[Congressional Record Volume 141, Number 167 (Thursday, October 26, 1995)]
[House]
[Pages H10995-H11365]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page H10995]]


         SEVEN-YEAR BALANCED BUDGET RECONCILIATION ACT OF 1995

                              (Continued)

                               H.R. 2517

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Seven-Year Balanced Budget 
     Reconciliation Act of 1995''.

     SEC. 2. TABLE OF TITLES.

       This Act is organized into titles as follows:

Title I--Committee on Agriculture
Title II--Committee on Banking and Financial Services
Title III--Committee on Commerce
Title IV--Committee on Economic and Educational Opportunities
Title V--Committee on Government Reform and Oversight
Title VI--Committee on International Relations
Title VII--Committee on the Judiciary
Title VIII--Committee on National Security
Title IX--Committee on Resources
Title X--Committee on Transportation and Infrastructure
Title XI--Committee on Veterans' Affairs
Title XII--Committee on Ways and Means-Trade
Title XIII--Committee on Ways and Means-Revenues
Title XIV--Committee on Ways and Means-Tax Simplification
Title XV--Preserving, Protecting, and Strengthening Medicare
Title XVI--Transformation of the Medicaid Program
Title XVII--Abolishment of Department of Commerce
Title XVIII--Welfare Reform
Title XIX--Contract with America-Tax Relief
Title XX--Budget Enforcement
                   TITLE I--COMMITTEE ON AGRICULTURE

     SEC. 1001. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This title may be cited as the 
     ``Agricultural Reconciliation Act of 1995''.
       (b) Table of Contents.--The table of contents of this title 
     is as follows:

                   TITLE I--COMMITTEE ON AGRICULTURE

Sec. 1001. Short title and table of contents.

                      Subtitle A--Freedom to Farm

Sec. 1101. Short title.
Sec. 1102. Seven-year contracts to improve farming certainty and 
              flexibility.
Sec. 1103. Availability of nonrecourse marketing assistance loans for 
              wheat, feed grains, cotton, rice, and oilseeds.
Sec. 1104. Reform of payment limitation provisions of Food Security Act 
              of 1985.
Sec. 1105. Suspension of certain provisions regarding program crops.

                           Subtitle B--Dairy

Chapter 1--Authorization of Market Transition Payments in Lieu of Milk 
                         Price Support Program

Sec. 1201. Seven-year market transition contracts for milk producers.
Sec. 1202. Recourse loans for commercial processors of dairy products.

                    Chapter 2--Dairy Export Programs

Sec. 1211. Dairy export incentive program.
Sec. 1212. Authority to assist in establishment and maintenance of 
              export trading company.
Sec. 1213. Standby authority to indicate entity best suited to provide 
              international market development and export services.
Sec. 1214. Study and report regarding potential impact of Uruguay Round 
              on prices, income and Government purchases.

                  Chapter 3--Dairy Promotion Programs

Sec. 1221. Research and promotion activities under Fluid Milk Promotion 
              Act of 1990.
Sec. 1222. Expansion of dairy promotion program to cover dairy products 
              imported into the United States.
Sec. 1223. Promotion of United States dairy products in international 
              markets through dairy promotion program.
Sec. 1224. Issuance of amended order under Dairy Production 
              Stabilization Act of 1983.

                Chapter 4--Verification of Milk Receipts

Sec. 1231. Program to verify receipts of milk.
Sec. 1232. Verification program to supersede multiple existing Federal 
              orders.

          Chapter 5--Miscellaneous Provisions Related to Dairy

Sec. 1241. Extension of transfer authority regarding military and 
              veterans hospitals.
Sec. 1242. Extension of dairy indemnity program.
Sec. 1243. Extension of report regarding export sales of dairy 
              products.
Sec. 1244. Status of producer-handlers.

                     Subtitle C--Other Commodities

Sec. 1301. Extension and modification of price support and quota 
              programs for peanuts.
Sec. 1302. Availability of loans for processors of sugarcane and sugar 
              beets.
Sec. 1303. Repeal of obsolete authority for price support for 
              cottonseed and cottonseed products.

               Subtitle D--Miscellaneous Program Changes

Sec. 1401. Limitations on assistance under emergency livestock feed 
              assistance program.
Sec. 1402. Conservation reserve program.
Sec. 1403. Crop insurance program.
Sec. 1404. Repeal of farmer owned reserve program.
Sec. 1405. Reduction in funding levels for export enhancement program.
Sec. 1406. Business Interruption Insurance Program.

     Subtitle E--Commission on 21st Century Production Agriculture

Sec. 1501. Establishment.
Sec. 1502. Composition.
Sec. 1503. Comprehensive review of past and future of production 
              agriculture.
Sec. 1504. Reports.
Sec. 1505. Powers.
Sec. 1506. Commission procedures.
Sec. 1507. Personnel matters.
Sec. 1508. Termination of Commission.
                      Subtitle A--Freedom to Farm

     SEC. 1101. SHORT TITLE.

       This subtitle may be cited as the ``Freedom to Farm Act of 
     1995''.

     SEC. 1102. SEVEN-YEAR CONTRACTS TO IMPROVE FARMING CERTAINTY 
                   AND FLEXIBILITY.

       (a) Contracts Authorized.--Section 102 of the Agricultural 
     Act of 1949 (7 U.S.C. 1443), which is obsolete, is amended to 
     read as follows:

[[Page H10996]]


     ``SEC. 102. SEVEN-YEAR MARKET TRANSITION CONTRACTS.

       ``(a) Contracts Authorized.--
       ``(1) Offer and main terms.--Beginning as soon as possible 
     after the date of the enactment of this section, the 
     Secretary shall offer to enter into a contract (to be known 
     as a `market transition contract') with eligible owners and 
     operators described in paragraph (2) on a farm containing 
     eligible farmland. Under the terms of a market transition 
     contract, the owner or operator shall agree, in exchange for 
     annual payments under the contract, to comply with the 
     conservation compliance plan for the farm prepared in 
     accordance with section 1212 of the Food Security Act of 1985 
     (16 U.S.C. 3812) and wetland protection requirements 
     applicable to the farm under subtitle C of title XII of such 
     Act (16 U.S.C. 3821 et seq.).
       ``(2) Eligible owners and operators described.--The 
     following persons shall be considered to be an owner or 
     operator eligible to enter into a market transition contract:
       ``(A) An owner of eligible farmland who assumes all of the 
     risk of producing a crop.
       ``(B) An owner of eligible farmland who shares in the risk 
     of producing a crop.
       ``(C) An operator of eligible farmland with a share-rent 
     lease of the eligible farmland, regardless of the length of 
     the lease, if the owner enters into the same market 
     transition contract.
       ``(D) An operator of eligible farmland who cash rents the 
     eligible farmland under a lease expiring on or after 
     September 30, 2002, in which case the consent of the owner is 
     not required.
       ``(E) An operator of eligible farmland who cash rents the 
     eligible farmland under a lease expiring before September 30, 
     2002, if the owner consents to the contract.
       ``(F) An owner of eligible farmland who cash rents the 
     eligible farmland and the lease term expires before September 
     30, 2002, but only if the actual operator of the farm 
     declines to enter into a market transition contract. In the 
     case of an owner covered by this subparagraph, payments will 
     not begin under a market transition contract until the fiscal 
     year following the fiscal year in which the lease held by the 
     nonparticipating operator expires.
       ``(3) Tenants and sharecroppers.--The Secretary shall 
     provide adequate safeguards to protect the interests of 
     operators who are tenants and sharecroppers.
       ``(b) Elements of Contracting.--
       ``(1) Time for contracting.--
       ``(A) Deadline.--Except as provided in subparagraph (B), 
     the Secretary may not enter into a market transition contract 
     after April 15, 1996.
       ``(B) Special rule for conservation reserve lands.--
     Eligible owners and operators on farms covered by a 
     conservation reserve contract under section 1231 of the Food 
     Security Act of 1985 (16 U.S.C. 3831) that expires after 
     April 15, 1996, may enter into or expand a market transition 
     contract to cover the acreage equal to the quantity of the 
     farm's crop acreage bases restored with respect to the farm 
     under the terms and conditions of the conservation reserve 
     program. The Secretary shall annually conduct an enrollment 
     for such conservation reserve program acreage for the fiscal 
     years 1997 through 2002.
       ``(2) Duration of contract.--The term of each market 
     transition contract shall--
       ``(A) begin with the 1996 crop year, or the crop year in 
     which the contract is entered into in the case of a contract 
     entered into after April 15, 1996; and
       ``(B) extend through the 2002 crop year.
       ``(3) Estimation of payments.--At the time the Secretary 
     enters into a market transition contract, the Secretary shall 
     provide an estimate of the minimum payments anticipated to be 
     made under the contract during at least the first fiscal year 
     for which payments will be made. If the actual payment under 
     the contract for the first fiscal year is less than 95 
     percent of the estimated payment, the owner or operator 
     subject to the contract may terminate the contract without 
     penalty.
       ``(4) Report on contracting.--Not later than 90 days after 
     the date of the enactment of this section, the Secretary 
     shall submit to the Committee on Agriculture of the House of 
     Representatives and the Committee on Agriculture, Nutrition, 
     and Forestry of the Senate a report describing the manner in 
     which the Secretary proposes to enter into market transition 
     contracts, the number of persons and acreage covered by such 
     contracts, and the total amount of anticipated payments to be 
     made under such contracts (consistent with the limitations 
     specified in subsection (e)).
       ``(c) Eligible Farmland Described.--Land shall be 
     considered to be farmland eligible for coverage under a 
     market transition contract only if the land has crop acreage 
     base attributable to the land and--
       ``(1) for at least one of the 1991 through 1995 crop years, 
     at least a portion of the land was enrolled in the acreage 
     reduction program authorized for a crop of rice, upland 
     cotton, feed grains, or wheat under section 101B, 103B, 105B, 
     or 107B or was considered planted to rice, upland cotton, 
     feed grains, or wheat, as certified under section 503(c)(7);
       ``(2) was subject to a conservation reserve contract under 
     section 1231 of the Food Security Act of 1985 (16 U.S.C. 
     3831) whose term expired on or after January 1, 1995; or
       ``(3) is released from coverage under a conservation 
     reserve contract by the Secretary during the period beginning 
     on January 1, 1995, and ending on April 15, 1996.
       ``(d) Time for Payment.--
       ``(1) In general.--An annual payment under a market 
     transition contract shall be made not later than September 30 
     of each of the fiscal years 1996 through 2002.
       ``(2) Advance payments.--Beginning in fiscal year 1997, 
     half of the annual payment may be made on March 15 at the 
     option of the owner or operator subject to the contract. At 
     the option of the owner or operator, half of the annual 
     payment for fiscal year 1996 may be made within 90 days of 
     the date on which the owner or operator enters into the 
     market transition contract.
       ``(e) Total Amounts Available for Payments Under All 
     Contracts.--
       ``(1) Total payments.--Total payments under all market 
     transition contracts for fiscal years 1996 through 2002 shall 
     not exceed $38,733,000,000.
       ``(2) Total payments per fiscal year.--Beginning in fiscal 
     year 1996, the Secretary shall expend on a fiscal year basis 
     the following amounts to satisfy the obligations of the 
     Secretary under market transition contracts:
       ``(A) For fiscal year 1996,
     $6,014,000,000.
       ``(B) For fiscal year 1997,
     $5,829,000,000.
       ``(C) For fiscal year 1998,
     $6,244,000,000.
       ``(D) For fiscal year 1999,
     $6,047,000,000.
       ``(E) For fiscal year 2000,
     $5,573,000,000.
       ``(F) For fiscal year 2001,
     $4,574,000,000.
       ``(G) For fiscal year 2002,
     $4,453,000,000.
       ``(3) Adjustment of payment amounts.--The Secretary shall 
     adjust the amount specified in paragraph (1), and the amount 
     specified in paragraph (2) for a particular fiscal year, as 
     follows:
       ``(A) Subtracting an amount equal to the amount, if any, 
     necessary during that fiscal year to satisfy payment 
     requirements under sections 101B, 103B, 105B, and 107B for 
     the 1994 and 1995 crop years.
       ``(B) Adding an amount equal to the sum of all producer 
     repayments of deficiency payments received during that fiscal 
     year under section 114(a)(2).
       ``(C) Adding an amount equal to the sum of all market 
     transition contract payments withheld by the Secretary, at 
     the request of producers, during the preceding fiscal year as 
     an offset against producer repayments of deficiency payments 
     otherwise required under section 114(a)(2).
       ``(D) Adding an amount equal to the sum of all refunds of 
     market transition contract payments received during the 
     preceding fiscal year under subsection (i).
       ``(f) Contract Payments to be Based on Historic Expenditure 
     Levels.--
       ``(1) Contract commodity defined.--For purposes of this 
     section, the term `contract commodity' means rice, upland 
     cotton, feed grains, or wheat.
       ``(2) Calculation of historic expenditure levels.--
       ``(A) In general.--For each contract commodity, the 
     Secretary shall calculate the total expenditures that were 
     required for the 1991 through 1995 crops of that contract 
     commodity under section 101B, 103B, 105B, or 107B, including 
     expenditures in the form of deficiency payments, loan 
     deficiency payments, gains realized from repaying loans at a 
     level less than the original level, and marketing 
     certificates.
       ``(B) Special rule for 1995 crop year.--In the absence of 
     information regarding actual expenditures for the 1995 crop 
     of each contract commodity, the Secretary may use an estimate 
     of expenditures under section 101B, 103B, 105B, or 107B for 
     that crop year. The Secretary shall base such estimate on 
     information contained in the President's budget for fiscal 
     year 1997 submitted to the Congress under section 1105 of 
     title 31, United States Code.
       ``(3) Amounts available for each contract commodity.--The 
     amount available for a fiscal year for payments with respect 
     to crop acreage base of a contract commodity included in 
     market transition contracts in effect during that fiscal year 
     shall be equal to the product of--
       ``(A) the ratio of the amount calculated under paragraph 
     (2) for that contract commodity to the total amount 
     calculated for all contract commodities under such paragraph; 
     and
       ``(B) the amount specified in paragraph (2) of subsection 
     (e) for that fiscal year, as adjusted under paragraph (3) of 
     such subsection.
       ``(g) Determination of Payments Under Particular 
     Contract.--
       ``(1) Individual production of contract commodities.--For 
     each market transition contract, the amount of production of 
     a contract commodity covered by the contract shall be equal 
     to the product of--
       ``(A) the crop acreage base of that contract commodity 
     attributable to the eligible farmland subject to the 
     contract; and
       ``(B) the farm program payment yield in effect for the 1995 
     crop of that contract commodity for the farm containing that 
     eligible farmland.
       ``(2) Annual total production of contract commodities.--For 
     each of the fiscal years 1996 through 2002, the total 
     production of each contract commodity covered by all market 
     transition contracts shall be equal to the sum of the amounts 
     calculated under paragraph (1) for each individual market 
     transition contract in effect during that fiscal year.

[[Page H10997]]

       ``(3) Annual payment rate.--The payment rate for a contract 
     commodity for a fiscal year shall be equal to--
       ``(A) the amount made available under subsection (f)(3) for 
     that contract commodity for that fiscal year; divided by
       ``(B) the amount determined under paragraph (2) for that 
     fiscal year.
       ``(4) Annual payment amount.--For each of the fiscal years 
     1996 through 2002, the amount to be paid under a particular 
     market transition contract in effect during that fiscal year 
     with respect to a contract commodity shall be equal to the 
     product of--
       ``(A) the amount of production determined under paragraph 
     (1) for that contract for that contract commodity; and
       ``(B) the payment rate in effect under paragraph (3) for 
     that fiscal year for that contract commodity.
       ``(5) Assignment of payments.--The provisions of section 
     8(g) of the Soil Conservation and Domestic Allotment Act (16 
     U.S.C. 590h(g)) (relating to assignment of payments) shall 
     apply to payments under this subsection. The owner or 
     operator making the assignment, or the assignee, shall 
     provide the Secretary with notice, in such manner as the 
     Secretary may require in the market transition contract, of 
     any assignment made under this paragraph.
       ``(6) Sharing of payments.--The Secretary shall provide for 
     the sharing of payments made under a market transition 
     contract among the owners and operators subject to the 
     contract on a fair and equitable basis.
       ``(h) Limitation on Total Amount of Payment.--The total 
     amount of payments made to a person under a market transition 
     contract during any fiscal year may not exceed $50,000. The 
     Secretary shall issue regulations defining the term `person' 
     as used in this section, which shall conform, to the extent 
     practicable, to the regulations defining the term `person' 
     issued under section 1001 of the Food Security Act of 1985 (7 
     U.S.C. 1308). In the case of payments under a market 
     transition contract provided to corporations and other 
     persons described in paragraph (5)(B)(i)(II) of such section, 
     the Secretary shall comply with the attribution requirements 
     specified in paragraph (5)(C) of such section.
       ``(i) Effect of Violation.--
       ``(1) Termination of contract.--If an owner or operator 
     subject to a market transition contract violates the 
     conservation compliance plan for the farm containing eligible 
     farmland under the contract or wetland protection 
     requirements applicable to the farm, the Secretary may 
     terminate the market transition contract with respect to that 
     owner or operator. Upon such termination, the owner or 
     operator shall forfeit all rights to receive future payments 
     under the contract and shall refund to the Secretary all 
     payments under the contract received by the owner or operator 
     during the period of the violation, together with interest 
     thereon as determined by the Secretary.
       ``(2) Refund or adjustment.--If the Secretary determines 
     that a violation of a market transition contract does not 
     warrant termination of the contract under paragraph (1), the 
     Secretary may require the owner or operator subject to the 
     contract--
       ``(A) to refund to the Secretary that part of the payments 
     received by the owner or operator during the period of the 
     violation, together with interest thereon as determined by 
     the Secretary; or
       ``(B) to accept an adjustment in the amount of future 
     payments otherwise required under the contract.
       ``(3) Foreclosure.--An owner or operator subject to a 
     market transition contract may not be required to make 
     repayments to the Secretary of amounts received under the 
     contract if the eligible farm land that is subject to the 
     contract has been foreclosed upon and the Secretary 
     determines that forgiving such repayments is appropriate in 
     order to provide fair and equitable treatment. This paragraph 
     shall not void the responsibilities of such an owner or 
     operator under the contract if the owner or operator 
     continues or resumes operation, or control, of the property 
     that is subject to the contract. Upon the resumption of 
     operation or control over the property by the owner or 
     operator, the provisions of the contract in effect on the 
     date of the foreclosure shall apply.
       ``(4) Review.--A determination of the Secretary under this 
     subsection shall be considered to be an adverse decision for 
     purposes of the availability of administrative review of the 
     determination.
       ``(j) Transfer of Interest in Lands Subject to Contract.--
       ``(1) Effect of transfer.--Except as provided in paragraph 
     (2), the transfer by an owner or operator subject to a market 
     transition contract of the right and interest of the owner or 
     operator in the eligible farmland under the contract shall 
     result in the termination of the contract with respect to 
     that farmland, effective on the date of the transfer, unless 
     the transferee of the land agrees with the Secretary to 
     assume all obligations of the contract. At the request of the 
     transferee, the Secretary may modify the contract if the 
     modifications are consistent with the objectives of this 
     section as determined by the Secretary.
       ``(2) Exception.--If an owner or operator who is entitled 
     to a payment under a market transition contract dies, becomes 
     incompetent, or is otherwise unable to receive such payment, 
     the Secretary shall make such payment, in accordance with 
     regulations prescribed by the Secretary and without regard to 
     any other provision of law, in such manner as the Secretary 
     determines is fair and reasonable in light of all of the 
     circumstances.
       ``(k) Planting Flexibility.--
       ``(1) Permitted crops.--In the case of acreage on a farm 
     that serves as the basis for payments under a market 
     transition contract, an owner or operator on the farm may 
     plant for harvest on the acreage--
       ``(A) rice, upland cotton, feed grains, and wheat;
       ``(B) any oilseed;
       ``(C) any industrial or experimental crop designated by the 
     Secretary;
       ``(D) mung beans, lentils, and dry peas; and
       ``(E) any other crop, except any fruit or vegetable crop 
     (including potatoes and dry edible beans) not covered by 
     subparagraph (D), unless such fruit or vegetable crop is 
     designated by the Secretary as--
       ``(i) an industrial or experimental crop; or
       ``(ii) a crop for which no substantial domestic production 
     or market exists.
       ``(2) Limitation.--At the discretion of the Secretary, the 
     Secretary may prohibit the planting of any crop specified in 
     paragraph (1) on acreage on a farm that serves as the basis 
     for payments under a market transition contract.
       ``(3) Notification.--With regard to commodities that may be 
     planted pursuant to this subsection, the Secretary shall make 
     a determination in each crop year of the commodities that may 
     not be planted pursuant to this subsection and shall make 
     available a list of the commodities.
       ``(4) Conservation uses.--In lieu of planting any crop 
     specified in paragraph (1), the owner or operator on a farm 
     may devote to conservation uses all or part of the eligible 
     farmland subject to a market transition contract, in 
     accordance with regulations issued by the Secretary.
       ``(5) Haying and grazing.--Haying and grazing of eligible 
     farmland subject to a market transition contract shall be 
     permitted, except during any consecutive five-month period 
     that is established by the State committee established under 
     section 8(b) of the Soil Conservation and Domestic Allotment 
     Act (16 U.S.C. 590h(b)) for a State. The 5-month period shall 
     be established during the period beginning April 1, and 
     ending October 31, of a year. In the case of a natural 
     disaster, the Secretary may permit unlimited haying and 
     grazing on the eligible farmland. The Secretary may not 
     exclude irrigated or irrigable acreage not planted in alfalfa 
     when exercising the authority under the preceding sentence.
       ``(l) Market Transition Contracts.--Notwithstanding any 
     other provision of law, no order issued for any fiscal year 
     under section 252 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 (2 U.S.C. 902) shall affect any 
     payment under any market transition contract.
       ``(m) Commodity Credit Corporation.--The Secretary shall 
     carry out this section through the Commodity Credit 
     Corporation, except that no funds of the Corporation shall be 
     used for any salary or expense of any officer or employee of 
     the Department of Agriculture in connection with the 
     administration of market transition payments or loans under 
     this Act.
       ``(n) Regulations.--The Secretary may issue such 
     regulations as the Secretary determines necessary to carry 
     out this section.''.
       (b) Conforming Amendments.--
       (1) Wheat 0/85 program.--Section 107B(c)(1)(E) of the 
     Agricultural Act of 1949 (7 U.S.C. 1445b-3a(c)(1)(E)) is 
     amended by striking ``through 1997'' in clauses (i) and (vii) 
     each place it appears and inserting ``and 1995''.
       (2) Feed grains 0/85 program.--Section 105B(c)(1)(E) of 
     such Act (7 U.S.C. 1444f(c)(1)(E)) is amended by striking 
     ``through 1997'' in clauses (i) and (vii) each place it 
     appears and inserting ``and 1995''.
       (3) Cotton program.--Section 103B of such Act (7 U.S.C. 
     1444-2) is amended--
       (A) in the section heading, by striking ``1997'' and 
     inserting ``1995'';
       (B) in subsections (a)(1), (b)(1), (c)(1)(A), 
     (c)(1)(B)(ii), and (o), by striking ``1997'' each place it 
     appears and inserting ``1995'';
       (C) in subsections (c)(1)(D)(i) and (c)(1)(D)(v)(II) by 
     striking ``through 1997'' each place it appears and inserting 
     ``and 1995'';
       (D) in the heading of subsection (c)(1)(D)(v)(II), by 
     striking ``through 1997 crops'' and inserting ``and 1995 
     crops'';
       (E) in subsection (e)(1)(D), by striking ``29\1/2\ percent 
     for each of the 1995 and 1996 crops, and 29 percent for the 
     1997 crop'' and inserting ``and 29\1/2\ percent for the 1995 
     crop''; and
       (F) in subparagraphs (B)(i), (D)(i), (E)(i), and (F)(i) of 
     subsection (a)(5), by striking ``1998'' each place it appears 
     and inserting ``1996''.
       (4) Rice 50/85 program.--Section 101B of such Act (7 U.S.C. 
     1441-2) is amended--
       (A) in subsections (c)(1)(D)(i) and (c)(1)(D)(v)(II), by 
     striking ``through 1997'' each place it appears and inserting 
     ``and 1995''; and
       (B) in the heading of subsection (c)(1)(D)(v)(II), by 
     striking ``through 1997 crops'' and inserting ``and 1995 
     crops''.
       (5) Oilseeds.--Section 205(c) of such Act (7 U.S.C. 
     1446f(c)) is amended by striking ``through 1997'' both places 
     it appears and inserting ``and 1995''.
       (6) Crop acreage base.--Section 509 of such Act (7 U.S.C. 
     1469) is amended by striking ``effective only for the 1991 
     through 1997 

[[Page H10998]]

     program crops'' and inserting ``effective only until January 
     1, 1996''.

     SEC. 1103. AVAILABILITY OF NONRECOURSE MARKETING ASSISTANCE 
                   LOANS FOR WHEAT, FEED GRAINS, COTTON, RICE, AND 
                   OILSEEDS.

       (a) Nonrecourse Loans Available.--The Agricultural Act of 
     1949 is amended by inserting after section 102, as amended by 
     section 1102, the following new section:

     ``SEC. 102A. NONRECOURSE MARKETING ASSISTANCE LOANS FOR 
                   CERTAIN CROPS.

       ``(a) Nonrecourse Loans Available.--For each of the 1996 
     through 2002 crops of wheat, feed grains, upland cotton, 
     extra long staple cotton, rice, and oilseeds, the Secretary 
     shall make available to eligible producers on a farm 
     nonrecourse marketing assistance loans under terms and 
     conditions that are prescribed by the Secretary and at a loan 
     rate calculated under subsection (c). A marketing assistance 
     loan shall have a term of nine months beginning on the first 
     day of the first month after the month in which the loan is 
     made. The Secretary may not extend the term of a marketing 
     assistance loan.
       ``(b) Announcement of Loan Rate.--The Secretary shall 
     announce the loan rate for each commodity specified in 
     subsection (a) not later than the start of the marketing year 
     of the commodity for which the loan rate is to be in effect.
       ``(c) Calculation of Loan Rate.--
       ``(1) Calculation.--Subject to adjustment under paragraph 
     (2), the loan rate for marketing assistance loans under 
     subsection (a) for a particular commodity specified in such 
     subsection shall be equal to 70 percent of the simple average 
     price received by producers of that commodity during the 
     marketing years for the immediately preceding five crops of 
     that commodity.
       ``(2) Required budgetary adjustments.--If the Secretary 
     estimates for one of the marketing years for the 1996 through 
     2002 crops of a particular commodity specified in subsection 
     (a) that the average price to be received by producers of 
     that commodity is likely to be less that the loan rate 
     calculated under paragraph (1) for that marketing year, the 
     Secretary shall reduce the loan rate for that commodity for 
     that marketing year by an amount sufficient to enable the 
     Secretary to provide marketing assistance loans at no net 
     cost to the Federal Government by preventing the accumulation 
     of that commodity by the Commodity Credit Corporation through 
     loan forfeitures and by limiting producer gains under the 
     marketing loan provision under subsection (d).
       ``(3) Simple average price.--The Secretary shall be 
     responsible for determining the simple average price received 
     by producers of a commodity specified in subsection (a). In 
     determining the simple average price a commodity for a five-
     year period, the Secretary shall exclude the year in which 
     the average price was the highest and the year in which the 
     average price was the lowest during the period.
       ``(d) Marketing Loan Provision.--If during the marketing 
     year, the Secretary determines that the market price of a 
     commodity subject to a marketing assistance loan under this 
     section falls below the lower of (1) the loan rate, or (2) 
     the loan rate as adjusted by subsection (c)(2), the Secretary 
     shall allow such loan to be repaid at such market price. This 
     subsection shall not apply in the case of marketing 
     assistance loans for extra long staple cotton, rye, or 
     oilseeds.
       ``(e) Adjustments for Grade, Type, Quality, Location, and 
     Other Factors.--The Secretary may make such adjustments in 
     the announced loan rate for a commodity specified in 
     subsection (a) as the Secretary considers appropriate to 
     reflect differences in grade, type, quality, location, and 
     other factors.
       ``(f) Producers Eligible for Loans.--Only the following 
     producers shall be eligible for a marketing assistance loan 
     under this section:
       ``(1) In the case of a marketing assistance loan for a crop 
     of wheat, feed grains (other than rye), upland cotton, or 
     rice, a producer whose land on which the crop is raised is 
     subject to a market transition contract under section 102.
       ``(2) In the case of a marketing assistance loan for a crop 
     of extra long staple cotton, rye, or oilseeds, any producer.
       ``(g) Prohibition on Storage Payments.--The Secretary may 
     not make payments to producers to cover storage charges 
     incurred in connection with marketing assistance loans made 
     under this section.
       ``(h) Definitions.--For purposes of this section:
       ``(1) The term `feed grains' means corn, grain sorghums, 
     barley, oats, and rye.
       ``(2) The term `oilseeds' means soybeans, sunflower seed, 
     rapeseed, canola, safflower, flaxseed, mustard seed, and, if 
     designated by the Secretary, other oilseeds.
       ``(i) Regulations.--The Secretary may issue such 
     regulations as the Secretary determines necessary to carry 
     out this section.''.
       (b) Repeal of Current Adjustment Authority.--Section 403 of 
     the Agricultural Act of 1949 (7 U.S.C. 1423) is repealed.

     SEC. 1104. REFORM OF PAYMENT LIMITATION PROVISIONS OF FOOD 
                   SECURITY ACT OF 1985.

       (a) Attribution of Payments Made to Corporations and Other 
     Entities.--Paragraph (5)(C) of section 1001 of the Food 
     Security Act of 1985 (7 U.S.C. 1308) is amended to read as 
     follows:
       ``(C)(i) In the case of payments to corporations and other 
     entities described in subparagraph (B)(i)(II), the Secretary 
     shall attribute payments to individuals in proportion to 
     their ownership interests in the corporation or entity 
     receiving the payment or in any other corporation or entity 
     that has a substantial beneficial interest in the corporation 
     or entity actually receiving the payment. This subparagraph 
     shall apply to individuals who hold or acquire, directly or 
     through another corporation or entity, a substantial 
     beneficial interest in the corporation or entity actually 
     receiving the payment.
       ``(ii) In the case of payments to corporations and other 
     entities described in subparagraph (B)(i)(II), the Secretary 
     shall also attribute payments to any State (or political 
     subdivision or agency thereof) or other corporation or entity 
     that has a substantial beneficial interest in the corporation 
     or entity actually receiving the payment in proportion to 
     their ownership interests in the corporation or entity 
     receiving the payment. This subparagraph shall apply even if 
     the payments are also attributable to individuals under 
     clause (i).
       ``(iii) For purposes of this subparagraph, the term 
     `substantial beneficial interest' means not less than five 
     percent of all beneficial interests in the corporation or 
     entity actually receiving the payment, except that the 
     Secretary may set a lower percentage in order to ensure that 
     the provisions of this section and the scheme or device 
     provisions in section 1001B are not circumvented.''.
       (b) Tracking of Payments.--Paragraph (3) of section 
     1001A(a) of the Food Security Act of 1985 (7 U.S.C. 1308-
     1(a)) is amended to read as follows:
       ``(3) Notification.--To facilitate administration of this 
     section, each entity or individual receiving payments as a 
     separate person shall notify each individual or other entity 
     that acquires or holds a substantial beneficial interest in 
     it of the requirements and limitations under this subsection. 
     Each such entity or individual receiving payments shall 
     provide to the Secretary, at such times and in such manner as 
     prescribed by the Secretary, the name and social security 
     number of each individual, or the name and taxpayer 
     identification number of each entity, that holds or acquires 
     a substantial beneficial interest.''.
       (c) Conforming Amendment.--Paragraph (2) of such section is 
     amended to read as follows:
       ``(2) Substantial beneficial interest.--For purposes of 
     this subsection, the term `substantial beneficial interest' 
     has the meaning given such term in section 
     1001(5)(C)(iii).''.

     SEC. 1105. SUSPENSION OF CERTAIN PROVISIONS REGARDING PROGRAM 
                   CROPS.

       (a) Wheat.--
       (1) Nonapplicability of certificate requirements.--Sections 
     379d through 379j of the Agricultural Adjustment Act of 1938 
     (7 U.S.C. 1379d-1379j) (relating to marketing certificate 
     requirements for processors and exporters) shall not be 
     applicable to wheat processors or exporters during the period 
     June 1, 1996, through May 31, 2003.
       (2) Suspension of land use, wheat marketing allocation, and 
     producer certificate provisions.--Sections 331 through 339, 
     379b, and 379c of the Agricultural Adjustment Act of 1938 (7 
     U.S.C. 1331 through 1339, 1379b, and 1379c) shall not be 
     applicable to the 1996 through 2002 crops of wheat.
       (3) Suspension of certain quota provisions.--The joint 
     resolution entitled ``A joint resolution relating to corn and 
     wheat marketing quotas under the Agricultural Adjustment Act 
     of 1938, as amended'', approved May 26, 1941 (7 U.S.C. 1330 
     and 1340) shall not be applicable to the crops of wheat 
     planted for harvest in the calendar years 1996 through 2002.
       (4) Nonapplicability of section 107 program.--Section 107 
     of the Agricultural Act of 1949 (7 U.S.C. 1445a) shall not be 
     applicable to the 1996 through 2002 crops of wheat.
       (b) Feed Grains.--Section 105 of the Agricultural Act of 
     1949 (7 U.S.C. 1444b) shall not be applicable to the 1996 
     through 2002 crops of feed grains.
       (c) Cotton.--
       (1) Suspension of base acreage allotments, marketing 
     quotas, and related provisions.--Sections 342, 343, 344, 345, 
     346, and 377 of the Agricultural Adjustment Act of 1938 (7 
     U.S.C. 1342-1346 and 1377) shall not be applicable to any of 
     the 1996 through 2002 crops of upland cotton.
       (2) Nonapplicability of section 103 program.--Section 
     103(a) of the Agricultural Act of 1949 (7 U.S.C. 1444(a)) 
     shall not be applicable to the 1996 through 2002 crops of 
     upland cotton.
                           Subtitle B--Dairy

CHAPTER 1--AUTHORIZATION OF MARKET TRANSITION PAYMENTS IN LIEU OF MILK 
                         PRICE SUPPORT PROGRAM

     SEC. 1201. SEVEN-YEAR MARKET TRANSITION CONTRACTS FOR MILK 
                   PRODUCERS.

       (a) Contracts Authorized.--Section 204 of the Agricultural 
     Act of 1949 (7 U.S.C. 1446e) is amended to read as follows:

     ``SEC. 204. SEVEN-YEAR MARKET TRANSITION CONTRACTS FOR MILK 
                   PRODUCERS AND RELATED PROVISIONS.

       ``(a) Market Transition Contracts Authorized.--
       ``(1) Offer and main terms.--The Secretary shall offer to 
     enter into a contract (to be known as a `market transition 
     contract') with willing milk producers, under which the milk 
     producers agree, in exchange for seven payments under the 
     contract, to comply with--

[[Page H10999]]

       ``(A) governmental animal waste management regulations 
     otherwise applicable to the milk producer; and
       ``(B) any wetland protection requirements applicable to the 
     farm under subtitle C of title XII of such Act (16 U.S.C. 
     3821 et seq.).
       ``(2) Milk producer defined.--For purposes of this section, 
     the term `milk producer' means a person that was engaged in 
     the production of cow's milk in the 48 contiguous States on 
     September 15, 1995, and that received a payment during the 
     45-day period before that date for cow's milk marketed for 
     commercial use. Such term includes a person considered to be 
     a producer-handler that satisfies the requirements of the 
     preceding sentence.
       ``(b) Time for Contracting; Duration.--The Secretary shall 
     begin to offer to enter into market transition contracts as 
     soon as possible after the date of the enactment of this 
     section. The Secretary may not enter into a market transition 
     contract after April 15, 1996. The term of each market 
     transition contract shall extend through December 31, 2001.
       ``(c) Estimation of Payments.--At the time the Secretary 
     enters into a market transition contract, the Secretary shall 
     provide an estimate of the payments anticipated to be made 
     under the contract for at least fiscal year 1996.
       ``(d) Time for Payment.--The fiscal year 1996 payment under 
     a market transition contract shall be made on April 15, 1996, 
     or as soon thereafter as practicable. The Secretary shall 
     make subsequent payments not later than October 15 of each of 
     the fiscal years 1997 through 2002.
       ``(e) Payment Rate.--The Secretary shall use the following 
     payment rates to calculate payments under a market transition 
     contract for a fiscal year:
       ``(1) For fiscal year 1996, 10 cents per hundredweight.
       ``(2) For fiscal year 1997, 15 cents per hundredweight.
       ``(3) For fiscal year 1998, 13 cents per hundredweight.
       ``(4) For fiscal year 1999, 11 cents per hundredweight.
       ``(5) For fiscal year 2000, 9 cents per hundredweight.
       ``(6) For fiscal year 2001, 7 cents per hundredweight.
       ``(7) For fiscal year 2002, 5 cents per hundredweight.
       ``(f) Contract Payments To Be Based on Production 
     History.--
       ``(1) In general.--The Secretary shall determine the 
     historic annual milk production for each milk producer that 
     enters into a market transition contract on the basis of milk 
     checks reflecting payments for commercial marketings of cow's 
     milk or such other records of commercial marketings or 
     product sales as may be acceptable to the Secretary. Each 
     milk producer's historic annual milk production shall be 
     expressed in terms of hundredweights of milk.
       ``(2) Producers with three or more years of production.--In 
     the case of a milk producer that has been engaged in the 
     production of milk for at least three of the calendar years 
     1991 through 1995, the milk producer's historic annual milk 
     production shall be equal to the average quantity of milk 
     marketed by the milk producer during the three years of such 
     period in which the largest quantities of milk were marketed 
     by the milk producer.
       ``(3) Producers with fewer years of production.--In the 
     case of a milk producer not covered by paragraph (2), the 
     Secretary shall assign the milk producer an historic annual 
     milk production equal to an annualized average of the monthly 
     quantity of milk marketed by the milk producer during the 
     period in which the milk producer has been engaged in milk 
     production. The Secretary shall not consider months of 
     production after December 31, 1995.
       ``(g) Calculation of Payment Amount.--The total amount to 
     be paid to a milk producer under a market transition contract 
     for a fiscal year shall be equal to the product of--
       ``(1) the payment rate in effect for that fiscal year under 
     subsection (e); and
       ``(2) the historic annual milk production for the milk 
     producer determined under subsection (f).
       ``(h) Assignment of Payments.--The right of a milk producer 
     to a payment under a market transition contract shall be 
     freely assignable by the milk producer. The milk producer or 
     assignee shall provide the Secretary with notice, in such 
     manner as the Secretary may require in the market transition 
     contract, of any assignment made under this subsection.
       ``(i) Effect of Violation.--
       ``(1) Termination of contract.--If a milk producer subject 
     to a market transition contract violates any governmental 
     animal waste management regulation that applies to the 
     producer or wetland protection requirements applicable to the 
     producer, the Secretary may terminate the producer's market 
     transition contract. Upon such termination, the milk 
     producer shall forfeit all rights to receive future 
     payments under the contract and shall refund to the 
     Secretary any payment under the contract received by the 
     producer after notification of the violation, together 
     with interest thereon as determined by the Secretary. The 
     Secretary shall make a determination regarding violations 
     of animal waste management regulations under this 
     paragraph in consultation with the appropriate State 
     governmental authority.
       ``(2) Refund or adjustment.--If the Secretary determines 
     that a violation of a market transition contract does not 
     warrant termination of the contract under paragraph (1), the 
     Secretary may require the milk producer subject to the 
     contract--
       ``(A) to refund to the Secretary any payment under the 
     contract received by the producer after notification of the 
     violation, together with interest thereon as determined by 
     the Secretary; or
       ``(B) to accept an adjustment in the amount of future 
     payments otherwise required under the contract.
       ``(j) Market Transition Contracts.--Notwithstanding any 
     other provision of law, no order issued for any fiscal year 
     under section 252 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 (2 U.S.C. 902) shall affect any 
     payment under any market transition contract.''.
       (b) Continued Operation of Existing Program Through 1995.--
       (1) Price support operations.--Until December 31, 1995, the 
     Secretary of Agriculture shall continue to use section 204 of 
     the Agricultural Act of 1949 (7 U.S.C. 1446e), as in effect 
     on the day before the date of the enactment of this Act, to 
     support the price of milk produced in the 48 contiguous 
     States.
       (2) Price Reduction.--Subsection (h) of such section, 
     relating to a reduction in the price received by milk 
     producers for all milk produced in the 48 contiguous States 
     and marketed for commercial use, shall continue to apply with 
     respect to milk marketed through December 31, 1995. In the 
     case of milk producers that did not increase milk marketings 
     in 1995 when compared to 1994 milk marketings, the Secretary 
     of Agriculture shall make refunds available in 1996 to such 
     milk producers in the manner provided in paragraph (3) of 
     such subsection.
       (c) Conforming Repeal of General Authority to Provide Price 
     Support for Milk.--
       (1) Designated nonbasic agricultural commodity.--Section 
     201(a) of the Agricultural Act of 1949 (7 U.S.C. 1446(a)) is 
     amended by striking ``milk,''.
       (2) Other nonbasic agricultural commodities.--Section 301 
     of the Agricultural Act of 1949 (7 U.S.C. 1447) is amended by 
     inserting ``(other than milk)'' after ``title II''.

     SEC. 1202. RECOURSE LOANS FOR COMMERCIAL PROCESSORS OF DAIRY 
                   PRODUCTS.

       The Agricultural Act of 1949 is amended by striking section 
     424 (7 U.S.C. 1433c), as added by section 1003 of the Food 
     Security Act of 1985 and effective for 1986 through 1990 
     crops, and inserting the following new section:

     ``SEC. 424. RECOURSE LOANS FOR COMMERCIAL PROCESSORS OF DAIRY 
                   PRODUCTS.

       ``(a) Recourse Loans Available.--On and after January 1, 
     1996, the Secretary may make recourse loans available to 
     commercial processors of eligible dairy products to assist 
     such processors to manage inventories of eligible dairy 
     products to assure a greater degree of price stability for 
     the dairy industry during the year. Recourse loans may be 
     made available under such reasonable terms and conditions as 
     the Secretary may prescribe.
       ``(b) Amount of Loan.--The Secretary shall establish the 
     amount of a loan for eligible dairy products, which shall 
     reflect 90 percent of the reference price for that product. 
     The rate of interest charged participants in this program 
     shall not be less than the rate of interest charged the 
     Commodity Credit Corporation by the United States Treasury.
       ``(c) Period of Loans.--A recourse loan made under this 
     section may not extend beyond the end of the fiscal year 
     during which the loan is made, except that the Secretary may 
     extend the loan for an additional period not to exceed the 
     end of the next fiscal year.
       ``(d) Definitions.--For purposes of this section:
       ``(1) The term `eligible dairy products' means cheddar 
     cheese, butter, and nonfat dry milk.
       ``(2) The term `reference price' means--
       ``(A) for cheddar cheese, the average National Cheese 
     Exchange price for 40 pound blocks of cheddar cheese for the 
     previous three months;
       ``(B) for butter the average Chicago Mercantile Exchange 
     price for butter for the previous three months; and
       ``(C) for nonfat dry milk, the Western States price for 
     nonfat dry milk for the previous three months.''.

                    CHAPTER 2--DAIRY EXPORT PROGRAMS

     SEC. 1211. DAIRY EXPORT INCENTIVE PROGRAM.

       (a) In General.--Section 153(c) of the Food Security Act of 
     1985 (15 U.S.C. 713a-14(c)) is amended--
       (1) by striking ``and'' at the end of paragraph (1);
       (2) by striking the period at the end of paragraph (2) and 
     inserting ``; and''; and
       (3) by adding at the end the following new paragraphs:
       ``(3) the maximum volume of dairy product exports allowable 
     consistent with the obligations of the United States as a 
     member of the World Trade Organization are exported under the 
     program each year (minus the volume sold under section 1163 
     of the Food Security Act of 1985 (7 U.S.C. 1731 note) during 
     that year), except to the extent that the export of such a 
     volume under the program would, in the judgment of the 
     Secretary, exceed the limitations on the value set forth in 
     subsection (f); and
       ``(4) payments may be made under the program for exports to 
     any destination in the world for the purpose of market 
     development, except a destination in a country with 

[[Page H11000]]

     respect to which shipments from the United States are 
     otherwise restricted by law.''.
       (b) Sole Discretion.--Section 153(b) of the Food Security 
     Act of 1985 (15 U.S.C. 713a-14(b)) is amended by inserting 
     ``sole'' before ``discretion''.
       (c) Market Development.--Section 153(e)(1) of the Food 
     Security Act of 1985 (15 U.S.C. 713a-14(e)(1)) is amended--
       (1) by striking ``and'' and inserting ``the''; and
       (2) by inserting before the period the following: ``, and 
     any additional amount that may be required to assist in the 
     development of world markets for United States dairy 
     products''.
       (d) Maximum Allowable Amounts.--Section 153 of the Food 
     Security Act of 1985 (15 U.S.C. 713a-14) is amended by adding 
     at the end the following:
       ``(f) Required Funding.--The Commodity Credit Corporation 
     shall in each year use money and commodities for the program 
     under this section in the maximum amount consistent with the 
     obligations of the United States as a member of the World 
     Trade Organization, minus the amount expended under section 
     1163 of the Food Security Act of 1985 (7 U.S.C. 1731 note) 
     during that year. However, the Commodity Credit Corporation 
     may not exceed the limitations specified in subsection (c)(3) 
     on the volume of allowable dairy product exports.''.
       (e) Conforming Amendment.--Section 153(a) of the Food 
     Security Act of 1985 (15 U.S.C. 713a-14(a)) is amended by 
     striking ``2001'' and inserting ``2002''.

     SEC. 1212. AUTHORITY TO ASSIST IN ESTABLISHMENT AND 
                   MAINTENANCE OF EXPORT TRADING COMPANY.

       The Secretary of Agriculture shall, consistent with the 
     obligations of the United States as a member of the World 
     Trade Organization, provide such advice and assistance to the 
     United States dairy industry as may be necessary to enable 
     that industry to establish and maintain an export trading 
     company under the Export Trading Company Act of 1982 (15 
     U.S.C. 4001 et seq.) for the purpose of facilitating the 
     international market development for and exportation of dairy 
     products produced in the United States.

     SEC. 1213. STANDBY AUTHORITY TO INDICATE ENTITY BEST SUITED 
                   TO PROVIDE INTERNATIONAL MARKET DEVELOPMENT AND 
                   EXPORT SERVICES.

       (a) Indication of Entity Best Suited to Assist 
     International Market Development for and Export of United 
     States Dairy Products.--If--
       (1) the United States dairy industry has not established an 
     export trading company under the Export Trading Company Act 
     of 1982 (15 U.S.C. 4001 et seq.) for the purpose of 
     facilitating the international market development for and 
     exportation of dairy products produced in the United States 
     on or before June 30, 1996; or
       (2) the quantity of exports of United States dairy products 
     during the 12-month period preceding July 1, 1997 does not 
     exceed the quantity of exports of United States dairy 
     products during the 12-month period preceding July 1, 1996 by 
     1.5 billion pounds (milk equivalent, total solids basis);

     the Secretary of Agriculture is directed to indicate which 
     entity autonomous of the Government of the United States is 
     best suited to facilitate the international market 
     development for and exportation of United States dairy 
     products.
       (b) Funding of Export Activities.--The Secretary shall 
     assist the entity in identifying sources of funding for the 
     activities specified in subsection (a) from within the dairy 
     industry and elsewhere.
       (c) Application of Section.--This section shall apply only 
     during the period beginning on July 1, 1997 and ending on 
     September 30, 2000.

     SEC. 1214. STUDY AND REPORT REGARDING POTENTIAL IMPACT OF 
                   URUGUAY ROUND ON PRICES, INCOME AND GOVERNMENT 
                   PURCHASES.

       (a) Study.--The Secretary of Agriculture shall conduct a 
     study, on a variety by variety of cheese basis, to determine 
     the potential impact on milk prices in the United States, 
     dairy producer income, and Federal dairy program costs, of 
     the allocation of additional cheese granted access to the 
     United States as a result of the obligations of the United 
     States as a member of the World Trade Organization.
       (b) Report.--Not later than September 30, 1996, the 
     Secretary shall report to the Committees on Agriculture of 
     the Senate and the House of Representatives the results of 
     the study conducted under this section.
       (c) Rule of Construction.--Any limitation imposed by Act of 
     Congress on the conduct or completion of studies or reports 
     to Congress shall not apply to the study and report required 
     under this section unless such limitation explicitly 
     references this section in doing so.

                  CHAPTER 3--DAIRY PROMOTION PROGRAMS

     SEC. 1221. RESEARCH AND PROMOTION ACTIVITIES UNDER FLUID MILK 
                   PROMOTION ACT OF 1990.

       (a) Extension of Order.--Section 1999O of the Fluid Milk 
     Promotion Act of 1990 (subtitle H of title XIX of Public Law 
     101-624; 7 U.S.C. 6414(a)) is amended--
       (1) by striking subsection (a); and
       (2) by redesignating subsections (b) and (c) as subsections 
     (a) and (b), respectively.
       (b) Definition of Research.--Paragraph (6) of section 1999C 
     of such Act (7 U.S.C. 6402) is amended to read as follows:
       ``(6) Research.--The term `research' means--
       ``(A) market research to support and increase the 
     effectiveness of industry advertising, promotion, and 
     educational activities; and
       ``(B) other research to expand sales of fluid milk 
     products, including research regarding the development of new 
     products, new product characteristics, and improved 
     technology in the production, manufacturing, or processing of 
     milk and the products of milk.''.
       (c) Conforming Amendments Regarding Marketing Orders.--
     Section 1999J(b) of such Act (7 U.S.C. 6409(b)) is amended--
       (1) by striking paragraph (1);
       (2) in paragraph (2), by striking ``(2) otherwise'' and 
     inserting ``(1)''; and
       (3) by redesignating paragraph (3) as paragraph (2).
       (d) Clarification of Referendum Requirements.--
       (1) Suspension or termination.--Subsection (b) of section 
     1999O of such Act (7 U.S.C. 6414), as redesignated by 
     subsection (a)(2), is amended--
       (A) in paragraph (1), by striking ``all processors'' and 
     inserting ``all fluid milk processors''; and
       (B) in paragraph (2)(B), by striking ``all processors'' and 
     inserting ``all fluid milk processors voting in the 
     referendum''.
       (2) Conforming amendment.--Section 1999N(b)(2) of such Act 
     (7 U.S.C. 6413(b)(2)) is amended by striking ``all 
     processors'' and inserting ``all fluid milk processors voting 
     in the referendum''.

     SEC. 1222. EXPANSION OF DAIRY PROMOTION PROGRAM TO COVER 
                   DAIRY PRODUCTS IMPORTED INTO THE UNITED STATES.

       (a) Declaration of Policy.--Section 110(b) of the Dairy 
     Production Stabilization Act of 1983 (7 U.S.C. 4501(b)) is 
     amended by inserting after ``commercial use'' the following: 
     ``and dairy products imported into the United States''.
       (b) Definitions.--
       (1) Milk.--Subsection (d) of section 111 of such Act (7 
     U.S.C. 4502) is amended by inserting before the period at the 
     end the following: ``or cow's milk imported into the United 
     States in the form of dairy products intended for consumption 
     in the United States''.
       (2) Dairy products.--Subsection (e) of such section is 
     amended by inserting before the semicolon the following: 
     ``and casein (except casein imported under sections 
     3501.90.20 (casein glue) and 3501.90.50 (other) of the 
     Harmonized Tariff Schedule)''.
       (3) Research.--Subsection (j) of such section is amended by 
     inserting before the semicolon the following: ``or to reduce 
     the costs associated with processing or marketing those 
     products''.
       (4) United states.--Subsection (l) of such section is 
     amended to read as follows:
       ``(l) the term `United States' means the several States and 
     the District of Columbia;''.
       (5) Importers and exporters.--Such section is further 
     amended--
       (A) in subsection (k), by striking ``and'' at the end of 
     such subsection; and
       (B) by adding at the end the following new subsections:
       ``(m) the term `importer' means the first person to take 
     title to dairy products imported into the United States for 
     domestic consumption; and
       ``(n) the term `exporter' means any person who exports 
     dairy products from the United States.''.
       (c) Membership of Board.--Section 113(b) of such Act (7 
     U.S.C. 4504(b)) is amended--
       (1) in the first sentence, by striking ``thirty-six 
     members'' and inserting ``38 members, including one 
     representative of importers and one representative of 
     exporters to be appointed by the Secretary'';
       (2) in the second sentence, by striking ``Members'' and 
     inserting ``The remaining members''; and
       (3) in the third sentence, by striking ``United States'' 
     and inserting ``United States, including Alaska and Hawaii''.
       (d) Assessment.--Section 113(g) of such Act (7 U.S.C. 
     4504(g)) is amended--
       (1) by inserting ``(1)'' after ``(g)''; and
       (2) by adding at the end the following new paragraph:
       ``(2) The order shall provide that each importer of dairy 
     products intended for consumption in the United States shall 
     remit to the Board, in the manner prescribed by the order, an 
     assessment equal to 1.2 cents per pound of total milk solids 
     contained in the imported dairy products, or 15 cents per 
     hundredweight of milk contained in the imported dairy 
     products, whichever is less. If an importer can establish 
     that it is participating in active, ongoing qualified State 
     or regional dairy product promotion or nutrition programs 
     intended to increase the consumption of milk and dairy 
     products, the importer shall receive credit in determining 
     the assessment due from that importer for contributions to 
     such programs of up to .8 cents per pound of total milk 
     solids contained in the imported dairy products, or 10 cents 
     per hundredweight of milk contained in the imported dairy 
     products, whichever is less. The assessment collected under 
     this paragraph shall be used for the purpose specified in 
     paragraph (1).''.
       (e) Records.--Section 113(k) of such Act (7 U.S.C. 4504(k)) 
     is amended in the first sentence by inserting after 
     ``commercial use,'' the following: ``each importer of dairy 
     products,''.

[[Page H11001]]

       (f) Termination or Suspension of Order.--Section 116(b) of 
     such Act (7 U.S.C. 4507(b)) is amended--
       (1) by inserting ``and importers'' after ``producers'' each 
     place it appears;
       (2) by striking ``who, during a representative period (as 
     determined by the Secretary), have been engaged in the 
     production of milk for commercial use''; and
       (3) by adding at the end the following new sentences: ``A 
     producer shall be eligible to vote in the referendum if the 
     producer, during a representative period (as determined by 
     the Secretary), has been engaged in the production of milk 
     for commercial use. An importer shall be eligible to vote in 
     the referendum if the importer, during a representative 
     period (as determined by the Secretary), has been engaged in 
     the importation of dairy products into the United States 
     intended for consumption in the United States.''.

     SEC. 1223. PROMOTION OF UNITED STATES DAIRY PRODUCTS IN 
                   INTERNATIONAL MARKETS THROUGH DAIRY PROMOTION 
                   PROGRAM.

       Section 113(e) of the Dairy Production Stabilization Act of 
     1983 (7 U.S.C. 4504(e)) is amended by adding at the end the 
     following new sentence: ``For each of the fiscal years 1996 
     through 2000, the Board's budget shall provide for the 
     expenditure of not less than 10 percent of the anticipated 
     revenues available to the Board to develop international 
     markets for, and to promote within such markets, the 
     consumption of dairy products produced in the United States 
     from milk produced in the United States.''.

     SEC. 1224. ISSUANCE OF AMENDED ORDER UNDER DAIRY PRODUCTION 
                   STABILIZATION ACT OF 1983.

       (a) Implementation of Amendments.--To implement the 
     amendments made by sections 1222 and 1223, the Secretary of 
     Agriculture shall issue an amended dairy products promotion 
     and research order under section 112 of the Dairy Production 
     Stabilization Act of 1983 (7 U.S.C. 4504) reflecting such 
     amendments, and no other changes, in the order in existence 
     on the date of the enactment of this Act.
       (b) Proposal of Amended Order.--Not later than 60 days 
     after the date of the enactment of this Act, the Secretary of 
     Agriculture shall publish a proposed dairy products promotion 
     and research order reflecting the amendments made by sections 
     1222 and 1223. The Secretary shall provide notice and an 
     opportunity for public comment on the proposed order.
       (c) Issuance of Amended Order.--After notice and 
     opportunity for public comment are provided in accordance 
     with subsection (b), the Secretary of Agriculture shall issue 
     a final dairy products promotion and research order, taking 
     into consideration the comments received and including in the 
     order such provisions as are necessary to ensure that the 
     order is in conformity with the amendments made by sections 
     1222 and 1223.
       (d) Effective Date.--The final dairy products promotion and 
     research order shall be issued and become effective not later 
     than 120 days after publication of the proposed order.
       (e) Referendum on Amendments.--Section 115 of Dairy 
     Production Stabilization Act of 1983 (7 U.S.C. 4506) is 
     amended--
       (1) by redesignating subsection (b) as subsection (c); and
       (2) by inserting after subsection (a) the following new 
     subsection:
       ``(b) Referendum.--Not later than 36 months after the 
     issuance of the order reflecting the amendments made by 
     sections 1222 and 1223 of the Agricultural Reconciliation Act 
     of 1995, the Secretary shall conduct a referendum under this 
     section for the sole purpose of determining whether the 
     requirements of such amendments shall be continued. The 
     Secretary shall conduct the referendum among persons who have 
     been producers or importers during a representative period as 
     determined by the Secretary. The requirements of such 
     amendments shall be continued only if the Secretary 
     determines that such requirements have been approved by not 
     less than a majority of the persons voting in the referendum. 
     If continuation of the amendments is not approved, the 
     Secretary shall issue a new order, within six months after 
     the announcement of the results of the referendum, that is 
     identical to the order in effect on the date of the enactment 
     of the Agricultural Reconciliation Act of 1995. The new order 
     shall become effective upon issuance and shall not be subject 
     to referendum for approval.''.

                CHAPTER 4--VERIFICATION OF MILK RECEIPTS

     SEC. 1231. PROGRAM TO VERIFY RECEIPTS OF MILK.

       (a) Establishment of Verification Program.--Section 204 of 
     the Agricultural Act of 1949 (7 U.S.C. 1446e), as amended by 
     section 1201, is further amended by adding at the end the 
     following new subsection:
       ``(k) Verification of Receipts of Milk.--
       ``(1) Verification program required.--The Secretary shall 
     establish a program through which the verification of 
     receipts of all cow's milk marketed in the 48 contiguous 
     States and the auditing of marketing agreements with respect 
     to receipts of such milk may be accomplished. The Secretary 
     shall prescribe regulations to establish the program required 
     by this subsection.
       ``(2) Administrative services.--The program shall provide a 
     means by which (A) processors, associations of producers, and 
     other persons engaged in the handling of milk and milk 
     products file reports with the Secretary regarding receipts 
     of milk, prices paid for milk, and the purposes for which 
     milk was used by handlers, (B) authorized deductions from 
     payments to producers, including assessments for research and 
     promotion programs, are collected, (C) assurance of proper 
     payment by handlers for milk purchased is achieved, and (D) 
     the reports, records, and facilities of handlers are reviewed 
     and inspected to assure their accuracy. The regulations shall 
     provide for the publication of statistics regarding receipts, 
     prices, and uses of milk. Statistics published by the 
     Secretary shall include information regarding payments 
     received by producers for milk on a component basis, 
     including payments for milkfat, protein and other solids. The 
     Secretary shall collect an assessment from handlers required 
     to file reports under this paragraph to cover any expenses 
     associated with the collection and publication of such 
     statistics. Assessments shall be based on the relative volume 
     of receipts of milk by each handler and shall not exceed the 
     total cost of such expenses.
       ``(3) Marketing services.--The program shall further 
     provide a means by which the weighing, sampling, and testing 
     of milk purchased from producers is accomplished and 
     verified. This paragraph shall not apply to producers for 
     whom such marketing services are rendered by a cooperative 
     marketing association qualified under the provisions of the 
     Act of February 18, 1922 (7 U.S.C. 291-292), commonly known 
     as the `Co-operative Marketing Associations Act'. An 
     assessment may be levied on producers for whom such services 
     are performed to cover the expenses of the Secretary or the 
     cooperative marketing association providing the services. 
     Assessments shall be based on the relative marketings of milk 
     by each producer and shall not exceed the total cost of 
     providing such services.
       ``(4) Marketing agreements.--Producers or associations of 
     producers, including cooperative marketing associations 
     qualified under the provisions of the Act of February 18, 
     1922 (7 U.S.C. 291-292), commonly known as the `Co-operative 
     Marketing Associations Act', may negotiate and enter into 
     marketing agreements or other private contracts with handlers 
     for the marketing and receipt of milk. Upon the request of 
     either or both of the parties, the Secretary may perform an 
     audit of the agreement or contract to assure compliance with 
     its terms, except that the Secretary shall be reimbursed for 
     any costs associated with the audit in the manner provided in 
     the agreement or contract. If there is no provision for the 
     reimbursement of the Secretary in the agreement or contract, 
     the party or parties requesting the audit shall provide such 
     reimbursement.
       ``(5) Prohibition on marketing limitations.--No marketing 
     agreement or Government order or regulation applicable to 
     milk and its products in any marketing area or jurisdiction 
     shall prohibit or in any manner limit the marketing in that 
     area of any milk or product of milk produced in any 
     production area in the United States.
       ``(6) Effect on existing marketing orders.--Effective July 
     1, 1996, the program established under this subsection shall 
     supersede any Federal marketing order issued under section 8c 
     of the Agricultural Adjustment Act (7 U.S.C. 608c), reenacted 
     with amendments by the Agricultural Marketing Agreement Act 
     of 1937, with respect to milk or its products.''.
       (b) Time for Issuance.--Not later than July 1, 1996, the 
     Secretary of Agriculture shall issue final regulations under 
     subsection (k) of section 204 of the Agricultural Act of 
     1949, as added by this section, to establish the verification 
     program required by such subsection. The regulations shall 
     take effect on that date.
       (c) Process.--In preparation for the issuance of the 
     regulations under subsection (k) of section 204 of the 
     Agricultural Act of 1949, as added by this section, the 
     Secretary shall comply with the following:
       (1) The Secretary shall issue proposed regulations not 
     later than April 1, 1996.
       (2) The Secretary shall provide for a comment period on the 
     regulations, as proposed under paragraph (1). However, the 
     comment period shall not exceed 60 days nor extend past May 
     31, 1996.

     SEC. 1232. VERIFICATION PROGRAM TO SUPERSEDE MULTIPLE 
                   EXISTING FEDERAL ORDERS.

       (a) Termination of Milk Marketing Orders.--Section 8c of 
     the Agricultural Adjustment Act (7 U.S.C. 608c), reenacted 
     with amendments by the Agricultural Marketing Agreement Act 
     of 1937, is amended by striking paragraphs (5) and (18) 
     relating to milk and its products.
       (b) Prohibition on Subsequent Orders Regarding Milk.--
     Paragraph (2) of such section is amended--
       (1) by striking ``Milk, fruits'' and inserting ``Fruits''; 
     and
       (2) by inserting ``milk,'' after ``honey,'' in subparagraph 
     (B).
       (c) Conforming Amendments.--(1) Section 2(3) of such Act (7 
     U.S.C. 602(3) is amended by striking ``, other than milk and 
     its products,''.
       (2) Section 8c of such Act (7 U.S.C. 608c) is amended--
       (A) in paragraph (6), by striking ``, other than milk and 
     its products,'';
       (B) in paragraph (7)(B), by striking ``(except for milk and 
     cream to be sold for consumption in fluid form)'';
       (C) in paragraph (11)(B), by striking ``Except in the case 
     of milk and its products, orders'' and inserting ``Orders'';

[[Page H11002]]

       (D) in paragraph (13)(A), by striking ``, except to a 
     retailer in his capacity as a retailer of milk and its 
     products''; and
       (E) in paragraph (17), by striking the second proviso, 
     which relates to milk orders.
       (3) Section 8d(2) of such Act (7 U.S.C. 608d(2)) is amended 
     by striking the second sentence, which relates to information 
     from milk handlers.
       (4) Section 10(b)(2) of such Act (7 U.S.C. 610(b)(2)) is 
     amended--
       (A) by striking clause (i);
       (B) by redesignating clauses (ii) and (iii) as clauses (i) 
     and (ii), respectively; and
       (C) in clause (i) (as so redesignated), by striking ``other 
     commodity'' in the first sentence and inserting 
     ``commodity''.
       (5) Section 11 of such Act (7 U.S.C. 611) is amended by 
     striking ``and milk, and its products,''.
       (6) Section 715 of the Agriculture, Rural Development, Food 
     and Drug Administration, and Related Agencies Appropriations 
     Act, 1994 (Public Law 103-111; 107 Stat. 1079; 7 U.S.C. 608d 
     note), is amended by striking the third proviso, which 
     relates to information from milk handlers.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on July 1, 1996.

          CHAPTER 5--MISCELLANEOUS PROVISIONS RELATED TO DAIRY

     SEC. 1241. EXTENSION OF TRANSFER AUTHORITY REGARDING MILITARY 
                   AND VETERANS HOSPITALS.

       Subsections (a) and (b) of section 202 of the Agricultural 
     Act of 1949 (7 U.S.C. 1446a) are amended by striking ``1995'' 
     both places it appears and inserting ``2002''.

     SEC. 1242. EXTENSION OF DAIRY INDEMNITY PROGRAM.

       Section 3 of Public Law 90-484 (7 U.S.C. 450l) is amended 
     by striking ``1995'' and inserting ``2002''.

     SEC. 1243. EXTENSION OF REPORT REGARDING EXPORT SALES OF 
                   DAIRY PRODUCTS.

       Section 1163(c) of the Food Security Act of 1985 is amended 
     by striking ``1995'' and inserting ``2002''.

     SEC. 1244. STATUS OF PRODUCER-HANDLERS.

       The legal status of producer-handlers of milk under the 
     Agricultural Adjustment Act (7 U.S.C. 601 et seq.), reenacted 
     with amendments by the Agricultural Marketing Agreement Act 
     of 1937, shall be the same after the amendments made by this 
     title take effect as it was before the effective date of the 
     amendments.
                     Subtitle C--Other Commodities

     SEC. 1301. EXTENSION AND MODIFICATION OF PRICE SUPPORT AND 
                   QUOTA PROGRAMS FOR PEANUTS.

       (a) Extension of Price Support Program.--Section 108B of 
     the Agricultural Act of 1949 (7 U.S.C. 1445c-3) is amended--
       (1) in the section heading, by striking ``1991 through 1997 
     crops of'';
       (2) in subsections (a)(1), (b)(1), and (h), by striking 
     ``1997'' each place it appears and inserting ``2002'';
       (3) in subsection (g)(1)--
       (A) by striking ``1997 crops'' the first place it appears 
     and inserting ``2002 crops''; and
       (B) by striking ``1997 crop'' both places it appears and 
     inserting ``1997 through 2002 crops''; and
       (4) in subsection (g)(2)(A)--
       (A) by striking ``1997 crop'' in clause (i)(IV) and 
     inserting ``1997 through 2002 crops''; and
       (B) by striking ``1997'' in clause (ii)(II) and inserting 
     ``2002''.
       (b) Changes to Price Support Program.--
       (1) Quota support rate.--
       (A) Support rate for 1996 through 2002 crops.--Subsection 
     (a)(2) of section 108B of the Agricultural Act of 1949 (7 
     U.S.C. 1445c-3) is amended to read as follows:
       ``(2) Support rate.--The national average quota support 
     rate for quota peanuts shall be equal to $610 per ton for 
     each of the 1996 through 2002 crops of quota peanuts.''.
       (B) Effect of amendment on current crop.--The national 
     average quota support rate in effect under section 108B(a)(2) 
     of the Agricultural Act of 1949 (7 U.S.C. 1445c-3) on the day 
     before the date of the enactment of this Act shall continue 
     to apply with respect to the 1995 crop of quota peanuts.
       (2) Offers from handlers.--Subsection (a) of such section 
     is amended--
       (A) by redesignating paragraphs (4) and (5) as paragraphs 
     (5) and (6), respectively; and
       (B) by inserting after paragraph (3) the following new 
     paragraph:
       ``(4) Offers from handlers.--The Secretary shall reduce the 
     support rate by 15 percent for any producer on a farm who had 
     available to the producer an offer from a handler to purchase 
     quota peanuts from the farm at a price equal to or greater 
     than the applicable quota support rate.''.
       (3) Covering losses.--Subsection (d)(2) of such section is 
     amended to read as follows:
       ``(2) Quota loan pools.--Losses in quota area pools shall 
     be covered using the following sources in the following order 
     of priority:
       ``(A) Transfers from additional loan pools.--The proceeds 
     due any producer from any pool shall be reduced by the amount 
     of any loss that is incurred with respect to peanuts 
     transferred from an additional loan pool to a quota loan pool 
     by such producer under section 358-1(b)(8) of the 
     Agricultural Adjustment Act of 1938.
       ``(B) Other producers in same pool.--Further losses in an 
     area quota pool shall be offset by reducing the gain of any 
     producer in such pool by the amount of pool gains attributed 
     to the same producer from the sale of additional peanuts for 
     domestic and export edible use.
       ``(C) Use of marketing assessments.--The Secretary shall 
     use funds collected under subsection (g) (except funds 
     attributable to handlers) to offset further losses in area 
     quota pools. The Secretary shall transfer to the Treasury 
     those funds collected under subsection (g) and available for 
     use under this paragraph that the Secretary determines are 
     not required to cover losses in area quota pools.
       ``(D) Cross compliance.--Further losses in area quota 
     pools, other than losses incurred as a result of transfers 
     from additional loan pools to quota loan pools under section 
     358-1(b)(8) of the Agricultural Adjustment Act of 1938, shall 
     be offset by any gains or profits from quota pools in other 
     production areas (other than separate type pools established 
     under subsection (c)(2)(A) for Valencia peanuts produced in 
     New Mexico) in such manner as the Secretary shall by 
     regulation prescribe.
       ``(E) Increased assessments.--If use of the authorities 
     provided in the preceding subparagraphs is not sufficient to 
     cover losses in an area quota pool, the Secretary shall 
     increase the marketing assessment established under 
     subsection (g) by such an amount as the Secretary considers 
     necessary to cover the losses. The increased assessment shall 
     apply only to quota peanuts marketed in the production area 
     covered by that pool. Amounts collected under subsection (g) 
     as a result of the increased assessment shall be retained by 
     the Secretary to cover losses in that pool.''.
       (c) Extension of National Poundage Quota Program.--Part VI 
     of subtitle B of title III of the Agricultural Adjustment Act 
     of 1938 is amended--
       (1) in section 358-1 (7 U.S.C. 1358-1)--
       (A) in the section heading, by striking ``1991 THROUGH 1997 
     CROPS OF'';
       (B) in subsection (a)(3), by striking ``1990'' and 
     inserting ``1990, for the 1991 through 1995 marketing years, 
     and 1995, for the 1996 through 2002 marketing years'';
       (C) in subsection (b)(1)(A)--
       (i) by striking ``1997'' and inserting ``2002''; and
       (ii) in clause (i), by inserting before the semicolon the 
     following: ``, in the case of the 1991 through 1995 marketing 
     years, and the 1995 marketing year, in the case of the 1996 
     through 2002 marketing years''; and
       (D) in subsections (b)(1)(B), (b)(2)(A), (b)(2)(C), 
     (b)(3)(A), and (f), by striking ``1997'' each place it 
     appears and inserting ``2002'';
       (2) in section 358b (7 U.S.C. 1358b)--
       (A) in the section heading, by striking ``1991 THROUGH 1995 
     CROPS OF''; and
       (B) in subsection (c), by striking ``1995'' and inserting 
     ``2002'';
       (3) in section 358c(d) (7 U.S.C. 1358c(d)), by striking 
     ``1995'' and inserting ``2002''; and
       (4) in section 358e (7 U.S.C. 1359a)--
       (A) in the section heading, by striking ``1991 THROUGH 
     1997'' and inserting ``CERTAIN''; and
       (B) in subsection (i), by striking ``1997'' and inserting 
     ``2002''.
       (d) Prioritized Quota Reductions.--Section 358-1(b)(2)(C) 
     of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1358-
     1(b)(2)(C)) is amended--
       (1) by striking ``all the''; and
       (2) by adding at the end the following new sentence: 
     ``Rather than allocating the decrease among all the farms in 
     a State, the Secretary shall allocate the decrease among 
     farms in the following order of priority:
       ``(i) Farms owned or controlled by municipalities, airport 
     authorities, schools, colleges, refuges, and other public 
     entities (not including universities for research purposes).
       ``(ii) Farms for which the quota holder is not a producer 
     and resides in another State.
       ``(iii) Farms for which the quota holder, although a 
     resident of the State, is not a producer.
       ``(iv) Other farms described in the first sentence of this 
     subparagraph.''.
       (e) Elimination of Quota Floor.--Section 358-1(a)(1) of the 
     Agricultural Adjustment Act of 1938 (7 U.S.C. 1358-1(a)(1)) 
     is amended by striking the second sentence.
       (f) Spring and Fall Transfers Within a State.--Section 
     358b(a)(1) of the Agricultural Adjustment Act of 1938 (7 
     U.S.C. 1358b(a)(1)) is amended--
       (1) by striking ``any such lease'' in the matter preceding 
     the subparagraphs and inserting ``any such sale or lease''; 
     and
       (2) by striking ``in the fall or after the normal planting 
     season--'' and subparagraphs (A) and (B) and inserting the 
     following: ``in the spring (or before the normal planting 
     season) or in the fall (or after the normal planting season) 
     with the owner or operator of a farm located within any 
     county in the same State. In the case of a fall transfer or a 
     transfer after the normal planting season, the transfer may 
     be made only if not less than 90 percent of the basic quota 
     (the farm quota exclusive of temporary quota transfers), plus 
     any poundage quota transferred to the farm under this 
     subsection, has been planted or considered planted on the 
     farm from which the quota is to be leased.''.
       (g) Transfers in Counties With Small Quotas.--Section 
     358b(a) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
     1358b(a)) is amended by adding at the end the following new 
     paragraph:
       ``(4) Transfers in counties with small quotas.--
     Notwithstanding paragraphs (1) and (2), in the case of any 
     county for which the poundage quota allocated to the county 
     was less than 10,000 tons for the preceding year's crop, all 
     or any part of a farm poundage quota for a farm in that 
     county may be 

[[Page H11003]]

     transferred by sale or lease or otherwise to a farm in any 
     other county in the same State.''.
       (h) Undermarketings.--
       (1) Elimination.--Subsection (b) of section 358-1 of the 
     Agricultural Adjustment Act of 1938 (7 U.S.C. 1358-1) is 
     amended by striking paragraphs (8) and (9).
       (2) Conforming amendments.--(A) Such subsection is further 
     amended--
       (i) in paragraph (1)(B), by striking ``including--'' and 
     clauses (i) and (ii) and inserting ``including any increases 
     resulting from the allocation of quotas voluntarily released 
     for 1 year under paragraph (7).''; and
       (ii) in paragraph (3)(B), by striking ``include--'' and 
     clauses (i) and (ii) and inserting ``include any increase 
     resulting from the allocation of quotas voluntarily released 
     for 1 year under paragraph (7).''.
       (B) Section 358b(a) of the Agricultural Adjustment Act of 
     1938 (7 U.S.C. 1358b(a)) is amended--
       (i) in paragraph (1) (as amended by subsection (f)), by 
     striking ``(including any applicable under marketings)'' both 
     places it appears;
       (ii) in paragraph (2), by striking ``(including any 
     applicable under marketings)''; and
       (iii) in paragraph (3), by striking ``(including any 
     applicable undermarketings)''.
       (i) Limitation on Payments for Disaster Transfers.--Section 
     358-1(b) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
     1358-1(b)), as amended by subsection (h), is further amended 
     by adding at the end the following new paragraph:
       ``(8) Transfer of additional peanuts.--Additional peanuts 
     on a farm from which the quota poundage was not harvested and 
     marketed because of drought, flood, or any other natural 
     disaster, or any other condition beyond the control of the 
     producer, may be transferred to the quota loan pool for 
     pricing purposes on such basis as the Secretary shall by 
     regulation provide, except that the poundage of such peanuts 
     so transferred shall not exceed the difference in the total 
     peanuts meeting quality requirements for domestic edible use 
     as determined by the Secretary marketed from the farm and the 
     total farm poundage quota, excluding quota pounds transferred 
     to the farm in the fall. Peanuts transferred under this 
     paragraph shall be supported at a total of not more than 70 
     percent of the quota support rate for the marketing years in 
     which such transfers occur and such transfers for a farm 
     shall not exceed 25 percent of the total farm quota 
     pounds, excluding pounds transferred in the fall.''.
       (j) Temporary Quota Allocation.--
       (1) Annual allocation.--Subsection (b)(2) of section 358-1 
     of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1358-1) 
     is amended--
       (A) in subparagraph (A), by striking ``subparagraph (B) and 
     subject to''; and
       (B) by striking subparagraph (B) and inserting the 
     following new subparagraph:
       ``(B) Temporary quota allocation.--
       ``(i) Allocation related to seed peanuts.--Temporary 
     allocation of quota pounds for the marketing year only in 
     which the crop is planted shall be made to producers for each 
     of the 1996 through 2002 marketing years as provided in this 
     subparagraph. The temporary quota allocation shall be equal 
     to the pounds of seed peanuts planted on the farm, as may be 
     adjusted under regulations prescribed by the Secretary. The 
     temporary allocation of quota pounds under this paragraph 
     shall be in addition to the farm poundage quota otherwise 
     established under this subsection and shall be credited for 
     the applicable marketing year only, in total to the producer 
     of the peanuts on the farm in a manner prescribed by the 
     Secretary.
       ``(ii) Effect of other requirements.--Nothing in this 
     section shall alter or change in any way the requirements 
     regarding the use of quota and additional peanuts established 
     by section 359a(b) of the Agricultural Adjustment Act of 1938 
     (7 U.S.C. 1359a(b)), as added by section 804 of the Food, 
     Agriculture, Conservation, and Trade Act of 1990.''.
       (2) Conforming amendment.--Subsection (a)(1) of such 
     section is amended by striking ``domestic edible, seed,'' and 
     inserting ``domestic edible use''.
       (k) Suspension of Marketing Quotas and Acreage 
     Allotments.--The following provisions of the Agricultural 
     Adjustment Act of 1938 shall not apply to the 1996 through 
     2002 crops of peanuts:
       (1) Subsections (a) through (j) of section 358 (7 U.S.C. 
     1358).
       (2) Subsections (a) through (h) of section 358a (7 U.S.C. 
     1358a).
       (3) Subsections (a), (b), (d), and (e) of section 358d (7 
     U.S.C. 1359).
       (4) Part I of subtitle C of title III (7 U.S.C. 1361 et 
     seq.).
       (5) Section 371 (7 U.S.C. 1371).
       (l) Extension of Reporting and Recordkeeping 
     Requirements.--Section 373(a) of the Agricultural Adjustment 
     Act of 1938 (7 U.S.C. 1373(a)) is amended by inserting after 
     the first sentence the following new sentence: ``In the case 
     of the 1996 through 2002 crops of peanuts, this subsection 
     shall also apply to all producers engaged in the production 
     of peanuts.''.
       (m) Suspension of Certain Price Support Provisions.--
     Section 101 of the Agricultural Act of 1949 (7 U.S.C. 1441) 
     shall not apply to the 1996 through 2002 crops of peanuts.

     SEC. 1302. AVAILABILITY OF LOANS FOR PROCESSORS OF SUGARCANE 
                   AND SUGAR BEETS.

       (a) Sugar Loans.--Section 206 of the Agricultural Act of 
     1949 (7 U.S.C. 1446g) is amended to read as follows:

     ``SEC. 206. ASSURANCE OF ADEQUATE SUGAR SUPPLY.

       ``(a) Sugarcane Processor Loans.--For the 1996 through 2002 
     crops of domestically grown sugarcane, the Secretary shall 
     make loans available to sugarcane processors on raw cane 
     sugar processed from such crops. Subject to subsection (c), 
     loans under this subsection shall be made at a rate equal to 
     the rate provided under this section, as in effect on the day 
     before the date of the enactment of the Agricultural 
     Reconciliation Act of 1995, for raw cane sugar produced from 
     the 1995 crop of domestically grown sugarcane.
       ``(b) Sugar Beets.--For the 1996 through 2002 crops of 
     domestically grown sugar beets, the Secretary shall make 
     loans available to sugar beet processors on refined beet 
     sugar processed from such crops. Subject to subsection (c), 
     loans under this subsection shall be made at a rate equal to 
     the rate provided under this section, as in effect on the day 
     before the date of the enactment of the Agricultural 
     Reconciliation Act of 1995, for refined beet sugar produced 
     from the 1995 crop of domestically grown sugar beets.
       ``(c) Reduction in Loan Rates.--
       ``(1) Reduction required.--The Secretary shall reduce the 
     loan rate specified in subsection (a) for domestically grown 
     sugarcane and subsection (b) for domestically grown sugar 
     beets if the Secretary determines that negotiated reductions 
     in export subsidies and domestic subsidies provided for sugar 
     of the European Union and other major sugar growing, 
     producing, and exporting countries in the aggregate exceed 
     the commitments made as part of the Agreement on Agriculture.
       ``(2) Extent of reduction.--The Secretary shall not reduce 
     the loan rate under subsection (a) or (b) below a rate that 
     provides an equal measure of support to that provided by the 
     European Union and other major sugar growing, producing, and 
     exporting countries, based on an examination of both domestic 
     and export subsidies subject to reduction in the Agreement on 
     Agriculture.
       ``(3) Announcement of reduction.--The Secretary shall 
     announce any loan rate reduction to be made under this 
     subsection as far in advance as is practicable.
       ``(4) Major sugar countries defined.--For purposes of this 
     subsection, the term `major sugar growing, producing, and 
     exporting countries' means--
       ``(A) the countries of the European Union; and
       ``(B) the ten foreign countries not covered by subparagraph 
     (A) that the Secretary determines produce the greatest amount 
     of sugar.
       ``(5) Agreement on agriculture defined.--For purposes of 
     this subsection and subsection (d), the term `Agreement on 
     Agriculture' means the Agreement on Agriculture referred to 
     in section 101(d)(2) of the Uruguay Round Agreements Act (19 
     U.S.C. 3511(d)(2)).
       ``(d) Loan Type; Processor Assurances.--
       ``(1) Recourse loans.--Subject to paragraph (2), the 
     Secretary shall carry out this section through the use of 
     recourse loans.
       ``(2) Switch to nonrecourse loans.--
       ``(A) In general.--During any fiscal year in which the 
     tariff rate quota for imports of sugar into the United States 
     is set at, or is increased to, a level that exceeds the loan 
     modification threshold, the Secretary shall carry out this 
     section by making available nonrecourse loans. Any recourse 
     loan previously made available by the Secretary under this 
     section during such fiscal year shall be modified by the 
     Secretary into a nonrecourse loan.
       ``(B) Loan modification threshold defined.--For the 
     purposes of this subsection, the term `loan modification 
     threshold' means--
       ``(i) for fiscal years 1996 and 1997, 1,257,000 short tons 
     raw value; and
       ``(ii) for fiscal years after fiscal year 1997, 103 percent 
     of the loan modification threshold for the previous fiscal 
     year.
       ``(3) Processor assurances.--If the Secretary is required 
     under paragraph (2) to make nonrecourse loans available 
     during a fiscal year or to modify recourse loans into 
     nonrecourse loans, the Secretary shall obtain from each 
     processor that receives a loan under this section such 
     assurances as the Secretary considers adequate that the 
     processor will provide an appropriate minimum payment for 
     sugar beets and sugarcane delivered by producers served by 
     the processor. The Secretary may establish appropriate 
     minimum payments for purposes of this paragraph.
       ``(4) Announcement of threshold.--As soon as practicable, 
     but not later than September 1 of each fiscal year, the 
     Secretary shall announce the loan modification threshold that 
     shall apply under paragraph (2) for the subsequent fiscal 
     year.
       ``(e) Length of Loans.--Each loan made under this section 
     shall be for a term of three months, and may be extended for 
     additional three-month terms, except that--
       ``(1) no loan may have a cumulative term in excess of nine 
     months or a term that extends beyond September 30 of the 
     fiscal year in which the loan is made; and
       ``(2) a processor may terminate a loan and redeem the 
     collateral for the loan at any time by payment in full of 
     principal, interest, and fees then owing.

[[Page H11004]]

       ``(f) Use of Commodity Credit Corporation.--The Secretary 
     shall use the funds, facilities, and authorities of the 
     Commodity Credit Corporation to carry out this section.
       ``(g) Marketing Assessment.--
       ``(1) Sugarcane.--Effective only for marketings of raw cane 
     sugar during fiscal years 1996 through 2003, the first 
     processor of sugarcane shall remit to the Commodity Credit 
     Corporation a nonrefundable marketing assessment for each 
     pound of raw cane sugar, processed by the processor from 
     domestically produced sugarcane or sugarcane molasses, that 
     has been marketed. The assessment rate per pound is equal to 
     1.5 percent of the loan rate for raw cane sugar under this 
     section.
       ``(2) Sugar beets.--Effective only for marketings of beet 
     sugar during fiscal years 1996 through 2003, the first 
     processor of sugar beets shall remit to the Commodity Credit 
     Corporation a nonrefundable marketing assessment for each 
     pound of beet sugar, processed by the processor from 
     domestically produced sugar beets or sugar beet molasses, 
     that has been marketed. The assessment rate per pound is 
     equal to 1.6083 percent of the loan rate for raw cane sugar 
     under this section.
       ``(3) Collection.--
       ``(A) Timing.--Marketing assessments required under this 
     subsection shall be collected on a monthly basis and shall be 
     remitted to the Commodity Credit Corporation within 30 days 
     after the end of each month. Any cane sugar or beet sugar 
     processed during a fiscal year that has not been marketed by 
     September 30 of that year shall be subject to assessment on 
     that date. The sugar shall not be subject to a second 
     assessment at the time that it is marketed.
       ``(B) Manner.--Subject to subparagraph (A), marketing 
     assessments shall be collected under this subsection in the 
     manner prescribed by the Secretary and shall be 
     nonrefundable.
       ``(4) Penalties.--If any person fails to remit the 
     assessment required by this subsection or fails to comply 
     with such requirements for recordkeeping or otherwise as are 
     required by the Secretary to carry out this subsection, the 
     person shall be liable to the Secretary for a civil penalty 
     up to an amount determined by multiplying--
       ``(A) the quantity of cane sugar or beet sugar involved in 
     the violation; by
       ``(B) the loan rate in effect at the time of the violation.
       ``(5) Enforcement.--The Secretary may enforce this 
     subsection in the courts of the United States.
       ``(6) Definition of market.--For purposes of this 
     subsection, the term `market' means to sell or otherwise 
     dispose of in commerce in the United States (including, with 
     respect to any integrated processor and refiner, the movement 
     of raw cane sugar into the refining process) and to deliver 
     to a buyer.
       ``(h) Information Reporting.--
       ``(1) Duty of processors and refiners to report.--All 
     sugarcane processors, cane sugar refiners, and sugar beet 
     processors shall furnish the Secretary, on a monthly basis, 
     such information as the Secretary may require to administer 
     sugar programs, including the quantity of purchases of 
     sugarcane, sugar beets, and sugar, and production, 
     importation, distribution, and stock levels of sugar.
       ``(2) Duty of producers to report.--In order to efficiently 
     and effectively carry out the program under this section, the 
     Secretary may require a producer of sugarcane or sugar beets 
     to report, in the manner prescribed by the Secretary, the 
     producer's sugarcane or sugar beet yields and acres planted 
     to sugarcane or sugar beets, respectively.
       ``(3) Penalty.--Any person willfully failing or refusing to 
     furnish the information, or furnishing willfully any false 
     information, shall be subject to a civil penalty of not more 
     than $10,000 for each such violation.
       ``(4) Monthly reports.--Taking into consideration the 
     information received under paragraph (1), the Secretary shall 
     publish on a monthly basis composite data on production, 
     imports, distribution, and stock levels of sugar.
       ``(i) Sugar Estimates.--
       ``(1) Domestic requirement.--Before the beginning of each 
     fiscal year, the Secretary shall estimate the United States 
     demand for sugar for that fiscal year, which shall be equal 
     to--
       ``(A) the quantity of sugar, that will be consumed in the 
     United States during the fiscal year (other than sugar 
     imported for the production of polyhydric alcohol or to be 
     refined and reexported in refined form or in sugar containing 
     products); plus
       ``(B) the quantity of sugar that would provide for adequate 
     carryover stocks; minus
       ``(C) the quantity of sugar that will be available from 
     carry-in stocks.
       ``(2) Quarterly reestimates.--The Secretary shall make 
     quarterly reestimates of sugar consumption, stocks, 
     production, and imports for a fiscal year no later than the 
     beginning of each of the second through fourth quarters of 
     the fiscal year.
       ``(j) Regulations.--The Secretary shall issue such 
     regulations as the Secretary determines necessary to carry 
     out this section.''.
       (b) Effect on Existing Loans for Sugar.--Section 206 of the 
     Agricultural Act of 1949 (7 U.S.C. 1446g), as in effect on 
     the day before the date of the enactment of this Act, shall 
     continue to apply with respect to the 1991 through 1995 crops 
     of sugarcane and sugar beets.
       (c) Termination of Marketing Quotas and Allotments.--
       (1) Termination.--Part VII of subtitle B of title III of 
     the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359aa-
     1359jj) is repealed.
       (2) Conforming amendment.--Section 344(f)(2) of such Act (7 
     U.S.C. 1344(f)(2)) is amended by striking ``sugar cane for 
     sugar; sugar beets for sugar;''.

     SEC. 1303. REPEAL OF OBSOLETE AUTHORITY FOR PRICE SUPPORT FOR 
                   COTTONSEED AND COTTONSEED PRODUCTS.

       (a) Repeal.--Section 301(b) of the Disaster Assistance Act 
     of 1988 (7 U.S.C. 1464 note) is amended by striking paragraph 
     (1).
       (b) Conforming Repeal.--Section 420 of the Agricultural Act 
     of 1949 (7 U.S.C. 1432) is repealed.
               Subtitle D--Miscellaneous Program Changes

     SEC. 1401. LIMITATIONS ON ASSISTANCE UNDER EMERGENCY 
                   LIVESTOCK FEED ASSISTANCE PROGRAM.

       Section 609 of the Emergency Livestock Feed Assistance Act 
     of 1988 (7 U.S.C. 1471g) is amended by striking subsections 
     (c) and (d) and inserting the following new subsection:
       ``(c) No person may receive benefits under this title 
     attributable to lost production of a feed commodity due to a 
     natural disaster if crop insurance protection or noninsured 
     crop disaster assistance for the loss of feed produced on the 
     farm is available to the person under the Federal Crop 
     Insurance Act (7 U.S.C. 1501 et seq.).''.

     SEC. 1402. CONSERVATION RESERVE PROGRAM.

       (a) Limitations on Acreage Enrollments.--
       (1) Limitation.--Section 1231(d) of the Food Security Act 
     of 1985 (16 U.S.C. 3831(d)) is amended by striking 
     ``38,000,000 acres'' and inserting ``36,400,000 acres''.
       (2) Prohibition on 1997 increase.--Section 727 of the 
     Agriculture, Rural Development, Food and Drug Administration, 
     and Related Agencies Appropriations Act, 1996, is amended by 
     striking the proviso relating to enrollment of new acres in 
     1997.
       (b) Optional Contract Termination by Producers.--Section 
     1235 of such Act (16 U.S.C. 3835), is amended by adding at 
     the end the following new subsection:
       ``(e) Termination by Owner or Operator.--
       ``(1) Notice of termination.--An owner or operator of land 
     subject to a contract entered into under this subchapter may 
     terminate the contract by submitting to the Secretary written 
     notice of the intention of the owner or operator to terminate 
     the contract.
       ``(2) Effective date.--The contract termination shall take 
     effect 60 days after the date on which the owner or operator 
     submits the written notice under paragraph (1).
       ``(3) Pro-rated rental payment.--If a contract entered into 
     under this subchapter is terminated under this subsection 
     before the end of the fiscal year for which a rental payment 
     is due, the Secretary shall provide a prorated rental payment 
     covering the portion of the fiscal year during which the 
     contract was in effect.
       ``(4) Renewed enrollment.--The termination of a contract 
     entered into under this subchapter shall not affect the 
     ability of the owner or operator who requested such 
     termination to submit a subsequent bid to enroll the land 
     that was subject to the contract into the conservation 
     reserve.
       ``(5) Conservation requirements.--If land that was subject 
     to a contract is returned to production of an agricultural 
     commodity, the Secretary may impose conservation requirements 
     under subtitle A on the use of the land that are similar to 
     the requirements imposed on other lands subject to such 
     subtitle, but in no case shall such requirements be more 
     onerous that the requirements imposed on other lands.''.
       (c) Limitation on Rental Rates.--Section 1234(c) of such 
     Act (16 U.S.C. 3834) is amended by adding at the end the 
     following new paragraph:
       ``(5) In the case of the extension of a contract, or a new 
     contract covering land which was previously enrolled in the 
     conservation reserve, annual rental payments under the new or 
     extended contract may not exceed 75 percent of the annual 
     rental payment under the previous contract.''.

     SEC. 1403. CROP INSURANCE.

       (a) Conversion of Catastrophic Risk Protection Program to 
     Voluntary Program.--Subsection (b)(7) of section 508 of the 
     Federal Crop Insurance Act (7 U.S.C. 1508) is amended--
       (1) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (2) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) Exception to mandatory participation requirement.--
     Notwithstanding subparagraph (A), a producer may decline to 
     obtain catastrophic risk protection beginning with spring-
     planted 1996 crops and in any subsequent crop year, yet 
     remain eligible for any market transition contract or 
     marketing assistance loan, the conservation reserve program, 
     or any benefit described in section 371 of the Consolidated 
     Farm and Rural Development Act, if the producer agrees in 
     writing to waive any eligibility for emergency crop loss 
     assistance in connection with losses to any crop for which 
     the producer declines to obtain catastrophic risk 
     protection.''.
       (b) Delivery of Voluntary Catastrophic Protection.--
     Subsection (b)(4) of such section is amended by adding at the 
     end the following new subparagraphs:

[[Page H11005]]

       ``(C) Elimination of secretarial option.--For crop years 
     beginning after the implementation of the exception under 
     paragraph (7)(B) to the mandatory participation requirement, 
     the option for delivery of catastrophic risk protection 
     provided in subparagraph (A)(ii) shall not be available to 
     the Secretary. All risk protection policies written by the 
     Department prior to that date shall be transferred, including 
     all fees collected for the crop year in which the private 
     sector will assume the policies, in an orderly manner to the 
     private sector for performance of all service and loss 
     adjustment functions.
       ``(D) Guarantee of private sector service.--In full 
     consultation and cooperation with approved insurance 
     providers, the Corporation shall develop a plan to ensure 
     that each producer of an insured crop has the opportunity to 
     be serviced by an approved insurance provider if insurance is 
     available for that crop in that county. Not later than May 1, 
     1996, the Corporation shall submit to the Committee on 
     Agriculture of the House of Representatives and the Committee 
     on Agriculture, Nutrition, and Forestry of the Senate the 
     plan in the form it is to be implemented by the Secretary.''.
       (c) Establishment of the Office of Risk Management.--
       (1) Establishment.--The Department of Agriculture 
     Reorganization Act of 1994 is amended by inserting after 
     section 226 (7 U.S.C. 6932) the following new section:

     ``SEC. 226A. OFFICE OF RISK MANAGEMENT.

       ``(a) Establishment.--Subject to subsection (e), the 
     Secretary shall establish and maintain in the Department an 
     independent Office of Risk Management.
       ``(b) Functions of the Office of Risk Management.--The 
     Office of Risk Management shall have jurisdiction over the 
     following functions:
       ``(1) Supervision of the Federal Crop Insurance 
     Corporation.
       ``(2) Administration and oversight of all aspects, 
     including delivery through local offices of the Department, 
     of all programs authorized under the Federal Crop Insurance 
     Act (7 U.S.C. 1501 et seq.).
       ``(3) Any pilot or other programs involving revenue 
     insurance, risk management savings accounts, or the use of 
     the futures market to manage risk and support farm income 
     that may be established under the Federal Crop Insurance Act 
     or other law.
       ``(4) Such other functions as the Secretary considers 
     appropriate.
       ``(c) Administrator.--
       ``(1) The Office of Risk Management shall be headed by an 
     Administrator who shall be appointed by the Secretary.
       ``(2) The Administrator of the Office of Risk Management 
     shall also serve as Manager of the Federal Crop Insurance 
     Corporation.
       ``(d) Resources.--
       ``(1) Functional coordination.--Certain functions of the 
     Office of Risk Management, such as human resources, public 
     affairs, and legislative affairs, may be provided by a 
     consolidation of such functions under the Under Secretary of 
     Agriculture for Farm and Foreign Agricultural Services.
       ``(2) Minimum provisions.--Notwithstanding paragraph (1) or 
     any other provision of law or order of the Secretary, the 
     Secretary shall provide the Office of Risk Management with 
     human and capital resources sufficient for the Office to 
     carry out its functions in a timely and efficient manner.
       ``(3) Fiscal year 1996 funding.--Not less than $88,500,000 
     of the appropriation provided for the salaries and expenses 
     of the Consolidated Farm Services Agency in the Agricultural, 
     Rural Development, Food and Drug Administration, and Related 
     Agencies Appropriations Act, 1996 shall be provided to the 
     Office of Risk Management for the salaries and expenses of 
     the Office.''.
       (2) Conforming amendment.--Section 226(b) of such Act (7 
     U.S.C. 6932(b)) is amended by striking paragraph (2).
       (d) Reconfiguration of Board of Directors.--Section 505 of 
     the Federal Crop Insurance Act (7 U.S.C. 1505) is amended to 
     read as follows:

     ``SEC. 505. BOARD OF DIRECTORS.

       ``(a) Authority.--The management of the Corporation shall 
     be vested in a Board of Directors subject to the general 
     supervision of the Secretary.
       ``(b) Membership.--
       ``(1) In general.--The Board shall consist of the Manager 
     of the Corporation, the Under Secretary of Agriculture for 
     Farm and Foreign Agricultural Services, one person who is an 
     officer or employee of an approved insurance provider, one 
     person who is a licensed crop insurance agent, one person 
     experienced in the reinsurance business who is not otherwise 
     employed by the Federal Government, and four active producers 
     who are not otherwise employed by the Federal Government. The 
     Secretary shall not be a member of the Board.
       ``(2) Producer members.--In appointing the four active 
     producers who are not otherwise employed by the Federal 
     Government, the Secretary shall ensure that three such 
     members are policyholders and are from different geographic 
     areas of the United States, in order that diverse 
     agricultural interests in the United States are at all times 
     represented on the Board. The Secretary shall ensure that the 
     fourth active producer, who may also be a policyholder, 
     receives a significant portion of crop income from crops 
     covered by the noninsured crop disaster assistance program 
     established under section 519.
       ``(c) Appointment.--
       ``(1) Manager.--The Administrator of the Office of Risk 
     Management appointed by the Secretary under section 226A(c) 
     of the Department of Agriculture Reorganization Act of 1994 
     shall serve as Manager of the Corporation.
       ``(2) Terms of other members.--Other than the Manager of 
     the Corporation and the Under Secretary of Agriculture for 
     Farm and Foreign Agricultural Services, the members of the 
     Board shall be appointed by the Secretary for a term of three 
     years. However, in the initial appointment of such members, 
     the Secretary shall appoint two members for one year, two 
     members for two years, and two members for three years in 
     order to provide greater continuity to the Board.
       ``(3) Succession.--A member of the Board appointed under 
     paragraph (2) may serve after the expiration of the term of 
     office of such member until the successor for such member has 
     taken office.
       ``(d) Quorum.--Five of the members in office shall 
     constitute a quorum for the transaction of the business of 
     the Board.
       ``(e) Impairment of Powers.--The powers of the Board to 
     execute the functions of the Corporation shall be impaired at 
     any time there are not six members of the Board in office. 
     Any impairment of the powers of the Board shall also serve to 
     impair the powers of the Manager to act under any delegation 
     of power provided under subsection (g).
       ``(f) Compensation.--
       ``(1) Employees of the department.--The members of the 
     Board who are employed in the Department shall receive no 
     additional compensation for their services as members, but 
     may be allowed necessary traveling and subsistence expenses 
     when engaged in business of the Corporation outside of the 
     District of Columbia.
       ``(2) Nonemployees of the federal government.--The members 
     of the Board who are not employed by the Federal Government 
     shall be paid such compensation for their services as members 
     as the Secretary shall determine, but such compensation shall 
     not exceed the daily equivalent of the rate prescribed for 
     positions a level V of the Executive Schedule under section 
     5316 of title 5, United States Code, when actually employed. 
     Such members may also receive actual necessary traveling and 
     subsistence expenses, or a per diem allowance in lieu of 
     subsistence expenses, as authorized by section 5703 of such 
     title for persons in Government service employed 
     intermittently, when on the business of the Corporation away 
     from their homes or regular places of business. Any such 
     compensation shall be paid from the insurance fund 
     established under section 516(c).
       ``(g) Chief Executive Officer.--The Manager of the 
     Corporation shall be its chief executive officer, with such 
     power and authority as may be conferred by the Board.''.

