrant
master rebate agreement under section 2175.
``(3) Effect of subsequent amendments.--For purposes of
paragraph (1)(B), in determining whether a manufacturer is in
compliance with the requirements of section 8126 of title 38,
United States Code--
``(A) the Secretary shall not take into account any
amendments to such section that are enacted after the
enactment of title VI of the Veterans Health Care Act
of 1992; and
``(B) a manufacturer is deemed to meet such
requirements if the manufacturer establishes to the
satisfaction of the Secretary that the manufacturer
would comply (and has offered to comply) with the
provisions of section 8126 of title 38, United States
Code (as in effect immediately after the enactment of
the Veterans Health Care Act of 1992) and would have
entered into an agreement under such section (as such
section was in effect at such time), but for a
legislative change in such section after the date of
the enactment of the Veterans Health Care Act of 1992.
``(g) Limitation on Payment for Abortions.--
``(1) In general.--Payment shall not be made to a State
under this part for any amount expended under the MediGrant
plan to pay for any abortion or to assist in the purchase, in
whole or in part, of health benefit coverage that includes
coverage of abortion.
``(2) Exception.--Paragraph (1) shall not apply to an
abortion--
``(A) if the pregnancy is the result of an act of
rape or incest, or
``(B) in the case where a woman suffers from a
physical disorder, illness, or injury that would, as
certified by a physician, place the woman in danger of
death unless an abortion is performed.
``(h) Limitation on Payment for Assisting Deaths.--Payment shall
not be made to a State under this part for amounts expended under the
MediGrant plan to pay for, or to assist in the purchase, in whole or in
part, of health benefit coverage that includes payment for any drug,
biological product, or service which was furnished for the purpose of
causing, or assisting in causing, the death, suicide, euthanasia, or
mercy killing of a person.
``Part D--Program Integrity and Quality
``SEC. 2131. USE OF AUDITS TO ACHIEVE FISCAL INTEGRITY.
``(a) Financial Audits of Program.--
``(1) In general.--Each MediGrant plan shall provide for an
annual audit of the State's expenditures from amounts received
under this title, in compliance with chapter 75 of title 31,
United States Code.
``(2) Verification audits.--If, after consultation with the
State and the Comptroller General and after a fair hearing, the
Secretary determines that a State's audit under paragraph (1)
was performed in substantial violation of chapter 75 of title 31,
United States Code, the Secretary may--
``(A) require that the State provide for a
verification audit in compliance with such chapter, or
``(B) conduct such a verification audit.
``(3) Availability of audit reports.--Within 30 days after
completion of each audit or verification audit under this
subsection, the State shall--
``(A) provide the Secretary with a copy of the
audit report, including the State's response to any
recommendations of the auditor, and
``(B) make the audit report available for public
inspection in the same manner as proposed MediGrant
plan amendments are made available under section 2105.
``(b) Fiscal Controls.--
``(1) In general.--With respect to the accounting and
expenditure of funds under this title, each State shall adopt
and maintain such fiscal controls, accounting procedures, and
data processing safeguards as the State deems reasonably
necessary to assure the fiscal integrity of the State's
activities under this title.
``(2) Consistency with generally accepted accounting
principles.--Such controls and procedures shall be generally
consistent with generally accepted accounting principles as
recognized by the Governmental Accounting Standards Board or
the Comptroller General.
``(c) Audits of Providers.--Each MediGrant plan shall provide that
the records of any entity providing items or services for which payment
may be made under the plan may be audited as necessary to ensure that
proper payments are made under the plan.
``SEC. 2132. FRAUD PREVENTION PROGRAM.
``(a) Establishment.--Each MediGrant plan shall provide for the
establishment and maintenance of an effective program for the detection
and prevention of fraud and abuse by beneficiaries, providers, and
others in connection with the operation of the program.
``(b) Program Requirements.--The program established pursuant to
subsection (a) shall include at least the following requirements:
``(1) Disclosure of information.--Any disclosing entity (as
defined in section 1124(a)) receiving payments under the
MediGrant plan shall comply with the requirements of section
1124.
``(2) Supply of information.--An entity (other than an
individual practitioner or a group of practitioners) that
furnishes, or arranges for the furnishing of, an item or
service under the MediGrant plan shall supply upon request
specifically addressed to the entity by the Secretary or the
State agency the information described in section 1128(b)(9).
``(3) Exclusion.--
``(A) In general.--The MediGrant plan shall exclude
any specified individual or entity from participation
in the plan for the period specified by the Secretary
when required by the Secretary to do so pursuant to
section 1128 or section 1128A, and provide that no
payment may be made under the plan with respect to any
item or service furnished by such individual or entity
during such period.
``(B) Authority.--In addition to any other
authority, a State may exclude any individual or entity
for purposes of participating under the MediGrant plan
for any reason for which the Secretary could exclude
the individual or entity from participation in a
program under title XVIII or under section 1128, 1128A,
or 1866(b)(2).
``(4) Notice.--The MediGrant plan shall provide that
whenever a provider of services or any other person is
terminated, suspended, or otherwise sanctioned or prohibited
from participating under the plan, the State agency responsible
for administering the plan shall promptly notify the Secretary
and, in the case of a physician, the State medical licensing
board of such action.
``(5) Access to information.--The MediGrant plan shall
provide that the State will provide information and access to
certain information respecting sanctions taken against health
care practitioners and providers by State licensing authorities
in accordance with section 2133.
``SEC. 2133. INFORMATION CONCERNING SANCTIONS TAKEN BY STATE LICENSING
AUTHORITIES AGAINST HEALTH CARE PRACTITIONERS AND
PROVIDERS.
``(a) Information Reporting Requirement.--The requirement referred
to in section 2132(b)(5) is that the State must provide for the
following:
``(1) Information reporting system.--The State must have in
effect a system of reporting the following information with
respect to formal proceedings (as defined by the Secretary in
regulations) concluded against a health care practitioner or
entity by any authority of the State (or of a political
subdivision thereof) responsible for the licensing of health
care practitioners (or any peer review organization or private
accreditation entity reviewing the services provided by health
care practitioners) or entities:
``(A) Any adverse action taken by such licensing
authority as a result of the proceeding, including any
revocation or suspension of a license (and the length
of any such suspension), reprimand, censure, or
probation.
``(B) Any dismissal or closure of the proceedings
by reason of the practitioner or entity surrendering
the license or leaving the State or jurisdiction.
``(C) Any other loss of the license of the
practitioner or entity, whether by operation of law,
voluntary surrender, or otherwise.
``(D) Any negative action or finding by such
authority, organization, or entity regarding the
practitioner or entity.
``(2) Access to documents.--The State must provide the
Secretary (or an entity designated by the Secretary) with
access to such documents of the authority described in
paragraph (1) as may be necessary for the Secretary to
determine the facts and circumstances concerning the actions
and determinations described in such paragraph for the purpose
of carrying out this Act.
``(b) Form of Information.--The information described in subsection
(a)(1) shall be provided to the Secretary (or to an appropriate private
or public agency, under suitable arrangements made by the Secretary
with respect to receipt, storage, protection of confidentiality, and
dissemination of information) in such a form and manner as the
Secretary determines to be appropriate in order to provide for
activities of the Secretary under this Act and in order to provide,
directly or through suitable arrangements made by the Secretary,
information--
``(1) to agencies administering Federal health care
programs, including private entities administering such
programs under contract,
``(2) to licensing authorities described in subsection
(a)(1),
``(3) to State agencies administering or supervising the
administration of State health care programs (as defined in
section 1128(h)),
``(4) to utilization and quality control peer review
organizations described in part B of title XI and to
appropriate entities with contracts under section 1154(a)(4)(C)
with respect to eligible organizations reviewed under the
contracts,
``(5) to State MediGrant fraud control units (as defined in
section 2134),
``(6) to hospitals and other health care entities (as
defined in section 431 of the Health Care Quality Improvement
Act of 1986), with respect to physicians or other licensed
health care practitioners that have entered (or may be
entering) into an employment or affiliation relationship with,
or have applied for clinical privileges or appointments to the
medical staff of, such hospitals or other health care entities
(and such information shall be deemed to be disclosed pursuant
to section 427 of, and be subject to the provisions of, that
Act),
``(7) to the Attorney General and such other law
enforcement officials as the Secretary deems appropriate, and
``(8) upon request, to the Comptroller General,
in order for such authorities to determine the fitness of
individuals to provide health care services, to protect the
health and safety of individuals receiving health care through
such programs, and to protect the fiscal integrity of such
programs.
``(c) Confidentiality of Information Provided.--The Secretary shall
provide for suitable safeguards for the confidentiality of the
information furnished under subsection (a). Nothing in this subsection
shall prevent the disclosure of such information by a party which is
otherwise authorized, under applicable State law, to make such
disclosure.
``(d) Appropriate Coordination.--The Secretary shall provide for
the maximum appropriate coordination in the implementation of
subsection (a) of this section and section 422 of the Health Care
Quality Improvement Act of 1986.
``SEC. 2134. STATE MEDIGRANT FRAUD CONTROL UNITS.
``(a) In General.--Each MediGrant plan shall provide for a State
MediGrant fraud control unit described in subsection (b) that
effectively carries out the functions and requirements described in
such subsection, 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 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) Units Described.--For purposes of this subsection, the term
`State MediGrant fraud control unit' means a single identifiable entity
of the State government which meets the following requirements:
``(1) Organization.--The entity--
``(A) is a unit of the office of the State Attorney
General or of another department of State government
which possesses statewide authority to prosecute
individuals for criminal violations;
``(B) is in a State the constitution of which does
not provide for the criminal prosecution of individuals
by a statewide authority and has formal procedures
that--
``(i) assure its referral of suspected
criminal violations relating to the program
under this title to the appropriate authority
or authorities in the State for prosecution,
and
``(ii) assure its assistance of, and
coordination with, such authority or
authorities in such prosecutions; or
``(C) has a formal working relationship with the
office of the State Attorney General and has formal
procedures (including procedures for its referral of
suspected criminal violations to such office) which
provide effective coordination of activities between
the entity and such office with respect to the
detection, investigation, and prosecution of suspected
criminal violations relating to the program under this
title.
``(2) Independence.--The entity is separate and distinct
from any State agency that has principal responsibilities for
administering or supervising the administration of the
MediGrant plan.
``(3) Function.--The entity's function is conducting a
statewide program for the investigation and prosecution of
violations of all applicable State laws regarding any and all
aspects of fraud in connection with any aspect of the provision
of medical assistance and the activities of providers of such
assistance under the MediGrant plan.
``(4) Review of complaints.--The entity has procedures for
reviewing complaints of the abuse and neglect of patients of
health care facilities which receive payments under the
MediGrant plan under this title, and, where appropriate, for
acting upon such complaints under the criminal laws of the
State or for referring them to other State agencies for action.
``(5) Overpayments.--The entity provides for the
collection, or referral for collection to a single State
agency, of overpayments that are made under the MediGrant plan
to health care providers and that are discovered by the entity
in carrying out its activities.
``(6) Personnel.--The entity employs such auditors,
attorneys, investigators, and other necessary personnel and is
organized in such a manner as is necessary to promote the
effective and efficient conduct of the entity's activities.
``SEC. 2135. RECOVERIES FROM THIRD PARTIES AND OTHERS.
``(a) Third Party Liability.--Each MediGrant plan shall provide for
reasonable steps--
``(1) to ascertain the legal liability of third parties to
pay for care and services available under the plan, including
the collection of sufficient information to enable States to
pursue claims against third parties; and
``(2) to seek reimbursement for medical assistance provided
to the extent legal liability is establish where the amount
expected to be recovered exceeds the costs of the recovery.
``(b) Beneficiary Protection.--
``(1) In general.--Each MediGrant plan shall provide that
in the case of a person furnishing services under the plan for
which a third party may be liable for payment--
``(A) the person may not seek to collect from the
individual (or financially responsible relative)
payment of an amount for the service more than could be
collected under the plan in the absence of such third
party liability, and
``(B) may not refuse to furnish services to such an
individual because of a third party's potential
liability for payment for the service.
``(2) Penalty.--A MediGrant plan may provide for a
reduction of any payment amount otherwise due with respect to a
person who furnishes services under the plan in an amount equal
to up to three times the amount of any payment sought to be
collected by that person in violation of paragraph (1)(A).
``(c) General Liability.--The State shall prohibit any health
insurer (including a group health plan as defined in section 607 of the
Employee Retirement Income Security Act of 1974, a service benefit
plan, or a health maintenance organization), in enrolling an individual
or in making any payments for benefits to the individual or on the
individual's behalf, from taking into account that the individual is
eligible for or is provided medical assistance under a MediGrant plan
for any State.
``(d) Acquisition of Rights of Beneficiaries.--To the extent that
payment has been made under a MediGrant plan in any case where a third
party has a legal liability to make payment for such assistance, the
State shall have in effect laws under which, to the extent that payment
has been made under the plan for health care items or services
furnished to an individual, the State is considered to have acquired
the rights of such individual to payment by any other party for such
health care items or services.
``(e) Assignment of Medical Support Rights.--The MediGrant plan
shall provide for mandatory assignment of rights of payment for medical
support and other medical care owed to recipients in accordance with
section 2136.
``(f) Required Laws Relating to Medical Child Support.--
``(1) In general.--Each State with a MediGrant plan shall
have in effect the following laws:
``(A) A law that prohibits an insurer from denying
enrollment of a child under the health coverage of the
child's parent on the ground that--
``(i) the child was born out of wedlock,
``(ii) the child is not claimed as a
dependent on the parent's Federal income tax
return, or
``(iii) the child does not reside with the
parent or in the insurer's service area.
``(B) 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--
``(i) 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 restrictions);
``(ii) 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
``(iii) not to disenroll (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 disenrollment.
``(C) 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--
``(i) 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 restrictions);
``(ii) 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
``(iii) not to disenroll (or eliminate
coverage of) any such child unless--
``(I) the employer is provided
satisfactory written evidence that such
court or administrative order is no
longer in effect, or the child is or
will be enrolled in comparable health
coverage which will take effect not later than the effective date of
such disenrollment, or
``(II) the employer has eliminated
family health coverage for all of its
employees; and
``(iv) to withhold from such employee's
compensation the employee's share (if any) of
premiums for health coverage (except that the
amount so withheld may not exceed the maximum
amount permitted to be withheld under section
303(b) of the Consumer Credit Protection Act),
and to pay such share of premiums to the
insurer, except that the Secretary may provide
by regulation for appropriate circumstances
under which an employer may withhold less than
such employee's share of such premiums.
``(D) A law that prohibits an insurer from imposing
requirements on a State agency, which has been assigned
the 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.
``(E) A law that requires an insurer, in any case
in which a child has health coverage through the
insurer of a noncustodial parent--
``(i) to provide such information to the
custodial parent as may be necessary for the
child to obtain benefits through such coverage;
``(ii) to permit the custodial parent (or
provider, with the custodial parent's approval)
to submit claims for covered services without
the approval of the noncustodial parent; and
``(iii) to make payment on claims submitted
in accordance with clause (ii) directly to such
custodial parent, the provider, or the State
agency.
``(F) 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--
``(i) 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,
``(ii) has received payment from a third
party for the costs of such services to such
child, but
``(iii) 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 such services.
``(2) Definition.--For purposes of this subsection, 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 maintenance organization, and an entity
offering a service benefit plan.
``(g) Estate Recoveries and Liens Permitted.--A State may take such
actions as it considers appropriate to adjust or recover from the
individual or the individual's estate any amounts paid as medical
assistance to or on behalf of the individual under the MediGrant plan,
including through the imposition of liens against the property or
estate of the individual.
``SEC. 2136. ASSIGNMENT OF RIGHTS OF PAYMENT.
``(a) In General.--For the purpose of assisting in the collection
of medical support payments and other payments for medical care owed to
recipients of medical assistance under the MediGrant plan, each
MediGrant plan shall--
``(1) provide that, as a condition of eligibility for
medical assistance under the plan to an individual who has the
legal capacity to execute an assignment for himself, the
individual is required--
``(A) to assign the State any rights, of the
individual or of any other person who is eligible for
medical assistance under the plan and on whose behalf
the individual has the legal authority to execute an
assignment of such rights, to support (specified as
support for the purpose of medical care by a court or
administrative order) and to payment for medical care
from any third party,
``(B) to cooperate with the State (i) in
establishing the paternity of such person (referred to
in subparagraph (A)) if the person is a child born out
of wedlock, and (ii) in obtaining support and payments
(described in subparagraph (A)) for himself and for
such person, unless (in either case) the individual is
a pregnant woman or the individual is found to have
good cause for refusing to cooperate as determined by
the State, and
``(C) to cooperate with the State in identifying,
and providing information to assist the State in
pursuing, any third party who may be liable to pay for
care and services available under the plan, unless such
individual has good cause for refusing to cooperate as
determined by the State; and
``(2) provide for entering into cooperative arrangements
(including financial arrangements), with any appropriate agency
of any State (including, with respect to the enforcement and
collection of rights of payment for medical care by or through
a parent, with a State's agency established or designated under
section 454(3)) and with appropriate courts and law enforcement
officials, to assist the agency or agencies administering the
plan with respect to--
``(A) the enforcement and collection of rights to
support or payment assigned under this section, and
``(B) any other matters of common concern.
``(b) Use of Amounts Collected.--Such part of any amount collected
by the State under an assignment made under the provisions of this
section shall be retained by the State as is necessary to reimburse it
for medical assistance payments made on behalf of an individual with
respect to whom such assignment was executed (with appropriate
reimbursement of the Federal Government to the extent of its
participation in the financing of such medical assistance), and the
remainder of such amount collected shall be paid to such individual.
``SEC. 2137. QUALITY ASSURANCE STANDARDS FOR NURSING FACILITIES.
``(a) Standards for and Certification of Certain Facilities.--
``(1) Standards for facilities.--
``(A) In general.--Each MediGrant plan shall
provide for the establishment and maintenance of
standards consistent with the contents described in
subparagraph (B) for nursing facilities which furnish
services under the plan. Such standards shall provide
that nursing facilities must care for residents in such
a manner and in such an environment as will promote
maintenance or enhancement of the quality of life of
each resident.
``(B) Contents of standards.--The standards
established for facilities under this paragraph shall
contain provisions relating to the following items:
``(i) The treatment of resident medical
records.
``(ii) Policies, procedures, and bylaws for
operation.
``(iii) Quality assurance systems.
``(iv) Resident assessment procedures,
including care planning and outcome evaluation.
``(v) The assurance of a safe and adequate
physical plant for the facility.
``(vi) Qualifications for staff sufficient
to provide adequate care, as defined by the
State.
``(vii) Utilization review.
``(viii) The protection and enforcement of
resident rights described in paragraph (2)(A).
``(C) Process for establishment.--The standards
established by the State for facilities under this
paragraph shall be promulgated either through the
State's legislative, regulatory, or other process, and
may only take effect after the State has provided the
public with notice and an opportunity for comment.
``(2) Residents' rights.--
``(A) In general.--The resident rights described in
this paragraph are the rights of residents to the
following:
``(i) To exercise the individual's rights
as a resident of the facility and as a citizen
or resident of the United States.
``(ii) To receive notice of rights and
services.
``(iii) To be protected against the misuse
of resident funds.
``(iv) To be provided privacy and
confidentiality.
``(v) To voice grievances.
``(vi) To examine the results of State
certification program inspections.
``(vii) To refuse to perform services for
the facility.
``(viii) To be provided privacy in
communications and to receive mail.
``(ix) To have the facility provide
immediate access to any resident by any
representative of the certification program,
the resident's individual physician, the State
long term care ombudsman, and any person the
resident has designated as a visitor.
``(x) To retain and use personal property.
``(xi) To be free from abuse, including
verbal, sexual, physical and mental abuse,
corporal punishment, and involuntary seclusion
and not to have any physical or chemical
restraints imposed for purposes of discipline
or convenience unless required to treat the
resident's medical symptoms.
``(xii) To be provided with prior written
notice of a pending transfer or discharge.
``(xiii) To organize and participate in
resident groups in the facility and to have
family members meet in the facility with the
families of other residents in the facility.
``(xiv) To participate in social,
religious, and community activities that do not
interfere with the rights of other residents in
the facility.
``(xv) To choose a personal attending
physician, to be fully informed in advance
about care and treatment, and (except with
respect to a resident adjudged incompetent) to
participate in planning care and treatment or
changes in care and treatment.
``(xvi) To not have psycho- pharmacologic
drugs administered except under the orders of a
physician and as part of a plan designed to
eliminate or modify the symptoms for which the
drugs are prescribed.
``(B) Rights of incompetent residents.--In the case
of a resident adjudged incompetent under the laws of a
State, the rights of the resident under the MediGrant
plan shall devolve upon, and, to the extent judged
necessary by a court of competent jurisdiction, be
exercised by, the person appointed under State law to
act on the resident's behalf.
``(3) Certification program.--
``(A) In general.--Each MediGrant plan shall
provide for the establishment and operation of a
program consistent with the requirements of
subparagraph (B) for the certification of nursing
facilities which meet the standards established under
paragraph (1) and the decertification of facilities
which fail to meet such standards.
``(B) Requirements for program.--In addition to any
other requirements the State may impose, in
establishing and operating the certification program
under subparagraph (A), the State shall ensure the
following:
``(i) The State shall ensure public access
(as defined by the State) to the certification
program's evaluations of participating
facilities, including compliance records and
enforcement actions and other reports by the
State regarding the ownership, compliance histories, and services
provided by certified facilities.
``(ii) Not less often than every 4 years,
the State shall audit its expenditures under
the program, through an entity designated by
the State which is not affiliated with the
program, as designated by the State.
``(b) Intermediate Sanction Authority.--
``(1) Authority.--In addition to any other authority under
State law, where a State determines that a nursing facility
which is certified for participation under the MediGrant plan
no longer substantially meets the requirements for such a
facility under this title and further determines that the
facility's deficiencies--
``(A) immediately jeopardize the health and safety
of its residents, the State shall at least provide for
the termination of the facility's certification for
participation under the plan, or
``(B) do not immediately jeopardize the health and
safety of its residents, the State may, in lieu of
providing for terminating the facility's certification
for participation under the plan, provide lesser
sanctions including one that provides that no payment
will be made under the plan with respect to any
individual admitted to such facility after a date
specified by the State.
``(2) Notice.--The State shall not make such a decision
with respect to a facility until the facility has had a
reasonable opportunity, following the initial determination
that it no longer substantially meets the requirements for such
a facility under the plan, to correct its deficiencies, and,
following this period, has been given reasonable notice and
opportunity for a hearing.
``(3) Effectiveness.--The State's decision to deny payment
may be made effective only after such notice to the public and
to the facility as may be provided for by the State, and its
effectiveness shall terminate (A) when the State finds that the
facility is in substantial compliance (or is making good faith
efforts to achieve substantial compliance) with the
requirements for such a facility under this title, or (B) in
the case described in paragraph (1)(B), with the end of the
eleventh month following the month such decision is made
effective, whichever occurs first. If a facility to which
clause (B) of the previous sentence applies still fails to
substantially meet the provisions of the respective section on
the date specified in such clause, the State shall terminate
such facility's certification for participation under the
MediGrant plan effective with the first day of the first month
following the month specified in such clause.
``SEC. 2138. OTHER PROVISIONS PROMOTING PROGRAM INTEGRITY.
``(a) Public Access to Survey Results.--Each MediGrant plan shall
provide that upon completion of a survey of any health care facility or
organization by a State agency to carry out the plan, the agency shall
make public in readily available form and place the pertinent findings
of the survey relating to the compliance of the facility or
organization with requirements of law.
``(b) Record Keeping.--Each MediGrant plan shall provide for
agreements with persons or institutions providing services under the
plan under which the person or institution agrees--
``(1) to keep such records (including ledgers, books, and
original evidence of costs) as are necessary to fully disclose
the extent of the services provided to individuals receiving
assistance under the plan; and
``(2) to furnish the State agency with such information
regarding any payments claimed by such person or institution
for providing services under the plan, as the State agency may
from time to time request.
``Part E--Establishment and Amendment of MediGrant Plans
``SEC. 2151. SUBMITTAL AND APPROVAL OF MEDIGRANT PLANS.
``(a) Submittal.--As a condition of receiving funding under part C,
each State shall submit to the Secretary a MediGrant plan that meets
the applicable requirements of this title.
``(b) Approval.--Except as the Secretary may provide under section
2154, a MediGrant plan submitted under subsection (a)--
``(1) shall be approved for purposes of this title, and
``(2) shall be effective beginning with a calendar quarter
that is specified in the plan, but in no case earlier than the
first calendar quarter that begins at least 60 days after the
date the plan is submitted.
``(c) Approval of Legislature for Submittal.--In the case of a
State which has a State allotment under section 2121(c)(1) for fiscal
year 1996 of more than $10 billion, the State may not submit a
MediGrant plan under this section unless the State legislature, by law,
has specifically authorized such submittal.
``SEC. 2152. SUBMITTAL AND APPROVAL OF PLAN AMENDMENTS.
``(a) Submittal of Amendments.--A State may amend, in whole or in
part, its MediGrant plan at any time through transmittal of a plan
amendment under this section.
``(b) Approval.--Except as the Secretary may provide under section
2154, an amendment to a MediGrant plan submitted under subsection (a)--
``(1) shall be approved for purposes of this title, and
``(2) shall be effective as provided in subsection (c).
``(c) Effective Dates for Amendments.--
``(1) In general.--Subject to the succeeding provisions of
this subsection, an amendment to MediGrant plan shall take
effect on one or more effective dates specified in the
amendment.
``(2) Amendments relating to eligibility or benefits.--
Except as provided in paragraph (4)--
``(A) Notice requirement.--Any plan amendment that
eliminates or restricts eligibility or benefits under
the plan may not take effect unless the State certifies
that it has provided prior or contemporaneous public
notice of the change, in a form and manner provided
under applicable State law.
``(B) Timely transmittal.--Any plan amendment that
eliminates or restricts eligibility or benefits under
the plan shall not be effective for longer than a 60
day period unless the amendment has been transmitted to the Secretary
before the end of such period.
``(3) Other amendments.--Subject to paragraph (4), any plan
amendment that is not described in paragraph (2) becomes
effective in a State fiscal year may not remain in effect after
the end of such fiscal year (or, if later, the end of the 90-
day period on which it becomes effective) unless the amendment
has been transmitted to the Secretary.
``(4) Exception.--The requirements of paragraphs (2) and
(3) shall not apply to a plan amendment that is submitted on a
timely basis pursuant to a court order or an order of the
Secretary.
``SEC. 2153. PROCESS FOR STATE WITHDRAWAL FROM PROGRAM.
``(a) In General.--A State may rescind its MediGrant plan and
discontinue participation in the program under this title at any time
after providing--
``(1) the public with 90 days prior notice in a publication
in one or more daily newspapers of general circulation in the
State or in any publication used by the State to publish State
statutes or rules, and
``(2) the Secretary with 90 days prior written notice.
``(b) Effective Date.--Such discontinuation shall not apply to
payments under part C for expenditures made for items and services
furnished under the MediGrant plan before the effective date of the
discontinuation.
``(c) Proration of Allotments.--In the case of any withdrawal under
this section other than at the end of a Federal fiscal year,
notwithstanding any provision of section 2121 to the contrary, the
Secretary shall provide for such appropriate proration of the
application of allotments under section 2121 as is appropriate.
``SEC. 2154. SANCTIONS FOR SUBSTANTIAL NONCOMPLIANCE.
``(a) Prompt Review of Plan Submittals.--The Secretary shall
promptly review MediGrant plans and plan amendments submitted under
this part to determine if they substantially comply with the
requirements of this title.
``(b) Determinations of Substantial Noncompliance.--
``(1) At time of plan or amendment submittal.--
``(A) In general.--If the Secretary, during the 30-
day period beginning on the date of submittal of a
MediGrant plan or plan amendment--
``(i) determines that the plan or amendment
substantially violates (within the meaning of
subsection (c)) a requirement of this title,
and
``(ii) provides written notice of such
determination to the State,
the Secretary shall issue an order specifying that the
plan or amendment, insofar as it is in substantial
violation of such a requirement, shall not be
effective, except as provided in subsection (c),
beginning at the end of a period of not less than 30
days, or 120 days in the case of the initial submission
of the MediGrant plan) specified in the order beginning
on the date of the notice of the determination.
``(B) Extension of time periods.--The time periods
specified in subparagraph (A) may be extended by
written agreement of the Secretary and the State
involved.
``(2) Violations in administration of plan.--
``(A) In general.--If the Secretary determines,
after reasonable notice and opportunity for a hearing
for the State, that in the administration of a
MediGrant plan there is a substantial violation of a
requirement of this title, the Secretary shall provide
the State with written notice of the determination and
with an order to remedy such violation. Such an order
shall become effective prospectively, as specified in
the order, after the date of receipt of such written
notice. Such an order may include the withholding of
funds, consistent with subsection (f), for parts of the
MediGrant plan affected by such violation, until the
Secretary is satisfied that the violation has been
corrected.
``(B) Effectiveness.--If the Secretary issues an
order under paragraph (1), the order shall become
effective, except as provided in subsection (c),
beginning at the end of a period (of not less than 30
days) specified in the order beginning on the date of
the notice of the determination to the State.
``(C) Timeliness of determinations relating to
report-based compliance.--The Secretary shall make
determinations under this paragraph respecting
violations relating to information contained in an
annual report under section 2102, an independent
evaluation under section 2103, or an audit report under
section 2131 not later than 30 days after the date of
transmittal of the report or evaluation to the
Secretary.
``(3) Consultation with state.--Before making a
determination adverse to a State under this section, the
Secretary shall (within any time periods provided under this
section)--
``(A) reasonably consult with the State involved,
``(B) offer the State a reasonable opportunity to
clarify the submission and submit further information
to substantiate compliance with the requirements of
this title, and
``(C) reasonably consider any such clarifications
and information submitted.
``(4) Justification of any inconsistencies in
determinations.--If the Secretary makes a determination under
this section that is, in whole or in part, inconsistent with
any previous determination issued by the Secretary under this
title, the Secretary shall include in the determination a
detailed explanation and justification for any such difference.
``(5) Substantial violation defined.--For purposes of this
title, a MediGrant plan (or amendment to such a plan) or the
administration of the MediGrant plan is considered to
`substantially violate' a requirement of this title if a
provision of the plan or amendment (or an omission from the
plan or amendment) or the administration of the plan--
``(A) is material and substantial in nature and
effect, and
``(B) is inconsistent with an express requirement
of this title.
A failure to meet a strategic objective or performance goal (as
described in section 2101) shall not be considered to
substantially violate a requirement of this title.
``(c) State Response to Orders.--
``(1) State response by revising plan.--
``(A) In general.--Insofar as an order under
subsection (b)(1) relates to a substantial violation by
a MediGrant plan or plan amendment, a State may respond
(before the date the order becomes effective) to such
an order by submitting a written revision of the plan
or plan amendment to substantially comply with the
requirements of this part.
``(B) Review of revision.--In the case of
submission of such a revision, the Secretary shall
promptly review the submission and shall withhold any
action on the order during the period of such review.
``(C) Secretarial response.--The revision shall be
considered to have corrected the deficiency (and the
order rescinded insofar as it relates to such
deficiency) unless the Secretary determines and
notifies the State in writing, within 15 days after the
date the Secretary receives the revision, that the plan
or amendment, as proposed to be revised, still
substantially violates a requirement of this title. In
such case the State may respond by seeking
reconsideration or a hearing under paragraph (2).
``(D) Revision retroactive.--If the revision
provides for substantial compliance, the revision may
be treated, at the option of the State, as being
effective either as of the effective date of the
provision to which it relates or such later date as the
State and Secretary may agree.
``(2) State response by seeking reconsideration or an
administrative hearing.--A State may respond to an order under
subsection (b) by filing a request with the Secretary for--
``(A) a reconsideration of the determination,
pursuant to subsection (d)(1), or
``(B) a review of the determination through an
administrative hearing, pursuant to subsection (d)(2).
In such case, the order shall not take effect before the
completion of the reconsideration or hearing.
``(3) State response by corrective action plan.--
``(A) In general.--In the case of an order
described in subsection (b)(2) that relates to a
substantial violation in the administration of the
MediGrant plan, a State may respond to such an order by
submitting a corrective action plan with the Secretary
to correct deficiencies in the administration of the
plan which are the subject of the order.
``(B) Review of corrective action plan.--In such
case, the Secretary shall withhold any action on the
order for a period (not to exceed 30 days) during which
the Secretary reviews the corrective action plan.
``(C) Secretarial response.--The corrective action
plan shall be considered to have corrected the
deficiency (and the order rescinded insofar as it
relates to such deficiency) unless the Secretary
determines and notifies the State in writing, within 15
days after the date the Secretary receives the
corrective action plan, that the State's administration
of the MediGrant plan, as proposed to be corrected in
the plan, will still substantially violate a
requirement of this title. In such case the State may
respond by seeking reconsideration or a hearing under
paragraph (2).
``(4) State response by withdrawal of plan amendment;
failure to respond.--Insofar as an order relates to a
substantial violation in a plan amendment submitted, a State
may respond to such an order by withdrawing the plan amendment
and the MediGrant plan shall be treated as though the amendment
had not been made.
``(d) Administrative Review and Hearing.--
``(1) Reconsideration.--Within 30 days after the date of
receipt of a request under subsection (b)(2)(A), the Secretary
shall notify the State of the time and place at which a hearing
will be held for the purpose of reconsidering the Secretary's
determination. The hearing shall be held not less than 20 days
nor more than 60 days after the date notice of the hearing is
furnished to the State, unless the Secretary and the State
agree in writing to holding the hearing at another time. The
Secretary shall affirm, modify, or reverse the original
determination within 60 days of the conclusion of the hearing.
``(2) Administrative hearing.--Within 30 days after the
date of receipt of a request under subsection (b)(2)(B), an
administrative law judge shall schedule a hearing for the
purpose of reviewing the Secretary's determination. The hearing
shall be held not less than 20 days nor more than 60 days after
the date notice of the hearing is furnished to the State,
unless the Secretary and the State agree in writing to holding
the hearing at another time. The administrative law judge shall
affirm, modify, or reverse the determination within 60 days of
the conclusion of the hearing.
``(e) Judicial Review.--
``(1) In general.--A State which is dissatisfied with a
final determination made by the Secretary under subsection
(d)(1) or a final determination of an administrative law judge
under subsection (d)(2) may, within 60 days after it has been
notified of such determination, file with the United States
court of appeals for the circuit in which the State is located
a petition for review of such determination. A copy of the
petition shall be forthwith transmitted by the clerk of the
court to the Secretary and, in the case of a determination
under subsection (d)(2), to the administrative law judge
involved. The Secretary (or judge involved) thereupon shall
file in the court the record of the proceedings on which the
final determination was based, as provided in section 2112 of
title 28, United States Code.
``(2) Standard for review.--The findings of fact by the
Secretary or administrative law judge, if supported by
substantial evidence, shall be conclusive, but the court, for
good cause shown, may remand the case to the Secretary or judge to take
further evidence, and the Secretary or judge may thereupon make new or
modified findings of fact and may modify a previous determination, and
shall certify to the court the transcript and record of the further
proceedings. Such new or modified findings of fact shall likewise be
conclusive if supported by substantial evidence.
``(3) Jurisdiction of appellate court.--The court shall
have jurisdiction to affirm the action of the Secretary or
judge or to set it aside, in whole or in part. The judgment of
the court shall be subject to review by the Supreme Court of
the United States upon certiorari or certification as provided
in section 1254 of title 28, United States Code.
``(f) Withholding of Funds.--
``(1) In general.--Any order under this section relating to
the withholding of funds shall be effective not earlier than
the effective date of the order and shall only relate to the
portions of a MediGrant plan or administration thereof which
substantially violate a requirement of this title. In the case
of a failure to meet a set-aside requirement under section
2112, any withholding shall only apply to the extent of such
failure.
``(2) Suspension of withholding.--The Secretary may suspend
withholding of funds under paragraph (1) during the period
reconsideration or administrative and judicial review is
pending under subsection (d) or (e).
