[Congressional Record Volume 140, Number 47 (Tuesday, April 26, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: April 26, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. BURNS:
S. 2044. A bill to provide that funds available to the Department of
Agriculture for the prescription of final regulations relating to
certain law enforcement activities of the Forest Service be utilized
instead for the improvement of trails on National Forest System lands
for the purpose of improving the access of individuals with
disabilities to such lands; to the Committee on Agriculture, Nutrition,
and Forestry.
forest service funds act of 1994
Mr. BURNS. Mr. President, I rise today to introduce legislation that
is meant to make a point. The bill I am introducing would direct the
U.S. Forest Service to redirect the money that is being currently spent
on a rule, and instead spend those moneys on trailbuilding for
handicapped access in our national forests.
Most of us going home over the holidays--and especially myself, from
Montana--found that we have a firestorm going on in our States about
some rules that have been submitted by the Forest Service.
Mr. President, I serve on the Interior Subcommittee of
Appropriations. I understand just how tight Federal dollars are.
That is why I am so upset by what the Forest Service now appears to
be up to. I am sure that most of my Senate colleagues are unaware of
the fact that the Forest Service has issued a proposed rule that would,
among other things, make it illegal to carry a gun in a national
forest, make it illegal to pick up and carry a pine cone out of a
national forest, make loud noises, or to curse in a national forest. It
would make the use of controlled substances a misdemeanor rather than
the felony that it now is, and it would authorize the payment up to
$500 to snitches for information leading to the convictions of
citizens--such as yourself--for any of the above crimes.
I think the rock hounds and the folks that use our national forests
are really up in arms about this proposed rule.
Mr. President, if this was not so scary, I would laugh. But it is no
laughing matter. The Forest Service is serious about this, and several
other proposed rules that they have issued. There are other efforts to
prevent citizens from cutting firewood. And I realize that some of this
problem was they had some stolen logs. But to set up a police force
with this much power and under these rules is really what I think is
irresponsible.
There is another one that would prevent citizens from cutting
firewood in lengths longer than 7 feet. I do not know why 7 feet,
because 8-foot logs can be used down at the local timber mill or a
house or for building timber. They do not want you sneaking in the back
way, cutting wood to keep the local timber workers working.
In my part of the country, we have also bears. As I say, if you are
going to be a bear, you might as well be a grizzly. And we have lots of
those. I was interested the other morning, on a television show, how a
man said the grizzly bear is, yes, on the endangered species list and
they are almost gone. Tell that to the people who live in northwest
Montana. There are a lot of them up there. And, of course, in bear
country, we have to be careful. We have all been careful since Lewis
and Clark first had one of these giants stand up and come toward them.
Now the Forest Service wants us to go one step further and carry heavy
bear-proof boxes with us when we go into the forest. These are heavy
boxes, and the Forest Service wants us to store them 10 feet up in a
tree and 4 feet out from the trunk. I cannot even reach a box that high
standing on the back of my own horse. And I am sure that a bear cannot,
either. But nonetheless, it is promulgating rules like this that is
absolutely getting out of hand in our national forests.
The point is: Whose forest is it, anyway? And in my view, these are
rules that are designed to keep the average citizen out of the national
forest. These are rules far more fitting for national parks than for
our forests. No loud noises? No firearms--including the right to use
air rifles or BB guns, starter pistols, or crossbows? What is going on
here?
As I said at the start, Federal dollars are tight. The Forest Service
ought not be using Federal dollars to even offer such a rule and I
propose that these dollars be redirected toward a useful purpose, one
that the Forest Service claims never to have enough money for--
constructing handicapped access to our National Forest trails.
Mr. President, I encourage my colleagues to join me in introducing
this legislation.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 2044
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. AVAILABILITY OF FUNDS FOR IMPROVEMENT OF TRAILS.
(a) In General.--Notwithstanding any other provision of
law, all funds appropriated for or otherwise available to the
Department of Agriculture for the purpose of prescribing the
regulations referred to in subsection (b) shall be utilized
by the Secretary of Agriculture, in lieu of such purpose, for
the purpose of improving trails on lands of the National
Forest System in order to improve the access of individuals
with disabilities to such lands.
(b) Covered Regulations.--The regulations referred to in
subsection (a) are the final regulations on law enforcement
activities of the National Forest Service on National Forest
System lands the proposed rules for which were published by
the Director of the National Forest Service in the Federal
Register on February 16, 1994 (59 Fed. Reg. 7880).
______
By Mr. PELL (by request):
S. 2045. A bill to amend the Bretton Woods Agreements Act to
authorize consent to and authorize appropriations for the U.S.
contribution to the Global Environment Facility, and for other
purposes; to the Committee on Foreign Relations.
global environment facility act of 1994
Mr. PELL. Mr. President, by request, I introduce for
appropriate reference a bill to amend the Bretton Woods Agreements Act
to authorize consent to and authorize appropriations for the U.S.
contribution to the Global Environment Facility, and for other
purposes.
This proposed legislation has been requested by the Department of the
Treasury, and I am introducing it in order that there may be a specific
bill to which Members of the Senate and the public may direct their
attention and comments.
I reserve my right to support or oppose this bill, as well as any
suggested amendments to it, when the matter is considered by the
Committee on Foreign Relations.
I ask unanimous consent that the bill be printed in the Record,
together with the letter from the general counsel of the Department of
the Treasury, which was received on April 14, 1994.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 2045
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, That the
Bretton Woods Agreements Act (22 U.S.C. 286 et seq.) is
amended by adding at the end the following new section:
``Sec. 62. (a) On behalf of the United States the United
States Governor of the Bank is authorized to contribute to
the Global Environment Facility $400,000,000, subject to
obtaining the necessary appropriations.
``(b) In order to pay for the United States contribution
provided for in subsection (a), there are authorized to be
appropriated without fiscal year limitation, $400,000,000 for
payment by the Secretary of the Treasury.''.
____
Department of the Treasury,
Washington, April 13, 1994.
Hon. Al Gore,
President of the Senate,
Washington, DC
Dear Mr. President: I am pleased to transmit herewith a
draft bill, ``To amend the Bretton Woods Agreements Act to
authorize consent to and authorize appropriations for the
United States contribution to the Global Environment
Facility, and for other purposes.''
This legislation is a critical component of United States
policy toward global environmental issues. The Global
Environmental Facility (GEF) provides funds to developing
countries, as well as to countries with economies in
transition, for projects that benefit the global environment
in the prevention of climate change, ozone depletion, loss of
biodiversity and pollution of international waters.
The Climate Change and Biodiversity Conventions have
accepted the GEF as the operating entity of their financial
mechanisms on an interim basis. As recently restructured, the
Conferences of the Parties to these conventions may accept
such role for the GEF on a more permanent basis.
The Administration recently reached an agreement with the
other GEF participants to restructure the GEF by finalizing
an instrument that we believe satisfies the Conventions'
criteria. The agreement was accepted by the representatives
of 73 countries, in close consultation with the World Bank,
the United Nations Development Programme and the United
Nations Environment Programme. The GEF will now be serviced
by a Secretariat that is functionally independent of the
World Bank. It will be directed by a Council of 32
governments, which will decide on the Facility's policies and
projects. For projects it finances, the GEF will fully
disclose all non-confidential information. Throughout the
project cycle, the GEF will consult with major groups and
local communities and arrange for their participation in
project identification, formulation and execution, as
appropriate.
In order to advance our international environmental
objectives, the Administration is seeking authorization for
the United States to contribute $400 million to the GEF, over
a four year period. Combined with an existing appropriation
of $30 million for FY 94, the U.S. will contribute just over
21 per cent of the total replenishment. Authority for the
$400 million contribution, of course, would also be subject
to obtaining the necessary appropriations. Enactment of the
proposed authorizing legislation will provide leverage to the
United States during GEF Council discussion on the policies,
programmatic strategies, and projects of the Facility.
Conversely, failure to enact the authorizing legislation
would severely undercut U.S. negotiating leverage at the GEF
Council.
It would be appreciated if you would lay the draft bill
before the Senate. An identical draft bill has been
transmitted to the Speaker of the House of Representatives.
The Office of Management and Budget has advised that there
is no objection to the transmittal of this draft bill to the
Congress, and that enactment would be in accord with the
President's program.
Sincerely,
Jean E. Hanson,
General Counsel.
______
By Mr. COCHRAN:
S. 2046. A bill to amend the Public Health Service Act to provide for
the establishment by the National Institutes of Health research centers
regarding movement disorders, and for other purposes; to the Committee
on Labor and Human Resources.
movement disorders research amendments of 1994
Mr. COCHRAN. Mr. President, today I am introducing a bill to
provide for the establishment of five movement disorders research
centers. The funding would come from the National Institute of
Neurological Disorders and Stroke within the National Institutes of
Health.
Rare disorders have traditionally been neglected by private sector
scientists while they focused their research on illnesses with larger
populations. My legislation will provide a means by which the National
Institute of Neurological Disorders and Stroke [NINDS] can extend its
intramural research into the private scientific community.
Movement disorders include debilitating diseases such as Parkinson's
disease, Huntington's disease, various forms of dystonia, progressive
supranuclear palsy [PSP], and 14 others. Many of the movement disorders
case extreme suffering, impoverished families, and shortened lives.
I encourage senators to join me in working for the establishment of
these movement disorders research centers legislation.
______
By Mr. CHAFEE:
S. 2047. A bill to amend title 38, United States Code, to provide
that receipt of additional disability compensation for dependents not
depend upon the waiver of receipt of an equal amount of retired or
retirement pay; to the Committee on Veterans' Affairs.
S. 2048. A bill to amend title 38, United States Code, to provide
that the reduction by waiver of retired pay due to receipt of
compensation or pension not apply to retired pay attributable to pay
for extraordinary heroism; to the Committee on Veterans' Affairs.
veterans legislation
Mr. CHAFEE. Mr. President, today I am introducing two measures
to address problems faced by disabled veterans who have earned military
retirement. These bills are the product of a number of discussions I
have had with my constituent, Mr. Harold Prew, of Pawtucket, RI, who
has worked tirelessly to ensure that our retired disabled veterans
receive the equitable treatment they deserve.
The first bill I am introducing deals with the matter of dependents'
allowances for disabled veterans. Under current law, a veteran who is
rated 30 percent or more disabled is entitled to a monthly allowance,
based on the number of his dependents, on top of his disability
compensation from the VA. However, it the veteran also has earned a
military pension from 20 years of service, he must reduce that pension
not only by the amount of his disability compensation, but by the
amount of his dependents' allowances as well. This legislation would
remove dependents' allowances from that equation.
The second measure addresses the little-known issue of
``extraordinary heroism pay.'' Right now, a career servicemember who
receives retirement pay can receive a 10-percent bonus in addition to
his pension if he is credited with extraordinary heroism in the line of
duty. Unfortunately, however, the combined total of retirement and
extraordinary heroism pay is subject to offset by any disability
compensation that the veteran receives from the VA. Thus, if the
servicemember's VA benefits exceed his total retired pay, he receives
zero extraordinary heroism pay. At the very least, I believe
extraordinary heroism pay should be exempt from offset by VA
compensation. This second measure will accomplish that objective.
Finally, Mr. President, I want to touch on the more general issue of
concurrent receipt of military retired pay and VA disability
compensation. I believe our current policy of prohibiting concurrent
receipt is terribly unfair, and look forward to supporting efforts on
the floor to change that policy. At this time, I ask unanimous consent
to enter into the Record two resolutions passed by the Rhode Island
House of Representatives and the Rhode Island Senate dealing with this
issue.
Again, Mr. president, I want to thank Mr. Prew for bringing these
matters to my attention and for helping me draft this legislation. I
strongly encourage my colleagues to join me in supporting these
measures.
There being no objection, the material was ordered to be printed in
the Record, as follows:
House Resolution
Whereas, Military retirees have earned military retirement
pay through reenlistment incentives and use of one's physical
capacity during prime youth years for a minimum of twenty
years; and
Whereas, The purpose of Veterans Administered Compensation
is to assist those who have completed ninety days or more of
active duty and have incurred service connected disabilities
during that time such as deformities, pains, wounds,
injuries, diseases, loss of earning power, or loss of limbs;
and
Whereas, Thirty percent or more rated disabilities include
an allowance for each dependent and a military retirement for
longevity has no dependent allowance; and
Whereas, Military retirees who are combat wounded and their
dependents are discriminated against by wavering the retirees
earned retirement pay on a dollar for dollar basis with
Veterans Compensation only to receive a tax break for the
Combat Wounded retiree and dependents; now, therefore, be it
Resolved, That this House of Representatives of the State
of Rhode Island and Providence Plantations hereby
memorializes the Congress of the United States to pass House
Bill 303 so that military retirees who are combat wounded can
receive earned retirement pay from the Armed Forces and also
receive Veterans Administered Compensation including
dependent allowances with no offset to military retirement
pay, and be it further
Resolved, That the secretary of state be and she hereby is
authorized and directed to transmit a duly certified copy of
this resolution to the Rhode Island delegation in the
Congress of the United States.
____
Senate Resolutions
Whereas, Military retirees have earned their military
pensions by remaining in the military, through reenlistment,
during a minimum of twenty years of the prime of their youth;
and
Whereas, if after ninety or more days of active duty, a
veteran incurs a service-related disability, such as
deformity, pain, wounds, injuries, disease, loss of earning
power, or loss of limb, Veterans' Administered Compensation
is meant to give them the special assistance they need; and
Whereas, Current Veterans' Administration policy is
penalizing the combat-wounded, POW's and their dependents by
forcing them to waive receiving a portion of their military
pension equivalent to the amount they receive from Veterans'
Administered Compensation in order to qualify for the tax
break accorded to combat-wounded retirees and POW's; and
Whereas, Veterans' Administered Compensation was meant to
provide special benefits for veterans whose impairments
render them 30% or more disabled. These benefits include the
cost of aid and attendance for some veterans who need it, and
an allowance for each of their dependents. In contrast, the
ordinary military retirement pension has no provision for
dependents' allowance; and
Whereas, The principle of recognizing and compensating
veterans who suffered injury or loss of capacity by providing
them more funds and services than the uninjured military
retiree has been seriously eroded. The current policy bodes
ill for injured veterans of the Persian Gulf as well; now,
therefore, be it
Resolved, That this Senate of the State of Rhode Island and
Providence Plantations hereby respectfully requests the
Congress of the United States to pass House Bills 303 and 304
and Senate Bill 190 so that military retirees who are combat-
wounded can receive the retirement pay they have earned as
well as the Veterans' Administered Benefits including
dependents' allowances, aid, and assistance, with no offset
in their military retirement pay; and be it further
Resolved, That the secretary of state be and she hereby is
authorized and directed to transmit a duly certified copy of
this resolution to the Rhode Island delegation in the
Congress of the United States.
______
By Mr. RIEGLE (for himself and Mr. Sarbanes):
S. 2049. A bill to reduce homelessness, reform public housing, expand
and preserve affordable housing and homeownership, ensure fair housing
for all, empower communities, and for other purposes; to the Committee
on Banking, Housing, and Urban Affairs.
The Housing Choice and Community Investment Act of 1994
Mr. RIEGLE. Mr. President, I am pleased to introduce by request the
Clinton administration's proposal to reauthorize our Nation's Federal
housing and community development programs. I commend Secretary
Cisneros for his leadership in developing strategies to address the
problems of our cities and reforming the management of the Department
of Housing and Urban Development. The needs of our Nation's cities are
great--rates of poverty, unemployment, crime, disinvestment, school
dropouts, teen pregnancy, and drug use are high and continue to rise. I
commend the administration for its strong commitment to our cities as
evidenced by its initiatives to promote empowerment zones and
enterprise communities, encourage pension fund investment in affordable
housing, build the capacity of grassroots community development
organizations through the national community development initiative,
and expedite the disposition of HUD-held and owned multifamily
property. Congress has acted on all these initiatives and we are
currently working on legislation to promote community development
financial institutions.
I look forward to working with the Housing Subcommittee and all
members of the committee to develop a housing reauthorization bill
which will command broad bipartisan support.
Mr. President, I ask unanimous consent that additional material be
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Department of Housing
and Urban Development,
Washington, DC, April 26, 1994.
Hon. Albert Gore, Jr.,
President of the U.S. Senate, Washington, DC.
Dear Mr. President: I am pleased to transmit to you the
``Housing Choice and Community Investment Act of 1994.'' For
the past several months, the department has been working with
the Office of Management and Budget, key Congressional
Committees and various housing and community development
groups on the preparation of this authorization bill.
This legislation would authorize $60 billion over the next
two fiscal years for HUD's housing and community development
programs. The legislation is focused on the five central
priorities governing HUD's community investment agenda:
reducing homelessness, turning around public housing,
expanding affordable housing, enhancing fair housing, and
empowering communities.
This legislation will transform the delivery of homeless
assistance programs by consolidating and reorganizing several
disparate programs into a single source of funding to support
local ``continuum of care'' systems to assist homeless
persons and prevent future homelessness.
The Act would set the foundation for a total remake of our
public housing program, ending public housing as we know it.
The bill would remove disincentives for public housing
residents to seek employment. It would reward entrepreneurial
public housing agencies through deregulation and the granting
of added powers to experiment and innovate. Anti-crime
efforts would be streamlined and linked to other law
enforcement efforts.
This bill also proposes to once again make HUD's Federal
Housing Administration (FHA) a positive force for enhancing
homeownership opportunities. The Act would raise the maximum
mortgage limits and give FHA the authority to innovate with
new homeownership products as well as enter into risk-sharing
arrangements with qualified governmental entities. Additional
subsidy tools and increased funding for counselling will also
help to foster homeownership opportunities.
HUD's fair housing efforts would be greatly enhanced under
this legislation, by advancing the goals of geographic
mobility, neighborhood equity, and residential diversity. The
bill would expand existing programs that enable HUD, with the
aid of non-profit groups and state and local governments, to
enforce our nation's fair housing laws.
Mr. President, the Act would also consolidate and revamp
HUD's Section 8 rental assistance programs, permit public
housing authorities including Indian housing authorities to
sell public and Indian housing to non-profit organizations to
facilitate homeownership opportunities to public housing
residents and create a new Choice in Residency program that
would give, for the first time, recipients of federal housing
aid the counselling they need to make informed choices about
where they should live.
The Housing Choice and Community Investment Act would also
support HUD's efforts to once again become a positive force
in the revitalization of our nation's communities. The
legislation would continue the strong support for the
Community Development Block Grant program, create a
Neighborhood LIFT program to develop neighborhoods' economic
infrastructures, create a Community Viability fund to build
the capacity of community-based groups, authorize additional
funds for the President's empowerment zone initiative, and
facilitate the use of Section 108 loan guarantees.
A section-by-section explanation and justification
accompanies this letter and more fully sets forth the
contents of the bill. I request that the bill be referred to
the appropriate committee and urge its early consideration.
The Housing Choice and Community Investment Act of 1994
would affect direct spending; therefore it is subject to the
pay-as-you-go requirement of the Omnibus Budget
Reconciliation Act of 1990. OMB's estimate is that the bill's
pay-as-you-go impact will be zero.
The Office of Management and Budget has advised that the
enactment of this legislation would be in accord with the
program of the President.
I am sending a similar letter to the Speaker of the House
of Representatives, Thomas S. Foley.
Sincerely,
Henry Cisneros,
Secretary.
____
Department of Housing
and Urban Development,
Washington, DC, April 26, 1994.
Hon. Thomas S. Foley,
The Speaker, U.S. House of Representatives, U.S. Capitol,
Washington, DC.
Dear Mr. Speaker: I am pleased to transmit to you the
``Housing Choice and Community Investment Act of 1994.'' For
the past several months, the department has been working with
the Office of Management and Budget, key Congressional
Committees and various housing and community development
groups on the preparation of this authorization bill.
This legislation would authorize $60 billion over the next
two fiscal years for HUD's housing and community development
programs. The legislation is focused on the five central
priorities governing HUD's community investment agenda:
reducing homelessness, turning around public housing,
expanding affordable housing, enhancing fair housing, and
empowering communities.
This legislation will transform the delivery of homeless
assistance programs by consolidating and reorganizing several
disparate programs into a single source of funding to support
local ``continuum of care'' systems to assist homeless
persons and prevent future homelessness.
The Act would set the foundation for a total remake of our
public housing program, ending public housing as we know it.
The bill would remove disincentives for public housing
residents to seek employment. It would reward entrepreneurial
public housing agencies through deregulation and the granting
of added powers to experiment and innovate. Anti-crime
efforts would be streamlined and linked to other law
enforcement efforts.
This bill also proposes to once again make HUD's Federal
Housing Administration (FHA) a positive force for enhancing
homeownership opportunities. The Act would raise the maximum
mortgage limits and give FHA the authority to innovate with
new homeownership products as well as enter into risk-sharing
arrangements with qualified governmental entities. Additional
subsidy tools and increased funding for counselling will also
help to foster homeownership opportunities.
HUD's fair housing efforts would be greatly enhanced under
this legislation, by advancing the goals of geographic
mobility, neighborhood equity, and residential diversity. The
bill would expand existing programs that enable HUD, with the
aid of nonprofit groups and state and local governments, to
enforce our nation's fair housing laws.
Mr. Speaker, the Act would also consolidate and revamp
HUD's Section 8 rental assistance programs, permit public
housing authorities including Indian housing authorities to
sell public and Indian housing to non-profit organizations to
facilitate homeownership opportunities to public housing
residents and create a new Choice in Residency program that
would give, for the first time, recipients of federal housing
aid the counselling they need to make informed choices about
where they should live.
The Housing Choice and Community Investment Act would also
support HUD's efforts to once again become a positive force
in the revitalization of our nation's communities. The
legislation would continue the strong support for the
Community Development Block Grant program, create a
Neighborhood LIFT program to develop neighborhoods' economic
infrastructures, create a Community Viability fund to build
the capacity of community-based groups, authorize additional
funds for the President's empowerment zone initiative, and
facilitate the use of Section 108 loan guarantees.
A section-by-section explanation and justification
accompanies this letter and more fully sets forth the
contents of the bill. I request that the bill be referred to
the appropriate committee and urge its early consideration.
The Housing Choice and Community Investment Act of 1994
would affect direct spending; therefore it is subject to the
pay-as-you-go requirement of the Omnibus Budget
Reconciliation Act of 1990. OMB's estimate is that the bill's
pay-as-you-go impact will be zero.
The Office of Management and Budget has advised that the
enactment of this legislation would be in accord with the
program of the President.
I am sending a similar letter to the President of the
United States Senate, Vice President Albert Gore, Jr.
Sincerely,
Henry Cisneros,
Secretary.
____
Department of Housing and Urban Development Explanation and
Justification For The Housing Choice and Community Investment Act of
1994
TITLE I--ASSISTANCE FOR THE HOMELESS
Subtitle A--Reorganization of the Stewart B. McKinney Homeless
Assistance Act
Overview
Continuum of Care--
Homelessness represents the most extreme breakdown of our
housing and social service systems. It afflicts a wide range
of populations, which can be broadly classified in two
categories: those who suffer from chronic disabilities and
those who suffer from crisis poverty. The best means of
dealing with both of these categories of homelessness is
through ongoing, rather than emergency, programs.
Accordingly, the Nation's efforts are best directed toward
reinvigorating the mainstream Federal housing and social
programs. This would greatly reduce the number of families
and individuals that become homeless and increasingly
minimize the need for an extensive Federal homeless
assistance program. Recent studies have shown that
homelessness persists despite the often heroic efforts of
thousands of selfless not-for-profit providers, advocates,
and others who have dedicated limitless hours and untold
energy over the past decade to helping those in need.
Unfortunately, their efforts have not received the level of
support they deserve from the Federal government. And, those
Federal funds that have been made available do not provide
localities and providers with the flexibility they need to
create a comprehensive system that truly addresses the many
dimensions of the problem in a coordinated fashion. As a
result, providers often have been compelled to design
programs to meet funding requirements rather than actual
community needs.
This proposal would reorganize the homeless housing
authorities in title IV of the Stewart B. McKinney Homeless
Assistance Act, to enable localities to shape a
comprehensize, flexible, coordinated system of homeless
assistance, called a ``continuum of care.'' This
comprehensive system for homeless care inspires cooperation,
encourages innovation, and demands coordinated action. It
also reflects the comments and insights of literally
thousands of not-for-profit providers and localities who
participated in 17 HUD-sponsored forums over the past year.
The continuum of care approach is predicated on the
understanding that homelessness is not caused merely by a
lack of shelter, but involves a variety of underlying, unmet
needs--physical, economic, and social. Dealing effectively
with the problems of homelessness requires a comprehensive
system of housing and necessary services for each stage--
from emergency shelter to permanent housing. The continuum
of care system and philosophy strives to fulfill those
requirements with three major components:
First, there must be an emergency shelter/assessment effort
which provides immediate shelter and can identify the needs
of an individual or family.
The second component offers transitional housing and
necessary social services. Such services include substance
abuse treatment, short-term mental health services, and
independent living skills.
The third and final component, and one which every homeless
individual and family needs, is permanent housing or
permanent supportive housing arrangements.
Components of Continuum of Care--
Outreach Intake Assessment,
Emergency Shelter,
Transitional Housing,
Permanent Housing,
Supportive Housing,
Mental Health, Job Training, Independent Living Skills,
Substance Abuse, Family Support, Education, and H.I.V.
While not all homeless individuals and families in a
community will need to access all three components, unless
all three components are coordinated within a community, none
will be successful. A strong homeless prevention strategy is
also key to the success of the continuum of care.
Moving to a Continuum of Care--
Since 1987, the programs and benefits authorized by the
United States Congress under the Stewart B. McKinney Homeless
Assistance Act have served as the foundation for Federal
homeless assistance to States, cities, and not-for-profit
providers. HUD administers more than 60% of the McKinney Act
funds through six grant programs--Supportive Housing (SHP),
Shelter Plus Care, Section 8 Moderate Rehabilitation for
Single Room Occupancy Dwellings (SRO), Emergency Shelter
Grants, Safe Havens, and the Rural Homelessness Assistance
Program--to address the various symptoms of homelessness.
These grant programs, as currently organized, require
providers of housing and services to apply to discrete
funding categories for particular needs. In order to receive
homeless assistance funding, providers must apply to the
Department for each separate McKinney program. Each
categorical program has its own appropriation, set of rules,
criteria and reporting requirements, which increase process
and paperwork and hamper project development and
implementation.
Providers consistently report that the competitive process
creates at least two major problems:
Because funds are limited and demand is high--the 1993 SHP
competition was only able to award 42 grants out of 1,400
requests--the application process wastes time and resources.
Time that could be more profitably spent on moving people to
permanent housing is currently wasted on navigating a maze of
individual programs.
The current competitive method results in funding decisions
made on individual applications irrespective of whether they
fit into a large coordinated plan. Therefore, there is a
virtual inability to use HUD funds to help establish a
comprehensive system in each locality or to rectify
imbalances in local delivery.
The current competitive grant structure also ignores a
fundamental truth: community-based efforts must be the focus
for addressing existing homelessness and preventing future
homelessness. The continuum of care provides for such a
framework, recognizing that needs of homeless individuals
and families in each community--and current resources and
systems to meet those needs--are as different and distinct
as the people who live within them. While the proposed
continuum of care approach can serve as the catalyst to
bring the essential components together (e.g. housing,
services, assessment facilities), only the community--
local government, not-for-profit providers and others,
each working together with their own unique expertise and
energy--can design a strategy that works best.
Four main principles serve as the foundation for this new
Federal approach to administering homeless assistance
programs:
The locality knows best--
The homeless population is diverse and its characteristics
are unique to a particular city or region. Therefore the
locality is best situated to determine homeless needs.
The sources of resources and collaborative relationships
vary depending on the locality. Existing relationships and
levels of commitment by the governments and not-for-profit
organizations vary in strength.
The level of development of services and housing is
different from area to area. Only the locality has a complete
picture of its existing inventory.
The locality can determine what ``gaps'' exist in the
current system, by assessing the homeless population and the
current inventory of housing and services designed to meet
needs of homeless persons.
Economic empowerment is the engine that drives
revitalization--if homeless individuals and families are
going to participate in the overall revitalization of a
community, then they must also be prepared to participate in
its economic activities--
The goal for every homeless person is self-sufficiency. The
continuum of care system must have appropriate job training,
childcare, and job placement services for those who need them
to move from homelessness to housing and independent living.
The goal for every homeless provider is to place people in
permanent situations, thereby allowing them to live
independently to the greatest extent possible.
The approach to homelessness must be comprehensive--
As human needs are interconnected, so must be the service
delivery system. Only through coordination can all elements
of an individual's needs be addressed.
There must be three systematic components: emergency,
transitional, and permanent--either all must work together or
all will fail.
The vertical, categorical structure of the current homeless
programs must be reorganized into a horizontal seamless
continuum. Policies and programs should be driven by the
comprehensive needs of the community, not by the caprice of
separate grant applications and funding cycles.
Empower the field--
Field office staff requires the flexibility and authority
to tailor the Federal response to the particular needs of
localities.
Placing trust in the experts in the ``field,'' such as
specialty service providers, is key to the success of the
continuum of care system. We should rely upon those with
experience and dedication to do what they do best.
Application of these principles leads to a policy
formulation which reorganizes the McKinney Act homeless
housing assistance programs from categorical, limited
approaches to a ``menu'' of resources which can be tailored
to the specific needs of each locality. For example, rather
than Washington targeting resources for the single adult and
family populations, for supportive services and permanent
housing, the resources would be flexible enough to fit the
specific needs of the locality's population and providers.
The McKinney reorganization would reorganize the myriad of
existing HUD programs into a single grant to States and
localities, with a funding authorization of $1.02 billion for
fiscal year 1995. This would give localities added
flexibility enabling them to fashion a comprehensive system
through a continuum of care which addresses the needs of
different homeless populations and which ensures that the
various elements of the system (emergency, transitional and
permanent housing with supportive services when necessary)
are in balance. At the same time, participation by not-for-
profit providers and others would be required, both in
developing and implementing the plan and program.
In order to enable communities to establish a coordinated
approach, local governments, urban counties, and States would
be eligible for a formula grant based on need. This would
replace the complexity and uncertainty of funding under
the existing method of providing funds through competitive
programs. Funds would be allocated among States,
metropolitan cities, urban counties, Indian tribes, and
Insular Areas using the allocation mechanism contained in
the Emergency Shelter Grants program (except that 75
percent of the funds after meeting the needs of Indian
tribes and Insular Areas) would be allocated to eligible
units of general local government, and 25 percent to
States). Future amounts would be allocated by any other
formula that may subsequently be enacted into law.
However, in the event that the annual appropriation for the
new program is less than 50 percent of the amount authorized
for any given year, the Secretary would make the funds
available to States, units of general local government,
Indian tribes, Insular Areas, and private non-profit
organizations on the basis of a competition. This is to
assure that the funds would not be too thinly spread among
the recipients, which could happen under a formula allocation
if the amounts appropriated were substantially lower than the
authorization levels proposed herein.
The application process for receipt of all or part of these
formula funds would be structured to insure community-based
development and maintenance of a continuum of care within
each community. In order to receive these formula funds, a
local jurisdiction or its designee would be required to
submit an application which would contain a homeless plan.
The applicant would be required to described in its
application the development of a comprehensive system that
includes, at a minimum, a system of outreach and assessment,
emergency shelter, transitional housing, permanent housing
and necessary services. The application must demonstrate
linkages between homeless assistance and resources provided
under other Federal, State, and local programs that may be
used to assist homeless individuals and families, including
programs administered by the Secretaries of Housing and Urban
Development, Veterans Affairs, Health and Human Services,
Education, and Labor, and the Corporation for National
Service. The end product of the homeless plan would include
an assessment of needs, priorities based upon that
assessment, a strategy for addressing these priorities, and
an annual plan and budget to direct resources in support of
the strategy. This homeless plan would be incorporated into
the new consolidated planning submission for CPD's formula
grant programs.
A local government would be permitted to designate a public
or not-for-profit agency or consortium of agencies to be an
applicant on its behalf. In the event that a community or its
designee failed to submit an acceptable application or
refused to apply for a grant, HUD could designate a public
agency or non-profit to do so, or could conduct the process
for determining the recipient(s) of the funds designated for
that community. This would insure that the dollars stay in
the community where they are needed and used in a manner
that supports establishment and maintenance of a continuum
of care to help homeless persons.
Partnerships among the locality, not-for-profits, and
others would be further enhanced through the requirement that
the application result from a broad-based planning effort.
Both formula and non-formula recipients would be requir5ed to
involve not-for-profit groups and other community members in
determining the plan, the strategy and the implementation of
the program.
This process, the application and the continuum of care
system, would be overseen by a community planning board which
would sign the locality's homeless assistance application.
The planning board would include members representing not-
for-profit organizations, homeless or formerly homeless
persons, local and state government representatives, business
sector representatives, and others. Under this concept, the
board would have a decisive role in all of the key elements
of the delivery system--including determining who is the
applicant; development of the plan; development of the
strategy for implementation; and reporting on performance.
In addition to the community-based planning, to ensure that
all voices are heard during the application process, each
locality and State must provide public notices that funds are
available. The public notices and meetings would include all
relevant information; for example, that the locality may
intend to designate other entities to act on its behalf after
consultation with all interested parties, particularly
homeless not-for-profit providers.
The plan should be geared toward the creation of a
continuum of care that takes into account the diverse needs
of the community's homeless individuals and families and that
taps into the expertise of local providers, advocates, and
others. All of the activities that are now eligible under the
existing HUD McKinney homeless programs would be eligible
under this new grant program. The Secretary would require
that any recipient of assistance use, to the maximum extent
practicable, existing providers and other interested
organizations in the community to develop the application and
the strategy for implementing a comprehensive system for
assisting the homeless. In addition, at least 51% of the
assistance made available to localities and the States would
be required to be available to eligible homeless not-for-
profit providers.
Under the current system, match requirements differ based
on the program and the specific activity. This variability in
match requirements skews activity choice away from need.
Under the reorganization, this variable match would be
replaced with a uniform required match of 25% of the amount
of the grant in either cash or in-kind contributions. Up to
25% of the required match could come from the proceeds
from bond financing validly issued by a State or local
government, agency, or instrumentality thereof, or
political subdivision thereof, and repayable with revenues
derived from a project assisted under the new program.
This would replace the current complex of match
requirements under existing programs, permitting the
locality and providers to focus on activities based on
needs rather than based on the level of match required. In
addition, recipients would be required to demonstrate and
certify that Federal assistance will not be substituted
for State and local resources currently provided for
homeless activities, thereby ensuring that the HUD grant
is used to move beyond maintenance of the current system
toward creation of a continuum of care.
Under the reorganization, States would be required to
establish a system for distributing funds in accordance with
the needs of small communities, consortia of communities, and
rural areas that intend to establish comprehensive homeless
assistance systems. However, where there may not be a
demonstrated need for the development of a comprehensive
system, this requirement may be waived permitting funding for
individual homeless assistance activities. The State would
undertake the role of administering the program for small
cities and unincorporated areas and would be expected to
oversee the performance of the participating communities or
agencies to which it allocates the funds. State program
recipients (small cities or consortia of small cities or
approved nonprofits) would be required to establish local
boards to plan, develop and implement the local homeless
assistance program.
section-by-section summary
Short title
Section 101 would provide that the new program may be cited
as the ``Stewart B. McKinney Homeless Housing Assistance
Reorganization Act of 1994''.
Findings and purposes
Section 102(a) would state congressional findings that--
(1) more Americans are homeless than at any time since the
Great Depression;
(2) homeless populations differ in different parts of the
country and require different types of systems of varying
sophistication to meet the needs of those populations;
(3) the best approach for addressing this situation is to
focus Federal homeless housing assistance on a ``continuum
of care''-- a seamless process which moves the homeless
from the street into a system which provides outreach and
assessment, emergency shelter, transitional housing, and
permanent housing;
(4) the Stewart B. McKinney Homeless Assistance Act created
emergency programs to solve specific homeless problems as
they were identified, and has evolved into an ad hoc approach
of separate programs with separate means of distributing
assistance, separate rules, and separate reporting
requirements, which tax the resources of the Department of
Housing and Urban Development, local governments, and not-
for-profit homeless providers;
(5) the competitive process for distributing assistance
under these programs--
(A) restricts the flexibility of communities to fashion
homeless systems that meet the needs of homeless persons in
their areas;
(B) does not ensure that Federal resources are targeted
where the need is;
(C) results in unpredictable funding streams which hinder
communities' ability to plan, develop, and implement
comprehensive ``continuum of care'' systems to assist
homeless individuals and families; and
(D) impedes the integration and coordination of the
resources--Federal, private, not-for-profit, and local
government--available within a community; and
(6) the current array of programs does not ensure that a
community will have the tools to create a ``continuum of
care'' to address its homeless needs.
Subsection (b) would state that the purposes of the new
program are to--
(1) reorganize the McKinney Act homeless housing assistance
authorities, to assist States and localities to use them more
efficiently and effectively through a comprehensive system
involving a ``continuum of care'' approach designed to meet
the shelter, service, and permanent housing needs of the
Nation's homeless individuals and families;
(2) simplify and make more flexible the provision of
Federal homeless assistance;
(3) encourage the cooperation and participation of the
States and units of general local government, along with
private non-profit organizations, in planning and
implementing comprehensive homeless assistance programs that
are designed to meet the array of service and shelter needs
of the homeless population toward the ultimate goal of
assisting individuals and families to move to permanent
housing and self-sufficiency with supportive services, if
necessary, as quickly as possible;
(4) maximize a community's ability to implement a
``continuum of care,'' by working with local groups and not-
for-profit providers;
(5) assure private non-profit organizations and community
groups that HUD will administer the grant if States or units
of general local government are reluctant to participate in
the program established by this subtitle;
(6) make more efficient and equitable the manner in which
the Department of Housing and Urban Development distributes
Federal homeless assistance, and to reduce the burden on the
Department's staff in managing numerous competitions for
grants so that its limited staff can focus on providing
technical support, analysis, and evaluation to better enable
States, units of general local government, and non-profit
providers to use Federal homeless assistance;
(7) reduce the costs to States, units of general local
government, and private non-profit organizations in applying
for and using the assistance; and
(8) begin the process of moving toward the goal of meeting
the needs of most of the Nation's homeless population through
the mainstream programs as the Federal resources supporting
these programs become available, in accordance with the
Nation's Plan to End Homelessness.
Definitions
Section 103 contains definitions of terms used in the new
program:
(1) The term ``Act'' would mean the Stewart B. McKinney
Homeless Assistance Act.
(2) The term ``applicant'' would mean a grantee submitting
an application under section 105.
(3) The term ``allocation unit of general local
government'' would mean a metropolitan city and an urban
county.
(4) The term ``grantee'' would mean--
(A) an allocation unit of general local government, Indian
tribe, or Insular Area that administers a grant or designates
a public agency or private non-profit organization (or a
consortium of such organizations) to administer grant
amounts instead of the jurisdiction;
(B) a public agency or private non-profit organization (or
a consortium of such organizations) designated by the
Secretary to administer grant amounts instead of an
allocation unit of general local government, Indian tribe, or
Insular Area;
(C) an entity receiving grant amounts from the Secretary
where the Secretary administers the grant of an allocation
unit of general local government;
(D) a State administering a grant;
(E) a unit of general local government receiving a grant
from the Secretary when HUD administers the State program;
and
(F) a private non-profit organization receiving a grant
from the Secretary where HUD administers grant amounts for
individual State recipients.
(5) The term ``homeless individual'' has the meaning given
the term in section 103 of the Act.
(6) The term ``homeless family'' would mean a group of one
or more related individuals who are homeless individuals.
(7) the term ``Indian tribe'' would mean any Indian tribe,
band, group, and nation, including Alaska Indians, Aleuts,
and Eskimos, and any Alaskan Native Village, of the United
States, which is considered as eligible recipient under the
Indian Self-Determination and Education Assistance Act
(Public Law 93-638) or was considered an eligible recipient
under chapter 67 of title 31, United States Code, before the
repeal of such chapter.
(8) The term ``Insular Area'' would mean the Virgin
Islands, Guam, American Samoa, and the Northern Mariana
Islands.
(9) The term ``metropolitan city'' has the meaning given
the term in section 102(a)(4) of the Housing and Community
Development Act of 1974.
(10) The term ``private nonprofit organization'' would mean
an organization--
(A) no part of the net earnings of which insures to the
benefit of any member, founder, contributor, or individual;
(B) that has a voluntary board;
(C) that has an accounting system, or has designated a
fiscal agent in accordance with requirements established by
the Secretary; and
(D) that practices nondiscrimination in the provision of
assistance.
(11) The term ``recipient'' would mean a grantee (other
than a State distributing grant amounts to State recipients)
and a State recipient.
(12) The term ``Secretary'' would mean the Secretary of
Housing and Urban Development.
(13) The term ``State'' would mean each of the several
States, and the Commonwealth of Puerto Rico.
(14) The term ``State recipient'' would mean--
(A) a unit of general local government within the State
(other than an allocation unit of general local government)
that receives grant amounts from the State under section
108(b); and
(B) a private non-profit organization receiving amounts
from the State where the State administers grant amounts for
individual State recipients.
(15) The term ``unit of general local government'' would
mean--
(A) a city, town, township, county, parish, village, or
other general purpose political subdivision of a State;
(B) the District of Columbia; and
(C) any agency or instrumentality thereof that is
established pursuant to legislation and designated by the
chief executive to act on behalf of the jurisdiction with
regard to provisions of this subtitle.
The term would include a consortium of geographically
contiguous units of general local government if the Secretary
determines that the consortium--
(i) has sufficient authority and administrative capability
to carry out the purposes of the new program on behalf of its
member jurisdictions; and
(ii) will, according to a written certification by the
State (or States, if the consortium includes jurisdictions in
more than one State), direct its activities to alleviation of
problems of homeless individuals or families within the
State or States.
(16) The term ``urban county'' has the meaning given the
term in section 102(a)(6) of the Housing and Community
Development Act of 1974.
Authorizations
Section 104(a) would authorize the Secretary to make grants
to grantees to carry out activities to assist homeless
individuals and families in support of comprehensive homeless
assistance systems.
Subsection (b) would authorize the appropriation of
$1,020,000,000 for fiscal year 1995, and such sum as may be
necessary for each of fiscal years 1996 and 1997, for the new
program. Any amounts appropriated would remain available
until expended.
Subsection (c) would require that the Secretary distribute
amounts appropriated for the program to grantees in
accordance with the provisions of the new program. If,
however, the amounts appropriated under subsection (b) for
any fiscal year are less than 50% of the amount authorized to
be appropriated under that subsection for that year, the
Secretary would be required to distribute the amounts
appropriated to states, units of general local government,
Indian tribes, Insular Areas, and private nonprofit
organizations on the basis of a competition. Competitive
grants would be subject to the provisions of the new program,
except those provisions that the Secretary determines are
inconsistent with the purposes of the competitive program.
The Secretary could establish such additional or alternative
requirements for grants under the competitive program, which
must include requirements for applying for, and criteria for
awarding, the grants.
The criteria for awarding competitive grants would
include--
(1) the extent to which there is a need for assistance for
homeless individuals and families in the jurisdiction;
(2) the extent to which the proposed activities further the
establishment and maintenance of the comprehensive homeless
assistance system referred to in section 105(b)(1)(C);
(3) the extent to which private non-profit organizations
providing assistance to homeless individuals and families in
the jurisdiction have been, and will be, included in planning
for the receipt of assistance under this subtitle, the
development of the application under section 105, and the
execution of the proposed activities; and
(4) the extent to which homeless individuals and families
will proceed with appropriate expedition through the
comprehensive homeless assistance system and into permanent
housing.
The Secretary would be authorized to set aside amounts for
grants under the competitive program for Indian tribes and
Insular Areas.
Application
Section 105(a) would require each applicant to submit an
application in such form and in accordance with such
procedures as the Secretary shall establish. Subsection (b)
would specify that the application at a minimum:
(1) on the basis of information provided in the current
comprehensive affordable housing strategy for the appropriate
jurisdiction under section 105 of the Cranston-Gonzalez
National Affordable Housing Act, or such other plan as the
Secretary may prescribe, set forth for the jurisdiction--
(A) a detailed description of the current population of
homeless individuals and families;
(B) the current facilities and services designed to assist
that population; and
(C) the comprehensive homeless assistance system to be
established and maintained within the jurisdiction (a
``continuum of care''), which must include at a minimum--
(i) a system of outreach and assessment for determining
whether an individual or family is homeless, needs assistance
to avoid becoming homeless, or needs other assistance, and
for ensuring that individuals and families that are so
identified receive appropriate housing and supportive
services (which may include services with respect to health,
mental health, substance abuse, family support, education,
and child care, and services directed toward obtaining
appropriate income support, including employment training);
(ii) the availability of emergency shelters with
appropriate supportive services to ensure that homeless
individuals and families for which such housing is
appropriate receive adequate shelter, including during the
period in which the assessment referred to above is being
performed;
(iii) the availability of transitional housing with
appropriate supportive services to ensure that homeless
individuals and families for which such housing is
appropriate are prepared for increased responsibility and
permanent housing, or permanent supportive housing, after the
transition period;
(iv) the availability of permanent housing, or permanent
supportive housing, adequate to meet the long-term housing
needs of all homeless individuals and families; and
(v) linkages between assistance provided under the new
program and assistance provided under other Federal, State,
and local programs that may be used to assist homeless
individuals and families, such as assistance under the Public
and Indian Housing and Section 8 programs under the United
States Housing Act of 1937, the Home Investment Partnerships
Act, and the Community Development Block Grant program under
title I of the Housing and Community Development Act of 1974;
programs administered by the Secretary of Labor; health,
social service, and income support services; programs
designed to assist homeless veterans; and adult education,
employment training, and education for homeless children and
youth; and national service.
(2) provide an assessment of what is required to establish
and maintain the comprehensive system;
(3) set forth a multi-year strategy for establishing and
maintaining the system, including appropriate timetables,
milestones, and budget estimates for accomplishing each
element of the strategy;
(4) set forth a one-year action plan, identifying all
activities to be carried out with assistance under this
subtitle and demonstrating how these activities will further
the strategy referred to above;
(5) describe the means the applicant (other than a State
distributing grant amounts to State recipients) will use to
distribute grant amounts to subgrantees, including whether
the amounts will be awarded on a competitive or non-
competitive basis;
(6) demonstrate that the local board referred to in section
109(b) has signed the application;
(7) contain certifications or other such forms of proof of
commitments of financial and other resources from each public
agency or private non-profit organization that has a role
in establishing and maintaining the comprehensive homeless
assistance system;
(8) contain assurances satisfactory to the Secretary that
activities carried out under section 106 will meet the
requirements of the Act, as provided in section 106(b);
(9) in the case States distributing grant amounts to State
recipients, describe the method of distribution;
(10) except for grant amounts that States will distribute
to State recipients, contain a certification from the public
official responsible for submitting the comprehensive housing
affordability strategy under section 105 of the Cranston-
Gonzalez National Affordable Housing Act for the State or
unit of general local government within which the project is
located that the proposed project is consistent with the
approved housing strategy of such State or unit of general
local government;
(11) contain a certification that the applicant will comply
with the requirements of the Fair Housing Act, title VI of
the Civil Rights Act of 1964, section 504 of the
Rehabilitation Act of 1973, and the Age Discrimination Act of
1975, and will affirmatively further fair housing; and
(12) contain a certification that the applicant will comply
with the requirements of the new program and other applicable
laws.
Eligible activities
Section 106(a) would authorize recipients to carry out only
the following activities under the new program--
(1) activities eligible for assistance under the following
provisions of the Act: emergency shelters under subtitle B of
title IV; transitional housing under subtitle C of title IV;
safe havens under subtitle D of title IV; single room
occupancy dwellings under section 441; shelter plus care
under subtitle F of title IV; and rural homeless housing
assistance under subtitle G of title IV;
(2) permanent housing meeting such requirements as the
Secretary prescribes;
(3) for the first year in which a recipient receives grant
amounts under the new program, administrative expenses in
connection with planning the development of, and
establishing, its program under the new authority, and in
subsequent years, defraying the cost of administering the
program; in all years, defraying the cost of constituting and
operating the local board referred to in section 109(b);
except that not more than 5% of any amounts provided to a
recipient under the new program for a fiscal year may be
used for these administrative expenses; and
(4) building the capacity of private non-profit
organizations to participate in the comprehensive homeless
assistance system of the recipient, except that not more than
2% of any amounts provided to a recipient under the new
program for a fiscal year may be used for capacity building
activities.
Subsection (b) would require that activities assisted under
the new program comply with all applicable requirements of
the Act, except those that the Secretary determines are
inconsistent with the provisions or purposes of the new
program.
Subsection (c) would require each recipient to ensure that
contributions totaling not less than 25% of the grant amounts
made available to the recipient for any fiscal year under the
new program are provided from non-Federal sources, as defined
by the Secretary, to carry out the recipient's homeless
assistance program. Each recipient shall certify to the
Secretary that it has complied with this section, and shall
include with the certification a description of the sources
and amounts of the matching funds.
A recipient could request that the Secretary reduce or
waive this matching requirement. The request would be
required to be in a form and manner prescribed by the
Secretary, and must demonstrate that the recipient lacks the
finances and other resources to meet the requirement. The
Secretary may grant the request, if the Secretary determines
that imposition of the match would create a significant
hardship for the recipient and would thwart the overall
purpose of the homeless assistance program of the recipient.
In calculating the amount of the required match, a
recipient may include any funds derived from a non-Federal
source; the value of any lease on a building; any salary paid
to staff to carry out the program of the recipient; the value
of the time and services contributed by volunteers, at a rate
determined by the Secretary; and the proceeds from bond
financing validly issued by a State or local government,
agency, or instrumentality thereof, or political subdivision
thereof, and repayable with revenues derived from a project
assisted under this subtitle, but not more than 25% of the
required contribution may be derived from this source.
Subsection (d) would provide that no assistance received
under the new program (or any State or local government funds
used to supplement such assistance) may be used to replace
other funds previously used, or designated for use, by the
State, unit of general local government, Indian tribe, or
Insular Area to assist homeless individuals and families.
Subsection (e) would require that each recipient make
available at least 51% of the grant amounts it receives for
any fiscal year to private non-profit organizations that
provide assistance to homeless individuals and families to
carry out activities under the new program. These
organizations would have to meet such minimum standards as
the Secretary deems appropriate.
Subsection (f) would provide that an allocation unit of
general local government, Indian tribe, or Insular Area, or a
State recipient, that designates a public agency or a private
non-profit organization, or a State recipient that enters
into an agreement with a State to administer its program,
must make available, to defray the administrative expenses of
the designee or the State, such sums as the Secretary deems
appropriate from amounts eligible for administrative expenses
under subsection (a)(2).
Allocation and distribution of funds
Section 107(a) would require that, for each fiscal year,
the Secretary allocate assistance under the new program to
Insular Areas in accordance with an allocation formula
established by the Secretary.
For each fiscal year, of the amounts that remain after
amounts are reserved for Insular Areas, the Secretary shall
allocate assistance according to the formula described below
or such other formula as may hereafter be enacted into law.
Initially, amounts would be allocated for allocation units
of general local government and States, and for Indian
tribes, according to the formula for allocating assistance
under the Emergency Shelter Grants program. Specifically, the
amounts would be distributed in a manner that ensures that
the percentage of the total amount available under the new
program for any fiscal year that is allocated for any State
or allocation unit of general local government, or for Indian
tribes, is equal to the percentage of the total amount
available for section 106 of the Housing and Community
Development Act of 1974 for such prior fiscal year that is
allocated for such State or allocation unit of general local
government, or for Indian tribes.
Subsection (b) would provide that if under the allocation
provisions applicable under the new program, any allocation
unit of general local government would receive a grant of
less than 0.05% of the amounts appropriated to carry out this
subtitle for any fiscal year, such amount shall instead be
reallocated to the State for use under section 108(b), except
that any city that is located in the State that does not have
counties as local governments; that has a population greater
than 40,000, but less than 50,000, as used in determining the
fiscal year 1987 community development block grant program
allocation; and that was allocated in excess of $1,000,000
in community development block grant funds in fiscal year
1987 would be eligible to receive its allocation directly.
Unlike the ESG program, 75 percent of amounts available
after funding Indian tribes and Insular Areas would be
allocated for units of general local government and 25
percent for States. This would be accomplished by increasing
the amounts for units of general local government on a pro
rata basis until the aggregate of such amounts equals 75
percent of the amounts appropriated for the new program for
each year, and by decreasing the amounts for States on a pro
rata basis until the aggregate of such amounts equals 25
percent of the amounts appropriated for each year.
The formula amount determined for an allocation unit of
general local government or a State, above, is the maximum
amount that the jurisdiction is eligible to receive. The
Secretary may provide a grant for a State or for an
allocation unit of general local government for an amount
less than the formula amount, if the Secretary determines
that such action is appropriate based upon review of the
application under section 105 or as a result of the annual
performance review and audit under section 110.
Subsection (c) would provide that any amounts that a State
or an allocation unit of general local government is eligible
to receive under subsection (b) that are not received for use
in the jurisdiction, as provided by section 108(a) and (b),
or that become available as a result of actions under section
110(b), would be added to amounts available for allocation
under section 107 for the succeeding fiscal year.
Administration of Program
Section 108(a) would provide that except as provided below,
an allocation unit of general local government, Indian tribe,
or Insular Area must administer grant amounts received under
section 107 for any fiscal year.
An allocation unit of general local government, Indian
tribe, or Insular Area may elect for any fiscal year to
designate a public agency or a private non-profit
organization (or a consortium of such organizations) to
administer grant amounts under section 107 instead of the
jurisdiction.
The Secretary would prescribe the manner and time for
making this election, and would establish criteria for the
approval of agencies and organizations, which would include
demonstrated experience of the entity in providing assistance
to homeless individuals and families in the jurisdiction.
The allocation unit of general local government, Indian
tribe, or Insular Area would remain both the grantee and the
recipient for purposes of the new program. The Secretary may,
at the request of the jurisdiction, provide grant amounts
directly to the designated agency or organization.
If an allocation unit of general local government, Indian
tribe, or Insular Area, or (if appropriate) a public agency
or private non-profit organization designated by the
jurisdiction, above, does not receive a grant for any fiscal
year because of failure to meet the application requirements
of section 105, the Secretary would be authorized to
designate an agency or organization to administer the grant.
Any designated agency or organization would be both the
grantee and recipient for purposes of the new program.
If for any fiscal year the Secretary determines that
amounts allocated for an allocation unit of general local
government will not be used in the jurisdiction, as provided
by the preceding provisions of this subsection, the Secretary
could administer the amounts instead of the jurisdiction.
Subsection (b) would require States to elect either to
administer grant amounts received under section 107 or to
have the Secretary administer these amounts instead of the
State. If a State elects to administer grant amounts under
subparagraph (A), the election would be permanent and final.
Of amounts provided to a State, the State--
(1) may use up to 15% to carry out its own homeless
assistance program, except that these amounts may only be
used for eligible activities under section 106(a)(1) for
which States are eligible recipients under the Act; and
(2) must distribute the remaining amounts to State
recipients.
Grants to States may only be used to carry out activities in
areas of the State outside allocation units of general local
government.
A State distributing amounts to State recipients under
paragraph (1)(A) shall, for each fiscal year, afford the
recipient the options of administering the grant amounts on
its own behalf; designating a public agency or a private non-
profit organization to administer the grant amounts instead
of the jurisdiction; or entering into an agreement with the
State, in consultation with private non-profit organizations
providing assistance to homeless individuals and families in
the jurisdiction, under which the State will administer the
grant amounts instead of the jurisdiction. These options
would be exercised at such time and in accordance with such
criteria as the Secretary may prescribe.
A State recipient designating an agency or organization, or
entering into an agreement with the State, would remain the
recipient for purposes of this subtitle. The State may, at
the request of the State recipient, provide grant amounts
directly to a designated agency or organization.
The State must distribute amounts to State recipients (or
to designated agencies or organizations, as appropriate) on
the basis of an application containing such information as
the Secretary may prescribe. Each application must evidence
an intent to establish a comprehensive homeless assistance
systems, except that the State may waive this requirement
with respect to one or more proposed activities, where the
State determines that the activities are necessary to meet
the needs of homeless individuals and families within the
jurisdiction and a comprehensive homeless assistance system
is not necessary, due to the nature and extent of
homelessness in the jurisdiction.
In selecting State recipients, the State must give
preference to applications that demonstrate higher relative
levels of homeless need and fiscal distress.
Each State distributing grant amounts to State recipients
may retain amounts not to exceed 5% of the amount to be used
for this purpose to defray the cost of carrying out its
responsibilities under the new program.
If in any fiscal year a State distributes grant amounts to
a State recipient, but the recipient fails to receive the
amounts, the Secretary or the State, as the Secretary may
provide, may distribute the amounts to private non-profit
organizations in the jurisdiction. If the Secretary
distributes the amounts, the Secretary would deduct the
amounts distributed from the grant provided to the State for
that fiscal year.
If a State elects to have the Secretary administer its
grant amounts as described above, the Secretary is authorized
to distribute grant amounts to State recipients instead of
the State, in accordance with requirements and procedures
prescribed by the Secretary. The Secretary would establish
criteria for selecting recipients and making awards under
this paragraph, which would include giving preference to
applications that demonstrate higher relative levels of
homeless need and fiscal distress.
Citizen participation
Section 109(a) would require each recipient to ensure that
citizens, and appropriate private non-profit organizations
and other interested groups and entities, participate fully
in the development and carrying out of the program
authorized under the new program. The Secretary would be
required to prescribe requirements to carry out this
section, which would include requirements applicable to
the local boards referred to in subsection (b) and the
citizen participation provisions of subsection (c), and
the timing of, and sequence for, carrying out the
requirements of those subsections.
Subsection (b) would require each recipient to establish
and support a local board, which would assist the recipient
in determining whether the grant should be administered by
the recipient, a public agency or private non-profit
organization, or the State or the Secretary, as appropriate;
developing the application under section 105; overseeing the
activities carried out with assistance under the new program;
and evaluating the performance of the recipient in carrying
out these activities.
The local board would be required to consist of--
(1) at least one member representing each of the following
groups: homeless individuals and families; homeless
advocates; individuals and entities providing assistance to
homeless individuals and families; the business community;
and neighborhood advocates;
(2) in the case of a recipient that is a State, one member
representing the State agency or instrumentality dealing with
mental health; and
(3) not more than one member representing the recipient.
At least 51 percent of the membership of the board must
have been nominated by individuals and entities other than a
governmental jurisdiction.
No applicant may submit to the Secretary an application
under section 105, and no grantee may submit to the Secretary
a performance report under subsection 110(a), unless the
board signs the document. No State recipient may submit an
application or a performance to a State, unless the Board
signs the document.
If the board or other members of the community believe that
the process for constituting or operating the board is
unfair, they may ask the Secretary to review the matter. The
Secretary would attempt to resolve the problem and where the
Secretary finds that the process is unfair, the Secretary may
disapprove an application under section 105 or refuse to
accept a performance report under section 110(a).
The Secretary would be required to prescribe standards
governing potential conflicts of interest under which members
of local boards may participate in activities carried out
under the new program.
Subsection (c) would require each recipient to--
(1) make available to its citizens, public agencies, and
other interested parties information concerning the amount of
assistance the jurisdiction expects to receive and the range
of activities that may be undertaken with the assistance;
(2) publish the proposed application in a manner that, in
the determination of the Secretary, affords affected
citizens, public agencies, and other interested parties a
reasonable opportunity to examine its content and to submit
comments on it;
(3) hold one or more public hearings to obtain the views of
citizens, public agencies, and other interested parties on
the housing needs of the jurisdiction; and
(4) provide citizens, public agencies, and other interested
parties with reasonable access to records regarding any uses
of any assistance the recipient may have received during the
preceding 5 years.
Before submitting any performance report under section
110(a) or substantial amendment to an application under
section 105, a recipient must provide citizens with
reasonable notice of, and opportunity to comment on, such
performance report or application before its submission.
A recipient must consider any comments or views of citizens
in preparing a final application, amendment to an application
or performance report for submission. A summary of such
comments or views must be attached when an application,
amendment to an application or performance report is
submitted. The submitted application, amendment, or report
must be made available to the public.
The Secretary would establish procedures appropriate and
practicable for providing a fair hearing and timely
resolution of citizen complaints related to applications or
performance reports under the new program.
Subsection (d) would require the Secretary to prescribe
citizen participation requirements comparable (to the extent
appropriate) to those contained in the preceding subsections
for States distributing grant amounts to State recipients and
certain instances in which the Secretary is administering
grant amounts. The following provisions of law do not apply
with respect to the actions of the Secretary in establishing
citizen participation requirements: the Federal Advisory
Committee Act and section 103 of the Department of Housing
and Urban Development Reform Act of 1989. The Secretary
would be required to establish appropriate standards to
ensure the integrity of the process for awarding
assistance.
Reports, reviews, and audits
Section 110(a) would require each grantee to submit to the
Secretary a performance and evaluation report concerning the
use of funds made available under the new program. The report
would be submitted at such time and contain such information
as the Secretary prescribes, and must be made available to
the local boards referred to in section 109(b) and to
citizens in the jurisdiction of the grantee in sufficient
time to permit the board and the citizens to comment on the
report before its submission. Each grantee performance report
must be signed by the local board.
Subsection (b) would require the Secretary, at least on an
annual basis, to make such reviews and audits as may be
necessary or appropriate to determine--
(1) in the case of a grantee (other than a grantee referred
to in paragraph (2)), whether the grantee--
(A) has carried out its activities in a timely manner;
(B) has made progress toward establishing and maintaining
the comprehensive homeless assistance system (``continuum of
care'') in conformity with its application under this
subtitle;
(C) has carried out the activities and its certifications
in accordance with the requirements of this subtitle and with
other applicable laws; and
(D) has a continuing capacity to carry out the activities
in a timely manner; and
(2) in the case of States distributing grant amounts to
State recipients, whether the State--
(A) has distributed amounts to the recipients in a timely
manner and in conformance with the method of distribution
described in its application;
(B) has carried out its activities and certifications in
compliance with the requirements of this subtitle and other
applicable laws; and
(C) has made such reviews and audits of the recipients as
may be necessary or appropriate to determine whether they
have satisfied the applicable performance criteria contained
in paragraph (1).
The Secretary may make appropriate adjustments in the
amount of grants in accordance with the Secretary's findings.
With respect to assistance made available for State
recipients, the Secretary may adjust, reduce, or withdraw
such assistance, or take other action as appropriate in
accordance with the Secretary's reviews and audits under this
subsection, except that funds already expended on eligible
activities under the new program may not be recaptured or
deducted from future assistance to such recipients.
Nondiscrimination in programs and activities
Section 111(a) would provide that no person in the United
States shall on the ground of race, color, national origin,
religion, or sex be excluded from participation in, be denied
the benefits of, or be subjected to discrimination under any
program or activity funded in whole or in part with funds
made available under the new program. Any prohibition against
discrimination on the basis of age under the Age
Discrimination Act of 1975 or with respect to an otherwise
qualified handicapped individual, as provided in section 504
of the Rehabilitation Act of 1973, shall also apply to any
such program or activity.
Subsection (b) would provide that no grant may be made to
an Indian tribe under the new program unless the applicant
provides satisfactory assurances that its program will be
conducted and administered in conformity with title II of
Public Law 90-284. The Secretary may waive, in connection
with grants to Indian tribes, the provisions of subsection
(a).
Nothing in the new program relating to discrimination on
the basis of race would apply to the provision of assistance
to the Hawaiian Home Lands.