     SEC. 1404. REPEAL OF FARMER OWNED RESERVE PROGRAM.

       (a) Repeal.--Section 110 of the Agricultural Act of 1949 (7 
     U.S.C. 1445e) is repealed.
       (b) Effect of Repeal on Existing Loans.--The repeal of 
     section 110 of the Agricultural Act of 1949 by subsection (a) 
     shall not affect the validity or terms and conditions of any 
     extended price support loan provided under such section 
     before the date of the enactment of this Act.

     SEC. 1405. REDUCTION IN FUNDING LEVELS FOR EXPORT ENHANCEMENT 
                   PROGRAM.

       Section 301(e) of the Agricultural Trade Act of 1978 (7 
     U.S.C. 5651(e)) is amended by striking paragraph (1) and 
     inserting the following new paragraph:
       ``(1) In general.--To carry out the program established 
     under this section, the Commodity Credit Corporation shall 
     make available--
       ``(A) for each of the fiscal years 1991 through 1995, not 
     more than $500,000,000 of the funds or commodities of the 
     Commodity Credit Corporation;
       ``(B) for each of the fiscal years 1996 and 1997, not more 
     than $400,000,000 of the funds or commodities of the 
     Commodity Credit Corporation;
       ``(C) for fiscal year 1998, not more than $500,000,000 of 
     the funds or commodities of the Commodity Credit Corporation;
       ``(D) for fiscal year 1999, not more than $550,000,000 of 
     the funds or commodities of the Commodity Credit Corporation;
       ``(E) for fiscal year 2000, not more than $579,000,000 of 
     the funds or commodities of the Commodity Credit Corporation; 
     and
       ``(F) for each of the fiscal years 2001 and 2002, not more 
     than $478,000,000 of the funds or commodities of the 
     Commodity Credit Corporation.''.

     SEC. 1406. BUSINESS INTERRUPTION INSURANCE PROGRAM.

       (a) Establishment of Program.--Not later than December 31, 
     1996, the Secretary of Agriculture shall implement a program 
     (to be known as the ``Business Interruption Insurance 
     Program''), under which the producer of a program crop could 
     elect to obtain revenue insurance coverage to ensure that the 
     producer receives an indemnity payment if the producer 
     suffers a loss of revenue. The nature and extent of the 
     program and the manner of determining the amount of an 
     indemnity payment shall be established by the Secretary.
       (b) Report on Progress and Proposed Expansion.--Not later 
     than January 1, 1998, the Secretary shall submit to the 
     Commission on the 21st Century Production Agriculture the 
     data and results of the program through October 1, 1997. In 
     addition, the Secretary shall 

[[Page H11006]]

     submit information and recommendations to the Commission with 
     respect to the program that will serve as the basis for the 
     Secretary to offer revenue insurance to agricultural 
     producers, at one or more levels of coverage, that--
       (1) is in addition to, or in lieu of, catastrophic and 
     higher levels of crop insurance;
       (2) is offered through reinsurance arrangements with 
     private insurance companies;
       (3) is actuarially sound; and
       (4) requires the payment of premiums and administrative 
     fees by participating producers.
       (c) Program Crop Defined.--For purposes of this section, 
     the term ``program crop'' means a crop of wheat, corn, grain 
     sorghums, oats, barley, upland cotton, or rice.
     Subtitle E--Commission on 21st Century Production Agriculture

     SEC. 1501. ESTABLISHMENT.

       There is hereby established a commission to be known as the 
     ``Commission on 21st Century Production Agriculture'' 
     (hereinafter in this title referred to as the 
     ``Commission'').

     SEC. 1502. COMPOSITION.

       (a) Membership and Appointment.--The Commission shall be 
     composed of 11 members, appointed as follows:
       (1) Three members shall be appointed by the President.
       (2) Four members shall be appointed by the Chairman of the 
     Committee on Agriculture of the House of Representatives in 
     consultation with the ranking minority member of the 
     Committee.
       (3) Four members shall be appointed by the Chairman of the 
     Committee on Agriculture, Nutrition, and Forestry of the 
     Senate in consultation with the ranking minority member of 
     the Committee.
       (b) Qualifications.--At least one of the members appointed 
     under each of the paragraphs (1), (2), and (3) of subsection 
     (a) shall be an individual who is primarily involved in 
     production agriculture. All other members of the Commission 
     shall be appointed from among individuals having knowledge 
     and experience in agricultural production, marketing, 
     finance, or trade.
       (c) Term of Members; Vacancies.--Members of the Commission 
     shall be appointed for the life of the Commission. A vacancy 
     on the Commission shall not affect its powers, but shall be 
     filled in the same manner as the original appointment was 
     made.
       (d) Time for Appointment; First Meeting.--The members of 
     the Commission shall be appointed not later than October 1, 
     1997. The Commission shall convene its first meeting to carry 
     out its duties under this title 30 days after six members of 
     the Commission have been appointed.
       (e) Chairman.--The chairman of the Commission shall be 
     designated jointly by the Chairman of the Committee on 
     Agriculture of the House of Representatives and the Chairman 
     of the Committee on Agriculture, Nutrition, and Forestry of 
     the Senate from among the members of the Commission.

     SEC. 1503. COMPREHENSIVE REVIEW OF PAST AND FUTURE OF 
                   PRODUCTION AGRICULTURE.

       (a) Initial Review.--The Commission shall conduct a 
     comprehensive review of changes in the condition of 
     production agriculture in the United States since the date of 
     the enactment of this Act and the extent to which such 
     changes are the result of the amendments made by this Act. 
     The review shall include the following:
       (1) An assessment of the initial success of market 
     transition contracts under section 102 of the Agricultural 
     Act of 1949 in supporting the economic viability of farming 
     in the United States.
       (2) An assessment of the food security situation in the 
     United States in the areas of trade, consumer prices, 
     international competitiveness of United States production 
     agriculture, food supplies, and humanitarian relief.
       (3) An assessment of the changes in farmland values and 
     agricultural producer incomes since the date of the enactment 
     of this Act.
       (4) An assessment of the extent to which regulatory relief 
     for agricultural producers has been enacted and implemented, 
     including the application of cost/benefit principles in the 
     issuance of agricultural regulations.
       (5) An assessment of the extent to which tax relief for 
     agricultural producers has been enacted in the form of 
     capital gains tax reductions, estate tax exemptions, and 
     mechanisms to average tax loads over high and low income 
     years.
       (6) An assessment of the effect of any Government 
     interference in agricultural export markets, such as the 
     imposition of trade embargoes, and the degree of 
     implementation and success of international trade agreements.
       (7) An assessment of the likely affect of the sale, lease, 
     or transfer of farm poundage quota for peanuts across State 
     lines.
       (b) Subsequent Review.--The Commission shall conduct a 
     comprehensive review of the future of production agriculture 
     in the United States and the appropriate role of the Federal 
     Government in support of production agriculture. The review 
     shall include the following:
       (1) An assessment of changes in the condition of production 
     agriculture in the United States since the initial review 
     conducted under subsection (a).
       (2) Identification of the appropriate future relationship 
     of the Federal Government with production agriculture after 
     2002.
       (3) An assessment of the personnel and infrastructure 
     requirements of the Department of Agriculture necessary to 
     support the future relationship of the Federal Government 
     with production agriculture.
       (c) Recommendations.--In carrying out the subsequent review 
     under subsection (b), the Commission shall develop specific 
     recommendations for legislation to achieve the appropriate 
     future relationship of the Federal Government with production 
     agriculture identified under subsection (a)(2).

     SEC. 1504. REPORTS.

       (a) Report on Initial Review.--Not later than June 1, 1998, 
     the Commission shall submit to the President, the Committee 
     on Agriculture of the House of Representatives, and the 
     Committee on Agriculture, Nutrition, and Forestry of the 
     Senate a report containing the results of the initial review 
     conducted under section 1503(a).
       (b) Report on Subsequent Review.--Not later than January 1, 
     2001, the Commission shall submit to the President and the 
     congressional committees specified in subsection (a) a report 
     containing the results of the subsequent review conducted 
     under section 1503(b).

     SEC. 1505. POWERS.

       (a) Hearings.--The Commission may, for the purpose of 
     carrying out this title, conduct such hearings, sit and act 
     at such times, take such testimony, and receive such 
     evidence, as the Commission considers appropriate.
       (b) Assistance From Other Agencies.--The Commission may 
     secure directly from any department or agency of the Federal 
     Government such information as may be necessary for the 
     Commission to carry out its duties under this title. Upon 
     request of the chairman of the Commission, the head of the 
     department or agency shall, to the extent permitted by law, 
     furnish such information to the Commission.
       (c) Mail.--The Commission may use the United States mails 
     in the same manner and under the same conditions as the 
     departments and agencies of the Federal Government.
       (d) Assistance From Secretary.--The Secretary of 
     Agriculture shall provide to the Commission appropriate 
     office space and such reasonable administrative and support 
     services as the Commission may request.

     SEC. 1506. COMMISSION PROCEDURES.

       (a) Meetings.--The Commission shall meet on a regular basis 
     (as determined by the chairman) and at the call of the 
     chairman or a majority of its members.
       (b) Quorum.--A majority of the members of the Commission 
     shall constitute a quorum for the transaction of business.

     SEC. 1507. PERSONNEL MATTERS.

       (a) Compensation.--Each member of the Commission shall 
     serve without compensation, but shall be allowed travel 
     expenses including per diem in lieu of subsistence, as 
     authorized by section 5703 of title 5, United States Code, 
     when engaged in the performance of Commission duties.
       (b) Staff.--The Commission shall appoint a staff director, 
     who shall be paid at a rate not to exceed the maximum rate of 
     basic pay under section 5376 of title 5, United States Code, 
     and such professional and clerical personnel as may be 
     reasonable and necessary to enable the Commission to carry 
     out its duties under this title without regard to the 
     provisions of title 5, United States Code, governing 
     appointments in the competitive service, and without regard 
     to the provisions of chapter 51 and subchapter III of chapter 
     53 of such title, or any other provision of law, relating to 
     the number, classification, and General Schedule rates. No 
     employee appointed under this subsection (other than the 
     staff director) may be compensated at a rate to exceed the 
     maximum rate applicable to level GS-15 of the General 
     Schedule.
       (c) Detailed Personnel.--Upon request of the chairman of 
     the Commission, the head of any department or agency of the 
     Federal Government is authorized to detail, without 
     reimbursement, any personnel of such department or agency to 
     the Commission to assist the Commission in carrying out its 
     duties under this section. The detail of any such personnel 
     may not result in the interruption or loss of civil service 
     status or privilege of such personnel.

     SEC. 1508. TERMINATION OF COMMISSION.

       The Commission shall terminate upon submission of the final 
     report required by section 1504.
         TITLE II--COMMITTEE ON BANKING AND FINANCIAL SERVICES

     SEC. 2001. TABLE OF CONTENTS.

       The table of contents for this title is as follows:

                     Subtitle A--Housing Provisions

Sec. 2101. Termination of RTC and FDIC affordable housing programs.
Sec. 2102. Foreclosure avoidance and borrower assistance.
Sec. 2103. Reform of HUD-owned multifamily property disposition 
              program.
Sec. 2104. Recapture of rural housing loan subsidies by Rural Housing 
              and Community Development Service.
Sec. 2105. Reduction of section 8 annual adjustment factors for units 
              without tenant turnover.

                 Subtitle B--Thrift Charter Conversion

Sec. 2200. Short title.

 Chapter 1--Bank Insurance Fund and Savings Association Insurance Fund

Sec. 2201. Special assessment.

[[Page H11007]]

Sec. 2202. Assessments on insured depository institutions.
Sec. 2203. Merger of Bank Insurance Fund and Savings Association 
              Insurance Fund after recapitalization of SAIF.
Sec. 2204. Refund of amounts in deposit insurance fund in excess of 
              designated reserve amount.
Sec. 2205. Assessments authorized only if needed to maintain the 
              reserve ratio of a deposit insurance fund.

          Chapter 2--Status of Banks and Savings Associations

Sec. 2221. Termination of Federal savings associations; treatment of 
              State savings associations as banks for purposes of 
              Federal banking law.
Sec. 2222. Treatment of certain activities and affiliations of bank 
              holding companies resulting from this Act.
Sec. 2223. Transition provisions for activities of savings associations 
              which convert into or become treated as banks.
Sec. 2224. Registration of bank holding companies resulting from 
              conversions of savings associations to banks or treatment 
              of savings associations as banks.
Sec. 2225. Additional transition provisions and special rules.
Sec. 2226. Technical and conforming amendments.
Sec. 2227. References to savings associations and State banks in 
              Federal law.
Sec. 2228. Repeal of Home Owners' Loan Act.
Sec. 2229. Effective date; definitions.

       Chapter 3--Transfer of Functions, Personnel, and Property

Sec. 2241. Office of Thrift Supervision abolished.
Sec. 2242. Determination of transferred functions and employees.
Sec. 2243. Savings provisions.
Sec. 2244. References in Federal law to Director of the Office of 
              Thrift Supervision.
Sec. 2245. Reconfiguration of board of directors of FDIC as a result of 
              removal of Director of the Office of Thrift Supervision.

           Subtitle C--Community Reinvestment Act Amendments

Sec. 2301. Expression of congressional intent.
Sec. 2302. Community Reinvestment Act exemption.
Sec. 2303. Self-certification of CRA compliance.
Sec. 2304. Community input and conclusive rating.
Sec. 2305. Special purpose financial institutions.
Sec. 2306. Increased incentives for lending to low- and moderate-income 
              communities.
Sec. 2307. Prohibition on additional reporting under CRA.
Sec. 2308. Technical amendment.
Sec. 2309. Duplicative reporting.
Sec. 2310. CRA congressional oversight.
Sec. 2311. Consultation among examiners.
Sec. 2312. Limitation on regulations.

               Subtitle D--Phase-Down of Oversight Board

Sec. 2401. Termination of authority of Oversight Board to employ staff.
                     Subtitle A--Housing Provisions

     SEC. 2101. TERMINATION OF RTC AND FDIC AFFORDABLE HOUSING 
                   PROGRAMS.

       (a) Repeal of Unified Program and Transfer of RTC Windup 
     Authority to HUD.--Section 21A(c) of the Federal Home Loan 
     Bank Act (12 U.S.C. 1441a(c)) is amended by striking 
     paragraph (17) and inserting the following new paragraph:
       ``(17) Transfer of authority.--The Secretary shall assume, 
     not later than December 31, 1995, and thereafter shall carry 
     out, any remaining authority and responsibilities of the 
     Corporation to recapture excess proceeds from resale of 
     properties and to monitor and enforce low-income occupancy 
     requirements or rent limitations under this subsection and 
     shall assume any direct or contingent liability of the 
     Corporation to carry out such authority and 
     responsibilities.''.
       (b) Termination of RTC Affordable Housing Program.--Section 
     21A(c) of the Federal Home Loan Bank Act (12 U.S.C. 1441a(c)) 
     is amended by adding at the end the following new paragraph:
       ``(18) Termination.--
       ``(A) In general.--On and after the date of the enactment 
     of the Seven-Year Balanced Budget Reconciliation Act of 1995, 
     the provisions of this subsection (other than paragraph (17)) 
     shall not apply with respect to any eligible residential 
     property or eligible condominium property.
       ``(B) Savings provision.--Notwithstanding subparagraph (A), 
     the provisions of this subsection shall continue to apply on 
     and after such date of enactment to any eligible residential 
     property or eligible condominium property that--
       ``(i) has been sold or otherwise disposed of by the 
     Corporation before such date of enactment; or
       ``(ii) is subject to a contract of sale or other 
     disposition entered into before such date of enactment.''.
       (c) Termination of Affordable Housing Advisory Board.--
     Section 14(b)(9) of the Resolution Trust Corporation 
     Completion Act (12 U.S.C. 1831q note) is amended by striking 
     ``September 30, 1998'' and inserting ``September 30, 1995''.
       (d) Repeal of FDIC Program and Transfer of Windup Authority 
     to HUD.--
       (1) Repeal.--Section 40 of the Federal Deposit Insurance 
     Act (12 U.S.C. 1831q) is hereby repealed.
       (2) Transfer of windup authority.--Notwithstanding 
     paragraph (1)--
       (A) effective December 31, 1995, the Secretary shall carry 
     out any remaining authority and responsibilities of the 
     Federal Deposit Insurance Corporation under section 40 of the 
     Federal Deposit Insurance Act to recapture excess proceeds 
     from resale of properties and to monitor and enforce low-
     income occupancy requirements or rent limitations under such 
     section and shall assume any direct or contingent liability 
     of the Corporation to carry out such authority and 
     responsibilities; and
       (B) the Federal Deposit Insurance Corporation shall 
     consummate any sales of property under section 40 of such Act 
     that were pending under contracts of sale on September 30, 
     1995.
       (e) FDIC Disposition of Assets as Conservator or 
     Receiver.--Section 11(d)(13)(E) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(d)(13)(E)) is amended--
       (1) in clause (iii), by inserting ``and'' after the 
     semicolon;
       (2) in clause (iv), by striking ``; and'' and inserting a 
     period; and
       (3) by striking clause (v).
       (f) Disposition of FDIC Assets.--Section 13(d)(3)(D) of the 
     Federal Deposit Insurance Act (12 U.S.C. 1823(d)(3)(D)) is 
     amended--
       (1) in clause (iii), by inserting ``and'' after the 
     semicolon;
       (2) in clause (iv), by striking ``; and'' and inserting a 
     period; and
       (3) by striking clause (v).

     SEC. 2102. FORECLOSURE AVOIDANCE AND BORROWER ASSISTANCE.

       (a) Foreclosure Avoidance.--The last sentence of section 
     204(a) of the National Housing Act (12 U.S.C. 1710(a)) is 
     amended by inserting before the period the following: ``: And 
     provided further, That the Secretary may pay insurance 
     benefits to the mortgagee to recompense the mortgagee for its 
     actions to provide an alternative to foreclosure of a 
     mortgage that is in default, which actions may include such 
     actions as special forbearance, loan modification, and deeds 
     in lieu of foreclosure, all upon such terms and conditions as 
     the mortgagee shall determine in the mortgagee's sole 
     discretion within guidelines provided by the Secretary, but 
     which may not include assignment of a mortgage to the 
     Secretary: And provided further, That for purposes of the 
     preceding proviso, no action authorized by the Secretary and 
     no action taken, nor any failure to act, by the Secretary or 
     the mortgagee shall be subject to judicial review''.
       (b) Authority to Assist Mortgagors in Default.--Section 230 
     of the National Housing Act (12 U.S.C. 1715u) is amended to 
     read as follows:


              ``authority to assist mortgagors in default

       ``Sec. 230. (a) Payment of Partial Claim.--The Secretary 
     may establish a program for payment of a partial insurance 
     claim to a mortgagee that agrees to apply the claim amount to 
     payment of a mortgage on a 1- to 4-family residence that is 
     in default. Any such payment under such program to the 
     mortgagee shall be made in the Secretary's sole discretion 
     and on terms and conditions acceptable to the Secretary, 
     except that--
       ``(1) the amount of the payment shall be in an amount 
     determined by the Secretary, which shall not exceed an amount 
     equivalent to 12 monthly mortgage payments and any costs 
     related to the default that are approved by the Secretary; 
     and
       ``(2) the mortgagor shall agree to repay the amount of the 
     insurance claim to the Secretary upon terms and conditions 
     acceptable to the Secretary.

     The Secretary may pay the mortgagee, from the appropriate 
     insurance fund, in connection with any activities that the 
     mortgagee is required to undertake concerning repayment by 
     the mortgagor of the amount owed to the Secretary.
       ``(b) Assignment.--
       ``(1) Program authority.--The Secretary may establish a 
     program for assignment to the Secretary, upon request of the 
     mortgagee, of a mortgage on a 1- to 4-family residence 
     insured under this Act.
       ``(2) Program requirements.--The Secretary may accept 
     assignment of a mortgage under a program under this 
     subsection only if--
       ``(A) the mortgage was in default;
       ``(B) the mortgagee has modified the mortgage to cure the 
     default and provide for mortgage payments within the 
     reasonable ability of the mortgagor to pay at interest rates 
     not exceeding current market interest rates; and
       ``(C) the Secretary arranges for servicing of the assigned 
     mortgage by a mortgagee (which may include the assigning 
     mortgagee) through procedures that the Secretary has 
     determined to be in the best interests of the appropriate 
     insurance fund.
       ``(3) Payment of insurance benefits.--Upon accepting 
     assignment of a mortgage under the program under this 
     subsection, the Secretary may pay insurance benefits to the 
     mortgagee from the appropriate insurance fund in an amount 
     that the Secretary determines to be appropriate, but which 
     may not 

[[Page H11008]]

     exceed the amount necessary to compensate the mortgagee for 
     the assignment and any losses and expenses resulting from the 
     mortgage modification.
       ``(c) Prohibition of Judicial Review.--No decision by the 
     Secretary to exercise or forego exercising any authority 
     under this section shall be subject to judicial review.''.
       (c) Savings Provision.--Any mortgage for which the 
     mortgagor has applied to the Secretary of Housing and Urban 
     Development, before the date of the enactment of this Act, 
     for assignment pursuant to section 230(b) of the National 
     Housing Act shall continue to be governed by the provisions 
     of such section, as in effect immediately before such date of 
     enactment.
       (d) Applicability of Other Laws.--No provision of the 
     National Housing Act or any other law shall be construed to 
     require the Secretary of Housing and Urban Development to 
     provide an alternative to foreclosure for mortgagees with 
     mortgages on 1- to 4-family residences insured by the 
     Secretary under the National Housing Act, or to accept 
     assignments of such mortgages.

     SEC. 2103. REFORM OF HUD-OWNED MULTIFAMILY PROPERTY 
                   DISPOSITION PROGRAM.

       (a) In General.--Effective October 1, 1995, section 203 of 
     the Housing and Community Development Amendments of 1978 (12 
     U.S.C. 1701z-11) is amended to read as follows:

     ``SEC. 203. MANAGEMENT AND DISPOSITION OF HUD-OWNED 
                   MULTIFAMILY HOUSING PROJECTS.

       ``(a) In General.--The Secretary of Housing and Urban 
     Development may manage and dispose of (1) multifamily housing 
     projects that are owned by the Secretary or that are subject 
     to mortgages held by the Secretary, and (2) mortgages on 
     multifamily housing projects that are held by the Secretary, 
     without regard to any other provision of law.
       ``(b) Authority to Delegate.--The Secretary of Housing and 
     Urban Development may delegate to one or more entities the 
     authority to carry out some or all of the functions and 
     responsibilities of the Secretary in connection with the 
     foreclosure of mortgages on multifamily housing projects held 
     by the Secretary.
       ``(c) Definition.--For purposes of this section, the term 
     `multifamily housing project' means any multifamily rental 
     housing project which is, or prior to acquisition by the 
     Secretary was, assisted or insured under the National Housing 
     Act, or was subject to a loan under section 202 of the 
     Housing Act of 1959.''.
       (b) Conforming Amendments.--
       (1) Nondiscrimination against certificate and voucher 
     holders.--Section 183(c) of the Housing and Community 
     Development Act of 1987 (42 U.S.C. 1437f note) is amended by 
     striking ``section 203(i)(2) of the Housing and Community 
     Development Amendments of 1978, as amended by section 181(h) 
     of this Act'' and inserting ``section 203(b) of the Housing 
     and Community Development Amendments of 1978 (as in effect 
     before October 1, 1995)''.
       (2) LIHPRH act of 1990.--Section 212(c) of the Low-Income 
     Housing Preservation and Resident Homeownership Act of 1990 
     (12 U.S.C. 4102(c)) is amended by striking the last sentence.
       (3) Hope homeownership program.--Section 427 of the 
     Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
     12877) is amended by striking ``subject to--'' and all that 
     follows and inserting ``subject to the Low-Income Housing 
     Preservation and Resident Homeownership Act of 1990.''.
       (4) FHA multifamily housing mortgage insurance.--Section 
     207(k) of the National Housing Act (12 U.S.C. 1713(k)) is 
     amended by striking the third sentence.
       (5) Multifamily mortgage foreclosure act of 1981.--Section 
     367(b)(2) of the Multifamily Mortgage Foreclosure Act of 1981 
     (12 U.S.C.3706(b)(2)) is amended--
       (A) by striking subparagraph (B); and
       (B) by striking ``(A)''.
       (6) Preventing mortgage defaults on insured multifamily 
     projects.--Section 103(h)(2)(B) of the Multifamily Housing 
     Property Disposition Reform Act of 1994 (12 U.S.C. 1715z-1a 
     note) is amended by inserting ``(as in effect before October 
     1, 1995)'' after ``1978''.

     SEC. 2104. RECAPTURE OF RURAL HOUSING LOAN SUBSIDIES BY RURAL 
                   HOUSING AND COMMUNITY DEVELOPMENT SERVICE.

       The first sentence of section 521(a)(1)(D)(i) of the 
     Housing Act of 1949 (42 U.S.C. 1490a(a)(1)(D)(i)) is amended 
     by inserting ``upon the repayment of any loan made under this 
     title or'' after ``assistance rendered''.

     SEC. 2105. REDUCTION OF SECTION 8 ANNUAL ADJUSTMENT FACTORS 
                   FOR UNITS WITHOUT TENANT TURNOVER.

       Paragraph (2)(A) of section 8(c) of the United States 
     Housing Act of 1937 (42 U.S.C. 1437f(c)(2)(A)) is amended by 
     striking the last sentence.
                 Subtitle B--Thrift Charter Conversion

     SEC. 2200. SHORT TITLE.

       This subtitle may be cited as the ``Thrift Charter 
     Conversion Act of 1995''.

 CHAPTER 1--BANK INSURANCE FUND AND SAVINGS ASSOCIATION INSURANCE FUND

     SEC. 2201. SPECIAL ASSESSMENT.

       Section 7(b)(6) of the Federal Deposit Insurance Act (12 
     U.S.C. 1817(b)(6)) is amended--
       (1) by redesignating clauses (i), (ii), and (iii) of 
     subparagraph (A) as subclauses (I), (II), and (III), 
     respectively;
       (2) by redesignating subparagraphs (A) and (B) as clauses 
     (i) and (ii), respectively;
       (3) by moving the left margin of such clauses and 
     subclauses (as so redesignated) 2 ems to the right;
       (4) by striking ``special assessments.--In addition to'' 
     and inserting ``special assessments.--
       ``(A) In general.--In addition to''; and
       (5) by adding at the end the following new subparagraphs:
       ``(B) Single additional special assessment with respect to 
     certain accounts.--
       ``(i) In general.--The Corporation shall impose, on the 
     basis of such factors as the Board of Directors considers to 
     be appropriate, a single special assessment on the 
     institutions described in the following subclauses (other 
     than institutions exempt under subparagraph (C)):

       ``(I) Each Savings Association Insurance Fund member 
     (including any Savings Association Insurance Fund member 
     referred to in section 5(d)(2)(G)).
       ``(II) Each Bank Insurance Fund member which has deposits 
     which are treated, under section 5(d)(3), as deposits which 
     are insured by the Savings Association Insurance Fund.

       ``(ii) Amount of assessment.--The assessment imposed under 
     clause (i) shall be in an amount equal to such percentage of 
     the Savings Association Insurance Fund assessment base (of 
     the institutions subject to such assessment) as of March 31, 
     1995, as the Board of Directors determines, in the Board of 
     Directors' discretion, to be necessary in order for the 
     reserve ratio of the Savings Association Insurance Fund to 
     meet the designated reserve ratio on the 1st business day of 
     January, 1996.
       ``(iii) Deposit of assessment.--Notwithstanding any other 
     provision of law, the proceeds of any assessment imposed 
     under clause (i) shall be deposited in the Savings 
     Association Insurance Fund.
       ``(iv) Date payment due.--The special assessment imposed 
     under this subparagraph shall be--

       ``(I) due on the 1st business day of January, 1996; and
       ``(II) paid to the Corporation on the later of the due date 
     or such other date as the Corporation may prescribe which may 
     not be later than the end of the 60-day period beginning on 
     the date of the Thrift Charter Conversion Act of 1995.

       ``(v) Savings association insurance fund assessment base 
     defined.--For purposes of this subparagraph, the term Savings 
     Association Insurance Fund assessment base means--

       ``(I) the assessment base of Savings Association Insurance 
     Fund members on which assessments are imposed under the risk-
     based assessment system established pursuant to paragraph 
     (1); and
       ``(II) in the case of an institution described in clause 
     (i)(II), the adjusted attributable deposit amount determined 
     under subparagraph (C) of section 5(d)(3) for purposes of 
     subparagraph (B)(i) of such section.

       ``(C) Special rules for certain exempt institutions.--
       ``(i) In general.--The Board of Directors may exempt any 
     weak insured depository institution from the payment of the 
     assessment imposed under subparagraph (B)(i) if the exemption 
     would reduce risk to the Savings Association Insurance Fund.
       ``(ii) Continuation of assessment rates applicable as of 
     june 30, 1995.--Notwithstanding any other provision of this 
     subsection or any determination by the Corporation pursuant 
     to paragraph (2), the semiannual assessment rate 
     applicable under paragraph (2) during the period beginning 
     on January 1, 1996, and ending on December 31, 1999, with 
     respect to any insured depository institution which 
     receives an exemption under clause (i) shall be the 
     semiannual assessment rate which would be applicable to 
     such institution under paragraph (2) if such assessment 
     rate were calculated in the manner in which semiannual 
     assessment rates for Savings Association Insurance Fund 
     members were determined by the Corporation under such 
     paragraph as of June 30, 1995.
       ``(iii) Special rule for oakar banks.--If an insured 
     depository institution to which clause (ii) applies is an 
     institution described in subparagraph (B)(i)(II), section 
     5(d)(3) (as in effect on September 13, 1995) shall continue 
     to apply with respect to such institution for purposes of 
     clause (ii) without regard to the repeal of such section by 
     section 2202(c) of the Thrift Charter Conversion Act of 1995.
       ``(iv) Deposit of assessment.--Assessments imposed under 
     paragraph (2) in accordance with clause (i) on depository 
     institutions to which such clause applies shall be 
     deposited--

       ``(I) in the Savings Association Insurance Fund until such 
     fund is merged into the deposit insurance fund pursuant to 
     section 2203(a)(2) of the Thrift Charter Conversion Act of 
     1995; and
       ``(II) after such merger, in the deposit insurance fund.

       ``(v) Guidelines.--

       ``(I) Guidelines required.--Not later than 30 days after 
     the date of the enactment of the Thrift Charter Conversion 
     Act of 1995, the Board of Directors shall prescribe 
     guidelines containing the criteria to be used by the Board of 
     Directors in making any determination under clause (i).
       ``(II) Publication.--The guidelines prescribed under 
     subclause (I) shall be published in the Federal Register.

       ``(D) Pro rata payment of special assessment by exempt 
     institutions authorized.--In the case of any depository 
     institution 

[[Page H11009]]

     which receives an exemption under subparagraph (C)(i) from 
     the special assessment imposed under subparagraph (B) and any 
     successor to such institution, subparagraph (C)(ii) shall 
     cease to apply with respect to such institution as of the 
     date on which the institution makes a payment to the 
     Corporation, on such terms as the Board of Directors may 
     prescribe, in an amount equal to the product of--
       ``(i) 12.5 percent of the product of--

       ``(I) the Savings Association Insurance Fund assessment 
     base of the institution which would have been used in the 
     calculation of the amount of such special assessment if the 
     institution had not received the exemption from such 
     assessment; and
       ``(II) the percentage rate calculated by the Board of 
     Directors under subparagraph (B)(ii) for use in determining 
     the amount of the special assessment for depository 
     institutions which did not receive an exemption under 
     subparagraph (C); and

       ``(ii) the whole number of full semiannual periods which 
     begin after the date of such payment and end before January 
     1, 2000.
       ``(E) Assessment for certain deposits.--
       ``(i) In general.--Notwithstanding any other provision of 
     law, in carrying out the special assessment under 
     subparagraph (B), the Corporation may set assessment rates on 
     the basis of the factors described in clause (iii) for 
     deposits treated under section 5(d)(3) as deposits insured by 
     the Savings Association Insurance Fund.
       ``(ii) Minimum rate.--Notwithstanding clause (i), any rate 
     assessed under such clause may not be less than \2/3\ of the 
     assessment rate imposed under subparagraph (B).
       ``(iii) Factors.--In setting any assessment rate under 
     clause (i), the Corporation shall consider the following 
     factors:

       ``(I) The extent to which deposits treated under section 
     5(d)(3) as deposits insured by the Savings Association 
     Insurance Fund do not reflect the actual amount of deposits 
     insured by such fund because of the growth attribution rule 
     contained in clause (iii) of such section.
       ``(II) The ability of an insured depository institution to 
     demonstrate with deposit data the amount of actual deposits 
     which should be treated as deposits insured by the Savings 
     Association Insurance Fund notwithstanding the growth 
     attribution rule referred to in subclause (I).

       ``(iv) No net budget effect.--Notwithstanding any other 
     provision of this subparagraph, the Corporation shall not set 
     any assessment rate under clause (i) that would result in 
     an increased budget outlay or a decrease in offsetting 
     receipts under this paragraph.''.

     SEC. 2202. ASSESSMENTS ON INSURED DEPOSITORY INSTITUTIONS.

       (a) Financing Corporation Assessments on all FDIC-Insured 
     Depository Institutions.--Section 21(f) of the Federal Home 
     Loan Bank Act (12 U.S.C. 1441(f)) is amended--
       (1) in the portion of paragraph (2) which precedes 
     subparagraph (A)--
       (A) by striking ``each Savings Association Insurance Fund 
     member'' and inserting ``each insured depository institution 
     (as defined in section 3(c)(2) of the Federal Deposit 
     Insurance Act)''; and
       (B) by striking ``such members'' and inserting ``such 
     institutions''; and
       (2) by striking ``, except that--'' and all that follows 
     through the end of the paragraph and inserting ``, except 
     that the Financing Corporation shall have first priority to 
     make the assessment.''.
       (b) Assessment Rates for SAIF Members May Not Be Less Than 
     Assessment Rates for BIF Members.--Section 7(b)(2)(F) of the 
     Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)(F)) is 
     amended--
       (1) by striking ``and'' at the end of clause (i);
       (2) by striking the period at the end of clause (ii) and 
     inserting ``; and''; and
       (3) by adding at the end the following new clause:
       ``(iii) notwithstanding any other provision of this 
     subsection, assessment rates for Savings Association 
     Insurance Fund members may not be less than assessment rates 
     for Bank Insurance Fund members.''.
       (c) Repeal of Exit Moratorium and Oakar Bank Provisions.--
     Effective January 1, 1998, section 5(d) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1815(d)) is amended by 
     striking paragraphs (2) and (3).
       (d) Technical and Conforming Amendments.--
       (1) Section 7(b)(2)(D) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1817(b)(2)(D)) is amended by striking ``Savings 
     Association Insurance Fund members'' and inserting ``members 
     of a deposit insurance fund''.
       (2) Section 21(k) of the Federal Home Loan Bank Act (12 
     U.S.C. 1441(k)) is amended--
       (A) by striking paragraph (1); and
       (B) by redesignating paragraphs (2) and (3) as paragraphs 
     (1) and (2), respectively.
       (e) Effective Date.--The amendments made by subsections 
     (a), (b), and (d) shall take effect on January 1, 1996.

     SEC. 2203. MERGER OF BANK INSURANCE FUND AND SAVINGS 
                   ASSOCIATION INSURANCE FUND AFTER 
                   RECAPITALIZATION OF SAIF.

       (a) Establishment of Deposit Insurance Fund.--
       (1) In general.--Effective January 1, 1998, section 
     11(a)(5) of the Federal Deposit Insurance Act (12 U.S.C. 
     1821(a)(5)) is amended to read as follows:
       ``(5) Deposit insurance fund.--
       ``(A) Establishment.--There is established a fund to be 
     known as the deposit insurance fund which shall--
       ``(i) be maintained and administered by the Corporation; 
     and
       ``(ii) initially consist of the assets and liabilities of 
     the Bank Insurance Fund and Savings Association Insurance 
     Fund which have been merged by the Corporation into the 
     deposit insurance fund pursuant to section 2203(a)(2) of the 
     Thrift Charter Conversion Act of 1995, other than any assets 
     of the Savings Association Insurance Fund which have been 
     deposited in the special reserve of the deposit insurance 
     fund pursuant to section 2203(b)(2) of such Act.
       ``(B) Uses.--The deposit insurance fund shall be available 
     to the Corporation for use in carrying out the insurance 
     purposes of the Corporation in accordance with this Act with 
     respect to insured depository institutions.
       ``(C) Deposits.--All amounts assessed against insured 
     depository institutions by the Corporation shall be deposited 
     into the deposit insurance fund.''.
       (2) Merger by corporation.--Except with respect to any 
     assets of the Savings Association Insurance Fund which are 
     required to be deposited in the special reserve of the 
     deposit insurance fund pursuant to subsection (b)(2), the 
     Corporation shall merge the Bank Insurance Fund and the 
     Savings Association Insurance Fund on January 1, 1998, into 
     the deposit insurance fund established by the amendment made 
     by paragraph (1).
       (b) Establishment of Special Reserve of the Deposit 
     Insurance Fund.--
       (1) In general.--Effective January 1, 1998, section 
     11(a)(6) of the Federal Deposit Insurance Act (12 U.S.C. 
     1821(a)(6)) is amended to read as follows:
       ``(6) Special reserve of the deposit insurance fund.--
       ``(A) In general.--There is established a fund to be known 
     as the special reserve of the deposit insurance fund which 
     shall--
       ``(i) be maintained and administered by the Corporation; 
     and
       ``(ii) initially consist of amounts deposited in the 
     special reserve pursuant to section 2203(b)(2) of the Thrift 
     Charter Conversion Act of 1995.
       ``(B) Emergency use of special reserve.--
       ``(i) Use authorized.--Subject to clause (ii) and 
     notwithstanding subparagraph (C), the Corporation may, in the 
     sole discretion of the Board of Directors, transfer amounts 
     from the special reserve for deposit in the deposit 
     insurance fund for use in accordance with paragraph 
     (5)(B).
       ``(ii) Conditions on transfer.--The Board of Directors may 
     authorize a transfer under clause (i) only if--

       ``(I) the Board of Directors determines that the reserve 
     ratio of the deposit insurance fund is less than 50 percent 
     of the designated reserve ratio; and
       ``(II) the Board of Directors finds that the reserve ratio 
     of the deposit insurance will likely be less than the 
     designated reserve ratio of the fund for each of the 4 
     calendar quarters beginning after the date of such 
     determination.

       ``(C) No refunds or other uses authorized.--Except as 
     provided in subparagraph (B), the Corporation may not make 
     any payment from the special reserve, make any refund or 
     provide any credit to any insured depository institution with 
     respect to any amount in the special reserve, or use any 
     amount in the special reserve for any other purpose 
     (including the use of any such amount as security for the 
     repayment of any obligation of the Corporation).
       ``(D) Exclusion of special reserve in calculating the 
     reserve ratio.--No amount in the special reserve may be taken 
     into account in calculating the reserve ratio of the deposit 
     insurance fund under section 7.''.
       (2) Transfer and deposit by corporation.--If, at the time 
     of the merger of the Bank Insurance Fund and the Savings 
     Association Insurance Fund pursuant to subsection (a)(2), the 
     reserve ratio of the Savings Association Insurance Fund 
     exceeds the designated reserve ratio, the Corporation shall 
     transfer from such fund to the special reserve of the deposit 
     insurance fund established by the amendment made by paragraph 
     (1) an amount equal to the amount which causes the reserve 
     ratio of the Savings Association Insurance Fund to exceed the 
     designated reserve ratio.
       (c) Technical and Conforming Amendments.--
       (1) Section 3(y) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(y)) is amended by striking ``the Bank Insurance 
     Fund or the Savings Association Insurance Fund, as 
     appropriate'' and inserting ``the deposit insurance fund 
     established under section 11(a)(5)''.
       (2) Section 11(a) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(a)) is amended by striking paragraphs (4)(A) and 
     (7).
       (3) Section 5(d)(1) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1815(d)(1)) is amended--
       (A) in subparagraph (A), by striking ``reserve ratios'' and 
     all that follows through the period and inserting ``the 
     reserve ratio of the deposit insurance fund.'';
       (B) by striking subparagraph (B); and
       (C) by redesignating subparagraph (C) as subparagraph (B).
       (4) Section 7 of the Federal Deposit Insurance Act (12 
     U.S.C. 1817) is amended by striking subsection (l).
       (5) Section 7(b)(2) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1817(b)(2)) is amended--

[[Page H11010]]

       (A) by striking subparagraphs (B), (F), and (G);
       (B) in clauses (i) and (iv) of subparagraph (A), by 
     striking ``each deposit insurance fund'' and inserting ``the 
     deposit insurance fund'';
       (C) in subparagraph (A)(iii), by striking ``a deposit 
     insurance fund'' and inserting ``the deposit insurance 
     fund''; and
       (D) by inserting after subparagraph (E) the following new 
     subparagraph:
       ``(F) Reserve ratio defined.--For purposes of this 
     subsection, the term `reserve ratio' means the ratio of the 
     net worth of the deposit insurance fund to the aggregate 
     estimated insured deposits held in all insured depository 
     institutions.''.
       (6) Section 7(b)(3) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1817(b)(3)) is amended--
       (A) in subparagraph (A) by striking ``any deposit insurance 
     fund'' and inserting ``the deposit insurance fund''; and
       (B) by striking subparagraphs (C) and (D).
       (7) Subparagraph (A) of section 7(b)(6) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1817(b)(6)) (as so 
     redesignated by section 2201 of this subtitle) is amended--
       (A) in clause (i)--
       (i) by inserting ``or'' after the semicolon at the end of 
     subclause (I);
       (ii) by striking subclause (II); and
       (iii) by striking ``; and'' at the end of subclause (III) 
     and inserting a period; and
       (B) by striking clause (ii).
       (8) Section 11(a)(4)(B) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1821(a)(4)(B)) is amended by striking ``Bank 
     Insurance Fund and the Savings Association Insurance Fund'' 
     and inserting ``deposit insurance fund''.
       (9) Paragraph (1) of section 11(f) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(f)) is amended by striking 
     ``depositor, except that--'' and all that follows through the 
     period at the end of the paragraph and inserting 
     ``depositor.''.
       (10) Section 11(i)(3) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1821(i)(3)) is amended--
       (A) by striking subparagraph (B); and
       (B) in subparagraph (C), by striking ``subparagraphs (A) 
     and (B)'' and inserting ``subparagraph (A)''.
       (11) Section 11A(a)(3) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1821a(a)(3)) is amended by striking ``Bank 
     Insurance Fund, the Savings Association Insurance Fund,'' and 
     inserting ``deposit insurance fund''.
       (12) Section 11A(f) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1821a(f)) is amended by striking ``Savings 
     Association Insurance Fund'' and inserting ``deposit 
     insurance fund''.
       (13) Section 13(a)(1) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1823(a)(1)) is amended by striking ``Bank 
     Insurance Fund, the Savings Association Insurance Fund,'' and 
     inserting ``deposit insurance fund, the special reserve of 
     the deposit insurance fund,''.
       (14) Section 13(c)(4)(G)(ii) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1823(c)(4)(G)(ii)) is amended--
       (A) by striking ``appropriate insurance fund'' and 
     inserting ``deposit insurance fund'';
       (B) by striking ``the members of the insurance fund (of 
     which such institution is a member)'' and inserting ``insured 
     depository institutions'';
       (C) by striking ``each member's'' and inserting ``each 
     insured depository institution's''; and
       (D) by striking ``the member's'' each place such term 
     appears and inserting ``the institution's''.
       (15) Section 13(c) of the Federal Deposit Insurance Act (12 
     U.S.C. 1823(c)) is amended by striking paragraph (11).
       (16) Section 13(h) of the Federal Deposit Insurance Act (12 
     U.S.C. 1823(h)) is amended by striking ``Bank Insurance 
     Fund'' and inserting ``deposit insurance fund''.
       (17) Section 14(a) of the Federal Deposit Insurance Act (12 
     U.S.C. 1824(a)) is amended--
       (A) by striking ``Bank Insurance Fund or the Savings 
     Association Insurance Fund'' and inserting ``deposit 
     insurance fund''; and
       (B) by striking ``each such fund'' and inserting ``the 
     fund''.
       (18) Section 14(b) of the Federal Deposit Insurance Act (12 
     U.S.C. 1824(b)) is amended by striking ``Bank Insurance Fund 
     or Savings Association Insurance Fund'' and inserting 
     ``deposit insurance fund''.
       (19) Section 14(c) of the Federal Deposit Insurance Act (12 
     U.S.C. 1824(c)) is amended by striking paragraph (3).
       (20) Section 14 of the Federal Deposit Insurance Act (12 
     U.S.C. 1824) is amended by striking subsection (d).
       (21) Section 15(c)(5) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1825(c)(5)) is amended--
       (A) by striking ``Bank Insurance Fund or Savings 
     Association Insurance Fund, respectively,'' and inserting 
     ``deposit insurance fund'';
       (B) by striking ``Bank Insurance Fund or Savings 
     Association Insurance Fund, respectively;'' and inserting 
     ``deposit insurance fund;''; and
       (C) by striking ``Bank Insurance Fund or the Savings 
     Association Insurance Fund, respectively,'' and inserting 
     ``deposit insurance fund,''.
       (22) Section 17(a)(1) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1827(a)(1)) is amended by striking ``Bank 
     Insurance Fund, the Savings Association Insurance Fund,'' 
     each place such term appears and inserting ``deposit 
     insurance fund''.
       (23) Section 17(d) of the Federal Deposit Insurance Act (12 
     U.S.C. 1827(d)) is amended by striking ``Bank Insurance Fund, 
     the Savings Association Insurance Fund,'' each place such 
     term appears and inserting ``deposit insurance fund''.
       (24) The heading for section 17(a) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1827(a)) is amended by striking 
     ``BIF, SAIF,'' and inserting ``the Deposit Insurance Fund''.
       (25) Subsections (a)(1) and (d)(1)(A) of section 24 of the 
     Federal Deposit Insurance Act (12 U.S.C. 1831a) are each 
     amended by striking ``appropriate''.
       (26) Section 24(e)(2) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1831a(e)(2)) is amended--
       (A) in subparagraph (A), by striking ``of which such banks 
     are members''; and
       (B) in subparagraph (B)(ii), by striking ``of which such 
     bank is a member''.
       (27) Section 24(f)(6)(B) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1831a(f)(6)(B)) is amended by striking ``of 
     which such bank is a member''.
       (28) Section 31 of the Federal Deposit Insurance Act (12 
     U.S.C. 1831h) is hereby repealed.
       (29) Section 36(i)(3) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1831m(i)(3)) is amended by striking ``affected''.
       (30) Section 38 of the Federal Deposit Insurance Act (12 
     U.S.C. 1831o) is amended by striking subsection (o).
       (31) Section 21B(f)(2)(C)(ii) of the Federal Home Loan Bank 
     Act (12 U.S.C. 1441b(f)(2)(C)(ii)) is amended to read as 
     follows:
       ``(C) Payments by federal home loan banks.--To the extent 
     the amounts available pursuant to subparagraphs (A) and (B) 
     are insufficient to cover the amount of interest payments, 
     each Federal home loan bank shall pay to the Funding 
     Corporation each calendar year an amount equal to 23.7 
     percent of the bank's net earnings for the year for which 
     such amount is required to be paid.''.
       (d) Effective Date of Amendments.--The amendments made by 
     subsection (c) shall take effect on January 1, 1998.

     SEC. 2204. REFUND OF AMOUNTS IN DEPOSIT INSURANCE FUND IN 
                   EXCESS OF DESIGNATED RESERVE AMOUNT.

       Subsection (e) of section 7 of the Federal Deposit 
     Insurance Act (12 U.S.C. 1817(e)) is amended to read as 
     follows:
       ``(e) Refunds.--
       ``(1) Overpayments.--In the case of any payment of an 
     assessment by an insured depository institution in excess of 
     the amount due to the Corporation, the Corporation may--
       ``(A) refund the amount of the excess payment to the 
     insured depository institution; or
       ``(B) credit such excess amount toward the payment of 
     subsequent semiannual assessments until such credit is 
     exhausted.
       ``(2) Balance in insurance fund in excess of designated 
     reserve.--
       ``(A) In general.--Subject to subparagraph (B), if as of 
     the end of any semiannual period the amount of the actual 
     reserves in--
       ``(i) the Bank Insurance Fund (until the merger of such 
     fund into the deposit insurance fund pursuant to section 
     2203(a)(2) of the Thrift Charter Conversion Act of 1995); or
       ``(ii) the deposit insurance fund (after the establishment 
     of such fund under section 2203(a)(1) of such Act),
     exceeds the balance required to meet the designated reserve 
     ratio applicable with respect to such fund, such excess 
     amount shall be refunded to members of the fund by the 
     Corporation on such basis as the Board of Directors 
     determines to be appropriate, taking into account the 
     factors considered under the risk-based assessment system.
       ``(B) Refund not to exceed previous semiannual 
     assessment.--The amount of any refund under this paragraph to 
     any member of a deposit insurance fund for any semiannual 
     period may not exceed the total amount of assessments paid by 
     such member to the insurance fund with respect to such 
     period.''.

     SEC. 2205. ASSESSMENTS AUTHORIZED ONLY IF NEEDED TO MAINTAIN 
                   THE RESERVE RATIO OF A DEPOSIT INSURANCE FUND.

       (a) In General.--Section 7(b)(2)(A)(i) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)(i)) is amended 
     in the portion of such section preceding subclause (I) by 
     inserting ``when necessary, and only to the extent 
     necessary'' after ``insured depository institutions''.
       (b) Limitation on Assessment.--Section 7(b)(2)(A)(iii) of 
     the Federal Deposit Insurance Act (12 U.S.C. 
     1817(b)(2)(A)(iii)) is amended to read as follows:
       ``(iii) Limitation on assessment.--The Board of Directors 
     shall not set semiannual assessments with respect to a 
     deposit insurance fund in excess of the amount needed--

       ``(I) to maintain the reserve ratio of the fund at the 
     designated reserve ratio; or
       ``(II) if the reserve ratio is less than the designated 
     reserve ratio, to increase the reserve ratio to the 
     designated reserve ratio.''.

          CHAPTER 2--STATUS OF BANKS AND SAVINGS ASSOCIATIONS

     SEC. 2221. TERMINATION OF FEDERAL SAVINGS ASSOCIATIONS; 
                   TREATMENT OF STATE SAVINGS ASSOCIATIONS AS 
                   BANKS FOR PURPOSES OF FEDERAL BANKING LAW.

       (a) Termination of Federal Savings Association Charters.--

[[Page H11011]]

       (1) In general.--Each Federal savings association shall--
       (A) convert to a national bank charter;
       (B) convert to a State depository institution charter; or
       (C) surrender the charter of such savings association and 
     liquidate the institution.
       (2) Conversion to national bank by operation of law.--If 
     any Federal savings association has not taken any action 
     required under paragraph (1) as of January 1, 1998, the 
     savings association shall--
       (A) become a national bank on such date by operation of 
     law;
       (B) immediately file articles of association and an 
     organizational certificate with the Comptroller of the 
     Currency in accordance with sections 5133, 5134, and 5135 of 
     the Revised Statutes of the United States; and
       (C) cease to exist as a Federal savings association as of 
     such date.
       (3) Prohibition on new charters of federal savings 
     associations.--The Director of the Office of Thrift 
     Supervision may not grant any charter for a Federal savings 
     association for which an application was received after the 
     date of the enactment of this Act.
       (b) Treatment of State Savings Associations as Banks For 
     Purposes of Federal Banking Law.--
       (1) Amendments to federal deposit insurance act.--Section 3 
     of the Federal Deposit Insurance Act (12 U.S.C. 1813) is 
     amended--
       (A) by striking paragraph (2) of subsection (a) and 
     inserting the following new paragraph:
       ``(2) State bank.--
       ``(A) In general.--The term `State bank' means any bank, 
     banking association, trust company, savings bank, industrial 
     bank (or similar depository institution which the Board of 
     Directors finds to be operating substantially in the same 
     manner as an industrial bank), building and loan association, 
     savings and loan association, homestead association, 
     cooperative bank, or other banking institution--
       ``(i) which is engaged in the business of receiving 
     deposits, other than trust funds (as defined in this 
     section); and
       ``(ii) which--

       ``(I) is incorporated under the laws of any State;
       ``(II) is organized and operating according to the laws of 
     the State in which such institution is chartered or 
     organized; or
       ``(III) is operating under the Code of Law for the District 
     of Columbia (except a national bank).

       ``(B) Certain insured banks included.--The term `State 
     bank' includes any cooperative bank or other unincorporated 
     bank the deposits of which were insured by the Corporation on 
     the day before the date of the enactment of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989.
       ``(C) Certain uninsured banks excluded.--The term `State 
     bank' does not include any cooperative bank or other 
     unincorporated bank the deposits of which were not insured by 
     the Corporation on the day before the date of the enactment 
     of the Financial Institutions Reform, Recovery, and 
     Enforcement Act of 1989.''; and
       (B) in subsection (q)--
       (i) by inserting ``and'' after the semicolon at the end of 
     paragraph (2);
       (ii) by striking ``; and'' at the end of paragraph (3) and 
     inserting a period; and
       (iii) by striking paragraph (4).
       (2) Amendments to the bank holding company act of 1956.--
     Section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 
     1841) is amended--
       (A) by striking subparagraph (E) of subsection (a)(5); and
       (B) by striking subparagraphs (B) and (J) of subsection 
     (c)(2).
       (3) Amendments to the federal reserve act.--The 2d and 3d 
     paragraphs of the 1st section of the Federal Reserve Act (12 
     U.S.C. 221) are each amended by inserting ``(as defined in 
     section 3(a)(2) of the Federal Deposit Insurance Act)'' after 
     ``State bank''.

     SEC. 2222. TREATMENT OF CERTAIN ACTIVITIES AND AFFILIATIONS 
                   OF BANK HOLDING COMPANIES RESULTING FROM THIS 
                   ACT.

       Section 4 of the Bank Holding Company Act of 1956 (12 
     U.S.C. 1843) is amended by adding at the end the following 
     new subsection:
       ``(k) Treatment of Companies Resulting From Savings and 
     Loan Holding Companies.--
       ``(1) In general.--Notwithstanding any other provision of 
     this section (other than paragraph (5)) or any other 
     provision of Federal law including sections 20 and 32 of the 
     Banking Act of 1933, a qualified bank holding company may, 
     after such company becomes a bank holding company--
       ``(A) maintain or enter into any nonbanking affiliation 
     which such company was authorized to maintain or enter into 
     as of September 22, 1995, or was authorized to maintain 
     following a merger of insured depository institution 
     subsidiaries pursuant to an application filed no later than 
     such date; and
       ``(B) engage, directly or through any affiliate described 
     in subparagraph (A) which is not a bank, in any activity in 
     which such company or any affiliate described in subparagraph 
     (A) was authorized to engage as of September 22, 1995, or in 
     which such company was authorized to engage following a 
     merger of insured depository institution subsidiaries 
     pursuant to an application filed no later than such date,

     if the requirements of paragraph (4) are met.
       ``(2) Qualified bank holding company defined.--For purposes 
     of this subsection, the term `qualified bank holding company' 
     means--
       ``(A) any company which--
       ``(i) as of September 13, 1995, is a savings and loan 
     holding company and is not a bank holding company; and
       ``(ii) becomes a bank holding company after such date; and
       ``(B) any bank holding company which as of September 13, 
     1995--
       ``(i) is a savings and loan holding company; and
       ``(ii) is exempt from this section pursuant to an order 
     issued by the Board under subsection (d).
       ``(3) No loss of subsection (d) exemption.--No qualified 
     bank holding company described in paragraph (2)(B) shall lose 
     the grounds for the exemption under subsection (d) because a 
     savings association which such company controlled, directly 
     or indirectly, as of September 13, 1995, becomes a bank after 
     such date so long as such bank continues to meet the 
     requirements of subparagraphs (A) and (B) of paragraph (4).
       ``(4) Prerequisites for continuation of grandfathered 
     activities and affiliations.--This subsection shall cease to 
     apply with respect to a qualified bank holding company if, at 
     any time after such company first meets the definition of a 
     qualified bank holding company--
       ``(A) any insured depository institution controlled by such 
     company which, as of the day before the company first meets 
     the definition of a qualified bank holding company, was 
     subject to the requirements contained in section 10(m) of the 
     Home Owners' Loan Act, as in effect on such date, (and 
     regulations in effect on such date under such section) for 
     treatment as a qualified thrift lender under such section 
     fails to meet such requirements;
       ``(B) any insured depository institution controlled by such 
     company fails to comply with any limitation or restriction on 
     the type or amounts of loans or investments of the 
     institution to which such institution was subject as of the 
     date of the enactment of the Thrift Charter Conversion Act of 
     1995; or
       ``(C) the company or any subsidiary of the company acquires 
     more than 5 percent of the shares or assets of any bank or 
     insured institution after September 13, 1995.
       ``(5) Nontransferable.--This subsection shall not apply 
     with respect to any qualified bank holding company if, after 
     September 13, 1995, any person acquires, directly or 
     indirectly, control of the company or the company is the 
     subject of any merger, consolidation, or other similar 
     transaction.
       ``(6) Prohibition on certain insured depository 
     institutions identifying themselves as national banks.--
       ``(A) In general.--Notwithstanding the requirement of 
     section 5134 of the Revised Statutes of the United States--
       ``(i) the name of an insured depository institution 
     subsidiary of a qualified bank holding company which--

       ``(I) as of the date of the enactment of the Thrift Charter 
     Conversion Act of 1995, is a savings and loan holding company 
     described in section 10(c)(3) of the Home Owners' Loan Act 
     (as in effect on such date); and
       ``(II) is subject to the restrictions contained in 
     paragraph (3),

     may not include the term `national'; and
       ``(ii) such insured depository institution may not be 
     identified as a national bank on any sign displayed by the 
     institution or in any advertisement or other publication of 
     the institution.
       ``(B) Depository institution not liable for fraudulent 
     misrepresentation for not representing itself as a national 
     bank.--An insured depository institution which is subject to 
     subparagraph (A) shall not be liable for any civil or 
     criminal penalty under any Federal or State consumer 
     protection law, or in any criminal or civil action, for 
     fraudulently misrepresenting the nature of the charter of the 
     institution, for falsely advertising the status of the 
     institution, for making a false statement with respect to the 
     status of the institution, or for any similar offense by 
     reason of the institution's compliance with such 
     subparagraph.
       ``(7) Enforcement.--In addition to any other power of the 
     Board, the Board may enforce compliance with the provisions 
     of this subsection with respect to any qualified bank holding 
     company and any bank controlled by such company under section 
     8 of the Federal Deposit Insurance Act.''.

     SEC. 2223. TRANSITION PROVISIONS FOR ACTIVITIES OF SAVINGS 
                   ASSOCIATIONS WHICH CONVERT INTO OR BECOME 
                   TREATED AS BANKS.

       Notwithstanding any other provision of Federal law, any 
     insured depository institution which, as of September 13, 
     1995, is a savings association (as defined in section 3(b) of 
     the Federal Deposit Insurance Act (as in effect on such 
     date)) and after such date converts to a national or State 
     bank charter or becomes treated as a State bank pursuant to 
     the amendment made by section 2221(b) may continue to engage, 
     directly or indirectly, in any activity in which such 
     institution was lawfully engaged as of such date during the 
     5-year period beginning on the effective date of such 
     conversion or the effective date of such amendments, as the 
     case may be.

     SEC. 2224. REGISTRATION OF BANK HOLDING COMPANIES RESULTING 
                   FROM CONVERSIONS OF SAVINGS ASSOCIATIONS TO 
                   BANKS OR TREATMENT OF SAVINGS ASSOCIATIONS AS 
                   BANKS.

       Section 3 of the Bank Holding Company Act of 1956 (12 
     U.S.C. 1842) is amended by adding at the end the following 
     new subsections:

[[Page H11012]]

       ``(h) Registration of Certain Bank Holding Companies.--A 
     company which, as of September 13, 1995, is a savings and 
     loan holding company (as defined in section 10(a)(1)(D) of 
     Home Owners' Loan Act (as in effect on such date)) and is not 
     a bank holding company shall not be required to obtain the 
     approval of the Board under subsection (a) to become a bank 
     holding company after September 13, 1995, as a result of the 
     conversion of any insured depository institution subsidiary 
     of such company into a bank or by virtue of the treatment of 
     any insured depository institution subsidiary of such company 
     as a bank pursuant to the amendments made by the Thrift 
     Charter Conversion Act of 1995, if such company--
       ``(1) registers as a bank holding company with the Board in 
     accordance with section 5(a); and
       ``(2) does not acquire, directly or indirectly, ownership 
     or control of any additional insured depository institution 
     or other company in connection with such conversion or 
     treatment.
       ``(i) Regulation of Qualified Bank Holding Companies.--The 
     Board shall regulate qualified bank holding companies (as 
     defined in section 4(k)(2)) in a manner consistent with--
       ``(1) the regulation of such companies by the Director of 
     the Office of Thrift Supervision before the date of the 
     enactment of the Thrift Charter Conversion Act of 1995; and
       ``(2) the safety and soundness of insured depository 
     institution subsidiaries of such companies.''.

     SEC. 2225. ADDITIONAL TRANSITION PROVISIONS AND SPECIAL 
                   RULES.

       (a) Mutual National Banks Authorized; Conversion of Mutual 
     Savings Associations Into National Banks.--
       (1) In general.--Chapter one of title LXII of the Revised 
     Statutes of the United States (12 U.S.C. 21 et seq.) is 
     amended by inserting after section 5133 the following new 
     section:

     ``SEC. 5133A. MUTUAL NATIONAL BANKS.

       ``(a) In General.--Notwithstanding the paragraph designated 
     the ``Third'' of section 5134, the Comptroller of the 
     Currency may charter national banks organized in the mutual 
     form either de novo or through a conversion of any stock 
     national or State bank (as defined in section 3 of the 
     Federal Deposit Insurance Act) or any State mutual bank or 
     credit union, subject to regulations prescribed by the 
     Comptroller of the Currency in accordance with this section.
       ``(b) Regulations.--
       ``(1) Transition rules.--National banks organized in the 
     mutual form shall be subject to the regulations of the 
     Director of the Office of Thrift Supervision governing 
     corporate organization, governance, and conversion of mutual 
     institutions, as in effect on September 13, 1995, including 
     parts 543, 544, 546, 563b, and 563c of chapter V of title 12 
     of the Code of Federal Regulations (as in effect on such 
     date), during the 3-year period beginning on the date of the 
     enactment of the Thrift Charter Conversion Act of 1995.
       ``(2) Regulations of the comptroller.--The Comptroller of 
     the Currency shall prescribe appropriate regulations for 
     national banks organized in the mutual form, effective as of 
     the end of the 3-year period referred to in paragraph (1).
       ``(3) Applicability of capital stock requirements.--The 
     Comptroller of the Currency shall prescribe regulations 
     regarding the manner in which requirements of title LXII of 
     the Revised Statutes of the United States with respect to 
     capital stock, and limitations imposed on national banks 
     under such title based on capital stock, shall apply to 
     national banks organized in mutual form pursuant to 
     subsection (a).
       ``(c) Conversions.--
       ``(1) Conversion to stock national bank.--Subject to 
     subsection (b)(1) and, after the end of the 3-year period 
     referred to in such subsection, such regulations as the 
     Comptroller of the Currency may prescribe for the protection 
     of depositors' rights and for any other purpose the 
     Comptroller of the Currency may consider appropriate, any 
     national bank which is organized in mutual form pursuant to 
     paragraph (1) may reorganize as a stock national bank.
       ``(2) Conversions to state banks.--Any national mutual bank 
     may convert to a State bank charter in accordance with 
     regulations prescribed by the Comptroller of the Currency and 
     applicable State law.''.
       (2) Mutual bank holding companies.--Subsection (g) of 
     section 3 of the Bank Holding Company Act of 1956 (12 U.S.C. 
     1842(g)) is amended to read as follows:
       ``(g) Mutual Bank Holding Companies.--
       ``(1) In general.--A national mutual bank may reorganize so 
     as to become a holding company by--
       ``(A) chartering an interim national bank, the stock of 
     which is to be wholly owned, except as otherwise provided in 
     this section, by the national mutual bank; and
       ``(B) transferring the substantial part of the national 
     mutual bank's assets and liabilities, including all of the 
     bank's insured liabilities, to the interim national bank.
       ``(2) Directors and certain account holders' approval of 
     plan required.--A reorganization is not authorized under this 
     subsection unless--
       ``(A) a plan providing for such reorganization has been 
     approved by a majority of the board of directors of the 
     national mutual bank; and
       ``(B) in the case of a national mutual bank in which 
     holders of accounts and obligors exercise voting rights, such 
     plan has been submitted to and approved by a majority of such 
     individuals at a meeting held at the call of the directors in 
     accordance with the procedures prescribed by the bank's 
     charter and bylaws.
       ``(3) Notice to the board; disapproval period.--
       ``(A) Notice required.--
       ``(i) In general.--At least 60 days before taking any 
     action described in paragraph (1), a national mutual bank 
     seeking to establish a mutual holding company shall provide 
     written notice to the Board.
       ``(ii) Contents of notice.--The notice shall contain such 
     relevant information as the Board shall require by regulation 
     or by specific request in connection with any particular 
     notice.
       ``(B) Transaction allowed if not disapproved.--Unless the 
     Board within such 60-day notice period disapproves the 
     proposed holding company formation, or extends for another 30 
     days the period during which such disapproval may be issued, 
     the national mutual bank providing such notice may proceed 
     with the transaction, if the requirements of paragraph (2) 
     have been met.
       ``(C) Grounds for disapproval.--The Board may disapprove 
     any proposed holding company formation only if--
       ``(i) such disapproval is necessary to prevent unsafe or 
     unsound practices;
       ``(ii) the financial or management resources of the 
     national mutual bank involved warrant disapproval;
       ``(iii) the national mutual bank fails to furnish the 
     information required under subparagraph (A); or
       ``(iv) the national mutual bank fails to comply with the 
     requirement of paragraph (2).
       ``(D) Retention of capital assets.--In connection with the 
     transaction described in paragraph (1), a national mutual 
     bank may, subject to the approval of the Board, retain 
     capital assets at the holding company level to the extent 
     that the capital retained at the holding company is in excess 
     of the amount of capital required in order for the interim 
     national bank to meet all relevant capital standards 
     established by the Comptroller of the Currency for national 
     banks.
       ``(4) Ownership.--
       ``(A) In general.--Persons having ownership rights in the 
     national mutual bank under section 5133A of the Revised 
     Statutes of the United States (including paragraph 575.5 of 
     chapter V of title 12 of the Code of Federal Regulations, as 
     in effect on September 13, 1995, and applicable to national 
     mutual banks pursuant to such section) or State law shall 
     have the same ownership rights with respect to the mutual 
     holding company.
       ``(B) Holders of certain accounts.--Holders of savings, 
     demand, or other accounts of--
       ``(i) a national bank chartered as part of a transaction 
     described in paragraph (1); or
       ``(ii) a mutual bank acquired pursuant to paragraph (5)(B),
     shall have the same ownership rights with respect to the 
     mutual holding company as persons described in subparagraph 
     (A) of this paragraph.
       ``(5) Permitted activities.--A mutual holding company may 
     engage only in the following activities:
       ``(A) Investing in the stock of a national or State bank.
       ``(B) Acquiring a mutual bank through the merger of such 
     bank into a national bank subsidiary of such holding company 
     or an interim national bank subsidiary of such holding 
     company.
       ``(C) Subject to paragraph (6), merging with or acquiring 
     another holding company, one of whose subsidiaries is a 
     national mutual bank.
       ``(D) Investing in a corporation the capital stock of which 
     is available for purchase by a national mutual bank under 
     Federal law or under the law of any State where the home 
     office of any subsidiary bank is located.
       ``(E) Engaging in the activities permitted under section 
     4(c).
       ``(6) Limitations on certain activities of acquired holding 
     companies.--
       ``(A) New activities.--If a mutual holding company acquires 
     or merges with another holding company under paragraph 
     (5)(C), the holding company acquired or the holding company 
     resulting from such merger or acquisition may only invest in 
     assets and engage in activities which are authorized under 
     paragraph (5).
       ``(B) Grace period for divesting prohibited assets or 
     discontinuing prohibited activities.--Not later than 2 years 
     following a merger or acquisition described in paragraph 
     (5)(C), the acquired holding company or the holding company 
     resulting from such merger or acquisition shall--
       ``(i) dispose of any asset which is an asset in which a 
     mutual holding company may not invest under paragraph (5); 
     and
       ``(ii) cease any activity which is an activity in which a 
     mutual holding company may not engage under paragraph (5).
       ``(7) Chartering and other requirements.--
       ``(A) In general.--A mutual holding company shall be 
     chartered by the Board and shall be subject to such 
     regulations as the Board may prescribe.
       ``(B) Other requirements.--Unless the context otherwise 
     requires, a mutual holding company shall be subject to the 
     other requirements of this Act regarding regulation of 
     holding companies.
       ``(8) Capital improvement.--

[[Page H11013]]

       ``(A) Pledge of stock of savings association subsidiary.--
     This section shall not prohibit a mutual holding company from 
     pledging all or a portion of the stock of a national bank 
     chartered as part of a transaction described in paragraph (1) 
     to raise capital for such bank.
       ``(B) Issuance of nonvoting shares.--No provision of this 
     Act shall be construed as prohibiting a national bank 
     chartered as part of a transaction described in paragraph (1) 
     from issuing any nonvoting shares or less than 50 percent of 
     the voting shares of such bank to any person other than the 
     mutual holding company.
       ``(9) Insolvency and liquidation.--
       ``(A) In general.--Notwithstanding any provision of law, 
     upon--
       ``(i) the default of any national bank--

       ``(I) the stock of which is owned by any mutual holding 
     company; and
       ``(II) which was chartered in a transaction described in 
     paragraph (1);

       ``(ii) the default of a mutual holding company; or
       ``(iii) a foreclosure on a pledge by a mutual holding 
     company described in paragraph (8)(A),

     a trustee shall be appointed receiver of such mutual holding 
     company and such trustee shall have the authority to 
     liquidate the assets of, and satisfy the liabilities of, such 
     mutual holding company pursuant to title 11, United States 
     Code.
       ``(B) Distribution of net proceeds.--Except as provided in 
     subparagraph (C), the net proceeds of any liquidation of any 
     mutual holding company pursuant to subparagraph (A) shall be 
     transferred to persons who hold ownership interests in such 
     mutual holding company.
       ``(C) Recovery by corporation.--If the Corporation incurs a 
     loss as a result of the default of any savings association 
     subsidiary of a mutual holding company which is liquidated 
     pursuant to subparagraph (A), the Corporation shall succeed 
     to the ownership interests of the depositors of such savings 
     association in the mutual holding company, to the extent of 
     the Corporation's loss.
       ``(10) State mutual bank holding company.--
       ``(A) In general.--Notwithstanding any provision of Federal 
     law, a State bank operating in mutual form may reorganize so 
     as to form a holding company under State law.
       ``(B) Regulation of state mutual holding company.--A 
     corporation organized as a holding company in accordance with 
     subparagraph (A) shall be regulated on the same terms and be 
     subject to the same limitations as any other holding company 
     which controls a bank.
       ``(11) Regulations.--
       ``(A) Transition rules.--Mutual bank holding companies 
     organized under this subsection shall be subject to the 
     regulations of the Director of the Office of Thrift 
     Supervision governing corporate organization, governance, and 
     conversion of mutual institutions, as in effect on September 
     13, 1995, including part 575 of chapter V of title 12 of the 
     Code of Federal Regulations (as in effect on such date), 
     during the 3-year period beginning on the date of the 
     enactment of the Thrift Charter Conversion Act of 1995.
       ``(B) Regulations of the board.--The Board shall prescribe 
     appropriate regulations for mutual holding companies, 
     effective at the end of the 3-year period referred to in 
     subparagraph (A).
       ``(12) Definitions.--For purposes of this subsection--
       ``(A) Mutual holding company.--The term `mutual holding 
     company' means a corporation organized as a holding company 
     under this subsection.
       ``(B) Default.--The term `default' means an adjudication or 
     other official determination of a court of competent 
     jurisdiction or other public authority pursuant to which a 
     conservator, receiver, or other legal custodian is appointed.
       ``(C) National mutual bank.--The term `national mutual 
     bank' means a national bank organized in mutual form under 
     section 5133A of the Revised Statutes of the United 
     States.''.
       (3) Limitation on federal regulation of state banks.--
     Except as otherwise provided in Federal law, the Comptroller 
     of the Currency, Board of Governors of the Federal Reserve 
     System, and Federal Deposit Insurance Corporation may not 
     adopt or enforce any regulation which contravenes the 
     corporate governance rules prescribed by State law or 
     regulation for State banks unless the Comptroller, Board, or 
     Corporation finds that such Federal regulation is necessary 
     to assure the safety and soundness of such State banks.
       (4) Conversions of mutual savings associations to mutual 
     national banks by operation of law.--Notwithstanding any 
     other provision of Federal or State law, any savings 
     association (as defined in section 3 of the Federal Deposit 
     Insurance Act (as in effect on September 13, 1995)) which is 
     organized in mutual form as of the date of the enactment of 
     this Act may become a national mutual bank by operation of 
     law if the association--
       (A) files the articles of association and organization 
     certificate with the Comptroller of the Currency before 
     January 1, 1998, in accordance with chapter one of title LXII 
     of the Revised Statutes of the United States; and
       (B) provides such other document or information as the 
     Comptroller of the Currency may prescribe in regulations 
     consistent with this section and section 5133A of the Revised 
     Statutes of the United States (as added by paragraph (1) of 
     this subsection).
       (5) Clerical amendment.--The table of sections for chapter 
     one of title LXII of the Revised Statutes of the United 
     States (12 U.S.C. 21 et seq.) is amended by inserting after 
     the item relating to section 5133 the following new item:

``5133A.  Mutual national banks.''.

       (b) Membership in Federal Home Loan Banks.--Any insured 
     depository institution which--
       (1) as of the date of the enactment of this Act, is a 
     Federal savings association which, pursuant to section 6(e) 
     of the Federal Home Loan Bank Act, may not voluntarily 
     withdraw from membership in a Federal home loan bank; and
       (2) after such date converts from a Federal savings 
     association to a national bank,
     shall continue to be subject to the prohibition under such 
     section on voluntary withdrawal from such membership as 
     though such bank were still a Federal savings association 
     until the bank ceases to be a national bank.
       (c) Branches.--
       (1) In general.--Notwithstanding any provision of the 
     Federal Deposit Insurance Act, the Bank Holding Company Act 
     of 1956, or any other Federal or State law, any depository 
     institution which--
       (A) as of the date of the enactment of this Act, is a 
     savings association; and
       (B) becomes a bank before January 1, 1998, or, pursuant to 
     the amendments made by this subsection, is treated as a bank 
     as of such date under the Federal Deposit Insurance Act,

     and any depository institution or bank holding company which 
     acquires such depository institution, may continue, after the 
     depository institution becomes or commences to be treated as 
     a bank, to operate any branch which the savings association 
     operated as a branch on September 13, 1995.
       (2) No additional branches.--Paragraph (1) shall not be 
     construed as authorizing the establishment, acquisition, or 
     operation of any additional branch of a depository 
     institution in any State by virtue of the operation by such 
     institution of a branch in such State pursuant to such 
     paragraph except to the extent such establishment, 
     acquisition, or operation is permitted under the Federal 
     Deposit Insurance Act, Bank Holding Company Act of 1956, and 
     any other applicable Federal or State law without regard to 
     such branch.
       (d) Transition Provision Relating to Limitations on Loans 
     to 1 Borrower.--Section 5200 of the Revised Statutes of the 
     United States (12 U.S.C. 84) is amended by adding at the end 
     the following new subsection:
       ``(e) Transition Provision for Savings Associations 
     Converting to National Banks.--In the case of any depository 
     institution which, as of September 13, 1995, is a savings 
     association (as defined in section 3(b) of the Federal 
     Deposit Insurance Act (as in effect on such date)) and 
     becomes a national bank on or before January 1, 1998, any 
     loan, or legally binding commitment to make a loan, made or 
     entered into by such institution which is outstanding on the 
     date the institution becomes a national bank may continue to 
     be held without regard to any limitation contained in this 
     section during the 3-year period beginning on such date.''.

     SEC. 2226. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Amendments to the Federal Deposit Insurance Act.--
       (1) Section 3(z) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(z)) is amended by striking ``the Director of the 
     Office of Thrift Supervision,''.
       (2) Section 8(b) of the Federal Deposit Insurance Act (12 
     U.S.C. 1818(b)) is amended by striking paragraph (9).
       (3) Section 13 of the Federal Deposit Insurance Act (12 
     U.S.C. 1823) is amended by striking subsection (k).
       (4) Subsections (c)(2) and (i)(2) of section 18 of the 
     Federal Deposit Insurance Act (12 U.S.C. 1828) are each 
     amended--
       (A) in subparagraph (B), by inserting ``and'' after the 
     semicolon;
       (B) in subparagraph (C), by striking ``; and'' and 
     inserting a period; and
       (C) by striking subparagraph (D).
       (5) Section 18 of the Federal Deposit Insurance Act (12 
     U.S.C. 1828) is amended by striking subsection (m).
       (6) The Federal Deposit Insurance Act (12 U.S.C. 1811 et 
     seq.) is amended by striking section 28.
       (b) Amendments to the Bank Holding Company Act of 1956.--
       (1) Section 2 of the Bank Holding Company Act of 1956 (12 
     U.S.C. 1841) is amended by striking subsections (i) and (j).
       (2) Section 4(c)(8) of the Bank Holding Company Act of 1956 
     (12 U.S.C. 1843(c)(8)) is amended by striking the sentence 
     preceding the penultimate sentence.
       (3) Section 4(f) of the Bank Holding Company Act of 1956 
     (12 U.S.C. 1843(f)) is amended--
       (A) in paragraph (2)(A)(i), by striking ``or an insured 
     institution'' and all that follows through ``of this 
     subsection)'';
       (B) in paragraph (2)(A)(ii)--
       (i) by striking ``or a savings association'' where such 
     term appears in the portion of such paragraph which precedes 
     subclause (I);
       (ii) by inserting ``and'' at the end of subclause (VI);
       (iii) by striking subclauses (VIII), (IX), and (X); and

[[Page H11014]]

       (iv) by striking ``(V), and (VIII)'', where such term 
     appears in the portion of such paragraph which appears after 
     the end of subclause (VII), and inserting ``and (V)''; and
       (C) by striking paragraphs (10), (11), (12), and (13).
       (4) Section 4(i) of the Bank Holding Company Act of 1956 
     (12 U.S.C. 1843(i)) is amended--
       (A) by striking paragraphs (1) and (2); and
       (B) in paragraph (3)(A), by striking ``any Federal savings 
     association'' and all that follows through the period at the 
     end of such paragraph and inserting ``such association was 
     authorized to engage under this section as of September 15, 
     1995.''.
       (c) Other Technical and Conforming Amendments.--
       (1) Section 804(a) of the Alternative Mortgage Transaction 
     Parity Act of 1982 (12 U.S.C. 3803) is amended--
       (A) in the portion of such subsection which precedes 
     paragraph (1)--
       (i) by striking ``, and other nonfederally chartered 
     housing creditors,''; and
       (ii) by inserting ``and in order to permit other 
     nonfederally chartered housing creditors to make, purchase, 
     and enforce alternative mortgage transactions,'' after 
     ``enforcing alternative mortgage transactions, ''; and
       (B) in paragraph (1), by inserting ``(as such term is 
     defined in section 3(a) of the Federal Deposit Insurance 
     Act)'' after ``with respect to banks''.
       (2) Section 205 of the Depository Institution Management 
     Interlocks Act (12 U.S.C. 3204) is amended--
       (A) in the portion of paragraph (8)(A) which precedes 
     clause (i), by striking ``A diversified savings'' and all 
     that follows through ``with respect to'' and inserting ``A 
     depository institution holding company which, as of September 
     13, 1995, and at all times thereafter, is a diversified 
     savings and loan holding company (as defined in section 
     10(1)(F) of Home Owners' Loan Act, as such section is in 
     effect on such date) with respect to''; and
       (B) by striking paragraph (9).
       (3) Section 19(b)(1)(A) of the Federal Reserve Act (12 
     U.S.C. 461(b)(1)(A)) is amended--
       (A) by inserting ``and'' after the semicolon at the end of 
     clause (v); and
       (B) by striking clause (vi).
       (4) Subparagraphs (A), (B), (C) of section 10(e)(5) of the 
     Federal Home Loan Bank Act (12 U.S.C. 1430(e)(5)) are each 
     amended by inserting before the period at the end ``(as such 
     section is in effect on September 13, 1995)''.

     SEC. 2227. REFERENCES TO SAVINGS ASSOCIATIONS AND STATE BANKS 
                   IN FEDERAL LAW.

       Effective January 1, 1998, any reference in any Federal 
     banking law to--
       (1) the term ``savings association'' shall be deemed to be 
     a reference to a bank as defined in section 3(a) of the 
     Federal Deposit Insurance Act; and
       (2) the term ``State bank'' shall be deemed to include any 
     depository institution included in the definition of such 
     term in section 3(a)(2) of such Act.

     SEC. 2228. REPEAL OF HOME OWNERS' LOAN ACT.

       Effective January 1, 1998, the Home Owners' Loan Act (12 
     U.S.C. 1461 et seq.) is hereby repealed.

     SEC. 2229. EFFECTIVE DATE; DEFINITIONS.

       (a) Effective Date of Amendments.--The amendments made by 
     this chapter shall take effect on January 1, 1998.
       (b) Definitions.--For purposes of this chapter, the terms 
     ``appropriate Federal banking agency'', ``bank holding 
     company'', ``depository institution'', ``Federal savings 
     association'', ``insured depository institution'', ``savings 
     association'', and ``State bank'' have the same meanings as 
     in section 3 of the Federal Deposit Insurance Act (as in 
     effect on the date of the enactment of this Act).

       CHAPTER 3--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY

     SEC. 2241. OFFICE OF THRIFT SUPERVISION ABOLISHED.

       Effective January 1, 1998, the Office of Thrift Supervision 
     and the position of Director of the Office of Thrift 
     Supervision are hereby abolished.

     SEC. 2242. DETERMINATION OF TRANSFERRED FUNCTIONS AND 
                   EMPLOYEES.

       (a) All Office of Thrift Supervision Employees Shall Be 
     Transferred.--All employees of the Office of Thrift 
     Supervision shall be identified for transfer under subsection 
     (b) to the Office of the Comptroller of the Currency, the 
     Federal Deposit Insurance Corporation, or the Board of 
     Governors of the Federal Reserve System.
       (b) Functions and Employees Transferred.--
       (1) In general.--The Director of the Office of Thrift 
     Supervision, the Comptroller of the Currency, the Chairperson 
     of the Federal Deposit Insurance Corporation, and the 
     Chairman of the Board of Governors of the Federal Reserve 
     System shall jointly determine the functions or activities of 
     the Office of Thrift Supervision, and the number of employees 
     of such Office necessary to perform or support such functions 
     or activities, which are transferred from the Office to the 
     Office of the Comptroller of the Currency, the Federal 
     Deposit Insurance Corporation, or the Board of Governors 
     of the Federal Reserve System, as the case may be.
       (2) Allocation of employees.--The Comptroller of the 
     Currency, the Chairperson of the Federal Deposit Insurance 
     Corporation, and the Chairman of the Board of Governors of 
     the Federal Reserve System shall allocate the employees of 
     the Office of Thrift Supervision consistent with the number 
     determined pursuant to paragraph (1) in a manner which such 
     Comptroller, Chairperson, and Chairman, in their sole 
     discretion, deem equitable, except that, within work units, 
     the agency preferences of individual employees shall be 
     accommodated as far as possible.
       (c) Disposition of Affairs.--
       (1) In general.--In winding up the affairs of the Office of 
     Thrift Supervision, the Director of the Office of Thrift 
     Supervision shall consult and cooperate with the Comptroller 
     of the Currency, the Federal Deposit Insurance Corporation, 
     and the Board of Governors of the Federal Reserve System, as 
     the case may be, to facilitate the orderly transfer of the 
     functions to such Comptroller, Corporation, or Board.
       (2) Continuing authority of director of the office of 
     thrift supervision.--Except as provided in paragraph (1), no 
     provision of this subtitle shall be construed as affecting 
     the authority vested in the Director of the Office of Thrift 
     Supervision before the date of enactment of this Act which is 
     necessary to carry out the duties of the position until the 
     date upon which the position of Director of the Office of 
     Thrift Supervision is abolished.
       (3) Continuation of agency services.--Any agency, 
     department, or other instrumentality of the United States, or 
     any successor to any such agency, department, or 
     instrumentality, which was providing support services to the 
     Director of the Office of Thrift Supervision on the day 
     before the date such position is abolished shall--
       (A) continue to provide such services on a reimbursable 
     basis, in accordance with the terms of the arrangement 
     pursuant to which such services were provided until the 
     arrangement is modified or terminated in accordance with such 
     terms, except that effective January 1, 1998, the Comptroller 
     of the Currency, the Federal Deposit Insurance Corporation, 
     or the Board of Governors of the Federal Reserve System, as 
     the case may be, shall be substituted for the Director of the 
     Office of Thrift Supervision as a party to the arrangement; 
     and
       (B) consult with the Comptroller, the Corporation, or the 
     Board to coordinate and facilitate a prompt and reasonable 
     transition.
       (d) Transfer of Property.--Effective January 1, 1998, all 
     property of the Office of Thrift Supervision shall be 
     transferred to the Comptroller of the Currency, the Federal 
     Deposit Insurance Corporation, or the Board of Governors of 
     the Federal Reserve System, as determined in accordance with 
     subsections (a) and (b).

     SEC. 2243. SAVINGS PROVISIONS.

       (a) Existing Rights, Duties, and Obligations Not 
     Affected.--No provision of this title shall be construed as 
     affecting the validity of any right, duty, or obligation of 
     the United States, the Director of the Office of Thrift 
     Supervision, or any person, which existed on the day before 
     the date upon which the position of Director of the Office of 
     Thrift Supervision and the Office of Thrift Supervision are 
     abolished.
       (b) Continuation of Suits.--No action or other proceeding 
     commenced by or against the Director of the Office of Thrift 
     Supervision shall abate by reason of enactment of this Act, 
     except that, effective January 1, 1998, the Comptroller of 
     the Currency, the Federal Deposit Insurance Corporation, or 
     the Board of Governors of the Federal Reserve System, as the 
     case may be, shall be substituted as a party to any such 
     action or proceeding.
       (c) Continuation of Administrative Rules.--All orders, 
     resolutions, determinations, regulations, interpretative 
     rules, other interpretations, guidelines, procedures, 
     supervisory and enforcement actions, and other advisory 
     material (other than any regulation implementing or 
     prescribed pursuant to section 3(f) of the Home Owners' Loan 
     Act (as in effect on September 13, 1995)) which--
       (1) have been issued, made, prescribed, or permitted to 
     become effective by the Office of Thrift Supervision, and
       (2) are in effect on December 31, 1996, (or become 
     effective after such date pursuant to the terms of the order, 
     resolution, determination, rule, other interpretation, 
     guideline, procedure, supervisory or enforcement action, and 
     other advisory material, as in effect on such date), shall--
       (A) continue in effect according to the terms of such 
     orders, resolutions, determinations, regulations, 
     interpretative rules, other interpretations, guidelines, 
     procedures, supervisory or enforcement actions, or other 
     advisory material;
       (B) be administered by the Comptroller of the Currency, the 
     Federal Deposit Insurance Corporation, or the Board of 
     Governors of the Federal Reserve System; and
       (C) be enforceable by or against the Comptroller of the 
     Currency, the Federal Deposit Insurance Corporation, or the 
     Board of Governors of the Federal Reserve System until 
     modified, terminated, set aside, or superseded in accordance 
     with applicable law by the Comptroller, Corporation, or 
     Board, by any court of competent jurisdiction, or by 
     operation of law.
       (d) Treatment of References in Adjustable Rate Mortgages 
     Issued Before FIRREA.--For purposes of section 402(e) of 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 (12 U.S.C. 1437 note), any reference in such section 
     to--

[[Page H11015]]

       (A) the Director of the Office of Thrift Supervision shall 
     be deemed to be a reference to the Secretary of the Treasury; 
     and
       (B) a Savings Association Insurance Fund member shall be 
     deemed to be a reference to an insured depository institution 
     (as defined in section 3 of the Federal Deposit Insurance 
     Act).
       (e) Treatment of References in Adjustable Rate Mortgage 
     Instruments Issued After FIRREA.--
       (1) In general.--For purposes of adjustable rate mortgage 
     instruments that are in effect as of the date of enactment of 
     this Act, any reference in the instrument to the Director of 
     the Office of Thrift Supervision or Savings Association 
     Insurance Fund members shall be treated as a reference to the 
     Secretary of the Treasury or insured depository institutions 
     (as defined in section 3 of the Federal Deposit Insurance 
     Act), as appropriate.
       (2) Substitution for indexes.--If any index used to 
     calculate the applicable interest rate on any adjustable rate 
     mortgage instrument is no longer calculated and made 
     available as a direct or indirect result of the enactment of 
     this Act, any index--
       (A) made available by the Secretary of the Treasury; or
       (B) determined by the Secretary of the Treasury, pursuant 
     to paragraph (4), to be substantially similar to the index 
     which is no longer calculated or made available,
     may be substituted by the holder of any such adjustable rate 
     mortgage instrument upon notice to the borrower.
       (3) Agency action required to provide continued 
     availability of indexes.--Promptly after the enactment of 
     this subsection, the Secretary of the Treasury, the 
     Chairperson of the Federal Deposit Insurance Corporation, and 
     the Comptroller of the Currency shall take such action as may 
     be necessary to assure that the indexes prepared by the 
     Director of the Office of Thrift Supervision immediately 
     prior to the enactment of this subsection and used to 
     calculate the interest rate on adjustable rate mortgage 
     instruments continue to be available.
       (4) Requirements relating to substitute indexes.--If any 
     agency can no longer make available an index pursuant to 
     paragraph (3), an index that is substantially similar to such 
     index may be substituted for such index for purposes of 
     paragraph (2) if the Secretary of the Treasury determines, 
     after notice and opportunity for comment, that--
       (A) the new index is based upon data substantially similar 
     to that of the original index; and
       (B) the substitution of the new index will result in an 
     interest rate substantially similar to the rate in effect at 
     the time the original index became unavailable.

     SEC. 2244. REFERENCES IN FEDERAL LAW TO DIRECTOR OF THE 
                   OFFICE OF THRIFT SUPERVISION.

       Effective January 1, 1998, any reference in any Federal law 
     to the Director of the Office of Thrift Supervision or the 
     Office of Thrift Supervision shall be deemed to be a 
     reference to the appropriate Federal banking agency (as 
     defined in section 3(q) of the Federal Deposit Insurance 
     Act).

     SEC. 2245. RECONFIGURATION OF BOARD OF DIRECTORS OF FDIC AS A 
                   RESULT OF REMOVAL OF DIRECTOR OF THE OFFICE OF 
                   THRIFT SUPERVISION.

       (a) In General.--Section 2(a)(1) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1812(a)(1)) is amended to read as 
     follows:
       ``(1) In general.--The management of the Corporation shall 
     be vested in a Board of Directors consisting of 3 members--
       ``(A) 1 of whom shall be the Comptroller of the Currency; 
     and
       ``(B) 2 of whom shall be appointed by the President, by and 
     with the advice and consent of the Senate, from among 
     individuals who are citizens of the United States.''.
       (b) Technical and Conforming Amendments.--
       (1) Section 2(a)(2) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1812(a)(2)) is amended--
       (A) by striking ``February 28, 1993'' and inserting 
     ``January 1, 1998''; and
       (B) by striking ``3'' and inserting ``2''.
       (2) Section 2(d)(2) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1812(d)(2)) is amended--
       (A) by striking ``or the office of Director of the Office 
     of Thrift Supervision'';
       (B) by striking ``or such Director'';
       (C) by striking ``or the Acting Director of the Office of 
     Thrift Supervision, as the case may be''; and
       (D) by striking ``or Director''.
       (c) Effective Date.--The amendments made by subsections (a) 
     and (b) shall take effect on January 1, 1998.
       (d) Designation of Abolished Position.--Unless there is a 
     vacancy in the position of an appointed member of the Board 
     of Directors as of January 1, 1998, the President, consistent 
     with the requirements of section 2(a)(2) of the Federal 
     Deposit Insurance Act, shall designate which of the 3 
     positions of appointed member of such Board of Directors 
     shall be abolished pursuant to the amendment made by 
     subsection (a).
           Subtitle C--Community Reinvestment Act Amendments

     SEC. 2301. EXPRESSION OF CONGRESSIONAL INTENT.

       Subsection (b) of section 802 of the Community Reinvestment 
     Act of 1977 (12 U.S.C. 2901) is amended to read as follows:
       ``(b) It is the purpose of this title to require each 
     appropriate Federal financial supervisory agency to use its 
     authority, when examining financial institutions, to 
     encourage such institutions to help meet the credit needs of 
     the local communities in which they are chartered consistent 
     with the safe and sound operation of such institutions. When 
     examining financial institutions, a supervisory agency shall 
     not impose additional burden, recordkeeping, or reporting 
     upon such institutions.''.

     SEC. 2302. COMMUNITY REINVESTMENT ACT EXEMPTION.

       The Community Reinvestment Act of 1977 (12 U.S.C. 2901 et 
     seq.) is amended by adding at the end the following new 
     section:

     ``SEC. 809. TREATMENT OF SMALL FINANCIAL INSTITUTIONS.

       ``(a) In General.--In lieu of being evaluated under section 
     806A and receiving a written evaluation under section 807, an 
     eligible regulated financial institution shall make a notice, 
     signed by the president, available to the public that--
       ``(1) lists the type of credit and services that the 
     institution provides to help meet the credit needs of the 
     local community; and
       ``(2) states that the institution helps meet the credit 
     needs of the local communities in which the institution 
     operates, including low- and moderate-income neighborhoods.
       ``(b) Eligible regulated financial institutions.--
       ``(1) In general.--A regulated financial institution shall 
     be eligible for purposes of subsection (a) if the institution 
     and any bank holding company which controls such institution 
     have aggregate assets of not more than $100,000,000.
       ``(2) Annual adjustment.--The dollar amount in paragraph 
     (1) shall be adjusted annually after December 31, 1994, by 
     the annual percentage increase in the Consumer Price Index 
     for Urban Wage Earners and Clerical Workers published by the 
     Bureau of Labor Statistics.
       ``(c) Exemption From Other Requirements.--A regulated 
     financial institution which has complied with the notice 
     requirements of subsection (a) shall not be subject to 
     section 804 and any regulations prescribed under section 
     806.''.

     SEC. 2303. SELF-CERTIFICATION OF CRA COMPLIANCE.

       Section 804 of the Community Reinvestment Act of 1977 (12 
     U.S.C. 2903) is amended by adding at the end the following 
     new subsection (c):
       ``(c) Self-Certification of CRA Compliance.--
       ``(1) Certification.--In lieu of being evaluated under 
     section 806A and receiving a written evaluation under section 
     807, a qualifying financial institution may elect to self-
     certify to the appropriate Federal financial supervisory 
     agency that such institution is in compliance with the goals 
     of this title.
       ``(2) Qualifying institution.--
       ``(A) In general.--For purposes of paragraph (1), the term 
     `qualifying institution' means a financial institution 
     which--
       ``(i) has not more than $250 million in assets;
       ``(ii) has not been found to have engaged in a pattern or 
     practice of illegal discrimination under the Fair Housing Act 
     or the Equal Credit Opportunity Act for the preceding 5-year 
     calendar period; and
       ``(iii) received rating under section 807(b)(2) of 
     `satisfactory' or `outstanding' in the most recent evaluation 
     of such institution under this title.
       ``(B) Annual adjustment.--The dollar amount in subparagraph 
     (A) shall be adjusted annually after December 31, 1994, by 
     the annual percentage increase in the Consumer Price Index 
     for Urban Wage Earners and Clerical Workers published by the 
     Bureau of Labor Statistics.
       ``(3) Public notice.--
       ``(A) In general.--A qualifying institution shall maintain 
     in every branch a public notice stating that--
       ``(i) the institution has self-certified that the 
     institution is satisfactorily helping to meet the credit 
     needs of its community;
       ``(ii) the institution maintains--

       ``(I) at the main office of such institution, a public file 
     which contains a copy of the self-certification to the 
     appropriate Federal financial supervisory agency; and
       ``(II) a map delineating the community served by the 
     institution;

       ``(iii) a list of the types of credit and services that the 
     institution provides to the community served by the 
     institution;
       ``(iv) such other information that the institution believes 
     demonstrates the institution's record of helping to meet the 
     credit needs of its community; and
       ``(v) every public comment or letter to the institution 
     (and any response by the institution) received within the 
     previous 2-year period about the record of the institution of 
     helping to meet the credit needs of its community.
       ``(B) Public file.--A qualifying institution shall maintain 
     a public file containing the contents described in this 
     paragraph at the institution's main office.
       ``(4) Rating.--
       ``(A) In general.--A qualifying institution shall be deemed 
     to have a rating of a `satisfactory record of meeting 
     community credit needs' for the purposes of this section and 
     section 806A(c).
       ``(B) Publication.--Each Federal financial supervisory 
     agency shall publish in the Federal Register once each month 
     a list of institutions that have self-certified during the 
     previous month.
       ``(C) Publication constitutes disclosure.--Publication of 
     the name of the institution in the Federal Register as having 
     self- 

[[Page H11016]]

     certified shall constitute disclosure of the rating of the 
     institution to the public for purposes of sections 806A and 
     807.
       ``(5) Regulatory review.--
       ``(A) Assessment.--During each examination for safety and 
     soundness, a qualifying institution's supervisory agency 
     shall, as part of the agency's review of the institution's 
     loans, assess whether the institution's basis for its self-
     certification is reasonable based on the public notice and 
     the information contained in the public file pursuant to 
     paragraph (3).
       ``(B) Examination if self-certification is not 
     reasonable.--If the agency determines that the institution's 
     basis for the institution's self-certification is not 
     reasonable, the agency shall schedule an examination of the 
     institution for the purpose of assessing the institution's 
     record of helping to meet the credit needs of its community.
       ``(C) Revocation of self-certification.--If an assessment 
     pursuant to subparagraph (B) results in a less than 
     `satisfactory' rating, the agency shall revoke the 
     institution's self-certification and substitute a written 
     evaluation as provided under section 807.
       ``(D) Period of ineligibility for self-certification.--An 
     institution whose self-certification has been revoked may not 
     self-certify pursuant to this subsection during the 5 years 
     succeeding the year in which the self-certification is 
     revoked.
       ``(E) Subsequent eligibility.--After the end of the period 
     of ineligibility described in subparagraph (D), an 
     institution which meets the requirements for self-
     certification may elect to self-certify.
       ``(6) Prohibition on additional requirements.--No 
     appropriate Federal financial supervisory agency may impose 
     any additional requirements, whether by regulation or 
     otherwise, relating to the self-certification procedure under 
     this subsection.''.

     SEC. 2304. COMMUNITY INPUT AND CONCLUSIVE RATING.

       (a) Conforming Amendment.--Section 804(a) of the Community 
     Reinvestment Act of 1977 (12 U.S.C. 2903) is amended by 
     inserting ``conducted in accordance with section 806A,'' 
     after ``financial institution,''.
       (b) Community Input and Conclusive Rating.--The Community 
     Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.) is amended 
     by inserting after section 806 the following new section:

     ``SEC. 806A. COMMUNITY INPUT AND CONCLUSIVE RATING.

       ``(a) Publication of Exam Schedule and Opportunity for 
     Comment.--
       ``(1) Publication of notice.--Each appropriate Federal 
     financial supervisory agency shall--
       ``(A) publish in the Federal Register, 30 days before the 
     beginning of a calendar quarter, a listing of institutions 
     scheduled for evaluation for compliance with this title 
     during such calendar quarter; and
       ``(B) provide opportunity for written comments from the 
     community on the performance, under this title, of each 
     institution scheduled for evaluation.
       ``(2) Comment period.--Written comments may not be 
     submitted to an appropriate Federal financial supervisory 
     agency pursuant to paragraph (1) after the end of the 30-day 
     period beginning on the first day of the calendar quarter.
       ``(3) Copy of comments.--The agency shall provide a copy of 
     such comments to the institution.
       ``(b) Evaluation.--The appropriate Federal financial 
     supervisory agency shall--
       ``(1) evaluate the institution in accordance with the 
     standards contained in section 804; and
       ``(2) prepare and publish a written evaluation of the 
     institution as required under section 807.
       ``(c) Reconsideration of Rating.--
       ``(1) Request for reconsideration.--A reconsideration of an 
     institution's rating referred to in section 807(b)(1)(C), may 
     be requested within 30 days of the rating's disclosure to the 
     public.
       ``(2) Procedures for request.--Any such request shall be 
     made in writing and filed with the appropriate Federal 
     financial supervisory agency, and may be filed by the 
     institution or a member of the community.
       ``(3) Basis for request.--Any request for reconsideration 
     under this subsection shall be based on significant issues of 
     a substantive nature which are relevant to the delineated 
     community of the institution and, in the case of a request by 
     a member of the community, shall be limited to issues 
     previously raised in comments submitted pursuant to 
     subsection (a).
       ``(4) Completion of review.--The appropriate Federal 
     financial supervisory agency shall complete any requested 
     reconsideration within 30 days of the filing of the request.
       ``(d) Conclusive Rating.--
       ``(1) In general.--An institution's rating shall become 
     conclusive on the later of--
       ``(A) 30 days after the rating is disclosed to the public; 
     or
       ``(B) the completion of any requested reconsideration by 
     the Federal financial supervisory agency.
       ``(2) Rating conclusive of meeting community credit 
     needs.--An institution's rating shall be the conclusive 
     assessment of the institution's record of meeting the credit 
     needs of its community for purposes of section 804 until the 
     institution's next rating, developed pursuant to an 
     examination, becomes conclusive.
       ``(3) Safe harbor.--Institutions which have received a 
     `satisfactory' or `outstanding' rating shall be deemed to 
     have met the purposes of section 804.
       ``(4) Rule of construction.--Notwithstanding any other 
     provision of law, no provision of this section shall be 
     construed as granting a cause of action to any person.''.
       (c) Overall Evaluation of Institution.--Paragraph (2) of 
     section 804(a) of the Community Reinvestment Act of 1977 (12 
     U.S.C. 2903(a)) is amended to read as follows:
       ``(2) take such record into account in the overall 
     evaluation of the condition of the institution by the 
     appropriate Federal financial supervisory agency.''.