``(3) Restoration of funds.--Any funds withheld under this
subsection under an order shall be immediately restored to a
State--
``(A) to the extent and at the time the order is--
``(i) modified or withdrawn by the
Secretary upon reconsideration,
``(ii) modified or reversed by an
administrative law judge, or
``(iii) set aside (in whole or in part) by
an appellate court; or
``(B) when the Secretary determines that the
deficiency which was the basis for the order is
corrected;
``(C) when the Secretary determines that violation
which was the basis for the order is resolved or the
amendment which was the basis for the order is
withdrawn; or
``(D) at any time upon the initiative of the
Secretary.
``SEC. 2155. SECRETARIAL AUTHORITY.
``(a) Negotiated Agreement and Dispute Resolution.--
``(1) Negotiations.--Nothing in this part shall be
construed as preventing the Secretary and a State from at any
time negotiating a satisfactory resolution to any dispute
concerning the approval of a MediGrant plan (or amendments to a
MediGrant plan) or the compliance of a MediGrant plan
(including its administration) with requirements of this title.
``(2) Cooperation.--The Secretary shall act in a
cooperative manner with the States in carrying out this title.
In the event of a dispute between a State and the Secretary,
the Secretary shall, whenever practicable, engage in informal
dispute resolution activities in lieu of formal enforcement or
sanctions under section 2154.
``(b) Limitations on Delegation of Decision-making Authority.--The
Secretary may not delegate (other than to the Administrator of the
Health Care Financing Administration) the authority to make
determinations or reconsiderations respecting the approval of MediGrant
plans (or amendments to such plans) or the compliance of a MediGrant
plan (including its administration) with requirements of this title.
Such Administrator may not further delegate such authority to any
individual, including any regional official of such Administration.
``(c) Requiring Formal Rulemaking for Changes in Secretarial
Administration.--The Secretary shall carry out the administration of
the program under this title only through a prospective formal
rulemaking process, including issuing notices of proposed rule making,
publishing proposed rules or modifications to rules in the Federal
Register, and soliciting public comment.
``Part F--General Provisions
``SEC. 2171. DEFINITIONS.
``(a) Medical Assistance.--
``(1) In general.--For purposes of this title, except as
provided in paragraph (2), the term `medical assistance' means
payment of part or all the cost of any of the following for
eligible low-income individuals (as defined in subsection (b))
as specified under the MediGrant plan:
``(A) Inpatient hospital services.
``(B) Outpatient hospital services.
``(C) Physician services.
``(D) Surgical services.
``(E) Clinic services and other ambulatory health
care services.
``(F) Nursing facility services.
``(G) Intermediate care facility services for the
mentally retarded.
``(H) Prescription drugs and biologicals.
``(I) Over-the-counter medications.
``(J) Laboratory and radiological services.
``(K) Family planning services and supplies.
``(L) Inpatient mental health services, including
services furnished in a State-operated mental hospital
and including residential or other 24-hour
therapeutically planned structured services in the case
of a child.
``(M) Outpatient mental health services, including
services furnished in a State-operated mental hospital
and including community-based services in the case of a
child.
``(N) Durable medical equipment and other
medically-related or remedial devices (such as
prosthetic devices, implants, eyeglasses, hearing aids,
dental devices, and adaptive devices).
``(O) Disposable medical supplies.
``(P) Home and community-based health care services
and related supportive services (such as home health
nursing services, home health aide services, personal
care, assistance with activities of daily living, chore
services, day care services, respite care services, and training for
family members).
``(Q) Community supported living arrangements.
``(R) Nursing care services (such as private duty
nursing care, nurse midwife services, respiratory care
services, pediatric nurse services, and advanced
practice nurse services) in a home, school, or other
setting.
``(S) Dental services.
``(T) Inpatient substance abuse treatment services
and residential substance abuse treatment services.
``(U) Outpatient substance abuse treatment
services.
``(V) Case management services.
``(W) Care coordination services.
``(X) Physical therapy, occupational therapy, and
services for individuals with speech, hearing, and
language disorders.
``(Y) Hospice care.
``(Z) Any other medical, diagnostic, screening,
preventive, restorative, remedial, therapeutic, or
rehabilitative services (whether in a facility, home,
school, or other setting) if recognized by State law
and if the service is--
``(i) prescribed by or furnished by a
physician or other licensed or registered
practitioner within the scope of practice as
defined by State law,
``(ii) performed under the general
supervision or at the direction of a physician,
or
``(iii) furnished by a health care facility
that is operated by a State or local government
or is licensed under State law and operating
within the scope of the license.
``(AA) Premiums for private health care insurance
coverage, including private long-term care insurance
coverage.
``(BB) Medical transportation.
``(CC) Medicare cost-sharing (as defined in
subsection (c)).
``(DD) Enabling services (such as transportation,
translation, and outreach services) designed to
increase the accessibility of primary and preventive
health care services for eligible low-income
individuals.
``(EE) Any other health care services or items
specified by the Secretary.
``(2) Exclusion of certain payments.--Such term does not
include the payment with respect to care or services for--
``(A) any individual who is an inmate of a public
institution (except as a patient in a State psychiatric
hospital); and
``(B) any individual who is not an eligible low-
income individual.
``(b) Eligible Low-Income Individual.--The term `eligible low-
income individual' means an individual who has been determined eligible
by the State for medical assistance under the MediGrant plan and whose
family income (as determined under the plan) does not exceed a
percentage (specified in the MediGrant plan and not to exceed 300
percent) of the poverty line for a family of the size involved. In
determining the amount of income under the previous sentence, a State
may exclude costs incurred for medical care or other types of remedial
care recognized by the State.
``(c) Medicare Cost-Sharing.--For purposes of this title, the term
`medicare cost-sharing' means any of the following:
``(1)(A) Premiums under section 1839.
``(B) Premiums under section 1818 or 1818A.
``(2) Coinsurance under title XVIII (including coinsurance
described in section 1813).
``(3) Deductibles established under title XVIII (including
those described in section 1813 and section 1833(b)).
``(4) The difference between the amount that is paid under
section 1833(a) and the amount that would be paid under such
section if any reference to `80 percent' therein were deemed a
reference to `100 percent'.
``(5) Premiums for enrollment of an individual with an
eligible organization under section 1876 or with a MedicarePlus
organization under part C of title XVIII.
``(d) Additional Definitions.--For purposes of this title:
``(1) Child.--The term `child' means an individual under 19
years of age.
``(2) Poverty line defined.--The term `poverty line' means
the income official poverty line (as defined by the Office of
Management and Budget and revised annually in accordance with
section 673(2) of the Omnibus Budget Reconciliation Act of
1981).
``(3) Pregnant woman.--The term `pregnant woman' includes a
woman during the 60-day period beginning on the last day of the
pregnancy.
``SEC. 2172. TREATMENT OF TERRITORIES.
``Notwithstanding any other requirement of this title, the
Secretary may waive or modify any requirement of this title with
respect to the medical assistance program a State other than the 50
States and the District of Columbia, other than a waiver of--
``(1) the applicable Federal medical assistance percentage,
``(2) the limitation on total payments in a fiscal year to
the amount of the allotment under section 2121(c), or
``(3) the requirement that payment may be made for medical
assistance only with respect to amounts expended by the State
for care and services described in paragraph (1) of section
2171(a) and medically-related services (as defined in section
2112(e)(2)).
``SEC. 2173. DESCRIPTION OF TREATMENT OF INDIAN HEALTH SERVICE
FACILITIES.
``In the case of a State in which one or more facilities of the
Indian Health Service are located, the MediGrant plan shall include a
description of--
``(1) what provision (if any) has been made for payment for
items and services furnished by such facilities, and
``(2) the manner in which medical assistance for low-income
eligible individuals who are Indians will be provided,
as determined by the State in consultation with the appropriate Indian
tribes and tribal organizations.
``SEC. 2174. APPLICATION OF CERTAIN GENERAL PROVISIONS.
``The following sections in part A of title XI shall apply to
States under this title in the same manner as they applied to a State
under title XIX:
``(1) Section 1101(a)(1) (relating to definition of State).
``(2) Section 1116 (relating to administrative and judicial
review), but only insofar as consistent with the provisions of
part C.
``(3) Section 1124 (relating to disclosure of ownership and
related information).
``(4) Section 1126 (relating to disclosure of information
about certain convicted individuals).
``(5) Section 1132 (relating to periods within which claims
must be filed).
``SEC. 2175. MEDIGRANT MASTER DRUG REBATE AGREEMENTS.
``(a) Requirement for Manufacturer to Enter Into Agreement.--
``(1) In general.--Pursuant to section 2123(f), in order
for payment to be made to a State under part C for medical
assistance for covered outpatient drugs of a manufacturer, the
manufacturer shall enter into and have in effect an MediGrant
master rebate agreement described in subsection (b) with the
Secretary on behalf of States electing to participate in the
agreement.
``(2) State participation in master agreement optional.--
Nothing in this section shall be construed to--
``(A) require a State to participate in an
MediGrant master rebate agreement under this section;
or
``(B) prohibit a State from entering into an
agreement with a manufacturer of covered outpatient
drugs (under such terms as the State and manufacturer
may agree upon) regarding the amount of payment for
such drugs under the MediGrant plan.
``(3) Coverage of drugs not covered under rebate
agreements.--Nothing in this section shall be construed to
prohibit a State in its discretion from providing coverage
under its MediGrant plan of a covered outpatient drug for which
no rebate agreement is in effect under this section.
``(4) Effect on existing agreements.--If a State has a
rebate agreement in effect with a manufacturer on the date of
the enactment of this section which provides for a minimum
aggregate rebate equal to or greater than the minimum aggregate
rebate which would otherwise be paid under the MediGrant master
agreement under this section, at the option of the State--
``(A) such agreement shall be considered to meet
the requirements of the MediGrant master rebate
agreement; and
``(B) the State shall be considered to have elected
to participate in the MediGrant master rebate
agreement.
``(b) Terms of Rebate Agreement.--
``(1) Periodic rebates.--The MediGrant master rebate
agreement under this section shall require the manufacturer to
provide, to the MediGrant plan of each State participating in
the agreement, a rebate for a rebate period in an amount
specified in subsection (c) for covered outpatient drugs of the
manufacturer dispensed after the effective date of the
agreement, for which payment was made under the plan for such
period. Such rebate shall be paid by the manufacturer not later
than 30 days after the date of receipt of the information
described in paragraph (2) for the period involved.
``(2) State provision of information.--
``(A) State responsibility.--Each State
participating in the MediGrant master rebate agreement
shall report to each manufacturer not later than 60
days after the end of each rebate period and in a form
consistent with a standard reporting format established
by the Secretary, information on the total number of
units of each dosage form and strength and package size
of each covered outpatient drug, for which payment was
made under the MediGrant plan for the period, and shall
promptly transmit a copy of such report to the
Secretary.
``(B) Audits.--A manufacturer may audit the
information provided (or required to be provided) under
subparagraph (A). Adjustments to rebates shall be made
to the extent that information indicates that
utilization was greater or less than the amount
previously specified.
``(3) Manufacturer provision of price information.--
``(A) In general.--Each manufacturer which is
subject to the MediGrant master rebate agreement under
this section shall report to the Secretary--
``(i) not later than 30 days after the last
day of each rebate period under the agreement
(beginning on or after January 1, 1991), on the
average manufacturer price (as defined in
subsection (i)(1)) and, for single source drugs
and innovator multiple source drugs, the
manufacturer's best price (as defined in
subsection (c)(1)(C)) for each covered
outpatient drug for the rebate period under the
agreement, and
``(ii) not later than 30 days after the
date of entering into an agreement under this
section, on the average manufacturer price (as
defined in subsection (i)(1)) as of October 1,
1990, for each of the manufacturer's covered
outpatient drugs.
``(B) Verification surveys of average manufacturer
price.--The Secretary may survey wholesalers and
manufacturers that directly distribute their covered
outpatient drugs, when necessary, to verify
manufacturer prices reported under subparagraph (A).
The Secretary may impose a civil monetary penalty in an
amount not to exceed $10,000 on a wholesaler,
manufacturer, or direct seller, if the wholesaler,
manufacturer, or direct seller of a covered outpatient
drug refuses a request for information by the Secretary
in connection with a survey under this subparagraph.
The provisions of section 1128A (other than subsections
(a) (with respect to amounts of penalties or additional assessments)
and (b)) shall apply to a civil money penalty under this subparagraph
in the same manner as such provisions apply to a penalty or proceeding
under section 1128A(a).
``(C) Penalties.--
``(i) Failure to provide timely
information.--In the case of a manufacturer
which is subject to the MediGrant master rebate
agreement that fails to provide information
required under subparagraph (A) on a timely
basis, the amount of the penalty shall be
$10,000 for each day in which such information
has not been provided and such amount shall be
paid to the Treasury. If such information is
not reported within 90 days of the deadline
imposed, the agreement shall be suspended for
services furnished after the end of such 90-day
period and until the date such information is
reported (but in no case shall such suspension
be for a period of less than 30 days).
``(ii) False information.--Any manufacturer
which is subject to the MediGrant master rebate
agreement, or a wholesaler or direct seller,
that knowingly provides false information under
subparagraph (A) or (B) is subject to a civil
money penalty in an amount not to exceed
$100,000 for each item of false information.
Any such civil money penalty shall be in
addition to other penalties as may be
prescribed by law. The provisions of section
1128A (other than subsections (a) and (b))
shall apply to a civil money penalty under this
subparagraph in the same manner as such
provisions apply to a penalty or proceeding
under section 1128A(a).
``(D) Confidentiality of information.--
Notwithstanding any other provision of law, information
disclosed by manufacturers or wholesalers under this
paragraph or under an agreement with the Secretary of
Veterans Affairs described in section 2123(f) is
confidential and shall not be disclosed by the
Secretary or the Secretary of Veterans Affairs or a
State agency (or contractor therewith) in a form which
discloses the identity of a specific manufacturer or
wholesaler or the prices charged for drugs by such
manufacturer or wholesaler, except--
``(i) as the Secretary determines to be
necessary to carry out this section,
``(ii) to permit the Comptroller General to
review the information provided, and
``(iii) to permit the Director of the
Congressional Budget Office to review the
information provided.
``(4) Length of agreement.--
``(A) In general.--The MediGrant master rebate
agreement under this section shall be effective for an
initial period of not less than 1 year and shall be
automatically renewed for a period of not less than one
year unless terminated under subparagraph (B).
``(B) Termination.--
``(i) By the secretary.--The Secretary may
provide for termination of the MediGrant master
rebate agreement with respect to a manufacturer
for violation of the requirements of the
agreement or other good cause shown. Such
termination shall not be effective earlier than
60 days after the date of notice of such
termination. The Secretary shall provide, upon
request, a manufacturer with a hearing
concerning such a termination, but such hearing
shall not delay the effective date of the
termination. Failure of a State to provide any
advance notice of such a termination as
required by regulation shall not affect the
State's right to terminate coverage of the
drugs affected by such termination as of the
effective date of such termination.
``(ii) By a manufacturer.--A manufacturer
may terminate its participation in the
MediGrant master rebate agreement under this
section for any reason. Any such termination
shall not be effective until the calendar
quarter beginning at least 60 days after the
date the manufacturer provides notice to the
Secretary.
``(iii) Effectiveness of termination.--Any
termination under this subparagraph shall not
affect rebates due under the agreement before
the effective date of its termination.
``(iv) Notice to states.--In the case of a
termination under this subparagraph, the
Secretary shall provide notice of such
termination to the States within not less than
30 days before the effective date of such
termination.
``(v) Application to terminations of other
agreements.--The provisions of this
subparagraph shall apply to the terminations of
master agreements described in section 8126(a)
of title 38, United States Code.
``(C) Delay before reentry.--In the case of any
rebate agreement with a manufacturer under this section
which is terminated, another such agreement with the
manufacturer (or a successor manufacturer) may not be
entered into until a period of 1 calendar quarter has
elapsed since the date of the termination, unless the
Secretary finds good cause for an earlier reinstatement
of such an agreement.
``(c) Determination of Amount of Rebate.--
``(1) Basic rebate for single source drugs and innovator
multiple source drugs.--
``(A) In general.--Except as provided in paragraph
(2), the amount of the rebate specified in this
subsection with respect to a State participating in the
MediGrant master rebate agreement for a rebate period
(as defined in subsection (i)(8)) with respect to each
dosage form and strength of a single source 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); and
``(ii) the greater of--
``(I) the difference between the
average manufacturer price and the best
price (as defined in subparagraph (C))
for the dosage form and strength of the
drug, or
``(II) the minimum rebate
percentage (specified in subparagraph
(B)) of such average manufacturer
price,
for the rebate period.
``(B) Minimum rebate percentage.--For purposes of
subparagraph (A)(ii)(II), the `minimum rebate
percentage' is 15.1 percent.
``(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
manufacturer, the lowest price available from
the manufacturer during the rebate period to
any wholesaler, retailer, provider, health
maintenance 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 Department 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 section 340B(a)(4) of the
Public Health Service Act;
``(II) any prices charged under the
Federal Supply Schedule of the General
Services Administration;
``(III) any prices used under a
State pharmaceutical assistance
program; and
``(IV) any depot prices and single
award contract 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 that are
contingent on any purchase requirement,
volume discounts, and rebates (other
than rebates under this section);
``(II) shall be determined without
regard to special packaging, labeling,
or identifiers on the dosage form or
product or package;
``(III) shall not take into account
prices that are merely nominal in
amount; and
``(IV) shall exclude rebates paid
under this section or any other rebates
paid to a State participating in the
MediGrant master rebate agreement.
``(2) Additional rebate for single source and innovator
multiple source drugs.--
``(A) In general.--The amount of the rebate
specified in this subsection with respect to a State
participating in the MediGrant master rebate agreement
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 amount
equal to the product of--
``(i) the total number of units of such
dosage form and strength dispensed after
December 31, 1990, for which payment was made
under the MediGrant 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
manufacturer, after the first day of
such quarter), 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 (ii)(II) 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 participating in the MediGrant master rebate
agreement 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) shall be equal to the product of--
``(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 payment was made
under the MediGrant plan for the rebate period.
``(B) Applicable percentage defined.--For purposes
of subparagraph (A)(i), the `applicable percentage' is
11 percent.
``(4) Limitation on amount of rebate to amounts paid for
certain drugs.--Upon request of a manufacturer of a covered
outpatient drug for which a majority of the estimated number of
units of such dosage form and strength that are subject to
rebates under this section were dispensed to inpatients of
nursing facilities (including drugs which are exempt from the
requirements of the MediGrant master rebate agreement under
this section under subsection (h)(1)(B)), the Secretary shall
limit the amount of the rebate under this subsection with
respect to a dosage form and strength of the drug for a rebate
period to the amount paid under the MediGrant plan with respect
to such dosage form and strength of the drug in the rebate
period (without consideration of any dispensing fees paid).
``(d) Limitations on Coverage of Drugs by States Participating in
Master Agreement.--
``(1) Permissible restrictions.--A State participating in
the MediGrant master rebate agreement under this section may--
``(A) subject to prior authorization under its
MediGrant plan any covered outpatient drug so long as
any such prior authorization program complies with the
requirements of paragraph (5); and
``(B) exclude or otherwise restrict coverage under
its plan of a covered outpatient drug if--
``(i) the prescribed use is not for a
medically accepted indication (as defined in
subsection (i)(5));
``(ii) the drug is contained in the list
referred to in paragraph (2);
``(iii) the drug is subject to such
restrictions pursuant to the MediGrant master
rebate agreement or any agreement described in
subsection (a)(4); or
``(iv) the State has excluded coverage of
the drug from its formulary established in
accordance with paragraph (4).
``(2) List of drugs subject to restriction.--The following
drugs or classes of drugs, or their medical uses, may be
excluded from coverage or otherwise restricted by a State
participating in the MediGrant master rebate agreement:
``(A) Agents when used for anorexia, weight loss,
or weight gain.
``(B) Agents when used to promote fertility.
``(C) Agents when used for cosmetic purposes or
hair growth.
``(D) Agents when used for the symptomatic relief
of cough and colds.
``(E) Agents when used to promote smoking
cessation.
``(F) Prescription vitamins and mineral products,
except prenatal vitamins and fluoride preparations.
``(G) Nonprescription drugs.
``(H) Covered outpatient drugs which the
manufacturer seeks to require as a condition of sale
that associated tests or monitoring services be
purchased exclusively from the manufacturer or its
designee.
``(I) Barbiturates.
``(J) Benzodiazepines.
``(3) Additions to drug listings.--The Secretary shall, by
regulation, periodically update the list of drugs or classes of
drugs described in paragraph (2), or their medical uses, which
the Secretary has determined to be subject to clinical abuse or
inappropriate use.
``(4) Requirements for formularies.--A State participating
in the MediGrant master rebate agreement may establish a
formulary if the formulary meets the following requirements:
``(A) The formulary is developed by a committee
consisting of physicians, pharmacists, and other
appropriate individuals appointed by the Governor of
the State.
``(B) Except as provided in subparagraph (C), the
formulary includes the covered outpatient drugs of any
manufacturer which has entered into and complies with
the agreement under subsection (a) (other than any drug
excluded from coverage or otherwise restricted under
paragraph (2)).
``(C) A covered outpatient drug may be excluded
with respect to the treatment of a specific disease or
condition for an identified population (if any) only
if, based on the drug's labeling (or, in the case of a
drug the prescribed use of which is not approved under
the Federal Food, Drug, and Cosmetic Act but is a
medically accepted indication, based on information
from the appropriate compendia described in subsection
(i)(5)), the excluded drug does not have a significant,
clinically meaningful therapeutic advantage 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 explanation
(available to the public) of the basis for the
exclusion.
``(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) The 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
paragraph (5) is not a formulary subject to the requirements of
this paragraph.
``(5) Requirements of prior authorization programs.--The
MediGrant plan of a State participating in the MediGrant master
rebate agreement may require, as a condition of coverage or
payment for a covered outpatient drug for which Federal
financial participation is available in accordance with
this section the approval of the drug before its dispensing for any
medically accepted indication (as defined in subsection (i)(5)) only if
the system providing for such approval--
``(A) provides response by telephone or other
telecommunication device within 24 hours of a request
for prior authorization; and
``(B) except with respect to the drugs on the list
referred to in paragraph (2), provides for the
dispensing of at least a 72-hour supply of a covered
outpatient prescription drug in an emergency situation
(as defined by the Secretary).
``(6) Other permissible restrictions.--A State
participating in the MediGrant master rebate agreement may
impose limitations, with respect to all such drugs in a
therapeutic class, on the minimum or maximum quantities per
prescription or on the number of refills, if such limitations
are necessary to discourage waste, and may address instances of
fraud or abuse by individuals in any manner authorized under
this Act.
``(e) Drug Use Review.--
``(1) In general.--A State participating in the MediGrant
master rebate agreement may provide for a drug use review
program to educate physicians and pharmacists to identify and
reduce the frequency of patterns of fraud, abuse, gross
overuse, or inappropriate or medically unnecessary care, among
physicians, pharmacists, and patients, or associated with
specific drugs or groups of drugs, as well as potential and
actual severe adverse reactions to drugs.
``(2) Application of state standards.--A State with a drug
use review program under this subsection shall establish and
operate the program under such standards as it may establish.
``(f) Electronic Claims Management.--In accordance with chapter 35
of title 44, United States Code (relating to coordination of Federal
information policy), the Secretary shall encourage each State to
establish, as its principal means of processing claims for covered
outpatient drugs under its MediGrant plan, a point-of-sale electronic
claims management system, for the purpose of performing on-line, real
time eligibility verifications, claims data capture, adjudication of
claims, and assisting pharmacists (and other authorized persons) in
applying for and receiving payment.
``(g) Annual Report.--
``(1) In general.--Not later than May 1 of each year, the
Secretary shall transmit to the Committee on Finance of the
Senate, the Committee on Commerce of the House of
Representatives, and the Committee on Aging of the Senate a
report on the operation of this section in the preceding fiscal
year.
``(2) Details.--Each report shall include information on--
``(A) ingredient costs paid under this title for
single source drugs, multiple source drugs, and
nonprescription covered outpatient drugs;
``(B) the total value of rebates received and
number of manufacturers providing such rebates;
``(C) the effect of inflation on the value of
rebates required under this section;
``(D) trends in prices paid under this title for
covered outpatient drugs; and
``(E) Federal and State administrative costs
associated with compliance with the provisions of this
title.
``(h) Exemption for Capitated Health Care Organizations, Hospitals,
and Nursing Facilities.--
``(1) In general.--Except as provided in paragraph (2), the
requirements of the MediGrant master rebate agreement under
this section shall not apply with respect to covered outpatient
drugs dispensed by or through--
``(A) a capitated health care organization (as
defined in section 2114(c)(1)); or
``(B) a hospital or nursing facility that dispenses
covered outpatient drugs using a drug formulary system
and bills the State no more than the hospital's
purchasing costs for covered outpatient drugs.
``(2) Construction in determining best price.--Nothing in
paragraph (1) shall be construed as excluding amounts paid by
the entities described in such paragraph for covered outpatient
drugs from the determination of the best price (as defined in
subsection (c)(1)(C)) for such drugs.
``(i) Definitions.--In the section--
``(1) Average manufacturer price.--The term `average
manufacturer price' means, with respect to a covered outpatient
drug of a manufacturer for a rebate period, the average price
paid to the manufacturer for the drug in the United States by
wholesalers for drugs distributed to the retail pharmacy class
of trade, after deducting customary prompt pay discounts.
``(2) Covered outpatient drug.--Subject to the exceptions
in subparagraph (D), the term `covered outpatient drug' means--
``(A) of those drugs which are treated as
prescribed drugs for purposes of section 2171(a)(1)(H),
a drug which may be dispensed only upon prescription
(except as provided in paragraph (7)), and--
``(i) which is approved as a prescription
drug under section 505 or 507 of the Federal
Food, Drug, and Cosmetic Act;
``(ii)(I) which was commercially used or
sold in the United States before the date of
the enactment of the Drug Amendments of 1962 or
which is identical, similar, or related (within
the meaning of section 310.6(b)(1) of title 21
of the Code of Federal Regulations) to such a
drug, and (II) which has not been the subject
of a final determination by the Secretary that
it is a `new drug' (within the meaning of
section 201(p) of the Federal Food, Drug, and
Cosmetic Act) or an action brought by the
Secretary under section 301, 302(a), or 304(a)
of such Act to enforce section 502(f) or 505(a)
of such Act; or
``(iii)(I) which is described in section
107(c)(3) of the Drug Amendments of 1962 and
for which the Secretary has determined there is
a compelling justification for its medical
need, or is identical, similar, or related
(within the meaning of section 310.6(b)(1) of
title 21 of the Code of Federal Regulations) to
such a drug, and (II) for which the Secretary
has not issued a notice of an opportunity for a
hearing under section 505(e) of the Federal
Food, Drug, and Cosmetic Act on a proposed
order of the Secretary to withdraw approval of
an application for such drug under such section
because the Secretary has determined that the
drug is less than effective for some or all
conditions of use prescribed, recommended, or
suggested in its labeling;
``(B) a biological product, other than a vaccine
which--
``(i) may only be dispensed upon
prescription,
``(ii) is licensed under section 351 of the
Public Health Service Act, and
``(iii) is produced at an establishment
licensed under such section to produce such
product;
``(C) insulin certified under section 506 of the
Federal Food, Drug, and Cosmetic Act; and
``(D) a drug which may be sold without a
prescription (commonly referred to as an `over-the-
counter drug'), if the drug is prescribed by a
physician (or other person authorized to prescribe
under State law).
``(3) Limiting definition.--The term `covered outpatient
drug' does not include any drug, biological product, or insulin
provided as part of, or as incident to and in the same setting
as, any of the following (and for which payment may be made
under a MediGrant plan as part of payment for the following and
not as direct reimbursement for the drug):
``(A) Inpatient hospital services.
``(B) Hospice services.
``(C) Dental services, except that drugs for which
the MediGrant plan authorizes direct reimbursement to
the dispensing dentist are covered outpatient drugs.
``(D) Physicians' services.
``(E) Outpatient hospital services.
``(F) Nursing facility services and services
provided by an intermediate care facility for the
mentally retarded.
``(G) Other laboratory and x-ray services.
``(H) Renal dialysis services.
Such term also does not include any such drug or product for
which a National Drug Code number is not required by the Food
and Drug Administration or a drug or biological used for a
medical indication which is not a medically accepted
indication. 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 subsection (c)(1)(C))
for such drug, biological product, or insulin.
``(4) Manufacturer.--The term `manufacturer' means, with
respect to a covered outpatient drug, the entity holding legal
title to or possession of the National Drug Code number for
such drug.
``(5) Medically accepted indication.--The term `medically
accepted indication' means any use for a covered outpatient
drug which is approved under the Federal Food, Drug, and
Cosmetic Act, or the use of which is supported by one or more
citations included or approved for inclusion in any of the
following compendia:
``(A) American Hospital Formulary Service Drug
Information.
``(B) United States Pharmacopeia-Drug Information.
``(C) American Medical Association Drug
Evaluations.
``(D) The peer-reviewed medical literature.
``(6) Multiple source drug; innovator multiple source drug;
noninnovator multiple source drug; single source drug.--
``(A) Defined.--
``(i) Multiple source drug.--The term
`multiple source drug' means, with respect to a
rebate period, a covered outpatient drug (not
including any drug described in paragraph
(2)(D)) for which there are 2 or more drug
products which--
``(I) are rated as therapeutically
equivalent (under the Food and Drug
Administration's most recent
publication of `Approved Drug Products
with Therapeutic Equivalence
Evaluations'),
``(II) except as provided in
subparagraph (B), are pharmaceutically
equivalent and bioequivalent, as
defined in subparagraph (C) and as
determined by the Food and Drug
Administration, and
``(III) are sold or marketed in the
State during the period.
``(ii) Innovator multiple source drug.--The
term `innovator multiple source drug' means a
multiple source drug that was originally
marketed under an original new drug application
or product licensing application approved by
the Food and Drug Administration.
``(iii) Noninnovator multiple source
drug.--The term `noninnovator multiple source
drug' means a multiple source drug that is not
an innovator multiple source drug.
``(iv) Single source drug.--The term
`single source drug' means a covered outpatient
drug which is produced or distributed under an
original new drug application approved by the
Food and Drug Administration, including a drug
product marketed by any cross-licensed
producers or distributors operating under the
new drug application or product licensing
application.
``(B) Exception.--Subparagraph (A)(i)(II) shall not
apply if the Food and Drug Administration changes by
regulation the requirement that, for purposes of the
publication described in subparagraph (A)(i)(I), in
order for drug products to be rated as therapeutically
equivalent, they must be pharmaceutically equivalent
and bioequivalent, as defined in subparagraph (C).
``(C) Definitions.--For purposes of this
paragraph--
``(i) drug products are pharmaceutically
equivalent if the products contain identical
amounts of the same active drug ingredient in
the same dosage form and meet compendial or
other applicable standards of strength,
quality, purity, and identity;
``(ii) drugs are bioequivalent if they do
not present a known or potential bioequivalence
problem, or, if they do present such a problem,
they are shown to meet an appropriate standard
of bioequivalence; and
``(iii) a drug product is considered to be
sold or marketed in a State if it appears in a
published national listing of average wholesale
prices selected by the Secretary, if the listed
product is generally available to the public
through retail pharmacies in that State.
``(7) Nonprescription drugs.--If the MediGrant plan of a
State participating in the MediGrant master rebate agreement
under this section includes coverage of prescribed drugs as
described in section 2171(a)(1)(H) and permits coverage of
drugs which may be sold without a prescription (commonly
referred to as `over-the-counter' drugs), if they are
prescribed by a physician (or other person authorized to
prescribe under State law), such a drug shall be regarded as a
covered outpatient drug for purposes of the State's
participation in the agreement.
``(8) Rebate period.--The term `rebate period' means, with
respect to an agreement under subsection (a), a calendar
quarter or other period specified by the Secretary with respect
to the payment of rebates under such agreement.''.
SEC. 16002. TERMINATION OF CURRENT PROGRAM AND TRANSITION.
(a) Termination of Current Program; Limitation on Medicaid Payments
in Fiscal Year 1996.--Title XIX of the Social Security Act is amended--
(1) by redesignating section 1931 as section 1932; and
(2) by inserting after section 1930 the following new
section:
``termination of medicaid program; limitation on new obligation
authority
``Sec. 1931. (a) Elimination of Individual Entitlement.--Effective
on the date of the enactment of this section--
``(1) except as provided in subsection (b), the Federal
Government has no obligation to provide payment with respect to
items and services provided under this title, and
``(2) this title shall not be construed as providing for an
entitlement, under Federal law in relation to the Federal
Government, in an individual or person (including any provider)
at the time of provision or receipt of services.
``(b) Limitation on Obligation Authority.--Notwithstanding any
other provision of this title--
``(1) Post-enactment, pre-medigrant.--Subject to paragraph
(2), the Secretary is authorized to enter into obligations with
any State under this title for expenses incurred after the date
of the enactment of this Act and during fiscal year 1996, but
not in excess of the obligation allotment for that State for
fiscal year 1996 under section 2121(b)(4).
``(2) None after medigrant.--The Secretary is not
authorized to enter into any obligation with any State under
this title for expenses incurred on or after the earlier of--
``(A) October 1, 1996; or
``(B) the first day of the first quarter on which
the State plan under title XXI is first effective.
``(3) Agreement.--A State's submission of claims for
payment under section 1903 after the date of the enactment of
this title with respect to which the limitation described in
paragraph (1) applies is deemed to constitute the State's
acceptance of the obligation limitation under such paragraph
(including the formula for computing the amount of such
obligation limitation).
``(c) Requirement for Timely Submittal of Claims.--No payment shall
be made to a State under this title with respect to an obligation
incurred before the date of the enactment of this section, unless the
State has submitted to the Secretary, by not later than June 30, 1996,
a claim for Federal financial participation for expenses paid by the
State with respect to such obligations. Nothing in subsection (a) or
(b) shall be construed as affecting the obligation of the Federal
Government to pay claims described in the previous sentence.''.
(b) Medicaid Transition.--
(1) Treatment of certain causes of action.--No cause of
action under title XIX of the Social Security Act which seeks
to require a State to establish or maintain minimum payment
rates under such title and which has not become final as of the
date of the enactment of this Act shall be brought or
continued.
(2) Treatment of certain disallowances.--Notwithstanding
any provision of law, in the case where payment has been made
under section 1903(a) of the Social Security Act to a State
before October 1, 1995, and for which a disallowance has not
been taken as of such date (or, if so taken, has not been
completed by such date), the Secretary of Health and Human
Services shall discontinue the disallowance proceeding and, if
such disallowance has been taken as of the date of the
enactment of this Act, any payment reductions effected shall be
rescinded and the payments returned to the State.
(3) Extension of moratorium.--Section 6408(a)(3) of the
Omnibus Budget Reconciliation Act of 1989, as amended by
section 13642 of the Omnibus Budget Reconciliation Act of 1993,
is amended by striking ``December 31, 1995'' and inserting
``the first day of the first quarter on which the MediGrant
plan for the State of Michigan is first effective under title
XXI of such Act''.
(c) No Application of Prior Medicaid Judgments to MediGrant
Program.--No judicial or administrative decision rendered regarding
requirements imposed under title XIX of the Social Security Act with
respect to a State shall have any application to the MediGrant plan of
the State title XXI of such Act. A State may, pursuant to the previous
sentence, seek the abrogation or modification of any such decision
after the date of termination of the State plan under title XIX of such
Act.
(d) Termination of Program for Distribution of Pediatric Vaccines
(1) In general.--Subject to paragraph (2), section 1928 of
the Social Security Act (42 U.S.C. 1396s) is repealed,
effective on the date of the enactment of this Act.
(2) Transition.--(A) Such repeal shall not affect the
distribution of vaccines purchased and delivered to the States
before the date of the enactment of this Act.
(B) No vaccine may be purchased after such date by the
Federal Government or any State under any contract under
section 1928(d) of the Social Security Act.
(e) Anti-Fraud Provisions.--
(1) In general.--Section 1128(h)(1) of the Social Security
Act (42 U.S.C. 1320a-7(h)(1)) is amended by inserting ``or a
MediGrant plan under title XXI'' after ``title XIX''.
(2) Continued role of inspector general.--The Inspector
General in the Department of Health and Human Services shall
have the same responsibilities and duties in relation to fraud
and abuse and related matters under the MediGrant program under
title XXI of the Social Security Act as such Inspector General
has had in relation to the medicaid program under title XIX of
such Act before the date of the enactment of this Act.