Consultation
Section 112 would provide that in carrying out the
provisions of the new program, including the issuance of
regulations, the Secretary shall consult with other Federal
departments and agencies administering programs affecting
homeless individuals and families.
Records, reports, and audits
Section 113(a) would require any entity receiving grant
amounts under the new program to keep such records as may be
reasonably necessary to disclose the amounts and the
disposition of the grant amounts and to ensure compliance
with the requirements of this subtitle.
Subsections (b) and (c) would give the Secretary and the
Comptroller General access for the purpose of audit and
examination to any books, documents, papers, and records of
any entity receiving grant amounts under the new program that
are pertinent to grant amounts received in connection with,
and the requirements of, the new program.
Reports to Congress
Section 114 would require the Secretary to submit a report
to the Congress annually, summarizing the activities carried
out under the new program and setting forth the findings,
conclusions, and recommendations of the Secretary as a result
of the activities. The report would be submitted not later
than 4 months after the end of each fiscal year (except that,
in the case of fiscal year 1995, the report would be
submitted not later than 6 months after the end of the fiscal
year).
Innovative Homeless Program
Section 115(a) would authorize the appropriation of $100
million for fiscal year 1995 and such sums as may be
necessary for fiscal year 1996 for the comprehensive homeless
initiative under section 2(c) of the HUD Demonstration Act of
1993.
Subtitle B--Emergency Food and Shelter
Transfer of the Emergency Food and Shelter Program from FEMA to HUD
Section 121 would amend the Stewart B. McKinney Homeless
Assistance Act to transfer the Emergency Food and Shelter
Program from the Federal Emergency Management Agency (FEMA)
to HUD. Currently, the Emergency Food and Shelter program is
administered by FEMA and is implemented through a National
Board consisting of the Director of FEMA as chairperson and
six other members nominated by the United Way of America; the
Salvation Army; the National Council of Churches of Christ in
the U.S.A., Catholic Charities, U.S.A.; the Council of Jewish
Federations, Inc.; and the American Red Cross.
Under the proposed legislation, the Secretary of HUD would
replace the Director of FEMA as chairperson of the Board. The
Secretary of HUD would appoint members to vacancies on the
National Board.
The transfer of this program to HUD would improve the
coordination and delivery of homeless resources, given HUD's
lead responsibility for housing and shelter.
title ii--public and indian housing; cross-cutting authorizations
Direct loans for modernization and replacement
Section 201 would establish a direct loan program for
modernization of public housing and provision of replacement
housing for units that cannot be made viable. By making
available substantial amounts of capital, the program would
make it possible for PHAs and their local units of government
to plan and execute actions to eliminate seriously
deteriorated public housing, either by major rehabilitation
or by replacing existing projects with new housing, including
new, mixed-income developments in which public housing
tenants would comprise only a portion of the tenancy of the
project.
The loan program would provide participating housing
agencies with an efficient source of financing for their
modernization activity, so that PHAs can address current
needs now, rather than waiting until sufficient CGP funds are
available sometime in the future. The Department is proposing
an amendment to section 14, in another legislative proposal,
so that modernization funds can be used for replacement
housing. That proposal, in combination with this proposal for
a modernization direct loan program, would allow PHAs to use
loan proceeds to replace deteriorated and uninhabitable
projects. The availability of capital for development will
make it possible for PHAs to leverage private capital in
order to construct mixed-income projects.
Only CGP agencies with an acceptable rate of obligation of
modernization funds would be eligible, unless the agency
indicated its willingness and intent to administer the
borrowed funds through contract management. The loans would
be repaid with the annual formula allocations of
modernization funds under the Comprehensive Grant program and
other Federal and non-Federal financial resources. Cities or
States would be co-borrowers with the PHAs and would pledge
their funds as collateral, in case of default, for some
portion of the loan. These city funds could be future
allocations of CDBG, tax revenues, or other income sources,
at the discretion of the city. In the event of default, the
State or unit of general local government would pay a share
of the remaining unpaid debt service proportional to the
original pledge.
Any activities eligible under the Comprehensive Grant
program would be eligible except that, unlike the CGP,
activities to upgrade the management and operation of public
housing projects would not be eligible. In another
legislative proposal, public housing development and section
8 project-based and tenant-based assistance would become
eligible uses for modernization funds when the units are
provided as replacement housing under Section 18.
The maximum aggregate amount of loans that HUD could make
for any PHA would be limited to five times the PHA's latest
CGP allocation amount, or such lower limit as the Secretary
established by regulation. In addition, in determining the
approvable size of the loan, HUD could take into
consideration (a) the ability of the PHA to use the funds
effectively, directly or through contract management, and (b)
the adequacy of remaining future allocations in providing
repairs, replacements and improvements which will be needed
as a result of usage and depreciation of existing projects
over the borrowing period. If, at any time during a fiscal
year, HUD found that 50% of the loan authority for that
fiscal year had been committed or applied for, HUD could
limit any individual loan. The maximum term of the loan would
be 10 years.
The authorization for loans under the program would be
$2,000,000,000 in FY 1995 and the same amount in FY 1996. A
premium large enough to offset the Federal government's risk
would be charged against the PHA's Comprehensive Grant in the
year the loan is made.
Any technical assistance funds set aside under section 14
could be used for training and technical assistance in
support of this program.
PHAs in the Comprehensive Grant program typically have
major rehabilitation needs which far exceed their annual
allocation of funds. Most of these needs are a part of a
multi-billion dollar backlog which existed at the beginning
of the CGP in FY 1992. Under the present system, it will be
many years before sufficient funds are available to address
these needs. In the meantime, projects which could be
providing housing sit empty, and some public housing
residents are living in severely deteriorated housing.
If PHAs were able to borrow against their anticipated
annual allocation and other anticipated income, they would be
able to speed up the elimination of the backlog of
modernization needs. The result would be that vacant units
could be made habitable and occupied sooner, and current
residents would have better living conditions.
In addition, in some PHAs, the most efficient use of funds
is not to rehabilitate existing projects but to demolish them
and build replacement units. Often, through this process, far
better housing can be provided in better locations at the
same cost. If large amounts of capital are made available for
development in this way, it will be possible to leverage
private investment in housing to construct mixed-income
developments, ending the segregation of public housing
residents in very low-income areas.
Use of modernization funds for replacement housing
Section 202 would amend section 14 of the 1937 Act to
authorize PHAs to use modernization funds for the development
of additional public housing under the 1937 Act, subject to
the requirements applicable to such development, and for 15-
year project-based assistance and 5-year tenant-based
assistance, in accordance with section 8, to provide
replacement housing as required by section 18. Section 18
requires replacement housing in certain circumstances in
connection with the demolition or disposition of public
housing. This proposal would not modify the section 18
requirements for replacement housing or the types of housing
that may be counted as replacement housing under those
requirements.
Current law governing the modernization program inhibits
the ability of PHAs (including Indian housing authorities) to
provide housing solutions that are tailored to local needs.
The public housing modernization program only permits PHAs to
rehabilitate existing units, even under conditions where
demolition and replacement would be more economical and
socially preferable. This proposal would provide PHAs with
the flexibility to determine whether replacement, rather than
rehabilitation, or 15-year project-based or 5-year tenant-
based section 8 assistance, would be a preferable option
under the public housing modernization program.
Facilitate use of public-private partnerships in modernizing public
housing
Section 203 would amend the requirement that Section 14
funds can be used only for low-rent housing projects which
are owned by public housing agencies and permit the Secretary
to specify other forms of control of the property by the PHA,
as an alternative to ownership.
For example, the PHA could own the land on which a project
is located and provide a ground lease to the owner of the
building or be the mortgagee for the property.
This change would facilitate private investment in the
modernization of public housing projects by permitting use of
low-income tax credits by the private investor. In this
manner, the amount of funds available for modernization of
public housing could be increased.
Public housing is currently extremely limited in the
methods of financing that may be used for modernization. This
change would open opportunities for private-public
partnerships in improving the Nation's public housing.
Modification of the Early Childhood Development Program
Section 204 would amend the requirements for the Early
Childhood Development program for residents of public housing
to permit the Secretary to make grants for the expansion or
refunding of pre-existing child care centers. In addition,
this proposal would permit homeless families with children to
use the early childhood development services funded under the
program and would require the Secretary, in providing grants
under the program, to take into account the proximity of the
proposed site to facilities for the homeless. Finally, the
proposal would authorize $35 million for the program FY 1995
and $35 million for FY 1996.
Allowing Child Care grants to be made available to expand
or refund existing centers for public housing residents would
make the early childhood development program more equitable
and efficient. Expanded centers would provide qualified
families that would otherwise be denied access to existing
centers that are filled to capacity an opportunity to share
the same services. Also, expansion would enhance the capacity
of existing centers that are straining to serve a large
number of families with children. The ability to refund
existing centers under this program would help the economic
stability of centers that need additional funding.
Expansion of the program to include assistance for homeless
families would provide them the opportunity to share the same
services that are available for public housing residents.
Access to these facilities would otherwise not be available
for homeless families.
Entrepreneurial PHAs and RMCs
Section 205 would authorize the Entrepreneurial PHAs and
RMCs demonstration. Under this demonstration, the Secretary
would be permitted to approve requests for waiver of
statutory requirements to permit selected PHAs (including
Indian housing authorities) or RMCs (or some of each) to set
their own policies for the operation, maintenance,
management, and development (including modernization) of any
of their projects. In addition, HUD could specify alternative
requirements in connection with the demonstration. Regulatory
and contract waivers are not addressed in this proposal,
because current regulations already contain adequate and
explicit waiver authority. This proposal would permit up to
25 demonstrations conducted by the total of 25 PHAs or RMCs
(or a combination of both). Demonstrations could be approved
for a period of up to five years.
While these agencies and RMCs would be bound by State or
local law, they would not be bound by the requirements of the
U.S. Housing Act of 1937, except for the fundamental
requirement limiting occupancy to low-income families as
defined in section 3, and the requirements of section 18 of
the 1937 Act requiring replacement units that apply in the
case of demolition or disposition (except that the limitation
on the use of tenant-based assistance to applications
proposing demolition or disposition of 200 or more units may
be waived). In addition, the Secretary could waive any other
statutory requirements applicable to the project, or specify
alternative requirements, except for the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970
and statutory requirements pertaining to fair housing and
equal opportunity, the environment, or labor standards.
The Secretary could select among applicant PHAs and RMCs in
a manner determined to be appropriate, taking into account
such factors as (1) the need for a range of project sizes,
(2) the need for a range of types of public housing agencies
and RMC's, (3) the capability of the PHA to carry out the
demonstration, and (4) the potential effects and benefits the
variations proposed by the agency or RMC could have on the
public housing program if the variations were adopted for the
whole program.
Each demonstration would have to: (1) be approved
personally by the Secretary; (2) taken as a whole over the
life of the demonstration, not result in higher costs to the
Federal government; (3) be consistent with the overall
purposes of the public housing program; (4) be evaluated by
an independent party; and (5) be consistent with the Fair
Housing Act, title VI of the Civil Rights Act of 1964,
section 504 of the Rehabilitation Act of 1973, the Age
Discrimination Act of 1975, and the National Environmental
Policy Act of 1969.
The Secretary would be authorized to establish any
requirements determined to be necessary for the conduct of
these demonstrations.
The PHA or RMC for each demonstration site would be
required to submit an annual progress report. In addition,
within one year of the conclusion of each demonstration, the
Secretary would be required to submit to Congress a report
describing the results of the demonstration and any
recommendations for legislation.
One million dollars would be authorized for the evaluation
of the demonstrations under this proposal. An independent
evaluation would be an important part of the demonstrations
and would measure the effects of permitting agencies and RMCs
to waive certain Federal requirements and set overall policy.
This authorization is essential to HUD's and the Congress'
ability to take the lessons learned from these demonstrations
and put them to practical use by revising current programs or
creating new ones.
Entrepreneurial PHA demonstrations would promote innovation
in addressing public housing issues, allowing PHAs to
identify statutory impediments to achieving public housing
objectives and their plan to reinvent their public housing
program without the constraints of those impediments.
One of the criticisms of HUD's public and Indian housing
programs is that they are sometimes too prescriptive or rigid
to fit the needs or circumstances of many local community
situations. These demonstrations will encourage local
decision making. These demonstrations will provide HUD with
valuable first-hand experience on what truly reinvented
public housing programs may be.
Policies such as those relating to occupancy, development
and modernization could be waived by the Secretary upon a
specific request from an agency or RMC participating in the
demonstration. PHAs and RMCs would have to describe the
policies which they wanted waived as part of the application
to participate in the demonstration, but they could also
request additional waivers after they had been selected. For
example,
A PHA could propose, and the Secretary could authorize
experimentation with different methods of setting rent for
their public housing units in order to test alternative
rental strategies. Rents for public housing are currently set
by law at the highest of 30% of adjusted income, 10% of gross
income, or the welfare shelter rent. Waivers could be granted
for developments with long-standing problems of high
vacancies, authorizing imposition of ceiling rents below the
current statutory level; setting lower rents for unit sizes,
such as efficiencies, which are particularly hard to rent; or
imposition of minimum tenant rents for residents of public
housing who might otherwise pay no tenant rent. The
demonstration of alternative rent-setting strategies could
employ (a) a project-specific feature, a demonstration of use
of an alternative rent schedule as a mechanism for solving a
particular problem at a project or projects, or (b) a PHA-
wide feature, a demonstration of the effects of removal of
the rent restrictions PHA-wide on the income levels and
characteristics of families housed by public housing.
A PHA could propose, and the Secretary could authorize,
alternative methods for determining the income on the basis
of which rent is determined. For example, in order to create
a work incentive and to recognize the additional costs of
working over not working, a PHA could disregard a portion of
all earned income, or treat differently the income of a
second wage-earner in a family, or phase in any income
increases which result from going to work. Income
disregards implemented by PHAs could include ones that are
currently in the 1937 Act but that have not been
implemented because they are subject to appropriations
which have not been provided.
A PHA could propose and HUD could authorize a variety of
creative uses of development funds, including projects which
house a mixture or incomes in which the public housing
portion is a percentage of the project and the units, rather
than specific buildings and units. Such uses could also
include projects which combine public housing for the elderly
with intermediate care facilities.
Disallowance of earned income for residents who obtain employment
Section 206 would amend section 3 of the 1937 Act, which
was amended in 1990 to disallow counting as income the
earnings and benefits of any public housing (including Indian
housing) resident resulting from participation in various
employment training programs established under Federal,
State, or local law in order to provide a work incentive. The
disallowance of earned income resulting from the program
extends for 18 months. The purpose of the provision was to
provide a work incentive and to facilitate the transition
from welfare to work.
This proposal would delete the 1990 disallowance provision
and substitute a new section 3(d), which would provide an 18-
month disallowance of increases in income due to employment
of public housing residents who become employed after having
been unemployed for at least one year, regardless of whether
they have participated in any employment training program.
Thus, the proposal would provide the work incentive to an
expanded group of public housing residents, by eliminating
the need to participate in certain training programs. It
would also target the incentive to those with no recent work
experience, thus limiting somewhat the group now affected by
the law. The net effect of substituting the new proposal for
the earlier provision is no increase in cost.
In the interests of equity to residents, ease of
administration, and the general comprehension and
effectiveness of the work incentive, it is important that the
rules affecting the treatment of earned income of residents
previously unemployed be as consistent as possible,
regardless of what kind of training program they may have
participated in or whether their transition required any
training at all. Further, because this provision applies to
all members of the household, it creates the same incentive
to begin working for a dependent child who has come of age
and for any other additional adults in the household.
Under the previous provision, only those members of the
household who were eligible for, and who participated in,
selected training programs would be able to benefit.
For families under the new section 3(d), rent increases
after the initial 18-month period would be limited to 10% per
year if the increases would result from the continued
employment of a resident. By allowing a 10% annual increase
in rent, the provision will prevent the newly employed person
from experiencing any large increase which would create an
incentive to cease employment. It cannot be assumed that,
after a few years of employment, a person's income is likely
to be substantial enough to afford a large rent increase.
Low-income workers often experience little or no increase in
wages over many years, and frequently have periods of
unemployment.
The proposal would also repeal section 957 of the Cranston-
Gonzalez National Affordable Housing Act, which applies to
all assisted housing programs, and which provides that rent
increases are limited to 10% per year for the first 36 months
after employment if the rent increases would result from the
employment of a resident who was previously unemployed.
Unfortunately, section 957 creates an incentive for abuse by
authorizing the disregard after any period of unemployment,
no matter how short. It also would require appropriations
because it applies to all assisted housing, unlike this
proposal and the one it replaces, which apply only to public
housing. Further, although the 36-month phase-in of rent
increases would be quite adequate for most people going from
welfare income levels to low-wage jobs, some workers would
experience substantial rent increases at the end of the 36-
month period. This proposal for an 18-month disallowance
followed by an annual rent increase limitation of 10% avoids
the weaknesses of section 957 while retaining the important
concept of phasing in rent increases due to employment.
Ceiling rents based on reasonable rental value
Section 207 would amend the existing ceiling rent authority
for the Public and Indian Housing programs to authorize PHAs
to establish ceiling rents no lower than the reasonable rent
for the unit.
Public housing now serves the poorest of the poor. The
median income of nonelderly households is 16% of the local
area median income. The national average income of non-
elderly public housing families is less than $7,000. Only 6%
of all non-elderly households have income exceeding 50% of
local area medical income. Only 28% of all nonelderly
households derive their income primarily from wages. Many
developments have a very small number of working households.
Literally, thousands of children are being raised in public
housing developments where almost no one gets up and goes to
work every morning. Nearly all the 700,000 non-elderly
households in public housing live in areas characterized
by extreme poverty.
The goal of public housing is to serve low-income
households, and to serve them well. Creation of communities
which do not include families whose lifestyle focuses on
work, education, and upward mobility is to create communities
which reinforce dependency, school drop-outs, teenage
pregnancy, crime, and a bleak future for the children. Such
communities do not serve their residents well and do not
offer hope for the future of our cities and our nation.
A policy which contributes significantly to extreme
concentration of very low-income households in non-elderly
public housing is the so-called ``30% rule,'' which requires
PHAs to charge most resident families an amount which is 30%
of their adjusted income, regardless of the value of the
units. Developments vary widely in actual rental value. HUD's
analysis shows that, based on rents that families are willing
to pay for public housing units, over half of all public
housing units have rental values below $300, and almost three
quarters of all public housing have rental values under $400.
Each time that a PHA informs a resident that the rent for the
unit will be increased for the next year, the resident has to
weigh the available options and decide whether to pay that
amount for the unit, or try to get a better deal elsewhere. A
decision to move may mean that the family lives in
substandard housing, or that it pays an even higher
percentage of income for rent, but it also means that it has
chosen a unit that it believes to be worth the rent that is
being charged, given the choices available in that market.
Because the 30% rule frequently forces PHAs to charge more
than units are worth or residents are willing to pay, the
policy is an incentive for many working families every year
to leave public housing. Because some public housing
developments are old and poorly designed, and lack security
and good maintenance and management, their actual rental
value is very low and some of the families being pushed out
by the 30% rule may have incomes well below 50% of median.
Nearly all the ``push-outs,'' however, are working families.
Application of the 30% rule also discourages public housing
residents from working more hours and seeking higher pay,
because a substantial part of the increase in earnings must
go for rent.
Section 3(a)(2)(A) of the U.S. Housing Act of 1937 now
allow use of maximum or ``ceiling'' rents. Ceiling rents may
not exceed a maximum amount that--
(i) is established by the PHA/IHA and approved by HUD;
(ii) is not more than the amount payable by the family
under the tenant rent formula (generally 30% of adjusted
income); and
(iii) is not less than the amount of debt service and
operating expenses attributable to units of similar size in
developments owned and operated by the PHA.
Although this policy provides ceiling rents which are low
enough to encourage working households to remain in some
developments, in the majority of PHAs this formula produces a
number that is higher than the perceived rental value of
most, if not all, of the units. This occurs because there is
no necessary relationship between cost and rental value. Many
developments have very high debt service relating to
extensive amounts of modernization or to recent construction.
Operating costs can be increased substantially by high energy
costs. The poor design, security problems, and stigma that
often accompany public housing also contribute to a very low
rental value. An effective ceiling rent must be related to
the rental value of the units and must take into
consideration the variation of rental values among the
developments of a PHA.
The proposal would amend the 1937 Act to authorize PHAs to
establish ceiling rents no lower than the reasonable rental
value of the unit, as determined by the Secretary. The
current requirement in (iii), above, would be deleted. A
variety of methods would be permitted for determining
reasonable rental value.
HUD has the capacity to analyze rents now being paid, by
development, and to identify the highest 5% of rents, which
represent the most that families are willing to pay for those
units in that particular development. HUD would provide this
data to PHAs so that it could be used as one method of
determining ceiling rents. Indeed, the transition provisions
that would apply until final regulations become effective
would permit the use of such ceiling rents.
Effective ceiling rents would encourage poor, working
households to remain in public housing longer and would
attract such families to public housing. The families
affected would primarily be working families with incomes
between minimum wage, which is 25% of the national median
income, and 50% of median. Effective ceiling rents would also
encourage working families to obtain more income, since their
rents will be frozen at the ceiling rent. Workers may work
more hours, or spouses or adult children can become employed,
without having a rent increase. This ceiling rent initiative
based on rental value of the units could be expected to begin
to improve the residential mix in nearly all developments,
including the very poorest, within the first year.
For Indian housing, because normal market forces do not
impact actual rents paid due to the limited choice of housing
on Indian lands, HUD is exploring alternative methodologies
for determining reasonable rental value for units in Indian
housing authority developments.
Since the working families who will remain longer in public
housing or will be attracted to public housing because of
ceiling rents have incomes well above the average admission,
the ceiling rent policy will more than pay for itself, even
in the first year.
Pursuant to subsection (b), the Secretary would, after
notice and an opportunity for comment, establish by
regulation such requirements as may be necessary to carry out
the ceiling rent authority, as amended by subsection (a).
Prior to the issuance of final regulations, a public housing
agency would be permitted to implement ceiling rents either
determined in accordance with section 3(a)(2)(A) of the U.S.
Housing Act of 1937, as it existed prior to the enactment of
these amendments, or equal to the 95th percentile of the rent
paid for a unit of comparable size by tenants in the same
project or a group of comparable projects totaling 50 units
or more.
Authorization to sell public housing to nonprofit organizations
Section 208 would permit PHAs, including IHAs, to sell
public and Indian housing to non-profit organizations for the
purpose of facilitating homeownership by public housing
residents. In addition, the reference to ``lower income
tenants'' would be changed to ``low-income families,'' which
is the correct term under the 1937 Act.
Section 5(h) of the United States Housing Act of 1937
authorizes public and Indian housing authorities to sell
housing units to their residents. This section would be
amended to allow PHAs, at their option, to sell housing to a
non-resident-controlled intermediate entity to facilitate
homeownership. The use of a non-profit intermediary would
offer administrative flexibility to those PHAs that do not
have the necessary expertise or that do not wish to handle
the implementing details of a section 5(h) sale transaction.
The Department would require PHAs which wish to exercise
this authority to enter into a binding agreement with the
nonprofit to transfer the units within a specified period of
time and to transfer the units in good condition. If
rehabilitation is necessary, it must be accomplished before
sale and at the expense of the PHA. The PHA would have
flexibility to set a sales price which would make purchase by
residents feasible.
Subtitle B--Severely Distressed Public Housing Program, Revitalization
of Severely Distressed Public Housing
Amendments to section 24
Section 211 would amend section 24 of the U.S. Housing Act
of 1937, the authorization for the Severely Distressed Public
Housing program. Section 24 was enacted by section 120 of the
Housing and Community Development (HCD) Act of 1992. For FYs
1993 and 1994, the Urban Revitalization Demonstration (URD)
program, a program with similar objectives to the section 24
program, was established and funded under HUD's
appropriations Acts. For FY 1995, the President's Budget
proposes to fund the Severely Distressed Public Housing
program. The amendments to section 24 made by this section
incorporate some of the best features of the URD program into
the section 24 program and make other improvements.
Designation of Eligible Projects.--Subsection (a)(1) would
repeal the requirement in section 24(b) that the Secretary
designate severely distressed projects. The Department thinks
it is both unwise and unnecessary to establish and maintain a
list of ``severely distressed'' public housing developments.
As funds become available, localities will revitalize their
distressed developments with funds from the Comprehensive
Grant Program or apply for funding under this section. In the
meantime, housing agencies will do their best to maintain
these developments and create a decent living environment
under very difficult circumstances. It would not be at all
helpful to the ongoing effort to sustain these developments
to label them as ``severely distressed.'' A conforming
amendment would be made to the annual report requirement in
section 24(i).
Increase Planning Grant Dollar Cap.--Subsection (a)(2)
would increase the maximum planning grant from $200,000 to
$500,000. The current cap is too low for large public housing
developments. The higher amount is needed to assure sound
planning for undertakings as costly as those funded under
section 24.
Community Service.--Subsection (a)(4) would require that
planning grant applications propose planning for community
service activities, and subsection (a)(7) would require that
implementation grant applications propose community service
activities. Subsections (a)(3) and (a)(6) would add planning
for community service activities and the activities
themselves as eligible activities.
Community service activities are a key feature of the URD
program. These amendments recognize the important
contributions residents of the developments can make to the
well-being of all the residents of the development and the
wider community, and that other members of the community and
other persons can also provide significant support for the
development. Community service opportunities for
disadvantaged youth generally include opportunity for
completion of high school education requirements, job
training, and other activity designed to lead to economic
mobility.
Replacement Housing.--Subsection (a) (6) (A) would clarify
that funding under section 24 may be used to fund replacement
housing. HUD would establish policies and procedures by
regulation for the use of assistance available under section
24 for replacement housing, including replacement housing
provided under equivalent State and local programs.
Increase Support Services Cap.--Subsection (a)(6)(B)(i)
would increase the cap on the amount of the implementation
grant that may be used for support services from 15% to 20%.
This will provide greater flexibility to the PHAs and permit
greater emphasis on critical social problems.
Contributions for Support Services.--Subsection
(a)(6)(B)(ii) would establish a requirement similar to one in
the URD program for contributions from non-Federal sources
for supportive services in an amount equal to at least 15% of
the amount of the implementation grant used for supportive
services. In the URD, the contribution must be made by the
local government. However, the Department has determined that
flexibility to allow contributions from local foundations,
private non-profit organizations, and other non-governmental
groups will be equally useful in assuring a local commitment
to the success of the revitalization effort. The contribution
could be in the form of cash, administrative costs, or the
reasonable value of in-kind contributions and could include
CDBG funding.
National Geographic Diversity.--Subsection (a) (5) and
subsection (a) (8) would clarify that ``national geographic
diversity among housing for which applicants are selected to
receive assistance'' is not a factor on the basis of which
applications would initially be ranked. Ranking would take
place on the basis of other factors. Then, when the initial
ranking has occurred and it is possible to see the geographic
location of the ranked applications, HUD would have the
authority to select a lower-rated, approvable application
over a higher-rated application to increase the level of
national geographic diversity of applications approved under
section 24.
Exception to Program Requirements.--Subsection (a)(9) would
permit a revitalization plan to include demolition and
replacement on site or in same neighborhood if the number of
replacement units provided in the same neighborhood is fewer
than the number of units demolished as a result of the
revitalization effort. In addition, this subsection would
permit a PHA to replace not more than one-third of the units
demolished or disposed of through a revitalization project
with tenant-based assistance under section 8.
Definition of Severely Distressed Public Housing.--
Subsection (a)(10)(A) would recast the definition of severely
distressed public housing, as follows:
(5) Severely Distressed Public Housing.--The term
``severely distressed public housing'' means a public housing
project or a building in a project--
(A) that requires major redesign, reconstruction,
redevelopment, or partial or total demolition to correct
serious deficiencies in the original design (including
inappropriately high population density), deferred
maintenance, physical deterioration or obsolescence of major
systems, and other deficiencies in the physical plant of the
project; and
(B) that either--
(i)(I) is occupied predominantly by families with children
which have extremely low incomes, high rates of unemployment,
and extensive dependency on various forms of public
assistance; and
(II) has high rates of vandalism and criminal activity
(including drug-related criminal activity); or
(ii) that has a vacancy rate, as determined by the
Secretary, of 50 percent or more; and
(C) that cannot be revitalized through assistance under
other programs, such as the programs under sections 9 and 14,
or through other administrative means because of the
inadequacy of available funds in relation to the total
modernization needs of the public housing agency; and
(D) that in the case of individual buildings, the building
is, in the Secretary's determination, sufficiently separable
from the remainder of the project to make use of the building
feasible for purposes of this subtitle.
Instead of qualifying as severely distressed public housing
by meeting the requirements of either subparagraphs (A) or
(B), the definition combines most features from both
subparagraphs (A) and (B), simplifying and clarifying the
definition and making it more feasible to administer.
An example of the problems in current law is section
24(h)(5)(ii), which refers to housing which is occupied by
families in a severe state of distress, characterized, among
other things, by such factors as high rates of teenage
pregnancy and minimal educational achievement. Information on
these two characteristics is not readily available at the
project level. It is likely these variables are highly
correlated to the data on amount and source of income, which
is readily available and would be retained as proposed
paragraph (5)(B)(i), above.
Another change is the deletion from current law of section
24(h)(5)(B)(i), which requires that projects qualifying under
subparagraph (B) must be owned by a troubled PHA. A severely
distressed, high vacancy development may occur in an agency
that is not troubled.
Definition of Community Service and Support Services.--
Subsection (a)(9)(B) would add two new definitions, as
follows:
Community Service.--The term ``community service'' means
services provided on a volunteer basis for the social,
economic, or physical improvement of the community to be
served.
Support Services.--The term ``support services'' includes
all activities designed to lead toward upward mobility, self-
sufficiency, and improved quality of life for the residents
of the development, such as literacy training, job training,
day care, and economic development. Such activities may allow
for participation of the residents of the neighborhood.
Amendments to section 18
Subsections (c) and (d) would make several changes to give
public housing agencies (including Indian housing
authorities) more flexibility in planning for the future of
their stock.
Use of Tenant-Based Assistance for Replacement Housing.--
Subsection (c) would amend section 18(b)(3)(C)(i) to modify
the circumstances under which tenant-based assistance under
section 8 may be used as replacement housing by removing the
requirement that the supply of private housing must be likely
to remain available for 15 years. Instead the supply would be
required to be likely to remain available for the full term
of the tenant-based assistance. Since changes made in 1992
permit use of 5-year assistance in some cases, the test for
feasibility would be changed to reflect the actual term of
the assistance.
Replacement Housing Outside the Jurisdiction of the PHA.--
At present, section 18 restricts the location of replacement
units to the PHA's jurisdiction. Subsection (d) would
permit locating some or all of the replacement units
outside of the jurisdiction of the PHA but within the same
housing market area, based on a realistic look at housing
needs in the real economic community, and not simply
according to the boundaries of political jurisdictions.
For core-city PHAs, this might solve the problem of the
unavailability of suitable replacement sites within their
jurisdictions. It would allow adjoining communities to
cooperate in a way that best serves the interests of the
poor and might help to open up housing opportunities in
adjacent areas where the employment picture is favorable.
Specifically, replacement units could be located outside
the PHA's jurisdiction if--
(a) the location is in the same housing market area as the
original agency, as determined by the Secretary;
(b) the replacement housing plan contains an agreement
between the original agency and the PHA in the alternate
location, or other public or private entity that will be
responsible for providing the additional units in the
alternate location (``alternate agency or entity''), that the
alternate agency or entity will, with respect to the dwelling
units involved--
(1) provide the dwelling units in accordance with program
requirements;
(2) complete the plan within the required time period;
(3) work with the original agency to ensure that (A) the
same number of individuals and families will be provided
housing and (B) the maximum post-relocation rent provisions
are complied with; and
(4) not impose a local residency preference on any resident
of the jurisdiction of the original agency for purposes of
admission to any such units; and
(c) the arrangement is approved by the unit of general
local government for the jurisdiction in which the additional
units will be located.
Modernization program reserve funds
Section 212 would permit PHAs (public housing agencies,
including Indian housing authorities) to apply to use amounts
in the $75 million reserve under the Public Housing
Modernization program, which is not available only for needs
resulting from natural and other disasters and from
emergencies, for modernization activities related to
settlement of litigation and desegregation of public
housing.
Under the Modernization program, each Federal fiscal year,
HUD begins the year with a $75 million reserve for disasters
and emergencies. Any unused funds remain in the reserve and
HUD replenishes it so that at the beginning of each fiscal
year it begins with a $75 million balance. Currently, PHAs
may request funds from the reserve in two circumstances: (1)
a natural or other disaster such as a hurricane or
earthquake, affecting only one or a few PHAs or any disaster
declared by the President or would qualify for a Presidential
declaration if it were on a larger scale; and (2) an
emergency, defined as a physical need of an emergency nature,
posing an immediate threat to the health or safety of
residents and which must be corrected within one year.
Allowing PHAs to request reserve funds for litigation and
desegregation activities will enable PHAs under the
Comprehensive Grant program to preserve their formula funding
for planned activities approved in the Comprehensive Plan
which was subject to a public hearing. The formula funding
provided to PHAs is based on backlog and accrual needs. Since
the formula does not factor in litigation or desegregation
needs, PHAs that have such needs would not be treated
equitably if those needs had to be funded from the dollars
allocated in the formula grant.
There is similar authority in the reserve established under
section 213(d) of the 1974 Act, which is funded from amounts
appropriated for public and Indian housing development and
section 8 rental assistance. Currently, the section 213(d)
reserve may only be used for:
(a) unforeseen housing needs resulting from natural and
other disasters;
(b) housing needs resulting from emergencies other than
such disasters;
(c) housing needs resulting from the settlement of
lawsuits; and
(d) housing in support of desegregation efforts.
Another provision of this bill would authorize use of the
section 213 reserve for fair housing activities and cash
settlements in connection with civil rights litigation.
Eligibility of severely distressed public housing for public housing
operating subsidies
Section 213 would amend section 9 of the U.S. Housing Act
of 1937 to make it clear that public housing developed with
funds appropriated under the URD demonstration or for the
section 24 program of Revitalization of Severely
Distressed Public Housing is eligible for operating
subsidy.
The FY 1993 appropriations Act, which created the Urban
Revitalization Demonstration, clearly contemplated that funds
appropriated for URD could be used to construct new public
housing units, either on the site of the project to be
revitalized or elsewhere as replacement housing. The
statutory language provides that ``funding provided shall be
used-. . . for the capital costs of replacement units . .
.''-Further, it states that units demolished or disposed of
under this demonstration may be replaced ``by any combination
of conventional public housing'' and other approaches to
providing affordable housing.
The HUD Act of 1992, which authorized the successor program
to the URD, the section 24 program of revitalization of
severely distressed public housing, also contemplates that
public housing will be developed with URD money when projects
are demolished and rebuilt.
However, there is some question as to whether operating
subsidy can be paid to these units developed with URD or
section 24 funds, since the operating subsidy statutory
authority states, at section 9(a)(2), that ``[t]he Secretary
may not make assistance available under this section for any
low-income project unless such project is one developed
pursuant to a contributions contract authorized by section 5
. . .''-Neither URD nor section 24 fit into this category.
Since it appears that the Congress expected housing
developed with URD funds to be considered public housing, the
amendment requested is a technical amendment to allow the
intent of Congress to be met. It would simply add URD and
section 24 developed projects to those eligible for operating
subsidy.
Applicability of section 24 and URD statute and rules
Section 214 would establish that if any portion of a public
housing development receives funding under section 24 of the
1937 Act or through the Urban Revitalization Demonstration
(URD) funded under the fiscal year 1993 and 1994
appropriations Acts and has an approved comprehensive plan,
the Secretary may establish such requirements for all the
activities undertaken in the efforts to revitalize the whole
project without regard to the requirements of the 1937 Act,
and regardless of the funding source. For example, HUD could
establish the same requirements for the modernization
activities undertaken in the project with comprehensive grant
funding as the Department establishes for rehabilitation
activities undertaken in the project with section 24 or URD
funds without regard to the requirements of section 14 of
the 1937 Act.
It will be critical to the success of the severely
distressed public housing program under section 24 and the
URD program in dealing comprehensively and effectively with
the problem of severely distressed public housing and its
related social and economic issues to provide maximum
flexibility to public housing authorities receiving such
funding. Evidence already exists that URD grantees are
finding that the process of obtaining waivers of rules that
the grantees see as necessary to a successful revitalization
is time-intensive and not conducive to innovative and
experimental thinking. Under this proposal, a more
fundamental approach to effecting change is taken. Statutes
and rules governing one-for-one replacement, rent
calculations, and site and neighborhood standards, for
example, could be revised for any development receiving any
section 24 or URD funds. For example, a 750-unit site that
has received URD funding for 500 units and Comprehensive
Grant funding for the remaining 250 units (or the reverse)
would be subject only to one set of requirements that the
Secretary establishes for the project with respect to both
the URD funding and the Comprehensive Grant funding.
In addition, projects could be exempted from requirements
of the 1937 Act that could hinder the PHA's ability to
successfully bring about the revitalization of a public
housing project that is subject to the section 24 Severely
Distressed Public Housing program or the Urban Revitalization
Demonstration. This would include provisions of section 18
that require the PHA to replace public housing that is
demolished on a one-for-one basis. The replacement housing
requirement has often proven impossible for PHAs to satisfy.
This proposal would allow the Secretary the discretion to
determine if a PHA should be exempted from the replacement
housing, or other requirements, if those requirements hinder
the revitalization of the project.
A major concern is about how site and neighborhood
standards should apply to replacement housing under the
section 24 program and URD. Many of the older developments
that are targeted under this program are in serious
disrepair, and may be candidates for demolition and
replacement. Some of these sites would not meet HUD's current
requirements for new assisted housing construction. Under
this proposal, HUD would be able to establish standards for
review of site selection for replacement public housing in a
manner that recognizes the need for revitalization of the
neighborhood as well as the air housing implications of the
racial and socio-economic information relevant to the
replacement of public housing units.
Currently HUD is working aggressively with the two rounds
of URD grantees to ensure that their strategies expand
assisted housing opportunities in non-poor and non-minority
neighborhoods, and ensure meaningful neighborhood
reinvestment in distressed communities. Because the goals
and principles of the Department's site and neighborhood
standards correspond fully to the goals and conditions of
the URD program, the Secretary will be able to establish a
site and neighborhood assessment for URD projects that
will balance the interests of neighborhood revitalization
and spatial deconcentration.
Therefore, this proposal would facilitate the goals of the
section 24 program and URD by ensuring that PHAs are able to
move aggressively and comprehensively in implementing their
revitalization plans by allowing the rules established for
section 24 and URD projects and the approved comprehensive
strategy (plan) for any section 24 or URD grant to govern all
activities at the affected development (or in any impacted
area off-site), regardless of such factors as funding source
and the number of units in a replacement project.
Subtitle C--Anti-Crime Initiatives
Community Partnerships Against Crime
Section 221 would amend the Public and Assisted Housing
Drug Elimination Act of 1990 to create an expanded program
entitled the ``Community Partnerships Against Crime Act of
1994.'' Under the revised program, HUD would be authorized to
make grants to public housing agencies (including Indian
housing authorities) and federally assisted low-income
housing projects for use in carrying out activities to
implement plans for crime suppression, intervention, and
prevention in and around such housing projects.
Problem statement
Local officials, PHAs, and HUD share the responsibility of
providing safe and decent housing for public and Indian
housing residents. Housing in many areas suffers from rampant
crime, which may include gangs or drug dealers imposing a
reign of terror on local residents. The increase in crime
activity has not only led to fear and acts of violence
against residents, but also to a deterioration of the
physical environment resulting in substantial government
expenditures.
Crime is no longer limited to America's largest cities. The
problems of crime and drugs have spread to the smaller cities
and suburbs. Federal Bureau of Investigation data show
significant increases in violent crimes against persons and
crimes against property since 1985 in both large and small
urban areas.
Purposes
Subsection (b) would amend section 5122 of the 1990 Act to
establish the following new purposes:
(1) To improve the quality of life for law-abiding public
housing residents by reducing the levels of fear, violence,
and crime in their communities;
(2) To expand and enhance the Federal Government's
commitment to eliminating crime in public housing;
(3) To broaden the scope of the Public and Assisted Housing
Drug Elimination Act of 1990 to apply to all types of crime,
and not simply crime that is drug-related;
(4) To target opportunities for long-term commitments of
funding primarily to public housing agencies with serious
crime problems;
(5) To encourage the involvement of a broad range of
community-based groups, and residents of neighboring housing
that is owned or assisted by the Secretary, in the
development and implementation of anti-crime plans;
(6) To reduce crime and disorder in and around public
housing through the expansion of community-oriented policing
activities and problem solving;
(7) To provide training, information services, and other
technical assistance to program participants; and
(8) To establish a standardized assessment system to
evaluate need among public housing agencies, and to measure
progress in reaching crime reduction goals.
Program response
This proposal would establish an expanded program to
address the issue of crime in public and Indian housing
communities. The program, known as COMPAC, would organize
PHAs, residents, and police as a community force in the
development of comprehensive plans to counter crime in their
neighborhoods.
Under a revised and renamed Public and Assisted Housing
Drug Elimination Act of 1990, the program would include a
much wider variety of crime reduction, security enhancement,
and other efforts to counteract violence, substance abuse,
and gang related activities.
Subsection (h) would amend section 5130 of the 1990 Act to
provide a funding level for the expanded program of $265
million in grants for FYs 1995 and 1996. Of this amount, not
more than 6.25% could be used for federally-assisted housing
programs.
Subsection (h) would also add a new section 5130(d) to
authorize the use of up to 2% of appropriated funds for
contracts, grants, cooperative agreements, or interagency
agreements with PHAs or other public or private
organizations, to implement innovative programs which involve
joint investment by the public and private sectors, to
conduct activities designed to reduce crime and violence in
public housing. These funds could be used to create pilot
programs or to replicate identified successful program
models. There has been widespread support from resident
organizations, sponsoring companies, and PHAs for crime
prevention initiatives, such as after school programs which
provide a safe haven for youth who might otherwise return to
an unsafe environment. The Federal investment would leverage
a variety of resources from the private sector and other
agencies.
Subsection (j) would add a new section 5131 to the 1990
Act, under which the Secretary would be permitted to use $10
million of the funds appropriated under section 5130 in FY
1995 and FY 1996 for technical and related assistance,
including the establishment and operation of the
clearinghouse on drug abuse in public housing and the
regional training program on drug abuse in public housing. In
addition, the Secretary would be permitted to use these funds
for the establishment and management of assessment and
evaluation criteria and specifications, and the procurement
of the opinions of experts in relevant fields.
Expanded focus of program
The program would focus resources on areas of greatest
need; be flexible enough to respond to the circumstances in
each community; provide a cost-effective funding system; and
establish standards for enforcement which define and clarify
the roles of local officials, enforcement personnel, PHAs,
and residents.
Subsection (d) would amend section 5125 of the 1990 Act to
provide greater certainty of continued funding for those PHAs
with especially severe problems. It would give HUD the
authority to provide renewable grants, up to five years, to
PHAs with serious crime problems, subject to the availability
of appropriations. To renew a grant, HUD would be required to
perform an annual performance review and determine that the
grantee's performance is satisfactory.
Subsection (c) would expand the list of eligible uses of
grant funds in section 5124(a) of the 1990 Act beyond the
existing eligible activities to include the following:
Community Policing would be an eligible activity. This
approach has been effective in regaining control of crime-
ridden neighborhoods. Providing police officers to specific
neighborhoods on a consistent basis builds relationships with
residents, thereby increasing information exchange which
deters and prevents crime. Residents become less fearful
of reporting crime and, therefore, participate in
solutions to address crime problems. Foot or bicycle
patrols, police substations in public housing, community
relations officers, and other techniques which put the
officer in more direct contact with the community have
demonstrated results in reducing crime statistics.
Youth Initiatives would recognize public housing youth as
an essential resource in solving community problems. Their
enlistment can, in itself, be good prevention-programming.
Youth can be coaches in recreational programs, peer mentors,
and leaders in community solution action planning. More
emphasis could be placed on training, education, recreation,
career planning, employment, and substance abuse education
and prevention. Youth programming should provide the
opportunities, skills, and information needed for youth to
make appropriate life-style choices and offer a deterrence to
gang activity. The chapter would specifically authorize use
of grants for youth initiates such as training, education,
after school activities, tutoring, recreation, career
planning, employment, and entrepreneur programs.
Resident Services Programs provide comprehensive resident
services to effectively intervene and prevent crime
activities in public housing populations. Services may
include job training, educational programs, treatment, or
other appropriate social services which address the
contributing factors of crime.
Physical Security Hardware costs, such as fencing,
lighting, locking and surveillance systems, would be
allowable.
Authority for assisted housing owners and public housing agencies to
ban guns
Section 222 would preempt State and local law to provide
explicit authority for owners of insured housing and assisted
housing (including housing projects under the section 8 and
section 236 programs and housing units assisted under the
Certificate and Voucher programs) and PHAs, including IHAs,
under the Public Housing program to adopt lease provisions
banning the use, possession, and discharge of guns in
insured, assisted, and public housing.
Residents of assisted housing and public housing in many
localities experience a higher level of violent crime than
others who live in the locality. Guns are involved in a high
percentage of these crimes. Owners of insured housing
would be covered by this proposal to give them the
discretion to include such lease provisions where
appropriate.
When the Richmond Redevelopment and Housing Authority
(RRHA) adopted a lease with a gun ban, it was sued by the
American Civil Liberties Union and the National Rifle
Association in Federal District Court on the grounds that the
lease provision was not ``reasonable'' as is required by
Federal Law. It its defense, RRHA relied on the testimony of
Dr. Allan Barrett, then of Virginia Commonwealth University,
who had studied crime in Richmond and, specifically, in RRHA
units for the past 20 years. Dr. Barrett testified that even
though the crime rate in the City was significantly higher
than the national average for cities of similar size, the
incidence of crime in RRHA developments was much higher than
the city rate. He further testified about the incidence of
gun-related crime. Finally, he damaged the NRA's position
that the residents needed guns to protect themselves, by
pointing out that there was not a single instance, in 20
years, of a resident using a gun for self-protection.
The Court in this case found that the PHA'S lease provision
banning guns was reasonable. Unfortunately, RRHA's court
victory was overruled by the Commonwealth's passage of a bill
prohibiting public housing agencies from banning guns. This
prohibition does not apply to private landlords.
Make criminal records available for screening and evictions
Section 223 would preempt State and local law and override
other Federal laws to enable PHAs, including IHAs, to obtain
information on the criminal records of applicants for, and
residents of, public housing, for the purposes of applicant
screening, lease enforcement, and eviction. PHAs would be
authorized to pay a reasonable fee for this information.
Current regulations (24 CFR Part 960) direct PHAs to avoid
admitting families that have the potential of damaging the
social or financial stability of developments. Police
departments are specifically cited in the regulation as
sources of information PHAs may contact. Similarly, in 24 CFR
Part 966, PHAs are directed to have lease provisions that
make criminal activity grounds for eviction.
These requirements are difficult to carry out. The problem
is that in some localities the police departments are either
uncooperative or are barred by State law or local ordinance
from providing criminal records. In the State of California,
for example, the only access to police records is by police
departments and then only for law enforcement purposes. In
addition, there is a valuable Federal data base
which currently excludes PHAs--the National Crime
Information Center (NCIC).
Subtitle D--Authorizations and extensions
Low-Income Housing
Section 231 would amend section 5(c) of the United States
Housing Act of 1937 to authorize increases in budget
authority for fiscal years 1995 and 1996 for the Section 8
and Public and Indian Housing programs. Within the aggregate
increase in budget authority, the earmarks set forth below
would be made. For the most part, the amounts indicated are
the same for each of fiscal years 1995 and 1996:
Public housing grants--$413 million, including $263 million
for Indian housing;
Section 8--For FY 1995, $2.743 million, including
$514,275,000 each for the community investment demonstration
program and homeless assistance, and $171,425,000 for
assistance for the disabled; for FY 1996, $2,811,500,000
including $527,175,000 each for the community investment
demonstration program and homeless assistance and
$175,725,000 for assistance for the disabled.
Modernization grants--$2.786 billion for FY 1995 and $2.375
billion for FY 1996, including $15 million for technical
assistance and training;
Loan management--$150 million;
Extensions of expiring section 8 contracts--$5.092 billion
for FY 1995 and such sums as may be necessary for FY 1996;
Section 8 contract amendments--$2.2021 billion for FY 1995
and such sums as may be necessary for FY 1996;
Service coordinators in public housing projects--$30
million;
Public housing lease adjustments--$21.9 million;
Demolition and disposition units, and opt outs--
$82,916,000;
Section 23 conversions--$3,960,000; and
Revitalization of severely distressed public housing--$500
million.
Public Housing Operating Subsidies
Section 232 would authorize appropriations for Public
Housing Operating Subsidies at $2,496,000,000 for fiscal year
1995 and $2,376,000,000 for fiscal year 1996.
Family Self-Sufficiency Program
Section 233 would authorize appropriations for the Family
Self-Sufficiency program at $17,300,000 for fiscal year 1995
and $17,732,000 for fiscal year 1996.
Public Housing Family Investment Centers
Section 234 would authorize appropriations for Public
Housing Family Investment Centers at $26,342,000 for fiscal
year 1995 and $27,001,000 for fiscal year 1996.
Revised Congregate Services Program
Section 235 would authorize appropriations for fiscal year
1995 of $6,267,000 for the Revised Congregate Services
program.
Indian Housing Loan Guarantee Program
Section 236 would authorize an appropriation for the cost
of subsiding loans in the Indian Housing Loan Guarantee Fund
of $3 million for each of fiscal years 1995 and 1996. The
limitation on the aggregate principal amount of loans in each
such year would be $22,388,000.
Subtitle E--Applicability
Applicability of Public Housing Amendments to Indian Housing
Section 241 would repeal section 201(b)(2) of the United
States Housing Act of 1937. This provision states that
amendments modifying the public housing program that are
enacted after the Indian Housing Act of 1988 do not apply to
Indian housing unless explicitly made applicable. This
proposal would also make clear that certain amendments
affecting the public housing program made by the Cranston-
Gonzalez National Affordable Housing Act (NAHA), the Housing
and Community Development Act of 1992 (92 Act), and the
Multifamily Housing Property Disposition Reform Act of 1994
(94 Act) apply to the Indian Housing program.
Since its enactment in 1988, section 201(b)(2) has caused
confusion as to which legislative amendments affecting the
public housing program apply to Indian housing. Even where
the law expressly applies to Indian housing, HUD staff and
IHAs have trouble keeping straight which provisions in the
1937 Act and other Acts apply to the Indian housing
program.
Even worse is the situation where there is no logical
reason for an amendment not to apply to Indian housing, but
Congress fails to include the section 201(b) boilerplate
required to make the provision applicable. For example, NAHA,
the 92 Act, and the 94 Act made the following amendments
affecting the public housing program that, because of failure
to include the necessary boilerplate, to not apply to Indian
housing.
NAHA
Section 955(b)--Exempt wage standards under section 12 for
volunteer work.
92 Act
Section 103(a)(1)--Exempt retroactive SSI payments from
income.
Section 112--Lower the applicability of Federal preferences
from 70% to 50% of units.
Section 114--Miscellaneous operating subsidy amendments.
Section 116--Miscellaneous demolition and disposition
amendments.
Section 118--Public housing homeownership under section 21
(technical amendments).
Section 903--Require new consent form for the release of
applicant and participant information.
Section 927--Protect tenants who receive utility allowances
from having their eligibility or benefits under energy
assistance programs reduced or eliminated.
94 Act
Section 301--Correct the definition of family in the 37
Act.
Section 302--Eliminate the requirement to identify CIAP
replacement needs.
Section 303--Raise threshold for project-based accounting
from 250 units to 500 units.
Section 304--Permit operating subsidy adjustments only for
actual rent increases from fraud recoveries.
The repeal of section 201(b)(2) would avoid the inadvertent
failure to provide that amendments to the public housing
program apply to the Indian housing program. Section
201(b)(1) (retained in this amendment) provides, however,
that unless otherwise specified, the provisions of the 1937
Act that apply to public housing apply to Indian housing.
Therefore, if the authors of future legislation involving
public housing do not want it to apply to Indian housing,
they will need to make that explicit. Such situations should,
however, arise much more infrequently than situations where
the authors do want the amendments to apply to Indian
housing.
The bill makes it clear that the repeal of section
201(b)(2) is not intended to affect existing legislation that
applies changes to public housing to the Indian housing
program in accordance with the repealed authority.
In addition, as discussed above, there is no apparent
reason why the amendments specified above were not made
applicable to the Indian Housing program. Therefore, this
proposal would make them applicable.
title iii--homeownership; fha mortgage insurance authorizations
Subtitle A--Expand single family homeownership opportunities
Single Family Mortgage Insurance in Revitalization Areas
Section 301 would establish a new FHA program to make FHA
home mortgage insurance available on special terms to low-
and moderate-income homebuyers in revitalization areas. The
proposal recognizes the substantial contributions FHA has
made over the last 60 years in providing homeownership
opportunities and offers an expansion of the program to
buyers in neighborhoods undergoing revitalization efforts. A
new section of the National Housing Act would authorize
insuring authority and special financing terms targeted to
first-time homebuyers in revitalization areas receiving
public and private investment for improvement.
This program is an additional mechanism to encourage
homeownership among low- and moderate-income families through
the FHA insurance program, as opposed to direct subsidies.
The proposal dovetails with the counseling initiative
(``Homeownership Counseling and Outreach'') elsewhere in the
bill, since counseling will be mandatory under the program
and can also benefit from the down payment assistance
contemplated in the National Homeownership Fund Demonstration
or other local programs.
There are three important reasons for this proposal:
Affordable homeownership is a key goal of the
Administration. The opportunity to purchase one's own home is
an abiding dream for millions of Americans, especially for
America's young, for whom homeownership rates fell during the
1980's. FHA will continue to make an important contribution
to reaching this goal.
FHA has a special responsibility to serve a broad range of
families. While the need to operate a financially sound and
responsible FHA program is clear, nonetheless there are
opportunities to expand FHA's reach into the community by
offering favorable terms, and the proposal reflects this
outreach.
FHA must become more of a partner in local and community
efforts to revitalize neighborhoods. The availability of
mortgage insurance can be one key element in developing sound
neighborhoods as new homeowners purchase and upgrade housing
in the community.
Advantageous financing for mortgagors
The proposal would establish new insuring authority under
the National Housing Act to provide home mortgage insurance
in revitalization areas.
The main feature of this insurance is that it would provide
very favorable financing terms for eligible mortgagors
purchasing affordable housing in revitalizing areas. Under
the program, buyers would be able to receive 100% financing
on the home. Insurance could be written for 100% of the
appraised value of the property, as opposed to the graduated
method of calculating the maximum insurable mortgage. The
value would not include an allowance for closing costs.
Although closing costs could not be financed through the
insured mortgage, these costs as well as other cash
requirements for closing (e.g. points, prepaid expenses)
could be provided through State or local government programs,
non-profit contributions, or even seller or other third party
gifts. In other words, the program would not restrict how
these costs were covered and would not impose a minimum cash
requirement (as a percentage of acquisition costs) as is
normally done under the single family programs. In addition,
FHA would allow for second trusts if necessary to finance the
mortgagor's cash requirements, although these trusts could
not be insured.
The combination of 100% insured financing and allowing the
prospective mortgagors to derive their cash requirements from
sources other than their own could in many instances result
in debt amounts that exceed the value of the property.
However, this would be balanced in the program by two
requirements.
First, mortgagors participating in the program would have
to meet certain mortgage credit guidelines. The standard
ratios of income to mortgage payment and income to fixed
obligations would be applied and the mortgagor would have to
be able to afford the housing on this basis.
Second, all mortgagors would be required to participate in
prepurchase counseling regarding homeownership, money
management, and household maintenance. These services could
in fact be a part of the neighborhood revitalization program
undertaken at the local level and in this sense might be
contributed.
Program targeting
This new program would be targeted to revitalization areas
defined as (a) empowerment zones, enterprise communities, and
equivalent State-approved enterprise zones, and (b) urban
neighborhoods that are targeted by a city or a county for
coordinated affordable housing programs and enhanced
supportive services. This is because the outreach built into
the new program is intended in part to help cities and
distressed areas regain vitality.
This definition will allow substantial flexibility for the
locality to select a neighborhood that will benefit from
coordinated investment by the public and private sectors. At
the same time, the definition is intended to preclude
localities from defining so large an area that targeted
investments may be ineffectual. Such investments may include
the commitment of State or local housing or other program
funds, partnership efforts undertaken by public and private
entities, or areas where non-profit and community development
corporation activities are being undertaken. In addition, the
areas could contain efforts undertaken by the secondary
market agencies under their affordable housing programs or
community reinvestment lending activities undertaken by local
lenders.
The combination of these types of local efforts and FHA
insurance will be beneficial. New homeowners will have a
chance to purchase and invest in housing. Insurance will be
available for new, existing or rehabilitated single family
dwellings, and property types could include condominium and
cooperative units. In addition, the program could utilize
single family properties owned by HUD or other governmental
entities, and complement programs such as HOME and HOPE III
in the disposition of owned real estate. As this investment
in housing occurs, upgrading of the housing should take place
and the community itself should become more stable as
homeowners settle in the area and new owners are attracted.
In addition to targeting to certain areas, the program will
be targeted to certain mortgagors. First, the program will be
available to those who have no more than 115% of median
income of the area. This establishes a reasonable limit on
participation in the program, in terms of not providing its
favorable terms to all mortgagors, but would allow the
program to assist an income mix and avoid concentration of
only low-income beneficiaries. Coupled with the income
limitation, the program will have a maximum insured mortgage
amount of the greater of $67,500 or 75% of the high cost
limit established under Section 203(b)(2) of the National
Housing Act. On individual structures, the mortgage also is
limited to 100% of appraised value.
Second, the mortgagor must be a first time homebuyer. The
proposal employs the definition of first time buyer contained
in Section 104 of the National Affordable Housing Act of
1990. That definition provides that a first time homebuyer is
an individual and spouse who have not owned a home during the
previous three year period. The definition also includes
displaced homemakers (who may have owned a home with a spouse
prior to the purchase of a home under this authority) and
single parents who are unmarried or legally separated from a
spouse. The proposal recognizes the fact that if very
advantageous FHA terms are allowed, they be available to
those who may need them the most and who may have special
needs.
Finally, mortgagors may participate in the program only
once.
Premium charges and program costs
Because of its unique nature, the program will be insured
under the General Insurance Fund. This means that while the
program is intended to be operated in a financially
responsible manner, it is not required by statute to be
actuarially sound and therefore can assume more risk in order
to serve the social purposes of increasing homeownership
opportunities and assisting neighborhood revitalization
efforts. The program will not impact the Mutual Mortgage
Insurance Fund.
Premium charges under this program will differ form the
normal premium structure. A deferred ``up front'' premium
will be collected. The appropriate deferred up front charge
will be due and payable when the property is sold or the
mortgage otherwise terminated. However, the mortgagor will
pay a 0.55 percent annual premium for the life of the insured
loan or if a larger downpayment has been made, for a shorter
period. In addition, there will be two circumstances where
the deferred charge will not be collected as scheduled:
If the property is sold, the Department would be able to
recapture the premium charge or 50 percent of the net
appreciation of the property, whichever is less. This will
allow the mortgagor to retain at least 50 percent of the
equity built up in the home and will avoid the deferred
premium charge as acting as a disincentive to maintain and
keep current on the property.
If during the course of the life of the loan the mortgagor
wishes to undertake a streamline refinancing of the initial
loan, the Department will allow such refinancing and will not
collect the deferred premium as part of the loan transaction.
The mortgagor would be responsible for the premium charge on
the new mortgage, however. In this way, it may be possible
for some mortgagors to refinance on a favorable (and sounder)
basis without having to face the deferred charge.
It is clear that the program will involve risks greater
than those than normally assume under the Section 203(b)
program and because of its very favorable terms the program
will be popular with individual and communities. A limit will
be placed upon program volume, however. That limit will be 10
percent of the previous year's single family mortgage
insurance volume. (This volume includes any 2-4 family
activity.) A volume of 20,000-30,000 loans should be
expected under the program, with lighter volume the first
year as counseling requirements are met and counseling
resources developed at the local level. Preliminary budget
analysis shows that $3.6 million in credit subsidy per
5,000 participants would be needed for the FY 1994 book of
business and $2.7 million per 5,000 participants for the
subsequent years' book of business.
section-by-section summary
A section-by-section summary follows: Subsection (a) of
this section would add a new section 256 to the National
Housing Act. Section 256(a) would authorize the Secretary to
insure mortgages in accordance with the provisions of section
256, and to make commitments to insure such mortgages before
the date of their execution or disbursement thereon.
Subsection (b) would limit participation in the new program
to a mortgagor who--
(1) has an income not exceeding 115% of the median income
for the area, as determined by the Secretary with adjustments
for smaller and larger families, except that the Secretary
may establish income ceilings higher (but no more than 140%)
or lower than 115% of the median for the area on the basis of
the Secretary's findings that such variations are necessary
because of prevailing levels of construction costs or
unusually high or low family incomes;
(2) is a first-time homebuyer, as defined in section
104(14) of the Cranston-Gonzalez National Affordable Housing
Act;
(3) will occupy the dwelling as his or her principal
residence;
(4) has received such pre-purchase counseling as the
Secretary deems appropriate with respect to the
responsibilities and financial management involved in
homeownership;
(5) has not previously been a mortgagor under this section;
(6) has assets not exceeding such amount as the Secretary
may prescribe; and
(7) meets such other requirements as the Secretary may
prescribe.
Subsection (c) would permit a mortgage to be insured under
the new program only if the mortgage--
(1) has been made to, and is held by, a mortgagee approved
by the Secretary as responsible and able to serve the
mortgage properly;
( 2) covers a one-family dwelling (including a one-family
unit in a condominium development and shares representing a
one-family unit in a cooperative development) that is located
in an urban neighborhood that, in the determination of the
Secretary, is targeted by a unit of general local government
for revitalization using coordinated affordable housing
programs and enhanced supportive services;
(3) involves a principal obligation (exclusive of any
charges and costs in connection with the loan, including
initial service charges and appraisal and inspection fees) in
an amount not exceeding the lesser of--
(A) $75,000 or 75% of the maximum mortgage amount
determined under section 203(b)(2)(A), whichever is greater;
or
(B) 100% of the appraised value of the property as of the
date the mortgage is accepted for insurance.
However, in any case where the dwelling is not approved for
mortgage insurance before the beginning of construction, the
mortgage may not exceed 90% of the appraised value of the
property as of the date the mortgage is accepted for
insurance, unless (i) the dwelling was completed more than
one year before the application for mortgage insurance; or
(ii) the dwelling was approved for guaranty, insurance, or a
direct loan under chapter 37 of title 38, United States Code,
before the beginning of construction; or (iii) the dwelling
is covered by a consumer protection or warranty plan
acceptable to the Secretary and satisfies all requirements
that would have been applicable if the dwelling had been
approved for mortgage insurance before the beginning of
construction.