     SEC. 2305. SPECIAL PURPOSE FINANCIAL INSTITUTIONS.

       (a) In General.--Section 804 of the Community Reinvestment 
     Act of 1977 (12 U.S.C. 2903) is amended by inserting after 
     subsection (c) (as added by section 2303 of this subtitle) 
     the following new subsection:
       ``(d) Special Purpose Institutions.--
       ``(1) In general.--In conducting assessments pursuant to 
     this section at any special purpose institution, the 
     appropriate Federal financial supervisory agency shall--
       ``(A) consider the nature of business such institution is 
     involved in; and
       ``(B) assess and take into account the record of the 
     institution commensurate with the amount of deposits (as 
     defined in section 3(1) of the Federal Deposit Insurance Act) 
     received by such institution.
       ``(2) Standards.--Each appropriate Federal financial 
     supervisory agency shall develop standards under which 
     special purpose institutions may be deemed to have complied 
     with the requirements of this title which are consistent with 
     the specific nature of such businesses.''.
       (b) Special Purpose Institution Defined.--Section 803 of 
     the Community Reinvestment Act of 1977 (12 U.S.C. 2902) is 
     amended by adding at the end the following new paragraph:
       ``(5) Special purpose institutions.--The term `special 
     purpose institution' means a financial institution that does 
     not generally accept deposits from the public in amounts of 
     less than $100,000, such as wholesale, credit card, and trust 
     institutions.''.

     SEC. 2306. INCREASED INCENTIVES FOR LENDING TO LOW- AND 
                   MODERATE-INCOME COMMUNITIES.

       (a) In General.--Section 804(b) of the Community 
     Reinvestment Act of 1977 (12 U.S.C. 2903(b)) is amended to 
     read as follows:
       ``(b) Positive Consideration of Certain Loans and 
     Investments.--In assessing and taking into account the 
     records of a regulated financial institution under subsection 
     (a), the appropriate Federal financial supervisory agency 
     shall--
       ``(1) consider as a positive factor, consistent with the 
     safe and sound operation of the institution, the 
     institution's investment in or loan to--
       ``(A) any minority depository institution or women's 
     depository institution (as such terms are defined in section 
     808(b)) or any low-income credit union;
       ``(B) any joint venture or other entity or project which 
     promotes the public welfare in any distressed community (as 
     defined by such agency) whether or not the distressed 
     community is located in the local community in which the 
     regulated financial institution is chartered to do business; 
     and
       ``(C) targeted low- and moderate-income communities, 
     including real property loans to such communities; and
       ``(2) consider equally with other factors capital 
     investment, loan participation, and other ventures undertaken 
     by the institution in cooperation with--
       ``(A) minority- and women-owned financial institutions and 
     low-income credit unions to the extent that these activities 
     help meet the credit needs of the local communities in which 
     such institutions are chartered; and
       ``(B) community development corporations in extending 
     credit and other financial services principally to low- and 
     moderate-income persons and small businesses to the extent 
     that such community development corporations help meet the 
     credit needs of the local communities served by the majority-
     owned institution.''.
       (b) Amendment to Definitions.--Section 803 of the Community 
     Reinvestment Act of 1977 (12 U.S.C. 2902) is amended by 
     inserting after paragraph (5) (as added by section 2305(b) of 
     this subtitle) the following new paragraph:
       ``(6) State bank supervisor.--The term `State bank 
     supervisor' has the same meaning as in section 3(r) of the 
     Federal Deposit Insurance Act.''.
       (c) Technical Correction.--The 1st of the 2 paragraphs 
     designated as paragraph (2) of section 803 of the Community 
     Reinvestment Act of 1977 (12 U.S.C. 2902) is amended to read 
     as follows:
       ``(D) the Director of the Office of Thrift Supervision with 
     respect to any savings association (the deposits of which are 
     insured by the Federal Deposit Insurance Corporation) and any 
     savings and loan holding company (other than a company which 
     is a bank holding company);''.

     SEC. 2307. PROHIBITION ON ADDITIONAL REPORTING UNDER CRA.

       Section 806 of the Community Reinvestment Act of 1977 (12 
     U.S.C. 2905) is amended to read as follows:

     ``SEC. 806. REGULATIONS.

       ``(a) In General.--
       ``(1) Publication requirement.--Regulations to carry out 
     the purposes of this title 

[[Page H11017]]

     shall be published by each appropriate Federal financial 
     supervisory agency.
       ``(2) Prohibition on additional recordkeeping.--Regulations 
     prescribed and policy statements, commentary, examiner 
     guidance, or other supervisory material issued under this 
     title shall not impose any additional recordkeeping on a 
     financial institution.
       ``(3) Prohibition on loan data collection.--No loan data 
     may be required to be collected and reported by a financial 
     institution and no such data may be made public by any 
     Federal financial supervisory agency under this title.''.

     SEC. 2308. TECHNICAL AMENDMENT.

       Section 807(b)(1)(B) of the Community Reinvestment Act (12 
     U.S.C. 2906) is amended by striking ``The information'' and 
     inserting ``In the case of a regulated financial institution 
     that maintains domestic branches in 2 or more States, the 
     information''.

     SEC. 2309. DUPLICATIVE REPORTING.

       Section 10(g) of the Federal Home Loan Bank Act (12 U.S.C. 
     1430(g)) is amended by adding at the end the following new 
     paragraph (3):
       ``(3) Special rule.--This subsection shall not apply to 
     members receiving a grade of `outstanding' or `satisfactory' 
     under section 807 of the Community Reinvestment Act of 
     1977.''.

     SEC. 2310. CRA CONGRESSIONAL OVERSIGHT.

       (a) Sense of Congress Relating to Aggressive Oversight.--It 
     is the sense of the Congress that the appropriate committees 
     of the House of Representatives and the Senate should 
     exercise aggressive oversight of the adoption and 
     implementation of any regulation by any appropriate Federal 
     financial supervisory agency under the Community Reinvestment 
     Act of 1977 after the date of the enactment of this Act.
       (b) Agency Reports Required.--
       (1) In general.--Each appropriate Federal financial 
     supervisory agency shall submit a report to the Congress by 
     December 31, 1996, and by December 31, 1997, on the 
     implementation of all regulations prescribed by such agency 
     under the Community Reinvestment Act of 1977 after the date 
     of the enactment of this Act.
       (2) Requirements relating to preparation of reports.--In 
     preparing each report required under paragraph (1), each 
     appropriate Federal financial supervisory agency shall--
       (A) solicit and include comments from regulated financial 
     institutions with respect to the regulations which are the 
     subject of the report; and
       (B) include quantifiable measures of the cost savings 
     achieved under the regulations which are the subject of the 
     report and the effectiveness of such regulations in achieving 
     the purposes of the Community Reinvestment Act of 1977.
       (3) Definitions.--For purposes of this section, the terms 
     ``appropriate Federal financial supervisory agency'' and 
     ``regulated financial institution'' have the same meanings as 
     in section 803 of the Community Reinvestment Act of 1977.

     SEC. 2311. CONSULTATION AMONG EXAMINERS.

       Section 10 of the Federal Deposit Insurance Act (12 U.S.C. 
     1820) is amended by adding at the end the following new 
     subsection:
       ``(j) Consultation Among Examiners.--
       ``(1) In general.--Each appropriate Federal banking agency 
     shall take such action as may be necessary to ensure that 
     examiners employed by the agency--
       ``(A) consult on examination activities with respect to any 
     depository institution; and
       ``(B) achieve an agreement and resolve any inconsistencies 
     on the recommendations to be given to such institution as a 
     consequence of any examinations.
       ``(2) Examiner-in-charge.--Each agency shall consider 
     appointing an examiner-in-charge with respect to a depository 
     institution to ensure consultation on examination activities 
     among all of the agency's examiners involved in examinations 
     of such institution.''.

     SEC. 2312. LIMITATION ON REGULATIONS.

       Section 806 of the Community Reinvestment Act of 1977 (12 
     U.S.C. 2905) (as amended by section 2307) is amended by 
     adding at the end the following new subsections:
       ``(b) Limitation on Regulations.--No regulation may be 
     prescribed under this title by any Federal agency which 
     would--
       ``(1) require any regulated financial institution to--
       ``(A) make any loan or enter into any other agreement on 
     the basis of any discriminatory criteria prohibited under any 
     law of the United States; or
       ``(B) make any loan to, or enter into any other agreement 
     with, any uncreditworthy person that would jeopardize the 
     safety and soundness of such institution; or
       ``(2) prevent or hinder in any way a financial 
     institution's full responsibility to provide credit to all 
     segments of the community.
       ``(c) Encourage Loans to Creditworthy Borrowers.--
     Regulations prescribed under this title shall encourage 
     regulated financial institutions to make loans and extend 
     credit to all creditworthy persons, consistent with safety 
     and soundness.''.
               Subtitle D--Phase-Down of Oversight Board

     SEC. 2401. TERMINATION OF AUTHORITY OF OVERSIGHT BOARD TO 
                   EMPLOY STAFF.

       (a) In General.--Section 21A(a) of the Federal Home Loan 
     Bank Act (12 U.S.C. 1441a(a)) is amended by adding at the end 
     the following new paragraph:
       ``(17) Phased-down operation of oversight board following 
     termination of corporation.--
       ``(A) Termination of authority to employ staff.--Except as 
     provided in subparagraph (B), the authority of the Thrift 
     Depositor Protection Oversight Board under paragraph (5) to 
     establish officer and employee positions, to compensate 
     officers and employees of the Board, to provide other 
     benefits for officers and employees of the Board, and to 
     utilize staff of any other department or agency shall 
     terminate as of December 31, 1995.
       ``(B) Limited authority for detailing staff from other 
     agencies.--If the Thrift Depositor Protection Oversight Board 
     determines that any staff is required to carry out the 
     functions of the Board after the authority to employ staff 
     terminates under subparagraph (A), the Board shall--
       ``(i) utilize employees of any other department or agency 
     in accordance with paragraph (5)(F) to carry out the staff 
     functions which have been determined to be necessary; and
       ``(ii) submit a report to the Congress containing--

       ``(I) the number of staff positions which the Board has 
     determined are necessary to carry out the Board's functions 
     after the termination of the Corporation;
       ``(II) a justification for such determination; and
       ``(III) an estimate of the length of the period for which 
     such staff positions will be required.''.

       (b) Technical and Conforming Amendments.--
       (1) Subparagraphs (B), (C), (D), and (E) of section 
     21A(a)(5) of the Federal Home Loan Bank Act (12 U.S.C. 
     1441a(a)(5)) are each amended by inserting ``subject to 
     paragraph (17)(A),'' after the closing parenthesis of the 
     subparagraph designation.
       (2) Section 21A(a)(5)(F) of the Federal Home Loan Bank Act 
     (12 U.S.C. 1441a(a)(5)(F)) is amended by inserting ``subject 
     to subparagraphs (A) and (B) of paragraph (17) and'' after 
     ``(F)''.
                    TITLE III--COMMITTEE ON COMMERCE
                       Subtitle A--Communications

                      CHAPTER 1--SPECTRUM AUCTIONS

     SEC. 3001. SPECTRUM AUCTIONS.

       (a) Extension and Expansion of Auction Authority.--
       (1) Amendments.--Section 309(j) of the Communications Act 
     of 1934 (47 U.S.C. 309(j)) is amended--
       (A) by striking paragraphs (1) and (2) and inserting in 
     lieu thereof the following:
       ``(1) General authority.--If, consistent with the 
     obligations described in paragraph (6)(E), mutually exclusive 
     applications are accepted for any initial license or 
     construction permit which will involve an exclusive use of 
     the electromagnetic spectrum, then the Commission shall grant 
     such license or permit to a qualified applicant through a 
     system of competitive bidding that meets the requirements of 
     this subsection.
       ``(2) Exemptions.--The competitive bidding authority 
     granted by this subsection shall not apply to licenses or 
     construction permits issued by the Commission--
       ``(A) that, as the result of the Commission carrying out 
     the obligations described in paragraph (6)(E), are not 
     mutually exclusive;
       ``(B) for public safety radio services, including non-
     Government uses that protect the safety of life, health, and 
     property and that are not made commercially available to the 
     public; or
       ``(C) for initial licenses or construction permits for new 
     terrestrial digital television services assigned by the 
     Commission to existing terrestrial broadcast licensees to 
     replace their current television licenses.''; and
       (B) by striking ``1998'' in paragraph (11) and inserting 
     ``2002''.
       (2) Conforming amendment.--Subsection (i) of section 309 of 
     such Act is repealed.
       (3) Effective date.--The amendment made by paragraph (1)(A) 
     shall not apply with respect to any license or permit for 
     which the Federal Communications Commission has accepted 
     mutually exclusive applications on or before the date of 
     enactment of this Act.
       (b) Commission Obligation To Make Additional Spectrum 
     Available by Auction.--
       (1) In general.--The Federal Communications Commission 
     shall complete all actions necessary to permit the 
     assignment, by September 30, 2002, by competitive bidding 
     pursuant to section 309(j) of the Communications Act of 1934 
     (47 U.S.C. 309(j)) of licenses for the use of bands of 
     frequencies that--
       (A) individually span not less than 25 megahertz, unless a 
     combination of smaller bands can, notwithstanding the 
     provisions of paragraph (7) of such section, reasonably be 
     expected to produce greater receipts;
       (B) in the aggregate span not less than 100 megahertz;
       (C) are located below 3 gigahertz; and
       (D) have not, as of the date of enactment of this Act--
       (i) been designated by Commission regulation for assignment 
     pursuant to such section; or
       (ii) been identified by the Secretary of Commerce pursuant 
     to section 113 of the National Telecommunications and 
     Information Administration Organization Act.

     The Commission shall conduct the competitive bidding for not 
     less than one-half of such aggregate spectrum by September 
     30, 2000.

[[Page H11018]]

       (2) Criteria for reassignment.--In making available bands 
     of frequencies for competitive bidding pursuant to paragraph 
     (1), the Commission shall--
       (A) seek to promote the most efficient use of the spectrum;
       (B) take into account the cost to incumbent licensees of 
     relocating existing uses to other bands of frequencies or 
     other means of communication;
       (C) take into account the needs of public safety radio 
     services; and
       (D) comply with the requirements of international 
     agreements concerning spectrum allocations.
       (3) Notification to ntia.--The Commission shall notify the 
     Secretary of Commerce if--
       (A) the Commission is not able to provide for the effective 
     relocation of incumbent licensees to bands of frequencies 
     that are available to the Commission for assignment; and
       (B) the Commission has identified bands of frequencies that 
     are--
       (i) suitable for the relocation of such licensees; and
       (ii) allocated for Federal Government use, but that could 
     be reallocated pursuant to part B of the National 
     Telecommunications and Information Administration 
     Organization Act (as amended by this Act).
       (c) Identification and Reallocation of Frequencies.--The 
     National Telecommunications and Information Administration 
     Organization Act (47 U.S.C. 901 et seq.) is amended--
       (1) in section 113, by adding at the end the following new 
     subsection:
       ``(f) Additional Reallocation Report.--If the Secretary 
     receives a notice from the Commission pursuant to section 
     3001(b)(3) of the Seven-Year Balanced Budget Reconciliation 
     Act of 1995, the Secretary shall prepare and submit to the 
     President and the Congress a report recommending for 
     reallocation for use other than by Federal Government 
     stations under section 305 of the 1934 Act (47 U.S.C. 305), 
     bands of frequencies that are suitable for the uses 
     identified in the Commission's notice.'';
       (2) in section 114(a)(1), by striking ``(a) or (d)(1)'' and 
     inserting ``(a), (d)(1), or (f)''.
       (d) Completion of C-Block PCS Auction.--The Federal 
     Communications Commission shall commence the Broadband 
     Personal Communications Services C-Block auction described in 
     the Commission's Sixth Report and Order in DP Docket 93-253 
     (FCC 93-510, released July 18, 1995) not later than December 
     4, 1995. The Commission's competitive bidding rules governing 
     such auction, as set forth in such Sixth Report and Order, 
     are hereby ratified and adopted as a matter of Federal law.
       (e) Modification of Auction Policy To Preserve Auction 
     Value of Spectrum.--The voluntary negotiation period for 
     relocating fixed microwave licensees to frequency bands other 
     than those allocated for licensed emerging technology 
     services (including licensed personal communications 
     services), established by the Commission's Third Report and 
     Order in ET Docket No. 92-9, shall expire one year after the 
     date of acceptance by the Commission of applications for such 
     licensed emerging technology services. The mandatory 
     negotiation period for relocating fixed microwave licensees 
     to frequency bands other than those allocated for licensed 
     emerging technology services (including licensed personal 
     communications services), established in such Third Report 
     and Order, shall expire two years after the date of 
     acceptance by the Commission of applications for such 
     licensed emerging technology services.
       (f) Identification and Reallocation of Auctionable 
     Frequencies.--The National Telecommunications and Information 
     Administration Organization Act (47 U.S.C. 901 et seq.) is 
     amended--
       (1) in section 113(b)--
       (A) by striking the heading of paragraph (1) and inserting 
     ``Initial reallocation report'';
       (B) by inserting ``in the first report required by 
     subsection (a)'' after ``recommend for reallocation'' in 
     paragraph (1);
       (C) by inserting ``or (3)'' after ``paragraph (1)'' each 
     place it appears in paragraph (2); and
       (D) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) Second reallocation report.--In accordance with the 
     provisions of this section, the Secretary shall recommend for 
     reallocation in the second report required by subsection (a), 
     for use other than by Federal Government stations under 
     section 305 of the 1934 Act (47 U.S.C. 305), a single 
     frequency band that spans not less than an additional 20 
     megahertz, that is located below 3 gigahertz, and that meets 
     the criteria specified in paragraphs (1) through (5) of 
     subsection (a).''; and
       (2) in section 115--
       (A) in subsection (b), by striking ``the report required by 
     section 113(a)'' and inserting ``the initial reallocation 
     report required by section 113(a)''; and
       (B) by adding at the end the following new subsection:
       ``(c) Allocation and Assignment of Frequencies Identified 
     in the Second Reallocation Report.--With respect to the 
     frequencies made available for reallocation pursuant to 
     section 113(b)(3), the Commission shall, not later than 1 
     year after receipt of the second reallocation report required 
     by such section, prepare, submit to the President and the 
     Congress, and implement, a plan for the allocation and 
     assignment under the 1934 Act of such frequencies. Such plan 
     shall propose the immediate allocation and assignment of all 
     such frequencies in accordance with section 309(j).''.

       CHAPTER 2--FEDERAL COMMUNICATIONS COMMISSION AUTHORIZATION

     SEC. 3011. SHORT TITLE.

       This chapter may be cited as the ``Federal Communications 
     Commission Authorization Act of 1995''.

     SEC. 3012. EXTENSION OF AUTHORITY.

       (a) Authorization of Appropriations.--Section 6 of the 
     Communications Act of 1934 (47 U.S.C. 156) is amended to read 
     as follows:

     ``SEC. 6. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated for the 
     administration of this Act by the Commission $186,000,000 for 
     fiscal year 1996, together with such sums as may be necessary 
     for increases resulting from adjustments in salary, pay, 
     retirement, other employee benefits required by law, and 
     other nondiscretionary costs, for fiscal year 1996. Of the 
     sum appropriated in each fiscal year under this section, a 
     portion, in an amount determined under sections 8(b) and 
     9(b), shall be derived from fees authorized by sections 8 and 
     9.''.
       (b) Travel and Reimbursement Program.--Section 4(g)(2) of 
     the Communications Act of 1934 (47 U.S.C. 154(g)(2)) is 
     amended to read as follows:
       ``(2) The Commission shall submit to the appropriate 
     committees of Congress, and publish in the Federal Register, 
     semiannual reports specifying the reimbursements which the 
     Commission has accepted under section 1353 of title 31, 
     United States Code.''.
       (c) Communications Support From Older Americans.--Section 
     6(a) of the Federal Communications Commission Authorization 
     Act of 1988 (47 U.S.C. 154 note) is amended by striking 
     ``fiscal years 1992 and 1993'' and inserting ``fiscal year 
     1996''.

     SEC. 3013. APPLICATION FEES.

       (a) Adjustment of Application Fee Schedule.--Section 8(b) 
     of the Communications Act of 1934 (47 U.S.C. 158(b)) is 
     amended to read as follows:
       ``(b)(1) For fiscal year 1996 and each fiscal year 
     thereafter, the Commission shall, by regulation, modify the 
     application fees by proportionate increases or decreases so 
     as to result in estimated total collections for the fiscal 
     year equal to--
       ``(A) $40,000,000; plus
       ``(B) an additional amount, specified in an appropriation 
     Act for the Commission for that fiscal year to be collected 
     and credited to such appropriation, not to exceed the amount 
     by which the necessary expenses for the costs described in 
     paragraph (5) exceeds $40,000,000.
       ``(2) In making adjustments pursuant to this paragraph the 
     Commission may round such fees to the nearest $5.00 in the 
     case of fees under $100, or to the nearest $20 in the case of 
     fees of $100 or more. The Commission shall transmit to the 
     Congress notification of any adjustment made pursuant to this 
     paragraph immediately upon the adoption of such adjustment.
       ``(3) The Commission is authorized to continue to collect 
     fees at the prior year's rate until the effective date of fee 
     adjustments or amendments made pursuant to paragraphs (1) and 
     (4).
       ``(4) The Commission shall, by regulation, add, delete, or 
     reclassify services, categories, applications, or other 
     filings subject to application fees to reflect additions, 
     deletions, or changes in the nature of its services or 
     authorization of service processes as a consequence of 
     Commission rulemaking proceedings or changes in law.
       ``(5) Any modified fees established under paragraph (4) 
     shall be derived by determining the full-time equivalent 
     number of employees performing application activities, 
     adjusted to take into account other expenses that are 
     reasonably related to the cost of processing the application 
     or filing, including all executive and legal costs incurred 
     by the Commission in the discharge of these functions, and 
     other factors that the Commission determines are necessary in 
     the public interest. The Commission shall--
       ``(A) transmit to the Congress notification of any proposed 
     modification made pursuant to this paragraph immediately upon 
     adoption of such proposal; and
       ``(B) transmit to the Congress notification of any 
     modification made pursuant to this paragraph immediately upon 
     adoption of such modification.
       ``(6) Increases or decreases in application fees made 
     pursuant to this subsection shall not be subject to judicial 
     review.''.
       (b) Treatment of Additional Collections.--Section 8(e) of 
     such Act is amended to read as follows:
       ``(e) Of the moneys received from fees authorized under 
     this section--
       ``(1) $40,000,000 shall be deposited in the general fund of 
     the Treasury to reimburse the United States for amounts 
     appropriated for use by the Commission in carrying out its 
     functions under this Act; and
       ``(2) the remainder shall be deposited as an offsetting 
     collection in, and credited to, the account providing 
     appropriations to carry out the functions of the 
     Commission.''.
       (c) Schedule of Application Fees for PCS.--The schedule of 
     application fees in section 8(g) of such Act is amended by 
     adding, at the end of the portion under the heading ``common 
     carrier services'', the following new item:

``23. Personal communications services
  ``a. Initial or new application...............................230.00 

[[Page H11019]]

  ``b. Amendment to pending application..........................35.00 
  ``c. Application for assignment or transfer of control........230.00 
  ``d. Application for renewal of license........................35.00 
  ``e. Request for special temporary authority..................200.00 
  ``f. Notification of completion of construction................35.00 
  ``g. Request to combine service areas........................50.00''.

       (d) Vanity Call Signs.--
       (1) Lifetime license fees.--
       (A) Amendment.--The schedule of application fees in section 
     8(g) of such Act is further amended by adding, at the end of 
     the portion under the heading ``private radio services'', the 
     following new item:

      ``11. Amateur vanity call signs........................150.00''. 

       (B) Treatment of receipts.--Moneys received from fees 
     established under the amendment made by this subsection shall 
     be deposited as an offsetting collection in, and credited to, 
     the account providing appropriations to carry out the 
     functions of the Commission.
       (2) Termination of annual regulatory fees.--The schedule of 
     regulatory fees in section 9(g) of such Act (47 U.S.C. 
     159(g)) is amended by striking the following item from the 
     fees applicable to the Private Radio Bureau:

    ``Amateur vanity call-signs....................................7''.

     SEC. 3014. REGULATORY FEES.

       (a) Executive and Legal Costs.--Section 9(a)(1) of the 
     Communications Act of 1934 (47 U.S.C. 159(a)(1)) is amended 
     by inserting before the period at the end the following: ``, 
     and all executive and legal costs incurred by the Commission 
     in the discharge of these functions''.
       (b) Establishment and Adjustment.--Section 9(b) of such Act 
     is amended--
       (1) in paragraph (4)(B), by striking ``90 days'' and 
     inserting ``45 days''; and
       (2) by adding at the end the following new paragraph:
       ``(5) Effective date of adjustments.--The Commission is 
     authorized to continue to collect fees at the prior year's 
     rate until the effective date of fee adjustments or 
     amendments made pursuant to paragraph (2) or (3).''.
       (c) Regulatory Fees for Satellite TV Operations.--The 
     schedule of regulatory fees in section 9(g) of such Act is 
     amended, in the fees applicable to the Mass Media Bureau, by 
     inserting after each of the items pertaining to construction 
     permits in the fees applicable to VHF commercial and UHF 
     commercial TV the following new item:

``Terrestrial television satellite operations....................500''.

       (d) Governmental Entities Use for Common Carrier 
     Purposes.--Section 9(h) of such Act is amended by adding at 
     the end the following new sentence: ``The exceptions provided 
     by this subsection for governmental entities shall not be 
     applicable to any services that are provided on a commercial 
     basis in competition with another carrier.''.
       (e) Information Required in Connection With Adjustment of 
     Regulatory Fees.--Title I of such Act is amended--
       (1) in section 9, by striking subsection (i); and
       (2) by inserting after section 9 the following new section:

     ``SEC. 10. ACCOUNTING SYSTEM AND ADJUSTMENT INFORMATION.

       ``(a) Accounting System Required.--The Commission shall 
     develop accounting systems for the purposes of making the 
     adjustments authorized by sections 8 and 9. The Commission 
     shall annually prepare and submit to the Congress an analysis 
     of such systems and shall annually afford interested persons 
     the opportunity to submit comments concerning the allocation 
     of the costs of performing the functions described in section 
     8(a)(5) and 9(a)(1) in making such adjustments in the 
     schedules required by sections 8 and 9.
       ``(b) Information Required in Connection with Adjustment of 
     Application and Regulatory Fees.--
       ``(1) Schedule of requested amounts.--No later than May 1 
     of each calendar year, the Commission shall prepare and 
     transmit to the Committees of Congress responsible for the 
     Commission's authorization and appropriations a detailed 
     schedule of the amounts requested by the President's budget 
     to be appropriated for the ensuing fiscal year for the 
     activities described in sections 8(a)(5) and 9(a)(1), 
     allocated by bureaus, divisions, and offices of the 
     Commission.
       ``(2) Explanatory statement.--If the Commission anticipates 
     increases in the application fees or regulatory fees 
     applicable to any applicant, licensee, or unit subject to 
     payment of fees, the Commission shall submit to the Congress 
     by May 1 of such calendar year a statement explaining the 
     relationship between any such increases and either (A) 
     increases in the amounts requested to be appropriated for 
     Commission activities in connection with such applicants, 
     licensees, or units subject to payment of fees, or (B) 
     additional activities to be performed with respect to such 
     applicants, licensees, or units.
       ``(3) Definition.--For purposes of this subsection, the 
     term `amount requested by the President's budget' shall 
     include any adjustments to such requests that are made by May 
     1 of such calendar year. If any such adjustment is made after 
     May 1, the Commission shall provide such Committees with 
     updated schedules and statements containing the information 
     required by this subsection within 10 days after the date of 
     any such adjustment.''.

     SEC. 3015. INSPECTION OF SHIP RADIO STATIONS.

       (a) Authority To Designate Entities To Inspect.--Section 
     4(f)(3) of the Communications Act of 1934 (47 U.S.C. 
     154(f)(3)) is amended by inserting before the period at the 
     end the following: ``: And provided further, That, in the 
     alternative, an entity designated by the Commission may make 
     the inspections referred to in this paragraph''.
       (b) Conduct of Inspections.--Section 362(b) of such Act (47 
     U.S.C. 362(b)) is amended to read as follows:
       ``(b) Every ship of the United States that is subject to 
     this part shall have the equipment and apparatus prescribed 
     therein inspected at least once each year by the Commission 
     or an entity designated by the Commission. If, after such 
     inspection, the Commission is satisfied that all relevant 
     provisions of this Act and the station license have been 
     complied with, the fact shall be certified to on the station 
     license by the Commission. The Commission shall make such 
     additional inspections at frequent intervals as the 
     Commission determines may be necessary to ensure 
     compliance with the requirements of this Act. The 
     Commission may, upon a finding that the public interest 
     could be served thereby--
       ``(1) waive the annual inspection required under this 
     section for a period of up to 90 days for the sole purpose of 
     enabling a vessel to complete its voyage and proceed to a 
     port in the United States where an inspection can be held; or
       ``(2) waive the annual inspection required under this 
     section for a vessel that is in compliance with the radio 
     provisions of the Safety Convention and that is operating 
     solely in waters beyond the jurisdiction of the United 
     States, provided that such inspection shall be performed 
     within 30 days of such vessel's return to the United 
     States.''.
       (c) Inspection by Other Entities.--Section 385 of such Act 
     (47 U.S.C. 385) is amended by inserting ``or an entity 
     designated by the Commission'' after ``The Commission''.

     SEC. 3016. EXPEDITED ITFS PROCESSING.

       Section 5(c)(1) of the Communications Act of 1934 (47 
     U.S.C. 155(c)(1)) is amended by striking the last sentence 
     and inserting the following: ``Except for cases involving the 
     authorization of service in the Instructional Television 
     Fixed Service, or as otherwise provided in this Act, nothing 
     in this paragraph shall authorize the Commission to provide 
     for the conduct, by any person or persons other than persons 
     referred to in paragraph (2) or (3) of section 556(b) of 
     title 5, United States Code, of any hearing to which such 
     section applies.''.

     SEC. 3017. TARIFF REJECTION AUTHORITY.

       Section 203(d) of the Communications Act of 1934 (47 U.S.C. 
     203(d)) is amended by inserting after the first sentence the 
     following new sentences: ``The Commission may, after 
     affording interested parties an opportunity to comment, 
     reject a proposed tariff filing in whole or in part, if the 
     filing or any part thereof is patently unlawful. In 
     evaluating whether a proposed tariff filing is patently 
     unlawful, the Commission may consider additional information 
     filed by the carrier or any interested party and shall 
     presume the facts alleged by the carrier to be true.''.

     SEC. 3018. REFUND AUTHORITY.

       Title II of the Communications Act of 1934 (47 U.S.C. 201 
     et seq.) is amended by adding at the end thereof the 
     following new section:

     ``SEC. 230. REFUND AUTHORITY.

       ``In addition to any other provision of this Act under 
     which the Commission may order refunds, the Commission may 
     require by order the refund of such portion of any charge by 
     any carrier or carriers as results from a violation of 
     section 220 (a), (b), or (d) or 221 (c) or (d) or of any of 
     the rules promulgated pursuant to such sections or pursuant 
     to section 215, 218, or 219. Such refunds shall be ordered 
     only to the extent that the Commission or a court finds that 
     such violation resulted in unlawful charges and shall be made 
     to such persons or classes of persons as the Commission 
     determines reasonably represent the persons from whom amounts 
     were improperly received by reason of such violation. No 
     refunds shall be required under this section unless--
       ``(1) the Commission issues an order advising the carrier 
     of its potential refund liability and provides the carrier 
     with an opportunity to file written comments as to why 
     refunds should not be required; and
       ``(2) such order is issued not later than 5 years after the 
     date the charge was paid.
     In the case of a continuing violation, a violation shall be 
     considered to occur on each date that the violation is 
     repeated.''.

     SEC. 3019. LICENSING OF AVIATION AND MARITIME SERVICES BY 
                   RULE.

       Section 307(e) of the Communications Act of 1934 (47 U.S.C. 
     307(e)) is amended to read as follows:
       ``(e)(1) Notwithstanding any license requirement 
     established in this Act, if the Commission determines that 
     such authorization serves the public interest, convenience, 
     and necessity, the Commission may by rule authorize the 
     operation of radio stations without individual licenses in 
     the following radio services: (A) the aviation radio service 
     for aircraft stations operated on domestic flights when such 
     aircraft are not otherwise required to carry a radio station; 
     and (B) the maritime radio service for ship stations 

[[Page H11020]]

     navigated on domestic voyages when such ships are not 
     otherwise required to carry a radio station.
       ``(2) Any radio station operator who is authorized by the 
     Commission to operate without an individual license shall 
     comply with all other provisions of this Act and with rules 
     prescribed by the Commission under this Act.
       ``(3) For purposes of this subsection, the terms `aircraft 
     station' and `ship station' shall have the meanings given 
     them by the Commission by rule.''.

     SEC. 3020. AUCTION TECHNICAL AMENDMENTS.

       (a) Funding Availability.--Section 309(j)(8)(B) of the 
     Communications Act of 1934 (47 U.S.C. 309(j)(8)(B)) is 
     amended by adding at the end the following new sentence: 
     ``Such offsetting collections are authorized to remain 
     available until expended.''.
       (b) Escrow of Deposits.--Section 309(j)(8) of such Act is 
     further amended by adding at the end the following new 
     subparagraph:
       ``(C) Escrow of deposit.--The Commission is authorized, 
     based on the competitive bidding methodology selected, to 
     provide for the deposit of moneys for bids in an interest-
     bearing account until such time as the Commission accepts a 
     deposit from the high bidder. All interest earned on bid 
     moneys received from the winning bidder shall be deposited 
     into the general fund of the Treasury. All interest earned on 
     bid moneys deposited from unsuccessful bidders, less any 
     applicable fees and penalties, shall be paid to those 
     bidders.''.

     SEC. 3021. FORFEITURES FOR VIOLATIONS IMPERILING SAFETY OF 
                   LIFE.

       (a) Administrative Sanctions.--Section 312(a) of the 
     Communications Act of 1934 (47 U.S.C. 312(a)) is amended--
       (1) by striking ``or'' at the end of paragraph (6);
       (2) by striking the period at the end of paragraph (7) and 
     inserting ``; or''; and
       (3) by adding at the end the following new paragraph:
       ``(8) for failure to comply with any requirement of this 
     Act or the Commission's rules that imperils the safety of 
     life.''.
       (b) Forfeitures.--Section 503(b)(1) of such Act (47 U.S.C. 
     503(b)(1)) is amended--
       (1) by striking ``or'' at the end of subparagraph (C);
       (2) by striking the semicolon at the end of subparagraph 
     (D) and inserting ``; or''; and
       (3) by adding after subparagraph (D) the following new 
     subparagraph:
       ``(E) failed to comply with any requirement of this Act or 
     the Commission's rules that imperils the safety of life;''.

     SEC. 3022. USE OF EXPERTS AND CONSULTANTS.

       Section 4(f)(1) of the Communications Act of 1934 (47 
     U.S.C. 154) is amended by adding at the end thereof the 
     following: ``The Commission may also procure the services of 
     experts and consultants in accordance with section 3109 of 
     title 5, United States Code, relating to appointments in the 
     Federal Service, at rates of compensation for individuals not 
     to exceed the daily rate equivalent to the maximum rate 
     payable for senior-level positions under section 5276 of 
     title 5, United States Code.''.

     SEC. 3023. STATUTE OF LIMITATIONS FOR FORFEITURE PROCEEDINGS 
                   AGAINST COMMON CARRIERS.

       Section 503(b)(6) of the Communications Act of 1934 (47 
     U.S.C. 503(b)(6)) is amended--
       (1) by striking ``or'' at the end of subparagraph (A);
       (2) by inserting ``and is not a common carrier'' after 
     ``title III of this Act'' in subparagraph (B);
       (3) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (4) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) such person is a common carrier and the required 
     notice of apparent liability is issued more than 5 years 
     after the date the violation charged occurred; or''.

     SEC. 3024. UTILIZATION OF FM BAND FOR ASSISTIVE DEVICES FOR 
                   HEARING IMPAIRED INDIVIDUALS.

       Within 6 months after the date of enactment of this Act, 
     the Federal Communications Commission shall report to the 
     Congress on the existing and future use of the FM band to 
     facilitate the use of auditory assistive devices for 
     individuals with hearing impairments. In preparing such 
     report, the Commission shall consider--
       (1) the potential for utilizing FM band auditory assistive 
     devices to comply with the American with Disabilities Act;
       (2) the impact on such compliance of the vulnerability of 
     such devices to harmful interference from radio licensees; 
     and
       (3) alternative frequency allocations that could facilitate 
     such compliance.

     SEC. 3025. TECHNICAL AMENDMENT.

       Section 302(d)(1) of the Communications Act of 1934 (47 
     U.S.C. 309(d)(1)) is amended--
       (1) in subparagraph (A), by striking ``allocated to the 
     domestic cellular radio telecommunications service'' and 
     inserting ``utilized to provide commercial mobile service (as 
     defined in section 332(d))''; and
       (2) in subparagraph (C), by striking ``cellular'' and 
     inserting ``commercial mobile service''.
        Subtitle B--Nuclear Regulatory Commission Annual Charge

     SEC. 3031. NUCLEAR REGULATORY COMMISSION ANNUAL CHARGES.

       Section 6101(a)(3) of the Omnibus Budget Reconciliation Act 
     of 1990 (42 U.S.C. 2214(a)(3)) is amended by striking 
     ``September 30, 1998'' and inserting ``September 30, 2002''.
            Subtitle C--United States Enrichment Corporation

     SEC. 3035. SHORT TITLE AND REFERENCE.

       (a) Short Title.--This subtitle may be cited as the ``USEC 
     Privatization Act''.
       (b) Reference.--Except as otherwise expressly provided, 
     whenever in this subtitle an amendment or repeal is expressed 
     in terms of an amendment to, or repeal of, a section or other 
     provision, the reference shall be considered to be made to a 
     section or other provision of the Atomic Energy Act of 1954 
     (42 U.S.C. 2011 et seq.).

     SEC. 3036. PRODUCTION FACILITY.

       Paragraph v. of section 11 (42 U.S.C. 2014 v.) is amended 
     by striking ``or the construction and operation of a uranium 
     enrichment production facility using Atomic Vapor Laser 
     Isotope Separation technology''.

     SEC. 3037. DEFINITIONS.

       Section 1201 (42 U.S.C. 2297) is amended--
       (1) in paragraph (4), by inserting before the period the 
     following: ``and any successor corporation established 
     through privatization of the Corporation'';
       (2) by redesignating paragraphs (10) through (13) as 
     paragraphs (14) through (17), respectively, and by inserting 
     after paragraph (9) the following new paragraphs:
       ``(10) The term `low-level radioactive waste' has the 
     meaning given such term in section 102(9) of the Low-Level 
     Radioactive Waste Policy Amendments Act of 1985 (42 U.S.C. 
     2021b(9)).
       ``(11) The term `mixed waste' has the meaning given such 
     term in section 1004(41) of the Solid Waste Disposal Act (42 
     U.S.C. 6903(41)).
       ``(12) The term `privatization' means the transfer of 
     ownership of the Corporation to private investors pursuant to 
     chapter 25.
       ``(13) The term `privatization date' means the date on 
     which 100 percent of ownership of the Corporation has been 
     transferred to private investors.'';
       (3) by inserting after paragraph (17) (as redesignated) the 
     following new paragraph:
       ``(18) The term `transition date' means July 1, 1993.'';
       (4) by redesignating the unredesignated paragraph (14) as 
     paragraph (19); and
       (5) by adding the following new paragraphs after paragraph 
     (19):
       ``(20) The term `gaseous diffusion plants' means the 
     Paducah Gaseous Diffusion Plant at Paducah, Kentucky and the 
     Portsmouth Gaseous Diffusion Plant at Piketon, Ohio.
       ``(21) The term `private corporation' means the corporation 
     established under section 1503.
       ``(22) The term `Russian HEU agreement' means the Agreement 
     Between the Government of the United States of America and 
     the Government of the Russian Federation Concerning the 
     Disposition of Highly Enriched Uranium Extracted from Nuclear 
     Weapons, dated February 18, 1993.
       ``(23) The term `Suspension Agreement' means the Agreement 
     to Suspend the Antidumping Investigation on Uranium from the 
     Russian Federation, as amended.''.

     SEC. 3038. EMPLOYEES OF THE CORPORATION.

       (a) Paragraphs (1) and (2).--Section 1305(e) (42 U.S.C. 
     2297b-4(e)) is amended by striking paragraphs (1) and (2) and 
     inserting in thereof the following:
       ``(1) In general.--
       ``(A) Privatization shall not diminish the accrued, vested 
     pension benefits of employees of the Corporation's operating 
     contractor at the two gaseous diffusion plants.
       ``(B) In the event that the private corporation terminates 
     or changes the contractor at either or both of the gaseous 
     diffusion plants, the plan sponsor or other appropriate 
     fiduciary of the pension plan covering employees of the prior 
     operating contractor shall arrange for the transfer of all 
     plan assets and liabilities relating to accrued pension 
     benefits of such plan's participants and beneficiaries from 
     such plan to a pension plan sponsored by the new contractor 
     or the private corporation, as the case may be.
       ``(C) Any employer (including the private corporation or 
     any contractor of the private corporation) at a gaseous 
     diffusion plant shall abide by the terms of any unexpired 
     collective bargaining agreement covering employees in 
     bargaining units at the plant and in effect on the 
     privatization date until the expiration of the agreement.
       ``(D) In the event of a plant closing or mass layoff (as 
     such terms are defined in section 2101(a) (2) and (3) of 
     title 29, United States Code) at either of the gaseous 
     diffusion plants, the Secretary of Energy shall treat such 
     plant as a Department of Energy defense nuclear facility and 
     any person employed by an operating contractor on the 
     privatization date at either plant as a Department of Energy 
     employee for purposes of sections 3161 through 3163 of the 
     National Defense Authorization Act for Fiscal Year 1993 (42 
     U.S.C. 7274h-7274j).
       ``(E) The Department of Energy and the private corporation 
     shall continue to fund postretirement health benefits for 
     persons employed by an operating contractor at either of the 
     gaseous diffusion plants at substantially the same level 
     of coverage as eligible retirees are entitled to receive 
     on the privatization date, consistent with clauses (i) 
     through (iii), except that the Department of Energy, the 
     private corporations and the operating contractor shall 
     have the right to implement cost-saving measures, 
     including (but not limited to) preferred provider 
     organizations, managed care programs, mandatory second 
     opinions before surgery or other medical procedures, and 
     mandatory use of generic drugs, that do not materially 
     diminish the overall quality of the medical care 
     provided--

[[Page H11021]]

       ``(i) persons eligible for this coverage shall be limited 
     to persons who retired from active employment at one of the 
     gaseous diffusion plants as of the privatization date, as 
     vested participants in a pension plan maintained either by 
     the Corporation's operating contractor or by a contractor 
     employed prior to July 1, 1993, by the Department of Energy 
     to operate either of the gaseous diffusion plants and persons 
     who, as of the privatization date, are employed by the 
     Corporation's operating contractor and are vested 
     participants in a pension plan maintained either by the 
     Corporation's operating contractor or by a contractor 
     employed prior to July 1, 1993, by the Department of Energy 
     to operate either of the gaseous diffusion plants;
       ``(ii) for persons who retired from employment with an 
     operating contractor prior to July 1, 1993, the Department of 
     Energy shall fund the entire cost of postretirement health 
     benefits; and
       ``(iii) for persons who retire from employment with an 
     operating contractor after July 1, 1993, the Department of 
     Energy and the private corporation shall fund the cost of 
     postretirement health benefits in proportion to the retired 
     persons' years and months of service at a gaseous diffusion 
     plant under their respective management.''.
       (b) Paragraph (4).--Paragraph (4) of section 1305(e) (42 
     U.S.C. 2297b-4(e)(4)) is amended--
       (1) by striking ``and detailees'' in the heading;
       (2) by striking the first sentence;
       (3) in the second sentence, by inserting ``from other 
     Federal employment'' after ``transfer to the Corporation''; 
     and
       (4) by striking the last sentence.

     SEC. 3039. MARKETING AND CONTRACTING AUTHORITY.

       (a) Marketing Authority.--Section 1401(a) (42 U.S.C. 
     2297c(a)) is amended effective on the privatization date (as 
     defined in section 1201(13) of the Atomic Energy Act of 
     1954)--
       (1) by amending the subsection heading to read ``Marketing 
     Authority.--''; and
       (2) by striking the first sentence.
       (b) Transfer of Contracts.--Section 1401(b) (42 U.S.C. 
     2297c(b)) is amended--
       (1) in paragraph (2)(B), by adding at the end the 
     following: ``The privatization of the Corporation shall not 
     affect the terms of, or the rights or obligations of the 
     parties to, any such power purchase contract.''; and
       (2) by adding at the end the following:
       ``(3) Effect of transfer.--
       ``(A) As a result of the transfer pursuant to paragraph 
     (1), all rights, privileges, and benefits under such 
     contracts, agreements, and leases, including the right to 
     amend, modify, extend, revise, or terminate any of such 
     contracts, agreements, or leases were irrevocably assigned to 
     the Corporation for its exclusive benefit.
       ``(B) Notwithstanding the transfer pursuant to paragraph 
     (1), the United States shall remain obligated to the parties 
     to the contracts, agreements, and leases transferred pursuant 
     to paragraph (1) for the performance of the obligations of 
     the United States thereunder during the term thereof. The 
     Corporation shall reimburse the United States for any amount 
     paid by the United States in respect of such obligations 
     arising after the privatization date to the extent such 
     amount is a legal and valid obligation of the Corporation 
     then due.
       ``(C) After the privatization date, upon any material 
     amendment, modification, extension, revision, replacement, or 
     termination of any contract, agreement, or lease transferred 
     under paragraph (1), the United States shall be released from 
     further obligation under such contract, agreement, or lease, 
     except that such action shall not release the United States 
     from obligations arising under such contract, agreement, or 
     lease prior to such time.''.
       (c) Pricing.--Section 1402 (42 U.S.C. 2297c-1) is amended 
     to read as follows:

     ``SEC. 1402. PRICING.

       ``The Corporation shall establish prices for its products, 
     materials, and services provided to customers on a basis that 
     will allow it to attain the normal business objectives of a 
     profitmaking corporation.''.
       (d) Leasing of Gaseous Diffusion Facilities of 
     Department.--Effective on the privatization date (as defined 
     in section 1201(13) of the Atomic Energy Act of 1954), 
     section 1403 (42 U.S.C. 2297c-2) is amended by adding at the 
     end the following:
       ``(h) Low-Level Radioactive Waste and Mixed Waste.--
       ``(1) Responsibility of the department; costs.--
       ``(A) With respect to low-level radioactive waste and mixed 
     waste generated by the Corporation as a result of the 
     operation of the facilities and related property leased by 
     the Corporation pursuant to subsection (a) or as a result of 
     treatment of such wastes at a location other than the 
     facilities and related property leased by the Corporation 
     pursuant to subsection (a) the Department, at the request 
     of the Corporation, shall--
       ``(i) accept for treatment or disposal of all such wastes 
     for which treatment or disposal technologies and capacities 
     exist, whether within the Department or elsewhere; and
       ``(ii) accept for storage (or ultimately treatment or 
     disposal) all such wastes for which treatment and disposal 
     technologies or capacities do not exist, pending development 
     of such technologies or availability of such capacities for 
     such wastes.
       ``(B) All low-level wastes and mixed wastes that the 
     Department accepts for treatment, storage, or disposal 
     pursuant to subparagraph (A) shall, for the purpose of any 
     permits, licenses, authorizations, agreements, or orders 
     involving the Department and other Federal agencies or State 
     or local governments, be deemed to be generated by the 
     Department and the Department shall handle such wastes in 
     accordance with any such permits, licenses, authorizations, 
     agreements, or orders. The Department shall obtain any 
     additional permits, licenses, or authorizations necessary to 
     handle such wastes, shall amend any such agreements or orders 
     as necessary to handle such wastes, and shall handle such 
     wastes in accordance therewith.
       ``(C) The Corporation shall reimburse the Department for 
     the treatment, storage, or disposal of low-level radioactive 
     waste or mixed waste pursuant to subparagraph (A) in an 
     amount equal to the Department's costs but in no event 
     greater than an amount equal to that which would be charged 
     by commercial, State, regional, or interstate compact 
     entities for treatment, storage, or disposal of such waste.
       ``(2) Agreements with other persons.--The Corporation may 
     also enter into agreements for the treatment, storage, or 
     disposal of low-level radioactive waste and mixed waste 
     generated by the Corporation as a result of the operation of 
     the facilities and related property leased by the Corporation 
     pursuant to subsection (a) with any person other than the 
     Department that is authorized by applicable laws and 
     regulations to treat, store, or dispose of such wastes.''.
       (e) Liabilities.--
       (1) Subsection (a) of section 1406 (42 U.S.C. 2297c-5(a)) 
     is amended--
       (A) by inserting ``and Privatization'' after ``Transition'' 
     in the heading; and
       (B) by adding at the end the following: ``As of the 
     privatization date, all liabilities attributable to the 
     operation of the Corporation from the transition date to the 
     privatization date shall be direct liabilities of the United 
     States.''.
       (2) Subsection (b) of section 1406 (42 U.S.C. 2297c-5(b)) 
     is amended--
       (A) by inserting ``and Privatization'' after ``Transition'' 
     in the heading; and
       (B) by adding at the end the following: ``As of the 
     privatization date, any judgment entered against the 
     Corporation imposing liability arising out of the operation 
     of the Corporation from the transition date to the 
     privatization date shall be considered a judgment against the 
     United States.''.
       (3) Subsection (d) of section 1406 (42 U.S.C. 2297c-5(d)) 
     is amended--
       (A) by inserting ``and Privatization'' after ``Transition'' 
     in the heading; and
       (B) by striking ``the transition date'' and inserting ``the 
     privatization date (or, in the event the privatization date 
     does not occur, the transition date)''.
       (f) Transfer of Uranium.--
       (1) Amendment.--Title II (42 U.S.C. 2297 et seq.) is 
     amended by redesignating section 1408 as section 1409 and by 
     inserting after section 1407 the following:

     ``SEC. 1408. URANIUM TRANSFERS AND SALES.

       ``(a) Transfers and Sales by the Secretary.--The Secretary 
     shall not provide enrichment services or transfer or sell any 
     uranium (including natural or enriched uranium in any form) 
     to any person except as provided in this section.
       ``(b) Russian Heu.--
       ``(1) Tranfers.--Prior to December 31, 1996, the United 
     States Executive Agent under the Russian HEU Agreement shall 
     transfer to the Secretary without charge an amount of uranium 
     hexafluoride equivalent to the natural uranium component of 
     low-enriched uranium derived from at least 18 metric tons of 
     highly enriched uranium purchased from the Russian Executive 
     Agent under the Russian HEU Agreement. The quantity of such 
     uranium hexafluoride delivered to the Secretary shall be 
     based on a tails assay of 0.30 U235. Title to uranium 
     hexafluoride delivered to the Secretary pursuant to this 
     paragraph shall transfer to the Secretary upon delivery of 
     such material to the Secretary. Uranium hexafluoride 
     delivered to the Secretary pursuant to this paragraph shall 
     be deemed to be of Russian origin.
       ``(2) Contracts.--Within 7 years of the date of enactment 
     of the USEC Privatization Act, the Secretary shall enter into 
     contracts to sell the uranium hexafluoride transferred to the 
     Secretary pursuant to paragraph (1). Such uranium 
     hexafluoride shall be sold--
       ``(A) at any time for use in the United States for the 
     purpose of overfeeding;
       ``(B) at any time for use outside the United States; and
       ``(C) for consumption by end users in the United States not 
     prior to January 1, 2002, in volumes not to exceed 3 million 
     pounds U3O8 equivalent per year.
       ``(3) Uranium hexafluoride.--With respect to all low-
     enriched uranium that is delivered to the United States 
     Executive Agent under the Russian HEU Agreement after January 
     1, 1997, the United States Executive Agent shall, upon 
     request of the Russian Executive Agent, deliver to the 
     Russian Executive Agent an amount of uranium hexafluoride 
     equivalent to the natural uranium component of such low-
     enriched uranium simultaneously with the delivery of such 
     low-enriched uranium. The quantity of such uranium 
     hexafluoride delivered to the Russian Executive Agent shall 
     be based on a tails assay of 0.30 U235. Title to uranium 
     hexafluoride delivered to the Russian Executive Agent 
     pursuant to this paragraph shall transfer to the Russian 
     Executive Agent upon delivery of such material to the Russian 
     Executive Agent at a North American 

[[Page H11022]]

     facility designated by the Russian Executive Agent. Uranium 
     hexafluoride delivered to the Russian Executive Agent 
     pursuant to this paragraph shall be deemed to be of Russian 
     origin. Such uranium hexafluoride may be sold to any person 
     or entity consistent with the limitations on delivery to end 
     users set forth in this subsection. Nothing in 
     this subsection shall restrict the sale of the conversion 
     component of such uranium hexafluoride.
       ``(4) Independent party.--In the event that the Russian 
     Executive Agent does not request delivery of the natural 
     uranium component of any low-enriched uranium, as 
     contemplated in paragraph (3), within 90 days of the date 
     such low-enriched uranium is delivered to the United States 
     Executive Agent, then the United States Executive Agent shall 
     engage an independent party through a competitive selection 
     process to auction an amount of uranium hexafluoride 
     equivalent to the natural uranium component of such low-
     enriched uranium. Such independent party shall sell such 
     uranium hexafluoride to any person or entity consistent with 
     the limitations set forth in this subsection. The independent 
     entity shall pay to the Russian Executive Agent the proceeds 
     of any such auction less all transaction and other 
     administrative costs. The quantity of such uranium 
     hexafluoride auctioned shall be based on a tails assay of 
     0.30 U235. Title to uranium hexafluoride auctioned pursuant 
     to this paragraph shall transfer to the buyer of such 
     material upon delivery of such material to the buyer. Uranium 
     hexafluoride auctioned pursuant to this paragraph shall be 
     deemed to be of Russian origin.
       ``(5) Consumption.--Except as provided in paragraphs (6) 
     and (7), uranium hexafluoride delivered to the Secretary 
     under paragraph (1) or the Russian Executive Agent under 
     paragraph (3) or auctioned pursuant to paragraph (4), may not 
     be delivered for consumption by end users in the United 
     States prior to January 1, 1998 and thereafter only in 
     accordance with the following schedule:

Annual Maximum Deliveries to End Users
(millions lbs. U3O8 equivalent)
2 million lbs. U3O8 equivalent...............................
4 million lbs. U3O8 equivalent...............................
6 million lbs. U3O8 equivalent...............................
8 million lbs. U3O8 equivalent...............................
10 million lbs. U3O8 equivalent..............................
12 million lbs. U3O8 equivalent..............................
14 million lbs. U3O8 equivalent..............................
16 million lbs. U3O8 equivalent..............................

       ``(6) Matched sales.--Uranium hexafluoride delivered to the 
     Secretary under paragraph (1) or the Russian Executive Agent 
     under paragraph (3) or auctioned pursuant to paragraph (4) 
     may be sold at any time as Russian-origin natural uranium in 
     a sale with an equal portion of U.S.-origin natural uranium 
     pursuant to the Suspension Agreement and in such case shall 
     not be counted against the annual maximum deliveries set 
     forth in paragraph (5).
       ``(7) Overfeeding.--Uranium hexafluoride delivered to the 
     Secretary under paragraph (1) or the Russian Executive Agent 
     under paragraph (3) or auctioned pursuant to paragraph (4) 
     may be sold at any time for use in the United States for the 
     purpose of overfeeding in the operations of enrichment 
     facilities.
       ``(c) Transfers to the Corporation.--(1) Before the 
     privatization date, the Secretary may transfer to the 
     Corporation without charge the low enriched uranium from up 
     to 50 metric tons of highly enriched uranium and up to 7,000 
     metric tons of natural uranium, subject to the restrictions 
     in subsection (b)(2).
       ``(2) The Corporation (or its successor) may not deliver 
     for commercial end use--
       ``(A) any of the natural uranium transferred under this 
     subsection before January 1, 1998;
       ``(B) more than 10 percent of the natural uranium (by 
     uranium hexafluoride equivalent content) transferred under 
     this subsection or more than 4 million pounds, whichever is 
     less, in any calendar year after 1997; or
       ``(C) more than 800,000 separative work units of low-
     enriched uranium transferred under this subsection in any 
     calendar year.
       ``(d) Inventory Sales.--(1) In addition to the transfers 
     authorized under subsection (b), the Secretary may, from time 
     to time, sell natural and low-enriched uranium (including 
     low-enriched uranium derived from highly enriched uranium) 
     from the Department of Energy s stockpile.
       ``(2) Except as provided in subsections (b) and (d), no 
     sale or transfer of natural or low-enriched uranium shall be 
     made unless--
       ``(A) the President determines that the material is not 
     necessary to national security needs,
       ``(B) the Secretary determines that the sale of the 
     material will not have an adverse impact on the domestic 
     uranium mining and enrichment industries, taking into account 
     the sales of uranium under the Russian HEU Agreement and the 
     Suspension Agreement, and
       ``(C) the price paid to the Secretary will not be less than 
     the fair market value of the material.
       ``(e) Government Transfers.--Notwithstanding subsection 
     (c), the Secretary may transfer or sell low-enriched 
     uranium--
       ``(1) to a federal agency if the material is transferred 
     for the use of the receiving agency without any resale or 
     transfer to another entity and the material does not meet 
     commercial specifications;
       ``(2) to any person for national security purposes, as 
     determined by the Secretary; or
       ``(3) to any state or local agency or nonprofit, 
     charitable, or educational institution for use other than the 
     generation of electricity for commercial use.''.
       (2) Conforming amendment.--The table of contents for 
     chapter 24 is amended by redesignating the item relating to 
     section 1408 as the item relating to section 1409 and by 
     inserting after the item for section 1407 the following: 
``Sec. 1408. Uranium transfers and sales.''.

     SEC. 3040. PRIVATIZATION OF THE CORPORATION.

       (a) Establishment of Private Corporation.--Chapter 25 (42 
     U.S.C. 2297d et seq.) is amended by adding at the end the 
     following new section:

     ``SEC. 1503. ESTABLISHMENT OF PRIVATE CORPORATION.

       ``(a) Establishment.--
       ``(1) In general.--In order to facilitate privatization, 
     the Corporation may provide for the establishment of a 
     private corporation organized under the laws of any of the 
     several States. Such corporation shall have among its 
     purposes the following:
       ``(A) To help maintain a reliable and economical domestic 
     source of uranium enrichment services.
       ``(B) To undertake any and all activities as provided in 
     its corporate charter.
       ``(2) Authorities.--The corporation established pursuant to 
     paragraph (1) shall be authorized to--
       ``(A) enrich uranium, provide for uranium to be enriched by 
     others, or acquire enriched uranium (including low-enriched 
     uranium derived from highly enriched uranium);
       ``(B) conduct, or provide for conducting, those research 
     and development activities related to uranium enrichment and 
     related processes and activities the corporation considers 
     necessary or advisable to maintain itself as a commercial 
     enterprise operating on a profitable and efficient basis;
       ``(C) enter into transactions regarding uranium, enriched 
     uranium, or depleted uranium with--
       ``(i) persons licensed under section 53, 63, 103, or 104 in 
     accordance with the licenses held by those persons;
       ``(ii) persons in accordance with, and within the period 
     of, an agreement for cooperation arranged under section 123; 
     or
       ``(iii) persons otherwise authorized by law to enter into 
     such transactions;
       ``(D) enter into contracts with persons licensed under 
     section 53, 63, 103, or 104, for as long as the corporation 
     considers necessary or desirable, to provide uranium or 
     uranium enrichment and related services;
       ``(E) enter into contracts to provide uranium or uranium 
     enrichment and related services in accordance with, and 
     within the period of, an agreement for cooperation arranged 
     under section 123 or as otherwise authorized by law; and
       ``(F) take any and all such other actions as are permitted 
     by the law of the jurisdiction of incorporation of the 
     corporation.
       ``(3) Transfer of assets.--For purposes of implementing the 
     privatization, the Corporation may transfer some or all of 
     its assets and obligations to the corporation established 
     pursuant to this section, including--
       ``(A) all of the Corporation's assets and obligations, 
     including all of the Corporation's rights, duties, and 
     obligations accruing subsequent to the privatization date 
     under contracts, agreements, and leases entered into by the 
     Corporation before the privatization date, including all 
     uranium enrichment contracts and power purchase contracts;
       ``(B) all funds in accounts of the Corporation held by the 
     Treasury or on deposit with any bank or other financial 
     institution;
       ``(C) all of the Corporation's rights, duties, and 
     obligations, accruing subsequent to the privatization date, 
     under the power purchase contracts covered by section 
     1401(b)(2)(B);
       ``(D) all of the Corporation's rights, duties, and 
     obligations, accruing subsequent to the privatization date, 
     under the lease agreement between the Department and the 
     Corporation executed by the Department and the Corporation 
     pursuant to section 1403; and
       ``(E) all of the Corporation's records, including all of 
     the papers and other documentary materials, regardless of 
     physical form or characteristics, made or received by the 
     Corporation.
       ``(4) Merger or consolidation.--For purposes of 
     implementing the privatization, the Corporation may merge or 
     consolidate with the corporation established pursuant to 
     subsection (a)(1) if such action is contemplated by the 
     plan for privatization approved by the President under 
     section 1502(b). The Board shall have exclusive authority 
     to approve such merger or consolidation and to take all 
     further actions necessary to consummate such merger or 
     consolidation, and no action by or in respect of 
     shareholders shall be required. The merger or 
     consolidation shall be effected in accordance with, and 
     have the effects of a merger or consolidation under, the 
     laws of the jurisdiction of incorporation of the surviving 
     corporation, and all rights and benefits provided under 
     this title to the Corporation shall apply to the surviving 
     corporation as if it were the Corporation.

[[Page H11023]]

       ``(b) OSHA Requirements.--For purposes of the regulation of 
     radiological and nonradiological hazards under the 
     Occupational Safety and Health Act of 1970, the corporation 
     established pursuant to subsection (a)(1) shall be treated in 
     the same manner as other employers licensed by the Nuclear 
     Regulatory Commission. Any interagency agreement entered 
     into between the Nuclear Regulatory Commission and the 
     Occupational Safety and Health Administration governing 
     the scope of their respective regulatory authorities shall 
     apply to the corporation as if the corporation were a 
     Nuclear Regulatory Commission licensee.
       ``(c) Legal Status of Private Corporation.--
       ``(1) Not federal agency.--The Corporation established 
     pursuant to subsection (a)(1) shall not be an agency, 
     instrumentality, or establishment of the United States 
     Government and shall not be a Government corporation or 
     Government-controlled corporation.
       ``(2) No recourse against united states.--Obligations of 
     the Corporation established pursuant to subsection (a)(1) 
     shall not be obligations of, or guaranteed as to principal or 
     interest by, the Corporation or the United States, and the 
     obligations shall so plainly state.
       ``(3) No claims court jurisdiction.--No action under 
     section 1491 of title 28, United States Code, shall be 
     allowable against the United States based on the actions of 
     the Corporation established pursuant to subsection (a)(1).
       ``(d) Board of Director's Election After Public Offering.--
     In the event that the privatization is implemented by means 
     of a public offering, an election of the members of the board 
     of directors of the Corporation by the shareholders shall be 
     conducted before the end of the 1-year period beginning the 
     date shares are first offered to the public pursuant to such 
     public offering.
       ``(e) Adequate Proceeds.--The Secretary of Energy shall not 
     allow the privatization of the Corporation unless before the 
     sale date the Secretary determines that the estimated sum of 
     the gross proceeds from the sale of the Corporation will be 
     an adequate amount.''.
       (b) Ownership Limitations.--Chapter 25 (as amended by 
     subsection (a)) is amended by adding at the end the following 
     new section:

     ``SEC. 1504. OWNERSHIP LIMITATIONS.

       ``(a) Securities Limitation.--In the event that the 
     privatization is implemented by means of a public offering, 
     during a period of 3 years beginning on the privatization 
     date, no person, directly or indirectly, may acquire or hold 
     securities representing more than 10 percent of the total 
     votes of all outstanding voting securities of the 
     Corporation.
       ``(b) Application.--Subsection (a) shall not apply--
       ``(1) to any employee stock ownership plan of the 
     Corporation,
       ``(2) to underwriting syndicates holding shares for resale, 
     or
       ``(3) in the case of shares beneficially held for others, 
     to commercial banks, broker-dealers, clearing corporations, 
     or other nominees.
       ``(c) Acquisitions.--No director, officer, or employee of 
     the Corporation may acquire any securities, or any right to 
     acquire securities, of the Corporation--
       ``(1) in the public offering of securities of the 
     Corporation in the implementation of the privatization,
       ``(2) pursuant to any agreement, arrangement, or 
     understanding entered into before the privatization date, or
       ``(3) before the election of directors of the Corporation 
     under section 1503(d) on any terms more favorable than those 
     offered to the general public.''.
       (c) Exemption From Liability.--Chapter 25 (as amended by 
     subsection (b)) is amended by adding at the end the following 
     new section:

     ``SEC. 1505. EXEMPTION FROM LIABILITY.

       ``(a) In General.--No director, officer, employee, or agent 
     of the Corporation shall be liable, for money damages or 
     otherwise, to any party if, with respect to the subject 
     matter of the action, suit, or proceeding, such person was 
     fulfilling a duty, in connection with any action taken in 
     connection with the privatization, which such person in good 
     faith reasonably believed to be required by law or vested in 
     such person.
       ``(b) Exception.--The privatization shall be subject to the 
     Securities Act of 1933 and the Securities Exchange Act of 
     1934. The exemption set forth in subsection (a) shall not 
     apply to claims arising under such Acts or under the 
     Constitution or laws of any State, territory, or possession 
     of the United States relating to transactions in securities, 
     which claims are in connection with a public offering 
     implementing the privatization.
       ``(c) Securities Laws Applicable.--Any offering or sale of 
     securities by the Corporation established pursuant to section 
     1503(a)(1) shall be subject to the Securities Act of 1933, 
     the Securities Exchange Act of 1934 and the provisions of the 
     Constitution and laws of any State, territory, or possession 
     of the United States relating to transactions in 
     securities.''.
       (d) Resolution of Certain Issues.--Chapter 25 (as amended 
     by subsection (c)) is amended by adding at the end the 
     following new section:

     ``SEC. 1506. RESOLUTION OF CERTAIN ISSUES.

       ``(a) Corporation Actions.--Notwithstanding any provision 
     of any agreement to which the Corporation is a party, the 
     Corporation shall not be considered to be in breach, default, 
     or violation of any such agreement because of any provision 
     of this chapter or any action the Corporation is required to 
     take under this chapter.
       ``(b) Right To Sue Withdrawn.--The United States hereby 
     withdraws any stated or implied consent for the United 
     States, or any agent or officer of the United States, to be 
     sued by any person for any legal, equitable, or other relief 
     with respect to any claim arising out of, or resulting from, 
     acts or omissions under this chapter.''.
       (e) Conforming Amendment.--The table of contents for 
     chapter 25 is amended by inserting after the item for section 
     1502 the following:

``Sec. 1503. Establishment of Private Corporation.
``Sec. 1504. Ownership Limitations.
``Sec. 1505. Exemption from Liability.
``Sec. 1506. Resolution of Certain Issues.''.

       (f) Section 193 (42 U.S.C. 2243) is amended by adding at 
     the end the following:
       ``(f) Limitation.--If the privatization of the United 
     States Enrichment Corporation results in the Corporation 
     being--
       ``(1) owned, controlled, or dominated by a foreign 
     corporation or a foreign government, or
       ``(2) otherwise inimical to the common defense or security 
     of the United States,
     any license held by the Corporation under sections 53 and 63 
     shall be terminated.''.
       (g) Period for Congressional Review.--Section 1502(d) (42 
     U.S.C. 2297d-1(d)) is amended by striking ``less than 60 days 
     after notification of the Congress'' and inserting ``less 
     than 60 days after the date of the report to Congress by the 
     Comptroller General under subsection (c)''.

     SEC. 3041. PERIODIC CERTIFICATION OF COMPLIANCE.

       Section 1701(c)(2) (42 U.S.C. 2297f(c)(2)) is amended by 
     striking ``Annual application for certificate of 
     compliance.--The Corporation shall apply at least annually to 
     the Nuclear Regulatory Commission for a certificate of 
     compliance under paragraph (1).'' and inserting ``Periodic 
     application for certificate of compliance.--The Corporation 
     shall apply to the Nuclear Regulatory Commission for a 
     certificate of compliance under paragraph (1) periodically, 
     as determined by the Nuclear Regulatory Commission, but not 
     less than every 5 years.''.

     SEC. 3042. LICENSING OF OTHER TECHNOLOGIES.

       Subsection (a) of section 1702 (42 U.S.C. 2297f-1(a)) is 
     amended by striking ``other than'' and inserting 
     ``including''.

     SEC. 3043. CONFORMING AMENDMENTS.

       (a) Repeals in Atomic Energy Act of 1954 as of the 
     Privatization Date.--
       (1) Repeals.--As of the privatization date (as defined in 
     section 1201(13) of the Atomic Energy Act of 1954), the 
     following sections (as in effect on such privatization date) 
     of the Atomic Energy Act of 1954 are repealed:
       (A) Section 1202.
       (B) Sections 1301 through 1304.
       (C) Sections 1306 through 1316.
       (D) Sections 1404 and 1405.
       (E) Section 1601.
       (F) Sections 1603 through 1607.
       (2) Conforming amendment.--The table of contents of such 
     Act is amended by repealing the items referring to sections 
     repealed by paragraph (1).
       (b) Statutory Modifications.--As of such privatization 
     date, the following shall take effect:
       (1) For purposes of title I of the Atomic Energy Act of 
     1954, all references in such Act to the ``United States 
     Enrichment Corporation'' shall be deemed to be references to 
     the corporation established pursuant to section 1503 of the 
     Atomic Energy Act of 1954 (as added by section 3036(a)).
       (2) Section 1018(1) of the Energy Policy Act of 1992 (42 
     U.S.C. 2296b-7(1)) is amended by striking ``the United 
     States'' and all that follows through the period and 
     inserting ``the corporation referred to in section 1201(4) of 
     the Atomic Energy Act of 1954.''.
       (3) Section 9101(3) of title 31, United States Code, is 
     amended by striking subparagraph (N), as added by section 
     902(b) of Public Law 102-486.
       (c) Revision of Section 1305.--As of such privatization 
     date, section 1305 of the Atomic Energy Act of 1954 (42 U.S.C 
     2297b-4) is amended--
       (1) by repealing subsections (a), (b), (c), and (d), and
       (2) in subsection (e)--
       (A) by striking the subsection designation and heading,
       (B) by redesignating paragraph (1) (as added by section 
     3038(a)) as subsection (a), striking ``In general.--'' and 
     inserting ``In General.--'', redesignating subparagraphs (A) 
     through (E) as paragraphs (1) through (5) (redesignating in 
     such paragraph, clauses (i) through (iii) as subparagraphs 
     (A) through (C)), striking ``clauses (i) through (iii)'' in 
     paragraph (5) and inserting ``subparagraphs (A) through 
     (C)'', and by moving the margins 2-ems to the left,
       (C) by striking paragraph (3), and
       (D) by redesignating paragraph (4) (as amended by section 
     3038(b)) as subsection (b), and by moving the margins 2-ems 
     to the left.
               Subtitle D--Waste Isolation Pilot Project

     SEC. 3045. SHORT TITLE AND REFERENCE.

       (a) Short Title.--This subtitle may be cited as the ``Waste 
     Isolation Pilot Plant Land Withdrawal Amendment Act''.
       (b) Reference.--Except as otherwise expressly provided, 
     whenever in this subtitle an amendment or repeal is expressed 
     in terms of an amendment to, or repeal of, a section or other 
     provision, the reference 

[[Page H11024]]

     shall be considered to be made to a section or other 
     provision of the Waste Isolation Pilot Plant Land Withdrawal 
     Act (Public Law 102-579).

     SEC. 3046. DEFINITIONS.

       Paragraphs (18) and (19) of section 2 are repealed.

     SEC. 3047. TEST PHASE AND RETRIEVAL PLANS.

       Section 5 is repealed.

     SEC. 3048. TEST PHASE ACTIVITIES.

       Section 6 is amended--
       (1) by repealing subsections (a) and (b),
       (2) by repealing paragraph (1) of subsection (c),
       (3) by repealing subparagraph (A) of paragraph (2) of 
     subsection (c),
       (4) by redesignating subsection (c) as subsection (a), by 
     striking the subsection heading and the matter before 
     paragraph (1) and inserting ``Study.--The following study 
     shall be conducted:'', by striking ``(2) Remote-handled 
     waste.--'', by striking ``(B) Study.--'', and by 
     redesignating clauses (i), (ii), and (iii) as paragraphs (1), 
     (2), and (3), respectively, and moving them 4-ems to the 
     left, and
       (5) by redesignating subsection (d) as subsection (b).

     SEC. 3049. DISPOSAL OPERATIONS.

       Section 7(b) is repealed.

     SEC. 3050. ENVIRONMENTAL PROTECTION AGENCY DISPOSAL 
                   REGULATIONS.

       (a) Section 8(d)(1).--Section 8(d)(1) is amended by 
     striking subparagraphs (B), (C), and (D) and by adding after 
     subparagraph (A) the following:
       ``(B) Comments of administrator.--Within 2 months of 
     receipt of the application under subparagraph (A), the 
     Administrator shall provide the Secretary with any comments 
     on the Secretary's application. Within one month of the 
     receipt of such comments, the Secretary shall, to the extent 
     practicable, incorporate the Administrator's comments in the 
     Secretary's application. The comments of the Administrator 
     provided to the Secretary should also be transmitted to the 
     appropriate committees of jurisdiction in the House of 
     Representatives and the Senate.''.
       (b) Section 8(d) (2), (3).--Section 8(d) is amended by 
     striking paragraphs (2) and (3), by striking ``(1) Compliance 
     with disposal regulations.--'', and by redesignating 
     subparagraphs (A) and (B) of paragraph (1), as amended by 
     subsection (a), as paragraphs (1) and (2), respectively, and 
     moving them 2-ems to the left.
       (c) Section 8(f).--Subsection (f) of section 8 is amended--
       (1) by amending the subsection heading to read ``Periodic 
     Review'', and
       (2) by amending paragraph (2) to read as follows:
       ``(2) Review by the administrator.--The Administrator 
     shall, not later than 6 months after receiving a submission 
     under paragraph (1), comment on whether or not the WIPP 
     facility continues to be in compliance with the final 
     disposition regulations.''.
       (d) Section 8(g).--Section 8(g) is amended to read as 
     follows:
       ``(g) Engineered and Natural Barriers, Etc.--The Secretary 
     should determine whether or not engineered barriers or 
     natural barriers, or both, will be required at WIPP 
     consistent with regulations published as part 191 of 40 
     C.F.R.''.

     SEC. 3051. COMPLIANCE WITH ENVIRONMENTAL LAWS AND 
                   REGULATIONS.

       (a) Section 9(a)(1).--Section 9(a)(1) is amended by adding 
     after and below subparagraph (H) the following:

     ``With respect to transuranic mixed waste designated by the 
     Secretary for disposal at WIPP, such waste is exempt from the 
     land disposal restrictions published at part 268 of 40 C.F.R. 
     because compliance with the environmental radiation 
     protection standards published at part 191 of 40 C.F.R. 
     renders compliance with the land disposal restrictions 
     unnecessary to achieve desired environmental protection and a 
     no migration variance is not required for disposal of 
     transuranic mixed waste at WIPP.''.
       (b) Section 9(b).--Subsection (b) of section 9 is repealed.
       (c) Sections 9(c), (d).--Subsections (c) and (d) of section 
     9 are repealed.

     SEC. 3052. RETRIEVABILITY.

       Section 10 is amended to read as follows:

     ``SEC. 10. TRANSURANIC WASTE.

       ``It is the intent of Congress that a decision will be made 
     by the Secretary with respect to the disposal of transuranic 
     waste no later than March 31, 1997.''.

     SEC. 3053. DECOMMISSIONING OF WIPP.

       Section 13 is amended--
       (1) by repealing subsection (a), and
       (2) in subsection (b), by striking ``(b) Management Plan 
     for the Withdrawal After Decommissioning.--Within 5 years 
     after the date of the enactment of this Act, the'' and 
     inserting ``The''.

     SEC. 3054. ECONOMIC ASSISTANCE AND MISCELLANEOUS PAYMENTS.

       Section 15(a) is amended--
       (1) by striking ``to the Secretary for payments to the 
     State $20,000,000 for each of the 15 fiscal years beginning 
     with the fiscal year in which the transport of transuranic 
     waste to WIPP is initiated'' and inserting ``to the State 
     $20,000,000 for each of the 15 fiscal years beginning with 
     the date of the enactment of the Waste Isolation Pilot Plant 
     Land Withdrawal Amendment Act'', and
       (2) by adding at the end the following: ``An appropriation 
     to the State shall be in addition to any appropriation for 
     WIPP.''.

     SEC. 3055. NON-DEFENSE WASTE.

       Section 7(a) is amended by redesignating paragraph (3) as 
     paragraph (4) and by inserting after paragraph (2) the 
     following:
       ``(3) Nondefense waste.--Within the capacity prescribed by 
     paragraph (4), WIPP may receive transuranic waste from the 
     Secretary which did not result from a defense activity.''.
                Subtitle E--Strategic Petroleum Reserve

     SEC. 3071. LEASE OF EXCESS STRATEGIC PETROLEUM RESERVE 
                   CAPACITY.

       (a) Amendment.--Part B of title I of the Energy Policy and 
     Conservation Act (42 U.S.C. 151 et seq.) is amended by adding 
     at the end the following new section:


                   ``use of underutilized facilities

       ``Sec. 168. (a) Authority.--Notwithstanding any other 
     provision of this title, the Secretary, by lease or 
     otherwise, for any term and under such other conditions as 
     the Secretary considers necessary or appropriate, may store 
     in underutilized Strategic Petroleum Reserve facilities 
     petroleum product owned by a foreign government or its 
     representative.
       ``(b) Conditions of Withdrawal.--The lessee or occupier of 
     facilities under subsection (a) may not withdraw petroleum 
     product from those facilities more frequently than once every 
     5 years, unless an earlier drawdown is required to comply 
     with the terms of the International Energy Agreement or to 
     respond to a national energy emergency involving the 
     disruption of more than 5 percent of the lessee's or 
     occupier's imports.
       ``(c) Priority Access.--When a drawdown of the reserve is 
     ordered pursuant to section 161, the United States shall have 
     priority access, over a lessee or occupier of facilities 
     under subsection (a), to distribution facilities, including 
     pipelines and terminals.
       ``(d) Status of Stored Petroleum Product.--Petroleum 
     product stored under this section is not part of the Reserve, 
     and may be exported from the United States.''.
       (b) Table of Contents Amendment.--The table of contents of 
     part B of title I of the Energy Policy and Conservation Act 
     is amended by adding at the end the following new item:

           Subtitle F--FDA Export Reform and Enhancement Act

     SECTION 3081. SHORT TITLE.

       This Act may be cited as the ``FDA Export Reform and 
     Enhancement Act of 1995''.

     SEC. 3082. EXPORT OF NEW DRUGS.

       Section 801(e) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 381(e) is amended--
      (1) in paragraph (1), by inserting after ``under this Act'' 
     the following: ``or in violation of section 505 or section 
     351 of the Public Health Service Act'',
      (2) in paragraph (1), by striking the last sentence, and
       (3) by amending paragraph (2) to read as follows:
       ``(2) Paragraph (1) does not apply to the export of--
      ``(A) any device--
      ``(i) which does not comply with an applicable requirement 
     under section 514 or 515,
      ``(ii) which under section 520(g) is exempt from either such 
     section, or
      ``(iii) which is a banned device under section 516, or
      ``(B) any drug (including a biological product) which does 
     not comply with an applicable requirement under section 505 
     or 512 or section 351 of the Public Health Service Act,

     unless the device or drug is in compliance with the 
     requirements of paragraph (1) and if the device or drug is to 
     be exported to a country which is not a member of the World 
     Trade Organization, the person exporting it has notified the 
     Secretary of the export at least 30 days before the export 
     and has included in such notice the name of the product, the 
     country to which the product is being exported, and a brief 
     description of the medical need for such device or drug in 
     such country. In the case of a device or drug for which an 
     export notice is required under this paragraph, the Secretary 
     may prohibit the export of such device or drug if the 
     Secretary determines that the possibility of the 
     reimportation of the device or drug into the United States 
     presents an imminent hazard to the public health and safety 
     of the United States and the only means of limiting the 
     hazard is to prohibit the export of the device or drug.''.

     SEC. 3083. EXPORT OF CERTAIN UNAPPROVED PRODUCTS.

       Section 802 (21 U.S.C. 382) is repealed.

     SEC. 3084. PARTIALLY PROCESSED BIOLOGICAL PRODUCTS.

       Subsection (h) of section 351 of the Public Health Service 
     Act (42 U.S.C. 262) is amended to read as follows:
       ``(h) A partially-processed biological product which--
      ``(1) is not a form applicable to the prevention, treatment, 
     or cure of diseases or injuries of man,
      ``(2) is not intended for sale in the United States, and
      ``(3) is intended for further manufacture into final dosage 
     form outside the United States,

     shall be subject to no restriction on its export under this 
     Act or the Federal, Food, Drug, and Cosmetic Act (21 U.S.C. 
     321 et seq.).''
``Sec. 168. Use of underutilized facilities.''.
     TITLE IV--COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

     SEC. 4000. TABLE OF CONTENTS.

       The table of contents for this title is as follows:

[[Page H11025]]


            TITLE IV--ECONOMIC AND EDUCATIONAL OPPORTUNITIES

                      Subtitle A--Higher Education

Sec. 4001. Short title; effective date.
Sec. 4002. Termination of direct lending.
Sec. 4003. Elimination of grace period interest subsidies.
Sec. 4004. Plus program reductions.
Sec. 4005. Loan transfer fee.
Sec. 4006. Lender fees to guaranty agencies.
Sec. 4007. Additional loan program changes.
Sec. 4008. Use of reserve funds to purchase defaulted loans.
Sec. 4009. Extension of period a guaranty agency must hold a defaulted 
              loan.
Sec. 4010. Privatization of College Construction Loan Insurance 
              Association.
Sec. 4011. Eligible institution.
Sec. 4012. Extension of program duration.

                  Subtitle B--Service Contract Repeal

Sec. 4101. Service Contract Act of 1965.

   Subtitle C--Provisions Relating to the Employee Retirement Income 
                          Security Act of 1974

Sec. 4201. Waiver of minimum period for joint and survivor annuity 
              explanation before annuity starting date.
                      Subtitle A--Higher Education

     SEC. 4001. SHORT TITLE; EFFECTIVE DATE.

       (a) Short Title.--This subtitle may be cited as the 
     ``Higher Education Program Efficiency Act of 1995''.
       (b) Effective Date.--Except as otherwise provided therein, 
     the amendments made by this subtitle shall take effect on 
     January 1, 1996.

     SEC. 4002. TERMINATION OF DIRECT LENDING.

       (a) Termination of Authority.--
       (1) Program authority.--Section 451(a) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087a(a)) is amended by 
     inserting ``and ending June 30, 1996'' after ``period 
     beginning July 1, 1994''.
       (2) Termination of funding.--Section 452 of such Act (20 
     U.S.C. 1087b) is amended by adding at the end the following 
     new subsection:
       ``(e) Termination of Funding.--The Secretary shall not 
     provide funds under this section for loans for any academic 
     year beginning on or after July 1, 1996. The Secretary shall 
     not pay any fees pursuant to subsection (b) of this section 
     on or after January 1, 1996.''.
       (3) Termination of authority to enter new agreements.--
     Section 453(a) of such Act (20 U.S.C. 1087c(a)) is amended--
       (A) in paragraph (1), by inserting ``and ending before July 
     1, 1996'' after ``academic years beginning on or after July 
     1, 1994'';
       (B) in paragraph (2)--
       (i) by inserting ``and'' after the semicolon at the end of 
     subparagraph (A);
       (ii) by striking the semicolon at the end of subparagraph 
     (B) and inserting a period; and
       (iii) by striking subparagraphs (C) and (D); and
       (C) by striking paragraph (3) and redesignating paragraph 
     (4) as paragraph (3).
       (b) Administrative Cost Amendments.--Section 458 of such 
     Act (20 U.S.C. 1087h) of such Act is amended--
       (1) by striking subsection (d);
       (2) by redesignating subsections (b) and (c) as subsections 
     (f) and (g), respectively; and
       (3) by striking subsection (a) and inserting the following:
       ``(a) In General.--
       ``(1) Direct administrative costs.--Each fiscal year there 
     shall be available to the Secretary of Education, from funds 
     not otherwise appropriated, funds to be obligated for the 
     subsidy costs of direct administrative costs under this part, 
     subject to subsection (b) of this section.
       ``(2) Indirect administrative costs.--There shall also be 
     available from funds available from funds not otherwise 
     appropriated, funds to be obligated for indirect 
     administrative costs under this part and part B, subject to 
     subsection (c) of this section, not to exceed (from such 
     funds not otherwise appropriated) $260,000,000 in fiscal year 
     1994, $345,000,000 in fiscal year 1995, $110,000,000 in 
     fiscal year 1996 (of which $40,000,000 shall be available for 
     administrative cost allowances for guaranty agencies for 
     October through December of 1995), and $70,000,000 in each of 
     the fiscal years 1997 through 2002.
       ``(3) Reduction.--The amount authorized to be made 
     available for fiscal year 1997 under paragraph (2) shall be 
     reduced by the amount of any unobligated unexpended funds 
     available to carry out this subsection for any fiscal year 
     prior to fiscal year 1996.
       ``(b) Subsidy Costs.--For purposes of this section, 
     `subsidy cost' means the estimated long-term cost to the 
     Federal Government of direct administrative expenses 
     calculated on a net present value basis.
       ``(c) Direct Administrative Expenses.--For purposes of this 
     section, `direct administrative expenses' shall consist of 
     the cost of--
       ``(1) activities related to credit extension, loan 
     origination, loan servicing, management of contractors, and 
     payments to contractors, other government entities, and 
     program participants;
       ``(2) collection of delinquent loans; and
       ``(3) write-off and closeout of loans.
       ``(d) Indirect Administrative Expenses.--For purposes of 
     this section, `indirect administrative expenses' shall 
     consist of the cost of--
       ``(1) personnel engaged in developing program regulations, 
     policy, and administrative guidelines;
       ``(2) audits of institutions and contractors;
       ``(3) program reviews; and
       ``(4) other oversight of the program.
       ``(e) Limitation on Part D Expenditures.--For any fiscal 
     year, expenditures for indirect administrative expenses and 
     for loan servicing for loans made pursuant to this part shall 
     not exceed 30 percent of funds available pursuant to 
     paragraph (2) for such fiscal year.''.
       (c) Elimination of Transition to Direct Loans.--Such Act is 
     further amended--
       (1) in section 422(c)(7) (20 U.S.C. 1072(c)(7))--
       (A) by striking ``during the transition'' and all that 
     follows through ``part D of this title'' in subparagraph (A); 
     and
       (B) by striking ``section 428(c)(10)(F)(v)'' in 
     subparagraph (B) and inserting ``section 428(c)(9)(F)(v)'';
       (2) in section 428(c)(8) (20 U.S.C. 1078(c)(8)), by 
     striking subparagraph (B) and inserting the following:
       ``(B) Prior to making such determination for any guaranty 
     agency, the Secretary shall, in consultation with the 
     guaranty agency, develop criteria to determine whether such 
     guaranty agency has made adequate collection efforts. In 
     determining whether a guaranty agency's collection efforts 
     have met such criteria, the Secretary shall consider the 
     agency's record of success in collecting on defaulted loans, 
     the age of the loans, and the amount of recent payments 
     received on the loans.'';
       (3) in section 428(c)(9)(E)--
       (A) by inserting ``or'' after the semicolon at the end of 
     clause (iv);
       (B) by striking ``; or'' at the end of clause (v) and 
     inserting a period; and
       (C) by striking clause (vi);
       (4) in clause (vii) of section 428(c)(9)(F)--
       (A) by inserting ``and'' before ``to avoid disruption''; 
     and
       (B) by striking ``, and to ensure an orderly transition'' 
     and all that follows through the end of such clause and 
     inserting a period;
       (5) in section 428(c)(9)(K), by striking ``the progress of 
     the transition from the loan programs under this part to'' 
     and inserting ``the integrity and administration of'';
       (6) in section 428(e)(1)(B)(ii), by striking ``during the 
     transition'' and all that follows through ``part D of this 
     title'';
       (7) in section 428(e)(3), by striking ``of transition'';
       (8) in section 428(j)(3)--
       (A) by striking ``during transition to direct lending''; 
     and
       (B) by striking ``during the transition'' and all that 
     follows through ``part D of this title,'' in subparagraph (A) 
     and inserting a comma;
       (9) in section 453(c)(2) (20 U.S.C. 1087c(c)(2)), by 
     striking ``Transition'' and inserting ``Institutional'';
       (10) in section 453(c), by striking paragraph (3); and
       (11) in section 456(b) (20 U.S.C. 1087f(b))--
       (A) by inserting ``and'' after the semicolon at the end of 
     paragraph (3);
       (B) by striking paragraph (4);
       (C) by redesignating paragraph (5) as paragraph (4); and
       (D) in such paragraph (4) (as redesignated), by striking 
     ``successful operation'' and inserting ``integrity and 
     efficiency''.
       (d) Additional Conforming Amendments.--
       (1) Ability of part d borrowers to obtain federal stafford 
     consolidation loans.--Section 428C(a)(4) of such Act (20 
     U.S.C. 1078-3(a)(4)) is amended--
       (A) by redesignating subparagraphs (C) and (D) as 
     subparagraphs (D) and (E); and
       (B) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) made under part D of this title;''.
       (2) Conforming amendments.--Section 428C(b) of such Act (20 
     U.S.C. 1078-3(b)) is amended by striking paragraph (5).

     SEC. 4003. ELIMINATION OF GRACE PERIOD INTEREST SUBSIDIES.

       Section 428(a)(3) of the Higher Education Act of 1965 (20 
     U.S.C. 1078(a)(3)) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Notwithstanding subparagraph (A), no portion of the 
     interest which accrues after the student ceases to carry at 
     an eligible institution at least one-half the normal full-
     time academic workload (as determined by the institution) and 
     prior to the beginning of the repayment period of the loan 
     shall be paid by the Secretary under this subsection on any 
     loan made on or after January 1, 1996. Interest on the unpaid 
     principal amount of any such loan during the interval 
     described in the preceding sentence shall, at the option of 
     the borrower--
       ``(i) be paid monthly or quarterly, or
       ``(ii) be added by the lender to the principal amount of 
     the loan at the commencement of the repayment period.''.

     SEC. 4004. PLUS PROGRAM REDUCTIONS.

       (a) Loan Limits.--Section 428B(b) of the Higher Education 
     Act of 1965 (20 U.S.C. 1078-2(b)) is amended--
       (1) by striking ``(b) Limitation Based on Need.--'' and 
     inserting the following:
       ``(b) Annual Limits.--
       ``(1) Limitation based on need.--'';
       (2) by inserting before the last sentence thereof the 
     following:
       ``(3) Limitation computed on basis of actual payments.--''; 
     and
       (3) by inserting before paragraph (3) (as designated by the 
     amendment made by paragraph (2) of this subsection) the 
     following new paragraph:

[[Page H11026]]

       ``(2) Dollar limitation.--Subject to paragraph (1), the 
     maximum amount parents may borrow for one student in any 
     academic year or its equivalent (as defined by regulations of 
     the Secretary) is $15,000.''.
       (b) Interest Rebate.--Section 428B of such Act is further 
     amended by adding at the end the following new subsection:
       ``(f) Interest Rebate.--
       ``(1) Rebate required.--Each holder of a loan under this 
     section made on or after the date of enactment of this 
     subsection, shall pay, on June 30 and December 31 of each 
     year, to the Secretary a rebate of subsidies in an amount 
     equal to 0.8 percent of the outstanding principal balance of 
     loans held on such date. Payment of such rebate shall be made 
     not later than 60 days after each such date.
       ``(2) Deposit of rebates.--The Secretary shall deposit all 
     fees collected pursuant to paragraph (1) into the insurance 
     fund established in section 431.''.
       (c) Plus Loans Interest Rates.--Section 427A(c)(4) of such 
     Act (20 U.S.C. 1077a(c)(4)) is amended by adding at the end 
     the following new subparagraph:
       ``(F) Notwithstanding subparagraphs (A), (D), and (E), for 
     any loan made pursuant to section 428B for which the first 
     disbursement is made on or after January 1, 1996--
       ``(i) subparagraph (B) shall be applied by substituting 
     `4.0' for `3.25'; and
       ``(ii) the interest rate shall not exceed 11 percent.''.
       (d) Conforming Amendment.--Section 427A(h) of such Act (20 
     U.S.C. 1077a(h)) is amended--
       (1) by striking paragraph (2); and
       (2) by redesignating paragraph (3) as paragraph (2).

     SEC. 4005. LOAN TRANSFER FEE.

       Section 428(b)(2) of the Higher Education Act of 1965 (20 
     U.S.C. 1078(b)(2)) is amended--
       (1) by striking ``and'' at the end of subparagraph (E);
       (2) by striking the period at the end of subparagraph (F) 
     and inserting ``; and''; and
       (3) by adding at the end thereof the following new 
     subparagraph:
       ``(G) provide that, if a lender or holder, on or after 
     January 1, 1996, sells, transfers, or assigns a loan under 
     this part, then the transferee shall pay to the Secretary a 
     transfer fee in an amount equal to 0.20 percent of the 
     principal of the loan, which transfer fee shall be deposited 
     into the insurance fund established in section 431, except 
     that the provisions of this subparagraph shall not apply to 
     any such sale, transfer, or assignment by a lender or holder 
     to such lender's or holder's affiliate or pursuant to a 
     merger or other consolidation transaction.''.

     SEC. 4006. LENDER FEES TO GUARANTY AGENCIES.

       Subsection (f) of section 428 of the Higher Education Act 
     of 1965 (20 U.S.C. 1078(f)) is amended to read as follows:
       ``(f) Payments of Certain Costs.--
       ``(1) Payments from lenders.--With respect to any loan 
     under this part for which the first disbursement is made on 
     or after January 1, 1996, the originating lender shall remit 
     to the guaranty agency which guarantees the loan, a fee equal 
     to 0.70 percent of the principal amount of the loan.
       ``(2) Use of payments.--Payments made pursuant to paragraph 
     (1) shall be used for the purposes of--
       ``(A) the administrative costs of collections of loans;
       ``(B) the administrative costs of preclaim assistance and 
     other predefault activities;
       ``(C) the administrative costs of monitoring the enrollment 
     and repayment status of students; and
       ``(D) other such costs related to the student loan 
     insurance program.
       ``(3) Timing of payments.--Payments made pursuant to 
     paragraph (1) shall be made at the time insurance premiums on 
     such loans are paid to the guaranty agency.
       ``(4) Prohibition on pass-through.--No part of any payments 
     required by this section shall be assessed or collected, 
     directly or indirectly, from any borrower under this part.''.

     SEC. 4007. ADDITIONAL LOAN PROGRAM CHANGES.

       (a) Reserve Funds.--
       (1) Amendments to section 422.--Section 422 of the Higher 
     Education Act of 1965 (20 U.S.C. 1072) is amended--
       (A) in the last sentence of subsection (a)(2), by striking 
     ``Except as provided in section 428(c)(10)(E) or (F), such 
     unencumbered'' and inserting ``Such'';
       (B) in subsection (g)(1), by striking ``or the program 
     authorized by part D of this title'' each place it appears;
       (C) in subsection (g)(1)(D), by striking ``(A) or (B)'' and 
     inserting ``(A), (B), or (C)''; and
       (D) in subsection (g), by striking paragraph (4) and 
     inserting the following:
       ``(4) Disposition of funds returned to or recovered by the 
     secretary.--Any funds that are returned to or otherwise 
     recovered by the Secretary pursuant to this subsection shall 
     be returned to the Treasury of the United States for purposes 
     of reducing the Federal debt and shall be deposited into the 
     special account under section 3113(d) of title 31, United 
     States Code.''.
       (2) Amendments to section 428.--Section 428(c)(9)(A) of 
     such Act (20 U.S.C. 1078(c)(9)(A)) is amended--
       (A) by inserting ``and'' after the semicolon at the end of 
     clause (i);
       (B) by striking ``; and'' at the end of clause (ii) and 
     inserting a period; and
       (C) by striking clause (iii).
       (b) Application for Part B Loans Using Free Federal 
     Application.--
       (1) Single form required.--Section 483(a) of such Act (20 
     U.S.C. 1090(a)) is amended--
       (A) in paragraph (1)--
       (i) by inserting ``B,'' after ``assistance under parts 
     A,'';
       (ii) by striking ``and to determine the need of a student 
     for the purpose of part B of this title''; and
       (iii) by striking the last sentence and inserting the 
     following: ``Such form may be in an electronic or any other 
     format (subject to section 485B) in order to facilitate use 
     by borrowers and institutions.''; and
       (B) in paragraph (3), by striking ``and States shall 
     receive,'' and inserting ``, any guaranty agency authorized 
     by any such institution, and States shall receive, at their 
     request and''.
       (2) Use of electronic forms.--Section 483(a) of such Act is 
     further amended by adding the following new paragraph after 
     paragraph (4):
       ``(5) Electronic forms.--(A) The Secretary, in cooperation 
     with representatives of institutions of higher education, 
     eligible lenders, and guaranty agencies, shall prescribe an 
     electronic version of the form described in subsection 
     (a)(1). Such electronic form shall not require signatures to 
     be collected at the time such form is submitted if the data 
     contained in the electronic form is certified in one or more 
     separate writings. The Secretary shall prescribe the initial 
     electronic form not later than 90 days after the date of 
     enactment of this paragraph.
       ``(B) Nothing in this Act shall preclude the use of the 
     electronic form prescribed under subparagraph (A) through 
     software developed, produced, distributed (including by 
     diskette, modem or network communication, or otherwise) or 
     collected by eligible lenders, guaranty agencies, eligible 
     institutions, or consortia thereof. Such organization or 
     consortium shall submit such electronic form to the Secretary 
     for review prior to its use. If such electronic form is 
     inconsistent with the provisions of this part, the 
     Secretary shall notify the submitting organization or 
     consortium of his objection within 30 days of such 
     submission, and shall specifically identify the necessary 
     changes. In the absence of such an objection the 
     organization or consortium may use the electronic form as 
     submitted. No fee may be charged in connection with use of 
     the electronic form, or of any other electronic forms used 
     in conjunction with such form in applying for Federal or 
     State student financial assistance.''.
       (c) Amendments to Eligible Lender Definition.--Section 
     435(d)(1) of such Act (20 U.S.C. 1085) is amended--
       (1) by inserting before the semicolon at the end of 
     subparagraph (A) the following: ``; and in determining 
     whether the making or holding of loans to students and 
     parents under this part is the primary consumer credit 
     function of the eligible lender, loans made or held as 
     trustee or in a trust capacity for the benefit of a third 
     party shall not be considered'';
       (2) by striking ``and'' at the end of subparagraph (I);
       (3) in subparagraph (J), by striking the period and 
     inserting ``; and''; and
       (4) by adding at the end the following new subparagraph:
       ``(K) a wholly owned subsidiary of a publicly-held holding 
     company which, as of the date of enactment of this 
     subparagraph, through one or more subsidiaries (i) acts as a 
     finance company, and (ii) participates in the program 
     authorized by this part pursuant to subparagraph (C).''.
       (d) Additional Amendments to Section 428.--
       (1) Amendments.--Section 428 of such Act is further 
     amended--
       (A) in subsection (b)(1)(G), by striking ``98 percent'' and 
     inserting ``95 percent'';
       (B) in subsection (b)(1)(X), by striking ``section 
     428(c)(10)'' and inserting ``section 428(c)(9)'';
       (C) in subsection (c)(1)(A), by striking ``98 percent'' and 
     inserting ``96 percent'';
       (D) in subsection (c)(1)(B)(i), by striking ``88 percent'' 
     and inserting ``86 percent'';
       (E) in subsection (c)(1)(B)(ii), by striking ``78 percent'' 
     and inserting ``76 percent'';
       (F) in subsection (c)(9)(C)(ii), by striking ``80 percent'' 
     and inserting ``76 percent'';
       (G) in subsection (c)(9)(I) by inserting ``on the record'' 
     after ``for a hearing'';
       (H) in subsection (j)(2)(A), by striking ``60'' and 
     inserting ``15'';
       (I) in subsection (j)(2)(B), by striking ``two rejections'' 
     and inserting ``one rejection''; and
       (J) in subsection (l)--
       (i) by striking paragraph (2); and
       (ii) by striking ``(1) Assistance required.--''.
       (2) Effective date.--The amendments made by subparagraphs 
     (A) and (C) through (F) of paragraph (1) of this subsection 
     shall apply to loans on which the first disbursement of 
     principal is made on or after January 1, 1996.
       (e) Reinsurance Percentage Under Section 428I.--Section 
     428I of such Act (20 U.S.C. 1078-9) is amended in subsection 
     (b)(1)--
       (1) by striking ``100 percent'' in the heading and 
     inserting ``95 percent''; and
       (2) by striking ``100 percent'' and inserting ``95 
     percent''.
       (f) Loan Fees From Lenders.--Section 438(d)(2) of such Act 
     (20 U.S.C. 1087-1(d)(2)) is amended to read as follows:
       ``(2) Amount of loan fees.--The amount of the loan fee 
     which shall be deducted under paragraph (1) shall be--

[[Page H11027]]

       ``(A) 0.50 percent of the principal amount of the loan, for 
     any loan under this part for which the first disbursement was 
     made on or after October 1, 1993, and before January 1, 1996; 
     or
       ``(B) 0.30 percent of the principal amount of the loan, for 
     any loan under this part for which the first disbursement was 
     made on or after January 1, 1996.''.
       (g) Small Lender Audit Exemption.--Section 
     428(b)(1)(U)(iii) of such Act (20 U.S.C. 1078(b)(1)(U)(iii)) 
     is amended--
       (1) by inserting ``in the case of any lender that 
     originates or holds more than $5,000,000 in principal on 
     loans made under this title in any fiscal year,'' before 
     ``for (I)'';
       (2) by inserting ``such'' before ``lender at least once'';
       (3) by inserting ``such'' before ``a lender that is 
     audited''; and
       (4) by striking ``if the lender'' and inserting ``if such 
     lender''.

