[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.''.
                                 ______

      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 .
                                 ______

      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.

                          ____________________