(4) has a maturity satisfactory to the Secretary, but not
to exceed 30 years from the date of the beginning of
amortization of the mortgage;
(5) contains complete amortization provisions satisfactory
to the Secretary requiring periodic payments by the mortgagor
not in excess of the mortgagor's reasonable ability to pay,
as determined by the Secretary;
(6) bears interest at such rate as may be agreed upon by
the mortgagor and the mortgagee;
(7) provides, in a manner satisfactory to the Secretary,
for the application of the mortgagor's periodic payments
(exclusive of the amount allocated to interest and to the
premium charge which is required for mortgage insurance as
hereinafter provided) to amortization of the principal of the
mortgage;
(8) contains such terms and provisions with respect to
insurance, repairs, alterations, payment of taxes, default
reserves, delinquency charges, foreclosure proceedings,
anticipation of maturity, additional and secondary liens, and
other matters as the Secretary may prescribe; and
(9) complies with such other terms and conditions as the
Secretary may prescribe.
Subsection (d) would require the mortgagor to pay all
charges and costs in connection with the loan, including any
costs necessary to close the loan. However, some or all of
these charges and costs could be paid on behalf of the
mortgagor by any person or entity (including the seller, a
governmental jurisdiction, or a private non-profit entity),
under such terms and conditions as the Secretary may
prescribe.
Any charges or costs paid on behalf of a mortgagor may be
in the form of a loan secured by the property under such
terms and conditions as the Secretary may prescribe. Any such
indebtedness must be a lien subsequent to that of the insured
mortgage; must not be part of the loan secured by the insured
mortgage; and must not be considered for purposes of
determining the maximum mortgage amount under subsection
(c)(3).
Subsection (e) would provide that in connection with the
insurance of a mortgage under section 256, the Secretary must
establish and collect a deferred up-front premium and an
annual premium, as provided in section 203(c)(2) of this Act
and section 2103(b)(2) of the Omnibus Budget Reconciliation
Act of 1990. Instead of collecting the MIP at the time of
insurance, the mortgagee would collect the amount due from
the proceeds of the sale of the property or upon payment of
the mortgage in full, and would have to remit the amount to
the Secretary according to such procedures and at such time
as the Secretary may prescribe. In determining the amount of
MIP due, no interest would be charged on the MIP.
The amount of the deferred up-front premium payable to the
Secretary would be the lesser of (i) the amount of the
premium established, minus any refund due; and (ii) 50% of
the net appreciation of the property, as determined by the
Secretary. For purposes of the program, net appreciation of
the property would mean any increase in the value of the
property over the original purchase price, less the
reasonable costs of sale and the reasonable costs of
improvements made to the property.
No part of the deferred up-front premium established in
connection with a mortgage that was insured under section 256
and that is refinanced under section 223(a)(7) would be
payable to the Secretary.
Subsection (f) would provide that the term appraised value
means the amount set forth in the written statement required
under section 226, or a similar amount determined by the
Secretary if section 226 does not apply.
Subsection (g) would provide that any mortgagee under an
insured mortgage is entitled to receive the benefits of the
insurance as provided in section 204(a) with respect to
mortgages insured under section 203, and the provisions of
subsections (b), (c), (d), (e), (f), (g), (h), (j), and (k)
of section 204 would apply to the mortgages insured under
section 256, except that (1) all references in section 204 to
the Mutual Mortgage Insurance Fund or the Fund would be
construed to refer to the General Insurance Fund; (2) all
references therein to section 203 would be construed to refer
to this section; and (3) the excess remaining, referred to in
section 204(f)(1), would be retained by the Secretary and
credited to the General Insurance Fund.
Subsection (h) would provide that the aggregate dollar
amount of commitments to insure mortgage under this section
for any fiscal year could not exceed 5% of the amount of
commitments to insure mortgages covering one- to four-family
properties that were made by HUD under title II of the
National Housing Act during the preceding fiscal year.
However, HUD could make commitments to insure mortgages for
up to an additional 5% in the case of properties in
empowerment zones or empowerment communities approved under
Subchapter U of Chapter 1 of the Internal Revenue Code of
1986, or in equivalent State-approved enterprise zones. In
addition, no more than 20% of the units in any revitalization
area could be subject to a mortgage insured under the new
program.
Subsection (b) of this section of the bill would provide
that the Secretary shall, by interim rule published for
effect in the Federal Register, establish such requirements
as may be necessary to carry out the provisions of subsection
(a). The Secretary would issue final regulations based on the
interim rule after notice and opportunity for public comment.
Subsection (c) would require HUD, within 4 years of the
date of implementation, to evaluate the program and, if
appropriate, recommend to Congress legislation to terminate
or improve it.
Maximum Dollar Amount for FHA Single Family Mortgages
Section 302 would amend section 203(b)(2) of the National
Housing Act to revise FHA single family mortgage limits.
Currently, the National Housing Act establishes a floor
mortgage limit of $67,500 and allows for high-cost limits
which may not exceed the lesser of 95% of the median house
price in the area or 75% of the FNMA/FHLMC conforming loan
limits ($151,750). The Housing and Community Development Act
of 1992 contained the last increase in FHA mortgage limits
for single family and for 2-4 family properties. That
legislation tied the maximum limits to the above percentage
of the conforming loan limits (for appropriate sized
dwellings) that were in effect as of September 30, 1992.
Although the conforming loan limits may increase according to
an index under separate authority, future increases in the
FNMA/FHLMC limits will have no effect on the FHA mortgage
limits until the law is changed. The 1992 Act also mandated
that the General Accounting Office (GAO) conduct a study of
the effect of tying the FHA limits to the limits set for FNMA
and FHLMC, including the effect on low- and moderate-income
borrowers of indexing the limits.
The amendment proposed would establish a new floor limit
based on average sales price data employed in the Mortgage
Revenue Bond program and would increase one of the loan
ceiling factors from 75% to 85% of the FNMA/FHLMC conforming
limits ($172,675). Both the floor and the maximum limits
would be adjusted annually. The proposal would not only make
FHA more responsive of the home buying public but also would
streamline the mortgage limit setting process by reducing the
number of areas for which the Department must set limits.
In establishing the floor limit, the Department will use
data on average sale prices for new and for existing homes
which are used to establish mortgage limits in the Mortgage
Revenue Bond program. These data are prepared by the Office
of Thrift Supervision for the Federal Housing Finance Board,
and are used by HUD under agreement with IRS to establish
basic mortgage limits in connection with Mortgage Revenue
Bonds. HUD will establish one limit for each metropolitan
area and one limit for all other areas in a State.
Existing floor limit levels as of the date of enactment
will not be lowered if the new limits are lower, but will be
held harmless. The floor limit will be indexed to the
Constant Quality Index, a national measure of home price
changes in a dwelling with characteristics that remain
constant over the years, and will be subject to annual
adjustment.
One key effect of the amendment will be to expand the
housing opportunities for average American families (e.g.
teachers, police and fire fighters, factory workers) in areas
that have relatively high housing costs. This will be true
not only in the very high-cost areas as may be found in
California and Connecticut, but also in some areas where the
floor limit increases over $67,500.
For example, the salary range for teachers, police
officers, and fire fighters in Bridgeport, Connecticut is
between $27,000 and $35,000. Under FHA underwriting rules and
assuming a combined income of $65,000, a family could qualify
for a median priced house in excess of both the current and
proposed limits. Similar examples can be found in California
and other States. However, the current limit shuts out a part
of relatively high-cost markets for these families. This
would be opened up to them under the new limits, and there
would be 118 counties which could be affected. However, the
limits would continue to be set at about 15 percent under the
standard limits for conventional lending.
In addition, expanding FHA's ability to serve modest income
workers can be done without an increase in expected risk. HUD
would expect that slightly larger loans would perform better
than relatively smaller loans, on the basis of past
experience.
Finally, the increase in the base or floor limits will have
several beneficial effects:
Homeownership opportunities for families with modest income
in moderately high cost areas will be increased;
New business resulting from increases in floor limit levels
will be sound business and will strengthen the Mutual
Mortgage Insurance Fund (MMIF);
The MMIF will be better positioned to reach out to other
underserved buyers because of the cross subsidization allowed
under its mutuality feature;
Administrative costs involved in setting mortgage limits
for numerous small communities will be reduced; and
The change will alleviate problems which have been
encountered in some rural counties, where the current limits
do not reflect proximate city housing costs.
Streamlined Refinancing for HUD-Held Mortgages
Section 303(a) would provide insured refinancing for
certain single family mortgages that have been assigned\1\ to
the Secretary. Currently, only insured mortgages are eligible
for refinancing under the National Housing Act (NHA).
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Footnotes at end of table.
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The proposal would add a new section 223(a)(8) to the NHA
to permit streamlined refinancing (without a new appraisal)
for eligible Secretary-held mortgages on single family
properties and condominium units. The proposal would permit
refinancing mortgages on single family properties to be
insured under section 203(b)\2\ or 221(d)(2)\3\ at the option
of the lender. With regard to condominium units, the
mortgages involved in the streamlined refinancing program
would be insured under section 234(c) of the NHA. A mortgagor
could refinance under the new authority only once.\4\
This program would be optional for eligible mortgagors
that: are current under the note and have made the full
payment under the note for at least six months; or are under
a forbearance agreement and have been making the full payment
under the note for at least six months.\5\
A conservative estimate of the number of mortgages that
would be eligible for this program is about 12,000, amounting
to almost 13 percent of HUD's assigned inventory.
The principal amount of the refinancing mortgage could
exceed the amount of the original mortgage if required to
accommodate additions to the principal amount stemming from a
delinquency and the provision of assignment assistance.
However, the new payment under the refinanced mortgage could
not exceed the required monthly payment under the existing
mortgage. Consistent with the current refinancing authority,
the term of the refinancing mortgage would be limited to 12
years beyond the unexpired term of the existing insured
mortgage. The proceeds of the refinancing mortgage would be
deposited in the MMIF, or another appropriate fund, at
settlement, thereby providing a onetime increase to the
Fund.\6\
For the purpose of the streamlined refinancing program,
this proposal would establish mortgage limits under section
221(d)(2) at 50 percent of the applicable dollar limitation
for a one- to four-family residence under section 203(b)(2).
For mortgages refinanced under section 203(b), the
mortgagors would be required to pay the new risk-based
mortgage insurance premium (MIP). Mortgages refinanced under
section 203(b) or 234 would be subject to the applicable
mortgage limits for the area.
The proposal would also make a technical change in section
223(a) of the NHA. A proviso currently a part of paragraph
(7), which does not involve paragraph (7), would be moved to
the end of section 223(a) as paragraph (10).
HUD's assigned inventory has been growing over the last
five years and currently amounts to approximately 94,000
mortgages, including loans treated under the assignment
program as well as certain loans assigned to the Secretary
pursuant to section 221(g)(4). This proposal constitutes a
way for HUD to meet the management challenge associated with
part of this increasing workload. Selling loans from the
assignment program is not a viable option. However, these
loans are not an attractive investment vehicle without
insurance. This proposal would remove the refinanced
mortgages from the assigned inventory, place the proceeds of
the refinancing into the MMIF, or other appropriate fund, and
place mortgagors in a current status with a new loan. Making
these loans current with a new lender would free HUD staff up
to accomplish other tasks, including better monitoring and
servicing of the remaining loans.
By virtue of this proposal, HUD in effect would be
exchanging an existing debt for a new insurance risk. It is
HUD's view that the insurance risk of the refinanced mortgage
would be comparable to that of the existing debt for several
reasons.
First, the amount of the new mortgage would only marginally
exceed the old debt. The possible extension of up to 12 years
in the term of the mortgage should not make any difference in
risk. Under section 230(a)(2)(C) of the NHA and HUD's
regulations, HUD now has the authority to extend the term of
HUD-held mortgages in the assignment program for up to 10
years.
Second, only mortgagors that have been current in their
payments under the note for six months will be eligible. HUD
believes that this is a significant risk-reduction feature of
the new program. The assignment program is designed to give
temporary relief to mortgagors that have experienced
difficulties beyond their control, and a significant number
do in fact recover.
Third, those mortgagors under a forbearance agreement will
have a new incentive to keep their refinanced mortgages
current. They will be starting with a clean slate, free from
any delinquency, with the advantages of an extended mortgage
term and the current lower market interest rates. Those
mortgagors under a forbearance agreement that are making
their required payments on the note may nonetheless be living
in a state of virtual perpetual delinquency. The forbearance
agreement does not necessarily require payment of all
deferred charges from the date of initial default. With the
refinancing, however, all delinquencies would be rolled into
the refinanced mortgage. On the other hand, HUD is cognizant
of the fact that the mortgagors that are under a forbearance
agreement have had difficulties meeting their obligations in
the past; their refinanced mortgages will have high loan-to-
value ratios; and their monthly payments may be equivalent to
their monthly payments on the earlier note.
The statute as currently written does not permit the
refinancing of assigned mortgages. A change to allow the
streamlined refinance of Secretary-held mortgages would
benefit a number of parties. The Department would benefit
since the assigned inventory would be reduced, servicing
demand would be reduced, and the proceeds from the
refinancing would replenish the MMIF. The mortgagor would
benefit because the mortgagor would be paying a lower
interest rate, and might even have a lower payment than
currently agreed upon with HUD. Lenders would benefit because
the refinancing would entail relatively little processing.
The new program would work as follows. HUD would notify
mortgagors currently in the assignment program of
the availability of the new program for refinancing and
the possible benefits of participation. Also, HUD would
notify lenders of the availability of the program and how
it is to work.
The refinanced mortgages could be processed under section
203(b), 221(d)(2), or, for condominiums, 234(c), at the
option of the lender. Section 221(d)(2) would be available in
order to protect the MMIF from undue risk and provide lenders
with an insurance option.
HUD would establish administrative guidelines under the
refinancing program to minimize the risks involved. In
addition to those discussed above, these would include
advising lenders that:
They could institute underwriting steps, such as credit
checks, verifications, application of income and payment
guidelines, in addition to those required under the
streamlined refinancing of insured mortgages; and
They could recommend (but not require) homeownership
counseling for the mortgagor in appropriate cases, provided
that counseling agencies and funds for counseling are
available.
In some cases, because of delinquencies, the new mortgage
balance may exceed the initial mortgage balance. However,
this should not pose a processing problem since no appraisal
is involved with a streamlined refinance and because the
mortgagor will have at least a six-month history of
successful performance at a payment that equals or exceeds
the new payment on the refinancing mortgage.
The option for refinancing under section 221(d)(2) removes
the credit risk from the MMIF while at the same time
providing favorable financing terms for the mortgagor. First,
proceeds would be returned to the MMIF on an accelerated
basis and servicing costs would be reduced. Second, since the
mortgagors involved are special cases, default risk on the
new credit would be transferred to the General Insurance
Fund.
Subsection (b) would authorize HUD to implement the new
refinancing authority by notice published in the Federal
Register setting forth such requirements as may be necessary.
Subsection (c) would terminate HUD's authority to refinance
a mortgage held by HUD 30 months after the date of enactment
of this Act. The total number of mortgages refinanced under
the new authority could not exceed 20,000. HUD will evaluate
the results of refinancing mortgages under this new authority
before considering extension of the program.
Innovative Affordable Housing Demonstrations
Section 304(a) would authorized HUD to establish Innovative
Affordable Housing Programs demonstrations which would have
the potential to increase homeownership opportunities through
the use of alternative mortgage instruments insured under the
National Housing Act and partnerships with the Federal Home
Loan Mortgage Corporation (``Freddie Mac'') and the Federal
National Mortgage Association (``Fannie Mae''), with the
Federal Home Loan Banks and their members, and with State and
local housing finance agencies in connection within their
responsibilities to achieve affordable housing goals. While
current law contains authority for specific alternative
financing programs, it does not provide general authority for
FHA to develop or insure new mortgage instruments. Because of
this omission, each potential innovation must await new
legislation, which can take several years to be enacted.
Similarly, broad authority to enter into partnerships with
other housing entities could enhance private and public
efforts to provide affordable housing and homeownership
opportunities.
Under subsection (b), each demonstration could be approved
for a period of up to three years, but the term of an insured
mortgage or activity could extend beyond this term. In total,
these demonstrations could not exceed 10 percent of the
previous year's single family FHA insurance volume. The total
number of mortgages insured pursuant to any one demonstration
in any fiscal year could not exceed 5% of the number of
single family mortgages insured in the previous fiscal year.
Under each approved demonstration, the Secretary could waive
any requirements of the National Housing Act or any other
applicable statutory or regulatory requirements that were
determined to be inconsistent with the purposes of these
demonstrations and establish necessary program requirements
(see subsection (c)).
In accordance with subsection (d), the alternative
mortgages would be obligations of the general insurance fund
under section 519 of the National Housing Act and the
Secretary would establish appropriate terms and conditions,
notwithstanding otherwise applicable provisions of the
National Housing Act.
Subsection (e) would authorize HUD to establish necessary
requirements to further the purposes of the demonstration,
and subsection (f) would establish certain conditions for
each demonstration, including a requirement that each
demonstration be evaluated. Annual progress reports and a
final report to Congress would be required by subsection (g).
Subsection (h) would authorize $1 million for an evaluation.
The term ``alternative mortgage instruments'' would be
defined in subsection (i) to include (but would not be
limited to) mortgages within the definition of ``alternative
mortgage transaction'' in section 803(1) of the Alternative
Mortgages Transaction Party Act of 1982. This includes loans
or credit sales (a) in which the interest rate or finance
charge may be adjusted or renegotiated, (b) involving a
fixed-rate, but which permits rate adjustments by having the
debt mature before the term of the amortization schedule, or
(c) involving any similar type of rate, method of determining
return, term, repayment, or other variation not common to
traditional fixed-rate, fixed-term transactions.
Single Family Risk-Sharing Mortgage Insurance Program
Section 305 would add a new section to the National Housing
Act to authorize risk sharing of insured mortgages between
HUD and selected State and local agencies to allow those
agencies to better serve their relatively high cost markets.
The purposes of the program under this section would be (a)
to increase the availability of single family mortgage
financing in areas where there is need for mortgage insurance
under this Act that cannot be met due to particularly high
average median house prices in the area, and (b) to foster
arrangements with State and local agencies to share the risk
of mortgage insurance. (See section 257(b).)
In States such as California, where many metropolitan areas
have relatively high average home prices, the FHA single
family mortgage insurance program may not be used effectively
because it is limited by statutory mortgage limits. State and
local programs in such areas generally contain mortgage
limits which exceed those of FHA. This proposal is designed
to offer FHA credit enhancement through a risk sharing
arrangement with State and local agencies in connection with
loans which qualify under a State or local agency program but
which exceed FHA maximum mortgage amounts.
The proposal is designed to complement State and local
efforts to provide affordable housing without assuming undue
risk. There will be a fairly narrow market for this program
because it is targeted at those States with relatively high
costs that fall between the maximum FHA amount and the
conforming loan amount. This slice of the market includes
working class families in high-cost housing market areas who
may have a difficult time finding affordable homes. The
presence of FHA as a credit enhancer may allow State and
local programs to work better (for example, through sales of
the State and local loans to the secondary market other than
GNMA).
Eligibility
HUD would be authorized to do business under this insuring
authority only with a State or local agency (or an agency or
instrumentality of a State or local agency) that demonstrates
that (a) it has the legal authority under State and, where
applicable, local law to participate in the risk-sharing
mortgage insurance program, (b) it can carry out a
financially sound, efficient, and effective mortgage
insurance program, while maintaining a top credit rating, and
(c) it has the ongoing administrative and financial capacity
necessary to oversee financial operations and sound
processing of loan origination and property disposition (See
section 257(c)(1).)
HUD would have the authority under the risk-sharing
agreement to cancel the approval of a State or local agency
to participate in this program, effective upon receipt of the
notice by the mortgagee or at a later date specified by HUD.
A decision by HUD to cancel approval would be final and
conclusive and would not be subject to judicial review. (See
section 257(c)(2).)
Delegation of insuring authority
Pursuant to a risk-sharing agreement negotiated between HUD
and an eligible State or local agency, HUD would delegate to
the agency the authority to insure the portion of the
mortgage covered by FHA insurance. (See section 257(d).) The
agency would also assume responsibility for loan management
and property disposition.
Underwriting standards and processing
The agency would adopt underwriting standards and loan
terms and conditions for the purpose of the program without
regard to requirements of the National Housing Act, other
than the new authority, section 203(g) (restrictions on
investors), and section 203(r)(2) (assumptions restricted to
credit-worthy purchasers). These underwriting standards and
loan terms and conditions would be subject to HUD review and
approval. HUD could negotiate changes to an agency's
underwriting system prior to approving a State or locality
for the program if such changes would improve upon the
quality of the loans. (See section 257(e).) The HUD
assignment program would not be available to mortgagors under
the risk sharing program (see section 257(i)), and no
property would be taken into HUD's inventory.
Risk sharing
The risk sharing method would be structured as follows:
The portion of the loan insured by HUD could not exceed an
amount equal to the lesser of (a) 80% of the appraised value
of the property, or (b) the maximum dollar amount HUD may
insure under section 203(b) of the National Housing Act
(the single family program limits) for the area (but not
including any amount for mortgage insurance premium). (See
section 257(g)(1).)
The total principal amount of the insured mortgage would
have to exceed the maximum dollar amount HUD may insure under
section 203(b)(2)(A) for the area, but could not exceed the
conforming limit set by the Federal Home Loan Mortgage
Corporation (currently $203,150). (See section 257(g)(2).)
The total amount of the mortgage could not exceed the
amount determined in accordance with the rules applicable to
the regular single family program under section 203(b)(2)(B),
plus the mortgage insurance premium, except in the case of
refinancing a mortgage previously insured under this new
authority. Under section 203(b)(2)(B), the maximum would be
the total of 97% of the first $25,000 of the appraised value
of the property, 95% of the value in excess of $25,000
through $125,000 and 95% of any amount over $125,000. (See
section 257(g)(3).)
In the case of default and foreclosure, the mortgagee would
file an insurance claim with the State or local agency. The
agency would pay the full amount of the claim owed to the
mortgagee. If the loss on the insured mortgage exceeds the
amount of insurance by the agency, the Secretary would
reimburse the agency for the difference from the General
Insurance Fund. (See section 257(h).)
Premiums on the loans would be shared by the Department and
the State or local agency. The share paid to HUD could not be
less than the amount necessary to cover HUD's risk and
administrative costs. (See section 257(f).)
GNMA securitization prohibited
GNMA would be prohibited from securitizing any loans
insured under this section. (See section 257(j).)
Definitions
The terms ``State agency'' and ``local agency'' would be
defined to mean an agency of a State or locality which has
the authority to insure mortgages and to participate with HUD
in this program, or an agency or instrumentality of a State
or local agency if the agency or instrumentality has such
authority.
The term ``single family property'' would mean a property
designed for occupancy by one family and would include a
condominium and a cooperative.
The term ``State'' would mean the 50 States and Puerto
Rico, the District of Columbia, Guam, the Trust Territory of
the Pacific Islands, American Samoa, and the Virgin Islands.
See section 257(k) for the definitions.
Implementation
Under subsection (b), HUD would have the authority to
implement the program by entering into risk-sharing
agreements negotiated with State and local agencies. HUD does
not anticipate publishing regulations or a notice to
implement the program. Otherwise applicable FHA regulations
would not apply to this special program, which is largely to
be carried out under State designs.
Homeownership Counseling and Outreach
Section 306 would amend section 106 of the Housing and
Community Development Act of 1968. The amendment would
authorize the Secretary to enter into contracts for
homeownership counseling and outreach with national, State,
and community-based organizations or consortia of such
organizations with demonstrated experience in reaching out to
and assisting households who have not previously been in the
homeownership market, or households who want to own but have
previously been unsuccessful. It would authorize
appropriations of up to $50,000,000 for section 106
counseling activities.
Under existing authority the Secretary will continue to
award housing counseling contracts to HUD-approved housing
counseling agencies. These contractors will deliver
comprehensive or specialized housing counseling, such as
prepurchase, default, and tenant counseling.
The new authority would authorize the Secretary to support
community-based efforts to bridge the gap between housing
consumers and the housing/mortgage markets. Specifically, it
would consist of outreach activities by national, State, and
community-based organizations to promote and expand the use
of governmental and private housing programs by low- and
moderate-income persons. It would include, but not be limited
to, counseling educational and marketing efforts, with
special emphasis upon homeownership under HUD programs. The
new authority would also consist of efforts to establish
ongoing working relationships between contractors and the
housing and mortgage lending industries on a national and
community basis.
The objective of the new homeownership counseling and
outreach program is two-fold:
a. Reduce barriers to homeownership for low- and moderate-
income persons, and
b. Encourage proactive efforts that increase homeownership
awareness and homebuying by low- and moderate-income families
by expanding access to mortgage markets and sources of
mortgage credit.
Housing counseling is a HUD-supported and partially HUD-
funded service that enables housing consumers to understand
and use governmental and private housing programs to meet
their housing needs and resolve their housing problems. These
consumers include homebuyers, homeowners, and tenants. The
proposed amendment to section 106 places a new emphasis upon
homebuyer counseling that includes follow-up activities to
assist homeowners to maintain and retain their housing.
Type of counseling currently funded
Since the inception of funding for counseling in 1972, HUD-
approved housing counseling agencies have used HUD funding to
provide comprehensive housing counseling. Comprehensive
counseling includes, but is not limited to, the following
types of counseling: pre-purchase, mortgage default, pre-
rental and renter, and rent delinquency. Later, HUD added
mortgage assignment and Home Equity Conversion Mortgage
(HECM) counseling.
Supporting these types of counseling, agencies include such
matters as housing selection, obtaining a mortgage, tenant-
landlord relations, budgeting, debt management, credit-
worthiness, and home maintenance. HUD Handbook 7610.1 REV-3
(6/93) provides additional details.
Expansion of counseling under the proposed amendment
Under the proposed amendment, the kinds of contracts funded
would go beyond the provision of counseling sessions. The
expanded efforts would remove barriers to homeownership and
coordinate efforts between other programs designed to assist
low-income persons to purchase homes. These activities would
generally be undertaken in conjunction with programs of
individual and group counseling by HUD-approved housing
counseling agencies.
The competition for these contracts would be conducted on
the basis of the merits of the proposed homeownership
strategies and would take into account such considerations as
the applicants' demonstrated ability and future plans, in
addition to traditional comprehensive housing counseling, to
carry out the following kinds of eligible activities:
(a) Leveraging Federal funds with other sources of funding
to support activities under its counseling program, including
leveraging private, community-based resources for the purpose
of assisting prospective mortgagors achieve homeownership.
(b) Conducting outreach and marketing to prospective
homebuyers, particularly those in targeted neighborhoods with
a high proportion of low- and moderate-income and minority
renter households. This activity would include determining
the level of counseling assistance required for those
responding to outreach efforts.
(c) Coordinating a proactive pre-purchase homeownership
strategy that includes linkages with other HUD-approved
counseling providers and community-based organizations. These
efforts should include: assisting prospective homebuyers to
repair credit, educating potential homebuyers on the
requirements of homeownership, providing technical
assistance, assisting in the packaging of mortgage loan
applications, and matching a family's resources with
appropriate Government and private sector homeownership
assistance programs. Contractors would also be required to
offer post-purchase and default-prevention counseling to help
homeowners retain their homes.
(d) Serving as an advocate for homebuyers by working with
the mortgage lending industry with regard to overcoming
mortgage credit barriers to homeownership.
Applicants would not need to be current HUD-approved
counseling agencies.
Example of Housing Counseling Program Advocacy and Outreach
Here is an example of how the proposed legislative
authority for housing counseling could be used to assist in
identifying and overcoming barriers to homeownership for low-
and moderate-income homebuyers.
A local population of low- and moderate-income individuals
and families in community ``X'' remain out of the homebuying
market for a number of related reasons. This population lacks
knowledge of Federal, State, and local homeownership
programs, including FHA, HOPE, HOME, RTC, Section 8
homeownership assistance, bank foreclosed properties, bank
CRA programs, and local downpayment assistance and other
financial programs designed especially for that population.
That population also lacks general information and skills
needed for participation in the homebuying market. The local
lending community, if knowledgeable about programs for low-
and moderate-income housing consumers, makes no special
effort to promote those programs among that population.
Because of this situation, the need exists for advocacy
and outreach that will make homeownership opportunities
available to that population.
To address this sample situation (numerous other specific
examples could be described), HUD would award a grant to an
existing entity experienced in, and successful at, preparing
low- and moderate-income housing consumers to take advantage
of homeownership opportunities. This effect would consist of
two major aspects that could occur concurrently in a
complementary fashion.
The grantee would work with all aspects of the local
housing market--consumers, lenders, realtors, etc.--to
actively educate the target population in homeownership
programs and develop cooperative efforts by builders,
realtors, and lenders to assure the availability of housing
and mortgages.
In support of these homeownership promotional efforts, the
grantee would assure the provision of a comprehensive
prepurchase housing counseling program to the consumers. The
details of the counseling are set forth in HUD Handbook
7610.1 REV-3 (6/93). This counseling would include post-
purchase counseling that would assist the homeowners in such
areas as budget maintenance, home repair, and delinquency/
default situations to avoid foreclosure. The grantee could
provide the counseling or assure that a HUD-approved housing
counseling agency provides the counseling.
Although HUD's traditional comprehensive housing counseling
program has provided prepurchase counseling to prospective
homeowners, the bulk of counseling actually delivered has
been default-oriented. The counseling has been structured to
inform the decisions of individuals seeking to achieve
homeownership and to minimize or cure the problems of
defaults and foreclosures.
Prepurchase housing counseling to individuals, while
beneficial, lacked any provision for proactively affecting
the wider circumstances governing barriers to homeownership.
Under the existing authorities, housing counseling agencies
cannot be compensated for a variety of proactive works, such
as community outreach, working with lenders on general
mortgage credit issues, and working with various state and
local agencies to bring about a more comprehensive program to
advance the cause of homeownership.
Therefore, new legislation is needed to permit HUD to fund
broader strategies of prepurchase counseling in conjunction
with other efforts to promote homeownership.
Subtitle B--National Homeownership Fund Demonstration
Subtitle B would amend the National Homeownership Trust
Demonstration to consolidate activities authorized under the
program and to make the program more efficient.
The National Homeownership Trust Demonstration was
authorized by the Cranston-Gonzalez National Affordable
Housing Act of 1990 and further amended in 1992. The
demonstration was designed to provide certain assistance to
first time homebuyers to allow them to purchase a home.
Assistance included interest rate write downs, downpayment
assistance, and second mortgages to facilitate homeownership
affordability.
HUD's Budget for FY 1995 requests $100 million for the
demonstration. The program is consistent with the
Department's goal to provide homeownership opportunities to
low and moderate income families. In order to make the
program more effective, the Department is proposing a number
of revisions to the program terms. These include:
Elimination of the Trust entity and its Board of Directors.
The Program is funded through a direct appropriation and
there is no need for a duplicative organization to administer
the assistance funds. HUD plans to establish a grant program
with State agencies and non-profit intermediaries.
Elimination of interest rate assistance. The problem most
potential buyers face is with the downpayment. Assistance for
interest rate buy downs tends to be more expensive than
assistance or second mortgage assistance, and is
administratively complicated and staff-intensive. Mortgages
under the program will carry a rate negotiated between the
buyer and lender. The program will still be able to be used
in conjunction with Mortgage Revenue Bonds, but without any
special terms or restrictions for such use.
Increased targeting to low and moderate income families.
The income eligibility level for the program will be set at
80% of median income, as opposed to the 115% level currently
authorized. In addition, the definition of first time buyer
will be tightened to eliminate an exception for current
owners whose property needs repair. Repair needs are able to
be met with other Departmental programs, such as the
Community Development Block Grant program.
Reduction of repayment requirements. Although repayment of
assistance will continue to be required if the mortgagor
ceases to use the property as a principal residence, the
requirements for repayment upon sale of the property or
upon an increase in the mortgagors income will be
eliminated. This is because these are the most staff
intensive requirements to administer and it is more
efficient to simplify the program. In addition, because
assistance will be limited to downpayment assistance and
second mortgages (the terms of which will be established
by the grantees), and interest reduction payments will not
be an eligible form of assistance, the repayment
provisions are not as critical to the success of the
program.
Allocation of funds will be to States and non-profit
housing entities on the basis of an application containing a
plan that describes how the applicant will achieve the
overall objectives of the Demonstration. The grant approach
is highly efficient. Funding will be competitive each fiscal
year. The Secretary would establish criteria for electing
grantees, which would include the extent to which the
applicant has experience in the provision of homeownership
opportunities for low- and moderate-income households. The
current termination date in the statute will be struck.
Subtitle C--Authorizations
Flexible Subsidy Program
Section 321 would authorize appropriations for each of
fiscal years 1995 and 1996 for the Flexible Subsidy program
at $50 million, and authorize continued use of the assets of
the Excess Rentals fund for that purpose.
Service Coordinators in Multifamily Housing
Section 322 would authorize an appropriation for fiscal
years 1995 and 1996 for $16,300,000 and $16,700,000,
respectively, for service coordinators in the following
federally-assisted multifamily housing programs:
Supportive housing for the elderly;
Supportive housing for persons with disabilities; and
Elderly or disabled families in--
Project-based Section 8 housing;
Section 236 projects; and
Certain section 221(d)(3) projects.
Limitation on GNMA Guarantees for Mortgage-Backed Securities
Section 323 would authorize an aggregate amount of loan
principal to be guaranteed under the Mortgage-Backed Security
program of $130,000,000,000 for each of fiscal years 1995 and
1996. Separate or additional authorization is not required
for the new REMIC program since all GNMA REMIC securities
will be based on and backed by mortgage-backed securities
issued under GNMA's authority. While ``costs'' (i.e., the
subsidy) are also authorized at such sums as may be
necessary, it is not anticipated that there will be any such
costs for the programs. Also, administrative costs for the
program are estimated at $9,044,000, but separate
authorization for this amount is not required.
Limitation on FHA Insuring Authority
Section 324 would authorize action in an appropriation Act
to permit the Secretary to insure mortgages in an aggregate
principal amount of $104,666,794,000 in fiscal year 1995, and
$91,037,845,000 in fiscal year 1996.
title iv--economic opportunity expansion of affordable housing
Subtitle A--Economic Opportunity
Economic Opportunities for Residents in HUD-Assisted Programs
Section 401 would provide for more effective implementation
of section 3 of the HUD Act of 1968 by strengthening the
Department's ability to enforce Section 3 and by supporting
recipients' capacity to implement Section 3 through the
creation of Economic Opportunity Centers (EOCs).
In addition to authority for the establishment of Economic
Opportunity Centers, this proposal consists of the following
specific changes to legislation.
(a) Amendment to section 3(c)(1)(B)(i) to add noncustodial
parents of children living in public housing to the
categories of persons with priority for Section 3 employment,
if the noncustodial parent has a court-ordered or
administratively-ordered and thus enforceable support
agreement. Having a Section 3 job could allow that parent to
make payments required by that agreement which he or she
would not otherwise have been able to make.
(b) Authority for the Secretary to permit recipients of HUD
assistance to expend program funds for job-related
activities, such as training, supervision of trainees, and
job recruitment, so that other HUD program resources can
support the costs of implementing Section 3.
(c) Authorization of $25 million for FY 1995 to support the
implementation of the Section 3 program, including the costs
of technical assistance to HUD grantees for low-income
persons.
$17.5 million is proposed to be reserved for the
establishment of Economic Opportunity Centers (EOCs) to
provide services necessary to link low-income residents with
jobs generated by HUD-assisted projects. Although EOCs
established with funds made available in FY 1995 would be
colocated with Family Investment Centers (FICs), and PHAs
would be the only eligible grant applicants during that year,
the services offered by the EOC would be available to anyone
eligible to benefit from activities under Section 3. Of
approximately 75 sites receiving up to $500,000 in FIC
funding, 35 of those sites would also receive a Section 3
grant of $500,000. The performance period would be 3-5
years. Applicants would submit proposals to be reviewed by
the Department, which would then administer the grants.
$4 million would be authorized to establish and sustain
employment and business initiatives with other Federal
agencies, such as the Department of Labor, the Department of
Health and Human Services, the Department of Commerce, and
the Small Business Administration. Through an interagency
agreement, the Department would transfer the HUD funds to
other Federal agencies so that they could provide programs
and services specifically tailored for Section 3 residents
and businesses. FHEO would administer these efforts.
$3.5 million would be authorized to be used for a Section 3
management and technical assistance program for the
development of materials, systems, and information designed
to enhance (i) the Department's capacity to manage Section 3
activities, and (ii) the capacity of public housing agencies,
contractors, and other entities subject to Section 3 to
comply with their responsibilities.
Section 3 mandates that HUD maximize jobs and other
economic opportunities for low-income residents in connection
with HUD-assisted projects. Despite the 1992 amendments
designed to improve the law's effectiveness, the Department
requires further legislative authority to fully achieve the
Section 3 mandate.
Additional funding in support of section 3 activities
History and current experiences show that recipients and
contractors need assistance in meeting their obligations. In
addition, the intended beneficiaries need program support--
such as training, education, child care, and transitional
income--to address impediments to their employment. The
proposal also recognizes the interrelationship of jobs for
residents to the Federal government's overall welfare reform
effort.
The lack of funds for training and providing job-related
support for low-income residents has impeded the
accomplishment of the Section 3 goal of linking low-income
persons with jobs and other economic opportunities generated
by HUD assisted projects. The new authority for the Secretary
to permit use of HUD program funds for such activities will
provide a vital tool to remedy this problem.
Public housing and other Section 3 residents have not fully
participated in existing training, employment, and business
development programs administered by other Federal agencies.
Targeting and leveraging of existing funds will reduce
duplication and enhance achievement of Federal, not just HUD,
objectives for employment and training of low-income persons.
The Community Development Block Grant, HOME, Youthbuild,
and other programs have funds specifically designated for the
provision of technical assistance to program recipients and
intended beneficiaries. The Department has never had such
funds for the implementation of Section 3. The positive
experience of providing technical assistance in Section 3
covered programs is evidence that funds for technical
assistance are critical for achieving statutory objectives.
Priority for non-custodial parents
Uniform establishment of paternity and enforcement of child
support agreements are two principles of the welfare reform
movement. Housing policy can be used to reinforce these
principles by including non-custodial parents of children
living in public housing in the Section 3 priorities. Often,
non-custodial parents fail to support their children, not
because of a lack of concern, but because they are not
employed. A Section 3 priority for these parents would offer
opportunities to receive training and find reliable
employment, thus enabling them to make support payments. This
change in policy would also be supported by the rent reform
proposal, which includes ceiling rents. This would reduce
another disincentive to support payments--the family would
not be penalized for the increase in income provided by the
non-custodial parent's payments. In some cases, this might
lead to reunification of the family.
Economic opportunity centers
A new initiative to establish Economic Opportunity Centers
is the initial basis for an intensified, coordinated Section
3 training, employment, and contracting program. EOCs would
be colocated with Family Investment Centers and coordinated
with the public housing Comprehensive Grant modernization
program. EOCs would provide services necessary to link public
housing residents and other low-income persons with jobs
generated by HUD-assisted projects. EOCs would link public
housing residents with jobs generated by modernization
activities. Homeless persons and all other section 3
residents would be eligible to receive services provided by
the EOCs.
Initially, EOCs would be located within or near public
housing developments and would be operated, either directly
or under contract with another agency, by the PHA. In
addition, proximity to transitional housing would be
considered in the site selection of EOCs. The legislation
would provide that State and local governments and their
agencies and private organizations will be eligible for
Economic Opportunity Center grants in the future.
The Department is seeking funds, beginning in FY 1995, to
establish a grant program which would award funds made
available under the Economic Opportunity Center program. In
the first year of this program, funds would be awarded to
PHAs and IHAs with Family Investment Center programs. The
purpose of the Family Investment Center (FIC) program is to
provide families living in public and Indian housing with
better access to educational and employment opportunities
that will help them achieve self-sufficiency. The EOC funds
would be awarded to PHAs that agree to use their
Comprehensive Grant modernization program as a vehicle for
providing employment, training, and contacting opportunities
and to use comprehensive grant funds to help pay the costs of
the effort.
Grants would be awarded competitively to PHAs that
demonstrate the capacity to assess training and support-
service needs, develop or provide employment development
skills to low-income persons, coordinate and utilize existing
public and private training, employment, and business
assistance funds or services, and perform such other
functions as the Secretary shall approve. The applicants
would be required to demonstrate working relationships with
unions or other construction trade associations.
Participation in the Step-Up program would be one way of
meeting this requirement.
In addition to activities funded by FICs, Economic
Opportunity Centers would include the provision of financial
and other assistance to individual residents to allow access
and retention of residents into existing and newly created
job training and employment. The following types of services
would be offered:
Developing facilities for training and support services;
Assessing training and service needs of public housing
residents;
Funding essential training and support services that cannot
otherwise be paid;
Maintaining a ``job bank'' of positions connected with
CDBG, Homeless Assistance, HOME and other Section 3- covered
project recipients and contractors, as well as listings of
jobs available in the private sector;
Assisting construction contractors, contractor
associations, and joint labor-management committees and
funding for developing Step-Up and other training and
apprenticeship initiatives;
Training and funding resident councils, resident management
corporations, neighborhood groups, and nonprofit
organizations to provide information to residents and
businesses about the requirements of Section 3 and available
economic opportunities;
Funding businesses' start-up costs; and
Providing space, resident referral, and otherwise providing
linkages with training funded through the Department of
Labor/Job Training Partnership Act, child care services
funded through the Department of Health and Human Services,
and business development and assistance programs funded
through the Small Business Administration and Department of
Commerce. In addition, space also may be made available for
services provided by non-profit organizations such as
Opportunities for Industrialization Centers, the Urban
League, and the National Service Commission.
Resident Management/Tenant Opportunity Program
Section 402 would make several amendments to the Resident
Management program under section 20 of the 1937 Act.
(1) New Name and Expanded Use of Assistance.--This proposal
would change the name of the program from ``Resident
Management Program'' to ``Tenant Opportunity Program (TOP)''.
The new name reflects the expanded scope of assistance under
section 20(f) proposed by this section.
(2) Expansion of Current Program.--This proposal would
expand the scope of the existing program under section 20(f)
that currently provides financial assistance to resident
management corporations (RMCs) and resident councils (RCs) to
obtain technical assistance for the development of resident
management entities, the development of the management
capability of newly formed or existing entities, and the
identification of the social support needs of residents of
public housing and the securing of such social support. In
addition to such technical assistance funding, HUD would be
authorized to provide assistance to RMCs and RCs in support
of a wide variety of activities for economic uplift which
are sponsored by resident organizations, such as job
training, economic development, security, and other self-
sufficiency activities beyond those related to the
management of public housing developments.
Many resident organizations, initially funded under section
20(f) for the purpose of exploring the feasibility of
resident management of public housing or for developing
resident capacity so that such management might be possible,
have come to believe that their efforts are best focussed
directly on programs for self-sufficiency and economic
uplift, whether or not such programs are likely to result
eventually in resident management of public housing. It is
time to amend the 1937 Act to reflect this broader purpose of
the program, while retaining all the rights and protections
initially granted by the statute to resident organizations
which want to manage public housing.
(3) 10% Set Aside.--A set-aside of up to 10% of the amounts
made available under section 20(f) would be established to
permit HUD to enter into contracts with (a) various entities
for monitoring, providing technical assistance, and
disseminating information designed to improve the
effectiveness of the program as a whole, and (b) PHAs,
resident organizations, and public or private entities for
innovative public/private initiatives for economic
development and increased self-sufficiency of public housing
residents. Eligible activities related to economic
development and increased self-sufficiency would include such
programs as counseling, treatment for substance abuse, child
care, remedial education, job training, and development of
resident businesses.
The 10% set-aside would enable the Department, through
contracts, to provide better quality and more proactive
training and monitoring, which is especially important
because of the shortage of HUD field staff. It is envisioned
that such technical assistance would generally be provided by
qualified local entities such as universities, not only
resident organizations. This proposal also would fund
resident organizations, PHAs, and private for-profit and non-
profit organizations to conduct activities which would
create, directly or indirectly, greater economic opportunity
for public housing residents. The ability to provide some HUD
funding for economic development would leverage investment
from the private sector.
(4) Joint Application With PHA.--The proposal would give
RCs and RMCs the option of applying jointly with a PHA for
TOP grants under the regular (non-set-aside) program. Under
current law, a PHA may join in an application from an RC or
RMC but may not be the grantee.
This fourth component of this proposal would authorize
joint application for funds under the regular program (not
the 10% set-aside) by a resident organization and the PHA. A
PHA may apply for assistance only if the resident
organization approves and is a joint applicant. Joint
planning and program development by resident organizations
and PHAs creates a strong partnership for the development of
resident management and other related public housing and
self-sufficiency activities, and should be permitted and
encouraged. Resident entities that submit applications with
evidence of a strong partnership with the PHA now receive
extra points in the competition. This proposal would further
encourage resident/PHA partnerships. In some cases, it will
be appropriate for the PHA to be the grantee.
(5) Increase Maximum Amount of Assistance.--The maximum
amount of financial assistance under section 20(f) would be
increased from $100,000 to $250,000.
This amendment would increase the maximum amount of
financial assistance with respect to any public housing
project grant amount from $100,000 to $250,000. It is
necessary to increase the grant limit because the current
maximum amount has proven to be too low to provide enough
training and mentoring for residents to operate self-help
projects.
(6) Funding Authorization.--The proposal would authorize
$85 million for activities under the TOP program, from
amounts made available for the modernization program.
This program applies to PHAs, including IHAs.
Subtitle B--Section 8 initiatives
In an effort to expand housing opportunities for low-income
Americans, the Department of Housing and Urban Development
has developed new initiatives within the section 8 tenant-
based program, which currently consists of the Certificate
and Voucher programs. For 20 years, this program has
reflected a successful partnership between the Federal
government and the private sector that has helped millions of
people find housing in many thriving communities throughout
the country. This year, HUD has developed new proposals to
increase housing choice for tenants by building on the
most successful elements of this program.
Before 1974, low-income families needing housing assistance
faced limited choices--either government-owned or government-
subsidized housing projects. The Section 8 tenant-based
program has brought new meaning to the term ``housing
choice.'' Since the inception of this program, millions of
assisted households have been able to choose among a wide
range of neighborhoods offering quality housing at a
reasonable price.
Over the years, however, the program has become extremely
complex, with the addition of a large number of legislative
mandates and regulatory constraints on the behavior of PHAs,
landlords, and families. The greatest of these problems may
be the existence of the separate, but similar, Certificate
and Voucher programs. The existence of two separate programs
places unreasonable burdens on the public Home agencies that
administer tenant-based assistance. The Department is about
to publish for effect a regulation that, to the extent
feasible under current law, streamlines the programs, gets
rid of unnecessary distinctions between certificates and
vouchers, and makes tenant-based assistance more user-
friendly. As one important example, this regulation will
simplify the system for administering the provisions of the
certificate and voucher programs that make assistance
portable across jurisdictional lines. But this regulation
cannot go far enough in clearing away impediments to good
program administration without legislative changes.
A combination of statutory problems and persistent patterns
of spatial separation by race and income has meant that
tenant-based assistance has not achieved its full potential
for assuring metropolitan-wide access to housing. In
particular, owners of rental housing in good condition and in
good neighborhoods are able to market their units to
unsubsidized tenants and may be reluctant to get involved
with a government program. This is aggravated by program
rules that impose restrictions on the future use of property
that are not part of the normal landlord-tenant relationship.
Finally, families often do not understand the choice of
housing options that the program offers, and fail to take
advantage of these options. The Department must overcome
these and other programmatic impediments to enable low-income
families to take full advantage of the Section 8 program
benefits.
The Department has prepared a series of legislative
proposals to reform the Section 8 program and to ensure its
long-term viability. These proposals feature a fundamental
delegation of responsibility and accountability to those
whose daily lives are affected by the program: landlords, and
most importantly, the families themselves.
Many of the provisions will allow more assisted families to
live in communities with viable local institutions that
provide high quality essential services. For instance, HUD is
proposing to merge the Certificate and Voucher programs into
a single integrated Certificate program that features the
best elements of each. Program rules would encourage families
to negotiate their rents within reasonable parameters instead
of imposing an arbitrary limit on their rental contributions.
The Department also has developed an enhancement initiative
(Choice in Residency) that will enable families to understand
that their housing choices include a broad range of
communities, including parts of the metropolitan area that
they may not have considered accessible to them. In addition,
HUD has proposed a technical amendment that would eliminate
barriers impeding the use of certificates in single room
occupancy (SRO) units.
Job opportunities, family circumstances, and other factors
often encourage families to move. The Clinton Administration
believes that tenants should have the flexibility to use
their Section 8 certificates and vouchers in other
jurisdictions when these circumstances arise.
The merger proposal will benefit PHAs as well as families
by eliminating the paperwork burden required for two separate
programs and the needless administrative work associated with
explaining two sets of similar but different program rules to
participating families and to landlords. The merger proposal
has been developed on the basis of extensive consultation
with PHAs to identify the best features of each program. For
example, the merger will empower PHAs to adjust payment
standards based on local market conditions, a provision of
the current voucher program that PHAs believe has helped them
respond to the rapidly changing market conditions of the late
1980s.
The private sector landlord is the linchpin of the Section
8 program. Without a broad network of participating landlords
representing a range of neighborhoods, building sizes, and
unit types, the Section 8 program cannot house assisted
families effectively and help them through the social and
economic transitions identified throughout this legislative
package. The Choice in Residency initiative is designed to
maintain and cultivate landlord participation in the Section
8 program. While the program would provide families with
counseling and support services to expand their housing
search outside of ``traditional'' housing markets, the plan
also would include an aggressive effort to recruit new
landlords into the program. In addition to making new
neighborhoods available to the program, a broader range of
housing units from which to choose should make it possible
for families to choose better quality housing at more
competitive prices.
Many private sector landlords do not participate in the
Section 8 program because it diverges from the traditional
landlord-tenant relationship. HUD has developed a series of
provisions that would make Section 8 participants similar to
other tenants and overcome this barrier. For example, the
Department will no longer require landlords to provide 90-day
notice when they terminate their section 8 contract. Finally,
the Department proposes to drop the current requirement that
landlords offer all units to Section 8 renters if any one
unit is made available to a program participant.
The Department is developing a homeownership certificate
program, as authorized by section 8(y) of the 1937 Act, to
complement the Section 8 rental tenant-based program. Recent
research indicates a clear relationship between homeownership
and improved social outcomes for children.' HUD understands
the benefit of homeownership and soon will publish a proposed
rule for this initiative. Through this effort, the Department
hopes to build upon the housing choices afforded through the
Section 8 rental Certificate and Voucher programs and provide
eligible families with even greater housing opportunities.
When combined with the ``entrepreneurial PHA''
demonstration provisions and several streamlining efforts
included elsewhere in the legislative package, these
initiatives truly represent a new way of doing business with
HUD's partners--one that emphasizes performance and customer
service over paperwork and bureaucracy. The following
sections provide detailed information on the Choice in
Residency initiative and the Certificate and Voucher program
merger proposal.
Choice in Residency
Introduction
Pursuant to section 411, the Department proposes to provide
funding to facilitate enhanced metropolitan-wide housing
search under the Choice in Residency initiative. The effort
would involve two prongs:
Families would receive counseling and other assistance to
increase their knowledge of housing opportunities throughout
a community, and ensure that they can act on their locational
choices. Rather than concentrating in low-income
neighborhoods, families participating in the Section 8 and
other assisted housing programs would be encouraged to
widen their horizons.
Landlords across communities would be encouraged to
participate in the Section 8 program, further enhancing
housing choices. Without a large and diverse network of
participating landlords representing a wide range of
neighborhoods and unit types, the Section 8 program cannot
effectively house assisted tenants, and help propel them
through the social and economic transitions which are
identified throughout this legislative package.
The program would be funded at $149.1 million for FY 1995
and $152.9 million for FY 1996.
Awards for Choice in Residency counseling and related
services would be made directly to public housing agencies
(PHAs) on an invitation basis, and competitively to PHAs or
nonprofit organizations, or both. PHAs receiving awards on an
invitation basis would generally arrange for experienced
nonprofit organizations to provide these services directly to
the families. HUD would identify these communities through a
simple formula by, for example, using the size of the
metropolitan area as a proxy for the likelihood that low-
income families need help in recognizing the full range of
housing opportunities available to them. The Department would
anticipate that PHAs and nonprofit organizations from large
and small, rural and urban communities would compete for the
other funds available through the program. The Secretary
would annually determine the allocation of funds between the
two allocation mechanisms.
Choice in Residency would provide individual counseling to
families applying for or already receiving tenant-based
assistance under the Section 8 Certificate and Voucher
programs, including homebuyers under the program's
homeownership provisions. Activities would include, but would
not be limited to:
Strategies for a successful housing search;
Transportation assistance and other services to assure
access to low-poverty tracts;
Information and counseling as the families adjust to their
new environment; and
Aggressive outreach to property owners to expand the
availability of housing outside of high poverty census
tracts.
Because the assistance will be made available to families
who are currently assisted and may want to consider other
housing options, it has the potential over time for reaching
a very large number of families. Currently there are 1.3
million families using Section 8 certificates and vouchers.
The level of counseling and related services provided to each
will vary depending on needs and circumstances, but as many
as 200,000 families could be assisted annually.
Once a PHA has been invited to participate in the Choice in
Residency program, failure to apply or successfully implement
a Choice in Residency program could adversely affect the
PHA's ability to obtain future allocations of incremental
assistance under the merged Certificate program. HUD would
consider failure by a PHA to apply for participation in the
Choice in Residency program and effectiveness of Choice in
Residency counseling when reviewing the PHA's future funding
applications for incremental Certificate assistance.
Performance criteria would be developed, including measures
such as tenant characterizations of the counseling they
received from the program, increasing success rates for
certificates in non-traditional neighborhoods, increased
program participation by landlords, increased numbers of
neighborhoods represented in the program, and reduced numbers
of assisted families living in high poverty census tracts.
The Department assumes that PHAs would ordinarily implement
these responsibilities through contracts with nonprofit
organizations. PHAs invited to participate in Choice in
Residency could, however, demonstrate to HUD their capacity
to administer activities directly.
For awards made on a competitive basis, HUD could conduct
separate competitions by geographic area (e.g., metro and
nonmetro) or by size/type of awardee. Such determinations
would be made in annual Notices of Funding Availability
(NOFA). The NOFA would also provide criteria for awarding
funds.
When making funding determinations on either an invitation
or a competitive basis, the Secretary could take into account
the extent of local matching funds identified in the
application for assistance.
Awards would be made for a fixed amount of dollars
associated with the provision of counseling services, to be
carried out over a specified period. For awards made to PHAs,
the PHAs would be responsible for all aspects of Choice in
Residency implementation, including monitoring of nonprofit
organization activities (as applicable). PHAs and nonprofit
organizations would be required to comply with HUD reporting
requirements.
The Section 8 tenant-based assistance provided to low-
income families under the Certificate and Voucher programs
offers access to housing located throughout the State of the
PHA issuing the certificate or voucher, and certain
metropolitan areas in adjacent States. With some limitations,
families receiving assistance under the Voucher program are
allowed to use the subsidy nationwide. Despite these
opportunities to rent housing throughout large geographical
areas, there are barriers to the successful use of this
assistance. These barriers include:
Landlord reluctance to participate in Federal housing
programs;
Discrimination on the basis of race, ethnicity, family
status or the assisted status of the family;
Reluctance on the part of some families to move from
poverty-concentrated areas to higher income areas; and
Difficulty finding housing within the maximum rents allowed
in the Certificate program or within acceptable rent burdens
for voucher families.
Under the Certificate and Voucher programs as currently
administered, the PHA is responsible for assisting low-income
families during their housing search, and also for conducting
outreach to landlords to assure broad availability of housing
in a wide range of neighborhoods. However, the quality and
extent of this counseling is uneven, and the PHA's area of
operation often stops at the city limits, as opposed to the
entire metropolitan area. While the Certificate and Voucher
programs have successfully broadened residential
opportunities for low-income families (especially when
compared with public housing and other project-based
programs), these programs have not come close to reaching
their full potential for promoting increased mobility. Choice
in Residency offers participating families significantly
expanded choice as well as meaningful support so they can act
on these choices.
Some families, particularly those in high poverty
communities, will choose to move to neighborhood where they
will have better access to jobs, and less concern about their
safety and the quality of schooling. Families that use their
Certificates and Vouchers to live in distressed neighborhoods
avoid high rent burdens, but they lack some basic amenities:
community services, safety from violence, neighbors who serve
as positive role models for children, and access to good
jobs. Experience with housing assistance offered in
combination with support for metropolitan-wide housing search
suggests that it can provide long-term benefits for low-
income families, especially families with children.
The FY 1995 Budget proposal to reduce Fair Market Rents
(FMRs) applicable in the Section 8 program from the 45th
percentile of private market rents to the 40th percentile
will cause a reduction of approximately 3% in FMRs. This
policy change need not have any detrimental impact on the
success of Choice in Residency. HUD has proposed that the
authority to grant exceptions to FMRs be retained. This
authority allows HUD to approve rents for a part of a
metropolitan area (such as a jurisdiction or group of
jurisdictions) by as much as 20% above the FMR. HUD intends
to carefully monitor the use of locality exception FMRs and
to encourage PHAs to request use of this authority where
appropriate and especially where needed to further the
objectives of Choice in Residency.
Merger of the Certificate and Voucher Programs
Section 412 would merge the existing Certificate and
Housing Voucher programs into a single Certificate program
under a revised section 8(o) of the U.S. Housing Act of 1937.
The project-based Certificate (PBC) program would be moved
from section 8(d)(2) to section 8(o)(13). This proposal would
also make necessary conforming and technical changes and
repeal obsolete and unnecessary provisions. The merged
program would use section 8(o) rather than 8(d) as the
starting point because the Voucher program legislation is
more recent and covers a number of areas of program
administration that had arisen since the Certificate
legislation was first enacted in 1974. Section 8(d) would be
retained since it will continue to apply to other section 8
project-based existing housing programs.
New certificate program
Subsection (a) would establish the new, merged program--
called the Certificate program--in an amended section 8(o).
The following references to the provisions of section 8(o)
refer to the proposed version, except where noted.
Authorization and payment standards
Section 8(o)(1) would provide the basic authorization for
HUD to provide assistance under the new merged program. It is
based on the existing section 8(o)(1), amended to make
explicit that the payment standard could not exceed the
section 8 existing housing FMR, or, in a sub-market area,
120% of the FMR. HUD could require a PHA to submit proposed
payment standards for approval. This would give HUD a tool to
assure that PHAs do not set payment standards too high or too
low.
The payment standard feature would allow PHAs to establish
payment standards below the HUD-established FMRs to reflect
local rents, or to assist more families by providing a
shallower subsidy. PHAs could react more quickly to changing
real estate prices than is possible under the current
Certificate program FMR system. PHAs would continue to
determine that every contract rent is reasonably based on
the rents of comparable units.
HUD is concerned that some PHAs may set artificially low
payment standards which do not reflect local rental rates and
that low-income program participants would be forced to pay
excessive rent burdens. Accordingly, HUD intends to closely
monitor rent burdens and review any payment standard that
results in more than 50% of the families in any bedroom size
paying more than 30% of adjusted income for rent. HUD could
require PHAs to modify the payment standard based on the
review results. Another protection against excessive rent
burdens would be the requirement that families cannot pay
more than 40% of adjusted income for rent when they first
received assistance or move to a new unit (see proposed
section 8(o)(3)).
HUD would be authorized to establish a review process by
which it would review PHA plans to adopt a higher payment
standard for a designated part of the market area, such as
for a locality or part of a county. This review process would
be similar to the process now used by HUD in reviewing and
approving locality exceptions to FMRs.
Rental assistance
Section 8(o)(2) would establish formulas for determining
rental assistance. The assistance payment where the rent does
not exceed the payment standard would be the difference
between the rent and the family share of the rent. The family
share is the same as for all other section 8 programs, except
for the current Voucher program. Under the formula, a family
would pay the highest of 30% of adjusted income, 10% of gross
income, and welfare rent. Where the rent exceeds the payment
standard, the assistance payment would be the difference
between the payment standard and the family share. This means
that the family would be responsible for paying any amount by
which the rent exceeds the assistance payment. The formula
for providing assistance for families using assistance under
the new Certificate program under the tenant-based
homeownership program authorized by section 8(y) of the 1937
Act would be amended to be comparable to the formula for
tenant-based rental assistance.
However, the total amount a family could pay towards rent
at the time it initially receive assistance with respect to
any one unit (that is, for the family's first unit under the
program and whenever a family moves to another unit) could
not exceed 40% of its adjusted income (see subsection
(o)(3)). Families under the PBC program would continue to pay
rent in accordance with the regular section 8 tenant rent
formula under section 3(a)(1), and assistance payments for
the family would continue to be determined in accordance
with section 8(c).
The housing assistance payment for the new Certificate
program is modeled on the subsidy formula for the current
Certificate program in that it does not include a shopping
incentive for families who rent units that cost less than the
payment standard. It is modeled after the current Voucher
program in that it permits any family who chooses to do so to
pay more than 30% of adjusted income for units renting above
the payment standard.
The voucher payment standard approach to determining
whether families can choose to pay more than 30% of adjusted
income is being proposed because it allows increased housing
choice, and in particular will permit families to move to
neighborhoods in which there are better job and educational
opportunities. However, the merged program would include new
features that are being proposed to provide increased tenant
protection and prevent rent gouging by owners.
HUD considered establishing a cap on the family's rent
burden in relation to family income, not just for the initial
receipt of assistance, but for any time during the subsidy
period. HUD rejected that idea because such an action might
discourage owner participation because the subsidy could be
terminated for reasons over which the owner had no control.
In addition, a continuing rent cap could harm a family by
withdrawing rent subsidy when family rent burden goes over
the cap even with the subsidy. Moreover, there is evidence
from research on the tenant-based Section 8 programs that
suggests that this additional control may be unnecessary.
When voucher holders were recertified, the rents increased
less than the year-to-year increase in the FMR, so that
families who were paying more than 30% of income found their
rent burdens shifting down towards 30% over time.
HUD also considered restricting the number of program
participants who could pay more than 30% of income for rent,
as does the current law for the Certificate program, which
permits only 10% percent of the families in a PHA's
incremental assistance program to do so. This option was not
selected since it would be difficult for PHAs to choose which
families could exercise an option to pay a higher rent, and
it was determined that this should be the sole choice of the
family.
The shopping incentive provision of the current Voucher
program, which lets families pay less rent if they lease a
unit renting for less than the payment standard, would be
deleted. It is costly and, in about one-third of the cases,
is provided to families who don't necessarily shop for the
best buys, because they use the assistance for the units they
already occupy. Further, there is no evidence that the
shopping incentive helps accomplish its intended purpose
of preventing rent inflation.
Eligibility
Under section 8(o)(4), as under current section 8(o)(3)(A),
very low-income families and families previously assisted
under the 1937 Act could receive a certificate. In addition,
families with incomes up to 80% of the median income for the
area could receive assistance in certain cases. The new
program does not use the voucher model, which identifies
specific categories of families who may receive a voucher
even if their income is above 50% of the area median (but no
more than 80%), such as families that qualify to receive a
voucher in connection with a HOPE homeownership program. The
voucher model is too narrow and complicated and cannot cover
all categories of families that should be included since that
list will continue to change over time. Instead, HUD would
establish eligibility criteria for families with incomes
above 50% of the area median and up to 80%. Providing for
exceptions specified by HUD through regulations would allow a
more flexible vehicle for granting exceptions to appropriate
categories of families without having to seek legislative
change each time an appropriate exception arises.
Preferences
Section 8(o)(6) would adopt the Federal preferences now in
section 8(o)(3)(B). However, the list of examples of local
preferences permitted for up to 10% of the tenant-based
assistance and 30% of the PBC assistance (or a higher
percentage if HUD determines necessary or appropriate) would
delete a reference to families in accordance with section
8(u)(2) (rental rehab families and families under the FmHA
section 533 program), since funding of the Rental
Rehabilitation program has been discontinued. PHAs could
continue to choose to give a local preference to families
under the section 533 program.