(f) Final Extension of Medicaid Waiver for Dayton Area Health
Plan.--Section 2 of Public Law 102-276, as amended by section 13644 of
the Omnibus Budget Reconciliation Act of 1993, is amended by striking
``December 31, 1995'' and inserting ``the last day of the last calendar
quarter in which a State medicaid plan is in effect in Ohio under title
XIX of the Social Security Act''.
TITLE XVII--ABOLISHMENT OF DEPARTMENT OF COMMERCE
SEC. 17001. SHORT TITLE.
This title may be cited as the ``Department of Commerce Dismantling
Act''.
SEC. 17002. TABLE OF CONTENTS.
The table of contents for this title is as follows:
TITLE XVII--ABOLISHMENT OF DEPARTMENT OF COMMERCE
Sec. 17001. Short title.
Sec. 17002. Table of contents.
Subtitle A--Abolishment of Department of Commerce
Sec. 17101. Abolishment of Department of Commerce.
Sec. 17102. Resolution and termination of Department functions.
Sec. 17103. Responsibilities of the Director of the Office of
Management and Budget.
Sec. 17104. Office of Programs Resolution.
Sec. 17105. Personnel.
Sec. 17106. Plans and reports.
Sec. 17107. GAO audit and access to records.
Sec. 17108. Conforming amendments.
Sec. 17109. Privatization framework.
Sec. 17110. Priority placement programs for Federal employees affected
by a reduction in force attributable to
this title.
Sec. 17111. Funding reductions for transferred functions.
Sec. 17112. Definitions.
Subtitle B--Disposition of Various Programs, Functions, and Agencies of
Department of Commerce
Sec. 17201. Abolishment of Economic Development Administration and
transfer of functions.
Sec. 17202. Technology Administration.
Sec. 17203. Reorganization of the Bureau of the Census.
Sec. 17204. Bureau of Economic Analysis.
Sec. 17205. Terminated functions of NTIA.
Sec. 17206. National Oceanic and Atmospheric Administration.
Sec. 17207. National Institute for Science and Technology.
Sec. 17208. Miscellaneous terminations; moratorium on program
activities.
Sec. 17209. Effective date.
Subtitle C--Office of United States Trade Representative
Chapter 1--General Provisions
Sec. 17301. Definitions.
Chapter 2--Offsubchapter a--establishmentRepresentative
Sec. 17311. Establishment of the Office.
Sec. 17312. Functions of subchapter b--officers
Sec. 17321. Deputy Administrator of the Office.
Sec. 17322. Deputy United States Trade Representatives.
Sec. 17323. Assistant Administrators.
Sec. 17324. Director General for Export Promotion.
Sec. 17325. General Counsel.
Sec. 17326. Inspector General.
Sec. 17327. Chiefsubchapter c--transfers to the office
Sec. 17331. Office of the United States Trade Representative.
Sec. 17332. Transfers from the Department of Commerce.
Sec. 17333. Trade and Development Agency.
Sec. 17334. Export-Import Bank.
Sec. 17335. Overseas Private Investment Corporation.
Sec. 17336. Consolidation of export promotion and financing activities.
Sec. 17337. Addisubchapter d--administrative provisions
Sec. 17341. Personnel provisions.
Sec. 17342. Delegation and assignment.
Sec. 17343. Succession.
Sec. 17344. Reorganization.
Sec. 17345. Rules.
Sec. 17346. Funds transfer.
Sec. 17347. Contracts, grants, and cooperative agreements.
Sec. 17348. Use of facilities.
Sec. 17349. Gifts and bequests.
Sec. 17350. Working capital fund.
Sec. 17351. Service charges.
Sec. 17352. Seal of Osubchapter e--related agencies
Sec. 17361. Interagency Trade Organization.
Sec. 17362. National Security Council.
Sec. 17363. Internsubchapter f--conforming amendments
Sec. 17371. Amendments to general provisions.
Sec. 17372. Repeals.
Sec. 17373. Conforming amendments relating to Executive Schedule
subchapter g--miscellaneous
Sec. 17381. Effective date.
Sec. 17382. Interim appointments.
Sec. 17383. Funding reductions resulting from reorganization.
Subtitle D--Patent and Trademark Office Corporation
Sec. 17401. Short title.
Chapter 1--Patent And Trademark Office
Sec. 17411. Establishment of Patent and Trademark Office as a
corporation.
Sec. 17412. Powers and duties.
Sec. 17413. Organization and management.
Sec. 17414. Management Advisory Board.
Sec. 17415. Independence from Department of Commerce.
Sec. 17416. Trademark trial and appeal board.
Sec. 17417. Board of patent appeals and interferences.
Sec. 17418. Suits by and against the corporation.
Sec. 17419. Annual report of Commissioner.
Sec. 17420. Suspension or exclusion from practice.
Sec. 17421. Funding.
Sec. 17422. Audits.
Sec. 17423. Transfers.
Chapter 2--Effective Date; Technical Amendments
Sec. 17431. Effective date.
Sec. 17432. Technical and conforming amendments.
Subtitle E--Miscellaneous Provisions
Sec. 17501. References.
Sec. 17502. Exercise of authorities.
Sec. 17503. Savings provisions.
Sec. 17504. Transfer of assets.
Sec. 17505. Delegation and assignment.
Sec. 17506. Authority of director of the office of management and
budget with respect to functions
transferred.
Sec. 17507. Certain vesting of functions considered transfers.
Sec. 17508. Availability of existing funds.
Sec. 17509. Definitions.
Subtitle A--Abolishment of Department of Commerce
SEC. 17101. ABOLISHMENT OF DEPARTMENT OF COMMERCE.
(a) Abolishment of Department.--The Department of Commerce is
abolished effective on the abolishment date specified in subsection
(c).
(b) Transfer of Department Functions to OMB.--Except as otherwise
provided in this title, all functions that immediately before the
abolishment date specified in subsection (c) are authorized to be
performed by the Secretary of Commerce, any other officer or employee
of the Department acting in that capacity, or any agency or office of
the Department, are transferred to the Director of the Office of
Management and Budget effective on that abolishment date.
(c) Abolishment Date.--The abolishment date referred to in
subsections (a) and (b) is the earlier of--
(1) the last day of the 6-month period beginning on the
date of the enactment of this Act; or
(2) September 30, 1996.
SEC. 17102. RESOLUTION AND TERMINATION OF DEPARTMENT FUNCTIONS.
(a) Resolution of Functions.--During the period beginning on the
date of enactment of this Act and ending on the functions termination
date specified in subsection (c)--
(1) the disposition and resolution of functions of the
Department of Commerce shall be completed in accordance with
this title; and
(2) the Director shall resolve all functions that are
transferred to the Director under section 17101(b) and are not
otherwise continued under this title.
(b) Termination of Functions.--All functions that are transferred
to the Director under section 17101(b) that are not otherwise continued
by this title shall terminate on the functions termination date
specified in subsection (c).
(c) Functions Termination Date.--The functions termination date
referred to in subsections (a) and (b) is the last day of the 3-year
period beginning on the date of the enactment of this Act.
SEC. 17103. RESPONSIBILITIES OF THE DIRECTOR OF THE OFFICE OF
MANAGEMENT AND BUDGET.
The Director of the Office of Management and Budget, acting through
the Administrator of the Office of Programs Resolution, shall be
responsible for the implementation of this subtitle, including--
(1) the administration and wind-up, during the wind-up
period, of all functions transferred to the Director under
section 17101(b);
(2) the administration and wind-up, during the wind-up
period, of any outstanding obligations of the Federal
Government under any programs terminated by this title; and
(3) taking such other actions as may be necessary to wind-
up any outstanding affairs of the Department of Commerce before
the end of the wind-up period.
SEC. 17104. OFFICE OF PROGRAMS RESOLUTION.
(a) Establishment of Office.--There is established in the Office of
Management and Budget an office to be known as the Office of Programs
Resolution.
(b) Administrator.--There shall be at the head of the Office an
Administrator who shall be appointed by the President, by and with the
advice and consent of the Senate. The Administrator shall receive
compensation at the rate prescribed for level III of the Executive
Schedule under section 5314 of title 5, United States Code. The
Administrator shall serve as principal adviser to the Director on
Government organization and reorganization matters, and shall report
directly to the Director.
(c) Functions.--The Administrator shall perform such functions as
are vested in the Administrator by this title or delegated to the
Administrator by the Director.
(d) Authorities of the Administrator.--For purposes of performing
the functions of the Administrator under subsection (c) and subject to
the availability of appropriations, the Administrator may--
(1) enter into contracts;
(2) employ experts and consultants in accordance with
section 3109 of title 5, United States Code, at rates for
individuals not to exceed the per diem rate equivalent to the
rate for level IV of the Executive Schedule; and
(3) utilize, on a reimbursable basis, the services,
facilities, and personnel of other Federal agencies.
(e) Auditor General.--
(1) In general.--There shall be in the Office an Auditor
General, who shall be appointed by and report to the
Administrator.
(2) Functions.--The Auditor General shall--
(A) conduct audits and investigations with respect
to activities of the Office; and
(B) submit to the Administrator and the Director
reports on the findings of those audits and
investigations.
(f) Reorganization.--The Administrator may allocate or reallocate
among the officers of the Office any function vested in the
Administrator or the Office, and may establish, consolidate, alter, or
discontinue in the Office any organizational entities that were
entities of the Department of Commerce, as the Administrator considers
necessary or appropriate.
(g) Annual Authorization Required.--No sums may be appropriated for
any fiscal year for the Office except as specifically authorized for
that fiscal year by law.
SEC. 17105. PERSONNEL.
Effective on the abolishment date specified in section 17101(c),
there are transferred to the Office all individuals who--
(1) immediately before the abolishment date, were officers
or employees of the Department of Commerce; and
(2) in their capacity as such an officer or employee,
performed functions that are transferred to the Director under
section 17101(b).
SEC. 17106. PLANS AND REPORTS.
(a) Initial Implementation Plan.--
(1) In general.--Not later than 90 days after the date of
enactment of this Act, the Director shall submit a report,
through the President, to the Congress specifying those actions
taken and necessary to be taken--
(A) to resolve those programs and functions
terminated on the date of enactment of this Act; and
(B) to implement the additional transfers and other
program dispositions provided for in this title.
(2) Contents.--The report shall include--
(A) a description of the anticipated size and
composition of the Programs Resolution Office,
(B) recommendations for additional legislation, if
any, needed to reflect or otherwise to implement the
abolishments, transfers, terminations, and other
dispositions of programs and functions under this
title; and
(C) a description of actions planned and taken to
comply with limitations imposed by this Act on future
spending for continued functions.
(b) Annual Status Reports.--At the end of each of the first,
second, and third years following the date of enactment of this Act,
the Director shall submit a report, through the President, to the
Congress which--
(1) specifies the status and progress of actions taken to
implement this title and to wind-up the affairs of the
Department of Commerce by the functions termination date
specified in section 17102(c);
(2) includes a summary of reports submitted to the Director
under section 17104(e)(2)(B) during the period covered by the
report by the Auditor General of the Office;
(3) includes any recommendations the Director may have for
additional legislation; and
(4) describes actions taken to comply with limitations
imposed by this Act on future spending for continued functions.
(c) GAO Reports.--Not later than 60 days after issuance of each
report under subsections (a) and (b), the Comptroller General of the
United States shall submit to the Congress a report which--
(1) evaluates the report under that subsection; and
(2) includes any recommendations the Comptroller General
considers appropriate.
SEC. 17107. GAO AUDIT AND ACCESS TO RECORDS.
(a) Audit of Persons Performing Functions Pursuant to This Act.--
All agencies, corporations, organizations, and other persons of any
description which under the authority of the United States perform any
function or activity pursuant to this title shall be subject to audit
by the Comptroller General of the United States with respect to such
function or activity.
(b) Audit of Persons Providing Certain Goods or Services.--All
persons and organizations which, by contract, grant, or otherwise,
provide goods or services to, or receive financial assistance from, any
agency or other person performing functions or activities under or
referred to by this title shall be subject to audit by the Comptroller
General of the United States with respect to such provision of goods or
services or receipt of financial assistance.
(c) Provisions Applicable to audits Under This Section.--
(1) Nature and scope of audit.--The Comptroller General of
the United States shall determine the nature, scope, terms, and
conditions of audits conducted under this section.
(2) Coordination with other provisions of law.--The
authority of the Comptroller General of the United States under
this section shall be in addition to any audit authority
available to the Comptroller General under other provisions of
this title or any other law.
(3) Rights of access, examination, and copying.--The
Comptroller General of the United States, and any duly
authorized representative of the Comptroller General, shall
have access to, and the right to examine and copy, all records
and other recorded information in any form, and to examine any
property within the possession or control of any agency or
person which is subject to audit under this section, which the
Comptroller General considers relevant to an audit conducted
under this section.
(4) Enforcement of right of access.--The right of access of
the Comptroller General of the United States to information
under this section shall be enforceable under section 716 of
title 31, United States Code.
(5) Maintenance of confidential records.--Section 716(e) of
title 31, United States Code, shall apply to information
obtained by the Comptroller General under this section.
SEC. 17108. CONFORMING AMENDMENTS.
(a) Presidential Succession.--Section 19(d)(1) of title 3, United
States Code, is amended by striking ``Secretary of Commerce,''.
(b) Executive Departments.--Section 101 of title 5, United States
Code, is amended by striking the following item: ``The Department of
Commerce.''.
(c) Secretary's Compensation.--Section 5312 of title 5, United
States Code, is amended by striking the following item: ``Secretary of
Commerce.''.
(d) Compensation for Positions at Level III.--Section 5314 of title
5, United States Code, is amended--
(1) by striking the following item:
``Under Secretary of Commerce, Under Secretary of Commerce for
Economic Affairs, Under Secretary of Commerce for Export Administration
and Under Secretary of Commerce for Travel and Tourism.'';
(2) by striking the following item:
``Under Secretary of Commerce for Oceans and Atmosphere, the
incumbent of which also serves as Administrator of the National Oceanic
and Atmospheric Administration.'';
(3) by striking the following item:
``Under Secretary of Commerce for Technology.''; and
(4) by adding at the end the following item:
``Administrator, Office of Programs Resolution''.
(e) Compensation for Positions at Level IV.--Section 5315 of title
5, United States Code, is amended--
(1) by striking the following item:
``Assistant Secretaries of Commerce (11).'';
(2) by striking the following item:
``General Counsel of the Department of Commerce.'';
(3) by striking the following item:
``Assistant Secretary of Commerce for Oceans and Atmosphere, the
incumbent of which also serves as Deputy Administrator of the National
Oceanic and Atmospheric Administration.'';
(4) by striking the following item:
``Director, National Institute of Standards and Technology,
Department of Commerce.'';
(5) by striking the following item:
``Inspector General, Department of Commerce.'';
(6) by striking the following item:
``Chief Financial Officer, Department of Commerce.''; and
(7) in the item relating to the Bureau of the Census, by
striking ``, Department of Commerce''.
(f) Compensation for Positions at Level V.--Section 5316 of title
5, United States Code, is amended--
(1) by striking the following item:
``Director, United States Travel Service, Department of
Commerce.''; and
(2) by striking the following item:
``National Export Expansion Coordinator, Department of Commerce.''.
(g) Inspector General Act of 1978.--The Inspector General Act of
1978 (5 U.S.C. App.) is amended--
(1) in section 9(a)(1), by striking subparagraph (B);
(2) in section 11(1), by striking ``Commerce,''; and
(3) in section 11(2), by striking ``Commerce,''.
(h) Effective Date.--The amendments made by this section shall be
effective on the abolishment date specified in section 17101(c).
SEC. 17109. PRIVATIZATION FRAMEWORK.
(a) In General.--The Office of Management and Budget shall
privatize each function designated for privatization under subtitle B
within 18 months of the date the transfer of such function to the
Office. The Office shall pursue such forms of privatization
arrangements as the Office considers appropriate to best serve the
interests of the United States. If the Office is unable to privatize a
function within 18 months, the Office shall report its inability to the
Congress with its recommendations as to the appropriate disposition of
the function and its assets.
(b) Role of the Federal Government.--No privatization arrangement
made under subsection (a) shall include any future role for, or
accountability to, the Federal Government unless it is necessary to
assure the continued accomplishment of a specific Federal objective.
The Federal role should be the minimum necessary to accomplish Federal
objectives.
(c) Assets.--In privatizing a function, the Office of Management
and Budget shall take any action necessary to preserve the value of the
assets of a function during the period the Office holds such assets and
to continue the performance of the function to the extent necessary to
preserve the value of the assets or to accomplish core Federal
objectives.
SEC. 17110. PRIORITY PLACEMENT PROGRAMS FOR FEDERAL EMPLOYEES AFFECTED
BY A REDUCTION IN FORCE ATTRIBUTABLE TO THIS TITLE.
(a) In General.--Subchapter I of chapter 33 of title 5, United
States Code, is amended by adding at the end the following:
``Sec. 3329b. Priority placement programs for employees affected by a
reduction in force attributable to the Department of
Commerce Dismantling Act
``(a)(1) For the purpose of this section, the term `affected
agency'--
``(A) except as provided in subparagraph (B), means an
Executive agency to which personnel are transferred in
connection with a transfer of function under the Department of
Commerce Dismantling Act, and
``(B) with respect to employees of the Department of
Commerce in general administration, the Inspector General's
office, or the General Council's office, or who provided
overhead support to other components of the Department on a
reimbursable basis, means all agencies to which functions of
those employees are transferred under the Department of
Commerce Dismantling Act.
``(2) This section applies with respect to any reduction in force
that--
``(A) occurs within 12 months after the date of the
enactment of this section; and
``(B) is due to--
``(i) the termination of any function of the
Department of Commerce or the Office of Programs
Resolution, as the case may be; or
``(ii) the agency's having excess personnel as a
result of a transfer of function described in paragraph
(1), as determined by--
``(I) the Administrator of the Office of
Programs Resolution, in the case of a function
transferred to the Office of Management and
Budget; or
``(II) the head of the agency, in the case
of any other function.
``(b) As soon as practicable after the date of the enactment of
this section, each affected agency shall establish an agencywide
priority placement program to facilitate employment placement for
employees who--
``(1) are scheduled to be separated from service due to a
reduction in force described in subsection (a)(2); or
``(2) are separated from service due to such a reduction in
force.
``(c)(1) Each agencywide priority placement program shall include
provisions under which a vacant position shall not be filled by the
appointment or transfer of any individual from outside of that agency
if--
``(A) there is then available any individual described in
paragraph (2) who is qualified for the position; and
``(B) the position--
``(i) is at the same grade (or pay level) or not
more than 1 grade (or pay level) below that of the
position last held by such individual before placement
in the new position; and
``(ii) is within the same commuting area as the
individual's last-held position (as referred to in
clause (i)) or residence.
``(2) For purposes of an agencywide priority placement program, an
individual shall be considered to be described in this paragraph if
such individual's most recent performance evaluation was at least fully
successful (or the equivalent), and such individual is either--
``(A) an employee of such agency who is scheduled to be
separated, as described in subsection (b)(1); or
``(B) an individual who became a former employee of such
agency as a result of a separation, as described in subsection
(b)(2).
``(d)(1) Nothing in this section shall affect any priority
placement program of the Department of Defense which is in operation as
of the date of the enactment of this section.
``(2) Nothing in this section shall impair placement programs
within agencies subject to reductions in force resulting from causes
other than the Department of Commerce Dismantling Act.
``(e) An individual shall cease to be eligible to participate in a
program under this section on the earlier of--
``(1) the conclusion of the 12-month period beginning on
the date on which that individual first became eligible to
participate under subsection (c)(2); or
``(2) the date on which the individual declines a bona fide
offer (or if the individual does not act on the offer, the last
day for accepting such offer) from the affected agency of a
position described in subsection (c)(1)(B).''.
(b) Technical and Conforming Amendments.--(1) Title 5, United
States Code, is amended by redesignating the second section which is
designated as section 3329 as section 3329a.
(2) The table of sections for chapter 33 of title 5, United States
Code, is amended by striking the item relating to the second section
which is designated as section 3329 and inserting the following:
``3329a. Government-wide list of vacant positions.
``3329b. Priority placement programs for employees affected by a
reduction in force attributable to the
Department of Commerce Dismantling Act.''.
SEC. 17111. FUNDING REDUCTIONS FOR TRANSFERRED FUNCTIONS.
(a) Funding Reductions.--Except as provided in subsection (b), for
each fiscal year that begins on or after the date of the enactment of
this Act, the total amount obligated or expended by the United States
in performing functions transferred under this title to the Director or
to the Office from the Department of Commerce, or any of its officers
or components, may not exceed 75 percent of the total amount obligated
or expended by the United States in performing such functions for
fiscal year 1995.
(b) Exceptions.--Subsection (a) shall not apply to--
(1) functions transferred to the Director under section
17203 (relating to the Bureau of the Census); or
(2) obligations or expenditures incurred as a direct
consequence of the termination, transfer, or other disposition
of functions described in subsection (a) pursuant to this
title.
(c) Rule of Construction.--This section shall take precedence over
any other provision of law unless such provision explicitly refers to
this section and makes an exception to it.
(d) Responsibilities of the Director.--The Director shall--
(1) ensure compliance with the requirements of this
section; and
(2) include in each report under sections 17106 (a) and (b)
a description of actions taken to comply with such
requirements.
SEC. 17112. DEFINITIONS.
For purposes of this subtitle, the following definitions apply:
(1) Administrator.--The term ``Administrator'' means the
Administrator of the Office of Programs Resolution.
(2) Director.--The term ``Director'' means the Director of
the Office of Management and Budget.
(3) Office.--The term ``Office'' means the Office of
Programs Resolution.
(4) Wind-up period.--The term ``wind-up period'' means the
period beginning on the date of the enactment of this Act and
ending on the functions termination date specified in section
17102(c).
Subtitle B--Disposition of Various Programs, Functions, and Agencies of
Department of Commerce
SEC. 17201. ABOLISHMENT OF ECONOMIC DEVELOPMENT ADMINISTRATION AND
TRANSFER OF FUNCTIONS.
(a) In General.--The Public Works and Economic Development Act of
1965 (40 U.S.C. 3131 et seq.) is amended by striking all after the
first section and inserting the following:
``SEC. 2. ADMINISTRATOR DEFINED.
``In this Act, the term `Administrator' means the Administrator of
the Small Business Administration.
``TITLE I--STATEMENT OF PURPOSE
``SEC. 101. FINDINGS AND DECLARATION.
``(a) Findings.--Congress finds that--
``(1) the maintenance of the national economy at a high
level is vital to the best interests of the United States, but
that some of our regions, counties, and communities are
suffering substantial and persistent unemployment and
underemployment that cause hardship to many individuals and
their families, and waste invaluable human resources;
``(2) to overcome this problem the Federal Government, in
cooperation with the States, should help areas and regions of
substantial and persistent unemployment and underemployment to
take effective steps in planning and financing their public
works and economic development;
``(3) Federal financial assistance, including grants for
public works and development facilities to communities,
industries, enterprises, and individuals in areas needing
development should enable such areas to help themselves achieve
lasting improvement and enhance the domestic prosperity by the
establishment of stable and diversified local economies and
improved local conditions, if such assistance is preceded by
and consistent with sound, long-range economic planning; and
``(4) under the provisions of this Act, new employment
opportunities should be created by developing and expanding new
and existing public works and other facilities and resources
rather than by merely transferring jobs from one area of the
United States to another.
``(b) Declaration.--Congress declares that, in furtherance of
maintaining the national economy at a high level--
``(1) the assistance authorized by this Act should be made
available to both rural and urban areas;
``(2) such assistance should be made available for planning
for economic development prior to the actual occurrences of
economic distress in order to avoid such condition; and
``(3) such assistance should be used for long-term economic
rehabilitation in areas where long-term economic deterioration
has occurred or is taking place.
``TITLE II--GRANTS FOR PUBLIC WORKS AND DEVELOPMENT FACILITIES
``SEC. 201. DIRECT AND SUPPLEMENTARY GRANTS.
``(a) In General.--Upon the application of any eligible recipient,
the Administrator may--
``(1) make direct grants for the acquisition or development
of land and improvements for public works, public service, or
development facility usage, and the acquisition, design and
engineering, construction, rehabilitation, alteration,
expansion, or improvement of such facilities, including related
machinery and equipment, within an area described in section
502(a), if the Administrator finds that--
``(A) the project for which financial assistance is
sought will directly or indirectly--
``(i) tend to improve the opportunities, in
the area where such project is or will be
located, for the successful establishment or
expansion of industrial or commercial plants or
facilities;
``(ii) otherwise assist in the creation of
additional long-term employment opportunities
for such area; or
``(iii) primarily benefit the long-term
unemployed and members of low-income families;
``(B) the project for which a grant is requested
will fulfill a pressing need of the area, or part
thereof, in which it is, or will be, located; and
``(C) the area for which a project is to be
undertaken has an approved investment strategy as
provided by section 503 and such project is consistent
with such strategy;
``(2) make supplementary grants in order to enable the
States and other entities within areas described in section
502(a) to take maximum advantage of designated Federal grant-
in-aid programs (as defined in subsection (c)(4)), direct
grants-in-aid authorized under this section, and Federal grant-
in-aid programs authorized by the Watershed Protection and
Flood Prevention Act (68 Stat. 666), and the 11 watersheds
authorized by the Flood Control Act of December 22, 1944 (58
Stat. 887), for which they are eligible but for which, because
of their economic situation, they cannot supply the required
matching share.
``(b) Cost Sharing.--Subject to subsection (c), the amount of any
direct grant under this subsection for any project shall not exceed 50
percent of the cost of such project.
``(c) Requirements Applicable to Supplementary Grants.--
``(1) Amount of supplementary grants.--
``(A) In general.--Except as provided by
subparagraph (B), the amount of any supplementary grant
under this section for any project shall not exceed the
applicable percentage established by regulations
promulgated by the Administrator, but in no event shall
the non-Federal share of the aggregate cost of any such
project (including assumptions of debt) be less than 20
percent of such cost.
``(B) Exception.--Notwithstanding subparagraph (A),
in the case of an Indian tribe, a State (or a political
subdivision of the State), or a community development
corporation which the Administrator determines has
exhausted its effective taxing and borrowing capacity,
the Administrator shall reduce the non-Federal share
below the percentage specified in subparagraph (A) or
shall waive the non-Federal share in the case of such a
grant for a project in an area described in section
502(a)(4).
``(2) Form of supplementary grants.--Supplementary grants
shall be made by the Administrator, in accordance with such
regulations as the Administrator may prescribe, by increasing
the amounts of direct grants authorized under this section or
by the payment of funds appropriated under this Act to the
heads of the departments, agencies, and instrumentalities of
the Federal Government responsible for the administration of
the applicable Federal programs.
``(3) Federal share limitations specified in other laws.--
Notwithstanding any requirement as to the amount or sources of
non-Federal funds that may otherwise be applicable to the
Federal program involved, funds provided under this subsection
shall be used for the sole purpose of increasing the Federal
contribution to specific projects in areas described in section
502(a) under such programs above the fixed maximum portion of
the cost of such project otherwise authorized by the applicable
law.
``(4) Designated federal grant-in-aid programs defined.--In
this subsection, the term `designated Federal grant-in-aid
programs' means such existing or future Federal grant-in-aid
programs assisting in the construction or equipping of
facilities as the Administrator may, in furtherance of the
purposes of this Act, designate as eligible for allocation of
funds under this section.
``(5) Consideration of relative need in determining
amount.--In determining the amount of any supplementary grant
available to any project under this section, the Administrator
shall take into consideration the relative needs of the area
and the nature of the projects to be assisted.
``(d) Regulations.--The Administrator shall prescribe rules,
regulations, and procedures to carry out this section which will assure
that adequate consideration is given to the relative needs of eligible
areas. In prescribing such rules, regulations, and procedures the
Administrator shall consider among other relevant factors--
``(1) the severity of the rates of unemployment in the
eligible areas and the duration of such unemployment; and
``(2) the income levels of families and the extent of
underemployment in eligible areas.
``(e) Review and Comment Upon Projects by Local Governmental
Authorities.--The Administrator shall prescribe regulations which will
assure that appropriate local governmental authorities have been given
a reasonable opportunity to review and comment upon proposed projects
under this section.
``SEC. 202. CONSTRUCTION COST INCREASES.
``In any case where a grant (including a supplemental grant) has
been made by the Administrator under this title for a project and after
such grant has been made but before completion of the project, the cost
of such project based upon the designs and specifications which were
the basis of the grant has been increased because of increases in
costs, the amount of such grant may be increased by an amount equal to
the percentage increase, as determined by the Administrator, in such
costs, but in no event shall the percentage of the Federal share of
such project exceed that originally provided for in such grant.
``SEC. 203. USE OF FUNDS IN PROJECTS CONSTRUCTED UNDER PROJECTED COST.
``In any case where a grant (including a supplemental grant) has
been made by the Administrator under this title for a project, and
after such grant has been made but before completion of the project,
the cost of such project based upon the designs and specifications
which were the basis of the grant has decreased because of decreases in
costs, such underrun funds may be used to improve the project either
directly or indirectly as determined by the Administrator.
``SEC. 204. CHANGED PROJECT CIRCUMSTANCES.
``In any case where a grant (including a supplemental grant) has
been made by the Administrator under this title for a project, and
after such grant has been made but before completion of the project,
the purpose or scope of such project based upon the designs and
specifications which were the basis of the grant has changed, the
Administrator may approve the use of grant funds on such changed
project if the Administrator determines that such changed project meets
the requirements of this title and that such changes are necessary to
enhance economic development in the area.
``TITLE III--SPECIAL ECONOMIC DEVELOPMENT AND ADJUSTMENT ASSISTANCE
``SEC. 301. STATEMENT OF PURPOSE.
``The purpose of this title to provide special economic development
and adjustment assistance programs to help State and local areas meet
special needs arising from actual or threatened severe unemployment
arising from economic dislocation (including unemployment arising from
actions of the Federal Government, from defense base closures and
realignments, and from compliance with environmental requirements which
remove economic activities from a locality) and economic adjustment
problems resulting from severe changes in economic conditions
(including long-term economic deterioration), and to encourage
cooperative intergovernmental action to prevent or solve economic
adjustment problems. Nothing in this title is intended to replace the
efforts of the economic adjustment program of the Department of
Defense.
``SEC. 302. SPECIAL ECONOMIC DEVELOPMENT AND ADJUSTMENT ASSISTANCE.
``(a) In General.--The Administrator is authorized to make grants
directly to any eligible recipient in an area which the Administrator
determines, in accordance with criteria to be established by the
Administrator by regulation--
``(1) has experienced, or may reasonably be foreseen to be
about to experience, a special need to meet an expected rise in
unemployment, or other economic adjustment problems (including
those caused by any action or decision of the Federal
Government); or
``(2) has demonstrated long-term economic deterioration.
``(b) Purposes.--Amounts from grants under subsection (a) shall be
used by an eligible recipient to carry out or develop an investment
strategy which--
``(1) meets the requirements of section 503; and
``(2) is approved by the Administrator.
``(c) Types of Assistance.--In carrying out an investment strategy
using amounts from grants under subsection (a), an eligible recipient
may provide assistance for any of the following:
``(1) Public facilities.
``(2) Public services.
``(3) Business development.
``(4) Planning.
``(5) Research and technical assistance.
``(6) Administrative expenses.
``(7) Training.
``(8) Relocation of individuals and businesses.
``(9) Other assistance which demonstrably furthers the
economic adjustment objectives of this title.
``(d) Direct Expenditure or Redistribution by Recipient.--Amounts
from grants under subsection (a) may be used in direct expenditures by
the eligible recipient or through redistribution by the eligible
recipient to public and private entities in grants, loans, loan
guarantees, payments to reduce interest on loan guarantees, or other
appropriate assistance, but no grant shall be made by an eligible
recipient to a private profit-making entity.
``(e) Coordination.--The Administrator to the extent practicable
shall coordinate the activities relating to the requirements for
investment strategies and making grants and loans under this title with
other Federal programs, States, economic development districts, and
other appropriate planning and development organizations.
``(f) Base Closings and Realignments.--
``(1) Location of projects.--In any case in which the
Administrator determines a need for assistance under subsection
(a) due to the closure or realignment of a military
installation, the Administrator may make such assistance
available for projects to be carried out on the military
installation and for projects to be carried out in communities
adversely affected by the closure or realignment.
``(2) Interest in property.--Notwithstanding any other
provision of law, the Administrator may provide to an eligible
recipient any assistance available under this Act for a project
to be carried out on a military installation that is closed or
scheduled for closure or realignment without requiring that the
eligible recipient have title to the property or a leasehold
interest in the property for any specified term.
``SEC. 303. ANNUAL REPORTS BY RECIPIENT.
``Each eligible recipient which receives assistance under this
title from the Administrator shall annually during the period such
assistance continue to make a full and complete report to the
Administrator, in such manner as the Administrator shall prescribe, and
such report shall contain an evaluation of the effectiveness of the
economic assistance provided under this title in meeting the need it
was designed to alleviate and the purposes of this title.
``SEC. 304. SALE OF FINANCIAL INSTRUMENTS IN REVOLVING LOAN FUNDS.
``Any loan, loan guarantee, equity, or other financial instrument
in the portfolio of a revolving loan fund, including any financial
instrument made available using amounts from a grant made before the
effective date specified in section 802, may be sold, encumbered, or
pledged at the discretion of the grantee of the Fund, to a third party
provided that the net proceeds of the transaction--
``(1) shall be deposited into the Fund and may only be used
for activities which are consistent with the purposes of this
title; and
``(2) shall be subject to the financial management,
accounting, reporting, and auditing standards which were
originally applicable to the grant.
``SEC. 305. TREATMENT OF REVOLVING LOAN FUNDS.
``(a) In General.--Amounts from grants made under this title which
are used by an eligible recipient to establish a revolving loan fund
shall not be treated, except as provided by subsection (b), as amounts
derived from Federal funds for the purposes of any Federal law after
such amounts are loaned from the fund to a borrower and repaid to the
fund.
``(b) Exceptions.--Amounts described in subsection (a) which are
loaned from a revolving loan fund to a borrower and repaid to the
fund--
``(1) may only be used for activities which are consistent
with the purposes of this title; and
``(2) shall be subject to the financial management,
accounting, reporting, and auditing standards which were
originally applicable to the grant.
``(c) Regulations.--Not later than 30 days after the effective date
specified in section 802, the Administrator shall issue regulations to
carry out subsection (a).
``(d) Public Review and Comment.--Before issuing any final
guidelines or administrative manuals governing the operation of
revolving loan funds established using amounts from grants under this
title, the Administrator shall provide reasonable opportunity for
public review of and comment on such guidelines and administrative
manuals.
``(e) Applicability to Past Grants.--The requirements of this
section applicable to amounts from grants made under this title shall
also apply to amounts from grants made, before the effective date
specified in section 802, under title I of this Act, as in effect on
the day before such effective date.
``TITLE IV--TECHNICAL ASSISTANCE, RESEARCH, AND INFORMATION
``SEC. 401. TECHNICAL ASSISTANCE.
``(a) In General.--In carrying out its duties under this Act, the
Administrator may provide technical assistance which would be useful in
alleviating or preventing conditions of excessive unemployment or
underemployment to areas which the Administrator finds have substantial
need for such assistance. Such assistance shall include project
planning and feasibility studies, management and operational
assistance, establishment of business outreach centers, and studies
evaluating the needs of, and development potentialities for, economic
growth of such areas.
``(b) Procedures and Terms.--
``(1) Manner of providing assistance.--Assistance may be
provided by the Administrator through--
``(A) members of the Administrator's staff;
``(B) the payment of funds authorized for this
section to departments or agencies of the Federal
Government;
``(C) the employment of private individuals,
partnerships, firms, corporations, or suitable
institutions under contracts entered into for such
purposes; or
``(D) grants-in-aid to appropriate public or
private nonprofit State, area, district, or local
organizations.
``(2) Repayment terms.--The Administrator, in the
Administrator's discretion, may require the repayment of
assistance provided under this subsection and prescribe the
terms and conditions of such repayment.