     SEC. 4008. USE OF RESERVE FUNDS TO PURCHASE DEFAULTED LOANS.

       Section 422 of the Higher Education Act of 1965 (20 U.S.C. 
     1072) is amended by adding at the end the following new 
     subsection:
       ``(h) Use of Reserve Funds to Purchase Defaulted Loans.--
       ``(1) In general.--Except as provided in paragraph (2), a 
     guaranty agency shall use not less than 50 percent of such 
     agency's reserve funds to purchase and hold defaulted loans 
     that are guaranteed by such agency and for which a claim for 
     insurance is filed with such agency by an eligible lender 
     after the date of enactment of this subsection. The amount of 
     such purchases shall be considered as reserve funds under 
     this section and used in the calculation of the minimum 
     reserve level under section 428(c)(9).
       ``(2) Special rule.--A guaranty agency shall not be 
     required to use its reserve funds to purchase and hold 
     defaulted loans in accordance with paragraph (1) to the 
     extent that--
       ``(A) the dollar volume of insurance claims filed with such 
     agency does not amount to 50 percent of such agency's 
     available reserve funds; or
       ``(B) such use is prohibited by State law; or
       ``(C) such use will compromise the ability of the guaranty 
     agency to pay program expenses.''.

     SEC. 4009. EXTENSION OF PERIOD A GUARANTY AGENCY MUST HOLD A 
                   DEFAULTED LOAN.

       (a) Exemption for Extended Holding Period.--The last 
     sentence of section 428(c)(1)(A) of the Higher Education Act 
     of 1965 (20 U.S.C. 1078(c)(1)(A)) is amended by striking out 
     ``A guaranty agency'' and inserting ``Except as provided in 
     section 428K, a guaranty agency''.
       (b) New Extended Holding Period Program.--Part B of title 
     IV of such Act (20 U.S.C. 1071 et seq.) is amended by 
     inserting after section 428J the following new section:

     ``SEC. 428K. GUARANTOR PURCHASE OF CLAIMS WITH RESERVE FUNDS.

       ``(a) Loans Subject to Extended Holding Period.--Except as 
     provided in subsection (b), a guaranty agency shall file a 
     claim for reimbursement with respect to losses (resulting 
     from the default of a student borrower) subject to 
     reimbursement by the Secretary pursuant to section 428(c)(1) 
     not less than 180 days nor more than 225 days after the 
     guaranty agency discharges such agency's insurance obligation 
     on a loan insured under this part. Such claim shall include 
     losses on the unpaid principal and accrued interest of any 
     such loan, including interest accrued from the date of such 
     discharge to the date such agency files the claim for 
     reimbursement from the Secretary.
       ``(b) Loans Excluded From Extended Holding.--A guaranty 
     agency may file a claim with respect to losses subject to 
     reimbursement by the Secretary pursuant to section 428(c)(1) 
     prior to 180 days after the date the guaranty agency 
     discharges such agency's insurance obligation on a loan 
     insured under this part, if--
       ``(1) such agency used 50 percent or more of such agency's 
     reserve funds to purchase or hold loans in accordance with 
     section 422(h);
       ``(2) such claim is based on an inability to locate the 
     borrower and the guaranty agency certifies to the Secretary 
     that--
       ``(A) diligent attempts were made to locate the borrower 
     through the use of reasonable skip-tracing techniques in 
     accordance with section 428(c)(2)(G); and
       ``(B) such skip-tracing attempts to locate the borrower 
     were unsuccessful; or
       ``(3) the guaranty agency determines that the borrower is 
     unlikely to possess the financial resources to begin repaying 
     the loan prior to 180 days after default by the borrower.
       ``(c) Guaranty Agency Efforts During Extended Holding 
     Period.--A guaranty agency shall attempt to bring a loan 
     described in subsection (a) into repayment status prior to 
     180 days after the date the guaranty agency discharges its 
     insurance obligation on the loan, so that no claim for 
     reimbursement by the Secretary is necessary. Upon securing 
     payment satisfactory to the guaranty agency during the 180-
     day period, such agency shall, if practicable, sell such loan 
     to an eligible lender. Such loan shall not be sold to an 
     eligible lender that the guaranty agency determines has 
     substantially failed to exercise the due diligence required 
     of lenders under this part.
       ``(d) Regulation Prohibited.--The Secretary shall not 
     regulate the collection activities of a guaranty agency with 
     respect to a loan described in subsection (a) for which 
     reinsurance has not been paid under section 428(c)(1).''.

     SEC. 4010. PRIVATIZATION OF COLLEGE CONSTRUCTION LOAN 
                   INSURANCE ASSOCIATION.

       (a) Repeal of Statutory Restrictions.--Part D of title VII 
     of the Higher Education Act of 1965 (20 U.S.C. 1132f et seq.) 
     is repealed.
       (b) Status of the Corporation.--
       (1) Status of the corporation.--The Corporation shall not 
     be an agency, instrumentality, or establishment of the United 
     States Government and shall not be a ``Government 
     corporation'' nor a ``Government controlled corporation'' as 
     defined in section 103 of title 5, United States Code. No 
     action under section 1491 of title 28, United States Code 
     (commonly known as the Tucker Act), shall be allowable 
     against the United States based on the actions of the 
     Corporation.
       (2) Corporate powers.--The Corporation shall have the power 
     to engage in any business or other activities for which 
     corporations may be organized under the laws of any State of 
     the United States or the District of Columbia. The 
     Corporation shall have the power to enter into contracts, to 
     execute instruments, to incur liabilities, to provide 
     products and services, and to do all things as are necessary 
     or incidental to the proper management of its affairs and the 
     efficient operation of a private, for-profit business.
       (3) Limitation on ownership of stock.--Except as provided 
     in subsection (d)(2) of this section, no stock of the 
     Corporation may be sold or issued to an agency, 
     instrumentality, or establishment of the United States 
     Government, to a Government corporation or a Government 
     controlled corporation (as such terms are defined in section 
     103 of title 5, United States Code), or to a Government 
     sponsored enterprise (as such term is defined in section 622 
     of title 2, United States Code). The Student Loan Marketing 
     Association shall not own any stock of the Corporation, 
     except that it may retain the stock it owns on the date of 
     enactment. The Student Loan Marketing Association shall 
     not control the operation of the Corporation, except that 
     the Student Loan Marketing Association may participate in 
     the election of directors as a shareholder, and may 
     continue to exercise its right to appoint directors under 
     section 754 of the Higher Education Act of 1965 as long as 
     that section is in effect. The Student Loan Marketing 
     Association shall not provide financial support or 
     guarantees to the Corporation. Notwithstanding the 
     prohibitions in this subsection, the United States may 
     pursue any remedy against a holder of the Corporation's 
     stock to which it would otherwise be entitled.
       (c) Related Privatization Requirements.--
       (1) Notice requirements.--During the 5-year period 
     following the date of the enactment of this Act, the 
     Corporation shall include in any document offering the 
     Corporation's securities, in any contracts for insurance, 
     guarantee, or reinsurance of obligations, and in any 
     advertisement or promotional material, a statement that--
       (A) the Corporation is not a Government-sponsored 
     enterprise or instrumentality of the United States; and
       (B) the Corporation's obligations are not guaranteed by the 
     full faith and credit of the United States.
       (2) Corporate charter.--The Corporation's charter shall be 
     amended as necessary and without delay to conform the 
     requirements of this Act.
       (3) Corporate name.--The name of the Corporation, or of any 
     direct or indirect subsidiary thereof, may not contain the 
     term ``College Construction Loan Insurance Association''.
       (4) Articles of incorporation.--The Corporation shall amend 
     its articles of incorporation without delay to reflect that 
     one of the purposes of the Corporation shall be to guarantee, 
     insure and reinsure bonds, leases, and other evidences of 
     debt of educational institutions, including Historically 
     Black Colleges and Universities and other academic 
     institutions which are ranked in the lower investment grade 
     category using a nationally recognized credit rating system.
       (5) Transition requirements.--
       (A) Requirements until stock sale.--Notwithstanding 
     subsection (a), the requirements of section 754 of the Higher 
     Education Act of 1965 (20 U.S.C. 1132f-3), as in existence as 
     of the day before enactment of this Act, shall continue to be 
     effective until the day immediately following the date of 
     closing of the purchase of the Secretary's stock (or the date 
     of closing of the final purchase, in the case of multiple 
     transactions) pursuant to subsection (d) of this section.
       (B) Reports after stock sale.--The Corporation shall, not 
     later than March 30 of the first full calendar year 
     immediately following the sale pursuant to subsection (d), 
     and each of the 2 succeeding years, submit to the Secretary 
     of Education a report describing the Corporation's efforts to 
     assist in the financing of education facilities projects, 
     including projects for elementary, secondary, and 
     postsecondary educational institution infrastructure, and 
     detailing, on a project-by-project basis, the Corporation's 
     business dealings with educational institutions that are 
     rated by a nationally recognized statistical rating 
     organization at or below the organization's third highest 
     ratings.
       (d) Sale of Federally Owned Stock.--
       (1) Sale of stock required.--The Secretary of the Treasury 
     shall make every effort to sell, pursuant to section 324 of 
     title 

[[Page H11028]]

     31, United States Code, the stock of the Corporation owned by 
     the Secretary of Education not later than 6 months after the 
     date of the enactment of this Act.
       (2) Purchase by the corporation.--In the event that the 
     Secretary of the Treasury is unable to sell the stock, or any 
     portion thereof, at a price acceptable to the Secretary of 
     Education and the Secretary of the Treasury, the Corporation 
     shall purchase, within the period specified in paragraph (1), 
     such stock at a price determined by the Secretary of the 
     Treasury and acceptable to the Corporation based on 
     independent appraisal by one or more nationally recognized 
     financial firms, except that such price shall not exceed the 
     value of the Secretary's stock as determined by the 
     Congressional Budget Office in House Report 104-153, dated 
     June 22, 1995. Such firms shall be selected by the Secretary 
     of the Treasury in consultation with the Secretary of 
     Education and the Corporation.
       (e) Assistance by the Corporation.--The Corporation shall 
     provide such assistance as the Secretary of the Treasury and 
     the Secretary of Education may require to facilitate the sale 
     of the stock under this section.
       (f) Definition.--As used in this section, the term 
     ``Corporation'' means the Corporation established pursuant to 
     the provision of law repealed by subsection (a).

     SEC. 4011. ELIGIBLE INSTITUTION.

       (a) Amendments.--Section 481(b) of the Higher Education Act 
     of 1965 (20 U.S.C. 1088(b)) is amended--
       (1) by inserting before the period at the end of the first 
     sentence the following: ``on the basis of a review by the 
     institution's independent auditor using generally accepted 
     accounting principles''; and
       (2) by inserting after the end of such first sentence the 
     following new sentences: ``For the purposes of clause (6), 
     revenues from sources that are not derived from funds 
     provided under this title include revenues from programs of 
     education or training that do not meet the definition of an 
     eligible program in subsection (e), but are provided on a 
     contractual basis under Federal, State, or local training 
     programs, or to business and industry. For the purposes of 
     determining whether an institution meets the requirements of 
     clause (6), the Secretary shall not consider the financial 
     information of any institution for a fiscal year began on or 
     before April 30, 1994.''.
       (b) Effective Date.--Notwithstanding section 713 of this 
     Act, the amendments made by subsection (a) shall apply to any 
     determination made on or after July 1, 1994, by the Secretary 
     of Education pursuant to section 481(b)(6) of the Higher 
     Education Act of 1965.

     SEC. 4012. EXTENSION OF PROGRAM DURATION.

       Part B of title IV of the Higher Education Act of 1965 is 
     amended--
       (1) in section 424(a) (20 U.S.C. 1074(a)), by striking 
     ``1998'' and inserting ``2002'';
       (2) in section 428(a)(5) (20 U.S.C. 1078(a)(5))--
       (A) by striking ``2002'' and inserting ``2006''; and
       (B) by striking ``1998'' and inserting ``2002''; and
       (3) in section 428C(e) (20 U.S.C. 1078-3(e)), by striking 
     the first sentence and inserting ``The authority to make 
     loans under this section expires at the close of September 
     30, 2002.''.
                  Subtitle B--Service Contract Repeal

     SEC. 4101. SERVICE CONTRACT ACT OF 1965.

       (a) Repeal.--The Service Contract Act of 1965 (41 U.S.C. 
     351 et seq.) is repealed.
       (b) Application.--The amendment made by subsection (a) 
     shall not apply to a contract which was entered into before 
     the 45th day after the date of the enactment of this Act and 
     to which the Service Contract Act of 1965 applied.
   Subtitle C--Provisions Relating to the Employee Retirement Income 
                          Security Act of 1974

     SEC. 4201. WAIVER OF MINIMUM PERIOD FOR JOINT AND SURVIVOR 
                   ANNUITY EXPLANATION BEFORE ANNUITY STARTING 
                   DATE.

       (a) General Rule.--For purposes of section 205(c)(3)(A) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1055(c)(3)(A)), the minimum period prescribed by the 
     Secretary of the Treasury between the date that the 
     explanation referred to in such section is provided and the 
     annuity starting date shall not apply if waived by the 
     participant and, if applicable, the participant's spouse.
       (b) Effective Date.--Subsection (a) shall apply to plan 
     years beginning after December 31, 1995.
         TITLE V--COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
 Subtitle A--Federal Employee and Congressional Benefits; Availability 
              of Surplus Property for Homeless Assistance

     SEC. 5001. EXTENSION OF DELAY IN COST-OF-LIVING ADJUSTMENTS 
                   IN FEDERAL EMPLOYEE RETIREMENT BENEFITS THROUGH 
                   FISCAL YEAR 2002.

       Section 11001(a) of the Omnibus Budget Reconciliation Act 
     of 1993 (Public Law 103-66; 107 Stat. 408) is amended in the 
     matter preceding paragraph (1) by striking out ``or 1996,'' 
     and inserting in lieu thereof ``1996, 1997, 1998, 1999, 2000, 
     2001, or 2002,''.

     SEC. 5002. INCREASED CONTRIBUTIONS TO FEDERAL CIVILIAN 
                   RETIREMENT SYSTEMS.

       (a) Civil Service Retirement System.--
       (1) Deductions.--The first sentence of section 8334(a)(1) 
     of title 5, United States Code, is amended to read as 
     follows: ``The employing agency shall deduct and withhold 
     from the basic pay of an employee, Member, Congressional 
     employee, law enforcement officer, firefighter, bankruptcy 
     judge, judge of the United States Court of Appeals for the 
     Armed Forces, United States magistrate, Claims Court judge, 
     or member of the Capitol Police, as the case may be, the 
     percentage of basic pay applicable under subsection (c).''.
       (2) Agency contributions.--
       (A) Increase in agency contributions during calendar years 
     1996 through 2002.--Section 8334(a)(1) of title 5, United 
     States Code (as amended by this section) is further amended--
       (i) by inserting ``(A)'' after ``(1)''; and
       (ii) by adding at the end thereof the following new 
     subparagraph:
       ``(B)(i) Notwithstanding subparagraph (A), the agency 
     contribution under the second sentence of such subparagraph, 
     during the period beginning on January 1, 1996, through 
     December 31, 2002--
       ``(I) for each employing agency (other than the United 
     States Postal Service) shall be 8.5 percent of the basic pay 
     of an employee, Congressional employee, and a Member of 
     Congress, 9 percent of the basic pay of a law enforcement 
     officer, a member of the Capitol Police, and a firefighter, 
     and 9.5 percent of the basic pay of a Claims Court judge, a 
     United States magistrate, a judge of the United States Court 
     of Appeals for the Armed Services, and a bankruptcy judge, as 
     the case may be; and
       ``(II) for the United States Postal Service shall be 7 
     percent of the basic pay of an employee and 9 percent of the 
     basic pay of a law enforcement officer.''.
       (B) No reduction in agency contributions by the postal 
     service.--Agency contributions by the United States Postal 
     Service under section 8348(h) of title 5, United States 
     Code--
       (i) shall not be reduced as a result of the amendments made 
     under paragraph (3) of this subsection; and
       (ii) shall be computed as though such amendments had not 
     been enacted.
       (3) Individual deductions, withholdings, and deposits.--The 
     table under section 8334(c) of title 5, United States Code, 
     is amended--
       (A) in the matter relating to an employee by striking out


                                          ``7....................  After December 31, 1969.''                   
                                                                                                                

     and inserting in lieu thereof the following:


                                          ``7....................  January 1, 1970, to December 31, 1995.       
                                           7.25..................  January 1, 1996, to December 31, 1996.       
                                           7.4...................  January 1, 1997, to December 31, 1997.       
                                           7.5...................  January 1, 1998, to December 31, 2002.       
                                           7.....................  After December 31, 2002.'';                  
                                                                                                                

       (B) in the matter relating to a Member or employee for 
     Congressional employee service by striking out


                                          ``7\1/2\...............  After December 31, 1969.''                   
                                                                                                                

     and inserting in lieu thereof the following:


                                          ``7.5..................  January 1, 1970, to December 31, 1995.       
                                           7.25..................  January 1, 1996, to December 31, 1996.       
                                           7.4...................  January 1, 1997, to December 31, 1997.       
                                           7.5...................  January 1, 1998, to December 31, 2002.       
                                           7.....................  After December 31, 2002.'';                  
                                                                                                                

       (C) in the matter relating to a Member for Member service 
     by striking out


                                          ``8....................  After December 31, 1969.''                   
                                                                                                                

     and inserting in lieu thereof the following:


                                          ``8....................  January 1, 1970, to December 31, 1995.       
                                           7.25..................   January 1, 1996, to December 31, 1996.      
                                           7.4...................  January 1, 1997, to December 31, 1997.       
                                           7.5...................  January 1, 1998, to December 31, 2002.       
                                           7.....................  After December 31, 2002.'';                  
                                                                                                                

       (D) in the matter relating to a law enforcement officer for 
     law enforcement service and firefighter for firefighter 
     service by striking out


                                          ``7\1/2\...............  After December 31, 1974.''                   
                                                                                                                

     and inserting in lieu thereof the following:


                                          ``7.5..................  January 1, 1975, to December 31, 1995.       
                                           7.75..................  January 1, 1996, to December 31, 1996.       
                                           7.9...................  January 1, 1997, to December 31, 1997.       
                                           8.....................  January 1, 1998, to December 31, 2002.       
                                           7.5...................  After December 31, 2002.'';                  
                                                                                                                

       (E) in the matter relating to a bankruptcy judge by 
     striking out


                                          ``8....................  After December 31, 1983.''                   
                                                                                                                

     and inserting in lieu thereof the following:


                                          ``8....................  January 1, 1984, to December 31, 1995.       
                                           8.25..................  January 1, 1996, to December 31, 1996.       
                                           8.4...................  January 1, 1997, to December 31, 1997.       
                                           8.5...................  January 1, 1998, to December 31, 2002.       
                                           8.....................  After December 31, 2002.'';                  
                                                                                                                

       (F) in the matter relating to a judge of the United States 
     Court of Appeals for the Armed Forces for service as a judge 
     of that court by striking out


                                          ``8....................  On and after the date of the enactment of the
                                                                    Department of Defense Authorization Act,    
                                                                    1984.''                                     
                                                                                                                

     and inserting in lieu thereof the following:


                                          ``8....................  The date of the enactment of the Department  
                                                                    of Defense Authorization Act, 1984, to      
                                                                    December 31, 1995.                          
                                           8.25..................  January 1, 1996, to December 31, 1996.       
                                                                                                                


                                                                                                                

[[Page H11029]]
                                           8.4...................  January 1, 1997, to December 31, 1997.       
                                           8.5...................  January 1, 1998, to December 31, 2002.       
                                           8.....................  After December 31, 2002.'';                  
                                                                                                                


       (G) in the matter relating to a United States magistrate by 
     striking out


                                          ``8....................  After September 30, 1987.''                  
                                                                                                                

     and inserting in lieu thereof the following:


                                          ``8....................  October 1, 1987, to December 31, 1995.       
                                           8.25..................  January 1, 1996, to December 31, 1996.       
                                           8.4...................  January 1, 1997, to December 31, 1997.       
                                           8.5...................  January 1, 1998, to December 31, 2002.       
                                                                                                                


                                           8.....................  After December 31, 2002.'';                  
                                                                                                                

       (H) in the matter relating to a Claims Court judge by 
     striking out


                                          ``8....................  After September 30, 1988.''                  
                                                                                                                

     and inserting in lieu thereof the following:


                                          ``8....................  October 1, 1988, to December 31, 1995.       
                                           8.25..................  January 1, 1996, to December 31, 1996.       
                                           8.4...................  January 1, 1997, to December 31, 1997.       
                                           8.5...................  January 1, 1998, to December 31, 2002.       
                                           8.....................  After December 31, 2002.'';                  
                                                                                                                

     and
       (I) by inserting after the matter relating to a Claims 
     Court judge the following:

                                                                                                                
                                                                                                                
                                                                                                                
``Member of the Capitol Police..........  2.5....................  August 1, 1920, to June 30, 1926.            
                                          ``3.5..................  July 1, 1926, to June 30, 1942.              
                                          ``5....................  July 1, 1942, to June 30, 1948.              
                                          ``6....................  July 1, 1948, to October 31, 1956.           
                                          ``6.5..................  November 1, 1956, to December 31, 1969.      
                                          ``7.5..................  January 1, 1970, to December 31, 1995.       
                                          ``7.75.................  January 1, 1996, to December 31, 1996.       
                                          ``7.9..................  January 1, 1997, to December 31, 1997.       
                                          ``8....................  January 1, 1998, to December 31, 2002.       
                                          ``7.5..................  After December 31, 2002.''.                  
                                                                                                                

       (4) Other service.--
       (A) Military service.--Section 8334(j) of title 5, United 
     States Code, is amended--
       (i) in paragraph (1)(A) by inserting ``and subject to 
     paragraph (5),'' after ``Except as provided in subparagraph 
     (B),''; and
       (ii) by adding at the end thereof the following new 
     paragraph:
       ``(5) Effective with respect to any period of military 
     service after December 31, 1995, the percentage of basic pay 
     under section 204 of title 37 payable under paragraph (1) 
     shall be equal to the same percentage as would be applicable 
     under section 8334(c) for that same period for service as an 
     employee, subject to paragraph (1)(B).''.
       (B) Volunteer service.--Section 8334(l) of title 5, United 
     States Code, is amended--
       (i) in paragraph (1) by adding at the end thereof the 
     following: ``This paragraph shall be subject to paragraph 
     (4).''; and
       (ii) by adding at the end thereof the following new 
     paragraph:
       ``(4) Effective with respect to any period of service after 
     December 31, 1995, the percentage of the readjustment 
     allowance or stipend (as the case may be) payable under 
     paragraph (1) shall be equal to the same percentage as would 
     be applicable under section 8334(c) for that same period for 
     service as an employee.''.
       (b) Federal Employees Retirement System.--
       (1) Individual deductions and withholdings.--
       (A) In general.--Section 8422(a) of title 5, United States 
     Code, is amended by striking out paragraph (2) and inserting 
     in lieu thereof the following:
       ``(2) The percentage to be deducted and withheld from basic 
     pay for any pay period shall be equal to--
       ``(A) the applicable percentage under paragraph (3), minus
       ``(B) the percentage then in effect under section 3101(a) 
     of the Internal Revenue Code of 1986 (relating to rate of tax 
     for old-age, survivors, and disability insurance).
       ``(3) The applicable percentage under this paragraph, for 
     civilian service shall be as follows:

                                                                                                                
                                           ``Percentage of basic                                                
                                                   pay                             Service period               
                                                                                                                
Employee................................  7......................  Before January 1, 1996.                      
                                          7.25...................  January 1, 1996, to December 31, 1996.       
                                          7.4....................  January 1, 1997, to December 31, 1997.       
                                          7.5....................  January 1, 1998, to December 31, 2002.       
                                          7......................  After December 31, 2002.                     
 Congressional employee.................  7.5....................  Before January 1, 1996.                      
                                          7.25...................  January 1, 1996, to December 31, 1996.       
                                          7.4....................  January 1, 1997, to December 31, 1997.       
                                          7.5....................  January 1, 1998, to December 31, 2002.       
                                          7......................  After December 31, 2002.                     
 Member.................................  7.5....................  Before January 1, 1996.                      
                                          7.25...................  January 1, 1996, to December 31, 1996.       
                                          7.4....................  January 1, 1997, to December 31, 1997.       
                                          7.5....................  January 1, 1998, to December 31, 2002.       
                                          7......................  After December 31, 2002.                     
 Law enforcement officer, firefighter,    7.5....................  Before January 1, 1996.                      
 member of the Capitol Police, or air                                                                           
 traffic controller.                                                                                            
                                          7.75...................  January 1, 1996, to December 31, 1996.       
                                          7.9....................  January 1, 1997, to December 31, 1997.       
                                          8......................  January 1, 1998, to December 31, 2002.       
                                          7.5....................  After December 31, 2002.''                   
                                                                                                                

       (B) Military service.--Section 8422(e) of title 5, United 
     States Code, is amended--
       (i) in paragraph (1)(A) by inserting ``and subject to 
     paragraph (6),'' after ``Except as provided in subparagraph 
     (B),''; and
       (ii) by adding at the end thereof the following:
       ``(6) The percentage of basic pay under section 204 of 
     title 37 payable under paragraph (1), with respect to any 
     period of military service performed during--
       ``(A) January 1, 1996, through December 31, 1996, shall be 
     3.25 percent;
       ``(B) January 1, 1997, through December 31, 1997, shall be 
     3.4 percent; and
       ``(C) January 1, 1998, through December 31, 2002, shall be 
     3.5 percent.''.
       (C) Volunteer service.--Section 8422(f) of title 5, United 
     States Code, is amended--
       (i) in paragraph (1) by adding at the end thereof the 
     following: ``This paragraph shall be subject to paragraph 
     (4).''; and
       (ii) by adding at the end the following:
       ``(4) The percentage of the readjustment allowance or 
     stipend (as the case may be) payable under paragraph (1), 
     with respect to any period of volunteer service performed 
     during--
       ``(A) January 1, 1996, through December 31, 1996, shall be 
     3.25 percent;
       ``(B) January 1, 1997, through December 31, 1997, shall be 
     3.4 percent; and
       ``(C) January 1, 1998, through December 31, 2002, shall be 
     3.5 percent.''.
       (2) No reduction in agency contributions.--Agency 
     contributions under section 8423 (a) and (b) of title 5, 
     United States Code, shall not be reduced as a result of the 
     amendments made under paragraph (1) of this subsection.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the first day of the first applicable 
     pay period beginning on or after January 1, 1996.

     SEC. 5003. FEDERAL RETIREMENT PROVISIONS RELATING TO MEMBERS 
                   OF CONGRESS AND CONGRESSIONAL EMPLOYEES.

       (a) Relating to the Years of Service as a Member of 
     Congress and Congressional Employees for Purposes of 
     Computing an Annuity.--
       (1) CSRS.--Section 8339 of title 5, United States Code, is 
     amended--
       (A) in subsection (a) by inserting ``or Member'' after 
     ``employee''; and
       (B) by striking out subsections (b) and (c).
       (2) FERS.--Section 8415 of title 5, United States Code, is 
     amended--
       (A) by striking out subsections (b) and (c);
       (B) in subsections (a) and (g) by inserting ``or Member'' 
     after ``employee'' each place it appears; and
       (C) in subsection (g)(2) by striking out ``Congressional 
     employee''.
       (3) Capitol police.--Section 8339(q) of title 5, United 
     States Code, is amended--
       (A) by striking ``subsection (b),'' and inserting 
     ``subsection (b) (as last in effect),''; and
       (B) by striking ``subsection (b)(2),'' and inserting 
     ``subsection (b)(2) (as last in effect),''.
       (b) Administrative Regulations.--The Secretary of the 
     Senate and the Clerk of the House of Representatives, in 
     consultation with the Office of Personnel Management, may 
     prescribe regulations to carry out the provisions of this 
     section and the amendments made by this section for 
     applicable employees and Members of Congress.
       (c) Effective Dates.--
       (1) Years of service; annuity computation.--(A) The 
     amendments made by subsection (a) shall take effect on the 
     date of the enactment of this Act and shall apply only with 
     respect to the computation of an annuity relating to--
       (i) the service of a Member of Congress as a Member or as a 
     Congressional employee performed on or after January 1, 1996; 
     and
       (ii) the service of a Congressional employee as a 
     Congressional employee performed on or after January 1, 1996.
       (B) An annuity shall be computed as though the amendments 
     made under subsection (a) had not been enacted with respect 
     to--
       (i) the service of a Member of Congress as a Member or a 
     Congressional employee or military service performed before 
     January 1, 1996; and

[[Page H11030]]

       (ii) the service of a Congressional employee as a 
     Congressional employee or military service performed before 
     January 1, 1996.
       (2) Regulations.--The provisions of subsection (b) shall 
     take effect on the date of the enactment of this Act.

     SEC. 5004. FEDERAL EMPLOYEES RETIREMENT SECURITY COMMISSION.

       (a) Establishment.--There shall be established in the 
     legislative branch a commission to be known as the ``Federal 
     Employees Retirement Security Commission'' (hereinafter in 
     this section referred to as the ``Commission'').
       (b) Members.--
       (1) Appointment.--The Commission shall be composed of 7 
     members, to be appointed within 30 days after the date of the 
     enactment of this Act, as follows:
       (A) 2 members appointed by the Speaker of the House of 
     Representatives.
       (B) 2 members appointed by the majority leader of the 
     Senate.
       (C) 1 member appointed by the minority leader of the House 
     of Representatives.
       (D) 1 member appointed by the minority leader of the 
     Senate.
       (E) 1 member appointed by the President.
       (2) Chairman; vice chairman.--The members of the Commission 
     shall select 1 of the members to be the Chairman and another 
     to be the Vice Chairman of the Commission.
       (3) Terms.--Each member shall be appointed for the life of 
     the Commission.
       (4) Pay and travel expenses.--
       (A) Pay generally.--Each member, other than the Chairman, 
     shall be paid at a rate not to exceed the daily equivalent of 
     the annual rate of basic pay payable for level IV of the 
     Executive Schedule under section 5315 of title 5, United 
     States Code, for each day (including travel time) during 
     which such member is engaged in the actual performance of 
     duties vested in the Commission.
       (B) Pay for the chairman.--The Chairman shall be paid, for 
     each day referred to in subparagraph (A), at a rate not to 
     exceed the daily equivalent of the annual rate of basic pay 
     payable for level III of the Executive Schedule under section 
     5314 of title 5, United States Code.
       (C) Travel expenses.--Each member of the Commission shall, 
     subject to the availability of appropriations and in such 
     amounts as may be provided by such Act, be allowed travel 
     expenses in the same manner as any individual employed 
     intermittently by the Government is allowed travel expenses 
     under section 5703 of title 5, United States Code.
       (D) Government employees and members of congress.--
     Notwithstanding any other provision of this paragraph, 
     members of the Commission who are full-time officers or 
     employees of the United States or Members of Congress may not 
     receive additional pay, allowances, or benefits by reason of 
     their service on the Commission, except for travel expenses 
     under subparagraph (C).
       (5) Vacancies.--A vacancy in the Commission shall be filled 
     in the manner in which the original appointment was made.
       (c) Meetings.--
       (1) Open meetings.--Each meeting of the Commission, other 
     than meetings in which classified information is to be 
     discussed, shall be open to the public.
       (2) Access by request.--
       (A) In general.--All the proceedings, information, and 
     deliberations of the Commission shall be open, upon request, 
     to the Chairman and the ranking minority party member of the 
     respective committees under subparagraph (B) or such chairmen 
     or ranking minority party members of subcommittees of any 
     such committee as may be designated by the Chairman or 
     ranking minority party member, respectively, of such 
     committee.
       (B) Identification of committees.--The committees under 
     this subparagraph are as follows:
       (i) The Committee on Government Reform and Oversight of the 
     House of Representatives.
       (ii) The Committee on National Security of the House of 
     Representatives.
       (iii) The Committee on Governmental Affairs of the Senate.
       (iv) The Committee on Armed Services of the Senate.
       (3) First meeting.--The Commission shall hold its first 
     meeting within 60 days after the date of the enactment of 
     this Act.
       (d) Director; Staff.--
       (1) Director.--The Commission shall have a Director, who--
       (A) shall be appointed by the Commission; and
       (B) shall be paid at a rate not to exceed the rate of basic 
     pay payable for level IV of the Executive Schedule under 
     section 5315 of title 5, United States Code.
       (2) Staff.--
       (A) Appointments; pay.--The Director, with the approval of 
     the Commission, may appoint and fix the pay of additional 
     personnel, except that no individual so appointed may receive 
     pay at a rate in excess of the maximum rate of basic pay 
     payable under section 5376 of title 5, United States Code, 
     for positions classified above GS-15 of the General Schedule.
       (B) Details from congressional committees and offices.--
     Upon the request of the Director, the chairman of any 
     standing committee or other committee of either House or both 
     Houses of the Congress, or the head of any other 
     congressional office, may detail any of the personnel of that 
     committee or office to the Commission to assist the 
     Commission in carrying out its duties under this Act.
       (C) Assistance from gao.--The Comptroller General of the 
     United States shall provide assistance, including the 
     detailing of employees, to the Commission in accordance with 
     an agreement entered into with the Commission.
       (e) Duties.--
       (1) In general.--The Commission shall study and, within 7 
     months after the date of the enactment of this Act, submit to 
     the Congress a written report on--
       (A) the financial soundness of the retirement systems for 
     Government employees (including employees of nonappropriated 
     fund instrumentalities) and members of the uniformed 
     services;
       (B) the cost and level of benefits provided by the Civil 
     Service Retirement System, the Federal Employees' Retirement 
     System, and the other retirement systems under subparagraph 
     (A), as compared with the cost and level of benefits of 
     retirement systems prevalent in the private sector;
       (C) the appropriate level and design of benefits of an 
     alternative retirement system and modifications of existing 
     systems to achieve the objectives described in paragraph (2); 
     and
       (D) the cost and suitability of benefits provided by the 
     military retirement system, and their appropriateness in 
     light of current and projected military readiness 
     requirements.
       (2) Considerations.--The considerations described in this 
     paragraph are as follows:
       (A) Portability of benefits, consistent with the greater 
     mobility anticipated with respect to the workforce of the 
     21st century.
       (B) Financial soundness, consistent with the requirements 
     of the Employee Retirement Income Security Act of 1974 and 
     the requirements that must be met in order to qualify to be 
     insured by the Pension Benefit Guarantee Corporation.
       (C) The Government's presence in a wide range of 
     occupations and local labor markets, and the need for 
     retirement benefits to be representative of the level of 
     benefits received by most Americans in the private sector in 
     order to allow the Government to recruit and retain a 
     qualified workforce.
       (D) Total compensation trends in the private sector, 
     including the use of cafeteria plans.
       (3) Contents.--The Commission's report shall contain a 
     detailed statement of the findings and conclusions of the 
     Commission, together with its recommendations for any 
     legislation that the Commission considers appropriate.
       (f) Other Authority.--
       (1) Experts and consultants.--The Commission may procure by 
     contract, to the extent funds are available, the temporary or 
     intermittent services of experts or consultants subject to 
     the same terms and conditions as would apply under section 
     3109 of title 5, United States Code, in the case of an 
     Executive agency.
       (2) Leases.--The Commission may lease space and acquire 
     personal property to the extent funds are available.
       (g) Funding.--There are authorized to be appropriated to 
     the Commission such funds as are necessary to carry out its 
     duties under this Act. Such funds shall remain available 
     until expended.
       (h) Termination.--The Commission shall cease to exist 30 
     days after submitting its report to the Congress under 
     subsection (e).

     SEC. 5005. REPEAL OF AUTHORIZATION OF TRANSITIONAL 
                   APPROPRIATIONS FOR THE UNITED STATES POSTAL 
                   SERVICE.

       (a) Repeal.--
       (1) In general.--Section 2004 of title 39, United States 
     Code, is repealed.
       (2) Technical and conforming amendments.--
       (A) The table of sections for chapter 20 of such title is 
     amended by repealing the item relating to section 2004.
       (B) Section 2003(e)(2) of such title is amended by striking 
     ``sections 2401 and 2004'' each place it appears and 
     inserting ``section 2401''.
       (b) Clarification That Liabilities Formerly Paid Pursuant 
     to Section 2004 Remain Liabilities Payable by the Postal 
     Service.--Section 2003 of title 39, United States Code, is 
     amended by adding at the end the following:
       ``(h) Liabilities of the former Post Office Department to 
     the Employees' Compensation Fund (appropriations for which 
     were authorized by former section 2004, as in effect before 
     the effective date of this subsection) shall be liabilities 
     of the Postal Service payable out of the Fund.''.
       (c) Effective Date.--
       (1) In general.--This section and the amendments made by 
     this section shall be effective as of October 1, 1995.
       (2) Provisions relating to payments for fiscal year 1996.--
       (A) Amounts not yet paid.--No payment may be made to the 
     Postal Service Fund, on or after the date of the enactment of 
     this Act, pursuant to any appropriation for fiscal year 1996 
     authorized by section 2004 of title 39, United States Code 
     (as in effect before the effective date of this section).
       (B) Amounts paid.--If any payment to the Postal Service 
     Fund is or has been made pursuant to an appropriation for 
     fiscal year 1996 authorized by such section 2004, then an 
     amount equal to the amount of such payment shall be paid from 
     such Fund into the Treasury as miscellaneous receipts.

[[Page H11031]]


     SEC. 5006. AVAILABILITY OF SURPLUS PROPERTY FOR HOMELESS 
                   ASSISTANCE.

       (a) Repeal.--(1) Title V of the Stewart B. McKinney 
     Homeless Assistance Act (42 U.S.C. 11411 et seq.) is 
     repealed.
       (2) The table of contents in section 101(b) of that Act is 
     amended by striking the items relating to title V.
       (3) This subsection shall be effective October 1, 1995.
       (b) Authority To Transfer Surplus Real Property for Housing 
     Use.--Section 203 of the Federal Property and Administrative 
     Services Act of 1949 (40 U.S.C. 484) is amended by adding at 
     the end the following:
       ``(r) Under such regulations as the Administrator may 
     prescribe, and in consultation with appropriate local 
     governmental authorities, the Administrator may transfer to 
     any nonprofit organization which exists for the primary 
     purpose of providing housing or housing assistance for 
     homeless individuals or families, such surplus real property, 
     including buildings, fixtures, and equipment situated 
     thereon, as is needed for housing use.
       ``(s)(1) Under such regulations as the Administrator may 
     prescribe, and in consultation with appropriate local 
     governmental authorities, the Administrator may transfer to 
     any non-profit organization which exists for the primary 
     purpose of providing housing or housing assistance for low-
     income individuals or families such surplus real property, 
     including buildings, fixtures, and equipment situated 
     thereon, as is needed for housing use.
       ``(2) In making transfers under this subsection, the 
     Administrator shall take such actions, which may include 
     grant agreements with an organization receiving a grant, as 
     may be necessary to ensure that--
       ``(A) assistance provided under this subsection is used to 
     facilitate and encourage homeownership opportunities through 
     the construction of self-help housing, under terms which 
     require that the person receiving the assistance contribute a 
     significant amount of labor toward the construction; and
       ``(B) the dwellings constructed with property transferred 
     under this subsection shall be quality dwellings that comply 
     with local building and safety codes and standards and shall 
     be available at prices below the prevailing market prices.''.
          Subtitle B--Debt Collection Improvement Act of 1995

     SEC 5201. SHORT TITLE.

       This subtitle may be cited as the ``Debt Collection 
     Improvement Act of 1995''.

     SEC. 5202. TABLE OF CONTENTS.

       The table of contents for this subtitle is as follows:

Sec. 5201. Short title.
Sec. 5202. Table of contents.
Sec. 5203. Effective date.
Sec. 5204. Purposes.

              Part I--General Debt Collection Initiatives


                  subpart a--general offset authority

Sec. 5211. Expansion of administrative offset authority.
Sec. 5212. Enhancement of administrative offset authority.
Sec. 5213. Exemption from computer matching requirements under the 
              Privacy Act of 1974.
Sec. 5214. Use of administrative offset authority for debts to States.
Sec. 5215. Technical and conforming amendments.


                   subpart b--salary offset authority

Sec. 5221. Enhancement of salary offset authority.


                subpart c--taxpayer identifying numbers

Sec. 5231. Access to debtor information.
Sec. 5232. Barring delinquent Federal debtors from obtaining Federal 
              loans or loan guarantees.


     subpart d--expansion and enhancement of collection authorities

Sec. 5241. Disclosure to consumer reporting agencies and commercial 
              reporting agencies.
Sec. 5242. Contracts for collection services.
Sec. 5243. Cross-servicing partnerships and centralization of debt 
              collection activities in the Department of the Treasury.
Sec. 5244. Compromise of claims.
Sec. 5245. Wage garnishment requirement.
Sec. 5246. Debt sales by agencies.
Sec. 5247. Adjustments of administrative debt.
Sec. 5248. Dissemination of information regarding identity of 
              delinquent debtors.


              subpart e--federal civil monetary penalties

Sec. 5251. Adjusting Federal civil monetary penalties for inflation.


                        subpart f--gain sharing

Sec. 5261. Debt collection improvement account.


                 subpart g--tax refund offset authority

Sec. 5271. Expanding tax refund offset authority.
Sec. 5272. Expanding authority to collect past-due support.


                        subpart h--disbursements

Sec. 5281. Electronic funds transfer.
Sec. 5282. Requirement to include taxpayer identifying number with 
              payment voucher.


                        subpart i--miscellaneous

Sec. 5291. Miscellaneous amendments to definitions.
Sec. 5292. Monitoring and reporting.
Sec. 5293. Review of standards and policies for compromise or write-
              down of delinquent debts.

                    Part II--Justice Debt Management

Sec. 5301. Expanded use of private attorneys.
Sec. 5302. Nonjudicial foreclosure of mortgages.

     SEC. 5203. EFFECTIVE DATE.

       Except as otherwise provided in this subtitle, the 
     provisions of this subtitle and the amendments made by this 
     subtitle shall become effective October 1, 1995.

     SEC. 5204. PURPOSES.

       The purposes of this subtitle are the following:
       (1) To maximize collections of delinquent debts owed to the 
     Government by ensuring quick action to enforce recovery of 
     debts and the use of all appropriate collection tools.
       (2) To minimize the costs of debt collection by 
     consolidating related functions and activities and utilizing 
     interagency teams.
       (3) To reduce losses arising from debt management 
     activities by requiring proper screening of potential 
     borrowers, aggressive monitoring of all accounts, and sharing 
     of information within and among Federal agencies.
       (4) To ensure that the public is fully informed of the 
     Federal Government's debt collection policies and that 
     debtors are cognizant of their financial obligations to repay 
     amounts owed to the Federal Government.
       (5) To ensure that debtors have all appropriate due process 
     rights, including the ability to verify, challenge, and 
     compromise claims, and access to administrative appeals 
     procedures which are both reasonable and protect the 
     interests of the United States.
       (6) To encourage agencies, when appropriate, to sell 
     delinquent debt, particularly debts with underlying 
     collateral.
       (7) To rely on the experience and expertise of private 
     sector professionals to provide debt collection services to 
     Federal agencies.

              PART I--GENERAL DEBT COLLECTION INITIATIVES

                  Subpart A--General Offset Authority

     SEC. 5211. EXPANSION OF ADMINISTRATIVE OFFSET AUTHORITY.

       Chapter 37 of title 31, United States Code, is amended--
       (1) in each of sections 3711, 3716, 3717, and 3718, by 
     striking ``the head of an executive or legislative agency'' 
     each place it appears and inserting ``the head of an 
     executive, judicial, or legislative agency''; and
       (2) by amending section 3701(a)(4) to read as follows:
       ``(4) `executive, judicial, or legislative agency' means a 
     department, agency, court, court administrative office, or 
     instrumentality in the executive, judicial, or legislative 
     branch of government, including government corporations.''.

     SEC. 5212. ENHANCEMENT OF ADMINISTRATIVE OFFSET AUTHORITY.

       (a) Persons Subject to Administrative Offset.--Section 
     3701(c) of title 31, United States Code, is amended to read 
     as follows:
       ``(c) In sections 3716 and 3717 of this title, the term 
     `person' does not include an agency of the United States 
     Government.''.
       (b) Requirements and Procedures.--Section 3716 of title 31, 
     United States Code, is amended--
       (1) by amending subsection (b) to read as follows:
       ``(b) Before collecting a claim by administrative offset, 
     the head of an executive, judicial, or legislative agency 
     must either--
       ``(1) adopt, without change, regulations on collecting by 
     administrative offset promulgated by the Department of 
     Justice, the General Accounting Office, or the Department of 
     the Treasury; or
       ``(2) prescribe regulations on collecting by administrative 
     offset consistent with the regulations referred to in 
     paragraph (1).'';
       (2) by amending subsection (c)(2) to read as follows:
       ``(2) when a statute explicitly prohibits using 
     administrative offset or setoff to collect the claim or type 
     of claim involved.'';
       (3) by redesignating subsection (c) as subsection (e); and
       (4) by inserting after subsection (b) the following new 
     subsections:
       ``(c)(1)(A) Except as otherwise provided in this 
     subsection, a disbursing official of the Department of the 
     Treasury, the Department of Defense, the United States Postal 
     Service, or any other government corporation, or any 
     disbursing official of the United States designated by the 
     Secretary of the Treasury, shall offset at least annually the 
     amount of a payment which a payment certifying agency has 
     certified to the disbursing official for disbursement, by an 
     amount equal to the amount of a claim which a creditor agency 
     has certified to the Secretary of the Treasury pursuant to 
     this subsection.
       ``(B) An agency that designates disbursing officials 
     pursuant to section 3321(c) of this title is not required to 
     certify claims arising out of its operations to the Secretary 
     of the Treasury before such agency's disbursing officials 
     offset such claims.
       ``(C) Payments certified by the Department of Education 
     under a program administered by the Secretary of Education 
     under title IV of the Higher Education Act of 1965 shall not 
     be subject to administrative offset under this subsection.
       ``(2) Neither the disbursing official nor the payment 
     certifying agency shall be liable--
       ``(A) for the amount of the administrative offset on the 
     basis that the underlying obligation, represented by the 
     payment before 

[[Page H11032]]

     the administrative offset was taken, was not satisfied; or
       ``(B) for failure to provide timely notice under paragraph 
     (8).
       ``(3) The Secretary of the Treasury shall exempt from 
     administrative offset under this subsection payments under 
     means-tested programs when requested by the head of the 
     respective agency. The Secretary may exempt other payments 
     from administrative offset under this subsection upon the 
     written request of the head of a payment certifying agency. A 
     written request for exemption of other payments must provide 
     justification for the exemption under standards prescribed by 
     the Secretary. Such standards shall give due consideration to 
     whether administrative offset would tend to interfere 
     substantially with or defeat the purposes of the payment 
     certifying agency's program. The Secretary shall report to 
     the Congress annually on exemptions granted under this 
     section.
       ``(4) The Secretary of the Treasury may charge a fee 
     sufficient to cover the full cost of implementing this 
     subsection. The fee may be collected either by the retention 
     of a portion of amounts collected pursuant to this 
     subsection, or by billing the agency referring or 
     transferring a claim for those amounts. Fees charged to the 
     agencies shall be based on actual administrative offsets 
     completed. Amounts received by the United States as fees 
     under this subsection shall be deposited into the account of 
     the Department of the Treasury under section 3711(g)(4) of 
     this title, and shall be collected and accounted for in 
     accordance with the provisions of that section.
       ``(5) The Secretary of the Treasury may disclose to a 
     creditor agency the current address of any payee and any data 
     related to certifying and authorizing payments to a payee in 
     accordance with section 552a of title 5, United States Code, 
     even if the payment has been exempt from administrative 
     offset. If a payment is made electronically, the Secretary 
     may obtain the current address of the payee from the 
     institution receiving the payment. Upon request by the 
     Secretary, the institution receiving the payment shall report 
     the current address of the payee to the Secretary.
       ``(6) The Secretary of the Treasury may prescribe such 
     rules, regulations, and procedures as the Secretary of the 
     Treasury considers necessary to carry out this subsection. 
     The Secretary shall consult with the heads of affected 
     agencies in the development of such rules, regulations, and 
     procedures.
       ``(7) Any Federal agency that is owed by a person a past 
     due, legally enforceable nontax debt that is over 180 days 
     delinquent, including nontax debt administered by a third 
     party acting as an agent for the Federal Government, shall 
     notify the Secretary of the Treasury of all such nontax debts 
     for purposes of administrative offset under this subsection.
       ``(8)(A) The disbursing official conducting an 
     administrative offset with respect to a payment to a payee 
     shall notify the payee in writing of--
       ``(i) the occurrence of the administrative offset to 
     satisfy a past due legally enforceable debt, including a 
     description of the type and amount of the payment otherwise 
     payable to the payee against which the offset was executed;
       ``(ii) the identity of the creditor agency requesting the 
     offset; and
       ``(iii) a contact point within the creditor agency that 
     will handle concerns regarding the offset.
       ``(B) If the payment to be offset is a periodic benefit 
     payment, the disbursing official shall take reasonable steps, 
     as determined by the Secretary of the Treasury, to provide 
     the notice to the payee not later than the date on which the 
     payee is otherwise scheduled to receive the payment, or as 
     soon as practical thereafter, but no later than the date of 
     the administrative offset. Notwithstanding the preceding 
     sentence, the failure of the debtor to receive such notice 
     shall not impair the legality of such administrative offset.
       ``(9) A levy pursuant to the Internal Revenue Code of 1986 
     shall take precedence over requests for administrative offset 
     pursuant to other laws.
       ``(d) Nothing in this section is intended to prohibit the 
     use of any other administrative offset authority existing 
     under statute or common law.''.
       (c) Nontax Debt or Claim Defined.--Section 3701 of title 
     31, United States Code, is amended--
       (1) in subsection (b) by inserting ``and subsection (a)(8) 
     of this section'' after ``of this chapter''; and
       (2) in subsection (a) by adding at the end the following 
     new paragraph:
       ``(8) `nontax' means, with respect to any debt or claim, 
     any debt or claim other than a debt or claim under the 
     Internal Revenue Code of 1986.''.

     SEC. 5213. EXEMPTION FROM COMPUTER MATCHING REQUIREMENTS 
                   UNDER THE PRIVACY ACT OF 1974.

       Section 3716 of title 31, United States Code, as amended by 
     section 5212(b) of this subtitle, is further amended by 
     adding at the end the following new subsections:
       ``(f) The Secretary may waive the requirements of sections 
     552a(o) and (p) of title 5 for administrative offset or 
     claims collection upon written certification by the head of 
     the executive, judicial, or legislative agency seeking to 
     collect the claim that the requirements of subsection (a) of 
     this section have been met.
       ``(g) The Data Integrity Board of the Department of the 
     Treasury established under 552a(u) of title 5 shall review 
     and include in reports under paragraph (3)(D) of that section 
     a description of any matching activities conducted under this 
     section. If the Secretary has granted a waiver under 
     subsection (f) of this section, no other Data Integrity Board 
     is required to take any action under section 552a(u) of title 
     5.''.

     SEC. 5214. USE OF ADMINISTRATIVE OFFSET AUTHORITY FOR DEBTS 
                   TO STATES.

       Section 3716 of title 31, United States Code, as amended by 
     sections 5212 and 5213 of this subtitle, is further amended 
     by adding at the end the following new subsection:
       ``(h)(1) The Secretary may, in the discretion of the 
     Secretary, apply subsection (a) with respect to any past-due, 
     legally-enforceable debt owed to a State if--
       ``(A) the appropriate State disbursing official requests 
     that an offset be performed; and
       ``(B) a reciprocal agreement with the State is in effect 
     which contains, at a minimum--
       ``(i) requirements substantially equivalent to subsection 
     (b) of this section; and
       ``(ii) any other requirements which the Secretary considers 
     appropriate to facilitate the offset and prevent duplicative 
     efforts.
       ``(2) This subsection does not apply to--
       ``(A) the collection of a debt or claim on which the 
     administrative costs associated with the collection of the 
     debt or claim exceed the amount of the debt or claim;
       ``(B) any collection of any other type, class, or amount of 
     claim, as the Secretary considers necessary to protect the 
     interest of the United States; or
       ``(C) the disbursement of any class or type of payment 
     exempted by the Secretary of the Treasury at the request of a 
     Federal agency.''.

     SEC. 5215. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Title 31.--Title 31, United States Code, is amended--
       (1) in section 3322(a), by inserting ``section 3716 and 
     section 3720A of this title and'' after ``Except as provided 
     in'';
       (2) in section 3325(a)(3), by inserting ``or pursuant to 
     payment intercepts or offsets pursuant to section 3716 or 
     3720A of this title,'' after ``voucher''; and
       (3) in each of sections 3711(e)(2) and 3717(h) by inserting 
     ``, the Secretary of the Treasury,'' after ``Attorney 
     General''.
       (b) Internal Revenue Code of 1986.--Subsection 
     6103(l)(10)(A) of the Internal Revenue Code of 1986 (26 
     U.S.C. 6103(l)(10)(A)) is amended--
       (1) in subparagraph (A), by inserting ``and to officers and 
     employees of the Department of the Treasury in connection 
     with such reduction'' after ``6402''; and
       (2) in subparagraph (B), by inserting ``and officers and 
     employees of the Department of the Treasury'' after 
     ``agency'' the first place it appears.

                   Subpart B--Salary Offset Authority

     SEC. 5221. ENHANCEMENT OF SALARY OFFSET AUTHORITY.

       Section 5514 of title 5, United States Code, is amended--
       (1) in subsection (a)--
       (A) by adding at the end of paragraph (1) the following: 
     ``All Federal agencies to which debts are owed and which have 
     outstanding delinquent debts shall participate in a computer 
     match at least annually of their delinquent debt records with 
     records of Federal employees to identify those employees who 
     are delinquent in repayment of those debts. The preceding 
     sentence shall not apply to any debt under the Internal 
     Revenue Code of 1986. Matched Federal employee records shall 
     include, but shall not be limited to, records of active Civil 
     Service employees government-wide, military active duty 
     personnel, military reservists, United States Postal Service 
     employees, employees of other government corporations, and 
     seasonal and temporary employees. The Secretary of the 
     Treasury shall establish and maintain an interagency 
     consortium to implement centralized salary offset computer 
     matching, and promulgate regulations for this program. 
     Agencies that perform centralized salary offset computer 
     matching services under this subsection are authorized to 
     charge a fee sufficient to cover the full cost for such 
     services.'';
       (B) by redesignating paragraphs (3) and (4) as paragraphs 
     (4) and (5), respectively;
       (C) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) Paragraph (2) shall not apply to routine intra-agency 
     adjustments of pay that are attributable to clerical or 
     administrative errors or delays in processing pay documents 
     that have occurred within the four pay periods preceding the 
     adjustment and to any adjustment that amounts to $50 or less, 
     if at the time of such adjustment, or as soon thereafter as 
     practical, the individual is provided written notice of the 
     nature and the amount of the adjustment and a point of 
     contact for contesting such adjustment.''; and
       (D) by amending paragraph (5)(B) (as redesignated by 
     subparagraph (B) of this paragraph) to read as follows:
       ``(B) `agency' includes executive departments and agencies, 
     the United States Postal Service, the Postal Rate Commission, 
     the Senate, the House of Representatives, and any court, 
     court administrative office, or instrumentality in the 
     judicial or legislative branches of the Government, and 
     government corporations.'';
       (2) by adding after subsection (c) the following new 
     subsection:
       ``(d) A levy pursuant to the Internal Revenue Code of 1986 
     shall take precedence over deductions under this section.''.

[[Page H11033]]


                Subpart C--Taxpayer Identifying Numbers

     SEC. 5231. ACCESS TO DEBTOR INFORMATION.

       Section 4 of the Debt Collection Act of 1982 (Public Law 
     97-365, 96 Stat. 1749, 26 U.S.C. 6103 note) is amended--
       (1) in subsection (b), by striking ``For purposes of this 
     section'' and inserting ``For purposes of subsection (a)''; 
     and
       (2) by adding at the end the following new subsections:
       ``(c) Federal Agencies.--
       ``(1) In general.--Each Federal agency shall require each 
     person doing business with that agency to furnish to that 
     agency such person's taxpayer identifying number.
       ``(2) Doing business.--For purposes of this subsection, a 
     person shall be considered to be doing business with a 
     Federal agency if the person is--
       ``(A) a lender or servicer in a Federal guaranteed or 
     insured loan program administered by the agency;
       ``(B) an applicant for, or recipient of--
       ``(i) a Federal guaranteed, insured, or direct loan 
     administered by the agency; or
       ``(ii) a Federal license, permit, right-of-way, grant, or 
     benefit payment administered by the agency or insurance 
     administered by the agency;
       ``(C) a contractor of the agency;
       ``(D) assessed a fine, fee, royalty or penalty by the 
     agency; and
       ``(E) in a relationship with the agency that may give rise 
     to a receivable due to that agency, such as a partner of a 
     borrower in or a guarantor of a Federal direct or insured 
     loan administered by the agency.
       ``(3) Disclosure.--Each agency shall disclose to a person 
     required to furnish a taxpayer identifying number under this 
     subsection its intent to use such number for purposes of 
     collecting and reporting on any delinquent amounts arising 
     out of such person's relationship with the Government.
       ``(4) Definitions.--For purposes of this subsection--
       ``(A) the term `taxpayer identifying number' has the 
     meaning given such term in section 6109 of the Internal 
     Revenue Code of 1986 (26 U.S.C. 6109); and
       ``(B) the term `person'--
       ``(i) subject to clause (ii), means an individual, sole 
     proprietorship, partnership, corporation, or nonprofit 
     organization, or any other form of business association; and
       ``(ii) does not include debtors under third party claims of 
     the United States, other than debtors owing claims resulting 
     from petroleum pricing violations.
       ``(d) Access to Debtor Information.--Notwithstanding 
     section 552a(b) of title 5, United States Code, creditor 
     agencies to which a delinquent claim is owed, and their 
     agents, may match their debtor records with Department of 
     Health and Human Services and Department of Labor records to 
     obtain names (including names of employees), name controls, 
     names of employers, social security account numbers, 
     addresses (including addresses of employers), and dates of 
     birth. The Department of Health and Human Services and the 
     Department of Labor shall release that information to 
     creditor agencies and may charge reasonable fees sufficient 
     to pay the costs associated with that release.
       ``(e) Electronic Payments.--If a payment is made 
     electronically by any executive, judicial, or legislative 
     agency, the Secretary of the Treasury may obtain from the 
     institution receiving the payment the taxpayer identification 
     number of any joint holder of the account to which the 
     payment is made. Upon request of the Secretary, the 
     institution receiving the payment shall report the taxpayer 
     identification number of the joint holder to the 
     Secretary.''.

     SEC. 5232. BARRING DELINQUENT FEDERAL DEBTORS FROM OBTAINING 
                   FEDERAL LOANS OR LOAN GUARANTEES.

       (a) In General.--Title 31, United States Code, is amended 
     by inserting after section 3720A the following new section:

     ``Sec. 3720B. Barring delinquent Federal debtors from 
       obtaining Federal loans or loan guarantees

       ``(a) Unless this subsection is waived by the head of a 
     Federal agency, a person may not obtain any Federal financial 
     assistance in the form of a loan (other than a disaster loan) 
     or loan guarantee administered by the agency if the person 
     has an outstanding debt (other than a debt under the Internal 
     Revenue Code of 1986) with any Federal agency which is in a 
     delinquent status, as determined under standards prescribed 
     by the Secretary of the Treasury. Such a person may obtain 
     additional loans or loan guarantees only after such 
     delinquency is resolved in accordance with those standards. 
     The Secretary of the Treasury may exempt, at the request of 
     an agency, any class of claims.
       ``(b) The head of a Federal agency may delegate the waiver 
     authority under subsection (a) to the Chief Financial Officer 
     of the agency. The waiver authority may be redelegated only 
     to the Deputy Chief Financial Officer of the agency.
       ``(c) For purposes of this section, the term `person' 
     means--
       ``(1) an individual; or
       ``(2) any sole proprietorship, partnership, corporation, 
     nonprofit organization, or other form of business 
     association.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter II of chapter 37 of title 31, United States Code, 
     is amended by inserting after the item relating to section 
     3720A the following new item:

``3720B. Barring delinquent Federal debtors from obtaining Federal 
              loans or loan guarantees.''.

     Subpart D--Expansion and Enhancement of Collection Authorities

     SEC. 5241. DISCLOSURE TO CONSUMER REPORTING AGENCIES AND 
                   COMMERCIAL REPORTING AGENCIES.

       Section 3711(f) of title 31, United States Code, is 
     amended--
       (1) by striking ``may'' the first place it appears and 
     inserting ``shall'';
       (2) by striking ``an individual'' each place it appears and 
     inserting ``a covered person'';
       (3) by striking ``the individual'' each place it appears 
     and inserting ``the covered person''; and
       (4) by adding at the end the following new paragraphs:
       ``(4) The head of each executive agency shall require, as a 
     condition for guaranteeing any loan, financing, or other 
     extension of credit under any law to a covered person, that 
     the lender provide information relating to the extension of 
     credit to consumer reporting agencies or commercial reporting 
     agencies, as appropriate.
       ``(5) The head of each executive agency may provide to a 
     consumer reporting agency or commercial reporting agency 
     information from a system of records that a covered person is 
     responsible for a claim which is current, if notice required 
     by section 552a(e)(4) of title 5 indicates that information 
     in the system may be disclosed to a consumer reporting agency 
     or commercial reporting agency, respectively.
       ``(6) In this subsection, the term `covered person' means 
     an individual, a sole proprietorship, a corporation 
     (including a nonprofit corporation), or any other form of 
     business association.''.

     SEC. 5242. CONTRACTS FOR COLLECTION SERVICES.

       Section 3718 of title 31, United States Code, is amended--
       (1) in subsection (a), by striking the first sentence and 
     inserting the following: ``Under conditions the head of an 
     executive, judicial, or legislative agency considers 
     appropriate, the head of the agency may enter into a contract 
     with a person for collection service to recover indebtedness 
     owed, or to locate or recover assets of, the United States 
     Government. The head of an agency may not enter into a 
     contract under the preceding sentence to locate or recover 
     assets of the United States held by a State government or 
     financial institution unless that agency has established 
     procedures approved by the Secretary of the Treasury to 
     identify and recover such assets.''; and
       (2) in subsection (d), by inserting ``, or to locate or 
     recover assets of,'' after ``owed''.

     SEC. 5243. CROSS-SERVICING PARTNERSHIPS AND CENTRALIZATION OF 
                   DEBT COLLECTION ACTIVITIES IN THE DEPARTMENT OF 
                   THE TREASURY.

       Section 3711 of title 31, United States Code, is amended by 
     adding at the end the following new subsections:
       ``(g)(1) If a nontax debt or claim owed to the United 
     States has been delinquent for a period of 180 days--
       ``(A) the head of the executive, judicial, or legislative 
     agency that administers the program that gave rise to the 
     debt or claim shall transfer the debt or claim to the 
     Secretary of the Treasury; and
       ``(B) upon such transfer the Secretary of the Treasury 
     shall take appropriate action to collect or terminate 
     collection actions on the debt or claim.
       ``(2) Paragraph (1) shall not apply--
       ``(A) to any debt or claim that--
       ``(i) is in litigation or foreclosure;
       ``(ii) will be disposed of under an asset sales program 
     within 1 year after the date the debt or claim is first 
     delinquent, or a greater period of time if a delay would be 
     in the best interests of the United States, as determined by 
     the Secretary of the Treasury;
       ``(iii) has been referred to a private collection 
     contractor for collection for a period of time determined by 
     the Secretary of the Treasury;
       ``(iv) has been referred by, or with the consent of, the 
     Secretary of the Treasury to a debt collection center for a 
     period of time determined by the Secretary of the Treasury; 
     or
       ``(v) will be collected under internal offset, if such 
     offset is sufficient to collect the claim within 3 years 
     after the date the debt or claim is first delinquent; and
       ``(B) to any other specific class of debt or claim, as 
     determined by the Secretary of the Treasury at the request of 
     the head of an executive, judicial, or legislative agency or 
     otherwise.
       ``(3) For purposes of this section, the Secretary of the 
     Treasury may designate, and withdraw such designation of debt 
     collection centers operated by other Federal agencies. The 
     Secretary of the Treasury shall designate such centers on the 
     basis of their performance in collecting delinquent claims 
     owed to the Government.
       ``(4) At the discretion of the Secretary of the Treasury, 
     referral of a nontax claim may be made to--
       ``(A) any executive department or agency operating a debt 
     collection center for servicing, collection, compromise, or 
     suspension or termination of collection action;
       ``(B) a contractor operating under a contract for servicing 
     or collection action; or
       ``(C) the Department of Justice for litigation.
       ``(5) nontax claims referred or transferred under this 
     section shall be serviced, collected, or compromised, or 
     collection action 

[[Page H11034]]

     thereon suspended or terminated, in accordance with otherwise 
     applicable statutory requirements and authorities. Executive 
     departments and agencies operating debt collection centers 
     may enter into agreements with the Secretary of the Treasury 
     to carry out the purposes of this subsection. The Secretary 
     of the Treasury shall--
       ``(A) maintain competition in carrying out this subsection;
       ``(B) maximize collections of delinquent debts by placing 
     delinquent debts quickly;
       ``(C) maintain a schedule of contractors and debt 
     collection centers eligible for referral of claims; and
       ``(D) refer delinquent debts to the person most appropriate 
     to collect the type or amount of claim involved.
       ``(6) Any agency operating a debt collection center to 
     which nontax claims are referred or transferred under this 
     subsection may charge a fee sufficient to cover the full cost 
     of implementing this subsection. The agency transferring or 
     referring the nontax claim shall be charged the fee, and the 
     agency charging the fee shall collect such fee by retaining 
     the amount of the fee from amounts collected pursuant to this 
     subsection. Agencies may agree to pay through a different 
     method, or to fund an activity from another account or from 
     revenue received from the procedure described under section 
     3720C of this title. Amounts charged under this subsection 
     concerning delinquent claims may be considered as costs 
     pursuant to section 3717(e) of this title.
       ``(7) Notwithstanding any other law concerning the 
     depositing and collection of Federal payments, including 
     section 3302(b) of this title, agencies collecting fees may 
     retain the fees from amounts collected. Any fee charged 
     pursuant to this subsection shall be deposited into an 
     account to be determined by the executive department or 
     agency operating the debt collection center charging the fee 
     (in this subsection referred to in this section as the 
     `Account'). Amounts deposited in the Account shall be 
     available until expended to cover costs associated with the 
     implementation and operation of Governmentwide debt 
     collection activities. Costs properly chargeable to the 
     Account include--
       ``(A) the costs of computer hardware and software, word 
     processing and telecommunications equipment, and other 
     equipment, supplies, and furniture;
       ``(B) personnel training and travel costs;
       ``(C) other personnel and administrative costs;
       ``(D) the costs of any contract for identification, 
     billing, or collection services; and
       ``(E) reasonable costs incurred by the Secretary of the 
     Treasury, including services and utilities provided by the 
     Secretary, and administration of the Account.
       ``(8) Not later than January 1 of each year, there shall be 
     deposited into the Treasury as miscellaneous receipts an 
     amount equal to the amount of unobligated balances remaining 
     in the Account at the close of business on September 30 of 
     the preceding year, minus any part of such balance that the 
     executive department or agency operating the debt collection 
     center determines is necessary to cover or defray the costs 
     under this subsection for the fiscal year in which the 
     deposit is made.
       ``(9) To carry out the purposes of this subsection, the 
     Secretary of the Treasury may prescribe such rules, 
     regulations, and procedures as the Secretary considers 
     necessary.
       ``(h)(1) The head of an executive, judicial, or legislative 
     agency acting under subsection (a)(1), (2), or (3) of this 
     section to collect a claim, compromise a claim, or terminate 
     collection action on a claim may obtain a consumer report (as 
     that term is defined in section 603 of the Fair Credit 
     Reporting Act (15 U.S.C. 1681a)) or comparable credit 
     information on any person who is liable for the claim.
       ``(2) The obtaining of a consumer report under this 
     subsection is deemed to be a circumstance or purpose 
     authorized or listed under section 604 of the Fair Credit 
     Reporting Act (15 U.S.C. 1681b).''.

     SEC. 5244. COMPROMISE OF CLAIMS.

       Section 11 of the Administrative Dispute Resolution Act 
     (Public Law 101-552, 104 Stat. 2736, 5 U.S.C. 571 note) is 
     amended by adding at the end the following sentence: ``This 
     section shall not apply to section 8(b) of this Act.''.

     SEC. 5245. WAGE GARNISHMENT REQUIREMENT.

       (a) In General.--Chapter 37 of title 31, United States 
     Code, is amended in subchapter II by adding after section 
     3720C, as added by section 5261 of this subtitle, the 
     following new section:

     ``Sec. 3720D. Garnishment

       ``(a) Notwithstanding any provision of State law, the head 
     of an executive, judicial, or legislative agency that 
     administers a program that gives rise to a delinquent nontax 
     debt owed to the United States by an individual may in 
     accordance with this section garnish the disposable pay of 
     the individual to collect the amount owed, if the individual 
     is not currently making required repayment in accordance with 
     any agreement between the agency head and the individual.
       ``(b) In carrying out any garnishment of disposable pay of 
     an individual under subsection (a), the head of an executive, 
     judicial, or legislative agency shall comply with the 
     following requirements:
       ``(1) The amount deducted under this section for any pay 
     period may not exceed 15 percent of disposable pay, except 
     that a greater percentage may be deducted with the written 
     consent of the individual.
       ``(2) The individual shall be provided written notice, sent 
     by mail to the individual's last known address, a minimum of 
     30 days prior to the initiation of proceedings, from the head 
     of the executive, judicial, or legislative agency, informing 
     the individual of--
       ``(A) the nature and amount of the debt to be collected;
       ``(B) the intention of the agency to initiate proceedings 
     to collect the debt through deductions from pay; and
       ``(C) an explanation of the rights of the individual under 
     this section.
       ``(3) The individual shall be provided an opportunity to 
     inspect and copy records relating to the debt.
       ``(4) The individual shall be provided an opportunity to 
     enter into a written agreement with the executive, judicial, 
     or legislative agency, under terms agreeable to the head of 
     the agency, to establish a schedule for repayment of the 
     debt.
       ``(5) The individual shall be provided an opportunity for a 
     hearing in accordance with subsection (c) on the 
     determination of the head of the executive, judicial, or 
     legislative agency concerning--
       ``(A) the existence or the amount of the debt, and
       ``(B) in the case of an individual whose repayment schedule 
     is established other than by a written agreement pursuant to 
     paragraph (4), the terms of the repayment schedule.
       ``(6) If the individual has been reemployed within 12 
     months after having been involuntarily separated from 
     employment, no amount may be deducted from the disposable pay 
     of the individual until the individual has been reemployed 
     continuously for at least 12 months.
       ``(c)(1) A hearing under subsection (b)(5) shall be 
     provided prior to issuance of a garnishment order if the 
     individual, on or before the 15th day following the mailing 
     of the notice described in subsection (b)(2), and in 
     accordance with such procedures as the head of the executive, 
     judicial, or legislative agency may prescribe, files a 
     petition requesting such a hearing.
       ``(2) If the individual does not file a petition requesting 
     a hearing prior to such date, the head of the agency shall 
     provide the individual a hearing under subsection (a)(5) upon 
     request, but such hearing need not be provided prior to 
     issuance of a garnishment order.
       ``(3) The hearing official shall issue a final decision at 
     the earliest practicable date, but not later than 60 days 
     after the filing of the petition requesting the hearing.
       ``(d) The notice to the employer of the withholding order 
     shall contain only such information as may be necessary for 
     the employer to comply with the withholding order.
       ``(e)(1) An employer may not discharge from employment, 
     refuse to employ, or take disciplinary action against an 
     individual subject to wage withholding in accordance with 
     this section by reason of the fact that the individual's 
     wages have been subject to garnishment under this section, 
     and such individual may sue in a State or Federal court of 
     competent jurisdiction any employer who takes such action.
       ``(2) The court shall award attorneys' fees to a prevailing 
     employee and, in its discretion, may order reinstatement of 
     the individual, award punitive damages and back pay to the 
     employee, or order such other remedy as may be reasonably 
     necessary.
       ``(f)(1) The employer of an individual--
       ``(A) shall pay to the head of an executive, judicial, or 
     legislative agency as directed in a withholding order issued 
     in an action under this section with respect to the 
     individual, and
       ``(B) shall be liable for any amount that the employer 
     fails to withhold from wages due an employee following 
     receipt by such employer of notice of the withholding order, 
     plus attorneys' fees, costs, and, in the court's discretion, 
     punitive damages.
       ``(2)(A) The head of an executive, judicial, or legislative 
     agency may sue an employer in a State or Federal court of 
     competent jurisdiction to recover amounts for which the 
     employer is liable under paragraph (1)(B).
       ``(B) A suit under this paragraph may not be filed before 
     the termination of the collection action, unless earlier 
     filing is necessary to avoid expiration of any applicable 
     statute of limitations period.
       ``(3) Notwithstanding paragraphs (1) and (2), an employer 
     shall not be required to vary its normal pay and disbursement 
     cycles in order to comply with this subsection.
       ``(g) For the purpose of this section, the term `disposable 
     pay' means that part of the compensation of any individual 
     from an employer remaining after the deduction of any amounts 
     required by any other law to be withheld.
       ``(h) The Secretary of the Treasury shall issue regulations 
     to implement this section.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter II of chapter 37 of title 31, United States Code, 
     is amended by inserting after the item relating to section 
     3720C (as added by section 5261 of this subtitle) the 
     following new item:

``3720D. Garnishment.''.

     SEC. 5246. DEBT SALES BY AGENCIES.

       Section 3711 of title 31, United States Code, is further 
     amended by adding at the end the following new subsection:
       ``(h)(1) The head of an executive, judicial, or legislative 
     agency may sell, subject to section 504(b) of the Federal 
     Credit Reform Act of 1990 and using competitive procedures, 

[[Page H11035]]

     any nontax debt owed to the United States that is delinquent 
     for more than 90 days. Appropriate fees charged by a 
     contractor to assist in the conduct of a sale under this 
     subsection may be payable from the proceeds of the sale.
       ``(2) After terminating collection action, the head of an 
     executive, judicial, or legislative agency shall sell, using 
     competitive procedures, any nontax debt or class of nontax 
     debts owed to the United States, if the Secretary of the 
     Treasury determines the sale is in the best interest of the 
     United States.
       ``(3) Sales of nontax debt under this subsection--
       ``(A) shall be for--
       ``(i) cash, or
       ``(ii) cash and a residuary equity or profit participation, 
     if the head of the agency reasonably determines that the 
     proceeds will be greater than sale solely for cash,
       ``(B) shall be without recourse, but may include the use of 
     guarantees if otherwise authorized, and
       ``(C) shall transfer to the purchaser all rights of the 
     Government to demand payment of the nontax debt, other than 
     with respect to a residuary equity or profit participation 
     under subparagraph (A)(ii).
       ``(4)(A) Within one year after the date of enactment of the 
     Debt Collection Improvement Act of 1995, and every year 
     thereafter, each executive agency with current and delinquent 
     collateralized nontax debts shall report to the Congress on 
     the valuation of its existing portfolio of loans, notes and 
     guarantees, and other collateralized debts based on standards 
     developed by the Director of the Office of Management and 
     Budget, in consultation with the Secretary of the Treasury.
       ``(B) The Director of the Office of Management and Budget 
     shall determine what information is required to be reported 
     to comply with subparagraph (A). At a minimum, for each 
     financing account and for each liquidating account (as those 
     terms are defined in sections 502(7) and 502(8), 
     respectively, of the Federal Credit Reform Act of 1990) the 
     following information shall be reported:
       ``(i) The cumulative balance of current debts outstanding, 
     the estimated net present value of such debts, the annual 
     administrative expenses of those debts (including the portion 
     of salaries and expenses that are directly related thereto), 
     and the estimated net proceeds that would be received by the 
     Government if such debts were sold.
       ``(ii) The cumulative balance of delinquent debts, debts 
     outstanding, the estimated net present value of such debts, 
     the annual administrative expenses of those debts (including 
     the portion of salaries and expenses that are directly 
     related thereto), and the estimated net proceeds that would 
     be received by the Government if such debts were sold.
       ``(iii) The cumulative balance of guaranteed loans 
     outstanding, the estimated net present value of such 
     guarantees, the annual administrative expenses of such 
     guarantees (including the portion of salaries and expenses 
     that are directly related to such guaranteed loans), and the 
     estimated net proceeds that would be received by the 
     Government if such loan guarantees were sold.
       ``(iv) The cumulative balance of defaulted loans that were 
     previously guaranteed and have resulted in loans receivables, 
     the estimated net present value of such loan assets, the 
     annual administrative expenses of such loan assets (including 
     the portion of salaries and expenses that are directly 
     related to such loan assets), and the estimated net proceeds 
     that would be received by the Government if such loan assets 
     were sold.
       ``(v) The marketability of all debts.
       ``(5) This subsection is not intended to limit existing 
     statutory authority of agencies to sell loans, debts, or 
     other assets.''.

     SEC. 5247. ADJUSTMENTS OF ADMINISTRATIVE DEBT.

       Section 3717 of title 31, United States Code, is amended by 
     adding at the end of subsection (h) the following new 
     subsection:
       ``(i)(1) The head of an executive, judicial, or legislative 
     agency may increase an administrative claim by the cost of 
     living adjustment in lieu of charging interest and penalties 
     under this section. Adjustments under this subsection will be 
     computed annually.
       ``(2) For the purpose of this subsection--
       ``(A) the term `cost of living adjustment' means the 
     percentage by which the Consumer Price Index for the month of 
     June of the calendar year preceding the adjustment exceeds 
     the Consumer Price Index for the month of June of the 
     calendar year in which the claim was determined or last 
     adjusted; and
       ``(B) the term `administrative claim' includes all debt 
     that is not based on an extension of Government credit 
     through direct loans, loan guarantees, or insurance, 
     including fines, penalties, and overpayments.''.

     SEC. 5248. DISSEMINATION OF INFORMATION REGARDING IDENTITY OF 
                   DELINQUENT DEBTORS.

       (a) In General.--Chapter 37 of title 31, United States 
     Code, is amended in subchapter II by adding after section 
     3720D, as added by section 5245 of this subtitle, the 
     following new section:

     ``Sec. 3720E. Dissemination of information regarding identity 
       of delinquent debtors

       ``(a) The head of any agency may, with the review of the 
     Secretary of the Treasury, for the purpose of collecting any 
     delinquent nontax debt owed by any person, publish or 
     otherwise publicly disseminate information regarding the 
     identity of the person and the existence of the nontax debt.
       ``(b)(1) The Secretary of the Treasury, in consultation 
     with the Director of the Office of Management and Budget and 
     the heads of other appropriate Federal agencies, shall issue 
     regulations establishing procedures and requirements the 
     Secretary considers appropriate to carry out this section.
       ``(2) Regulations under this subsection shall include--
       ``(A) standards for disseminating information that maximize 
     collections of delinquent nontax debts, by directing actions 
     under this section toward delinquent debtors that have assets 
     or income sufficient to pay their delinquent nontax debt;
       ``(B) procedures and requirements that prevent 
     dissemination of information under this section regarding 
     persons who have not had an opportunity to verify, contest, 
     and compromise their nontax debt in accordance with this 
     subchapter; and
       ``(C) procedures to ensure that persons are not incorrectly 
     identified pursuant to this section.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter II of chapter 37 of title 31, United States Code, 
     is amended by adding after the item relating to section 3720D 
     (as added by section 5245 of this subtitle) the following new 
     item:

``3720E. Dissemination of information regarding identity of delinquent 
              debtors.''.

              Subpart E--Federal Civil Monetary Penalties

     SEC. 5251. ADJUSTING FEDERAL CIVIL MONETARY PENALTIES FOR 
                   INFLATION.

       (a) In General.--The Federal Civil Penalties Inflation 
     Adjustment Act of 1990 (Public Law 101-410, 104 Stat. 890; 28 
     U.S.C. 2461 note) is amended--
       (1) by amending section 4 to read as follows:
       ``Sec. 4. The head of each agency shall, not later than 180 
     days after the date of enactment of the Debt Collection 
     Improvement Act of 1995, and at least once every 4 years 
     thereafter--
       ``(1) by regulation adjust each civil monetary penalty 
     provided by law within the jurisdiction of the Federal 
     agency, except for any penalty (including any addition to tax 
     and additional amount) under the Internal Revenue Code of 
     1986, the Tarriff Act of 1930, or the Social Security Act, by 
     the inflation adjustment described under section 5 of this 
     Act; and
       ``(2) publish each such regulation in the Federal 
     Register.'';
       (2) in section 5(a), by striking ``The adjustment described 
     under paragraphs (4) and (5)(A) of section 4'' and inserting 
     ``The inflation adjustment under section 4''; and
       (3) by adding at the end the following new section:
       ``Sec. 7. Any increase under this Act in a civil monetary 
     penalty shall apply only to violations which occur after the 
     date the increase takes effect.''.
       (b) Limitation on Initial Adjustment.--The first adjustment 
     of a civil monetary penalty made pursuant to the amendment 
     made by to subsection (a) may not exceed 10 percent of such 
     penalty.

                        Subpart F--Gain Sharing

     SEC. 5261. DEBT COLLECTION IMPROVEMENT ACCOUNT.

       (a) In General.--Title 31, United States Code, is amended 
     by inserting after section 3720B (as added by section 5232 of 
     this subtitle) the following new section:

     ``Sec. 3720C. Debt Collection Improvement Account

       ``(a)(1) There is hereby established in the Treasury a 
     special fund to be known as the `Debt Collection Improvement 
     Account' (hereinafter in this section referred to as the 
     `Account').
       ``(2) The Account shall be maintained and managed by the 
     Secretary of the Treasury, who shall ensure that agency 
     programs are credited with amounts transferred under 
     subsection (b)(1).
       ``(b)(1) Not later than 30 days after the end of a fiscal 
     year, an agency may transfer to the Account the amount 
     described in paragraph (3), as adjusted under paragraph (4).
       ``(2) Agency transfers to the Account may include 
     collections from--
       ``(A) salary, administrative, and tax refund offsets;
       ``(B) automated levy authority;
       ``(C) the Department of Justice;
       ``(D) private collection agencies;
       ``(E) sales of delinquent loans; and
       ``(F) contracts to locate or recover assets.
       ``(3) The amount referred to in paragraph (1) shall be 5 
     percent of the amount of delinquent debt collected by an 
     agency in a fiscal year, minus the greater of--
       ``(A) 5 percent of the amount of delinquent nontax debt 
     collected by the agency in the previous fiscal year, or
       ``(B) 5 percent of the amount of delinquent nontax debt 
     collected by the agency in the previous 4 fiscal years.
       ``(4) In consultation with the Secretary of the Treasury, 
     the Office of Management and Budget may adjust the amount 
     described in paragraph (3) for an agency to reflect the level 
     of effort in credit management programs by the agency. As an 
     indicator of the level of effort in credit management, the 
     Office of Management and Budget shall consider the following:
       ``(A) The number of days between the date a claim or debt 
     became delinquent and the date which an agency referred the 
     debt or claim to the Secretary of the Treasury or obtained an 
     exemption from this referral under section 3711(g)(2) of this 
     title.

[[Page H11036]]

       ``(B) The ratio of delinquent debts or claims to total 
     receivables for a given program, and the change in this ratio 
     over a period of time.
       ``(c)(1) The Secretary of the Treasury may make payments 
     from the Account solely to reimburse agencies for qualified 
     expenses. For agencies with franchise funds, such payments 
     may be credited to subaccounts designated for debt 
     collection.
       ``(2) For purposes of this section, the term `qualified 
     expenses' means expenditures for the improvement of credit 
     management, debt collection, and debt recovery activities, 
     including--
       ``(A) account servicing (including cross-servicing under 
     section 3711(g) of this title),
       ``(B) automatic data processing equipment acquisitions,
       ``(C) delinquent debt collection,
       ``(D) measures to minimize delinquent debt,
       ``(E) sales of delinquent debt,
       ``(F) asset disposition, and
       ``(G) training of personnel involved in credit and debt 
     management.
       ``(3)(A) Amounts in the Account shall be available to the 
     Secretary of the Treasury for purposes of this section to the 
     extent and in amounts provided in advance in appropriation 
     Acts.
       ``(B) As soon as practicable after the end of the third 
     fiscal year after which appropriations are made pursuant to 
     this section, and every 3 years thereafter, any 
     unappropriated balance in the Account shall be transferred to 
     the general fund of the Treasury as miscellaneous receipts.
       ``(d) For direct loans and loan guarantee programs subject 
     to title V of the Congressional Budget Act of 1974, amounts 
     credited in accordance with subsection (c) shall be 
     considered administrative costs.
       ``(e) The Secretary of the Treasury shall prescribe such 
     rules, regulations, and procedures as the Secretary considers 
     necessary or appropriate to carry out the purposes of this 
     section.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     37 of title 31, United States Code, is amended by inserting 
     after the item relating to section 3720B (as added by section 
     5232 of this subtitle) the following new item:

``3720C. Debt Collection Improvement Account.''.

                 Subpart G--Tax Refund Offset Authority

     SEC. 5271. EXPANDING TAX REFUND OFFSET AUTHORITY.

       (a) Discretionary Authority.--Section 3720A of title 31, 
     United States Code, is amended by adding after subsection (h) 
     the following new subsection:
       ``(i) An agency subject to section 9 of the Act of May 18, 
     1933 (16 U.S.C. 831h), may implement this section at its 
     discretion.''.
       (b) Federal Agency Defined.--Section 6402(f) of the 
     Internal Revenue Code of 1986 (26 U.S.C. 6402(f)), is amended 
     to read as follows:
       ``(f) Federal Agency.--For purposes of this section, the 
     term `Federal agency' means a department, agency, or 
     instrumentality of the United States, and includes a 
     Government corporation (as such term is defined in section 
     103 of title 5, United States Code).''.

     SEC. 5272. EXPANDING AUTHORITY TO COLLECT PAST-DUE SUPPORT.

       (a) Notification of Secretary of the Treasury.--Section 
     3720A(a) of title 31, United States Code, is amended to read 
     as follows:
       ``(a) Any Federal agency that is owed by a person a past-
     due, legally enforceable debt (including debt administered by 
     a third party acting as an agent for the Federal Government) 
     shall, and any agency subject to section 9 of the Act of May 
     18, 1933 (16 U.S.C. 831h), owed such a debt may, in 
     accordance with regulations issued pursuant to subsections 
     (b) and (d), notify the Secretary of the Treasury at least 
     once each year of the amount of such debt.''.
       (b) Implementation of Support Collection by Secretary of 
     the Treasury.--Section 464(a) of the Act of August 14, 1935 
     (42 U.S.C. 664(a)) is amended--
       (1) in paragraph (1), by adding at the end the following: 
     ``This subsection may be executed by the disbursing official 
     of the Department of the Treasury.''; and
       (2) in paragraph (2)(A), by adding at the end the 
     following: ``This subsection may be executed by the 
     disbursing official of the Department of the Treasury.''.

                        Subpart H--Disbursements

     SEC. 5281. ELECTRONIC FUNDS TRANSFER.

       Section 3332 of title 31, United States Code, popularly 
     known as the Federal Financial Management Act of 1994, is 
     amended--
       (1) by redesignating subsection (e) as subsection (h), and 
     inserting after subsection (d) the following new subsections:
       ``(e)(1) Notwithstanding subsections (a) through (d) of 
     this section, sections 5120(a) and (d) of title 38, and any 
     other provision of law, all Federal payments to a recipient 
     who becomes eligible for that type of payments after 90 days 
     after the date of the enactment of the Debt Collection 
     Improvement Act of 1995 shall be made by electronic funds 
     transfer.
       ``(2) The head of a Federal agency shall, with respect to 
     Federal payments made or authorized by the agency, waive the 
     application of paragraph (1) to a recipient of those payments 
     upon receipt of written certification from the recipient that 
     the recipient does not have an account with a financial 
     institution or an authorized payment agent.
       ``(f)(1) Notwithstanding any other provision of law 
     (including subsections (a) through (e) of this section and 
     sections 5120(a) and (d) of title 38), except as provided in 
     paragraph (2) all Federal payments made after January 1, 
     1999, shall be made by electronic funds transfer.
       ``(2)(A) The Secretary of the Treasury may waive 
     application of this subsection to payments--
       ``(i) for individuals or classes of individuals for whom 
     compliance imposes a hardship;
       ``(ii) for classifications or types of checks; or
       ``(iii) in other circumstances as may be necessary.
       ``(B) The Secretary of the Treasury shall make 
     determinations under subparagraph (A) based on standards 
     developed by the Secretary.
       ``(g) Each recipient of Federal payments required to be 
     made by electronic funds transfer shall--
       ``(1) designate 1 or more financial institutions or other 
     authorized agents to which such payments shall be made; and
       ``(2) provide to the Federal agency that makes or 
     authorizes the payments information necessary for the 
     recipient to receive electronic funds transfer payments 
     through each institution or agent designated under paragraph 
     (1).''; and
       (2) by adding after subsection (h) (as so redesignated) the 
     following new subsections:
       ``(i)(1) The Secretary of the Treasury may prescribe 
     regulations that the Secretary considers necessary to carry 
     out this section.
       ``(2) Regulations under this subsection shall ensure that 
     individuals required under subsection (g) to have an account 
     at a financial institution because of the application of 
     subsection (f)(1)--
       ``(A) will have access to such an account at a reasonable 
     cost; and
       ``(B) are given the same consumer protections with respect 
     to the account as other account holders at the same financial 
     institution.
       ``(j) For purposes of this section--
       ``(1) The term `electronic funds transfer' means any 
     transfer of funds, other than a transaction originated by 
     cash, check, or similar paper instrument, that is initiated 
     through an electronic terminal, telephone, computer, or 
     magnetic tape, for the purpose of ordering, instructing, or 
     authorizing a financial institution to debit or credit an 
     account. The term includes Automated Clearing House 
     transfers, Fed Wire transfers, transfers made at automatic 
     teller machines, and point-of-sale terminals.
       ``(2) The term `Federal agency' means--
       ``(A) an agency (as defined in section 101 of this title); 
     and
       ``(B) a Government corporation (as defined in section 103 
     of title 5).
       ``(3) The term `Federal payments' includes--
       ``(A) Federal wage, salary, and retirement payments;
       ``(B) vendor and expense reimbursement payments; and
       ``(C) benefit payments.
     Such term shall not include any payment under the Internal 
     Revenue Code of 1986.''

     SEC. 5282. REQUIREMENT TO INCLUDE TAXPAYER IDENTIFYING NUMBER 
                   WITH PAYMENT VOUCHER.

       Section 3325 of title 31, United States Code, is amended by 
     adding at the end the following new subsection:
       ``(d) The head of an executive agency or an officer or 
     employee of an executive agency referred to in subsection 
     (a)(1)(B), as applicable, shall include with each certified 
     voucher submitted to a disbursing official pursuant to this 
     section the taxpayer identifying number of each person to 
     whom payment may be made under the voucher.''.

                        Subpart I--Miscellaneous

     SEC. 5291. MISCELLANEOUS AMENDMENTS TO DEFINITIONS.

       Section 3701 of title 31, United States Code, is amended--
       (1) by amending subsection (a)(1) to read as follows:
       ``(1) `administrative offset' means withholding funds 
     payable by the United States (including funds payable by the 
     United States on behalf of a State government) to, or held by 
     the United States for, a person to satisfy a claim.'';
       (2) by amending subsection (b) to read as follows:
       ``(b)(1) In subchapter II of this chapter, the term `claim' 
     or `debt' means any amount of funds or property that has been 
     determined by an appropriate official of the Federal 
     Government to be owed to the United States by a person, 
     organization, or entity other than another Federal agency. A 
     claim includes, without limitation--
       ``(A) funds owed on account of loans made, insured, or 
     guaranteed by the Government, including any deficiency or any 
     difference between the price obtained by the Government in 
     the sale of a property and the amount owed to the Government 
     on a mortgage on the property,
       ``(B) expenditures of nonappropriated funds,
       ``(C) over-payments, including payments disallowed by 
     audits performed by the Inspector General of the agency 
     administering the program,
       ``(D) any amount the United States is authorized by statute 
     to collect for the benefit of any person,
       ``(E) the unpaid share of any non-Federal partner in a 
     program involving a Federal payment and a matching, or cost-
     sharing, payment by the non-Federal partner,

[[Page H11037]]

       ``(F) any fines or penalties assessed by an agency; and
       ``(G) other amounts of money or property owed to the 
     Government.
       ``(2) For purposes of sections 3716 of this title, each of 
     the terms `claim' and `debt' includes an amount of funds or 
     property owed by a person to a State (including any past-due 
     support being enforced by the State), the District of 
     Columbia, American Samoa, Guam, the United States Virgin 
     Islands, the Commonwealth of the Northern Mariana Islands, or 
     the Commonwealth of Puerto Rico.''; and
       (3) by adding after subsection (f) (as added by section 
     5241 of this subtitle) the following new subsection:
       ``(g) In section 3716 of this title--
       ``(1) `creditor agency' means any agency owed a claim that 
     seeks to collect that claim through administrative offset; 
     and
       ``(2) `payment certifying agency' means any agency that has 
     transmitted a voucher to a disbursing official for 
     disbursement.''.

     SEC. 5292. MONITORING AND REPORTING.

       (a) Guidelines.--The Secretary of the Treasury, in 
     consultation with concerned Federal agencies, may establish 
     guidelines, including information on outstanding debt, to 
     assist agencies in the performance and monitoring of debt 
     collection activities.
       (b) Report.--Not later than 3 years after the date of 
     enactment of this subtitle, the Secretary of the Treasury 
     shall report to the Congress on collection services provided 
     by Federal agencies or entities collecting debt on behalf of 
     other Federal agencies under the authorities contained in 
     section 3711(g) of title 31, United States Code, as added by 
     section 5243 of this subtitle.
       (c) Agency Reports.--Section 3719 of title 31, United 
     States Code, is amended--
       (1) in subsection (a)--
       (A) by amending the first sentence to read as follows: ``In 
     consultation with the Comptroller General of the United 
     States, the Secretary of the Treasury shall prescribe 
     regulations requiring the head of each agency with 
     outstanding nontax claims to prepare and submit to the 
     Secretary at least once each year a report summarizing the 
     status of loans and accounts receivable that are managed by 
     the head of the agency.''; and
       (B) in paragraph (3), by striking ``Director'' and 
     inserting ``Secretary''; and
       (2) in subsection (b), by striking ``Director'' and 
     inserting ``Secretary''.
       (d) Consolidation of Reports.--Notwithstanding any other 
     provision of law, the Secretary of the Treasury may 
     consolidate reports concerning debt collection otherwise 
     required to be submitted by the Secretary into one annual 
     report.

     SEC. 5293. REVIEW OF STANDARDS AND POLICIES FOR COMPROMISE OR 
                   WRITE-DOWN OF DELINQUENT DEBTS.

       The Director of the Office of Management and Budget shall--
       (1) review the standards and policies of each Federal 
     agency for compromising, writing-down, forgiving, or 
     discharging indebtedness arising from programs of the agency;
       (2) determine whether those standards and policies are 
     consistent and protect the interests of the United States;
       (3) in the case of any Federal agency standard or policy 
     that the Secretary determines is not consistent or does not 
     protect the interests of the United States, direct the head 
     of the agency to make appropriate modifications to the 
     standard or policy; and
       (4) report annually to the Congress on--
       (A) deficiencies in the standards and policies of Federal 
     agencies for compromising, writing-down, forgiving, or 
     discharging indebtedness; and
       (B) progress made in improving those standards and 
     policies.

                    PART II--JUSTICE DEBT MANAGEMENT

     SEC. 5301. EXPANDED USE OF PRIVATE ATTORNEYS.

       (a) Elimination of Limitation on Fees.--Section 
     3718(b)(1)(A) of title 31, United States Code, is amended by 
     striking the fourth sentence.
       (b) Repeal.--Sections 3 and 5 of the Act of October 28, 
     1986 (popularly known as the Federal Debt Recovery Act; 
     Public Law 99-578, 100 Stat. 3305) are hereby repealed.

     SEC. 5302. NONJUDICIAL FORECLOSURE OF MORTGAGES.

       Chapter 176 of title 28, United States Code, is amended--
       (1) in the table of subchapters at the beginning of the 
     chapter by adding at the end the following new item:

``E. Nonjudicial foreclosure................................3401''; and

       (2) by adding at the end of the chapter the following new 
     subchapter:

                ``SUBCHAPTER E--NONJUDICIAL FORECLOSURE

``Sec.
``3401. Definitions.
``3402. Rules of construction.
``3403. Election of procedure.
``3404. Designation of foreclosure trustee.
``3405. Notice of foreclosure sale; statute of limitations.
``3406. Service of notice of foreclosure sale.
``3407. Cancellation of foreclosure sale.
``3408. Stay.
``3409. Conduct of sale; postponement.
``3410. Transfer of title and possession.
``3411. Record of foreclosure and sale.
``3412. Effect of sale.
``3413. Disposition of sale proceeds.
``3414. Deficiency judgment.

     ``Sec. 3401. Definitions

       ``As used in this subchapter--
       ``(1) `agency' means--
       ``(A) an Executive department, as set forth in section 101 
     of title 5, United States Code;
       ``(B) an independent establishment, as defined in section 
     104 of title 5, United States Code (except that it shall not 
     include the General Accounting Office);
       ``(C) a military department, as set forth in section 102 of 
     title 5, United States Code; and
       ``(D) a wholly owned government corporation, as defined in 
     section 9101(3) of title 31, United States Code;
       ``(2) `agency head' means the head and any assistant head 
     of an agency, and may upon the designation by the head of an 
     agency include the chief official of any principal division 
     of an agency or any other employee of an agency;
       ``(3) `bona fide purchaser' means a purchaser for value in 
     good faith and without notice of any adverse claim who 
     acquires the seller's interest free of any adverse claim;
       ``(4) `debt instrument' means a note, mortgage bond, 
     guaranty, or other instrument creating a debt or other 
     obligation, including any instrument incorporated by 
     reference therein and any instrument or agreement amending or 
     modifying a debt instrument;
       ``(5) `file' or `filing' means docketing, indexing, 
     recording, or registering, or any other requirement for 
     perfecting a mortgage or a judgment;
       ``(6) `foreclosure trustee' means an individual, 
     partnership, association, or corporation, or any employee 
     thereof, including a successor, appointed by the agency head 
     to conduct a foreclosure sale pursuant to this subchapter;
       ``(7) `mortgage' means a deed of trust, deed to secure 
     debt, security agreement, or any other form of instrument 
     under which any interest in real property, including 
     leaseholds, life estates, reversionary interests, and any 
     other estates under applicable law is conveyed in trust, 
     mortgaged, encumbered, pledged, or otherwise rendered subject 
     to a lien, for the purpose of securing the payment of money 
     or the performance of any other obligation;
       ``(8) `of record' means an interest recorded pursuant to 
     Federal or State statutes that provide for official recording 
     of deeds, mortgages, and judgments, and that establish the 
     effect of such records as notice to creditors, purchasers, 
     and other interested persons;
       ``(9) `owner' means any person who has an ownership 
     interest in property and includes heirs, devisees, executors, 
     administrators, and other personal representatives, and 
     trustees of testamentary trusts if the owner of record is 
     deceased;
       ``(10) `sale' means a sale conducted pursuant to this 
     subchapter, unless the context requires otherwise; and
       ``(11) `security property' means real property, or any 
     interest in real property including leaseholds, life estates, 
     reversionary interests, and any other estates under 
     applicable State law that secure a mortgage.