Retention of the program provision allowing HUD to permit
PHAs to apply local preferences for more than 10% of the
assistance, for good cause, would give PHAs the ability to
address pressing local concerns in exceptional circumstances.
Inspections for HQS compliance
Section 8(o)(7) would include the current Voucher and
Certificate program requirements for a PHA to inspect units
to assure they meet housing quality standards.
Vacancy payments
Section 8(o)(8) would retain the current provision in
section 8(o)(4) that if a family vacates a unit, no
assistance payment may be made with respect to the unit after
the month during which the family vacated the unit, with
one amendment. The reference to ``expiration of the lease
term'' would be removed because it is misleading. In
effect, the owner retains the housing assistance payment
for the month in which the vacancy occurs.
Repeal of 5-year ACC term requirements
The first sentence of section 8(o)(5) of current law would
not be included. That section includes a requirement that the
initial term for an ACC under the voucher program must be 5
years. There is no such limitation for the Certificate
program, and no reason to retain it here.
HUD intends to continue most initial funding for a five-
year term, but may require the flexibility to provide funding
for a shorter term for leveling out of the program funding
increments.
Cooperatives and mutual housing
The provisions for cooperative and mutual housing in
section 8(o)(7) would be deleted because they are no longer
necessary now that a tenant-based section 8 homeownership
program is available to low-income families under section
8(y). The homeownership program provides a broad
authorization for use of section 8 tenant-based assistance
for homeownership, including cooperatives and mutual housing.
However, section 8(y) is being revised to allow participation
of families who already own their cooperative or mutual
housing units. This revision is necessary so that cooperative
homeowners who are not first-time homebuyers would continue
to be eligible for section 8 subsidies if the other
requirements of section 8(y) are met.
Adjustments of payment standards
Section 8(o)(9) would authorize a PHA to adjust its payment
standards to assure continued affordability for families
receiving tenant-based assistance. This is a revision of the
first sentence of section 8(o)(6)(A) of current law, designed
to reflect HUD's current interpretation of its intent. The
section 8 rent adjustment provisions used for the existing
Certificate program would not be retained, except for the PBC
program, which would continue to provide for rent adjustments
in accordance with section 8(c) of existing law.
Section 8(o)(6)(B) of existing law would be repealed. That
section requires each ACC to be in an amount equal to 115% of
the estimated aggregate amount of assistance during the first
year of the contract. HUD intends to continue this practice,
but believes that the statute should not mandate this since
it could become appropriate to reserve higher or lower
amounts.
Adjustment pools
Section 8(o)(8) would not be amended, but would be
redesignated as section 8(o)(10). That section authorizes HUD
to use up to 5% of available budget authority as an
adjustment pool, to support higher subsidy needs where a PHA
adjusts its payment standards as permitted by section
8(o)(9).
Deletion of obsolete provision
Section 8(o)(9) of existing law would not be retained,
since it is unnecessary. It authorizes HUD to enter into
contracts to provide vouchers for replacing public housing
transferred under the HOPE 1 program.
Rent reasonableness requirements
Section 8(o)(11) would apply the rent reasonableness
requirements applicable now to the voucher and certificate
programs to the merged program. The special rule in the
penultimate sentence of section 8(c)(1) for determining rent
reasonableness for units that are exempt from local rent
control would be repeated here.
Assistance for manufactured homeowners who rent pads
As permitted for both the existing Certificate and Voucher
programs, section 8(o)(12) would provide for rental
assistance to families who own a manufactured home and rent
the real property (``pads'') on which it is located. PHAs
would establish a payment standard, which could not exceed an
amount established or approved by HUD. Sections 8(o)(11)(C)
through (E) of existing law would be deleted. They are not
necessary to carry out this aspect of the program.
The calculation for the subsidy payment to manufactured
home owners who own their home but who rent a pad would be
revised to provide a more generous subsidy amount based on a
less complicated subsidy formula. This calculation would make
the subsidy determination like that used to determine the
housing assistance payment for other tenant-based units in
the merged certificate program by basing the subsidy on the
real property rented, plus an allowance for any tenant-paid
utilities. The mortgage payment in the original formula would
be eliminated because it has little if any impact.
HUD intends to rely more on local rental cost data for
manufactured home pads in lieu of establishing separate FMRs
for pads. The 40% rent burden limit and the rent
reasonableness requirements would be the same as for the
tenant-based program.
Project-based certificate program
Section 8(o)(13) would contain authority for the PBC
program now contained in section 8(d)(2).
The current PHA option to project-base some of its
certificate units is being retained in the merged program.
There are two principal differences between the current PBC
program and the PBC program under the merged program.
First, the percentage of units which could be project-based
would include both ``old'' and merged certificate units and
the ``old'' voucher units in the 15% maximum per PHA, which
increases the total number of units a PHA could choose to
project-base since current law limits the number to 15% of
certificates and does not apply to Vouchers. This also
simplifies the program since a PHA can easily determine what
its limit is by calculating 15% of the total funding for its
program.
Second, the provision in section 8(d)(2)(D) concerning
owner tenant selection policies has been deleted. It is
unnecessary since PHAs have HUD-approved tenant selection
policies which they use to refer applicants to owners.
Section 8(c)(3)(A) establishes the amount the family
contributes toward rent. Families may not pay more than the
amount determined under the rent formula in section 3(a)(1).
For PBC units, there is no exception to this rule.
The provisions now contained in section 8(d)(2) would be
slightly reorganized and broken into more subparagraphs for
easier understanding. In addition, an error in existing
section 8(d)(2)(B) would be corrected. Section 8(d)(2)(B)
authorizes a PHA to approve the attachment of assistance with
respect to newly constructed structures if, as provided in
clause (ii), the aggregate assistance provided by the PHA
pursuant to the new construction authority and ``the last
sentence of subparagraph (A)'' does not exceed 15%. When
Congress amended subparagraph (A) in section 613(a) of the
Cranston-Gonzalez National Affordable Housing Act, to add
sentences to the end of subparagraph (A), it did not correct
the cross reference in subparagraph (B) to the last sentence
of subparagraph (A). That sentence, before NAHA, permits a
PHA to permit attachment of certificate assistance to
rehabilitated projects with respect to no more than 15% of
the PHA's assistance. The error would be corrected by
combining the authority for project basing of rehabilitated
and newly constructed units in the proposed section
8(o)(13)(A). The aggregate amount of such assistance could
not exceed 10%.
Inapplicability of section 8(c)
Under section 8(o)(15), section 8(c) would be made
explicitly inapplicable to the merged Certificate program.
For the most part, this simply clarifies that the
miscellaneous requirements of subsection (c) do not apply to
the program. Some explanation, however, is appropriate.
Section 8(c)(8) should not apply to the merged program
because owner notifications of rent increases prior to HAP
contract expiration are not necessary for a tenant-based
subsidy program, and owners cannot opt out of PBC HAP
contracts because extensions of PBC HAP contracts are at the
sole option of HUD and the PHA. An amendment to section
8(c)(8) to exclude the merged program is included in
subsection (e)(6).
Section 8(c)(9) would be made inapplicable to the new
program (see subsection (e)(7)). A 90-day termination notice
is not necessary for the tenant-based Section 8 Certificate
program since families may move and continue to receive
assistance when a HAP contract is terminated by the owner for
business or economic reasons. Participation in the tenant-
based section 8 Certificate program is voluntary for
landlords, and the notice requirement hurts the program by
discouraging owner participation. It also imposes a massive,
but meaningless, paperwork requirement on the Department,
PHAs, and owners in a time of scarce staff resources by
involving HUD in the owner's termination of HAP contracts for
individual tenants. The existence of grounds for eviction
should not be determined by HUD or the PHA, but by the State
landlord/tenant court.
Owner termination notices also are not necessary for PBC
units since NAHA amended section 8(d)(2)(C) to require that
the HAP contract allow extensions. The contract must obligate
owners to have such contract extensions accepted by the owner
and the owner's successors in interest. Accordingly, the
requirement that the owner provide one-year notice of
termination to allow HUD to adjust contract rents in order to
avoid the termination is unnecessary. The only owners which
would be able to terminate section 8 PBC contracts are those
which HUD and the PHA agree are undesirable and owners for
which there is insufficient funding for contract extensions.
Portability
Subsection (b) would amend section 8(r) to confirm that HUD
may reserve amounts available for the new Certificate program
to compensate PHAs which issue certificates to families that
move into the jurisdiction of the agency holding a
certificate or voucher issued by another PHA.
In addition, a family that moves out of an assisted unit in
violation of its lease would not be eligible to move to
another jurisdiction under portability procedures. Some
certificate and voucher participants have moved outside the
initial PHA's jurisdiction several times in the same year, in
violation of the initial one-year lease term. This practice
would be prohibited under the new Certificate program.
Repeal of requirement that owners of multifamily housing
projects lease to certificate and voucher holders
Subsection (c) would repeal the requirement in section 8(t)
that once an owner of a multifamily housing project enters
into a section 8 HAP contract, the owner may not refuse to
lease any available unit in any project of the owner because
the family holds a section 8 certificate or voucher.
This provision would be repealed because it imposes a
requirement which is contrary to maintaining normal landlord-
tenant relationships which are key to the success of any
tenant-based program. The provision is a major disincentive
for owner participation in the program. As a result of the
current requirement, many nonparticipating owners are
unwilling to rent to any family under the Certificate or
Voucher programs. Owners fear charges of discrimination and
legal action even if they refuse to lease to a section 8
family for reasons other than their participation in the
section 8 program. Since it is often easier and more
desirable to simply rent to an unassisted person in the
private market, section 8(t) has the effect of reducing the
number of choices available to section 8 families rather than
protecting families.
Homeownership option
As described above, subsection (d) would amend the
homeownership option authority in section 8(y)(1)(A) to
authorize a family to receive section 8 assistance for
homeownership through ownership of shares in a cooperative
housing, whether or not the family is a first-time homeowner.
Section 8(y)(1)(B)(i) currently allows families
participating in the FSS program to participate in the
homeownership program regardless of income. This is
problematic because an FSS family may lack sufficient income
to meet the responsibilities of homeownership. Since an
adequate income is critical to a family's successful
participation in the homeownership program, the FSS exception
would be amended to allow FSS participants with incomes below
the threshold to participate only if the PHA determines that
the families have sufficient resources. Of course, FSS
graduates or participants that meet the income thresholds can
still participate in the homeownership program.
Finally, the assistance formula for families receiving
assistance for homeownership would be amended to be
comparable to the proposed formula for tenant-based rental
assistance, described above.
Technical and conforming amendments; deletion of obsolete and
unnecessary provisions
Subsection (e) would contain miscellaneous technical and
conforming amendments. In addition, obsolete and unnecessary
provisions would be repealed. For example--
1. The second sentence of section 8(b) would be repealed.
The original purpose of this ACC provision was to require HUD
to provide funding for identifiable periods instead of
merging ``new'' certificate units with ``old'' certificate
units and establishing an identical ACC term for all units.
HUD has discontinued this practice by providing a
consolidated ACC with specified terms for each increment of
units. (subsection (e)(2))
2. Section 8(c)(5) would be repealed because it applies to
the development of Section 8 new construction and substantial
rehabilitation projects and is, therefore, obsolete.
(subsection (e)(5))
3. Section 8(n), single room occupancy, would be repealed.
SRO units provide a desirable affordable housing alternative
in many communities. All units leased under the Certificate
program must meet the HQS and the other program requirements.
Like other section 8 units, SRO units are not exempt from
local codes, and section 8 subsidies are not provided unless
program requirements are met and participants actually occupy
the units. Therefore, the special SRO certifications, demand
justifications, and approvals by the PHA and local government
in section 8(n) are unnecessary. (subsection (e)(12))
4. Section 8(d)(1)(A)(i) would be amended to delete the
provision that a family otherwise eligible for assistance
under section 8 may not be denied preference under the
certificate program solely because the family resides in
public housing. In addition, the merged Certificate program
would not include such a provision. HUD has interpreted this
section as permitting a family residing in public housing
that qualified for a Federal preference when it moved into
public housing and that was on the Section 8 waiting list
when it moved into public housing, to retain the Federal
preference status for section 8 (i.e., its place on the
certificate and voucher waiting list), even though the
qualifying condition no longer exists.
The Department believes that this provision should be
repealed primarily for reasons of equity. When there are
families with Federal preferences on the Section 8 waiting
list (such as families who are homeless or who have high rent
burdens), there is no justification to delay assistance to
those families while providing tenant-based Section 8
assistance to families who are adequately housed in public
housing. The provision inaccurately and unfairly
characterizes all public housing as inferior to Section 8.
Implementation of this provision would also cause increases
in PHA public housing expenses associated with turnover
vacancies.
If the public housing family is living in a substandard
public housing unit, the family would qualify for a Federal
preference for tenant-based Section 8 assistance. Therefore,
under current regulations, a family inadequately housed in
the public housing program has preference status for
certificates and vouchers. We believe that the concern the
amendment addresses is addressed under current regulations.
Subsection (f) would make technical, conforming amendments
to statutes other than the United States Housing Act of 1937.
Implementation
The transition period for merging the existing programs
will require careful planning and discussions with PHAs and
other interested parties. Accordingly, as provided by
subsection (g), the regulations would be issued after notice
and opportunity for public comment. The amendments made by
this section would not take effect until a date specified in
HUD in regulations establishing the new program or in a
notice published in the Federal Register. Considering the
extensive public comment HUD anticipates, this process is
likely to take some time. Even after the regulations go into
effect, HUD would be authorized to continue to apply former
law where necessary to simplify program administration or to
avoid hardship to families or owners.
HUD could provide for the transition of assistance under
the existing Certificate and Voucher programs to the new
Certificate program.
A premise underlying future appropriations for the new
Certificate program will be that amounts would be available
both for the new Certificate program, and to provide funding
for any necessary amendments needed for HUD's existing
contractual relationships. The legal capacity to manage
appropriations flexibly would be one of the desirable results
of the proposed new Certificate program.
Section 8 Certificate and Voucher Fees
Section 413 would amend section 8(q) of the 1937 Act to
change the way HUD determines fees that are paid to PHAs
(public housing agencies, including Indian housing
authorities) for the costs of administering the section 8
Certificate and Housing Voucher programs. In addition, it
would limit the preliminary fee to the initial increment of
assistance to PHAs that have not previously carried out a
Certificate or Housing Voucher program. For these PHAs, the
amount of the preliminary fee would be increased from $275 to
$500.
Under the revised system, a PHA would receive a fee for
each month for which a dwelling unit is covered by a housing
assistance payments (HAP) contract. The initial fee would be
a percentage, as specified by law, of a ``base amount''
established by HUD. This initial fee would be 7.65% of a HUD-
determined base amount for the first 1,000 units, and 7% of
the base amount for any additional units. Each year, HUD
would publish as a Notice in the Federal Register the per-
unit-month fee amounts that would apply for PHAs operating in
each metropolitan area and nonmetropolitan county for that
Federal fiscal year. The change in the per-unit-month fee
amounts would be based on changes in wage data or other
objectively measurable data that reflect the costs of
administering the program, as determined by HUD.
HUD's determination of the ``base amount'' would build on
practices established in FY 1994. As a result of section 11
of the HUD Demonstration Act of 1993, enacted in the Fall of
1993, the base amount used in FY 1994 is equal to the larger
of two numbers: (a) the FY 1993 fair market rent (FMR)
established by HUD for a 2-bedroom existing rental dwelling
unit in the market area of the PHA; and (b) the FY 1994 FMR
when higher than the FY 1993 FMR, but not to exceed the FY
1993 FMR by more than 3.5%. Under the proposed system, the
base amount would be the same as the base amount actually
used in FY 1994, subject however to a ceiling and floor. The
base amount would be used only to determine the fee amount
for the initial year.
To calculate the ceiling and floor, HUD has examined the
distribution of certificates and vouchers across all PHAs in
the country. Fifteen percent of the units are administered by
PHAs with a base amount of $422 or less, and $422 becomes the
floor. Fifteen percent are in PHAs with a base amount of $777
or more, and $777 becomes the ceiling. The intent of applying
these caps and floors to the base amounts is to increase the
level of reimbursement to PHAs serving areas with very low
FMRs, and to avoid over-reimbursement of PHAs providing
assistance in very high FMR areas.
The proposal would retain authority for HUD to increase the
fee if necessary to reflect the higher costs of administering
small programs and programs operating over large geographic
areas (see section 8(q)(1) of existing law), and for
extraordinary expenses (see section 8(q)(2)(A)(iii)). In
addition, HUD could approve higher fees if necessary to
reflect the higher costs of administering the Family Self-
Sufficiency program under section 23 of the 1937 Act.
The current system of section 8 administrative fees is
unnecessarily complex, unwieldy, and inconsistent with
program needs. The proposed amendment simplifies the current
system and eliminates its most serious flaws.
The current system has three different rate structures. For
pre-1989 allocations a 6.5% fee applies for vouchers and a
7.65% fee applies for certificates. For both programs, an
8.2% fee applies for incremental allocations made after 1988.
Research shows that administrative costs for certificates and
vouchers are very similar. The proposal would make the fee
system more uniform.
Basing administrative fees on each year's FMRs means that
administrative budgets are tied to changes in FMRs. Rents are
subject to market forces and periodic rebenchmarking which
can produce sudden increases or decreases in FMRs and
administrative fees (but with no connection to changes in
administrative costs). Erratic and sudden changes in
administrative fees are not conducive to sound program
management and can disrupt PHA efforts to provide a high and
consistent quality of management and advisory services. If
not for the special legislative language enacted in the Fall
of 1993, the rebenchmarking of FMRs to the 1990 Census would
have increased or decreased administrative funding for some
PHAs by 25-30%. These problems would be solved by the
proposal on a more permanent basis. Under this proposed new
PHA fee system, PHAs would no longer face the possibility of
sudden decreases in administrative budgets. Small PHAs and
PHAs with unusually low FMRs would tend to receive higher
fees. Large PHAs and those operating in high-FMR areas that
research has shown to have excessive fees would receive some
decreases.
Linking administrative fees to FMRs produces upward
pressures on FMRs. The primary cost of administering the
Section 8 program is wages paid to PHA employees. These wages
are closely tied to local wage costs, but not necessarily to
local rental costs.
FMR/local wage ratios differ significantly from area to
area, with low FMR areas relatively underfunded and high FMR
areas relatively overfunded. Small PHAs and PHAs in non-metro
areas tend to have the lowest FMRs and appear to be least-
favored by the current system. Research conducted by HUD's
Office of Policy Development and Research indicates that
housing costs (and FMRs) are more variable than wages and
non-housing costs, and that areas with unusually high or
low FMRs receive relatively high or low levels of
administrative funding relative to local wage and other
non-housing costs. This inequity is addressed by placing a
``ceiling'' and ``floor'' on the calculation of this
initial fee base.
Small programs appear to have difficulties with current
administrative fee levels, partly because they tend to
operate in low FMR areas and partly because they are unable
to achieve the economies of scale possible in larger PHSs.
This is especially true where the small program covers a
large geographic area. Under the new system, small PHAs would
tend to receive higher fees, and could also apply for
additional funds as needed.
The current statutory provision in section 8(q)(2(A)(ii)
regarding costs of assisting families who experience unusual
difficulties would be repealed. The currently used ``hard-to
house'' add-on to fee reimbursements is no longer considered
necessary to assure that adequate assistance is provided to
large families with children. Almost 20% of families
participating in the Certificate and Voucher programs contain
three or more children, and the recent rebenchmarking for
FMRs in most local markets has generally increased the FMR
applicable for units with three or more bedrooms, and
presumably also the availability of such units.
Current provisions in law that allow for additional fees
for small PHSs, delivery of assistance within large
geographic areas, and extraordinary costs would be retained.
However, HUD would approve additional fees only in unusual
circumstances, where the PHA documents justifies the need.
The use of a floor in the setting of the initial fee base
should help most small PHAs and PHAs serving large geographic
areas, minimizing the need for additional fees.
The current preliminary fee of up to $275 per unit for new
allocations, which is no longer a significant source of
revenue because program sizes are now large relative to
incremental unit allocations in any one year, would be
modified. It would be increased to $500, limited to PHAs in
their initial year of carrying out either the Certificate or
Housing Voucher program, and paid without documentation by a
PHA. Few additional PHAs enter either program in any one
year. The preliminary fee has not been increased since the
beginning of the program in the mid-1970s. Eliminating the
need for PHAs to document the need for a preliminary fee
would eliminate unnecessary paperwork. Virtually all PHAs are
able to justify the proposed level of preliminary fees in
their first year of participation in the program.
Implementation
Implementation of this proposal will require issuance of a
proposed and final rule. HUD anticipates that the year of
initial implementation will be fiscal year 1995.
To avoid administrative problems associated with sudden
changes in fees, and taking into consideration the
rebenchmarking of FMRs that has recently occurred, this
proposal also extends (until such time as a final rule for
this legislative proposal has been implemented) the fee rates
applicable in FY 1994.
Subtitle C--Miscellaneous
Section 811 Rental Assistance for Persons With Disabilities
Section 421 would make a number of amendments to section
811 of the National Affordable Housing Act, Supportive
Housing for Persons with Disabilities.
Rental assistance for existing buildings
Subsection (a) would permit HUD to provide rental
assistance to lessors and owners of existing housing for a
five-year term. The assistance could be provided to private,
nonprofit organizations that lease or own housing which meets
the requirements of the section 811 program for persons with
disabilities.
Private, nonprofit organizations could also apply for
section 811 capital advances for the construction,
rehabilitation, or acquisition of housing receiving the
benefit of a 20-year rental assistance contract. Sponsors
requesting only rental assistance would be required to meet
the eligibility requirements and adhere to similar
application procedures as those seeking capital advances.
Subsection (a)(1) would permit qualifying private nonprofit
organizations to receive rental assistance for housing they
own or lease. Subsection (a)(2) would limit the 40-year very
low-income use requirement to projects assisted with capital
advances. Subsection (a)(3) would establish a maximum initial
term of five years for existing housing. For example, a
private, nonprofit organization could receive assistance for
one or more units in a project it owns, or it could lease
units for its programs, thus providing housing without
incurring the long-term commitment of purchasing the units.
This would give private nonprofit organizations greater
flexibility in serving persons with disabilities and would
permit selection of housing units to promote greater
integration of persons with disabilities into the community.
It would permit HUD to assist private nonprofit entities and
to deliver assistance more quickly to a population in
need, while still preserving the quality of housing,
supportive services, and section 811 program standards.
Expiring contracts could be extended for a term of not
less than five years.
Subsection (a)(4) would clarify that the selection
criterion in section 811(g)(1) relating to ability of the
applicant to develop housing only applies when development is
involved.
Subsection (a)(5) would make a technical amendment to the
selection criteria for assistance in sections 811(g) (3) and
(5), to refer not only to the ``proposed design'' of the
housing involved but also the ``design'' of such housing,
since existing housing does not involve a ``proposed
design.''
Subsection (a)(6) (A) and (B) would limit the site control
requirements of section 811(j)(3) to applicants proposing to
use capital advance assistance and redesignate them as
subparagraph (B). Subsection (a)(6)(C) would add a new
section 811(j)(3)(B) to cover site control requirements where
only project rental assistance (not capital advance
assistance) is involved. In that case, the applicant would be
required to have ownership or control (such as a lease) of a
suitable site at the time of application. HUD could approve a
transfer of the assistance to another site at any time from
the date the application is submitted to the expiration date
of the rental assistance contract.
Subsection (a)(7) would amend section 811(j)(4). This
provision requires an owner to deposit up to $10,000 in a
special escrow account to assure the owner's commitment to
the housing. Subsection (a)(7) would make the provision
applicable only if the housing is assisted with capital
advances. Since the rental assistance contracts involved
would only be for a term of five years and would not involve
capital advances, HUD believes a deposit is not necessary to
assure the owner's commitment to the housing.
Subsection (a)(8) would amend section 811(k)(1) to permit
waiver of the 8-person limit for group homes in the case of
existing housing as well as the development of housing with a
capital advance.
Subsection (a)(9) would amend the definition of ``owner''
to include owners where only rental assistance is provided.
Subsection (a)(10) would correct a cross reference.
Repeal of tenant-based assistance
Subsection (b) would repeal the amendments made by section
623 of the Housing and Community Development Act of 1992.
This provision amended the Section 811 program to authorize
the use of program funds for tenant-based assistance for the
disabled. Unlike the rest of the Section 811 program, which
is operated by non-profit sponsors, section 623 requires that
tenant-based rental assistance be administered only by public
housing agencies (PHAs).
The Department does not believe that responsibility for the
program should have split administration. Non-profit sponsors
have successfully and efficiently operated the Section 811
program and its predecessor throughout their history. The
Department sees no need to fix a system that is working well.
The amendment in subsection (b) would simply return the
Section 811 program to its status before enactment of the
1992 Act, with respect to this matter.
Finally, enactment of the existing housing authority in
subsection (a) would address a need very similar to that
contained in section 623.
Technical change
1. Subsection (c)(1) would make technical changes to
section 811(k)(6)(A) of NAHA. This provision, added by
section 603 of the 1992 Act, requires Section 811 housing
sponsors to have received, or have temporary clearance to
receive, a tax exemption under section 503(c) of the Internal
Revenue Code of 1986.
First, subsection (c)(1) would permit sponsors to have a
tax exemption under either section 501(c) (3) or (4).
Sponsors that are tax-exempt under section 501(c)(4) were
eligible before the 1992 amendment. There appears no reason
to exclude these sponsors from participation in the program,
and subsection (c) would restore this coverage.
Second, subsection (c)(1) would remove an erroneous
reference to ``temporary clearance'' of tax-exempt status by
the IRS. IRS advises that there is no such clearance
procedure.
Subsection (c)(2) contains a conforming change deleting
section 8(i) of the 1937 Act, as added by section 623(b) of
the 1992 Act.
Funding for Supportive Housing for the Elderly and for Persons With
Disabilities
Section 422 would authorize appropriations for fiscal years
1995 and 1996 for the section 202 Supportive Housing for
the Elderly program, and the section 811 Supportive
Housing for Persons with Disabilities program, as follows:
For fiscal year 1995, $537,000,000 would be authorized for
both programs, including for the section 811 program,
$387,000,000, and for the section 202 program, $150,000,000.
For fiscal year 1996, the total authorization would be for
$387,000,000, entirely for the Supportive Housing for Persons
with Disabilities program under section 811.
Youthbuild
Section 423 would amend the Youthbuild program, authorized
under subtitle D of title IV of the Cranston-Gonzalez
National Affordable Housing Act,\8\ to make the program more
cost-efficient as a training mechanism and to make
cooperation with the Youthbuild program more attractive to
developers.
Subsection (a)(1) would amend section 454(b)(2) of the
Cranston-Gonzalez National Affordable Housing Act to provide
that occupied housing is not eligible in the Youthbuild
program.
One major objective of the program is to expand the supply
of affordable housing for homeless and low-income persons.
The housing can be new construction or rehabilitation. It
should be made clear that the rehab is only for vacant units,
not occupied housing. Relocation costs can be significant in
occupied housing and the priority needs to focus on actually
expanding the number of units available for new occupants.
Subsection (a)(2) would amend section 454(b) to remove,
from the list of eligible Youthbuild implementation grant
activities, the funding of operating expenses and replacement
reserves of property covered by the Youthbuild program.
Removing authority to fund operating expenses and
replacement reserves under the program would result in the
training of more disadvantaged youth, because all grant funds
would be spent on training-related costs instead of being
dedicated to the long-term operating expenses and replacement
reserve costs of the housing provided under Youthbuild.
Subsection (b) would eliminate the requirement for HUD to
develop a procedure for a combined application for a planning
grant and an implementation grant, currently contained in
section 454(g).
The combined grant format is not useful. Applicants need to
apply for planning or implementation grants--not both.
Combined grants are operationally infeasible and costly. The
structure of the planning process does not work with the
implementation cycle. Combined grants tie up implementation
funds for too long with any direct results or benefits.
Demand is so high that only 1 out of 10 implementation grant
applications can be approved.
Subsection (c)(1) would amend section 455(a) to ease the
use restrictions on Youthbuild properties by making it clear
that these restrictions apply only to properties for which
Youthbuild funds are used to pay for hard costs, such as
construction. This would make the program more attractive to
developers.
Easing the use restrictions would make the program more
attractive to developers who could serve as partners by
providing construction and rehabilitation sites for
Youthbuild training, thus reducing the amount of Youthbuild
funds spent on construction.
Subsection (c)(2) would redefine income eligibility under
section 455 by requiring 90% of the units to be available for
occupancy with families with incomes no higher than 50% of
median, instead of incomes less than 60%.
This would eliminate the confusion generated by the use of
a 60% standard instead of the usual HUD standard for defining
very low-income families of 50%.
Subsection (d) would amend section 458(d) to permit HUD to
use amounts from the technical assistance set-aside to
contract for assistance in managing the program.
HUD has insufficient staff to monitor the Youthbuild
program. Contract resources are essential to avoid fraud and
mismanagement. It is efficient to have the technical
assistance provider assist in the management of the program
consistent with section 458(a) of the Act.
HOPE Authorization of Appropriations
Section 424 would, in subsection (a), authorize
appropriations for the HOPE Homeownership programs
at $100,000,00 for fiscal year 1995 and $100,000,000 for
fiscal year 1996. Amounts for technical assistance would
be included within this authorization. Subsection (b)
would authorize $50 million for each of fiscal years 1995
and 1996 for the Youthbuild program.
Authorization of Appropriations for Housing Opportunities for Persons
with AIDS Program
Section 425 would authorize $156,000,000 for appropriations
in each of fiscal years 1995 and 1996 for housing for persons
with AIDS.
Title V--Preservation and Production Miscellaneous Amendments to
Lihprha
During the late 1960's and early 1970's, several thousand
multifamily housing projects were built with mortgages
insured or assisted by HUD under the section 221(d)(3) and
section 236 programs of the National Housing Act. For
projects owned by limited distribution mortgagors, HUD
regulations provide the owner may prepay the mortgage debt
after 20 years without HUD's consent. Prepayment of the
mortgage has the effect of terminating the HUD-imposed low-
income affordability restrictions which ensure that the
project is maintained for very low-income, low-income, and
moderate-income tenants. Over the next 15 years, the owners
of 360,000 units of multifamily housing projects will become
eligible to prepay their mortgage loans and convert the
properties to market rate rental housing or other purposes.
During the mid-1980's public concern was raised about the
risk of losing the availability of this stock for use for
low-income housing purposes.
In response to these concerns, the Emergency Low Income
Housing Preservation Act of 1987 (``1987 Act'') was enacted.
The 1987 Act placed constraints on an owner's right to prepay
and created incentives either to encourage owners to retain
the low-income affordability restrictions in exchange for
receiving a greater return on investment or to transfer the
property to purchasers that would agree to retain the low-
income affordability restrictions. The fundamental principles
of the 1987 Act were that the housing should be preserved for
its originally intended beneficiaries and that owners should
be assured a fair and reasonable return on their investment
through new incentives for the project for the remaining term
of the mortgage. The 1987 Act was intended to be temporary in
nature and gave Congress time to develop a permanent program.
This program was established under the Low-Income Housing
Preservation and Resident Homeownership Act of 1990 (``1990
Act''), which replaced title II of the 1987 Act and was
enacted as part of the National Affordable Housing Act.
The basic objectives of the 1990 Act are to assure that
most of the projects eligible to prepay remain affordable to
low-income tenants and to provide opportunities for tenants
to become homeowners. At the same time, the 1990 Act provides
for fair compensation for owners for the value of their
properties. The 1990 Act provides authority under very
specific and limited circumstances for owners to prepay their
mortgage loans and convert their properties to other uses.
Section 501 would make several changes to the 1990 Act to
assure excessive incentives are not provided and to simplify
administration of the program, as described below.
Establish a realistic Federal cost cap
Under current law, HUD can provide assistance to an owner
to maintain a project as affordable rental housing so that
total project rents will be as much as the higher of 120% of
the section 8 existing housing fair market rent for the
market area (FMR) or 120% of the prevailing rents in the
relevant local market area. This is called the Federal Cost
Limit. For owners seeking to sell their projects, the current
law contains no limit on the amount of HUD assistance. For
projects with aggregate preservation rents exceeding the
Federal Cost Limit, HUD is authorized under subsection (d)(2)
of section 221 (Mandatory Sale for Housing Exceeding Federal
Cost Limits) to provide additional assistance in the form of
a capital grant to priority purchasers.
The Federal Cost Limit in the current law results in
extremely expensive incentives packages. The amendments would
cap the Federal cost limit at the local FMR. This would
establish a uniform and realistic ceiling on incentives
packages for owners retaining their properties and for owners
selling their properties. When the value of an incentives
package exceeds the local FMR, it is more cost-effective for
HUD to assist eligible tenants with section 8 vouchers than
to provide owners or purchasers with the additional project-
based assistance above the FMR.
Owners of projects with aggregate preservation rents that
exceed the new Federal Cost Limit would be able to prepay
their mortgages, subject to the protections for tenants in
section 223. Section 223 requires issuance of vouchers to
families and provides other benefits. Recaptures of existing
project-based rental assistance and interest reduction
payments would largely offset the costs of the vouchers for
their first five-year term.
Alternatively, owners could elect to accept an incentives
package or sell a project at a price that does not exceed the
new Federal Cost Limit. State and local governments could
elect to make up some or all of the difference above the
Federal Cost Limit if they determine it is important to
preserve certain projects. This would encourage non-Federal
participants to share the costs of preserving, for low- and
moderate-income housing purposes, projects with high costs or
values, where appropriate.
Subsection (a)(1)(A) would amend section 215, which
establishes the Federal cost limits, to reduce the cap to
100% of the FMR. Subsection (a)(1)(B) would repeal section
215(a)(2), which establishes the Federal cost limit based on
120% of prevailing rents in the relevant local market area.
Subsection (a)(3)(A) would repeal section 221, which provides
incentives beyond the Federal Cost Limit in the case of sales
to a qualified purchaser (including a priority purchaser).
Subsection (a)(2) would amend section 215(b)(2)(C) to provide
that where the preservation rents exceed the Federal cost
limit, the owner could file a second notice of intent
indicating an intention to terminate low-income
affordability restrictions, subject to compliance with the
tenant protections in section 223 (Assistance for
Displaced Tenants). The protections in section 223 now
apply where an owner does not receive a purchase offer,
the purchaser is unable to complete the purchase, or HUD
is unable to fund an acceptable plan of action. The
remainder of the amendments in subsection (a) contain
related conforming amendments.
Cap appraisals under LIHPRHA at fair market value for
residential rental use
Subsection (b) would amend section 213(b)(2) of the Low-
Income Housing Preservation and Resident Homeownership Act of
1990 to cap appraisals for all purposes at the fair market
value of the property assuming market rate residential rental
use. Under existing law, where an owner is selling or
otherwise transferring the property to qualified purchasers
under section 220 or 221, appraisals are performed based on
the ``highest and best use'' of the property. For purposes of
extending low-income affordability restrictions and receiving
incentives under LIHPRHA, the preservation value is the fair
market value of the property based on the highest and best
use of the property as residential rental housing.
Requiring an appraisal based on the highest and best use of
the property for market rate residential rental purposes,
both for owners who elect to extend low-income affordability
restrictions and owners who elect to sell or otherwise
transfer the property, would reduce the subsidy costs of the
Preservation program under LIHPRHA, the cost of conducting
two types of appraisals, and the time needed for HUD to
process applications. In addition, the disincentive to extend
low-income affordability restrictions, due to the typically
lower appraised value as market rate residential rental use,
would be removed.
Repeal of homeownership assistance
Subsection (c) would eliminate the use of grants for
resident homeownership. Grants are expensive because all the
funding has to be provided on an up-front basis. However,
even absent the homeownership grants provision, homeownership
conversion to limited equity cooperatives will still continue
and be funded through section 8 assistance to low-income
resident buyers. Eliminating grants also simplifies the
program and makes it easier for residents to participate.
Transition
Subsection (e) would apply the amendments made by this
section only to eligible owners that file a plan of action
under the Low-Income Housing Preservation and Resident
Homeownership Act of 1990 on or after the date of enactment
of this Act.
Low-Income Housing Preservation Authorization of Appropriations
Section 502 would authorize appropriations for Low-Income
Housing Preservation at $226,000,000 for fiscal year 1996.
FHA Fund Support of Section 8 Assistance for Property Disposition
Under section 503, section 8 assistance that was used in
connection with property disposition under section 203 of the
Housing and Community Development Amendments of 1978 would be
funded from the cognizant FHA Fund (General Insurance or
Special Risk, as applicable), instead of being funded with
budget authority provided under the U.S. Housing Act of 1937
(as all other section 8 assistance is funded). The amounts of
budget authority to be made available from the Fund for the
section 8 assistance would be $3.945 billion for 5 years.
Also, section 207 of the National Housing Act would be
amended to make rental assistance an eligible cost in
connection with the sale or lease of acquired properties.
In common with other amounts drawn from the Fund for
property disposition, the rental assistance and newly-
authorized grant funds would properly be scored as a
mandatory, rather than discretionary, expenditure. See
sections 250(c) (7) and (8) of the Gramm-Rudman-Hollings Act.
Demands on amounts budgeted for HUD's discretionary programs
would be reduced, to the extent that the rental assistance
and grants in connection with property disposition costs were
borne by the FHA Fund, instead of the 1937 Act. The costs of
the new mandatory program would be offset by the savings in
other, FHA mandatory charges that would be incurred if the
properties are held in inventory rather than sold.
The management and disposition of HUD-owned multifamily
properties and the foreclosure of delinquent, HUD-held
mortgages is subject to the strict affordability mandates of
section 203 of the Housing and Community Development
Amendments of 1978. The legislation requires that section 8
rental assistance, or an equivalent subsidy, be provided for
a minimum of 15 years to preserve HUD-held and -owned
mortgages and properties after foreclosure or sale. Section
203 was recently amended by the Multifamily Housing Property
``Disposition Reform Act of 1994 to modify the requirements,
particularly as applied to formerly unsubsidized projects,
but affordability will remain a funding issue for
substantial numbers of formerly subsidized projects.
The Department is effectively prohibited from selling
properties without the required amounts of section 8 subsidy,
currently scored as a discretionary expenditure. To the
extent insufficient amounts of discretionary subsidy are
appropriated for this and other section 8 programs, the
Department is nevertheless required by law to manage the
properties in a manner meeting the statutory affordability
criteria. This means managing the asset and providing
suitable and affordable housing to the low-income target
population, without section 8 subsidy. The cost associated
with HUD ownership, including maintenance and the rental
subsidies that HUD must nevertheless supply, are paid for out
of the General Insurance Fund. The holding costs are scored
as a mandatory charge.
With the existing budgetary distinctions between
``mandatory'' and ``discretionary'' expenditures,
classification of an activity is of critical importance. The
tightening caps and reductions associated with discretionary
charges has, over the years, created a perverse incentive to
hold properties in inventory and subsidize them as a
mandatory expense rather than request or appropriate
requisite amounts of discretionary budget authority to sell
the asset and return it to private and non-profit ownership.
While this may constitute rational budget strategy, it is not
a sound methodology for making the optimal social and
financial decisions regarding asset ownership.
The current proposal is designed to establish a ``level
playing field'' for decisions regarding the management and
disposition of these assets, so that concerns in addition to
the scoring of the budget authority receives due
consideration.
The proposal has a significant budgetary scoring impact
(for the better) and also should provide for more cost-
effective methods for dealing with the substantial mortgage
note and property investments acquired by the Federal
government.
HOME Program Loan Guarantees
Section 504 would establish a loan guarantee program for
the HOME Program, similar to the Section 108 authority for
the Community Development Block Grant Program. This authority
would provide participating jurisdictions with an efficient
source of financing for large scale housing development.
Eligible applicants would be eligible HOME participating
jurisdictions.
The participating jurisdiction may be the borrower or it
may designate a public agency to issue the notes or other
obligations and receive the guarantee.
Eligible activities would include: acquisition, new
construction, reconstruction, or moderate or substantial
rehabilitation of affordable housing including real property
acquisition, site improvements, conversion, demolition and
other expenses, including financing costs, relocation
expenses of any displaced persons, families or business
organizations. Credit enhancements and debt service reserves
would be eligible under this authority while these activities
are limited under the regular program because of the
disbursement requirements under the statute. The costs
associated with a public offering is also eligible. All
housing funded under this section shall meet the requirements
of this title.
The maximum amount of loans that HUD may guarantee or
commit to guarantee for each PJ is limited to five times the
participating jurisdiction's latest HOME allocation amount,
as well as being limited by the appropriations action.
Security for the loan guarantee is a pledge by the
applicant of its current and future HOME funds. HUD may also
require additional security, especially if the repayment
period exceeds 10 years. In any event, the repayment period
may not exceed 20 years. The guaranteed loans would be
financed in the same manner as the CDBG Section 108 loan
guarantee program. In the event of default, HUD could make
payments on the loan using the pledged HOME funds.
The ability to use HOME loan guarantees could be essential
to participating jurisdictions who had formulated and were
implementing a neighborhoodwide strategy to build or
rehabilitate large numbers of units as a single undertaking
within a relatively short period of time. The ability to
borrow a large sum of money for construction would result in
economies of scale and the opportunity to make a visible
impact on a neighborhood in the short term. Providing large
physical change may be the only way to turn crime ridden,
seriously deteriorated neighborhoods around.
The use of loan guarantees in the HOME Program would
enhance the program's ability to be a major force for
development. This proposal would also put the loan guarantee
program under the Department's direct scrutiny and forestall
increasing pressure to use HOME funds for credit enhancements
developed by individual participating jurisdictions. Many of
the local proposals have been open ended and without a clear
measure of benefit to low-income housing production.
Home Authorization of Appropriations
Section 505 would authorize appropriations for the HOME
Investment Partnerships program at $1,000,000,000 for fiscal
year 1995 and $1,000,000,000 for fiscal year 1996.
Extension of the Section 221(g)(4) Auction Provisions
Section 506 would amend section 221(g)(4)(C)(viii) of the
National Housing Act to extend through December 31, 2005 the
sunset date for the authority to auction mortgages insured
under section 221 and assigned to HUD. Under current law, the
auction provisions expire September 30, 1995. If a mortgage
insured under section 221 pursuant to a commitment issued
before November 30, 1983 is not in default 20 years from the
date of endorsement for insurance, the mortgagee may assign
the mortgage to HUD and receive the benefits of insurance.
This proposal is necessary to continue the auction of
multifamily and single family mortgages assigned to HUD
pursuant to section 221(g)(4) after September 30, 1995. An
expiration date of December 31 2005, would give HUD an
opportunity to auction all mortgages that provide for
assignment and are assigned pursuant to this authority.
Extension of the Multifamily Mortgage Credit Demonstrations
Section 507 would extend the Multifamily Mortgage Credit
Demonstrations under section 542 of the HCD Act of 1992. The
FHA Multifamily Risk-Sharing Pilot program under subsection
(b) would be extended through FY 1996, and the Housing
Finance Agency Pilot program would be extended through FY
1997.
title vi--expand fair housing
Metropolitan areawide strategy demonstration
Section 601 would authorize the Metropolitan Areawide
Strategy demonstrations. Under this demonstration, the
Secretary would selection a consortia of units of general
local government in each of three different metropolitan
areas to engage in the marketing of assisted housing on a
metropolitan areawide basis. The consortia would carry out
the demonstration through clearinghouses administered by
private, nonprofit organizations selected by the consortia.
The demonstration could be approved for a period of up to
three years for any one metropolitan area.
Objection of the Demonstration
The demonstration would help carry out the Secretary's
statutory mandate under the Fair Housing Act to affirmatively
further fair housing in all programs of housing and urban
development. In addition, the demonstration would fulfill
President Clinton's directive in Executive Order 12892 and
the accompanying Presidential Memorandum, signed January 16,
1994, to undertake pilot programs, together with other
Federal agencies as the Secretary considers appropriate, to
further fair housing and to address problems of metropolitan
segregation.
The demonstration would promote innovation in addressing
racial segregation in the Department's assisted housing
programs. It would also advance the Secretary's objective to
affirmatively further fair housing, allowing the Department
to identify statutory impediments to achieving fair housing
and reinvent the way assisted housing programs are marketed.
PHAs in the selected metropolitan areas would be expected
to provide incentives to improve the attraction of public
housing, achieve desegregation, and affirmatively further
fair housing. These measures would be aimed at changing the
perception of public housing as the housing of last resort.
Instead, they would be intended, in combination with other
measures proposed, to make presently minority-dominated
public housing a path to social and economic mobility for
non-minorities as well.
HUD would require PHAs to focus their comprehensive grant
modernization funds on developments that are predominantly
minority and where disparities in services and amenities
exist.
Waiver Authority
The Secretary would be authorized to waive, or specify
alternative requirements for, statute and regulations HUD
administers, upon finding that the waiver or alternative
requirement (1) is necessary to facilitate the demonstration
and (2) would not be inconsistent with the overall purpose of
the statute of regulation affected. However, the Secretary
could not waive or specify alternative requirements for
statutory requirements related to nondiscrimination, fair
housing, labor standards, or the environment, except that
the Secretary could waive affirmative marketing
requirements for participants in the demonstration.
Application and Selection
Applicants would be required to demonstrate extensive
cooperation by public housing agencies in the metropolitan
area and by private owners of federally-insured and
federally-assisted housing and State- and locally-assisted
housing, by submitting evidence that they are willing to list
all vacancies with the clearinghouse and to make selections
from tenants referred by the clearinghouse. The Secretary
would select among applicants in a manner the Secretary
determines to be appropriate, taking into account such
factors as (1) the need for a range of metropolitan area
sizes, (2) the extent of racial separation, isolation, and
segregation in the applicant's metropolitan area, (3) the
capacity of the ability of the proposed nonprofit
organization selected to administer the clearinghouse, (4)
the degree of cooperation and coordination achieved among
governments in the metropolitan area and between government
and private assisted housing providers, and (5) the potential
effects and benefits the variations on regional planning,
housing counseling, and other support services and approaches
to marketing strategies proposed by each applicant could have
on the racial patterns in assisted housing programs if the
variations were adopted nationwide.
Waiting List
The nonprofit organizations administering the
clearinghouses would operate a consolidated waiting list for
federally-assisted family housing programs in each
participating jurisdiction within the selected metropolitan
areas, covering all jurisdictions in which the demonstration
operates. Elderly housing programs would not be included.
Under this system the waiting list would have separate sub-
lists for each housing program. All eligible applicants for
assisted housing would be on all sub-lists. Housing vacancies
in each program would be reported to the clearinghouses by
PHAs and other housing providers as they occurred.
The clearinghouses would review eligibility, perform income
and employment verification, check previous tenant history,
and secure all information necessary to determine Federal and
local preferences. First priority within all preference
categories would be given to those who wished to select a
location where their race is not predominant. No residency
preferences would be permitted in the Federal preference
categories. Residency preferences could be allowed as part
of local, non-Federal preferences after review by the
Department to assure that they were not inconsistent with
the demonstration objectives or in violation of the Fair
Housing Act. Housing providers would carry out tenant
suitability screening of all applicants referred from the
clearinghouses and could accept or reject them for good
cause.
Information Campaign
The clearinghouses would carry out a broad-based
(multimedia) information campaign to reach out to all persons
seeking housing within the metropolitan area. No single
ethnic or racial group would have an advantage in applying
for housing. The clearinghouses would carry out an active
fair housing information and support program to encourage
applicants to consider choices which would promote fair
housing. This would include escort services to neighborhoods
where the applicant's race is not predominant, counseling
regarding social services available in such neighborhoods,
information regarding transportation alternatives, schools
and health care, and establishing tenant support groups to
overcome the ``pioneer'' obstacle.
Progress Reports and Independent Evaluation
The clearinghouse for each demonstration site would be
required to submit an annual progress report. In addition,
within one year of the conclusion of each demonstration, the
Department plans to submit to Congress a report describing
the results of the demonstration and any recommendations for
legislation.
An independent evaluation would be an important part of the
demonstration and would measure the effects of waiving
certain Federal requirements and policies. This evaluation is
essential to HUD's and the Congress' ability to take the
lessons learned from the demonstration and put them to
practical use by revising current assisted housing programs
or creating new ones.
Funding
For each of FYs 1995, 1996, and 1997, $15 million would be
authorized to be appropriated for costs related to regional
planning, housing counseling, and administrative costs of the
nonprofit organizations selected to carry out the
demonstration. In addition, $9 million from amounts available
for assisted housing would be earmarked each year for
modernization of public housing of central city PHAs
participating in the demonstration. Of the amounts
appropriated for tenant-based certificates, HUD would be
authorized to set aside each year up to $100,000,000 for use
by PHAs in support of the demonstration. This amount is
expected to provide approximately 3,000 certificates each
year.
Expand use of amounts in section 213(d)(4), headquarters reserve, in
connection with settlement of civil rights litigation
Section 602 would permit the Secretary to use amounts in
the Headquarters Reserve, established under section 213(d)(4)
of the 1974 Act, for additional purposes, in connection with
the settlement of civil rights litigation that is brought
against the Department (other than by a HUD employee or
former employee). This would include authority to use the
Reserve to resolve disputes under existing settlement
agreements and court orders. The new uses would be fair
housing activities and cash payments. Currently, amounts in
the reserve may only be used for public housing development
and section 8 assistance.
Section 213(d)(4) of the 1974 Act authorizes HUD to retain
up to 5% of the financial assistance that become available
under the public housing and section 8 programs in the
Headquarters Reserve. Currently, the Reserve may only be used
for:
(i) unforeseen housing needs resulting from natural and
other disasters;
(ii) housing needs resulting from emergencies other than
such disasters;
(iii) housing needs resulting from the settlement of
lawsuits; and
(iv) housing in support of desegregation efforts.
In addition to these housing activities, this proposal
would enable the Secretary to undertake activities related to
the settlement of civil rights litigation, such as:
Contracting with a non-profit organization to establish a
Fair Housing Services Center to provide technical support to
PHAs which are attempting to desegregate their projects;
Contracting with a non-profit organization to monitor
compliance with civil rights requirements;
Contracting with a non-profit entity to provide services to
public housing applicants and residents and section 8
certificate-holders with information on alternatives housing
possibilities, transportation for the housing search, and
other assistance in exercising their freedom of housing
choice; and
Making cash payments to individuals and organizations
harmed by violation of civil rights requirements.
As a technical matter, to permit use of amounts
appropriated for use under the 1937 Act, the 1937 Act would
also be amended to permit up to 5% of the aggregate amounts
appropriated for section 8 and public housing development to
be used for these new purposes under the Headquarters Reserve
in addition to the activities now authorized. Since the
Reserve will continue to be used for housing as well, less
than the full 5% is expected to be used for the new
activities.
Section 213(d)(4) of the 1974 Act authorizes the Secretary
to use amounts in the Headquarters Reserve only for housing
assistance authorized by the 1937 Act (i.e., for the
development of additional Public and Indian housing units and
funding of section 8 assistance, including certificates and
vouchers). Since it may not always be appropriate or possible
to settle litigation in such a manner, the Department is
requesting the flexibility to settle lawsuits by provision of
funds for other purposes. Having this flexibility would also
make it possible to settle cases more quickly and sometimes
with significantly lower costs.
The proposed fair housing enforcement and related
activities would also help make housing available to a
broader cross-section of the eligible population and ensure
greater housing choice and opportunity. Funds used for fair
housing activities would greatly contribute to the success of
any metropolitan areawide housing strategy, since fair
housing policies are integral parts of such strategies.
This proposal has become necessary because Congress, in
1992, amended the Fair Housing Initiatives program (FHIP)
legislation so that FHIP funds could not be used in support
of litigation settlements. It is more appropriate to fund
activities addressing discrimination under 1937 Act programs
using 1937 Act funds rather than reducing amounts available
for fair housing enforcement.
Make CDBG expenditures on fair housing activities eligible activities
in their own right
Section 603 would change the status of fair housing-related
activities in the Community Development Block Grant
regulations at 24 CFR 570.206(c) and 570.201(e). Section
570.206(c) includes as eligible program administration
activities the conduct of fair housing enforcement and
education activities designed to further the objectives of
the Fair Housing Act. Section 570.201(e) makes eligible for
CDBG funding fair housing activities that qualify as
public services. Overall funding caps apply to all public
service and administrative expenses (planning and program
administration) undertaken by grant recipients. This
proposal would make fair housing-related activities free-
standing eligible activities in their own right.
Activities subject to the proposal include the provision of
fair housing services designed to further the objectives of
the Fair Housing Act by making all persons aware of the
housing opportunities available to them; and other non-
physical development activities designed to further the
objective of avoiding undue concentration of lower income
persons. The proposal also would presume that these
freestanding fair housing activities would principally
benefit low- and moderate-income residents of the
jurisdiction.
Under the proposal, preparation and analysis of impediments
to fair housing would remain under the planning and
management activities cap stated in 24 CFR 570.205(a)(4)(vii)
and would not be a free-standing fair housing activity. (The
Department is proposing this in order to maintain the
distinction currently found in the Community Development
Block Grant regulations between planning and other
activities.)
The Community Development Block Grant Entitlement program
regulations now permit grantees to carry out limited fair
housing activities. Section 570.205(a)(4)(vii) allows the
conduct of an analysis of impediments to fair housing as an
eligible planning, management, and capacity building
activity. As noted, Sec. 570.206(c) includes as eligible
program administration activities the conduct of fair housing
enforcement and education activities designed to further the
objectives of the Fair Housing Act, and Sec. 570.201(e) makes
eligible for CDBG funding fair housing activities that
qualify as public services.
This status as only one of many eligible activities under
the categories of administrative costs, planning activities,
and public services reduces the importance of fair housing
within the total scheme of activities in the CDBG Entitlement
program. Furthermore, including fair housing within the
categories of administrative costs and planning activities
makes it very difficult for the Department to determine the
dollars spent on fair housing activities.
Adding fair housing as an eligible activity under section
105 of the 1974 Act would bring about the following results:
The funding cost caps which currently limit funding for
covered fair housing-related activities would be removed.
In addition to making fair housing an eligible activity in
its own right, the statutory provisions would presume that
fair housing activities would benefit low- and moderate-
income residents of the jurisdiction. By applying this
presumption, the Department would relieve recipients of an
administrative burden to substantiate low- and moderate-
income benefit.
The duty of CDBG recipients to affirmatively further fair
housing would be regarded as an equal and comparable basis
for the use of CDBG funding as other ``brick and mortar''
housing and community development activities. This newfound
equality would be crucial to the success of metropolitan
areawide strategies and of fair housing strategies applied
within local communities, since these strategies act as the
underpinning for the other activities that generate greater
housing opportunities for all segments of the eligible
population. The CDBG-funded fair housing activities are
supposed to insure that the jurisdiction will carry out its
certification to affirmatively further fair housing through
the other programs it funds as a CDBG Entitlement recipient.
Fair housing initiatives program authorization of appropriations
Section 604 would authorize appropriations for the Fair
Housing Initiatives program at $26 million for each of fiscal
years 1995 and 1996. Included with these amounts, for each
such years, would be the following:
$9 million for private enforcement initiatives;
$7 million for fair housing enforcement organizations;
$7 million for education and outreach programs; and
$3 million for administrative enforcement.
Civil money penalties for violations of the Home Mortgage Disclosure
Act by nonsupervised mortgagees
Section 605 would amend section 305(b) of the Home Mortgage
Disclosure Act of 1975 (HMDA) to give the Secretary of
Housing and Urban Development the authority to enforce
compliance with the reporting requirements that HMDA imposes
on nonsupervised lending institutions, i.e., mortgage
bankers.\9\ Enforcement would be through imposition of civil
money penalties. Violations for which a civil money
penalty may be imposed are the late submission of a
report, failure to submit a report, submission of an
illegible report, submission of an erroneous report, and
failure to submit a corrected report for one that was
illegible or erroneous.
This is an amendment to correct a legislative error in
Sec. 305(b)(4) of HMDA. It would give the Secretary
enforcement authority. The need for this correction was
identified by the Civil Money Penalties Working Group of the
HMDA Subcommittee of the FFIEC Consumer Compliance Task
Force.\10\ The Working Group has developed guidelines for the
imposition of uniform civil money penalties by the FFIEC
agencies for violations of HMDA by financial institutions
required to submit annual reports on their lending
activities.
Section 305 of HMDA is captioned ``Enforcement;''
subsection (b) of section 305 presently reads as follows:
(b) Powers of certain other agencies. Compliance with the
requirements imposed under this title shall be enforced
under--
(1) section 8 of the Federal Deposit Insurance Act in the
case of--
(A) national banks, by the Comptroller of the Currency;
(B) member banks of the Federal Reserve System other than
national banks, by the [Federal Reserve] Board;
(C) banks insured by the Federal Deposit Insurance
Corporation (other than members of the Federal Reserve
System) and mutual savings banks as defined in section 3(f)
of the Federal Deposit Insurance Act (12 U.S.C. 1813(f)) and
any other depository institution not referred to in this
paragraph or paragraph (2) or (3) of this subsection, by
the Board of Directors of the Federal Deposit Insurance
Corporation;
(2) section 8 of the Federal Deposit Insurance Act by the
Director of the Office of Thrift Supervision, in the case of
a savings association, the deposits of which are insured by
the Federal Deposit Insurance Corporation;
(3) the Federal Credit Union Act, by the Administrator of
the National Credit Union Administration with Respect to any
credit union; and
(4) other lending institutions, by the Secretary of Housing
and Urban Development.
The Civil Money Penalties Working Group was comprised of
representatives of the FFIEC agencies and HUD. A memorandum
written by the Federal Reserve Board's representative on the
Working Group includes the following statement:
However, while HUD is given the enforcement authority over
``other lending institutions'', no act is cited in this
statute which gives them the authority to fine. Therefore,
while the FFIEC agencies do have the power to fine, HUD
appears to need the authority from another act to assess
these penalties.
HUD concurs with this statement. Furthermore, not only is
the language of section 305(b)(4) inadequate to permit the
Secretary to impose civil money penalties, it is also, on its
face, meaningless. Literally, it reads:
Compliance with the requirements imposed under this title
shall be enforced under other lending institutions, by the
Secretary of Housing and Urban Development.
The provisions relating to civil money penalties are
adapted from section 536 of the National Housing Act. The
violations specified in proposed section 305(c)(4) are those
for which the FFIEC member agencies will impose civil money
penalties.
Title VII--Community Development and Empowerment
Subtitle A--Neighborhood Leveraged Investments for Tomorrow (LIFT)
Program
Subtitle A creates a new, project-based program that is an
integral part of, and catalyst for, comprehensive
neighborhood revitalization and economic development,
particularly in communities that develop comprehensive plans
for community development. The proposed initial appropriation
is $200 million.
The overall objective of the LIFT program would be to
provide States, units of general local government, Indian
tribes, and community-based non-profit organizations funds
for stimulating public and private investment in the
community-building enterprises that provide essential
services to disadvantaged communities, spur new investment
and development in nearby areas, and create jobs for
neighborhood residents. These projects would be designed to
fill a market gap and improve the quality of life in
``neighborhoods of need'' located in urbanized areas.
Assisted activities could only take place in connection
with neighborhoods in need. The Secretary would define these
neighborhoods, and would define levels of need by reference
to factors such as concentrations of low- and moderate-income
persons in census tracts in the neighborhood, poverty rates
in the neighborhood, and rates of unemployment in the
neighborhood. Assisted areas would be limited to
neighborhoods outside central business districts, although
the Secretary could waive this requirement where a successful
neighborhood revitalization strategy is contingent upon the
simultaneous revitalization of such a district.
The types of eligible activities would include, but not be
limited to the construction, rehabilitation, or financing of:
retail and service facilities; mixed-use projects; projects
that link housing and economic development; community
centers; community-based business expansions; and industrial
development.
Community Building Enterprises
The LIFT proposal has two principal elements. The first
component, which is discretionary, would help localities and
community-based organizations (CBOs) develop and implement
neighborhood revitalization projects, for example, as
developers or joint-venture partners with for-profit
developers. After amounts are deducted for training,
information, and technical assistance activities in
connection with the program, 75 percent of the remaining
amounts in any fiscal year would be available for this
component. HUD would act as a facilitator in putting together
public/private partnerships that include CBOs, units
of general local government, and for-profit entities
within the selected jurisdictions. A funding preference
would be given to projects that meet such factors as:
Providing essential goods and services to residents of the
neighborhood;
Generating jobs for residents of the neighborhood,
especially for residents who are chronically unemployed or
receive welfare;
Being an essential element of, and catalyst for, the
comprehensive physical and economic revitalization of the
neighborhood;
Building the economic base of the neighborhood through such
measures as business expansion, job opportunities, and
meaningful reinvestment of a share of the profits of a
successful project in the neighborhood, including
economically empowering neighborhood residents to carry out
additional neighborhood development projects; and
Leveraging public and private investment (other than
assistance under this subtitle) in the physical and economic
revitalization of the neighborhood and in the activities
proposed to be assisted.
The second LIFT component, which is competitive, would
complement the Community Development Block Grant (CDBG)
program and the Section 108 Loan Guarantee program by
providing funds for those development projects that need a
source of extremely patient secondary financing that can wait
for periods of up to five to ten years before a business
reaches an acceptable level of profitability. This
competitive component, which would be funded at 25 percent of
appropriations, would fill a critical gap in the available
arsenal of tools to bring about the physical and economic
revitalization of distressed urban neighborhoods and rural
communities by offering businesses a sufficient economic
incentive to make these projects viable. LIFT funds would act
as a catalyst for investments in these projects. Due to the
scale and timing of these projects, CDBG funds are often
insufficient to capitalize the needs of such economic
revitalization projects.
The Secretary would establish limits on the number of
applications submitted by individual grantees within any unit
of general local government, State, or Indian tribe for each
funding round. The Secretary would also establish aggregate
limits on the grant amounts that may be made available to
individual grantees within a unit of general local
government, State, or Indian tribe for each announcement of
funding availability for each funding round.
In selecting grantees for these grants, the Secretary would
make grants based on the extent to which the assisted
activities would:
Generate jobs for residents of the neighborhood, especially
for residents who are chronically unemployed or receive
welfare;
Build the economic base of the neighborhood through such
measures as business expansion, job opportunities, and
meaningful reinvestment of a share of the profits of a
successful project in the neighborhood, including
economically empowering neighborhood residents to carry out
additional neighborhood development projects;
Are sponsored by for-profit or non-profit development
partnerships with a proven record of success;
Build upon and expand the capacity of local institutions to
carry out neighborhood revitalization; and
Are an integral part of the housing and community
development plans of the appropriate governmental
jurisdiction.
Finally, the Secretary would set aside such amounts as the
Secretary deems appropriate to carry out training,
information, and technical assistance activities in
connection with the LIFT program.
In many physically and economically needy urban
neighborhoods and rural communities, specific types of
development--such as neighborhood shopping centers, other
commercial developments, light industrial projects, or large-
scale, mixed-use developments (such as a public/private
``town center'' cluster of activities)--are sorely needed.
However, businesses continue to avoid investing their funds
in these areas, both for real and perceived risks, and in
fact, many existing businesses continue to reduce their
exposure in such distressed areas and continue to withdraw
facilities, services, and jobs. This contributes to downward
spiral in the neighborhood's local economy causing additional
businesses to close, thereby further exacerbating the
economical distress of the neighborhood. As each additional
closure ripples through the lives of the residents,
unemployment increases, housing falls into disrepair, the
strain on social services grows, and the fabric of the
community disintegrates further.