``(c) Grants Covering Administrative Expenses.--
``(1) In general.--The Administrator may make grants to
defray not to exceed 50 percent of the administrative expenses
of organizations which the Administrator determines to be
qualified to receive grants-in-aid under subsections (a) and (b);
except that in the case of a grant under this subsection to an Indian
tribe, the Administrator is authorized to defray up to 100 percent of
such expenses.
``(2) Determination of non-federal share.--In determining
the amount of the non-Federal share of such costs or expenses,
the Administrator shall give due consideration to all
contributions both in cash and in kind, fairly evaluated,
including contributions of space, equipment, and services.
``(3) Use of grants with planning grants.--Where
practicable, grants-in-aid authorized under this subsection
shall be used in conjunction with other available planning
grants to assure adequate and effective planning and economical
use of funds.
``(d) Availability of Technical Information; Federal Procurement.--
The Administrator shall aid areas described in section 502(a) and other
areas by furnishing to interested individuals, communities, industries,
and enterprises within such areas any assistance, technical
information, market research, or other forms of assistance,
information, or advice which would be useful in alleviating or
preventing conditions of excessive unemployment or underemployment
within such areas. The Administrator may furnish the procurement
divisions of the various departments, agencies, and other
instrumentalities of the Federal Government with a list containing the
names and addresses of business firms which are located in areas
described in section 502(a) and which are desirous of obtaining
Government contracts for the furnishing of supplies or services, and
designating the supplies and services such firms are engaged in
providing.
``SEC. 402. ECONOMIC DEVELOPMENT PLANNING.
``(a) Direct Grants.--
``(1) In general.--The Administrator may make, upon
application of any State, or city, or other political
subdivision of a State, or sub-State planning and development
organization (including an area described in section 502(a) or
an economic development district), direct grants to such State,
city, or other political subdivision, or organization to pay up
to 50 percent of the cost for economic development planning.
``(2) Planning projects specifically included.--The
planning for cities, other political subdivisions, and sub-
State planning and development organizations (including areas
described in section 502(a) and economic development districts)
assisted under this section shall include systematic efforts to
reduce unemployment and increase incomes.
``(3) Planning process.--The planning shall be a continuous
process involving public officials and private citizens in
analyzing local economies, defining development goals,
determining project opportunities, and formulating and
implementing a development program.
``(4) Coordination of assistance under section 401(c).--The
assistance available under this section may be provided in
addition to assistance available under section 401(c) but shall
not supplant such assistance.
``(b) Compliance With Review Procedure.--The planning assistance
authorized under this title shall be used in conjunction with any other
available Federal planning assistance to assure adequate and effective
planning and economical use of funds.
``TITLE V--ELIGIBILITY AND INVESTMENT STRATEGIES
``PART A--ELIGIBILITY
``SEC. 501. ELIGIBLE RECIPIENT DEFINED.
``In this Act, the term `eligible recipient' means an area
described in section 502(a), an economic development district
designated under section 510, an Indian tribe, a State, a city or other
political subdivision of a State, or a consortium of such political
subdivisions, or a public or private nonprofit organization or
association acting in cooperation with officials of such political
subdivisions.
``SEC. 502. AREA ELIGIBILITY.
``(a) Certification.--In order to be eligible for assistance under
title II, an applicant seeking assistance to undertake a project in an
area shall certify, as part of an application for such assistance, that
the area on the date of submission of such application meets 1 or more
of the following criteria:
``(1) The area has a per capita income of 80 percent or
less of the national average.
``(2) The area has an unemployment rate 1 percent above the
national average percentage for the most recent 24-month period
for which statistics are available.
``(3) The area has experienced or is about to experience a
sudden economic dislocation resulting in job loss that is
significant both in terms of the number of jobs eliminated and
the effect upon the employment rate of the area.
``(4) The area is a community or neighborhood (defined
without regard to political or other subdivisions or
boundaries) which the Administrator determines has one or more
of the following conditions:
``(A) A large concentration of low-income persons.
``(B) Rural areas having substantial out-migration.
``(C) Substantial unemployment.
``(b) Documentation.--A certification made under subsection (a)
shall be supported by Federal data, when available, and in other cases
by data available through the State government. Such documentation
shall be accepted by the Administrator unless it is determined to be
inaccurate. The most recent statistics available shall be used.
``(c) Prior Designations.--Any designation of a redevelopment area
made before the effective date specified in section 802 shall not be
effective after such effective date.
``SEC. 503. INVESTMENT STRATEGY.
``The Administrator may provide assistance under titles II and III
to an applicant for a project only if the applicant submits to the
Administrator, as part of an application for such assistance, and the
Administrator approves an investment strategy which--
``(1) identifies the economic development problems to be
addressed using such assistance;
``(2) identifies past, present, and projected future
economic development investments in the area receiving such
assistance and public and private participants and sources of
funding for such investments;
``(3) sets forth a strategy for addressing the economic
problems identified pursuant to paragraph (1) and describes how
the strategy will solve such problems;
``(4) provides a description of the project necessary to
implement the strategy, estimates of costs, and timetables; and
``(5) provides a summary of public and private resources
expected to be available for the project.
``SEC. 504. APPROVAL OF PROJECTS.
``Only applications for grants or other assistance under this Act
for specific projects shall be approved which are certified by the
State representing such applicant and determined by the Administrator--
``(1) to be included in a State investment strategy;
``(2) to have adequate assurance that the project will be
properly administered, operated, and maintained; and
``(3) to otherwise meet the requirements for assistance
under this Act.
``PART B--ECONOMIC DEVELOPMENT DISTRICTS
``SEC. 510. DESIGNATION OF ECONOMIC DEVELOPMENT DISTRICTS AND ECONOMIC
DEVELOPMENT CENTERS.
``(a) In General.--In order that economic development projects of
broader geographic significance may be planned and carried out, the
Administrator may--
``(1) designate appropriate `economic development
districts' within the United States with the concurrence of the
States in which such districts will be wholly or partially
located, if--
``(A) the proposed district is of sufficient size
or population, and contains sufficient resources, to
foster economic development on a scale involving more
than a single area described in section 502(a);
``(B) the proposed district contains at least 1
area described in section 502(a);
``(C) the proposed district contains 1 or more
areas described in section 502(a) or economic
development centers identified in an approved district
investment strategy as having sufficient size and
potential to foster the economic growth activities
necessary to alleviate the distress of the areas
described in section 502(a) within the district; and
``(D) the proposed district has a district
investment strategy which includes adequate land use
and transportation planning and contains a specific
program for district cooperation, self-help, and public
investment and is approved by the State or States
affected and by the Administrator;
``(2) designate as `economic development centers', in
accordance with such regulations as the Administrator shall
prescribe, such areas as the Administrator may deem
appropriate, if--
``(A) the proposed center has been identified and
included in an approved district investment strategy
and recommended by the State or States affected for
such special designation;
``(B) the proposed center is geographically and
economically so related to the district that its
economic growth may reasonably be expected to
contribute significantly to the alleviation of distress
in the areas described in section 502(a) of the
district; and
``(C) the proposed center does not have a
population in excess of 250,000 according to the most
recent Federal census.
``(3) provide financial assistance in accordance with the
criteria of this Act, except as may be herein otherwise
provided, for projects in economic development centers
designated under subsection (a)(2), if--
``(A) the project will further the objectives of
the investment strategy of the district in which it is
to be located;
``(B) the project will enhance the economic growth
potential of the district or result in additional long-
term employment opportunities commensurate with the
amount of Federal financial assistance requested; and
``(C) the amount of Federal financial assistance
requested is reasonably related to the size,
population, and economic needs of the district;
``(4) subject to the 50 percent non-Federal share required
for any project by section 201(c), increase the amount of grant
assistance authorized by section 201 for projects within areas
described in section 502(a), by an amount not to exceed 10
percent of the aggregate cost of any such project, in
accordance with such regulations as the Administrator shall
prescribe if--
``(A) the area described in section 502(a) is
situated within a designated economic development
district and is actively participating in the economic
development activities of the district; and
``(B) the project is consistent with an approved
investment strategy.
``(b) Authorities.--In designating economic development districts
and approving district investment strategies under subsection (a), the
Administrator may, under regulations prescribed by the Administrator--
``(1) invite the several States to draw up proposed
district boundaries and to identify potential economic
development centers;
``(2) cooperate with the several States--
``(A) in sponsoring and assisting district economic
planning and development groups; and
``(B) in assisting such district groups to
formulate district investment strategies; and
``(3) encourage participation by appropriate local
governmental authorities in such economic development
districts.
``(c) Termination or Modification of Designations.--The
Administrator shall by regulation prescribe standards for the
termination or modification of economic development districts and
economic development centers designated under the authority of this
section.
``(d) Definitions.--In this Act, the following definitions apply:
``(1) Economic development district.--The term `economic
development district' refers to any area within the United
States composed of cooperating areas described in section
502(a) and, where appropriate, designated economic development
centers and neighboring counties or communities, which has been
designated by the Administrator as an economic development
district. Such term includes any economic development district
designated under section 403 of this Act, as in effect on the
day before the effective date specified in section 802.
``(2) Economic development center.--The term `economic
development center' refers to any area within the United States
which has been identified as an economic development center in
an approved investment strategy and which has been designated
by the Administrator as eligible for financial assistance under
this Act in accordance with the provisions of this section.
``(3) Local government.--The term `local government' means
any city, county, town, parish, village, or other general-
purpose political subdivision of a State.
``(e) Parts of Economic Development Districts Not Within Areas
Described in Section 502(a).--The Administrator is authorized to
provide the financial assistance which is available to an area
described in section 502(a) under this Act to those parts of an
economic development district which are not within an area described in
section 502(a), when such assistance will be of a substantial direct
benefit to an area described in section 502(a) within such district.
Such financial assistance shall be provided in the same manner and to
the same extent as is provided in this Act for an area described in
section 502(a); except that nothing in this subsection shall be
construed to permit such parts to receive the increase in the amount of
grant assistance authorized in subsection (a)(4).
``TITLE VI--ADMINISTRATION
``SEC. 601. APPOINTMENT OF ASSOCIATE ADMINISTRATOR; FULL TIME
EQUIVALENT EMPLOYEES.
``(a) Appointment.--The Administrator shall carry out the duties
vested in the Administrator by this Act acting through an Associate
Administrator of the Small Business Administration, who shall be
appointed by the President by and with the advice and consent of the
Senate.
``(b) Pay.--The Associate Administrator shall be compensated by the
Federal Government at the rate prescribed for level V of the Executive
Schedule under section 5316 of title 5, United States Code.
``(c) Full Time Equivalent Employees.--The Administrator shall
assign not to exceed 25 full time equivalent employees of the Small
Business Administration (excluding the Associate Administrator) to
assist the Administrator in the carrying out the duties vested in the
Administrator by this Act.
``SEC. 602. REGIONAL COOPERATIVE AGREEMENTS.
``(a) In General.--The Administrator shall make grants and carry
out such other functions under this Act as the Administrator considers
appropriate by entering into cooperative agreements with 1 or more
States on a regional basis. Each State entering into such an agreement
shall be represented by the chief executive officer of the State.
``(b) Terms and Conditions.--A cooperative agreement entered into
under subsection (a) shall include such terms and conditions as the
Administrator determines are necessary to carry out the provisions of
this Act. Such terms and conditions at a minimum shall provide that no
decision concerning regional policies or approval of project or grant
applications may be made without the consent of the Administrator and a
majority of the States participating in the cooperative agreement.
``(c) Participation Not Required.--No State shall be required to
enter into a cooperative agreement under this section or to participate
in any program established by this Act.
``SEC. 603. ADMINISTRATIVE EXPENSES.
``(a) Payment by States.--Fifty percent of the administrative
expenses incurred by States in participating in a cooperative agreement
entered into under section 602 shall be paid by such States and the
remaining 50 percent of such expenses shall be paid by the Federal
Government.
``(b) Determination of State Share.--The share of the
administrative expenses to be paid by each State participating in a
cooperative agreement shall be determined by a majority vote of such
States. The Administrator may not participate or vote in such
determination.
``(c) Delinquent Payments.--No assistance authorized by this Act
shall be furnished to any State or to any political subdivision or
resident of a State, nor shall the State participate or vote in any
decision described in section 602(b), while such State is delinquent in
the payment of such State's share of the administrative expenses
described in subsection (a).
``SEC. 604. FEDERAL SHARE.
``Except as otherwise expressly provided by this Act, the Federal
share of the cost of any project funded with amounts made available
under this Act shall not exceed 50 percent of such cost.
``SEC. 605. COOPERATION OF FEDERAL AGENCIES.
``Each Federal department and agency, in accordance with applicable
laws and within the limits of available funds, shall cooperate with the
Administrator in order to assist the Administrator in carrying out the
functions of the Administrator.
``SEC. 606. CONSULTATION WITH OTHER PERSONS AND AGENCIES.
``(a) Consultation on Problems Relating to Employment.--The
Administrator is authorized from time to time to call together and
confer with any persons, including representatives of labor,
management, agriculture, and government, who can assist in meeting the
problems of area and regional unemployment or underemployment.
``(b) Consultation on Administration of Act.--The Administrator may
make provisions for such consultation with interested departments and
agencies as the Administrator may deem appropriate in the performance
of the functions vested in the Administrator by this Act.
``SEC. 607. ADMINISTRATION, OPERATION, AND MAINTENANCE.
``No Federal assistance shall be approved under this Act unless the
Administrator is satisfied that the project for which Federal
assistance is granted will be properly and efficiently administered,
operated, and maintained.
``TITLE VII--MISCELLANEOUS
``SEC. 701. POWERS OF ADMINISTRATOR.
``(a) In General.--In performing the Administrator's duties under
this Act, the Administrator is authorized to--
``(1) adopt, alter, and use a seal, which shall be
judicially noticed;
``(2) subject to the civil-service and classification laws,
select, employ, appoint, and fix the compensation of such
personnel as may be necessary to carry out the provisions of
this Act;
``(3) hold such hearings, sit and act at such times and
places, and take such testimony, as the Administrator may deem
advisable;
``(4) request directly from any executive department,
bureau, agency, board, commission, office, independent
establishment, or instrumentality information, suggestions,
estimates, and statistics needed to carry out the purposes of
this Act; and each department, bureau, agency, board,
commission, office, establishment, or instrumentality is
authorized to furnish such information, suggestions, estimates,
and statistics directly to the Administrator;
``(5) under regulations prescribed by the Administrator,
assign or sell at public or private sale, or otherwise dispose
of for cash or credit, in the Administrator's discretion and
upon such terms and conditions and for such consideration as
the Administrator determines to be reasonable, any evidence of
debt, contract, claim, personal property, or security assigned
to or held by the Administrator in connection with assistance
extended under this Act, and collect or compromise all
obligations assigned to or held by the Administrator in
connection with such assistance until such time as such
obligations may be referred to the Attorney General for suit or
collection;
``(6) deal with, complete, renovate, improve, modernize,
insure, rent, or sell for cash or credit, upon such terms and
conditions and for such consideration as the Administrator
determines to be reasonable, any real or personal property
conveyed to, or otherwise acquired by the Administrator in
connection with assistance extended under this Act;
``(7) pursue to final collection, by way of compromise or
other administrative action, prior to reference to the Attorney
General, all claims against third parties assigned to the
Administrator in connection with assistance extended this Act;
``(8) acquire, in any lawful manner and in accordance with
the requirements of the Federal Property and Administrative
Services Act of 1949, any property (real, personal, or mixed,
tangible or intangible), whenever necessary or appropriate to
the conduct of the activities authorized under this Act;
``(9) in addition to any powers, functions, privileges, and
immunities otherwise vested in the Administrator, take any
action, including the procurement of the services of attorneys
by contract, determined by the Administrator to be necessary or
desirable in making, purchasing, servicing, compromising,
modifying, liquidating, or otherwise administratively dealing
with assets held in connection with financial assistance
extended under this Act;
``(10) employ experts and consultants or organizations as
authorized by section 3109 of title 5, United States Code,
compensate individuals so employed at rates not in excess of
$100 per diem, including travel time, and allow them, while
away from their homes or regular places of business, travel
expenses (including per diem in lieu of subsistence) as
authorized by section 5703 of title 5, United States Code, for
persons in the Government service employed intermittently,
while so employed, except that contracts for such employment
may be renewed annually;
``(11) sue and be sued in any court of record of a State
having general jurisdiction or in any United States district
court, and jurisdiction is conferred upon such district court
to determine such controversies without regard to the amount in
controversy; but no attachment, injunction, garnishment, or
other similar process, mesne or final, shall be issued against
the Administrator or the Administrator's property;
``(12) make discretionary grants, pursuant to authorities
otherwise available to the Administrator under this Act and
without regard to the requirements of section 504, to implement
significant regional initiatives, to take advantage of special
development opportunities, or to respond to emergency economic
distress in a region from the funds withheld from distribution
by the Administrator; except that the aggregate amount of such
discretionary grants in any fiscal year may not exceed 10
percent of the amounts appropriated under title VIII for such
fiscal year;
``(13) allow a State to use not to exceed 5 percent of the
total of amounts received by the State in a fiscal year in
grants under this Act for reasonable expenses incurred by the
State in administering such amounts; and
``(14) establish such rules, regulations, and procedures as
the Administrator considers appropriate in carrying out the
provisions of this Act.
``(b) Deficiency Judgments.--The authority under subsection (a)(7)
to pursue claims shall include the authority to obtain deficiency
judgments or otherwise in the case of mortgages assigned to the
Administrator.
``(c) Inapplicability of Certain Other Requirements.--Section 3709
of the Revised Statutes of the United States shall not apply to any
contract of hazard insurance or to any purchase or contract for
services or supplies on account of property obtained by the
Administrator as a result of assistance extended under this Act if the
premium for the insurance or the amount of the insurance does not
exceed $1,000.
``(d) Powers of Conveyance and Execution.--The power to convey and
to execute, in the name of the Administrator, deeds of conveyance,
deeds of release, assignments and satisfactions of mortgages, and any
other written instrument relating to real or personal property or any
interest therein acquired by the Administrator pursuant to the
provisions of this Act may be exercised by the Administrator, or by any
officer or agent appointed by the Administrator for such purpose,
without the execution of any express delegation of power or power of
attorney.
``SEC. 702. ESTABLISHMENT OF CLEARINGHOUSE.
``In carrying out the Administrator's duties under this Act, the
Administrator shall ensure that the Small Business Administration--
``(1) serves as a central information clearinghouse on
matters relating to economic development, economic adjustment,
disaster recovery, and defense conversion programs and
activities of the Federal and State governments, including
political subdivisions of the States; and
``(2) helps potential and actual applicants for economic
development, economic adjustment, disaster recovery, and
defense conversion assistance under Federal, State, and local
laws in locating and applying for such assistance, including
financial and technical assistance.
``SEC. 703. PERFORMANCE MEASURES.
``The Administrator shall establish performance measures for grants
and other assistance provided under this Act. Such performance measures
shall be used to evaluate project proposals and conduct evaluations of
projects receiving such assistance.
``SEC. 704. MAINTENANCE OF STANDARDS.
``The Administrator shall continue to implement and enforce the
provisions of section 712 of this Act, as in effect on the day before
the effective date specified in section 802.
``SEC. 705. TRANSFER OF FUNCTIONS.
``The functions, powers, duties, and authorities and the assets,
funds, contracts, loans, liabilities, commitments, authorizations,
allocations, and records which are vested in or authorized to be
transferred to the Secretary of the Treasury under section 29(b) of the
Area Redevelopment Act, and all functions, powers, duties, and
authorities under section 29(c) of such Act are hereby vested in the
Administrator.
``SEC. 706. DEFINITION OF STATE.
``In this Act, the terms `State', `States', and `United States'
include the several States, the District of Columbia, Puerto Rico, the
Virgin Islands, American Samoa, Guam, the Marshall Islands, Micronesia,
and the Northern Mariana Islands.
``SEC. 707. ANNUAL REPORT TO CONGRESS.
``The Administrator shall transmit to Congress a comprehensive and
detailed annual report of the Administrator's operations under this Act
for each fiscal year beginning with the fiscal year ending September
30, 1996. Such report shall be printed and shall be transmitted to
Congress not later than April 1 of the year following the fiscal year
with respect to which such report is made.
``SEC. 708. USE OF OTHER FACILITIES.
``(a) Delegation of Functions to Other Federal Departments and
Agencies.--The Administrator may delegate to the heads of other
departments and agencies of the Federal Government any of the
Administrator's functions, powers, and duties under this Act as the
Administrator may deem appropriate, and to authorize the redelegation
of such functions, powers, and duties by the heads of such departments
and agencies.
``(b) Department and Agency Execution of Delegated Authority.--
Departments and agencies of the Federal Government shall exercise their
powers, duties, and functions in such manner as will assist in carrying
out the objectives of this Act.
``(c) Transfer Between Departments.--Funds authorized to be
appropriated under this Act may be transferred between departments and
agencies of the Government, if such funds are used for the purposes for
which they are specifically authorized and appropriated.
``(d) Funds Transferred From Other Departments and Agencies.--In
order to carry out the objectives of this Act, the Administrator may
accept transfers of funds from other departments and agencies of the
Federal Government if the funds are used for the purposes for which
(and in accordance with the terms under which) the funds are
specifically authorized and appropriated. Such transferred funds shall
remain available until expended, and may be transferred to and merged
with the appropriations under the heading `salaries and expenses' by
the Administrator to the extent necessary to administer the program.
``SEC. 709. EMPLOYMENT OF EXPEDITERS AND ADMINISTRATIVE EMPLOYEES.
``No financial assistance shall be extended by the Administrator
under this Act to any business enterprise unless the owners, partners,
or officers of such business enterprise--
``(1) certify to the Administrator the names of any
attorneys, agents, and other persons engaged by or on behalf of
such business enterprise for the purpose of expediting
applications made to the Administrator for assistance of any
sort, under this Act, and the fees paid or to be paid to any
such person; and
``(2) execute an agreement binding such business
enterprise, for a period of 2 years after such assistance is
rendered by the Administrator to such business enterprise, to
refrain from employing, tendering any office or employment to,
or retaining for professional services, any person who, on the
date such assistance or any part thereof was rendered, or
within the 1-year period ending on such date, shall have served
as an officer, attorney, agent, or employee, occupying a
position or engaging in activities which the Administrator
determines involves discretion with respect to the granting of
assistance under this Act.
``SEC. 710. MAINTENANCE OF RECORDS OF APPROVED APPLICATIONS FOR
FINANCIAL ASSISTANCE; PUBLIC INSPECTION.
``(a) Maintenance of Record Required.--The Administrator shall
maintain as a permanent part of the records of the Small Business
Administration a list of applications approved for financial assistance
under this Act, which shall be kept available for public inspection
during the regular business hours of the Small Business Administration.
``(b) Posting to List.--The following information shall be posted
in such list as soon as each application is approved:
``(1) The name of the applicant and, in the case of
corporate applications, the names of the officers and directors
thereof.
``(2) The amount and duration of the financial assistance
for which application is made.
``(3) The purposes for which the proceeds of the financial
assistance are to be used.
``SEC. 711. RECORDS AND AUDIT.
``(a) Recordkeeping and Disclosure Requirements.--Each recipient of
assistance under this Act shall keep such records as the Administrator
shall prescribe, including records which fully disclose the amount and
the disposition by such recipient of the proceeds of such assistance,
the total cost of the project or undertaking in connection with which
such assistance is given or used, and the amount and nature of that
portion of the cost of the project or undertaking supplied by other
sources, and such other records as will facilitate an effective audit.
``(b) Access to Books for Examination and Audit.--The Administrator
and the Comptroller General of the United States, or any of their duly
authorized representatives, shall have access for the purpose of audit
and examination to any books, documents, papers, and records of the
recipient that are pertinent to assistance received under this Act.
``SEC. 712. PROHIBITION AGAINST A STATUTORY CONSTRUCTION WHICH MIGHT
CAUSE DIMINUTION IN OTHER FEDERAL ASSISTANCE.
``All financial and technical assistance authorized under this Act
shall be in addition to any Federal assistance previously authorized,
and no provision of this Act shall be construed as authorizing or
permitting any reduction or diminution in the proportional amount of
Federal assistance to which any State or other entity eligible under
this Act would otherwise be entitled under the provisions of any other
Act.
``SEC. 713. ACCEPTANCE OF APPLICANTS' CERTIFICATIONS.
``The Administrator may accept, when deemed appropriate, the
applicants' certifications to meet the requirements of this Act.
``TITLE VIII--FUNDING; EFFECTIVE DATE
``SEC. 801. AUTHORIZATION OF APPROPRIATIONS
``There is authorized to be appropriated to carry out this Act
$340,000,000 per fiscal year for each of fiscal years 1996, 1997, 1998,
1999, and 2000. Such sums shall remain available until expended.
``SEC. 802. EFFECTIVE DATE.
``The effective date specified in this section is the abolishment
date specified in section 17101(c) of the Department of Commerce
Dismantling Act.''.
(b) Conforming Amendments to Title 5.--Section 5316 of title 5,
United States Code, is amended--
(1) by striking ``Associate Administrators of the Small
Business Administration (4)'' and inserting ``Associate
Administrators of the Small Business Administration (5)''; and
(2) by striking ``Administrator for Economic
Development.''.
(c) GAO Study.--On or before December 30, 1996, the Comptroller
General shall submit to Congress a plan or plans for consolidating
economic development programs throughout the Federal Government. The
plan or plans shall focus on, but not be limited to, consolidating
programs included in the Catalogue of Federal Domestic Assistance with
similar purposes and target populations. The plan or plans shall detail
how consolidation can lead to improved grant or program management,
improvements in achieving program goals, and reduced costs.
SEC. 17202. TECHNOLOGY ADMINISTRATION.
(a) Technology Administration.--
(1) General rule.--Except as otherwise provided in this
section, the Technology Administration is terminated.
(2) Office of technology policy.--The Office of Technology
Policy is terminated.
(b) National Institute of Standards and Technology.--
(1) Redesignation.--The National Institute of Standards and
Technology is hereby redesignated as the National Bureau of
Standards, and all references to the National Institute of
Standards and Technology in Federal law or regulations are
deemed to be references to the National Bureau of Standards.
(2) General rule.--The National Bureau of Standards (in
this subsection referred to as the ``Bureau'') is transferred
to the National Institute for Science and Technology,
established under section 17207.
(3) Functions of director.--Except as otherwise provided in
this section or section 17208, upon the transfer under
paragraph (2), the Director of the Bureau shall perform all
functions relating to the Bureau that, immediately before the
effective date specified in section 17209(a), were functions of
the Secretary of Commerce or the Under Secretary of Commerce
for Technology.
(c) National Technical Information Service.--All functions of the
National Technical Information Service are transferred to the Director
of Office of Management and Budget for privatization in accordance with
section 17109.
(d) Amendments.--
(1) National institute of standards and technology act.--
The National Institute of Standards and Technology Act (15
U.S.C. 271 et seq.) is amended--
(A) in section 2(b), by striking paragraph (1) and
redesignating paragraphs (2) through (11) as paragraphs
(1) through (10), respectively;
(B) in section 2(d), by striking ``, including the
programs established under sections 25, 26, and 28 of
this Act'';
(C) in section 10, by striking ``Advanced'' in both
the section heading and subsection (a), and inserting
in lieu thereof ``Standards and''; and
(D) by striking sections 24, 25, 26, and 28.
(2) Stevenson-wydler technology innovation act of 1980.--
The Stevenson-Wydler Technology Innovation Act of 1980 (15
U.S.C. 3701 et seq.) is amended--
(A) in section 3, by striking paragraph (2) and
redesignating paragraphs (3) through (5) as paragraphs
(2) through (4), respectively;
(B) in section 4, by striking paragraphs (1), (4),
and (13) and redesignating paragraphs (2), (3), (5),
(6), (7), (8), (9), (10), (11), and (12) as paragraphs
(1) through (10), respectively;
(C) by striking sections 5, 6, 7, 8, 9, and 10;
(D) in section 11--
(i) by striking ``, the Federal Laboratory
Consortium for Technology Transfer,'' in
subsection (c)(3);
(ii) by striking ``and the Federal
Laboratory Consortium for Technology Transfer''
in subsection (d)(2);
(iii) by striking ``, and refer such
requests'' and all that follows through
``available to the Service'' in subsection
(d)(3); and
(iv) by striking subsection (e); and
(E) in section 17--
(i) by striking ``Subject to paragraph (2),
separate'' in subsection (c)(1) and inserting
in lieu thereof ``Separate'';
(ii) by striking paragraph (2) of
subsection (c) and redesignating paragraph (3)
as paragraph (2);
(iii) by striking ``funds to carry out'' in
subsection (f), and inserting in lieu thereof
``funds only to pay the salary of the Director
of the Office of Quality Programs, who shall be
responsible for carrying out''; and
(iv) by adding at the end the following new
subsection:
``(h) Voluntary and Uncompensated Services.--The Director of the
Office of Quality Programs may accept voluntary and uncompensated
services notwithstanding the provisions of section 1342 of title 31,
United States Code.''.
(3) Miscellaneous amendments.--Section 3 of Public Law 94-
168 (15 U.S.C. 205b) is amended--
(A) by striking paragraph (2);
(B) by redesignating paragraphs (3) and (4) as
paragraphs (2) and (3), respectively; and
(C) in paragraph (3), as so redesignated by
subparagraph (B) of this paragraph, by striking ``in
nonbusiness activities''.
SEC. 17203. REORGANIZATION OF THE BUREAU OF THE CENSUS.
(a) Provisions Relating to Interim Period.--
(1) Functions of the secretary of commerce.--During the 6-
month period beginning on the abolishment date specified in
section 17101(c), the Director of the Office of Management and
Budget shall perform all functions that, immediately before
such effective date, were functions of the Secretary of
Commerce under title 13, United States Code.
(2) Reorganization authority under section 17104(f) not to
apply.--Section 17104(f) shall not apply with respect to the
Bureau of the Census or any function to be performed by the
appropriate official pursuant to paragraph (1).
(b) Transfer of Functions.--
(1) In general.--Notwithstanding any provision of section
17209, effective as of the first day following the end of the
6-month period referred to in subsection (a)(1)--
(A) the Bureau of the Census shall be transferred
to the Department of Labor; and
(B) all functions that, immediately before such
first day, were functions of the Director of the Office
of Management and Budget by reason of subsection (a)(1)
shall be transferred to the Secretary of Labor.
(2) Continuation of service of the director of the
census.--The individual serving as the Director of the Census
at the end of the 6-month period referred to in subsection
(a)(1) may continue serving in that capacity, after the end of
such period, until a successor has taken office.
(c) Amendments.--Effective as of the first day following the end of
the 6-month period referred to in subsection (a)(1)--
(1) Transfer of the bureau of the census to the department
of labor.--(A) Section 2 of title 13, United States Code, is
amended by striking ``is continued as'' through the period and
inserting ``is an agency within, and under the jurisdiction of,
the Department of Labor.''.
(B) Subsection (e) of section 12 of the Act of February 14,
1903 (15 U.S.C. 1511(e)) is repealed.
(2) Definition of secretary.--Title 13, United States Code,
is amended in section 1(2) by striking ``Secretary of
Commerce'' and inserting ``Secretary of Labor''.
(3) References to the department of commerce.--Title 13,
United States Code, is amended in sections 4, 9(a), 23(b),
24(e), 44, 103, 132, 211, 213(b)(2), 221, 222, 223, 224,
225(a), and 241 by striking ``Department of Commerce'' each
place it appears and inserting ``Department of Labor''.
(4) References to the secretary of commerce.--(A) Section
304(a) of title 13, United States Code, is amended by striking
``Secretary of Commerce'' and inserting ``Secretary of Labor''.
(B)(i) Section 401(a) of title 13, United States Code, is
amended by striking ``Secretary of Commerce'' and inserting
``Secretary''.
(ii) Section 8(e) of the Foreign Direct Investment and
International Financial Data Improvements Act of 1990 (22
U.S.C. 3144(e)) is amended by striking ``Secretary of
Commerce'' and inserting ``Secretary of Labor''.
(iii) Section 401(a) of title 13, United States Code, is
amended by striking ``Department of Commerce'' and inserting
``Federal Reserve System''.
(5) Compensation for the position of director of the
census.--Section 5315 of title 5, United States Code, as
amended by section 17108(e)(7), is further amended by striking
``Census.'' and inserting ``Census, Department of Labor.''.
(6) Confidentiality.--Section 9 of title 13, United States
Code, is amended by adding at the end the following:
``(c)(1) Nothing in subsection (a)(3) shall be considered to permit
the disclosure of any matter or information to an officer or employee
of the Department of Labor who is not referred to in subchapter II if,
immediately before the start of the 6-month period referred to in
section 17203(a)(1) of the Department of Commerce Dismantling Act, such
disclosure (if then made by an officer or employee of the Department of
Commerce) would have been impermissible under this section (as then in
effect).
``(2) Paragraph (1) shall not apply with respect to any disclosure
made to the Secretary.''.
(d) Sense of the Congress.--It is the sense of the Congress that
the Bureau of the Census should--
(1) make appropriate use of any authority afforded to it by
the Census Address List Improvement Act of 1994 (Public Law
103-430; 108 Stat. 4393), and take measures to ensure the
timely implementation of such Act; and
(2) streamline census questionnaires to promote savings in
the collection and tabulation of data.
(e) Rule of Construction.--For purposes of subtitle E, the
reorganization of the Bureau of the Census pursuant to subsections (b)
and (c) shall be treated as if it involved a transfer of functions.
SEC. 17204. BUREAU OF ECONOMIC ANALYSIS.
(a) In General.--(1) The functions of the Bureau of Economic
Analysis are transferred to the Secretary of Labor.
(2) All functions which, immediately before such date, are
functions of the Secretary of Commerce with respect to the Bureau of
Economic Analysis are transferred to the Secretary of Labor.
(b) Consolidation With the Bureau of Labor Statistics.--The
Secretary of Labor shall consolidate the functions transferred under
subsection (a) with the Bureau of Labor Statistics within the
Department of Labor.
(c) Reports.--Not later than 18 months after the date of the
enactment of this Act, the Secretary of Labor, after consultation with
the Director of the Office of Management and Budget, shall submit to
the Congress a written report on--
(1) the availability of any private sector resources that
may be capable of performing any or all of the functions of the
Bureau of Economic Analysis, and the feasibility of having any
such functions so performed; and
(2) the feasibility of implementing a system under which
fees may be assessed by the Bureau of Economic Analysis in
order to defray the costs of any services performed by the
Bureau of Economic Analysis, when such services are performed
other than on behalf of the Federal Government or an agency or
instrumentality thereof.
(d) Rule of Construction.--For purposes of subtitle E, the
reorganization of the Bureau of Economic Analysis under this section
shall be treated as if it involved a transfer of functions.
(e) Limitation on Annual Obligations and Expenditures for Continued
Functions.--
(1) In general.--Except as provided in paragraph (2), for
each fiscal year that begins on or after the effective date of
this section, the total of amounts obligated or expended by the
United States each fiscal year for performance of functions
which immediately before the date of the enactment of this Act
were authorized to be performed by the Secretary of Commerce
with respect to the Bureau of Economic Analysis, or by or an
agency, officer, or employee of the Department of Commerce with
respect to that bureau, may not exceed 75 percent of the total
of amounts obligated or expended by the United States for
performance of such functions for fiscal year 1995.
(2) Exception.--Paragraph (1) shall not apply to
obligations or expenditures incurred as a direct consequence of
the termination, transfer, or other disposition of funtions
pursuant to this section.
(3) Rule of construction.--This subsection shall take
precedence over any other provision of law unless such
provision explicitly refers to this section and makes an
exception to it.
(4) Responsibilities of the director of the office of
management and budget.--The Director of the Office of
Management and Budget shall--
(A) ensure compliance with the requirements of this
subsection; and
(B) include in each report under sections 17106(a)
and (b) a description of actions taken to comply with
such requirements.
SEC. 17205. TERMINATED FUNCTIONS OF NTIA.
(a) Repeals.--The following provisions of law are repealed:
(1) Subpart A of part IV of title III of the Communications
Act of 1934 (47 U.S.C. 390 et seq.), relating to assistance for
public telecommunications facilities.
(2) Subpart B of part IV of title III of the Communications
Act of 1934 (47 U.S.C. 394 et seq.), relating to the Endowment
for Children's Educational Television.