     ``Sec. 3402. Rules of construction

       ``(a) In General.--If an agency head elects to proceed 
     under this subchapter, this subchapter shall apply and the 
     provisions of this subchapter shall govern in the event of a 
     conflict with any other provision of Federal law or State 
     law.
       ``(b) Limitation.--This subchapter shall not be construed 
     to supersede or modify the operation of--
       ``(1) the lease-back/buy-back provisions under section 335 
     of the Consolidated Farm and Rural Development Act, or 
     regulations promulgated thereunder; or
       ``(2) The Multifamily Mortgage Foreclosure Act of 1981.
       ``(c) Effect on Other Laws.--This subchapter shall not be 
     construed to curtail or limit the rights of the United States 
     or any of its agencies--
       ``(1) to foreclose a mortgage under any other provision of 
     Federal law or State law; or
       ``(2) to enforce any right under Federal law or State law 
     in lieu of or in addition to foreclosure, including any right 
     to obtain a monetary judgment.
       ``(d) Application to Mortgages.--The provisions of this 
     subchapter may be used to foreclose any mortgage, whether 
     executed prior or subsequent to the effective date of this 
     subchapter.

     ``Sec. 3403. Election of procedure

       ``(a) Security Property Subject to Foreclosure.--An agency 
     head may foreclose a mortgage upon the breach of a covenant 
     or condition in a debt instrument or mortgage for which 
     acceleration or foreclosure is authorized. An agency head may 
     not institute foreclosure proceedings on the mortgage under 
     any other provision of law, or refer such mortgage for 
     litigation, during the pendency of foreclosure proceedings 
     pursuant to this subchapter.
       ``(b) Effect of Cancellation of Sale.--If a foreclosure 
     sale is canceled pursuant to section 3407, the agency head 
     may thereafter foreclose on the security property in any 
     manner authorized by law.

     ``Sec. 3404. Designation of foreclosure trustee

       ``(a) In General.--An agency head shall designate a 
     foreclosure trustee who shall supersede any trustee 
     designated in the mortgage. A foreclosure trustee designated 
     under this section shall have a nonjudicial power of sale 
     pursuant to this subchapter.
       ``(b) Designation of Foreclosure Trustee.--
       ``(1) An agency head may designate as foreclosure trustee--
       ``(A) an officer or employee of the agency;

[[Page H11038]]

       ``(B) an individual who is a resident of the State in which 
     the security property is located; or
       ``(C) a partnership, association, or corporation, if such 
     entity is authorized to transact business under the laws of 
     the State in which the security property is located.
       ``(2) The agency head is authorized to enter into personal 
     services and other contracts not inconsistent with this 
     subchapter.
       ``(c) Method of Designation.--An agency head shall 
     designate the foreclosure trustee in writing. The foreclosure 
     trustee may be designated by name, title, or position. An 
     agency head may designate one or more foreclosure trustees 
     for the purpose of proceedings with multiple foreclosures or 
     a class of foreclosures.
       ``(d) Availability of Designation.--An agency head may 
     designate such foreclosure trustees as the agency head deems 
     necessary to carry out the purposes of this subchapter.
       ``(e) Multiple Foreclosure Trustees Authorized.--An agency 
     head may designate multiple foreclosure trustees for 
     different tracts of a secured property.
       ``(f) Removal of Foreclosure Trustees; Successor 
     Foreclosure Trustees.--An agency head may, with or without 
     cause or notice, remove a foreclosure trustee and designate a 
     successor trustee as provided in this section. The 
     foreclosure sale shall continue without prejudice 
     notwithstanding the removal of the foreclosure trustee and 
     designation of a successor foreclosure trustee. Nothing in 
     this section shall be construed to prohibit a successor 
     foreclosure trustee from postponing the foreclosure sale in 
     accordance with this subchapter.

     ``Sec. 3405. Notice of foreclosure sale; statute of 
       limitations

       ``(a) In General.--
       ``(1) Not earlier than 21 days nor later than ten years 
     after acceleration of a debt instrument or demand on a 
     guaranty, the foreclosure trustee shall serve a notice of 
     foreclosure sale in accordance with this subchapter.
       ``(2) For purposes of computing the time period under 
     paragraph (1), there shall be excluded all periods during 
     which there is in effect--
       ``(A) a judicially imposed stay of foreclosure; or
       ``(B) a stay imposed by section 362 of title 11, United 
     States Code.
       ``(3) In the event of partial payment or written 
     acknowledgement of the debt after acceleration of the debt 
     instrument, the right to foreclose shall be deemed to accrue 
     again at the time of each such payment or acknowledgement.
       ``(b) Notice of Foreclosure Sale.--The notice of 
     foreclosure sale shall include--
       ``(1) the name, title, and business address of the 
     foreclosure trustee as of the date of the notice;
       ``(2) the names of the original parties to the debt 
     instrument and the mortgage, and any assignees of the 
     mortgagor of record;
       ``(3) the street address or location of the security 
     property, and a generally accepted designation used to 
     describe the security property, or so much thereof as is to 
     be offered for sale, sufficient to identify the property to 
     be sold;
       ``(4) the date of the mortgage, the office in which the 
     mortgage is filed, and the location of the filing of the 
     mortgage;
       ``(5) the default or defaults upon which foreclosure is 
     based, and the date of the acceleration of the debt 
     instrument;
       ``(6) the date, time, and place of the foreclosure sale;
       ``(7) a statement that the foreclosure is being conducted 
     in accordance with this subchapter;
       ``(8) the types of costs, if any, to be paid by the 
     purchaser upon transfer of title; and
       ``(9) the terms and conditions of sale, including the 
     method and time of payment of the foreclosure purchase price.

     ``Sec. 3406. Service of notice of foreclosure sale

       ``(a) Record Notice.--At least 21 days prior to the date of 
     the foreclosure sale, the notice of foreclosure sale required 
     by section 3405 shall be filed in the manner authorized for 
     filing a notice of an action concerning real property 
     according to the law of the State where the security property 
     is located or, if none, in the manner authorized by section 
     3201 of this chapter.
       ``(b) Notice by Mail.--
       ``(1) At least 21 days prior to the date of the foreclosure 
     sale, the notice set forth in section 3405 shall be sent by 
     registered or certified mail, return receipt requested--
       ``(A) to the current owner of record of the security 
     property as the record appears on the date that the notice of 
     foreclosure sale is recorded pursuant to subsection (a);
       ``(B) to all debtors, including the mortgagor, assignees of 
     the mortgagor and guarantors of the debt instrument;
       ``(C) to all persons having liens, interests or 
     encumbrances of record upon the security property, as the 
     record appears on the date that the notice of foreclosure 
     sale is recorded pursuant to subsection (a); and
       ``(D) to any occupants of the security property.

     If the names of the occupants of the security property are 
     not known to the agency, or the security property has more 
     than one dwelling unit, the notice shall be posted at the 
     security property.
       ``(2) The notice shall be sent to the debtor at the 
     address, if any, set forth in the debt instrument or mortgage 
     as the place to which notice is to be sent, and if different, 
     to the debtor's last known address as shown in the mortgage 
     record of the agency. The notice shall be sent to any person 
     other than the debtor to that person's address of record or, 
     if there is no address of record, to any address at which the 
     agency in good faith believes the notice is likely to come to 
     that person's attention.
       ``(3) Notice by mail pursuant to this subsection shall be 
     effective upon mailing.
       ``(c) Notice by Publication.--The notice of the foreclosure 
     sale shall be published at least once a week for each of 
     three successive weeks prior to the sale in at least one 
     newspaper of general circulation in any county or counties in 
     which the security property is located. If there is no 
     newspaper published at least weekly that has a general 
     circulation in at least one county in which the security 
     property is located, copies of the notice of foreclosure sale 
     shall instead be posted at least 21 days prior to the sale at 
     the courthouse of any county or counties in which the 
     property is located and the place where the sale is to be 
     held.

     ``Sec. 3407. Cancellation of foreclosure sale

       ``(a) In General.--At any time prior to the foreclosure 
     sale, the foreclosure trustee shall cancel the sale--
       ``(1) if the debtor or the holder of any subordinate 
     interest in the security property tenders the performance due 
     under the debt instrument and mortgage, including any amounts 
     due because of the exercise of the right to accelerate, and 
     the expenses of proceeding to foreclosure incurred to the 
     time of tender; or
       ``(2) if the security property is a dwelling of four units 
     or fewer, and the debtor--
       ``(A) pays or tenders all sums which would have been due at 
     the time of tender in the absence of any acceleration;
       ``(B) performs any other obligation which would have been 
     required in the absence of any acceleration; and
       ``(C) pays or tenders all costs of foreclosure incurred for 
     which payment from the proceeds of the sale would be allowed; 
     or
       ``(3) for any reason approved by the agency head.
       ``(b) Limitation.--The debtor may not, without the approval 
     of the agency head, cure the default under subsection (a)(2) 
     if, within the preceding 12 months, the debtor has cured a 
     default after being served with a notice of foreclosure sale 
     pursuant to this subchapter.
       ``(c) Notice of Cancellation.--The foreclosure trustee 
     shall file a notice of the cancellation in the same place and 
     manner provided for the filing of the notice of foreclosure 
     sale under section 3406(a).

     ``Sec. 3408. Stay

       ``If, prior to the time of sale, foreclosure proceedings 
     under this subchapter are stayed in any manner, including the 
     filing of bankruptcy, no person may thereafter cure the 
     default under the provisions of section 3407(a)(2). If the 
     default is not cured at the time a stay is terminated, the 
     foreclosure trustee shall proceed to sell the security 
     property as provided in this subchapter.

     ``Sec. 3409. Conduct of sale; postponement

       ``(a) Sale Procedures.--Foreclosure sale pursuant to this 
     subchapter shall be at public auction and shall be scheduled 
     to begin at a time between the hours of 9:00 a.m. and 4:00 
     p.m. local time. The foreclosure sale shall be held at the 
     location specified in the notice of foreclosure sale, which 
     shall be a location where real estate foreclosure auctions 
     are customarily held in the county or one of the counties in 
     which the property to be sold is located or at a courthouse 
     therein, or upon the property to be sold. Sale of security 
     property situated in two or more counties may be held in any 
     one of the counties in which any part of the security 
     property is situated. The foreclosure trustee may designate 
     the order in which multiple tracts of security property are 
     sold.
       ``(b) Bidding Requirements.--Written one-price sealed bids 
     shall be accepted by the foreclosure trustee, if submitted by 
     the agency head or other persons for entry by announcement by 
     the foreclosure trustee at the sale. The sealed bids shall be 
     submitted in accordance with the terms set forth in the 
     notice of foreclosure sale. The agency head or any other 
     person may bid at the foreclosure sale, even if the agency 
     head or other person previously submitted a written one-price 
     bid. The agency head may bid a credit against the debt due 
     without the tender or payment of cash. The foreclosure 
     trustee may serve as auctioneer, or may employ an auctioneer 
     who may be paid from the sale proceeds. If an auctioneer is 
     employed, the foreclosure trustee is not required to attend 
     the sale. The foreclosure trustee or an auctioneer may bid as 
     directed by the agency head.
       ``(c) Postponement of Sale.--The foreclosure trustee shall 
     have discretion, prior to or at the time of sale, to postpone 
     the foreclosure sale. The foreclosure trustee may postpone a 
     sale to a later hour the same day by announcing or posting 
     the new time and place of the foreclosure sale at the time 
     and place originally scheduled for the foreclosure sale. The 
     foreclosure trustee may instead postpone the foreclosure sale 
     for not fewer than 9 nor more than 31 days, by serving notice 
     that the foreclosure sale has been postponed to a specified 
     date, and the notice may include any revisions the 
     foreclosure trustee deems appropriate. The notice shall be 
     served by publication, mailing, and posting in accordance 
     with section 3406(b) and (c), except that publication may be 
     made on any of 

[[Page H11039]]

     three separate days prior to the new date of the foreclosure 
     sale, and mailing may be made at any time at least 7 days 
     prior to the new date of the foreclosure sale.
       ``(d) Liability of Successful Bidder Who Fails To Comply.--
     The foreclosure trustee may require a bidder to make a cash 
     deposit before the bid is accepted. The amount or percentage 
     of the cash deposit shall be stated by the foreclosure 
     trustee in the notice of foreclosure sale. A successful 
     bidder at the foreclosure sale who fails to comply with the 
     terms of the sale shall forfeit the cash deposit or, at the 
     election of the foreclosure trustee, shall be liable to the 
     agency on a subsequent sale of the property for all net 
     losses incurred by the agency as a result of such failure.
       ``(e) Effect of Sale.--Any foreclosure sale held in 
     accordance with this subchapter shall be conclusively 
     presumed to have been conducted in a legal, fair, and 
     commercially reasonable manner. The sale price shall be 
     conclusively presumed to constitute the reasonably equivalent 
     value of the security property.

     ``Sec. 3410. Transfer of title and possession

       ``(a) Deed.--After receipt of the purchase price in 
     accordance with the terms of the sale as provided in the 
     notice of foreclosure sale, the foreclosure trustee shall 
     execute and deliver to the purchaser a deed conveying the 
     security property to the purchaser that grants and conveys 
     title to the security property without warranty or covenants 
     to the purchaser. The execution of the foreclosure trustee's 
     deed shall have the effect of conveying all of the right, 
     title, and interest in the security property covered by the 
     mortgage. Notwithstanding any other law to the contrary, the 
     foreclosure trustee's deed shall be a conveyance of the 
     security property and not a quitclaim. No judicial proceeding 
     shall be required ancillary or supplementary to the 
     procedures provided in this subchapter to establish the 
     validity of the conveyance.
       ``(b) Death of Purchaser Prior to Consummation of Sale.--If 
     a purchaser dies before execution and delivery of the deed 
     conveying the security property to the purchaser, the 
     foreclosure trustee shall execute and deliver the deed to the 
     representative of the purchaser's estate upon payment of the 
     purchase price in accordance with the terms of sale. Such 
     delivery to the representative of the purchaser's estate 
     shall have the same effect as if accomplished during the 
     lifetime of the purchaser.
       ``(c) Purchaser Considered Bona Fide Purchaser Without 
     Notice.--The purchaser of property under this subchapter 
     shall be presumed to be a bona fide purchaser without notice 
     of defects, if any, in the title conveyed to the purchaser.
       ``(d) Possession by Purchaser; Continuing Interests.--A 
     purchaser at a foreclosure sale conducted pursuant to this 
     subchapter shall be entitled to possession upon passage of 
     title to the security property, subject to any interest or 
     interests senior to that of the mortgage. The right to 
     possession of any person without an interest senior to the 
     mortgage who is in possession of the property shall terminate 
     immediately upon the passage of title to the security 
     property, and the person shall vacate the security property 
     immediately. The purchaser shall be entitled to take any 
     steps available under Federal law or State law to obtain 
     possession.

     ``Sec. 3411. Record of foreclosure and sale

       ``(a) Recital Requirements.--The foreclosure trustee shall 
     recite in the deed to the purchaser, or in an addendum to the 
     foreclosure trustee's deed, or shall prepare an affidavit 
     stating--
       ``(1) the date, time, and place of sale;
       ``(2) the date of the mortgage, the office in which the 
     mortgage is filed, and the location of the filing of the 
     mortgage;
       ``(3) the persons served with the notice of foreclosure 
     sale;
       ``(4) the date and place of filing of the notice of 
     foreclosure sale under section 3406(a);
       ``(5) that the foreclosure was conducted in accordance with 
     the provisions of this subchapter; and
       ``(6) the sale amount.
       ``(b) Effect of Recitals.--The recitals set forth in 
     subsection (a) shall be prima facie evidence of the truth of 
     such recitals. Compliance with the requirements of subsection 
     (a) shall create a conclusive presumption of the validity of 
     the sale in favor of bona fide purchasers and encumbrancers 
     for value without notice.
       ``(c) Deed To Be Accepted for Filing.--The register of 
     deeds or other appropriate official of the county or counties 
     where real estate deeds are regularly filed shall accept for 
     filing and shall file the foreclosure trustee's deed and 
     affidavit, if any, and any other instruments submitted for 
     filing in relation to the foreclosure of the security 
     property under this subchapter.

     ``Sec. 3412. Effect of sale

       ``A sale conducted under this subchapter to a bona fide 
     purchaser shall bar all claims upon the security property 
     by--
       ``(1) any person to whom the notice of foreclosure sale was 
     mailed as provided in this subchapter who claims an interest 
     in the property subordinate to that of the mortgage, and the 
     heir, devisee, executor, administrator, successor, or 
     assignee claiming under any such person;
       ``(2) any person claiming any interest in the property 
     subordinate to that of the mortgage, if such person had 
     actual knowledge of the sale;
       ``(3) any person so claiming, whose assignment, mortgage, 
     or other conveyance was not filed in the proper place for 
     filing, or whose judgment or decree was not filed in the 
     proper place for filing, prior to the date of filing of the 
     notice of foreclosure sale as required by section 3406(a), 
     and the heir, devisee, executor, administrator, successor, or 
     assignee of such a person; or
       ``(4) any other person claiming under a statutory lien or 
     encumbrance not required to be filed and attaching to the 
     title or interest of any person designated in any of the 
     foregoing subsections of this section.

     ``Sec. 3413. Disposition of sale proceeds

       ``(a) Distribution of Sale Proceeds.--The foreclosure 
     trustee shall distribute the proceeds of the foreclosure sale 
     in the following order:
       ``(1)(A) First, to pay the commission of the foreclosure 
     trustee, other than an agency employee, the greater of--
       ``(i) the sum of--
       ``(I) 3 percent of the first $1,000 collected, plus
       ``(II) 1.5 percent on the excess of any sum collected over 
     $1,000; or
       ``(ii) $250.
       ``(B) The amounts described in subparagraph (A)(i) shall be 
     computed on the gross proceeds of all security property sold 
     at a single sale.
       ``(2) Thereafter, to pay the expense of any auctioneer 
     employed by the foreclosure trustee, if any, except that the 
     commission payable to the foreclosure trustee pursuant to 
     paragraph (1) shall be reduced by the amount paid to an 
     auctioneer, unless the agency head determines that such 
     reduction would adversely affect the ability of the agency 
     head to retain qualified foreclosure trustees or auctioneers.
       ``(3) Thereafter, to pay for the costs of foreclosure, 
     including--
       ``(A) reasonable and necessary advertising costs and 
     postage incurred in giving notice pursuant to section 3406;
       ``(B) mileage for posting notices and for the foreclosure 
     trustee's or auctioneer's attendance at the sale at the rate 
     provided in section 1921 of title 28, United States Code, for 
     mileage by the most reasonable road distance;
       ``(C) reasonable and necessary costs actually incurred in 
     connection with any search of title and lien records; and
       ``(D) necessary costs incurred by the foreclosure trustee 
     to file documents.
       ``(4) Thereafter, to pay valid real property tax liens or 
     assessments, if required by the notice of foreclosure sale.
       ``(5) Thereafter, to pay any liens senior to the mortgage, 
     if required by the notice of foreclosure sale.
       ``(6) Thereafter, to pay service charges and advancements 
     for taxes, assessments, and property insurance premiums.
       ``(7) Thereafter, to pay late charges and other 
     administrative costs and the principal and interest balances 
     secured by the mortgage, including expenditures for the 
     necessary protection, preservation, and repair of the 
     security property as authorized under the debt instrument or 
     mortgage and interest thereon if provided for in the debt 
     instrument or mortgage, pursuant to the agency's procedure.
       ``(b) Insufficient Proceeds.--In the event there are no 
     proceeds of sale or the proceeds are insufficient to pay the 
     costs and expenses set forth in subsection (a), the agency 
     head shall pay such costs and expenses as authorized by 
     applicable law.
       ``(c) Surplus Monies.--
       ``(1) After making the payments required by subsection (a), 
     the foreclosure trustee shall--
       ``(A) distribute any surplus to pay liens in the order of 
     priority under Federal law or the law of the State where the 
     security property is located; and
       ``(B) pay to the person who was the owner of record on the 
     date the notice of foreclosure sale was filed the balance, if 
     any, after any payments made pursuant to paragraph (1).
       ``(2) If the person to whom such surplus is to be paid 
     cannot be located, or if the surplus available is 
     insufficient to pay all claimants and the claimants cannot 
     agree on the distribution of the surplus, that portion of the 
     sale proceeds may be deposited by the foreclosure trustee 
     with an appropriate official authorized under law to receive 
     funds under such circumstances. If such a procedure for the 
     deposit of disputed funds is not available, and the 
     foreclosure trustee files a bill of interpleader or is sued 
     as a stakeholder to determine entitlement to such funds, the 
     foreclosure trustee's necessary costs in taking or defending 
     such action shall be deducted first from the disputed funds.

     ``Sec. 3414. Deficiency judgment

       ``(a) In General.--If after deducting the disbursements 
     described in section 3413, the price at which the security 
     property is sold at a foreclosure sale is insufficient to pay 
     the unpaid balance of the debt secured by the security 
     property, counsel for the United States may commence an 
     action or actions against any or all debtors to recover the 
     deficiency, unless specifically prohibited by the mortgage. 
     The United States is also entitled to recover any amount 
     authorized by section 3011 and costs of the action.
       ``(b) Limitation.--Any action commenced to recover the 
     deficiency shall be brought within 6 years of the last sale 
     of security property.
       ``(c) Credits.--The amount payable by a private mortgage 
     guaranty insurer shall be 

[[Page H11040]]

     credited to the account of the debtor prior to the 
     commencement of an action for any deficiency owed by the 
     debtor. Nothing in this subsection shall curtail or limit the 
     subrogation rights of a private mortgage guaranty insurer.''.
             TITLE VI--COMMITTEE ON INTERNATIONAL RELATIONS
     Subtitle A--Recovery Of Costs Of Certain Health Care Services

     SEC. 6001. RECOVERY OF COSTS OF HEALTH CARE SERVICES FOR 
                   PERSONNEL OF THE FOREIGN SERVICE OF THE UNITED 
                   STATES AND OTHER ELIGIBLE INDIVIDUALS.

       (a) Authorities.--Section 904 of the Foreign Service Act of 
     1980 (22 U.S.C. 4084) is amended--
       (1) in subsection (a) by--
       (A) striking ``and'' before ``members of the families of 
     such members and employees''; and
       (B) by inserting immediately before the period ``, and for 
     care provided abroad) such other persons as are designated by 
     the Secretary of State, except that such persons shall be 
     considered persons other than covered beneficiaries for 
     purposes of subsections (g) and (h)'';
       (2) in subsection (d) by inserting ``, subject to the 
     provisions of subsections (g) and (h)'' after ``treatment''; 
     and
       (3) by adding the following new subsections:
       ``(g)(1) In the case of a person who is a covered 
     beneficiary, the Secretary of State is authorized to collect 
     from a third-party payer the reasonable costs incurred by the 
     Department of State on behalf of such person for health care 
     services to the same extent that the covered beneficiary 
     would be eligible to receive reimbursement or indemnification 
     from the third-party payer for such costs.
       ``(2) If the insurance policy, plan, contract, or similar 
     agreement of that third-party payer includes a requirement 
     for a deductible or copayment by the beneficiary of the plan, 
     then the Secretary of State may collect from the third-party 
     payer only the reasonable costs of the care provided less the 
     deductible or copayment amount.
       ``(3) A covered beneficiary shall not be required to pay 
     any deductible or copayment for health care services under 
     this subsection.
       ``(4) No provision of any insurance, medical service, or 
     health plan contract or agreement having the effect of 
     excluding from coverage or limiting payment of charges for 
     care in the following circumstances shall operate to prevent 
     collection by the Secretary of State under paragraph (1)--
       ``(A) care provided directly or indirectly by a 
     governmental entity;
       ``(B) care provided to an individual who has not paid a 
     required deductible or copayment; or
       ``(C) care provided by a provider with which the third-
     party payer has no participation agreement.
       ``(5) No law of any State, or of any political subdivision 
     of a State, and no provision of any contract or agreement 
     shall operate to prevent or hinder recovery or collection by 
     the United States under this section.
       ``(6) As to the authority provided in paragraph (1) of this 
     subsection--
       ``(A) the United States shall be subrogated to any right or 
     claim that the covered beneficiary may have against a third-
     party payer;
       ``(B) the United States may institute and prosecute legal 
     proceedings against a third-party payer to enforce a right of 
     the United States under this subsection; and
       ``(C) the Secretary may compromise, settle, or waive a 
     claim of the United States under this subsection.
       ``(7) The Secretary shall prescribe regulations for the 
     administration of this subsection and subsection (h). Such 
     regulations shall provide for computation of the reasonable 
     cost of health care services.
       ``(8) Regulations prescribed under this subsection shall 
     provide that medical records of a covered beneficiary 
     receiving health care under this subsection shall be made 
     available for inspection and review by representatives of the 
     payer from which collection by the United States is sought 
     for the sole purpose of permitting the third party to 
     verify--
       ``(A) that the care or services for which recovery or 
     collection is sought were furnished to the covered 
     beneficiary; and
       ``(B) that the provisions of such care or services to the 
     covered beneficiary meets criteria generally applicable under 
     the health plan contract involved, except that this paragraph 
     shall be subject to the provisions of paragraphs (2) and (4).
       ``(9) Amounts collected under this subsection or under 
     subsection (h) from a third party payer or from any other 
     payer shall be deposited in the Treasury as a miscellaneous 
     offsetting receipt.
       ``(10) For purposes of this section--
       ``(A) the term `covered beneficiary' means an individual 
     eligible to receive health care under this section whose 
     health care costs are to be paid by a third-party payer under 
     a contractual agreement with such payer;
       ``(B) the term `services', as used in `health care 
     services' includes products; and
       ``(C) the term `third-party payer' means an entity that 
     provides a fee-for-service insurance policy, contract, or 
     similar agreement through the Federal Employees Health 
     Benefit program, under which the expenses of health care 
     services for individuals are paid.
       ``(h) In the case of a person, other than a covered 
     beneficiary, who receives health care services pursuant to 
     this section, the Secretary of State is authorized to collect 
     from such person the reasonable costs of health care services 
     incurred by the Department of State on behalf of such person. 
     The United States shall have the same rights against persons 
     subject to the provisions of this subsection as against 
     third-party payers covered by subsection (g).''.
       (b) Effective Date.--The authorities of this section shall 
     be effective beginning on the date of the enactment of this 
     Act.
       Subtitle B--Enactment Into Law of Division A of H.R. 1561

     SEC. 6101. ENACTMENT INTO LAW OF DIVISION A OF H.R. 1561.

       Division A of H.R. 1561, as passed the House of 
     Representatives on June 8, 1995 (relating to consolidation of 
     foreign affairs agencies), is hereby enacted into law.
Subtitle C--Cuban Liberty and Democratic Solidarity (LIBER- TAD) Act of 
                                  1995

     SEC. 6201. SHORT TITLE.

       This subtitle may be cited as the ``Cuban Liberty and 
     Democratic Solidarity (LIBERTAD) Act of 1995''.

     SEC. 6202. FINDINGS.

       The Congress makes the following findings:
       (1) The economy of Cuba has experienced a decline of at 
     least 60 percent in the last 5 years as a result of--
       (A) the end of its subsidization by the former Soviet Union 
     of between 5 billion and 6 billion dollars annually;
       (B) 36 years of Communist tyranny and economic 
     mismanagement by the Castro government;
       (C) the extreme decline in trade between Cuba and the 
     countries of the former Soviet bloc; and
       (D) the stated policy of the Russian Government and the 
     countries of the former Soviet bloc to conduct economic 
     relations with Cuba on strictly commercial terms.
       (2) At the same time, the welfare and health of the Cuban 
     people have substantially deteriorated as a result of this 
     economic decline and the refusal of the Castro regime to 
     permit free and fair democratic elections in Cuba.
       (3) The Castro regime has made it abundantly clear that it 
     will not engage in any substantive political reforms that 
     would lead to democracy, a market economy, or an economic 
     recovery.
       (4) The repression of the Cuban people, including a ban on 
     free and fair democratic elections, and continuing violations 
     of fundamental human rights have isolated the Cuban regime as 
     the only completely nondemocratic government in the Western 
     Hemisphere.
       (5) As long as free elections are not held in Cuba, the 
     economic condition of the country and the welfare of the 
     Cuban people will not improve in any significant way.
       (6) The totalitarian nature of the Castro regime has 
     deprived the Cuban people of any peaceful means to improve 
     their condition and has led thousands of Cuban citizens to 
     risk or lose their lives in dangerous attempts to escape from 
     Cuba to freedom.
       (7) Radio Marti and Television Marti have both been 
     effective vehicles for providing the people of Cuba with news 
     and information and have helped to bolster the morale of the 
     people of Cuba living under tyranny.
       (8) The consistent policy of the United States towards Cuba 
     since the beginning of the Castro regime, carried out by both 
     Democratic and Republican administrations, has sought to keep 
     faith with the people of Cuba, and has been effective in 
     sanctioning the totalitarian Castro regime.
       (9) The United States has shown a deep commitment, and 
     considers it a moral obligation, to promote and protect human 
     rights and fundamental freedoms as expressed in the Charter 
     of the United Nations and in the Universal Declaration of 
     Human Rights.
       (10) The Congress has historically and consistently 
     manifested its solidarity and the solidarity of the American 
     people with the democratic aspirations of the Cuban people.
       (11) The Cuban Democracy Act of 1992 calls upon the 
     President to encourage the governments of countries that 
     conduct trade with Cuba to restrict their trade and credit 
     relations with Cuba in a manner consistent with the purposes 
     of that Act.
       (12) The 1992 FREEDOM Support Act requires that the 
     President, in providing economic assistance to Russia and the 
     emerging Eurasian democracies, take into account the extent 
     to which they are acting to ``terminate support for the 
     communist regime in Cuba, including removal of troops, 
     closing military facilities, and ceasing trade subsidies and 
     economic, nuclear, and other assistance''.
       (13) The Cuban Government engages in the illegal 
     international narcotics trade and harbors fugitives from 
     justice in the United States.
       (14) The Castro government threatens international peace 
     and security by engaging in acts of armed subversion and 
     terrorism such as the training and supplying of groups 
     dedicated to international violence.
       (15) The Castro government has utilized from its inception 
     and continues to utilize torture in various forms (including 
     by psychiatry), as well as execution, exile, confiscation, 
     political imprisonment, and other forms of terror and 
     repression, as means of retaining power.

[[Page H11041]]

       (16) Fidel Castro has defined democratic pluralism as 
     ``pluralistic garbage'' and continues to make clear that he 
     has no intention of tolerating the democratization of Cuban 
     society.
       (17) The Castro government holds innocent Cubans hostage in 
     Cuba by no fault of the hostages themselves solely because 
     relatives have escaped the country.
       (18) Although a signatory state to the 1928 Inter-American 
     Convention on Asylum and the International Covenant on Civil 
     and Political Rights (which protects the right to leave one's 
     own country), Cuba nevertheless surrounds embassies in its 
     capital by armed forces to thwart the right of its citizens 
     to seek asylum and systematically denies that right to the 
     Cuban people, punishing them by imprisonment for seeking to 
     leave the country and killing them for attempting to do so 
     (as demonstrated in the case of the confirmed murder of over 
     40 men, women, and children who were seeking to leave Cuba on 
     July 13, 1994).
       (19) The Castro government continues to utilize blackmail, 
     such as the immigration crisis with which it threatened the 
     United States in the summer of 1994, and other unacceptable 
     and illegal forms of conduct to influence the actions of 
     sovereign states in the Western Hemisphere in violation of 
     the Charter of the Organization of American States and other 
     international agreements and international law.
       (20) The United Nations Commission on Human Rights has 
     repeatedly reported on the unacceptable human rights 
     situation in Cuba and has taken the extraordinary step of 
     appointing a Special Rapporteur.
       (21) The Cuban Government has consistently refused access 
     to the Special Rapporteur and formally expressed its decision 
     not to ``implement so much as one comma'' of the United 
     Nations Resolutions appointing the Rapporteur.
       (22) The United Nations General Assembly passed Resolution 
     1992/70 on December 4, 1992, Resolution 1993/48/142 on 
     December 20, 1993, and Resolution 1994/49/544 on October 19, 
     1994, referencing the Special Rapporteur's reports to the 
     United Nations and condemning ``violations of human rights 
     and fundamental freedoms'' in Cuba.
       (23) Article 39 of Chapter VII of the United Nations 
     Charter provides that the United Nations Security Council 
     ``shall determine the existence of any threat to the peace, 
     breach of the peace, or act of aggression and shall make 
     recommendations, or decide what measures shall be taken . . 
     ., to maintain or restore international peace and 
     security.''.
       (24) The United Nations has determined that massive and 
     systematic violations of human rights may constitute a 
     ``threat to peace'' under Article 39 and has imposed 
     sanctions due to such violations of human rights in the cases 
     of Rhodesia, South Africa, Iraq, and the former Yugoslavia.
       (25) In the case of Haiti, a neighbor of Cuba not as close 
     to the United States as Cuba, the United States led an effort 
     to obtain and did obtain a United Nations Security Council 
     embargo and blockade against that country due to the 
     existence of a military dictatorship in power less than 3 
     years.
       (26) United Nations Security Council Resolution 940 of July 
     31, 1994, subsequently authorized the use of ``all necessary 
     means'' to restore the ``democratically elected government of 
     Haiti'', and the democratically elected government of Haiti 
     was restored to power on October 15, 1994.
       (27) The Cuban people deserve to be assisted in a decisive 
     manner to end the tyranny that has oppressed them for 36 
     years and the continued failure to do so constitutes 
     ethically improper conduct by the international community.
       (28) For the past 36 years, the Cuban Government has posed 
     and continues to pose a national security threat to the 
     United States.

     SEC. 6203. PURPOSES.

       The purposes of this subtitle are as follows:
       (1) To assist the Cuban people in regaining their freedom 
     and prosperity, as well as in joining the community of 
     democracies that are flourishing in the Western Hemisphere.
       (2) To seek international sanctions against the Castro 
     government in Cuba.
       (3) To encourage the holding of free and fair democratic 
     elections in Cuba, conducted under the supervision of 
     internationally recognized observers.
       (4) To develop a plan for furnishing assistance to a 
     transition government and, subsequently, to a democratically 
     elected government when such governments meet the eligibility 
     requirements of this subtitle.
       (5) To protect property rights abroad of United States 
     nationals.
       (6) To provide for the continued national security of the 
     United States in the face of continuing threats from the 
     Castro government of terrorism, theft of property from United 
     States nationals, and domestic repression from which refugees 
     flee to United States shores.

     SEC. 6204. DEFINITIONS.

       As used in this subtitle, the following terms have the 
     following meanings:
       (1) Appropriate congressional committees.--The term 
     ``appropriate congressional committees'' means the Committee 
     on International Relations, the Committee on Ways and Means, 
     and the Committee on Appropriations of the House of 
     Representatives and the Committee on Foreign Relations, the 
     Committee on Finance, and the Committee on Appropriations of 
     the Senate.
       (2) Commercial activity.--The term ``commercial activity'' 
     has the meaning given that term in section 1603(d) of title 
     28, United States Code.
       (3) Confiscated.--As used in parts 1 and 3, the term 
     ``confiscated'' refers to--
       (A) the nationalization, expropriation, or other seizure by 
     the Cuban Government of ownership or control of property, on 
     or after January 1, 1959--
       (i) without the property having been returned or adequate 
     and effective compensation provided; or
       (ii) without the claim to the property having been settled 
     pursuant to an international claims settlement agreement or 
     other mutually accepted settlement procedure; and
       (B) the repudiation by the Cuban Government of, the default 
     by the Cuban Government on, or the failure by the Cuban 
     Government to pay, on or after January 1, 1959--
       (i) a debt of any enterprise which has been nationalized, 
     expropriated, or otherwise taken by the Cuban Government;
       (ii) a debt which is a charge on property nationalized, 
     expropriated, or otherwise taken by the Cuban Government; or
       (iii) a debt which was incurred by the Cuban Government in 
     satisfaction or settlement of a confiscated property claim.
       (4) Cuban government.--(A) The term ``Cuban Government'' 
     includes the government of any political subdivision of Cuba, 
     and any agency or instrumentality of the Government of Cuba.
       (B) For purposes of subparagraph (A), the term ``agency or 
     instrumentality of the Government of Cuba'' means an agency 
     or instrumentality of a foreign state as defined in section 
     1603(b) of title 28, United States Code, with ``Cuba'' 
     substituted for ``a foreign state'' each place it appears in 
     such section.
       (5) Democratically elected government in cuba.--The term 
     ``democratically elected government in Cuba'' means a 
     government determined by the President to have met the 
     requirements of section 206.
       (6) Economic embargo of cuba.--The term ``economic embargo 
     of Cuba'' refers to the economic embargo imposed against Cuba 
     pursuant to section 620(a) of the Foreign Assistance Act of 
     1961 (22 U.S.C. 2370(a)), section 5(b) of the Trading With 
     the Enemy Act (50 U.S.C. App. 5(b)), the International 
     Emergency Economic Powers Act (50 U.S.C. 1701 and following), 
     and the Export Administration Act of 1979 (50 U.S.C. App. 
     2401 and following), as modified by the Cuban Democracy Act 
     of 1992 (22 U.S.C. 6001 and following).
       (7) Foreign national.--The term ``foreign national'' 
     means--
       (A) an alien; or
       (B) any corporation, trust, partnership, or other juridical 
     entity not organized under the laws of the United States, or 
     of any State, the District of Columbia, the Commonwealth of 
     Puerto Rico, or any other territory or possession of the 
     United States.
       (8) Knowingly.--The term ``knowingly'' means with knowledge 
     or having reason to know.
       (9) Property.--(A) The term ``property'' means any property 
     (including patents, copyrights, trademarks, and any other 
     form of intellectual property), whether real, personal, or 
     mixed, and any present, future, or contingent right, 
     security, or other interest therein, including any leasehold 
     interest.
       (B) For purposes of part 3 of this subtitle, the term 
     ``property'' shall not include real property used for 
     residential purposes unless, as of the date of the enactment 
     of this Act--
       (i) the claim to the property is owned by a United States 
     national and the claim has been certified under title V of 
     the International Claims Settlement Act of 1949; or
       (ii) the property is occupied by a member or official of 
     the Cuban Government or the ruling political party in Cuba.
       (10) Traffics.--(A) As used in part 3, a person or entity 
     ``traffics'' in property if that person or entity knowingly 
     and intentionally--
       (i) sells, transfers, distributes, dispenses, brokers, 
     manages, or otherwise disposes of confiscated property, or 
     purchases, leases, receives, possesses, obtains control of, 
     manages, uses, or otherwise acquires or holds an interest in 
     confiscated property,
       (ii) engages in a commercial activity using or otherwise 
     benefiting from confiscated property, or
       (iii) causes, directs, participates in, or profits from, 
     trafficking (as described in clauses (i) and (ii)) by another 
     person, or otherwise engages in trafficking (as described in 
     clauses (i) and (ii)) through another person,

     without the authorization of the United States national who 
     holds a claim to the property.
       (B) The term ``traffics'' does not include--
       (i) the delivery of international telecommunication signals 
     to Cuba that are authorized by section 1705(e) of the Cuban 
     Democracy Act of 1992 (22 U.S.C. 6004(e)); or
       (ii) the trading or holding of securities publicly traded 
     or held, unless the trading is with or by a person determined 
     by the Secretary of the Treasury to be a specially designated 
     national.
       (11) Transition government in cuba.--The term ``transition 
     government in Cuba'' means a government determined by the 
     President to have met the requirements of section 6235.
       (12) United states national.--The term ``United States 
     national'' means--
       (A) any United States citizen; or
       (B) any other legal entity which is organized under the 
     laws of the United States, or of any State, the District of 
     Columbia, the 

[[Page H11042]]

     Commonwealth of Puerto Rico, or any other territory or 
     possession of the United States, and which has its 
     principal place of business in the United States.

        PART 1--SEEKING SANCTIONS AGAINST THE CASTRO GOVERNMENT

     SEC. 6211. STATEMENT OF POLICY.

       It is the sense of the Congress that--
       (1) the acts of the Castro government, including its 
     massive, systematic, and extraordinary violations of human 
     rights, are a threat to international peace;
       (2) the President should advocate, and should instruct the 
     United States Permanent Representative to the United Nations 
     to propose and seek, within the Security Council, a mandatory 
     international embargo against the totalitarian Cuban 
     Government pursuant to chapter VII of the Charter of the 
     United Nations, which is similar to measures taken by United 
     States representatives with respect to Haiti; and
       (3) any resumption or commencement of efforts by any state 
     to make operational the nuclear facility at Cienfuegos, Cuba, 
     will have a detrimental impact on United States assistance to 
     and relations with that state.

     SEC. 6212. ENFORCEMENT OF THE ECONOMIC EMBARGO OF CUBA.

       (a) Policy.--(1) The Congress hereby reaffirms section 
     1704(a) of the Cuban Democracy Act of 1992 that states the 
     President should encourage foreign countries to restrict 
     trade and credit relations with Cuba.
       (2) The Congress further urges the President to take 
     immediate steps to apply the sanctions described in section 
     1704(b) of that Act against countries assisting Cuba.
       (b) Diplomatic Efforts.--The Secretary of State shall 
     ensure that United States diplomatic personnel abroad 
     understand and, in their contacts with foreign officials, are 
     communicating the reasons for the United States economic 
     embargo of Cuba, and are urging foreign governments to 
     cooperate more effectively with the embargo.
       (c) Existing Regulations.--The President should instruct 
     the Secretary of the Treasury and the Attorney General to 
     enforce fully the Cuban Assets Control Regulations set forth 
     in part 515 of title 31, Code of Federal Regulations.
       (d) Trading With the Enemy Act.--
       (1) Civil penalties.--Subsection (b) of section 16 of the 
     Trading With the Enemy Act (50 U.S.C. App. 16(b)) is amended 
     to read as follows:
       ``(b)(1) A civil penalty of not to exceed $50,000 may be 
     imposed by the Secretary of the Treasury on any person who 
     violates any license, order, rule, or regulation issued in 
     compliance with the provisions of this Act.
       ``(2) Any property, funds, securities, papers, or other 
     articles or documents, or any vessel, together with its 
     tackle, apparel, furniture, and equipment, that is the 
     subject of a violation under paragraph (1) shall, at the 
     discretion of the Secretary of the Treasury, be forfeited to 
     the United States Government.
       ``(3) The penalties provided under this subsection may not 
     be imposed for--
       ``(A) news gathering, research, or the export or import of, 
     or transmission of, information or informational materials; 
     or
       ``(B) clearly defined educational or religious activities, 
     or activities of recognized human rights organizations, that 
     are reasonably limited in frequency, duration, and number of 
     participants.
       ``(4) The penalties provided under this subsection may be 
     imposed only on the record after opportunity for an agency 
     hearing in accordance with sections 554 through 557 of title 
     5, United States Code, with the right to prehearing 
     discovery.
       ``(5) Judicial review of any penalty imposed under this 
     subsection may be had to the extent provided in section 702 
     of title 5, United States Code.''.
       (2) Forfeiture of property used in violation.--Section 16 
     of the Trading With the Enemy Act is further amended by 
     striking subsection (c).
       (3) Clerical amendment.--Section 16 of the Trading With the 
     Enemy Act is further amended by inserting ``Sec. 16.'' before 
     ``(a)''.
       (e) Coverage of Debt-for-Equity Swaps by Economic Embargo 
     of Cuba.--Section 1704(b)(2) of the Cuban Democracy Act of 
     1992 (22 U.S.C. 6003(b)(2)) is amended--
       (1) by striking ``and'' at the end of subparagraph (A);
       (2) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (3) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) includes an exchange, reduction, or forgiveness of 
     Cuban debt owed to a foreign country in return for a grant of 
     an equity interest in a property, investment, or operation of 
     the Government of Cuba (including the government of any 
     political subdivision of Cuba, and any agency or 
     instrumentality of the Government of Cuba) or of a Cuban 
     national; and''; and
       (4) by adding at the end the following flush sentence:
     ``As used in this paragraph, the term `agency or 
     instrumentality of the Government of Cuba' means an agency or 
     instrumentality of a foreign state as defined in section 
     1603(b) of title 28, United States Code, with `Cuba' 
     substituted for `a foreign state' each place it appears in 
     such section.''.

     SEC. 6213. PROHIBITION AGAINST INDIRECT FINANCING OF THE 
                   CASTRO DICTATORSHIP.

       (a) Prohibition.--Notwithstanding any other provision of 
     law, no loan, credit, or other financing may be extended 
     knowingly by a United States national, permanent resident 
     alien, or United States agency, to a foreign national, United 
     States national, or permanent resident alien, in order to 
     finance transactions involving any confiscated property the 
     claim to which is owned by a United States national as of the 
     date of the enactment of this Act.
       (b) Termination of Prohibition.--The prohibition of 
     subsection (a) shall cease to apply on the date on which the 
     economic embargo of Cuba terminates under section 6235.
       (c) Penalties.--Violations of subsection (a) shall be 
     punishable by the same penalties as are applicable to 
     violations of the Cuban Assets Control Regulations set forth 
     in part 515 of title 31, Code of Federal Regulations.
       (d) Definitions.--As used in this section--
       (1) the term ``permanent resident alien'' means an alien 
     admitted for permanent residence into the United States; and
       (2) the term ``United States agency'' has the meaning given 
     the term ``agency'' in section 551(1) of title 5, United 
     States Code.

     SEC. 6214. UNITED STATES OPPOSITION TO CUBAN MEMBERSHIP IN 
                   INTERNATIONAL FINANCIAL INSTITUTIONS.

       (a) Opposition to Cuban Membership in International 
     Financial Institutions.--(1) Until such time as the President 
     determines that a transition government in Cuba is in power, 
     the Secretary of the Treasury should instruct the United 
     States executive director to each international financial 
     institution to use the voice and vote of the United States to 
     oppose the admission of Cuba as a member of such institution.
       (2) Once a transition government in Cuba is in power, the 
     President is encouraged to take steps to support the 
     processing of Cuba's application for membership in any 
     financial institution subject to the membership taking effect 
     at such time as the President deems most likely to facilitate 
     the transition to a democratically elected government in 
     Cuba.
       (b) Reduction in United States Payments to International 
     Financial Institutions.--If any international financial 
     institution approves a loan or other assistance to the Cuban 
     Government over the opposition of the United States, then the 
     Secretary of the Treasury shall withhold from payment to that 
     institution an amount equal to the amount of the loan or 
     other assistance to the Cuban Government, with respect to 
     each of the following types of payment:
       (1) The paid-in portion of the increase in capital stock of 
     the institution.
       (2) The callable portion of the increase in capital stock 
     of the institution.
       (c) Definition.--For purposes of this section, the term 
     ``international financial institution'' means the 
     International Monetary Fund, the International Bank for 
     Reconstruction and Development, the International Development 
     Association, the International Finance Corporation, the 
     Multilateral Investment Guaranty Agency, and the Inter-
     American Development Bank.

     SEC. 6215. UNITED STATES OPPOSITION TO ENDING THE SUSPENSION 
                   OF THE GOVERNMENT OF CUBA FROM THE ORGANIZATION 
                   OF AMERICAN STATES.

       The President should instruct the United States Permanent 
     Representative to the Organization of American States to use 
     the voice and vote of the United States to oppose ending the 
     suspension of the Government of Cuba from the Organization 
     until the President determines under section 6233(c)(3) that 
     a democratically elected government in Cuba is in power.

     SEC. 6216. ASSISTANCE BY THE INDEPENDENT STATES OF THE FORMER 
                   SOVIET UNION FOR THE CUBAN GOVERNMENT.

       (a) Reporting Requirement.--Not later than 90 days after 
     the date of the enactment of this Act, the President shall 
     submit to the appropriate congressional committees a report 
     detailing progress towards the withdrawal of personnel of any 
     independent state of the former Soviet Union (within the 
     meaning of section 3 of the FREEDOM Support Act (22 U.S.C. 
     5801)), including advisers, technicians, and military 
     personnel, from the Cienfuegos nuclear facility in Cuba.
       (b) Criteria for Assistance.--Section 498A(a)(11) of the 
     Foreign Assistance Act of 1961 (22 U.S.C. 2295a(a)(11)) is 
     amended by striking ``of military facilities'' and inserting 
     ``military and intelligence facilities, including the 
     military and intelligence facilities at Lourdes and 
     Cienfuegos''.
       (c) Ineligibility for Assistance.--(1) Section 498A(b) of 
     that Act (22 U.S.C. 2295a(b)) is amended--
       (A) by striking ``or'' at the end of paragraph (4);
       (B) by redesignating paragraph (5) as paragraph (6); and
       (C) by inserting after paragraph (4) the following:
       ``(5) for the government of any independent state effective 
     30 days after the President has determined and certified to 
     the appropriate congressional committees (and Congress has 
     not enacted legislation disapproving the determination within 
     that 30-day period) that such government is providing 
     assistance for, or engaging in nonmarket based trade (as 
     defined in section 498B(k)(3)) with, the Cuban Government; 
     or''.
       (2) Subsection (k) of section 498B of that Act (22 U.S.C. 
     2295b(k)), is amended by adding at the end the following:
       ``(3) Nonmarket based trade.--As used in section 
     498A(b)(5), the term `nonmarket based trade' includes 
     exports, imports, exchanges, or other arrangements that 
     are provided for goods and services (including oil 

[[Page H11043]]

     and other petroleum products) on terms more favorable than 
     those generally available in applicable markets or for 
     comparable commodities, including--
       ``(A) exports to the Cuban Government on terms that involve 
     a grant, concessional price, guaranty, insurance, or subsidy;
       ``(B) imports from the Cuban Government at preferential 
     tariff rates;
       ``(C) exchange arrangements that include advance delivery 
     of commodities, arrangements in which the Cuban Government is 
     not held accountable for unfulfilled exchange contracts, and 
     arrangements under which Cuba does not pay appropriate 
     transportation, insurance, or finance costs; and
       ``(D) the exchange, reduction, or forgiveness of Cuban debt 
     in return for a grant by the Cuban Government of an equity 
     interest in a property, investment, or operation of the Cuban 
     Government or of a Cuban national.
       ``(4) Cuban government.--(A) The term `Cuban Government' 
     includes the government of any political subdivision of Cuba, 
     and any agency or instrumentality of the Government of Cuba.
       ``(B) For purposes of subparagraph (A), the term `agency or 
     instrumentality of the Government of Cuba' means an agency or 
     instrumentality of a foreign state as defined in section 
     1603(b) of title 28, United States Code, with `Cuba' 
     substituted for `a foreign state' each place it appears in 
     such section.''.
       (d) Facilities at Lourdes, Cuba.--(1) The Congress 
     expresses its strong disapproval of the extension by Russia 
     of credits equivalent to approximately $200,000,000 in 
     support of the intelligence facility at Lourdes, Cuba, in 
     November 1994.
       (2) Section 498A of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2295a) is amended by adding at the end the following 
     new subsection:
       ``(d) Reduction in Assistance for Support of Intelligence 
     Facilities in Cuba.--(1) Notwithstanding any other provision 
     of law, the President shall withhold from assistance 
     provided, on or after the date of the enactment of this 
     subsection, for an independent state of the former Soviet 
     Union under this chapter an amount equal to the sum of 
     assistance and credits, if any, provided on or after such 
     date by such state in support of intelligence facilities in 
     Cuba, including the intelligence facility at Lourdes, Cuba.
       ``(2)(A) The President may waive the requirement of 
     paragraph (1) to withhold assistance if the President 
     certifies to the appropriate congressional committees that 
     the provision of such assistance is important to the national 
     security of the United States, and, in the case of such a 
     certification made with respect to Russia, if the President 
     certifies that the Russian Government has assured the United 
     States Government that the Russian Government is not sharing 
     intelligence data collected at the Lourdes facility with 
     officials or agents of the Cuban Government.
       ``(B) At the time of a certification made with respect to 
     Russia pursuant to subparagraph (A), the President shall also 
     submit to the appropriate congressional committees a report 
     describing the intelligence activities of Russia in Cuba, 
     including the purposes for which the Lourdes facility is used 
     by the Russian Government and the extent to which the Russian 
     Government provides payment or government credits to the 
     Cuban Government for the continued use of the Lourdes 
     facility.
       ``(C) The report required by subparagraph (B) may be 
     submitted in classified form.
       ``(D) For purposes of this paragraph, the term `appropriate 
     congressional committees' includes the Permanent Select 
     Committee on Intelligence of the House of Representatives and 
     the Select Committee on Intelligence of the Senate.
       ``(3) The requirement of paragraph (1) to withhold 
     assistance shall not apply with respect to--
       ``(A) assistance to meet urgent humanitarian needs, 
     including disaster and refugee relief;
       ``(B) democratic political reform and rule of law 
     activities;
       ``(C) technical assistance for safety upgrades of civilian 
     nuclear power plants;
       ``(D) the creation of private sector and nongovernmental 
     organizations that are independent of government control;
       ``(E) the development of a free market economic system; and
       ``(F) assistance for the purposes described in the 
     Cooperative Threat Reduction Act of 1993 (title XII of Public 
     Law 103-160).''.

     SEC. 6217. TELEVISION BROADCASTING TO CUBA.

       (a) Conversion to UHF.--The Director of the United States 
     Information Agency shall implement a conversion of television 
     broadcasting to Cuba under the Television Marti Service to 
     ultra high frequency (UHF) broadcasting.
       (b) Periodic Reports.--Not later than 45 days after the 
     date of the enactment of this Act, and every three months 
     thereafter until the conversion described in subsection (a) 
     is fully implemented, the Director of the United States 
     Information Agency shall submit a report to the appropriate 
     congressional committees on the progress made in carrying out 
     subsection (a).
       (c) Termination of Broadcasting Authorities.--Upon 
     transmittal of a determination under section 6233(c)(3), the 
     Television Broadcasting to Cuba Act (22 U.S.C. 1465aa and 
     following) and the Radio Broadcasting to Cuba Act (22 U.S.C. 
     1465 and following) are repealed.

     SEC. 6218. REPORTS ON ASSISTANCE AND COMMERCE RECEIVED BY 
                   CUBA FROM OTHER FOREIGN COUNTRIES.

       (a) Reports Required.--Not later than 90 days after the 
     date of the enactment of this Act, and every year thereafter, 
     the President shall submit a report to the appropriate 
     congressional committees on assistance and commerce received 
     by Cuba from other foreign countries during the preceding 12-
     month period.
       (b) Contents of Reports.--Each report required by 
     subsection (a) shall, for the period covered by the report, 
     contain the following, to the extent such information is 
     known:
       (1) A description of all bilateral assistance provided to 
     Cuba by other foreign countries, including humanitarian 
     assistance.
       (2) A description of Cuba's commerce with foreign 
     countries, including an identification of Cuba's trading 
     partners and the extent of such trade.
       (3) A description of the joint ventures completed, or under 
     consideration, by foreign nationals involving facilities in 
     Cuba, including an identification of the location of the 
     facilities involved and a description of the terms of 
     agreement of the joint ventures and the names of the parties 
     that are involved.
       (4) A determination whether or not any of the facilities 
     described in paragraph (3) is the subject of a claim by a 
     United States national.
       (5) A determination of the amount of Cuban debt owed to 
     each foreign country, including--
       (A) the amount of debt exchanged, forgiven, or reduced 
     under the terms of each investment or operation in Cuba 
     involving foreign nationals; and
       (B) the amount of debt owed to the foreign country that has 
     been exchanged, reduced, or forgiven in return for a grant by 
     the Cuban Government of an equity interest in a property, 
     investment, or operation of the Cuban Government or of a 
     Cuban national.
       (6) A description of the steps taken to ensure that raw 
     materials and semifinished or finished goods produced by 
     facilities in Cuba involving foreign nationals do not enter 
     the United States market, either directly or through third 
     countries or parties.
       (7) An identification of countries that purchase, or have 
     purchased, arms or military supplies from the Cuban 
     Government or that otherwise have entered into agreements 
     with the Cuban Government that have a military application, 
     including--
       (A) a description of the military supplies, equipment, or 
     other materiel sold, bartered, or exchanged between the Cuban 
     Government and such countries;
       (B) a listing of the goods, services, credits, or other 
     consideration received by the Cuban Government in exchange 
     for military supplies, equipment, or materiel; and
       (C) the terms or conditions of any such agreement.

     SEC. 6219. AUTHORIZATION OF SUPPORT FOR DEMOCRATIC AND HUMAN 
                   RIGHTS GROUPS AND INTERNATIONAL OBSERVERS.

       (a) Authorization.--Notwithstanding any other provision of 
     law, except for section 634A of the Foreign Assistance Act of 
     1961 (22 U.S.C. 2394-1) and comparable notification 
     requirements contained in any Act making appropriations for 
     foreign operations, export financing, and related programs, 
     the President is authorized to furnish assistance and provide 
     other support for individuals and independent nongovernmental 
     organizations to support democracy-building efforts for 
     Cuba, including the following:
       (1) Published and informational matter, such as books, 
     videos, and cassettes, on transitions to democracy, human 
     rights, and market economies, to be made available to 
     independent democratic groups in Cuba.
       (2) Humanitarian assistance to victims of political 
     repression, and their families.
       (3) Support for democratic and human rights groups in Cuba.
       (4) Support for visits and permanent deployment of 
     independent international human rights monitors in Cuba.
       (b) OAS Emergency Fund.--(1) The President shall take the 
     necessary steps to encourage the Organization of American 
     States to create a special emergency fund for the explicit 
     purpose of deploying human rights observers, election 
     support, and election observation in Cuba.
       (2) The President should instruct the United States 
     Permanent Representative to the Organization of American 
     States to encourage other member states of the Organization 
     to join in calling for the Cuban Government to allow the 
     immediate deployment of independent human rights monitors of 
     the Organization throughout Cuba and on-site visits to Cuba 
     by the Inter-American Commission on Human Rights.
       (3) Notwithstanding section 307 of the Foreign Assistance 
     Act of 1961 (22 U.S.C. 2227) or any other provision of law 
     limiting the United States proportionate share of assistance 
     to Cuba by any international organization, the President 
     should provide not less than $5,000,000 of the voluntary 
     contributions of the United States to the Organization of 
     American States as of the date of the enactment of this Act 
     solely for the purposes of the special fund referred to in 
     paragraph (1).

     SEC. 6220. WITHHOLDING OF FOREIGN ASSISTANCE FROM COUNTRIES 
                   SUPPORTING NUCLEAR PLANT IN CUBA.

       (a) Findings.--The Congress makes the following findings:
       (1) President Clinton stated in April 1993 that ``the 
     United States opposes the construction of the Juragua nuclear 
     power plant 

[[Page H11044]]

     because of our concerns about Cuba's ability to ensure the 
     safe operation of the facility and because of Cuba's refusal 
     to sign the Nuclear Non-Proliferation Treaty or ratify the 
     Treaty of Tlatelolco.''.
       (2) Cuba has not signed the Treaty on the Non-Proliferation 
     of Nuclear Weapons or ratified the Treaty of Tlatelolco, the 
     latter of which establishes Latin America and the Caribbean 
     as a nuclear weapons-free zone.
       (3) The State Department, the Nuclear Regulatory 
     Commission, and the Department of Energy have expressed 
     concerns about the construction and operation of Cuba's 
     nuclear reactors.
       (4) In a September 1992 report to Congress, the General 
     Accounting Office outlined concerns among nuclear energy 
     experts about deficiencies in the nuclear plant project in 
     Juragua, near Cienfuegos, Cuba, including--
       (A) a lack in Cuba of a nuclear regulatory structure;
       (B) the absence in Cuba of an adequate infrastructure to 
     ensure the plant's safe operation and requisite maintenance;
       (C) the inadequacy of training of plant operators;
       (D) reports by a former technician from Cuba who, by 
     examining with x-rays weld sites believed to be part of the 
     auxiliary plumbing system for the plant, found that 10 to 15 
     percent of those sites were defective;
       (E) since September 5, 1992, when construction on the plant 
     was halted, the prolonged exposure to the elements, including 
     corrosive salt water vapor, of the primary reactor 
     components; and
       (F) the possible inadequacy of the upper portion of the 
     reactors' dome retention capability to withstand only 7 
     pounds of pressure per square inch, given that normal 
     atmospheric pressure is 32 pounds per square inch and United 
     States reactors are designed to accommodate pressures of 50 
     pounds per square inch.
       (5) The United States Geological Survey claims that it had 
     difficulty determining answers to specific questions 
     regarding earthquake activity in the area near Cienfuegos 
     because the Cuban Government was not forthcoming with 
     information.
       (6) The Geological Survey has indicated that the Caribbean 
     plate, a geological formation near the south coast of Cuba, 
     may pose seismic risks to Cuba and the site of the power 
     plant, and may produce large to moderate earthquakes.
       (7) On May 25, 1992, the Caribbean plate produced an 
     earthquake numbering 7.0 on the Richter scale.
       (8) According to a study by the National Oceanic and 
     Atmospheric Administration, summer winds could carry 
     radioactive pollutants from a nuclear accident at the power 
     plant throughout all of Florida and parts of the States on 
     the gulf coast as far as Texas, and northern winds could 
     carry the pollutants as far northeast as Virginia and 
     Washington, D.C.
       (9) The Cuban Government, under dictator Fidel Castro, in 
     1962 advocated the Soviets' launching of nuclear missiles to 
     the United States, which represented a direct and dangerous 
     provocation of the United States and brought the world to the 
     brink of a nuclear conflict.
       (10) Fidel Castro over the years has consistently issued 
     threats against the United States Government, most recently 
     that he would unleash another perilous mass migration from 
     Cuba upon the enactment of this Act.
       (11) Despite the various concerns about the plant's safety 
     and operational problems, a feasibility study is being 
     conducted that would establish a support group to include 
     Russia, Cuba, and third countries with the objective of 
     completing and operating the plant.
       (b) Withholding of Foreign Assistance.--
       (1) In general.--Notwithstanding any other provision of 
     law, the President shall withhold from assistance allocated, 
     on or after the date of the enactment of this Act, for any 
     country an amount equal to the sum of assistance and credits, 
     if any, provided on or after such date of enactment by that 
     country or any entity in that country in support of the 
     completion of the Cuban nuclear facility at Juragua, near 
     Cienfuegos, Cuba.
       (2) Exceptions.--The requirement of paragraph (1) to 
     withhold assistance shall not apply with respect to--
       (A) assistance to meet urgent humanitarian needs, including 
     disaster and refugee relief;
       (B) democratic political reform and rule of law activities;
       (C) the creation of private sector and nongovernmental 
     organizations that are independent of government control;
       (D) the development of a free market economic system; and
       (E) assistance for the purposes described in the 
     Cooperative Threat Reduction Act of 1993 (title XII of Public 
     Law 103-160).
       (3) Definition.--As used in paragraph (1), the term 
     ``assistance'' means assistance under the Foreign Assistance 
     Act of 1961, credits, sales, and guarantees of extensions of 
     credit under the Arms Export Control Act, assistance under 
     titles I and III of the Agricultural Trade Development and 
     Assistance Act of 1954, assistance under the FREEDOM Support 
     Act of 1992, and any other program of assistance or credits 
     provided by the United States to other countries under other 
     provisions of law, except that the term ``assistance'' does 
     not include humanitarian assistance, including disaster 
     relief assistance.

     SEC. 6221. EXPULSION OF CRIMINALS FROM CUBA.

       The President shall instruct all United States Government 
     officials who engage in official conduct with the Cuban 
     Government to raise on a regular basis the extradition of or 
     rendering to the United States all persons residing in Cuba 
     who are sought by the United States Department of Justice for 
     crimes committed in the United States.

           PART 2--ASSISTANCE TO A FREE AND INDEPENDENT CUBA

     SEC. 6231. POLICY TOWARD A TRANSITION GOVERNMENT AND A 
                   DEMOCRATICALLY ELECTED GOVERNMENT IN CUBA.

       The policy of the United States is as follows:
       (1) To support the self-determination of the Cuban people.
       (2) To recognize that the self-determination of the Cuban 
     people is a sovereign and national right of the citizens of 
     Cuba which must be exercised free of interference by the 
     government of any other country.
       (3) To encourage the Cuban people to empower themselves 
     with a government which reflects the self-determination of 
     the Cuban people.
       (4) To recognize the potential for a difficult transition 
     from the current regime in Cuba that may result from the 
     initiatives taken by the Cuban people for self-determination 
     in response to the intransigence of the Castro regime in not 
     allowing any substantive political or economic reforms, and 
     to be prepared to provide the Cuban people with humanitarian, 
     developmental, and other economic assistance.
       (5) In solidarity with the Cuban people, to provide 
     appropriate forms of assistance--
       (A) to a transition government in Cuba;
       (B) to facilitate the rapid movement from such a transition 
     government to a democratically elected government in Cuba 
     that results from an expression of the self-determination of 
     the Cuban people; and
       (C) to support such a democratically elected government.
       (6) Through such assistance, to facilitate a peaceful 
     transition to representative democracy and a market economy 
     in Cuba and to consolidate democracy in Cuba.
       (7) To deliver such assistance to the Cuban people only 
     through a transition government in Cuba, through a 
     democratically elected government in Cuba, through United 
     States Government organizations, or through United States, 
     international, or indigenous nongovernmental organizations.
       (8) To encourage other countries and multilateral 
     organizations to provide similar assistance, and to work 
     cooperatively with such countries and organizations to 
     coordinate such assistance.
       (9) To ensure that appropriate assistance is rapidly 
     provided and distributed to the people of Cuba upon the 
     institution of a transition government in Cuba.
       (10) Not to provide favorable treatment or influence on 
     behalf of any individual or entity in the selection by the 
     Cuban people of their future government.
       (11) To assist a transition government in Cuba and a 
     democratically elected government in Cuba to prepare the 
     Cuban military forces for an appropriate role in a democracy.
       (12) To be prepared to enter into negotiations with a 
     democratically elected government in Cuba either to return 
     the United States Naval Base at Guantanamo to Cuba or to 
     renegotiate the present agreement under mutually agreeable 
     terms.
       (13) To consider the restoration of diplomatic recognition 
     and support the reintegration of the Cuban Government into 
     Inter-American organizations when the President determines 
     that there exists a democratically elected government in 
     Cuba.
       (14) To take steps to remove the economic embargo of Cuba 
     when the President determines that a transition to a 
     democratically elected government in Cuba has begun.
       (15) To assist a democratically elected government in Cuba 
     to strengthen and stabilize its national currency.
       (16) To pursue trade relations with a free, democratic, and 
     independent Cuba.

     SEC. 6232. ASSISTANCE FOR THE CUBAN PEOPLE.

       (a) Authorization.--
       (1) In general.--The President shall develop a plan for 
     providing economic assistance to Cuba at such time as the 
     President determines that a transition government or a 
     democratically elected government in Cuba (as determined 
     under section 6233(c)) is in power.
       (2) Effect on other laws.--Assistance may be provided under 
     this section subject to an authorization of appropriations 
     and subject to the availability of appropriations.
       (b) Plan for Assistance.--
       (1) Development of plan.--The President shall develop a 
     plan for providing assistance under this section--
       (A) to Cuba when a transition government in Cuba is in 
     power; and
       (B) to Cuba when a democratically elected government in 
     Cuba is in power.
       (2) Types of assistance.--Assistance under the plan 
     developed under paragraph (1) may, subject to an 
     authorization of appropriations and subject to the 
     availability of appropriations, include the following:
       (A) Transition government.--(i) Except as provided in 
     clause (ii), assistance to Cuba under a transition government 
     shall, subject to an authorization of appropriations and 
     subject to the availability of appropriations, be limited 
     to--

[[Page H11045]]

       (I) such food, medicine, medical supplies and equipment, 
     and assistance to meet emergency energy needs, as is 
     necessary to meet the basic human needs of the Cuban people; 
     and
       (II) assistance described in subparagraph (C).
       (ii) Assistance provided only after the President certifies 
     to the appropriate congressional committees, in accordance 
     with procedures applicable to reprogramming notifications 
     under section 634A of the Foreign Assistance Act of 1961, 
     that such assistance is essential to the successful 
     completion of the transition to democracy.
       (iii) Only after a transition government in Cuba is in 
     power, remittances by individuals to their relatives of cash 
     or goods, as well as freedom to travel to visit them without 
     any restrictions, shall be permitted.
       (B) Democratically elected government.--Assistance to a 
     democratically elected government in Cuba may, subject to an 
     authorization of appropriations and subject to the 
     availability of appropriations, consist of additional 
     economic assistance, together with assistance described in 
     subparagraph (C). Such economic assistance may include--
       (i) assistance under chapter 1 of part I (relating to 
     development assistance), and chapter 4 of part II (relating 
     to the economic support fund), of the Foreign Assistance Act 
     of 1961;
       (ii) assistance under the Agricultural Trade Development 
     and Assistance Act of 1954;
       (iii) financing, guarantees, and other forms of assistance 
     provided by the Export-Import Bank of the United States;
       (iv) financial support provided by the Overseas Private 
     Investment Corporation for investment projects in Cuba;
       (v) assistance provided by the Trade and Development 
     Agency;
       (vi) Peace Corps programs; and
       (vii) other appropriate assistance to carry out the policy 
     of section 6231.
       (C) Military adjustment assistance.--Assistance to a 
     transition government in Cuba and to a democratically elected 
     government in Cuba shall also include assistance in 
     preparing the Cuban military forces to adjust to an 
     appropriate role in a democracy.
       (c) Strategy for Distribution.--The plan developed under 
     subsection (b) shall include a strategy for distributing 
     assistance under the plan.
       (d) Distribution.--Assistance under the plan developed 
     under subsection (b) shall be provided through United States 
     Government organizations and nongovernmental organizations 
     and private and voluntary organizations, whether within or 
     outside the United States, including humanitarian, 
     educational, labor, and private sector organizations.
       (e) International Efforts.--The President shall take the 
     necessary steps--
       (1) to seek to obtain the agreement of other countries and 
     of international financial institutions and multilateral 
     organizations to provide to a transition government in Cuba, 
     and to a democratically elected government in Cuba, 
     assistance comparable to that provided by the United States 
     under this subtitle; and
       (2) to work with such countries, institutions, and 
     organizations to coordinate all such assistance programs.
       (f) Communication With the Cuban People.--The President 
     shall take the necessary steps to communicate to the Cuban 
     people the plan for assistance developed under this section.
       (g) Report to Congress.--Not later than 180 days after the 
     date of the enactment of this Act, the President shall 
     transmit to the appropriate congressional committees a report 
     describing in detail the plan developed under this section.
       (h) Trade and Investment Relations.--
       (1) Report to congress.--The President, following the 
     transmittal to the Congress of a determination under section 
     6233(c)(3) that a democratically elected government in Cuba 
     is in power, shall submit to the appropriate congressional 
     committees a report that describes--
       (A) acts, policies, and practices that constitute 
     significant barriers to, or distortions of, United States 
     trade in goods or services or foreign direct investment with 
     respect to Cuba;
       (B) policy objectives of the United States regarding trade 
     relations with a democratically elected government in Cuba, 
     and the reasons therefor, including possible--
       (i) reciprocal extension of nondiscriminatory trade 
     treatment (most-favored- nation treatment);
       (ii) designation of Cuba as a beneficiary developing 
     country under title V of the Trade Act of 1974 (relating to 
     the Generalized System of Preferences) or as a beneficiary 
     country under the Caribbean Basin Economic Recovery Act, and 
     the implications of such designation with respect to trade 
     with any other country that is such a beneficiary developing 
     country or beneficiary country or is a party to the North 
     American Free Trade Agreement; and
       (iii) negotiations regarding free trade, including the 
     accession of Cuba to the North American Free Trade Agreement;
       (C) specific trade negotiating objectives of the United 
     States with respect to Cuba, including the objectives 
     described in section 108(b)(5) of the North American Free 
     Trade Agreement Implementation Act (19 U.S.C. 3317(b)(5)); 
     and
       (D) actions proposed or anticipated to be undertaken, and 
     any proposed legislation necessary or appropriate, to achieve 
     any of such policy and negotiating objectives.
       (2) Consultations.--The President shall consult with the 
     appropriate congressional committees and shall seek advice 
     from the appropriate advisory committees established under 
     section 135 of the Trade Act of 1974 regarding the policy and 
     negotiating objectives and the legislative proposals 
     described in paragraph (1).

     SEC. 6233. COORDINATION OF ASSISTANCE PROGRAM; IMPLEMENTATION 
                   AND REPORTS TO CONGRESS; REPROGRAMMING.

       (a) Coordinating Official.--The President shall designate a 
     coordinating official who shall be responsible for--
       (1) implementing the strategy for distributing assistance 
     described in section 6232(b);
       (2) ensuring the speedy and efficient distribution of such 
     assistance; and
       (3) ensuring coordination among, and appropriate oversight 
     by, the agencies of the United States that provide assistance 
     described in section 6232(b), including resolving any 
     disputes among such agencies.
       (b) United States-Cuba Council.--Upon making a 
     determination under subsection (c)(3) that a democratically 
     elected government in Cuba is in power, the President, after 
     consultation with the coordinating official, is authorized to 
     designate a United States-Cuba council--
       (1) to ensure coordination between the United States 
     Government and the private sector in responding to change in 
     Cuba, and in promoting market-based development in Cuba; and
       (2) to establish periodic meetings between representatives 
     of the United States and Cuban private sectors for the 
     purpose of facilitating bilateral trade.
       (c) Implementation of Plan; Reports to Congress.--
       (1) Implementation with respect to transition government.--
     Upon making a determination that a transition government in 
     Cuba is in power, the President shall transmit that 
     determination to the appropriate congressional committees and 
     shall, subject to an authorization of appropriations and 
     subject to the availability of appropriations, commence the 
     delivery and distribution of assistance to such transition 
     government under the plan developed under section 6232(b).
       (2) Reports to congress.--(A) The President shall transmit 
     to the appropriate congressional committees a report setting 
     forth the strategy for providing assistance described in 
     section 6232(b)(2) (A) and (C) to the transition government 
     in Cuba under the plan of assistance developed under section 
     6232(b), the types of such assistance, and the extent to 
     which such assistance has been distributed in accordance with 
     the plan.
       (B) The President shall transmit the report not later than 
     90 days after making the determination referred to in 
     paragraph (1), except that the President shall transmit the 
     report in preliminary form not later than 15 days after 
     making that determination.
       (3) Implementation with respect to democratically elected 
     government.--The President shall, upon determining that a 
     democratically elected government in Cuba is in power, submit 
     that determination to the appropriate congressional 
     committees and shall, subject to an authorization of 
     appropriations and subject to the availability of 
     appropriations, commence the delivery and distribution of 
     assistance to such democratically elected government under 
     the plan developed under section 6232(b).
       (4) Annual reports to congress.--Not later than 60 days 
     after the end of each fiscal year, the President shall 
     transmit to the appropriate congressional committees a report 
     on the assistance provided under the plan developed under 
     section 6232(b), including a description of each type of 
     assistance, the amounts expended for such assistance, and a 
     description of the assistance to be provided under the plan 
     in the current fiscal year.
       (d) Reprogramming.--Any changes in the assistance to be 
     provided under the plan developed under section 6232(b) may 
     not be made unless the President notifies the appropriate 
     congressional committees at least 15 days in advance in 
     accordance with the procedures applicable to reprogramming 
     notifications under section 634A of the Foreign Assistance 
     Act of 1961 (22 U.S.C. 2394-1).

     SEC. 6234. TERMINATION OF THE ECONOMIC EMBARGO OF CUBA.

       (a) Presidential Actions.--Upon submitting a determination 
     to the appropriate congressional committees under section 
     6233(c)(1) that a transition government in Cuba is in power, 
     the President, after consulting with the Congress, is 
     authorized to take steps to suspend the economic embargo of 
     Cuba to the extent that such action contributes to a stable 
     foundation for a democratically elected government in Cuba.
       (b) Suspension of Certain Provisions of Law.--In carrying 
     out subsection (a), the President may suspend the enforcement 
     of--
       (1) section 620(a) of the Foreign Assistance Act of 1961 
     (22 U.S.C. 2370(a));
       (2) section 620(f) of the Foreign Assistance Act of 1961 
     (22 U.S.C. 2370(f)) with regard to the ``Republic of Cuba'';
       (3) sections 1704, 1705(d), and 1706 of the Cuban Democracy 
     Act (22 U.S.C. 6003, 6004(d), 6005);
       (4) section 902(c) of the Food Security Act of 1985; and
       (5) the prohibitions on transactions described in part 515 
     of title 31, Code of Federal Regulations.

[[Page H11046]]

       (c) Additional Presidential Actions.--Upon submitting a 
     determination to the appropriate congressional committees 
     under section 6233(c)(3) that a democratically elected 
     government in Cuba is in power, the President shall take 
     steps to terminate the economic embargo of Cuba.
       (d) Conforming Amendments.--On the date on which the 
     President submits a determination under section 6233(c)(3)--
       (1) section 620(a) of the Foreign Assistance Act of 1961 
     (22 U.S.C. 2370(a)) is repealed;
       (2) section 620(f) of the Foreign Assistance Act of 1961 
     (22 U.S.C. 2370(f)) is amended by striking ``Republic of 
     Cuba'';
       (3) sections 1704, 1705(d), and 1706 of the Cuban Democracy 
     Act of 1992 (22 U.S.C. 6003, 6004(d), and 6005) are repealed; 
     and
       (4) section 902(c) of the Food Security Act of 1985 is 
     repealed.
       (e) Review of Suspension of Economic Embargo.--
       (1) Review.--If the President takes action under subsection 
     (a) to suspend the economic embargo of Cuba, the President 
     shall immediately so notify the Congress. The President shall 
     report to the Congress no less frequently than every 6 months 
     thereafter, until he submits a determination under section 
     6233(c)(3) that a democratically elected government in Cuba 
     is in power, on the progress being made by Cuba toward the 
     establishment of such a democratically elected government. 
     The action of the President under subsection (a) shall cease 
     to be effective upon the enactment of a joint resolution 
     described in paragraph (2).
       (2) Joint resolutions.--For purposes of this subsection, 
     the term ``joint resolution'' means only a joint resolution 
     of the 2 Houses of Congress, the matter after the resolving 
     clause of which is as follows: ``That the Congress 
     disapproves the action of the President under section 6234(a) 
     of the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act 
     of 1995 to suspend the economic embargo of Cuba, notice of 
     which was submitted to the Congress on ____.'', with the 
     blank space being filled with the appropriate date.
       (3) Referral to committees.--Joint resolutions introduced 
     in the House of Representatives shall be referred to the 
     Committee on International Relations and joint resolutions 
     introduced in the Senate shall be referred to the Committee 
     on Foreign Relations.
       (4) Procedures.--(A) Any joint resolution shall be 
     considered in the Senate in accordance with the provisions of 
     section 601(b) of the International Security Assistance and 
     Arms Export Control Act of 1976.
       (B) For the purpose of expediting the consideration and 
     enactment of joint resolutions, a motion to proceed to the 
     consideration of any joint resolution after it has been 
     reported by the appropriate committee shall be treated as 
     highly privileged in the House of Representatives.
       (C) Not more than 1 joint resolution may be considered in 
     the House of Representatives and the Senate in the 6-month 
     period beginning on the date on which the President notifies 
     the Congress under paragraph (1) of the action taken under 
     subsection (a), and in each 6-month period thereafter.

     SEC. 6235. REQUIREMENTS FOR A TRANSITION GOVERNMENT.

       For purposes of this subtitle, a transition government in 
     Cuba is a government in Cuba which--
       (1) is demonstrably in transition from communist 
     totalitarian dictatorship to representative democracy;
       (2) has recognized the right to independent political 
     activity and association;
       (3) has released all political prisoners and allowed for 
     investigations of Cuban prisons by appropriate international 
     human rights organizations;
       (4) has ceased any interference with Radio or Television 
     Marti broadcasts;
       (5) makes public commitments to and is making demonstrable 
     progress in--
       (A) establishing an independent judiciary;
       (B) dissolving the present Department of State Security in 
     the Cuban Ministry of the Interior, including the Committees 
     for the Defense of the Revolution and the Rapid Response 
     Brigades;
       (C) respecting internationally recognized human rights and 
     basic freedoms as set forth in the Universal Declaration of 
     Human Rights, to which Cuba is a signatory nation;
       (D) effectively guaranteeing the rights of free speech and 
     freedom of the press;
       (E) organizing free and fair elections for a new 
     government--
       (i) to be held in a timely manner within a period not to 
     exceed 1 year after the transition government assumes power;
       (ii) with the participation of multiple independent 
     political parties that have full access to the media on an 
     equal basis, including (in the case of radio, television, or 
     other telecommunications media) in terms of allotments of 
     time for such access and the times of day such allotments are 
     given; and
       (iii) to be conducted under the supervision of 
     internationally recognized observers, such as the 
     Organization of American States, the United Nations, and 
     other elections monitors;
       (F) assuring the right to private property;
       (G) taking appropriate steps to return to United States 
     citizens (and entities which are 50 percent or more 
     beneficially owned by United States citizens) property taken 
     by the Cuban Government from such citizens and entities on or 
     after January 1, 1959, or to provide equitable compensation 
     to such citizens and entities for such property;
       (H) granting permits to privately owned telecommunications 
     and media companies to operate in Cuba; and
       (I) allowing the establishment of independent trade unions 
     as set forth in conventions 87 and 98 of the International 
     Labor Organization, and allowing the establishment of 
     independent social, economic, and political associations;
       (6) does not include Fidel Castro or Raul Castro;
       (7) has given adequate assurances that it will allow the 
     speedy and efficient distribution of assistance to the Cuban 
     people;
       (8) permits the deployment throughout Cuba of independent 
     and unfettered international human rights monitors; and
       (9) has extradited or otherwise rendered to the United 
     States all persons sought by the United States Department of 
     Justice for crimes committed in the United States.

     SEC. 6236. REQUIREMENTS FOR A DEMOCRATICALLY ELECTED 
                   GOVERNMENT.

       For purposes of this subtitle, a democratically elected 
     government in Cuba, in addition to continuing to comply with 
     the requirements of section 6235, is a government in Cuba 
     which--
       (1) results from free and fair elections conducted under 
     the supervision of internationally recognized observers;
       (2) has permitted opposition parties ample time to organize 
     and campaign for such elections, and has permitted full 
     access to the media to all candidates in the elections;
       (3) is showing respect for the basic civil liberties and 
     human rights of the citizens of Cuba;
       (4) has made demonstrable progress in establishing an 
     independent judiciary;
       (5) is substantially moving toward a market-oriented 
     economic system;
       (6) is committed to making constitutional changes that 
     would ensure regular free and fair elections that meet the 
     requirements of paragraph (2); and
       (7) has made demonstrable progress in returning to United 
     States citizens (and entities which are 50 percent or more 
     beneficially owned by United States citizens) property taken 
     by the Cuban Government from such citizens and entities on or 
     after January 1, 1959, or providing full compensation for 
     such property in accordance with international law standards 
     and practice.

   PART 3--PROTECTION OF PROPERTY RIGHTS OF UNITED STATES NATIONALS 
           AGAINST CONFISCATORY TAKINGS BY THE CASTRO REGIME

     SEC. 6251. STATEMENT OF POLICY.

       The Congress makes the following findings:
       (1) The right of individuals to hold and enjoy property is 
     a fundamental right recognized by the United States 
     Constitution and international human rights law, including 
     the Universal Declaration of Human Rights.
       (2) The illegal confiscation or taking of property by 
     governments, and the acquiescence of governments in the 
     confiscation of property by their citizens, undermines the 
     comity among nations, the free flow of commerce, and economic 
     development.
       (3) It is in the interest of all nations to respect equally 
     the property rights of their citizens and nationals of other 
     countries.
       (4) Nations that provide an effective mechanism for prompt, 
     adequate, and fair compensation for the confiscation of 
     private property will continue to have the support of the 
     United States.
       (5) The United States Government has an obligation to its 
     citizens to provide protection against illegal confiscation 
     by foreign nations and their citizens, including the 
     provision of private remedies.
       (6) Nations that illegally confiscate private property 
     should not be immune to another nation's laws whose purpose 
     is to protect against the confiscation of lawfully acquired 
     property by its citizens.
       (7) Trafficking in illegally acquired property is a crime 
     under the laws of the United States and other nations, yet 
     this same activity is allowed under international law.
       (8) International law, by not providing effective remedies, 
     condones the illegal confiscation of property and allows for 
     the unjust enrichment from the use of confiscated property by 
     governments and private entities at the expense of those who 
     hold legal claim to the property.
       (9) The development of an international mechanism 
     sanctioning those governments and private entities that 
     confiscate and unjustly use private property so confiscated 
     should be a priority objective of United States foreign 
     policy.

     SEC. 6252. LIABILITY FOR TRAFFICKING IN PROPERTY CONFISCATED 
                   FROM UNITED STATES NATIONALS.

       (a) Civil Remedy.--
       (1) Liability for trafficking.--(A) Except as provided in 
     paragraphs (3) and (4), any person, including any agency or 
     instrumentality of a foreign state in the conduct of a 
     commercial activity, that, after the end of the 6-month 
     period beginning on the date of the enactment of this Act, 
     traffics in confiscated property shall be liable to any 
     United States national who owns the claim to such property 
     for money damages in an amount equal to the sum of--
       (i) the amount which is the greater of--
       (I) the amount, if any, certified to the claimant by the 
     Foreign Claims Settlement Commission under the International 
     Claims Settlement Act of 1949, plus interest;
       (II) the amount determined under section 6253(a)(2), plus 
     interest; or
       (III) the fair market value of that property, calculated as 
     being the then current 

[[Page H11047]]

     value of the property, or the value of the property when 
     confiscated plus interest, whichever is greater; and
       (ii) reasonable costs and attorneys' fees.
       (B) Interest under subparagraph (A)(i) shall be at the rate 
     set forth in section 1961 of title 28, United States Code, 
     computed by the court from the date of the confiscation of 
     the property involved to the date on which the action is 
     brought under this subsection.
       (2) Presumption in favor of certified claims.--There shall 
     be a presumption that the amount for which a person, 
     including any agency or instrumentality of a foreign state in 
     the conduct of a commercial activity, is liable under clause 
     (i) of paragraph (1)(A) is the amount that is certified under 
     subclause (I) of that clause. The presumption shall be 
     rebuttable by clear and convincing evidence that the 
     amount described in subclause (II) or (III) of that clause 
     is the appropriate amount of liability under that clause.
       (3) Increased liability for prior notice.--Except as 
     provided in paragraph (4), any person, including any agency 
     or instrumentality of a foreign state in the conduct of a 
     commercial activity, that traffics in confiscated property 
     after having received--
       (A) notice of a claim to ownership of the property by a 
     United States national who owns a claim to the confiscated 
     property, and
       (B) notice of the provisions of this section,

     shall be liable to that United States national for money 
     damages in an amount which is the sum of the amount equal to 
     the amount determined under paragraph (1)(A)(ii) plus triple 
     the amount determined applicable under subclause (I), (II), 
     or (III) of paragraph (1)(A)(i).
       (4) Applicability.--(A) Except as otherwise provided in 
     this paragraph, actions may be brought under paragraph (1) 
     with respect to property confiscated before, on, or after the 
     date of the enactment of this Act.
       (B) In the case of property confiscated before the date of 
     the enactment of this Act, no United States national may 
     bring an action under this section unless such national 
     acquired ownership of the claim to the confiscated property 
     before such date.
       (C) In the case of property confiscated on or after the 
     date of the enactment of this Act, no United States national 
     who acquired ownership of a claim to confiscated property by 
     assignment for value after such date of enactment may bring 
     an action on the claim under this section.
       (5) Treatment of certain actions.--(A) In the case of any 
     action brought under this section by a United States national 
     who was eligible to file the underlying claim in the action 
     with the Foreign Claims Settlement Commission under title V 
     of the International Claims Settlement Act of 1949 but did 
     not so file the claim, the court may hear the case only if 
     the court determines that the United States national had good 
     cause for not filing the claim.
       (B) In the case of any action brought under this section by 
     a United States national whose claim in the action was timely 
     filed with the Foreign Claims Settlement Commission under 
     title V of the International Claims Settlement Act of 1949 
     but was denied by the Commission, the court may assess the 
     basis for the denial and may accept the findings of the 
     Commission on the claim as conclusive in the action under 
     this section unless good cause justifies another result.
       (6) Inapplicability of act of state doctrine.--No court of 
     the United States shall decline, based upon the act of state 
     doctrine, to make a determination on the merits in an action 
     brought under paragraph (1).
       (b) Definition.--As used in this subsection, the term 
     ``agency or instrumentality of a foreign state'' has the 
     meaning given that term in section 1603(b) of title 28, 
     United States Code.
       (c) Jurisdiction.--
       (1) In general.--Chapter 85 of title 28, United States 
     Code, is amended by inserting after section 1331 the 
     following new section:

     ``Sec. 1331a. Civil actions involving confiscated property

       ``The district courts shall have exclusive jurisdiction of 
     any action brought under section 6252 of the Cuban Liberty 
     and Democratic Solidarity (LIBERTAD) Act of 1995, regardless 
     of the amount in controversy.''.
       (2) Conforming amendment.--The table of sections for 
     chapter 85 of title 28, United States Code, is amended by 
     inserting after the item relating to section 1331 the 
     following:

``1331a. Civil actions involving confiscated property.''.

       (d) Certain Property Immune From Execution.--Section 1611 
     of title 28, United States Code, is amended by adding at the 
     end the following:
       ``(c) Notwithstanding the provisions of section 1610 of 
     this chapter, the property of a foreign state shall be immune 
     from attachment and from execution in an action brought under 
     section 6252 of the Cuban Liberty and Democratic Solidarity 
     (LIBERTAD) Act of 1995 to the extent the property is a 
     facility or installation used by an accredited diplomatic 
     mission for official purposes.''.
       (e) Election of Remedies.--
       (1) Election.--Subject to paragraph (2)--
       (A) any United States national that brings an action under 
     this section may not bring any other civil action or 
     proceeding under the common law, Federal law, or the law of 
     any of the several States, the District of Columbia, or any 
     territory or possession of the United States, that seeks 
     monetary or nonmonetary compensation by reason of the same 
     subject matter; and
       (B) any person who brings, under the common law or any 
     provision of law other than this section, a civil action or 
     proceeding for monetary or nonmonetary compensation arising 
     out of a claim for which an action would otherwise be 
     cognizable under this section may not bring an action under 
     this section on that claim.
       (2) Treatment of certified claimants.--In the case of any 
     United States national that brings an action under this 
     section based on a claim certified under title V of the 
     International Claims Settlement Act of 1949--
       (A) if the recovery in the action is equal to or greater 
     than the amount of the certified claim, the United States 
     national may not receive payment on the claim under any 
     agreement entered into between the United States and Cuba 
     settling claims covered by such title, and such national 
     shall be deemed to have discharged the United States from any 
     further responsibility to represent the United States 
     national with respect to that claim;
       (B) if the recovery in the action is less than the amount 
     of the certified claim, the United States national may 
     receive payment under a claims agreement described in 
     subparagraph (A) but only to the extent of the difference 
     between the amount of the recovery and the amount of the 
     certified claim; and
       (C) if there is no recovery in the action, the United 
     States national may receive payment on the certified claim 
     under a claims agreement described in subparagraph (A) to the 
     same extent as any certified claimant who does not bring an 
     action under this section.
       (f) Deposit of Excess Payments by Cuba Under Claims 
     Agreement.--Any amounts paid by Cuba under any agreement 
     entered into between the United States and Cuba settling 
     certified claims under title V of the International Claims 
     Settlement Act of 1949 that are in excess of the payments 
     made on such certified claims after the application of 
     subsection (e) shall be deposited into the United States 
     Treasury.
       (g) Termination of Rights.--
       (1) In general.--All rights created under this section to 
     bring an action for money damages with respect to property 
     confiscated before the date of the enactment of this Act 
     shall cease upon the transmittal to the Congress of a 
     determination of the President under section 6233(c)(3).
       (2) Pending suits.--The termination of rights under 
     paragraph (1) shall not affect suits commenced before the 
     date of such termination, and in all such suits, proceedings 
     shall be had, appeals taken, and judgments rendered in the 
     same manner and with the same effect as if this subsection 
     had not been enacted.

     SEC. 6253. DETERMINATION OF CLAIMS TO CONFISCATED PROPERTY.

       (a) Evidence of Ownership.--
       (1) Conclusiveness of certified claims.--In any action 
     brought under this part, the courts shall accept as 
     conclusive proof of ownership a certification of a claim to 
     ownership that has been made by the Foreign Claims Settlement 
     Commission pursuant to title V of the International Claims 
     Settlement Act of 1949 (22 U.S.C. 1643 and following).
       (2) Claims not certified.--In the case of a claim that has 
     not been certified by the Foreign Claims Settlement 
     Commission before the enactment of this Act, a court may 
     appoint a special master, including the Foreign Claims 
     Settlement Commission, to make determinations regarding the 
     amount and validity of claims to ownership of confiscated 
     property. Such determinations are only for evidentiary 
     purposes in civil actions brought under this part and do not 
     constitute certifications pursuant to title V of the 
     International Claims Settlement Act of 1949.
       (3) Effect of determinations of foreign entities.--In 
     determining ownership, courts shall not accept as conclusive 
     evidence of ownership any findings, orders, judgments, or 
     decrees from administrative agencies or courts of foreign 
     countries or international organizations that invalidate the 
     claim held by a United States national, unless the 
     invalidation was found pursuant to binding international 
     arbitration to which United States national submitted the 
     claim.
       (b) Amendment of the International Claims Settlement Act of 
     1949.--Title V of the International Claims Settlement Act of 
     1949 (22 U.S.C. 1643 and following) is amended by adding at 
     the end the following new section:


  ``evaluation of ownership claims referred by district courts of the 
                             united states

       ``Sec. 514. Notwithstanding any other provision of this 
     title and only for purposes of section 6252 the Cuban Liberty 
     and Solidarity (LIBERTAD) Act, a United States district 
     court, for fact-finding purposes, may refer to the 
     Commission, and the Commission may determine, questions of 
     the amount and ownership of a claim by a United States 
     national (as defined in section 6204 of the Cuban Liberty and 
     Solidarity (LIBERTAD) Act) resulting from the confiscation of 
     property by the Government of Cuba described in section 
     503(a), whether or not the United States national qualified 
     as a national of the United States (as defined in section 
     502(1)) at the time of the action by the Government of 
     Cuba.''.

[[Page H11048]]

       (c) Rule of Construction.--Nothing in this subtitle or 
     section 514 of the International Claims Settlement Act of 
     1949, as added by subsection (b), shall be construed--
       (1) to require or otherwise authorize the claims of Cuban 
     nationals who became United States citizens after their 
     property was confiscated to be included in the claims 
     certified to the Secretary of State by the Foreign Claims 
     Settlement Commission for purposes of future negotiation and 
     espousal of claims with a friendly government in Cuba when 
     diplomatic relations are restored; or
       (2) as superseding, amending, or otherwise altering 
     certifications that have been made pursuant to title V of the 
     International Claims Settlement Act of 1949 before the 
     enactment of this Act.

     SEC. 6254. EXCLUSIVITY OF FOREIGN CLAIMS SETTLEMENT 
                   COMMISSION CERTIFICATION PROCEDURE.

       Title V of the International Claims Settlement Act of 1949 
     (22 U.S.C. 1643 and following), as amended by section 6253, 
     is further amended by adding at the end the following new 
     section:


  ``exclusivity of foreign claims settlement commission certification 
                               procedure

       ``Sec. 515. (a) Subject to subsection (b), neither any 
     national of the United States who was eligible to file a 
     claim under section 503 but did not timely file such claim 
     under that section, nor any national of the United States (on 
     the date of the enactment of this section) who was not 
     eligible to file a claim under that section, nor any national 
     of Cuba, including any agency, instrumentality, subdivision, 
     or enterprise of the Government of Cuba or any local 
     government of Cuba in place on the date of the enactment of 
     this section, nor any successor thereto, whether or not 
     recognized by the United States, shall have a claim to, 
     participate in, or otherwise have an interest in, the 
     compensation proceeds or other nonmonetary compensation paid 
     or allocated to a national of the United States by virtue of 
     a claim certified by the Commission under section 507, nor 
     shall any court of the United States or any State court have 
     jurisdiction to adjudicate any such claim.
       ``(b) Nothing in subsection (a) shall be construed to 
     detract from or otherwise affect any rights in the shares of 
     the capital stock of nationals of the United States owning 
     claims certified by the Commission under section 507.''.

                  PART 4--EXCLUSION OF CERTAIN ALIENS

     SEC. 6271. EXCLUSION FROM THE UNITED STATES OF ALIENS WHO 
                   HAVE CONFISCATED PROPERTY OF UNITED STATES 
                   NATIONALS OR WHO TRAFFIC IN SUCH PROPERTY.

       (a) Grounds for Exclusion.--The Secretary of State, in 
     consultation with the Attorney General, shall exclude from 
     the United States any alien who the Secretary of State 
     determines is a person who--
       (1) has confiscated, or has directed or overseen the 
     confiscation of, property a claim to which is owned by a 
     United States national, or converts or has converted for 
     personal gain confiscated property, a claim to which is owned 
     by a United States national;
       (2) traffics in confiscated property, a claim to which is 
     owned by a United States national;
       (3) is a corporate officer, principal, or shareholder with 
     a controlling interest of an entity which has been involved 
     in the confiscation of property or trafficking in confiscated 
     property, a claim to which is owned by a United States 
     national; or
       (4) is a spouse, minor child, or agent of a person 
     excludable under paragraph (1), (2), or (3).
       (b) Definitions.--As used in this section, the following 
     terms have the following meanings:
       (1) Confiscated; confiscation.--The terms ``confiscated'' 
     and ``confiscation'' refer to--
       (A) the nationalization, expropriation, or other seizure by 
     foreign governmental authority of ownership or control of 
     property on or after January 1, 1959--
       (i) without the property having been returned or adequate 
     and effective compensation provided; or
       (ii) without the claim to the property having been settled 
     pursuant to an international claims settlement agreement or 
     other mutually accepted settlement procedure; and
       (B) the repudiation by foreign governmental authority of, 
     the default by foreign governmental authority on, or the 
     failure by foreign governmental authority to pay, on or after 
     January 1, 1959--
       (i) a debt of any enterprise which has been nationalized, 
     expropriated, or otherwise taken by foreign governmental 
     authority;
       (ii) a debt which is a charge on property nationalized, 
     expropriated, or otherwise taken by foreign governmental 
     authority; or
       (iii) a debt which was incurred by foreign governmental 
     authority in satisfaction or settlement of a confiscated 
     property claim.
       (2) Property.--The term ``property'' does not include 
     claims arising from a territory in dispute as a result of war 
     between United Nations member states in which the ultimate 
     resolution of the disputed territory has not been resolved.
       (3) Traffics.--(A) A person or entity ``traffics'' in 
     property if that person or entity knowingly and 
     intentionally--
       (i) sells, transfers, distributes, dispenses, brokers, 
     manages, or otherwise disposes of confiscated property, or 
     purchases, leases, receives, possesses, obtains control of, 
     manages, uses, or otherwise acquires or holds an interest in 
     confiscated property,
       (ii) engages in a commercial activity using or otherwise 
     benefiting from confiscated property, or
       (iii) causes, directs, participates in, or profits from, 
     trafficking (as described in clauses (i) and (ii)) by another 
     person, or otherwise engages in trafficking (as described in 
     clauses (i) and (ii)) through another person,

     without the authorization of the United States national who 
     holds a claim to the property.
       (B) The term ``traffics'' does not include--
       (i) the delivery of international telecommunication signals 
     to Cuba that are authorized by section 1705(e) of the Cuban 
     Democracy Act of 1992 (22 U.S.C. 6004(e)); or
       (ii) the trading or holding of securities publicly traded 
     or held, unless the trading is with or by a person determined 
     by the Secretary of the Treasury to be a specially designated 
     national.
       (c) National Interest Exemption.--This section shall not 
     apply where the Secretary of State finds, on a case-by-case 
     basis, that making a determination under subsection (a) would 
     be contrary to the national interest of the United States.
       (d) Effective Date.--
       (1) In general.--This section applies to aliens seeking to 
     enter the United States on or after the date of the enactment 
     of this Act.
       (2) Trafficking.--This section applies only with respect to 
     acts within the meaning of ``traffics'' that occur on or 
     after the date of the enactment of this Act.
                 TITLE VII--COMMITTEE ON THE JUDICIARY

     SEC. 7001. PATENT AND TRADEMARK FEES.