This neighborhood-based initiative addresses this problem
by providing HUD the ability to help localities and
community-based organizations promote economic revitalization
and community-building. The first component of the program
would provide a flexible targeted source of funds to assist
individual development projects in ``neighborhoods of need''.
CDBG funds are often insufficient to capitalize the needs
of economic revitalization projects and cannot be
committed beyond the one-year budget cycle. Because such
scale and timing issues are critical for project-based
assistance, communities need a program that operates
outside the CDBG decision-making process.
The second element of the program fills a critical gap in
the available arsenal of tools to bring about the physical
and economic revitalization of needy neighborhoods by
offering businesses sufficient economic incentive to be a
catalyst. Both the CDBG program and the Section 108 Loan
Guarantee program are seen as necessary components of a
community's strategy that complement LIFT. LIFT funds would
provide investment for larger scale projects, up to $5
million, and act as a catalyst to support smaller scale
economic development projects traditionally undertaken with
CDBG funds. In a similar fashion, LIFT will complement the
Section 108 Loan Guarantee program by providing funds for
those larger development projects that need a source of
extremely patient secondary financing that are able to wait
for periods of five to ten years before a business reaches an
acceptable level of profitability.
The second element is envisioned as a pool of funds to be
used to leverage private investment by providing the gap
financing, including debt service reserves, necessary to make
an otherwise unfeasible project's financing work. Grantees
could support projects through grants, loans, or credit
enhancement. Uses would be flexible to encourage innovation
and tailoring to local needs and project circumstances. The
competition would provide additional preferences to income-
generating projects, that economically empower residents to
carry out additional neighborhood-based economic development
projects. Based on previous Federal experience, the
leveraging power of these dollars could be expected to be $3-
$5 of private investment to every $1 of federal investment--
or $600 million to $1 billion in additional investment.
Through this program, the Federal government will start the
engines of growth and revitalization in needy urban
neighborhoods and rural communities by creating an
environment that generates outside investment, creates jobs
for residents, and creates opportunities for long-term
capital formation that empowers its residents.
Subtitle B--Community viability fund
This subtitle would amend the John Heinz Neighborhood
Development program to create a new grant and recognition
award program that is designed to enhance the viability of
the Nation's communities. The grant and recognition awards
programs would be funded at $130 million. Seventy-five
percent of the grants awarded would be allocated through
competition and 25 percent allocated at the discretion of
the Secretary.
Strategic Planning and Urban Design
The first component of the new program would provide grants
to encourage strategic planning and urban design. Grants
could be earmarked for the following types of activities:
Urban design and the development of public amenities in
lower income neighborhoods that serve as a catalyst for, and
result in, the renewal of the neighborhood;
Development and implementation of comprehensive plans that
focus on local and metropolitan strategies which create
sustainable community development at the neighborhood, city,
and metropolitan level;
Expanding economic opportunities for persons of low and
moderate income through areawide planning approaches that
provide educational and employment opportunities for such
persons;
Coordinated efforts that stimulate fair housing, further
the deconcentration of the poor and minorities, reduce the
isolation of income groups within communities, remove
barriers to affordable housing development, and expand
housing opportunities for persons of low and moderate income;
The conservation of important historic, visual, and
cultural features; and
The development and implementation of comprehensive
approaches that integrate poorer, inner-city neighborhoods
into the greater metropolitan region.
Preference would be given to projects that include
interagency and intergovernmental coordination of Federal,
State, and local public, private, and non-profit resources in
an integrated manner; represent an innovative approach to
furthering the objectives of this section; and are part of an
overall strategic revitalization plan.
Eligible applicants for strategic planning and urban design
grants include States, units of general local government, and
metropolitan, non-metropolitan, and regional planning
agencies.
Community Institution Building and Neighborhood Development
The second element of the new program would provide grants
to promote the development and expansion of community-
based institutions, in particular community organizing in
a manner that establishes new grass-roots community
organizations in unorganized neighborhoods. Specifically,
funds could be used to provide training, technical
assistance, and capacity building for new and existing
organizations and institutions; building the capacity of
neighborhood organizations and institutions, such as
Community Development Corporations, community banks, and
credit unions; establishing new community-based
organizations and institutions; and promoting joint
ventures that expand housing, educational, and employment
choices for inner city residents.
In addition, grantees would be able to use funds for
``eligible neighborhood development activities,'' as defined
in the John Heinz Neighborhood Development program under
section 123 of the Housing and Urban-Rural Recovery Act of
1983. These activities include: creating permanent jobs in
the neighborhood; establishing or expanding businesses within
the neighborhood; developing, rehabilitating, or managing
neighborhood housing stock; developing delivery mechanisms
for essential services that have lasting benefit to the
neighborhood; or planning, promoting, or financing voluntary
neighborhood improvement efforts.
Preference would be given for activities that will:
Develop new grass-roots community organizations in
previously unorganized areas that do not yet have the tract
record necessary to secure project-based funding;
Develop new organizations that link housing, economic, and
human development;
Coordinate with local law enforcement agencies or public
housing agencies involving anti-crime initiatives like
Operation Safe Home;
Leverage matching contributions to support a wide variety
of community development initiatives from the private sector;
foundations; colleges and universities; civic groups; social,
cultural, religious, and other institutions; and the national
service program in a manner that achieves greater long-term
private sector support;
Build the managerial, financial, and administrative
capacity of the applicant organization or the community
organizations to which it proposes to provide services; and
Assist eligible neighborhood organizations currently
eligible under the Heinz program.
Eligible applicants would include eligible neighborhood
development organizations, non-profit organizations, and
entities that assist such organizations in carrying out
activities under this element of the Fund.
Recognition Awards
The recognition awards program would recognize excellence
and innovation in the preparation and implementation of
community-wide and regional strategies or activities that
successfully further sustain community development by
expanding fair housing opportunities; furthering economic
revitalization; reducing economic isolation of income groups
within communities and the region; expanding housing,
educational, and employment choices for low- and moderate-
income persons throughout a metropolitan area; and providing
amenities in lower income neighborhoods that serve as a
catalyst for, and result in, the neighborhood's
revitalization.
Up to $10 million from the overall amounts appropriated for
the Fund could be used:
To provide grants to, and to enter into contracts with,
public and private organizations (including governmental,
non-profit, and for-profit organizations) to assist in the
analysis and selection of award recipients, the provision
(directly or by contract) of technical assistance, and the
dissemination of information used to carry out the programs
authorized under subsections (b) and (c);
To defray the costs of the Secretary in administering the
program authorized by this subsection, including (but not
limited to) such costs as printing and disseminating
information; holding conferences; establishing and using
design juries selected by the Secretary; providing nominal
awards to winning nominees; holding competitions for awards,
including travel and per diem costs; and travel of award
winners to attend follow-on conferences endorsed by the
Secretary and to provide peer-to-peer assistance to other
appropriate individuals and entities; and
To provide technical assistance, directly or by contract,
to further the purposes of this subsection.
The plight of poorer communities over the past decade has
grown increasingly grimmer--with soaring crime rates;
disinvestment in commercial and residential properties; and
the increasing inability of institutions, such as schools,
churches, and neighborhood organizations, to address the
growing problems that surround them. And yet, the evening
news highlights one anecdotal story after another of how one
group, be it city, church, nonprofit, or business has stepped
forward with an innovative approach to address the problems
in its neighborhood.
This proposal recognizes that government does not have all
the answers. Innovative planning and design solutions to the
problems of our communities must be discovered, recognized,
and replicated, and new innovative solutions must continue to
be nurtured, tested, and shared with all of our communities
so that the best we can create can be utilized by all to
begin to solve the problems facing America's communities.
This proposal focuses on capacity building and is designed
to achieve a number of the goals of the Secretary that are
not now being adequately addressed by other programs, such as
the CDBG program: improving urban design and quality of life;
area-wide planning for strategic economic development;
deconcentration of the poor and minorities; and capacity
building for community-based organizations.
This program would give the Secretary an instrument to
focus on improving the state of the art of community-building
in a number of areas. It consolidates a number of the
Secretary's priorities into a single program that permits a
more comprehensive and interdisciplinary approach to
addressing urban problems.
Subtitle C--Colonias assistance program
Subtitle C would establish a Colonias Assistance program to
address the severe community development and housing needs of
colonia residents in the Southwest border region. Funds would
be used for the comprehensive, coordinated development of
viable communities. This proposal also extends the existing
CDBG Colonias set-aside mandate through FY 1997.
The Colonias Assistance program would provide comprehensive
assistance which will bring about significant, permanent,
solutions to needs in funded communities. Eligible activities
would include:
All activities currently eligible for assistance under the
Community Development Block Grant program and the HOME
program;
Refinancing existing homeowner debt to convert the existing
contracts-for-deed homeownership regimen into mortgages;
New housing construction, including self-help, energy-
efficient and innovative housing design initiatives;
New subdivision development for affordable housing;
Re-platting and redevelopment of existing subdivisions; and
Infrastructure planning and construction necessary for the
development of needed housing, economic development, and
community facilities and amenities.
As in the Community Development Block Grant program, certain
activities, such as the construction of buildings for the
conduct of government, would not be eligible for funding
under the program.
The new program would be funded at $100 million. Of this
amount, 80 percent--$80 million--would be used to provide
substantial assistance on a model basis to units of general
local government, States, non-profit organizations, or
entities or instrumentalities established under the authority
of any of these entities. At least one project would be
chosen in each of the four border States, and at least one
project would be chosen in a metropolitan area. Projects
would be selected at the Secretary's discretion, reflecting
the Secretary's desire to consider a variety of solution
models applied to a variety of needs situations.
In selecting projects for funding, the Secretary would
consider the extent of needs in the colonia(s), the
comprehensiveness of approach in addressing identified needs,
the need to consider a variety of solutions to a variety of
need situations, and the commitment of funding from other
sources. Selection of projects would occur after negotiation
with grantees and consultation with the affected States.
The remaining 20 percent--$20 million--would be distributed
on a competitive basis in response to a request for
proposals. A Notice of Fund Availability would be published
announcing funding. Eligible applicants would be the same as
for model program grants. Applicants could propose to work in
one colonia or in multiple colonias in a county or region.
To help ensure that colonias in all States have access to
funds, a portion of the $20 million would be set aside for
benchmark allocations to the four States, based on objective
need factors (such as poverty and population in eligible
border-area counties). The Secretary would reserve the right
to reallocate funds if there are insufficient viable
proposals to fully use a State's benchmark allocation. The
remainder of the $20 million, plus any portion of the
benchmark allocations not awarded in a State, would be used
to fund quality proposals regardless of their location.
Selection criteria would be established by the Secretary,
and would include factors similar to those for the model
program, above. Special consideration would be given to
projects which represent a regional approach to problem-
solving, and to proposals which demonstrate consistency with
State action plans for colonia regions.
Colonias are severely distressed, rural, unplanned,
predominantly unincorporated settlements located along the
2,000-mile United States-Mexico border. Due to a lack of
affordable housing, colonias came into existence as a result
of developers selling unimproved lots under high-interest
bearing contracts for deed. Buyers generally constructed
whatever limited dwellings or shelters they could afford. As
a result, most colonias have inadequate roads and drainage,
inadequate or non-existent water and/or sewer facilities, and
grossly sub-standard housing.
In Texas, the extensive use of sales contracts, which allow
the developer to retain title until the debt is fully paid,
has prevented occupants from obtaining mortgage-secured home
improvement financing. Residents are overwhelmingly very low-
income Mexican-Americans with limited ability to pay off
these contracts or make home improvements without assistance.
The extent of needs in colonias is massive. The State of
Texas has identified some 1,200 communities occupied by an
estimated 300,000 people. Smaller numbers of colonias exist
in Arizona, California, and New Mexico. (Some estimates place
the population of colonias as high as 500,000.) Current
resources are woefully inadequate to even minimally provided
for and address the infrastructure and housing needs of the
burgeoning population. For example, the State of Texas
estimates that it will cost nearly $700 million just for
water and sewer service for colonia residents.
In section 916 of the Cranston-Gonzalez National Affordable
Housing Act, Congress mandated a set-aside of up to 10% of
State CDBG program allocations to Arizona, California, New
Mexico, and Texas for use in colonias areas. For FY 1994, the
sum of set-asides for the four States is about $12 million;
Texas accounts for two-thirds of this amount.
Due to limited State CDBG colonias set-aside funds, the
four border States give priority to applications related to
planning and infrastructure activities with special
consideration to those that propose first time water and
sewer service. The funding of other critical areas necessary
to the health and well-being of these communities has been
woefully inadequate: construction of roads, housing, health
care, education and training, employment, and human services.
The present State set-aside expires after FY 1994. The
Colonias Assistance program would continue efforts to assist
these States with colonias. However, neither the CDBG
Colonias set-aside nor this infusion of Colonias Assistance
program funds will alone be able to meet all the identified
needs of colonias. Therefore, the set-aside mandate should be
extended for three additional years. The Secretary will
continue to determine the appropriate percentage after
consultation with representatives of the interests of
colonias.
Several States have taken steps to coordinate and maximize
the use of existing resources through working groups of
State, Federal, and local government officials. The Colonias
Assistance program would build on, and support, existing
coordination efforts, while striving to address the most
pressing needs of residents. It would also encourage and
support regional consortiums desiring to provide a
comprehensive approach to address the needs of colonia
residents on a State-wide or region-wide basis.
Subtitle D--Zone economic development initiative
Subtitle D would authorize the Secretary to make up to $500
million in Zone Economic Development Initiative (ZEDI) grants
to localities in which Empowerment Zones and Enterprise
Communities have been designated, to help them implement
their strategic plans for economic revitalization. These
grants would stimulate the economic revitalization of Zones
and Communities by expanding business opportunities and job
creation activities and stimulate the housing sector by
providing project-based rental assistance certificates and
funding other activities to construct or rehabilitate rental
housing units for very low-income families and other housing
assistance. See proposed sections 731, 732, and 733.
Localities in which Zones and Communities have been
designated would be able to propose their projected mix of
economic revitalization and housing activities to address
their identified needs (see sections 733 and 734). These
grant funds are also expected to leverage additional private,
State, local and other Federal housing and economic
revitalization resources under such programs as HUD's Section
108 Loan Guarantee program (see section 735), the Community
Development Block Grant program, and SBA's One Stop Capital
Shops.
For each approvable application, each urban Empowerment
Zone would receive $50 million; each rural Zone would receive
$20 million; and each Enterprise Community would receive $1.4
million (see section 734(b)). Amounts remaining after these
allocations could be used for training and information
activities in connection with the ZEDI program (see sections
733(c) and 737(b).
Comprehensive revitalization of
Empowerment Zones and
Enterprise Communities is a long and expensive process
because it requires massive efforts for economic, human, and
physical development. Tax incentives alone are not adequate
to trigger total community revitalization. Part of the
original Empowerment Zone concept of the Administration was
that there were to be two grant programs: enterprise
grants--which was a block grant for Empowerment Zones and
Enterprise Communities--and safety and community policing
grants. Since neither of these provisions were included in
the final bill (instead, a $1 billion incremental Social
Services Block grant was earmarked for Empowerment Zones
and Enterprise Communities), there remains a large gap in
Federal assistance to Empowerment Zones and Enterprise
Communities which must be filled to ensure that they do
not fail.
Zone Economic Development Grants will be able to provide
some of the first visible signs that the Zone or Community is
turning itself around by stimulating the investment in and
construction or reconstruction of housing, businesses, and
infrastructure. It is this tangible evidence of improvement
to their community that motivates citizens, businesses, and
local officials to continue to commit their energy and local,
State, and Federal resources to the revitalization of the
Zone or Community. It is particularly important that grant
dollars be available for Enterprise Communities since most of
the block grant funds and tax incentives are focused on the
nine Empowerment Zones.
Subtitle E--Authorizations of appropriations, capacity building for
community development and affordable housing
Section 741 would authorize appropriations of $20,000,000
for fiscal year 1995 and such sums as may be necessary for
fiscal year 1996, for the Capacity Building for Community
Development and Affordable Housing program under section 4 of
the HUD Demonstration Act of 1993.
Community Development Block Grants
Section 742 would amend title I of the Housing and
Community Development Act of 1974 to provide for an
authorization for appropriations for the Community
Development Block Grant program of $4.4 billion for each of
fiscal years 1995 and 1996, and for a loan limitation under
section 108 of that program's legislation of $2.054 billion
for each such year. The provision would also authorize the
following activity under the special purpose grants provision
in section 107, for each of fiscal years 1995 and 1996:
$7 million under section 107(b)(1) for insular areas;
$6.5 million under section 107(b)(3) for historically Black
colleges and universities;
$28 million under section 107(b)(4) for technical
assistance;
$6 million under section 107(b)(5) for university related
activities;
$2 million under section 107(b)(6) for readjustments;
$3 million under section 107(c) for work-study programs;
and
Such sums as may be necessary for section 107(b)(2), the
hold harmless provision.
Economic Development Initiative
Section 743 would authorize appropriations of $50 million
for FY 1995 and such sums as may be necessary for FY 1996 for
Economic Development Grants, under the new section 108(q) of
the Housing and Community Development Act of 1974. For FY
1995, amounts in addition to the foregoing authorizations
would be drawn from recapture Urban Development Action Grant
funds, in accordance with a recent amendment to section 119
of such Act. Separate authorization for appropriation for the
UDAG funds is not needed since these funds have already been
appropriated. It is estimated that the recaptured UDAG funds
will be $100 million in FY 1995, and so the program level
would be $150 million.
title viii--management reform
Subtitle A--Improve the allocation and use of assistance, limit section
8 contract rent adjustments for rents above section 8 existing housing
FMRs
Section 801 would give HUD the authority to deny further
section 8 contract rent increases based on annual adjustment
factors (AAFs) wherever the contract rent for a unit in a
section 8 new construction, substantial rehabilitation, or
moderate rehabilitation project is more than the section 8
fair market rent (FMR), including any exception rents. To
qualify for a rent adjustment where the contract rent exceeds
the FMR, the owner would have to demonstrate to the
Department that the contract rent, as it would be adjusted by
the AAF, would not exceed rents for comparable unassisted
units in the market area. The proposal would apply to all new
construction, substantial rehabilitation, and moderate
rehabilitation projects subject to rent adjustments using
annual adjustment factors established under section
8(c)(2)(A) of the 1937 Act.
Roughly 75% of section 8 new construction, substantial
rehabilitation, and moderate rehabilitation projects
currently have section 8 contract rents above the section 8
existing housing FMRs. By contrast, two-thirds of all units
rent for less than the FMR in the average metropolitan area.
A lack of market discipline on operating expenses and years
of cumulative rent increases based on AAFs are partly
responsible for the current high rents in assisted properties
that exceed the FMR, a benchmark for the cost of assisting
households with tenant-based assistance and for apartment
rents in the surrounding private market. Section 8 projects
with contract rents that exceed the section 8 existing
housing FMR should not receive automatic inflation
adjustments to rents unless their owners can prove that the
rents, as adjusted, would be in line with those in
comparable, unassisted projects.
In general, while assisted projects continue to have a
place in national low-income housing policy, HUD can no
longer afford to over-subsidize projects. ``Material
differences'' do exist between assisted and unassisted
properties. The money the Department spends on rental
assistance helps fewer households when it is tied to
unreasonably high-rent projects. Public confidence in HUD
programs is also undermined whenever HUD is seen to be paying
rents well above the going rate or continuing to prop up
undeserving projects.
Provide incentives to refinance high interest mortgages for section 8
projects
As an incentive to owners to refinance high-interest rate
mortgages that were used to finance section 8 new
construction, substantial rehabilitation, and moderate
rehabilitation projects, section 802 would allow HUD to spend
some of the first-year savings in section 8 assistance to
cover-up front costs to the owner of refinancing under
sections 223(a)(7) and 223(f).
Many section 8 new construction, substantial
rehabilitation, and moderate rehabilitation projects were
built and financed when interest rates were higher than
today. These mortgages should be refinanced to reduce debt
service and section 8 contract rents. To date, there has not
been much incentive for owners to refinance, because they
would incur significant refinancing costs, whereas the
savings would belong to HUD via a reduction in assisted
rents. The policy of sharing 10% of savings with an owner has
not proven sufficient. Remaining high-interest rate mortgages
will be refinanced if HUD removes the disincentive of up-
front costs and provides the owner with additional inducement
to save the government money.
The Budget reflects significant savings each year in
reduced debt service, but lower net savings in FY 1995 due to
offsetting expenditures to cover the up-front costs of
refinancing. The budget estimates that $25 million spent in
FY 1995 would generate $27 million in section 8 savings in FY
1995 and each subsequent year.
LMSA reforms
Section 803 would amend section 8(v)(1) of the 1937 Act to
remove the requirement that HUD renew all Section 8 Loan
Management Set-Aside (LMSA) contracts at contract expiration
if the owner agrees to continue providing housing for low-
income families during the term of the contract. In addition,
this proposal would give HUD authority to reduce the number
of units that may be assisted under a LMSA contract when a
family moves from a unit. Projects receiving LMSA as part of
an incentives packaged under ELIHPA or LIHPRHA would be
excluded, since reducing their assistance could lead to
prepayments.
The LMSA program provides project-based assistance to
replace older Rent Supplement and rental assistance payment
(RAP) contracts (``conversions'') and, on a competitive
basis, to provide assistance for troubled properties to
reduce vacancies or increase rental income (``remedial''
LMSA). Congress in 1987 began requiring HUD to renew all
contracts as project-based assistance regardless of whether
the project needs additional assistance to maintain financial
stability or is providing housing for such low quality that
it should no longer receive assistance.
Project-based rental assistance provided to FHA-insured
projects that once needed it should not be automatically and
indefinitely continued. Department research suggests that
some projects receiving LMSA could survive without it; some
others continue to be physically or financially distressed--
and fail to provide decent, safe, and sanitary housing--even
after receiving substantial assistance. In such projects, HUD
believes that projects should not continue to receive project
subsidies. Public confidence in HUD programs is undermined
whenever HUD is seen to be propping up undeserving projects.
To protect assisted tenants, the Budget permits HUD to
discontinue (``attrit'') additional LMSA assistance when a
family moves.
The Budget assumes that 4% of LMSA units lose their
assistance due to turnover or vacancy. This represents about
one-third of normal turnover. HUD should have flexibility to
determine which units--to be selected using its Comprehensive
Multifamily Servicing procedures--would return to unassisted
status. They could be concentrated in a few projects or
spread out over many.
Reduce AAF for units where family has not moved since previous year
For the section 8 new construction, substantial
rehabilitation, moderate rehabilitation, LMSA, PD, and
certificate programs, section 804 would amend section
8(c)(2)(A) of the 1937 Act to permit adjustment of contract
rents using the published AAF, adjusted so that any rent
increase would be one percentage point\11\ less than the
adjustment based on the published factor, for any unit
occupied by the same family at the time of the last contract
rent adjustment. In many cases, contract rents will not be
eligible for adjustment due to the limitation proposed in
section 801 of this bill limiting adjustments of section 8
rents above the section 8 existing housing FMR. This
reduction for ``stayers'' would only apply to contract rent
adjustments that would otherwise be granted in full.
Because the costs to owners of turnover-related vacancies,
maintenance, and marketing are lower for long-term stable
tenants, these tenants are typically charged less than recent
movers in the unassisted market. Since HUD pays the full
amount of any rent increases for assisted tenants in section
8 projects and under the Certificate program, HUD should
expect to benefit from this ``tenure discount.'' Turnover is
lower in assisted properties than in the unassisted
market, so the effect of the current inconsistency with
market-based rent increases is exacerbated.
Preference for working families
Section 805 would amend section 6(c)(4)(A)(ii) and section
8 (d)(1)(A)(ii) of the 1937 Act to include, as an example of
allowable local preferences, a preference for admission to
public and assisted housing based on an applicant's
employment.
In addition, it would revise the phrase added at the end of
the penultimate sentence of section 16(c) by section 105 of
the HCD Act of 1992, so that the phrase reads ``except that
such prohibition shall not apply with respect to families
selected for occupancy in public housing.'' This proposal
would delete the remainder of that phrase, which currently
reads ``under the system of preferences established by the
agency pursuant to section 6(c)(4)(A)(ii).''
Numerous PHAs have expressed interest in having a
preference for working families. They argue that
implementation of such a preference would give them a better
income mix among tenants, as required by section
6(c)(4)(a)(iv); provide role models to encourage other
families to strive for self-sufficiency; and result in higher
rent collections, a need for less operating subsidy and a
savings for the department. Adding an employment preference
as an example of an allowable local preference would increase
the number of employed persons in the public and assisted
housing programs. It would provide the necessary vehicle for
improving the representation of working families, who can
serve as role models, particularly in the project-based
programs. It would also provide a work incentive to low-
income applicants, by offering an advantage, in the
admissions process, to those with earned income. In some
cases, it could result in serving more families, of still
quite limited means, who could pay somewhat higher rents,
with cost savings to the Federal Government.
At present, among those very low-income nonelderly families
that are eligible for the assisted housing programs, a
majority include one or more employed members. Yet, for
example, among nonelderly families now residing in public
housing, only 28 percent are employed. Including an
employment preference as a example of an allowable local
preference would provide a basis for overcoming this under-
representation of working families in the public and assisted
housing programs.
Of course, any local preference based on employment would
have to take into consideration the inability of some
disabled persons to work. By definition, those who qualify as
``disabled'' under section 223 of the Social Security Act,
are, essentially, unable to work.
This proposal would amend section 16(c) to clarify the
exemption for public housing from the restrictions placed on
project owners in connection with admitting relatively higher
income applicants over relatively lower income applicants.
Section 16(c) prohibits project owners from selecting
families in an order different from the order on the waiting
list for the purpose of selecting relatively higher income
families. The HCD Act of 1992 exempted from this prohibition
those families selected for occupancy in public housing under
the system of local preferences. Congress' intention in 1992
seems to have been to clarify that the prohibition in section
16(c) should not apply to public housing at all. Because the
1992 amendment applied only to local preferences, however,
the effect of this amendment was to require public housing
agencies (PHAs) interested in obtaining a better income
balance in their tenant population to establish a dual tenant
selection system.
The particular language used appears to have inadvertently
created an excessive and unnecessary administrative burden on
PHAs. Deleting the words ``under the system of preferences
established by the agency pursuant to section
6(c)(4)(A)(ii)'' would alleviate this burden and more closely
track the apparent intention of Congress.
Use of technical assistance funds by or for HUD staff
Section 806 would amend the Department of Housing and Urban
Development Act to include general authority for the
Secretary to use for training and technical assistance
provided by or to HUD staff any money appropriated to any
program that includes a technical assistance statutory
authorization. No more than 10% of the amount available for
transfer could be used for technical assistance, training,
travel, and related expenses provided to HUD staff. The
amount transferred would have to be used for a program that
is funded from an account from which amounts are transferred.
The Secretary currently has authority to use program money
in at least six programs to provide for training of staff of
the recipients of funding, but cannot use program funding for
parallel training of the HUD staff. With severe staffing
limitations, maintaining high productivity among HUD
employees becomes increasingly crucial to continued
operations, and continuing training is central to this
productivity. Similarly, with severe limitations on funding
for salaries and expenses, every opportunity to obtain
services for the Department, including training, at rock
bottom rates must be seized. In this connection, there is
currently an anomaly under which HUD can use program money to
train staff of funding recipients, but cannot by and large
take advantage of the same training sessions for the
parallel training of its own employees.
This amendment would, first, remedy the foregoing situation
by permitting a transfer of a reasonable amount of HUD's
Salaries and Expenses account to cover the salaries,
transportation, and other costs of HUD employees who are
being trained in a program. The amendment would thus leave in
the Salaries and Expenses account the costs of training of
HUD employees that were not program-specific or were for a
program that has no authorization for technical assistance.
Second, the amendment would permit program funds to be used
to pay for the salaries and expenses of HUD staff, whenever
they provide training or technical assistance in a program
the statutory authority for which includes technical
assistance.
Subtitle B--Office of public and Indian housing, oversight, technical
assistance, emergency action resources, and resident survey for public
housing programs
Section 811 would authorize a set-aside of up to 1% from
the annual appropriation of modernization funding and up to
\1/2\ of one percent from the annual appropriation of
development funding to be used (a) to contract with entities
with the expertise to assist in the oversight of the Public
and Indian Housing Modernization program and (b) to provide
the Secretary with expert technical resources for training
and technical assistance, and to assist in the management of
public and Indian housing agencies, including funding of
resident surveys.
Contracts would be awarded to: (a) hire inspectors to
conduct inspections, appraisals, cost estimates, and monitor
the quality of work; (b) provide a resource for emergency
response actions ranging from ``SWAT teams'' to PHA
takeovers; and (c) administer resident satisfaction surveys
to a national sample of public housing residents. The set-
aside would also be used (d) to provide training, and expert
technical assistance and diagnostic support to PHAs with
regard to administrative, technical or financial system
improvements, or management deficiencies. When the training
or technical assistance is being provided to PHAs, the set-
aside would also be available to pay for training and related
HUD staff costs.
Inspections
Recent amendments to the Comprehensive Grant program
(section 14(e)(4)(B)) and the Public Housing Management
Assessment (PHMAP) program (sections 6(j)(1) and (4)) place
additional monitoring responsibilities on the Department. In
order to carry out these responsibilities, the
Department's proposal would give HUD the discretion to
contract with firms to inspect work underway.
Inspectors would be able to use program funds to perform
periodic on-site reviews of physical and management
improvements as directed by the HUD field office. Inadequate
staff and travel resources, from the Salaries and Expenses
Account, have limited the frequency of HUD on-site monitoring
in the past. Where risk analysis indicates more frequent on-
site monitoring of a PHA is appropriate, the HUD field staff
may direct an inspector to perform the review. Typically,
PHAs which manage complex Modernization programs, have
limited staff capacity, or have had recent problems, require
regular monitoring visits. Inspectors would be required to
examine the physical rehabilitation work and the procurement
contracts during these visits.
Under the development program, inspectors would review the
quality and timeliness of HA construction activities,
including activities under Major Reconstruction of Obsolete
Projects, and report back to the field office with
recommendations for corrective actions.
Expert Technical Assistance
To address management deficiencies, contracts would be
awarded to conduct in-depth reviews of targeted PHAs and make
recommendations on management or technical improvements,
including training needs. The contractors would work with the
PHAs to diagnose problems, develop systems, and/or improve
aspects of major functional areas such as maintenance,
construction management systems, procurement, or financial
management. Areas of weakness would also be identified by the
PHMAP evaluation, the Administrative Capability Assessment,
IG reports, and monitoring and field reviews. When training
and technical assistance is provided by contractors, related
HUD staff costs, such as the travel costs necessary to insure
the presence of HUD staff at the training, could be paid from
these funds. Previously, the Salaries and Expense Account was
the only source for HUD staff travel costs.
Technical assistance and training could also be provided
with the assistance of contractors for the purpose of helping
PHAs make use of the Comprehensive Grant Program Loan
Guarantee program, which will make it possible for PHAs to
borrow against their future CGP allocations in order to
address the needs of projects which need significant levels
of work now.
Emergency Response Resource
Contracts would be awarded to provide the Secretary with
readily available expert resources to conduct emergency
actions as necessary, including sending ``SWAT teams'' of
experts to PHAs to assess critical problems and resolve them,
and for interventions and takeovers. In the past, HUD has
not had a continuing resource base to use in addressing
emergency situations in PHAs and has had to rely on ad hoc
measures and available expertise. This would provide the
Secretary with the capability, through access to highly
skilled, multi-disciplinary expert resources, to act
swiftly in emergency situations with the appropriate array
of management, finance/accounting, and/or automated data
processing (ADP) expertise necessary.
Resident Satisfaction Survey
Executive Order 12862 of September 11, 1993, requires
Federal agencies to survey customers ``to determine the kind
and quality of services they want and their level of
satisfaction with existing services.'' An on-going survey of
public housing residents, which would be administered by HUD,
would serve as one part of HUD's overall response to
Executive Order 12862. Survey results, as analyzed by HUD,
would include data from about 120 randomly selected PHAs, and
would be used to provide guidance to the Department in
setting policies and procedures, monitoring, and providing
technical assistance on a program-wide basis.
The survey instrument will also be available to PHAs not
included in the sample when the PHA management wants feedback
from its residents and is willing to pay for the cost of the
survey.
The estimated cost of the survey on an annual basis is $1.2
million. The cost of survey coverage for a typical medium-to-
large PHA would be $10,000 (200 completed surveys @ $50 per
survey).
Recapture of development amounts
Section 812 would amend section 5(k) of the U.S. Housing
Act of 1937 to give the Secretary discretion to recapture
amounts reserved for development of specific public housing
projects without waiting the entire 30-month period that is
now required. This discretion could be exercised in
situations where the Secretary makes a specific finding that
there is no feasible way for the project to begin
construction or rehabilitation, or to complete acquisition,
within the 30-month period. The amendment would preserve the
30-month period as the normal minimum time period for start
of construction, rehabilitation, or acquisition, and retain
the exclusions from the time period for factors beyond the
control of the public housing agency.
The amendment would tend to increase pressure on public
housing agencies and Indian housing authorities to implement
as quickly as reasonably possible the development projects
for which they have funding reservations. The amendment would
also provide HUD with more flexibility in the management of
public housing development funding. In this regard,
amounts recaptured under the amendment--like amounts
recaptured under the present 30-month minimum rule--may be
made available sooner than would be otherwise possible to
fund other assisted housing projects, or to accomplish
budget goals, as enacted under subsequent laws.
If a project ceases to be feasible, even at a different
site or reformulated, then there would seem to be no useful
purpose in preventing the Secretary from acting to recapture
the funding, and reserve it for another project, before the
arbitrary 30-month minimum waiting period now in section 5(k)
has elapsed.
Subtitle C--Office of housing, section 235 refinancing
Section 821 would make the refinancing of mortgages under
section 235(r) of the National Housing Act more feasible.
This proposal is designed to implement the objective of the
recommendation of the Report of the National Performance
Review (NPR), issued on September 7, 1993, that HUD should
speed savings from refinancing expensive, old section 235
mortgages subsidized by HUD.
Section 235(r) of the National Housing Act gives HUD the
authority to pay the mortgagor an incentive to refinance and
to pay the mortgagor for costs incurred in connection with
the refinancing. The refinancing program does not have a
source of funding absent an appropriation, which has not
occurred since section 235(r) was enacted as part of the HUD
Reform Act of 1989. In the absence of funding for incentives
and closing costs, the program has not resulted in
refinancing existing 235 mortgages. Because a mortgagor
already benefits from an interest reduction subsidy that
brings its debt service payment below current market rates, a
mortgagor does not have the traditional economic incentive to
refinance, since its monthly payment is not reduced as a
result of the refinancing.
This proposal would implement the objective of the
recommendation of the NPR report by giving HUD the authority
to pay for incentives to both the mortgagor and the mortgagee
to refinance section 235 mortgages (see paragraph (2)). In
addition, this proposal would give HUD the authority to
include the costs incurred in connection with the refinancing
in the new mortgage (see paragraph (1)). Finally, this
proposal would give HUD the authority to use funds recaptured
from assistance payments contracts relating to mortgages that
are being refinanced to pay for refinancing costs and
incentives (see paragraph (3)).
The additional incentives and a source of funding are
necessary to encourage mortgagors and mortgagees to refinance
section 235 mortgages. Presently, there are 35,000 section
235 mortgages with interest rates at or above 10%, insured
for over $1.3 billion. Savings to the Treasury from
refinancing would significantly exceed the HUD payment of
refinancing costs and incentives.
Elimination of new activity in low-use FHA multifamily development
programs
Section 822 would require HUD to stop accepting requests
for mortgage insurance under the six multifamily development
programs listed below. The proposed statutory language would
preclude HUD from accepting applications, effective 30 days
after the date the law is enacted, but keep all other
existing authority in place. Continued statutory authority
would support processing and insurance of applications in the
pipeline and management and disposition activities on loans
insured under these programs.
The programs listed below are seldom used and the rental
and cooperative housing produced under these programs can be
produced under other HUD programs that are actively used,
familiar to HUD staff, and often more advantageous to both
borrowers and lenders. Eliminating new activity in these low-
use programs would benefit both Headquarters and the Field.
Headquarters would have fewer regulations, handbooks, and
data systems to keep current. Field staff would no longer
need to keep abreast of these programs' rarely used
processing procedures. The list below identifies the programs
for which new activity should be terminated and any alternate
FHA programs owners could use.
Section 207 Manufactured Housing Parks.--Since mobile home
parks cannot be insured under any other FHA program, this
proposal would end FHA insurance of new manufactured housing
parks. FHA has insured only one manufactured housing park
this year and has only 39 loans in force on these parks.
Section 207 New Construction (NC)/Substantial
Rehabilitation (SR) Rental Housing.--NC/SR rental projects
could be insured under Section 221(d)(4) which has more
favorable underwriting criteria. Note: HUD would still accept
applications for existing cooperatives and rentals that will
be processed under section 223(f) and insured under section
207.
Section 231 Elderly Rentals.--Mortgages can be insured
under section 221(d)(3) for nonprofit sponsors and under
section 221(d)(4) for profit-motivated developers.
Section 220 in Urban Renewal and Concentrated Development
Areas.--Section 221(d)(4) can be used for NC/SR insurance.
Section 234(d) Condominiums. Individual units in
condominium projects can be insured under section 234(c).
Developers sought project-wide 234(d) insurance when
legislation required that individual units within a
condominium project could be insured only after the
condominium had been processed and insured as a multifamily
project. The statutory requirement for project processing has
been repealed, and HUD rarely receives an application for FHA
project mortgage insurance.
Title XI Group Practice Medical Facilities. HUD has insured
only five loans under this program.
Indemnification for project managers
Section 823 would make explicit the Secretary's authority
to indemnify certain project managers against claims by third
parties for death, bodily injury, and property damage. The
covered project managers would be those under contract with
HUD to manage HUD-acquired projects in the HUD multifamily
property disposition program. HUD contracts with project
managers to operate, repair, and maintain these multifamily
projects that are HUD-owned or where HUD is the mortgagee-in-
possession.
Prior to 1977: Project managers purchased comprehensive
general liability insurance coverage for themselves and the
project owners, but not for HUD. Generally, the cost was a
project expense paid from rent receipts.
1977-1984: In 1977, HUD determined it was more cost-
effective to purchase a nationwide blanket insurance policy
for all of its contract project managers. HUD was one of the
named insureds on these policies, along with each project
manager and each project manager's employees. In 1984, the
insurance carrier providing the coverage went into
receivership and HUD was unable to purchase a replacement
policy at a reasonable cost.
1985-Present: Beginning in 1985, because of the
unavailability of liability insurance, HUD undertook to
indemnify project managers as specified in each manager's
contract with HUD. The practice of indemnification continues
at this time because of the continued unavailability of
suitable blanket insurance arrangements and the relatively
small amounts paid under the indemnification arrangements.
Currently, HUD contracts with project managers provide that
HUD will indemnify the manager for tort claims involving
personal injuries, wrongful death, or property damage that
resulted from the manager's performance under HUD contracts.
Indemnification is limited to an aggregate of $500,000 for
all claims per occurrence, arising from the same set of
facts. The contracts further provide that indemnification is
subject to the availability of appropriations.
As recently as 1991, HUD issued a request for proposals
(RFP) for a blanket insurance policy to cover all project
managers; no proposals were received under the solicitation.
HUD believes that no insurance company will provide a blanket
insurance policy at a reasonable cost. Although HUD believes
individual insurance policies may now be available to most
projects on a project-by-project or project manager-by-
project manager basis, insurance will not be available for
certain managers for certain projects because of those
projects are in deteriorated condition and are more
susceptible to having significant insurance claims. Moreover,
HUD believes the total cost of such insurance, estimated at
over $4 million per year, if purchased on a projected-by-
project basis, will far exceed the amount of claims paid by
the Department under its indemnification program to date of
approximately $100,000 to $200,000 per year.
In support of its practice of indemnifying these project
managers, HUD has relied on sections of the National Housing
Act which give the Secretary broad authority to pay out of
the General Insurance Fund all expenses or charges in
connection with properties the Secretary acquires.
Notwithstanding the Secretary's broad authority, there is
case law which indicates that specific statutory authority is
necessary for an agency to indemnify. Accordingly, the
proposed statutory provision would clarify the Secretary's
authority to indemnify multifamily project managers.
Subtitle D--Office of Community Planning and Development
Management information systems
Section 831 would authorize the secretary to set aside up
to 0.5% of the CDBG appropriation for each of FYs 1995 and
1996 for improving CDBG management information systems used
by the Department and CDBG grantees. The funds primarily
would be used to develop and support a state-of-the-art
consolidated data system for the existing four CPD formula
programs. The system would accomplish the following:
Provide basic fund control for program expenditures.
Correct material weaknesses cited by the Inspector General,
concerning the reporting of accurate and timely information
on program activities.
Develop performance reporting systems on program
accomplishments to improve the management CPD programs.
Purchase software and hardware needed.
Train grantees and HUD field staff in new systems.
Input national demographic data to assist local
jurisdictions in program formulation.
CDBG reallocations
Section 832 would repeal the amendment to section 106(c)
made by section 933 of the National Affordable Housing Act.
Section 933 directs the Secretary to make available to
metropolitan cities and urban counties affected by disasters
any amounts that become available as a result of HUD actions
taken under section 104(e) or 111. The Secretary is directed
to provide for applications for assistance under section 933,
and such assistance may only be made available to
metropolitan cities and urban counties within the three-year
period beginning on the date of the disaster declaration by
the President.
Funds recovered under sections 104(e) and 111 are received
by HUD on a sporadic, unpredictable basis, usually in amounts
less than $200,000. Rarely has the Department accumulated an
aggregate amount exceeding $3 million in any fiscal year.
Administration of the distribution of these funds is
complicated by the statutory requirement that a changing
universe of eligible applicants is to be served pursuant to
section 106(c)(4)(F). Since this universe can range from 250-
350 jurisdictions at any time, HUD has determined that
requests for applications from potential grantees should only
be issued when a significant amount of funds (at least $5
million) becomes available for reallocation. Raising the
expectations of a large number of potential grantees for de
minimis incremental amounts of disaster assistance could be
counterproductive as there would always be a substantial
number of unfunded applications.
In addition, the disaster authorities of FEMA and other
agencies are normally the first lines of aid preferred by the
Federal Government. Section 933 only provides an occasional,
minuscule increment to funds available. When a very large
disaster, such as Hurricane Andrew occurs, the pattern of the
HUD response has involved the use of special supplemental
appropriations, making any section 933 aid superfluous.
Use of UDAG recaptures
Section 832 would make a technical change to section 119(o)
of the Housing and Community Development Act of 1974. This
provision establishes a pool of funds for the new Economic
Development Grants initiative under section 108(q) of the Act
(as added by section 232(a) of the Multifamily Housing
Property Disposition Reform Act of 1994). The pool is
comprised of UDAG recaptures that are available as of October
1, 1993 and amounts released to HUD after the 90-day
moratorium period under the UDAG Retention program (section
108(t) of the 1974 Act).
The amendment would change the date for determining the
first element of the pool from October 1, 1993 to April 11,
1994, the date of enactment of the Property Disposition
Reform Act. The original legislation was intended for
enactment in the summer of 1993. The October 1 date was
designed to commence the program for fiscal year 1994.
Although the legislation was enacted in April 1994, the
October date was not adjusted. This change would correct this
situation, and would permit more rapid implementation of the
Economic Development Grants program.
Subtitle E--Nonjudicial foreclosure of defaulted single family
mortgages
The proposed Single Family Foreclosure Act would authorize
the non-judicial foreclosure of defaulted single family
mortgages. The new authority would be patterned after the
Multifamily Mortgage Foreclosure Act of 1981 (Multifamily
Act). The Multifamily Act created a non-judicial foreclosure
mechanism for HUD in connection with certain multifamily
mortgages held by the Department pursuant to the National
Housing Act and section 312 of the Housing Act of 1964.
The reasons for this proposal are essentially the same as
those which led to passage of the Multifamily Act:
The multiplicity of State laws under which HUD forecloses
defaulted mortgages burdens the programs involved, and is
detrimental to the properties and to the communities in which
they are located.
Long periods to complete foreclosures under certain State
laws lead to deterioration in the condition of the properties
involved; necessitate substantial Federal management and
holding expenditures; increase the risk of vandalism, fire
loss, depreciation, damage, and waste; and adversely affect
the neighborhoods in which the properties are located.
These conditions seriously impair HUD's ability to protect
the Federal financial interest in the affected properties and
frustrate attainment of the objectives of the underlying
program authority.
The availability of a uniform and more expeditious, non-
judicial foreclosure procedure would ameliorate these
conditions and would relieve the burden on an already clogged
judicial system by removing these cases from the courts. It
would also further the FHA Reform objectives contained in the
HUD Reform Act and the National Affordable Housing Act of
ensuring that the Department administer its programs in a
business-like and financially sound manner.
This proposal would create a non-judicial foreclosure
remedy for single family mortgages that are held by HUD
pursuant to title I or title II of the National House Act or
were obligated pursuant to section 312 of the Housing Act of
1964. Specifically, the proposal would cover any mortgage
that:
Covers a one- to four-family dwelling and was previously
insured under title I or title II of the National Housing
Act, and has been acquired and is being held by HUD by reason
of assignment or otherwise, or that HUD holds following
acquisition and subsequent transfer of the property pursuant
to a purchase money mortgage agreement; or
Covers a one- to four-family dwelling that HUD holds
pursuant to section 312 (except that when a one- to four-
family dwelling is combined with non-residential space in a
``mixed-use'' project, the mortgage is covered by the
Multifamily Foreclosure Act).
The proposed remedy would be available for use by the
Secretary in connection with any mortgage covering these
properties, irrespective of its date of execution.
The procedure contemplated is similar to the deed of trust
foreclosure approach caused in approximately half of the
States. The proposed Act would be procedural only, and is not
intended to affect substantive rights, except as explicitly
set out therein. To the extent that a mortgagor has equitable
defenses, it would be free to seek injunctive relieve against
foreclosure in the courts.
The proposed Act is important to the Department's single
family mortgage insurance program and other collection
efforts. Lengthy delays in foreclosing defaulted mortgages
caused by excessive foreclosure periods in some States
increase the risk of property deterioration, vandalism, and
waste. The resulting loss to the Department (including its
mortgage insurance funds) and the taxpayer in terms of
increased management and holding expenses is substantial.
Moreover, these conditions impose a severe hardship on the
neighborhoods in which the properties are located. The
proposed legislation would ameliorate this situation by
providing an efficient, equitable and, most important,
relatively expeditious non-judicial foreclosure remedy.
The availability of an expeditious foreclosure remedy would
also provide HUD with the flexibility needed to deal with
defaulted single family mortgages in a manner designed to
promote the best interests of the owners and residents of the
properties involved, the government, and the communities in
which the security properties are located. In certain
instances, some delay in instituting foreclosure proceedings
would give a deserving mortgagor the opportunity to bring the
mortgage current or cure a nonmonetary default, thereby
ensuring that the interests of the mortgagor, the tenants,
and the government are best served. The expeditious
foreclosure remedy contemplated by the bill would permit
such a delay while at the same time assuring that, if a
relatively brief delay is later found not to have been
warranted, the mortgage could be foreclosed in a timely
fashion. In contrast, the cumbersome, time-consuming
foreclosure procedures in some States require that, as a
practical matter, because it is so difficult to complete
the process, HUD limit forbearance prior to initiating
foreclosure.
In addition, the non-judicial foreclosure procedure
contemplated by the proposal would be far less costly than
foreclosures conducted under State laws requiring judicial
process. The savings occasioned by this measure would accrue
not only to the taxpayers but also to the defaulting property
owner, since foreclosure costs are typically deducted from
the mortgagor's share of sale proceeds. Finally, the proposal
would relieve the courts of the burden of entertaining
judicial foreclosures of mortgages subject to the proposed
Act.
The proposed Act sets forth in detail the procedures to be
followed for foreclosure. The principal features of these
procedures are:
The Secretary of Housing and Urban Development would
designate a foreclosure commissioner, who would be empowered
to sell the property involved in accordance with the
requirements of the Act. The foreclosure commissioner would
have to be competent to conduct the foreclosure. (Sec. 845)
The foreclosure commissioner would commence the foreclosure
upon the request of the Secretary where a default or other
breach for which foreclosure is authorized by the mortgage or
applicable agreement has occurred. (Secs. 846 and 848)
The foreclosure would be commenced with service of a Notice
of Default and Foreclosure Sale. (Sec. 847) The Notice would
set forth information relevant to the sale and would be
published in a newspaper of general circulation once a week
for three weeks; and sent by certified or registered mail,
return receipt requested, to the owner, all present and past
mortgagors (except those that have been released), occupants,
and lienors. The Notice would be sent to all the parties,
except lienors, 21 days before the sale; it would be sent
at least 21 days before the sale to lienors. (Secs. 848
and 849)
Specific provisions would prescribe the conduct of the
proceeding prior to sale, the sale itself, the allowance of
foreclosure costs, the disposition of sale proceeds, the
transfer of title and possession, and the record of
foreclosure and sale. (Secs. 850-855)
There would be no right of redemption. (Sec. 854) The
proposed Act contains its own redemption provision, and would
not rely upon section 204(l) of the National Housing Act and
section 701 of the Department of Housing and Urban
Development Reform Act of 1989, which provides that there
shall be no right of redemption when HUD forecloses on a
single family mortgage, so that this bill may provide for a
complete self-contained remedy.
Since foreclosure extinguishes property rights, the
proposed Act contains numerous provisions to protect the
mortgagor of the property subject to foreclosure sale,
tenants, as well as other interested parties.
Major features include the following:
The foreclosure commissioner would have to be responsible,
financially sound, and competent to conduct the foreclosure.
(Sec. 845)
The commissioner would be specifically authorized to
adjourn or cancel the sale if conditions are not conducive to
a sale fair to the owner. (Sec. 851)
Even if not so provided in the mortgage instrument, the
owner would have the right to have the mortgage reinstated
one time by bringing the mortgage current or curing a
nonmonetary default; subsequent reinstatement could be made
at the discretion of the Secretary. (Sec. 850)
The provisions for publication and mailing of the Notice of
Default and Foreclosure Sale are extensive and thorough.
Foreclosure by reason of monetary default could generally
be based only upon total failure to meet an installment.
(Sec. 846)
No other proceeding to foreclose the mortgage could be
continued or initiated during the pendency of a foreclosure
under the Act. (Sec. 846).
If a new commissioner is designated, foreclosure would
continue unless the new commissioner finds that continuation
would unfairly affect the interests of the mortgagor. (Sec.
848)
If a sale is adjourned to another day, a new Notice of
Default and Foreclosure Sale would have to be served. (Sec.
851)
The requirement that occupants be notified would give
notice to tenants and other occupants of a potential passage
of title. (Sec. 849)
The requirement that lienors of record be notified would
give opportunity for the third parties most likely to bid or
purchase at foreclosure to do so. (Sec. 849)
The requirement that sale be by public auction would
increase the chances of arriving at a sales price reflective
of the value of the property. (Sec. 851)
Costs would be limited to out-of-pocket expenses and fees
established by the Secretary. (Sec. 852)
Finally, the measure would specify that redemption periods
under State law do not apply to mortgages foreclosed pursuant
to the Act. (Sec. 854) If redemption periods provided under
State law--up to 18 months or longer in some States--were
applied to these mortgages, salability of the properties
involved would be seriously impaired and their rehabilitation
and improvement discouraged. Such a result would increase the
Federal financial exposure and frustrate achievement of the
programs' objectives and the national housing goals.
This legislation is important to HUD's single family
housing programs, since it would help remedy lengthy State
foreclosure procedures that have caused substantial losses to
the government and the taxpayer and hardship to affected
residents and neighborhoods. In addition, because of the
expeditious foreclosure procedure contemplated by the
proposed Act, the Department would be provided flexibility to
deal with defaulted single family mortgages in a manner
designed to promote the best interests of the owners and
residents of affected properties, the Department, and the
communities in which the security properties are located.
Of course, since foreclosure extinguishes property rights,
the interest of the owner and other concerned parties deserve
the fullest protection possible. As outlined above, the
proposed Act contains extensive provisions to assure that all
parties concerned are treated as fairly as possible.
TITLE IX--MISCELLANEOUS AMENDMENTS
OFHEO assessment collection dates
The authorizing legislation for the Office of Federal
Housing Enterprise Oversight (OFHEO) provides for FNMA and
FHLMC to supply the money for the operations of the Office
through an annual assessment, to be paid in two payments each
year. The statute provides for these payments to be made ``on
September 1 and March 1 of the year for which the assessment
is made.'' (See section 1316(b)(2), Housing and Community
Development Act of 1992.) While the money is supplied by
these enterprises, it is deposited by the Office into the
Treasury, and the use of this money, like any other money in
the Treasury, is subject to appropriation. These payment
dates, however, bear no relation to the annual appropriation
process, which controls both the timing and the amount. The
dates have unduly complicated the operations of the Office's
and the Department's Salaries and Expenses accounts because
they result in internal borrowing and lending being necessary
to keep OFHEO solvent.
Section 901 would change the collection dates, to
coordinate them with the fiscal year--October 1st and the
next April 1st. In the event there is no regular
appropriation in effect on October 1st of a given year, there
would be a continuing resolution. OFHEO has adequate
authority to specify the level and collect the October 1
payment on the assessment, under whatever terms a continuing
resolution would specify (e.g., prior year operating level,
House-passed level, etc.). Presumably, to the extent that the
October collection, at the level indicated by the continuing
resolution, differed from half the amount of the assessment
for the year indicated by the regular appropriation if
enacted, an appropriate adjustment could be made in the April
collection.
Lead-based paint technical assistance amendments
Section 902 would broaden the Secretary's authority to
carry out a comprehensive program to attack lead-based paint
problems in the nation's housing. It would do so in two ways.
First, it would permit the existing funding set-aside for
research and technical activities in the programs, to be used
for lead-based paint research under the Department's broader
basic research authority, Title V of the Housing and Urban
Development Act of 1970 (12 U.S.C. 1701z-1), including
demonstrations, pilot testing of new or improved programs,
public education on lead hazards, and the development of
training modules on lead hazards. Second, it would permit the
work under set-aside funding to be done by HUD staff or under
contracts or other agreements.
The proposal would also set aside $5 million and $10
million for each of fiscal years 1995 and 1996 for technical
assistance and capacity building for grantees, and for
research and technical activities in the program,
respectively.
The broadened authority and increased funding for set-
asides are needed to permit the Secretary to conduct a broad,
flexible, and balanced attack on childhood lead poisoning in
housing, a problem that is viewed by health authorities as
the number one preventable threat to children's health.
Lead-based paint, target housing hazard reduction program
Section 903 would authorize appropriations for the Lead-
Based Paint Target housing Hazard Reduction Program at
$100,000,000 for fiscal year 1995 and $100,000,000 for fiscal
year 1996. Included within the authorizations are proposed
set asides of $5,000,000 and $10,000,000 for each of fiscal
years 1995 and 1996 for technical assistance and capacity
building for grantees, and for research and technical
activities in the program, respectively.
HUD research and development
Section 904 would authorize appropriations for HUD's
research and development program at $40 million for each of
fiscal years 1995 and 1996.
Footnotes
\1\Generally, assigned mortgages are formerly insured
mortgages that the Department has acquired following borrower
default and payment of the mortgage insurance claim to the
lender. Qualifying borrowers participate in the assignment
program. This program is designed to provide defaulted
mortgagors with up to three years of ``forbearance
assistance'' so that they may resume full obligations under
the mortgage by the end of the assistance period. If a
mortgagor cannot do so, the Department forecloses on the
mortgage.
\2\Section 203(b) is the FHA basic home mortgage insurance
authority and its mortgages are obligations of the Mutual
Mortgage Insurance fund (MMIF).
\3\Section 221(d)(2) is a special authority that insures
mortgages that pose a greater risk of default, and is in the
General insurance Fund (GIF).
\4\Such a mortgagor would, however, be eligible for a second
assignment.
\5\A mortgagor in this category may have an outstanding
delinquency.
\6\This would, however, only accelerate payments to the MMIF,
or the other appropriate fund, since the mortgagor is making
monthly payments to HUD under the assignment program.
\7\Children of low-income homeowning parents are 15% more
likely to stay in school, and somewhat less likely to bear
children as teenagers or be arrested. See Measuring the
Benefits of homeowning: Effects on Children, Richard K. Green
and Michelle J. White, University of Chicago, February 1994.
\8\As added by section 164 of the Housing and Community
Development Act of 1992.
\9\HUD already has the authority to impose a civil money
penalty on an FHA-approved, nonsuprevised lender pursuant to
section 536 of the National housing Act (``Civil Money
Penalties against Mortgagees and Lenders'') since failure to
comply with HMDA is now a violation of an FHA handbook.
\10\FFIEC is the Federal Financial Institutions Examination
Council, created by the 1980 Amendments to HMDA. The FFIEC is
comprised of the five banking regulators: The Board of
Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, the Comptroller of the Currency, the
Office of Thrift Supervision, and the National Credit Union
Administration. HUD is not a member of FFIEC, but it does
have voting delegates on the HMDA Subcommittee of the
Consumer Compliance Task Force.
\11\Or less if the factor would result in an adjustment of
less than one percent. For example, if the factor is 1.04,
the adjustment would be based on a factor of 1.03. If the
factor is 1.009, the factor would be reduced to 1.0 and the
rents would not be adjusted.
\12\The Proposed Act would state that a legal newspaper that
is accepted as a newspaper of legal record in the county or
counties where the property is located would constitute a
newspaper of general circulation.
Mr. SARBANES. Mr. President, I join Banking Committee Chairman Donald
Riegle today in introducing the Housing Choice and Community Investment
Act of 1994. The Housing Choice and Community Investment Act of 1994
has been submitted to the Congress by the Secretary of the Department
of Housing and Urban Development [HUD], Henry Cisneros, and reflects
the administration's priorities of reducing homelessness, turning
around public housing, expanding affordable housing, enforcing fair
housing, and empowering communities. We certainly welcome the
importance that the Clinton administration has placed on revitalizing
America's communities.
This year, the Congress will need to reauthorize all of the Federal
Government's housing programs. The legislation we introduce today on
behalf of Secretary Cisneros embodies the administration's proposals
for reauthorizing HUD's existing programs and for new programs to be
administered by HUD. As chairman of the Senate Subcommittee on Housing
and Urban Affairs, I intend to review the administration's proposals
carefully.
Over the last 15 months, it has been my pleasure to work with
Secretary Cisneros on two pieces of legislation--since signed into
law--that reflect his thoughtful approach to HUD's mission. These new
laws will improve HUD's performance by streamlining the multifamily
property disposition process, reducing defaults on mortgages insured by
HUD, removing certain barriers to the flexible use of the HOME
Investment Partnerships Program, and sharing more responsibility with
other partners in housing and community development activities. Equally
important, the new legislation enacted last year allows the Secretary
to test new approaches to solving housing and community development
problems. We are looking forward to the seeing the results of newly
enacted demonstration programs that were recommended by the Secretary
to test innovative solutions to the problems of homelessness, to
encourage prudent and safe pension fund investment in affordable
housing, to build the capacity of community-based nonprofits, and to
enhance the community development loan guarantee program as an economic
development tool.
Since his arrival, Secretary Cisneros has made tremendous strides in
his efforts to make the Federal Government a stronger partner in
revitalizing our Nation's communities. He has demonstrated great energy
and vision in putting forth an agenda to improve HUD's management and
get HUD moving forward again. He deserves our continued support for his
efforts to restore HUD's credibility, to leverage new resources, and to
strengthen partnerships between the Federal Government and other levels
of government and the private sector. I look forward to working with
Secretary Cisneros and his able team at HUD in shaping a
reauthorization bill this year that will further their efforts. The
Housing Choice and Community Investment Act of 1994, which we introduce
today, is an important foundation for the reauthorization process that
will now get underway.
______
By Mr. LEAHY (by request):
S. 2050. A bill to amend the Federal Insecticide, Fungicide, and
Rodenticide Act, and for other purposes; to the Committee on
Agriculture, Nutrition, and Forestry.
Federal Insecticide, Fungicide, and Rodenticide Act Amendments of 1994
Mr. LEAHY. Mr. President, after nearly a year's worth of work
on the part of the Department of Agriculture, the Environmental
Protection Agency, and the Food and Drug Administration, the
administration presents to us today two pesticide reform bills. One
amends the tolerance setting scheme of the Food, Drug, and Cosmetic
Act, and one amends FIFRA, the Federal Insecticide, Fungicide, and
Rodenticide Act, which governs the sale and use of pesticides. I am
pleased that the administration has asked me to introduce its FIFRA
amendments.
Most Americans probably believe that our food safety laws are based
purely on health considerations that protect all Americans, including
children. That is not true.
Most Americans probably believe that if pesticides do not meet such a
standard, then they are removed from the market quickly. That is not
true.
Finally, most Americans probably believe that farmers have plenty of
alternative pest control methods if a pesticide is removed from the
market. That is not true either.
Unfortunately, our system does not work this way, largely for
historical reasons. Our food safety laws were primarily designed to
address gross food contamination, not pesticide residues. They were not
originally intended to be food safety laws at all. They were written to
make sure that pesticides on the market actually worked for farmers.
Our basic agricultural research and farm programs were conceived before
pesticides were widely used, and well before pesticides on food became
a national issue.
Despite attempts to connect and relate these laws over the years,
they do not work in an integrated way to meet our national objectives.
They are like using the wrong tool to repair an engine. Either the tool
or the engine ends up broken.
After 12 years of delay and denial, we have a President who is
committed to a thorough overhaul of our pesticide and food safety laws.
The administration has put together a comprehensive proposal that I
believe could lay a foundation for lasting reform.
Some of the reforms included in the administration's FIFRA bill are:
Changing cancellation and suspension proceedings from trial-type,
adjudicatory hearings that can last years to notice and comment
rulemaking proceedings;
Beefing up FIFRA enforcement authorities to the level of other
environmental laws and adding whistleblower protection; citizen suits
are also authorized, but not against farmers;
Requiring the Department of Health and Human Services and USDA, in
conjunction with EPA, to collect all the data necessary to implement
the recommendations of the National Academy of Sciences on pesticides
in the diets of infants and children;
Recordkeeping for all agricultural uses of pesticides;
Giving registration applications that include three or more minor
uses priority for review and extending exclusive data use rights;
during reregistration, allowing unsupported minor crop uses to continue
until the last study is due;
New authority for EPA to phase down or eliminate the use of a
pesticide if it is reasonably likely to pose a significant risk to
humans or the environment;
Authorizing pilot programs for pesticide use reduction;
Streamlining registration and extending exclusive data use rights for
reduced risk pesticides;
Making pesticide registrations time-limited--registrations would
automatically sunset after 15 years unless the registrant applied for a
renewal and submitted any necessary health and safety data;
Additional authority to assess fees to cover the $20 million
projected shortfall in the reregistration budget; and
Coordinating tolerance revocations under the Food, Drug, and Cosmetic
Act [FFDCA] with FIFRA cancellation proceedings.
The bill also includes a provision to stop some pesticides that are
banned in the United States from ending up in our food supply on
imported food. This part of bill differs from the circle of poison bill
that I introduced in the last Congress, particularly in its treatment
of never-registered pesticides. Nevertheless, I remain confident that
these differences can be resolved in a manner that will protect
consumers and level the playing field for farmers.