(3) Subpart C of part IV of title III of the Communications
Act of 1934 (47 U.S.C. 395 et seq.), relating to
Telecommunications Demonstration grants.
(b) Disposal of NTIA Laboratories.--
(1) Privatization.--All laboratories of the National
Telecommunications and Information Administration are
transferred to the Director of the Office of Management and
Budget for privatization in accordance with section 17109.
(2) Transfer of functions.--The functions of the National
Telecommunications and Information Administration concerning
research and analysis of the electromagnetic spectrum described
in section 5112(b) of the Omnibus Trade and Competitiveness Act
of 1988 (15 U.S.C. 1532) are transferred to the Director of the
National Bureau of Standards.
(c) Transfer of National Telecommunications and Information
Administration Functions.--
(1) Transfer to ustr.--Except as provided in subsection
(b)(2), the functions of the National Telecommunications and
Information Administration, and of the Secretary of Commerce
and the Assistant Secretary for Communications and Information
of the Department of Commerce with respect to the National
Telecommunications and Information Administration, are
transferred to the United States Trade Representative.
(2) References.--References in any provision of law
(including the National Telecommunications and Information
Administration Organization Act) to the Secretary of Commerce
or the Assistant Secretary for Communications and Information
of the Department of Commerce--
(A) with respect to a function vested pursuant to
this section in the United States Trade Representative
shall be deemed to refer to the United States Trade
Representative; and
(B) with respect to a function vested pursuant to
this section in the Director of the National Bureau of
Standards shall be deemed to refer to the Director of
the National Bureau of Standards.
(3) Termination of ntia.--Effective on the abolishment date
specified in section 17101(c), the National Telecommunications
and Information Administration is abolished.
SEC. 17206. NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION.
(a) Termination of Miscellaneous Research Programs and Accounts.--
(1) In general.--No funds may be appropriated in any fiscal
year for the following programs and accounts of the National
Oceanic and Atmospheric Administration:
(A) The National Undersea Research Program.
(B) The Fleet Modernization Program.
(C) The Charleston, South Carolina, Special
Management Plan.
(D) Chesapeake Bay Observation Buoys (as of
September 30, 1996).
(E) Federal/State Weather Modification Grants.
(F) The Southeast Storm Research Account.
(G) The Southeast United States Caribbean Fisheries
Oceanographic Coordinated Investigations Program.
(H) National Institute for Environmental Renewal.
(I) The Lake Champlain Study.
(J) The Maine Marine Research Center.
(K) The South Carolina Cooperative Geodetic Survey
Account.
(L) Pacific Island Technical Assistance.
(M) Sea Grant Oyster Disease Account.
(N) Sea Grant Zebra Mussel Account.
(O) VENTS program.
(P) National Weather Service non-Federal, non-
wildfire Weather Service.
(Q) National Weather Service Regional Climate
Centers.
(R) National Weather Service Samoa Weather Forecast
Office Repair and Upgrade Account.
(S) Dissemination of Weather Charts (Marine
Facsimile Service).
(T) The Climate and Global Change Account.
(U) The Global Learning and Observations to Benefit
the Environment Program.
(V) Great Lakes nearshore research.
(W) Mussel watch.
(2) Repeals.--The following provisions of law are repealed:
(A) The Ocean Thermal Conversion Act of 1980 (42
U.S.C. 9101 et seq.).
(B) Title IV of the Marine Protection, Research,
and Sanctuaries Act of 1972 (16 U.S.C. 1447 et seq.).
(C) Title V of the Marine Protection, Research, and
Sanctuaries Act of 1972 (33 U.S.C. 2801 et seq.).
(D) The Great Lakes Shoreline Mapping Act of 1987
(33 U.S.C. 883a note).
(E) The Great Lakes Fish and Wildlife Tissue Bank
Act (16 U.S.C. 943 et seq.).
(F) The Nonindigenous Aquatic Nuisance Prevention
and Control Act of 1990 (16 U.S.C. 4701 et seq.),
except for those provisions affecting the Assistant
Secretary of the Army (civil works) and the Secretary
of the department in which the Coast Guard is
operating.
(G) Section 3 of the Sea Grant Program Improvement
Act of 1976 (33 U.S.C. 1124a).
(H) Section 208(c) of the National Sea Grant
College Program Act (33 U.S.C. 1127(c)).
(I) Section 305 of the Coastal Zone Management Act
of 1972 (16 U.S.C. 1454) is repealed effective October
1, 1998.
(J) The NOAA Fleet Modernization Act (33 U.S.C. 891
et seq.).
(K) Public Law 85-342 (72 Stat. 35; 16 U.S.C. 778
et seq.), relating to fish research and
experimentation.
(L) The first section of the Act of August 8, 1956
(70 Stat. 1126; 16 U.S.C. 760d), relating to grants for
commercial fishing education.
(M) Public Law 86-359 (16 U.S.C. 760e et seq.),
relating to the study of migratory marine gamefish.
(N) The Act of August 15, 1914 (Chapter 253; 38
Stat. 692; 16 U.S.C. 781 et seq.), prohibiting the
taking of sponges in the Gulf of Mexico and the Straits
of Florida.
(b) Aeronautical Mapping and Charting.--
(1) In general.--The aeronautical mapping and charting
functions of the National Oceanic and Atmospheric
Administration are transferred to the Defense Mapping Agency.
(2) Termination of certain functions.--The Defense Mapping
Agency shall terminate any functions transferred under
paragraph (1) that are performed by the private sector.
(3) Functions requested by federal aviation
administration.--(A) Notwithstanding paragraph (2), the
Director of the Defense Mapping Agency shall carry out such
aeronautical charting functions as may be requested by the
Administrator of the Federal Aviation Administration.
(B) In carrying out aeronautical mapping functions
requested by the Administrator under subparagraph (A), the
Director shall--
(i) publish and distribute to the public and to the
Administrator any aeronautical charts requested by the
Administrator; and
(ii) provide to the Administrator such other air
traffic control products and services as may be
requested by the Administrator,
in such manner and including such information as the
Administrator determines is necessary for, or will promote, the
safe and efficient movement of aircraft in air commerce.
(4) Continuing applicability.--The requirements of section
1307 of title 44, United States Code, shall continue to apply
with respect to all aeronautical products created or published
by the Director of the Defense Mapping Agency in carrying out
the functions transferred to the Director under this paragraph;
except that the prices for such products shall be established
jointly by the Director and the Secretary of Transportation on
an annual basis.
(c) Transfer of Mapping, Charting, and Geodesy Functions to the
United States Geological Survey.--
(1) In general.--Except as provided in subsection (b),
there are hereby transferred to the Director of the United
States Geological Survey the functions relating to mapping,
charting, and geodesy authorized under the Act of August 7,
1947 (61 Stat. 787; 33 U.S.C. 883a).
(2) Termination of certain functions.--The Director of the
United States Geological Survey shall terminate any functions
transferred under paragraph (1) that are performed by the
private sector.
(d) NESDIS.--There are transferred to the National Institute for
Science and Technology all functions and assets of the National Oceanic
and Atmospheric Administration that on the date immediately before the
effective date of this section were authorized to be performed by the
National Environmental Satellite, Data, and Information System.
(e) OAR.--There are transferred to the National Institute for
Science and Technology all functions and assets of the National Oceanic
and Atmospheric Administration (including global programs) that on the
date immediately before the effective date of this section were
authorized to be performed by the Office of Oceanic and Atmospheric
Research.
(f) NWS.--
(1) In general.--There are transferred to the National
Institute for Science and Technology all functions and assets
of the National Oceanic and Atmospheric Administration that on
the date immediately before the effective date of this section
were authorized to be performed by the National Weather
Service.
(2) Duties.--To protect life and property and enhance the
national economy, the Administrator of Science and Technology,
through the National Weather Service, except as outlined in
paragraph (3), shall be responsible for the following:
(A) Forecasts. The Administrator of Science and
Technology, through the National Weather Service, shall
serve as the sole official source of severe weather
warnings.
(B) Issuance of storm warnings.
(C) The collection, exchange, and distribution of
meteorological, hydrological, climatic, and
oceanographic data and information.
(D) The preparation of hydro-meteorological
guidance and core forecast information.
(3) Limitations on competition.--The National Weather
Service may not compete, or assist other entities to compete,
with the private sector to provide a service when that service
is currently provided or can be provided by a commercial
enterprise unless--
(A) the Administrator of Science and Technology
finds that the private sector is unwilling or unable to
provide the service; or
(B) the Administrator of Science and Technology
finds that the service provides vital weather warnings
and forecasts for the protection of lives and property
of the general public.
(4) Organic act amendments.--
(A) Amendments.--The Act of 1890 is amended--
(i) by striking section 3 (15 U.S.C. 313);
and
(ii) in section 9 (15 U.S.C. 317), by
striking ``Department of'' and all that follows
thereafter and inserting ``National Institute
for Science and Technology.''.
(B) Definition.--For purposes of this paragraph,
the term ``Act of 1890'' means the Act entitled ``An
Act to increase the efficiency and reduce the expenses
of the Signal Corps of the Army, and to transfer the
Weather Bureau to the Department of Agriculture'',
approved October 1, 1890 (26 Stat. 653).
(5) Repeal.--Sections 706 and 707 of the Weather Service
Modernization Act (15 U.S.C. 313 note) are repealed.
(6) Conforming Amendments.--The Weather Service
Modernization Act (15 U.S.C. 313 note) is amended--
(A) in section 702, by striking paragraph (3) and
redesignating paragraphs (4) through (10) as paragraphs
(3) through (9), respectively; and
(B) in section 703--
(i) by striking ``(a) National
Implementation Plan.--'';
(ii) by striking paragraph (3) and
redesignating paragraphs (4), (5), and (6) as
paragraphs (3), (4), and (5), respectively; and
(iii) by striking subsections (b) and (c).
(g) Termination of the National Oceanic and Atmospheric
Administration Corps of Commissioned Officers.--
(1) Number of officers.--Notwithstanding section 8 of the
Act of June 3, 1948 (33 U.S.C. 853g), the total number of
commissioned officers on the active list of the National
Oceanic and Atmospheric Administration shall not exceed 358 for
fiscal year 1996. No commissioned officers are authorized for
any fiscal year after fiscal year 1996.
(2) Separation pay.--(A) Commissioned officers may be
separated from the active list of the National Oceanic and
Atmospheric Administration. Any officer so separated because of
paragraph (1) shall, subject to subparagraph (B) and the
availability of appropriations, be eligible for separation pay
under section 9 of the Act of June 3, 1948 (33 U.S.C. 853h) to
the same extent as if such officer had been separated under
section 8 of such Act (33 U.S.C. 853g).
(B) Any officer who, under paragraph (4), transfers to
another of the uniformed services or becomes employed in a
civil service position shall not be eligible for separation pay
under this paragraph.
(C)(i) Any officer who receives separation pay under this
paragraph shall be required to repay the amount received if,
within 1 year after the date of the separation on which the
payment is based, such officer is reemployed in a civil service
position in the National Oceanic and Atmospheric
Administration, the duties of which position would formerly
have been performed by a commissioned officer, as determined by
the Administrator of the National Oceanic and Atmospheric
Administration.
(ii) A repayment under this subparagraph shall be made in a
lump sum or in such installments as the Administrator may
specify.
(D) In the case of any officer who makes a repayment under
subparagraph (C)--
(i) the National Oceanic and Atmospheric
Administration shall pay into the Civil Service
Retirement and Disability Fund, on such officer's
behalf, any deposit required under section 8422(e)(1)
of title 5, United States Code, with respect to any
prior service performed by that individual as such an
officer; and
(ii) if the amount paid under clause (i) is less
than the amount of the repayment under subparagraph
(C), the National Oceanic and Atmospheric
Administration shall pay into the Government Securities
Investment Fund (established under section
8438(b)(1)(A) of title 5, United States Code), on such
individual's behalf, an amount equal to the difference.
The provisions of paragraph (5)(C)(iv) shall apply with respect
to any contribution to the Thrift Savings Plan made under
clause (ii).
(3) Priority placement program.--A priority placement
program similar to the programs described in section 3329b of
title 5, United States Code, as amended by section 17110, shall
be established by the National Oceanic and Atmospheric
Administration to assist commissioned officers who are
separated from the active list of the National Oceanic and
Atmospheric Administration because of paragraph (1).
(4) Transfer.--(A) Subject to the approval of the Secretary
of Defense and under terms and conditions specified by the
Secretary, commissioned officers subject to paragraph (1) may
transfer to the Armed Forces under section 716 of title 10,
United States Code.
(B) Subject to the approval of the Secretary of
Transportation and under terms and conditions specified by the
Secretary, commissioned officers subject to paragraph (1) may
transfer to the United States Coast Guard under section 716 of
title 10, United States Code.
(C) Subject to the approval of the Administrator of the
National Oceanic and Atmospheric Administration and under terms
and conditions specified by that Administrator, commissioned
officers subject to paragraph (1) may be employed by the
National Oceanic and Atmospheric Administration as members of
the civil service.
(5) Retirement provisions.--(A) For commissioned officers
who transfer under paragraph (4)(A) to the Armed Forces, the
National Oceanic and Atmospheric Administration shall pay into the
Department of Defense Military Retirement Fund an amount, to be
calculated by the Secretary of Defense in consultation with the
Secretary of the Treasury, equal to the actuarial present value of any
retired or retainer pay they will draw upon retirement, including full
credit for service in the NOAA Corps. Any payment under this
subparagraph shall, for purposes of paragraph (2) of section 17207(g),
be considered to be an expenditure described in such paragraph.
(B) For commissioned officers who transfer under paragraph
(4)(B) to the United States Coast Guard, full credit for
service in the NOAA Corps shall be given for purposes of any
annuity or other similar benefit under the retirement system
for members of the United States Coast Guard, entitlement to
which is based on the separation of such officer.
(C)(i) For a commissioned officer who becomes employed in a
civil service position pursuant to paragraph (4)(C) and
thereupon becomes subject to the Federal Employees' Retirement
System, the National Oceanic and Atmospheric Administration
shall pay, on such officer's behalf--
(I) into the Civil Service Retirement and
Disability Fund, the amounts required under clause
(ii); and
(II) into the Government Securities Investment
Fund, the amount required under clause (iii).
(ii)(I) The amount required under this subclause is the
amount of any deposit required under section 8422(e)(1) of such
title 5 with respect to any prior service performed by the
individual as a commissioned officer of the National Oceanic
and Atmospheric Administration.
(II) To determine the amount required under this subclause,
first determine, for each year of service with respect to which
the deposit under subclause (I) relates, the product of the
normal-cost percentage for such year (as determined under the
last sentence of this subclause) multiplied by basic pay
received by the individual for any such service performed in
such year. Second, take the sum of the amounts determined for
the respective years under the first sentence. Finally,
subtract from such sum the amount of the deposit under
subclause (I). For purposes of the first sentence, the normal-
cost percentage for any year shall be as determined for such
year under the provisions of section 8423(a)(1) of title 5,
United States Code, except that, in the case of any year before
the first year for which any normal-cost percentage was
determined under such provisions, the normal-cost percentage
for such first year shall be used.
(iii) The amount required under this clause is the amount
by which the separation pay to which the officer would have
been entitled under the second sentence of paragraph (2)(A)
(assuming the conditions for receiving such separation pay have
been met) exceeds the amount of the deposit under clause
(ii)(I), if at all.
(iv)(I) Any contribution made under this subparagraph to
the Thrift Savings Plan shall not be subject to any otherwise
applicable limitation on contributions contained in the
Internal Revenue Code of 1986, and shall not be taken into
account in applying any such limitation to other contributions
or benefits under the Thrift Savings Plan, with respect to the
year in which the contribution is made.
(II) Such plan shall not be treated as failing to meet any
nondiscrimination requirement by reason of the making of such
contribution.
(6) Repeals.--(A) The following provisions of law are
repealed:
(i) The Coast and Geodetic Survey Commissioned
Officers' Act of 1948 (33 U.S.C. 853a-853o, 853p-853u).
(ii) The Act of February 16, 1929 (Chapter 221,
section 5; 45 Stat. 1187; 33 U.S.C. 852a).
(iii) The Act of January 19, 1942 (Chapter 6; 56
Stat. 6).
(iv) Section 9 of Public Law 87-649 (76 Stat. 495).
(v) The Act of May 22, 1917 (Chapter 20, section
16; 40 Stat. 87; 33 U.S.C. 854 et seq.).
(vi) The Act of December 3, 1942 (Chapter 670; 56
Stat. 1038.
(vii) Sections 1 through 5 of Public Law 91-621 (84
Stat. 1863; 33 U.S.C. 857-1 et seq.).
(viii) The Act of August 10, 1956 (Chapter 1041,
section 3; 70A Stat. 619; 33 U.S.C. 857a).
(ix) The Act of May 18, 1920 (Chapter 190, section
11; 41 Stat. 603; 33 U.S.C. 864).
(x) The Act of July 22, 1947 (Chapter 286; 61 Stat.
400; 33 U.S.C. 873, 874).
(xi) The Act of August 3, 1956 (Chapter 932; 70
Stat. 988; 33 U.S.C. 875, 876).
(xii) All other Acts inconsistent with this
subsection.
No repeal under this subparagraph shall affect any annuity or
other similar benefit payable, under any provision of law so
repealed, based on the separation of any individual from the
NOAA Corps on or before September 30, 1996. Any authority
exercised by the Secretary of Commerce or his designee with
respect to any such benefits shall be exercised by the
Administrator of the National Oceanic and Atmospheric
Administration, and any authorization of appropriations
relating to those benefits, which is in effect as of September
30, 1996, shall be considered to have remained in effect.
(B) The effective date of the repeals under subparagraph
(A) shall be October 1, 1996.
(7) Creditability of noaa service for purposes relating to
reductions in force.--A commissioned officer who is separated
from the active list of the National Oceanic and Atmospheric
Administration because of paragraph (1) shall, for purposes of
any subsequent reduction in force, receive credit for any
period of service performed as such an officer before
separation from such list to the same extent and in the same
manner as if it had been a period of active service in the
Armed Forces.
(8) Abolition.--The Office of the National Oceanic and
Atmospheric Administration Corps of Operations and the
Commissioned Personnel Center are abolished effective September
30, 1996.
(h) NOAA Fleet.--
(1) Service contracts.--Notwithstanding any other provision
of law and subject to the availability of appropriations, the
Administrator of the National Institute for Science and
Technology shall enter into contracts, including multiyear
contracts, subject to paragraph (3), for the use of vessels to
conduct oceanographic research and fisheries research,
monitoring, enforcement, and management, and to acquire other
data necessary to carry out the missions of the National
Oceanic and Atmospheric Administration. The Administrator of
the National Institute for Science and Technology shall enter
into these contracts unless--
(A) the cost of the contract is more than the cost
(including the cost of vessel operation, maintenance,
and all personnel) to the National Oceanic and
Atmospheric Administration of obtaining those services
on vessels of the National Oceanic and Atmospheric
Administration;
(B) the contract is for more than 7 years; or
(C) the data is acquired through a vessel agreement
pursuant to paragraph (4).
(2) Vessels.--The Administrator of the National Institute
for Science and Technology may not enter into any contract for
the construction, lease-purchase, upgrade, or service life
extension of any vessel.
(3) Multiyear contracts.--
(A) In general.--Subject to subparagraphs (B) and
(C), and notwithstanding section 1341 of title 31,
United States Code, and section 11 of title 41, United
States Code, the Administrator of the National
Institute for Science and Technology may acquire data
under multiyear contracts.
(B) Required findings.--The Administrator of the
National Institute for Science and Technology may not
enter into a contract pursuant to this paragraph unless
such Administrator finds with respect to that contract
that there is a reasonable expectation that throughout
the contemplated contract period the Administrator will
request from Congress funding for the contract at the
level required to avoid contract termination.
(C) Required provisions.--The Administrator of the
National Institute for Science and Technology may not
enter into a contract pursuant to this paragraph unless
the contract includes--
(i) a provision under which the obligation
of the United States to make payments under the
contract for any fiscal year is subject to the
availability of appropriations provided in
advance for those payments;
(ii) a provision that specifies the term of
effectiveness of the contract; and
(iii) appropriate provisions under which,
in case of any termination of the contract
before the end of the term specified pursuant
to clause (ii), the United States shall only be
liable for the lesser of--
(I) an amount specified in the
contract for such a termination; or
(II) amounts that were appropriated
before the date of the termination for
the performance of the contract or for
procurement of the type of acquisition
covered by the contract and are
unobligated on the date of the
termination.
(4) Vessel agreements.--The Administrator of the National
Institute for Science and Technology shall use excess capacity
of University National Oceanographic Laboratory System vessels
where appropriate and may enter into memoranda of agreement
with the operators of these vessels to carry out this
requirement.
(5) Transfer of excess vessels.--The Administrator of the
National Institute for Science and Technology shall transfer
any vessels that are excess to the needs of the National
Oceanic and Atmospheric Administration to the National Defense
Reserve Fleet. Notwithstanding any other provision of law,
these vessels may be scrapped in accordance with section 510(i)
of the Merchant Marine Act, 1936 (46 App. U.S.C. 1160(i)).
(i) National Marine Fisheries Service.--(1) There are transferred
to the National Institute for Science and Technology all functions that
on the day before the effective date of this section were authorized by
law to be performed by the National Marine Fisheries Service.
(2) Notwithstanding any other provision of law, the National Marine
Fisheries Service may not affect on-land activities under the
Endangered Species Act of 1973 for salmon recovery in the State of
Idaho (16 U.S.C. 1531 et seq.).
(j) National Ocean Service.--Except as otherwise provided in this
title, there are transferred to the National Institute for Science and
Technology all functions and assets of the National Oceanic and
Atmospheric Administration that on the date immediately before the
effective date of this section were authorized to be performed by the
National Ocean Service (including the Coastal Ocean Program).
(k) Transfer of Coastal Nonpoint Pollution Control Functions.--
There are transferred to the Administrator of the Environmental
Protection Agency the functions under section 6217 of the Omnibus
Budget Reconciliation Act of 1990 (16 U.S.C. 1455b) that on the day
before the effective date of this section were vested in the Secretary
of Commerce.
SEC. 17207. NATIONAL INSTITUTE FOR SCIENCE AND TECHNOLOGY.
(a) Establishment.--There is established as an independent agency
in the Executive Branch the National Institute for Science and
Technology (in this section referred to as the ``Institute''). The
Institute, and all functions and offices transferred to it under this
title, shall be administered under the supervision and direction of an
Administrator of Science and Technology. The Administrator of Science
and Technology shall be appointed by the President, by and with the
advice and consent of the Senate, and shall receive basic pay at the
rate payable for level II of the Executive Schedule under section 5313
of title 5, United States Code.
(b) Principal Officers.--There shall be in the Institute, on the
transfer of functions and offices under this title--
(1) an Administrator of the National Oceanic and
Atmospheric Administration, who shall be appointed by the
President, by and with the advice and consent of the Senate,
and who shall receive basic pay at the rate payable for level
III of the Executive Schedule under section 5314 of title 5,
United States Code; and
(2) a Director of the National Bureau of Standards, who
shall be appointed by the President, by and with the advice and
consent of the Senate, and who shall receive basic pay at the
rate payable for level IV of the Executive Schedule under
section 5315 of title 5, United States Code.
(c) Additional Officers.--There shall be in the Institute--
(1) a Chief Financial Officer of the Institute, to be
appointed by the President, by and with the advice and consent
of the Senate;
(2) a Chief of External Affairs, to be appointed by the
President, by and with the advice and consent of the Senate;
(3) a General Counsel, to be appointed by the President, by
and with the advice and consent of the Senate; and
(4) an Inspector General, to be appointed in accordance
with the Inspector General Act of 1978.
Each Officer appointed under this subsection shall receive basic pay at
the rate payable for level IV of the Executive Schedule under section
5315 of title 5, United States Code.
(d) Transfer of Functions and Offices.--Except as otherwise
provided in this title, there are transferred to the Institute--
(1) the National Oceanic and Atmospheric Administration,
along with its functions and offices, as provided in section
17206;
(2) the National Bureau of Standards, along with its
functions and offices, as provided in section 17202; and
(3) the Office of Space Commerce, along with its functions
and offices.
(e) Elimination of Positions.--The Administrator of Science and
Technology may eliminate positions that are no longer necessary because
of the termination of functions under this section, section 17202, and
section 17206.
(f) Agency Terminations.--
(1) Terminations.--On the date specified in section
17209(a), the following shall terminate:
(A) The Office of the Deputy Administrator and
Assistant Secretary of the National Oceanic and
Atmospheric Administration.
(B) The Office of the Deputy Under Secretary of the
National Oceanic and Atmospheric Administration.
(C) The Office of the Chief Scientist of the
National Oceanic and Atmospheric Administration.
(D) The position of Deputy Assistant Secretary for
Oceans and Atmosphere.
(E) The position of Deputy Assistant Secretary for
International Affairs.
(F) Any office of the National Oceanic and
Atmospheric Administration or the National Bureau of
Standards whose primary purpose is to perform high
performance computing communications, legislative,
personnel, public relations, budget, constituent,
intergovernmental, international, policy and strategic
planning, sustainable development, administrative,
financial, educational, legal and coordination
functions. These functions shall, as necessary, be
performed only by officers described in subsection (c).
(G) The position of Associate Director of the
National Institute of Standards and Technology.
(2) Termination of executive schedule positions.--Each
position which was expressly authorized by law, or the
incumbent of which was authorized to receive compensation at
the rate prescribed for levels I through V of the Executive
Schedule under sections 5312 through 5315 of title 5, United
States Code, in an office terminated pursuant to this section,
section 17202, and section 17206 shall also terminate.
(g) Funding Reductions Resulting From Reorganization.--
(1) Funding reductions.--For each fiscal year that begins
on or after the effective date of this section, the amount
obligated or expended by the United States in performing all
functions vested in the National Institute for Science and
Technology pursuant to this subtitle may not exceed 75 percent
of the total of the amounts obligated or expended by the United
States in performing, during fiscal year 1995, all functions
vested in the National Oceanic and Atmospheric Administration,
the National Institute of Standards and Technology, and the
Office of Space Commerce, except for those functions
transferred under section 17206 to agencies or departments
other than the National Institute for Science and Technology.
(2) Exception.--Paragraph (1) shall not apply to
obligations or expenditures incurred as a direct consequence of
the termination, transfer, or other disposition of functions
described in paragraph (1) pursuant to this subtitle.
(3) Rule of construction.--This subsection shall take
precedence over any other provision of law unless such
provision explicitly refers to this section and makes an
exception to it.
(4) Responsibilities of the director of the office of
management and budget.--The Director of the Office of
Management and Budget shall--
(A) ensure compliance with the requirements of this
subsection; and
(B) include in each report under section 17106 (a)
and (b) of this title a description of actions taken to
comply with such requirements.
SEC. 17208. MISCELLANEOUS TERMINATIONS; MORATORIUM ON PROGRAM
ACTIVITIES.
(a) Terminations.--The following agencies and programs of the
Department of Commerce are terminated:
(1) The Minority Business Development Administration.
(2) The United States Travel and Tourism Administration.
(3) The programs and activities of the National
Telecommunications and Information Administration referred to
in section 17205(a).
(4) The Advanced Technology Program under section 28 of the
National Institute of Standards and Technology Act (15 U.S.C.
278n).
(5) The Manufacturing Extension Programs under sections 25
and 26 of the National Institute of Standards and Technology
Act (15 U.S.C. 278k and 278l).
(6) The National Institute of Standards and Technology
METRIC Program.
(b) Moratorium on Program Activities.--The authority to make
grants, enter into contracts, provide assistance, incur obligations, or
provide commitments (including any enlargement of existing obligations
or commitments, except if required by law) with respect to the agencies
and programs described in subsection (a) is terminated effective on the
date of the enactment of this title.
SEC. 17209. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (b), this
subtitle shall take effect on the abolishment date specified in section
17101(c).
(b) Provisions Effective on Date of Enactment.--The following
provisions of this subtitle shall take effect on the date of the
enactment of this Act:
(1) Section 17201.
(2) Section 17206(g), except as otherwise provided in that
section.
(3) Section 17208(b).
(4) This section.
Subtitle C--Office of United States Trade Representative
CHAPTER 1--GENERAL PROVISIONS
SEC. 17301. DEFINITIONS.
For purposes of this subtitle--
(1) the term ``Office'' means the Office of the United
States Trade Representative;
(2) the term ``Federal agency'' has the meaning given to
the term ``agency'' by section 551(1) of title 5, United States
Code; and
(3) the term ``USTR'' means the United States Trade
Representative as provided for under section 17311.
CHAPTER 2--OFFICE OF UNITED STATES TRADE REPRESENTATIVE
Subchapter A--Establishment
SEC. 17311. ESTABLISHMENT OF THE OFFICE.
(a) In General.--The Office of the United States Trade
Representative is established as an independent establishment in the
executive branch of Government as defined under section 104 of title 5,
United States Code. The United States Trade Representative shall be the
head of the Office and shall be appointed by the President, by and with
the advice and consent of the Senate.
(b) Ambassador Status.--The USTR shall have the rank and status of
Ambassador and shall represent the United States in all trade
negotiations conducted by the Office.
(c) Continued Service of Current USTR.--The individual serving as
United States Trade Representative on the date immediately preceding
the effective date of this subtitle may continue to serve as USTR under
subsection (a).
(d) Successor to the Department of Commerce.--The Office shall be
the successor to the Department of Commerce for purposes of protocol.
SEC. 17312. FUNCTIONS OF THE USTR.
(a) In General.--In addition to the functions transferred to the
USTR by this subtitle, such other functions as the President may assign
or delegate to the USTR, and such other functions as the USTR may,
after the effective date of this subtitle, be required to carry out by
law, the USTR shall--
(1) serve as the principal advisor to the President on
international trade policy and advise the President on the
impact of other policies of the United States Government on
international trade;
(2) exercise primary responsibility, with the advice of the
interagency organization established under section 242 of the
Trade Expansion Act of 1962, for developing and implementing
international trade policy, including commodity matters and, to
the extent related to international trade policy, direct
investment matters and, in exercising such responsibility,
advance and implement, as the primary mandate of the Office,
the goals of the United States to--
(A) maintain United States leadership in
international trade liberalization and expansion
efforts;
(B) reinvigorate the ability of the United States
economy to compete in international markets and to
respond flexibly to changes in international
competition; and
(C) expand United States participation in
international trade through aggressive promotion and
marketing of goods and services that are products of
the United States;
(3) exercise lead responsibility for the conduct of
international trade negotiations, including negotiations
relating to commodity matters and, to the extent that such
negotiations are related to international trade, direct
investment negotiations;
(4) exercise lead responsibility for the establishment of a
national export strategy, including policies designed to
implement such strategy;
(5) with the advice of the interagency organization
established under section 242 of the Trade Expansion Act of
1962, issue policy guidance to other Federal agencies on
international trade, commodity, and direct investment functions
to the extent necessary to assure the coordination of
international trade policy;
(6) seek and promote new opportunities for United States
products and services to compete in the world marketplace;
(7) assist small businesses in developing export markets;
(8) enforce the laws of the United States relating to
trade;
(9) analyze economic trends and developments;
(10) report directly to the Congress--
(A) on the administration of, and matters
pertaining to, the trade agreements program under the
Omnibus Trade and Competitiveness Act of 1988, the
Trade Act of 1974, the Trade Expansion Act of 1962,
section 350 of the Tariff Act of 1930, and any other
provision of law enacted after this Act; and
(B) with respect to other important issues
pertaining to international trade;
(11) keep each official adviser to the United States
delegations to international conferences, meetings, and
negotiation sessions relating to trade agreements who is
appointed from the Committee on Finance of the Senate or the
Committee on Ways and Means of the House of Representatives
under section 161 of the Trade Act of 1974 currently informed
on United States negotiating objectives with respect to trade
agreements, the status of negotiations in progress with respect
to such agreements, and the nature of any changes in domestic
law or the administration thereof which the USTR may recommend
to the Congress to carry out any trade agreement;
(12) consult and cooperate with State and local governments
and other interested parties on international trade matters of
interest to such governments and parties, and to the extent
related to international trade matters, on investment matters,
and, when appropriate, hold informal public hearings;
(13) serve as the principal advisor to the President on
Government policies designed to contribute to enhancing the
ability of United States industry and services to compete in
international markets;
(14) develop recommendations for national strategies and
specific policies intended to enhance the productivity and
international competitiveness of United States industries;
(15) serve as the principal advisor to the President in
identifying and assessing the consequences of any Government
policies that adversely affect, or have the potential to
adversely affect, the international competitiveness of United
States industries and services;
(16) promote cooperation between business, labor, and
Government to improve industrial performance and the ability of
United States industries to compete in international markets
and to facilitate consultation and communication between the
Government and the private sector about domestic industrial
performance and prospects and the performance and prospects of
foreign competitors; and
(17) monitor and enforce foreign government compliance with
international trade agreements to protect United States
interests.
(b) Interagency Organization.--The USTR shall be the chairperson of
the interagency organization established under section 242 of the Trade
Expansion Act of 1962.
(c) National Security Council.--The USTR shall be a member of the
National Security Council.
(d) Advisory Council.--The USTR shall be Deputy Chairman of the
National Advisory Council on International Monetary and Financial
Policies established under Executive Order 11269, issued February 14,
1966.
(e) Agriculture.--(1) The USTR shall consult with the Secretary of
Agriculture or the designee of the Secretary of Agriculture on all
matters that potentially involve international trade in agricultural
products.
(2) If an international meeting for negotiation or consultation
includes discussion of international trade in agricultural products,
the USTR or the designee of the USTR shall be Chairman of the United
States delegation to such meeting and the Secretary of Agriculture or
the designee of such Secretary shall be Vice Chairman. The provisions
of this paragraph shall not limit the authority of the USTR under
subsection (h) to assign to the Secretary of Agriculture responsibility
for the conduct of, or participation in, any trade negotiation or
meeting.
(f) Trade Promotion.--The USTR shall be the chairperson of the
Trade Promotion Coordinating Committee.
(g) National Economic Council.--The USTR shall be a member of the
National Economic Council established under Executive Order No. 12835,
issued January 25, 1993.
(h) International Trade Negotiations.--Except where expressly
prohibited by law, the USTR, at the request or with the concurrence of
the head of any other Federal agency, may assign the responsibility for
conducting or participating in any specific international trade
negotiation or meeting to the head of such agency whenever the USTR
determines that the subject matter of such international trade
negotiation is related to the functions carried out by such agency.
Subchapter B--Officers
SEC. 17321. DEPUTY ADMINISTRATOR OF THE OFFICE.
(a) Establishment.--There shall be in the Office the Deputy
Administrator of the Office of the United States Trade Representative,
who shall be appointed by the President, by and with the advice and
consent of the Senate.
(b) Absence, Disability, or Vacancy of USTR.--The Deputy
Administrator of the Office of the United States Trade Representative
shall act for and exercise the functions of the USTR during the absence
or disability of the USTR or in the event the office of the USTR
becomes vacant. The Deputy Administrator shall act for and exercise the
functions of the USTR until the absence or disability of the USTR no
longer exists or a successor to the USTR has been appointed by the
President and confirmed by the Senate.
(c) Functions of Deputy Administrator.--The Deputy Administrator of
the Office of the United States Trade Representative shall exercise all
functions, under the direction of the USTR, transferred to or
established in the Office, except those functions exercised by the
Deputy United States Trade Representatives, the Director General for
Export Promotion, the Inspector General, and the General Counsel of the
Office, as provided by this subtitle.
SEC. 17322. DEPUTY UNITED STATES TRADE REPRESENTATIVES.
(a) Establishment.--There shall be in the Office 2 Deputy United
States Trade Representatives, who shall be appointed by the President,
by and with the advice and consent of the Senate. The Deputy United
States Trade Representatives shall exercise all functions under the
direction of the USTR, and shall include--
(1) the Deputy United States Trade Representative for
Negotiations; and
(2) the Deputy United States Trade Representative to the
World Trade Organization.
(b) Functions of Deputy United States Trade Representatives.--(1)
The Deputy United States Trade Representative for Negotiations shall
exercise all functions transferred under section 17331 and shall have
the rank and status of Ambassador.
(2) The Deputy United States Trade Representative to the World
Trade Organization shall exercise all functions relating to
representation to the World Trade Organization and shall have the rank
and status of Ambassador.