       Section 10101 of the Omnibus Budget Reconciliation Act of 
     1990 (35 U.S.C. 41 note) is amended--
       (1) in subsection (a) by striking ``1998'' and inserting 
     ``2002'';
       (2) in subsection (b)(2) by striking ``1998'' and inserting 
     ``2002''; and
       (3) in subsection (c)--
       (A) by striking ``through 1998'' and inserting ``through 
     2002''; and
       (B) by adding at the end the following:
       ``(9) $119,000,000 in fiscal year 1999.
       ``(10) $119,000,000 in fiscal year 2000.
       ``(11) $119,000,000 in fiscal year 2001.
       ``(12) $119,000,000 in fiscal year 2002.''.
               TITLE VIII--COMMITTEE ON NATIONAL SECURITY
                    Subtitle A--Military Retired Pay

     SEC. 8001. ELIMINATION OF DISPARITY BETWEEN EFFECTIVE DATES 
                   FOR MILITARY AND CIVILIAN RETIREE COST-OF-
                   LIVING ADJUSTMENTS FOR FISCAL YEARS 1996, 1997, 
                   AND 1998.

       (a) Conformance With Schedule for Civil Service COLAs.--
     Subparagraph (B) of section 1401a(b)(2) of title 10, United 
     States Code, is amended--
       (1) by striking out ``through 1998'' the first place it 
     appears and all that follows through ``In the case of'' the 
     second place it appears and inserting in lieu thereof 
     ``through 1996.--In the case of'';
       (2) by striking ``of 1994, 1995, 1996, or 1997'' and 
     inserting in lieu thereof ``of 1993, 1994, or 1995''; and
       (3) by striking out ``September'' and inserting in lieu 
     thereof ``March''.
       (b) Repeal of Prior Conditional Enactment.--Section 
     8114A(b) of Public Law 103-335 (108 Stat. 2648) is repealed.
                  Subtitle B--Naval Petroleum Reserves

     SEC. 8011. SALE OF NAVAL PETROLEUM RESERVES.

       (a) Sale of Reserves Required.--Chapter 641 of title 10, 
     United States Code, is amended by inserting after section 
     7421 the following new section:

     ``Sec. 7421a. Sale of naval petroleum reserves

       ``(a) Sale Required.--(1) Notwithstanding any other 
     provision of this chapter, the Secretary shall sell all 
     right, title, and interest of the United States in and to the 
     lands owned or controlled by the United States inside the 
     naval petroleum and oil shale reserves established by this 
     chapter. In the case of Naval Petroleum Reserve Numbered 1, 
     the lands to be sold shall include sections 16 and 36 of 
     township 30 south, range 23 east, Mount Diablo Principal 
     Meridian, California.
       ``(2) Not later than September 30, 1996, the Secretary 
     shall enter into one or more contracts for the sale of all of 
     the interest of the United States in the naval petroleum 
     reserves.
       ``(b) Timing and Administration of Sale.--(1) Not later 
     than January 1, 1996, the Secretary shall retain the services 
     of five independent experts in the valuation of oil and gas 
     fields to conduct separate assessments, in a manner 
     consistent with commercial practices, of the fair market 
     value of the interest of the United States in each naval 
     petroleum reserve. In making their assessments for each naval 
     petroleum reserve, the independent experts shall consider 
     (among other factors) all equipment and facilities to be 
     included in the sale, the net present value of the reserve, 
     and the net present value of the anticipated revenue stream 
     that the Secretary determines the Treasury would receive from 
     the reserve if it were not sold, adjusted for any anticipated 
     increases in tax revenues that would result if it were sold. 
     The independent experts shall complete their assessments not 
     later than June 1, 1996. In setting the minimum acceptable 
     price for each naval petroleum reserve, the Secretary shall 
     consider the average of the five assessments regarding the 
     reserve or, if more advantageous to the Government, the 
     average 

[[Page H11049]]

     of three assessments after excluding the high and low 
     assessments.
       ``(2) Not later than March 1, 1996, the Secretary shall 
     retain the services of an investment banker to independently 
     administer, in a manner consistent with commercial practices 
     and in a manner that maximizes sale proceeds to the 
     Government, the sale of the naval petroleum reserves under 
     this section. The Secretary may enter into the contracts 
     required under this paragraph and paragraph (1) on a 
     noncompetitive basis.
       ``(3) Not later than June 1, 1996, the sales administrator 
     selected under paragraph (2) shall complete a draft contract 
     for the sale of each naval petroleum reserve, which shall 
     accompany the invitation for bids and describe the terms and 
     provisions of the sale of the interest of the United States 
     in the reserve. Each draft contract shall identify all 
     equipment and facilities to be included in the sales. Each 
     draft contract, including the terms and provisions of the 
     sale of the interest of the United States in the naval 
     petroleum reserves, shall be subject to review and approval 
     by the Secretary, the Secretary of the Treasury, and the 
     Director of the Office of Management and Budget.
       ``(4) Not later than July 1, 1996, the Secretary shall 
     publish an invitation for bids for the purchase of the naval 
     petroleum reserves.
       ``(5) Not later than September 1, 1996, the Secretary shall 
     accept the highest responsible offer for purchase of the 
     interest of the United States in the naval petroleum 
     reserves, or a particular reserve, that meets or exceeds the 
     minimum acceptable price determined under paragraph (1). The 
     Secretary may accept an offer for only a portion of a reserve 
     so long as the entire reserve is still sold under this 
     section at a price that meets or exceeds the minimum 
     acceptable price.
       ``(c) Future Liabilities.--To effectuate the sale of the 
     interest of the United States in a naval petroleum reserve, 
     the Secretary may extend such indemnities and warranties as 
     the Secretary considers reasonable and necessary to protect 
     the purchaser from claims arising from the ownership in the 
     reserve by the United States.
       ``(d) Special Rules Preparatory to Sale of Naval Petroleum 
     Reserve Numbered 1.--(1) Not later than June 1, 1996, the 
     Secretary shall finalize equity interests of the known oil 
     and gas zones in Naval Petroleum Reserve Numbered 1 in the 
     manner provided by this subsection.
       ``(2) The Secretary shall retain the services of an 
     independent petroleum engineer, mutually acceptable to the 
     equity owners, who shall prepare a recommendation on final 
     equity figures. The Secretary may accept the recommendation 
     of the independent petroleum engineer for final equity in 
     each known oil and gas zone and establish final equity 
     interest in the Naval Petroleum Reserve Numbered 1 in 
     accordance with such recommendation, or the Secretary may use 
     such other method to establish final equity interest in that 
     reserve as the Secretary considers appropriate. The Secretary 
     may enter into the contract required under this paragraph on 
     a noncompetitive basis.
       ``(3) If, on the effective date of this section, there is 
     an ongoing equity redetermination dispute between the equity 
     owners under section 9(b) of the unit plan contract, such 
     dispute shall be resolved in the manner provided in the unit 
     plan contract not later than June 1, 1996. Such resolution 
     shall be considered final for all purposes under this 
     section.
       ``(4) In this section, the term `unit plan contract' means 
     the unit plan contract between equity owners of the lands 
     within the boundaries of Naval Petroleum Reserve Numbered 1 
     (Elk Hills) entered into on June 19, 1944.
       ``(e) Production Allocation Regarding Naval Petroleum 
     Reserve Numbered 1.--(1) As part of the contract for purchase 
     of Naval Petroleum Reserve Numbered 1, the purchaser of the 
     interest of the United States in that reserve shall agree to 
     make up to 25 percent of the purchaser's share of annual 
     petroleum production from the purchased lands available for 
     sale to small refiners, which do not have their own adequate 
     sources of supply of petroleum, for processing or use only in 
     their own refineries. None of the reserved production sold to 
     small refiners may be resold in kind. The purchaser of that 
     reserve may reduce the quantity of petroleum reserved under 
     this subsection in the event of an insufficient number of 
     qualified bids. The seller of this petroleum production has 
     the right to refuse bids that are less than the prevailing 
     market price of comparable oil.
       ``(2) The purchaser of Naval Petroleum Reserve Numbered 1 
     shall also agree to ensure that the terms of every sale of 
     the purchaser's share of annual petroleum production from the 
     purchased lands shall be so structured as to give full and 
     equal opportunity for the acquisition of petroleum by all 
     interested persons, including major and independent oil 
     producers and refiners alike.
       ``(f) Maintaining Production Pending Sale of Naval 
     Petroleum Reserve Numbered 1.--Until the sale of Naval 
     Petroleum Reserve Numbered 1 is completed under this section, 
     the Secretary shall continue to produce that reserve at the 
     maximum daily oil or gas rate from a reservoir, which will 
     permit maximum economic development of the reservoir 
     consistent with sound oil field engineering practices in 
     accordance with section 3 of the unit plan contract. The 
     definition of maximum efficient rate in section 7420(6) of 
     this title shall not apply to Naval Petroleum Reserve 
     Numbered 1.
       ``(g) Effect on Existing Contracts.--(1) In the case of any 
     contract, in effect on the effective date of this section, 
     for the purchase of production from any part of the United 
     States' share of the naval petroleum reserves, the sale of 
     the interest of the United States in the reserves shall be 
     subject to the contract for a period of three months after 
     the closing date of the sale or until termination of the 
     contract, whichever occurs first. The term of any contract 
     entered into after the effective date of this section for the 
     purchase of such production shall not exceed the anticipated 
     closing date for the sale of the reserve.
       ``(2) In the case of Naval Petroleum Reserve Numbered 1, 
     the Secretary shall exercise the termination procedures 
     provided in the contract between the United States and 
     Bechtel Petroleum Operation, Inc., Contract Number DE-ACO1-
     85FE60520 so that the contract terminates not later than the 
     date of closing of the sale of that reserve.
       ``(3) In the case of Naval Petroleum Reserve Numbered 1, 
     the Secretary shall exercise the termination procedures 
     provided in the unit plan contract so that the unit plan 
     contract terminates not later than the date of closing of the 
     sale of that reserve.
       ``(h) Offer of Settlement of State of California Claims 
     Regarding Naval Petroleum Reserve Numbered 1.--(1) In 
     connection with the sale of Naval Petroleum Reserve Numbered 
     1, the Secretary shall offer to settle all claims against the 
     United States by the State of California and the Teachers' 
     Retirement Fund of the State of California with respect to 
     lands within that reserve, including sections 16 and 36 of 
     township 30 south, range 23 east, Mount Diablo Principal 
     Meridian, California, or production or proceeds of sale from 
     that reserve. Subject to paragraph (2), the Secretary shall 
     offer in settlement of such claims--
       ``(A) a payment from funds provided for this purpose in 
     advance in appropriation Acts;
       ``(B) a grant of land pursuant to sections 2275 and 2276 of 
     the Revised Statutes of the United States (43 U.S.C. 851 and 
     852) so long as such land is not generating revenue for the 
     United States;
       ``(C) any other option that would not be inconsistent with 
     the Congressional Budget Act of 1974 (2 U.S.C. 621 et seq.); 
     or
       ``(D) any combination of subparagraphs (A), (B), and (C).
       ``(2) The value of any payment, grant, or option (or 
     combination thereof) offered as settlement under paragraph 
     (1) may not exceed an amount equal to seven percent of the 
     proceeds from the sale of Naval Petroleum Reserve Numbered 1, 
     after deducting the costs incurred to conduct the sale of 
     that reserve.
       ``(3) Acceptance of the settlement offered under paragraph 
     (1) shall be subject to the condition that all claims against 
     the United States by the State of California or the 
     Teachers' Retirement Fund of the State of California are 
     released with respect to lands within the Naval Petroleum 
     Reserve Numbered 1, including sections 16 and 36 of 
     township 30 south, range 23 east, Mount Diablo Principal 
     Meridian, California, or production or proceeds of sale 
     from that reserve. The Secretary may specify the manner in 
     which the release of such claims shall be evidenced.
       ``(i) Effect on Antitrust Laws.--Nothing in this section 
     shall be construed to alter the application of the antitrust 
     laws of the United States to the purchaser of a naval 
     petroleum reserve or to the lands in the naval petroleum 
     reserves subject to sale under this section upon the 
     completion of the sale.
       ``(j) Preservation of Private Right, Title, and Interest.--
     Nothing in this section shall be construed to adversely 
     affect the ownership interest of any other entity having any 
     right, title, and interest in and to lands within the 
     boundaries of the naval petroleum reserves.
       ``(k) Congressional Notification.--Section 7431 of this 
     title shall not apply to the sale of the naval petroleum 
     reserves under this section. However, the Secretary may not 
     enter into a contract for the sale of a naval petroleum 
     reserve until the end of the 15-day period beginning on the 
     date on which the Secretary notifies the Committee on Armed 
     Services of the Senate and the Committee on National Security 
     and the Committee on Commerce of the House of Representatives 
     that the Secretary has accepted an offer under subsection 
     (b)(5) for the sale of that reserve.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of such chapter is amended by inserting after the 
     item relating to section 7421 the following new item:

``7421a. Sale of naval petroleum reserves.''.
                 Subtitle C--National Defense Stockpile

     SEC. 8021. DISPOSAL OF CERTAIN MATERIALS IN NATIONAL DEFENSE 
                   STOCKPILE FOR DEFICIT REDUCTION.

       (a) Disposals Required.--(1) During fiscal year 1996, the 
     President shall dispose of all cobalt contained in the 
     National Defense Stockpile that, as of the date of the 
     enactment of this Act, is authorized for disposal under any 
     law (other than this Act).
       (2) In addition to the disposal of cobalt under paragraph 
     (1), the President shall dispose of additional quantities of 
     cobalt and quantities of aluminum, ferro columbium, 
     germanium, palladium, platinum, and rubber contained in the 
     National Defense Stockpile so as to result in receipts to the 
     United States in amounts equal to--
       (A) $21,000,000 during the fiscal year ending September 30, 
     1996;

[[Page H11050]]

       (B) $338,000,000 during the five-fiscal year period ending 
     on September 30, 2000; and
       (C) $649,000,000 during the seven-fiscal year period ending 
     on September 30, 2002.
       (3) The President is not required to include the disposal 
     of the materials identified in paragraph (2) in an annual 
     materials plan for the National Defense Stockpile. Disposals 
     made under this section may be made without consideration of 
     the requirements of an annual materials plan.
       (b) Limitation on Disposal Quantity.--The total quantities 
     of materials authorized for disposal by the President under 
     subsection (a)(2) may not exceed the amounts set forth in the 
     following table:


                     Authorized Stockpile Disposals                     
------------------------------------------------------------------------
           Material for disposal                      Quantity          
------------------------------------------------------------------------
Aluminum..................................  62,881 short tons           
Cobalt....................................  42,482,323 pounds contained 
Ferro Columbium...........................  930,911 pounds contained    
Germanium.................................  68,207 kilograms            
Palladium.................................  1,264,601 troy ounces       
Platinum..................................  452,641 troy ounces         
Rubber....................................  125,138 long tons           
------------------------------------------------------------------------

       (c) Deposit of Receipts.--Notwithstanding section 9 of the 
     Strategic and Critical Materials Stock Piling Act (50 U.S.C. 
     98h), funds received as a result of the disposal of materials 
     under subsection (a)(2) shall be deposited into the general 
     fund of the Treasury for the purpose of deficit reduction.
       (d) Relationship to Other Disposal Authority.--The disposal 
     authority provided in subsection (a)(2) is new disposal 
     authority and is in addition to, and shall not affect, any 
     other disposal authority provided by law regarding the 
     materials specified in such subsection.
       (e) Termination of Disposal Authority.--The President may 
     not use the disposal authority provided in subsection (a)(2) 
     after the date on which the total amount of receipts 
     specified in subparagraph (C) of such subsection is achieved.
       (f) Definition.--The term ``National Defense Stockpile'' 
     means the National Defense Stockpile provided for in section 
     4 of the Strategic and Critical Materials Stock Piling Act 
     (50 U.S.C. 98c).
                    TITLE IX--COMMITTEE ON RESOURCES

     SEC. 9000. TABLE OF CONTENTS.

       The table of contents for this title is as follows:

                    TITLE IX--COMMITTEE ON RESOURCES

Sec. 9000. Table of contents.

              Subtitle A--Alaska and Helium Privatization

                             Part 1--Alaska

Sec. 9001. Exports of Alaskan North Slope oil.
Sec. 9002. Arctic Coastal Plain leasing and revenue.
Sec. 9003. Alaska Power Administration sale.

                      Part 2--Helium Privatization

Sec. 9011. Short title.
Sec. 9012. Amendment of Helium Act.
Sec. 9013. Authority of Secretary.
Sec. 9014. Sale of crude helium.
Sec. 9015. Elimination of stockpile.
Sec. 9016. Repeal of authority to borrow.
Sec. 9017. Reports.
Sec. 9018. Land conveyance in Potter County, Texas.

                      Subtitle B--Water and Power

                Part 1--Power Marketing Administrations

Sec. 9201. Short title.
Sec. 9202. Evaluation of sales of Southeastern, Southwestern, and 
              Western Area Power Administration facilities.
Sec. 9203. Bonneville Power Administration appropriations refinancing.

                          Part 2--Reclamation

Sec. 9211. Prepayment of certain repayment contracts between the United 
              States and the Central Utah Water Conservancy District.
Sec. 9212. Treatment of city of Folsom as a Central Valley Project 
              contractor.
Sec. 9213. Sly Park.
Sec. 9214. Hetch Hetchy Dam.

         Subtitle C--National Parks, Forests, and Public Lands

                       Part 1--Concession Reform

Sec. 9301. Short title.
Sec. 9302. Purpose.
Sec. 9303. Definitions.
Sec. 9304. Nature and types of concession authorizations.
Sec. 9305. Competitive selection process for concession service 
              agreements.
Sec. 9306. Concessioner evaluations.
Sec. 9307. Capital improvements.
Sec. 9308. Duration of concession authorization.
Sec. 9309. Rates and charges to the public.
Sec. 9310. Transferability of concession authorizations.
Sec. 9311. Fees charged by the United States for concession 
              authorizations.
Sec. 9312. Disposition of fees.
Sec. 9313. Dispute resolution.
Sec. 9314. Recordkeeping.
Sec. 9315. Application of general governmental acquisition 
              requirements.
Sec. 9316. Rules of construction.
Sec. 9317. Regulations.
Sec. 9318. Relationship to other existing laws.

                   Part 2--National Forest Ski Areas

Sec. 9321. Privatization of Forest Service ski areas.
Sec. 9322. Ski area permit fees and withdrawal of ski areas from 
              operation of mining laws.

                   Part 3--Domestic Livestock Grazing

Sec. 9331. Applicable regulations.
Sec. 9332. Fees and charges.
Sec. 9333. Animal unit month.
Sec. 9334. Term of grazing permits or grazing leases.
Sec. 9335. Conformance with land use plan.
Sec. 9336. Effective date.

     Part 4--Regional Disposal Facility of Southwestern Low Level 
                   Radioactive Waste Disposal Compact

Sec. 9341. Conveyance of property.
Sec. 9342. Conveyance of easements.

                        Subtitle D--Territories

          Part 1--Commonwealth of the Northern Mariana Islands

Sec. 9401. Termination of annual direct grant assistance.

            Part 2--Territorial Administrative Cessation Act

Sec. 9421. Short title.
Sec. 9422. Congressional findings.
Sec. 9423. Elimination of Office of Territorial and International 
              Affairs.
Sec. 9424. Certain activities not funded.

                          Subtitle E--Minerals

                        Part 1--Hardrock Mining

Sec. 9501. Findings and purpose.
Sec. 9502. Patents under the general mining law.
Sec. 9503. Royalty under the general mining law.
Sec. 9504. Mineral materials.
Sec. 9505. Claim maintenance requirements.

                 Part 2--Federal Oil and Gas Royalties

Sec. 9511. Short title.
Sec. 9512. Definitions.
Sec. 9513. Limitation periods.
Sec. 9514. Adjustment and refunds.
Sec. 9515. Required recordkeeping.
Sec. 9516. Royalty interest, penalties, and payments.
Sec. 9517. Limitation on assessments.
Sec. 9518. Alternatives for marginal properties.
Sec. 9519. Royalty in kind.
Sec. 9520. Royalty simplification and cost-effective audit and 
              collection requirements.
Sec. 9521. Repeals.
Sec. 9522. Delegation to States.
Sec. 9523. Performance standard.
Sec. 9524. Indian lands.
Sec. 9525. Private lands.
Sec. 9526. Effective date.

                       Subtitle F--Indian Gaming

Sec. 9601. Indian gaming.

                        Subtitle G--Consultation

Sec. 9701. Consultation.

                          Subtitle H--Mapping

Sec. 9801. Short title.
Sec. 9802. Surveying and mapping contracting program.
Sec. 9803. Inventory of activities.
Sec. 9804. Plan to increase use of contracts.
Sec. 9805. Reports.
Sec. 9806. Definitions.
              Subtitle A--Alaska and Helium Privatization

                             PART 1--ALASKA

     SEC. 9001. EXPORTS OF ALASKAN NORTH SLOPE OIL.

       (a) Amendment of Mineral Leasing Act.--Section 28(s) of the 
     Mineral Leasing Act (30 U.S.C. 185(s)) is amended to read as 
     follows:


                  ``exports of alaskan north slope oil

       ``(s)(1) Subject to paragraphs (2) through (6) of this 
     subsection and notwithstanding any other provision of this 
     Act or any other provision of law (including any regulation) 
     applicable to the export of oil transported by pipeline over 
     right-of-way granted pursuant to section 203 of the Trans-
     Alaska Pipeline Authorization Act (43 U.S.C. 1652), such oil 
     may be exported unless the President finds that exportation 
     of this oil is not in the national interest. The President 
     shall make his national interest determination within 5 
     months after the date of enactment of this subsection. In 
     evaluating whether exports of this oil are in the national 
     interest, the President shall at a minimum consider--
       ``(A) whether exports of this oil would diminish the total 
     quantity or quality of petroleum available to the United 
     States;
       ``(B) the results of an appropriate environmental review, 
     including consideration of appropriate measures to mitigate 
     any potential adverse effects of exports of this oil on the 
     environment, which shall be completed within four months of 
     the date of the enactment of this subsection; and
       ``(C) whether exports of this oil are likely to cause 
     sustained material oil supply shortages or sustained oil 
     prices significantly above world market levels that would 
     cause sustained material adverse employment effects in the 
     United States or that would cause substantial harm to 
     consumers, including in noncontiguous States and Pacific 
     territories.

     If the President determines that exports of this oil are in 
     the national interest, he may impose such terms and 
     conditions (other than a volume limitation) as are necessary 
     or appropriate to ensure that such exports are consistent 
     with the national interest.

[[Page H11051]]

       ``(2) Except in the case of oil exported to a country with 
     which the United States entered into a bilateral 
     international oil supply agreement before November 26, 1979, 
     or to a country pursuant to the International Emergency Oil 
     Sharing Plan of the International Energy Agency, any oil 
     transported by pipeline over right-of-way granted pursuant to 
     section 203 of the Trans-Alaska Pipeline Authorization Act 
     (43 U.S.C. 1652) shall, when exported, be transported by a 
     vessel documented under the laws of the United States and 
     owned by a citizen of the United States (as determined in 
     accordance with section 2 of the Shipping Act, 1916 (46 
     U.S.C. App. 802)).
       ``(3) Nothing in this subsection shall restrict the 
     authority of the President under the Constitution, the 
     International Emergency Economic Powers Act (50 U.S.C. 1701 
     et seq.), or the National Emergencies Act (50 U.S.C. 1601 et 
     seq.) to prohibit exports of this oil or under Part B of 
     title II of the Energy Policy and Conservation Act (42 U.S.C. 
     6271-76).
       ``(4) The Secretary of Commerce shall issue any rules 
     necessary for implementation of the President's national 
     interest determination, including any licensing requirements 
     and conditions, within 30 days of the date of such 
     determination by the President. The Secretary of Commerce 
     shall consult with the Secretary of Energy in administering 
     the provisions of this subsection.
       ``(5) If the Secretary of Commerce finds that exporting oil 
     under authority of this subsection has caused sustained 
     material oil supply shortages or sustained oil prices 
     significantly above world market levels and further finds 
     that these supply shortages or price increases have caused or 
     are likely to cause sustained material adverse employment 
     effects in the United States, the Secretary of Commerce, in 
     consultation with the Secretary of Energy, shall recommend, 
     and the President may take, appropriate action concerning 
     exports of this oil, which may include modifying or revoking 
     authority to export such oil.
       ``(6) Administrative action under this subsection is not 
     subject to sections 551 and 553 through 559 of title 5, 
     United States Code.''.
       (b) GAO Report.--
       (1) Review.--The Comptroller General of the United States 
     shall conduct a review of energy production in California and 
     Alaska and the effects of Alaskan North Slope oil exports, if 
     any, on consumers, independent refiners, and shipbuilding and 
     ship repair yards on the West Coast and in Hawaii. The 
     Comptroller General shall commence this review 2 years after 
     the date of enactment of this Act and, within 6 months after 
     commencing the review, shall provide a report to the 
     Committee on Resources and the Committee on Commerce of the 
     House of Representatives and the Committee on Energy and 
     Natural Resources of the Senate.
       (2) Contents of report.--The report shall contain a 
     statement of the principal findings of the review and 
     recommendations for Congress and the President to address job 
     loss in the shipbuilding and ship repair industry on the West 
     Coast, as well as adverse impacts on consumers and refiners 
     on the West Coast and in Hawaii, that the Comptroller General 
     attributes to Alaska North Slope oil exports.

     SEC. 9002. ARCTIC COASTAL PLAIN LEASING AND REVENUE.

       (a) Purpose.--It is the purpose of this section to reduce 
     the Federal deficit by an estimated $1,300,000,000 over the 
     next 5 years. This revenue will be derived from competitive 
     bonus bids for oil and gas leases in the Coastal Plain area 
     of Alaska's North Slope.
       (b) Definitions.--For the purposes of this section:
       (1) The term ``Secretary'' means the Secretary of the 
     Interior.
       (2) The term ``Coastal Plain'' means that portion of the 
     Arctic National Wildlife Refuge identified in section 
     1002(b)(1) of the Alaska National Interest Lands Conservation 
     Act of 1980 (Public Law 96-487; 16 U.S.C. 3142(b)(1)) 
     consisting of approximately 1,549,000 acres.
       (c) Compatibility.--Congress hereby determines that the oil 
     and gas leasing program and activities authorized by this 
     section in the Coastal Plain are compatible with the purposes 
     for which the Arctic National Wildlife Refuge was 
     established, and that no further findings or decisions are 
     required to implement this determination.
       (d) Authorization.--(1) Congress hereby authorizes and 
     directs the Secretary to establish and promptly implement a 
     program to assure the expeditious competitive leasing 
     exploration, development, production, and transportation of 
     the oil and gas resources of the Coastal Plain. Regulations 
     to implement this program and to govern oil and gas leasing, 
     exploration, development and production shall be promulgated 
     by the Secretary within 6 months of the date of enactment of 
     this section.
       (2) The Coastal Plain leasing program required by paragraph 
     (1) shall include the following:
       (A) The first lease sale of not less than 200,000 acres 
     shall be conducted within 12 months of the date of enactment 
     of this section.
       (B) The lease sales shall be based upon an industry 
     nomination process.
       (C) The Secretary is directed to grant to the highest 
     responsible qualified bidder or bidders by competitive 
     bidding, under regulations promulgated in advance, any oil 
     and gas lease on unleased Federal lands within the Coastal 
     Plain. These regulations may provide for the deposit of cash 
     bids in an interest-bearing account until the Secretary 
     accepts the bids, with interest earned paid to the General 
     Treasury for bids that are accepted, and to the unsuccessful 
     bidders for bids that are rejected.
       (D) Royalty payments shall not be less than 12\1/2\ 
     percent, and rental payments shall be prescribed by the 
     Secretary.
       (E) The Attorney General of the United States and the 
     Federal Trade Commission may conduct such review of lease 
     terms and lease sale activities as are necessary to ensure 
     compliance with the antitrust laws.
       (F) The size of lease tracts may be up to 11,520 acres but 
     not less than 2,560 acres, as determined by the Secretary, 
     except that the Secretary may lease smaller tracts if he 
     determines smaller tracts are necessary to promote a more 
     competitive leasing program or are necessary in certain 
     locations to mitigate reasonably foreseeable impacts on the 
     environment.
       (G) Each lease shall be issued for an initial period of up 
     to 10 years and shall be extended as long as oil or gas is 
     produced in paying quantities from the lease or unit area to 
     which the lease is committed or as drilling or reworking 
     operations as approved by the Secretary are conducted 
     thereon.
       (H) The Secretary is authorized and directed to promulgate 
     regulations and to include terms in leases to ensure that--
       (i) activities are conducted pursuant to an approved 
     exploration or development plan;
       (ii) lessees secure an appropriate performance bond to 
     cover activities;
       (iii) provision is made for the suspension, cancellation, 
     assignment, relinquishment and unitization of leases; and
       (iv) the Secretary has access to lease information and that 
     confidential, privileged or proprietary information furnished 
     by lessees is adequately protected.
       (e) Judicial Review.--Any complaint filed seeking judicial 
     review of an action of the Secretary in promulgating any 
     regulation under this section may be filed only in the United 
     States Court of Appeals for the District of Columbia, and 
     such complaint shall be filed within 90 days from the date of 
     such promulgation, or after such date if such complaint is 
     based solely on grounds arising after such 90th day, in which 
     case the complaint must be filed within 90 days after the 
     complainant knew or reasonably should have known of the 
     grounds for the complaint. Any complaint seeking judicial 
     review of any other actions of the Secretary under this 
     section may be filed in any appropriate district court of the 
     United States, and such complaint must be filed within 90 
     days from the date of the action being challenged, or after 
     such date if such complaint is based solely on grounds 
     arising after such 90th day, in which case the complaint must 
     be filed within 90 days after the complainant knew or 
     reasonably should have known of the grounds for the 
     complaint.
       (f) Administration.--(1) Section 1003 of the Alaska 
     National Interest Lands Conservation Act of 1980 (94 Stat. 
     2452; 16 U.S.C. 3143) is repealed.
       (2) This section shall be considered the primary land 
     management authorization for all activities associated with 
     exploration, development, and production from the Coastal 
     Plain. No land management review, determination, or other 
     action shall be required except as specifically authorized by 
     this section.
       (g) Protection of Fish and Wildlife Resources and Other 
     Environmental Values.--(1) Before conducting a competitive 
     oil and gas lease sale under this section, the Secretary 
     shall promulgate, within 6 months, as provided in subsection 
     (d)(1), such rules and regulations as are necessary to ensure 
     that oil and gas exploration, development, production, and 
     transportation activities undertaken in the Coastal Plain 
     achieve the reasonable protection of the fish and wildlife 
     resources, environment and subsistence uses of the Coastal 
     Plain.
       (2) The Secretary shall administer the provisions of this 
     section through regulations and lease terms that the 
     Secretary determines to be necessary to mitigate reasonably 
     foreseeable and significantly adverse effects on the fish and 
     wildlife, surface resources and subsistence resources of the 
     Coastal Plain.
       (3)(A) The Secretary, after consultation with the State of 
     Alaska, the city of Kaktovik, Alaska, and the North Slope 
     Borough, is authorized to close to leasing and designate up 
     to 30,000 acres of the Coastal Plain as Special Areas if the 
     Secretary determines that these lands are of such unique 
     character and interest so as to require special management 
     and regulatory protection. The Secretary shall notify the 
     Committee on Energy and Natural Resources of the Senate and 
     the Committee on Resources of the House of Representatives 90 
     days in advance of making such designations. The Secretary 
     may permit leasing of all or portions of any lands within the 
     Coastal Plain designated as Special Areas by setting lease 
     terms that limit or condition surface use and occupancy by 
     lessees of such lands but permit the use of horizontal 
     drilling technology from sites on leases located outside the 
     designated Special Areas.
       (B) Notwithstanding any other provision of law or any 
     international agreement to which the United States is a 
     party, the Secretary's sole authority to close lands within 
     the Coastal Plain to oil and gas leasing and to exploration, 
     development, and production as provided for in this part is 
     set forth in subparagraph (A).

[[Page H11052]]

       (4) The Secretary shall, in consultation with the State of 
     Alaska, the city of Kaktovik, Alaska, and the North Slope 
     Borough, develop guidelines to encourage the siting of 
     facilities having common use characteristics (service bases, 
     ports and docks, airports, major pipelines and roads) in a 
     manner which leads to facility consolidation, avoids 
     unnecessary duplication, utilizes existing facilities, 
     minimizes impacts on fish, wildlife, habitat and the 
     subsistence activities of residents of Native communities, 
     and avoids disruption of the lives of the residents of the 
     Village of Kaktovik and other communities.
       (5) Notwithstanding title XI of the Alaska National 
     Interest Lands Conservation Act of 1980 (94 Stat. 2457; 16 
     U.S.C. 3161 et seq.), the Secretary is authorized and 
     directed to grant, under sections 28(a) through (t) and (v) 
     through (y) of the Mineral Leasing Act (30 U.S.C. 185), 
     rights-of-way and easements across the Coastal Plain for the 
     purposes of this section, for pipeline construction, and the 
     transportation of oil and gas and related purposes.
       (6) The Secretary is authorized to close, on a seasonal 
     basis, portions of the Coastal Plain to exploratory drilling 
     activities as necessary to protect caribou calving areas and 
     other species of fish and wildlife.
       (h) Application of Environmental Laws.--The ``Final 
     Legislative Environmental Impact Statement'' (April 1987) 
     prepared pursuant to section 1002 of the Alaska National 
     Interest Lands Conservation Act of 1980 (94 Stat. 2449; 16 
     U.S.C. 3142) and section 102(2)(C) of the National 
     Environmental Policy Act of 1969 (89 Stat. 424; 42 U.S.C. 
     4332(2)(C)) is hereby determined to be adequate and legally 
     sufficient for all actions authorized pursuant to this 
     section, including all phases of oil and gas leasing, 
     exploration, development, production, transportation and 
     related activities, including the granting of rights-of-way, 
     use permits and other authorizations.
       (i) New Revenues.--(1) Notwithstanding any other provision 
     of law, all revenues received from competitive bids, sales, 
     bonuses, royalties, rents, fees, interest or other income 
     derived from the leasing of oil and gas resources within the 
     Coastal Plain shall be deposited into the Treasury of the 
     United States: Provided, That 50 percent of all such Coastal 
     Plain revenues shall be paid by the Secretary of the Treasury 
     semiannually, on March 30th and on September 30th of each 
     year, to the State of Alaska.
       (2) On March 1st of each year following the date of 
     enactment of this section, the Secretary shall prepare and 
     submit to the Congress an annual report on the revenues 
     derived and on the leasing program authorized by this 
     section.
       (j) Conveyance.--Notwithstanding the provisions of section 
     1302(h)(2) of the Alaska National Interest Lands Conservation 
     Act (16 U.S.C. 3192(h)(2)), the Secretary is authorized and 
     directed to convey (1) to the Kaktovik Inupiat Corporation 
     the surface estate of the lands described in paragraph 2 of 
     Public Land Order 6959, to the extent necessary to fulfill 
     the corporation's entitlement under section 12 of the Alaska 
     Native Claims Settlement Act (43 U.S.C. 1611), and (2) to the 
     Arctic Slope Regional Corporation the subsurface estate 
     beneath such surface estate pursuant to the August 9, 1983, 
     agreement between the Arctic Slope Regional Corporation and 
     the United States of America.
       (k) Penalty.--Any person, including any Federal official, 
     who fails to comply with any provision or mandate of this 
     section, a lease term, or a regulation promulgated under this 
     section, after notice of such failure and expiration of a 
     reasonable period for corrective action, shall be liable, 
     after hearing, for a civil penalty of not more than $10,000 
     for each day of the continuance of such failure.
       (l) Community Assistance.--There is hereby established a 
     Community Assistance Fund in the Treasury which shall be 
     maintained at a level of $5,000,000 annually from the 
     Federal share of Coastal Plain revenues and shall be 
     available to the Secretary for the purposes of this 
     section. Organized boroughs, other municipal subdivisions 
     of the State of Alaska, and recognized Indian 
     Reorganization Act entities which are impacted by 
     activities authorized under this section shall be 
     eligible, on application to the Secretary, for local 
     assistance from the Community Assistance Fund for needed 
     social services and to provide public services and 
     facilities required in connection with supporting 
     exploration and development of the Coastal Plain.
       (m) Employment and Contracting.--As a condition of any 
     leases, permits, or other Federal authorizations granted or 
     issued pursuant to this section, a recipient of those leases, 
     permits, or authorizations shall be required to use its best 
     efforts to assure that the lessee and its agents and 
     contractors provide a fair share of employment and 
     contracting for Alaska Natives and Alaska Native Corporations 
     from throughout the State.
       (n) Use of ANWR Revenues.--
       (1) Establishment of endowment.--There is hereby 
     established in the general fund of the Treasury a separate 
     account which shall be known as the National Endowment for 
     Fish and Wildlife.
       (2) Contents.--(A) Except as provided in subparagraph (B), 
     the Endowment shall consist of revenues received from the 
     following sources:
       (i) Gifts, devises, and bequests to the Endowment.
       (ii) Amounts appropriated by the Congress to the Endowment.
       (iii) Any revenues deposited into the Treasury of the 
     United States under subsection (i), from the Federal share of 
     revenues derived from oil and gas leasing within the Coastal 
     Plain, that exceed $1,300,000,000.
       (B) After the Endowment has reached a level of $250,000,000 
     in principal, further payments to the Endowment shall consist 
     only of the following:
       (i) Gifts, devises, and bequests to the Endowment.
       (ii) Amounts appropriated by the Congress to the Endowment.
       (iii) 5 percent of the Federal royalties derived from 
     commercial production of oil and gas on Federal leases on the 
     Coastal Plain.
       (3) Establishment of fish and wildlife conservation 
     commission.--(A) To carry out the purposes of this 
     subsection, there is hereby established a commission to be 
     known as the Fish and Wildlife Conservation Commission.
       (B) The Commission shall consist of--
       (i) the Secretary of the Interior, who shall be the 
     chairman,
       (ii) 3 Members of the Senate selected by the President of 
     the Senate, and
       (iii) 3 Members of the House of Representatives selected by 
     the Speaker.
       (C) At least 1 member of the Commission selected from each 
     House of Congress shall be a member of the minority party in 
     that House.
       (D) Any Member of the House of Representatives who is a 
     member of the Commission, if reelected to the succeeding 
     Congress, may serve on the Commission notwithstanding the 
     expiration of a Congress.
       (E) Any vacancy on the Commission shall be filled in the 
     same manner as the original appointment.
       (4) Expenditures by commission.--(A) The Fish and Wildlife 
     Commission may make expenditures from the Endowment for the 
     following fish and wildlife conservation purposes:
       (i) Acquisition of important habitat lands for endangered 
     species or threatened species from owners of private 
     property. Such lands may be acquired solely on a willing 
     seller basis and shall be managed by the Secretary of the 
     Interior for the conservation of such species pursuant to the 
     terms of section 5 of the Endangered Species Act of 1973 (16 
     U.S.C. 1534).
       (ii) Provision of funding for purposes authorized under the 
     Endangered Species Act of 1973.
       (iii) Provision of funds to the North American Wetlands 
     Conservation Fund pursuant to the North American Wetlands 
     Conservation Act (16 U.S.C. 4401 et seq.).
       (B) The amount expended under subparagraph (A)(iii) each 
     fiscal year shall equal or exceed 25 percent of the total 
     expenditures from the Endowment in that fiscal year.
       (C) The Secretary of the Interior may not recommend any 
     lands or interest in lands for purchase or other forms of 
     acquisition using funds made available under the terms of 
     this section unless the Secretary of the Interior--
       (i) has determined that such lands are necessary for the 
     conservation of endangered species or other fish and 
     wildlife; and
       (ii) has consulted with the county or other unit of local 
     government in which such lands are located and with the 
     Governor of the State concerned.
       (D) Land or an interest in land may not be acquired with 
     moneys from the Endowment unless--
       (i) the acquisition thereof has been approved by the 
     Governor of the State in which the land is located; and
       (ii) the owner of the land or interest has offered the land 
     or interest for acquisition under this subsection and 
     consented to the acquisition.
       (5) Annual report.--The Commission shall, through its 
     chairman, annually report in detail to the Congress, by not 
     later than the first Monday in December, regarding the 
     operations of the Commission during the preceding fiscal 
     year.
       (6) State law.--The jurisdiction of any State, both civil 
     and criminal, over persons upon areas acquired under this 
     subsection shall not be changed or otherwise affected by 
     reason of the acquisition and administration of the areas by 
     the United States as endangered species habitat. Nothing 
     in this subsection is intended to interfere with the 
     operation of the game laws of the States.
       (7) Administration of areas acquired.--Areas of lands, 
     waters, or interest therein acquired or reserved pursuant to 
     this subsection shall, unless otherwise provided by law, be 
     administered by the Secretary of the Interior under rules and 
     regulations prescribed by the Secretary to conserve and 
     protect endangered species in accordance with the Endangered 
     Species Act of 1973, or to restore or develop adequate 
     wildlife habitat.
       (8) Definitions.--In this subsection:
       (A) The term ``Commission'' means the Fish and Wildlife 
     Conservation Commission established by this subsection.
       (B) The term ``Endowment'' means the National Endowment for 
     Fish and Wildlife established by this subsection.
       (9) Conforming amendment.--Section 7 of the North American 
     Wetlands Conservation Act of 1989 (16 U.S.C. 4406) is amended 
     by adding at the end the following:
       ``(e) Fish and Wildlife Commission Funding.--In addition to 
     the amounts made available under subsections (a), (b), and 
     (c) of this section, the Council may receive funds from the 
     Fish and Wildlife Commission to carry 

[[Page H11053]]

     out the purposes of this Act. Use of such funds shall not be 
     subject to the cost allocation requirements of section 8 of 
     this Act.''.

     SEC. 9003. ALASKA POWER ADMINISTRATION SALE.

       (a) Definitions.--For purposes of this section:
       (1) The term ``Eklutna assets'' means the Eklutna 
     Hydroelectric Project and related assets as described in 
     section 4 and Exhibit A of the Eklutna Purchase Agreement.
       (2) The term ``Eklutna Purchase Agreement'' means the 
     August 2, 1989, Eklutna Purchase Agreement between the Alaska 
     Power Administration of the Department of Energy and the 
     Eklutna Purchasers, together with any amendments thereto 
     which were adopted before the enactment of this section.
       (3) The term ``Eklutna Purchasers'' means the Municipality 
     of Anchorage doing business as Municipal Light and Power, the 
     Chugach Electric Association, Inc. and the Matanuska Electric 
     Association, Inc.
       (4) The term ``Secretary'' means the Secretary of Energy 
     except where otherwise specified.
       (5) The term ``Snettisham assets'' means the Snettisham 
     Hydroelectric Project and related assets as described in 
     section 4 and Exhibit A of the Snettisham Purchase Agreement.
       (6) The term ``Snettisham Purchase Agreement'' means the 
     February 10, 1989, Snettisham Purchase Agreement between the 
     Alaska Power Administration of the Department of Energy and 
     the Alaska Power Authority and its successors in interest, 
     together with any amendments thereto which were adopted 
     before the enactment of this section.
       (b) Sale of Snettisham and Eklutna Assets.--
       (1) Snettisham.--The Secretary is authorized and directed 
     to sell and transfer the Snettisham assets to the State of 
     Alaska in accordance with the terms of this section and the 
     Snettisham Purchase Agreement.
       (2) Eklutna.--The Secretary is authorized and directed to 
     sell and transfer the Eklutna assets to the Eklutna 
     Purchasers in accordance with the terms of this section and 
     the Eklutna Purchase Agreement.
       (3) Cooperation of other agencies.--Other departments, 
     agencies, and instrumentalities of the United States shall 
     cooperate with the Secretary in implementing the sales and 
     transfers under this section.
       (4) Authorization of appropriations; contributed funds.--
     (A) There are authorized to be appropriated such sums as may 
     be necessary to prepare, survey, or acquire Snettisham and 
     Eklutna assets for sale and transfer under this section. Such 
     preparations and acquisitions shall provide sufficient title 
     in the assets to ensure beneficial use, enjoyment, and 
     occupancy thereof to the purchasers.
       (B) Notwithstanding any other provision of law, the Alaska 
     Power Administration is authorized to receive, administer, 
     and expend such contributed funds as may be provided by the 
     Eklutna Purchasers or customers or the Snettisham Purchasers 
     or customers for the purposes of upgrading, improving, 
     maintaining, or administering Eklutna or Snettisham. Upon the 
     termination of the Alaska Power Administration required under 
     subsection (d), the Secretary of Energy shall administer and 
     expend any remaining balances of such contributed funds for 
     the purposes intended by the contributors.
       (C) The Secretary is directed to use up to $5,000,000 from 
     unobligated balances available to the Department of Energy to 
     fund any sale preparation costs for the sales under this 
     section, and shall provide an accounting of all sale 
     preparation costs to the Committee on Resources of the House 
     of Representatives and to the Committee on Energy and Natural 
     Resources of the Senate within 60 days after completion of 
     the sale.
       (c) General Provisions.--
       (1) Rights-of-way and other lands for the eklutna 
     project.--With respect to Eklutna lands described in Exhibit 
     A of the Eklutna Purchase Agreement:
       (A) The Secretary of the Interior shall issue rights-of-way 
     to the Alaska Power Administration for subsequent 
     reassignment to the Eklutna Purchasers at no cost to the 
     Eklutna Purchasers.
       (B) Such rights-of-way shall remain effective for a period 
     equal to the life of the Eklutna hydroelectric project as 
     extended by improvements, repairs, renewals, or replacements.
       (C) Such rights-of-way shall be sufficient for the 
     operation, maintenance, repair, and replacement of, and 
     access to, the facilities of the Eklutna hydroelectric 
     project located on military lands and lands managed by the 
     Bureau of Land Management, including land selected by, but 
     not yet conveyed to, the State of Alaska.
       (D) If the Eklutna Purchasers subsequently sell or transfer 
     the Eklutna hydroelectric project to private ownership, the 
     Bureau of Land Management may assess reasonable and customary 
     fees for continued use of the rights-of-way on lands managed 
     by the Bureau of Land Management and military lands in 
     accordance with applicable law.
       (E) The Secretary shall transfer fee title to lands at 
     Anchorage Substation to the Eklutna Purchasers at no 
     additional cost if the Secretary of the Interior determines 
     that pending claims to and selections of those lands are 
     invalid or relinquished.
       (F) With respect only to the Eklutna lands identified in 
     Exhibit A of the Eklutna Purchase Agreement, the State of 
     Alaska may select, and the Secretary of the Interior shall 
     convey, to the State, improved lands under the selection 
     entitlements in section 6 of the Alaska Statehood Act (Public 
     Law 85-508; 72 Stat. 339) and the North Anchorage Land 
     Agreement of January 31, 1983. The conveyance of such lands 
     is subject to the rights-of-way provided to the Eklutna 
     Purchasers under subparagraph (A).
       (2) Lands for the snettisham project.--With respect to the 
     Snettisham lands identified in Exhibit A of the Snettisham 
     Purchase Agreement, the State of Alaska may select, and the 
     Secretary of the Interior shall convey to the State, improved 
     lands under the selection entitlement in section 6 of the 
     Alaska Statehood Act (Public Law 85-508; 72 Stat. 339).
       (3) Effect on state selections.--Notwithstanding the 
     expiration of the right of the State of Alaska to make 
     selections under section 6 of the Alaska Statehood Act 
     (Public Law 85-508; 72 Stat. 339), the State of Alaska may 
     select lands authorized for selection under this section or 
     any Purchase Agreement incorporated into or ratified by this 
     section. The State shall complete such selections within one 
     year after the date of the enactment of this section. The 
     Secretary of the Interior shall convey lands selected by the 
     State under this section notwithstanding the limitation 
     contained in section 6(b) of the Alaska Statehood Act (Public 
     Law 85-508; 72 Stat. 339) regarding the occupancy, 
     appropriation, or reservation of selected lands. Nothing in 
     this subsection shall be construed to authorize the Secretary 
     of the Interior to convey to the State of Alaska a total 
     acreage of selected lands in excess of the total acreage 
     which could be transferred to the State of Alaska pursuant to 
     the Alaska Statehood Act (Public Law 85-508; 72 Stat. 339), 
     and other applicable law.
       (4) Repeal of act of august 9, 1955.--The Act of August 9, 
     1955 (69 Stat. 618), concerning water resources 
     investigations in Alaska, is repealed.
       (5) Treatment of asset sale.--The sales of assets under 
     this section shall not be considered a disposal of Federal 
     surplus property under the Federal Property and 
     Administrative Services Act of 1949 (40 U.S.C. 484) or the 
     Surplus Property Act of 1944 (50 U.S.C. App. 1622).
       (6) Application of certain laws.--(A) The Act of July 31, 
     1950 (64 Stat. 382), shall cease to apply on the date, as 
     determined by the Secretary, when all Eklutna assets have 
     been conveyed to the Eklutna Purchasers.
       (B) Section 204 of the Flood Control Act of 1962 (Public 
     Law 87-874; 76 Stat. 1193) shall cease to apply effective on 
     the date, as determined by the Secretary, when all Snettisham 
     assets have been conveyed to the State of Alaska.
       (d) Termination of Alaska Power Administration.--
       (1) Termination of alaska power administation.--Not later 
     than one year after both of the sales authorized in this 
     section have occurred, as measured by the Transaction Dates 
     stipulated in the Purchase Agreements, the Secretary shall--
       (A) complete the business of, and close out, the Alaska 
     Power Administration;
       (B) prepare and submit to Congress a report documenting the 
     sales; and
       (C) return unobligated balances of funds appropriated for 
     the Alaska Power Administration to the Treasury of the United 
     States.
       (2) DOE organization act.--Section 302(a) of the Department 
     of Energy Organization Act (42 U.S.C. 7152(a)) is amended as 
     follows:
       (A) In paragraph (1)--
       (i) by striking out subparagraph (C); and
       (ii) by redesignating subparagraphs (D), (E), and (F) as 
     subparagraphs (C), (D), and (E) respectively.
       (B) In paragraph (2), by striking out ``the Bonneville 
     Power Administration, and the Alaska Power Administration'' 
     and inserting in lieu thereof ``and the Bonneville Power 
     Administration''.

     The amendments made by this paragraph shall take effect on 
     the date on which the Secretary submits the report referred 
     to in subparagraph (B) of paragraph (1).
       (e) Proceeds.--The proceeds from the sale of Snettisham and 
     Eklutna assets under this section shall be credited to 
     miscellaneous receipts in the Treasury.
       (f) Section 147(d) of Internal Revenue Code.--For purposes 
     of section 147(d) of the Internal Revenue Code of 1986, the 
     ``first use'' of Snettisham shall be considered to occur 
     pursuant to acquistion of the property by or on behalf of the 
     State of Alaska.

                      PART 2--HELIUM PRIVATIZATION

     SEC. 9011. SHORT TITLE.

       This part may be cited as the ``Helium Privatization Act of 
     1995''.

     SEC. 9012. AMENDMENT OF HELIUM ACT.

       Except as otherwise expressly provided, whenever in this 
     part an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a section or other provision, the 
     reference shall be considered to be made to a section or 
     other provision of the Helium Act (50 U.S.C. 167 to 167n).

     SEC. 9013. AUTHORITY OF SECRETARY.

       Sections 3, 4, and 5 are amended to read as follows:

     ``SEC. 3. AUTHORITY OF SECRETARY.

       ``(a) Extraction and Disposal of Helium on Federal Lands.--
     (1) The Secretary may enter into agreements with private 
     parties for the recovery and disposal of helium on Federal 
     lands upon such terms and conditions as he deems fair, 
     reasonable and necessary. The Secretary may grant leasehold 

[[Page H11054]]

     rights to any such helium. The Secretary may not enter into 
     any agreement by which the Secretary sells such helium other 
     than to a private party with whom the Secretary has an 
     agreement for recovery and disposal of helium. Such 
     agreements may be subject to such rules and regulations as 
     may be prescribed by the Secretary.
       ``(2) Any agreement under this subsection shall be subject 
     to the existing rights of any affected Federal oil and gas 
     lessee. Each such agreement (and any extension or renewal 
     thereof) shall contain such terms and conditions as deemed 
     appropriate by the Secretary.
       ``(3) This subsection shall not in any manner affect or 
     diminish the rights and obligations of the Secretary and 
     private parties under agreements to dispose of helium 
     produced from Federal lands in existence at the enactment of 
     the Helium Privatization Act of 1995 except to the extent 
     that such agreements are renewed or extended after such date.
       ``(b) Storage, Transportation, and Sale.--The Secretary is 
     authorized to store, transport, and sell helium only in 
     accordance with this Act.
       ``(c) Monitoring and Reporting.--The Secretary is 
     authorized to monitor helium production and helium reserves 
     in the United States and to periodically prepare reports 
     regarding the amounts of helium produced and the quantity of 
     crude helium in storage in the United States.

     ``SEC. 4. STORAGE, TRANSPORTATION, AND WITHDRAWAL OF CRUDE 
                   HELIUM.

       ``(a) Storage, Transportation, and Withdrawal.--The 
     Secretary is authorized to store and transport crude helium 
     and to maintain and operate existing crude helium storage at 
     the Bureau of Mines Cliffside Field, together with related 
     helium transportation and withdrawal facilities.
       ``(b) Cessation of Production, Refining, and Marketing.--
     Effective 18 months after the date of enactment of the Helium 
     Privatization Act of 1995, the Secretary shall cease 
     producing, refining and marketing refined helium and shall 
     cease carrying out all other activities relating to helium 
     which the Secretary was authorized to carry out under this 
     Act before the date of enactment of the Helium Privatization 
     Act of 1995, except those activities described in subsection 
     (a). The amount of helium reserves owned by the United States 
     and stored in the Bureau of Mines Cliffside Field at such 
     date of cessation, less 600,000,000 cubic feet, shall be the 
     helium reserves owned by the United States required to be 
     sold pursuant to section 8(b) hereof.
       ``(c) Disposal of Facilities.--(1) Within two years after 
     the date on which the Secretary ceases producing, refining 
     and marketing refined helium and ceases all other activities 
     relating to helium in accordance with subsection (b), the 
     Secretary shall dispose of all facilities, equipment, and 
     other real and personal property, together with all interests 
     therein, held by the United States for the purpose of 
     producing, refining and marketing refined helium. The 
     disposal of such property shall be in accordance with the 
     provisions of law governing the disposal of excess or surplus 
     properties of the United States.
       ``(2) All proceeds accruing to the United States by reason 
     of the sale or other disposal of such property shall be 
     treated as moneys received under this chapter for purposes of 
     section 6(f). All costs associated with such sale and 
     disposal (including costs associated with termination of 
     personnel) and with the cessation of activities under 
     subsection (b) shall be paid from amounts available in the 
     helium production fund established under section 6(f).
       ``(3) Paragraph (1) shall not apply to any facilities, 
     equipment, or other real or personal property, or any 
     interest therein, necessary for the storage and 
     transportation of crude helium or any equipment needed to 
     maintain the purity, quality control, and quality assurance 
     of helium in the reserve.
       ``(d) Existing Contracts.--All contracts which were entered 
     into by any person with the Secretary for the purchase by 
     such person from the Secretary of refined helium and which 
     are in effect on the date of the enactment of the Helium 
     Privatization Act of 1995 shall remain in force and effect 
     until the date on which the facilities referred to in 
     subsection (c) are disposed of. Any costs associated with the 
     termination of such contracts shall be paid from the helium 
     production fund established under section 6(f).

     ``SEC. 5. FEES FOR STORAGE, TRANSPORTATION AND WITHDRAWAL.

       ``Whenever the Secretary provides helium storage, 
     withdrawal, or transportation services to any person, the 
     Secretary is authorized and directed to impose fees on such 
     person to reimburse the Secretary for the full costs of 
     providing such storage, transportation, and withdrawal. All 
     such fees received by the Secretary shall be treated as 
     moneys received under this Act for purposes of section 
     6(f).''.

     SEC. 9014. SALE OF CRUDE HELIUM.

       Section 6 is amended as follows:
       (1) Subsection (a) is amended by striking out ``from the 
     Secretary'' and inserting ``from persons who have entered 
     into enforceable contracts to purchase an equivalent amount 
     of crude helium from the Secretary''.
       (2) Subsection (b) is amended by inserting ``crude'' before 
     ``helium'' and by adding the following at the end thereof: 
     ``Except as may be required by reason of subsection (a), the 
     Secretary shall not make sales of crude helium under this 
     section in such amounts as will disrupt the market price of 
     crude helium.''.
       (3) Subsection (c) is amended by inserting ``crude'' before 
     ``helium'' the first place it appears and by striking 
     ``together with interest as provided in subsection (d) of 
     this section'' and all that follows down through the period 
     at the end of such subsection and inserting the following:

     ``all funds required to be repaid to the United States as of 
     October 1, 1995, under this section (hereinafter referred to 
     as `repayable amounts'). The price at which crude helium is 
     sold by the Secretary shall not be less than the amount 
     determined by the Secretary as follows:
       ``(1) Divide the outstanding amount of such repayable 
     amounts by the volume (in mcf) of crude helium owned by the 
     United States and stored in the Bureau of Mines Cliffside 
     Field at the time of the sale concerned.
       ``(2) Adjust the amount determined under paragraph (1) by 
     the Consumer Price Index for years beginning after December 
     31, 1995.''.
       (4) Subsection (d) is amended to read as follows:
       ``(d) Extraction of Helium From Deposits on Federal 
     Lands.--All moneys received by the Secretary from the sale or 
     disposition of helium on Federal lands shall be paid to the 
     Treasury and credited against the amounts required to be 
     repaid to the Treasury under subsection (c) of this 
     section.''.
       (5) Subsection (e) is repealed.
       (6) Subsection (f) is amended by inserting ``(1)'' after 
     ``(f)'' and by adding the following at the end thereof:
       ``(2) Within 7 days after the commencement of each fiscal 
     year after the disposal of the facilities referred to in 
     section 4(c), all amounts in such fund in excess of 
     $2,000,000 (or such lesser sum as the Secretary deems 
     necessary to carry out this Act during such fiscal year) 
     shall be paid to the Treasury and credited as provided in 
     paragraph (1). Upon repayment of all amounts referred to in 
     subsection (c), the fund established under this section shall 
     be terminated and all moneys received under this Act shall be 
     deposited in the Treasury as General Revenues.''.

     SEC. 9015. ELIMINATION OF STOCKPILE.

       Section 8 is amended to read as follows:

     ``SEC. 8. ELIMINATION OF STOCKPILE.

       ``(a) Review of Reserves.--The Secretary shall review 
     annually the known helium reserves in the United States and 
     make a determination as to the expected life of the domestic 
     helium reserves (other than Federally owned helium stored at 
     the Cliffside Reservoir) at that time.
       ``(b) Stockpile Sales.--Not later than January 1, 2005, the 
     Secretary shall commence offering for sale crude helium from 
     helium reserves owned by the United States in such minimum 
     annual amounts as would be necessary to dispose of all such 
     helium reserves in excess of 600,000,000 cubic feet (mcf) on 
     a straight-line basis between such date and January 1, 2015: 
     Provided, That the minimum price for all such sales, as 
     determined by the Secretary in consultation with the helium 
     industry, shall be such as will ensure repayment of the 
     amounts required to be repaid to the Treasury under section 
     6(c), and provided further that the minimum annual sales 
     requirement may be deferred only if, and to the extent that, 
     the Secretary is unable to arrange sales at the minimum 
     price. The sales shall be at such times during each year and 
     in such lots as the Secretary determines, in consultation 
     with the helium industry, are necessary to carry out this 
     subsection with minimum market disruption.
       ``(c) Discovery of Additional Reserves.--The discovery of 
     additional helium reserves shall not affect the duty of the 
     Secretary to make sales of helium as provided in subsection 
     (b), as the case may be.''.

     SEC. 9016. REPEAL OF AUTHORITY TO BORROW.

       Sections 12 and 15 are repealed.

     SEC. 9017. REPORTS.

       Section 16 is amended by redesignating existing section 16 
     as section 16(a) and inserting the following at the end 
     thereof:
       ``(b)(1) The Inspector General of the Department of the 
     Interior shall cause to be prepared, not later than March 31 
     following each fiscal year commencing with the date of 
     enactment of the Helium Privatization Act of 1995, annual 
     financial statements for the Helium Operations of the Bureau 
     of Mines. The Director of the Bureau of Mines shall cooperate 
     with the Inspector General in fulfilling this requirement, 
     and shall provide him with such personnel and accounting 
     assistance as may be necessary for that purpose. The 
     financial statements shall be audited by the General 
     Accounting Office, and a report on such audit shall be 
     delivered by the General Accounting Office to the Secretary 
     of the Interior and Congress, not later than June 30 
     following the end of the fiscal year for which they are 
     prepared. The audit shall be prepared in accordance with 
     generally accepted government auditing standards.
       ``(2) The financial statements shall be comprised of the 
     following:
       ``(A) A balance sheet reflecting the overall financial 
     position of the Helium Operations, including assets and 
     liabilities thereof;
       ``(B) the Statement of Operations, reflecting the fiscal 
     period results of the Helium Operations;
       ``(C) a statement cash flows or changes in financial 
     position of the Helium Operations; and
       ``(D) a reconciliation of budget reports of the Helium 
     Operations.

[[Page H11055]]

       ``(3) The Statement of Operations shall include but not be 
     limited to the revenues from, and costs of, sales of crude 
     helium, the storage and transportation of crude helium, the 
     production, refining and marketing of refined helium, and the 
     maintenance and operation of helium storage facilities at the 
     Bureau of Mines Cliffside Field. The term `revenues' for this 
     purpose shall exclude (A) royalties paid to the United States 
     for production of helium or other extraction of resources, 
     except to the extent that the Helium Operations incur direct 
     costs in connection therewith, and (B) proceeds from sales of 
     assets other than inventory. The term `expenses' shall 
     include, but not be limited to (i) all labor costs of the 
     Bureau of Mines Helium Operations, and of the Department of 
     the Interior in connection therewith, and (ii) for financial 
     reporting purposes but not in connection with the 
     determination of sales prices in section 6(c), all current-
     period interest on outstanding repayable amounts (as 
     described in section 6(c)) calculated at the same rates as 
     such interest was calculated prior to the enactment of the 
     Helium Privatization Act of 1995.
       ``(4) The balance sheet shall include, but not be limited 
     to, on the asset side, the present discounted market value of 
     crude helium reserves; and on the liability side, the accrued 
     liability for principal and interest on debt to the United 
     States. For financial reporting purposes but not in 
     connection with the determination of sales prices in section 
     6(c), the balance sheet shall also include accrued but unpaid 
     interest on outstanding repayable amounts (as described in 
     section 6(c)) through the date of the report, calculated at 
     the same rates as such interest was calculated prior to the 
     enactment of the Helium Privatization Act of 1995.''.

     SEC. 9018. LAND CONVEYANCE IN POTTER COUNTY, TEXAS.

       (a) In General.--The Secretary of the Interior shall 
     transfer all right, title, and interest of the United States 
     in and to the parcel of land described in subsection (b) to 
     the Texas Plains Girl Scout Council for consideration of $1, 
     reserving to the United States such easements as may be 
     necessary for pipeline rights-of-way.
       (b) Land Description.--The parcel of land referred to in 
     subsection (a) is all those certain lots, tracts or parcels 
     of land lying and being situated in the County of Potter and 
     State of Texas, and being the East Three Hundred Thirty-One 
     (E331) acres out of Section Seventy-eight (78) in Block Nine 
     (9), B.S. & F. Survey, (sometimes known as the G. D. Landis 
     pasture) Potter County, Texas, located by certificate No. 1/
     39 and evidenced by letters patents Nos. 411 and 412 issued 
     by the State of Texas under date of November 23, 1937, and of 
     record in Vol. 66A of the Patent Records of the State of 
     Texas. The metes and bounds description of such lands is as 
     follows:
       (1) First tract.--One Hundred Seventy-one (171) acres of 
     land known as the North part of the East part of said survey 
     Seventy-eight (78) aforesaid, described by metes and bounds 
     as follows:

     Beginning at a stone 20 x 12 x 3 inches marked X, set by W. 
     D. Twichell in 1905, for the Northeast corner of this survey 
     and the Northwest corner of Section 59;

     Thence, South 0 degrees 12 minutes East with the West line of 
     said Section 59, 999.4 varas to the Northeast corner of the 
     South 160 acres of East half of Section 78;

     Thence, North 89 degrees 47 minutes West with the North line 
     of the South 150 acres of the East half, 956.8 varas to a 
     point in the East line of the West half Section 78;

     Thence North 0 degrees 10 minutes West with the East line of 
     the West half 999.4 varas to a stone 18 x 14 x 3 inches in 
     the middle of the South line of Section 79;

     Thence South 89 degrees 47 minutes East 965 varas to the 
     place of beginning.
       (2) Second tract.--One Hundred Sixty (160) acres of land 
     known as the South part of the East part of said survey No. 
     Seventy-eight (78) described by metes and bounds as follows:

     Beginning at the Southwest corner of Section 59, a stone 
     marked X and a pile of stones;

     Thence North 89 degrees 47 minutes West with the North line 
     of Section 77, 966.5 varas to the Southeast corner of the 
     West half of Section 78; Thence North 0 degrees 10 minutes 
     West with the East line of the West half of Section 78;

     Thence South 89 degrees 47 minutes East 965.8 varas to a 
     point in the East line of Section 78;

     Thence South 0 degrees 12 minutes East 934.6 varas to the 
     place of beginning.

     Containing an area of 331 acres, more or less.
                      Subtitle B--Water and Power

                PART 1--POWER MARKETING ADMINISTRATIONS

     SEC. 9201. SHORT TITLE.

       This part may be cited as the ``Power Administration Act''.

     SEC. 9202. EVALUATION OF SALES OF SOUTHEASTERN, SOUTHWESTERN, 
                   AND WESTERN AREA POWER ADMINISTRATION 
                   FACILITIES.

       (a) Repeals.--The following provisions are repealed:
       (1) Section 505 of Public Law 102-377, the Fiscal Year 1993 
     Energy and Water Development Appropriations Act.
       (2) Section 208 of Public Law 99-349, the Urgent 
     Supplemental Appropriations Act, 1986.
       (3) Section 510 of Public Law 101-514, the Fiscal Year 1991 
     Energy and Water Development appropriations Act.
       (b) Evaluation of Issues.--(1) The Secretary of Energy, the 
     Secretary of the Interior, and the Secretary of the Army 
     shall enter into arrangements with an experienced private 
     sector firm to serve as advisor to the Secretaries with 
     respect to the sale of the facilities used to generate and 
     transmit the electric power marketed by the Southeastern 
     Power Administration, the Southwestern Power Administration 
     and the Western Area Power Administration, including all 
     transmission and related structures, equipment, facilities 
     and all real, tangible and intangible property (including 
     rights-of-way) which are used in connection with, and 
     necessary for, the operation of such power generation and 
     transmission facilities.
       (2) Prior to December 31, 1996, the advisor shall provide 
     to the Secretaries and the Congress a report identifying all 
     recipients of water and power from such facilities, all 
     relevant contracts, debt obligations, equity interests, and 
     other binding agreements which apply to the facilities 
     concerned and to the sale of electric power from such 
     facilities, all assets tangible or intangible, all applicable 
     requirements relating to environmental mitigation, Indian 
     trust responsibilities, land ownership or use rights relevant 
     to the proposed transfers which could terminate based on a 
     transfer out of Federal ownership, and navigational 
     requirements which affect the operation of such facilities.
       (3) In conducting the evaluation, the Secretaries and the 
     advisor should also recognize that many of the dams and 
     reservoirs associated with the generation of electric power 
     marketed by the Power Marketing Administrations are first and 
     foremost water supply, flood control, or navigation projects. 
     In general, power generation is incidental to these primary 
     purposes. In addition, there are also secondary purposes such 
     as recreation and environmental values which are served by 
     these facilities as well as the power production. The 
     evaluation should assume that such facilities will continue 
     to be operated in a manner consistent with their current, 
     primary purposes and the evaluation directed by this section 
     shall not assume any changes in the other current operational 
     objectives of the facilities.
       (4) Such evaluation shall also include an evaluation of the 
     tax consequences, and the revenue impacts of such 
     consequences for the United States, of possible arrangements 
     for the sale of generation and transmission facilities to 
     potential transferees identified by the advisor. The report 
     shall also investigate alternative groupings of such 
     generation and transmission facilities for purposes of sale 
     in order to determine which groupings would be most desirable 
     for purposes of effectuating such sales. Proposed transfers 
     should be structured by watershed or by project unless the 
     advisor can provide satisfactory information to the 
     Secretaries that another alternative should be used. Asset 
     groupings shall specifically be designed to avoid the sale of 
     the most valuable assets while the Federal government would 
     be forced to retain the less valuable assets.

     SEC. 9203. BONNEVILLE POWER ADMINISTRATION APPROPRIATIONS 
                   REFINANCING.

       (a) Definitions.--For the purposes of this section:
       (1) The term ``Administrator'' means the Administrator of 
     the Bonneville Power Administration.
       (2) The term ``capital investment'' means a capitalized 
     cost funded by Federal appropriations that--
       (A) is for a project, facility, or separable unit or 
     feature of a project or facility;
       (B) is a cost for which the Administrator is required by 
     law to establish rates to repay to the United States Treasury 
     through the sale of electric power, transmission, or other 
     services;
       (C) excludes a Federal irrigation investment; and
       (D) excludes an investment financed by the current revenues 
     of the Administrator or by bonds issued and sold, or 
     authorized to be issued and sold, by the Administrator under 
     section 13 of the Federal Columbia River Transmission System 
     Act (16 U.S.C. 838(k)).
       (3) The term ``new capital investment'' means a capital 
     investment for a project, facility, or separable unit or 
     feature of a project or facility, placed in service after 
     September 30, 1995.
       (4) The term ``old capital investment'' means a capital 
     investment whose capitalized cost--
       (A) was incurred, but not repaid, before October 1, 1995; 
     and
       (B) was for a project, facility, or separable unit or 
     feature of a project or facility, placed in service before 
     October 1, 1995.
       (5) The term ``repayment date'' means the end of the period 
     within which the Administrator's rates are to assure the 
     repayment of the principal amount of a capital investment.
       (6) The term ``Treasury rate'' means--
       (A) for an old capital investment, a rate determined by the 
     Secretary of the Treasury, taking into consideration 
     prevailing market yields, during the month preceding October 
     1, 1995, on outstanding interest-bearing obligations of the 
     United States with periods to maturity comparable to the 
     period between October 1, 1995, and the repayment date for 
     the old capital investment; and
       (B) for a new capital investment, a rate determined by the 
     Secretary of the Treasury, taking into consideration 
     prevailing market 

[[Page H11056]]

     yields, during the month preceding the beginning of the 
     fiscal year in which the related project, facility, or 
     separable unit or feature is placed in service, on 
     outstanding interest-bearing obligations of the United 
     States with periods to maturity comparable to the period 
     between the beginning of the fiscal year and the repayment 
     date for the new capital investment.
       (b) New Principal Amounts.--(1) Effective October 1, 1995, 
     an old capital investment shall have a new principal amount 
     that is the sum of--
       (A) the present value of the old payment amounts for the 
     old capital investment, calculated using a discount rate 
     equal to the Treasury rate for the old capital investment; 
     and
       (B) an amount equal to $100,000,000 multiplied by a 
     fraction whose numerator is the principal amount of the old 
     payment amounts for the old capital investment and whose 
     denominator is the sum of the principal amounts of the old 
     payment amounts for all old capital investments.
       (2) With the approval of the Secretary of the Treasury 
     based solely on consistency with this Act, the Administrator 
     shall determine the new principal amounts under paragraph (1) 
     and the assignment of interest rates to the new principal 
     amounts under subsection (c).
       (3) For the purposes of this section, ``old payment 
     amounts'' means, for an old capital investment, the annual 
     interest and principal that the Administrator would have paid 
     to the United States Treasury from October 1, 1995, if this 
     section were not enacted, assuming that--
       (A) the principal were repaid--
       (i) on the repayment date the Administrator assigned before 
     October 1, 1993, to the old capital investment, or
       (ii) with respect to an old capital investment for which 
     the Administrator has not assigned a repayment date before 
     October 1, 1993, on a repayment date the Administrator shall 
     assign to the old capital investment in accordance with 
     paragraph 10(d)(1) of the version of Department of Energy 
     Order RA 6120.2 in effect on October 1, 1993; and
       (B) interest were paid--
       (i) at the interest rate the Administrator assigned before 
     October 1, 1993, to the old capital investment, or
       (ii) with respect to an old capital investment for which 
     the Administrator has not assigned an interest rate before 
     October 1, 1993, at a rate determined by the Secretary of the 
     Treasury, taking into consideration prevailing market yields, 
     during the month preceding the beginning of the fiscal year 
     in which the related project, facility, or separable unit or 
     feature is placed in service, on outstanding interest-bearing 
     obligations of the United States with periods to maturity 
     comparable to the period between the beginning of the fiscal 
     year and the repayment date for the old capital investment.
       (c) Interest Rate for New Principal Amounts.--As of October 
     1, 1995, the unpaid balance on the new principal amount 
     established for an old capital investment under subsection 
     (b) shall bear interest annually at the Treasury rate for the 
     old capital investment until the earlier of the date that the 
     new principal amount is repaid or the repayment date for the 
     new principal amount.
       (d) Repayment Dates.--As of October 1, 1995, the repayment 
     date for the new principal amount established for an old 
     capital investment under subsection (b) shall be no earlier 
     than the repayment date for the old capital investment 
     assumed in subsection (b)(3)(A).
       (e) Prepayment Limitations.--During the period October 1, 
     1995, through September 30, 2000, the total new principal 
     amounts of old capital investments, as established under 
     subsection (b), that the Administrator may pay before their 
     respective repayment dates shall not exceed $100,000,000.
       (f) Interest Rates for New Capital Investments During 
     Construction.--(1) The principal amount of a new capital 
     investment includes interest in each fiscal year of 
     construction of the related project, facility, or separable 
     unit or feature at a rate equal to the one-year rate for the 
     fiscal year on the sum of--
       (A) construction expenditures that were made from the date 
     construction commenced through the end of the fiscal year, 
     and
       (B) accrued interest during construction.
       (2) The Administrator shall not be required to pay, during 
     construction of the project, facility, or separable unit or 
     feature, the interest calculated, accrued, and capitalized 
     under paragraph (1).
       (3) For the purposes of this subsection, ``one-year rate'' 
     for a fiscal year means a rate determined by the Secretary of 
     the Treasury, taking into consideration prevailing market 
     yields, during the month preceding the beginning of the 
     fiscal year, on outstanding interest-bearing obligations of 
     the United States with periods to maturity of approximately 
     one year.
       (g) Interest Rates for New Capital Investments.--The unpaid 
     balance on the principal amount of a new capital investment 
     bears interest at the Treasury rate for the new capital 
     investment from the date the related project, facility, or 
     separable unit or feature is placed in service until the 
     earlier of the date the new capital investment is repaid or 
     the repayment date for the new capital investment.
       (h) Credits to Administrator's Payments to the United 
     States Treasury.--The Confederated Tribe of the Colville 
     Reservation Grand Coulee Dam Settlement Act (Public Law 103-
     436) is amended by striking section 6 and inserting the 
     following:

     ``SEC. 6. CREDITS TO ADMINISTRATOR'S PAYMENTS TO THE UNITED 
                   STATES TREASURY.

       ``(a) In General.--So long as the Adminisatrator makes 
     annual payments to the tribes under the settlement agreement, 
     the Administrator shall apply against amounts otherwise 
     payable by the Administrator to the United States Treasury a 
     credit that reduces the Administrator's payment in the amount 
     and for each fiscal year as follows: $15,250,000 in fiscal 
     year 1996; $15,860,000 in fiscal year 1997; $16,490,000 in 
     fiscal year 1998; $17,150,000 in fiscal year 1999; 
     $17,840,000 in fiscal year 2000; and $4,100,000 in each 
     succeeding fiscal year.
       ``(b) Definitions.--For the purposes of this section--
       ``(1) the term `settlement agreement' means that settlement 
     agreement between the United States of America and the 
     Confederated Tribes of the Colville Reservation signed by the 
     Tribes on April 16, 1994, and by the United States of America 
     on April 21, 1994, which settlement agreement resolves claims 
     of the Tribes in Docket 181-D of the Indian Claims 
     Commission, which docket has been transferred to the United 
     States Court of Federal Claims; and
       ``(2) the term `Tribes' means the Confederated Tribes of 
     the Colville Reservation, a Federally recognized Indian 
     Tribe.''.
       (i) Contract Provisions.--In each contract of the 
     Administrator that provides for the Administrator to sell 
     electric power, transmission, or related services, and that 
     is in effect after September 30, 1995, the Administrator 
     shall offer to include, or as the case may be, shall offer to 
     amend to include, provisions specifying that after September 
     30, 1995--
       (1) the Administrator shall establish rates and charges on 
     the basis that--
       (A) the principal amount of an old capital investment shall 
     be no greater than the new principal amount established under 
     subsection (b);
       (B) the interest rate applicable to the unpaid balance of 
     the new principal amount of an old capital investment shall 
     be no greater than the interest rate established under 
     subsection (c);
       (C) any payment of principal of an old capital investment 
     shall reduce the outstanding principal balance of the old 
     capital investment in the amount of the payment at the time 
     the payment is tendered; and
       (D) any payment of interest on the unpaid balance of the 
     new principal amount of an old capital investment shall be a 
     credit against the appropriate interest account in the amount 
     of the payment at the time the payment is tendered;
       (2) apart from charges necessary to repay the new principal 
     amount of an old capital investment as established under 
     subsection (b), and to pay the interest on the principal 
     amount under subsection (c), no amount may be charged for 
     return to the United States Treasury as repayment for or 
     return on an old capital investment, whether by way of rate, 
     rent, lease payment, assessment, user charge, or any other 
     fee;
       (3) amounts provided under section 1304 of title 31, United 
     States Code, shall be available to pay, and shall be the sole 
     source for payment of, a judgment against or settlement by 
     the Administrator or the United States on a claim for a 
     breach of the contract provisions required by this Act; and
       (4) the contract provisions specified in this Act shall 
     not--
       (A) preclude the Administrator from recovering, through 
     rates or other means, any tax that is generally imposed on 
     electric utilities in the United States, or
       (B) affect the Administrator's authority under applicable 
     law, including section 7(g) of the Pacific Northwest Electric 
     Power Planning and Conservation Act (16 U.S.C. 839e(g)), to--
       (i) allocate costs and benefits, including but not limited 
     to fish and wildlife costs, to rates or resources, or
       (ii) design rates.
       (j) Savings Provisions.--(1) This section does not affect 
     the obligation of the Administrator to repay the principal 
     associated with each capital investment, and to pay interest 
     on the principal, only from the ``Administrator's net 
     proceeds,'' as defined in section 13 of the Federal Columbia 
     River Transmission System Act (16 U.S.C. 838k(b)).
       (2) Except as provided in subsection (e) of this section, 
     this section does not affect the authority of the 
     Administrator to pay all or a portion of the principal amount 
     associated with a capital investment before the repayment 
     date for the principal amount.
       (k) DOE Study.--(1) The Administrator shall undertake a 
     study to determine the effect that increases in the rates for 
     electric power sales made by the Administrator may have on 
     the customer base of the Bonneville Power Administration. 
     Such study shall identify other sources of electric power 
     that may be available to customers of the Bonneville Power 
     Administration and shall estimate the level at which higher 
     rates for power sales by the Administration may result in the 
     loss of customers by the Administration.
       (2) The Administrator shall undertake a study to determine 
     the total prior costs incurred by the Bonneville Power 
     Administration for compliance with the provisions of the 
     Endangered Species Act of 1973 and the total future costs 
     anticipated to be incurred by the Administration for 
     compliance with such provisions.

[[Page H11057]]

       (3) The Administrator shall submit the results of the 
     studies undertaken under this section to the Congress within 
     180 days after the date of the enactment of this Act.

                          PART 2--RECLAMATION

     SEC. 9211. PREPAYMENT OF CERTAIN REPAYMENT CONTRACTS BETWEEN 
                   THE UNITED STATES AND THE CENTRAL UTAH WATER 
                   CONSERVANCY DISTRICT.

       The second sentence of section 210 of the Central Utah 
     Project Completion Act (106 Stat. 4624) is amended to read as 
     follows: ``The Secretary of the Interior shall allow for 
     prepayment of the repayment contract between the United 
     States and the Central Utah Water Conservancy District dated 
     December 28, 1965, and supplemented on November 26, 1985, 
     providing for repayment of the municipal and industrial water 
     delivery facilities for which repayment is provided pursuant 
     to such contract, under such terms and conditions as the 
     Secretary deems appropriate to protect the interest of the 
     United States, which shall be similar to the terms and 
     conditions contained in the supplemental contract that 
     provided for the prepayment of the Jordan Aqueduct dated 
     October 28, 1993. The District shall exercise its right to 
     prepayment pursuant to this section by the end of fiscal year 
     2002.''.

     SEC. 9212. TREATMENT OF CITY OF FOLSOM AS A CENTRAL VALLEY 
                   PROJECT CONTRACTOR.

       For the purposes of being considered eligible to be a 
     transferee of Central Valley Project water to be used for 
     municipal and industrial purposes, the city of Folsom, 
     California, shall be treated as a Central Valley Project 
     contractor as of November 1, 1990.

     SEC. 9213. SLY PARK.

       (a) Short Title.--This section may be cited as the ``Sly 
     Park Unit Conveyance Act''.
       (b) Definitions.--For purposes of this section:
       (1) The term ``El Dorado Irrigation District'' or 
     ``District'' means a political subdivision of the State of 
     California duly organized, existing, and acting pursuant to 
     the laws thereof with its principal place of business in the 
     city of Placerville, El Dorado County, California.
       (2) The term ``Secretary'' means the Secretary of the 
     Interior.
       (3) The term ``Sly Park Unit'' means the Sly Park Dam and 
     Reservoir, Camp Creek Diversion Dam and Tunnel and conduits 
     and canals as authorized under the American River Act of 
     October 14, 1949 (63 Stat. 852), together with all other 
     facilities owned by the United States including those used to 
     convey and store water delivered from Sly Park, as well as 
     all recreation facilities associated thereto.
       (c) Sale of the Sly Park Unit.--
       (1) In general.--The Secretary shall, within one year after 
     the date of enactment of this Act, sell and convey to the El 
     Dorado Irrigation District the Sly Park Unit. Within such 
     one-year period, the Secretary shall also transfer and assign 
     the water rights relating to the Sly Park Unit held in trust 
     by the Secretary for diversion and storage under California 
     State permits numbered 2631, 5645A, 10473, and 10474 to the 
     El Dorado Irrigation District.
       (2) Sale price.--The sale price shall not exceed--
       (A) the construction costs ($30,926,230), as included in 
     the accounts of the Secretary, plus
       (B) interest on the construction costs allocated to 
     domestic use, at the authorized rate included in enactment of 
     the Act of October 14, 1949 (63 Stat. 852), up to an agreed 
     upon date, less
       (C) all revenues to date as collected under the terms of 
     the contract between the United States and the El Dorado 
     Irrigation District, estimated at $9,146,885.
       (3) Terms of payment.--The Secretary shall provide for a 
     payment of the purchase price under paragraph (2) on terms 
     not to exceed 20 years. The interest rate to be paid by the 
     District shall be the authorized rate included in the Act of 
     October 14, 1949 (63 Stat. 852). Section 213(c) of the 
     Reclamation Reform Act of 1982 (43 U.S.C. 390mm(c)) shall not 
     apply to the purchase of the Sly Park Unit under this 
     section.
       (4) Conveyance.--Upon signing the agreement to carry out 
     the sale required by this section, the Secretary shall convey 
     and assign to the El Dorado Irrigation District all right, 
     title, and interest of the United States in and to the Sly 
     Park Unit.
       (5) No additional environmental impact.--The Congress 
     specifically finds that (A) the sale, conveyance and 
     assignment of the Sly Park Unit and water rights under this 
     section involves the transfer of the ownership and operation 
     of an existing ongoing water project, (B) the Sly Park Unit 
     operation, facilities and water rights have been, and after 
     the sale and transfer will continue to be, committed to 
     maximum reasonable and beneficial use for existing services, 
     and (C) the sale, conveyance and assignment of the Sly Park 
     Unit and water rights does not involve any additional growth 
     or expansion of the project or other environmental impacts. 
     Consequently, the sale, conveyance and assignment of the Sly 
     Park Unit and water rights shall not be subject to 
     environmental review pursuant to the National Environmental 
     Policy Act of 1969 (42 U.S.C. 4332) or endangered species 
     review or consultation pursuant to section 7 of the 
     Endangered Species Act of 1973 (16 U.S.C. 1536).

     SEC. 9214. HETCH HETCHY DAM.

       Section 7 of the Act of December 19, 1913 (38 Stat. 242), 
     is amended--
       (1) by striking ``$30,000'' in the first sentence and 
     inserting ``$8,000,000'', and
       (2) by amending the second and third sentences to read as 
     follows: ``These funds shall be placed in a separate fund by 
     the United States and, notwithstanding any other provision of 
     law, shall not be available for obligation or expenditure 
     until appropriated by the Congress. The highest priority use 
     of the funds shall be for annual operation of Yosemite 
     National Park, with the remainder of any funds to be used to 
     fund operations of other national parks in the State of 
     California.''.
         Subtitle C--National Parks, Forests, and Public Lands

                       PART 1--CONCESSION REFORM

     SEC. 9301. SHORT TITLE.

       This part may be cited as the ``Visitor Facilities and 
     Services Enhancement Act of 1995''.

     SEC. 9302. PURPOSE.

       The purpose of this part is to ensure that quality visitor 
     facilities and services are provided by the Federal land 
     management agencies (Forest Service, United States Fish and 
     Wildlife Service, National Park Service, Bureau of Land 
     Management, Bureau of Reclamation and United States Army 
     Corps of Engineers). Each Federal land management agency 
     shall implement a program to encourage appropriate 
     development and operation of services and facilities for the 
     accommodation of visitors. The program implemented by each 
     such agency shall consist of actions which--
       (1) recognize the importance of the private sector in 
     providing a quality visitor experience on Federal lands by 
     encouraging private sector investments for facilities and 
     services on Federal lands under a fair and competitive 
     process;
       (2) establish the basis for an effective relationship 
     between the land management agencies and private businesses 
     operating on public lands and waters in efforts to serve the 
     public and to protect the resources of these areas;
       (3) measure quality and value of services provided by 
     concessioners and provide incentives for consistent 
     excellence.
       (4) ensure a fair return to the Federal Government; and
       (5) are consistent among the various agencies to the extent 
     practicable in order to increase efficiency of the Federal 
     Government and simplify requirements for concessioners.

     SEC. 9303. DEFINITIONS.

       For the purposes of this part:
       (1) The term ``adjusted gross receipts'' means gross 
     receipts less revenue derived from goods and services 
     provided on other than Federal lands or conveyed to units of 
     Government for hunting or fishing licenses or for entrance or 
     recreation fees, or from such other exclusions as the 
     Secretary concerned might apply.
       (2) The term ``agency head'' means the head of an agency or 
     his or her designated representative.
       (3) The term ``concessioner'' means a person or other 
     entity acting under a concession authorization which provides 
     public services, facilities, or activities on Federal lands 
     or waters pursuant to a concession services agreement or 
     concession license.
       (4) The term ``concession license'' means a written 
     contract between the agency head and the concessioner which 
     sets forth the terms and conditions under which the 
     concessioner is authorized to provide recreation services or 
     activities on a limited basis as well as the rights and 
     obligations of the Federal Government.
       (5) The term ``concession service agreement'' means a 
     written contract between the agency head and the concessioner 
     which sets forth the terms and conditions under which the 
     concessioner is authorized to provide visitor services, 
     facilities, or activities as well as the rights and 
     obligations of the Federal Government.
       (6) The term ``gross receipts'' means revenue from goods or 
     services provided by concession services, facilities, or 
     activities on Federal lands and waters.
       (7) The term ``performance incentive'' means a credit based 
     on past performance toward the score awarded by the Secretary 
     to a concessioner's proposal submitted in response to a 
     solicitation for the reissuance of such contract.
       (8) The term ``proposal'' means the complete submission for 
     a concession service agreement offered in response to the 
     solicitation for such concession service agreement.
       (9) The term ``prospectus'' means a document or documents 
     issued by the Secretary concerned and included with a 
     solicitation which sets forth the minimum requirements for 
     the award of a concession service agreement.
       (10) The term ``Secretary concerned'' means--
       (A) the Secretary of the Interior with respect to the 
     United States Fish and Wildlife Service, National Park 
     Service, Bureau of Land Management, and Bureau of 
     Reclamation;
       (B) the Secretary of Agriculture with respect to the Forest 
     Service; and
       (C) the Secretary of the Army with respect to the United 
     States Army Corps of Engineers.
       (11) The term ``solicitation'' means a request by the 
     Secretary concerned for proposals in response to a 
     prospectus.

[[Page H11058]]


     SEC. 9304. NATURE AND TYPES OF CONCESSION AUTHORIZATIONS.

       (a) In General.--The Secretary concerned may enter into 
     concession authorizations, as follows:
       (1) Concession services agreement.--A concession service 
     agreement shall be entered into for all concessions where the 
     Secretary concerned makes a finding that the provision of 
     concession services is in the interest of the Federal 
     Government and issues either a competitive offering for 
     concession services, facilities or activities or a 
     noncompetitive offering for such services, facilities, or 
     activities based on a finding that due to special 
     circumstances it is not in the public interest of the United 
     States to award a concession service agreement on a 
     competitive basis. Where the concessioner develops or uses 
     fixed facilities on Federal lands, the Secretary concerned 
     shall issue a lease.
       (2) Concession license.--Whenever the Secretary concerned 
     makes a finding that public enjoyment of Federal lands would 
     be enhanced through the provision of concession services and 
     that there exists no need to limit the number of 
     concessioners providing such services, he shall consider 
     entering into a concession license with a qualified 
     concessioner. Activities covered under a concession license 
     would typically be one-time, intermittent, or infrequently 
     scheduled. The Secretary concerned may not limit the number 
     of concession licenses issued for the same types of 
     activities in a particular geographic area. The Secretary 
     concerned shall monitor such concession licenses to determine 
     whether issuance of a concession service agreement would be a 
     more appropriate authorization.
       (3) Lands under multiple jurisdictions.--The Secretaries of 
     the Departments concerned shall designate an agency to be the 
     lead agency concerning concessions which conduct a single 
     operation on lands or waters under the jurisdiction of more 
     than one agency. Unless otherwise agreed to by each such 
     Secretary concerned, the lead agency shall be that agency 
     under whose jurisdiction the concessioner generates the 
     greatest amount of gross receipts. The agency so designated 
     shall issue a single authorization and collect a single fee 
     under paragraphs (1) and (2) for such operation. Such 
     authorization shall provide for use in a manner consistent 
     with the plans and policies for each agency.
       (b) Leases of Areas to States and State Third Party 
     Agreement Not Covered.--This part does not apply to leases or 
     licenses of entire areas to States or other political 
     subdivisions or to any third party agreement issued by any 
     such State or political subdivisions with respect to such 
     entire area.

     SEC. 9305. COMPETITIVE SELECTION PROCESS FOR CONCESSION 
                   SERVICE AGREEMENTS.

       (a) Award to Best Proposal.--The Secretary shall enter 
     into, and reissue, a concession service agreement with the 
     person whom the Secretary determines in accordance with this 
     section submits the best proposal through a competitive 
     process as defined in this section.
       (b) Solicitation and Prospectus.--The Secretary concerned 
     shall prepare a solicitation and prospectus which describes 
     the concession service opportunity and shall publish, in 
     appropriate locations, announcements of the availability of 
     the solicitation, prospectus, and the concession service 
     opportunity. The solicitation shall include (but need not be 
     limited to) the following:
       (1) A description of the services and facilities to be 
     provided by the concessioner.
       (2) The level of capital investment required by the 
     concessioner (if any).
       (3) Terms and conditions of the concession service 
     agreement.
       (4) Minimum facilities and services to be provided by the 
     Secretary to the concessioner and the public.
       (5) Minimum fees to the United States.
       (c) Factors and Minimum Standards in Determining Best 
     Proposal.--The prospectus shall assign a weight to each 
     factor indentified therein related to the importance of such 
     factor in the selection process. Points shall be awarded for 
     each such factor, based on the relative strength of the 
     proposal concerning that factor. In determining the best 
     proposal, the Secretary concerned shall take into 
     consideration (but shall not be limited to) the following, 
     including whether the proposal meets the minimum requirements 
     (if any) of the Secretary for each of the following:
       (1) Responsiveness to the prospectus.
       (2) Quality of visitor services taking into account the 
     nature of equipment and facilities to be provided.
       (3) Experience and performance in providing similar 
     services. This factor shall account for not less than 20 
     percent of the maximum points available under any prospectus. 
     Where the Secretary concerned determines it to be warranted 
     to provide for a high quality visitor experience, the 
     prospectus for a concession service agreement shall provide 
     greater weight to this factor based on such aspects of the 
     concession service agreement as scope or size, complexity, 
     nature of technical skills required, and site-specific 
     knowledge of the area. The similarity of the qualifying 
     experience outlined in the proposal to the nature of the 
     services required under the concession service agreement and 
     the length of such qualifying experience shall be the basis 
     for awarding points for this factor.
       (4) Record of resource protection (as appropriate for 
     services and activities with potential to impact natural or 
     cultural resources).
       (5) Financial capability.
       (6) Fees to the United States.
       (d) Selection Process.--The process for selecting the best 
     proposal shall consist of the following:
       (1) First, the Secretary concerned shall identify those 
     proposals which meet the minimum standards (if any) for the 
     factors identified under subsection (c).
       (2) Second, the Secretary concerned shall evaluate all 
     proposals identified under paragraph (1), considering all 
     factors identified under subsection (c), as well as 
     performance incentives earned under section 9306(c) and 
     renewal penalties incurred under section 9306(d).
       (3) Third, the Secretary concerned shall offer the 
     concession service agreement to the best qualified applicant 
     as determined by the evaluation under paragraph (2).
       (e) Inapplicability of NEPA to Temporary Extensions and 
     Similar Reissuance of Concessions Agreements.--The temporary 
     extension of a concession authorization, or reissuance of a 
     concession authorization to provide concession services 
     similar in nature and amount to concession services provided 
     under the previous authorization, is hereby determined to be 
     a categorical exclusion as provided for under the National 
     Environmental Policy Act of 1969 (42 U.S.C. 4331 et seq.).
       (f) Provision for Additional Related Services.--The 
     Secretary concerned may modify the concession service 
     agreement to allow concessioners to provide services closely 
     related to such agreement, if the Secretary concerned 
     determines that such changes would enhance the safety or 
     enjoyment of visitors and would not unduly restrict the award 
     of future concession service agreements.

     SEC. 9306. CONCESSIONER EVALUATIONS.

       (a) In General.--The Secretary concerned shall develop a 
     program of evaluations of the concessioners operating under a 
     concession service agreement who are providing visitor 
     services in areas under the jurisdiction of the Secretary. 
     The evaluations shall be on an annual basis over the duration 
     of the concession service agreement. In developing the 
     evaluation program, the Secretary concerned shall seek broad 
     public input from concessioners, State agencies, and other 
     interested persons. The evaluation program shall--
       (1) include the four program areas of: quality of visitor 
     services provided; resource protection (as applicable); 
     financial performance; and compliance with concession service 
     agreement provisions and pertinent laws and regulations;
       (2) define three levels of performance--
       (A) good, which shall be defined as a level of performance 
     which exceeds the requirements outlined in the prospectus, 
     but which is attainable;
       (B) satisfactory, which shall be defined as meeting the 
     requirements as contained in the prospectus; and
       (C) unsatisfactory, which shall be defined as not meeting 
     the requirements contained in the prospectus;
       (3) be based on criteria which--
       (A) are objective, measurable, and attainable; and
       (B) shall include as applicable general standards for all 
     concession operations, industry-specific standards, and 
     standards developed by the Secretary concerned in 
     consultation with the concessioner for each concession 
     service agreement;
       (4) be designed in such a manner that the annual evaluation 
     represents the overall performance of the concessioner 
     without undue weight to matters of limited importance; and
       (5) take into account factors beyond the control of the 
     concessioner, such as general market and other economic 
     fluctuations, as well as weather and other natural phenomena, 
     so that such factors may not be used as a justification for 
     denial of performance incentives.
       (b) Annual Evaluations.--
       (1) Requirements.--The Secretary concerned shall at least 
     semiannually review the performance of each concessioner and 
     shall assign an overall rating for each concessioner for each 
     year. The procedure for any performance evaluation shall be 
     provided to the concessioner prior to the beginning of any 
     evaluation period. Such procedure shall provide for adequate 
     notification of the concessioner prior to any on-site 
     evaluation and permit a representative of the concessioner to 
     observe the evaluation. The concessioner shall be entitled to 
     a complete explanation of any rating given. If the 
     Secretary's performance evaluation for any year results in an 
     unsatisfactory rating of the concessioner, the Secretary 
     concerned shall so notify the concessioner, in writing. Such 
     notification shall identify the nature of conditions which 
     require corrective action and shall provide the concessioner 
     with a list of corrective actions necessary to meet the 
     standards.
       (2) Suspension, revocation, and termination of 
     authorization.--The Secretary concerned may suspend, revoke, 
     or terminate a concession authorization if the concessioner 
     fails to correct the conditions identified by the Secretary 
     within the limitations established by the Secretary at the 
     time notice of the unsatisfactory rating is provided to the 
     concessioner. The Secretary may immediately suspend or revoke 
     a concession authorization where necessary to protect the 
     public health or welfare.
       (c) Performance incentives.--

[[Page H11059]]

       (1) In evaluating the performance of a concessioner, the 
     incumbent concessioner is entitled to a performance incentive 
     of--
       (A) one percent of the maximum points available under such 
     evaluations for performance in each year in which the 
     concessioner's annual performance is rated good, as specified 
     in subsection (a)(2)(A), and
       (B) a one-time three year merit term extension upon a 
     finding that a concessioner has been rated as good in each 
     annual performance evaluation through the term of the 
     concession service agreement.
       (2) A performance incentive awarded under paragraph (1)(A) 
     may not exceed 10 percent of the maximum points available 
     under such evaluations over the life of the concession 
     service agreement.
       (d) Renewal penalty.--In evaluating the performance of a 
     concessioner, a concessioner shall be penalized one percent 
     of the maximum points available under such evaluation for 
     performance in each year in which the concessioner's annual 
     performance is found to be unsatisfactory.

     SEC. 9307. CAPITAL IMPROVEMENTS.

       (a) Private Sector Development.--It is the policy of the 
     United States to encourage the private sector to develop, 
     own, and maintain to the extent possible such public 
     recreation facilities which would enhance public use and 
     enjoyment of Federal lands as are contained in approved plans 
     developed by the Secretary concerned. Under the terms of this 
     part, concessioners may only construct or finance 
     construction under terms of section 9312 such public 
     facilities on Federal lands as are to be used by the 
     concessioner under the terms of their concession service 
     agreement or facilities which are necessary for the 
     concessioner to administer such public facilities on Federal 
     lands.
       (b) Investment Interest.--
       (1) In general.--A concessioner, who is required or 
     authorized under a concession service agreement pursuant to 
     this part to acquire or construct any structure, improvement, 
     or fixture pursuant to such agreement on Federal lands shall 
     have an investment interest therein, to the extent provided 
     by the agreement and this part. Such investment interest 
     shall not be extinguished by the expiration of such 
     agreement. Such investment interest may be assigned, 
     transferred, encumbered or relinquished.
       (2) Limitation.--Such investment interest shall not be 
     construed to include or imply any authority, privilege, or 
     right to operate or engage in any business or other activity, 
     and the use of any improvement in which the concessioner has 
     an investment interest shall be wholly subject to the 
     applicable provisions of the concession service agreement and 
     of laws and regulations relating to the area.
       (3) Federal property.--The agreement shall specify which 
     new improvements required under terms of the concession 
     service agreement, if any, shall become the property of the 
     Federal Government at the end of the agreement. No concession 
     service agreement shall provide for a concessioner to obtain 
     an investment interest in any building which is wholly owned 
     by the Federal Government. Title to the land on which such 
     structure, improvement, or fixture is placed shall remain in 
     the United States.
       (c) Sale of Assets.--If the existing concessioner is not 
     selected as the best qualified applicant at the time of 
     reissuance of a concession service agreement, the Secretary 
     concerned shall require the new concessioner to buy the 
     investment interest of the existing concessioner.
       (d) Closure of Concessioner Facilities.--In the event of a 
     decision by the Secretary concerned, that the public 
     interest, by reason of public and safety considerations or 
     for other reasons beyond the control of the concessioner, 
     requires the discontinuation or closure of facilities in 
     which the concessioner has an investment interest, the 
     Secretary shall compensate the concessioner in the amount 
     equal to the value of the investment interest.
       (e) Determination of Value of Investment Interest.--For 
     purposes of this part, the investment interest of any capital 
     improvement at the end of the concession service agreement 
     period is the actual cost of construction of such capital 
     improvement adjusted from the completion of such construction 
     by changes in the Consumer Price Index (selected in the same 
     manner as such Index is selected under section 9311(c)(2)) 
     less depreciation evidenced by the condition and prospective 
     serviceability in comparison with a new unit of like kind, 
     but not to exceed fair market value. Such value shall be 
     determined by appraisal and included in any prospectus.

     SEC. 9308. DURATION OF CONCESSION AUTHORIZATION.