This bill has taken a long time to write. Nonetheless, the President
has my commitment to do everything possible to move a strong FIRRA
reform bill this year, in conjunction with reform of the FFDCA's
provisions for pesticide residue tolerances. That bill, of course,
falls under the Labor Committee's jurisdiction.
The administration has worked hard to propose a realistic starting
point for the process of pesticide law reform. They deserve to be
commended for their efforts.
But I am sure that will not stop critics from attacking the bill.
Plenty of inside-the-beltway lobbyists, who really just want more delay
and denial, are probably on the phones right now. No doubt, they are
grossly exaggerating how this bill will affect farmers, consumers, and
agribusiness, spouting off vitriolic sound bites for the press, and
telling their clients that a quick fix is all that is needed.
They are wrong. The White House has assured me a quick fix will not
be accepted. I will not accept one, and I am sure Senator Kennedy
shares my view. I intend to work closely with him to ensure that our
committees act in a coordinated fashion that will result in
comprehensive reform benefiting consumers and farmers alike.
While we work on legislation, I am also working with USDA and EPA on
an administrative solution to the lack of safer pesticide alternatives.
Yesterday, I received a firm commitment from the administration on a
historic initiative to solve this problem.
Right, now, EPA's regulatory decisions, to cancel a pesticide for
example, are not coordinated with USDA's research agenda. I raised this
issue several times last year on the Senate floor, before the Food
Group, and in a letter to Vice President Gore.
If EPA intends to cancel or otherwise limit use of a pesticide, and
there is no effective alternative, then USDA efforts to develop and
disseminate a safer pest control method should begin immediately. EPA
should be able to identify pesticides of concern well before regulatory
action is taken, so that USDA can help farmers find safe and effective
alternatives in a timely manner. Without such an early warning system,
farmers will continue to be left empty handed or with alternatives that
simply raise similar risk concerns.
Farmers need to be able to control pests and weeds. And if they are
to meet a new health-based safety standard, we must provide them with
safe, effective, and economical pest control methods.
The administration and I agree that we do not need legislation to get
started on a solution to this particular problem. My staff has been
working with EPA and USDA since February on a draft memorandum of
agreement to start getting safer alternatives into farmers' hands. I
was assured yesterday that the memorandum will be completed in July.
This agreement represents a leap forward in the way we think about
pesticides and pest management. All of the parties now recognize that
our regulatory policies are incomplete, and will never be fully
successful, until we establish a program to promote effective,
economical alternatives to dangerous chemical pesticides.
While the naysayers and fearmongers are building massive
war chests to fight reform, while they seek to exploit farmers'
understandable concerns, this administration is taking responsible
steps toward a constructive solution to the alternatives problem.
When the agreement is complete in July, farmers will finally get the
help they deserve to find and use safer pesticide alternatives. Instead
of an antiquated system that fosters confrontation and lurches from
crisis to crisis, we will finally have a rational policy that rewards
innovation and helps farmers find safer alternatives to the most
hazardous chemical pesticides, before they are removed from the market.
I look forward to taking the first step to resolve the alternatives
problem administratively while we continue to work toward comprehensive
pesticide law reform.
Mr. President, I ask unanimous consent that the full text of the bill
be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 2050
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS; REFERENCE
(a) Short Title.--This Act may be cited as the ``Federal
Insecticide, Fungicide, and Rodenticide Act Amendments of
1994''.
(b) Table of Contents.--
Sec. 1. Short title; Table of contents; Reference.
Sec. 2. Registration Renewal (``Sunset'').
Sec. 3. Imports and Export.
Sec. 4. Cancellation.
Sec. 5. Coordination with the Federal Food, Drug, and Cosmetic Act
(FFDCA).
Sec. 6. Suspension.
Sec. 7. Label Call-In.
Sec. 8. Phase-Out/Phase Down.
Sec. 9. Reduced Risk Pesticides.
(a) Reduced Risk Pesticides.
(b) Exclusive Use.
(c) Definition of Biological Pesticide.
(d) Conditional Registration for Biologicals.
(e) Registration Priorities.
(f) Conforming Amendments to Sections 20 and 23.
(g) Alternative Pest Control Strategies.
Sec. 10. Minor Uses.
Sec. 11. Fees.
Sec. 12. Use-by-Prescription.
Sec. 13. Judicial Review.
Sec. 14. Indemnification.
Sec. 15. Certification and Training.
Sec. 16. Pesticide Recordkeeping.
Sec. 17. Enforcement.
Sec. 18. ``Whistle Blower'' Provision.
(c) Reference.--Whenever in this Act 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 Federal
Insecticide, Fungicide, and Rodenticide Act.
SEC. 2. REGISTRATION RENEWAL (``SUNSET'').
(a) Section 3 of the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. 136A) is amended by adding at the
end the following:
``(g) Registration Renewal.--
``(1) General rule.--Under the subsection the registrations
of pesticides are to be renewed periodically as set out in
paragraph (4). The dates for the renewal of a registration of
a pesticide are based on dates applicable to the active
ingredient of the pesticide as set out in paragraph (2). The
date on or after which an application shall be submitted for
the renewal of a registration is the reapplication date of
the active ingredient as set out in paragraph (3). The
initial and subsequent reapplication date of an active
ingredient is set out in paragraph (4). The date of which a
renewal application is required to be approved is the
expiration date of the active ingredient as set out in
paragraph (5a). The expiration date refers to the date a
registration will expire if not renewed and such date is 3
years after the reapplication date of the active ingredient.
A registration shall not expire under this section except as
provided under paragraph (5) of this subsection.
``(2) List of active ingredients.--
``(A) Initial list.--Not later than 180 days after the date
of enactment of the Federal Insecticide, fungicide, and
Rodenticide Act Amendments of 1994, the Administrator shall
publish in the Federal Register a list of each ingredient
contained in any pesticide currently registered on the date
of the publication of such list.
``(B) List revision.--The Administrator shall revise the
list to add a new pesticide active ingredient on the date a
pesticide is registered under subsection (c) which contains
such ingredient. If the expiration date of the active
ingredient expires without renewal of the registration of at
least one pesticide containing such active ingredient, the
Administrator shall remove the active ingredient from the
list. The Administrator shall annually publish such list to
include each revision made under this subparagraph.
``(C) List content.--The list published by the
Administrator under this paragraph shall state the name,
reapplication date, and the expiration date of each active
ingredient contained in the list.
``(D) Publication groups.--Active ingredients listed under
this paragraph shall be grouped as follows: An active
ingredient shall be classified--
``(i) in group 1 if the active ingredient was first
contained in a pesticide initially registered after November
1, 1984,
``(ii) in group 1 if the active ingredient was first
contained in a pesticide initially registered after October
31, 1984, but before the date of enactment of the Federal
Insecticide, Fungicide, and Rodenticide Act Amendments of
1994, or
``(iii) in group 3 if the active ingredient was first
contained in a pesticide initially registered after such date
of enactment.
``(3) Reapplication date.--The initial reapplication date
of an active ingredient--
``(A) in group 1, shall be a date established by the
Administrator 12-14 years after the issuance of a
reregistration eligibility decision document for the active
ingredient under section 4(g)(2),
``(B) in group 2, shall be a date established by the
Administrator 10-13 years after the enactment of the Federal
Insecticide, Fungicide, and Rodenticide Act Amendments of
1994, and
``(C) in group 3 shall be 12 years after the date of
initial registration of a product containing the active
ingredient.
``Subsequent reapplication dates for each active ingredient
shall be 12 years after the preceding expiration date of such
active ingredient.
``(4) Renewal.--
``(A) Procedure for renewal.--All registrants shall comply
with guidelines published by the Administrator specifying the
information required for renewal of registration that are in
effect 4 years prior to the reapplication date for each
active ingredient in the registrant's product. Such
guidelines shall provide registrants with information
sufficient to determine each scientific study that must be
submitted for renewal of registration.
``(B) Data submission, compensation, and exemption.--For
purposes of this subsection, the provisions of subsection
(c)(1) and (c)(2)(D) shall be applicable to the requirements
for renewal of a registration of a pesticide.
``(C) Standard.--The Administrator shall renew the
registration of a pesticide if the Administrator determines
that (i) the registrant has submitted an application for
renewal of registration no later than the date set forth in
paragraph (3) of this subsection; (ii) the registrant has
submitted all required information as specified by the
guidelines published pursuant to subparagraph (A) and any
written communications from the Administrator to the
registrant regarding the application of such guidelines; and
(iii) the active ingredient meets the requirements of
subsection (c)(5) of this section.
``(D) Notification.--The Administrator shall endeavor to
review applications as expeditiously as practicable, and
shall notify the registrant promptly of any deficiencies in
the application for renewal of registration.
``(E) Effective date of renewal.--The renewal of the
registration of a pesticide under this paragraph shall take
effect on the day after the expiration date of the previous
registration of the pesticide.
``(F) Extension.--If the registrant of a pesticide submits
a complete application for the renewal of the registration of
a pesticide in accordance with subparagraph (A) and the
Administrator does not take final action on such application
before the expiration date of such registration, the
Administrator shall extend the pesticide's registration for
one additional year.
``(5) Expiration.--
``(A) Incomplete application.--If the registrant of a
pesticide does not submit a complete application to the
Administrator, including all required information as
specified by the guidelines published pursuant to paragraph
(4)(A), on or before the reapplication date of the active
ingredient for which registration renewal is required and the
Administrator has not after such date renewed the
registration, the Administrator shall notify the registrant
at least 30 days prior to the expiration date of the
registration that the registration shall expire upon the
expiration date unless the registrant has requested a hearing
before such time. No reapplication shall be deemed incomplete
if it complies with the guidelines under paragraph (4). If a
hearing is requested, the only matter for resolution at that
hearing shall be whether the registrant failed to submit
a complete application on or before the reapplication date
of the active ingredient. If a hearing is held, a decision
after completion of such hearing shall be final. If, after
a hearing, the Administrator issues a determination that
the application is incomplete, the registration shall
expire. Notwithstanding any other provision of this Act, a
hearing shall be held and a determination made within 75
days after receipt of a request for such hearing. If a
registrant fails to submit a request for a hearing under
this subsection, the registration shall expire
automatically upon the expiration date and the expiration
of the registration shall not be reviewable in any court.
``(B) Insufficient information.--Notwithstanding any other
provision of this section, if the Administrator determines
that the information submitted for an active ingredient for
which registration renewal is required is insufficient to
permit the Administrator to evaluate the active ingredient
under the requirements of section 3(c)(5), the Administrator
shall notify each registrant to which the determination
applies at least 30 days prior to the expiration date for
such registrations that each registration shall expire upon
the expiration date unless the registrant has requested a
hearing before such time. If a hearing is requested, the only
matter for resolution at that hearing shall be whether the
Administrator's determination was reasonable that the
information submitted is insufficient to evaluate the active
ingredient under section 3(c)(5). If a hearing is held, a
decision after completion of such hearing shall be final. If
after a hearing, the Administrator issues a determination
that the information submitted is insufficient to permit the
Administrator to evaluate the active ingredient under the
requirements of section 3(c)(5), the registration shall
expire. Notwithstanding any other provision of this Act, a
hearing shall be held and a determination made within 75 days
after receipt of a request for such hearing. If a registrant
fails to submit a request for a hearing under this
subsection, the registration shall expire automatically upon
the expiration date and the expiration of the registration
shall not be reviewable in any court.
``(6) Cancellation.--If the Administrator determines on the
basis of a registrant's application or any other information
that one or more uses of an active ingredient for which
registration renewal is required does not meet the
requirements of section 3(c)(5) of this Act, the
Administrator shall initiate a proceeding to cancel all
registrations containing such active ingredient to which the
determination applies under section 6(b) of this Act.
Registrations subject to cancellation proceedings shall
neither expire nor be renewed pending the completion of
cancellation proceedings. If, after completion of
cancellation proceedings under section 6(b), the
Administrator determines not to cancel a registration, the
Administrator shall renew such registration.
``(7) FEES.--
``(A) The Administrator is authorized to issue regulations
to assess fees from registrants reasonably calculated to
cover costs associated with the review of registrations
pursuant to this subsection.
``(B) If any fee prescribed by regulations issued pursuant
to this paragraph with respect to the registration of a
pesticide is not paid by the time prescribed by such
regulations, the Administrator, by order and without hearing,
may cancel the registration.
``(8) Registration renewal fund.--
``(A) Establishment.--There shall be established in the
Treasury of the United States a registration renewal fund.
``(B) Source and use.--All fees collected by the
Administrator under paragraph (6) shall be deposited into the
fund and shall be available to the Administrator, without
fiscal year limitation, to carry out the provisions of
subsection (g) of this Act.
``(9) Existing stocks.--Whenever a pesticide registration
expires pursuant to this subsection, the Administrator may
issue an order allowing continued distribution, sale or use
of existing stock of the expired pesticide subject to such
conditions and limitations as the Administrator may specify,
provided such distribution, sale or use is consistent with
the provisions of the Act.''.
SEC. 3. IMPORTS AND EXPORTS.
(A) Exports.--
(1) Section 17 (7 U.S.C. 136o) is amended to read as
follows:
``(a) Cancellation Notices Furnished to Foreign
Governments.--Whenever a registration or a cancellation or
suspension of the registration of a pesticide becomes
effective, or ceases to be effective, the Administrator shall
transmit, not later than 180 days after the effective date of
the action, notification of the action to the governments of
other countries and to appropriate international agencies.
The notification shall include information related to the
cancellation or suspension of the registration of the
pesticide and information concerning other pesticides that
are registered under section 3 and other alternatives
including Integrated Pest Management, that could be used in
lieu of the pesticide.
``(b) Certain Pesticides Prohibited From Export.--
``(1) Pesticides containing active ingredients banned
because of adverse effects on human health or the
environment.--
``(A) Except as provided in subparagraph (B) or (C), no
person may export to a foreign country a pesticide that
contains an active ingredient if all or virtually all use of
the active ingredient in the United States has been
prohibited. An active ingredient is subject to the preceding
sentence if any of the following has occurred:
``(i) Registration of pesticides containing the active
ingredient have been suspended or canceled by the
Administrator.
``(ii) Applications for registration of pesticides
containing the active ingredient have been denied by the
Administrator;
``(iii) Applications for registration of pesticides
containing the active ingredient have been withdrawn by the
registrant voluntarily;
``(iv) Registrations of the pesticide have been canceled by
the registrant voluntarily; or,
``(v) Tolerances under section 408 of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 346a) for the active
ingredient have been revoked; and, as a result, all or
virutally all volume of the active ingredient may not be used
lawfully in the United States.
``(B) The Administrator shall permit the export of a
pesticide subject to the prohibitions of paragraph (A) solely
because of actions described in subparagraph A (iii) or A
(iv), if the Administrator publishes after notice and
opportunity for public comment a determination that the
Administrator is unaware of any information indicating use of
the pesticide could pose a risk of significant adverse
effects on public health or the environment.
``(C) The Administrator shall permit the export of a
pesticide to a specific importing country if--
``(i) the Administrator finds, after notice and opportunity
for comment, that the pesticide is not subject to a
prohibition of subparagraph (A) for any reason related to an
adverse human health effect; and
``(ii) the importing country has informed the Administrator
in writing that the country wishes to import the pesticide
and affirms that the country is aware that all or virtually
all uses of the pesticide are prohibited in the United
States.
``A finding under this subparagraph shall be effective for 1
year, except that the Administrator may renew the finding if
the importing country informs the Administrator annually in
writing that it wishes to continue to import the pesticide.
``(D) The Administrator shall, after opportunity for
comment, establish and keep current a list of pesticide
active ingredients which the Administrator determines are
described in paragraph (1)(A). The Administrator shall
publish such list in the Federal Register initially within
six months of the date of enactment of this paragraph and
shall publish any additions to or deletions from the list
promptly upon the Administrator's determination that the list
should be amended.
``(E) The omission of any active ingredient from the list
published pursuant to subparagraph (D) that is subject to the
restrictions of paragraph (1)(A) shall not limit the
authority of the Administrator to initiate enforcement action
under this Act with regard to a pesticide containing such
active ingredient exported in violation of paragraph (1)(A).
``(2) Pesticides subject to objections from importing
countries.--
``(A) The Administrator shall, by order, prohibit persons
from exporting a pesticide to a foreign country that has
informed in writing the Administrator, or an international
agency of which the United States is a member, that the
country does not wish to import the pesticide and the foreign
country certifies that it--
``(i) is not producing and will not produce the pesticide
for use in the country;
``(ii) is not importing and will not import the pesticide
from any other country; and
``(iii) does not wish to import the pesticide because of
concerns of the country about adverse effects on human health
or the environment.
``(B) The Administrator shall issue an order under
subparagraph (A) not later than 30 days after receipt of the
certification.
``(C) If the Administrator determines, after notice and
opportunity for comment, that a foreign country is not in
compliance with a certification provided under subparagraph
(A), the Administrator shall promptly withdraw the order
issued under subparagraph (A). The withdrawal shall become
effective on publication in the Federal Register.
``(3) Requirement for a method of residue detection in
food.--
``No person may export a pesticide unless--
``(A) There is a tolerance or an exemption from the
requirement of tolerance under paragraph (3) or (4) of
section 408(d) of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 346a(d)) governing residues of each ingredient in
the pesticide in at least one food;
``(B) There is a practical method for detecting residues of
each ingredient in the pesticide in or on foods and the
Administrator has an appropriately certified pesticide
reference standard; or
``(C) the Administrator determines that the pesticide is
not likely to be used in a manner resulting in pesticide
residues in or on imported foods.
``(4) Pesticides that have never been registered under
section 3.--
``(A) No person may export a pesticide to a foreign country
if any ingredient of the pesticide has not been and is not
the subject of any registration under section 3, unless the
Administrator determines that--
``(i)(I) for each active ingredient, there is a tolerance
greater than zero or an exemption from the requirement for a
tolerance under paragraph (3) or (4) of section 408(d) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 346a(d)); or
``(II) residues of the pesticide on food have been
permitted or the pesticide has been approved for use in at
least 3 countries that evaluate pesticides prior to marketing
in accordance with internationally recognized scientific
standards and on the basis of a competent, independent,
scientific review of public health and environmental risks;
and (ii) the country of import participates in the United
Nations Environment Program-Food and Agriculture Organization
system for exchange of information on pesticides in
international trade, or has equivalent provisions in place.
``(B) Any person may petition the Administrator to withdraw
the determination under subparagraph (A) that a pesticide may
be exported.
``(5) Restrictions on the export of small quantities of
pesticides for research and development.--Notwithstanding
paragraphs (1) and (4), the Administrator may permit
the export of a small quantity of a pesticide to a foreign
country solely for purposes of research and development,
but not test marketing. The Administrator, however, shall
not permit the export of such a pesticide if it contains
any active ingredient which has been prohibited for all or
virtually all uses and for which the Administrator has not
made the determination in (1)(B). Export of a pesticide
under this subparagraph shall be subject to such quantity
limitations, notification, reporting and labeling
requirements as are necessary to determine the nature and
extent of such research and development activities and to
ensure that the pesticide will be used solely for research
and development in the country.
``(c) Requirement for Foreign Purchaser Acknowledgement
Statement.--In the case of an unregistered pesticide other
than a pesticide covered by paragraph (1) of subsection (b),
the exporter shall obtain from the foreign purchaser a signed
statement acknowledging that the purchaser understands that
the pesticide is not registered for use in the United States
and cannot be sold in the United States under this Act. A
copy of the statement shall be transmitted to the
Administrator and to an appropriate official of the importing
country.
``(d) Information on Alternatives.--The Administrator shall
develop and update annually a circular describing
environmentally preferable alternatives and pest management
techniques to exported pesticides that are not registered
under section 3 or registered pesticides that are exported
pursuant to paragraph (1)(C) of subsection (b) of this
section. The Administrator shall transmit the circular and
the annual update of the circular to the governments of other
countries and to appropriate international organizations.
``(e) Pesticides or Devices Intended for Export.--No
pesticide or device may be exported to a foreign country
unless--
``(1) the pesticide or device complies with this section
and sections 2(p), 2(q), 7, 8, 19(a), and 19(e); and
``(2) the label of the pesticide--
``(A) is written in an official language of the country of
use; and
``(B) to the extent not in conflict with requirements of
the country of use, contains all health, safety,
environmental, and other related information required to be
included under section 3 on the labeling for the pesticide
for use in the United States, if the product is registered
under Section 3 of this Act.
``(f) Product Stewardship.--
``(1) Regulations.--To promote proper product stewardship,
the Administrator shall, by regulation, require a person who
exports a pesticide from the United States to comply with the
product stewardship provisions of the 1993 International Code
of Conduct on the Distribution and Use of Pesticides of the
Food and Agricultural Organization of the United Nations. The
Administrator may amend such regulations to require persons
who export pesticides to comply with any amendments to such
code as the Administrator deems necessary.
``(2) Noncompliance.--If the Administrator determines after
providing notice and opportunity for informal hearing that an
exporter of pesticides has demonstrated a pattern of
noncompliance with a regulation issued under paragraph (1),
the Administrator--
``(A) shall publish in the Federal Register the finding of
the Administrator with respect to the noncompliance; and
``(B) may prohibit the exporter from exporting pesticides
for a period of not more than 180 days unless the
noncompliance has not been corrected by the end of the
period.
``(g) Confidentiality of Export Information.--
``(1) Notwithstanding sections 7(d) and 10(b), the
Administrator shall make available to the public on request
without restriction the following information in the
possession of the Administrator concerning exports of
pesticides:
``(A) The identity of the producer and exporter of an
exported pesticide.
``(B) The active ingredients in an exported pesticide.
``(C) The name of an exported pesticide.
``(D) The date of export.
``(E) The countries to which a pesticide is exported,
including the countries of final destination.
``(2) The Administrator shall make available to the public
upon request information specified by paragraph (1)
concerning the export of a pesticide solely in small
quantities for purposes of research and development only to
the estent that such information would be subject to
disclosure if it concerned a pesticide used for similar
research and development purposes in the United States,
provided the exporter, in accordance with rules issued by the
Administrator, certifies to the Administrator, in writing,
that the pesticide is being exported solely in small
quantities for purposes of research and development.
``(h) Records.--Any person who distributes or sells a
pesticide for export shall submit to the Administrator
records of the distribution or sale under such conditions as
the Administrator may prescribe by regulation. No regulation
issued pursuant to this subsection shall require any person
to duplicate reporting of any information otherwise required
to be reported by the person under section 7.
``(i) Annual Exports Report.--The Administrator shall
prepare and make available to the public an annual report
beginning with the first full calendar year following the
year of enactment of this subsection. The report shall
include a description of the identities, aggregate
quantities, and destinations of pesticides exported to
foreign countries during each calendar year, to the extent
the Administrator determines that disclosure of the
information is consistent with the requirements of section
10.
``(j) Fees.--
``(1) Authority.--The Administrator may issue regulations
to assess fees on pesticide registrants that are reasonably
calculated to cover costs associated with carrying out this
section.
``(2) Establishment of fund.--There shall be established in
the Treasury of the United States a fund to carry out this
section.
``(3) Source and use. All fees collected by the
Administrator under paragraph (1) shall be deposited into the
fund, and thereafter, shall be available until extended,
subject to appropriation, to carry out this section.
``(k) Technical Assistance Programs.--
``(1) In general.--The Administrator is authorized to use
each fiscal year not more than $4,000,000 to provide
countries technical assistance in--
``(A) safe handling and use of pesticides;
``(B) alternative methods of pest control;
``(C) strengthening of pesticide regulatory institutions;
``(D) provision of technical information;
``(E) support for pesticide management and safety training
programs; and
``(F) coordination with assistance efforts conducted by
other donor or international organizations.
``(2) Priority.--Priority for assistance under this
subsection shall be given to developing countries that are
major sources of food imported into the United States.
``(3) Coordination with the United States Agency for
International Development.--To ensure full consistency with
ongoing U.S. AID technical assistance programs in those
areas, all EPA activities conducted under this section in
countries that receive U.S. AID assistance shall be
undertaken in close cooperation with the Administrator of
U.S. AID.
``(l) Importation of Pesticides and Devices.--
(1) In general.--The Secretary of the Treasury shall--
``(A) Notify the Administrator of the arrival of pesticides
and devices;
``(B) deliver to the Administrator, on the request of the
Administrator, samples of pesticides or devices that are
being imported into the United States; and
``(C) give notice to the owner or consignee of the
pesticide or device.
``(2) Opportunity to be heard.--The owner or consignee may
appear before the Administrator and introduce testimony.
``(3) Violations.--If it appears from the examination of a
sample that the sample is adulterated, misbranded,
otherwise violates this Act, or is otherwise injurious to
health or the environment--
``(A) the pesticide or device may be refused admission; and
``(B) the Secretary of the Treasury may--
``(i) refuse delivery to the consignee; and
``(ii) cause the destruction of any pesticide or device
refused delivery.
``(4) Nonexport.--A pesticide or device that is refused
admission shall not be exported unless the export conforms to
the requirements of subsection (c) and such regulations as
the Secretary of the Treasury may prescribe, except in
accordance with this section.
``(5) Bond.--The Secretary of the Treasury may deliver to
the consignee the pesticide or device pending examination and
decision in the matter on execution of bond for the amount of
the full invoice value of the pesticide or device, together
with the duty on the pesticide or device. If the consignee
refuses to return the pesticide or device for any cause to
the custody of the Secretary of the Treasury, when demanded,
for the purpose of excluding the pesticide or device from the
United States, or for any other purpose, the consignee shall
forfeit the full amount of the bond.
``(6) Charges.--All charges for storage, cartage, and labor
on pesticides or devices that are refused admission or
delivery shall be paid by the owner or consignee. Any default
of the payment shall consititue a lien against any future
importation made by the owner or consignee.
``(7) Regulations.--The Secretary of the Treasury, in
conjunction with the Administrator, shall prescribe
regulations for the administration and enforcement of this
subsection.
``(m) Cooperation in International Efforts.--
``(1) President.--The President is encouraged to pursue
appropriate international agreements or arrangements to
address notification programs and trade in pesticides
consistent with this Act.
``(2) Administrator.--The Administrator is encouraged to,
in cooperation with the Secretary of State, the Administrator
of the Agency for International Development and the head of
any other appropriate Federal Agency, participate and
cooperate in any international efforts to develop improved
pesticide research and regulations.''.
(b) Conforming Amendments.--
(1) Registration of Establishments.--Section 7(c) (7 U.S.C.
136e (c)) is amended--
(A) by striking paragraph (1) and inserting the following
new paragraph:
``(1) In general.--
``(A) Any producer operating an establishment registered
under this section shall inform the Administrator within 30
days after the establishment is registered of the types and
quantities of pesticides and active ingredients used in
producing pesticides that the producer--
``(i) is currently producing;
``(ii) has produced during the past 365-day period; and
``(iii) has sold or distributed during the past 365-day
period.
``(b) Any producer operating an establishment registered
under this section shall inform the Administrator within 30
days after the establishment is registered of--
``(i) the types and quantities of pesticides, and active
ingredients used in producing pesticides, that are produced
for export to a foreign county; and
``(ii) the date of export and quantity of pesticides and
active ingredients exported to each foreign county to which
the producer has exported during the past 365-day period.
``(C) The information required by this paragraph shall be
kept current and submitted to the Administrator annually as
required under such regulations as the Administrator may
prescribe.''.
(B) in subparagraph (2) by striking ``(2)'', and inserting
``(2) Stop sale orders.''.
(2) Unlawful acts.--Section 12(a)(2) (7 U.S.C. 136j(a)(2))
is amended--
(A) by striking ``or'' at the end of subparagraph (R);
(B) by striking the period at the end of subparagraph (S)
and inserting ``; or''; and
(C) by adding at the end the following:
``(T) to export any pesticide in violation of section 17 or
to violate any regulation or order issued under section
17.''.
(3) Adverse effects information.--Section 6(a) (7 U.S.C.
136c(a)) is amended by adding at the end the following:
``Effective Date.--
``(A) The prohibitions in Section 17(b) shall become
effective 30 days after the date of enactment of the Federal
Insecticide, Fungicide, and Rodenticide Act Amendments of
1994.
``(3) Any person, who exports a pesticide or who produces a
pesticide for export, shall submit to the Administrator:
``(A) any factual information regarding unreasonable
adverse effects on the environment of the pesticide; and
``(B) any information regarding the regulatory status of
such pesticide in other countries that would affect whether
the pesticide may be exported.''.
SEC. 4. CANCELLATION.
(a) Section 3(c)(6) (7 U.S.C. 136a(c)(6)) is amended to
read as follows:
``(6) Denial of registration.--If the Administrator
determines that the requirements of paragraph (5) for
registration are not satisfied, the Administrator may issue a
notice proposing denial of registration. Such a notice shall
include the legal and factual bases for the denial. The
Administrator shall send a notice proposing denial to the
applicant for registration and shall promptly publish the
notice in the Federal Register. Subsequent action on the
proposed denial shall be in accord with the applicable
provisions of section 6(b).''.
(b) Section 3(d)(2) (7 U.S.C. 136a (d)(2)) is amended to
read as follows:
``(2) Change in classification.--If the Administrator
determines that a change in the classification of any use of
a pesticide from general use to restricted use is necessary
because, without such restriction, the use may cause
unreasonable adverse effects on the environment, he shall
follow the applicable provisions of section 6(b).''.
(c) Section 6(b) (7 U.S.C. 136d (b)) is amended to read as
follows:
``(b) Cancellation, Denial of Registration, Change in
Classification.--
``(1) Standard for cancellation.--The Administrator may
cancel, deny application for registration of, or change the
classification of a pesticide if the Administrator determines
that:
``(A) the pesticide generally causes unreasonable adverse
effects on the environment when used in accordance with
widespread and commonly recognized practice; or
``(B) the pesticide product or its labeling or other
material required to be submitted by the Act do not comply
with the requirements of the Act.
``The proponents of registration of a pesticide shall at all
times have the burden of showing that the standard for
cancellation, denial or change in classification is not met.
``(2) Consultation with federal agencies.--If the
Administrator intends to cancel or change the classification
of a pesticide registered for agricultural uses, the
Administrator shall consult with the Secretary of Agriculture
regarding the proposed action and provide an opportunity to
submit written comments. If the Administrator intends to
cancel or change the classification of a pesticide registered
for public health uses, the Administrator shall consult with
the Secretary of Health and Human Services regarding the
proposed action and provide an opportunity to submit written
comments.
``(3) Proposed order.--If the Administrator determines that
the standard for canceling, denying application for
registration of, or changing the classification of a
pesticide may be met, the Administrator may issue a proposed
order to cancel, deny or change the classification of a
pesticide. In issuing any proposed order under this
paragraph, the Administrator shall consider restricting a
pesticide's use or uses as an alternative to cancellation.
The Administrator shall send a copy of the proposed order to
each registrant holding a registration addressed by the
proposed order and shall publish the proposed order in the
Federal Register. The proposed order shall include (or
incorporate by reference to publicly available documents) the
following:
``(A) a statement of the factual and legal bases for the
proposed action;
``(B) if the pesticide is used to produce an agricultural
commodity, a general analysis of the impact of the proposed
action on consumers, retail food prices, production of
agricultural commodities, and otherwise on the agricultural
economy;
``(C) a copy of any written comments on the proposed action
submitted by the Secretary of Agriculture, the Secretary of
Health and Human Services, or the Scientific Advisory Panel;
``(D) the changes, if any, in the terms and conditions or
registration that a registrant would need to make in order
for the Administrator to conclude that cancellation or change
in classification would not be appropriate; and
``(E) notice of the availability of an informal public
hearing.
``(4) Procedures for proposed cancellation orders, denials
of applications for registration, or changes in
classification.--
``(A) The registrant or applicant for registration, and any
other interested person, shall be afforded an opportunity to
comment on a proposed cancellation order, denial of
application for registration, or change in classification,
for at least ninety days after publication of the proposal in
the Federal Register.
``(B) The registrant or applicant for registration, and any
other interested person, may request that the Administrator
hold an informal public hearing during the comment period.
Requests for hearing must be filed within twenty-one days of
publication of a proposed cancellation order, denial of
application, or change in classification in the Federal
Register. The Administrator may deny such request if holding
a hearing would not be in the public interest.
``(C) No final order to cancel, change classification, or
deny application may be issued under paragraph (6) of this
section before the appropriate comment period has expired.
``(D) If a final order to cancel or change classification
differs significantly from a proposed order, the
Administrator shall, prior to issuing the final order,
consult with the Secretary of Agriculture and the Secretary
of Health and Human Services under the conditions set forth
in paragraph (b)(2) of this section.
``(5) Informal public hearing.--
``(A) If a timely request for an informal public hearing is
made on a proposed cancellation, change in classification, or
denial of application, and the Administrator determines that
a hearing shall be held, the Administrator shall publish in
the Federal Register a notice of hearing, and shall send a
copy of such notice to any person who requested such a
hearing. Such notice shall identify a time and location for
the hearing, and shall specify such procedures for the
hearing as the Administrator may determine appropriate. Any
interested person shall be given an opportunity to appear at
the hearing, either in person or through an authorized
counsel or representative, and to be heard with respect to
the proposed order. The Administrator shall appoint a hearing
officer to preside over the hearing. The hearing officer
shall cause a verbatim transcript of the hearing to be kept.
Such transcript, and any written material submitted at a
hearing in accordance with any requirements set forth in the
notice of hearing, shall be a part of the record of the
proceeding.
``(B) If the Administrator denies a timely request for
hearing, the Administrator shall publish in the Federal
Register a notice of denial and the reasons therefor, and
shall send a copy of such notice to any person who requested
such hearing.
``(6) Final orders.--
``(A) If no comments opposing the proposed action are
submitted by registrants or other interested persons during
the comment period provided pursuant to paragraph (4) or at
any hearing held pursuant to paragraph (5), and if, in the
case of a proceeding to cancel or change the classification
of a pesticide, a registrant does not file a timely
application for amendment of registration to implement the
changes, if any, specified in the proposed order pursuant to
subparagraph (b)(3)(iv) of this section, the Administrator
may issue a summary final order canceling registration,
denying application for registration, or changing
classification. Such final order shall be published in the
Federal Register and sent to each registrant of, and
applicant for, a registration addressed by the final order.
Such final order shall not be subject to judicial review.
``(B) If, after reviewing comments submitted pursuant to
paragraph (4), and the record compiled at any informal
hearing held pursuant to paragraph (5), the Administrator
determines that the standard for cancellation of
registration, denial of application for registration, or
change in classification is met, the Administrator shall
publish a final order of cancellation, denial of application,
or change in classification in the Federal Register and shall
send a copy of such order to each applicant for, or
registrant holding, a registration addressed by the final
order. The final order shall include (or incorporate by
reference to publicly available documents) the following:
``(i) the factual and legal bases for the final order;
``(ii) a summary of the significant comments submitted
either in writing or orally at a hearing by the public and,
in the case of a proposed cancellation order, by the
Secretary or Agriculture, the Secretary of Health and Human
Services, the Scientific Advisory Panel, and the
Administrator's responses to those comments;
``(iii) in the case of a proceeding for the cancellation or
change in classification of a pesticide used in the
production of an agricultural commodity, a general analysis
of the impact of the action on consumers, retail food prices,
production of agricultural commodities, and otherwise on
the agricultural economy; and
``(iv) in the case of a final order canceling or changing
the classification of a pesticide, a description of the
changes, if any, in the terms and conditions of registration
of a pesticide product that a registrant would need to make
in order for the final order not to apply to the product.
``Final orders issued pursuant to this subparagraph will be
effective upon publication in the Federal Register, except
that in the case of a final order where the Administrator has
established terms and conditions as an alternative to
cancellation or change in classification pursuant to
subclause (iv), the order shall not be effective until thirty
days after publication in the Federal Register, and a product
will not be canceled nor its classification changed pursuant
to the order if a registrant, within such thirty day time
period, has applied to amend its registration to comply with
the specified terms and conditions.
``(C) If, after reviewing the comments submitted pursuant
to paragraph (4), and the record compiled at any informal
hearing held pursuant to paragraph (5), the Administrator
determines not to cancel, deny applications, or change
classification, the Administrator shall publish in the
Federal Register a final decision to that effect and shall
send a copy of such decision to each registrant of, and
applicant for, a registration addressed by the proposed
order. Such decision shall include the information described
by clauses (i)-(iii) of subparagraph (B) of this paragraph.
Such a decision shall be effective upon publication.
``(7) Petitions to suspend, cancel, deny application or
change classification.--
``(A) Any person may, at any time, petition the
Administrator to suspend or cancel a registration pursuant to
this section or to deny an application for registration or
change the classification of a pesticide pursuant to section
3 of this Act. Such a petition must include the factual and
legal bases supporting the petition.
``(B) If the Administrator determines that the requested
action is necessary to serve the purposes of the Act, the
Administrator shall suspend the pesticide or issue a proposed
order to cancel, deny application, or change classification,
and the appropriate provisions of sections 3 or 6 shall
apply.
``(C) If the Administrator denies the petition, the
Administrator shall issue an order specifying the basis for
such denial.
``(8) Effect of final order of cancellation, denial of
application, or change in classification.--
``(A) The Administrator may issue an order summarily
denying any application for registration or amendment under
section 3 or 24 of this Act, or application for exemption
pursuant to section 18 of this Act, with respect to a
pesticide that has been subject to a final order issued
pursuant to this section canceling registration, denying
application for registration, or changing classification,
unless the applicant has presented substantial new
information which:
``(i) may materially affect the basis for or content of the
prior order;
``(ii) was not available to the Administrator at the time
he issued the final order; and
``(iii) could not, through the exercise of due diligence,
have been available to the applicant prior to the issuance of
the final order.
``If the Administrator determines that the applicant has not
provided substantial new information complying with the
requirements set forth in this subparagraph, the
Administrator may issue an order summarily denying the
application and shall send a copy of such order to the
applicant.
``(B) If, after review of an application (and supporting
data submitted by the applicant) for a registration or
amendment pursuant to section 3 or 24 of this Act, the
Administrator determines that the applicant has submitted
substantial new information and that reconsideration of
the prior final order may be warranted, the Administrator
shall publish a notice in the Federal Register announcing
that the Administrator is reconsidering the prior final
order. Such notice shall describe the nature of the
application, contain the factual and legal bases for the
Administrator's determination that reconsideration may be
warranted, and shall provide an opportunity of at least 60
days for interested persons to comment on the issues of
whether reconsideration should be granted and whether the
application should be granted.
``(C) After the opportunity for comment on a notice issued
pursuant to section 6(b)(8)(B) has expired, the Administrator
shall publish a final decision in the Federal Register either
denying the application or granting reconsideration of the
prior final order to the extent necessary to consider the
application. A final decision granting reconsideration may,
at the Administrator's discretion, contain a final
determination granting or rejecting the application. If such
a final determination is not contained in a final decision
granting reconsideration, the application shall be reviewed
according to the provisions of section 3 or 24 as
appropriate.
``(D)(i) If the Administrator grants reconsideration, but
denies the application, the Administrator shall publish in
the Federal Register a notice proposing denial of
registration pursuant to section 3(c)(6) of this Act. Such a
notice may be contained in a final decision granting
reconsideration issued pursuant to section 6(b)(8)(B).
Subsequent action on the proposed denial shall be in accord
with the applicable provisions of section 6(b).
``(ii) If the Administrator determines, after granting
reconsideration, that the application should be granted, he
shall publish in the Federal Register a notice granting the
application. Such a notice may be contained in a final
decision granting reconsideration issued pursuant to section
6(b)(8)(B).
``(9) Existing stocks.--The Administrator may permit the
continued sale and use of existing stocks of a pesticide
whose registration is canceled under this Act to such extent,
under such conditions, and for such uses as the Administrator
may specify if such sale or use is not inconsistent with the
purposes of this Act and will not have unreasonable adverse
effects on the environment.''.
(d) Conforming Amendment.--
Section 25(d) (7 U.S.C. 136w(d)) is amended to read as
follows:
``(d) Scientific Advisory Panel.--Prior to issuance of a
proposed order under section 6(b), the Administrator shall
notify an advisory panel of such action and shall provide
such panel an opportunity to submit written comments as to
the impact on health and the environment of such proposed
orders. The Administrator shall submit proposed and final
form regulations issued under section 25(a) within the same
time periods as provided for the comments of the Secretary of
Agriculture. The time requirements for proposed and final
form regulations may not be modified or waived unless in
addition to meeting the requirements of section 25(a), the
advisory panel has failed to comment on the proposed action
within the prescribed time period or has agreed to the
modification or waiver.''.
SEC. 5. COORDINATION WITH THE FEDERAL FOOD, DRUG, AND
COSMETIC ACT.
Section 6 (7 U.S.C. 136d) is amended by adding at the end
the following:
``(i) Coordination With the Food, Drug, and Cosmetic Act.--
``(1) The Administrator shall, by order and without a
hearing, cancel a pesticide registration, or deny the
application for registration or amended registration of a
pesticide if the Administrator has revoked a tolerance
regulation or denied a petition to establish a tolerance
regulation under section 408 of title 21 of the United States
Code for residues of the pesticide in or on food that could
result from the use of the pesticide, unless the
Administrator determines that such use is unlikely to result
in food that is adulterated within the meaning of section
342(a)(2)(B) of title 21 of the United States Code.
(2) Except where such order eliminates all uses of a
pesticide, any order issued pursuant to paragraph (1) shall
not be effective until thirty days after publication in the
Federal Register, and an application or registration shall
not be denied or canceled pursuant to the order if the
applicant or registrant, within such thirty days, has applied
to amend the registration or application to delete the uses
that form the basis of the cancellation or denial under
paragraph (1).''.
SEC. 6. SUSPENSION.
(a) Section 6(c) (7 U.S.C. 136d(c)) is amended to read as
follows:
``(c) Suspension.--
``(1) Order.--If the Administrator determines that use of a
pesticide results in an imminent hazard, he may issue an
order immediately suspending the registration of such
pesticide. The order shall specify the bases for the
Administrator's determination that an imminent hazard exists.
The Administrator shall send to the registrant by certified
mail a copy of the suspension order, and shall publish the
order in the Federal Register. The order shall become
effective with respect to the registrant, upon publication in
the Federal Register or upon receipt by the registrant of the
order, whichever occurs first. The order shall become
effective with regard to persons other than the registrant,
upon publication of the order in the Federal Register. The
suspension shall automatically expire one hundred and eighty
days after becoming effective unless, on or before such
expiration date, the Administrator has published in the
Federal Register a proposed cancellation order that would
cancel the registration of the pesticide use suspended by the
order issued under this subparagraph. If a proposed
cancellation order is issued before the expiration date, the
suspension shall continue in effect until terminated in
accordance with paragraph (4).
``(2) Consultation with federal agencies.--If the
Administrator intends to suspend a pesticide registered for
agricultural uses the Administrator shall consult with the
Secretary of Agriculture regarding the proposed suspension.
If the Administrator intends to suspend a pesticide
registered for public health uses, the Administrator shall
consult with the Secretary of Health and Human Services
regarding the proposed suspension.
``(3) Duration of suspension.--A suspension order issued
under this subsection may be terminated by the Administrator
at any time. A suspension order issued under this subsection
shall automatically terminate upon completion of a proceeding
to cancel the registration of the pesticide under subsection
(b), or upon cancellation by the Administrator of the
suspended registration. If the Administrator's cancellation
of the suspended registration in overturned by a reviewing
court, the suspension order issued under this subsection
shall be reinstated unless otherwise ordered by the reviewing
court, if the decision of the court overturning the
cancellation allows for further substantive deliberations by
the Administrator on the proposed cancellation.
``(4) Petition to reconsider suspension.--(A) A registrant,
or any other interested person with the concurrence of the
registrant, may, within thirty days of publication of the
suspension order in the Federal Register, petition the
Administrator to reconsider the issuance of the suspension
order. A petitioner must include in the petition specific
objections to the suspension order, and must include the
specific bases supporting the petitioner's conclusion that
the standard for suspension is not met. A petition must be
accompanied by any information the petitioner wishes the
Administrator to consider in reviewing the petition. The
Administrator shall, within one hundred and twenty days of
receipt of the last of such petitions, issue an order
granting or denying petitions received within thirty days
of the publication of a suspension order. Any suspension
order issued under this subsection shall expire
automatically if the Administrator fails to respond to any
petition within the time required. Such an order
responding to a petition for reconsideration shall be sent
to the petitioner and published in the Federal Register,
and shall include the factual and legal bases for the
Administrator's determination on the petition.
``(A) A registrant, or any other interested person with the
concurrence of the registrant, may file with the
Administrator a petition to reconsider the issuance of a
suspension order more than thirty days after publication of
the suspension order in the Federal Register only if the
petition is based upon substantial new information which:
``(i) may materially affect the basis for or content of the
suspension order;
``(ii) was not available to the Administrator at the time
he issued the suspension order or denied any petition
submitted under subparagraph (5)(A) of this paragraph; and
``(iii) could not, through the exercise of due diligence,
have been submitted to the Administrator within thirty days
of the issuance of a suspension order.
``In addition to demonstrating that the petition is based
upon new information which meets the criteria of this
subparagraph, a person filing a petition more than thirty
days after the publication of a suspension order must include
in the petition specific objections to the suspension order
and the specific bases supporting the petitioner's conclusion
that the standard for suspension is not met. Such a petition
must be accompanied by any information the petitioner wishes
the Administrator to consider in reviewing the petition. The
Administrator shall issue an order granting or denying a
petition filed more than thirty days after the publication of
a suspension order within one hundred and twenty days of
receipt of the petition. Such an order shall be sent to the
petitioner and published in the Federal Register, and shall
include the factual and legal bases for the Administrator's
determination on the petition.''.
(b) Section 6(h) (7 U.S.C. 136d(h)) is amended to read as
follows:
``(h) Unreviewable Actions.--Nothing in this section
relating to the provision of notification to or consultation
with other Federal Agencies or the Scientific Advisory Panel
shall be construed as creating any right or benefit,
substantive or procedural, enforceable at law by a party
against the United States, its agencies, its officers, or any
person. No court of the United States shall have jurisdiction
to review any challenge to any action or failure to take
action by the Agency pursuant to this section where such
challenge is based upon an assertion that the Agency failed
to properly notify or consult with any other Federal Agency
or the Scientific Advisory Panel.''.
SEC. 7. LABEL CALL-IN.
(a) Section 3 (7 136a) is amended by adding at the end the
following:
``(h) Label call-in.
``(1) Authority to require changes.--If the Administrator
determines that the risks associated with the use of a
pesticide can be reduced by a change in the labeling,
packaging, or composition of the pesticide, the Administrator
may issue a notice requiring that registrants change the
labeling, packaging, or composition of the pesticide.
Provided, however, that the Administrator may not pursuant to
this section require any change in the labeling, packaging or
composition of a pesticide if the Administrator determines
the change will effectively prohibit or make economically
unfeasible substantially all use of the pesticide on one or
more use sites. The Administrator shall send any notice
issued pursuant to this section to the registrant of every
pesticide to which the determination relates. The notice
shall include a description of the required changes and the
bases for the Administrator's determination that such changes
will reduce the risks associated with the use of the
pesticide. The notice shall also include such requirements
for notifying the Administrator or submitting amendments of
registration reflecting the changes as the Administrator
deems appropriate.
``(2) Registrant response.--Any registrant receiving a
notice pursuant to subsection (a) may, within 60 days of
receipt of the notice, file written objections to the change.
A registrant may object to the change if the registrant
believes:
``(A) the change would effectively prohibit or make
economically unfeasible substantially all use of the
pesticide on one or more use sites;
``(B) the change is not necessary for the particular
product or that a better alternative means exists to prevent
the unreasonable adverse effects on the environment;
``(C) the costs to society of making the proposed change
exceed the benefits of the risk reduction associated with
making the proposed change.
``Any objections must include the specific bases for the
objections, and may be accompanied by any written information
the registrant desires to submit in support of the
objections. If a registrant fails to file timely objections
to a notice the requirements contained in the notice shall
become final and shall not be reviewable in any court.
``(3) Response to objections.--The Administrator shall
respond to any objections within 90 days of receipt of the
objections by either withdrawing, modifying, or affirming the
requirements contained in the notice issued pursuant to
subsection (a). Such written response shall be sent to the
registrant and shall include the bases therefor. The response
shall also include such requirements for notifying the
Administrator or submitting amendments of registration
reflecting the changes as the Administrator deems
appropriate.
``(4) Annual compliance date.--An annual compliance date is
hereby established to be on the first day of October. The
Administrator may establish a different compliance date for
registrants if it would be in the public interest.
``(5) Time to make change.--Except as provided in paragraph
(g), a registrant may not distribute or sell a product on or
after the first compliance date occurring more than one year
after issuance of a notice pursuant to subsection (a) of this
section unless the labeling, packaging, or composition of
such product complies with any requirements contained in the
notice or, if the notice is challenged, in the response to
objections issued pursuant to subsection (c). Provided,
however, that of timely objections are filed and the
Administrator does not respond to such objections within 90
days, a registrant may not distribute or sell a product on or
after the first compliance date occurring more than 7 months
after the Agency responds to the objections, or more than one
year from the issuance of the notice under subsection (a),
whichever is later.
``(6) Exception.--Notwithstanding any other provision of
this subsection, if the Administrator determines that
an earlier effective date for a change in product
labeling, packaging, or composition is in the public
interest, the Administrator may require such changes
within reasonable timeframes.
``(7) Suspension.--If a registrant fails to comply with a
notice issued under subsection (a) or a written response
modifying a notice under subsection (c), the Administrator
may issue an order without hearing suspending the
registration. Such suspension shall remain in effect until
the registrant has complied with the terms of the notice or
the response modifying the notice.
``(8) Pesticides in the channels of trade.--
``(A) Except as provided in paragraph (2), persons other
than the registrant, of a pesticde product that does not
comply with a notice issued under subsection (a) and any
written response to objections under subsection (c), may
continue to distribute or sell such pesticide product for two
years after the registrant is prohibited from selling such
product under subsection (f).
``(B) The Administrator may specify a shorter period for
the distribution or sale of non-conforming pesticide products
than is provided in paragraph (1) of this subsection if the
Administrator determines that a shorter period is in the
public interest. The Administrator shall publish promptly
such determination in the Federal Register.
``(9) Recall.--The Administrator may, by order, require the
recall of any pesticide distributed or sold in violation of
any requirement issued by the Administrator pursuant to this
section. An order issued under this subsection may apply to
any person who distributes or sells any pesticide in
violation of such a requirement and may require such person
to--
``(A) arrange to make available one or more storage
facilities to receive and store the pesticide to which the
recall order applies, and inform the Administrator of the
location of each such facility;
``(B) accept and store at such facility any pesticide
distributed or sold by such person in violation of this
section that are tendered by any other person who obtained
the pesticide directly or indirectly from the person that is
subject to such order;
``(C) on the request of a person making such a tender,
provide for proper transportation of the pesticide to a
storage facility;
``(D) take such reasonable steps as the Administrator may
prescribe to inform persons who may be holders of the
pesticide of the terms of the recall order and how those
persons may tender the pesticide and arrange for
transportation of the pesticide to a storage facility; and
``(E) reimburse any person to whom such pesticide was sold
for any unused quantities of such pesticide, unless the
purchaser had knowledge at the time of sale that such sale
was in violation of any requirement issued by the
Administrator pursuant to this section.
``(10) Use site.--For purposes of this section, a use site
means, for any agricultural use of a pesticide, a particular
crop or commodity. The Administrator shall identify, by
regulation, non-agricultural use sites.''.
``(b) Conforming Amendment.--
Section 12(a)(2) (7 U.S.C. 136j(a)(2)) is amended by adding
at the end the following:
``(T) to sell or distribute any pesticide product in
violation of any requirement issued by the Administrator
pursuant to section 3(g).''.
SEC. 8. PHASE-OUT/PHASE-DOWN.
Section 6 (7 U.S.C. 136d) is amended by adding at the end
the following:
``(j) Reduction, Restriction of Elimination of Use of
Production of a Pesticide.--
``(1) Standard for reduction, restriction, or
elimination.-- If the Administrator determines that--
``(A) credible scientific evidence indicates that use of
the pesticide is reasonably likely to pose a significant risk
to humans or the environment; and
``(B) additional information should be developed to reduce
uncertainties regarding the risk;
``the Administrator shall, pursuant to paragraphs (2)-(4),
restrict, reduce, or eliminate the use or production of the
pesticide, or evaluate other action as may be necessary to
address the risk during the period required for the
development, submission and review of such additional
information. The Administrator may gather any needed
information by use of section 3(c)(2)(B) of this Act.
``(2) Consultation with the secretary of agriculture.--
Prior to taking action under paragraph (1), The
Administrator, in consultation with the Secretary of
Agriculture, shall develop a strategy to reduce or limit the
risk identified in order to avoid unnecessary dislocation in
agricultural production.
``(3) Proposed rule.-- If the Administrator determines that
the standard for taking regulatory action under paragraph (1)
is met, the Administrator may issue a proposed rule to
restrict, reduce or eliminate the use or production of a
pesticide. The Administrator shall publish the proposed rule
in the Federal Register and shall afford the registrant and
any other interested person an opportunity to comment on the
proposed rule for at least 60 days after publication in the
Federal Register. Any person may submit comments concerning
the impact of the proposal on the benefits of the use of the
pesticide. The proposed rule shall include (or incorporate by
reference to publicly available documents) the following:
``(A) The terms and conditions of the proposed rule,
including any proposed strategy developed pursuant to
paragraph (2) to avoid unnecessary dislocation in
agricultural production;
``(B) a statement of the factual and legal bases for the
proposed action; and
``(C) a description of the additional information needed to
address the uncertainties of the risk identified in paragraph
(1).
``(4) Final rules.-- (A) If no comments opposing the
proposed rule are submitted by registrants or other
interested persons during the comment period provided under
paragraph (3), and if the registrant does not file a timely
application for amendment of registration to implement the
changes, if any, specified in the proposed rule, the
Administrator may issue a final rule. The Administrator shall
publish such final rule in the Federal Register. A final rule
issued under this paragraph shall not be subject to judicial
review.
``(B) If, after reviewing comments submitted pursuant to
paragraph (3). the Administrator determines that the standard
for taking action under paragraph (1) has been met, the
Administrator shall publish a final rule in the Federal
Register. The final rule shall include (or incorporate by
reference to publicly available documents) the following:
``(i) the terms and conditions of the final rule;
``(ii) the factual and legal bases for the final rule;
``(iii) a summary of the significant comments received
under paragraph (3) and the Administrator's responses to
those comments; and
``(iv) a description of the additional information needed
to address the uncertainties of the risk identified in
paragraph (1)
``(C) if, after reviewing the comments submitted under
paragraph (3) the Administrator determines not to restrict,
reduce, or eliminate pesticide uses or production the
Administration shall publish such determination in the
Federal Register. Such decision shall include the factual
and legal basis for the determination, a summary of the
significant comments submitted under paragraph (3), and
the Administrator's response to those comments. Such a
decision shall be effective upon publication.
``(D) Section 25(a) of this Act shall not apply to proposed
or final rules issued pursuant to this subsection.
``(E) Unless otherwise ordered by a court of appropriate
jurisdiction, a final rule issued under paragraph (4) shall
remain in effect pending the resolution of any regulatory
action under section 6 or section 106 or until such time as
the Administrator revokes or modifies the rule.
``(5) Review of information.--
``(A) The Administrator shall review promptly upon
submission the information identified in the final rule and
shall:
``(i) initiate appropriate regulatory action under section
6 or section 106;
``(ii) revoke or modify the rule pursuant to the procedures
provided in paragraphs (3) and (4) of this subsection; or
``(iii) issue a final determination to maintain in effect
the final rule if the information submitted is not sufficient
for the Administrator to proceed under clauses (i) and (ii).
``(B) A final determination issued pursuant to subparagraph
(A)(iii) to maintain in effect a final rule shall be
published in the Federal Register and shall be subject to
judicial review pursuant to section 16(a) of this Act.
``(6) Effect on other authorities.--Nothing in this
subsection shall limit the authority of the Administrator to
take any regulatory or enforcement action at any time under
any other provision of this Act.''.
SEC. 9. REDUCED RISK PESTICIDES.
(a) Reduced Risk Pesticides.--
(1) Section 3(c)(1) (7 U.S.C. 136a(c)(1)) is amended to add
at the end the following:
``(G) If the applicant is requesting designation as a
reduced risk pesticide, an explanation of the basis for the
request, in accordance with paragraph (9) of this
subsection.''.
(2) Section 3(c) (7 U.S.C. 136a(c)) is amended to add at
the end the following:
``(9) Reduced risk pesticides.--
``(A) Not later than 1 year after the enactment of this
paragraph, the Administrator shall develop criteria, after
opportunity for public comment, for the designation of
reduced risk pesticides. Such criteria shall, at a minimum,
address potential risks to human health, toxicity to other
non-target organisms, environmental persistence, potential to
contaminate the environment, and compatibility with
integrated pest management strategies.
``(B) Any registrant or applicant for registration may
request the Administrator to designate a pesticide as a
reduced risk pesticide under this paragraph. The
Administrator shall prescribe the form and content of such
requests for designation, which shall require the requestor
to address each criterion established under subparagraph (A).
A request for designation may be combined with an
application for registration under this section.
``(C) The Administrator, within 30 days after receiving a
request for designation, shall notify the applicant or
registrant requesting designation whether the request is
complete. If it is found to be incomplete, the Administrator
shall reject the request. If the request is complete, the
Administrator shall review the request not later than 120
days after receipt, and shall designate the pesticide as a
``reduced risk pesticide'' if the pesticide meets the
criteria for reduced risk issued pursuant to paragraph (A).
The Administrator shall publish a notice of findings
regarding such designation in the Federal Register.
``(D) If a request for designation is accompanied by an
application for registration or amended registration, the
Administrator, within 180 days of designating that a
pesticide qualifies for reduced risk status, shall complete
review of the application and shall notify the applicant or
registrant whether the registration or amended registration
has been granted or denied. If the application is denied, the
Administrator shall comply with the procedures under section
3(c)(6).
``(E) If at any time after the designation of a pesticide
as a reduced risk pesticide the registrant has additional
information bearing on the pesticide's ability to meet the
criteria established under subparagraph (A), the registrant
shall immediately submit a report containing such information
to the Administrator.
``(F) If at any time after the designation of a pesticide
as a reduced risk pesticide the Administrator concludes that
the determination made under subparagraph (C) can no longer
be supported, the Administrator shall revoke the designation,
after providing the registrant with an opportunity for
comment on the basis of the Agency's conclusion.
(b) Exclusive Use of Reduced Risk Pesticides and Minor Use
Pesticides.--Section 3(c)(1)(D) (7 U.S.C. 136a(c)(1)(D)) is
amended to add a new clause (ii) and to redesignate existing
clauses (ii) and (iii) as clauses (iii) and (iv),
respectively.
``(ii) the period of exclusive data use for data submitted
to support the application for the original registration of a
pesticide under clause (i) shall be extended by an additional
two years if, after the date of enactment of this provision--
``(I) the Administrator approves at least three minor uses
of the pesticide prior to the expiration of the period of
exclusive use under clause (i); or
``(II) the pesticide has been designated as a reduced risk
pesticide pursuant to paragraph (9)(C) of this subsection
prior to the expiration of exclusive use under clause (i).
``Any additional exclusive use period under subclause (I) or
(II) shall terminate if the original data submitter
voluntarily cancels the original registration of the
pesticide supported by data described in clause (i) of this
subsection. Any additional exclusive use period under
subclause (II) shall terminate if the Administrator revokes
the designation of a pesticide as reduced risk under
paragraph (9)(E) of this subsection.''.
(c) Definition of Biological Pesticide.--Section 2 (7
U.S.C. 136) is amended by adding at the end the following:
``(hh) Biological Pesticide.--The term ``biological
pesticide'' means a biochemical pesticide, plant pesticide,
or any organism that is a biological control agent, including
a microbial pesticide.''.
(d) Conditional Registration for New Biologicals.--Section
3(c)(7) (7 U.S.C. 136a (c)(7)) is amended by adding at the
end the following:
``(D) The Administrator may conditionally register a
biological pesticide, as that term is defined by section 2 (7
U.S.C. 136) of this Act, or a mixture of biological
pesticides not contained in any currently registered
pesticide prior to the development of all data necessary for
the Administrator to determine whether the pesticide meets
the requirements or paragraph (5) of this subsection. A
conditional registration under this paragraph may be granted
for a period no longer than is necessary for the generation,
submission and review of required data and on the condition
that by the end of such period the Administrator receives
such data and the data do not meet or exceed risk criteria
enumerated in regulations issued under this Act, and on such
other conditions as the Administrator may prescribe. A
conditional registration under this subparagraph shall be
granted only if the Administrator determines, based on
available information, that use of the pesticide during such
period will not cause any unreasonable adverse effect on the
environment, and that use of the pesticide is in the public
interest.''.
(e) Registration Priorities.--Section 3(c) is amended by
adding at the end the following:
``(10) The Administrator shall give priority to
applications in the following order:
``(A) applications for registration of any pesticide that
would meet pest control needs which are currently being
addressed through pesticide use authorized under Section 18
of this Act;
``(B) applications which EPA considers likely to reduce the
risk of adverse effects on the environment from the use of
currently registered pesticides subject to proceedings under
section 6;
``(C) applications for registration of any pesticide that
meets reduced risk criteria established by the Administrator;
``(D) applications for the registration of pesticides for
minor uses;
``(E) other applications.''.
(f) Amendments To Conform to Current Registration
Priorities.--
(1) Section 3(c)(3)(B)(ii) (7 U.S.C. 136a(c)(3)(B)(ii)) is
amended as follows:
``(ii) In expediting the review of an application for an
action described in clause (i), the Administrator shall, to
the extent consistent with the priorities established in
subsection (10),--''.
(2) Research and investigation, monitoring, education and
information.--Section 20 (7 U.S.C. 136r) is amended as
follows:
(A) by redesignating subsections (b) and (c) as (c) and
(d), respectively.
(B) by amending subsections (a)-(c) as follows--
``SECTION 20. RESEARCH AND INVESTIGATION, MONITORING,
EDUCATION AND INFORMATION''
``(a) Cooperative Agreements.--The Administrator may enter
into cooperative agreements, interagency agreements and
contracts with, and issue grants to, Federal, State tribal
and local agencies, other public or private agencies,
institutions, organizations, and individuals for research,
investigations, studies, demonstrations or other activities
for the purposes of carrying out this Act. Such activities
may include, but are not limited to, research,
investigations, demonstrations, and studies in integrated
pest management, alternative pest management, and reduced
pesticide use. The Administrator shall consult with the
Secretary of Agriculture in conducting research,
investigations, studies, and demonstrations in integrated
pest management, and with the Secretary of State and the
Administrator of the Agency for International Development
when international activities are involved.
``(b) Information Exchange.--The Administrator, in
cooperation with other Federal, State, Tribal, and local
agencies, universities or others, may promote training,
education and information exchange for the general public and
for pesticide users.''.
(3) by adding new subsections (e) and (f) as follows--
``(e) Surveys of Infants and Children.--The Secretary of
Health and Human Services and the Secretary of Agriculture,
in consultation with the Administrator, shall review the
recommendations of the National Academy of Sciences report,
``Pesticides in the Diets of Infants and Children'', and
conduct surveys to document dietary exposure to pesticides
among infants and children and perform such other research
and collect such information as they determine would be
necessary for the evaluation and implementation of the
recommendations.
``(f) Duplication of Activities.--The Administrator shall
ensure that activities conducted under this section will not
result in unnecessary duplication of activities being
undertaken by any other Federal agency or part of the
Environmental Protection Agency.''.