SEC. 17323. ASSISTANT ADMINISTRATORS.
(a) Establishment.--There shall be in the Office 3 Assistant
Administrators, who shall be appointed by the President, by and with
the advice and consent of the Senate. The Assistant Administrators
shall exercise all functions under the direction of the Deputy
Administrator of the Office of the United States Trade Representative
and include--
(1) the Assistant Administrator for Export Administration;
(2) the Assistant Administrator for Import Administration;
and
(3) the Assistant Administrator for Trade and Policy
Analysis.
(b) Functions of Assistant Administrators.--(1) The Assistant
Administrator for Export Administration shall exercise all functions
transferred under section 17332(1)(C).
(2) The Assistant Administrator for Import Administration shall
exercise all functions transferred under section 17332(1)(D).
(3) The Assistant Administrator for Trade and Policy Analysis shall
exercise all functions transferred under section 17332(1)(B) and all
functions transferred under section 17332(2).
SEC. 17324. DIRECTOR GENERAL FOR EXPORT PROMOTION.
(a) Establishment.--There shall be a Director General for Export
Promotion, who shall be appointed by the President, by and with the
advice and consent of the Senate.
(b) Functions.--The Director General for Export Promotion shall
exercise, under the direction of the USTR, all functions transferred
under sections 17332(1)(A) (relating to functions of the United States
and Foreign Commercial Service) and 17333 and shall have the rank and
status of Ambassador.
SEC. 17325. GENERAL COUNSEL.
There shall be in the Office a General Counsel, who shall be
appointed by the President, by and with the advice and consent of the
Senate. The General Counsel shall provide legal assistance to the USTR
concerning the activities, programs, and policies of the Office.
SEC. 17326. INSPECTOR GENERAL.
There shall be in the Office an Inspector General who shall be
appointed in accordance with the Inspector General Act of 1978, as
amended by section 17371(b) of this Act.
SEC. 17327. CHIEF FINANCIAL OFFICER.
There shall be in the Office a Chief Financial Officer who shall be
appointed in accordance with section 901 of title 31, United States
Code, as amended by section 17371(e) of this Act. The Chief Financial
Officer shall perform all functions prescribed by the Deputy
Administrator of the Office of the United States Trade Representative,
under the direction of the Deputy Administrator.
Subchapter C--Transfers to the Office
SEC. 17331. OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE.
There are transferred to the USTR all functions of the United
States Trade Representative and the Office of the United States Trade
Representative in the Executive Office of the President and all
functions of any officer or employee of such Office.
SEC. 17332. TRANSFERS FROM THE DEPARTMENT OF COMMERCE.
There are transferred to the USTR the following functions:
(1) All functions of, and all functions performed under the
direction of, the following officers and employees of the
Department of Commerce:
(A) The Under Secretary of Commerce for
International Trade, and the Director General of the
United States and Foreign Commercial Service, relating
to all functions exercised by the Service.
(B) The Assistant Secretary of Commerce for
International Economic Policy and the Assistant
Secretary of Commerce for Trade Development.
(C) The Under Secretary of Commerce for Export
Administration.
(D) The Assistant Secretary of Commerce for Import
Administration.
(2) All functions of the Secretary of Commerce relating to
the National Trade Data Bank.
(3) All functions of the Secretary of Commerce under the
Tariff Act of 1930, the Uruguay Round Agreements Act, the Trade
Act of 1974, and other trade-related Acts for which
responsibility is not otherwise assigned under this subtitle.
SEC. 17333. TRADE AND DEVELOPMENT AGENCY.
There are transferred to the Director General for Export Promotion
all functions of the Director of the Trade and Development Agency.
There are transferred to the Office of the Director General for Export
Promotion all functions of the Trade and Development Agency.
SEC. 17334. EXPORT-IMPORT BANK.
(a) In General.--(1) There are transferred to the USTR all
functions of the Secretary of Commerce relating to the Export-Import
Bank of the United States.
(2) Section 3(c)(1) of the Export-Import Bank Act of 1945 (12
U.S.C. 635a(c)(1)) is amended to read as follows:
``(c)(1) There shall be a Board of Directors of the Bank consisting
of the United States Trade Representative (who shall serve as
Chairman), the President of the Export-Import Bank of the United States
(who shall serve as Vice Chairman), the first Vice President, and 2
additional persons appointed by the President of the United States, by
and with the advice and consent of the Senate.''.
(b) Ex Officio Member of Export-Import Bank Board of Directors.--
The Director General for Export Promotion shall serve as an ex officio
nonvoting member of the Board of Directors of the Export-Import Bank.
(c) Amendments to Related Banking and Trade Acts.--Section 2301(h)
of the Omnibus Trade and Competitiveness Act of 1988 (15 U.S.C.
4721(h)) is amended to read as follows:
``(h) Assistance to Export-Import Bank.--The Commercial Service
shall provide such services as the Director General for Export
Promotion of the Office of the United States Trade Representative
determines necessary to assist the Export-Import Bank of the United
States to carry out the lending, loan guarantee, insurance, and other
activities of the Bank.''.
SEC. 17335. OVERSEAS PRIVATE INVESTMENT CORPORATION.
(a) Board of Directors.--The second and third sentences of section
233(b) of the Foreign Assistance Act of 1961 (22 U.S.C. 2193(b)) are
amended to read as follows: ``The United States Trade Representative
shall be the Chairman of the Board. The Administrator of the Agency for
International Development (who shall serve as Vice Chairman) shall
serve on the Board.''.
(b) Ex Officio Member of Overseas Private Investment Corporation
Board of Directors.--The Director General for Export Promotion shall
serve as an ex officio nonvoting member of the Board of Directors of
the Overseas Private Investment Corporation.
SEC. 17336. CONSOLIDATION OF EXPORT PROMOTION AND FINANCING ACTIVITIES.
(a) Submission of Plan.--Within 180 days after the date of the
enactment of this Act, the President shall transmit to the Congress a
comprehensive plan to consolidate Federal nonagricultural export
promotion activities and export financing activities and to transfer
those functions to the Office. The plan shall provide for--
(1) the elimination of the overlap and duplication among
all Federal nonagricultural export promotion activities and
export financing activities;
(2) a unified budget for Federal nonagricultural export
promotion activities which eliminates funding for the areas of
overlap and duplication identified under paragraph (1); and
(3) a long-term agenda for developing better cooperation
between local, State and Federal programs and activities
designed to stimulate or assist United States businesses in
exporting nonagricultural goods or services that are products
of the United States, including sharing of facilities, costs,
and export market research data.
(b) Plan Elements.--The plan under subsection (a) shall--
(1) place all Federal nonagricultural export promotion
activities and export financing activities within the Office;
(2) provide clear authority for the USTR to use the
expertise and assistance of other United States Government
agencies;
(3) achieve an overall 25 percent reduction in the amount
of funding for all Federal nonagricultural export promotion
activities within 2 years after the enactment of this Act; and
(4) include any functions of the Department of Commerce not
transferred by this subtitle, or of other Federal departments
the transfer of which to the Office would be necessary to the
competitiveness of the United States in international trade.
(c) Definition.--As used in this section, the term ``Federal
nonagricultural export promotion activities'' means all programs or
activities of any department or agency of the Federal Government
(including, but not limited to, departments and agencies with
representatives on the Trade Promotion Coordinating Committee
established under section 2312 of the Export Enhancement Act of 1988
(15 U.S.C. 4727)) that are designed to stimulate or assist United
States businesses in exporting nonagricultural goods or services that
are products of the United States, including trade missions.
SEC. 17337. ADDITIONAL TRADE FUNCTIONS.
(a) Termination of Authorizations of Appropriations.--
(1) NAFTA secretariat.--Section 105(b) of the North
American Free Trade Agreement Implementation Act (19 U.S.C.
3315(b)) is amended by striking ``each fiscal year after fiscal
year 1993'' and inserting ``each of fiscal years 1994 and
1995''.
(2) Border environment cooperation commission.--Section
533(a)(2) of the North American Free Trade Agreement
Implementation Act (19 U.S.C. 3473(a)(2)) is amended by
striking ``and each fiscal year thereafter'' and inserting
``fiscal year 1995''.
(b) Functions Related to Textile Agreements.--
(1) Functions of cita.--(A) Subject to subparagraph (B),
those functions delegated to the Committee for the
Implementation of Textile Agreements established under
Executive Order 11651 (7 U.S.C. 1854 note) (hereafter in this
subsection referred to as ``CITA'') are transferred to the
USTR.
(B) Those functions delegated to CITA that relate to the
assessment of the impact of textile imports on domestic
industry are transferred to the International Trade Commission.
(2) Abolition of cita.--CITA is abolished.
Subchapter D--Administrative Provisions
SEC. 17341. PERSONNEL PROVISIONS.
(a) Appointments.--The USTR may appoint and fix the compensation of
such officers and employees, including investigators, attorneys, and
administrative law judges, as may be necessary to carry out the
functions of the USTR and the Office. Except as otherwise provided by
law, such officers and employees shall be appointed in accordance with
the civil service laws and their compensation fixed in accordance with
title 5, United States Code.
(b) Positions Above GS-15.--(1) At the request of the USTR, the
Director of the Office of Personnel Management shall, under section
5108 of title 5, United States Code, provide for the establishment in a
grade level above GS-15 of the General Service, and in the Senior
Executive Service, of a number of positions in the Office equal to the
number of positions in that grade level which were used primarily for
the performance of functions and offices transferred by this subtitle
and which were assigned and filled on the day before the effective date
of this subtitle.
(2) Appointments to positions provided for under this subsection
may be made without regard to the provisions of section 3324 of title
5, United States Code, if the individual appointed in such position is
an individual who is transferred in connection with the transfer of
functions and offices under this subtitle and, on the day before the
effective date of this subtitle, holds a position and has duties
comparable to those of the position to which appointed under this
subsection.
(3) The authority under this subsection with respect to any
position established at a grade level above GS-15 shall terminate when
the person first appointed to fill such position ceases to hold such
position.
(4) For purposes of section 414(a)(3)(A) of the Civil Service
Reform Act of 1978, an individual appointed under this subsection shall
be deemed to occupy the same position as the individual occupied on the
day before the effective date of this subtitle.
(c) Experts and Consultants.--The USTR may obtain the services of
experts and consultants in accordance with section 3109 of title 5,
United States Code, and compensate such experts and consultants for
each day (including traveltime) at rates not in excess of the maximum
rate of pay for a position above GS-15 of the General Schedule under
section 5332 of such title. The USTR may pay experts and consultants
who are serving away from their homes or regular place of business
travel expenses and per diem in lieu of subsistence at rates authorized
by sections 5702 and 5703 of such title for persons in Government
service employed intermittently.
(d) Voluntary Services.--(1)(A) The USTR is authorized to accept
voluntary and uncompensated services without regard to the provisions
of section 1342 of title 31, United States Code, if such services will
not be used to displace Federal employees employed on a full-time,
part-time, or seasonal basis.
(B) The USTR is authorized to accept volunteer service in
accordance with the provisions of section 3111 of title 5, United
States Code.
(2) The USTR is authorized to provide for incidental expenses,
including but not limited to transportation, lodging, and subsistence
for individuals who provide voluntary services under subparagraph (A)
or (B) of paragraph (1).
(3) An individual who provides voluntary services under paragraph
(1)(A) shall not be considered a Federal employee for any purpose other
than for purposes of chapter 81 of title 5, United States Code,
relating to compensation for work injuries, and chapter 171 of title
28, United States Code, relating to tort claims.
(e) Foreign Service Positions.--In order to assure United States
representation in trade matters at a level commensurate with the level
of representation maintained by industrial nations which are major
trade competitors of the United States, the Secretary of State shall
classify certain positions at Foreign Service posts as commercial
minister positions and shall assign members of the Foreign Service
performing functions of the Office, with the concurrence of the USTR,
to such positions in nations which are major trade competitors of the
United States. The Secretary of State shall obtain and use the
recommendations of the USTR with respect to the number of positions to
be so classified under this subsection.
SEC. 17342. DELEGATION AND ASSIGNMENT.
Except where otherwise expressly prohibited by law or otherwise
provided by this subtitle, the USTR may delegate any of the functions
transferred to the USTR by this subtitle and any function transferred
or granted to the USTR after the effective date of this subtitle to
such officers and employees of the Office as the USTR may designate,
and may authorize successive redelegations of such functions as may be
necessary or appropriate. No delegation of functions by the USTR under
this section or under any other provision of this subtitle shall
relieve the USTR of responsibility for the administration of such
functions.
SEC. 17343. SUCCESSION.
(a) Order of Succession.--Subject to the authority of the
President, and except as provided in section 17321(b), the USTR shall
prescribe the order by which officers of the Office who are appointed
by the President, by and with the advice and consent of the Senate,
shall act for, and perform the functions of, the USTR or any other
officer of the Office appointed by the President, by and with the
advice and consent of the Senate, during the absence or disability of
the USTR or such other officer, or in the event of a vacancy in the
office of the USTR or such other officer.
(b) Continuation.--Notwithstanding any other provision of law, and
unless the President directs otherwise, an individual acting for the
USTR or another officer of the Office pursuant to subsection (a) shall
continue to serve in that capacity until the absence or disability of
the USTR or such other officer no longer exists or a successor to the
USTR or such other officer has been appointed by the President and
confirmed by the Senate.
SEC. 17344. REORGANIZATION.
(a) In General.--Subject to subsection (b), the USTR is authorized
to allocate or reallocate functions among the officers of the Office,
and to establish, consolidate, alter, or discontinue such
organizational entities in the Office as may be necessary or
appropriate.
(b) Exception.--The USTR may not exercise the authority under
subsection (a) to establish, consolidate, alter, or discontinue any
organizational entity in the Office or allocate or reallocate any
function of an officer or employee of the Office that is inconsistent
with any specific provision of this subtitle.
SEC. 17345. RULES.
The USTR is authorized to prescribe, in accordance with the
provisions of chapters 5 and 6 of title 5, United States Code, such
rules and regulations as the USTR determines necessary or appropriate
to administer and manage the functions of the USTR or the Office.
SEC. 17346. FUNDS TRANSFER.
The USTR may, when authorized in an appropriation Act in any fiscal
year, transfer funds from one appropriation to another within the
Office, except that no appropriation for any fiscal year shall be
either increased or decreased by more than 10 percent and no such
transfer shall result in increasing any such appropriation above the
amount authorized to be appropriated therefor.
SEC. 17347. CONTRACTS, GRANTS, AND COOPERATIVE AGREEMENTS.
(a) In General.--Subject to the provisions of the Federal Property
and Administrative Services Act of 1949, the USTR may make, enter into,
and perform such contracts, leases, cooperative agreements, grants, or
other similar transactions with public agencies, private organizations,
and persons, and make payments (in lump sum or installments, and by way
of advance or reimbursement, and, in the case of any grant, with
necessary adjustments on account of overpayments and underpayments) as
the USTR considers necessary or appropriate to carry out the functions
of the USTR or the Office.
(b) Exception.--Notwithstanding any other provision of this
subtitle, the authority to enter into contracts or to make payments
under this subchapter shall be effective only to such extent or in such
amounts as are provided in advance in appropriation Acts. This
subsection does not apply with respect to the authority granted under
section 17349.
SEC. 17348. USE OF FACILITIES.
(a) Use by USTR.--With their consent, the USTR, with or without
reimbursement, may use the research, services, equipment, and
facilities of--
(1) an individual,
(2) any public or private nonprofit agency or organization,
including any agency or instrumentality of the United States or
of any State, the District of Columbia, the Commonwealth of
Puerto Rico, or any territory or possession of the United
States,
(3) any political subdivision of any State, the District of
Columbia, the Commonwealth of Puerto Rico, or any territory or
possession of the United States, or
(4) any foreign government,
in carrying out any function of the USTR or the Office.
(b) Use of USTR Facilities.--The USTR, under terms, at rates, and
for periods that the USTR considers to be in the public interest, may
permit the use by public and private agencies, corporations,
associations or other organizations, or individuals, of any real
property, or any facility, structure or other improvement thereon,
under the custody of the USTR. The USTR may require permittees under
this section to maintain or recondition, at their own expense, the real
property, facilities, structures, and improvements used by such
permittees.
SEC. 17349. GIFTS AND BEQUESTS.
(a) In General.--The USTR is authorized to accept, hold,
administer, and utilize gifts and bequests of property, both real and
personal, for the purpose of aiding or facilitating the work of the
Office. Gifts and bequests of money and the proceeds from sales of
other property received as gifts or bequests shall be deposited in the
United States Treasury in a separate fund and shall be disbursed on
order of the USTR. Property accepted pursuant to this subsection, and
the proceeds thereof, shall be used as nearly as possible in accordance
with the terms of the gift or bequest.
(b) Tax Treatment.--For the purpose of Federal income, estate, and
gift taxes, and State taxes, property accepted under subsection (a)
shall be considered a gift or bequest to or for the use of the United
States.
(c) Investment.--Upon the request of the USTR, the Secretary of the
Treasury may invest and reinvest in securities of the United States or
in securities guaranteed as to principal and interest by the United
States any moneys contained in the fund provided for in subsection (a).
Income accruing from such securities, and from any other property held
by the USTR pursuant to subsection (a), shall be deposited to the
credit of the fund, and shall be disbursed upon order of the USTR.
SEC. 17350. WORKING CAPITAL FUND.
(a) Establishment.--The USTR is authorized to establish for the
Office a working capital fund, to be available without fiscal year
limitation, for expenses necessary for the maintenance and operation of
such common administrative services as the USTR shall find to be
desirable in the interest of economy and efficiency, including--
(1) a central supply service for stationery and other
supplies and equipment for which adequate stocks may be
maintained to meet in whole or in part the requirements of the
Office and its components;
(2) central messenger, mail, and telephone service and
other communications services;
(3) office space and central services for document
reproduction and for graphics and visual aids;
(4) a central library service; and
(5) such other services as may be approved by the Director
of the Office of Management and Budget.
(b) Operation of Fund.--The capital of the fund shall consist of
any appropriations made for the purpose of providing working capital
and the fair and reasonable value of such stocks of supplies,
equipment, and other assets and inventories on order as the USTR may
transfer to the fund, less the related liabilities and unpaid
obligations. The fund shall be reimbursed in advance from available
funds of agencies and offices in the Office, or from other sources, for
supplies and services at rates which will approximate the expense of
operation, including the accrual of annual leave and the depreciation
of equipment. The fund shall also be credited with receipts from sale
or exchange of property and receipts in payment for loss or damage to
property owned by the fund. There shall be covered into the United
States Treasury as miscellaneous receipts any surplus of the fund (all
assets, liabilities, and prior losses considered) above the amounts
transferred or appropriated to establish and maintain the fund. There
shall be transferred to the fund the stocks of supplies, equipment,
other assets, liabilities, and unpaid obligations relating to those
services which the USTR determines will be performed.
SEC. 17351. SERVICE CHARGES.
(a) Authority.--Notwithstanding any other provision of law, the
USTR may establish reasonable fees and commissions with respect to
applications, documents, awards, loans, grants, research data,
services, and assistance administered by the Office, and the USTR may
change and abolish such fees and commissions. Before establishing,
changing, or abolishing any schedule of fees or commissions under this
section, the USTR may submit such schedule to the Congress.
(b) Deposits.--The USTR is authorized to require a deposit before
the USTR provides any item, information, service, or assistance for
which a fee or commission is required under this section.
(c) Deposit of Moneys.--Moneys received under this section shall be
deposited in the Treasury in a special account for use by the USTR and
are authorized to be appropriated and made available until expended.
(d) Factors in Establishing Fees and Commissions.--In establishing
reasonable fees or commissions under this section, the USTR may take
into account--
(1) the actual costs which will be incurred in providing
the items, information, services, or assistance concerned;
(2) the efficiency of the Government in providing such
items, information, services, or assistance;
(3) the portion of the cost that will be incurred in
providing such items, information, services, or assistance
which may be attributed to benefits for the general public
rather than exclusively for the person to whom the items,
information, services, or assistance is provided;
(4) any public service which occurs through the provision
of such items, information, services, or assistance; and
(5) such other factors as the USTR considers appropriate.
(e) Refunds of Excess Payments.--In any case in which the USTR
determines that any person has made a payment which is not required
under this section or has made a payment which is in excess of the
amount required under this section, the USTR, upon application or
otherwise, may cause a refund to be made from applicable funds.
SEC. 17352. SEAL OF OFFICE.
The USTR shall cause a seal of office to be made for the Office of
such design as the USTR shall approve. Judicial notice shall be taken
of such seal.
Subchapter E--Related Agencies
SEC. 17361. INTERAGENCY TRADE ORGANIZATION.
Section 242(a)(3) of the Trade Expansion Act of 1962 (19 U.S.C.
1872(a)(3)) is amended to read as follows:
``(3)(A) The interagency organization established under
subsection (a) shall be composed of--
``(i) the United States Trade Representative, who
shall be the chairperson,
``(ii) the Secretary of Agriculture,
``(iii) the Secretary of the Treasury,
``(iv) the Secretary of Labor,
``(v) the Secretary of State, and
``(vi) the representatives of such other
departments and agencies as the United States Trade
Representative shall designate.
``(B) The United States Trade Representative may invite
representatives from other agencies, as appropriate, to attend
particular meetings if subject matters of specific functional
interest to such agencies are under consideration. It shall
meet at such times and with respect to such matters as the
President or the chairperson shall direct.''.
SEC. 17362. NATIONAL SECURITY COUNCIL.
The fourth paragraph of section 101(a) of the National Security Act
of 1947 (50 U.S.C. 402(a)) is amended--
(1) by redesignating clauses (5), (6), and (7) as clauses
(6), (7), and (8), respectively; and
(2) by inserting after clause (4) the following new clause:
``(5) the United States Trade Representative;''.
SEC. 17363. INTERNATIONAL MONETARY FUND.
Section 3 of the Bretton Woods Agreement Act is amended by adding
at the end the following new subsection:
``(e) The United States executive director of the Fund shall
consult with the United States Trade Representative with respect to
matters under consideration by the Fund which relate to trade.''.
Subchapter F--Conforming Amendments
SEC. 17371. AMENDMENTS TO GENERAL PROVISIONS.
(a) Inspector General.--The Inspector General Act of 1978 is
amended--
(1) in subsection 9(a)(1) by inserting after subparagraph
(W) the following:
``(X) of the United States Trade Representative,
all functions of the Inspector General of the
Department of Commerce and the Office of the Inspector
General of the Department of Commerce relating to the
functions transferred to the United States Trade
Representative by section 17332 of the Department of
Commerce Dismantling Act; and''; and
(2) in section 11--
(A) in paragraph (1) by inserting ``the United
States Trade Representative;'' after ``the Attorney
General;''; and
(B) in paragraph (2) by inserting ``the Office of
the United States Trade Representative,'' after
``Treasury;''.
(b) Amendment to the Trade Act of 1974.--(1) Chapter 4 of title I
of the Trade Act of 1974 is amended to read as follows:
``CHAPTER 4--REPRESENTATION IN TRADE NEGOTIATIONS
``SEC. 141. FUNCTIONS OF THE UNITED STATES TRADE REPRESENTATIVE.
``The United States Trade Representative established under section
17311 of the Department of Commerce Dismantling Act shall--
``(1) be the chief representative of the United States for
each trade negotiation under this title or chapter 1 of title
III of this Act, or subtitle A of title I of the Omnibus Trade
and Competitiveness Act of 1988, or any other provision of law
enacted after the Department of Commerce Dismantling Act;
``(2) report directly to the President and the Congress,
and be responsible to the President and the Congress for the
administration of trade agreements programs under this Act, the
Omnibus Trade and Competitiveness Act of 1988, the Trade
Expansion Act of 1962, section 350 of the Tariff Act of 1930,
and any other provision of law enacted after the Department of
Commerce Dismantling Act;
``(3) advise the President and the Congress with respect to
nontariff barriers to international trade, international
commodity agreements, and other matters which are related to
the trade agreements programs; and
``(4) be responsible for making reports to Congress with
respect to the matters set forth in paragraphs (1) and (2).''.
(2) The table of contents in the first section of the Trade Act of
1974 is amended by striking the items relating to chapter 4 and section
141 and inserting the following:
``Chapter 4--Representation in Trade Negotiations
``Sec. 141. Functions of the United States Trade Representative.''.
(d) Foreign Service Personnel.--The Foreign Service Act of 1980 is
amended by striking paragraph (3) of section 202(a) (22 U.S.C. 3922(a))
and inserting the following:
``(3) The United States Trade Representative may utilize
the Foreign Service personnel system in accordance with this
Act--
``(A) with respect to the personnel performing
functions--
``(i) which were transferred to the
Department of Commerce from the Department of
State by Reorganization Plan No. 3 of 1979; and
``(ii) which were subsequently transferred
to the United States Trade Representative by
section 17332 of the Department of Commerce
Dismantling Act; and
``(B) with respect to other personnel of the Office
of United States Trade Representative to the extent the
President determines to be necessary in order to enable
the Office of the United States Trade Representative to
carry out functions which require service abroad.''.
(e) Chief Financial Officers.--Section 901(b)(1) of title 31,
United States Code, is amended by adding at the end the following:
``(Q) The Office of the United States Trade
Representative.''.
SEC. 17372. REPEALS.
Sections 1 and 2 of the Act of June 5, 1939 (15 U.S.C. 1502 and
1503; 53 Stat. 808), relating to the Under Secretary of Commerce, are
repealed.
SEC. 17373. CONFORMING AMENDMENTS RELATING TO EXECUTIVE SCHEDULE
POSITIONS.
(a) Positions at Level I.--Section 5312 of title 5, United States
Code, is amended by amending the item relating to the United States
Trade Representative to read as follows:
``United States Trade Representative, Office of the United
States Trade Representative.''.
(b) Positions at Level II.--Section 5313 of title 5, United States
Code, is amended by adding at the end the following:
``Deputy Administrator of the Office of the United States
Trade Representative.
``Deputy United States Trade Representatives, Office of the
United States Trade Representative (2).''.
(c) Positions at Level III.--Section 5314 of title 5, United States
Code, is amended by adding at the end the following:
``Assistant Administrators, Office of the United States
Trade Representative (3).
``Director General for Export Promotion, Office of the
United States Trade Representative.''.
(d) Positions at Level IV.--Section 5315 of title 5, United States
Code, is amended--
(1) by striking the item relating to the Assistant
Secretary of Commerce and Director General of the United States
and Foreign Commercial Service; and
(2) by adding at the end the following:
``General Counsel, Office of the United States Trade
Representative.
``Inspector General, Office of the United States Trade
Representative.
``Chief Financial Officer, Office of the United States
Trade Representative.''.
Subchapter G--Miscellaneous
SEC. 17381. EFFECTIVE DATE.
(a) In General.--This subtitle shall take effect on the effective
date specified in section 17209(a), except that--
(1) section 17336 shall take effect on the date of the
enactment of this Act; and
(2) at any time after the date of the enactment of this Act
the officers provided for in subchapter B may be nominated and
appointed, as provided in such subchapter.
(b) Interim Compensation and Expenses.--Funds available to the
Department of Commerce or the Office of the United States Trade
Representative (or any official or component thereof), with respect to
the functions transferred by this subtitle, may be used, with approval
of the Director of the Office of Management and Budget, to pay the
compensation and expenses of an officer appointed under subsection (a)
who will carry out such functions until funds for that purpose are
otherwise available.
SEC. 17382. INTERIM APPOINTMENTS.
(a) In General.--If one or more officers required by this subtitle
to be appointed by and with the advice and consent of the Senate have
not entered upon office on the effective date of this subtitle and
notwithstanding any other provision of law, the President may designate
any officer who was appointed by and with the advice and consent of the
Senate, and who was such an officer on the day before the effective
date of this subtitle, to act in the office until it is filled as
provided by this subtitle.
(b) Compensation.--Any officer acting in an office pursuant to
subsection (a) shall receive compensation at the rate prescribed by
this subtitle for such office.
SEC. 17383. FUNDING REDUCTIONS RESULTING FROM REORGANIZATION.
(a) Funding Reductions.--Except as provided in subsection (b), for
each fiscal year that begins on or after the effective date of this
section, the total of amounts obligated or expended by the United
States in performing all functions vested in the USTR and the Office
pursuant to this subtitle may not exceed 75 percent of the total amount
obligated or expended by the United States in performing all such
functions for fiscal year 1995.
(b) Exception.--Subsection (a) shall not apply to obligations or
expenditures incurred as a direct consequence of the termination,
transfer, or other disposition of functions described in subsection (a)
pursuant to this title.
(c) Rule of Construction.--This section shall take precedence over
any other provision of law unless such provision explicitly refers to
this section and makes an exception to it.
(d) Responsibilities of the Director of the Office of Management
and Budget.--The Director of the Office of Management and Budget
shall--
(1) ensure compliance with the requirements of this
section; and
(2) include in each report under sections 17106(a) and (b)
a description of actions taken to comply with such
requirements.
Subtitle D--Patent and Trademark Office Corporation
SEC. 17401. SHORT TITLE.
This subtitle may be cited as the ``Patent and Trademark Office
Corporation Act of 1995''.
CHAPTER 1--PATENT AND TRADEMARK OFFICE
SEC. 17411. ESTABLISHMENT OF PATENT AND TRADEMARK OFFICE AS A
CORPORATION.
Section 1 of title 35, United States Code, is amended to read as
follows:
``Sec. 1. Establishment
``(a) Establishment.--The Patent and Trademark Office is
established as a wholly owned Government corporation subject to chapter
91 of title 31, except as otherwise provided in this title.
``(b) Offices.--The Patent and Trademark Office shall maintain an
office in the District of Columbia, or the metropolitan area thereof,
for the service of process and papers and shall be deemed, for purposes
of venue in civil actions, to be a resident of the district in which
its principal office is located. The Patent and Trademark Office may
establish offices in such other places as it considers necessary or
appropriate in the conduct of its business.
``(c) Reference.--For purposes of this title, the Patent and
Trademark Office shall also be referred to as the `Office'.''.
SEC. 17412. POWERS AND DUTIES.
Section 2 of title 35, United States Code, is amended to read as
follows:
``Sec. 2. Powers and Duties
``(a) In General.--The Patent and Trademark Office shall be
responsible for--
``(1) the granting and issuing of patents and the
registration of trademarks;
``(2) conducting studies, programs, or exchanges of items
or services regarding domestic and international patent and
trademark law or the administration of the Office, including
programs to recognize, identify, assess, and forecast the
technology of patented inventions and their utility to
industry;
``(3) authorizing or conducting studies and programs
cooperatively with foreign patent and trademark offices and
international organizations, in connection with the granting
and issuing of patents and the registration of trademarks; and
``(4) disseminating to the public information with respect
to patents and trademarks.
``(b) Specific Powers.--The Office--
``(1) shall have perpetual succession;
``(2) shall adopt and use a corporate seal, which shall be
judicially noticed and with which letters patent, certificates
of trademark registrations, and papers issued by the Office
shall be authenticated;
``(3) may sue and be sued in its corporate name and be
represented by its own attorneys in all judicial and
administrative proceedings, subject to the provisions of
section 8 of this title;
``(4) may indemnify the Commissioner of Patents and
Trademarks, and other officers, attorneys, agents, and
employees (including members of the Management Advisory Board
established in section 5) of the Office for liabilities and
expenses incurred within the scope of their employment;
``(5) may adopt, amend, and repeal bylaws, rules, and
regulations, governing the manner in which its business will be
conducted and the powers granted to it by law will be
exercised;
``(6) may acquire, construct, purchase, lease, hold,
manage, operate, improve, alter, and renovate any real,
personal, or mixed property, or any interest therein, as it
considers necessary to carry out its functions;
``(7)(A) may make such purchases, contracts for the
construction, maintenance, or management and operation of
facilities, and contracts for supplies or services, without
regard to section 111 of the Federal Property and
Administrative Services Act of 1949 (40 U.S.C. 759); and
``(B) may enter into and perform such purchases and
contracts for printing services, including the process of
composition, platemaking, presswork, silk screen processes,
binding, microform, and the products of such processes, as it
considers necessary to carry out the functions of the Office,
without regard to sections 501 through 517 and 1101 through
1123 of title 44;
``(8) may use, with their consent, services, equipment,
personnel, and facilities of other departments, agencies, and
instrumentalities of the Federal Government, on a reimbursable
basis, and cooperate with such other departments, agencies, and
instrumentalities in the establishment and use of services,
equipment, and facilities of the Office;
``(9) may obtain from the Administrator of General Services
such services as the Administrator is authorized to provide to
other agencies of the United States, on the same basis as those
services are provided to other agencies of the United States;
``(10) may use, with the consent of the United States and
the agency, government, or international organization
concerned, the services, records, facilities, or personnel of
any State or local government agency or instrumentality or
foreign government or international organization to perform
functions on its behalf;
``(11) may determine the character of and the necessity for
its obligations and expenditures and the manner in which they
shall be incurred, allowed, and paid, subject to the provisions
of this title and the Act of July 5, 1946 (commonly referred to
as the `Trademark Act of 1946');
``(12) may retain and use all of its revenues and receipts,
including revenues from the sale, lease, or disposal of any
real, personal, or mixed property, or any interest therein, of
the Office, in carrying out the functions of the Office,
including for research and development and capital investment,
subject to the provisions of section 10101 of the Omnibus
Budget Reconciliation Act of 1990 (35 U.S.C. 41 note);
``(13) shall have the priority of the United States with
respect to the payment of debts from bankrupt, insolvent, and
decedents' estates;
``(14) may accept monetary gifts or donations of services,
or of real, personal, or mixed property, in order to carry out
the functions of the Office;
``(15) may execute, in accordance with its bylaws, rules,
and regulations, all instruments necessary and appropriate in
the exercise of any of its powers;
``(16) may provide for liability insurance and insurance
against any loss in connection with its property, other assets,
or operations either by contract or by self-insurance; and
``(17) shall pay any settlement or judgment entered against
it from the funds of the Office and not from amounts available
under section 1304 of title 31.''.
SEC. 17413. ORGANIZATION AND MANAGEMENT.
Section 3 of title 35, United States Code, is amended to read as
follows:
``Sec. 3. Officers and employees
``(a) Commissioner.--
``(1) In general.--The management of the Patent and
Trademark Office shall be vested in a Commissioner of Patents
and Trademarks (hereafter in this title referred to as the
`Commissioner'), who shall be a citizen of the United States
and who shall be appointed by the President, by and with the
advice and consent of the Senate. The Commissioner shall be a
person who, by reason of professional background and experience
in patent and trademark law, is especially qualified to manage
the Office.
``(2) Duties.--
``(A) In general.--The Commissioner shall be
responsible for the management and direction of the
Office, including the issuance of patents and the
registration of trademarks.
``(B) Advising the president.--The Commissioner
shall advise the President of all activities of the
Patent and Trademark Office undertaken in response to
obligations of the United States under treaties and
executive agreements, or which relate to cooperative
programs with those authorities of foreign governments
that are responsible for granting patents or
registering trademarks. The Commissioner shall also
recommend to the President changes in law or policy
which may improve the ability of United States citizens
to secure and enforce patent rights or trademark rights
in the United States or in foreign countries.
``(C) Consulting with the management advisory
board.--The Commissioner shall consult with the
Management Advisory Board established in section 5 on a
regular basis on matters relating to the operation of
the Patent and Trademark Office, and shall consult with
the Board before submitting budgetary proposals to the
Office of Management and Budget or changing or
proposing to change patent or trademark user fees or
patent or trademark regulations.
``(D) Security clearances.--The Commissioner, in
consultation with the Director of the Office of
Personnel Management, shall maintain a program for
identifying national security positions and providing
for appropriate security clearances.
``(3) Term.--The Commissioner shall serve a term of 5
years, and may continue to serve after the expiration of the
Commissioner's term until a successor is appointed and assumes
office. The Commissioner may be reappointed to subsequent
terms.
``(4) Oath.--The Commissioner shall, before taking office,
take an oath to discharge faithfully the duties of the Office.
``(5) Compensation.--The Commissioner shall receive
compensation at the rate of pay in effect for Level III of the
Executive Schedule under section 5314 of title 5.
``(6) Removal.--The Commissioner may be removed from office
by the President only for cause.