       (a) Concession Service Agreement.--The standard term of a 
     concession service agreement shall be ten years. The 
     Secretary concerned may issue a concession service agreement 
     for less than ten years if he determines (in his discretion) 
     that the average annual gross receipts over the life of the 
     concession service agreement would be less than $100,000. The 
     Secretary concerned may not issue a concession service 
     agreement for less than five years. The Secretary concerned 
     shall issue a concession service agreement for longer than 
     ten years if the Secretary determines (in his discretion) 
     that such longer term is in the public interest or necessary 
     due to the extent of investment and associated financing 
     requirements and to meet the obligations assumed. The term 
     for a concession service agreement may not exceed 30 years.
       (b) Concession License.--The term for a concession license 
     may not exceed two years.
       (c) Temporary Extension.--The Secretary may agree to 
     temporary extensions of concession service agreements for up 
     to two years on a noncompetitive basis to avoid interruption 
     of services to the public.

     SEC. 9309. RATES AND CHARGES TO THE PUBLIC.

       In general, rates and charges to the public shall be set by 
     the concessioner. For concession service agreements only, a 
     concessioner's rates and charges to the public shall be 
     subject to the approval of the Secretary concerned in those 
     instances where the Secretary determines that sufficient 
     competition for such facilities and services does not exist 
     within or in close proximity to the area in which the 
     concessioner operates. In those instances, the concession 
     service agreement shall state that the reasonableness of the 
     concessioner's rates and charges to the public shall be 
     reviewed and approved by the Secretary concerned primarily by 
     comparison with those rates and charges for facilities and 
     services of comparable character under similar conditions, 
     with due consideration for length of season, seasonal 
     variations, average percentage of occupancy, accessibility, 
     availability and costs of labor and materials, type of 
     patronage, and other factors deemed significant by the 
     Secretary concerned. Such review shall be completed within 90 
     days of receipt of all necessary information, or the 
     requirement for the Secretary's approval shall be waived and 
     such rates and charges as proposed by the concessioner 
     considered to be approved for immediate use.

     SEC. 9310. TRANSFERABILITY OF CONCESSION AUTHORIZATIONS.

       (a) Concession Service Agreements.--
       (1) Approval required.--A concession service agreement is 
     transferable or assignable only upon the approval of the 
     Secretary concerned, which approval may not be unreasonably 
     withheld or delayed. The Secretary may not approve any such 
     transfer or assignment if the Secretary determines that the 
     prospective concessioner is or is likely to be unable to 
     completely satisfy all of the material requirements, terms, 
     and conditions of the agreement or that the terms of the 
     transfer or assignment would preclude providing appropriate 
     facilities or services to the public at reasonable rates.
       (2) Consideration period.--If the Secretary fails to 
     approve or disapprove a transfer or assignment under 
     paragraph (1) within 90 days after the date on which the 
     Secretary receives all necessary information requested by the 
     Secretary with respect to such transfer, the transfer or 
     assignment shall be deemed approved.
       (3) No modification of terms and conditions.--The terms and 
     conditions of the concessions service agreement shall not be 
     subject to modification by reason of any transfer or 
     assignment under this section.
       (4) Performance incentive.--Upon approval of the sale or 
     transfer, the prospective concessioner shall be entitled to 
     the benefit of performance incentives earned by the previous 
     concessioner.
       (b) Concession License.--A concession license may not be 
     transferred.

     SEC. 9311. FEES CHARGED BY THE UNITED STATES FOR CONCESSION 
                   AUTHORIZATIONS.

       (a) In General.--The Secretary concerned shall charge a fee 
     for the privilege of providing concession services pursuant 
     to this part. The fee for any concession service agreement 
     may include any of the following:
       (1) An annual cash payment for the privilege of providing 
     concession services.
       (2) The amount required for capital improvements required 
     pursuant to section 9307(a).
       (3) Fees for rental or lease of Government-owned facilities 
     or lands occupied by the concessioner.
       (4) Expenditures for maintenance of or improvements to 
     Government-owned facilities occupied by the concessioner.
       (b) Establishment of Amount.--
       (1) Minimum acceptable fee.--The Secretary concerned shall 
     establish a minimum fee for each applicable category 
     specified in paragraphs (1) through (4) of subsection (a) 
     which is acceptable to the Secretary under this section and 
     shall include the minimum fee in the prospectus under section 
     9305. This fee shall be based on historical data, where 
     available, as well as industry-specific and other market data 
     available to the Secretary concerned.
       (2) Final fee.--Except as provided by paragraph (3), the 
     final fee shall be the amount bid by the selected applicant 
     under section 9305.
       (3) Substantially similar services in a specific geographic 
     area.--Where the Secretary concerned simultaneously offers 
     authorizations for more than one river runner, outfitter, or 
     guide concession operation to provide substantially similar 
     services in a defined geographic area, the concession fee for 
     all such concessioners shall be specified by the Secretary 
     concerned in the prospectus. The Secretary concerned shall 
     base the fee on historical data, where available, as well as 
     on industry-specific and other market data available to the 
     Secretary concerned or may establish a charge per user day.
       (c) Adjustment of Fees.--
       (1) In general.--The amount of any fee for the term of the 
     concession service agreement 

[[Page H11060]]

     shall be set at the beginning of the concession authorization 
     and may only be modified on the basis of inflation, if the 
     annual payment is not determined by a percentage of adjusted 
     gross receipts (as measured by changes in the Consumer Price 
     Index), to reflect substantial changes from the conditions 
     specified in the prospectus, or in the event of an unforeseen 
     disaster.
       (2) CPI.--For the purposes of adjustments for inflation 
     under paragraph (1), the Federal agencies shall select a 
     Consumer Price Index published by the Bureau of Labor 
     Statistics and shall use such index in a consistent manner.
       (d) Concession License Fee.--The fee for a concession 
     license shall at least cover the program administrative costs 
     and may not be changed over the term of the license.

     SEC. 9312. DISPOSITION OF FEES.

       (a) Concession Improvement Account.--
       (1) In general.--The Secretary concerned shall, whenever 
     the concession service agreement requires or authorizes the 
     concessioner to make capital improvements or occupy 
     Government-owned facilities, require the concessioner to 
     establish a concession improvement account. The concessioner 
     shall deposit into this account--
       (A) all funds for capital improvements as specified in the 
     concession service agreement;
       (B) all funds for maintenance of or improvements to 
     Government-owned facilities occupied by the concessioner; and
       (C) all amounts received from the Secretary concerned 
     pursuant to subsection (b).
       (2) Terms and conditions.--The account shall be maintained 
     by the concessioner in an interest bearing account in a 
     Federally insured financial institution. The concessioner 
     shall maintain the account separately from any other funds or 
     accounts and shall not commingle the monies in the account 
     with any other moneys. The Secretary concerned may establish 
     such other terms, conditions, or requirements as the 
     Secretary determines to be necessary to ensure the financial 
     integrity of the account.
       (3) Disbursements.--The concessioner shall make 
     disbursements from the account for improvements and other 
     activities, only as specified in the concession service 
     agreement and subsection (b)(2)(C).
       (4) Records.--The concessioner shall maintain proper 
     records for all disbursements made from the account. Such 
     records shall include (but not be limited to) invoices, bank 
     statements, canceled checks, and such other information as 
     the Secretary concerned determines to be necessary.
       (5) Annual financial statement.--The concessioner shall 
     annually submit to the Secretary concerned a statement 
     reflecting total activity in the account for the preceding 
     financial year. The statement shall reflect monthly deposits, 
     expenditures by project, interest earned, and such other 
     information as the Secretary concerned requires.
       (6) Transfer of remaining balance.--Upon the termination of 
     a concession authorization, or upon the transfer of a 
     concession service agreement, any remaining balance in the 
     account shall be transferred by the concessioner to the 
     successor concessioner, to be used solely as set forth in 
     this subsection. In the event there is no successor 
     concessioner, the account balance shall be deposited in the 
     Treasury as miscellaneous receipts.
       (b) Amounts Received Relating to Privilege of Providing 
     Concession Services and Rental of Government-owned 
     Facilities.--
       (1) Deposit into treasury.--The Secretary concerned shall 
     deposit into the Treasury of the United States as 
     miscellaneous receipts amounts received for a fiscal year for 
     the privilege of providing concession services and the rental 
     of Government-owned facilities up to the amount specified in 
     the table in paragraph (3) for the National Park Service for 
     that fiscal year. For the other agencies covered under this 
     part, the Secretary concerned shall develop a schedule of 
     anticipated receipts to be deposited to the Treasury and 
     submit such schedule to the appropriate Congressional 
     committees within 18 months of the date of enactment of this 
     Act. Nothing in this part shall be construed to modify any 
     provision of law relating to sharing of Federal receipts with 
     any other level of Government.
       (2) Deposit into concession improvement accounts.--(A) 
     Amounts received by the Secretary concerned for a fiscal year 
     for the privilege of providing concession services and the 
     use of Government-owned facilities which exceed the amount 
     specified in the table in paragraph (3) for that fiscal year 
     shall be available for deposit in the succeeding fiscal year 
     into concession improvement accounts.
       (B) Of the amounts available for deposit into concession 
     improvement accounts, the Secretary shall make available to 
     each concessioner a percentage of such excess amounts which 
     bears the same ratio as the amount paid by the concessioner 
     to the Secretary concerned for a fiscal year for the 
     privilege of providing concession services and the use of 
     Government-owned facilities bears to the total amount paid 
     to the Secretary concerned by all concessioners for that 
     fiscal year for such privilege on an agency-wide basis.
       (C) Amounts made available to a concessioner under this 
     paragraph may be used only for expenditures on visitor 
     services and facilities at the area at which the funds were 
     generated.
       (3) Deposit into concession improvement accounts.--The 
     table referred to in paragraph (2), expressed by fiscal year 
     on an agency basis, is as follows:

                         National Park Service

    Fiscal year:                                               Amount: 
      1997.................................................$15,800,000 
      1998.................................................$21,100,000 
      1999.................................................$26,700,000 
      2000.................................................$32,300,000 
      2001.................................................$38,200,000 
      2002.................................................$44,400,000.
       (c) Audit Requirement.--Beginning with fiscal year 1998, 
     the Inspector General of the Department concerned shall 
     conduct a biennial audit of concession fees generated 
     pursuant to this part. The Inspector General shall make a 
     determination as to whether concession fees are being 
     collected and expended in accordance with this part and shall 
     submit copies of each audit to the Committee on Resources of 
     the House of Representatives and the Committee on Energy and 
     Natural Resources of the Senate.

     SEC. 9313. DISPUTE RESOLUTION.

       (a) Board of Contract Appeals.--The Board of Contract 
     Appeals within each Department shall adjudicate disputes 
     between the Federal Government and concessioners arising 
     under this part, including disputes regarding the revocation, 
     suspension, or termination of a concession authorization, 
     transfers of concession service agreements, and performance 
     evaluations of concessions. Such disputes shall be subject to 
     the Contract Disputes Act of 1978 (41 U.S.C. 601 et seq.). 
     The expiration of a concession authorization shall not be 
     subject to appeal to the Board.
       (b) Administrative Review.--Appeals of decisions may be 
     taken to the Board of Contract Appeals after one level of 
     review of decisions made within an agency.
       (c) Expedited Procedure.--Appeals of decisions to suspend, 
     revoke, or terminate a concession authorization shall be 
     considered under an expedited procedure, as provided by the 
     Secretary concerned by regulation.
       (d) Judicial Review.--
       (1) In general.--A person may seek judicial review of 
     decisions made by the Board. Such review shall be conducted 
     by the court with jurisdiction on a de novo basis.
       (2) Concession service agreements.--Judicial review of 
     decisions rendered by the Board regarding concession service 
     agreements shall be to the United States Court of Federal 
     Claims in accordance with section 1491 of title 28, United 
     States Code (commonly referred to as the ``Tucker Act'').
       (3) Concession licenses.--Judicial review of decisions 
     rendered by the Board regarding concession licenses shall be 
     to the appropriate Federal District Court.
       (d) Inapplicability of Certain Provisions.--Disputes 
     arising under this part shall not be subject to the 
     jurisdiction of the General Accounting Office to review bid 
     protests under the Competition in Contracting Act of 1984.

     SEC. 9314. RECORDKEEPING.

       (a) Maintenance and Access.--Each concessioner shall keep 
     such records as the Secretary concerned may prescribe to 
     enable the Secretary to determine that all terms of the 
     concession authorization have been and are being faithfully 
     performed, and the Secretary and his duly authorized 
     representatives shall, for the purpose of audit and 
     examination, have access at reasonable times and locations to 
     such records and to other books, documents, and papers of the 
     concessioner pertinent to the concession authorization and 
     all the terms and conditions thereof.
       (b) Access by Comptroller General.--The Comptroller General 
     of the United States or any of his duly authorized 
     representatives shall, until the expiration of five calendar 
     years after the close of the business year of each 
     concessioner have access to and the right to examine any 
     pertinent books, documents, papers, and records of the 
     concessioner related to the concession authorization 
     involved.

     SEC. 9315. APPLICATION OF GENERAL GOVERNMENTAL ACQUISITION 
                   REQUIREMENTS.

       The following laws and regulations shall not apply to 
     concession service agreements and concession licenses under 
     this part:
       (1) Title III of the Federal Property and Administrative 
     Services Act of 1949 (41 U.S.C. 251-266).
       (2) The Office of Federal Procurement Policy Act (41 U.S.C. 
     401 et seq.).
       (3) The Federal Acquisition Streamlining Act of 1994 
     (Public Law 103-355).
       (4) The Brooks Automatic Data Processing Act (40 U.S.C. 
     759).
       (5) Chapters 137 and 141 of title 10, United States Code.
       (6) The Federal Acquisition Regulation and any laws not 
     listed in paragraphs (1) through (5) providing authority to 
     promulgate regulations in the Federal Acquisition Regulation.
       (7) The Act of June 20, 1936 (20 U.S.C. 107; commonly 
     referred to as the ``Randolph-Sheppard Act'') and the Service 
     Contract Act of 1965 (41 U.S.C. 351 et seq.).

     SEC. 9316. RULES OF CONSTRUCTION.

       Concession programs of an agency on Federal lands and 
     waters subject to this part shall be fully consistent with 
     the agency's mission and laws applicable to the agency. 
     Nothing in this part shall be construed as limiting or 
     restricting any right, title, or interest of the United 
     States in any land or resources.

[[Page H11061]]


     SEC. 9317. REGULATIONS.

       (a) In General.--Pursuant to enactment of this part, no new 
     concession authorization may be issued, nor may any existing 
     concession authorization remain in effect after two years 
     after the date of the enactment of this Act, unless 
     regulations fully implementing this part are in effect. 
     During such two-year period, the Secretary may only extend an 
     existing concession authorization for a period ending at the 
     end of such two-year period. Such extensions shall be made in 
     accordance with the applicable provisions of law specified in 
     section 9318, as such provisions were in effect on the day 
     before the date of the enactment of this Act. The Secretary 
     of the Interior, Secretary of Agriculture, and Secretary of 
     the Army shall develop a single set of regulations which 
     specify a uniform set of recordkeeping requirements for all 
     concessioners with respect to implementation of this part.
       (b) Qualifications of Agency Personnel Assigned Concession 
     Management Duties.--The Secretary, by regulation under 
     subsection (a) and taking into account the provisions of this 
     part, shall specify the minimum training and qualifications 
     required for agency personnel assigned predominantly to 
     concession management duties, including (but not limited to) 
     competency in business management, public health and safety, 
     and the delivery of quality customer services.

     SEC. 9318. RELATIONSHIP TO OTHER EXISTING LAWS.

       (a) Repeals.--
       (1) The Act entitled ``An Act relating to the establishment 
     of concession policies in the areas administered by the 
     National Park Service and for other purposes'' (16 U.S.C. 20-
     20g) approved October 9, 1965, is repealed.
       (2) The last paragraph under the heading ``forest service'' 
     in the Act of March 4, 1915 (38 Stat. 1101), as amended by 
     the Act of July 28, 1956 (chap. 771; 70 Stat. 708) (16 U.S.C. 
     497), is repealed.
       (3) Section 7 of the Act of April 24, 1950 (16 U.S.C. 580d) 
     is repealed.
       (b) Superseded Provisions.--The provisions of this part 
     shall supersede the provisions of the following Acts as they 
     pertain to concessions management:
       (1) The Federal Land Policy and Management Act of 1976 
     (Oct. 21, 1976).
       (2) Public Law 87-714 (16 U.S.C. 460k et seq.; commonly 
     known as the ``Refuge Recreation Act'').
       (3) The National Wildlife Refuge System Administration Act 
     of 1966 (16 U.S.C. 668dd).
       (c) Conforming Amendment.--The fourth sentence of section 3 
     of the Act of August 25, 1916 (16 U.S.C. 3; 39 Stat. 535), is 
     amended by striking all through ``no natural'' and inserting 
     in lieu thereof ``No natural''.
       (d) Modified Provisions.--The second sentence of section 4 
     of the Act entitled ``An Act authorizing the construction of 
     certain public works on rivers and harbors for flood control, 
     and for other purposes'' (16 U.S.C. 460d) is amended by 
     inserting ``, except for commercial concessions purposes'' 
     the first place it appears after ``public interest''.
       (e) Savings.--
       (1) In general.--The repeal of any provision, the 
     superseding of any provision, and the amendment of any 
     provision, of an Act referred to in subsections (a), (b), or 
     (c) shall not affect the validity of any authorizations 
     entered into under any such Act. The provisions of this part 
     shall apply to any such authorizations, except to the extent 
     such provisions are inconsistent with the express terms and 
     conditions of such authorizations.
       (2) Right of renewal.--The right of renewal explicitly 
     provided for by any concession contract under any such 
     provision shall be preserved for a single renewal of a 
     contract following the enactment of, or concession 
     authorization under, this part.
       (3) Value of capital improvements or possessory interest.--
     Nothing in this part shall be construed to change the value 
     of existing capital improvements or possessory interest as 
     identified in concession contracts entered into before the 
     enactment of this Act.
       (4) ANILCA.--Nothing in this part shall be construed to 
     amend, supersede or otherwise affect any provision of the 
     Alaska National Interest Lands Conservation Act (16 U.S.C. 
     3101 et seq.) relating to revenue-producing visitor services.
       (5) Ski area permits.--No provision of this part shall 
     apply to any ski area permittee operating on lands 
     administered by the Forest Service.
       (6) Procedures for considering existing concessioners in 
     reissuance of contracts.--In the case of any concession 
     contract which has expired prior to the date of the enactment 
     of this Act, or within five years after the date of the 
     enactment of this Act, the incumbent concessioner shall be 
     entitled to a one-time bonus of five percent of the maximum 
     points available in the reissuance of a previous concession 
     authorization. For any concession contract entered into prior 
     to the date of enactment of this Act, which is projected to 
     terminate five years or later after the enactment of this 
     Act, any concessioner shall be entitled to a performance 
     incentive as outlined in this part. The concessioner shall be 
     entitled to an evaluation for the purposes of section 9306 of 
     good for each year in which the Secretary concerned does not 
     complete an evaluation as provided for in this part.

                   PART 2--NATIONAL FOREST SKI AREAS

     SEC. 9321. PRIVATIZATION OF FOREST SERVICE SKI AREAS.

       (a) Authorization To Sell.--
       (1) In general.--Not later than five years after the date 
     of enactment of this part, the Secretary of Agriculture shall 
     offer to sell not less than 40 ski areas to the qualifying 
     ski area operator. Any such sale shall provide for 
     continuation of public access for diverse recreational uses. 
     The Secretary shall offer such areas for sale only after 
     consultation with State and local governments. Any such sale 
     shall be at fair market value and, subject to valid existing 
     rights, shall transfer all right, title, and interest of the 
     United States in and to the lands. In any such sale, the 
     Secretary shall establish the minimum acceptable bid based on 
     the appraised fair market value of such lands.
       (2) Qualifying lands.--For the purposes of subsection (a), 
     lands are qualifying concession lands if such lands are--
       (A) subject to a lease on the date of the enactment of this 
     Act for use as a ski area with improvements with a fair 
     market value greater than $2,000,000; and
       (B) located either adjacent to the boundary of the Federal 
     lands or adjacent to other significant private inholdings.
       (b) Appraisal.--
       (1) In general.--The Secretary shall provide for an 
     independent appraisal of the lands and interests therein to 
     be transferred pursuant to subsection (a). The appraiser 
     shall--
       (A) utilize nationally recognized appraisal standards, 
     including to the extent appropriate the uniform appraisal 
     standards for Federal land acquisition; and
       (B) not include the value of any improvement placed on the 
     lands by the concessioner.
       (2) Appraisal report.--The appraiser shall submit a 
     detailed report to the Secretary.
       (c) Additional Lands.--In addition to the national forest 
     ski area, the Secretary may transfer by sale or exchange 
     additional National Forest System lands for the purpose of 
     adding such lands to and operating them as part of a ski area 
     sold under subsection (a). The transfer of additional lands 
     under this subsection shall be in accordance with this part 
     and the laws generally applicable to the National Forest 
     System.
       (d) Use of Proceeds by the Appropriate Secretary.--The 
     Secretary may retain 50 percent of the funds generated 
     through sales under this section to acquire other high 
     priority lands identified for acquisition in any forest land 
     and resource management plan. The remaining 50 percent of 
     such amount shall be deposited in the Treasury as 
     miscellaneous receipts.

     SEC. 9322. SKI AREA PERMIT FEES AND WITHDRAWAL OF SKI AREAS 
                   FROM OPERATION OF MINING LAWS.

       The National Forest Ski Area Permit Act of 1986 (16 U.S.C. 
     497b) is amended by adding at the end the following new 
     sections:

     ``SEC. 4. SKI AREA PERMIT FEES.

       ``(a) Ski Area Permit Fee.--
       ``(1) In general.--Except as provided by paragraph (2), 
     after the date of the enactment of this section, the fee for 
     all ski area permits on National Forest System lands shall be 
     calculated, charged, and paid only as set forth in subsection 
     (b).
       ``(2) Exception.--Paragraph (1) does not apply to any ski 
     area where the existing permit in effect on the date of 
     enactment of this section specifies a different method to 
     calculate the fee. In any such situation the terms of such 
     permit shall prevail, unless the permit holder notifies the 
     Forest Service that the permit holder agrees to adopt the 
     method of fee calculation specified in this section. The 
     Forest Service should encourage such permit holders to 
     consider adopting the new method of fee calculation in order 
     to reduce its administrative costs.
       ``(b) Method of Calculation.--
       ``(1) Determination of adjusted gross revenue subject to 
     fee.--The Secretary of Agriculture shall calculate the ski 
     area permit fee to be charged a ski area permittee by first 
     determining the permittee's adjusted gross revenue to be 
     subject to the permit fee. The permittee's adjusted gross 
     revenue is equal to the sum of the following:
       ``(A) The permittee's gross revenues from alpine lift 
     ticket and alpine season pass sales plus revenue from alpine 
     ski school operations, with such total multiplied by the 
     permittee's slope transport feet percentage on National 
     Forest System lands.
       ``(B) The permittee's gross revenues from nordic ski use 
     pass sales and nordic ski school operations, with such total 
     multiplied by the permittee's percentage of nordic trails on 
     National Forest System lands.
       ``(C) The permittee's gross revenues from ancillary 
     facilities physically located on National Forest System 
     lands, including all permittee or subpermittee lodging, food 
     service, rental shops, parking, and other ancillary 
     operations.
       ``(2) Determination of ski area permit fee.--The Secretary 
     shall determine the ski area permit fee to be charged a ski 
     area permittee by multiplying adjusted gross revenue 
     determined under paragraph (1) for the permittee by the 
     following percentages for each revenue bracket and adding the 
     total for each revenue bracket:
       ``(A) 1.5 percent of all adjusted gross revenue below 
     $3,000,000.
       ``(B) 2.5 percent for adjusted gross revenue between 
     $3,000,000 and $15,000,000.
       ``(C) 2.75 percent for adjusted gross revenue between 
     $15,000,000 and $50,000,000.
       ``(D) 4.0 percent for the amount of adjusted gross revenue 
     that exceeds $50,000,000.
       ``(3) Slope transport feet percentage.--In cases where ski 
     areas are only partially 

[[Page H11062]]

     located on National Forest System lands, the slope transport 
     feet percentage on national forest land referred to in 
     paragraph (1) shall be calculated as generally described in 
     the Forest Service Manual in effect as of January 1, 1992.
       ``(4) Annual adjustment of adjusted gross revenue.--In 
     order to insure that the ski area permit fee set forth in 
     this subsection remains fair and equitable to both the United 
     States and ski area permittees, the Secretary shall adjust, 
     on an annual basis, the adjusted gross revenue figures for 
     each revenue bracket in subparagraphs (A) through (D) of 
     paragraph (2) by the percent increase or decrease in the 
     national Consumer Price Index for the preceding calendar 
     year.
       ``(c) Minimum Fee.--In cases where an area of National 
     Forest System land is under a ski area permit but the 
     permittee does not have revenue or sales qualifying for fee 
     payment pursuant to subsection (a), the permittee shall pay 
     an annual minimum fee of $2 for each acre of National Forest 
     System land under permit. Rental fees imposed under this 
     subsection shall be paid at the time specified in subsection 
     (d).
       ``(d) Time for Payment.--The fee set forth in subsection 
     (b) shall be due on June 1 of each year and shall be paid or 
     prepaid by the permittee on a monthly, quarterly, annual, or 
     other schedule as determined appropriate by the Secretary in 
     consultation with the permittee. It is the intention of 
     Congress that unless mutually agreed otherwise by the 
     Secretary and the permittee, the payment or prepayment 
     schedule shall conform to the permittee's schedule in effect 
     prior to the enactment of this section. To simplify 
     bookkeeping and fee calculation burdens on the permittee and 
     the Forest Service, the Secretary shall each year provide the 
     permittee with a standardized form and worksheets (including 
     annual fee calculations brackets and rates) to be utilized 
     for fee calculation and submitted with the fee payment. 
     Information provided on such forms shall be compiled by the 
     Secretary annually and kept in the Office of the Chief, 
     United States Forest Service.
       ``(e) Definitions.--To simplify bookkeeping and 
     administrative burdens on ski area permittees and the Forest 
     Service, as used in this section, the terms `revenue' and 
     `sales' mean actual income from sales. Such terms do not 
     include sales of operating equipment, refunds, rent paid to 
     the permittee by sublessees, sponsor contributions to special 
     events or any amounts attributable to employee gratuities, 
     discounts, complimentary lift tickets, or other goods or 
     services (except for bartered goods) for which the permittee 
     does not receive money.
       ``(f) Effective Date for Fees.--The ski area permit fees as 
     provided under this section shall become effective on July 1, 
     1996, and cover receipts retroactive to July 1, 1995. If a 
     ski area permittee has paid fees for the 12-month period 
     ending on June 30, 1996, under the graduated rate fee system 
     formula in effect prior to the date of the enactment of this 
     section, such fees shall be credited toward the new ski area 
     permit fee due for that period under this section.
       ``(g) Report on Fair Market Value.--No later than five 
     years after the date of enactment of this section and every 
     10 years thereafter, the Secretary shall submit to the 
     Committee on Energy and Natural Resources of the United 
     States Senate and the Committees of Agriculture and Resources 
     of the United States House of Representatives a report 
     analyzing whether the ski area permit fee system legislated 
     by this section is returning a fair market value rental to 
     the United States together with any recommendations the 
     Secretary may have for modifications in the system.
       ``(h) Transition Period.--Where the new fee provided for in 
     this section results in an increase in permit fee greater 
     than one percent of the permittee's adjusted gross revenue 
     (as defined in subsection (b)(1)), the new fee shall be 
     phased in over a three year period in a manner providing for 
     increases of approximately equal increments.
       ``(i) Applicability of NEPA to Reissuance of Ski Area 
     Permits.--The reissuance of a ski area permit to provide 
     activities similar in nature and amount to the activities 
     provided under the previous permit is hereby determined to be 
     a categorical exclusion as provided for under the National 
     Environmental Policy Act of 1969 (42 U.S.C. 4331 et seq.).

     ``SEC. 5. WITHDRAWAL OF SKI AREAS FROM OPERATION OF MINING 
                   LAWS.

       ``Subject to valid existing rights, all lands located 
     within the boundaries of ski area permits issued prior to, 
     on, or after the date of the enactment of this section 
     pursuant to the authority of the Act of March 4, 1915 (16 
     U.S.C. 497), the Act of June 4, 1897 (16 U.S.C. 473 et seq.), 
     or section 3 of this Act are hereby and henceforth 
     automatically withdrawn from all forms of appropriation under 
     the mining laws and from disposition under all laws 
     pertaining to mineral and geothermal leasing. Such withdrawal 
     shall continue for the full term of the permit and any 
     modification, reissuance, or renewal of the permit. Such 
     withdrawal shall be canceled automatically upon expiration or 
     other termination of the permit unless, at the request of the 
     Secretary of Agriculture, the Secretary of the Interior 
     determines to continue the withdrawal. Upon cancellation 
     of the withdrawal, the land shall be automatically 
     restored to all appropriation not otherwise restricted 
     under the public land laws.''.

                   PART 3--DOMESTIC LIVESTOCK GRAZING

     SEC. 9331. APPLICABLE REGULATIONS.

       (a) BLM Lands.--Except as otherwise provided by this part, 
     grazing of domestic livestock on lands administered by the 
     Bureau of Land Management shall be in accordance with part 
     1780 and part 4100 of title 43, Code of Federal Regulations, 
     as in effect on January 1, 1995.
       (b) Forest Service Lands.--Except as otherwise provided by 
     this part, grazing of domestic livestock on lands 
     administered by the Forest Service shall, to the extent 
     possible, be in accordance with regulations, which the 
     Secretary of Agriculture shall promulgate, which are 
     substantially similar to the regulations referred to in 
     subsection (a). Regulations promulgated under this subsection 
     may differ from the regulations referred to in subsection (a) 
     to the extent necessary to conform to the laws governing the 
     National Forest System (other than this part).
       (c) Federal Lands.--For the purposes of this part, the term 
     ``Federal lands'' means lands administered by the Bureau of 
     Land Management and lands administered by the Forest Service.

     SEC. 9332. FEES AND CHARGES.

       (a) Basic Fee.--The basic fee for each animal unit month in 
     a grazing fee year to be determined by the Bureau of Land 
     Management and the Forest Service shall be equal to the 3-
     year average of the total gross value of production for beef 
     cattle, as compiled by the Economic Research Service of the 
     Department of Agriculture in accordance with subsection (b) 
     on the basis of economic data published by the Service in the 
     Economic Indicators of the Farm Sector: Cost of Production--
     Major Field Crops & Livestock and Dairy for the 3 years 
     preceding the grazing fee year, multiplied by the 10 year 
     average of the United States Treasury Securities 6-month bill 
     ``new issue'' rate and divided by 12.
       (b) Criteria.--The Economic Research Service of the 
     Department of Agriculture shall continue to compile the gross 
     production value of production of beef cattle as reported in 
     a dollar per bred cow basis in the ``U.S. Cow-Calf Production 
     Cash Costs and Returns''.
       (c) Surcharge.--
       (1) In general.--A surcharge shall be added to the grazing 
     fee billings for authorized grazing of livestock owned by 
     persons other than the permittee or lessee except where--
       (A) such use is made by livestock owned by a spouse, child, 
     or grandchild or their respective spouse of the permittee and 
     lessee; or
       (B) the permittee or lessee is unable to make full grazing 
     use, as authorized by a grazing permit or lease, due to the 
     infirmed condition or death of the permittee or lessee.
       (2) Treatment as additional fee.--The surcharge shall be 
     over and above any other fees that may be charged for using 
     public land forage.
       (3) Prior payment required.--Surcharges shall be paid prior 
     to grazing use.
       (4) Amount.--The surcharge for authorized pasturing of 
     livestock owned by persons other than the permittee or lessee 
     shall be equal to 25 percent of the difference between the 
     current year's Federal grazing fee and the prior year's 
     private grazing land lease rate per AUM for the appropriate 
     State as compiled by the National Agricultural Statistics 
     Service.
       (5) In general.--The Bureau of Land Management and the 
     Forest Service shall make a determination under subsection 
     (a) based on the following information gathered by the 
     National Agriculture Statistics Service of the Department of 
     Agriculture with respect to the largest single grazing lease 
     of each grazing operator (in terms of dollars):
       (A) Whether the operator charged--
       (i) per acre;
       (ii) per head per month;
       (iii) per pound of gain;
       (iv) per hundredweight of gain; or
       (v) by another measure, and the rate charged.
       (B)(i) The estimated average pounds gained per season for 
     the grazing lease.
       (ii) The total dollar amount estimated to be realized from 
     the grazing lease.
       (iii) Grazing lease acreage.
       (iv) The State and county where the grazing lease is 
     located.
       (C) The classes of livestock grazed.
       (D) The term of the grazing lease.
       (E)(i) Whether grazing lease payments are paid if no 
     grazing occurred.
       (ii) Whether the grazing lease contains a take or pay 
     provision.
       (F) Additional information on whether the following are 
     provided by the landlord on a 5-year basis:
       (i) Fencing maintenance.
       (ii) Animal management and oversight.
       (iii) Water maintenance.
       (iv) Salt and minerals.
       (v) Other service (specified).
       (vi) No services.
       (vii) Hunting.
       (viii) Fishing.
       (ix) Other (specified).
       (x) None.
       (6) Private native rangeland.--For the purpose of 
     determining rates for grazing leases of private native 
     rangeland, rates for irrigated pasture, crop aftermath, and 
     dryland winter wheat shall be excluded.

     SEC. 9333. ANIMAL UNIT MONTH.

       (a) Definition of Animal Unit Month.--The term ``animal 
     unit month'' means 1 month's use and occupancy of range by--

[[Page H11063]]

       (1) 1 cow, bull, steer, heifer, horse, burro, or mule, 7 
     sheep, or 7 goats, each of which is 6 months of age or older 
     on the date on which the animal begins grazing on Federal 
     land;
       (2) any such animal regardless of age if the animal is 
     weaned on the date on which the animal begins grazing on 
     Federal land; and
       (3) any such animal that will become 12 months of age 
     during the period of use authorized under a grazing permit or 
     grazing lease.
       (b) Livestock Not Counted.--There shall not be counted as 
     an animal unit month the use of Federal land for grazing by 
     an animal that is less than 6 months of age on the date on 
     which the animal begins grazing on Federal land and is the 
     natural progeny of an animal on which a grazing fee is paid 
     if the animal is removed from the Federal land before 
     becoming 12 months of age.

     SEC. 9334. TERM OF GRAZING PERMITS OR GRAZING LEASES.

       A grazing permit or grazing lease shall be issued for a 
     term of 15 years unless--
       (1) the land is pending disposal;
       (2) the land will be devoted to a public purpose that 
     precludes grazing prior to the end of 15 years; or
       (3) the Secretary determines that it would be in the best 
     interest of sound land management to specify a shorter term, 
     if the decision to specify a shorter term is supported by 
     appropriate and accepted resource analysis and evaluation.

     SEC. 9335. CONFORMANCE WITH LAND USE PLAN.

       Livestock grazing activities and management actions 
     approved by the Secretary of the Interior or the Secretary of 
     Agriculture, as the case may be--
       (1) may include any such activities as are not clearly 
     prohibited by a land use plan; and
       (2) shall not require any consideration under the National 
     Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) in 
     addition to the studies supporting the land use plan.

     SEC. 9336. EFFECTIVE DATE.

       This part shall apply to grazing on Federal lands on and 
     after the date of the enactment of this Act.

     PART 4--REGIONAL DISPOSAL FACILITY OF SOUTHWESTERN LOW LEVEL 
                   RADIOACTIVE WASTE DISPOSAL COMPACT

     SEC. 9341. CONVEYANCE OF PROPERTY.

       (a) Conveyance.--Upon the tendering of $500,000 on behalf 
     of the State of California and the release of the United 
     States by the State of California from any liability for 
     claims relating to the property described in subsection (b), 
     all right, title and interest of the United States in and to 
     said lands and improvements thereon are conveyed to the 
     Department of Health Services of the State of California: 
     Provided, That the property shall revert to the United States 
     if the property is not used as a low-level radioactive waste 
     disposal facility.
       (b) Description.--The lands conveyed are those depicted on 
     a map designated USGS 7.5 minute quadrangle, west of Flattop 
     Mtn, CA 1984, entitled ``Location Map for Ward Valley Site'', 
     located in San Bernardino Meridian, Township 9 North, Range 
     19 East.
       (c) Title.--The Secretary of the Interior shall issue 
     evidence of title pursuant to this Act notwithstanding any 
     other provision of law. The Southwestern Low-Level 
     Radioactive Waste Disposal Compact's Ward Valley regional 
     disposal facility and transfer of the land are in compliance 
     with any applicable provisions of section 7 of Endangered 
     Species Act of 1973 (16 U.S.C. 1536) and the National 
     Environmental Policy Act of 1969 (42 U.S.C. 4332).
       (d) Deposit of Funds.--Sums received pursuant to subsection 
     (a) shall be deposited as miscellaneous receipts in the 
     Treasury of the United States.
       (e) Expiration of Authority.--This authority expires 
     October 1, 2010.

     SEC. 9342. CONVEYANCE OF EASEMENTS.

       Concurrent with the conveyance property described in 
     section 9341(b) to the Department of Health Services of the 
     State of California, all necessary easements for utilities 
     and ingress and egress to said lands described in section 
     9341(b) of this Act and the right to improve those easements, 
     are also conveyed to the Department of Health Services of the 
     State of California: Provided, That the Department of Health 
     Services right-of-way easements revert to the United States 
     if the lands referenced in section 9341 are not licensed and 
     used as a low-level radioactive waste disposal facility.
                        Subtitle D--Territories

          PART 1--COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS

     SEC. 9401. TERMINATION OF ANNUAL DIRECT GRANT ASSISTANCE.

       (a) Termination.--Pursuant to section 704(d) of the 
     Covenant to Establish a Commonwealth of the Northern Mariana 
     Islands in Political Union with the United States of America 
     (48 U.S.C. 1681 note), the annual payments under section 702 
     of the Covenant shall terminate as of September 30, 1995.
       (b) Repeal.--Sections 3 and 4 of the Act of March 24, 1976 
     (Public Law 94-241; 48 U.S.C. 1681 note), as amended, are 
     repealed, effective October 1, 1995.
       (c) Removal of Authority To Obligate Certain Funds.--
     Amounts appropriated under title VII of the Covenant to 
     Establish a Commonwealth of the Northern Mariana Islands in 
     Political Union with the United States of America, and under 
     sections 3 and 4 of Public Law 94-241 (48 U.S.C. 1681), which 
     are not obligated as of the date of the enactment of this Act 
     may not be obligated after such date.
       (d) Conforming Amendments.--Section 5 of such Act (48 
     U.S.C. 1681 note) is amended--
       (1) by striking out ``agreement identified in section 3 of 
     this Act'' and inserting in lieu thereof ``Agreement of the 
     Special Representatives on Future United States Financial 
     Assistance for the Government of the Northern Mariana 
     Islands, executed July 10, 1985, between the special 
     representative of the President of the United States and the 
     special representatives of the Governor of the Northern 
     Mariana Islands''; and
       (2) by striking out ``Committee on Interior and Insular 
     Affairs'' and inserting in lieu thereof ``Committee on 
     Resources''.

            PART 2--TERRITORIAL ADMINISTRATIVE CESSATION ACT

     SEC. 9421. SHORT TITLE.

       This part may be cited as the ``Territorial Administrative 
     Cessation Act''.

     SEC. 9422. CONGRESSIONAL FINDINGS.

       The Congress finds that--
       (1) each of the four political subdivisions of the United 
     Nations Trust Territory of the Pacific Islands, known as the 
     Japanese Mandated Islands, have successfully entered into 
     distinct self-governing entities, thereby culminating in the 
     final termination of the Trusteeship and the end of the 
     trusteeship responsibilities of the United States as 
     administering authority of the Trust Territory on October 1, 
     1994;
       (2) the United States territories have developed 
     progressively increased local self-government over the past 
     five decades;
       (3) the territories predominantly deal directly with 
     Federal agencies and departments, as a State would;
       (4) the administering responsibilities of the Department of 
     the Interior with respect to the insular areas has declined 
     substantially during the past five decades; and
       (5) Federal-territorial relations can be enhanced and 
     Federal fiscal conditions improved by the elimination of 
     unnecessary Federal bureaucracy.

     SEC. 9423. ELIMINATION OF OFFICE OF TERRITORIAL AND 
                   INTERNATIONAL AFFAIRS.

       (a) In General.--The Office of Territorial and 
     International Affairs of the Department of the Interior, 
     established pursuant to the Order of the Secretary of the 
     Interior 3046, of February 14, 1980, as amended, is hereby 
     abolished.
       (b) Termination of Position of Assistant Secretary.--
     Section 5315 of title 5, United States Code, is amended by 
     striking ``Assistant Secretaries of the Interior (6)'' and 
     inserting ``Assistant Secretaries of the Interior (5)''.
       (c) Effective Date.--Subsection (a) and the amendment made 
     by subsection (b) shall take effect on the first day of the 
     first fiscal year that begins after the date of the enactment 
     of this Act.

     SEC. 9424. CERTAIN ACTIVITIES NOT FUNDED.

       Amounts may not be made available for the following program 
     activities for assistance to territories for fiscal years 
     beginning after September 30, 1995, as identified under the 
     appropriations account numbered 14-0412-0-1-808:
       (1) technical assistance, item 00.12;
       (2) maintenance assistance, item 00.14;
       (3) disaster fund, item 00.17; and
       (4) insular management controls, item 00.19.
                          Subtitle E--Minerals

                        PART 1--HARDROCK MINING

     SEC. 9501. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds and declares that--
       (1) a secure and reliable supply of locatable minerals is 
     essential to the industrial base of the United States, 
     national security, and balance of trade;
       (2) many of the deposits of locatable minerals that may be 
     commercially developed are on Federal lands as that term is 
     defined in this Act, and are difficult and expensive to 
     discover, mine, extract and process;
       (3) the national need for locatable minerals will continue 
     to expand, and without a strong mining industry the demand 
     for the minerals will exceed domestic sources of supply;
       (4) mining of locatable minerals is an extremely high-risk, 
     capital-intensive endeavor, which, to attract necessary 
     investment, requires certainty and predictability in access 
     to Federal lands in establishment of mining titles, and in 
     the rights of owners of mining claims or sites to develop 
     minerals;
       (5) the national interest is to foster and encourage 
     private enterprise in the development of a domestic minerals 
     industry to maintain and create high-paying jobs and the 
     various Federal, State, and local taxes paid by the mining 
     industry in the United States;
       (6) changes in the general mining laws of the United States 
     to provide more direct economic return to the United States 
     and greater protection of public resources are desirable, so 
     long as these changes do not act as a disincentive to 
     development of minerals, adversely affect employment in the 
     mining industry or in industries that provide goods and 
     services required for mining activities, interfere with a 
     secure and reliable domestic supply of minerals, or adversely 
     affect the balance of trade of the United States; and
       (7) mining claims, mill sites and tunnel sites located 
     under the general mining laws are property interests, and any 
     law or regulation that substantially impairs existing 
     property rights may expose the Federal Government to takings 
     claims under the fifth 

[[Page H11064]]

     amendment to the United States Constitution.
       (b) Purpose.--It is the purpose of this subtitle to--
       (1) affirm and maintain the policy established in section 2 
     of the Mining and Minerals Policy Act of 1970;
       (2) promote exploration for and the development of a secure 
     and reliable domestic source of locatable minerals;
       (3) provide for increased Federal revenue from the location 
     and production of locatable minerals from Federal lands 
     through patent payments and royalties; and
       (4) recognize that unpatented mining claims, mill sites and 
     tunnel sites are property rights in the fullest sense and 
     avoid, to the greatest extent possible, claims of takings of 
     existing property rights under the general mining laws that 
     could require compensation under the fifth amendment to the 
     United States Constitution.

     SEC. 9502. PATENTS UNDER THE GENERAL MINING LAW.

       (a) In General.--Any patent issued by the United States 
     under the general mining laws after the date of the enactment 
     of this Act for any interest in land covered by a mining 
     claim or site under such laws shall be issued only--
       (1) upon payment by the owner of the mining claim or site 
     of the fair market value for the interest in the land owned 
     by the United States exclusive of, and without regard to, the 
     mineral deposits in the land or the use of such land for 
     mineral activities unless the requirements of subsection (b) 
     are met, and
       (2) subject to a reservation by the United States of the 
     royalty provided in section 9503(a), unless the requirements 
     in subsection (b) are met.
       (b) Patent Transition.--(1) Subsection (a) shall not apply 
     to any mining claim or site if--
       (A) the claimant establishes that the claim or site 
     constituted a valid mining claim as of the date of the 
     enactment of this Act; and
       (B) the claimant has filed a patent application or mineral 
     survey application prior to the date of the enactment of this 
     Act, or files such an application with the Bureau of Land 
     Management before the date 2 years after the date of the 
     enactment of this Act. A patent application or mineral survey 
     application referred to in this subparagraph shall be deemed 
     timely, notwithstanding that the application may be corrected 
     or supplemented and resubmitted thereafter.
       (2) During the 2-year period in paragraph (1)(B), or while 
     there is pending a mineral survey or patent application to 
     which this subsection applies, an owner of the mining claim 
     or site may continue work on a mining claim or site directed 
     toward establishment and confirmation of entitlement to a 
     patent, and may amend the application as necessary.
       (3) Where access to any mining claim or site has been 
     denied or impeded by the action or inaction of any Federal 
     official, agency, or court during all or part of the 5-year 
     period preceding the date of enactment of this Act, including 
     any mining claim or site within the area described in section 
     106 of Public Law 103-433, and the mining claim or site may 
     require further exploration or development in order for the 
     claimant to file a patent application or a mineral survey 
     application and otherwise meet the requirements of paragraph 
     (1), the claimant may, within 1 year after the date of 
     enactment of this Act, submit a certified written statement 
     to the Secretary describing the access denial or impediment, 
     and shall then have a period of 10 years from the date of 
     enactment of this Act or the termination of such access 
     denial or impediment, whichever occurs first, to conduct such 
     mineral exploration or development activities, file a patent 
     application or mineral survey application, and otherwise meet 
     the requirements of paragraph (1).
       (c) Payment Plan.--(1) Any owner grossing less than 
     $500,000 annually shall qualify for a payment plan. Upon 
     completion of the patent process, the owner of the mining 
     claim may purchase the surface estate under the following 
     conditions:
       (A) Payment to be amortized over 5 years with 5 equal 
     annual payments, including principal and interest.
       (B) Interest shall be calculated per annum at a rate of 2 
     percent over the ``Treasury Current Value of Funds Rate'' on 
     the date of execution of the payment plan agreement.
       (2) The purchaser shall be notified by certified mail after 
     60 days of delinquent payments and have 90 days from receipt 
     of notification to correct the delinquency. Repossession 
     shall be by and under the laws of repossession, foreclosure, 
     and replevin of the State wherein the land is situated.
       (d) Repeal of Patenting Moratorium; Processing of Patent 
     Applications.--Sections ____ and ____ of Public Law ____ are 
     hereby repealed. The Secretary of the Interior shall 
     diligently process all patent applications under the general 
     mining laws pending on the date of enactment and shall make 
     determinations for all such applications regarding patent 
     issuance within 2 years.

     SEC. 9503. ROYALTY UNDER THE GENERAL MINING LAW.

       (a) In General.--The production and sale of locatable 
     minerals (including associated minerals) from any unpatented 
     mining claim (other than those from Federal lands to which 
     subsection 9502(b) applies) or any mining claim patented 
     under section 9502(a) shall be subject to a royalty of 3.5 
     percent on the net proceeds from such production mined and 
     sold from such claim.
       (b) Royalty Exclusion.--(1) The royalty payable under this 
     section shall be waived for any person or corporation with 
     annual net proceeds from mineral production subject to 
     subsection (a) of less than $50,000.
       (2) Where mining operations subject to this section are 
     conducted in 2 or more places by 1 person or corporation, the 
     operations shall be considered a single operation the 
     aggregate net proceeds from which shall be subject to the 
     $50,000 limitation set forth in this subsection.
       (3) No royalty shall be payable under this section with 
     respect to minerals processed at a facility by the same 
     person or entity which extracted the minerals if an urban 
     development action grant has been made under section 119 of 
     the Housing and Community Development Act of 1974 with 
     respect to any portion of such facility.
       (4) The obligation to pay royalties under this section 
     shall accrue only upon the sale of locatable minerals or 
     mineral products produced from a mining claim subject to such 
     royalty, and not upon the stockpiling of the same for future 
     processing.
       (c) Definitions.--For the purposes of this subtitle:
       (1) The term ``net proceeds'' means gross yield, less the 
     sum of the following deductions for costs incurred prior to 
     sale or value determination, and none other:
       (A) The actual cost of extracting the locatable mineral.
       (B) The actual cost of transporting the locatable mineral 
     from the claim to the place or places of reduction, 
     beneficiation, refining, and sale.
       (C) The actual cost of crushing, processing, reduction, 
     beneficiation, refining, and sale of the locatable mineral.
       (D) The actual cost of marketing and delivering the 
     locatable mineral and the conversion of the locatable mineral 
     into money.
       (E) The actual cost of maintenance and repairs of--
       (i) all machinery, equipment, apparatus, and facilities 
     used in the mine;
       (ii) all crushing, milling, leaching, refining, smelting, 
     and reduction works, plants, and facilities; and
       (iii) all facilities and equipment for transportation.
       (F) The actual cost for support personnel and support 
     services at the mine site, including without limitation, 
     accounting, assaying, drafting and mapping, computer 
     services, surveying, housing, camp, and office expenses, 
     safety, and security.
       (G) The actual cost of engineering, sampling, and assaying 
     pertaining to development and production.
       (H) The actual cost of permitting, reclamation, 
     environmental compliance and monitoring.
       (I) The actual cost of fire and other insurance on the 
     machinery, equipment, apparatus, works, plants, and 
     facilities mentioned in subparagraph (E).
       (J) Depreciation of the original capitalized cost of the 
     machinery, equipment, apparatus, works, plants, and 
     facilities listed in subparagraph (E). The annual 
     depreciation charge shall consist of amortization of the 
     original cost in the manner consistent with the Internal 
     Revenue Code of 1986, as amended from time to time. The 
     probable life of the property represented by the original 
     cost must be considered in computing the depreciation charge.
       (K) All money expended for premiums for industrial 
     insurance, and the owner paid cost of hospital and medical 
     attention and accident benefits and group insurance for all 
     employees engaged in the production or processing of 
     locatable minerals.
       (L) All money paid as contributions or payments under State 
     unemployment compensation law, all money paid as 
     contributions under the Federal Social Security Act, and all 
     money paid to State government in real property taxes and 
     severance or other taxes measured or levied on production, or 
     Federal excise tax payments and payments as fees or charges 
     for use of the Federal lands from which the locatable 
     minerals are produced.
       (M) The actual cost of the developmental work in or about 
     the mine or upon a group of mines when operated as a unit.
       (2) The term ``gross yield'' shall having the following 
     meaning:
       (A) In the case of sales of gold and silver ore, 
     concentrates or bullion, or the sales of other locatable 
     minerals in the form of ore or concentrates, the term ``gross 
     yield'' means the actual proceeds of sale of such ore, 
     concentrates or bullion.
       (B) In the case of sales of beneficiated products from 
     locatable minerals other than those subject to subparagraph 
     (A) (including cathode, anode or copper rod or wire, or other 
     products fabricated from the locatable minerals), the term 
     ``gross yield'' means the gross income from mining derived 
     from the first commercially marketable product determined in 
     the same manner as under section 613 of the Internal Revenue 
     Code of 1986.
       (C) If ore, concentrates, beneficiated or fabricated 
     products, or locatable minerals are used or consumed and are 
     not sold in an arms length transaction, the term ``gross 
     yield'' means the reasonable fair market value of the ore, 
     concentrates, beneficiated or fabricated products at the mine 
     or wellhead determined from the first applicable of the 
     following:
       (i) Published or other competitive selling prices of 
     locatable minerals of like kind and grade.
       (ii) Any proceeds of sale.
       (iii) Value received in exchange for any thing or service.

[[Page H11065]]

       (iv) The value of any locatable minerals in kind or used or 
     consumed in a manufacturing process or in providing a 
     service.

     Without limiting the foregoing, the profits or losses 
     incurred in connection with forward sales, futures or 
     commodity options trading, metal loans, or any other price 
     hedging or speculative activity or arrangement shall not be 
     included in gross yield.
       (3) The term ``Secretary'' means the Secretary of the 
     Interior.
       (d) Limitations and Allocations of Net Proceeds, Gross 
     Yield, and Allowable Costs.--(1) The deductions listed in 
     subsection (c)(1) are intended to allow a reasonable 
     allowance for overhead. Such deductions shall not include 
     any expenditures for salaries, or any portion of salaries, 
     of any person not actually engaged in--
       (A) the working of the mine;
       (B) the operating of the leach pads, ponds, plants, mills, 
     smelters, or reduction works;
       (C) the operating of the facilities or equipment for 
     transportation; or
       (D) superintending the management of any of those 
     operations described in subparagraphs (A) through (C).
       (2) Ores or solutions of locatable minerals subject to the 
     royalty requirements of this section may be extracted from 
     mines comprised of mining claims and lands other than mining 
     claims and ore or solutions of locatable minerals subject to 
     the royalty requirements of this section may be commingled 
     with ores or solutions from lands other than mining claims. 
     In any such case, for purposes of determining the amount of 
     royalties payable under this section--
       (A) the operator shall first sample, weigh or measure, and 
     assay the same in accordance with accepted industry 
     standards; and
       (B) gross yield, allowable costs and net proceeds for 
     royalty purposes shall be allocated in proportion to mineral 
     products recovered from the mining claims in accordance with 
     accepted industry standards.
       (e) Liability for Royalty Payments.--The owner or co-owners 
     of a mining claim subject to a royalty under this section 
     shall be liable for such royalty to the extent of the 
     interest in such claim owned. As used in this subsection, the 
     terms ``owner'' and ``co-owner'' mean the person or persons 
     owning the right to mine locatable minerals from such claim 
     and receiving the net proceeds of such sale. No person who 
     makes any royalty payment attributable to the interest of the 
     owner or co-owners liable therefor shall become liable to the 
     United States for such royalty as a result of making such 
     payment on behalf of such owner or co-owners.
       (f) Time and Manner of Payment.--(1) Royalty payments for 
     production from any mining claim subject to the royalty 
     payable under this section shall be due to the United States 
     at the end of the month following the end of the calendar 
     quarter in which the net proceeds from the sale of such 
     production are received by the owner or co-owners. Royalty 
     payments may be made based upon good faith estimates of the 
     gross yield, net proceeds and the quantity of ore, 
     concentrates, or other beneficiated or fabricated products of 
     locatable minerals, subject to adjustment when the actual 
     annual gross yield, net proceeds and quantity are determined 
     by the owner of the mining claim or site or co-owners.
       (2) Each royalty payment or adjustment shall be accompanied 
     by a statement containing each of the following:
       (A) The name and Bureau of Land Management serial number of 
     the mining claim or claims from which ores, concentrates, 
     solutions or beneficiated products of locatable minerals 
     subject to the royalty required in this section were produced 
     and sold for the period covered by such payment or 
     adjustment.
       (B) The estimated (or actual, if determined) quantity of 
     such ore, concentrates, solutions or beneficiated or 
     fabricated products produced and sold from such mining claim 
     or claims for such period.
       (C) The estimated (or actual, if determined) gross yield 
     from the production and sale of such ore, concentrates, 
     solutions or beneficiated products for such period.
       (D) The estimated (or actual, if determined) net proceeds 
     from the production and sale of such ores, concentrates, 
     solutions or beneficiated products for such period, including 
     an itemization of the applicable deductions described in 
     subsection (c)(1).
       (E) The estimated (or actual, if determined) royalty due to 
     the United States, or adjustment due to the United States or 
     such owner or co-owners, for such period.
       (3) In lieu of receiving a refund under subsection (h), the 
     owner or co-owners may elect to apply any adjustment due to 
     such owner or co-owners as an offset against royalties due 
     from such owner or co-owners to the United States under this 
     Act, regardless of whether such royalties are due for 
     production and sale from the same mining claim or claims.
       (g) Recordkeeping and Reporting Requirements.--(1) An 
     owner, operator, or other person directly involved in the 
     conduct of mineral activities, transportation, purchase, or 
     sale of locatable minerals, concentrates, or products derived 
     therefrom, subject to the royalty under this section, through 
     the point of royalty computation, shall establish and 
     maintain any records, make any reports, and provide any 
     information that the Secretary may reasonably require for the 
     purposes of implementing this section or determining 
     compliance with regulations or orders under this section. 
     Upon the request of the Secretary when conducting an audit or 
     investigation pursuant to subsection (i), the appropriate 
     records, reports, or information required by this 
     subsection shall be made available for inspection and 
     duplication by the Secretary.
       (2) Records required by the Secretary under this section 
     shall be maintained for 3 years after the records are 
     generated unless the Secretary notifies the record holder 
     that he or she has initiated an audit or investigation 
     specifically identifying and involving such records and that 
     such records must be maintained for a longer period. When an 
     audit or investigation is under way, such records shall be 
     maintained until the earlier of the date that the Secretary 
     releases the record holder of the obligation to maintain such 
     records or the date that the limitations period applicable to 
     such audit or investigation under subsection (i) expires.
       (h) Interest Assessments.--(1) If royalty payments under 
     this section are not received by the Secretary on the date 
     that such payments are due, or if such payments are less than 
     the amount due, the Secretary shall charge interest on such 
     unpaid amount. Interest under this subsection shall be 
     computed at the rate published by the Department of the 
     Treasury as the ``Treasury Current Value of Funds Rate.'' In 
     the case of an underpayment or partial payment, interest 
     shall be computed and charged only on the amount of the 
     deficiency and not on the total amount, and only for the 
     number of days such payment is late. No other late payment or 
     underpayment charge or penalty shall be charged with respect 
     to royalties under this section.
       (2) In any case in which royalty payments are made in 
     excess of the amount due, or amounts are held by the 
     Secretary pending the outcome of any appeal in which the 
     Secretary does not prevail, the Secretary shall promptly 
     refund such overpayments or pay such amounts to the person or 
     persons entitled thereto, together with interest thereon for 
     the number of days such overpayment or amounts were held by 
     the Secretary, with the addition of interest charged against 
     the United States computed at the rate published by the 
     Department of the Treasury as the ``Treasury Current Value of 
     Funds Rate.''
       (i) Audits, Payment Demands and Limitations.--(1) The 
     Secretary may conduct, after notice, any audit reasonably 
     necessary and appropriate to verify the payments required 
     under this section.
       (2) The Secretary shall send or issue any billing or demand 
     letter for royalty due on locatable minerals produced and 
     sold from any mining claim subject to royalty required by 
     this section not later than 3 years after the date such 
     royalty was due and must specifically identify the production 
     involved, the royalty allegedly due and the basis for the 
     claim. No action, proceeding or claim for royalty due on 
     locatable minerals produced and sold, or relating to such 
     production, may be brought by the United States, including 
     but not limited to any claim for additional royalties or 
     claim of the right to offset the amount of such additional 
     royalties against amounts owed to any person by the United 
     States, unless judicial suit or administrative proceedings 
     are commenced to recover specific amounts claimed to be due 
     prior to the expiration of 3 years from the date such royalty 
     is alleged to have been due.
       (j) Transitional Rules.--Any mining claim for which a 
     patent is issued pursuant to section 9502(b) shall not be 
     subject to the obligation to pay the royalty pursuant to this 
     section. Royalty payments for any claim processed under 
     section 9502(b) shall be suspended pending final 
     determination of the right to patent. For any such claim that 
     is determined not to qualify for the issuance of a patent 
     under section 9502(b), royalties shall be payable under this 
     section on production after the date of enactment of this 
     Act, plus interest computed at the rate published by the 
     Department of the Treasury as the ``Treasury Current Value of 
     Funds Rate'' on production after such date of enactment and 
     before the date of such determination.
       (k) Disbursement of Revenues.--The receipts from royalties 
     collected under this section shall be disbursed as follows:
       (1) Two-thirds of such receipts shall be paid into the 
     Treasury of the United States and deposited as miscellaneous 
     receipts.
       (2) One-third of such receipts shall be paid by the 
     Secretary of the Treasury to the State in which the mining 
     claim from which production occurred is located.
       (l) No Implied Covenants.--The owner of a mining claim 
     subject to the provisions of this title shall have no 
     obligation, express or implied, to explore for, develop, 
     produce or market locatable minerals as a result of the 
     obligation to pay a royalty hereunder, and the timing, 
     nature, extent and manner of exploring, developing, mining 
     and marketing such locatable minerals shall be in the sole 
     discretion of the claim owner.

     SEC. 9504. MINERAL MATERIALS.

       (a) Determinations.--Section 3 of the Act of July 23, 1955 
     (30 U.S.C. 611), is amended as follows:
       (1) Insert ``(a)'' before the first sentence.
       (2) Add the following new subsection at the end thereof:
       ``(b)(1) Subject to valid existing rights, after the date 
     of enactment of this subsection, notwithstanding the 
     reference to common varieties in subsection (a) and to the 
     exception to such term relating to a deposit of materials 
     with some property giving it distinct and special value, all 
     deposits of 

[[Page H11066]]

     mineral materials referred to in such subsection, including 
     the block pumice referred to in such subsection, shall be 
     subject to disposal only under the terms and conditions of 
     the Materials Act of 1947.
       ``(2) For purposes of paragraph (1), the term `valid 
     existing rights' means that a mining claim located for any 
     such mineral material had some property giving it the 
     distinct and special value referred to in subsection (a), or 
     as the case may be, met the definition of block pumice 
     referred to in such subsection, was properly located and 
     maintained under the general mining laws prior to the date of 
     the enactment of this subsection, and was supported by a 
     discovery of a valuable mineral deposit within the meaning of 
     the general mining laws as in effect immediately prior to 
     such date of enactment and that such claim continues to be 
     valid under this Act.''.
       (b) Identified Deposits.--In order to assure that the 
     Secretary has the authority to provide for the development of 
     mineral materials which, in order to justify the investment 
     necessary for the development of the appropriate mine, quarry 
     or other workings and related facilities, may require longer 
     and more secure tenure than is provided by sales contracts 
     under the Act entitled ``An Act to provide for the disposal 
     of materials on the public lands of the United States'', 
     approved July 31, 1947 (30 U.S.C. 602), and in order to 
     provide flexibility with regard to the manner of disposition 
     of mineral materials section 2 of such Act is amended by 
     adding at the end the following:
       ``(b) Identified Deposits.--(1) Lands known to contain 
     valuable deposits of mineral materials subject to this Act 
     and subsequent amendments and not covered by any contract, 
     permit, or lease under this section shall also be subject to 
     disposition by lease under this Act by the Secretary of the 
     Interior through advertisement, competitive bidding, or such 
     other methods as he may by general regulations adopt, and in 
     such reasonably compact areas as he shall fix.
       ``(2) All leases will be conditioned upon--
       ``(A) the payment by the lessee of such royalty as may be 
     fixed in the lease, not less than two percent of the quantity 
     or gross value of the output of mineral materials, and
       ``(B) the payment in advance of a rental of 25 cents per 
     acre for the first calendar year or fraction thereof; 50 
     cents per acre for the second, third, fourth, and fifth 
     years, respectively; and $1 per acre per annum thereafter 
     during the continuance of the lease, such rental for that 
     year being credited against royalties accruing for that year.
       ``(3)(A) Any lease issued under this subsection shall be 
     for a term of 20 years and so long thereafter as the lessee 
     complies with the terms and conditions of the lease and upon 
     the further condition that at the end of each 20-year period 
     succeeding the date of the lease such reasonable adjustment 
     of the terms and conditions thereof may be made therein as 
     may be prescribed by the Secretary of the Interior unless 
     otherwise provided by law at the expiration of such periods.
       ``(B) Leases shall be conditioned upon a minimum annual 
     production or the payment of a minimum royalty in lieu 
     thereof, except when production is interrupted by strikes, 
     the elements, or casualties not attributable to the lessee.
       ``(C) The Secretary of the Interior may permit suspension 
     of operations under any such leases when marketing conditions 
     are such that the leases cannot be operated except at a loss.
       ``(D) The Secretary upon application by the lessee prior to 
     the expiration of any existing lease in good standing shall 
     amend such lease to provide for the same tenure and to 
     contain the same conditions, including adjustment at the end 
     of each 20-year period succeeding the date of said lease, as 
     provided for in this subsection.
       ``(c) Other Lands.--(1) The Secretary of the Interior is 
     hereby authorized, under such rules and regulations as he may 
     prescribe, to grant to any qualified applicant a prospecting 
     permit which shall give the exclusive right to prospect for 
     mineral materials in lands belonging to the United States 
     which are not subject to subsection (b), and are not covered 
     by a contract, permit, or lease under this Act, except that a 
     prospecting permit shall not exceed a period of 2 years and 
     the area to be included in such a permit shall not exceed 
     2,560 acres of land in reasonably compact form.
       ``(2) The Secretary of the Interior shall reserve and may 
     exercise the authority to cancel any prospecting permit upon 
     failure by the permittee to exercise due diligence in the 
     prosecution of the prospecting work in accordance with the 
     terms and conditions stated in the permit, and shall insert 
     in every such permit issued under the provisions of this Act 
     appropriate provisions for its cancellation by him.
       ``(3) Upon showing to the satisfaction of the Secretary of 
     the Interior that valuable deposits of one of the mineral 
     materials subject to the Materials Act of 1947 have been 
     discovered by the permittee within the area covered by his 
     permit, and that such land is valuable therefor, the 
     permittee shall be entitled to a lease for any or all of the 
     land embraced in the prospecting permit, at a royalty of not 
     less than two percent of the quantity or gross value of the 
     output of the mineral materials at the point of shipment to 
     market, such lease to be taken in compact form by legal 
     subdivisions of the public land surveys, or if the land be 
     not surveyed, by survey executed at the cost of the permittee 
     in accordance with regulations prescribed by the Secretary of 
     the Interior.''.
       (d) Mineral Materials Disposal Clarification.--Section 4 of 
     the Act of July 23, 1955 (30 U.S.C. 612), as amended as 
     follows:
       (1) In subsection (b) insert ``and mineral material'' after 
     ``vegetative''.
       (2) In subsection (c) insert ``and mineral material'' after 
     ``vegetative''.
       (e) Conforming Amendment.--Section 1 of the Act of July 31, 
     1947, entitled ``An Act to provide for the disposal of 
     materials on the public lands of the United States'' (30 
     U.S.C. 601 and following) is amended by striking ``common 
     varieties of'' in the first sentence.
       (f) Short Titles.--
       (1) Surface resources.--The Act of July 23, 1955, is 
     amended by inserting after section 7 the following new 
     section:
       ``Sec. 8. This Act may be cited as the `Surface Resources 
     Act of 1955'.''.
       (2) Mineral materials.--The Act of July 31, 1947, entitled 
     ``An Act to provide for the disposal of materials on the 
     public lands of the United States'' (30 U.S.C. 601 and 
     following) is amended by inserting after section 4 the 
     following new section:
       ``Sec. 5. This Act may be cited as the `Materials Act of 
     1947'.''.
       (g) Repeals.--(1) Subject to valid existing rights, the Act 
     of August 4, 1892 (27 Stat. 348, 30 U.S.C. 161), commonly 
     known as the Building Stone Act, is hereby repealed.
       (2) Subject to valid existing rights, the Act of January 
     31, 1901 (30 U.S.C. 162), commonly known as the Saline Placer 
     Act, is hereby repealed.
       (h) Authorization for Disposal of Mineral Materials by 
     Contract.--Section 2(a) of the Act entitled ``An Act to 
     provide for the disposal of materials on the public lands of 
     the United States'', approved July 31, 1947 (30 U.S.C. 
     602(a)), is amended--
       (1) by striking the period at the end of paragraph (3) and 
     inserting ``or, if''; and
       (2) by adding after paragraph (3) the following:
       ``(4) the material is a mineral material.''.
       (i) Sodium.--Section 24 of the Mineral Leasing Act (30 
     U.S.C. 181 et seq.) is amended by inserting after ``2 per 
     centum'' in each place it appears the following: ``and not 
     greater than five and one-half per centum''. Any rate under 
     section 24 of the Mineral Leasing Act (30 U.S.C. 181) in 
     excess of five and one-half per centum shall not be allowed 
     unless the following conditions are met:
       (1) the Secretary, in consultation with the Secretary of 
     Commerce and the United States Trade Representative, finds 
     that any increase in the royalty rate for sodium will not 
     have an adverse effect on the export of domestically produced 
     soda ash;
       (2) the Secretary reports this finding of no ``adverse 
     effect'' to Congress and recommends an additional proposed 
     royalty rate increase; and
       (3) the Congress, within 360 days, approves the Secretary's 
     recommendation.

     The Secretary shall, within 90 days, offer for competitive 
     bid all tracts for which there are applications pending on 
     sodium leases.

     SEC. 9505. CLAIM MAINTENANCE REQUIREMENTS.

       (a) Maintenance Fees.--
       (1) Annual maintenance fee.--After the date of enactment of 
     this Act, the owner of each unpatented mining claim or site 
     located pursuant to the general mining laws, whether located 
     before or after the enactment of this Act, shall pay to the 
     Secretary in advance on or before September 1 of each year, 
     until a patent has been issued therefor, an annual 
     maintenance fee per mining claim or site.
       (2) Initial maintenance fee.--The owner of each unpatented 
     mining claim or site located after the date of enactment of 
     this Act pursuant to the general mining laws shall pay to the 
     Secretary, at the time the copy of the notice or certificate 
     of location is filed with the Bureau of Land Management 
     pursuant to section 314(b) of the Federal Land Policy and 
     Management Act of 1976 (43 U.S.C. 1744(b)), the location fee 
     required under subsection (i) of this section, in lieu of the 
     annual maintenance fee of $100 per mining claim or site for 
     the assessment year which includes the date of location of 
     such mining claim or site.
       (3) Exemption.--The owner of any mining claim or site who 
     certifies in writing to the Secretary on or before the first 
     day of any assessment year that access to such mining claim 
     or site was denied or impeded during the prior assessment 
     year by the action or inaction of any local, State, or 
     Federal governmental officer, agency, or court, or by any 
     Indian tribal authority, shall be exempt from the annual 
     maintenance fee requirements of paragraph (1) for the 
     assessment year following the filing of the certification.
       (4) Amount of annual maintenance fee.--For each assessment 
     year the annual maintenance fee payable under paragraph (1) 
     for a claim or site referred to in paragraph (1) shall be in 
     the amount specified in Table 1.
       

                                 TABLE 1                                
------------------------------------------------------------------------
                                                  Amount of Fee Per Site
                Assessment Year                          or Claim       
------------------------------------------------------------------------
1 through 3....................................       $100 per year     
4 through 5....................................       $150 per year     
6 through 10...................................       $200 per year     
11 through 15..................................       $300 per year     
16 and thereafter..............................       $500 per year     
------------------------------------------------------------------------

     For purposes of applying Table 1 in the case of claims filed 
     before the enactment of this Act, the portion of 
     the assessment year in which this Act is enacted shall be 
     treated as the first assessment year.

[[Page H11067]]

       (5) Effect of forfeiture.--No owner or co-owner of a mining 
     claim or site which has been forfeited because the 
     maintenance fee has not been paid and no person who is a 
     related person of any such owner or co-owner may relocate a 
     new claim on any part of lands located within the forfeited 
     claim for a period of 18 months after the date of forfeiture.
       (6) Deposit of fees.--The full amount of all fees paid 
     under this subsection shall be deposited in the General Fund 
     of the Treasury.
       (b) Annual Labor.--(1) Amounts expended on activities that 
     qualify as annual labor under the general mining laws may be 
     credited on a dollar for dollar basis towards up to 75 
     percent of the annual maintenance fee payable under this 
     section for the following assessment year.
       (2) Subject to the 75 percent limit set forth in paragraph 
     (1), the excess of amounts expended for annual labor 
     performed in any one year over such 75 percent limit may be 
     applied to the maintenance fee due in subsequent years for a 
     period of up to three years.
       (3) In order to receive credit under this subsection for 
     annual labor work or excess annual labor, the description and 
     value of the work must be included in the statement required 
     in subsection (e) and the statement must be timely filed.
       (4) Annual labor performed on an individual mining claim or 
     site within a group of contiguous claims may be credited 
     towards the aggregate amount of maintenance fees due on all 
     of the contiguous claims within that group.
       (c) Work Qualifying as Annual Labor.--(1) Only work which 
     directly benefits or develops a mining claim or facilitates 
     the extraction of ore qualifies as annual labor. Acceptable 
     labor and improvements include any of the following:
       (A) Drilling or excavating, including ore extraction.
       (B) Mining costs directly associated with the production of 
     ore.
       (C) Prospecting work which benefits the location or a 
     contiguous location.
       (D) Development work toward an actual mine, such as shafts, 
     tunnels, crosscuts and drifts, settling ponds and dams.
       (E) Bringing in water for direct mining or milling 
     purposes.
       (F) Clearing of brush, timber, debris, or overburden where 
     necessary to facilitate the extraction or processing of 
     minerals.
       (G) Construction of trails, roads, or landing strips 
     providing access to claims.
       (H) Construction costs of worker housing, mills, and 
     equipment storage buildings where reasonably necessary for 
     the development of the location.
       (I) Reasonable value of the use of equipment for 
     prospecting, mining, or development purposes on the location.
       (J) Repairs of equipment used for prospecting, sampling, or 
     production of minerals provided that such equipment has been 
     on site during the assessment year.
       (K) Cost of moving workers, materials, and equipment among 
     contiguous locations.
       (L) Watchman services of a bona fide employed watchman on 
     the property where reasonably necessary to protect mining 
     equipment of substantial value.
       (M) Activities covered under section 1 of the Act of 
     September 2, 1958 (30 U.S.C. 28-1), as amended.
       (N) Reclamation conducted pursuant to State or Federal 
     surface management regulations.
       (O) Other activities which the Secretary may determine 
     qualify as annual labor.
       (2) The following activities do not qualify as annual 
     labor:
       (A) Work involved in maintaining the location such as 
     brushing and marking boundaries or replacing corner posts and 
     location notices.
       (B) Transportation of workers to or from the location.
       (C) Prospecting or exploration work not conducted within 
     the location or a contiguous location.
       (d) Amendments of Public Law 85-876.--The Act of September 
     2, 1958 (Public Law 85-876; 30 U.S.C. 28-1), is amended as 
     follows:
       (1) Section 1 is amended by inserting ``mineral activities, 
     environmental baseline monitoring, and'' after ``without 
     being limited to'' and before ``geological, geochemical and 
     geophysical surveys'' and by striking ``Such'' at the 
     beginning of the last sentence and inserting ``Airborne''.
       (2) Section 2(d) is amended by inserting ``environmental 
     baseline monitoring or'' after ``experience to conduct'' and 
     before ``geological, geochemical or geophysical surveys''.
       (3) Section 2 is amended by adding at the end of the 
     following new subsection at the end thereof:
       ``(e) The term `environmental baseline monitoring' means 
     activities for collecting, reviewing and analyzing 
     information concerning soil, vegetation, wildlife, mineral, 
     air, water, cultural, historical, archaeological or other 
     resources related to planning for or complying with Federal 
     and State environmental or permitting requirements applicable 
     to potential or proposed mineral activities on the 
     claim(s).''.
       (e) Maintenance Fee Statement.--Each payment under 
     subsection (a) of this section shall be accompanied by a 
     statement which reasonably identifies the mining claim or 
     site for which the maintenance fee is being paid. The 
     statement required under this subsection shall be in lieu of 
     any annual filing requirements for mining claims or sites, 
     under any other Federal law, but shall not supersede any such 
     filing requirement under applicable State law.
       (f) Annual Labor Report.--When the value of annual labor is 
     credited towards part or all of the maintenance fee, subject 
     to the 75-percent limit set forth in subsection (b)(1), the 
     following shall apply:
       (1) The maintenance fee statement required in subsection 
     (e) must also state the dates of performance of the labor, 
     describe the character and total value of the improvements 
     made or the labor performed, the amount of labor used as a 
     credit toward the maintenance fee for the current year, and 
     the value of excess labor performed in previous years which 
     is to be applied to the maintenance fee for the current year.
       (2) Documentation which reasonably supports the activities 
     or improvements claimed must accompany the maintenance fee 
     statement. Such documentation may include, but is not limited 
     to, copies of maps showing sample locations, drill locations, 
     or survey data; environmental baseline data; reports on 
     geology, geochemistry, or geophysics by qualified experts; 
     drill results; or engineering reports by qualified engineers.
       (3) All supporting material filed pursuant to paragraph (2) 
     shall remain confidential in accordance with section 552 of 
     title 5 of the United States Code as long as the location is 
     maintained and for a period of one year after the location is 
     abandoned, after which all data filed shall be considered 
     public information.
       (g) Effect of Compliance as Against Subsequent Locators.--
     (1) Except as provided in paragraph (2), after the date of 
     enactment of this Act, compliance with the requirements of 
     this section shall, from the time the location notice or 
     certificate is posted on the land under applicable State law, 
     confer upon the owner of any unpatented mining claim or site, 
     whether located before or after the date of enactment of this 
     Act, an exclusive right of possession, as against subsequent 
     locators, of the land included in such mining claim or site 
     under the general mining laws. If more than one mining claim 
     or site owned or controlled by the same claim or site owner 
     covers substantially the same land, by reason of the location 
     of one or more mining claims or sites on such land, the 
     amendment or relocation of any such mining claim or site, or 
     otherwise, such exclusive right of possession shall extend to 
     all such mining claims or sites, effective from the time the 
     location notice or certificate for the initial mining claim 
     or site was posted on such land under applicable State law. 
     The order of location, amendment, or relocation of any such 
     mining claims or sites on such land shall not affect the 
     validity of any such mining claim or site. Such owner of the 
     mining claim or site shall not be required to be in actual, 
     physical occupation of such land and shall not be required to 
     exclude rival locators from such land. Such exclusive right 
     of possession shall be subject to applicable Federal law, 
     including the Multiple Mineral Development Act of 1954 (30 
     U.S.C. 521-31), the Materials Act of 1947 (30 U.S.C. 601-604) 
     and the Surface Resources Act of 1955 (30 U.S.C. 611-15) to 
     the extent applicable, and shall neither enlarge nor diminish 
     any rights of such owner of the mining claim or site as 
     against the United States in such land. This paragraph shall 
     supersede the common law doctrine of pedis possessio.
       (2) Conflicts over the right of exclusive possession of 
     land included in any mining claim or site shall be determined 
     in proceedings between owners of mining claims or sites under 
     the provisions of section 910 of the Revised Statutes (30 
     U.S.C. 53) and other applicable law, including but not 
     limited to each of the following:
       (A) Any conflict based upon circumstances existing as of 
     the date of enactment of this Act between mining claims or 
     sites located before the date of enactment of this Act, shall 
     be resolved under the law in effect on the day prior to the 
     date of enactment of this Act, including the common law 
     doctrine of pedis possessio.
       (B) Any conflict arising on or after the date of enactment 
     of this Act between mining claims or sites located before, on 
     or after the date of enactment over whether either owner of 
     the mining claim or site has complied with the requirements 
     of this section, shall be resolved under this Act.
       (h) Failure of Co-Owner To Contribute.--Upon the failure of 
     any one or more of several co-owners of any mining claim or 
     site to contribute such co-owner or owners' portion of any 
     location or maintenance fee payable under this section, any 
     co-owner who has paid such fee may, after the payment due 
     date, serve the delinquent co-owner or owners with notice of 
     such failure in writing or, if such delinquent co-owner or 
     owners cannot be located after reasonable efforts, by 
     publication in a general circulation newspaper published in a 
     location nearest the mining claim or site at least once a 
     week for at least 90 days. If at the expiration of 90 days 
     after such notice in writing or by publication, any 
     delinquent co-owner fails or refuses to contribute the owed 
     portion, such co-owner or owners' interest shall become the 
     property of the owner or co-owners who have paid the required 
     fee.
       (i) Location Fee.--The owner of each unpatented mining 
     claim or site located on or after the date of enactment of 
     this Act pursuant to the general mining laws shall pay to the 
     Secretary, at the time the notice 

[[Page H11068]]

     or certificate of location is filed with the Bureau of Land 
     Management pursuant to subsection 314(b) of the Federal Land 
     Policy and Management Act of 1976 (43 U.S.C. 1744(b)), a 
     location fee of $25.00 per mining claim or site. The full 
     amount of all fees paid under this subsection shall be 
     deposited in the General Fund of the Treasury. Effective on 
     the date of the enactment of this Act, section 10102 of the 
     Omnibus Budget Reconciliation Act of 1993 (107 Stat. 406; 30 
     U.S.C. 28g) is repealed.
       (j) Credit Against Maintenance Fee.--(1) Except as provided 
     in paragraph (2), the annual maintenance fee payable for any 
     unpatented mining claim or site for any assessment year shall 
     be reduced by the amount of royalty paid by such claimholder 
     for such mining claim or site, or for any contiguous mining 
     claim or site, during the prior assessment year.
       (2) Royalties paid during any assessment year prior to the 
     first full assessment year commencing after the enactment of 
     this Act shall not reduce the amount of any maintenance fee.
       (k) Oil Shale Claims Subject to Claim Maintenance Fee Under 
     Energy Policy Act of 1992.--This section shall not apply to 
     any oil shale claims for which a fee is required to be paid 
     under paragraph 2511(e)(2) of the Energy Policy Act of 1992 
     (30 U.S.C. 242(e)(2)).
       (l) Failure To Comply.--The failure of the owner of the 
     mining claim or site to pay any claim maintenance fee or 
     location fee for a mining claim or site on or before the date 
     such payment is due under this section shall constitute 
     forfeiture of the mining claim or site and such mining claim 
     or site shall be null and void, effective as of the day after 
     the date such payment is due, except that if such maintenance 
     fee or location fee is paid or tendered on or before the 30th 
     day after such payment was due under subsection of this 
     section, such mining claim or site shall not be forfeited or 
     null or void, and such maintenance fee or location fee shall 
     be deemed timely paid.
       (m) Amendment of FLPMA Filing Requirements.--(1) Section 
     314(a) of the Federal Land Policy and Management Act of 1976 
     (43 U.S.C. 1744(a)) is hereby repealed.
       (2) Section 314(c) of the Federal Land Policy and 
     Management Act of 1976 (43 U.S.C. 1744(c)) is amended to read 
     as follows:
       ``(c) Failure To File as Constituting Forfeiture; Defective 
     or Untimely Filing.--The failure to timely file the copy of 
     the notice or certificate of location as required by 
     subsection (b) shall constitute forfeiture of the mining 
     claim and such claim shall be null and void by operation of 
     law; except that it shall not be considered a failure to file 
     if the notice or certificate of location is defective or not 
     timely filed for record under other State or Federal laws 
     permitting or requiring the filing or recording thereof, or 
     if the copy of the notice or certificate is filed by or on 
     behalf of some but not all of the owners of the claim.''.
       (n) Related Persons.--As used in this section, the term 
     ``related persons'' includes--
       (1) the spouse and dependent children (as defined in 
     section 152 of the Internal Revenue Code of 1986), of the 
     owner of the mining claim or site; and
       (2) a person controlled by, controlling, or under common 
     control with the owner of the mining claim or site.
       (o) Repeal.--Section 10101 of the Omnibus Budget 
     Reconciliation Act of 1993 (107 Stat. 406; 30 U.S.C. 28g) is 
     repealed, effective with respect to assessment year 
     commencing after the enactment of this Act.
       (p) Periodic Review of Fee Structure.--Beginning in the 
     year 2005 and at 10 year intervals thereafter, the Secretary 
     shall review the costs incurred by the Secretary to 
     administer mining claims for locatable minerals under the 
     general mining laws and the structure and level of 
     maintenance and location fees received by the Secretary with 
     respect to such claims. The Secretary shall determine if the 
     revenues from such fees is adequate to cover such costs, 
     taking inflation and other appropriate factors into account. 
     The Secretary shall submit the results of each such review to 
     the Congress, together with such legislative recommendations 
     as the Secretary deems appropriate.

                 PART 2--FEDERAL OIL AND GAS ROYALTIES

     SEC. 9511. SHORT TITLE.

       This part may be cited as the ``Federal Oil and Gas Royalty 
     Simplification and Fairness Act of 1995''.

     SEC. 9512. DEFINITIONS.

       (a) In General.--Section 3 of the Federal Oil and Gas 
     Royalty Management Act of 1982 (30 U.S.C. 1701 et seq.) is 
     amended--
       (1) by amending paragraph (7) to read as follows:
       ``(7) `lessee' means any person to whom the United States, 
     an Indian tribe, or an Indian allottee issues a lease or any 
     person to whom operating rights have been assigned;''; and
       (2) by striking ``and'' at the end of paragraph (15), by 
     striking the period at the end of paragraph (16) and 
     inserting a semicolon, and by adding at the end the 
     following:
       ``(17) `adjustment' means an amendment to a previously 
     filed report on an obligation, and any additional payment or 
     credit, if any, applicable thereto, to rectify an 
     underpayment or overpayment on a lease;
       ``(18) `administrative proceeding' means any agency process 
     in which a demand, decision or order issued by the Secretary 
     is subject to appeal or has been appealed;
       ``(19) `assessment' means any fee or charge levied or 
     imposed by the Secretary or the United States other than--
       ``(A) the principal amount of any royalty, minimum royalty, 
     rental, bonus, net profit share or proceed of sale;
       ``(B) any interest; or
       ``(C) any civil or criminal penalty;
       ``(20) `commence' means--
       ``(A) with respect to a judicial proceeding, the service of 
     a complaint, petition, counterclaim, crossclaim, or other 
     pleading seeking affirmative relief or seeking credit or 
     recoupment; or
       ``(B) with respect to a demand, the receipt by the 
     Secretary or a lessee of the demand;
       ``(21) `credit' means the application of an overpayment (in 
     whole or in part) against an obligation which has become due 
     to discharge, cancel or reduce the obligation;
       ``(22) `demand' means--
       ``(A) an order to pay issued by the Secretary; or
       ``(B) a separate written request by a lessee which asserts 
     an obligation due the lessee,

     but does not mean any royalty or production report, or any 
     information contained therein, required by the Secretary;
       ``(23) `obligation' means--
       ``(A) any duty of the Secretary or the United States--
       ``(i) to take oil or gas royalty in kind; or
       ``(ii) to pay, refund, offset, or credit monies including 
     but not limited to--

       ``(I) the principal amount of any royalty, minimum royalty, 
     rental, bonus, net profit share or proceed of sale; or
       ``(II) any interest;

       ``(B) any duty of a lessee--
       ``(i) to deliver oil or gas royalty in kind; or
       ``(ii) to pay, offset or credit monies including but not 
     limited to--

       ``(I) the principal amount of any royalty, minimum royalty, 
     rental, bonus, net profit share or proceed of sale;
       ``(II) any interest;
       ``(III) any penalty; or
       ``(IV) any assessment,

     which arises from or relates to any lease administered by the 
     Secretary for, or any mineral leasing law related to, the 
     exploration, production and development of oil or gas on 
     Federal lands or the Outer Continental Shelf;
       ``(24) `order to pay' means a written order issued by the 
     Secretary or the United States which--
       ``(A) asserts a definite and quantified obligation; and
       ``(B) specifically identifies the obligation by lease, 
     production month and amount of such obligation ordered to be 
     paid, as well as the reason or reasons such obligation is 
     claimed to be due,

     but such term does not include any other communication or 
     action by or on behalf of the Secretary or the United States;
       ``(25) `overpayment' means any payment by a lessee in 
     excess of an amount legally required to be paid on an 
     obligation and includes the portion of any estimated payment 
     for a production month that is in excess of the royalties due 
     for that month;
       ``(26) `payment' means satisfaction, in whole or in part, 
     of an obligation;
       ``(27) `penalty' means a statutorily authorized civil fine 
     levied or imposed by the Secretary or the United States for a 
     violation of this Act, any mineral leasing law, or a term or 
     provision of a lease administered by the Secretary;
       ``(28) `refund' means the return of an overpayment by the 
     Secretary or the United States by the drawing of funds from 
     the United States Treasury;
       ``(29) `State concerned' means, with respect to a lease, a 
     State which receives a portion of royalties under this Act 
     from such lease; and
       ``(30) `underpayment' means any payment or nonpayment by a 
     lessee that is less than the amount legally required to be 
     paid on an obligation.''.
       (b) Lessee Liability.--Section 102(a) of the Federal Oil 
     and Gas Royalty Management Act of 1982 (30 U.S.C. 1712(a)) is 
     amended to read as follows:
       ``(a) A lessee who is required to make any royalty or other 
     payment under a lease or under the mineral leasing laws, 
     shall make such payments in the time and manner as may be 
     specified by the Secretary. A lessee may designate a person 
     to act on the lessee's behalf and shall notify the Secretary 
     in writing of such designation. The person to whom the United 
     States issues a lease or the person by whom operating rights 
     are currently owned, but not both, shall remain primarily 
     liable for its obligations.''.

     SEC. 9513. LIMITATION PERIODS.

       (a) In General.--The Federal Oil and Gas Royalty Management 
     Act of 1982 (30 U.S.C. 1701 et seq.) is amended by adding 
     after section 114 the following new section:

     ``SEC. 115. LIMITATION PERIODS AND AGENCY ACTIONS.

       ``(a) In General.--A judicial proceeding or demand which 
     arises from, or relates to an obligation, shall be commenced 
     within six years from the date on which the obligation 
     becomes due and if not so commenced shall be barred, except 
     as otherwise provided by this section.
       ``(b) Obligation Becomes Due.--
       ``(1) In general.--For purposes of this Act, an obligation 
     becomes due when the right to enforce the obligation is 
     fixed.
       ``(2) Royalty obligations.--The right to enforce the 
     royalty obligation for a production month for a lease is 
     fixed for purposes of this Act on the last day of the 
     calendar month following the month in which oil or gas is 
     produced.

[[Page H11069]]

       ``(c) Tolling of Limitation Period.--The running of the 
     limitation period under subsection (a) shall not be 
     suspended, tolled, extended, or enlarged for any obligation 
     for any reason by any action, including an action by the 
     Secretary or the United States, other than the following:
       ``(1) Tolling agreement.--A written agreement executed 
     during the limitation period between the Secretary and a 
     lessee which tolls the limitation period for the amount of 
     time during which the agreement is in effect.
       ``(2) Subpoena.--The issuance of a subpoena in accordance 
     with the provisions of section 107(c) shall toll the 
     limitation period with respect to the obligation which is the 
     subject of a subpoena only for the period beginning on the 
     date the lessee receives the subpoena and ending on the date 
     on which (A) the lessee has produced such subpoenaed records 
     for the subject obligation, (B) the Secretary receives 
     written notice that the subpoenaed records for the subject 
     obligation are not in existence or are not in the lessee's 
     possession or control, or (C) a court has determined in a 
     final decision that such records are not required to be 
     produced, whichever occurs first.
       ``(3) Fraud or concealment.--Any fraud or concealment by a 
     lessee in an attempt to defeat or evade an obligation in 
     which case the limitation period shall be tolled for the 
     period of such fraud or such concealment.
       ``(4) Tolling request.--A written tolling request from a 
     lessee based upon the lessee's representation that the 
     lessee's entitlement to an overpayment has not been finally 
     determined. The limitation period shall be tolled pursuant to 
     this paragraph from the date the Secretary receives the 
     tolling request until the earlier of the end of the requested 
     period or 12 months after the date the Secretary receives the 
     tolling request, but is subject to successive 12-month 
     renewals by the lessee made prior to the expiration of the 
     then applicable 12-month period. The tolling request shall be 
     sufficient if it identifies--
       ``(A) the person who made the potential overpayment;
       ``(B) the leases and production months involved in the 
     potential overpayment; and
       ``(C) the reasons the lessee believes that it may later be 
     entitled to a refund of the overpayment.
       ``(5) Order to perform a restructured accounting.--The 
     issuance of a notice under section 107(d)(4) that the lessee 
     has not adequately performed a restructured accounting shall 
     toll the limitation period with respect to the obligation 
     which is the subject of the notice only for the period 
     beginning on the date the lessee receives the notice and 
     ending on the date on which (A) the Secretary receives 
     written notice the accounting or other requirement has been 
     performed, or (B) a court has determined in a final decision 
     that the lessee is not required to perform the accounting, 
     whichever occurs first.
       ``(d) Termination of Limitation Period.--The limitation 
     period shall be terminated in the event--
       ``(1) the Secretary has notified the lessee in writing that 
     a time period is closed to further audit; or
       ``(2) the Secretary and a lessee have so agreed in writing.
       ``(e) Final Agency Action.--
       ``(1) 3-year period.--The Secretary shall issue a final 
     decision in any administrative proceeding, including any 
     administrative proceedings pending on the date of enactment 
     of the Federal Oil and Gas Royalty Simplification and 
     Fairness Act of 1995, within three years from the date such 
     proceeding was initiated or three years from the date of such 
     enactment, whichever is later. The three-year period may be 
     extended by any period of time agreed upon in writing by the 
     Secretary and the lessee.
       ``(2) Effect of failure to issue decision.--
       ``(A) In general.--If no such decision has been issued by 
     the Secretary within the three-year period referred to in 
     paragraph (1)--
       ``(i) the Secretary shall be deemed to have issued and 
     granted a decision in favor of the lessee or lessees as to 
     any nonmonetary obligation and any monetary obligation the 
     principal amount of which is less than $2,500; and
       ``(ii) the Secretary shall be deemed to have issued a final 
     decision in favor of the Secretary, which decision shall be 
     deemed to affirm those issues for which the agency rendered a 
     decision prior to the end of such period, as to any monetary 
     obligation the principal amount of which is $2,500 or more, 
     and the lessee shall have a right to a de novo judicial 
     review of such deemed final decision.
       ``(B) No precedential effect on other proceedings.--Deemed 
     decisions under subparagraph (A) shall have no precedential 
     effect in any judicial or administrative proceeding or for 
     any other purpose.
       ``(f) Administrative Settlement.--During the pendency of 
     any administrative proceeding, the parties shall hold at 
     least one settlement consultation for the purpose of 
     discussing disputed matters between the parties. For purposes 
     of settlement, the Secretary may take such action as is 
     appropriate to compromise and settle a disputed obligation, 
     including interest and allowing offsetting of obligations 
     among leases. The Secretary and the State concerned shall 
     seek to resolve disputes with a lessee in as expeditious a 
     manner as possible, through settlement negotiations and other 
     alternative dispute resolution processes methods. If any 
     dispute involving an obligation due is not resolved by the 
     end of the six-year period beginning on the date the 
     obligation became due, the amount of interest otherwise 
     payable with respect to the obligation shall accrue after 
     such six-year period at the rate--
       ``(1) for purposes of section 111(h), reduced each year 
     thereafter by two additional percentage points from the rate 
     in effect under this subsection for the previous year (but 
     not less than zero); and
       ``(2) for purposes of section 111(a), reduced each year 
     thereafter by one additional percentage point from the rate 
     in effect under this subsection for the previous year (but 
     not less than zero).
       ``(g) Limitation on Certain Actions.--When an action on or 
     enforcement of an obligation under the mineral leasing laws 
     is barred under this section--
       ``(1) no other or further action regarding that obligation, 
     including (but not limited to) the issuance of any order, 
     request, demand or other communication seeking any document, 
     accounting, determination, calculation, recalculation, 
     payment, principal, interest, assessment, or penalty or the 
     initiation, pursuit or completion of an audit with respect to 
     that obligation may be taken; and
       ``(2) no other equitable or legal remedy, whether under 
     statute or common law, with respect to an action on or an 
     enforcement of said obligation may be pursued.
       ``(h) Judicial Review.--In the event a demand subject to 
     this section is timely commenced, a judicial proceeding 
     challenging the final agency action with respect to such 
     demand shall be deemed timely so long as such judicial 
     proceeding is commenced within 180 days from receipt of 
     notice by the lessee of the final agency action.
       ``(i) Implementation of Final Decision.--In the event a 
     judicial proceeding or demand subject to this section is 
     timely commenced and thereafter the limitation period in this 
     section lapses during the pendency of such proceeding, any 
     party to such proceeding shall not be barred from taking such 
     action as is required or necessary to implement a final 
     unappealable judicial or administrative decision, including 
     any action required or necessary to implement such decision 
     by the recovery or recoupment of an underpayment or 
     overpayment by means of refund or credit.
       ``(j) Stay of Payment Obligation Pending Review.--Any party 
     ordered by the Secretary or the United States to pay any 
     obligation (other than an assessment) shall be entitled to a 
     stay of such payment without bond or other surety instrument 
     pending an administrative or judicial proceeding if the party 
     periodically demonstrates to the satisfaction of the 
     Secretary that such party is financially solvent or otherwise 
     able to pay the obligation. In the event the party is not 
     able to so demonstrate, the Secretary may require a bond or 
     other surety instrument satisfactory to cover the obligation. 
     Any party ordered by the Secretary to pay an assessment shall 
     be entitled to a stay without bond or other surety 
     instrument.
       ``(k) Inapplicability of the Other Statutes of 
     Limitation.--The limitations set forth in sections 2401, 
     2415, 2416, and 2462 of title 28, United States Code, section 
     42 of the Mineral Leasing Act (30 U.S.C. 226-2) and section 
     3716 of title 31, United States Code, shall not apply to any 
     obligation to which this Act applies.''.
       (b) Subpoena.--Section 107 of the Federal Oil and Gas 
     Royalty Management Act of 1982 (30 U.S.C. 1717) is amended by 
     adding at the end the following:
       ``(c) Rules Regarding Issuance of Subpoena Relating to 
     Reporting and Payment of an Obligation Due.--
       ``(1) In general.--A subpoena which requires a lessee to 
     produce records necessary to determine the proper reporting 
     and payment of an obligation due the Secretary may be issued 
     under this section only by an Assistant Secretary of the 
     Interior and an acting Assistant Secretary of the Interior 
     who is a schedule C employee (as defined by section 213.3301 
     of title 5, Code of Federal Regulations) and may not be 
     delegated.
       ``(2) Prior written request required.--A subpoena described 
     in paragraph (1) may only be issued against a lessee during 
     the limitation period provided in section 115 and only after 
     the Secretary has in writing requested the records from the 
     lessee related to the obligation which is the subject of the 
     subpoena and has determined that--
       ``(A) the lessee has failed to respond within a reasonable 
     period of time to the Secretary's written request for such 
     records necessary for an audit, investigation or other 
     inquiry made in accordance with the Secretary's 
     responsibilities under this Act;
       ``(B) the lessee has in writing denied the Secretary's 
     written request to produce such records in the lessee's 
     possession or control necessary for an audit, investigation 
     or other inquiry made in accordance with the Secretary's 
     responsibilities under this Act; or
       ``(C) the lessee has unreasonably delayed in producing 
     records necessary for an audit, investigation or other 
     inquiry made in accordance with the Secretary's 
     responsibilities under this Act after the Secretary's written 
     request.
       ``(3) Reasonable period for compliance with written 
     request.--In seeking records, the Secretary shall afford the 
     lessee a reasonable period of time after a written request by 
     the Secretary in which to provide such records prior to the 
     issuance of any subpoena.''.
       (c) Restructured Accounting.--Section 107 of the Federal 
     Oil and Gas Royalty Management Act of 1982 (30 U.S.C. 1717), 
     as 

[[Page H11070]]

     amended by subsection (b) of this section, is amended by 
     adding at the end the following:
       ``(d) Restructured Accounting.--
       ``(1) In general.--The Secretary shall issue an order to 
     perform a restructured accounting when the Secretary 
     determines during an in-depth audit of a lessee that the 
     lessee should recalculate royalty due on an obligation based 
     upon the Secretary's finding that the lessee has made 
     identified underpayments or overpayments which are 
     demonstrated by the Secretary to be based upon repeated, 
     systemic reporting errors for a significant number of leases 
     or a single lease for a significant number of reporting 
     months with the same type of error which constitutes a 
     pattern of violations and which are likely to result in 
     either significant underpayments or overpayments.
       ``(2) Delegation.--The power of the Secretary to issue an 
     order to perform a restructured accounting may not be 
     delegated below the most senior career professional position 
     having responsibility for the royalty management program, 
     which position is currently designated as the `Associate 
     Director for Royalty Management'. An order to perform a 
     restructured accounting shall--
       ``(A) be issued within a reasonable period of time from 
     when the audit identifies the systemic, reporting errors;
       ``(B) specify the reasons and factual bases for such order; 
     and
       ``(C) be specifically identified as an `order to perform a 
     restructured accounting'.
       ``(3) Order to perform.--An order to perform a restructured 
     accounting shall not include any other communication or 
     action by or on behalf of the Secretary or the United States.
       ``(4) Notice.--If a lessee fails to adequately perform a 
     restructured accounting pursuant to this subsection, a notice 
     shall be issued to the lessee that the restructured 
     accounting has not been adequately performed. Such notice may 
     be issued under this section only by an Assistant Secretary 
     of the Interior or an acting Assistant Secretary of the 
     Interior who is a schedule C employee (as defined by section 
     213.3301 of title 5, Code of Federal Regulations) and may not 
     be delegated.''.
       (d) State Suits.--Section 204 of the Federal Oil and Gas 
     Royalty Management Act of 1982 (30 U.S.C. 1751) is amended by 
     adding at the end the following:
       ``(d) With respect to an obligation, a State bringing an 
     action under this section shall enjoy no greater rights than 
     the Secretary enjoys under this Act.''.
       (e) Clerical Amendment.--The table of contents in section 1 
     of such Act (30 U.S.C. 1701) is amended by adding after the 
     item relating to section 114 the following new item:

``Sec. 115. Limitation periods and agency actions.''.