(3) State and tribal program development, enforcement, and
training.--Section 23 (7 U.S.C. 136u) is amended as follows:
``SEC. 23. STATE AND TRIBAL PROGRAM DEVELOPMENT, ENFORCEMENT,
AND TRAINING.
The Administrator may enter into cooperative agreements,
interagency agreements and contracts with, and issue grants
to, States and Indian tribes--
``(a) to delegate to any State or Indian tribe the
authority to cooperative in the enforcement of this Act
through the use of its personnel or facilities, to train
personnel of the State or Indian tribe to cooperative in the
enforcement of this Act, and to assist States and Indian
tribes in implementing cooperative enforcement programs;
``(b) to assist States and Indian tribes in developing and
administering State and tribal programs, and to train and
certify applicators consistent with the standards the
Administrator prescribes; and
``(c) to cooperate in the development of national pesticide
programs, including, but not limited to, efforts to protect
endangered species, ground water, the public, workers, and
users from pesticide contamination and exposure, and to
assist States and Indian tribes in implementing effective
pesticide programs.
``(d) the Administrator shall, in cooperation with the
Secretary of Agriculture, use the services of the cooperation
state extension services to inform and educate pesticide
users about accepted uses and other regulations made under
this Act.''.
``(g) Alternative Pest Control Strategies.--Section 28 (7
U.S.C. 136w) is amended to read:
``(a) In General.
``(1) It shall be the goal of the Secretary, as it relates
to research in pest control methods, to support research and
development of pest control methods that reduce risks to
human health and the environment. The purpose of such
research shall be to achieve pest management in the most
environmentally sound manner possible, to reduce the
incidence of pest resistance, and to develop sufficient pest
management alternative to ensure economical agricultural
production.
``(2) In support of (1), the following activities shall be
pursued:
``(A) Comparable information on pesticide properties. The
Administrator, in consultation with the Secretary of
Agriculture, shall develop and make readily available
information that identifies the significant environmental
properties and potential human health effects of pesticides,
provides for comparison and analysis of those properties, and
provides information necessary to assist in establishing
priorities for research and development of alternative pest
management methods.
``(B) Evaluation of effectiveness of pest control methods.
The Secretary of Agriculture, in coordination and cooperation
with the Administrator, shall develop a system for evaluating
agricultural pest control needs and the effectiveness of
available chemical, biological and non-pesticide methods to
control pests. Such system shall identify agricultural pest
management needs for which there are inadequate methods of
control including the incidence of pest resistance and
provide a means to assist in setting priorities for research
and development.
``(C) Research priorities. The Secretary of Agriculture,
after consultation with the Administrator, and taking into
account private, academic, and other public research
activities, shall establish priorities for the Department of
Agriculture's research and development efforts in pest
management methods. The Secretary shall give highest priority
to research and development of methods that would
significantly reduce risks to public health and the
environment and would meet agricultural pest management needs
for which there are inadequate methods of control. The
highest priority shall be for research and development into
methods that would meet the criteria stated above and would
provide pest control methods to serve as alternatives to
pesticides identified in (b).
``(b) Safer Alternative Pest Control Plans.--The Secretary
and the Administrator, in consultation with the Secretary of
the Interior shall develop and implement a process for
coordinating environmental risk reduction through
identification of pesticides that pose significant risk to
human health or the environment, and for which development of
use reduction programs and research on safer alternative
means of pest control should be high priority for USDA
research programs. The Secretary shall give highest priority
to research on methods that would significantly reduce risks
to public health and the environment, lead to more
sustainable agricultural systems, and would meet significant
agricultural pest management needs for which there are
inadequate methods of pest management.
``(1) List of Pesticides.--The Administrator shall identify
and provide to the Secretary of Agriculture, within six
months of enactment and annually thereafter, a list of
agricultural use pesticides--
``(A) for which the Administrator is considering regulatory
action under section 4 or 6 that would affect the
availability of the pesticide. Such list shall include the
associated agricultural commodities and pests which may be
affected by regulatory action regarding the pesticide.
``(B) which otherwise pose significant risks to human
health and the environment.
``(C) for which there exists significant instances of pest
resistance.
``(2) Development of plans.--The Secretary shall review all
available alternatives to the pesticides contained in the
list provided in (b)(1). Not later than 6 months after the
Administrator provides the list to the Secretary, the
Secretary shall, in consultation with the Administrator,
develop a research and technology transfer plan for each
pest-commodity combination on the list for which there are
insufficient efficacious alternative pest control techniques
that present significantly less risk to human health or the
environment. In developing and implementing such plans, the
Secretary shall give highest priority to those pesticides
identified in subsection (b)(1)(A).
``(A) The objectives of each plan shall be:
``(i) to provide alternative pest control methods to
growers who will otherwise be limited in the pest control
methods available, and;
``(ii) to significantly reduce risks to humans and the
environment.
``(B) Each plan shall be developed and implemented in a
manner consistent with any schedules for regulatory action in
sections 4 and 6.
``(c) Research.--The research component of each plan shall:
``(1) identify all ongoing research which could support the
strategy and establish priorities for research to be
undertaken pursuant to the plan;
``(2) provide for the direct involvement of growers in
affected regions, educational or research institutions, and
other interested persons in the design, implementation and
evaluation of the plan;
``(3) give priority to research in cultural pest controls,
biological pest controls, and other non-chemical pest
controls;
``(d) Technology Transfer.--The technology transfer
component of each plan shall:
``(1) be developed with direct involvement of affected
growers, educational or research institutions and other
interested persons;
``(2) provide for farm level education and technology
transfer of successful alternative pest controls.
``(3) identify research projects nearing completion which
meet the objectives of this subsection and expedite
technology transfer of such research to growers.''
``(e) Coordination With Registration Activities.--The
Administrator shall give priority to applications of any
pesticide meeting the criteria for reduced risk under section
9 that may be developed as part of the strategy
implementation;
``(f) Implementation Plan.--The Secretary and the
Administrator shall prepare annually and present to the House
Agriculture Committee and the Senate Agriculture and Forestry
Committee report on the progress of pest management for each
agricultural commodity for which there exists a plan under
paragraph (2). The report shall include an evaluation of
whether the plans are meeting the objectives of paragraph
(2). Evaluation shall be conducted by a committee that
includes affected growers, researchers, members of the public
and officials of USDA and EPA. The Secretary and the
Administrator shall make necessary modifications to the
plans, pursuant to such evaluation.
``(g) Use of Research Funds.--
``(1) The Secretary shall allocate sufficient appropriated
funds to carry out the objectives of this section.
``(2) The Secretary may provide funds to carry out research
and technology transfer plans to which grower funds have been
committed, including grower check-off programs, marketing
orders or other grower funded activities. The Secretary shall
give priority to research which is partially funded by non-
federal entities. No monies under this section may be made
available to persons directly or indirectly engaged in the
registration of pesticides under this Act for profit.
``(h) Duplication of Research Activities.--The Secretary
shall ensure that research conducted under this section does
not duplicate research being undertaken by other government
agencies, academic institutions, or private entities.
``(i) Integrated Pest Management.--The Secretary of
Agriculture, in consultation and cooperation with the
Administrator shall establish a national goal for the
adoption of integrated pest management techniques. Integrated
pest management refers to the use of pest management
techniques that includes reliance on field monitoring-data,
use of economic thresholds in decision-making, conservation
of beneficial and non-target species, utilization of
biologically based controls and other techniques which
minimize the environmental and human health risks of pest
management practices. The Secretary of Agriculture, in
cooperation with the Administrator, shall implement research,
demonstration, and education programs to support meeting the
goals for adoption of integrated pest management, and shall
collect such information as necessary to evaluate the extent
to which the goal is being met. The Secretary of Agriculture
and the Administrator shall make information on integrated
pest management widely available to pesticide users,
including federal agencies. Federal agencies shall use
integrated pest management techniques in carrying out pest
management activities and shall promote integrated pest
management through procurement, regulatory policies, and
other activities.
``(j) Use Reduction.--The Secretary, in cooperation with
the Administrator, shall initiate pilot programs designed to
establish and implement pesticide use reduction goals in
selected ecosystems, in cooperation with agricultural
producers, federal, state and local officials, and other
appropriate public and private entities.''.
SEC. 10. MINOR USE PESTICIDES.
(a) Definition.--Section 2 (7 U.S.C. 136) is amended by
adding at the end the following:
``(ii) Minor Use.--The term ``minor use'' means the use of
a pesticide on a commercial agricultural crop, on an animal,
or for the protection of public health, for which the
Administrator determines that:
``(1) the total United States acreage for the crop is less
than 300,000 acres and the average annual value of production
for the crop for the three calendar years most recently
completed does not exceed $500,000,000 adjusted upward
annually for inflation utilizing the Producer Price Index for
Farm Products; or
``(2) based on information supplied by the applicant, the
use does not provide sufficient economic incentive to support
initial or continued registration and one of the following
criteria applies:
``(A) there are insufficient efficacious alternative
registered pesticides available for the use;
(B) the alternatives to the pesticide pose greater risks to
the environment or human health; or
``(C) the pesticide plays a significant part in managing
pest resistance.''.
(b) Adequate Time For Submission of Minor Use Data.--
Section 4 (7 U.S.C. 136a) is amended by adding at the end the
following:
``(m) Adequate Time For Submission of Minor Use Data.--
``(1) If--
``(A) A registrant requests a waiver, within time frames
and in accordance with the terms established by the
Administrator for a minor use waiver of data required under
this section or section 3(c)(2)(B); and
``(B) The Administrator denies in whole or in part such
waiver request;
``the registrant shall have the time period originally
established by the Agency for submission of such data,
beginning with the date of the Administrator's notification
of denial.
``(2) If a registrant requests additional time, within time
frames and in accordance with the terms established by the
Administrator, for submission of residue chemistry data for
one or more minor food uses, the Administrator may approve a
time extension for submission of such data until the final
deadline, established as of the date of the approval of the
request, for the submission of the last data required to
support reregistration of the pesticide active ingredient.
``(n) Continuation of Unsupported Minor Uses--
``(1) Notwithstanding any other provision of this section,
the Administrator, on request of a registrant, many delay
action to delete a minor food or feed use for which the
registrant has not agreed to timely submit residue data
necessary for reregistration under this section. Provided
that, the Administrator may approve such delay only if the
registrant continues to timely submit all other data
necessary for reregistration and provided that the delay
would not increase the risk of unreasonable adverse effects
on the environment or impair the Administrator's ability to
make the determination required by subsection (g)(2). Such
delay shall extend no longer than the final deadline,
established as of the date of the approval of the request,
for the submission of data for the continued uses of the
active ingredient.
``(2) The Administrator shall publish in the Federal
Register notice of minor uses that are approved for continued
use, and the date upon which such will be deleted from the
pesticide registrations. Each registrant must cease all
distribution and sale of products labeled for the minor use
on the established date.
``(3) The Administrator may by order and without hearing
delete a use continued under this subsection at any time
prior to the established date if no registrant is fulfilling
data requirements (other than residue chemistry data)
necessary for reregistration, or if the Administrator
determines that the delay may increase the risk of
unreasonable adverse effects on the environment or
significantly impair the ability to make the determination
required by subsection (g)(2). If the registrant does not
comply with the order to remove the use from its product
registrations, the Administrator shall cancel registrations
continuing the use by order without a hearing.
``(o) Authorization of Funds to Develop Public Health
Data--
``(1) For the purposes of this section, ``Secretary'' means
Secretary of Health and Human Services, acting through the
Public Health Service.
``(2) In the case of a pesticide registered for use in
public health programs for vector control or for other uses
the Administrator determines to be human health protection
uses, the Administration shall upon timely request by the
registrant or any other interested person, or on the
Administrator's own initiative may, consult with the
Secretary prior to taking final action to suspend
registration under section 3(c)(2)(B)(iv), or cancel a
registration under sections 4, 6(e) or 6(f). In consultation
with the Secretary, the Administrator shall prescribe the
form and content of requests under this section.
``(3) The Administrator, after consulting with the
Secretary, shall make a determination whether the potential
benefits of continued use of the pesticide for public health
or health protection purposes are of such significance as to
warrant a commitment by the Secretary to conduct or to
arrange for the conduct of the studies required by the
Administrator to support continued registration under Section
3 or reregistration under Section 4.
``(4) If the Administrator determines that such a
commitment is warranted and in the public interest, the
Administrator shall notify the Secretary and shall, to the
extent necessary, amend a notice issued under section
3(c)(2)(B) to specify additional reasonable time periods for
submission of the data.
``(5) The Secretary shall make such arrangements for the
conduct of required studies as the Secretary finds necessary
and appropriate to permit submission of data in accordance
with the time periods prescribed by the Administrator. Such
arrangements may include, but are not limited to, Public
Health Service intramural research activities, grants,
contracts or cooperative agreements with academic, public
health, or other organizations qualified by experience and
training to conduct such studies.
``(6) The Secretary may provide for support of the required
studies using funds authorized to be appropriated under this
section, the Public Health Service Act, or other appropriate
authorities. After a determination is made under subsection
(d), the Secretary shall notify the Committees on
Appropriations of the House of Representatives and the Senate
of the sums required to conduct the necessary studies.
``(7) There is authorized to be appropriated to carry out
the purposes of this section $12,000,000 for fiscal year
1993, and such sums as may be necessary for succeeding fiscal
years.''.
SEC. 11. PESTICIDE FEES.
(a) Waiver of Fees For Biological Pesticides.--Section
4(i)(4) (U.S.C. 136a-1(i)(4)) is amended by:
(1) renumbering subparagraph (C) as subparagraph (D); and
(2) adding the following new subparagraph (C):
``(C) A biological pesticide the value or volume of use of
which is small, shall be exempt from the fees prescribed by
paragraphs (1), (2), and (3).''.
(b) Continuation of Maintenance Fees.--Section 4(i)(5)(E)
(U.S.C. 136a-1(4)(i)(5)(E) is amended to read as follows:
``(E) The authority provided under this paragraph shall
terminate on September 30, 1999.''.
(c) Conforming Amendments.--
(1) Section 4(i)(6) (U.S.C. 136a-1(4)(i)(6)) is repealed,
and subsection (7) is renumbered as subsection (6).
(2) Section 4(i) (U.S.C. 136a-1(4)(i)) is amended to add at
the end the following:
``(7) Supplemental Reregistration Fee.--
``(A) In addition to fees required pursuant to paragraphs
(1)-(5), the registrants of pesticides that contain an active
ingredient that is listed under subparagraphs (A), (B), (C),
or (D) of subsection (c)(2) and that is an active ingredient
of any pesticide registered for a major food or feed use
shall collectively pay a fee of up to $120,000 at such time
as the Administrator shall prescribe subject to the
limitation of subparagraph (C).
``(B) In addition to fees required pursuant to paragraphs
(1)-(5), the registrants of pesticides that contain an active
ingredient that is listed under subparagraphs (A), (B), (C),
or (D) of subsection (c)(2) and that is not an active
ingredient of any pesticide registered for a major food or
feed use shall collectively pay a fee of up to $60,000 at
such time as the Administrator shall prescribe subject to the
limitation of subparagraph (D).
``(C) The first 1/2 of the total fee due under subparagraph
(A) or (B) shall be paid not later than nine months after the
effective date of this paragraph and the remaining 1/2 not
later than 21 months after the effective date of this
paragraph.
``(D) If 2 or more registrants are required to pay any fee
prescribed by subparagraph (A) or (B) with respect to a
particular active ingredient, the fees for such active
ingredient shall be apportioned among such registrants on the
basis of the market share in United States sales of the
active ingredient for the calendar years 1990 through 1992;
provided, that no fee shall be collected from registrants
owing less than $100.00.
``(E) The Administrator, by order, may require any
registrant to submit such reports as the Administrator
determines to be necessary to allow the Administrator to
determine and apportion fees under subparagraph (A) or (B),
and (D), or to determine the registrant eligibility for a
reduction or waiver of a fee.
``(F) If a report required under subparagraph (E) is not
submitted by a registrant by the time prescribed, or if any
fee prescribed by subparagraph (A) or (B) for an active
ingredient is not paid by a registrant to the Administrator
by the time prescribed, the Administrator, by order and
without hearing, may cancel each registration held by such
registrant of a pesticide containing the active ingredient
with respect to which the reporting requirement or fee is
imposed.
``(G) An active ingredient that is contained only in
pesticides that are registered solely for agricultural or
non-agricultural minor uses, or a pesticide the value or
volume of use of which is small, shall be exempt from the
fees prescribed by subparagraph (B).
``(H) A biological pesticide shall be exempt from the fees
prescribed by subparagraphs (A) and (B).
``(8) Pesticide product reregistration fee.--
``(A) For all determinations pursuant to subsection (g)(2)
that a pesticide is eligible for reregistration, the
registrant of that pesticide shall pay a fee of $750 for each
affected product.
``(B) The amount of the fee prescribed under subparagraph
(A) may be adjusted by the Administrator to a level that will
result in the collection under this paragraph of, to the
extent practicable, an aggregate amount of at least
$4,000,000, over 4 years after enactment.
``(C) If any fee prescribed by this paragraph is not paid
within 90 days of the registrant's receipt of the
reregistration eligibility determination specified in Section
4(g)(2), or within 270 days after enactment of this
subparagraph, whichever is later, the Administrator, by order
and without hearing, may cancel the current registration and
deny reregistration for the pesticide for which the fee is
not paid.
``(D) In the case of a pesticide that is registered for a
minor agricultural use or the value of volume of use of which
is small, the Administrator may reduce or waive the payment
of the fee imposed under this paragraph if the Administrator
determines that the fee would significantly reduce the
availability of the pesticide for the use.
``(E) The cumulative maximum fees payable by a single
registrant under this paragraph shall be $75,000. A
registrant shall be required to pay no more than one fee for
each product.''.
SEC. 12. USE-BY-PRESCRIPTION.
Section 3(d)(1)(C)(ii) (7 U.S.C. 136a (d)(1)(C)(ii)) is
amended and Subsection (iii) is added at the end:
``(ii) If the Administrator classifies a pesticide, or one
or more uses of a pesticide, for restricted use because of a
determination that its use without additional regulatory
restriction may cause unreasonable adverse effects on the
environment, the pesticide shall be applied only by or under
the direct supervision of a certified applicator, or subject
to such other restrictions as the Administrator may provide
by regulation. A restricted use classification or a change in
classification of any use of a pesticide from general to
restricted use established by rule under this clause shall
not be subject to the provisions of section 6(b).
``(iii) The Administrator may include a provision in a rule
issued pursuant to subsection (ii) restricting a pesticide to
use only by prescription if the Administrator determines that
retaining the use of a pesticide subject to such restriction
is necessary for integrated pest management programs, pest
resistance programs or otherwise to reduce risk. If the
Administrator includes such a provision in a rule issued
pursuant to paragraph (ii), the Administrator shall (I)
prohibit the use of the pesticide in any state for which the
state has not developed, in accordance with criteria
established by the Administrator, an appropriate state
prescription use plan, or (II) establish criteria for issuing
pesticide use prescriptions, and may authorize persons
qualified under such criteria to issue prescriptions pursuant
to the rule.''.
SEC. 13. JUDICIAL REVIEW.
(b) Review by Courts of Appeals.--Sections 16(b) (7 U.S.C.
136n(b)) and Section 16(c) (7 U.S.C. 136n(c)) are amended to
read as follows:
``(b) Review by Courts of Appeals.--
``(1) Review in the District of Columbia Circuit.--A
petition for review of any of the following actions of the
Administrator may be filed by any adversely affected persons
only in the United States Court of Appeals for the District
of Columbia Circuit:
``(A) the promulgation of any regulations by the
Administrator under this Act, or a final determination
maintaining in effect a final rule under section
6(i)(5)(A)(iii) of this Act;
``(B) a final order of the Administrator canceling or
suspending a pesticide registration in whole or in part or
concluding that a pesticide registration should not be
canceled or suspended;
``(C) a final order of the Administrator approving or
denying an application for a pesticide registration;
``(D) a final order of the Administrator changing the
classification of any use of a pesticide;
``(E) a final order of the Administrator responding to
objections to a notice requiring changes in the labeling,
packaging, or composition of a pesticide;
``(F) a final order of the Administrator denying a petition
seeking to suspend or cancel a pesticide registration, to
deny an application for a registration, to reconsider whether
a registration should be suspended, or to change the
classification of a pesticide;
``(G) a final determination of the Administrator to renew a
pesticide registration under section 3(g)(4);
``(H) a final determination of the Administrator resulting
in the expiration of a registration under section 3(g)(5);
``(I) a final order issuing or denying an emergency
exemption to a Federal agency.
``(2) Review by other courts of appeals.--A petition for
review of any of the following actions of the Administrator
may be filed by any adversely affected person only in the
United States court of appeals for the circuit in which the
state in question is located or in which a hearing assessing
a civil penalty occurred:
``(A) a final order following a hearing assessing a civil
penalty;
``(B) a final order of the Administrator determining that a
state shall have primary enforcement authority pursuant to
section 26 of this Act;
``(C) a final order of the Administrator rescinding primary
enforcement authority pursuant to section 27 of this Act;
``(D) a final order of the Administrator approving or
disapproving a state certification plan for pesticide
applicators pursuant to section 11 of this Act;
``(E) a final order approving or disapproving a state plan
for the issuance of experimental use permits under section 5
of the Act;
``(F) a final order of the Administrator disapproving a
state's registration of a pesticide or suspending a state's
authority to register pesticides pursuant to section 24 of
this Act; or
``(G) a final order issuing or denying an emergency
exemption to a state.
``(3) Procedure.--Except as provided in paragraph (4) of
this subsection, any petition for review under paragraph (1)
or (2) of this subsection must be filed within sixty days of
the final action unless the petition for review is based
solely on grounds rising after the sixtieth day. Judicial
review shall be in accordance with sections 701 through 706
of Title 5 of the United States Code, and the challenged
action shall be sustained unless it is found to be arbitrary,
capricious, an abuse of discretion, or not in accordance with
law. Actions of the Administrator with respect to which
review could have been obtained under this subsection shall
not be subject to judicial review in civil or criminal
proceedings for enforcement.
``(4) Imminent hazard suspension.--Any petition for review
under paragraph (1) of a suspension order or denial of a
petition to reconsider suspension issued by the Administrator
pursuant to section 6(c) of this Act must be filed within ten
(10) days of publication of the suspension order in the
Federal Register, or, in the case of a challenge of the
denial of a petition to reconsider suspension, within twenty
(20) days of publication of the Administrator's order denying
the petition for reconsideration. The commencement of
proceedings under this paragraph shall not operate as a stay
of the suspension order unless otherwise ordered by the
court. The effect of any order of the court of appeals will
be only either to stay or uphold the effectiveness of the
suspension order, pending the Administrator's final
determination with respect to cancellation. Review of a
suspension order issued pursuant to section 6(c)(1), or
review of the petitioner's likelihood of success on the
merits of the case pursuant to a request for a temporary stay
from the suspension order, shall be based solely on the
information available to the Agency as of the date the
Administrator issued the suspension order. Other information
not available to the Administrator in issuing the suspension
order under section 6(c)(1) may be introduced solely through
the procedures for reconsideration of a suspension order set
forth in section 6(c)(4).
``(c) Jurisdiction of District Courts.--The district courts
of the United States are vested with jurisdiction over--
``(1) actions to enforce, and to prevent and restrain
violations of, this Act; and
``(2) challenges to any other final actions that are not
committed to the Administrator's discretion by law and which
are not subject to review in the courts of appeals under
subsection (a) of this section.''.
SEC. 14. INDEMNIFICATION.
Indemnification.--Section 15 (7 U.S.C. 136m) is amended by
adding at the end the following:
``(d) Time Limitation for Indemnity Payment.--Any claim for
an indemnity payment from the United States under subsection
(a) or (b) shall be barred unless it is made no later than--
``(1) 1 year after enactment of this subsection if the
pesticide was canceled prior to the enactment of this
subsection; or
``(2) 3 year after cancellation if the pesticide was
canceled after the enactment of this subsection.''.
SEC. 15. CERTIFICATION AND TRAINING.
Instruction in Integrated Pest Management Techniques.--
Section 11(c) (7 U.S.C. 136i(c)) is amended to read as
follows:
``(c) Instruction in Integrated Pest Management
Techniques--Standards prescribed by the Administrator for the
certification of applicators of pesticides under subsection
(a), and the State plans submitted to the Administrator under
subsections (a) and (b), shall include provisions for making
instructional materials concerning integrated pest management
techniques available to individuals at their request in
accordance with the provisions of section 23(c) of this Act.
The Administrator and States implementing such plans shall
provide that all interested individuals are notified of the
availability of such instructional materials.''.
SEC. 16. PESTICIDE RECORDKEEPING.
Section 7 U.S.C. 136i-1(a) is amended as follows:
(1) in subsection (1), by striking ``certified
applicators'' through ``136a(d)(1)(C) of this title'' and
inserting ``users of pesticides when used in agricultural
production''; and
(2) in subsection (2), by striking ``a commercial
certified'' and inserting ``a pesticide user''.
(3) in subsection (b), by striking ``individual
applicators'' and inserting ``individual users.''
SEC. 17. ENFORCEMENT.
(a) Definitions
(1) Sections 2(e) (7 U.S.C. 136e) is amended as follows:
``(e) Applicator.--
``(1) Certified applicator.--The term ``certified
applicator'' means any individual who is certified under
section 136b of this title as authorized to use or supervise
the use of any pesticide which is classified for restricted
use. Any applicator who holds or applies registered
pesticides, or uses dilutions of registered pesticides
consistent with subsection (ee) of this section, only to
provide a service of controlling pests without delivering any
unapplied pesticide to any person so served is not deemed to
be a seller of distributor of pesticides under this
subchapter.
``(2) Commercial applicator.--
``(A) Except as provided in subparagraph (3), the term
``commercial applicator'' means a person who--
``(i) uses or supervises the use, for any purpose or on any
property, of any pesticide that is classified for restricted
use;
``(ii) uses or supervises the use of any pesticide for hire
as a principal part of the business or work of the person; or
``(iii) as an employee of a person described in clause
(ii), uses or supervises the use of any pesticide.
``(3) Private applicator.--The term ``private applicator''
means a person who uses or supervises the use of any
pesticide that is classified for restricted use for purposes
of producing any agricultural product--
``(A) on property owned or rented by such person or the
employer of such person; or
``(B) on other property if applied without compensation
(other than trading of personal services between producers of
agricultural products).
``(4) Under the direct supervision of a certified
applicator.--Unless otherwise prescribed by its labeling, a
pesticide shall be considered to be used under the direct
supervision of a certified applicator if the pesticide is
applied by a person acting under the instructions and control
of a certified applicator who is available, if and when
needed, even though such certified applicator is not
physically present at the time and place the pesticide is
used.''.
(20 Section 2 (7 U.S.C. 136) is amended by adding at the
end the following:
``(jj) Pesticide Testing Facility.--The term `pesticide
testing facility' means any place where any person conducts
any test, study, survey, or investigation of the properties,
effects, or behavior of any pesticide (or any ingredient,
metabolite, or degradation product thereof), device, or
container or packaging of any pesticide or device, on its
behalf or on behalf of any registrant, applicant for
registration, or other person who sells or distributes the
pesticide. The term does not include any place solely on
account of--
(i) the participation of a commercial agricultural producer
as a cooperator in field testing of a pesticide; or
``(ii) the conduct of academic research at the facility.
``(kk) Pesticide Dealer.--The term ``pesticide dealer''
means any person who, in the ordinary course of business,
distributes or sells any pesticide.
``(11) Agricultural Producer.--The term ``agricultural
producer'' as used in this Chapter means a person who
produces any plant, or part thereof, or animal, or animal
product, primarily for sale, consumption, propagation, or
other use by humans or animals, including farmers, ranchers,
vineyardists, plant propagations, Christmas tree growers,
aquaculturalists, floriculturalists, orchardists, foresters,
or other comparable persons, but not including C corporations
as defined in 26 U.S.C. 1362 (a)(2).''.
(b) Recordkeeping.--Section 8 (7 U.S.C. 136f) is amended to
read as follows:
``SEC. 8 RECORDS.
``(a) Authority To Require Records.--
``(1) In general.--The Administrator, by regulation, shall
require any producer, distributor, importer or exporter of a
pesticide, registrant, applicant for registration, applicant
for or holder of an experimental use permit, pesticide
testing facility, or any holder of a pesticide that is the
subject of a regulation or order issued under section 19(b)
or under subsection 106.
``(A) to prepare, and to maintain for reasonable periods of
time, such records as the Administrator finds to be necessary
for the effective implementation or enforcement of this Act;
``(B) to furnish to the Administrator reports stating the
location where the records are maintained; and
``(C) to furnish a copy of any such record to the
Administrator on written request.
``(2) Records of commercial applicators.--The
Administrator, by regulation, shall require each commercial
applicator to maintain, and may require a commercial
applicator to provide the Administrator, records of each
pesticide application, including the identity and quantity of
pesticide applied and the date and location of such
application, for a period of 5 years after each such
application.
``(3) Records of pesticide dealers.--
``(A) In general.--The Administrator, by regulation, shall
require each pesticide dealer to maintain a record of each
sale or distribution of--
``(i) a pesticide classified for restricted use; and
``(ii) any other pesticide designated for purposes of this
subsection by order by the Administrator if the Administrator
determines that such records may be necessary to carry out
the purposes of this Act.
``(B) Contents.--Such records shall include the identity of
the pesticide sold or distributed, the identity of the person
to whom the pesticide was distributed or sold, the date of
the distribution or sale, and the amount of the pesticide
distributed or sold.
``(C) Duration.--A pesticide dealer shall maintain the
records required under this subsection for 5 years after the
date of the distribution or sale.
``(b) Limitations.--The Administrator may not, under the
authority of subsection (a), require any person to maintain
records of--
``(1) financial data, pricing data, or sales data other
than shipment data;
``(2) personnel data, except for data concerning exposure
of employees to pesticides or ingredients of pesticides, or
concerning health effects on employees that could reasonably
be attributable to such exposure; or
``(3) research or test data other than--
``(A) data relating to a registered pesticide;
``(B) data relating to any pesticide for which an
application for registration or for an experimental use
permit has been filed;
``(C) data relating to any pesticide for which an exemption
pursuant to section 18 has been requested;
``(D) data relating to any pesticide for which a regulation
has been promulgated pursuant to section 3(a);
``(E) data relating to testing at a pesticide testing
facility; or
``(F) data relating to the storage or disposal of a
pesticide whose registration has been suspended or
canceled.''.
(c) Inspection Authority.--Section 9 (7 U.S.C. 136g) is
amended to read as follows:
``(a) Authority To Enter, Inspect, Copy, and Obtain
samples.--An officer or employee of the United States or of
any State, duly designated by the Administrator, is
authorized at reasonable times as provided by this section--
``(1) to enter and inspect--
``(A) any place where any pesticide, active ingredient, or
device is produced, sold, distributed, stored, packaged,
used, or found;
``(B) any place where any records required under this Act
are kept;
``(C) any pesticide testing facility;
``(D) any place where such officer or employee has reason
to believe that this Act has been or is being violated; or
``(E) any place when the Administrator or States seek
information as part of an inquiry into specific environmental
or health problems.
``(2) to obtain--
``(A) samples of any pesticide (or any ingredient,
metabolite, or degradation product thereof) or device, or any
container or packaging of any pesticide or device;
``(B) copies of any records required under this Act or of
any labels or labeling of a pesticide, active ingredient or
device;
``(C) copies of documents related to compliance with the
provisions of this Act;
``(D) copies of any data or samples of any specimens
involved in the testing of any pesticide (or any ingredient,
metabolite, or degradation product thereof) or device; or
``(E) samples of and places where pesticide residues may be
found, including without limitation, agricultural
commodities, animals, pests, soil, or water.
``Provided that, nothing in this Act shall be construed as
authorizing officers or employees of the United States or of
any State to enter and inspect private residences or land,
property and appurtenances used in agricultural production
unless there is a suspected violation of this Act or the
Administrator or any State is seeking information as part of
an inquiry into specific environmental or health problems.
``(b) Administrative Warrants.--An officer or employee of
the United States or of any State, duly authorized by the
Administrator, is empowered to obtain and execute warrants
authorizing
``(1) entry, inspection, and obtaining of evidence for the
purposes of this section or section 8;
``(2) inspection and copying of all records required under
this Act or documents related to compliance with the
provisions of this Act; and
``(3) seizure of any pesticide, device, active ingredient,
labeling, or packaging that is in violation of this Act.
``(c) Procedure.--
``(1) Credentials and Statements.--Before any entry or
inspection of any premises not open to the general public is
made under this section, the person conducting the inspection
shall present to the person in charge of the premises
appropriate credentials, and a written statement of the
reason for the entry or inspection and whether a violation of
this Act is suspected.
``(2) Promptness.--Each entry or inspection shall be
commenced and completed with reasonable promptness.
``(3) Samples.--If the person conducting the entry or
inspection obtains any samples pursuant to subparagraph
9(a)(2), before leaving the premises such person shall give
to the person in charge of the premises a receipt describing
the sample and, if requested and practicable, a portion of
each such sample equal in volume or weight to the portion
retained. If an analysis is made of any such sample, a copy
of the results of such analysis shall be furnished on request
to the person in charge of the premises.
``(d) Coordination.--The Administrator shall coordinate
actions taken under this section with actions taken under
other Federal laws for the purpose of avoiding duplication of
inspections.''.
(d) Confidential Business Information To States.--Section
10 (7 U.S.C. 136h) is amended by adding at the end the
following:
``(h) Data Disclosure To States.--The Administrator may
disclose to a State any data or information acquired under
this Act if the State assures the Administrator, and the
Administrator determines, that
``(1) the submitter of the data or information will receive
no less protection with respect to the disclosure and use of
the data or information by the State than is otherwise
provided by this Act; and
``(2) the laws of the State allow the submitter of the data
or information to recover just compensation in a civil action
against the State for losses resulting from the disclosure or
use of the data or information by the State or its employees
or agents in a manner inconsistent with this Act.''.
(e) Unlawful Acts--
(1) Section 12(a)(1) (7 U.S.C. 136j(a)(1)) is amended to
read as follows:
``(a) In General.--
``(1) Except as provided in subsection (b), it shall be
unlawful for any person in any state to fail or refuse to
comply with any rule promulgated or order issued under
Section 3, 4, or 8 of this Act, or to distribute or sell to
any person--''.''
(2) Section 12(a)(2)(B) (7 U.S.C. 136j (a)(2)(B)) is
amended to read as follows:
``(B) to refuse to--
``(i) prepare, maintain, or submit any records required by
or under section 5, 7, 8, 11, 17, or 19;
``(ii) submit any reports required by or under section 5,
6, 7, 8, 11, 17, or 19; or
``(iii) allow any entry, inspection, copying of records, or
sampling authorized by this Act.
(3) Sections 12(a)(2)(I), (M), (N), and (O) (7 U.S.C. 136j
(a)(2)(I), (M), (N), (O)) are amended to read as follows:
``(I) to violate any order or subpoena issued under section
13.
``(M) to knowingly make any false material statement,
representation or certification in, fail to maintain, omit
material information from, or alter, conceal or fail to file,
any notice, application, record, report or other document or
information required pursuant to this Act to be submitted,
filed or maintained (whether such requirement is imposed by
the Administrator or by a state).
``(N) who is a registrant, wholesaler, dealer, retailer or
other distributor, commercial applicator, or private
applicator, to fail to file reports required by this Act.
``(O) to violate any regulation issued pursuant to this
Act.''.
(4) Section 12(a)(2) (7 U.S.C. 136j (a)(2) is amended by
adding at the end the following:
``(U) who is a registrant, to violate any term or condition
of a registration issued pursuant to this Act.
``(V) to violate any administrative order issued pursuant
to section 14(b) of the Act.''.
(5) Section 12 (7 U.S.C. 136(j)) is amended by adding at
the end the following:
``(c) Acts of Officers, Agents, Etc.--When construing and
enforcing the provisions of this Act, the act, omission, or
failure of any officer, employee, agent, or other person
acting for or employed by any person shall be deemed to be
the act, omission, or failure of such person as well as that
of the person employed.''.
(f) Subpoenas.--Section 13 (7 U.S.C. 136k) is amended by
adding at the end the following:
``(e) Subpoena Authority.--In carrying out this Act, the
Administrator may be subpoena require the attendance and
testimony of witnesses and the production of reports, papers,
documents, answers to questions, and other information that
the Administrator deems necessary. Witnesses shall be paid
the same fees and mileage that are paid witnesses in the
courts of the United States. In the event of contumacy,
failure, or refusal of any person to obey any such subpoena,
any district court of the United States in which venue is
proper shall have jurisdiction to order any such person to
comply with such subpoena. Any failure to obey such an order
of the court is punishable by the court as a contempt
thereof.''.
(g) Enforcement Authority.--Section 14 (7 U.S.C. 1361) is
amended to read as follows:
``(a) Enforcement Authorities.--
``(1) Whenever, on the basis of any information available
to the Administrator, the Administrator finds that any person
has violated, or is violation of, any requirement of this
Act, including, but not limited to, a requirement or
prohibition of any rule, order, or registration promulgated,
issued, or approved under this Act, the Administrator may:
``(A) issue an administrative order in accordance with
subsection (b) of this section, requiring such person to
comply with such requirement or prohibition;
``(B) issue an administrative penalty order in accordance
with subsection (c) of this section;
``(C) request the Attorney General to commence a civil
action in accordance with subsection (d) of this section; or
``(D) request the Attorney General to commence a criminal
action in accordance with subsection (e) of this section.
``(2) Notice to state.--A copy of any (1) administrative
order issued pursuant to subsection (b) of this section, (2)
administrative penalty order issued pursuant to subsection
(c) of this section, or (3) civil judicial complaint filed
pursuant to subsection (d) or subsection (g) of this section
shall be sent to the State agency regulating pesticides in
the State in which the violation occurs.
``(3) Warning notices.--The Administrator may issue a
warning notice for a first-time violation of the Act by a
private applicator, unless the violation is a knowing
violation.
``(b) Requirements for Administrative Orders.--
``(1) In general.--Any person who has violated, or is in
violation of, any provision of this Act or a regulation
promulgated thereunder, may be ordered by the Administrator
to cease their violative activities or to comply with
applicable requirements of this Act or regulations issued
under this Act.
``(2) Contents or order.--Any order issued under this
subsection shall state with reasonable specificity the nature
of the violation and specify a time for compliance which the
Administrator determines is reasonable, taking into account
the seriousness of the violation and any good faith efforts
to comply with applicable requirements. An order issued under
this subsection shall require the person to whom it was
issued to comply with the requirement immediately or within a
specified time period, but in no event longer than one year
after the date the order was issued.
``(3) Violation of order.--If a violator fails to take
corrective action within the time specified in the order, the
Administrator may assess a civil penalty of not more than
$25,000 for each day of continued noncompliance with the
order.
``(4) Consultation with administrator.--The recipient of an
order issued under this section (other than an administrative
penalty order as described in subsection (c)), shall have an
opportunity, within 10 days of the order's issuance, to
consult with the Administrator or any duly designated
representative concerning the alleged violation.
``(5) Other remedies and obligations.--No order issued
under this subsection shall prevent the State or the
Administrator from assessing any penalties nor otherwise
affect or limit the State's or the United States' authority
to enforce under other provisions of this Act, nor affect any
person's obligations to comply with any section of this Act
or with a term or condition of any registration approved
under this Act.
``(6) Timing of review.--No Federal court shall have
jurisdiction under any Federal or State law to review any
order issued under this subsection in any action except an
action to enforce an order issued under this subsection or to
recover a civil penalty for violation of, or noncompliance
with, such order.
``(c) Administrative Assessment of Civil Penalties.--
``(1) In general.--Any person who has violated, or is in
violation of, any provision of this Act or regulation
promulgated thereunder shall be liable to the United States
for a civil penalty in an amount not to exceed $25,000 or the
economic benefit of noncompliance, whichever is higher, for
each such violation. Each day such a violation continues
shall, for purposes of this subsection, constitute a separate
violation of the Act. The Administrator's authority under
this paragraph shall be limited to matters where the total
penalty sought does not exceed $400,000, except where the
Administrator and the Attorney General jointly determine that
a matter or matters involving a larger penalty amount are
appropriate for administrative penalty action. Any such
determination by the Administrator and the Attorney General
shall not be subject to judicial review.
``(2) Hearing.--A civil penalty for a violation of this Act
shall be assessed by the Administrator by an order made on
the record after an opportunity (provided in accordance with
this subparagraph) for a hearing in accordance with section
554 of Title 5, United States Code. Before issuing such an
order, the Administrator shall give written notice to the
person to be assessed a civil penalty under such order by the
Administrator, and shall provide such person an opportunity
to request, within 15 days of the date the notice is received
by such person, such a hearing on the order.
``(3) Determination of penalty.--In determining the amount
of a civil penalty, the Administrator shall take into account
the nature, circumstances, extent, and gravity of the
violation or violations and, with respect to the violator,
ability to pay, effect on ability to continue to do business,
any history of prior such violations (including whether the
violation was a first-time violation), the degree of
culpability, the economic benefit of noncompliance and such
other matters as justice may require.
``(4) The minimum penalty the Administrator must assess
under this subsection upon a determination of liability is
the amount of the economic benefit resulting from the
violation, where such economic benefit, if any, is
calculable, provided that nothing in this subsection shall
limit the Administrator's discretion to issue warning notices
pursuant to section 14(a)(3) of the Act.
``(5) Modification of penalty.--The Administrator may
compromise, modify, or remit, with or without conditions, any
civil penalty which may be imposed under this subsection. The
amount of such penalty, or the amount agreed upon in
compromise, may be deducted from any sums owing by the United
States to the person charged.
``(6) Judicial review.--Any person who requested in
accordance with paragraph (2) a hearing respecting the
assessment of a civil penalty and who is aggrieved by an
order assessing a civil penalty, or against whom a civil
penalty is assessed under paragraph (8) of this subsection,
may seek judicial review in accordance with section 16(a)(2)
of the Act.
``(7) Failure to pay.--
``(A) If a person fails to pay an assessment of a civil
penalty--
``(i) after the order making the assessment has become a
final order and if such person does not file a petition for
judicial review of the order in accordance with paragraph
(5), or
``(ii) after a court in an action brought under paragraph
(5) has entered a final judgment in favor of the
Administrator,
``the Attorney General shall recover the amount assessed
(plus interest at currently prevailing rates from the date of
the expiration of the 30-day period referred to in paragraph
(5) or the date of such final judgment, as the case may be)
in an action brought in any appropriate district court of the
United States. In such an action, the validity, amount and
appropriateness of such penalty shall not be subject to
review.
``(B) Any person who fails to pay on a timely basis a civil
penalty ordered and assessed under this section shall be
required to pay, in addition to such penalty and interest,
the United States enforcement expenses, including but not
limited to attorney's fees and costs incurred by the United
States for collection proceedings and a quarterly nonpayment
penalty for each quarter during which such failure to pay
persists. Such nonpayment penalty shall be 10 percent of the
aggregate amount of such person's outstanding penalties and
nonpayment penalties accrued as of the beginning of each
quarter.
``(8) Subpoenas.--The Administrator, in connection with
administrative proceedings under this subsection, may issue
subpoenas compelling the attendance and testimony of
witnesses and the production of documents, and may request
the Attorney General to bring an action to enforce any
subpoena issued under this paragraph. The district courts of
the United States shall have jurisdiction to enforce such
subpoenas and impose sanctions.
``(d) Civil Judicial Enforcement.--
``(1) In general.--The Administrator may commence a civil
action for a temporary or permanent injunction, and/or to
compel compliance, and/or to assess and recover a civil
penalty of not more than $25,000 or the economic benefit of
noncompliance, whichever is higher, for each day of
violation, whenever such person has violated or is in
violation of a requirement or prohibition of this Act, or a
regulation promulgated thereunder.
``(2) Jurisdiction.--Any action under this subsection may
be brought in the district court for the United States for
the district in which the violation is alleged to have
occurred, or is occurring, or in which the defendant resides,
or where the defendant's principal place of business is
located, and such court shall have jurisdiction to restrain
such violation, to require compliance, to assess civil
penalties, to collect any fees owed the United States under
this Act, and to award any other appropriate relief.
``(3) Determination of penalty.--In determining the amount
of a civil penalty, the court shall take into account the
factors enumerated in subsection (c)(3) of this section.
``(4) Minimum penalty.--The minimum penalty the court must
assess under this subsection upon a determination of
liability is the amount of the economic benefit, if any,
resulting from the violation, where such economic benefit is
calculable.
``(e) Criminal Penalties.--
``(1) Any person who negligently commits any act prohibited
under section 136j of this Title shall, upon conviction, be
punished by a fine of not more than $25,000 for each day of
violation, or by imprisonment for not more than one year, or
both. If the conviction is for a violation committed after a
first conviction of such person under this paragraph, the
maximum punishment shall be doubled with respect to both fine
and imprisonment.
``(2) Any person who knowingly commits any act prohibited
under section 136j of this Title shall, upon conviction, be
punished by a fine of not more than $50,000 for each day of
violation, or by imprisonment for not more than 5 years, or
both. If the conviction is for a violation committed after a
first conviction of such person under this paragraph, the
maximum punishment shall be doubled with respect to both fine
and imprisonment.
``(3)(A) Any person who commits any violation under
paragraph (2) of this subsection and in the course of or in
connection with committing such violation knows at the time
that he places another person in imminent danger of death or
serious bodily injury, shall, upon conviction, be punished by
a fine of not more than $250,000 or imprisonment of not more
than 15 years, or both. A person which is an organization
shall, upon conviction of violating this subparagraph, be
subject to a fine of not more than $1,000,000. If a
conviction of a person is for a violation committed after a
first conviction of such person under this subparagraph, the
maximum punishment shall be doubled with respect to both fine
and imprisonment.
``(B) For purposes of this subparagraph:
``(1) the term ``imminent danger'' means the existence of a
condition or set of conditions that could reasonably be
expected to cause death or serious bodily injury unless the
condition is remedied; and
``(ii) the term ``serious bodily injury'' means bodily
injury which involves a substantial risk of death,
unconsciousness, extreme physical pain, protracted and
obvious disfigurement, or protracted loss or impairment of
the function of a bodily member, organ, or mental faculty.
``(4) Notwithstanding any other provision of law, a court
may make the following disposition of fines imposed under
this Title, in addition to payment, if any, to the United
States Treasury.
``(A) Upon recommendation of the United States, and in
accordance with the terms of such recommendation, the court
may pay to an individual who has given information or
services leading to a criminal conviction under this Title an
amount from the criminal fine assessed as a result of any
violation of this subchapter not more than the lesser of one-
half the fine imposed or $50,000.
``(B) Upon recommendation of the United States, and in
accordance with the terms of such recommendation, the court
may pay to any state, municipality or other political
subdivision of a state, which has given significant support
to the prosecution or investigation leading to a conviction
under this Title, an amount not more than one-half of the
fine imposed for that conviction.
``(f) Emergency Powers.--Notwithstanding any other
provision of this Act, the Administrator, upon receipt of
evidence that a specific use of a pesticide or pesticide
device is presenting an imminent and substantial endangerment
to public health or welfare, or the environment, may request
the Attorney General to bring suit on behalf of the United
States in the appropriate United States district court to
immediately restrain any person using such pesticide or
device to stop the activity or to take such other action as
may be necessary, provided that relief under this subsection
does not include suspension under Section 6(c) of the Act and
is not available where the Administrator, in his discretion,
determines that a suspension under Section 6(c) is adequate
to stop or prevent the imminent and substantial endangerment.
If it is not practicable to assure prompt protection of
public health or welfare or the environment by commencement
of such civil action, the Administrator may issue such orders
as may be necessary to protect public health or welfare or
the environment. Any order issued by the Administrator under
this section shall be effective upon issuance and shall
remain in effect for a period of not more than 60 days,
unless an action is brought pursuant to the first sentence of
this section before the expiration of that period. Whenever
such an action is brought within the 60-day period, the order
shall remain in effect for an additional 14 days or for such
longer period as may be authorized by the court in which such
action is brought. Any order issued under this paragraph
shall not be subject to judicial review except during
judicial enforcement proceedings brought by the Attorney
General of his delegate. Nothing herein shall diminish the
right of any person subject to a suspension proceeding under
Section 6(c) of the Act.''.
(h) Contractor Listing.--Section 32 (7 U.S.C. 136 (z)) is
added following Section 31:
``SEC. 32. FEDERAL PROCUREMENT.--
``(A) Contracts Prohibited With Convicted Violators.--No
federal agency may enter into any contract, grant, or loan
with any person who has been convicted of any offense under
Section 1361 of this Title, if the contract for the
procurement of goods, materials, and services, or the grant
or loan is to be performed, in whole or in any part, at any
facility at which the violation which gave rise to such
conviction occurred, and is such facility is owned, operated,
leased, or supervised at the time of the violation by such
person. The prohibition in the preceding sentence shall
continue until the Administrator certifies that the condition
giving rise to such conviction has been corrected.
``(b) Notification.--The Administrator shall establish
procedures to provide all Federal agencies with the
notification necessary for the purposes of subsection (a).
``(c) Disclosure.--Each applicant who seeks to participate
in a federal contract, grant, or loan shall disclose any
conviction described in subsection (a) to each appropriate
Federal agency.
``(d) Exemptions.--The President may exempt any contract,
loan, or grant from all or part of the provisions of this
section where he determines such exemption is necessary in
the paramount interest of the United States and he shall
notify the Congress of such exemption.''.
(i) Citizen Suits.--Section 33 (7 U.S.C. 136aa) is added
following Section 32 to read as follows:
``SEC. 33. CITIZEN SUITS.--
(a) Except as provided in subsection (b), any person may
commence a civil action on his own behalf--
``(1) against any person (including any governmental
instrumentality or agency to the extent permitted by the
Eleventh Amendment to the Constitution) who is alleged to
have violated or to be in violation of any provision of the
Act or any rule promulgated thereunder, except that no such
action may be brought against any agricultural producer who
is alleged to have committed a violation or to be in
violation while engaged in the production of agricultural
product; or
``(2) against any federal official where there is alleged a
failure of the federal official to perform any act or duty
under this Act which is not discretionary with the federal
official.
``The district courts shall have jurisdiction, without
regard to the amount in controversy or the citizenship of the
parties, to enforce the Act and the regulations promulgated
thereunder, to order any appropriate relief under Section XX
of the Act, and to impose any appropriate civil penalties
(except for actions under subsection (2)) for violations of
the Act. The district court shall have jurisdiction in
actions brought under subsection (a)(2) against the federal
official to order the federal official to perform such act or
duty.
``(b) No actions may be commenced--
``(1) under subsection (a)(1)--
``(A) prior to 60 days after the plaintiff has given notice
of the violation to the Administrator, to the State in which
the violation occurs, and to any alleged violator; or
``(B) if the Administrator or State with primary
enforcement responsibility under Section 26 of the Act has
commenced and is diligently prosecuting a civil or criminal
action in a court of the United States or a State or a
federal administrative penalty action to require compliance
with the Act or a regulation promulgated thereunder, but in
any such civil action any person may intervene as a matter of
right.
``(2) under subsection (a)(2) prior to 60 days after the
plaintiff has given notice of such action to the federal
official.
``Notices under this subsection shall be given in such
manner as the Administrator shall prescribe by regulation.
``(c) Any person may request the Administrator or a State
with primary enforcement authority to commence an action
against any agricultural producer who is alleged to have
violated or to be in violation of any provision of the Act or
any rule promulgated thereunder while engaged in the
production of any agricultural product. A copy of such a
request shall be given to the alleged violator. Within 60
days after such request is made to the administrator or a
State, the Administrator or State shall either--
``(1) commence an action against the alleged violator; or
``(2) provide to the person making the request a written
response that (A) states the Administrator's or the State's
decision not to take enforcement action against the alleged
violator and (B) describes any other action the Administrator
or State has taken or intends to take in connection with the
alleged violation.
``The response of the Administrator or State under
subsection (c)(2) shall not be subject to judicial review.''
``(d)(1) In any action under this section, the United
States may intervene as a matter of right at any time in the
proceeding. A judgment in an action under this section to
which the United States is not a party shall not have any
binding effect upon the United States.
``(2) Whenever any action is brought under this section the
plaintiff shall serve a copy of the complaint on the Attorney
General of the United States and on the Administrator. No
consent judgment shall be entered in an action brought under
this section in which the United States is not a party prior
to 60 days following the receipt of a copy of the proposed
consent judgement by the Attorney General and the
Administrator during which time the Government may submit its
comments on the proposed consent judgment to the court and
parties or may intervene as a matter of right. The court
shall not approve a proposed consent judgment that is
inappropriate, improper, inadequate, or inconsistent with the
purposes or requirements of the Act, and shall consider any
views expressed by the United States with respect to the
consent judgment.
``(e) The court, in issuing any final order in any action
brought pursuant to subsection (a) of this section, may award
costs of litigation (including reasonable attorney and expert
witness fees) to any prevailing or substantially prevailing
party. The court may, if a temporary restraining order of
preliminary injunction is sought, require the filing of a
bond or equivalent security in accordance with the Federal
Rules of Civil Procedure.
``(f) Nothing in this section shall restrict any right
which any person, or class of persons, may have under any
statute or common law to seek enforcement of any requirement
or to seek any other relief (including relief against federal
officials or a State agency).
``(g) Any action under this Section shall be brought in
accordance with the provisions of 28 U.S.C. Section 1391.''.
(j) Indian Tribes.--Section 34 (7 U.S.C. 136bb) is added
following Section 33 to read as follows:
``SEC. 34. INDIAN TRIBES.--
``(1) In General.--The Administrator shall promulgate
regulations to treat Indian Tribes in the manner that States
are treated under the Act. Such treatment shall be authorized
only if:
``(A) the Indian Tribe is recognized by the Secretary of
the Interior and has a governing body carrying out
appropriate governmental duties and powers; and,
``(B) the functions to be exercised by the Indian Tribe are
within the area of the Tribe's jurisdiction.''.
SEC. 18. WHISTLE BLOWER.
Section 35 (7 U.S.C. 136cc) is added following Section 34
to read as follows:
``SEC. 35. WHISTLE BLOWER.--
``(a) In General.--No employer may discharge any employee
or otherwise discriminate against any employee with respect
to the employee's compensation, terms, conditions, or
privileges of employment because the employee (or any persons
acting pursuant to a request of the employee) has--
``(1) commenced, caused to be commenced, or is about to
commence or cause to be commenced a proceeding under this
chapter; or
``(2) testified or is about to testify in any such
proceeding; or
``(3) assisted or participated or is about to assist or
participate in any manner in such a proceeding or in any
other action to carry out the purposes of this chapter.
``(b) Remedy.--
``(1) Any employee who believes that the employee has been
discharged or otherwise discriminated against by any person
in violation of subsection (a) of this section may, within 30
days after such alleged violation occurs, file (or have any
person file on the employee's behalf) a complaint with the
Secretary of Labor (hereafter in this section referred to as
the ``Secretary'') alleging such discharge or discrimination.
Upon receipt of such a complaint, the Secretary shall notify
the person named in the complaint of the filing of the
complaint.
``(2)(A) Upon receipt of a complaint filed under paragraph
(1), the Secretary shall conduct an investigation of the
violation alleged in the complaint. Within 120 days of the
receipt of such complaint, the Secretary shall complete such
investigation and shall notify in writing the complainant
(and any person acting on behalf of the complainant) and the
person alleged to have committed such violation of the
results of the investigation conducted pursuant of this
paragraph. Within ninety days of the receipt of such
complaint the Secretary shall, unless the proceeding on the
complaint is terminated by the Secretary on the basis of a
settlement entered into by the Secretary and the person
alleged to have committed such violation, issue an order
either providing the relief prescribed by subparagraph (B) or
denying the complaint. An order of the Secretary shall be
made on the record after notice and opportunity for agency
hearing. The Secretary may not enter into a settlement
terminating a proceeding on a complaint without the
participation and consent of the complainant.
``(B) If in response to a complaint filed under paragraph
(1) the Secretary determines that a violation of subsection
(a) of this section has occurred, the Secretary shall order
(i) the person who committed such violation to take
affirmative action to abate the violation, (ii) such person
to reinstate the complainant to the complainant's former
position together with compensation (including back pay)
terms, condition, and privileges of the complainant's
employment, (iii) compensatory damages and (iv) where
appropriate, exemplary damages. If such an order is issued,
the Secretary, at the request of the complainant shall assess
against the person against whom the order is issued a sum
equal to the aggregate amount of all costs and expenses,
(including attorney's fees) reasonably incurred, as
determined by the Secretary, by the complainant for, or in
connection with, the bringing of the complaint upon which the
order was issued.
``(c) Review.--
``(1) Any employee or employer adversely affected or
aggrieved by an order issued under subsection (b) of this
section may obtain review of the order in the United States
Court of Appeals for the circuit in which the violation, with
respect to which the order was issued, allegedly occurred.
The petition for review must be filed within sixty days from
the issuance of the Secretary's order. Review shall conform
to chapter 7 of Title 5.
``(2) An order of the Secretary, with respect to which
review could have been obtained under paragraph (1), shall
not be subject to judicial review in any criminal or other
civil proceeding.
``(d) Enforcement.--Whenever a person has failed to comply
with an order issued under subsection (b)(2) of this section,
the Secretary shall file a civil action in the United States
district court for the district in which the violation was
found to occur to enforce such order. In actions brought
under this subsection, the district courts shall have
jurisdiction to grant all appropriate relief, including
injunctive relief and compensatory and exemplary damages.
``(e) Exclusion.--Subsection (a) of this section shall not
apply with respect to any employee who, acting without
direction from the employee's employer (or any agent of the
employer), deliberately causes a violation of any requirement
of this chapter.''.
______
By Mr. WARNER:
S. 2051. A bill to amend the Fair Labor Standards Act of 1938 to
exclude from the definition of employee firefighters and rescue squad
workers who perform volunteer services and to prevent employers from
requiring employees who are firefighters or rescue squad workers to
perform volunteer services, and to allow an employer not to pay
overtime compensation to a firefighter or rescue squad worker who
performs volunteer services for the employer, and for other purposes;
to the Committee on Labor and Human Resources.
the volunteer firefighter and rescue squad worker act
Mr. WARNER. Mr. President, I rise today to introduce legislation to
amend the Fair Labor Standards Act of 1938. This is a companion measure
to legislation, H.R. 3949, introduced in the House of Representatives
by Virginia Congressman Herb Bateman.
My bill may be referred to as the Volunteer Firefighter and Rescue
Squad Worker Act of 1994.
The purpose of the Volunteer Firefighter and Rescue Squad Worker Act
is to amend the Fair Labor Standards Act of 1938 to exclude from the
definition of ``employee'' firefighters and rescue squad workers who
perform volunteer services. In addition, it will prevent employers from
requiring employees who are firefighters or rescue squad workers to
perform volunteer services, and will allow an employer not to pay
overtime compensation to a firefighter or rescue squad worker who
performs volunteer services.
The need for this legislation stems from a 1993 U.S. Department of
Labor ruling which found that a career firefighter cannot serve as a
volunteer firefighter within the same county as they are employed. This
ruling is commonly referred to as the Montgomery County, Maryland
decision.
The Department of Labor's interpretation of the Fair Labor Standards
Act in the Montgomery decision has prompted a great deal of concern
from volunteer fire and rescue groups across the Nation, including
Virginia. The decision was made to prevent counties--employers--from
coercing career firefighters to work overtime without overtime
compensation.
While protection from coercion is a worthy and necessary element of
the Fair Labor Standards Act, the administrative decision offers a
presumption of guilt on the part of law abiding counties. In addition,
it precludes men and women who wish to volunteer their services within
their own community from doing so, if they reside in the same community
as they are employed. Finally, it represents yet another unfunded
Federal mandate and an intrusion on the rights of citizens to decide
for themselves what services local government should provide.
Historically, volunteer fire and rescue services have played an
important role in our communities. These men and women are private
citizens who selflessly answer the call to duty, day and night, to
protect the lives and property of others.
In many parts of Virginia today, indeed, in many parts of the Nation
still, the difference between life and death in the golden hour is the
initial emergency medical services provided by volunteer rescue
workers. Many localities are a good 45 minutes to 1 hour away from the
nearest hospital and the aid administered by volunteers is critical to
the survival of victims.
The volunteer fire departments and rescue squads provide fire and
emergency medical services [EMS] for 82 percent of all fire and EMS
services in Virginia. Of the 602 fire departments in the Commonwealth
of Virginia, 67 are combined career and volunteer departments and 535
are strictly volunteer departments. These statistics only begin to tell
about the important role that the 20,000 volunteer firefighters in
Virginia play in our daily lives.
Mr. President, the intent of my legislation is quite simply to help
to preserve the spirit of voluntarism in our communities and to assist
our volunteer fire and rescue workers in their mission to provide vital
lifesaving and property protection services.
Many of our valiant career firefighters come from the ranks of the
volunteers and received their initial training from those departments.
In turn, many career firefighters have volunteered their service and
expertise to the volunteer departments. I believe that my legislation
will help to preserve this unique relationship.
For the benefit of my colleagues, I would briefly like to outline
what my legislation would do.
Section 1 simply cites the legislation as the Volunteer Firefighter
and Rescue Squad Worker Act.
Section 2 would exempt career firefighters and rescue squad workers
who volunteer their off-duty services at locations, fire companies,
where they are not employed during the course of normal duty hours from
the Fair Labor Standards overtime provisions.
Section 3 would allow career firefighters and rescue squad workers to
waive their claim to overtime compensation.
Section 4 would prohibit employers from directly or indirectly
requiring firefighters or rescue squad workers to volunteer their
services during any period in which they would otherwise be entitled to
receive overtime compensation.
Mr. President, I urge my fellow Senators, particularly members of the
Congressional Fire Caucus, to join me in support of this important
measure.
______
By Mr. GORTON:
S. 2052. A bill entitled the Recreational Boating Safety Program
Funding Improvement Act; to the Committee on Finance.
the recreational boating safety program funding improvement act
Mr. GORTON. Mr. President, I have heard from many boaters in
Washington State who are alarmed that Washington State's Boater Safety
Program will be drastically slashed by the administration's budget
request. I am introducing legislation today to ensure that the money
recreational boaters pay every time they refuel, which currently funds
these important boater safety programs in the States won't be lost
because of bureaucratic Federal budget rules.
As we all know, the Coast Guard has been under tight budget
constraints for a number of years. This year, in what I believe is an
effort to protect their overall budget, they have proposed to eliminate
the States Recreational Boater Safety Program. I believe the main, if
not the only real reason for this proposal, is because of bureaucratic
Federal budget scoring rules. My legislation will change these rules
and thus ensure that this program is funded.
Under current law, the Secretary of the Treasury transfers motorboat
fuel tax receipts from the highway trust fund to the boat safety
account and the sport fish restoration account of the aquatic
resources--Wallop-Breaux--trust fund. The amount transferred is the
equivalent of the amount of motorboat fuel taxes received, up to a
maximum of $70 million per year. One-half of the money deposited is
available to the Coast Guard to offset a portion of the costs of
services provided by the Coast Guard for recreational boater safety,
including services of the Coast Guard auxiliary. Nearly one-half of the
remaining amount is authorized for grants to the States to assist them
in carrying out recreational boater safety programs.