``(7) Designee of commissioner.--The Commissioner shall
designate an officer of the Office who shall be vested with the
authority to act in the capacity of the Commissioner in the
event of the absence or incapacity of the Commissioner.
``(b) Officers and Employees of the Office.--
``(1) Deputy commissioners.--The Commissioner shall appoint
a Deputy Commissioner for Patents and a Deputy Commissioner for
Trademarks for terms that shall expire on the date on which the
Commissioner's term expires. The Deputy Commissioner for
Patents shall be a person with demonstrated experience in
patent law and the Deputy Commissioner for Trademarks shall be
a person with demonstrated experience in trademark law. The
Deputy Commissioner for Patents and the Deputy Commissioner for
Trademarks shall be the principal policy advisors to the
Commissioner on all aspects of the activities of the Office
that affect the administration of patent and trademark
operations, respectively.
``(2) Other officers and employees.--The Commissioner
shall--
``(A) appoint an Inspector General and such other
officers, employees (including attorneys), and agents
of the Office as the Commissioner considers necessary
to carry out its functions;
``(B) fix the compensation of such officers and
employees; and
``(C) define the authority and duties of such
officers and employees and delegate to them such of the
powers vested in the Office as the Commissioner may
determine.
The Office shall not be subject to any administratively or
statutorily imposed limitation on positions or personnel, and
no positions or personnel of the Office shall be taken into
account for purposes of applying any such limitation, except to
the extent otherwise specifically provided by statute with
respect to the Office.
``(c) Limits on Compensation.--Except as otherwise provided in this
title or any other provision of law, the basic pay of an officer or
employee of the Office for any calendar year may not exceed the annual
rate of basic pay in effect for level IV of the Executive Schedule
under section 5315 of title 5. The Commissioner shall by regulation
establish a limitation on the total compensation payable to officers or
employees of the Office, which may not exceed the annual rate of basic
pay in effect for level I of the Executive Schedule under section 5312
of title 5.
``(d) Inapplicability of Title 5 Generally.--Except as otherwise
provided in this section, officers and employees of the Office shall
not be subject to the provisions of title 5 relating to Federal
employees.
``(e) Continued Applicability of Certain Provision of Title 5.--The
following provisions of title 5 shall apply to the Office and its
officers and employees:
``(1) Section 3110 (relating to employment of relatives;
restrictions).
``(2) Subchapter II of chapter 55 (relating to withholding
pay).
``(3) Subchapter II of chapter 73 (relating to employment
limitations).
``(f) Provisions of Title 5 Relating to Certain Benefits.--
``(1) Retirement.--(A)(i) Any individual who becomes an
officer or employee of the Office pursuant to subsection (h)
shall, if such individual has at least 3 years of creditable
service (within the meaning of section 8332 or 8411 of title 5)
as of the effective date of the Patent and Trademark Office
Corporation Act of 1995, remain subject to subchapter III of
chapter 83 or chapter 84 of such title, as the case may be, so
long as such individual continues to hold an office or position
in or under the Office without a break in service.
``(ii)(I) Except as provided in subclause (II), with
respect to an individual described in clause (i), the Office
shall make the appropriate withholding from pay and shall pay
the contributions required of an employing agency into the
Civil Service Retirement and Disability Fund and, if
applicable, the Thrift Savings Fund in accordance with
applicable provisions of subchapter III of chapter 83 or
chapter 84 of title 5, as the case may be.
``(II) In the case of an officer or employee who remains
subject to subchapter III of chapter 83 of such title by virtue
of this subparagraph, the Office shall, instead of the amount
which would otherwise be required under the second sentence of
section 8334(a)(1) of title 5, contribute an amount equal to
the normal-cost percentage (determined with respect to officers
and employees of the Office using dynamic assumptions, as
defined by section 8401(9) of such title) of the individual's
basic pay, minus the amount required to be withheld from such
pay under such section 8334(a)(1).
``(B)(i) Notwithstanding subsection (d), the provisions of
subchapter III of chapter 83 or chapter 84 of title 5 (as
applicable) which relate to disability shall be considered to
remain in effect, with respect to an individual who becomes an
officer or employee of the Office pursuant to subsection (h), until the
end of the 2-year period beginning on the effective date of the Patent
and Trademark Office Corporation Act of 1995 or, if earlier, until such
individual satisfies the prerequisites for coverage under any program
offered by the Office to replace the disability retirement program
under chapter 83 or 84 of title 5.
``(ii) This clause applies with respect to any officer or
employee of the Office who is receiving disability coverage
under this subparagraph and has completed the service
requirement specified in the first sentence of section 8337(a)
or 8451(a)(1)(A) of title 5 (as applicable), but who is not
described in subparagraph (A)(i). In the case of any individual
to whom this clause applies, the Office shall pay into the
Civil Service Retirement and Disability Fund an amount equal to
that portion of the normal-cost percentage (determined in the
same manner as under subparagraph (A)(ii)(II)) of the basic pay
of such individual (for service performed during the period
during which such individual is receiving such coverage)
allocable to such coverage. Any amounts payable under this
clause shall be paid at such time and in such manner as
mutually agreed to by the Office and the Office of Personnel
Management, and shall be in lieu of any individual or agency
contributions otherwise required.
``(2) Health benefits.--(A) Officers and employees of the
Office shall not become ineligible to participate in the health
benefits program under chapter 89 of title 5 by reason of
subsection (d) until the effective date of elections made
during the first election period (under section 8905(f) of
title 5) beginning after the end of the 2-year period beginning
on the effective date of the the Patent and Trademark Office
Corporation Act of 1995.
``(B)(i) With respect to any individual who becomes an
officer or employee of the Office pursuant to subsection (h),
the eligibility of such individual to participate in such
program as an annuitant (or of any other person to participate
in such program as an annuitant based on the death of such
individual) shall be determined disregarding the requirements
of section 8905(b) of title 5. The preceding sentence shall not
apply if the individual ceases to be an officer or employee of
the Office for any period of time after becoming an officer or
employee of the Office pursuant to subsection (h) and before
separation.
``(ii) The Government contributions authorized by section
8906 for health benefits for anyone participating in the health
benefits program pursuant to this subparagraph shall be made by
the Office in the same manner as provided under section
8906(g)(2) of title 5 with respect to the United States Postal
Service for individuals associated therewith.
``(iii) For purposes of this subparagraph, the term
`annuitant' has the meaning given such term by section 8901(3)
of title 5.
``(3) Life insurance.--(A) Officers and employees of the
Office shall not become ineligible to participate in the life
insurance program under chapter 87 of title 5 by reason of
subsection (d) until the first day after the end of the 2-year
period beginning on the effective date of the the Patent and
Trademark Office Corporation Act of 1995.
``(B)(i) Eligibility for life insurance coverage after
retirement or while in receipt of compensation under subchapter
I of chapter 81 of title 5 shall be determined, in the case of
any individual who becomes an officer or employee of the Office
pursuant to subsection (h), without regard to the requirements
of section 8706(b) (1) or (2), but subject to the condition
specified in the last sentence of paragraph (2)(B)(i) of this
subsection.
``(ii) Government contributions under section 8708(d) on
behalf of any such individual shall be made by the Office in
the same manner as provided under paragraph (3) thereof with
respect to the United States Postal Service for individuals
associated therewith.
``(4) Employees' compensation fund.--The Office shall
remain responsible for reimbursing the Employees' Compensation
Fund, pursuant to section 8147 of title 5, for compensation
paid or payable after the effective date of the Patent and
Trademark Office Corporation Act of 1995 in accordance with
chapter 81 of title 5 with regard to any injury, disability, or
death due to events arising before such date, whether or not a
claim has been filed or is final on such date.
``(5) Requirement that the office offer certain minimum
number of life and health insurance policies.--The Office shall
offer at least 1 life insurance policy and at least 3 health
insurance policies to its officers and employees, comparable to
existing Federal benefits, beginning on the first day after the
end of the 2-year period beginning on the effective date of the
Patent and Trademark Office Corporation Act of 1995.
``(g) Labor-Management Relations.--
``(1) Labor relations and employee relations programs.--The
Office shall develop labor relations and employee relations
programs with the objective of improving productivity and
efficiency, incorporating the following principles:
``(A) Such programs shall be consistent with the
merit principles in section 2301(b) of title 5.
``(B) Such programs shall provide veterans
preference protections equivalent to those established
by sections 2801, 3308-3318, and 3320 of title 5.
``(C)(i) In order to maximize individual freedom of
choice in the pursuit of employment and to encourage an
economic climate conducive to economic growth, the
right to work shall not be subject to undue restraint
or coercion. The right to work shall not be infringed
or restricted in any way based on membership in,
affiliation with, or financial support of a labor
organization.
``(ii) No person shall be required, as a condition
of employment or continuation of employment:
``(I) To resign or refrain from voluntary
membership in, voluntary affiliation with, or
voluntary financial support of a labor
organization.
``(II) To become or remain a member of a
labor organization.
``(III) To pay any dues, fees, assessments,
or other charges of any kind or amount to a
labor organization.
``(IV) To pay to any charity or other third
party, in lieu of such payments, any amount
equivalent to or a pro-rata portion of dues,
fees, assessments, or other charges regularly
required of members of a labor organization.
``(V) To be recommended, approved,
referred, or cleared by or through a labor
organization.
``(iii) This subparagraph shall not apply to a
person described in section 7103(a)(2)(v) of title 5 or
a `supervisor', `management official', or `confidential
employee' as those terms are defined in 7103(a)(10),
(11), and (13) of such title.
``(iv) Any labor organization recognized by the
Office as the exclusive representative of a unit of
employees of the Office shall represent the interests
of all employees in that unit without discrimination
and without regard to labor organization membership.
``(2) Adoption of existing labor agreements.--The Office
shall adopt all labor agreements which are in effect, as of the
day before the effective date of the Patent and Trademark
Office Corporation Act of 1995, with respect to such Office (as
then in effect). Each such agreement shall remain in effect for
the 2-year period commencing on such date, unless the agreement
provides for a shorter duration or the parties agree otherwise
before such period ends.
``(h) Carryover of Personnel.--
``(1) From pto.--Effective as of the effective date of the
Patent and Trademark Office Corporation Act of 1995, all
officers and employees of the Patent and Trademark Office on
the day before such effective date shall become officers and
employees of the Office, without a break in service.
``(2) Other personnel.--Any individual who, on the day
before the effective date of the Patent and Trademark Office
Corporation Act of 1995, is an officer or employee of the
Department of Commerce (other than an officer or employee under
paragraph (1)) shall be transferred to the Office if--
``(A) such individual serves in a position for
which a major function is the performance of work
reimbursed by the Patent and Trademark Office, as
determined by the Secretary of Commerce;
``(B) such individual serves in a position that
performed work in support of the Patent and Trademark
Office during at least half of the incumbent's work
time, as determined by the Secretary of Commerce; or
``(C) such transfer would be in the interest of the
Office, as determined by the Secretary of Commerce in
consultation with the Commissioner of Patents and
Trademarks.
Any transfer under this paragraph shall be effective as of the
same effective date as referred to in paragraph (1), and shall
be made without a break in service.
``(3) Accumulated leave.--The amount of sick and annual
leave and compensatory time accumulated under title 5 before
the effective date described in paragraph (1), by officers or
employees of the Patent and Trademark Office who so become
officers or employees of the Office, are obligations of the
Office.
``(4) Termination rights.--Any employee referred to in
paragraph (1) or (2) of this subsection whose employment with
the Office is terminated during the 2-year period beginning on
the effective date of the Patent and Trademark Office
Corporation Act of 1995 shall be entitled to rights and
benefits, to be afforded by the Office, similar to those such
employee would have had under Federal law if termination had
occurred immediately before such date. An employee who would
have been entitled to appeal any such termination to the Merit
Systems Protection Board, if such termination had occurred
immediately before such effective date, may appeal any such
termination occurring within this 2-year period to the Board
under such procedures as it may prescribe.
``(5) Continuation in office of certain officers.--(A) The
individual serving as the Commissioner of Patents and
Trademarks on the day before the effective date of the Patent
and Trademark Office Corporation Act of 1995 may serve as the
Commissioner until the earlier of 1 year after the effective
date of that Act or the date on which a Commissioner is
appointed under subsection (a).
``(B) The individual serving as the Assistant Commissioner
for Patents on the day before the effective date of the Patent
and Trademark Office Corporation Act of 1995 may serve as the
Deputy Commissioner for Patents until the earlier of 1 year
after the effective date of that Act or the date on which a
Deputy Commissioner for Patents is appointed under subsection
(b).
``(C) The individual serving as the Assistant Commissioner
for Trademarks on the day before the effective date of the
Patent and Trademark Office Corporation Act of 1995 may serve
as the Deputy Commissioner for Trademarks until the earlier of
1 year after the effective date of that Act or the date on
which a Deputy Commissioner for Trademarks is appointed under
subsection (b).
``(i) Competitive Status.--For purposes of appointment to a
position in the competitive service for which an officer or employee of
the Office is qualified, such officer or employee shall not forfeit any
competitive status, acquired by such officer or employee before the
effective date of the Patent and Trademark Office Corporation Act of
1995, by reason of becoming an officer or employee of the Office
pursuant to subsection (h).
``(j) Savings Provisions.--All orders, determinations, rules, and
regulations regarding compensation and benefits and other terms and
conditions of employment, in effect for the Office and its officers and
employees immediately before the effective date of the Patent and
Trademark Office Corporation Act of 1995, shall continue in effect with
respect to the Office and its officers and employees until modified,
superseded, or set aside by the Office or a court of appropriate
jurisdiction or by operation of law.''.
SEC. 17414. MANAGEMENT ADVISORY BOARD.
Chapter 1 of part I of title 35, United States Code, is amended by
inserting after section 4 the following:
``Sec. 5. Patent and Trademark Office Management Advisory Board
``(a) Establishment of Management Advisory Board.--
``(1) Appointment.--The Patent and Trademark Office shall
have a Management Advisory Board (hereafter in this title
referred to as the `Board') of 12 members, 4 of whom shall be
appointed by the President, 4 of whom shall be appointed by the
Speaker of the House of Representatives, and 4 of whom shall be
appointed by the President pro tempore of the Senate. Not more
than 3 of the 4 members appointed by each appointing authority
shall be members of the same political party.
``(2) Terms.--Members of the Board shall be appointed for a
term of 4 years each, except that of the members first
appointed by each appointing authority, 1 shall be for a term
of 1 year, 1 shall be for a term of 2 years, and 1 shall be for
a term of 3 years. No member may serve more than 1 term.
``(3) Chair.--The President shall designate the chair of
the Board, whose term as chair shall be for 3 years.
``(4) Timing of appointments.--Initial appointments to the
Board shall be made within 3 months after the effective date of
the Patent and Trademark Office Corporation Act of 1995, and
vacancies shall be filled within 3 months after they occur.
``(5) Vacancies.--Vacancies shall be filled in the manner
in which the original appointment was made under this
subsection. Members appointed to fill a vacancy occurring
before the expiration of the term for which the member's
predecessor was appointed shall be appointed only for the
remainder of that term. A member may serve after the expiration
of that member's term until a successor is appointed.
``(b) Basis for Appointments.--Members of the Board shall be
citizens of the United States who shall be chosen so as to represent
the interests of diverse users of the Patent and Trademark Office, and
shall include individuals with substantial background and achievement
in corporate finance and management.
``(c) Applicability of Certain Ethics Laws.--Members of the Board
shall be special Government employees within the meaning of section 202
of title 18.
``(d) Meetings.--The Board shall meet at the call of the chair to
consider an agenda set by the chair.
``(e) Duties.--The Board shall--
``(1) review the policies, goals, performance, budget, and
user fees of the Patent and Trademark Office, and advise the
Commissioner on these matters; and
``(2) within 60 days after the end of each fiscal year,
prepare an annual report on the matters referred to in
paragraph (1), transmit the report to the President and the
Committees on the Judiciary of the Senate and the House of
Representatives, and publish the report in the Patent and
Trademark Office Official Gazette.
``(f) Staff.--The Board shall employ a staff of not more than 10
members and shall procure support services for the staff adequate to
enable the Board to carry out its functions, using funds available to
the Commissioner under section 42 of this title. The Board shall ensure
that members of the staff, other than clerical staff, are especially
qualified in the areas of patents, trademarks, or management of public
agencies. Persons employed by the Board shall receive compensation as
determined by the Board, which may not exceed the limitations set forth
in section 3(c) of this title, shall serve in accordance with terms and
conditions of employment established by the Board, and shall be subject
solely to the direction of the Board, notwithstanding any other
provision of law.
``(g) Compensation.--Members of the Board shall be compensated for
each day (including travel time) during which they are attending
meetings or conferences of the Board or otherwise engaged in the
business of the Board, at the rate which is the daily equivalent of the
annual rate of basic pay in effect for level III of the Executive
Schedule under section 5314 of title 5, and while away from their homes
or regular places of business they may be allowed travel expenses,
including per diem in lieu of subsistence, as authorized by section
5703 of title 5.
``(h) Access to Information.--Members of the Board shall be
provided access to records and information in the Patent and Trademark
Office, except for personnel or other privileged information and
information concerning patent applications required to be kept in
confidence by section 122 of this title.''.
SEC. 17415. INDEPENDENCE FROM DEPARTMENT OF COMMERCE.
(a) Duties of Commissioner.--Section 6 of title 35, United States
Code, is amended--
(1) by striking ``, under the direction of the Secretary of
Commerce,'' each place it appears; and
(2) by striking ``, subject to the approval of the
Secretary of Commerce,''.
(b) Regulations for Agents and Attorneys.--Section 31 of title 35,
United States Code, is amended by striking ``, subject to the approval
of the Secretary of Commerce,''.
SEC. 17416. TRADEMARK TRIAL AND APPEAL BOARD.
Section 17 of the Act of July 5, 1946 (commonly referred to as the
``Trademark Act of 1946'') (15 U.S.C. 1067) is amended to read as
follows:
``Sec. 17. (a) In every case of interference, opposition to
registration, application to register as a lawful concurrent user, or
application to cancel the registration of a mark, the Commissioner
shall give notice to all parties and shall direct a Trademark Trial and
Appeal Board to determine and decide the respective rights of
registration.
``(b) The Trademark Trial and Appeal Board shall include the
Commissioner, the Deputy Commissioner for Patents, the Deputy
Commissioner for Trademarks, and members competent in trademark law who
are appointed by the Commissioner.''.
SEC. 17417. BOARD OF PATENT APPEALS AND INTERFERENCES.
Section 7 of title 35, United States Code, is amended to read as
follows:
``Sec. 7. Board of Patent Appeals and Interferences
``(a) Establishment and Composition.--There shall be in the Patent
and Trademark Office a Board of Patent Appeals and Interferences. The
Commissioner, the Deputy Commissioner for Patents, the Deputy
Commissioner for Trademarks, and the examiners-in-chief shall
constitute the Board. The examiners-in-chief shall be persons of
competent legal knowledge and scientific ability.
``(b) Duties.--The Board of Patent Appeals and Interferences shall,
on written appeal of an applicant, review adverse decisions of
examiners upon applications for patents and shall determine priority
and patentability of invention in interferences declared under section
135(a) of this title. Each appeal and interference shall be heard by at
least 3 members of the Board, who shall be designated by the
Commissioner. Only the Board of Patent Appeals and Interferences may
grant rehearings.''.
SEC. 17418. SUITS BY AND AGAINST THE CORPORATION.
Chapter 1 of part I of title 35, United States Code, is amended--
(1) by redesignating sections 8 through 14 as sections 9
through 15; and
(2) by inserting after section 7 the following new section:
``Sec. 8. Suits by and against the Corporation
``(a) In General.--
``(1) Actions under united states law.--Any civil action or
proceeding to which the Patent and Trademark Office is a party
is deemed to arise under the laws of the United States. The
Federal courts shall have exclusive jurisdiction over all civil
actions by or against the Office.
``(2) Contract claims.--Any action or proceeding against
the Office in which any claim is cognizable under the Contract
Disputes Act of 1978 (41 U.S.C. 601 and following) shall be
subject to that Act. For purposes of that Act, the Commissioner
shall be deemed to be the agency head with respect to contract
claims arising with respect to the Office. Any other action or
proceeding against the Office founded upon contract may be
brought in an appropriate district court, notwithstanding any
provision of title 28.
``(3) Tort claims.--(A) Any action or proceeding against
the Office in which any claim is cognizable under the
provisions of section 1346(b) and chapter 171 of title 28,
shall be governed by those provisions.
``(B) Any other action or proceeding against the Office
founded upon tort may be brought in an appropriate district
court without regard to the provisions of section 1346(b) and
chapter 171 of title 28.
``(4) Prohibition on attachment, liens, etc.--No
attachment, garnishment, lien, or similar process, intermediate
or final, in law or equity, may be issued against property of
the Office.
``(5) Substitution of office as party.--The Office shall be
substituted as defendant in any civil action or proceeding
against an officer or employee of the Office, if the Office
determines that the officer or employee was acting within the
scope of his or her employment with the Office. If the Office
refuses to certify scope of employment, the officer or employee
may at any time before trial petition the court to find and
certify that the officer or employee was acting within the
scope of his or her employment. Upon certification by the
court, the Office shall be substituted as the party defendant.
A copy of the petition shall be served upon the Office. In any
such civil action or proceeding to which paragraph (3)(A)
applies, the provisions of section 1346(b) and chapter 171 of
title 28 shall apply in lieu of this paragraph.
``(b) Relationship With Justice Department.--
``(1) Exercise by office of attorney general's
authorities.--Except as provided in this section, with respect
to any action or proceeding in which the Office is a party or
an officer or employee thereof is a party in his or her
official capacity, the Office, officer, or employee may
exercise, without prior authorization from the Attorney
General, the authorities and duties that otherwise would be
exercised by the Attorney General on behalf of the Office,
officer, or employee under title 28 and other laws.
``(2) Appearances by attorney general.--Notwithstanding
paragraph (1), at any time the Attorney General may, in any
action or proceeding described in paragraph (1), file an
appearance on behalf of the Office or the officer or employee
involved, without the consent of the Office or the officer or
employee. Upon such filing, the Attorney General shall
represent the Office or such officer or employee with exclusive
authority in the conduct, settlement, or compromise of that
action or proceeding.
``(3) Consultations with and assistance by attorney
general.--The Office may consult with the Attorney General
concerning any legal matter, and the Attorney General shall
provide advice and assistance to the Office, including
representing the Office in litigation, if requested by the
Office.
``(4) Representation before supreme court.--The Attorney
General shall represent the Office in all cases before the
United States Supreme Court.
``(5) Qualifications of attorneys.--An attorney admitted to
practice to the bar of the highest court of at least one State
in the United States or the District of Columbia and employed
by the Office may represent the Office in any legal proceeding
in which the Office or an officer or employee of the Office is
a party or interested, regardless of whether the attorney is a
resident of the jurisdiction in which the proceeding is held
and notwithstanding any other prerequisites of qualification or
appearance required by the court or administrative body before
which the proceeding is conducted.''.
SEC. 17419. ANNUAL REPORT OF COMMISSIONER.
Section 15 of title 35, United States Code, as redesignated by
section 17418 of this Act, is amended to read as follows:
``Sec. 15. Annual report to Congress
``The Commissioner shall report to the Congress, not later than 180
days after the end of each fiscal year, the moneys received and
expended by the Office, the purposes for which the moneys were spent,
the quality and quantity of the work of the Office, and other
information relating to the Office. The report under this section shall
also meet the requirements of section 9106 of title 31, to the extent
that such requirements are not inconsistent with the preceding
sentence. The report required under this section shall be deemed to be
the report of the Patent and Trademark Office under section 9106 of
title 31, and the Commissioner shall not file a separate report under
such section.''.
SEC. 17420. SUSPENSION OR EXCLUSION FROM PRACTICE.
Section 32 of title 35, United States Code, is amended by inserting
before the last sentence the following: ``The Commissioner shall have
the discretion to designate any attorney who is an officer or employee
of the Patent and Trademark Office to conduct the hearing required by
this section.''.
SEC. 17421. FUNDING.
Section 42 of title 35, United States Code, is amended to read as
follows:
``Sec. 42. Patent and Trademark Office funding
``(a) Fees Payable to the Office.--All fees for services performed
by or materials furnished by the Patent and Trademark Office shall be
payable to the Office.
``(b) Use of Moneys.--Moneys of the Patent and Trademark Office not
otherwise used to carry out the functions of the Office shall be kept
in cash on hand or on deposit, or invested in obligations of the United
States or guaranteed by the United States, or in obligations or other
instruments which are lawful investments for fiduciary, trust, or
public funds. Fees available to the Commissioner under this title shall
be used exclusively for the processing of patent applications and for
other services and materials relating to patents. Fees available to the
Commissioner under section 31 of the Act of July 5, 1946 (commonly
referred to as the `Trademark Act of 1946'; 15 U.S.C. 1113), shall be
used exclusively for the processing of trademark registrations and for
other services and materials relating to trademarks.
``(c) Borrowing Authority.--The Patent and Trademark Office is
authorized to issue from time to time for purchase by the Secretary of
the Treasury its debentures, bonds, notes, and other evidences of
indebtedness (hereafter in this subsection referred to as
`obligations') to assist in financing its activities. Borrowing under
this subsection shall be subject to prior approval in appropriation
Acts. Such borrowing shall not exceed amounts approved in appropriation
Acts. Any such borrowing shall be repaid only from fees paid to the
Office and surcharges appropriated by the Congress. Such obligations
shall be redeemable at the option of the Office before maturity in the
manner stipulated in such obligations and shall have such maturity as
is determined by the Office with the approval of the Secretary of the
Treasury. Each such obligation issued to the Treasury shall bear
interest at a rate not less than the current yield on outstanding
marketable obligations of the United States of comparable maturity
during the month preceding the issuance of the obligation as determined
by the Secretary of the Treasury. The Secretary of the Treasury shall
purchase any obligations of the Office issued under this subsection and
for such purpose the Secretary of the Treasury is authorized to use as
a public-debt transaction the proceeds of any securities issued under
chapter 31 of title 31, and the purposes for which securities may be
issued under that chapter are extended to include such purpose. Payment
under this subsection of the purchase price of such obligations of the
Patent and Trademark Office shall be treated as public debt
transactions of the United States.''.
SEC. 17422. AUDITS.
Chapter 4 of part I of title 35, United States Code, is amended by
adding at the end the following new section:
``Sec. 43. Audits
``(a) In General.--Financial statements of the Patent and Trademark
Office shall be prepared on an annual basis in accordance with
generally accepted accounting principles. Such statements shall be
audited by an independent certified public accountant chosen by the
Commissioner. The audit shall be conducted in accordance with standards
that are consistent with generally accepted Government auditing
standards and other standards established by the Comptroller General,
and with the generally accepted auditing standards of the private
sector, to the extent feasible. The Commissioner shall transmit to the
Committees on the Judiciary of the House of Representatives and the
Senate the results of each audit under this subsection.
``(b) Review by Comptroller General.--The Comptroller General may
review any audit of the financial statement of the Patent and Trademark
Office that is conducted under subsection (a). The Comptroller General
shall report to the Congress and the Office the results of any such
review and shall include in such report appropriate recommendations.
``(c) Audit by Comptroller General.--The Comptroller General may
audit the financial statements of the Office and such audit shall be in
lieu of the audit required by subsection (a). The Office shall
reimburse the Comptroller General for the cost of any audit conducted
under this subsection.
``(d) Access to Office Records.--All books, financial records,
report files, memoranda, and other property that the Comptroller
General deems necessary for the performance of any audit shall be made
available to the Comptroller General.
``(e) Applicability in Lieu of Title 31 Provisions.--This section
applies to the Office in lieu of the provisions of section 9105 of
title 31.''.
SEC. 17423. TRANSFERS.
(a) Transfer of Functions.--Except as otherwise provided in this
Act, there are transferred to, and vested in, the Patent and Trademark
Office all functions, powers, and duties vested by law in the Secretary
of Commerce or the Department of Commerce or in the officers or
components in the Department of Commerce with respect to the authority
to grant patents and register trademarks, and in the Patent and
Trademark Office, as in effect on the day before the effective date of
this subtitle, and in the officers and components of such Office.
(b) Transfer of Funds and Property.--The Secretary of Commerce
shall transfer to the Patent and Trademark Office, on the effective
date of this subtitle, so much of the assets, liabilities, contracts,
property, records, and unexpended and unobligated balances of
appropriations, authorizations, allocations, and other funds employed,
held, used, arising from, available to, or to be made available to the
Department of Commerce, including funds set aside for accounts
receivable which are related to functions, powers, and duties which are
vested in the Patent and Trademark Office by this subtitle.
CHAPTER 2--EFFECTIVE DATE; TECHNICAL AMENDMENTS
SEC. 17431. EFFECTIVE DATE.
This subtitle shall take effect 6 months after the date of the
enactment of this Act.
SEC. 17432. TECHNICAL AND CONFORMING AMENDMENTS.
(a) Amendments to Title 35.--
(1) The table of contents for part I of title 35, United
States Code, is amended by amending the item relating to
chapter 1 to read as follows:
``1. Establishment, Officers and Employees, Functions....... 1.''
(2) The table of sections for chapter 1 of title 35, United
States Code, is amended to read as follows:
``CHAPTER 1--ESTABLISHMENT, OFFICERS AND EMPLOYEES, FUNCTIONS
``Sec.
``1. Establishment.
``2. Powers and duties.
``3. Officers and employees.
``4. Restrictions on officers and employees as to interest in patents.
``5. Patent and Trademark Office Management Advisory Board.
``6. Duties of Commissioner.
``7. Board of Patent Appeals and Interferences.
``8. Suits by and against the Corporation.
``9. Library.
``10. Classification of patents.
``11. Certified copies of records.
``12. Publications.
``13. Exchange of copies of patents with foreign countries.
``14. Copies of patents for public libraries.
``15. Annual report to Congress.''.
(3) The table of contents for chapter 4 of part I of title 35,
United States Code, is amended by adding at the end the following new
item:
``43. Audits.''.
(b) Other Provisions of Law.--
(1) Section 9101(3) of title 31, United States Code, is
amended by adding at the end the following:
``(O) the Patent and Trademark Office.''.
(2) Section 500(e) of title 5, United States Code, is
amended by striking ``Patent Office'' and inserting ``Patent
and Trademark Office''.
(3) Section 5102(c)(23) of title 5, United States Code, is
amended by striking ``Department of Commerce''.
(4) Section 5316 of title 5, United States Code (5 U.S.C.
5316) is amended by striking ``Commissioner of Patents,
Department of Commerce.'', ``Deputy Commissioner of Patents and
Trademarks.'', ``Assistant Commissioner for Patents.'', and
``Assistant Commissioner for Trademarks.''.
(5) Section 12 of the Act of February 14, 1903 (15 U.S.C.
1511) is amended by striking ``(d) Patent and Trademark
Office;'' and redesignating subsections (a) through (g) as
paragraphs (1) through (6), respectively.
(6) The Act of April 12, 1892 (27 Stat. 395; 20 U.S.C. 91)
is amended by striking ``Patent Office'' and inserting ``Patent
and Trademark Office''.
(7) Sections 505(m) and 512(o) of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 355(m) and 360b(o)) are each
amended by striking ``of the Department of Commerce''.
(8) Section 105(e) of the Federal Alcohol Administration
Act (27 U.S.C. 205(e)) is amended by striking ``Patent Office''
and inserting ``Patent and Trademark Office''.
(9) Section 1744 of title 28, United States Code is
amended--
(A) by striking ``Patent Office'' each place it
appears and inserting ``Patent and Trademark Office'';
and
(B) by striking ``Commissioner of Patents'' and
inserting ``Commissioner of Patents and Trademarks''.
(10) Section 1745 of title 28, United States Code, is
amended by striking ``United States Patent Office'' and
inserting ``Patent and Trademark Office''.
(11) Section 1928 of title 28, United States Code, is
amended by striking ``Patent Office'' and inserting ``Patent
and Trademark Office''.
(12) Section 160 of the Atomic Energy Act of 1954 (42
U.S.C. 2190) is amended--
(A) by striking ``United States Patent Office'' and
inserting ``Patent and Trademark Office''; and
(B) by striking ``Commissioner of Patents'' and
inserting ``Commissioner of Patents and Trademarks''.
(13) Section 305(c) of the National Aeronautics and Space
Act of 1958 (42 U.S.C. 2457(c)) is amended by striking
``Commissioner of Patents'' and inserting ``Commissioner of
Patents and Trademarks''.
(14) Section 12(a) of the Solar Heating and Cooling
Demonstration Act of 1974 (42 U.S.C. 5510(a)) is amended by
striking ``Commissioner of the Patent Office'' and inserting
``Commissioner of Patents and Trademarks''.
(15) Section 1111 of title 44, United States Code, is
amended by striking ``the Commissioner of Patents,''.
(16) Section 1114 of title 44, United States Code, is
amended by striking ``the Commissioner of Patents,''.
(17) Section 1123 of title 44, United States Code, is
amended by striking ``the Patent Office.''.
(18) Sections 1337 and 1338 of title 44, United States
Code, and the items relating to those sections in the table of
contents for chapter 13 of such title, are repealed.
(19) Section 10(i) of the Trading With the Enemy Act (50
U.S.C. App. 10(i)) is amended by striking ``Commissioner of
Patents'' and inserting ``Commissioner of Patents and
Trademarks''.
(20) Section 8G(a)(2) of the Inspector General Act of 1978
(5 U.S.C. App.) is amended by inserting ``the Patent and
Trademark Office,'', after ``the Panama Canal Commission,''.
Subtitle E--Miscellaneous Provisions
SEC. 17501. REFERENCES.
Any reference in any other Federal law, Executive order, rule,
regulation, or delegation of authority, or any document of or
pertaining to a department or office from which a function is
transferred by this title--
(1) to the head of such department or office is deemed to
refer to the head of the department or office to which such
function is transferred; or
(2) to such department or office is deemed to refer to the
department or office to which such function is transferred.
SEC. 17502. EXERCISE OF AUTHORITIES.
Except as otherwise provided by law, a Federal official to whom a
function is transferred by this title may, for purposes of performing
the function, exercise all authorities under any other provision of law
that were available with respect to the performance of that function to
the official responsible for the performance of the function
immediately before the effective date of the transfer of the function
under this title.
SEC. 17503. SAVINGS PROVISIONS.
(a) Legal Documents.--All orders, determinations, rules,
regulations, permits, grants, loans, contracts, agreements,
certificates, licenses, and privileges--
(1) that have been issued, made, granted, or allowed to
become effective by the President, the Secretary of Commerce,
the United States Trade Representative, any officer or employee
of any office transferred by this title, or any other
Government official, or by a court of competent jurisdiction,
in the performance of any function that is transferred by this
title, and
(2) that are in effect on the effective date of such
transfer (or become effective after such date pursuant to their
terms as in effect on such effective date),
shall continue in effect according to their terms until modified,
terminated, superseded, set aside, or revoked in accordance with law by
the President, any other authorized official, a court of competent
jurisdiction, or operation of law.
(b) Proceedings.--This title shall not affect any proceedings or
any application for any benefits, service, license, permit,
certificate, or financial assistance pending on the date of the
enactment of this Act before an office transferred by this title, but
such proceedings and applications shall be continued. Orders shall be
issued in such proceedings, appeals shall be taken therefrom, and
payments shall be made pursuant to such orders, as if this Act had not
been enacted, and orders issued in any such proceeding shall continue
in effect until modified, terminated, superseded, or revoked by a duly
authorized official, by a court of competent jurisdiction, or by
operation of law. Nothing in this subsection shall be considered to
prohibit the discontinuance or modification of any such proceeding
under the same terms and conditions and to the same extent that such
proceeding could have been discontinued or modified if this title had
not been enacted.
(c) Suits.--This title shall not affect suits commenced before the
date of the enactment of this Act, and in all such suits, proceeding
shall be had, appeals taken, and judgments rendered in the same manner
and with the same effect as if this title had not been enacted.
(d) Nonabatement of Actions.--No suit, action, or other proceeding
commenced by or against the Department of Commerce or the Secretary of
Commerce, or by or against any individual in the official capacity of
such individual as an officer or employee of an office transferred by
this title, shall abate by reason of the enactment of this title.
(e) Continuance of Suits.--If any Government officer in the
official capacity of such officer is party to a suit with respect to a
function of the officer, and under this title such function is
transferred to any other officer or office, then such suit shall be
continued with the other officer or the head of such other office, as
applicable, substituted or added as a party.
(f) Administrative Procedure and Judicial Review.--Except as
otherwise provided by this title, any statutory requirements relating
to notice, hearings, action upon the record, or administrative or
judicial review that apply to any function transferred by this title
shall apply to the exercise of such function by the head of the Federal
agency, and other officers of the agency, to which such function is
transferred by this title.
SEC. 17504. TRANSFER OF ASSETS.
Except as otherwise provided in this title, so much of the
personnel, property, records, and unexpended balances of
appropriations, allocations, and other funds employed, used, held,
available, or to be made available in connection with a function
transferred to an official or agency by this title shall be available
to the official or the head of that agency, respectively, at such time
or times as the Director of the Office of Management and Budget directs
for use in connection with the functions transferred.
SEC. 17505. DELEGATION AND ASSIGNMENT.
Except as otherwise expressly prohibited by law or otherwise
provided in this title, an official to whom functions are transferred
under this title (including the head of any office to which functions
are transferred under this title) may delegate any of the functions so
transferred to such officers and employees of the office of the
official as the official may designate, and may authorize successive
redelegations of such functions as may be necessary or appropriate. No
delegation of functions under this section or under any other provision
of this title shall relieve the official to whom a function is
transferred under this title of responsibility for the administration
of the function.
SEC. 17506. AUTHORITY OF DIRECTOR OF THE OFFICE OF MANAGEMENT AND
BUDGET WITH RESPECT TO FUNCTIONS TRANSFERRED.
(a) Determinations.--If necessary, the Director shall make any
determination of the functions that are transferred under this title.
(b) Incidental Transfers.--The Director, at such time or times as
the Director shall provide, may make such determinations as may be
necessary with regard to the functions transferred by this title, and
to make such additional incidental dispositions of personnel, assets,
liabilities, grants, contracts, property, records, and unexpended
balances of appropriations, authorizations, allocations, and other
funds held, used, arising from, available to, or to be made available
in connection with such functions, as may be necessary to carry out the
provisions of this title. The Director shall provide for the
termination of the affairs of all entities terminated by this title and
for such further measures and dispositions as may be necessary to
effectuate the purposes of this title.
SEC. 17507. CERTAIN VESTING OF FUNCTIONS CONSIDERED TRANSFERS.
For purposes of this title, the vesting of a function in a
department or office pursuant to reestablishment of an office shall be
considered to be the transfer of the function.
SEC. 17508. AVAILABILITY OF EXISTING FUNDS.
Existing appropriations and funds available for the performance of
functions, programs, and activities terminated pursuant to this title
shall remain available, for the duration of their period of
availability, for necessary expenses in connection with the termination
and resolution of such functions, programs, and activities.
SEC. 17509. DEFINITIONS.
For purposes of this title--
(1) the term ``function'' includes any duty, obligation,
power, authority, responsibility, right, privilege, activity,
or program; and
(2) the term `office' includes any office, administration,
agency, bureau, institute, council, unit, organizational
entity, or component thereof.
TITLE XVIII--WELFARE REFORM
SEC. 18001. ENACTMENT OF THE PERSONAL RESPONSIBILITY ACT OF 1995.
H.R. 4, as passed by the House of Representatives on March 24,
1995, is hereby enacted with the following amendments:
(1) In section 101, insert
``(a) In General.--'' before ``Title IV of the Social Security
Act''.
(2) At the end of section 101, add the following:
(b) Submission of State Plan for Fiscal Year 1996 Deemed Acceptance
of Grant Limitations and Formula.--The submission of a plan by a State
under section 402(a) of the Social Security Act (as in effect pursuant
to the amendment made by subsection (a) of this section) for fiscal
year 1996 is deemed to constitute the State's acceptance of the grant
limitations under section 403(a)(1)(A)(i) of such Act (as so in effect)
for fiscal year 1996 (including the formula for computing the amount of
the grant).
(3) Strike section 403(a)(1)(A) of the Social Security Act,
as proposed to be added by section 101, and insert the
following:
``(A) In general.--Each eligible State shall be
entitled to receive from the Secretary--
``(i) for fiscal year 1996, a grant in an
amount equal to--
``(I) the State family assistance
grant for fiscal year 1996; minus
``(II) the total amount of
obligations to the State under part A
of this title (as in effect before the
effective date of this part) for fiscal
year 1996, other than with respect to
amounts expended for child care
pursuant to subsection (g) or (i) of
section 402 of this title (as so in
effect); and
``(ii) for each of fiscal years 1997, 1998,
1999, and 2000, a grant in an amount equal to
the State family assistance grant for the
fiscal year.
(4) In section 201, insert
``(a) In General.--'' before ``Part B of title IV of the Social
Security Act''.
(5) At the end of section 201, add the following:
(b) Submission of State Plan for Fiscal Year 1996 Deemed Acceptance
of Grant Limitations and Formula.--The submission of a plan by a State
under section 422(a) of the Social Security Act (as in effect pursuant
to the amendment made by subsection (a) of this section) for fiscal
year 1996 is deemed to constitute the State's acceptance of the grant
limitations under section 423(a)(1)(A) of such Act (as so in effect)
for fiscal year 1996 (including the formula for computing the amount of
the grant).
(6) Strike section 423(a)(1) of the Social Security Act, as
proposed to be added by section 201, and insert the following:
``(1) In general.--Each eligible State shall be entitled to
receive from the Secretary--
``(A) for fiscal year 1996, a grant in an amount
equal to--
``(i) the State share of the child
protection amount for fiscal year 1996; minus
``(ii) the total amount of obligations to
the State under parts B and E of this title (as
in effect before the effective date of this
part) for fiscal year 1996; and
``(B) for each subsequent fiscal year specified in
subsection (b)(1), a grant in an amount equal to the
State share of the child protection amount for the
fiscal year.
(7) Strike section 301(b) and insert the following:
(b) Authorization of Appropriations.--Section 658B of the Child
Care and Development Block Grant Act of 1990 (42 U.S.C. 9858B) is
amended to read as follows:
``SEC. 658B. AUTHORIZATION OF APPROPRIATIONS.
``There are authorized to be appropriated to carry out this
subchapter $1,804,000,000 for fiscal year 1996 and $2,093,000,000 for
each of the fiscal years 1997, 1998, 1999, 2000, 2001, and 2002.''.
(8) In the matter preceding paragraph (1) of section 3 of
the Child Nutrition Act of 1966, as proposed to be amended by
section 321, strike ``The Secretary'' and insert ``(a) In
General.--The Secretary''.
(9) At the end of section 3 of the Child Nutrition Act of
1966, as proposed to be amended by section 321, add the
following:
``(b) Additional Requirements.--
``(1) Restriction on allotments.--
``(A) Computation.--The Secretary shall provide for
the computation of State obligation allotments in
accordance with this section for each of the fiscal
years 1996 through 2000.
``(B) Limitation on obligations.--The Secretary
shall not enter into obligations with any State under
this Act for a fiscal year in excess of the obligation
allotment for that State for the fiscal year, as
determined under subsection (a). The sum of such
obligation allotments for all States in any fiscal year
shall not exceed the amount appropriated to carry out
this Act for that fiscal year.
``(2) Agreement.--The submission of an application by a
State under section 4 is deemed to constitute the State's
acceptance of the obligation allotment limitations under this
section (including the formula for computing the amount of such
obligation allotment).
(10) In the matter preceding paragraph (1) of section 3 of
the National School Lunch Act, as proposed to be amended by
section 341, strike ``The Secretary'' and insert ``(a) In
General.--The Secretary''.
(11) At the end of section 3 of the National School Lunch
Act, as proposed to be amended by section 341, add the
following:
``(b) Additional Requirements.--
``(1) Restriction on allotments.--
``(A) Computation.--The Secretary shall provide for
the computation of State obligation allotments in
accordance with this section for each of the fiscal
years 1996 through 2000.
``(B) Limitation on obligations.--
``(i) In general.--Subject to clause (ii),
the Secretary shall not enter into obligations
with any State under this Act for a fiscal year
in excess of the obligation allotment for that
State for the fiscal year, as determined under
subsection (a). The sum of such obligation
allotments for all States in any fiscal year
shall not exceed the school-based nutrition
amount for that fiscal year.
``(ii) Reduction for post-enactment new
obligations in fiscal year 1996.--
``(I) In general.--The amount of
the obligation allotment otherwise
provided under this section for fiscal
year 1996 for a State under this Act
(as in effect on and after the date of
the enactment of the Personal
Responsibility Act of 1995) shall be
reduced by the amount of the
obligations described in subclause (II)
that are entered into under this Act or
under the Child Nutrition Act of 1966
on or after October 1, 1995, but prior
to the date of the enactment of the
Personal Responsibility Act of 1995.
``(II) Amount of obligations
described.--(aa) Except as provided in
division (bb), the amount of the
obligations described in this subclause
are 100 percent of the amount of the
obligations entered into under this Act
and under the Child Nutrition Act of
1966 (except obligations entered into
under section 17 of such Act).
``(bb) For purposes of obligations
entered into under the summer food
service program for children under
section 13 of this Act, the child and
adult care food program under section
17 of this Act, and the special milk
program under section 3 of the Child
Nutrition Act of 1966, the amount of
the obligations described in this
subclause are 12.5 percent of the
amount the obligations entered into
under each such program.
``(2) Agreement.--The submission of an application by a
State under section 4 is deemed to constitute the State's
acceptance of the obligation allotment limitations under this
section (including the formula for computing the amount of such
obligation allotment).
``(3) Termination of programs; limitation on new obligation
authority.--
``(A) Elimination of individual entitlement.--
Effective on the date of the enactment of the Personal
Responsibility Act of 1995--
``(i) except as provided in subparagraph
(B), the Federal Government has no obligation
to provide payment with respect to items and
services provided under this Act (as in effect
on and after the date of the enactment of the
Personal Responsibility Act of 1995); and
``(ii) this Act (as in effect on and after
the date of the enactment of the Personal
Responsibility Act of 1995) shall not be
construed as providing for an entitlement,
under Federal law in relation to the Federal
Government, in an individual or person at the
time of provision or receipt of services.
``(B) Limitation on obligation authority.--
Notwithstanding any other provision of this Act, the
Secretary is authorized to enter into obligations with
any State under this Act for expenses incurred after
the date of the enactment of the Personal
Responsibility Act and during fiscal year 1996, but not
in excess of the obligation allotment for that State
for fiscal year 1996, as determined under subsection
(a).
TITLE XIX--CONTRACT WITH AMERICA-TAX RELIEF
SEC. 19001. ENACTMENT OF CONTRACT WITH AMERICA TAX RELIEF ACT OF 1995.
(a) In General.--Title VI of H.R. 1215 of the 104th Congress, as
passed by the House of Representatives, is hereby enacted with the
following modifications to such title:
(1) Strike subtitle E (relating to social security earnings
test) and redesignate subtitles F and G as subtitles E and F,
respectively.
(2) Strike subsections (c)(2) and (d)(2) of section 6201.
(3) Strike the amendment contained in paragraph (2) of
section 6301(d) and insert the following: ``Subsection (h) of
section 1 is amended by adding at the end the following new
sentence: `For purposes of this subsection, taxable income
shall be computed without regard to the deduction allowed by
section 1202.'''
(4) Strike section 6321 (relating to depreciation
adjustment for certain property placed in service after
December 31, 1994).
(5) Strike part III of subtitle C (relating to alternative
minimum tax relief).
(6) Strike subtitle F (as redesignated by paragraph (1))
and insert the following:
``Subtitle F--Tax Reduction Contingent on Deficit Reduction
``SEC. 6701. TAX REDUCTION CONTINGENT ON DEFICIT REDUCTION.
``This title, which is contained within the Act that--
``(1) carries out the concurrent resolution on the budget
for fiscal year 1996 that provides that the budget of the
United States will be in balance by fiscal year 2002; and
``(2) achieves a level of deficit reduction pursuant to the
reconciliation instructions of that concurrent resolution that
will result in a budget of the United States that will be in
balance by fiscal year 2002; and
``(B) is certified pursuant to the requirements set forth
in section 210 of that concurrent resolution,
shall take effect as so provided by its effective date provisions.
``SEC. 6702. MONITORING.
``The Committees on the Budget of the House of Representatives and
the Senate shall each monitor progress on achieving a balanced budget
consistent with the most recently agreed to concurrent resolution on
the budget for fiscal year 1996 or any subsequent fiscal year (and the
reconciliation Act for that resolution) or the most recently agreed to
concurrent resolution on the budget that would achieve a balanced
budget by fiscal year 2002 (and the reconciliation Act for that
resolution). After consultation with the Director of the Congressional
Budget Office, each such committee shall submit a report of its
findings to its House and the President on or before December 15, 1995,
and annually thereafter. Each such report shall contain the following:
``(1) Estimates of the deficit levels (based on legislation
enacted through the date of the report) for each fiscal year
through fiscal year 2002.
``(2) An analysis of the variance (if any) between those
estimated deficit levels and the levels set forth in the
concurrent resolution on the budget for fiscal year 1996 or the
most recently agreed to concurrent resolution on the budget
that would achieve a balanced budget by fiscal year 2002.
``(3) Policy options to achieve the additional levels of
deficit reduction necessary to balance the budget of the United
States by fiscal year 2002.
``SEC. 6703. CONGRESSIONAL ACTION.
``Each House of Congress shall incorporate the policy options
included in the report of its Committee on the Budget under section
6702(a)(3) (or other policy options) in developing a concurrent
resolution on the budget for any fiscal year that achieves the
additional levels of deficit reduction necessary to balance the budget
of the United States by fiscal year 2002.
``SEC. 6704. PRESIDENTIAL ACTION.
``If the President submits a budget under section 1105(a) of title
31, United States Code, that does not provide for a balanced budget for
the United States by fiscal year 2002, then the President shall include
with that submission a complete budget that balances the budget by that
fiscal year.''
(7) Conform the table of contents accordingly.
(b) Technical Correction.--Effective with respect to taxable years
ending after December 31, 1994, paragraph (1) of section 1201(b) of the
Internal Revenue Code of 1986, as added by such title VI, is amended to
read as follows:
``(1) In general.--In the case of any taxable year ending
after December 31, 1994, and beginning before January 1, 1996,
in applying subsection (a), net capital gain for such taxable
year shall not exceed such net capital gain determined by
taking into account only gain or loss properly taken into
account for the portion of the taxable year after December 31,
1994.''
SEC. 19002. COMPLIANCE WITH CONCURRENT RESOLUTION ON THE BUDGET.
(a) In General.--For purposes of the Internal Revenue Code of 1986,
the taxpayer's net modified chapter 1 liability for any taxable year
shall be such liability determined without regard to this section--
(1) increased by 27 percent of the excess (if any) of--
(A) the amount which would be the taxpayer's net
modified chapter 1 liability for such year if such
liability were determined without regard to the
amendments made by subtitles A, B, C, and D of title VI
of H.R. 1215 of the 104th Congress, as passed by the
House of Representatives, over
(B) the taxpayer's net modified chapter 1 liability
for such year determined without regard to this
section, or
(2) reduced by 27 percent of the excess (if any) of the
amount described in paragraph (1)(B) over the liability
described in paragraph (1)(A).
(b) Net Modified Chapter 1 Liability.--For purposes of subsection
(a), the term ``net modified chapter 1 liability'' means the liability
for tax under chapter 1 of the Internal Revenue Code of 1986
determined--
(1) without regard to sections 1201 and 1202 of such Code,
as amended by such title VI,
(2) without regard to the amendments made by sections 6103
and 6104 of such title VI,
(3) after the application of any credit against such tax
other than the credits under sections 31, 33, and 34 of such
Code, and
(4) before crediting any payment of estimated tax for the
taxable year.
(c) Capital Gains.--
(1) Capital gains deduction for taxpayers other than
corporations.--For purposes of applying section 1202 of the
Internal Revenue Code of 1986, as added by such title VI--
(A) in the case of taxable years ending before
January 1, 1996, ``42.5 percent'' shall be substituted
for ``50 percent'' in subsection (a) thereof, and
(B) in the case of taxable years ending after
December 31, 1995, ``34.5 percent'' shall be
substituted for ``50 percent'' in subsection (a)
thereof.
(2) Alternative capital gains tax for corporations.--
(A) For purposes of applying section 1201 of such
Code, as amended by such title VI--
(i) in the case of taxable years ending
before January 1, 1996, ``26.5 percent'' shall
be substituted for ``25 percent'' in subsection
(a)(2) thereof, and
(ii) in the case of taxable years ending
after December 31, 1995, ``31.9 percent'' shall
be substituted for ``25 percent'' in subsection
(a)(2) thereof.
(B) For purposes of applying section
852(b)(3)(D)(iii) of such Code, as amended by such
title VI--
(i) in the case of taxable years ending
before January 1, 1996, ``73.5 percent'' shall
be substituted for ``75 percent'' in subsection
(a)(2) thereof, and
(ii) in the case of taxable years ending
after December 31, 1995, ``68.1 percent'' shall
be substituted for ``75 percent'' in subsection
(a)(2) thereof.
(3) Indexing.--For purposes of applying section 1022 of
such Code, as added by such title VI, only 69 percent of the
applicable inflation adjustment under subsection (c)(2) of such
section 1022 shall be taken into account.
(4) Conforming changes.--Proper adjustments shall be made
to the percentages and fractions in the following provisions to
reflect the percentages in paragraphs (1) and (2):
(A) Sections 170(c), 1445(e), and 7518(g)(6)(A) of
such Code.
(B) Section 607(h)(6)(A) of the Merchant Marine
Act, 1936.
(d) American Dream Savings Accounts.--For purposes of applying
section 408A of such Code, as added by such title VI--
(1) only 69 percent of the income on the assets held in an
American Dream Savings Account (which would otherwise be
includible in gross income) shall be excludible from gross
income,
(2) only 69 percent of any distribution attributable to
amounts not previously included in gross income shall be
entitled to the treatment described in subsection (d)(1) of
such section 408A, and
(3) only 69 percent of any payment or distribution referred
to in subsection (d)(3)(B) of such section 408A shall be
entitled to the treatment described in such subsection.
(e) Spousal Individual Retirement Accounts.--For purposes of
applying sections 219 and 408 of such Code--
(1) only 69 percent of the contributions to an individual
retirement plan which are allowable as a deduction solely by
reason of the amendments made by section 6104 of such title VI
shall be allowed as a deduction, and
(2) only 69 percent of the income on the assets held in an
individual retirement plan which are attributable to
contributions permitted solely by reason of the amendments made
by section 6104 of such title VI (which would otherwise be
includible in gross income) shall be excludible from gross
income.
(f) Alternative Minimum Tax.--
(1) In general.--In the case of taxable years beginning
after December 31, 1994--
(A) in the case of a taxpayer other than a
corporation, the tax imposed by section 55 of such Code
shall be determined without regard to paragraph (1) of
section 56(a) of such Code, and
(B) in the case of a corporation, the tentative
minimum tax under section 55 of such Code shall be
zero.
(2) Delay in benefit of repeal for taxable years 1995 and
1996.--
(A) In general.--Paragraph (1) shall not apply to
any taxable year beginning before January 1, 1997, but
there shall be allowed as a credit against the tax
imposed by subtitle A of such Code for each taxable
year referred to in subparagraph (C) an amount equal to
the credit determined under subparagraph (B).
(B) Amount of credit.--The credit determined under
this subparagraph for any taxable year to which this
paragraph applies is an amount equal to \1/3\ of the
excess (if any) of--
(i) the aggregate tax paid under section 55
of such Code for taxable years beginning after
December 31, 1994, and before January 1, 1997,
over
(ii) the amount of tax which would have
been imposed by such section 55 for such
taxable years had paragraph (1) applied to such
taxable years.
(C) Years credit allowed.--The taxable years
referred to in this subparagraph are the first 3
taxable years of the taxpayer beginning after December
31, 1996.
(D) Coordination with other provisions.--For
purposes of the Internal Revenue Code of 1986, the
credit allowed under paragraph (1) shall be treated as
a credit allowed under subpart C of part IV of
subchapter A of chapter 1 of such Code and as referred
to in paragraph (2) of 1324(b) of title 31, United
States Code, immediately before the period at the end
thereof.
(g) Comparable Treatment for Estate and Gift Tax Changes.--A rule
similar to the rule of subsection (a) shall apply to any reduction in
liability for tax under subtitle B of such Code by reason of the
amendments made by section 6351 of such title VI.
TITLE XX--BUDGET ENFORCEMENT
SEC. 20001. SHORT TITLE; PURPOSE.
(a) Short Title.--This title may be cited as the ``Seven-Year
Balanced Budget Enforcement Act of 1995''.
(b) Purpose.--This title extends and reduces the discretionary
spending limits and extends the pay-as-you-go requirements.
SEC. 20002. DISCRETIONARY SPENDING LIMITS.
(a) Limits.--Section 601(a)(2) of the Congressional Budget Act of
1974 is amended by striking subparagraphs (A), (B), (C), (D), and (F),
by redesignating subparagraph (E) as subparagraph (A) and by striking
``and'' at the end of that subparagraph, and by inserting after
subparagraph (A) the following new subparagraphs:
``(B) with respect to fiscal year 1996, for the
discretionary category: $485,074,000,000 in new budget
authority and $531,768,000,000 in outlays;
``(C) with respect to fiscal year 1997, for the
discretionary category: $482,430,000,000 in new budget
authority and $520,295,000,000 in outlays;
``(D) with respect to fiscal year 1998, for the
discretionary category: $490,692,000,000 in new budget
authority and $512,632,000,000 in outlays;
``(E) with respect to fiscal year 1999, for the
discretionary category: $482,207,000,000 in new budget
authority and $510,482,000,000 in outlays;
``(F) with respect to fiscal year 2000, for the
discretionary category: $489,379,000,000 in new budget
authority and $514,234,000,000 in outlays;
``(G) with respect to fiscal year 2001, for the
discretionary category: $496,601,000,000 in new budget
authority and $516,403,000,000 in outlays; and
``(H) with respect to fiscal year 2002, for the
discretionary category: $498,837,000,000 in new budget
authority and $515,075,000,000 in outlays;''.
(b) Committee Allocations and Enforcement.--Section 602 of the
Congressional Budget Act of 1974 is amended--
(1) in subsection (c), by striking ``1995'' and inserting
``2002'' and by striking the last sentence; and
(2) in subsection (d), by striking ``1992 to 1995'' in the
side heading and inserting ``1996 to 2002'' and by striking
``1992 through 1995'' and inserting ``1996 through 2002''.
(c) Term of Budget Resolutions.--Section 606 of the Congressional
Budget Act of 1974 is amended--
(1) in its section heading by striking ``5-year'' and
inserting ``term of'';
(2) in the sideheading of subsection (a), by striking ``5-
Year'' and inserting ``Term of'';
(3) in subsection (a), by striking ``1992, 1993, 1994, or
1995'' and inserting ``1996 or any fiscal year thereafter
through 2002'' and by inserting ``at least'' before ``each'';
and
(4) in subsection (d)(1), by striking ``1992, 1993, 1994,
and 1995'' and inserting ``1996 or any fiscal year thereafter
through 2002'', and by striking ``(i) and (ii)''.
(d) Effective Date.--Section 607 of the Congressional Budget Act of
1974 is amended by striking ``1991 to 1998'' and inserting ``1996 to
2002''.
(e) Sequestration Regarding Violent Crime Reduction Trust Fund.--
(1) Section 251A(b)(1) of the Balanced Budget and Emergency Deficit
Control Act of 1985 is amended by striking subparagraphs (B), (C), and
(D) and its last sentence and inserting the following:
``(B) For fiscal year 1996, $2,227,000,000.
``(C) For fiscal year 1997, $3,846,000,000.
``(D) For fiscal year 1998, $4,901,000,000.
``(E) For fiscal year 1999, $5,639,000,000.
``(F) For fiscal year 2000, $6,225,000,000.''.
(2) Section 310002 of the Violent Crime Control and Law Enforcement
Act of 1994 (42 U.S.C. 14212) is repealed.
(f) Conforming Amendment.--The item relating to section 606 in the
table of contents set forth in section 1(b) of the Congressional Budget
and Impoundment Control Act of 1974 is amended by striking ``5-year''
and inserting ``Term of''.
SEC. 20003. GENERAL STATEMENT AND DEFINITIONS.
(a) General Statement.--Section 250(b) of the Balanced Budget and
Emergency Deficit Control Act of 1985 is amended by striking the first
two sentences and inserting the following: ``This part provides for the
enforcement of deficit reduction by reducing and extending the
discretionary spending limits though fiscal year 2002 and permanently
extending pay-as-you-go requirements.''.
(b) Definitions.--Section 250(c) of the Balanced Budget and
Emergency Deficit Control Act of 1985 is amended--
(1) by striking paragraph (4) and inserting the following:
``(4) The term `category' means:
``(A) For fiscal years 1996 through 2000, all
discretionary appropriations except those subject to
section 251A; and
``(B) For fiscal year 2001 and any subsequent
fiscal year, all discretionary appropriations.'';
(2) by striking paragraph (6) and inserting the following:
``(6) The term `budgetary resources' means new budget
authority, unobligated balances, direct spending authority, and
obligation limitations.'';
(3) in paragraph (9), by striking ``1992'' and inserting
``1996''; and
(4) in paragraph (14), by striking ``through fiscal year
1995''.
SEC. 20004. ENFORCING DISCRETIONARY SPENDING LIMITS.
Section 251 of the Balanced Budget and Emergency Deficit Control
Act of 1985 is amended--
(1) in the side heading of subsection (a), by striking
``1991-1998'' and inserting ``1996-2002'';
(2) in the first sentence of subsection (b)(1), by striking
``1992, 1993, 1994, 1995, 1996, 1997 or 1998'' and inserting
``1997 or any fiscal year thereafter through 2002'' and by
striking ``through 1998'' and inserting ``through 2002'';
(3) in subsection (b)(1), by striking ``the following:''
and all that follows through ``The adjustments'' and inserting
``the following: the adjustments'' and by striking
subparagraphs (B) and (C);
(4) in subsection (b)(2), by striking ``1991, 1992, 1993,
1994, 1995, 1996, 1997, or 1998'' and inserting ``1996 or any
fiscal year thereafter through 2002'' and by striking ``through
1998'' and inserting ``through 2002'';
(5) in subsection (b)(2)(E), by striking clauses (i), (ii),
and (iii) and by striking ``(iv) if, for fiscal years 1994,
1995, 1996, 1997, and 1998'' and inserting ``If, for fiscal
years 1996 through 2002''; and
(6) in subsection (b)(2)(F), by striking everything after
``the adjustment in outlays'' and inserting ``for a category
for a fiscal year is the amount of the excess but not to exceed
0.5 percent of the adjusted discretionary spending limit on
outlays for that fiscal year in fiscal year 1996 or any fiscal
year thereafter through 2002.''.
SEC. 20005. ENFORCING PAY-AS-YOU-GO.
(a) Extension.--(1) Section 252 of the Balanced Budget and
Emergency Deficit Control Act of 1985 is amended--
(A) in the side heading of subsection (a), by striking
``Fiscal Years 1992-1998''; and
(B) in subsection (e), by striking ``, for any fiscal year
from 1991 through 1998,'' and by striking ``through 1995''.
(b) Rolling Pay-As-You-Go Scorecard.--Section 252(d) of the
Balanced Budget and Emergency Deficit Control Act of 1985 is amended by
striking ``each fiscal year through fiscal year 1998'' each place it
appears and inserting ``the current year (if applicable), the budget
year, and each of the first 4 outyears''.
SEC. 20006. REPORTS AND ORDERS.
Section 254 of the Balanced Budget and Emergency Deficit Control
Act of 1985 is amended--
(1) in subsection (d)(2), by striking ``1998'' and
inserting ``2002''; and
(2)(A) in subsection (g)(2)(A), by striking
``1998'' and inserting ``2002''; and
(B) in subsection (g)(3), by striking ``in each outyear
through 1998'' and inserting ``in each of the 4 ensuing
outyears''.
SEC. 20007. TECHNICAL CORRECTION.
Section 258 of the Balanced Budget and Emergency Deficit Control
Act of 1985, entitled ``Modification of Presidential Order'', is
repealed.
SEC. 20008. SPECIAL RULE ON INTERRELATIONSHIP BETWEEN CHANGES IN
DISCRETIONARY SPENDING LIMITS AND PAY-AS-YOU-GO
REQUIREMENTS.
(a)(1) Section 252 of the Balanced Budget and Emergency Deficit
Control Act of 1985 is amended by adding at the end the following new
subsection:
``(f) Special Rule on Interrelationship Between Sections 251, 251A,
and 252.--Whenever legislation is enacted during the 104th Congress
that decreases the discretionary spending limits for budget authority
and outlays for a fiscal year under section 601(a)(2) of the
Congressional Budget Act of 1974 or in section 251A(b) of the Balanced
Budget and Emergency Deficit Control Act of 1985, or both, then, for
purposes of subsection (b), an amount equal to that decrease in the
discretionary spending limit for outlays shall be treated as direct
spending legislation decreasing the deficit for that fiscal year.''.
(2) Section 310(a) of the Congressional Budget Act of 1974 is
amended by striking ``or'' at the end of paragraph (3), by
redesignating paragraph (4) as paragraph (5) and by striking ``and
(3)'' in such redesignated paragraph (5) and inserting ``(3), and
(4)'', and by inserting after paragraph (3) the following new
paragraph:
``(4) carry out section 252(f) of the Balanced Budget and
Emergency Deficit Control Act of 1985; or''.
(b) For purposes of section 252(f) of the Balanced Budget and
Emergency Deficit Control Act of 1985 (as amended by subsection
(a)(1))--
(1) reductions in the discretionary spending limit for
outlays under section 601(a)(2) of the Congressional Budget Act
of 1974 for each of fiscal years 1999 through 2002 under
section 20002 shall be measured as reductions from the
discretionary spending limit for outlays for fiscal year 1998
as in effect immediately before the enactment of this Act; and
(2) reductions in the discretionary spending limit for
outlays under section 251A(b) of the Balanced Budget and
Emergency Deficit Control Act of 1985 for each of fiscal years
1996 through 2000 under section 20002 shall be measured as
reductions in outlays for that fiscal year under section
251A(b) as in effect immediately before the enactment of this
Act.
SEC. 20009. MEDICARE SAVINGS CANNOT BE USED TO PAY FOR TAX CUTS.
Any net savings in direct spending and receipts in the Medicare
program for any fiscal year resulting from the enactment of this Act or
H.R. 2425 (as applicable) shall not be counted for purposes of section
252 of the Balanced Budget and Emergency Deficit Control Act of 1985.
SEC. 20010. EFFECTIVE DATE.
(a) Expiration.--Section 275(b) of the Balanced Budget and
Emergency Deficit Control Act of 1985 is amended--
(1) by striking ``Part C of this title, section'' and
inserting ``Sections 251, 253, 258B, and''; and
(2) by striking ``1995'' and inserting ``2002''.
(b) Expiration.--Section 14002(c)(3) of the Omnibus Budget
Reconciliation Act of 1993 (2 U.S.C. 900 note) is repealed.
SEC. 20011. APPLICATION OF SECTION 251 ADJUSTMENTS.
Section 251(b)(2) of the Balanced Budget and Emergency Deficit
Control Act of 1985 is amended by adding at the end the following new
subparagraph:
``(H) Special allowance for welfare reform.--If, for any
fiscal year, appropriations are enacted for accounts specified
in clauses (i) and (ii), the adjustment shall be the sum of:
``(i) the excess of the appropriation for the
fiscal year for the Child Care and Development Block
Grant over $1,082,000,000, but not to exceed
$722,000,000 in fiscal year 1996 or $1,011,000,000 in
fiscal year 1997 through 2002; and
``(ii) the excess of the appropriation for the
fiscal year for the Family Nutrition Block Grant
Program over $3,470,000,000, but not to exceed
$692,000,000 in fiscal year 1996, $1,307,000,000 in
fiscal year 1997, $1,466,000,000 in fiscal year 1998,
$1,650,000,000 in fiscal year 1999, $1,838,000,000 in
fiscal year 2000, $2,075,000,000 in fiscal year 2001,
or $2,324,000,000 in fiscal year 2002;
and the outlays flowing in all years from such excess
appropriations (as reduced pursuant to the limitations in
clauses (i) and (ii).''.
SEC. 20012. SPECIAL RULES APPLICABLE TO DEPARTMENT OF DEFENSE
SEQUESTRATION.
Section 255 of the Balanced Budget and Emergency Deficit Control
Act of 1985 is amended by striking subsection (h) (relating to optional
exemption of military personnel) and adding at the end the following
new subsection:
``(j) Optional Exemption for Military Personnel.--
``(1) Authority for exemption.--The President may, with
respect to any military personnel account, exempt that account
from sequestration or provide for a lower uniform percentage
reduction than would otherwise apply.
``(B) The President may not use the authority
provided by subparagraph (A) unless he notifies the
Congress of the manner in which such authority will be
exercised on or before the initial snapshot date for
the budget year.
``(2) Authority for Military Technicians and Medical
Personnel.--
``(A) Whenever the President exempts a military
personnel account from sequestration under paragraph
(1) and after all other sequestrations to Department of
Defense account have been made, the Secretary of
Defense may transfer amounts to any appropriation for
operation and maintenance for the current fiscal year
from amounts available under any other appropriation to
the Department of Defense, but--
``(i) amounts so transferred shall be
available only for the pay of military
technicians, the pay of medical personnel, and
other expenses of medical programs (including
CHAMPUS); and
``(ii) the total amount transferred to any
operations and maintenance appropriation shall
not exceed the amount sequestered from such
appropriation.
``(C) The authority to make transfers pursuant to
subparagraph (A) is in addition to any authority of the
Secretary of Defense to make transfers of appropriated
funds under any other provision of law.
``(D) The Secretary of Defense may carry out a
transfer of funds under subparagraph (A) only after
notifying the Committees on Appropriations of the
Senate and House of Representatives of the proposed
transfer and a period of 20 calendar days in session
has elapsed after such notice is received.''.
SEC. 20013. TREATMENT OF DIRECT STUDENT LOANS.
Section 504 of the Federal Credit Reform Act of 1990 is amended by
adding at the end the following new subsection:
``(h) Treatment of Direct Student Loans.--The cost of a direct loan
under the Federal direct student loan program shall be the net present
value, at the time when the direct loan is disbursed, of the following
cash flows for the estimated life of the loan:
``(1) Loan disbursements.
``(2) Repayments of principal.
``(3) Payments of interest and other payments by or to the
Government over the life of the loan after adjusting for
estimated defaults, prepayments, fees, penalties, and other
recoveries.
``(4) Direct expenses, including--
``(A) activities related to credit extension, loan
origination, loan servicing, management of contractors,
and payments to contractors, other government entities,
and program participants;
``(B) collection of delinquent loans; and
``(C) writeoff and closeout of loans.''.
SEC. 20014. DEFINITION OF PROGRAMS, PROJECTS, AND ACTIVITIES FOR
DEPARTMENT OF DEFENSE APPROPRIATIONS.
For purposes of the Balanced Budget and Emergency Deficit Control
Act of 1985, the term program, project, and activity for appropriations
contained in any Department of Defense appropriation Act shall be
defined as the most specific level of budget items identified in the
most recent Department of Defense appropriation Act, the accompanying
House and Senate Committee reports, the conference report and
accompanying joint explanatory statement of the managers of the
committee of conference, the related classified annexes and reports,
and the P-1 and R-1 budget justification documents as subsequently
modified by congressional action: Provided, That the following
exception to the above definition shall apply:
For the Military Personnel and the Operation and Maintenance
accounts, the term ``program, project, and activity'' is defined as the
appropriation accounts contained in the most recent Department of
Defense appropriation Act: Provided further, That at the time the
President submits his budget for any fiscal year, the Department of
Defense shall transmit to the Committees on Appropriations and the
Committees on Armed Services of the Senate and the House of
Representatives a budget justification document to be known as the ``O-
1'' which shall identify, at the budget activity, activity group, and
subactivity group level, the amounts requested by the President to be
appropriated to the Department of Defense for operation and maintenance
in any budget request, or amended budget request, for that fiscal year.
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