While no general revenue is involved in funding this program, budget
scorekeeping makes no distinction between these State grants and
funding for Coast Guard operating expenses. This scoring may have been
appropriate in the 1970's when grant funds were provided from general
revenues but since the 1980's the grant monies have been provided from
Federal gasoline excise tax receipts attributable to motorboat fuel
use. This is a true case of user pays/user benefits. The Coast Guard
does not use the money; its only role is to pass the money along to the
States to benefit the boaters who paid the taxes in the first place.
On a national level, States may lose approximately $32 million if
this budget problem is not addressed. The Coast guard estimates that
Washington State will lose over $450,000 in the coming year.
In 1992, 816 people lost their lives in recreational boating
accidents. My legislation will ensure that States will be able to count
on the money needed to fund their safety programs this and every year.
These programs include law enforcement and education programs to focus
on the dangers of boating under the influence of alcohol or drugs,
programs to emphasize the need to equip and use personal flotation
devices and other safety devices on-board a boat, rules of the
waterways, courtesy, and so forth. We know that boating safety programs
work. Since these programs were first established, the number of boats
has increased but the number of fatalities has decreased. We need to
act to ensure that important boating safety programs are not lost due
to arcane budget practices. I hope the Senate will expeditiously
consider and enact my legislation.
I ask unanimous consent that a copy of my legislation along with a
section-by-section analysis be included in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 2052
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SEC. 1. TRANSFER OF MOTORBOAT FUEL TAXES FROM HIGHWAY TRUST
FUND.
(a) Authorization of Transfers.--Section 9503(c)(4) of the
Internal Revenue Code of 1986 (26 U.S.C. 9503(c)(4)) is
amended--
(1) by striking subparagraph (A) of section 9503(c)(4);
(2) by redesignating subparagraph (B) as subparagraph (A)
and amending it to read as follows:
``(A) $1,000,000 per year transferred to land and water
conservation fund.--
``(i) In general.--The Secretary shall pay from time to
time from the Highway Trust Fund into the land and water
conservation fund provided for in title I of the Land and
Water Conservation Fund Act of 1965 amounts (as determined by
him) equivalent to the motorboat fuel taxes received on or
after October 1, 1993, and before October 1, 1997.
``(ii) Limitation.--The aggregate amount transferred under
this subparagraph during any fiscal year shall not exceed
$1,000,000.''; and
(3) by striking ``or (B)'' in clause (ii) of subparagraph
(B) (as so redesignated); and
(4) by redesignating subparagraphs (D) and (E) as
subparagraphs (C) and (D), respectively.
(b) Technical Amendment.--Section 9504(d) of the Internal
Revenue Code of 1986 (26 U.S.C. 9504(d)) is amended by
striking ``Boat Safety Account and''.
(c) Effective Date.--This amendment shall be effective
October 1, 1993.
SEC. 2. TECHNICAL AMENDMENTS TO AQUATIC RESOURCES TRUST FUND.
(a) Section 9504(a)(2) of the Internal Revenue Code of 1986
(26 U.S.C. 9504(a)(2)) is amended by inserting after
``section 9602(b)'' the following: ``of this title, or as
provided in subsection 4(a) of the Act entitled `An Act to
provide that the United States shall aid the States in fish
restoration and management projects, and for other purposes',
approved August 9, 1950 (64 Stat. 430; 16 U.S.C. 777c), as
amended,''.
(b) Section 9504(b)(2)(A) of the Internal Revenue Code of
1986 (26 U.S.C. 9504(b)(2)(A)) is amended by striking ``(as
in effect on October 1, 1988)''.
(c) Section 9504(c) of the Internal Revenue Code of 1986
(26 U.S.C. 9504(c)) is amended to read as follows:
``(c) Expenditures From Boat Safety Account.--Amounts in
the Boat Safety Account shall be available for
making expenditures before April 1, 1999, to carry out the
purposes of section 13106 of title 46, United States
Code.''.
(d) Effective Dates.--The amendment to section (a) shall be
effective October 1, 1994. The amendments to sections (b) and
(c) shall be effective October 1, 1993.
SEC. 3. FUNDING FOR RECREATIONAL BOATING SAFETY PROGRAMS.
(a) Transfer.--Section 4 of the Act of August 9, 1950 (16
U.S.C. 777c) is amended--
(1) by redesignating subsections (a), (b), (c), (d), and
(e) in order, as subsections (b), (c), (d), (e), and (f);
(2) by inserting before subsection (b) (as so redesignated)
the following new subsection:
``(a) Of each annual appropriation made in accordance with
the provisions of section 3 of this Act (16 U.S.C. 777b) from
transfers made from the Highway Trust Fund to the Sport Fish
Restoration Account for motorboat fuel taxes received on or
after October 1, 1993, and before October 1, 1997, the
Secretary of the Interior shall transfer to the Boat Safety
Account of the Aquatic Resources Trust Fund an amount equal
to $77,500,000 for fiscal year 1995, $80,000,000 for each of
fiscal years 1996 and 1997, and $90,000,000 for fiscal year
1998, to be expended by the Secretary of Transportation for
recreational boating safety programs under section 13106 of
title 46, United States Code.'';
(3) in subsection (b) (as so redesignated) by striking
``The Secretary of the Interior'' through ``section 3 of this
Act'' and inserting the following: ``Of the balance of each
annual appropriation remaining after making the distribution
under subsection (a), the Secretary of the Interior shall
distribute 18 per centum'';
(4) by amending subsection (c) (as so redesignated) to read
as follows:
``(c) Of the balance of each annual appropriation remaining
after making the distribution under subsections (a) and (b),
an amount equal to $7,500,000 for fiscal year 1995, and
$10,000,000 for each of fiscal years 1996 and 1997, shall be
available for two years for obligation under section 5604(c)
of the Clean Vessel Act of 1992. The Secretary of the
Interior may make grants for qualified projects in an amount
up to the amount available under this paragraph. Amounts
unobligated by the Secretary of the Interior after two years
shall be transferred to the Secretary of Transportation and
be expended for State recreational boating safety programs
under section 13106(b)(1) of title 46, United States Code.'';
(5) in subsection (d) (as so redesignated) by striking
``(a) and (b)'' and inserting ``(a), (b), and (c)''; and
(6) in subsection (e) (as so redesignated) by striking
``and (c)'' and inserting ``(c), and (d)''.
(b) Effective Date.--This amendment shall be effective
October 1, 1994.
SEC. 4. AUTHORIZATION OF EXPENDITURES FOR RECREATIONAL
BOATING SAFETY PROGRAMS.
Section 13106 of title 46, United States Code, is amended--
(a) by striking subsection (c);
(b) by redesignating subsections (a) and (b), in order, as
subsections (b) and (c);
(c) by inserting before subsection (b) (as so redesignated)
the following new subsection:
``(a) Of the amount transferred for each fiscal year to the
Boat Safety Account under section 4 of the Act of August 9,
1950 (16 U.S.C. 777c), as amended, $35,000,000 is available
to the Secretary for expenditures out of the operating
expenses account of the Coast Guard for services provided by
the Coast Guard for recreational boating safety, including
services provided by the Coast Guard Auxiliary. Amounts made
available by this subsection shall remain available until
expended.'';
(d) by amending subsection 13106(b)(1) (as so redesignated)
to read as follows:
``(b)(1) Subject to paragraph (2), the Secretary may expend
the balance of the amount transferred each fiscal year to the
Boat Safety Account under section 4 of the Act of August 9,
1950 (16 U.S.C. 777c), as amended, for State recreational
boating safety programs as provided under the guidelines
established under subsection (c) of this section. The amount
shall be allocated as provided under section 13103 of this
title. Amounts made available by this subsection shall remain
available until expended. Amounts previously obligated but
released by payment of a final voucher or modification of a
program acceptance shall be credited to the balance of
unobligated amounts and are immediately available for
expenditures.'';
(e) by amending the catchline of section 13106 to read as
follows:
``Sec. 13106. Spending authority for recreational boating
safety programs''; and
(f) by amending the item relating to section 13106 in the
table of sections at the beginning of chapter 131 of title
46, United States Code, to read as follows:
``13106. Spending authority for recreational boating safety
programs.''.
(g) Effective Date.--This amendment shall be effective
October 1, 1994.
____
Section-by-Section Analysis
SECTION 1. TRANSFERS OF MOTORBOAT FUEL TAXES FROM HIGHWAY TRUST FUND
Subsection (a) eliminates transfers of motorboat fuel taxes
from the Highway Trust Fund into the Boat Safety Account in
the Aquatic Resources Trust Fund, and provides that the first
$1 million of such taxes shall be transferred into the Land
and Water Conservation Fund, with the balance of such taxes
to be transferred into the Sport Fish Restoration Account in
the Aquatic resources Trust Fund. Under current law, the
first $70 million of motorboat fuel tax receipts (subject to
the limitation in 26 U.S.C. Sec. 9503(c)(4)(A)(ii)(II) is to
be transferred from the Highway Trust Fund to the Boat Safety
Account, with $1 million of any excess to be transferred to
the Land and Water Conservation Fund and the balance to be
transferred to the Sport Fish Restoration Account. Subsection
(b) is a conforming technical amendment to the cross-
reference in 26 U.S.C. Sec. 9504(d). Subsection (c)
establishes the effective date for this section.
section 2. technical amendments to aquatic resources trust fund
Subsections (a), (b), and (c) are conforming and/or
technical amendments to 26 U.S.C. Sec. 9504. Subsection (c)
deletes the words ``as provided by appropriations Acts.''
This language is deleted since, by the amendments of this
title, amounts to be expended from the Boat Safety Account
are appropriated through the permanent-indefinite
appropriation of the Sport Fish Restoration Account.
Subsection (d) establishes effective dates for the amendments
in subsections (a), (b), and (c).
section 3. funding for recreational boating safety programs
Subsection (a)(1) redesignates subsections (a), (b), (c),
(d), and (e) of 16 U.S.C. Sec. 777c as subsections (b), (c),
(d), (e), and (f), respectively. Subsection (a)(2) amends 16
U.S.C. Sec. 777c to insert a new subsection (a) providing
that the amount of trust fund receipts authorized for
recreational boating safety program for fiscal years 1995
through 1998 is to be transferred each year from the Sport
Fish Restoration Account to the Boat Safety Account of the
Aquatic Resources Trust Fund. The amounts authorized to be
transferred to the Boat Safety Account are $77.5 million for
FY95, $80 million each for FY96 and FY97, and $90 million for
FY98. These amounts include the $70 million currently
authorized each year for transfer from the Highway Trust Fund
to the Boat Safety Account and the additional funds ($7.5
million for FY95, $10 million each for FY96 and FY97, and $20
million for FY98) authorized for transfer by the Secretary of
the Interior to the Secretary of Transportation as a result
of the Clean Vessel Act of 1992. The provision specifies that
the funds transferred to the Boat Safety Account will be
comprised of motorboat fuel taxes that have been transferred
from the Highway Trust Fund.
The amendment expands on the precedent established by the
Clean Vessel Act of 1992 by providing that all amounts
authorized for the recreational boating safety programs
funded through the Boat Safety Account will be appropriated
through the Sport Fish Restoration Account under its
permanent-indefinite appropriation dating from 1951.
Subsections (a)(3) through (a)(6) are conforming technical
amendments to existing provisions of 16 U.S.C. Sec. 777c.
Subsection (b) establishes an effective date of October 1,
1994.
section 4. authorization of expenditures for recreational boating
safety programs
This section makes conforming amendments to 46 U.S.C.
Sec. 13106 to apportion the amounts transferred to the Boat
Safety Account between the Coast Guard and the States in the
same manner as they are authorized under current law in 46
U.S.C. 13106 and 16 U.S.C. Sec. 777.
Subsection (a) deletes the current 46 U.S.C. Sec. 13106(c).
Subsection (b) redesignates subsections (a) and (b) as
subsection (b) and (c), respectively. Subsection (c) inserts
a new subsection (a) that amends the current provisions in 46
U.S.C. Sec. 13106(c). Subsection (d) makes conforming
amendments to subsection 13106(b)(l) (current subsection
13106(a)(l)). Subsection (e) establishes an effective date of
October 1, 1994.
______
By Mr. BRADLEY:
S. 2053. A bill to prevent handgun violence and illegal commerce in
firearms; to the Committee on the Judiciary.
handgun control and violence prevention act of 1994
Mr. BRADLEY. Mr. President, handgun violence is redefining the
American way of life. We must own up to this reality and bring
desperately needed rationality to our gun laws. This is why I rise
today to introduce the Handgun Control and Violence Prevention Act of
1994. This legislation is one more important step in ensuring that the
madness of gun violence in this country will be brought to an end.
Every year, more than 24,000 Americans--65 a day--are killed with
handguns, in homicides, by committing suicide, and by unintentional
injuries. Handguns account for only one-third of all firearms, but are
responsible for two-thirds of all firearm-related deaths. Handguns are
used in about 80 percent of all firearm murders. Ninety-five percent of
the people injured by a handgun each year require emergency care or
hospitalization. Of these, 68 percent require overnight care and 32
percent require a hospital stay of 8 days or more. In 1991, the United
States led the developed world with 14,373 gun murders, as compared to
186 gun murders in Canada, 76 in Australia, 60 in England, and 74 in
Japan. One difference between the United States and the other countries
cited is that the other countries all have much stricter gun control
laws.
Some will argue that these grim statistics are the result of weak law
enforcement, light sentencing, legitimate fear, and the waning of
family values. Others will argue that they are the result of
joblessness, poverty, and long-term neglect of our most violent
neighborhoods. I have no doubt that the growing rate of violent
activity has been aggravated in part by all these factors. But
accepting many of these causes of handgun violence does not erase the
reality that crime and deviant behavior have become much more of a
burden on our society because of the explosive growth in handguns.
Disputes that were settled with fists and knives 10 years ago are now
being settled with guns. The number, availability and destructive
ability of handguns has contributed significantly to this tragedy.
Every single handgun used in a crime starts out as a legal gun. The
black market in illegal handguns is enormous and deadly. If we can
crack down on illegal sale and use, we can help drive guns off our
streets, out of our schools, and from our communities.
The purpose of this bill is to make it at least as difficult to use a
handgun as it is to drive a car. When the evidence on the danger of
handguns is made clear to us on a daily basis, it is irresponsible to
allow an instrument which can cause so much physical and psychological
damage to be made available to people on such a liberal basis.
This bill makes it illegal to purchase a handgun without a valid,
nationally uniform, State-issued handgun license. The license would be
similar to a driver's license and consist of an identification card
with a photograph. Only new purchases of handguns would require a
license. Those who currently possess handguns would not have to acquire
a license unless they wanted to purchase more handguns.
To stop the transfer of handguns from straw-man purchasers to
criminals and others intending to commit crimes, this legislation
requires that all handgun transfers be registered with local officials.
If the person transferring the weapon does not register the transfer,
he or she will be in violation of Federal law.
To curb interstate gun running, this bill limits the purchase of a
handgun by any one person to one gun a month. When this provision goes
into effect, maybe Interstate 95 will lose its nickname, the ``Iron
Road'', as it becomes less easy to run guns from States with little gun
control to states, like New Jersey, that already enjoy some of the
protections in this bill.
This bill also includes tough standards for Federal firearms dealers
licenses. Federally licensed firearms dealers will have to pass strict
background checks and meet all State and local regulations. This will
help guard against rogue gun dealers, who illegally sell thousands of
firearms to drug gangs and violent criminals. The legislation also
imposes stiff penalties on gun thieves.
I am particularly pleased, Mr. President, that this bill incorporates
my legislation, S. 1798, which increases the licensing fees for
federally licensed firearm dealers. In addition to existing
requirements, federally licensed firearm dealers would have to prove
that they are in compliance with State and local laws, pass background
checks, and pay $3,000 for a 3-year license. Today, there are more gun
dealers than gas stations and grocery stores. This is outrageous, and I
hope these provisions will change that situation.
In closing, Mr. President, we must continue our fight to end the
death and destruction of our children and our families, which is too
easily becoming a fact of life in our cities and towns. I urge support
for this responsible handgun licensing and registration legislation.
I ask unanimous consent that the text of the legislation be printed
in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 2053
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 ``Handgun Control and Violence
Prevention Act of 1994''.
SEC. 2. FINDINGS AND DECLARATIONS.
The Congress finds and declares that--
(1) crimes committed with firearms threaten the peace and
domestic tranquility of the United States and threaten the
security and general welfare of the Nation and its people;
(2) crimes committed with firearms, especially those
committed with handguns, have imposed a substantial burden on
interstate commerce;
(3) firearms are easily transported across State boundaries
and, as a result, individual State action to regulate
firearms is made less than effective by lax regulation by
other States; and
(4) accordingly, it is necessary to establish uniform
national laws governing all aspects of the firearms industry,
requiring handgun licensing and registration, expanding the
categories of persons prohibited from possessing firearms,
limiting Federal firearms licensees to bona fide importers,
manufacturers, and dealers, and prohibiting the sale of
semiautomatic assault weapons and other dangerous weapons.
SEC. 3. TABLE OF CONTENTS.
The table of contents of this Act is as follows:
Sec. 1. Short title.
Sec. 2. Findings and declarations.
Sec. 3. Table of contents.
TITLE I--NATIONAL HANDGUN CONTROLS
Sec. 101. State license required to receive a handgun.
Sec. 102. Prohibition of multiple handgun transfers.
Sec. 103. Prohibition of engaging in the business of dealing in
handguns without specific authorization; requirement that
authorization be provided if applicant demonstrates
significant unmet economic demand.
TITLE II--TRACING OF GUNS USED IN CRIMES
Sec. 201. Dealer assistance with tracing of firearms.
Sec. 202. Computerization of records.
Sec. 203. Interstate transportation of firearms.
Sec. 204. Gun running.
Sec. 205. Handgun barrel registration.
Sec. 206. National Firearms Tracing Center.
TITLE III--DEALER RESPONSIBILITY
Sec. 301. Compliance with State and local firearms licensing laws as
condition to issuance of Federal firearms license.
Sec. 302. Background investigation of licensees.
Sec. 303. Increased license fees for dealers.
Sec. 304. Increased penalties for making knowingly false statements in
connection with firearms.
Sec. 305. Dealer inspections.
Sec. 306. Gun shows.
Sec. 307. Acquisition and disposition records of dealers suspected of
serving as sources of illegal firearms.
Sec. 308. Dealer responsibility for sales to felons or minors.
Sec. 309. Interstate shipment of firearms.
TITLE IV--THEFT OF FIREARMS
Sec. 401. Dealer reporting of firearm thefts.
Sec. 402. Theft of firearms or explosives.
Sec. 403. Theft of firearms or explosives from licensee.
Sec. 404. Security of licensed firearms dealers.
Sec. 405. Prohibition of transactions involving stolen firearms that
have moved in interstate or foreign commerce.
TITLE V--ARMED FELONS
Sec. 501. Denial of administrative relief from certain firearms
prohibitions; inadmissibility of additional evidence in
judicial review of denials of such administrative relief
for other persons.
Sec. 502. Clarification of definition of conviction.
Sec. 503. Enhanced penalty for use of a semiautomatic firearm during a
crime of violence or a drug trafficking crime.
Sec. 504. Violation of firearms laws in aid of drug trafficking.
Sec. 505. Mandatory penalties for firearms possession by violent felons
and serious drug offenders.
TITLE VI--VIOLENT MISDEMEANANTS
Sec. 601. Prohibition of disposal of firearms or ammunition to, or
receipt of firearms or ammunition by, persons convicted
of a violent crime or subject to a protection order.
TITLE VII--AMMUNITION
Sec. 701. Federal license to deal in ammunition.
Sec. 702. Regulation of the manufacture, importation, and sale of
certain particularly dangerous bullets.
TITLE I--NATIONAL HANDGUN CONTROLS
SEC. 101. STATE LICENSE REQUIRED TO RECEIVE A HANDGUN.
(a) In General.--Section 922 of title 18, United States
Code, is amended by adding at the end the following new
subsection:
``(v)(1) It shall be unlawful for any person to sell,
deliver, or otherwise transfer a handgun to an individual who
is not licensed under section 923 unless--
``(A) the transferor (or a licensed dealer, if State law so
directs or allows) has verified that the transferee possesses
a valid State handgun license by--
``(i) examining the State handgun license;
``(ii) examining, in addition to the State handgun license,
a valid identification document (as defined in section 1028)
containing a photograph of the transferee; and
``(iii) contacting the chief law enforcement officer of the
State that issued the State handgun license to confirm that
the State handgun license has not been revoked; and
``(B) the transferor (or licensed dealer) has provided to
the chief law enforcement officer of the State in which the
transfer is to take place a completed State handgun
registration form for the handgun to be transferred.
``(2) It shall be unlawful for any person to sell, deliver,
or otherwise transfer handgun ammunition to an individual who
is not licensed under section 923 unless the transferor (or
licensed dealer, if State law so directs or allows) has
verified that the transferee possesses a valid State handgun
license by--
``(A) examining the State handgun license; and
``(B) examining, in addition to the State handgun license,
a valid identification document (as defined in section 1028)
containing a photograph of the transferee.
``(3) It shall be unlawful for any individual who is not
licensed under section 923 to receive a handgun or handgun
ammunition unless the individual possesses a valid State
handgun license.
``(4) As used in this subsection, the term `chief law
enforcement officer of the State' means the chief, or
equivalent officer, of the State police force, or the
designee of that officer.
``(5) As used in this subsection, the term `State handgun
license' means a license issued under a State law that, at a
minimum, meets the following requirements:
``(A) The State law provides that--
``(i) the chief law enforcement officer of the State shall
issue State handgun licenses, which shall meet such
requirements as to form, appearance, and security against
forgery as are prescribed by the Secretary in regulations, in
accordance with such procedures as are prescribed by the
Secretary in regulations;
``(ii) the State handgun license issued to a licensee shall
contain--
``(I) the name, address, date of birth, physical
description, and a photograph of the licensee; and
``(II) a unique license number; and
``(iii) a State handgun license shall be valid for a period
of not more than 2 years from the date of issue, unless
revoked.
``(B) The State law provides that a State handgun license
may not be issued unless the chief law enforcement officer of
the State determines that the applicant--
``(i) is at least 21 years of age;
``(ii) is a resident of the State, by examining, at a
minimum, in addition to a valid identification document (as
defined in section 1028), documentation such as a utility
bill or lease agreement;
``(iii) is not prohibited from possessing or receiving a
handgun under Federal, State, or local law, based upon name-
and fingerprint-based research in all available Federal,
State, and local recordkeeping systems, including the
national instant criminal background check system established
by the Attorney General pursuant to section 103 of the Brady
Handgun Violence Prevention Act; and
``(iv) has been issued a State handgun safety certificate.
``(D) The State law may authorize the chief law enforcement
officer of the State to charge a fee for the issuance of a
State handgun license.
``(E) The State law provides that, if the chief law
enforcement officer of the State determines that an
individual is ineligible to receive a State handgun license
and the individual in writing requests the officer to provide
the reasons for that determination, the officer shall provide
the reasons to the individual in writing within 20 business
days after receipt of the request.
``(F)(i) The State law provides for the revocation of a
State handgun license issued by the chief law enforcement
officer of the State if the chief law enforcement officer
determines that the licensee no longer satisfies 1 or more of
the conditions set forth in subparagraph (B).
``(ii) The State law provides that, within 10 days after a
person possessing a State handgun license that has been
revoked receives notice of the revocation, the person shall
return the license to the chief law enforcement officer who
issued the license.
``(G)(i) The State law provides that, within 24 hours after
a State handgun licensee discovers that a handgun has been
stolen from or lost by the licensee, the licensee shall
report the theft or loss to--
``(I) the Secretary;
``(II) the chief law enforcement officer of the State; and
``(III) appropriate local authorities.
``(ii) The State law shall provide that failure to make the
reports described in clause (i) shall be punishable by a
civil penalty of not less than $1,000.
``(6) As used in this subsection, the term `State handgun
registration form' means a handgun registration form
prescribed under a State law that, at a minimum, meets the
following requirements:
``(A) The State law provides that a handgun registration
form shall not be considered completed by an individual with
respect to a handgun, unless the form contains, at a
minimum--
``(i) information identifying the individual, including the
name, address, date of birth, and number on the State handgun
license issued to the individual; and
``(ii) information identifying the handgun, including the
make, model, caliber, and serial number of the handgun.
``(B) The State law provides that the chief law enforcement
officer of the State shall furnish information from completed
handgun registration forms to Federal, State, and local law
enforcement authorities upon request.
``(C) The State law may authorize the chief law enforcement
officer of the State to charge a fee for the registration of
a handgun.
``(7) As used in this subsection, the term `State handgun
safety certificate' means a certificate issued under a State
law that, at a minimum, meets the following requirements:
``(A) The State law provides that the chief law enforcement
officer of the State shall issue State handgun safety
certificates.
``(B) The State law provides that a State handgun safety
certificate is not to be issued to an applicant, unless the
chief law enforcement officer of the State determines that
the applicant--
``(i) is a resident of the State, by examining, at a
minimum, in addition to a valid identification document (as
defined in section 1028), documentation such as a utility
bill or lease agreement;
``(ii) has completed a course of not less than 2 hours of
instruction in handgun safety, that was taught by law
enforcement officers and designed by the chief law
enforcement officer; and
``(iii) has passed an examination, designed by the chief
law enforcement officer, testing the applicant's knowledge of
handgun safety.
``(C) The State law may authorize the chief law enforcement
officer of the State to charge a fee for the handgun safety
course and examination described in subparagraph (B).''.
(b) Definition of Handgun Ammunition.--Section 921(a) of
title 18, United States Code, is amended by adding at the end
the following new paragraph:
``(30) The term `handgun ammunition' means--
``(A) a centerfire cartridge or cartridge case less than
1.3 inches in length; or
``(B) a primer, bullet, or propellent powder designed
specifically for use in a handgun.''.
(c) Regulations.--Section 926 of title 18, United States
Code, is amended by adding at the end the following new
subsection:
``(d) The Secretary shall, for purposes of section 922(v),
prescribe regulations--
``(1) governing the form and appearance of State handgun
licenses;
``(2) establishing minimum standards that such licenses
must meet to be secure against forgery; and
``(3) establishing minimum standards that States must meet
in issuing such licenses in order to prevent fraud or theft
of such licenses.''.
(d) Penalties For Violations of Section 922 (q), (r), and
(v) of Title 18.--Section 924(a)(1)(B) of title 18, United
States Code, is amended by striking ``or (q)'' and inserting
``(r), or (v)''.
(e) Technical Correction to Brady Act.--Section
922(t)(1)(B)(ii) of title 18, United States Code, is amended
by inserting ``or State law'' after ``section''.
(f) Effective Date.--The amendments made by this section
shall become effective on the date that is 180 days after the
date of enactment of this Act.
(g) Funding.--
(1) Grants for establishing systems of licensing and
registration.--The Attorney General shall, subject to the
availability of appropriations, make a grant to each State
(as defined in section 921(a)(2) of title 18, United States
Code) to be used for the initial startup costs associated
with establishing a system of licensing and registration
consistent with the requirements of section 922(v) of title
18, United States Code.
(2) Authorization of appropriations.--There is authorized
to be appropriated for grants under paragraph (1) a total of
$200,000,000 for fiscal year 1995 and all fiscal years
thereafter.
SEC. 102. PROHIBITION OF MULTIPLE HANDGUN TRANSFERS.
Section 922 of title 18, United States Code, as amended by
section 101(a), is amended by adding at the end the following
new subsection:
``(w)(1) It shall be unlawful for any licensed dealer--
``(A) during any 30-day period, to sell 2 or more handguns
to an individual who is not licensed under section 923; or
``(B) to sell a handgun to an individual who is not
licensed under section 923 and who purchased a handgun during
the 30-day period ending on the date of the sale.
``(2) It shall be unlawful for any individual who is not
licensed under section 923 to purchase 2 or more handguns
during any 30-day period.
``(3) Paragraph (1) shall not apply to an exchange (with or
without consideration) of a handgun for a handgun.''.
SEC. 103. PROHIBITION OF ENGAGING IN THE BUSINESS OF DEALING
IN HANDGUNS WITHOUT SPECIFIC AUTHORIZATION;
REQUIREMENT THAT AUTHORIZATION BE PROVIDED IF
APPLICANT DEMONSTRATES SIGNIFICANT UNMET
ECONOMIC DEMAND.
(a) Prohibition Against Engaging in the Business of Dealing
in Handguns Without Specific Authorization.--Section
922(a)(1) of title 18, United States Code, is amended--
(1) by striking ``or'' 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) to engage in the business of dealing in handguns, or
in the course of such business, to ship, transport, or
receive any handgun in interstate or foreign commerce, unless
the person is specifically authorized to do so under section
923(d)(2)(A); or''.
(b) Requirement That Authorization Be Provided if Applicant
Demonstrates That it Is in the Public Interest.--Section
923(d) of title 18, United States Code, is amended--
(1) by redesignating paragraph (2) as paragraph (3); and
(2) by inserting after paragraph (1) the following new
paragraph:
``(2)(A) The Secretary shall authorize a licensed dealer
(or a person whose application for a license to engage in the
business of dealing in firearms is required to be approved by
the Secretary) to engage in the business of dealing in
handguns if the licensed dealer (or the applicant)
demonstrates to the Secretary, in accordance with regulations
that the Secretary shall prescribe, that there is significant
unmet lawful demand for handguns in the market area (as
defined by the Secretary) served by the licensed dealer (or
to be served by the applicant).
``(B) For purposes of paragraph (3) of this subsection and
subsections (e) and (f), a request for authority to engage in
the business of dealing in handguns shall be considered to be
an application for a license under this section, and the
provision of such authority shall be considered to be the
issuance of such a license.''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall take effect on the date
that is 1 year after the date of enactment of this Act.
(2) 2-year grandfathering of licensed dealers.--During the
2-year period that begins with the effective date specified
in paragraph (1), the amendments made by this section shall
not apply to any person who, on the effective date, is a
licensed dealer (as defined in section 921(a)(11) of title
18, United States Code).
TITLE II--TRACING OF GUNS USED IN CRIMES
SEC. 201. DEALER ASSISTANCE WITH TRACING OF FIREARMS.
(a) Provision of Record Information.--Section 923(g) of
title 18, United States Code, is amended by adding at the end
the following new paragraph:
``(6) Each licensee shall, at such times and under such
conditions as the Secretary shall prescribe by regulation,
provide all record information required to be kept by this
chapter, or such lesser information as the Secretary may
specify, as may be required for determining the disposition
of a firearm in the course of a law enforcement
investigation.''.
(b) No Criminal Penalty.--Section 924(a)(1)(D) of title 18,
United States Code, is amended by inserting ``except section
923(g)(6)'' after ``chapter''.
SEC. 202. COMPUTERIZATION OF RECORDS.
Section 926 of title 18, United States Code, as amended by
section 101(c), is amended--
(1) in subsection (a) by striking the second sentence; and
(2) by adding at the end the following new subsection:
``(e) The Director of the Bureau of Alcohol, Tobacco, and
Firearms shall centralize all records of receipts and
disposition of firearms obtained by the Bureau and maintain
such records in whatever manner will enable their most
efficient use in law enforcement investigations.''.
SEC. 203. INTERSTATE TRANSPORTATION OF FIREARMS.
Section 922(a)(3) of title 18, United States Code, is
amended to read as follows:
``(3)(A) for any person not licensed under section 923 to
transport a firearm from 1 State into another State; but
``(B)(i) subparagraph (A) shall not preclude any person who
lawfully acquires a firearm by bequest or intestate
succession in a State other than the person's State of
residence from transporting the firearm into or receiving the
firearm in the person's State of residence, if it is lawful
for the person to possess the firearm in the person's State
of residence; and
``(ii) subparagraph (A) shall not apply to--
``(I) the transportation or receipt of any firearm obtained
in conformity with subsection (b)(3);
``(II) the transportation of any firearm acquired in any
State before the effective date of this chapter;
``(III) the transportation of any firearm in accordance
with section 926A of this title; and
``(IV) the transportation of any firearm, under contract or
agreement with a person licensed under section 923, by a
person who ships or transports goods in the ordinary course
of business;''.
SEC. 204. GUN RUNNING.
(a) Prohibitions.--Section 922 of title 18, United States
Code, as amended by section 102, is amended by adding at the
end the following new subsection:
``(x) It shall be unlawful for a person not licensed under
section 923 to receive a firearm with the intent to transfer
the firearm for profit.''.
(b) Penalties.--Section 924(a) of title 18, United States
Code, is amended by adding at the end the following new
paragraph:
``(6)(A) Except as provided in subparagraph (B), a person
who violates section 922(x) shall be fined under this title,
imprisoned not less than 6 months and not more than 3 years,
or both.
``(B) A person who violates section 922(x) with respect to
5 or more firearms during a 30-day period shall be fined
under this title, imprisoned not less than 3 years, or
both.''.
SEC. 205. HANDGUN BARREL REGISTRATION.
Section 923(i) of title 18, United States Code, is
amended--
(1) by inserting ``(1)'' after ``(i)''; and
(2) by adding at the end the following:
``(2) Each licensed manufacturer shall, in accordance with
regulations prescribed by the Secretary--
``(A) maintain records of the ballistics of handgun barrels
made by the licensed manufacturer and of the serial numbers
of such barrels; and
``(B) make such records available to the Secretary.''.
SEC. 206. NATIONAL FIREARMS TRACING CENTER.
(a) Establishment.--The Secretary of the Treasury shall
establish in the Bureau of Alcohol, Tobacco, and Firearms a
National Firearms Tracing Center, which shall be operated for
the purpose of tracing the chain of possession of firearms
and ammunition used in crimes.
(b) Authorization of Appropriations.--For the establishment
and operation of the National Firearms Tracing Center there
are authorized to be appropriated to the Secretary of the
Treasury $20,000,000 for each of fiscal years 1994, 1995, and
1996.
TITLE III--DEALER RESPONSIBILITY
SEC. 301. COMPLIANCE WITH STATE AND LOCAL FIREARMS LICENSING
LAWS AS CONDITION TO ISSUANCE OF FEDERAL
FIREARMS LICENSE.
Section 923(d)(1) of title 18, United States Code, is
amended--
(1) by striking ``and'' at the end of subparagraph (D);
(2) by striking the period at the end of subparagraph (E)
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(F) in the case of an application for a license to engage
in the business of dealing in firearms--
``(i) the applicant has complied with all requirements
imposed on persons desiring to engage in such a business by
the State and political subdivision thereof in which the
applicant conducts or intends to conduct such business;
``(ii) the business to be conducted pursuant to the license
is not prohibited by the law of the State or locality in
which the business premises is located; and
``(iii) the application includes a written statement that--
``(I) is signed by the chief of police of the locality, or
the sheriff of the county, in which the applicant conducts or
intends to conduct such business, the head of the State
police of such State, or any official designated by the
Secretary; and
``(II) certifies that the information available to the
signer of the statement does not indicate that the applicant
is ineligible to obtain such a license under the law of such
State and locality.''.
SEC. 302. BACKGROUND INVESTIGATION OF LICENSEES.
(a) In General.--Section 923(d)(1)(B) of title 18, United
States Code, is amended--
(1) by inserting ``after a thorough investigation of''
before ``the applicant''; and
(2) by striking ``association)'' and inserting
``association), which investigation shall include checking
the applicant's fingerprints against all appropriate
compilations of criminal records, the Secretary determines
that the applicant''.
(b) Inspection of Applicant's Premises.--Section 923(d)(1)
of title 18, United States Code, as amended by section 301,
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 the following new subparagraph:
``(G) the Secretary has conducted an inspection of the
place at which the applicant is to conduct business pursuant
to the license.''.
(c) Business Premises Required of Applicant.--Section
923(d)(1)(E) of title 18, United States Code, is amended by
inserting ``business'' after ``(i)''.
(d) Extension of Period for Approving or Denying
Application.--Section 923(d)(3) of title 18, United States
Code, as redesignated by section 103(b), is amended by
striking ``forty-five-day'' and inserting ``180-day''.
SEC. 303. INCREASED LICENSE FEES FOR DEALERS.
Section 923(a)(3) of title 18, United States Code, is
amended to read as follows:
``(3) If the applicant--
``(A) is a dealer in destructive devices or ammunition for
destructive devices, a fee of $2,000 per year; or
``(B) is a dealer not described in subparagraph (A), a fee
of $3,000 for 3 years.''.
SEC. 304. INCREASED PENALTIES FOR MAKING KNOWINGLY FALSE
STATEMENTS IN CONNECTION WITH FIREARMS.
(a) In Acquiring a Firearm From a Licensed Dealer.--Section
924(a) of title 18, United States Code, is amended--
(1) in paragraph (1)(B) by striking ``(a)(6),''; and
(2) in paragraph (2) by inserting ``(a)(6),'' after
``subsection''.
(b) In Recordkeeping.--Section 924(a)(3) of title 18,
United States Code, is amended by striking ``fined not more
than $1,000, imprisoned not more than one year'' and
inserting ``fined under this title, imprisoned not more than
10 years''.
SEC. 305. DEALER INSPECTIONS.
Section 923(g)(1)(B) of title 18, United States Code, is
amended by striking all after ``warrant'' and inserting ``as
necessary to ensure compliance with this chapter, to further
a criminal investigation, or to determine the disposition of
1 or more particular firearms.''.
SEC. 306. GUN SHOWS.
(a) Prohibition of Certain Handgun Transfers at Gun
Shows.--Section 922(b) of title 18, United States Code, is
amended--
(1) by striking ``and'' at the end of paragraph (4);
(2) by striking the period at the end of paragraph (5) and
inserting ``; or''; and
(3) by inserting after paragraph (5) the following:
``(6) any handgun to any person who is not a licensed
importer, licensed manufacturer, or licensed dealer, at any
place other than the location specified on the license of the
transferor.''.
(b) Technical Amendment.--Section 923(j) of title 18,
United States Code, is amended in the first sentence by
inserting ``, consistent with section 922(b)(6),'' before
``temporarily''.
SEC. 307. ACQUISITION AND DISPOSITION RECORDS OF DEALERS
SUSPECTED OF SERVING AS SOURCES OF ILLEGAL
FIREARMS.
Section 923(g)(1) of title 18, United States Code, is
amended by adding at the end the following new subparagraph:
``(E) If the Secretary, during a 1-year period, has
identified a licensed dealer as the source of 3 or more
firearms that have been recovered by law enforcement
officials in criminal investigations, or if the Secretary has
reason to believe that a licensed dealer is a source of
firearms used in crimes, the Secretary may require the dealer
to produce any or all records maintained by the dealer of
acquisition and disposition of firearms, and may continue to
impose that requirement until the Secretary determines that
the dealer is not a source of firearms used in crimes.''.
SEC. 308. DEALER RESPONSIBILITY FOR SALES TO FELONS OR
MINORS.
(a) In General.--Chapter 44 of title 18, United States
Code, is amended by inserting after section 922 the following
new section:
``Sec. 922A. Tort liability of licensed dealers
``(a)(1) Any person suffering physical injury arising from
a crime of violence (as defined in section 924(c)(3)) in
which a qualified firearm is used may bring an action in any
United States district court against any qualified licensed
dealer for damages and such other relief as the court deems
appropriate.
``(2) As used in paragraph (1), the term `qualified
firearm' means a firearm that--
``(A) has been transferred by a licensed dealer to a person
who--
``(i) has been convicted in any court of a crime punishable
by imprisonment for a term exceeding 1 year; or
``(ii) has not attained the age of 18 years; and
``(B) is subsequently used by any person in a crime of
violence (as defined in section 924(c)(3)).
``(3) As used in paragraph (1), the term `qualified
licensed dealer' means, with respect to a firearm, a licensed
dealer who transfers the firearm to a person, knowing or
having reasonable cause to believe that the person is
prohibited by Federal or State law from receiving the
firearm.
``(b)(1) The defendant in an action brought under
subsection (a) shall be held liable in tort, without regard
to fault or proof of defect, for all direct and consequential
damages arising from the crime of violence referred to
therein, except as provided in paragraph (2). The court, in
its discretion, may award punitive damages.
``(2) There shall be no liability under subsection (a) if
it is established by a preponderance of the evidence that the
plaintiff suffered the physical injury while committing the
crime of violence referred to therein.''.
(b) Technical Amendment.--The chapter analysis for chapter
44 of title 18, United States Code, is amended by inserting
after the item relating to section 922 the following new
item:
``Sec. 922A. Tort liability of licensed dealers.''.
SEC. 309. INTERSTATE SHIPMENT OF FIREARMS.
Section 922(e) of title 18, United States Code, is
amended--
(1) in the first sentence by striking ``It shall be'' and
inserting the following:
``(2) It shall be'';
(2) in the second sentence by striking ``No common or
contract carrier'' and inserting the following:
``(3) No common or contract carrier'';
(3) by inserting ``(1) Any common or contract carrier that
undertakes to transport or deliver firearms in interstate or
foreign commerce shall, not less frequently than monthly,
obtain from the Secretary a list of licensed dealers. The
Secretary shall provide to any common or contract carrier,
upon request and without charge, a list of licensed dealers
and their license numbers.'' after ``(e)'';
(4) in paragraph (2), as designated by paragraph (1)--
(A) by striking ``, to persons other than licensed
importers, licensed manufacturers, licensed dealers, or
licensed collectors,''; and
(B) by striking ``ammunition'' the first place it appears
and all that follows through ``passenger'' and inserting
``ammunition--
``(A) without providing written notice to the carrier that
the firearm or ammunition is being transported or shipped;
and
``(B) if the intended recipient of the package or container
is a licensed dealer, providing written notice of the
dealer's license number,
except that any passenger''; and
(5) by adding at the end the following new paragraph:
``(4) A common or contract carrier shall be considered to
have cause to believe that a shipment of firearms would
violate this chapter if it is alleged to the carrier that the
intended recipient of the shipment is a licensed dealer and
the carrier fails to verify that the intended recipient is a
licensed dealer.''.
TITLE IV--THEFT OF FIREARMS
SEC. 401. DEALER REPORTING OF FIREARM THEFTS.
Section 923(g) of title 18, United States Code, as amended
by section 201(a), is amended by adding at the end the
following new paragraph:
``(7) Each licensee shall report to the Secretary, and to
the chief law enforcement officer (as defined in section
922(s)(8)) of the locality in which the premises specified on
the license is located, any theft of firearms from the
licensee, not later than the close of business on the first
business day of the licensee after the day on which the
licensee discovers the theft.''.
SEC. 402. THEFT OF FIREARMS OR EXPLOSIVES.
(a) Firearms.--Section 924 of title 18, United States Code,
is amended by adding at the end the following new subsection:
``(j) A person who steals any firearm that is moving as, or
is a part of, or that has moved in, interstate or foreign
commerce shall be fined under this title, imprisoned not less
than 2 nor more than 10 years, or both.''.
(b) Explosives.--Section 844 of title 18, United States
Code, is amended by adding at the end the following new
subsection:
``(k) A person who steals any explosive materials that are
moving as, or are a part of, or that have moved in,
interstate or foreign commerce shall be fined under this
title, imprisoned not less than 2 nor more than 10 years, or
both.''.
SEC. 403. THEFT OF FIREARMS OR EXPLOSIVES FROM LICENSEE.
(a) Firearms.--Section 924 of title 18, United States Code,
as amended by section 402(a), is amended by adding at the end
the following new subsection:
``(k) A person who steals any firearm from a licensed
importer, licensed manufacturer, licensed dealer, or licensed
collector shall be fined under this title, imprisoned not
more than 10 years, or both.''.
(b) Explosives.--Section 844 of title 18, United States
Code, as amended by section 402(b), is amended by adding at
the end the following new subsection:
``(l) A person who steals explosive materials from a
licensed importer, licensed manufacturer, licensed dealer, or
any permittee shall be fined under this title, imprisoned not
more than 10 years, or both.''.
SEC. 404. SECURITY OF LICENSED FIREARMS DEALERS.
(a) Requirement.--Section 923 of title 18, United States
Code, is amended by adding at the end the following new
subsection:
``(l) A licensed dealer shall provide for security against
theft of firearms from the dealer's business premises, in
accordance with regulations prescribed by the Secretary.''.
(b) Denial of Dealer's License.--Section 923(d)(1)(F) of
title 18, United States Code, as added by section 301(3), and
amended by section 302(b)(2), of this Act, is amended--
(1) by striking ``and'' at the end of clause (ii);
(2) by adding at the end the following new clause:
``(iv) the applicant has provided for security against
theft of firearms from the place at which business is to be
conducted pursuant to the license, in accordance with
regulations prescribed under subsection (l); and''.
SEC. 405. PROHIBITION OF TRANSACTIONS INVOLVING STOLEN
FIREARMS THAT HAVE MOVED IN INTERSTATE OR
FOREIGN COMMERCE.
Section 922(j) of title 18, United States Code, is amended
to read as follows:
``(j) It shall be unlawful for any person to receive,
possess, conceal, store, barter, sell, or dispose of any
stolen firearm or stolen ammunition, or pledge or accept as
security for a loan any stolen firearm or stolen ammunition,
that is moving as, that is a part of, that constitutes, or
that has been shipped or transported in, interstate or
foreign commerce (either before or after it was stolen),
knowing or having reasonable cause to believe that the
firearm or ammunition was stolen.''.
TITLE V--ARMED FELONS
SEC. 501. DENIAL OF ADMINISTRATIVE RELIEF FROM CERTAIN
FIREARMS PROHIBITIONS; INADMISSIBILITY OF
ADDITIONAL EVIDENCE IN JUDICIAL REVIEW OF
DENIALS OF SUCH ADMINISTRATIVE RELIEF FOR OTHER
PERSONS.
(a) In General.--Section 925(c) of title 18, United States
Code, is amended--
(1) in the first sentence--
(A) by inserting ``(1)'' before ``A person'';
(B) by inserting ``(other than an individual)'' before
``who is prohibited''; and
(C) by striking ``his'' and inserting ``the Secretary's'';
(2) by striking the second and third sentences;
(3) in the fourth sentence--
(A) by striking ``A licensed importer'' and inserting the
following:
``(2) A licensed importer'';
(B) by inserting ``person (other than an individual) who is
a'' before ``licensed importer''; and
(C) by striking ``his'' and inserting ``the person's''; and
(4) by amending the fifth sentence to read as follows:
``(3) When the Secretary grants relief to a person under
this section, the Secretary shall promptly publish in the
Federal Register a notice of the action, which shall
include--
``(A) the name of the person;
``(B) the disability with respect to which the relief is
granted, and, if the disability was imposed by reason of a
criminal conviction of the person, the crime for which, and
the court in which, the person was convicted; and
``(C) the reasons for the action.''.
(b) Applicability.--The amendments made by subsection (a)
shall apply to--
(1) applications for administrative relief, and actions for
judicial review, that are pending on or after the date of
enactment of this Act; and
(2) applications for administrative relief filed, and
actions for judicial review brought, on or after the date of
enactment of this Act.
SEC. 502. CLARIFICATION OF DEFINITION OF CONVICTION.
Section 921(a)(20) of title 18, United States Code, is
amended--
(1) in the first sentence--
(A) by inserting ``(A)'' after ``(20)''; and
(B) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively;
(2) in the second sentence by striking ``What'' and
inserting the following:
``(B) What''; and
(3) by striking the third sentence and inserting the
following:
``(C) A State conviction that has been expunged or set
aside, or for which a person has been pardoned or has had
civil rights restored, shall not be considered to be a
conviction for purposes of this chapter if--
``(i) the expungement, setting aside, pardon, or
restoration of civil rights applies to a named person and
expressly authorizes the person to ship, transport, receive,
and possess firearms; and
``(ii) the State authority granting the expungement,
setting aside, pardon, or restoration of civil rights has
expressly determined that the circumstances regarding the
conviction, and the person's record and reputation, are such
that--
``(I) the applicant will not be likely to act in a manner
that is dangerous to public safety; and
``(II) the granting of the relief would not be contrary to
the public interest.
``(D) Subparagraph (C) shall not apply to a conviction for
a violent felony (as defined in section 924(e)(2)(B)) or a
serious drug offense (as defined in section 924(e)(2)(A)).''.
SEC. 503. ENHANCED PENALTY FOR USE OF A SEMIAUTOMATIC FIREARM
DURING A CRIME OF VIOLENCE OR A DRUG
TRAFFICKING CRIME.
(a) In General.--Section 924(c)(1) of title 18, United
States Code, is amended by striking ``and if the firearm is a
short-barreled rifle, short-barreled shotgun'' and inserting
``if the firearm is a semiautomatic firearm, a short-barreled
rifle, or a short-barreled shotgun,''.
(b) Semiautomatic Firearm.--Section 921(a) of title 18,
United States Code, as amended by section 101(b), is amended
by adding at the end the following new paragraph:
``(31) The term `semiautomatic firearm' means a repeating
firearm that--
``(A) utilizes a portion of the energy of a firing
cartridge to extract the fired cartridge case and chamber the
next round; and
``(B) requires a separate pull of the trigger to fire each
cartridge.''.
SEC. 504. VIOLATION OF FIREARMS LAWS IN AID OF DRUG
TRAFFICKING.
Section 924 of title 18, United States Code, as amended by
section 403(a), is amended by adding at the end the
following:
``(l)(1) A person who, with the intent to engage in or to
promote conduct described in paragraph (2), violates any
provision of this chapter or attempts to do so shall be
imprisoned not more than 10 years, fined under this title, or
both.
``(2) Conduct is described in this paragraph if it is
conduct that--
``(A) is punishable under the Controlled Substances Act (21
U.S.C. 801 et seq.), the Controlled Substances Import and
Export Act (21 U.S.C. 951 et seq.), or the Maritime Drug Law
Enforcement Act (46 U.S.C. App. 1901 et seq.);
``(B) violates any law of a State relating to any
controlled substance (as defined in section 102 of the
Controlled Substances Act, 21 U.S.C. 802); or
``(C) constitutes a crime of violence (as defined in
subsection (c)(3)).''.
SEC. 505. MANDATORY PENALTIES FOR FIREARMS POSSESSION BY
VIOLENT FELONS AND SERIOUS DRUG OFFENDERS.
(a) 1 Prior Conviction.--Section 924(a)(2) of title 18,
United States Code, is amended by inserting ``, and if the
violation is of section 922(g)(1) by a person who has a
previous conviction for a violent felony or a serious drug
offense (as defined in subsection (e)(2) (A) and (B)), a
sentence imposed under this paragraph shall include a term of
imprisonment of not less than 5 years'' before the period.
(b) 2 Prior Convictions.--Section 924 of title 18, United
States Code, as amended by section 504, is amended by adding
at the end the following new subsection:
``(m)(1) Notwithstanding subsection (a)(2), a person who
violates section 922(g) and has 2 previous convictions by any
court referred to in section 922(g)(1) for a violent felony
(as defined in subsection (e)(2)(B)) or a serious drug
offense (as defined in subsection (e)(2)(A)) committed on
occasions different from one another shall be fined under
this title, imprisoned not less than 10 nor more than 20
years, or both.
``(2) Notwithstanding any other law, the court shall not
suspend the sentence of, or grant a probationary sentence to,
a person described in paragraph (1) with respect to the
conviction under section 922(g).''.
TITLE VI--VIOLENT MISDEMEANANTS
SEC. 601. PROHIBITION OF DISPOSAL OF FIREARMS OR AMMUNITION
TO, OR RECEIPT OF FIREARMS OR AMMUNITION BY,
PERSONS CONVICTED OF A VIOLENT CRIME OR SUBJECT
TO A PROTECTION ORDER.
(a) Prohibition Of Disposal.--Section 922(d) of title 18,
United States Code, 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 a semicolon; and
(3) by inserting after paragraph (7) the following new
paragraphs:
``(8) has been convicted in any court of an offense that--
``(A) is punishable by imprisonment for more than 6 months;
and
``(B)(i) has, as an element, the use, attempted use, or
threatened use of physical force against another person; or
``(ii) by its nature, involves a substantial risk that
physical force against a person described in subparagraph (A)
may be used in the course of committing the offense; or
``(9) is required, pursuant to an order issued by a court
in a case involving the use, attempted use, or threatened use
of physical force against another person, to refrain from
contact with or maintain a minimum distance from that
person.''.
(b) Prohibition of Receipt.--Section 922(g) of title 18,
United States Code, is amended--
(1) by striking ``or'' at the end of paragraph (6); and
(2) by inserting after paragraph (7) the following new
paragraphs:
``(8) who has been convicted in any court of an offense
that--
``(A) is punishable by imprisonment for more than 6 months;
and
``(B)(i) has, as an element, the use, attempted use, or
threatened use of physical force against another person; or
``(ii) by its nature, involves a substantial risk that
physical force against a person described in subparagraph (A)
may be used in the course of committing the offense; or
``(9) who is required, pursuant to an order issued by a
court in a case involving the use, attempted use, or
threatened use of physical force against another person, to
refrain from contact with or maintain a minimum distance from
that person,''.
TITLE VII--AMMUNITION
SEC. 701. FEDERAL LICENSE TO DEAL IN AMMUNITION.
(a) Definitions.--
(1) Dealer.--Section 921(a)(11)(A) of title 18, United
States Code, is amended by inserting ``or ammunition'' after
``firearms''.
(2) Collector.--Section 921(a)(13) of title 18, United
States Code, is amended by inserting ``or ammunition'' after
``firearms''.
(3) Engaged in the business.--Section 921(a)(21) of title
18, United States Code, is amended--
(A) by redesignating subparagraphs (E) and (F) as
subparagraphs (F) and (G), respectively; and
(B) by inserting after subparagraph (D) the following new
subparagraph:
``(E) as applied to a dealer in ammunition, a person who
devotes time, attention, and labor to engaging in such
activity as a regular course of trade or business with the
principal objective of livelihood and profit through the
repetitive purchase and resale of ammunition, but such term
does not include a person who makes occasional sales,
exchanges, or purchases of ammunition for the enhancement of
a personal collection or for a hobby, or who sells all or
part of the person's personal collection of ammunition;''.
(b) Prohibitions.--Section 922 of title 18, United States
Code, is amended--
(1) in subsection (a)--
(A) in paragraph (1) (as amended by section 103(a))--
(i) by amending subparagraph (A) to read as follows:
``(A) except a licensed importer, licensed manufacturer, or
licensed dealer, to engage in the business of importing,
manufacturing, or dealing in firearms or ammunition, or in
the course of such business to ship, transport, or receive
any firearm or ammunition in interstate or foreign commerce;
or'';
(ii) by striking ``or'' at the end of subparagraph (B); and
(iii) by striking subparagraph (C);
(B) in paragraphs (2), (3), and (5) by inserting ``or
ammunition'' after ``firearm'' each place it appears;
(2) in subsection (b)(3)--
(A) by inserting ``or ammunition'' after ``firearm'' each
place it appears; and
(B) by inserting ``, or ammunition for a rifle or
shotgun,'' after ``shotgun'';
(3) in subsection (c)--
(A) by inserting ``or ammunition'' after ``firearm'' the
first, third, fourth, fifth, sixth, and seventh places it
appears;
(B) by inserting ``or any ammunition other than for a
shotgun or rifle,'' after ``rifle,'' the first place it
appears; and
(C) by inserting ``or ammunition for a shotgun or rifle,''
after ``rifle,'' the second place it appears;
(4) in subsection (e) (as amended by section 309) by
inserting ``or ammunition'' after ``firearms'' each place it
appears; and
(5) in subsection (q)(1)--
(A) in subparagraph (A) by inserting ``or ammunition''
after ``firearm''; and
(B) by adding at the end the following new subparagraph:
``(C) Subparagraph (A) shall not apply to the possession of
ammunition--
``(i) on private property not part of school grounds;
``(ii) if the individual possessing the ammunition is
licensed to do so by the State in which the school zone is
located or a political subdivision of the State, and the law
of the State requires that, before an individual obtain such
a license, the law enforcement authorities of the State or
political subdivision verify that the individual is qualified
under law to receive the license;
``(iii) that is in a locked container;
``(iv) by an individual for use in a program approved by a
school in the school zone;
``(v) by an individual in accordance with a contract
entered into between a school in the school zone and the
individual or an employer of the individual;
``(vi) by a law enforcement officer acting in the officer's
official capacity; or
``(vii) that is possessed by an individual while traversing
school premises for the purpose of gaining access to public
or private lands open to hunting, if the entry on school
premises is authorized by school authorities.''.
(c) Licensing.--Section 923 of title 18, United States
Code, is amended--
(1) in the first sentence of subsection (a) by striking ``,
or importing or manufacturing'';
(2) in subsection (g)--
(A) in paragraph (1)--
(i) in subparagraph (A)--
(I) by inserting ``and ammunition'' after ``firearms'' the
first place it appears;
(II) by striking ``firearms'' the second place it appears;
and
(III) by striking ``or any licensed importer or
manufacturer of ammunition,'';
(ii) in each of subparagraphs (B)(iii) and (C)(ii) by
inserting ``or rounds of ammunition'' after ``firearms''; and
(iii) in subparagraph (D)(iv), as added by section 404(b),
by inserting ``or rounds of ammunition'' after ``firearms'';
(B) in paragraph (2)--
(i) by inserting ``or ammunition'' after ``firearm''; and
(ii) by inserting ``or ammunition'' after ``firearms'';
(C) in paragraph (6), as added by section 201(a), by
inserting ``or ammunition'' after ``firearm''; and
(D) in paragraph (7), as added by section 401, by inserting
``or ammunition'' after ``firearms'';
(3) in subsection (j)--
(A) by inserting ``or ammunition'' after ``firearms'' the
second place it appears; and
(B) by inserting ``and ammunition'' after ``firearms'' the
third place it appears; and
(4) in subsection (l), as added by section 404(a), by
inserting ``or ammunition'' after ``firearms''.
(d) Penalties.--Section 924 of title 18, United States
Code, is amended--
(1) in subsection (g) by inserting ``or ammunition'' after
``firearm'';
(2) in subsection (h) by inserting ``or ammunition'' after
``firearm'' each place it appears;
(3) in subsection (j), as added by section 402(a), by
inserting ``or ammunition'' after ``firearm''; and
(4) in subsection (k), as added by section 403(a), by
inserting ``or ammunition'' after ``firearm''.
(e) Interstate Transportation.--Section 926A of title 18,
United States Code, is amended--
(1) in the section heading by inserting ``and ammunition''
after ``firearms''; and
(2) in the text by inserting ``or ammunition'' after
``firearm'' in the first, second, third, and fourth places it
appears.
(f) Possession in Federal Facilities.--Section 930 of title
18, United States Code, is amended--
(1) in the section heading by inserting ``, ammunition,''
after ``firearms'';
(2) by inserting ``, ammunition,'' after ``firearm'' each
place it appears; and
(3) in subsection (c)(3) by inserting ``, ammunition,''
after ``firearms''.
(g) Technical Amendments.--The chapter analysis for chapter
44 of title 18, United States Code, is amended--
(1) in the item relating to section 926A by inserting ``and
ammunition'' after ``firearms''; and
(2) in the item relating to section 930 by inserting ``,
ammunition,'' after ``firearms''.
SEC. 702. REGULATION OF THE MANUFACTURE, IMPORTATION, AND
SALE OF CERTAIN PARTICULARLY DANGEROUS BULLETS.
Section 921(a)(17) of title 18, United States Code, is
amended by striking subparagraph (B) and inserting the
following:
``(B) The term `armor piercing am-munition'--
``(i) means--
``(I) a projectile or projectile core that may be used in a
handgun and that is constructed entirely (excluding the
presence of traces of other substances) from 1 or a
combination of tungsten alloys, steel, iron, brass, bronze,
beryllium copper, or depleted uranium;
``(II) a jacketed, hollow point projectile that may be used
in a handgun and the jacket of which is designed to produce,
upon impact, evenly spaced sharp or barb-like projections
that extend beyond the diameter of the unfired projectile; or
``(III) a jacketed projectile that may be used in a handgun
and the jacket of which has a weight of more than 25 percent
of the total weight of the projectile; but
``(ii) does not include--
``(I) shotgun shot required by Federal or State
environmental or game regulations for hunting purposes;
``(II) a frangible projectile designed for target shooting;
``(III) a projectile that the Secretary finds is primarily
intended to be used for sporting purposes; or
``(IV) any other projectile or projectile core that the
Secretary finds is intended to be used for industrial
purposes, including a charge used in an oil or gas well
perforating device.''.
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By Mr. LEAHY:
S. 2054. A bill to amend the Rural Electrification Act of 1936 to
remove the 7-percent interest rate limitation on certain Rural
Electrification Administration loans, and for other purposes; to the
Committee on Agriculture, Nutrition, and Forestry.
rural electrification administration loan amendments act of 1994
Mr. LEAHY. Mr. President, today I am introducing legislation to
repeal the 7-percent interest rate cap on certain Rural Electrification
Administration loans. This legislation will repeal a provision that was
included in the Rural Electrification Loan Restructuring Act of 1993,
(H.R. 3123/P.L. 103-129).
When President Clinton signed H.R. 3123, he indicated concern over
the 7-percent cap on certain REA loans and expressed that he would work
with Congress to remove this provision. The legislation that I am
introducing today is a good-faith effort on the part of the
administration to resolve this issue with Congress.
In President Clinton's ``Statement on Signing the Rural
Electrification Loan Restructuring Act of 1993'' he explained:
The act places a 7-percent interest rate cap on certain REA
loans, including those refinanced through the Department of
the Treasury's Federal Financing Bank. Experience with
Federal credit programs indicates that such statutorily fixed
interest rate ceilings produce unpredictable and unintended
results, including (1) inequities among borrowers using the
program at different times; (2) extraordinary demands for
loans when market interest rates are high; and (3) increased
budget deficits. The ``openended'' character of subsidies
resulting from the interest rate cap is inconsistent with the
administration's objective of managing Federal subsidies more
effectively.
I would like to inform my colleagues of my intent to seek quick
action on this legislation. I will move next week to discharge this
bill from the Committee on Agriculture, Nutrition, and Forestry and to
seek final passage .
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By Mr. WOFFORD:
S. 2055. A bill to amend the Guaranteed Rural Housing Loan Program
provisions of the Housing Act of 1949; to the Committee on Banking,
Housing, and Urban Affairs.
guaranteed rural housing fairness act
Mr. WOFFORD. Mr. President, today I am introducing the
Guaranteed Rural Housing Fairness Act to ensure our rural communities
have ample opportunity to obligate their Farmers Home Administration
[FmHA] 502 Program allocation. I very much support the program.
However, I am very concerned that the planned pooling on May 2, 1994,
is unfair to communities like those in Pennsylvania that experienced a
particularly difficult winter. Pennsylvania will lose millions of
dollars if the pooling occurs. This is unacceptable.
Pennsylvania has experienced one of the most severe winters in
decades, 66 of the 67 counties have applied for Federal disaster
assistance. The winter was so severe that construction was not possible
or practical. Therefore, Pennsylvania has gotten a slow start in using
its 502 funds. Without construction, there is no inventory to sell and
without sales there are no loans to process. Without loans to process,
there are no requests from lenders to FmHA for 502 loan guarantees.
The Guaranteed Rural Housing Loan Program is absolutely vital in
assisting needy rural residents to obtain quality, permanent and
affordable housing. At a time when our rural communities are recovering
from the severe winter and spring building is picking up, why are we
pooling these essential funds on May 2, 1994? This same thing happened
last year and Pennsylvania lost $7 million, causing a catastrophic
situation because homes were under construction and loans in process
and suddenly the program was out of money. I am concerned this may
happen again this year.
States that have a demonstrated need and through no fault of their
own are delayed, should be given every opportunity to use their 502
Program allocation. For this reason, I have introduced the Guaranteed
Rural Housing Fairness Act to ensure that States like Pennsylvania who
have seen the real benefit of this program are given every opportunity
to assist their rural communities.
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