     SEC. 9514. ADJUSTMENT AND REFUNDS.

       (a) In General.--The Federal Oil and Gas Royalty Management 
     Act of 1982 (30 U.S.C. 1701 et seq.) is amended by adding 
     after section 111 the following new section:

     ``SEC. 111A. ADJUSTMENTS AND REFUNDS.

       ``(a) Adjustments.--
       ``(1) If, during the adjustment period, a lessee determines 
     that an adjustment or refund request is necessary to correct 
     an underpayment or overpayment of an obligation, the lessee 
     shall make such adjustment or request a refund within a 
     reasonable period of time and only during the adjustment 
     period. The filing of a royalty report which reflects the 
     underpayment or overpayment of an obligation shall constitute 
     prior written notice to the Secretary of an adjustment.
       ``(2)(A) For any adjustment, the lessee shall calculate and 
     report the interest due attributable to such adjustment at 
     the same time the lessee adjusts the principal amount of the 
     subject obligation, except as provided by subparagraph (B).
       ``(B) In the case of a lessee on whom the Secretary 
     determines that subparagraph (A) would impose a hardship, the 
     Secretary shall calculate the interest due and notify the 
     lessee within a reasonable time of the amount of interest 
     due, unless such lessee elects to calculate and report 
     interest in accordance with subparagraph (A).
       ``(3) An adjustment or a request for a refund for an 
     obligation may be made after the adjustment period only upon 
     written notice to and approval by the Secretary during an 
     audit of the period which includes the production month for 
     which the adjustment is being made. If an overpayment is 
     identified during an audit, then the Secretary shall allow a 
     credit or refund in the amount of the overpayment.
       ``(4) For purposes of this section, the adjustment period 
     for any obligation shall be the five-year period following 
     the date on which an obligation became due. The adjustment 
     period shall be suspended, tolled, extended, enlarged, or 
     terminated by the same actions as the limitation period in 
     section 115.
       ``(b) Refunds.--
       ``(1) In general.--A request for refund is sufficient if 
     it--
       ``(A) is made in writing to the Secretary and, for purposes 
     of section 115, is specifically identified as a demand;
       ``(B) identifies the person entitled to such refund;
       ``(C) provides the Secretary information that reasonably 
     enables the Secretary to identify the overpayment for which 
     such refund is sought; and
       ``(D) provides the reasons why the payment was an 
     overpayment.
       ``(2) Payment by secretary of the treasury.--The Secretary 
     shall certify the amount of the refund to be paid under 
     paragraph (1) to the Secretary of the Treasury who shall make 
     such refund. Such refund shall be paid from amounts received 
     as current receipts from sales, bonuses, royalties (including 
     interest charges collected under this section) and rentals of 
     the public lands and the Outer Continental Shelf under the 
     provisions of the Mineral Leasing Act and the Outer 
     Continental Shelf Lands Act, which are not payable to a State 
     or the Reclamation Fund. The portion of any such refund 
     attributable to any amounts previously disbursed to a State, 
     the Reclamation Fund, or any recipient prescribed by law 
     shall be deducted from the next disbursements to that 
     recipient made under the applicable law. Such amounts 
     deducted from subsequent disbursements shall be credited to 
     miscellaneous receipts in the Treasury.
       ``(3) Payment period.--A refund under this subsection shall 
     be paid or denied (with an explanation of the reasons for the 
     denial) within 120 days of the date on which the request for 
     refund is received by the Secretary. Such refund shall be 
     subject to later audit by the Secretary and subject to the 
     provisions of this Act.
       ``(4) Prohibition against reduction of refunds or 
     credits.--In no event shall the Secretary directly or 
     indirectly claim any amount or amounts against, or reduce any 
     refund or credit (or interest accrued thereon) by the amount 
     of any obligation the enforcement of which is barred by 
     section 115.''.
       (b) Clerical Amendment.--The table of contents in section 1 
     of such Act (30 U.S.C. 1701) is amended by adding after the 
     item relating to section 111 the following new item:

``Sec. 111A. Adjustments and refunds.''.

     SEC. 9515. REQUIRED RECORDKEEPING.

       Section 103 of the Federal Oil and Gas Royalty Management 
     Act of 1982 (30 U.S.C. 1713(b)) is amended by adding at the 
     end the following:
       ``(c) Records required by the Secretary for the purpose of 
     determining compliance with any applicable mineral leasing 
     law, lease provision, regulation or order with respect to oil 
     and gas leases from Federal lands or the Outer Continental 
     Shelf shall be maintained for the same period of time during 
     which a judicial proceeding or demand may be commenced under 
     section 115(a). If a judicial proceeding or demand is timely 
     commenced, the record holder shall maintain such records 
     until the final nonappealable decision in such judicial 
     proceeding is made, or with respect to that demand is 
     rendered, unless the Secretary authorizes in writing an 
     earlier release of the requirement to maintain such records. 
     Notwithstanding anything herein to the contrary, under no 
     circumstance shall a record holder be required to maintain or 
     produce any record relating to an obligation for any time 
     period which is barred by the applicable limitation in 
     section 115.''.

     SEC. 9516. ROYALTY INTEREST, PENALTIES, AND PAYMENTS.

       (a) Period.--Section 111(f) of the Federal Oil and Gas 
     Royalty Management Act of 1982 (30 U.S.C. 1721(f)) is amended 
     to read as follows:
       ``(f) Upon a determination that it will further the 
     effective and efficient performance of his duties and 
     responsibilities, the Secretary may waive or forego such 
     interest in whole or in part. Interest shall be charged under 
     this section only for the number of days a payment is 
     late.''.
       (b) Lessee Interest.--Section 111 of the Federal Oil and 
     Gas Royalty Management Act of 1982 (30 U.S.C. 1721) is 
     amended by adding after subsection (g) the following:
       ``(h) Interest shall be allowed and the Secretary shall pay 
     or credit such interest on any overpayment, with such 
     interest to accrue from the date such overpayment was made, 
     at the rate obtained by applying the provisions of 
     subparagraphs (A) and (B) of section 6621(a)(1) of the 
     Internal Revenue Code of 1986. Interest which has accrued on 
     any overpayment may be applied to reduce an underpayment. 
     This subsection applies to overpayments made later than six 
     months after the date of enactment of this subsection or 
     September 1, 1996, whichever is later. Such interest shall be 
     paid from amounts received as current receipts from sales, 
     bonuses, royalties (including interest charges collected 
     under this section) and rentals of the public lands and the 
     Outer Continental Shelf under the provisions of the Mineral 
     Leasing Act, and the Outer Continental Shelf Lands Act, which 
     are not payable to a State or the Reclamation Fund. The 
     portion of any such interest payment attributable to any 
     amounts previously disbursed to a State, the Reclamation 
     Fund, or any other recipient designated by law shall be 
     deducted from the next disbursements to that recipient made 
     under the applicable law. Such amounts deducted from 
     subsequent disbursements shall be credited to miscellaneous 
     receipts in the Treasury.''.
       (c) Limitation on Interest.--Section 111 of such Act, as 
     amended by subsection (b) of this Act, is further amended by 
     adding at the end the following:
       ``(i) Upon a determination by the Secretary that an 
     excessive overpayment (based upon all obligations of a lessee 
     for a given reporting month) was made for the sole purpose of 
     receiving interest, interest shall not be paid on the 
     excessive amount of such overpayment. For purposes of this 
     Act, an `excessive overpayment' shall be the amount that any 
     overpayment a lessee pays for a given reporting month 
     (excluding payments for demands for obligations as a result 
     of judicial or administrative proceedings for settlement 

[[Page H11071]]

     agreements and for other similar payments) for the aggregate 
     of all of its Federal leases exceeds 25 percent of the total 
     royalties paid that month for those leases.''.
       (d) Estimated Payment.--Section 111 of such Act, as amended 
     by subsections (b) and (c) of this Act, is further amended by 
     adding at the end the following:
       ``(j) A lessee may make a payment for the approximate 
     amount of royalties (hereinafter in this subsection 
     `estimated payment') that would otherwise be due to the 
     Secretary for such lease to avoid underpayment or nonpayment 
     interest charges. When an estimated payment is made, actual 
     royalties become due at the end of the month following the 
     period covered by the estimated payment. If the lessee makes 
     a payment for such actual royalties, the lessee may apply the 
     estimated payment to future royalties. Any estimated payment 
     may be adjusted, recouped, or reinstated at any time by the 
     lessee.''.
       (e) Volume Allocation of Oil and Gas Production.--Section 
     111 of such Act (30 U.S.C. 1721), as amended by subsections 
     (b) through (d) of this Act, is amended by adding at the end 
     the following:
       ``(k)(1) Except as otherwise provided by this subsection--
       ``(A) a lessee of a lease in a unit or communitization 
     agreement which contains only Federal leases with the same 
     royalty rate and funds distribution must report and pay 
     royalties on oil and gas production for each production month 
     based on the actual volume of production sold by or on behalf 
     of that lessee;
       ``(B) a lessee of a lease in any other unit or 
     communitization agreement must report and pay royalties on 
     oil and gas production for each production month based on the 
     volume of oil and gas produced from such agreement and 
     allocated to the lease in accordance with the terms of the 
     agreement; and
       ``(C) a lessee of a lease that is not contained in a unit 
     or communitization agreement must report and pay royalties on 
     oil and gas production for each production month based on the 
     actual volume of production sold by or on behalf of that 
     lessee.
       ``(2) This subsection applies only to requirements for 
     reporting and paying royalties. Nothing in this subsection is 
     intended to alter a lessee's liability for royalties on oil 
     or gas production based on the share of production allocated 
     to the lease in accordance with the terms of the lease, a 
     unit or communitization agreement, or any other agreement.
       ``(3) For any unit or communitization agreement, if all 
     lessees contractually agree to an alternative method of 
     royalty reporting and payment, the lessees may submit such 
     alternative method to the Secretary for approval and make 
     payments in accordance with such approved alternative method 
     so long as such alternative method does not reduce the amount 
     of the royalty obligation.
       ``(4) The Secretary shall grant an exception from the 
     reporting and payment requirements for marginal properties by 
     allowing for any calendar year or portion thereof royalties 
     to be paid each month based on the volume of production sold. 
     Interest shall not accrue on the difference for the entire 
     calendar year or portion thereof between the amount of oil 
     and gas actually sold and the share of production allocated 
     to the lease until the beginning of the month following 
     calendar year or portion thereof. Any additional royalties 
     due or overpaid royalties and associated interest shall be 
     paid, refunded, or credited within six months after the end 
     of each calendar year in which royalties are paid based on 
     volumes of production sold. For the purpose of this 
     subsection, the term `marginal property' means a lease that 
     produces on average the combined equivalent of less than 15 
     barrels of oil per day or 90 thousand cubic feet of gas per 
     day, or a combination thereof, determined by dividing the 
     average daily production of domestic crude oil and domestic 
     natural gas from producing wells on such lease by the number 
     of such wells, unless the Secretary, together with the State 
     concerned, determines that a different production is more 
     appropriate.
       ``(5) Not later than two years after the date of the 
     enactment of this subsection, the Secretary shall issue any 
     appropriate demand for all outstanding royalty payment 
     disputes regarding who is required to report and pay 
     royalties on production from units and communitization 
     agreements outstanding on the date of the enactment of this 
     subsection, and collect royalty amounts owed on such 
     production.''.
       (f) Production Allocation.--Section 111 of such Act (30 
     U.S.C. 1721), as amended by subsections (b) through (e) of 
     this Act, is amended by adding at the end the following:
       ``(l) The Secretary shall issue all determinations of 
     allocations of production for units and communitization 
     agreements within 120 days of a request for determination. If 
     the Secretary fails to issue a determination within such 120-
     day period, the Secretary shall waive interest due on 
     obligations subject to the determination until the end of the 
     month following the month in which the determination is 
     made.''.

     SEC. 9517. LIMITATION ON ASSESSMENTS.

       Section 111 of the Federal Oil and Gas Royalty Management 
     Act of 1982 (30 U.S.C. 1721), as amended by section 9516, is 
     further amended by adding at the end the following:
       ``(m)(1) After the date of enactment of this subsection, 
     the Secretary shall not impose any assessment for any late 
     payment or underpayment. After the date of enactment of this 
     subsection, the Secretary may impose an assessment only for 
     erroneous reports submitted by lessees subject to the 
     limitations of paragraph (2). Nothing in this section shall 
     prohibit the Secretary from imposing penalties or interest 
     under other sections of this Act for late payments or 
     underpayments.
       ``(2) No assessment for erroneous reports shall be imposed 
     for 18 months following the date of enactment of this 
     subsection, or until the Secretary issues a final rule which 
     provides for imposition of an assessment only on a lessee who 
     chronically submits erroneous reports and which establishes 
     what constitutes chronic errors for a lessee, whichever is 
     later. However, if the Secretary determines during that 18-
     month period that the reporting error rate for all reporters 
     for all Federal leases has increased by one-third for three 
     consecutive report months for either production reporting or 
     royalty reporting over the 12 months preceding the date of 
     enactment of this subsection, the Secretary may impose an 
     assessment for erroneous reports only for the increased 
     category of report under regulations in effect on the date of 
     enactment of this subsection.''.

     SEC. 9518. ALTERNATIVES FOR MARGINAL PROPERTIES.

       (a) In General.--The Federal Oil and Gas Royalty Management 
     Act of 1982 (30 U.S.C. 1701 et seq.), as amended by section 
     9513 of this Act, is further amended by adding at the end the 
     following:

     ``SEC. 116. ALTERNATIVES FOR MARGINAL PROPERTIES.

       ``(a) Selling the Revenue Stream.--
       ``(1) In general.--Notwithstanding the provisions of any 
     lease to the contrary, upon request of the lessee or a State 
     under section 205(g), the Secretary shall authorize a lessee 
     for a marginal property and for a lease, the administration 
     of which is not cost-effective for the Secretary to 
     administer, to make a prepayment in lieu of royalty payments 
     under the lease for the remainder of the lease term. For the 
     purposes of this section, the term `marginal property' has 
     the same meaning given such term in section 111(k)(4), unless 
     the Secretary, together with each State in which such 
     marginal production occurs, determines that a different 
     definition of marginal property better achieves the purpose 
     of this section.
       ``(2) Marginal properties.--For marginal properties, 
     prepayments under paragraph (1) shall begin--
       ``(A) in the case of those properties producing on average 
     $500 or less per month in total royalties to the United 
     States, two years after the date of the enactment of this 
     section;
       ``(B) in the case of those properties producing on average 
     more than $500 but $1,000 or less per month in total 
     royalties to the United States, three years after the date of 
     the enactment of this section;
       ``(C) in the case of those properties producing on average 
     more than $1,000 but $1,500 or less per month in total 
     royalties to the United States, four years after the date of 
     the enactment of this section; and
       ``(D) in the case of those properties not described in 
     subparagraphs (A) through (C), five years after the date of 
     the enactment of this section.
       ``(3) Administration not cost-effective.--For a lease, the 
     administration of which is not cost-effective for the 
     Secretary to administer, prepayments under paragraph (1) 
     shall begin on the date of the enactment of this section.
       ``(4) Satisfaction of royalty obligation.--A lessee who 
     makes a prepayment under this section shall have satisfied in 
     full its obligation to pay royalty on production from the 
     lease or a portion of a lease and shall not be required to 
     submit any royalty reports to the Secretary. The prepayment 
     shall be shared by the Secretary with any State or other 
     recipient to the same extent as any royalty payment for such 
     lease.
       ``(5) Valuation.--The prepayment authorized under this 
     section shall only occur if the Secretary, the State 
     concerned, and the lessee determine that such prepayment is 
     based on the present value of the projected remaining 
     royalties from the production from the lease, based on 
     appropriate nominal discount rate for a comparable term. 
     Prior to accepting such prepayment, the Secretary and State 
     concerned shall agree that such prepayment is in the best 
     interest of the United States and the State concerned.
       ``(b) Alternative Accounting and Auditing Requirements.--
       ``(1) In general.--Within one year after the date of the 
     enactment of this section, for the marginal properties 
     referenced in subsection (a)(1), the Secretary shall provide 
     accounting, reporting, and auditing relief that will 
     encourage lessees to continue to produce and develop such 
     properties: Provided, That such relief will only be available 
     to lessees in a State that concurs. Prior to granting such 
     relief, the Secretary and the State concerned shall agree 
     that the type of marginal wells and relief provided under 
     this paragraph is in the best interest of the United States 
     and the State concerned.
       ``(2) Payment date.--For leases subject to this section, 
     the Secretary may allow royalties to be paid later than the 
     time specified in the lease.''.
       (b) Clerical Amendment.--The table of contents in section 1 
     of such Act (30 U.S.C. 1701) is amended by adding after the 
     item relating to section 115 the following new item:

``Sec. 116. Alternatives for marginal properties.''.

     SEC. 9519. ROYALTY IN KIND.

       (a) In General.--

[[Page H11072]]

       (1) OCS.--Section 27(a)(1) of the Outer Continental Shelf 
     Lands Act (43 U.S.C. 1353(a)(1)) is amended by adding at the 
     end the following:
     ``Any royalty or net profit share of oil or gas accruing to 
     the United States under any such lease, at the Secretary's 
     option, may be taken in kind at or near the lease (unless the 
     lease expressly provides for delivery at a different 
     location) upon prior written notice given reasonably in 
     advance by the Secretary to the lessee. Once the United 
     States has commenced taking royalty in kind, it shall 
     continue to do so until a reasonable time after the Secretary 
     has provided written notice reasonably in advance to the 
     lessee that it will resume taking royalty in value. Delivery 
     of royalty in kind by the lessee shall satisfy in full the 
     lessee's royalty obligation. Once the oil or gas is 
     delivered, the lessee shall not be subject to the reporting 
     and recordkeeping requirements under section 103 for its 
     share of oil and gas production other than records necessary 
     to verify the quantity of oil or gas delivered.''.
       (2) Onshore.--Section 36 of the Mineral Leasing Act (30 
     U.S.C. 192) is amended by adding at the end the following 
     undesignated paragraph:
       ``Notwithstanding the provisions of the previous paragraph, 
     any royalty or net profit share of oil or gas accruing to the 
     United States under any lease issued or maintained by the 
     Secretary for the exploration, production and development of 
     oil and gas on Federal lands, at the Secretary's option, may 
     be taken in kind at or near the lease (unless the lease 
     expressly provides for delivery at a different location) 
     after prior written notice given reasonably in advance by the 
     Secretary to the lessee. Once the United States has commenced 
     taking royalty in kind, it shall continue to do so until a 
     reasonable time after the Secretary has provided written 
     notice reasonably in advance to the lessee that it will 
     resume taking royalty in value. Delivery of royalty in kind 
     by the lessee shall satisfy in full the lessee's royalty 
     obligation. Once the oil or gas is delivered, the lessee 
     shall not be subject to the reporting and recordkeeping 
     requirements under section 103 for its share of oil and gas 
     production other than records necessary to verify the 
     quantity of oil or gas delivered.''.
       (b) Sale.--Sections 27(b)(1) and (c)(1) of the Outer 
     Continental Shelf Lands Act (43 U.S.C. 1353(c)(1)) are each 
     amended by striking ``competitive bidding for not more than 
     its regulated price, or, if no regulated price applies, not 
     less than its fair market value'' and inserting ``competitive 
     bidding or private sale''.

     SEC. 9520. ROYALTY SIMPLIFICATION AND COST-EFFECTIVE AUDIT 
                   AND COLLECTION REQUIREMENTS.

       (a) In General.--Section 101 of the Federal Oil and Gas 
     Royalty Management Act of 1982 (30 U.S.C. 1711) is amended by 
     adding at the end the following:
       ``(d)(1) For the purpose of reducing costs and increasing 
     net royalties to the United States and the States, the 
     Secretary, in consultation with States concerned, shall, 
     within one year after the date of the enactment of this 
     subsection, streamline and simplify current royalty 
     management requirements and practices, including royalty 
     reporting, instructions, audits and collections. This 
     streamlining and simplification shall specifically include--
       ``(A) elimination of all unnecessary royalty and production 
     reports;
       ``(B) modification and simplification of remaining reports 
     and associated instructions to eliminate redundant or 
     unnecessary reports and information that are provided or can 
     be obtained from other required reports, forms, computer 
     databases or government agencies;
       ``(C) elimination or modifications of accounting, 
     reporting, audit and collection requirements that are not 
     cost-effective, particularly those associated with de minimis 
     monetary amounts;
       ``(D) implementation of specific recommendations and 
     comments contained in Secretarial sponsored teams, 
     rulemakings, and studies or those participated in by the 
     Secretary to the extent these recommendations simplify and 
     streamline royalty management requirements without adversely 
     affecting the Secretary's ability to meet obligations under 
     this Act or other mineral leasing statutes;
       ``(E) recommendations and comments submitted by interested 
     parties to the extent these recommendations and comments 
     simplify and streamline royalty management requirements 
     without adversely affecting the Secretary's ability to meet 
     obligations under this Act or other mineral leasing statutes.
       ``(2) The Secretary shall submit to the Congress a progress 
     report on the implementation of this section within six 
     months from date of enactment of this Act, and a final report 
     within 12 months from date of enactment of this Act. These 
     reports shall include--
       ``(A) a description of the extent to which the Secretary 
     has implemented the requirements in paragraph (1), including 
     a list of specific initiatives implemented;
       ``(B) a list and description of additional initiatives 
     identified by the Secretary to simplify and streamline 
     royalty management requirements and practices; and
       ``(C) cost savings of implemented initiatives including 
     impact on net-receipts sharing for States.
       ``(3) If the Secretary and the State concerned determines 
     that the cost of accounting and auditing for and collecting 
     of any obligation due for any oil and gas production exceeds 
     the amount of the obligation to be collected, the Secretary 
     shall waive such obligation.
       ``(4) The Secretary and the State concerned shall not 
     perform accounting, reporting, or audit activities if the 
     Secretary and the State concerned determines that the cost of 
     conducting the activity exceeds the expected amount to be 
     collected by the activity.
       ``(5) The Secretary and the State concerned shall develop a 
     reporting and audit strategy which eliminates multiple or 
     redundant reporting of information.''.
       (b) Paperwork Reduction.--Section 107 of the Federal Oil 
     and Gas Royalty Management Act of 1982 (30 U.S.C. 1717), as 
     amended by section 9513(b) and (c), is amended by adding at 
     the end the following:
       ``(e) Paperwork Reduction.--Administrative actions and 
     investigations (including, but not limited to, accounting 
     collection and audits) under this Act involving obligations 
     shall be subject to section 3518(c)(1)(B) of title 44, United 
     States Code.''.

     SEC. 9521. REPEALS.

       (a) FOGRMA.--Section 307 of the Federal Oil and Gas Royalty 
     Management Act of 1982 (30 U.S.C. 1755), is repealed. Section 
     1 of such Act (relating to the table of contents) is amended 
     by striking out the item relating to section 307.
       (b) OCSLA.--Effective on the date of the enactment of this 
     Act, section 10 of the Outer Continental Shelf Lands Act (43 
     U.S.C. 1339) is repealed.

     SEC. 9522. DELEGATION TO STATES.

       (a) General Authority.--Section 205(a) of the Federal Oil 
     and Gas Royalty Management Act of 1982 (30 U.S.C. 1735(a)) is 
     amended to read as follows:
       ``(a) Upon written request of any State, the Secretary is 
     authorized to delegate, in accordance with the provisions of 
     this section, all or part of the authorities and 
     responsibilities of the Secretary under this Act to conduct 
     inspections, such production and royalty accounting duties 
     and responsibilities as the Secretary determines are legally 
     delegable, all audit coverage, and investigations to any 
     State with respect to all Federal lands within the State.''.
       (b) Standardized Reporting.--Section 205(b) of such Act (30 
     U.S.C. 1735(b)) is amended--
       (1) by striking ``and'' at the end of paragraph (2);
       (2) by striking the comma at the end of paragraph (3) and 
     inserting ``; and''; and
       (3) by inserting after paragraph (3) the following:
       ``(4) the State agrees to adopt Federal standardized 
     reporting for Federal royalty accounting and collection 
     purposes,''.
       (c) Cost Effective Collection of De Minimis Royalty 
     Amounts.--Section 205 of such Act (30 U.S.C. 1735) is amended 
     by adding at the end the following:
       ``(g) Upon written request of any State, the Secretary is 
     authorized to delegate for any year the responsibility to 
     collect royalties from all Federal leases within the State if 
     the average amount per year of mineral revenues received by 
     the State on all such leases under all Federal mineral 
     leasing laws for the previous five years is less than 
     $100,000. The State may also request that the Secretary sell 
     the revenue stream from all or part of the Federal leases 
     within the State in accordance with section 116 of the 
     Federal Oil and Gas Royalty Management Act of 1982, as added 
     by section 9518 of the Federal Oil and Gas Royalty 
     Simplification and Fairness Act of 1995.''.

     SEC. 9523. PERFORMANCE STANDARD.

       Section 109 of the Federal Oil and Gas Royalty Management 
     Act of 1982 (30 U.S.C. 1719) is amended in subsections (c) 
     and (d), by striking ``knowingly or willfully'' and inserting 
     ``by willful misconduct or gross negligence'' each place it 
     appears.

     SEC. 9524. INDIAN LANDS.

       The amendments made by this part shall not apply with 
     respect to Indian lands, and the provisions of the Federal 
     Oil and Gas Royalty Management Act of 1982 as in effect on 
     the day before the date of enactment of this Act shall 
     continue to apply after such date with respect to Indian 
     lands.

     SEC. 9525. PRIVATE LANDS.

       This part shall not apply to any privately owned minerals.

     SEC. 9526. EFFECTIVE DATE.

       Except as provided by section 115(e), section 111(h), 
     section 111(k)(5), and section 116 of the Federal Oil and Gas 
     Royalty Management Act of 1982 (as added by this part), this 
     part, and the amendments made by this part, shall apply with 
     respect to the production of oil and gas after the first day 
     of the month following the date of the enactment of this Act.
                       Subtitle F--Indian Gaming

     SEC. 9601. INDIAN GAMING.

       (a) Commission Funding.--Section 18(a) of the Indian Gaming 
     Regulatory Act (25 U.S.C. 2717(a)) is amended by striking out 
     ``$1,500,000'' each place it appears and inserting in lieu 
     thereof ``$2,500,000''.
       (b) Authorization of Appropriations.--Section 19(a) of the 
     Indian Gaming Regulatory Act (25 U.S.C. 2718(a)) is amended 
     by striking out all after ``(a)'' and inserting in lieu 
     thereof the following: ``Notwithstanding the provisions of 
     section 18, no funds may be authorized to be appropriated for 
     the operation of the Commission.''.

[[Page H11073]]

                        Subtitle G--Consultation

     SEC. 9701. CONSULTATION.

       Section 7(d) of the Endangered Species Act of 1973 (16 
     U.S.C. 1536(d)) is amended to read as follows:
       ``(d) Limitation on Commitment of Resources.--After 
     initiation of consultation required under subsection (a)(2) 
     of this section, the Federal agency and the permit or license 
     applicant shall not make any irreversible or irretrievable 
     commitment of resources with respect to the agency action 
     which has the effect of foreclosing the formulation or 
     implementation of any reasonable and prudent alternative 
     measures which would not violate subsection (a)(2) of this 
     section. This limitation on the commitment of resources is 
     only applicable to consultations regarding site-specific 
     projects and activities, and shall not apply to any 
     consultation regarding an agency's periodic or long-term 
     planning activities, mission or policy statements, 
     programmatic documents, or general policies, regulations, or 
     activities, whether or not such consultation has previously 
     been initiated pursuant to a court order, and regardless of 
     the date on which consultation was ordered or initiated.''.
                          Subtitle H--Mapping

     SEC. 9801. SHORT TITLE.

       This subtitle may be cited as the ``Department of the 
     Interior Surveying and Mapping Efficiency and Economic 
     Opportunity Act of 1995''.

     SEC. 9802. SURVEYING AND MAPPING CONTRACTING PROGRAM.

       In order to provide private firms, including small and 
     small disadvantaged businesses, ample opportunities 
     to provide quality services to the Department of the 
     Interior (hereinafter referred to as the ``Department''), 
     the Secretary of the Interior (hereinafter referred to as 
     the ``Secretary'') shall conduct a surveying and mapping 
     contracting program.

     SEC. 9803. INVENTORY OF ACTIVITIES.

       (a) Publication of Inventory.--Not later than 90 days after 
     the date of enactment of this Act, the Secretary, in 
     consultation with the Administrator of the Office of Federal 
     Procurement Policy, the Administrator of the Small Business 
     Administration and the trade association of private surveying 
     and mapping firms, shall publish an inventory of surveying 
     and mapping activities in the Department of the Interior for 
     the last fiscal year completed prior to the date of enactment 
     of this Act.
       (b) Items Included.--The inventory shall include each of 
     the following:
       (1) The total dollar value of surveying and mapping 
     activities in each agency of the Department.
       (2) The total dollar value of surveying and mapping 
     activities in each agency of the Department performed by 
     contract with private sector firms.
       (3) The total dollar value of surveying and mapping 
     activities in each agency of the Department performed by 
     personnel of the Department.
       (4) The total dollar value of surveying and mapping 
     activities in each agency of the Department performed for any 
     other department or agency of the Federal Government.
       (5) The total dollar value of surveying and mapping 
     activities in each agency of the Department performed for any 
     State or political subdivision thereof, or for any foreign 
     government.
       (6) The total number of personnel involved in surveying and 
     mapping activities in each agency of the Department.

     SEC. 9804. PLAN TO INCREASE USE OF CONTRACTS.

       (a) Establishment.--Based on the inventory conducted 
     pursuant to section 9803 of this Act, not later than 180 days 
     after the date of enactment of this Act, the Secretary, in 
     consultation with the Administrator of the Office of Federal 
     Procurement Policy, the Administrator of the Small Business 
     Administration and the trade association of private surveying 
     and mapping firms, shall develop and implement a plan to 
     increase the use of contracts with private firms for 
     surveying and mapping services.
       (b) Items Included in Plan.--The plan established pursuant 
     to subsection (a) of this section shall include, but not be 
     limited to each of the following:
       (1) A reduction of surveying and mapping activities by 
     personnel in the Department that duplicate capabilities 
     available by contract from the private sector.
       (2) A reduction of acquisition and maintenance of surveying 
     and mapping equipment that duplicate capabilities and capital 
     investment already made by the private sector.
       (3) The elimination of unfair Government competition in 
     activities in which the Department uses its personnel to 
     perform surveying and mapping for which it shares the cost 
     with, is reimbursed for, or makes a grant to any other agency 
     of the Federal Government, a State or political subdivision 
     thereof, or a foreign government, for such activities, when 
     such activities can be obtained by contract from the private 
     sector.
       (4) The use of contracts to perform surveying and mapping 
     requirements of the Department created through attrition.
       (5) The enhancement of the leadership role of the 
     Department of the Interior in--
       (A) the preparation of standards and specifications;
       (B) research in surveying and mapping instrumentation and 
     procedures, and the prompt transfer of technology to the 
     private sector;
       (C) providing technical guidance, coordination, cost 
     sharing, cooperative efforts and administration in the use of 
     Federal funds for surveying and mapping activities, and the 
     development of geographic information systems, that are 
     performed by the private sector by the contract to Federal, 
     State, and local government agencies;
       (D) establishing a schedule with quantifiable goals for 
     increasing the use of contracts with private sector for 
     current and future surveying and mapping activities; and
       (E) using Department personnel to perform only those 
     surveying and mapping activities that are inherently 
     governmental in nature, necessary to keep current the skills 
     of such personnel for evaluating contractor performance and 
     administering contracts, and to perform basic research.

     SEC. 9805. REPORTS.

       The Secretary shall transmit to the Committee on Resources 
     of the House of Representatives and the Committee on Energy 
     and Natural Resources of the Senate a report on 
     implementation of the program not later than January 15 of 
     each year.

     SEC. 9806. DEFINITIONS.

       As used in this subtitle:
       (1) The term ``surveying and mapping'' means collecting, 
     storing, retrieving, or disseminating graphical or digital 
     data depicting natural or man-made physical features, 
     phenomena and boundaries of the earth and any information 
     related thereto, including but not limited to data shown on 
     or in relation to surveys, maps, and charts.
       (2) The ``contract'' means an instrument to retain private 
     firms with licensed, certified, or otherwise qualified 
     professionals in such fields as surveying, photogrammetry, 
     cartography, and geodesy, which shall be awarded in 
     accordance with the selection procedures in title IX of the 
     Federal Property and Administrative Services Act of 1949 (40 
     U.S.C. 541 and following).
        TITLE X--COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
                      Subtitle A--Water Resources

     SEC. 10001. COMMERCIAL CONCESSIONS AT CORPS OF ENGINEERS 
                   PROJECTS.

       Notwithstanding part 1 of subtitle C of title IX of this 
     Act, the Secretary of the Army shall not modify any 
     concession service agreement, concession license, or similar 
     instrument (or any policy or procedure relating to such 
     agreement, license, or agreement) except to the extent that 
     such modification is permitted under laws in effect on the 
     day before the date of the enactment of this Act.

     SEC. 10002. FEMA RADIOLOGICAL EMERGENCY PREPAREDNESS FEES.

       (a) In General.--The Director of the Federal Emergency 
     Management Agency may assess and collect fees applicable to 
     persons subject to radiological emergency preparedness 
     regulations issued by the Director.
       (b) Requirements.--The assessment and collection of fees by 
     the Director under subsection (a) shall be fair and equitable 
     and shall reflect the full amount of costs to the Agency of 
     providing radiological emergency planning, preparedness, 
     response, and associated services. Such fees shall be 
     assessed by the Director in a manner which reflects the use 
     of resources of the Agency for classes of regulated persons 
     and the administrative costs of collecting such fees.
       (c) Amount of Fees.--The aggregate amount of fees assessed 
     under subsection (a) in a fiscal year shall approximate, but 
     not be less than, 100 percent of the amounts anticipated by 
     the Director to be obligated for the radiological emergency 
     preparedness program of the Agency for such fiscal year.
       (d) Deposit of Fees in Treasury.--Fees received pursuant to 
     subsection (a) shall be deposited in the general fund of the 
     Treasury as offsetting receipts.
       (e) Expiration of Authority.--The authority of the Director 
     to assess and collect fees under subsection (a) shall expire 
     on September 30, 2002.
                   Subtitle B--Ocean Shipping Reform

     SEC. 10201. SHORT TITLE.

       This subtitle may be cited as the ``Ocean Shipping Reform 
     Act of 1995''.

                    CHAPTER 1--OCEAN SHIPPING REFORM

     SEC. 10211. PURPOSES.

       Section 2 of the Shipping Act of 1984 (46 U.S.C. App. 1701) 
     is amended--
       (1) by striking ``and'' at the end of paragraph (2);
       (2) by striking the period at the end of paragraph (3) and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(4) to permit carriers and shippers to develop 
     transportation arrangements to meet their specific needs.''.

     SEC. 10212. DEFINITIONS.

       Section 3 of the Shipping Act of 1984 (46 U.S.C. App. 1702) 
     is amended--
       (1) effective January 1, 1997--
       (A) by striking paragraph (9); and
       (B) by redesignating paragraphs (10) through (19) as 
     paragraphs (9) through (18), respectively; and
       (2) effective June 1, 1997--
       (A) by striking paragraph (4);
       (B) in paragraph (7) by striking ``a common tariff;'' and 
     inserting ``a common schedule of transportation rates, 
     charges, classifications, rules, and practices;'';
       (C) by striking paragraph (10) (as redesignated by 
     paragraph (1) of this section);
       (D) by striking paragraph (13) (as redesignated by 
     paragraph (1) of this section);
       (E) by striking paragraph (16) (as redesignated by 
     paragraph (1) of this section);

[[Page H11074]]

       (F) by striking paragraph (18) (as redesignated by 
     paragraph (1) of this section) and inserting the following:
       ``(18) `ocean freight forwarder' means a person that--
       ``(A)(i) in the United States, dispatches shipments from 
     the United States via a common carrier and books or otherwise 
     arranges space for those shipments on behalf of shippers; or
       ``(ii) processes the documentation or performs related 
     activities incident to those shipments; or
       ``(B) acts as a common carrier that does not operate the 
     vessels by which the ocean transportation is provided, and is 
     a shipper in its relationship with an ocean common 
     carrier.'';
       (G) by striking paragraph (21);
       (H) in paragraph (23)--
       (i) by striking ``or'' the second place it appears and 
     inserting a comma; and
       (ii) by striking the period and inserting ``, a shippers' 
     association, or an ocean freight forwarder that accepts 
     responsibility for payment of the ocean freight.'';
       (I) by striking paragraph (24) and inserting the following:
       ``(24) `shippers' association' means a group of shippers 
     that consolidates or distributes freight, on a nonprofit 
     basis for the members of the group in order to secure 
     carload, truckload, or other volume rates or ocean 
     transportation contracts.''; and
       (J) by inserting after paragraph (18) (as redesignated by 
     paragraph (1) of this section) the following:
       ``(19) `ocean transportation contract' means a contract in 
     writing separate from the bill of lading or receipt between 1 
     or more common carriers or a conference and 1 or more 
     shippers to provide specified services under specified rates 
     and conditions.''.

     SEC. 10213. AGREEMENTS WITHIN THE SCOPE OF THE ACT.

       Effective June 1, 1997, section 4(a) of the Shipping Act of 
     1984 (46 U.S.C. App. 1703(a)) is amended--
       (1) in paragraph (5) by striking ``non-vessel-operating 
     common carriers'' and inserting ``ocean freight forwarders''; 
     and
       (2) by striking paragraph (7) and inserting the following:
       ``(7) discuss any matter related to ocean transportation 
     contracts, and enter ocean transportation contracts and 
     agreements related to those contracts.''.

     SEC. 10214. AGREEMENTS.

       Section 5 of the Shipping Act of 1984 (46 U.S.C. App. 1704) 
     is amended--
       (1) effective January 1, 1997--
       (A) in subsection (b)(4) by striking ``at the request of 
     any member, require an independent neutral body to police 
     fully'' and inserting ``state the provisions, if any, for the 
     policing of'';
       (B) in subsection (b)(7) by striking ``and'' at the end;
       (C) in subsection (b)(8) by striking the period and 
     inserting ``; and''; and
       (D) by adding at the end of subsection (b) the following:
       ``(9) provide that a member of the conference may enter 
     individual and independent negotiations and may conclude 
     individual and independent service contracts under section 8 
     of this Act.'';
       (2) effective June 1, 1997--
       (A) by striking subsection (b)(8) and inserting the 
     following:
       ``(8) provide that any member of the conference may take 
     independent action on any rate or service item agreed upon by 
     the conference for transportation provided under section 8(a) 
     of this Act upon not more than 3 business days' notice to the 
     conference, and that the conference will provide the new rate 
     or service item for use by that member, effective no later 
     than 3 business days after receipt of that notice, and by any 
     other member that notifies the conference that it elects to 
     adopt the independent rate or service item on or after its 
     effective date, in lieu of the existing conference provision 
     for that rate or service item;'';
       (B) in subsection (b)(9) by striking ``service'' and 
     inserting ``ocean transportation'' and by striking the period 
     at the end and inserting ``; and'';
       (C) by adding at the end of subsection (b) the following:
       ``(10) prohibit the conference from--
       ``(A) prohibiting or restricting the members of the 
     conference from engaging in individual negotiations for ocean 
     transportation contracts under section 8(b) with 1 or more 
     shippers; and
       ``(B) issuing mandatory rules or requirements affecting 
     ocean transportation contracts that may be entered by 1 or 
     more members of the conference, except that a conference may 
     require that a member of the conference disclose the 
     existence of an existing individual ocean transportation 
     contract or negotiations on an ocean transportation contract, 
     when the conference enters negotiations on an ocean 
     transportation contract with the same shipper.''; and
       (D) in subsection (e) by striking ``carrier that are 
     required to be set forth in a tariff,'' and inserting 
     ``carrier,''.

     SEC. 10215. EXEMPTION FROM ANTITRUST LAWS.

       Section 7 of the Shipping Act of 1984 (46 U.S.C. App. 1706) 
     is amended--
       (1) by striking subsection (a)(6) and inserting the 
     following:
       ``(6) subject to section 20(e)(2) of this Act, any 
     agreement, modification, or cancellation, in effect before 
     the effective date of this Act and any tariff, rate, fare, 
     charge, classification, rule, or regulation explanatory 
     thereof implementing that agreement, modification, or 
     cancellation.''; and
       (2) in subsection (c)(1) by striking ``agency'' and 
     inserting ``agency, department,''.

     SEC. 10216. COMMON AND CONTRACT CARRIAGE.

       (a) In General.--Effective June 1, 1997--
       (1) section 502 of the High Seas Driftnet Fisheries 
     Enforcement Act (46 U.S.C. App. 1707a) is repealed; and
       (2) section 8 of the Shipping Act of 1984 (46 U.S.C. App. 
     1707) is amended to read as follows:

     ``SEC. 8. COMMON AND CONTRACT CARRIAGE.

       ``(a) Common Carriage.--
       ``(1) A common carrier and a conference shall make 
     available a schedule of transportation rates which shall 
     include the rates, terms, and conditions for transportation 
     services not governed by an ocean transportation contract, 
     and shall provide the schedule of transportation rates, in 
     writing, upon the request of any person. A common carrier and 
     a conference may assess a reasonable charge for complying 
     with a request for a rate, term, and condition, except that 
     the charge may not exceed the cost of providing the 
     information requested.
       ``(2) A dispute between a common carrier or conference and 
     a person as to the applicability of the rates, terms, and 
     conditions for ocean transportation services shall be decided 
     in an appropriate State or Federal court of competent 
     jurisdiction, unless the parties otherwise agree.
       ``(3) A claim concerning a rate for ocean transportation 
     services which involves false billing, false classification, 
     false weighing, false report of weight, or false measurement 
     shall be decided in an appropriate State or Federal court of 
     competent jurisdiction, unless the parties otherwise agree.
       ``(b) Contract Carriage.--
       ``(1) 1 or more common carriers or a conference may enter 
     into an ocean transportation contract with 1 or more 
     shippers. A common carrier may enter into ocean 
     transportation contracts without limitations concerning the 
     number of ocean transportation contracts or the amount of 
     cargo or space involved. The status of a common carrier as 
     an ocean common carrier is not affected by the number or 
     terms of ocean transportation contracts entered.
       ``(2) A party to an ocean transportation contract entered 
     under this section shall have no duty in connection with 
     services provided under the contract other than the duties 
     specified by the terms of the contract.
       ``(3)(A) An ocean transportation contract or the 
     transportation provided under that contract may not be 
     challenged in any court on the grounds that the contract 
     violates a provision of this Act.
       ``(B) The exclusive remedy for an alleged breach of an 
     ocean transportation contract is an action in an appropriate 
     State or Federal court of competent jurisdiction, unless the 
     parties otherwise agree.
       ``(4) The requirements and prohibitions concerning 
     contracting by conferences contained in sections 5(b) (9) and 
     (10) of this Act shall also apply to any agreement among one 
     or more ocean common carriers that is filed under section 
     5(a) of this Act.''.
       (b) Confidentiality of Contracts.--Effective January 1, 
     1998, section 8(b) of the Shipping Act of 1984 (46 U.S.C. 
     App. 1707(b)), as amended by subsection (a) of this section, 
     is amended by adding at the end the following:
       ``(5) A contract entered under this section may be made on 
     a confidential basis, upon agreement of the parties. An ocean 
     common carrier that is a member of a conference agreement may 
     not be prohibited or restricted from agreeing with 1 or more 
     shippers that the parties to the contract will not disclose 
     the rates, services, terms, or conditions of that contract to 
     any other member of the agreement, to the conference, to any 
     other carrier, shipper, conference, or to any other third 
     party.''.

     SEC. 10217. PROHIBITED ACTS.

       Section 10 of the Shipping Act of 1984 (46 U.S.C. App. 
     1709) is amended--
       (1) effective January 1, 1997, in subsection (b)--
       (A) by striking paragraph (1) and inserting the following:
       ``(1) except for service contracts, subject a person, 
     place, port, or shipper to unreasonable discrimination;''; 
     and
       (B) by striking paragraphs (2), (3), (4), and (8);
       (2) effective June 1, 1997, by striking subsection (b) and 
     inserting the following:
       ``(b) Common Carriers.--No common carrier, either alone or 
     in conjunction with any other person, directly or indirectly, 
     may--
       ``(1) except for ocean transportation contracts, subject a 
     person, place, port, or shipper to unreasonable 
     discrimination;
       ``(2) retaliate against any shipper by refusing, or 
     threatening to refuse, cargo space accommodations when 
     available, or resort to other unfair or unjustly 
     discriminatory methods because the shipper has patronized 
     another carrier or has filed a complaint, or for any other 
     reason;
       ``(3) employ any fighting ship;
       ``(4) subject any particular person, locality, class, or 
     type of shipper or description of traffic to an unreasonable 
     refusal to deal;
       ``(5) refuse to negotiate with a shippers' association;
       ``(6) knowingly and willfully accept cargo from or 
     transport cargo for the account of an ocean freight forwarder 
     that does not have a bond, insurance, or other surety as 
     required by section 19;
       ``(7) knowingly and willfully enter into an ocean 
     transportation contract with an ocean 

[[Page H11075]]

     freight forwarder or in which an ocean freight forwarder is 
     listed as an affiliate that does not have a bond, insurance, 
     or other surety as required by section 19; or
       ``(8)(A) knowingly disclose, offer, solicit, or receive any 
     information concerning the nature, kind, quantity, 
     destination, consignee, or routing of any property tendered 
     or delivered to a common carrier without the consent of the 
     shipper or consignee if that information--
       ``(i) may be used to the detriment or prejudice of the 
     shipper or consignee;
       ``(ii) may improperly disclose its business transaction to 
     a competitor; or
       ``(iii) may be used to the detriment or prejudice of any 
     common carrier;
     except that nothing in this paragraph shall be construed to 
     prevent providing the information, in response to legal 
     process, to the United States, or to an independent neutral 
     body operating within the scope of its authority to fulfill 
     the policing obligations of the parties to an agreement 
     effective under this Act. Nor shall it be prohibited for any 
     ocean common carrier that is a party to a conference 
     agreement approved under this Act, or any receiver, trustee, 
     lessee, agent, or employee of that carrier, or any other 
     person authorized by that carrier to receive information, to 
     give information to the conference or any person, firm, 
     corporation, or agency designated by the conference or to 
     prevent the conference or its designee from soliciting or 
     receiving information for the purpose of determining whether 
     a shipper or consignee has breached an agreement with a 
     conference or for the purpose of determining whether a member 
     of the conference has breached the conference agreement or 
     for the purpose of compiling statistics of cargo movement, 
     but the use of that information for any other purpose 
     prohibited by this Act or any other Act is prohibited; and
       ``(B) after December 31, 1997, the rates, services, terms, 
     and conditions of an ocean transportation contract may not be 
     disclosed under this paragraph if the contract has been made 
     on a confidential basis under section 8(b) of this Act.

     The exclusive remedy for a disclosure under this paragraph 
     shall be an action for breach of contract as provided in 
     section 8(b)(3) of this Act.'';
       (3) effective June 1, 1997--
       (A) by striking subsection (c)(1) and inserting the 
     following:
       ``(1) boycott, take any concerted action resulting in an 
     unreasonable refusal to deal, or implement a policy or 
     practice that results in an unreasonable refusal to deal;'';
       (B) in subsection (c)(5) by inserting ``as defined in 
     section 3(14)(A) of this Act'' after ``freight forwarder''; 
     and
       (C) in subsection (c)(6) by striking ``a service 
     contract.'' and inserting ``an ocean transportation 
     contract.''; and
       (4) effective June 1, 1997, in subsection (d)(3) by 
     striking ``subsection (b) (11), (12), and (16)'' and 
     inserting ``paragraphs (1), (4), and (8) of subsection (b)''.

     SEC. 10218. REPARATIONS.

       Effective June 1, 1997, section 11(g) of the Shipping Act 
     of 1984 (46 U.S.C. App. 1710(g)) is amended--
       (1) by inserting ``or counter-complainant'' after 
     ``complainant'' the second place it appears;
       (2) by striking ``10(b) (5) or (7)'' and inserting ``10(b) 
     (2) or (3)''; and
       (3) by striking the last sentence.

     SEC. 10219. FOREIGN LAWS AND PRACTICES.

       Effective on June 1, 1997, section 10002 of the Foreign 
     Shipping Practices Act of 1988 (46 U.S.C. App. 1710a) is 
     amended--
       (1) in subsection (a)(1)--
       (A) by striking ```non-vessel-operating common carrier',''; 
     and
       (B) by inserting ```ocean freight forwarder','' after 
     ```ocean common carrier','';
       (2) in subsection (a)(4) by striking ``non-vessel-operating 
     common carrier operations,'';
       (3) in subsection (e)(1) by striking subparagraphs (B), 
     (C), and (D) and inserting the following:
       ``(B) suspension, in whole or in part, of the right of an 
     ocean common carrier to operate under any agreement filed 
     with the Secretary, including agreements authorizing 
     preferential treatment at terminals, preferential terminal 
     leases, space chartering, or pooling of cargo or revenues 
     with other ocean common carriers; and
       ``(C) a fee, not to exceed $1,000,000 per voyage.''; and
       (4) in subsection (h) by striking ``section 13(b)(5) of the 
     Shipping Act of 1984 (46 U.S.C. App. 1712(b)(5))'' and 
     inserting ``section 13(b)(2) of the Shipping Act of 1984 (46 
     U.S.C. App. 1712(b)(2))''.

     SEC. 10220. PENALTIES.

       Effective June 1, 1997, section 13 of the Shipping Act of 
     1984 (46 U.S.C. App. 1712) is amended--
       (1) in subsection (b)--
       (A) by striking paragraphs (1) and (3) and redesignating 
     paragraphs (2), (4), (5), and (6) as paragraphs (1), (2), 
     (3), and (4), respectively;
       (B) by striking paragraph (1), as so redesignated, and 
     inserting the following:
       ``(1) If the Secretary finds, after notice and an 
     opportunity for a hearing, that a common carrier has failed 
     to supply information ordered to be produced or compelled by 
     subpoena under section 12 of this Act, the Secretary may 
     request that the Secretary of the Treasury refuse or revoke 
     any clearance required for a vessel operated by that common 
     carrier. Upon request by the Secretary, the Secretary of the 
     Treasury shall, with respect to the vessel concerned, refuse 
     or revoke any clearance required by section 4197 of the 
     Revised Statutes of the United States (46 U.S.C. App. 91).''; 
     and
       (C) in paragraph (3), as so redesignated, by striking 
     ``finds appropriate,'' and all that follows through the 
     period at the end and inserting ``finds appropriate including 
     the imposition of the penalties authorized under paragraph 
     (2).''; and
       (2) in subsection (f)(1) by striking ``section 10 (a)(1), 
     (b)(1), or (b)(4)'' and inserting ``section 10(a)(1)''.

     SEC. 10221. REPORTS.

       (a) In General.--Effective January 1, 1997, section 15 of 
     the Shipping Act of 1984 (46 U.S.C. App. 1714) is amended--
       (1) in the section heading by striking ``and 
     certificates'';
       (2) by striking ``(a) Reports.--''; and
       (3) by striking subsection (b).
       (b) Clerical Amendment.--The table of contents contained in 
     the first section of such Act (46 U.S.C. App. 1701) is 
     amended by striking the item relating to section 15 and 
     inserting the following:

``Sec. 15. Reports.''.

     SEC. 10222. REGULATIONS.

       Section 17 of the Shipping Act of 1984 (46 U.S.C. App. 
     1716) is amended--
       (1) by striking ``(a)''; and
       (2) by striking subsection (b).

     SEC. 10223. REPEAL.

       (a) Repeal.--Section 18 of the Shipping Act of 1984 (46 
     U.S.C. App. 1717) is repealed.
       (b) Clerical Amendment.--The table of contents contained in 
     the first section of such Act (46 U.S.C. App. 1701) is 
     amended by striking the item relating to section 18.

     SEC. 10224. OCEAN FREIGHT FORWARDERS.

       Effective June 1, 1997, section 19 of the Shipping Act of 
     1984 (46 U.S.C. App. 1718) is amended--
       (1) by striking subsection (a) and inserting the following:
       ``(a) License.--No person in the United States may act as 
     an ocean freight forwarder unless that person holds a license 
     issued by the Commission. The Commission shall issue a 
     forwarder's license to any person that the Commission 
     determines to be qualified by experience and character to 
     render forwarding services.'';
       (2) by redesignating subsections (b), (c), and (d) as 
     subsections (c), (d), and (e), respectively;
       (3) by inserting after subsection (a) the following:
       ``(b) Financial Responsibility.--
       ``(1) No person may act as an ocean freight forwarder 
     unless that person furnishes a bond, proof of insurance, or 
     other surety in a form and amount determined by the 
     Commission to insure financial responsibility that is issued 
     by a surety company found acceptable by the Secretary of the 
     Treasury.
       ``(2) A bond, insurance, or other surety obtained pursuant 
     to this section shall be available to pay any judgment for 
     damages against an ocean freight forwarder arising from its 
     transportation-related activities under this Act or order for 
     reparation issued pursuant to section 11 or 14 of this Act.
       ``(3) An ocean freight forwarder not domiciled in the 
     United States shall designate a resident agent in the United 
     States for receipt of service of judicial and administrative 
     process, including subpoenas.'';
       (4) in subsection (c), as redesignated by paragraph (2) of 
     this section, by striking ``a bond in accordance with 
     subsection (a)(2)'' and inserting ``a bond, proof of 
     insurance, or other surety in accordance with subsection 
     (b)(1)''; and
       (5) in subsection (e), as redesignated by paragraph (2) of 
     this section--
       (A) by striking paragraph (3) and redesignating paragraph 
     (4) as paragraph (3); and
       (B) by adding at the end the following:
       ``(4) No conference or group of 2 or more ocean common 
     carriers in the foreign commerce of the United States that is 
     authorized to agree upon the level of compensation paid to an 
     ocean freight forwarder, as defined in section 3(18)(A) of 
     this Act, may--
       ``(A) deny to any member of the conference or group the 
     right, upon notice of not more than 3 business days, to take 
     independent action on any level of compensation paid to an 
     ocean freight forwarder; or
       ``(B) agree to limit the payment of compensation to an 
     ocean freight forwarder, as defined in section 3(18)(A) of 
     this Act, to less than 1.25 percent of the aggregate of all 
     rates and charges which are applicable under a common 
     schedule of transportation rates provided under section 8(a) 
     of this Act, and which are assessed against the cargo on 
     which the forwarding services are provided.''.

     SEC. 10225. EFFECTS ON CERTAIN AGREEMENTS AND CONTRACTS.

       Section 20(e) of the Shipping Act of 1984 (46 U.S.C. App. 
     1719) is amended to read as follows:
       ``(e) Savings Provisions.--
       ``(1) Each service contract entered into by a shipper and 
     an ocean common carrier or conference before the date of the 
     enactment of the Ocean Shipping Reform Act of 1995 may remain 
     in full force and effect according to its terms.
       ``(2) This Act and the amendments made by this Act shall 
     not affect any suit--
       ``(A) filed before the date of the enactment of the Ocean 
     Shipping Reform Act of 1995;
       ``(B) with respect to claims arising out of conduct engaged 
     in before the date of the enactment of the Ocean Shipping 
     Reform Act of 1995, filed within 1 year after the date of the 
     enactment of the Ocean Shipping Reform Act of 1995;

[[Page H11076]]

       ``(C) with respect to claims arising out of conduct engaged 
     in after the date of the enactment of the Ocean Shipping 
     Reform Act of 1995 but before January 1, 1997, pertaining to 
     a violation of section 10(b) (1), (2), (3), (4), or (8), as 
     in effect before January 1, 1997, filed by June 1, 1997;
       ``(D) with respect to claims pertaining to the failure of a 
     common carrier or conference to file its tariffs or service 
     contracts in accordance with this Act in the period beginning 
     January 1, 1997, and ending June 1, 1997, filed by December 
     31, 1997; or
       ``(E) with respect to claims arising out of conduct engaged 
     in on or after the date of the enactment of the Ocean 
     Shipping Reform Act of 1995 but before June 1, 1997, filed by 
     December 31, 1997.''.

     SEC. 10226. REPEAL.

       (a) Repeal.--Effective June 1, 1997, section 23 of the 
     Shipping Act of 1984 (46 U.S.C. App. 1721) is repealed.
       (b) Clerical Amendment.--Effective June 1, 1997, the table 
     of contents contained in the first section of such Act (46 
     U.S.C. App. 1701) is amended by striking the item relating to 
     section 23.

     SEC. 10227. MARINE TERMINAL OPERATOR SCHEDULES.

       (a) In General.--Effective June 1, 1997, the Shipping Act 
     of 1984 (46 U.S.C. App. 1701 et seq.) is amended by adding at 
     the end the following:

     ``SEC. 24. MARINE TERMINAL OPERATOR SCHEDULES.

       ``A marine terminal operator shall make available to the 
     public a schedule of rates, regulations, and practices, 
     including limitations of liability, pertaining to receiving, 
     delivering, handling, or storing property at its marine 
     terminal. The schedule shall be enforceable as an implied 
     contract, without proof of actual knowledge of its 
     provisions, for any activity by the marine terminal operator 
     that is taken to--
       ``(1) efficiently transfer property between transportation 
     modes;
       ``(2) protect property from damage or loss;
       ``(3) comply with any governmental requirement; or
       ``(4) store property in excess of the terms of any other 
     contract or agreement, if any, entered into by the marine 
     terminal operator.''.
       (b) Clerical Amendment.--The table of contents contained in 
     the first section of such Act (46 U.S.C. App. 1701) is 
     amended by adding at the end the following:

``Sec. 24. Marine terminal operator schedules.''.

               CHAPTER 2--CONTROLLED CARRIERS AMENDMENTS

     SEC. 10231. CONTROLLED CARRIERS.

       Effective June 1, 1997, section 9 of the Shipping Act of 
     1984 (46 U.S.C. App. 1708) is amended--
       (1)(A) in the first sentence of subsection (a)--
       (i) by striking ``in its tariffs or service contracts filed 
     with the Commission''; and
       (ii) by striking ``in those tariffs or service contracts''; 
     and
       (B) in the last sentence of subsection (a) by striking 
     ``filed by a controlled carrier'';
       (2) in paragraphs (1) and (2) of subsection (b) by striking 
     ``filed'' and inserting ``published'';
       (3) in subsection (c) by striking the first sentence;
       (4) by striking subsection (d) and inserting the following:
       ``(d) Within 120 days of the receipt of information 
     requested by the Secretary under this section, the Secretary 
     shall determine whether the rates, charges, classifications, 
     rules, or regulations of a controlled carrier may be unjust 
     and unreasonable. If so, the Secretary shall issue an order 
     to the controlled carrier to show cause why those rates, 
     charges, classifications, rules, or regulations should not be 
     approved. Pending a determination, the Secretary may suspend 
     the rates, charges, classifications, rules, or regulations at 
     any time. No period of suspension may be greater than 180 
     days. Whenever the Secretary has suspended any rates, 
     charges, classifications, rules, or regulations under this 
     subsection, the affected carrier may publish and, after 
     notification to the Secretary, assess new rates, charges, 
     classifications, rules, or regulations--except that the 
     Secretary may reject the new rates, charges, classifications, 
     rules, or regulations if the Secretary determines that they 
     are unreasonable.'';
       (5) in subsection (f) by striking ``This'' and inserting 
     ``Subject to subsection (g), this''; and
       (6) by adding at the end the following:
       ``(g) The rate standards, information submissions, 
     remedies, reviews, and penalties in this section shall also 
     apply to ocean common carriers that are not controlled, but 
     who have been determined by the Secretary to be structurally 
     or financially affiliated with nontransportation entities or 
     organizations (government or private) in such a way as to 
     affect their pricing or marketplace behavior in an unfair, 
     predatory, or anticompetitive way that disadvantages an ocean 
     common carrier or carriers. The Secretary may make such 
     determinations upon request of any person or upon the 
     Secretary's own motion, after conducting an investigation and 
     a public hearing.
       ``(h) The Secretary shall issue regulations by June 1, 
     1997, that prescribe the procedures and requirements that 
     would govern how price and other information is to be 
     submitted by controlled carriers and carriers subject to 
     determinations made under subsection (g) when such 
     information would be needed to determine whether prices 
     charged by these carriers are unfair, predatory, or 
     anticompetitive.
       ``(i) In any instance where information provided to the 
     Secretary under this section does not result in an 
     affirmative finding or enforcement action by the Secretary 
     that information may not be made public and shall be exempt 
     from disclosure under section 552 of title 5, United States 
     Code, except as may be relevant to an administrative or 
     judicial action or proceeding. This section does not prevent 
     disclosure to either body of Congress or to a duly authorized 
     committee or subcommittee of Congress.''.

     SEC. 10232. NEGOTIATING STRATEGY TO REDUCE GOVERNMENT 
                   OWNERSHIP AND CONTROL OF COMMON CARRIERS.

       Not later than January 1, 1997, the Secretary of 
     Transportation shall develop, submit to Congress, and begin 
     implementing a negotiation strategy to persuade foreign 
     governments to divest themselves of ownership and control of 
     ocean common carriers (as that term is defined in section 
     3(18) of the Shipping Act of 1984 (46 U.S.C. App. 1702).

     SEC. 10233. ANNUAL REPORT BY THE SECRETARY.

       Not later than September 30, 1998, and annually thereafter, 
     the Secretary shall report to Congress on the actions taken 
     under the Foreign Shipping Practices Act (46 U.S.C. App. 
     1708), section 9 of the Shipping Act of 1984 (46 U.S.C. App. 
     1708), and section 10232 of this Act and the effect on United 
     States maritime employment of laws, rules, regulations, 
     policies, or practices of foreign governments, or any 
     practices of foreign carriers or other persons providing 
     maritime or maritime-related services in a foreign country 
     that result in the existence of conditions that adversely 
     affect the operations of United States carriers in United 
     States oceanborne trade.

       CHAPTER 3--ELIMINATION OF THE FEDERAL MARITIME COMMISSION

     SEC. 10241. PLAN FOR AGENCY TERMINATION.

       (a) In General.--No later than 30 days after the date of 
     the enactment of this Act, the Director of the Office of 
     Management and Budget, in consultation with the Secretary of 
     Transportation, shall submit to Congress a plan to eliminate 
     the Federal Maritime Commission no later than October 1, 
     1997. The plan shall include a timetable for the transfer of 
     remaining functions of the Federal Maritime Commission to the 
     Secretary of Transportation beginning as soon as feasible in 
     fiscal year 1996. The plan shall also address matters related 
     to personnel and other resources necessary for the Secretary 
     of Transportation to perform the remaining functions of the 
     Federal Maritime Commission.
       (b) Implementation.--The Director of the Office of 
     Management and Budget shall implement the plan to eliminate 
     the Federal Maritime Commission submitted to Congress under 
     subsection (a) beginning as soon as feasible in fiscal year 
     1996.
       (c) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as may be necessary to carry out 
     this subtitle and the amendments made by this subtitle.
             Subtitle C--Midewin National Tallgrass Prairie

                     CHAPTER 1--GENERAL PROVISIONS

     SEC. 10301. SHORT TITLE.

       This subtitle may be cited as the ``Illinois Land 
     Conservation Act of 1995''.

     SEC. 10302. DEFINITIONS.

       For purposes of this subtitle, the following definitions 
     apply:
       (1) Administrator.--The term ``Administrator'' means the 
     Administrator of the United States Environmental Protection 
     Agency.
       (2) Agricultural purposes.--The term ``agricultural 
     purposes'' means the use of land for row crops, pasture, hay, 
     and grazing.
       (3) Arsenal.--The term ``Arsenal'' means the Joliet Army 
     Ammunition Plant located in the State of Illinois.
       (4) CERCLA.--The term ``CERCLA'' means the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9601 et seq.).
       (5) Defense environmental restoration program.--The term 
     ``Defense Environmental Restoration Program'' means the 
     program of environmental restoration for defense 
     installations established by the Secretary of Defense under 
     section 2701 of title 10, United States Code.
       (6) Environmental law.--The term ``environmental law'' 
     means all applicable Federal, State, and local laws, 
     regulations, and requirements related to protection of human 
     health, natural and cultural resources, or the environment, 
     including CERCLA, the Solid Waste Disposal Act (42 U.S.C. 
     6901 et seq.), the Federal Water Pollution Control Act (33 
     U.S.C. 1251 et seq.), the Clean Air Act (42 U.S.C. 7401 et 
     seq.), the Federal Insecticide, Fungicide, and Rodenticide 
     Act (7 U.S.C. 136 et seq.), the Toxic Substances Control Act 
     (15 U.S.C. 2601 et seq.), and the Safe Drinking Water Act (42 
     U.S.C. 300f et seq.).
       (7) Hazardous waste.--The term ``hazardous substance'' has 
     the meaning given such term by section 101(14) of CERCLA (42 
     U.S.C. 9601(14)).
       (8) MNP.--The term ``MNP'' means the Midewin National 
     Tallgrass Prairie established pursuant to section 10314 and 
     managed as a part of the National Forest System.

[[Page H11077]]

       (9) National cemetery.--The term ``national cemetery'' 
     means a cemetery established and operated as part of the 
     National Cemetery System of the Department of Veterans 
     Affairs and subject to the provisions of chapter 24 of title 
     38, United States Code.
       (10) Person.--The term ``person'' has the meaning given 
     such term by section 101(21) of CERCLA (42 U.S.C. 9601(21)).
       (11) Pollutant or contaminant.--The term ``pollutant or 
     contaminant'' has the meaning given such term by section 
     101(33) of CERCLA (42 U.S.C. 9601(33)).
       (12) Release.--The term ``release'' has the meaning given 
     such term by section 101(22) of CERCLA (42 U.S.C. 9601(22)).
       (13) Response action.--The term ``response action'' has the 
     meaning given the term ``response'' by section 101(25) of 
     CERCLA (42 U.S.C. 9601(25)).

   CHAPTER 2--CONVERSION OF JOLIET ARMY AMMUNITION PLANT TO MIDEWIN 
                       NATIONAL TALLGRASS PRAIRIE

     SEC. 10311. PRINCIPLES OF TRANSFER.

       (a) Land Use Plan.--The Congress ratifies in principle the 
     proposals generally identified by the land use plan which was 
     developed by the Joliet Arsenal Citizen Planning Commission 
     and unanimously approved on May 30, 1995.
       (b) Transfer Without Reimbursement.--The area constituting 
     the Midewin National Tallgrass Prairie shall be transferred, 
     without reimbursement, to the Secretary of Agriculture.
       (c) Management of MNP.--Management by the Secretary of 
     Agriculture of those portions of the Arsenal transferred to 
     the Secretary under this subtitle shall be in accordance with 
     sections 10314 and 10315 regarding the Midewin National 
     Tallgrass Prairie.
       (d) Security Measures.--The Secretary of the Army and the 
     Secretary of Agriculture shall each provide and maintain 
     physical and other security measures on such portion of the 
     Arsenal as is under the administrative jurisdiction of such 
     Secretary. Such security measures (which may include fences 
     and natural barriers) shall include measures to prevent 
     members of the public from gaining unauthorized access to 
     such portions of the Arsenal as are under the administrative 
     jurisdiction of such Secretary and that may endanger health 
     or safety.
       (e) Cooperative Agreements.--The Secretary of the Army, the 
     Secretary of Agriculture, and the Administrator are 
     individually and collectively authorized to enter into 
     cooperative agreements and memoranda of understanding among 
     each other and with other affected Federal agencies, State 
     and local governments, private organizations, and 
     corporations to carry out the purposes for which the Midewin 
     National Tallgrass Prairie is established.
       (f) Interim Activities of the Secretary of Agriculture.--
     Prior to transfer and subject to such reasonable terms and 
     conditions as the Secretary of the Army may prescribe, the 
     Secretary of Agriculture may enter upon the Arsenal property 
     for purposes related to planning, resource inventory, fish 
     and wildlife habitat manipulation (which may include 
     prescribed burning), and other such activities consistent 
     with the purposes for which the Midewin National Tallgrass 
     Prairie is established.

     SEC. 10312. TRANSFER OF MANAGEMENT RESPONSIBILITIES AND 
                   JURISDICTION OVER ARSENAL.

       (a) Initial Transfer of Jurisdiction.--Within 6 months 
     after the date of the enactment of this Act, the Secretary of 
     the Army shall effect the transfer of those portions of the 
     Arsenal property identified for transfer to the Secretary of 
     Agriculture pursuant to subsection (d). The Secretary of the 
     Army shall transfer to the Secretary of Agriculture only 
     those portions of the Arsenal for which the Secretary of the 
     Army and the Administrator concur that no further action is 
     required under any environmental law and which therefore have 
     been eliminated from the areas to be further studied pursuant 
     to the Defense Environmental Restoration Program for the 
     Arsenal. Within 4 months after the date of the enactment of 
     this Act, the Secretary of the Army and the Administrator 
     shall provide to the Secretary of Agriculture all existing 
     documentation supporting such finding and all existing 
     information relating to the environmental conditions of the 
     portions of the Arsenal to be transferred to the Secretary of 
     Agriculture pursuant to this subsection.
       (b) Additional Transfers.--The Secretary of the Army shall 
     transfer to the Secretary of Agriculture in accordance with 
     section 10316(c) any portion of the property generally 
     identified in subsection (d) and not transferred under 
     subsection (a) after the Secretary of the Army and the 
     Administrator concur that no further action is required at 
     that portion of property under any environmental law and 
     that such portion is therefore eliminated from the areas 
     to be further studied pursuant to the Defense 
     Environmental Restoration Program for the Arsenal. At 
     least 2 months before any transfer under this subsection, 
     the Secretary of the Army and the Administrator shall 
     provide to the Secretary of Agriculture all existing 
     documentation supporting such finding and all existing 
     information relating to the environmental conditions of 
     the portion of the Arsenal to be transferred. Transfer of 
     jurisdiction pursuant to this subsection may be 
     accomplished on a parcel-by-parcel basis.
       (c) Effect on Continued Responsibilities and Liability of 
     Secretary of the Army.--Subsections (a) and (b), and their 
     requirements, shall not in any way affect the 
     responsibilities and liabilities of the Secretary of the Army 
     specified in section 10313.
       (d) Identification of Portions for Transfer for MNP.--The 
     lands to be transferred to the Secretary of Agriculture under 
     subsections (a) and (b) shall be identified on a map or maps 
     which shall be agreed to by the Secretary of the Army and the 
     Secretary of Agriculture. Generally, the land to be 
     transferred to the Secretary of Agriculture shall be all the 
     real property and improvements comprising the Arsenal, except 
     for lands and facilities described in subsection (e) or 
     designated for transfer or disposal under section 10316 or 
     chapter 3.
       (e) Property Used for Environmental Cleanup.--
       (1) Retention.--The Secretary of the Army shall retain 
     jurisdiction, authority, and control over real property at 
     the Arsenal to be used for--
       (A) water treatment;
       (B) the treatment, storage, or disposal of any hazardous 
     substance, pollutant or contaminant, hazardous material, or 
     petroleum products or their derivatives;
       (C) other purposes related to any response action at the 
     Arsenal; and
       (D) other actions required at the Arsenal under any 
     environmental law to remediate contamination or conditions of 
     noncompliance with any environmental law.
       (2) Conditions.--The Secretary of the Army shall consult 
     with the Secretary of Agriculture regarding the 
     identification and management of the real property retained 
     under this subsection and ensure that activities carried out 
     on that property are consistent, to the extent practicable, 
     with the purposes for which the Midewin National Tallgrass 
     Prairie is established, as specified in section 10314(c), and 
     with the other provisions of sections 10314 and 10315.
       (3) Priority of response actions.--In the case of any 
     conflict between management of the property by the Secretary 
     of Agriculture and any response action, or any other action 
     required under any other environmental law, including actions 
     to remediate petroleum products of their derivatives, the 
     response action or other action shall take priority.
       (f) Surveys.--All costs of necessary surveys for the 
     transfer of jurisdiction of Arsenal property from the 
     Secretary of the Army to the Secretary of Agriculture shall 
     be borne by the Secretary of Agriculture.

     SEC. 10313. CONTINUATION OF RESPONSIBILITY AND LIABILITY OF 
                   SECRETARY OF THE ARMY FOR ENVIRONMENTAL 
                   CLEANUP.

       (a) Responsibility.--The liabilities and responsibilities 
     of the Secretary of the Army under any environmental law 
     shall not transfer under any circumstances to the Secretary 
     of Agriculture as a result of the property transfers made 
     under section 10312 or section 10316, or as a result of 
     interim activities of the Secretary of Agriculture on Arsenal 
     property under section 10311(f). With respect to the real 
     property at the Arsenal, the Secretary of the Army shall 
     remain liable for and continue to carry out--
       (1) all response actions required under CERCLA at or 
     related to the property;
       (2) all remediation actions required under any other 
     environmental law at or related to the property; and
       (3) all actions required under any other environmental law 
     to remediate petroleum products or their derivatives 
     (including motor oil and aviation fuel) at or related to the 
     property.
       (b) Liability.--
       (1) In general.--Nothing in this Act shall be construed to 
     effect, modify, amend, repeal, alter, limit, or otherwise 
     change, directly or indirectly, the responsibilities or 
     liabilities under any environmental law of any person 
     (including the Secretary of Agriculture), except as provided 
     in paragraph (3) with respect to the Secretary of 
     Agriculture.
       (2) Liability of secretary of the army.--The Secretary of 
     the Army shall retain any obligation or other liability at 
     the Arsenal that the Secretary may have under CERCLA and 
     other environmental laws. Following transfer of any portions 
     of the Arsenal pursuant to this Act, the Secretary of the 
     Army shall be accorded all easements and access to such 
     property as may be reasonably required to carry out such 
     obligation or satisfy such liability.
       (3) Special rules for secretary of agriculture.--The 
     Secretary of Agriculture shall not be responsible or liable 
     under any environmental law for matters which are in any way 
     related directly or indirectly to activities of the Secretary 
     of the Army, or any party acting under the authority of the 
     Secretary in connection with the Defense Environmental 
     Restoration Program, at the Arsenal and which are for any of 
     the following:
       (A) Costs of response actions required under CERCLA at or 
     related to the Arsenal.
       (B) Costs, penalties, or fines related to noncompliance 
     with any environmental law at or related to the Arsenal or 
     related to the presence, release, or threat of release of any 
     hazardous substance, pollutant, contaminant, hazardous waste 
     or hazardous material of any kind at or related to the 
     Arsenal, including contamination resulting from migration of 
     hazardous substances, pollutants, contaminants, hazardous 
     materials, or petroleum products or their derivatives 
     disposed during activities of the Department of the Army.
       (C) Costs of actions necessary to remedy such noncompliance 
     or other problem specified in subparagraph (B).

[[Page H11078]]

       (c) Payment of Response Action Costs.--Any Federal 
     department or agency that had or has operations at the 
     Arsenal resulting in the release or threatened release of 
     hazardous substances, pollutants, or contaminants shall pay 
     the cost of related response actions, or related actions 
     under other environmental laws, including actions to 
     remediate petroleum products or their derivatives.
       (d) Consultation.--The Secretary of Agriculture shall 
     consult with the Secretary of the Army with respect to the 
     Secretary of Agriculture's management of real property 
     included in the Midewin National Tallgrass Prairie subject to 
     any response action or other action at the Arsenal being 
     carried out by or under the authority of the Secretary of the 
     Army under any environmental law. The Secretary of 
     Agriculture shall consult with the Secretary of the Army 
     prior to undertaking any activities on the Midewin National 
     Tallgrass Prairie that may disturb the property to ensure 
     that such activities will not exacerbate contamination 
     problems or interfere with performance by the Secretary of 
     the Army of response actions at the property. In carrying out 
     response actions at the Arsenal, the Secretary of the Army 
     shall consult with the Secretary of Agriculture to ensure 
     that such actions are carried out in a manner consistent with 
     the purposes for which the Midewin National Tallgrass Prairie 
     is established, as specified in section 10314(c), and the 
     other provisions of sections 10314 and 10315.

     SEC. 10314. ESTABLISHMENT AND ADMINISTRATION OF MIDEWIN 
                   NATIONAL TALLGRASS PRAIRIE.

       (a) Establishment.--On the effective date of the initial 
     transfer of jurisdiction of portions of the Arsenal to the 
     Secretary of Agriculture under section 10312(a), the 
     Secretary of Agriculture shall establish the Midewin National 
     Tallgrass Prairie. The MNP shall--
       (1) be administered by the Secretary of Agriculture; and
       (2) consist of the real property so transferred and such 
     other portions of the Arsenal subsequently transferred under 
     section 10312(b) or 10316.
       (b) Administration.--
       (1) In general.--The Secretary of Agriculture shall manage 
     the Midewin National Tallgrass Prairie as a part of the 
     National Forest System in accordance with this Act and the 
     laws, rules, and regulations pertaining to the National 
     Forest System, except that the Bankhead-Jones Farm Tenant Act 
     of 1937 (7 U.S.C. 1010-1012) shall not apply to the MNP.
       (2) Initial management activities.--In order to expedite 
     the administration and public use of the Midewin National 
     Tallgrass Prairie, the Secretary of Agriculture may conduct 
     management activities at the MNP to effectuate the purposes 
     for which the MNP is established, as specified in subsection 
     (c), in advance of the development of a land and resource 
     management plan for the MNP.
       (3) Land and resource management plan.--In developing a 
     land and resource management plan for the Midewin National 
     Tallgrass Prairie, the Secretary of Agriculture shall consult 
     with the Illinois Department of Conservation and local 
     governments adjacent to the MNP and provide an opportunity 
     for public comment. Any parcel transferred to the Secretary 
     of Agriculture under this Act after the development of a land 
     and resource management plan for the MNP may be managed in 
     accordance with such plan without need for an amendment to 
     the plan.
       (c) Purposes of the Midewin National Tallgrass Prairie.--
     The Midewin National Tallgrass Prairie is established to be 
     managed for National Forest System purposes, including the 
     following:
       (1) To manage the land and water resources of the MNP in a 
     manner that will conserve and enhance the native populations 
     and habitats of fish, wildlife, and plants.
       (2) To provide opportunities for scientific, environmental, 
     and land use education and research.
       (3) To allow the continuation of agricultural uses of lands 
     within the MNP consistent with section 10315(b).
       (4) To provide a variety of recreation opportunities that 
     are not inconsistent with the preceding purposes.
       (d) Other Land Acquisition for MNP.--
       (1) Land acquisition funds.--Notwithstanding section 7 of 
     the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 
     460l-9), monies appropriated from the Land and Water 
     Conservation Fund established under section 2 of such Act (16 
     U.S.C. 460l-5) shall be available for acquisition of lands 
     and interests in land for inclusion in the Midewin National 
     Tallgrass Prairie.
       (2) Acquisition of private lands.--Acquisition of private 
     lands for inclusion in the Midewin National Tallgrass Prairie 
     shall be on a willing seller basis only.
       (e) Cooperation With States, Local Governments and Other 
     Entities.--In the management of the Midewin National 
     Tallgrass Prairie, the Secretary of Agriculture is authorized 
     and encouraged to cooperate with appropriate Federal, State, 
     and local governmental agencies, private organizations and 
     corporations. Such cooperation may include cooperative 
     agreements as well as the exercise of the existing 
     authorities of the Secretary under the Cooperative Forestry 
     Assistance Act of 1978 and the Forest and Rangeland Renewable 
     Resources Research Act of 1978. The objects of such 
     cooperation may include public education, land and resource 
     protection and cooperative management among government, 
     corporate, and private landowners in a manner which furthers 
     the purposes for which the Midewin National Tallgrass Prairie 
     is established.

     SEC. 10315. SPECIAL MANAGEMENT REQUIREMENTS FOR MIDEWIN 
                   NATIONAL TALLGRASS PRAIRIE.

       (a) Prohibition Against the Construction of New Through 
     Roads.--No new construction of any highway, public road, or 
     any part of the interstate system, whether Federal, State, or 
     local, shall be permitted through or across any portion of 
     the Midewin National Tallgrass Prairie. Nothing herein shall 
     preclude construction and maintenance of roads for use within 
     the MNP or the granting of authorizations for utility rights-
     of-way under applicable Federal law or preclude such access 
     as is necessary. Nothing herein shall preclude necessary 
     access by the Secretary of the Army for purposes of 
     restoration and cleanup as provided in this subtitle.
       (b) Agricultural Leases and Special Use Authorizations.--
     Within the Midewin National Tallgrass Prairie, use of the 
     lands for agricultural purposes shall be permitted subject to 
     the following terms and conditions:
       (1) If, at the time of transfer of jurisdiction under 
     section 10312, there exists any lease issued by the 
     Department of the Army, Department of Defense, or any other 
     agency thereof, for agricultural purposes upon the parcel 
     transferred, the Secretary of Agriculture, upon transfer of 
     jurisdiction, shall convert the lease to a special use 
     authorization, the terms of which shall be identical in 
     substance to the lease that existed prior to the transfer, 
     including the expiration date and any payments owed the 
     United States.
       (2) The Secretary of Agriculture may issue special use 
     authorizations to persons for use of the Midewin National 
     Tallgrass Prairie for agricultural purposes. Special use 
     authorizations issued pursuant to this paragraph shall 
     include terms and conditions as the Secretary of Agriculture 
     may deem appropriate.
       (3) No agricultural special use authorization shall be 
     issued for agricultural purposes which has a term extending 
     beyond the date 20 years from the date of the enactment of 
     this Act, except that nothing in this Act shall preclude the 
     Secretary of Agriculture from issuing agricultural special 
     use authorizations or grazing permits which are effective 
     after 20 years from the date of the enactment of this Act for 
     purposes primarily related to erosion control, provision for 
     food and habitat for fish and wildlife, or other resource 
     management activities consistent with the purposes of the 
     Midewin National Tallgrass Prairie.
       (c) Treatment of Rental Fees.--Monies received pursuant to 
     subsection (b) shall be subject to distribution to the State 
     of Illinois and affected counties pursuant to the Acts of May 
     23, 1908, and March 1, 1911 (16 U.S.C. 500). All such monies 
     not distributed pursuant to such Acts shall be deposited into 
     the Treasury and shall constitute a special fund, which shall 
     be available to the Secretary of Agriculture, in such amounts 
     as are provided in advance in appropriation Acts, to cover 
     the cost to the United States of such prairie-improvement 
     work as the Secretary may direct. Any portion of any deposit 
     made to the fund which the Secretary determines to be in 
     excess of the cost of doing such work shall be transferred, 
     upon such determination, to miscellaneous receipts, Forest 
     Service Fund, as a National Forest receipt of the fiscal year 
     in which such transfer is made.
       (d) User Fees.--The Secretary of Agriculture is authorized 
     to charge reasonable fees for the admission, occupancy, and 
     use of the Midewin National Tallgrass Prairie and may 
     prescribe a fee schedule providing for reduced, or a waiver 
     of, fees for persons or groups engaged in authorized 
     activities including those providing volunteer services, 
     research, or education. The Secretary shall permit admission, 
     occupancy, and use at no additional charge for persons 
     possessing a valid Golden Eagle Passport or Golden Age 
     Passport.
       (e) Salvage of Improvements.--The Secretary of Agriculture 
     may sell for salvage value any facilities and improvements 
     which have been transferred to the Secretary pursuant to this 
     subtitle.
       (f) Treatment of User Fees and Salvage Receipts.--Monies 
     collected pursuant to subsections (d) and (e) shall be 
     covered into the Treasury and constitute a special fund to be 
     known as the Midewin National Tallgrass Prairie Restoration 
     Fund. Deposits in the Midewin National Tallgrass Prairie 
     Restoration Fund shall be available to the Secretary of 
     Agriculture, in such amounts as are provided in advance in 
     appropriation Acts, for restoration and administration of the 
     Midewin National Tallgrass Prairie, including construction of 
     a visitor and education center, restoration of ecosystems, 
     construction of recreational facilities (such as trails), 
     construction of administrative offices, and operation and 
     maintenance of the MNP.

     SEC. 10316. SPECIAL DISPOSAL RULES FOR CERTAIN ARSENAL 
                   PARCELS INTENDED FOR MNP.

       (a) Description of Parcels.--Except as provided in 
     subsection (b), the following areas are designated for 
     transfer or disposal pursuant to subsection (c):
       (1) Manufacturing Area--Study Area 1--Southern Ash Pile, 
     Study Area 2--Explosive Burning Ground, Study Area 3--
     Flashing Grounds, Study Area 4--Lead Azide Area, Study Area 
     10--Toluene Tank Farms, Study Area 11--Landfill, Study Area 
     12--Sellite Manufacturing Area, Study Area 14--Former 

[[Page H11079]]

     Pond Area, Study Area 15--Sewage Treatment Plant.
       (2) Load Assemble Packing Area--Group 61: Study Area L1, 
     Explosive Burning Ground: Study Area L2, Demolition Area: 
     Study Area L3, Landfill Area: Study Area L4, Salvage Yard: 
     Study Area L5, Group 1: Study Area L7, Group 2: Study Area 
     L8, Group 3: Study Area L9, Group 3A: Study Area L10, Group 
     4: Study Area L14, Group 5: Study Area L15, Group 8: Study 
     Area L18, Group 9: Study Area L19, Group 27: Study Area L23, 
     Group 62: Study Area L25, PVC Area: Study Area L33, including 
     all associated inventoried buildings and structures as 
     identified in the Joliet Army Ammunition Plant Plantwide 
     Building and Structures Report and the contaminate study 
     sites for both the Manufacturing and Load Assembly and 
     Packing sides of the Joliet Arsenal as delineated in the 
     Dames and Moore Final Report, Proposed Future Land Use Map, 
     dated May 30, 1995.
       (b) Exception.--The parcels described in subsection (a) 
     shall not include the property at the Arsenal designated for 
     disposal under chapter 3.
       (c) Initial Offer to Secretary of Agriculture.--Within 6 
     months after the construction and installation of any 
     remedial design approved by the Administrator and required 
     for any lands described in subsection (a), the Administrator 
     shall provide to the Secretary of Agriculture all existing 
     information regarding the implementation of such remedy, 
     including information regarding its effectiveness. Within 3 
     months after the Administrator provides such information to 
     the Secretary of Agriculture, the Secretary of the Army shall 
     offer the Secretary of Agriculture the option of accepting a 
     transfer of the areas described in subsection (a), without 
     reimbursement, to be added to the Midewin National Tallgrass 
     Prairie and subject to the terms and conditions, including 
     the limitations on liability, contained in this subtitle. In 
     the event the Secretary of Agriculture declines such offer, 
     the property may be disposed of as the Secretary of the Army 
     would ordinarily dispose of such property under applicable 
     provisions of law. Any sale or other transfer of property 
     conducted pursuant to this subsection may be accomplished on 
     a parcel-by-parcel basis.

    CHAPTER 3--OTHER REAL PROPERTY DISPOSALS INVOLVING JOLIET ARMY 
                            AMMUNITION PLANT

     SEC. 10321. DISPOSAL OF CERTAIN REAL PROPERTY AT ARSENAL FOR 
                   A NATIONAL CEMETERY.

       (a) Transfer Required.--Subject to section 10331, the 
     Secretary of the Army shall transfer, without reimbursement, 
     to the Secretary of Veterans Affairs the parcel of real 
     property at the Arsenal described in subsection (b) for use 
     as a national cemetery.
       (b) Description of Property.--The real property to be 
     transferred under subsection (a) is a parcel of real property 
     at the Arsenal consisting of approximately 982 acres, the 
     approximate legal description of which includes part of 
     sections 30 and 31 Jackson Township, T34N R10E, and part of 
     sections 25 and 36 Channahon Township, T34N R9E, Will County, 
     Illinois, as depicted in the Arsenal Land Use Concept.
       (c) Security Measures.--The Secretary of Veterans Affairs 
     shall provide and maintain physical and other security 
     measures on the real property transferred under subsection 
     (a). Such security measures (which may include fences and 
     natural barriers) shall include measures to prevent members 
     of the public from gaining unauthorized access to the portion 
     of the Arsenal that is under the administrative jurisdiction 
     of the Secretary of Veterans Affairs and that may endanger 
     health or safety.
       (d) Surveys.--All costs of necessary surveys for the 
     transfer of jurisdiction of Arsenal properties from the 
     Secretary of the Army to the Secretary of Veterans Affairs 
     shall be borne solely by the Secretary of Veterans Affairs.

     SEC. 10322. DISPOSAL OF CERTAIN REAL PROPERTY AT ARSENAL FOR 
                   A COUNTY LANDFILL.

       (a) Transfer Required.--Subject to section 10331, the 
     Secretary of the Army shall transfer, without compensation, 
     to Will County, Illinois, all right, title, and interest of 
     the United States in and to the parcel of real property at 
     the Arsenal described in subsection (b), which shall be 
     operated as a landfill by the County.
       (b) Description of Property.--The real property to be 
     transferred under subsection (a) is a parcel of real property 
     at the Arsenal consisting of approximately 455 acres, the 
     approximate legal description of which includes part of 
     sections 8 and 17, Florence Township, T33N R10E, Will County, 
     Illinois, as depicted in the Arsenal Land Use Concept.
       (c) Condition on Conveyance.--The conveyance shall be 
     subject to the condition that the Army (or its agents or 
     assigns) may use the landfill established on the real 
     property transferred under subsection (a) for the disposal of 
     construction debris, refuse, and other nonhazardous materials 
     from the restoration and cleanup of the Arsenal property as 
     provided for in this Act. Such use shall be at no cost to the 
     Federal Government.
       (d) Reversionary Interest.--During the 5-year period 
     beginning on the date the Secretary of the Army makes the 
     conveyance under subsection (a), if the Secretary of the Army 
     determines that the conveyed real property is not being 
     operated as a landfill or that Will County, Illinois, is in 
     violation of the condition specified in subsection (c), then, 
     at the option of the United States, all right, title, and 
     interest in and to the property, including improvements 
     thereon, shall be subject to reversion to the United States. 
     In the event the United States exercises its option to cause 
     the property to revert, the United States shall have the 
     right of immediate entry onto the property. Any determination 
     of the Secretary of the Army under this subsection shall be 
     made on the record after an opportunity for a hearing.
       (e) Surveys.--All costs of necessary surveys for the 
     transfer of real property under this section shall be borne 
     by Will County, Illinois.
       (f) Additional Terms and Conditions.--The Secretary of the 
     Army may require such additional terms and conditions in 
     connection with the conveyance under this section as the 
     Secretary of the Army considers appropriate to protect the 
     interests of the United States.

     SEC. 10323. DISPOSAL OF CERTAIN REAL PROPERTY AT ARSENAL FOR 
                   ECONOMIC DEVELOPMENT.

       (a) Transfer Required.--Subject to section 10331, the 
     Secretary of the Army shall transfer to the State of 
     Illinois, all right, title, and interest of the United States 
     in and to the parcel of real property at the Arsenal 
     described in subsection (b), which shall be used for 
     economic redevelopment to replace all or a part of the 
     economic activity lost at the Arsenal.
       (b) Description of Property.--The real property to be 
     transferred under subsection (a) is a parcel of real property 
     at the Arsenal consisting of--
       (1) approximately 1,900 acres, the approximate legal 
     description of which includes part of section 30, Jackson 
     Township, Township 34 North, Range 10 East, and sections or 
     parts of sections 24, 25, 26, 35, and 36, Township 34 North, 
     Range 9 East, in Channahon Township, an area of 9.77 acres 
     around the Des Plaines River Pump Station located in the 
     southeast quarter of section 15, Township 34 North, Range 9 
     East of the Third Principal Meridian, in Channahon Township, 
     and an area of 511 feet by 596 feet around the Kankakee River 
     Pump Station in the Northwest Quarter of section 5, Township 
     33 North, Range 9 East, east of the Third Principal Meridian 
     in Wilmington Township, containing 6.99 acres, located along 
     the easterly side of the Kankakee Cut-Off in Will County, 
     Illinois, as depicted in the Arsenal Re-Use Concept, and the 
     connecting piping to the northern industrial site, as 
     described by the United States Army Report of Availability, 
     dated 13 December 1993; and
       (2) approximately 1,100 acres, the approximate legal 
     description of which includes part of sections 16, 17, 18 
     Florence Township, Township 33 North, Range 10 East, Will 
     County, Illinois, as depicted in the Arsenal Land Use 
     Concept.
       (c) Consideration.--The transfer under subsection (a) shall 
     be made without consideration. However, the transfer shall be 
     subject to the condition that, if the State of Illinois 
     reconveys all or any part of the transferred property to a 
     non-Federal entity, the State shall pay to the United States 
     an amount equal to the fair market value of the reconveyed 
     property. The Secretary of the Army shall determine the fair 
     market value of any property reconveyed by the State as of 
     the time of the reconveyance, excluding the value of 
     improvements made to the property by the State. The Secretary 
     may treat a lease of the property as a reconveyance if the 
     Secretary determines that the lease was used in an effort to 
     avoid operation of this subsection. Amounts received under 
     this subsection shall be deposited in the general fund of the 
     Treasury for purposes of deficit reduction.
       (d) Other Conditions of Conveyance.--
       (1) Redevelopment authority.--The transfer under subsection 
     (a) shall be subject to the further condition that the 
     Governor of the State of Illinois establish a redevelopment 
     authority to be responsible for overseeing the economic 
     redevelopment of the transferred land.
       (2) Time for establishment.--To satisfy the condition 
     specified in paragraph (1), the redevelopment authority shall 
     be established within 1 year after the date of the enactment 
     of this Act.
       (e) Reversionary Interest.--During the 20-year period 
     beginning on the date the Secretary of the Army makes the 
     transfer under subsection (a), if the Secretary determines 
     that a condition specified in subsection (c) or (d) is not 
     being satisfied or that the transferred land is not being 
     used for economic development purposes, then, at the option 
     of the United States, all right, title, and interest in and 
     to the property, including improvements thereon, shall be 
     subject to reversion to the United States. In the event the 
     United States exercises its option to cause the property to 
     revert, the United States shall have the right of immediate 
     entry onto the property. Any determination of the Secretary 
     under this subsection shall be made on the record after an 
     opportunity for a hearing.
       (f) Surveys.--All costs of necessary surveys for the 
     transfer of real property under this section shall be borne 
     by the State of Illinois.
       (g) Additional Terms and Conditions.--The Secretary of the 
     Army may require such additional terms and conditions in 
     connection with the transfer under this section as the 
     Secretary considers appropriate to protect the interests of 
     the United States.

[[Page H11080]]


                  CHAPTER 4--MISCELLANEOUS PROVISIONS

     SEC. 10331. DEGREE OF ENVIRONMENTAL CLEANUP.

       (a) In General.--Nothing in this Act shall be construed to 
     restrict or lessen the degree of cleanup at the Arsenal 
     required to be carried out under provisions of any 
     environmental law.
       (b) Response Action.--The establishment of the Midewin 
     National Tallgrass Prairie under chapter 2 and the additional 
     real property transfers and disposals required under chapter 
     3 shall not restrict or lessen in any way any response action 
     or degree of cleanup under CERCLA or other environmental law, 
     or any response action required under any environmental law 
     to remediate petroleum products or their derivatives 
     (including motor oil and aviation fuel), required to be 
     carried out under the authority of the Secretary of the Army 
     at the Arsenal and surrounding areas, except to the extent 
     otherwise allowable under such laws.
       (c) Environmental Quality of Property.--Any contract for 
     sale, deed, or other transfer of real property under chapter 
     3 shall be carried out in compliance with all applicable 
     provisions of section 120(h) of CERCLA and other 
     environmental laws.
                  Subtitle D--Miscellaneous Provisions

     SEC. 10401. EXTENSION OF HIGHER VESSEL TONNAGE DUTIES.

       (a) Extension of Duties.--Section 36 of the Act of August 
     5, 1909 (36 Stat. 111; 46 App. U.S.C. 121), is amended by 
     striking ``for fiscal years 1991, 1992, 1993, 1994, 1995, 
     1996, 1997, 1998,'' each place it appears and inserting ``for 
     fiscal years through fiscal year 2002,''.
       (b) Conforming Amendment.--The Act entitled ``An Act 
     concerning tonnage duties on vessels entering otherwise than 
     by sea'', approved March 8, 1910 (36 Stat. 234; 46 App. 
     U.S.C. 132), is amended by striking ``for fiscal years 1991, 
     1992, 1993, 1994, 1995, 1996, 1997, and 1998,'' and inserting 
     ``for fiscal years through fiscal year 2002,''.

     SEC. 10402. SALE OF GOVERNORS ISLAND, NEW YORK.

       (a) In General.--Notwithstanding any other provision of 
     law, the Administrator of General Services shall dispose of 
     by sale at fair market value all rights, title, and interests 
     of the United States in and to the land of, and improvements 
     to, Governors Island, New York.
       (b) Right of First Refusal.--Before a sale is made under 
     subsection (a) to any other parties, the State of New York 
     and the city of New York shall be given the right of first 
     refusal to purchase all or part of Governors Island. Such 
     right may be exercised by either the State of New York or the 
     city of New York or by both parties acting jointly.
       (c) Proceeds.--Proceeds from the disposal of Governors 
     Island under subsection (a) shall be deposited in the general 
     fund of the Treasury and credited as miscellaneous receipts.

     SEC. 10403. SALE OF AIR RIGHTS.

       (a) In General.--Notwithstanding any other provision of 
     law, the Administrator of General Services shall sell, at 
     fair market value and in a manner to be determined by the 
     Administrator, the air rights adjacent to Washington Union 
     Station described in subsection (b), including air rights 
     conveyed to the Administrator under subsection (d). The 
     Administrator shall complete the sale by such date as is 
     necessary to ensure that the proceeds from the sale will be 
     deposited in accordance with subsection (c).
       (b) Description.--The air rights referred to in subsection 
     (a) total approximately 16.5 acres and are depicted on the 
     plat map of the District of Columbia as follows:
       (1) Part of lot 172, square 720.
       (2) Part of lots 172 and 823, square 720.
       (3) Part of lot 811, square 717.
       (c) Proceeds.--Before September 30, 1996, proceeds from the 
     sale of air rights under subsection (a) shall be deposited in 
     the general fund of the Treasury and credited as 
     miscellaneous receipts.
       (d) Conveyance of Amtrak Air Rights.--
       (1) General rule.--As a condition of future Federal 
     financial assistance, Amtrak shall convey to the 
     Administrator of General Services on or before December 31, 
     1995, at no charge, all of the air rights of Amtrak described 
     in subsection (b).
       (2) Failure to comply.--If Amtrak does not meet the 
     condition established by paragraph (1), Amtrak shall be 
     prohibited from obligating Federal funds after March 1, 1996.
                TITLE XI--COMMITTEE ON VETERANS' AFFAIRS

     SEC. 11001. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This title may be cited as the ``Veterans 
     Reconciliation Act of 1995''.
       (b) Table of Contents.--The contents of this title are as 
     follows:

                TITLE XI--COMMITTEE ON VETERANS' AFFAIRS

Sec. 11001. Short title; table of contents.

             Subtitle A--Extension of Temporary Authorities

Sec. 11011. Authority to require that certain veterans agree to make 
              copayments in exchange for receiving health-care 
              benefits.
Sec. 11012. Medical care cost recovery authority.
Sec. 11013. Income verification authority.
Sec. 11014. Limitation on pension for certain recipients of medicaid-
              covered nursing home care.
Sec. 11015. Home loan fees.
Sec. 11016. Procedures applicable to liquidation sales on defaulted 
              home loans guaranteed by the Department of Veterans 
              Affairs.

                       Subtitle B--Other Matters

Sec. 11021. Revision to prescription drug copayment.
Sec. 11022. Rounding down of cost-of-living adjustments in compensation 
              and DIC rates.
Sec. 11023. Revised standard for liability for injuries resulting from 
              Department of Veterans Affairs treatment.
Sec. 11024. Enhanced loan asset sale authority.
Sec. 11025. Withholding of payments and benefits.

               Subtitle C--Health Care Eligibility Reform

Sec. 11031. Hospital care and medical services.
Sec. 11032. Extension of authority to priority health care for Persian 
              Gulf veterans.
Sec. 11033. Prosthetics.
Sec. 11034. Management of health care.
Sec. 11035. Improved efficiency in health care resource management.
Sec. 11036. Sharing agreements for specialized medical resources.
Sec. 11037. Personnel furnishing shared resources.
             Subtitle A--Extension of Temporary Authorities

     SEC. 11011. AUTHORITY TO REQUIRE THAT CERTAIN VETERANS AGREE 
                   TO MAKE COPAYMENTS IN EXCHANGE FOR RECEIVING 
                   HEALTH-CARE BENEFITS.

       (a) Hospital and Medical Care.--Section 8013(e) of the 
     Omnibus Budget Reconciliation Act of 1990 (38 U.S.C. 1710 
     note) is amended by striking out ``September 30, 1998'' and 
     inserting in lieu thereof ``September 30, 2002''.
       (b) Outpatient Medications.--Section 1722A(c) of title 38, 
     United States Code, is amended by striking out ``September 
     30, 1998'' and inserting in lieu thereof ``September 30, 
     2002''.

     SEC. 11012. MEDICAL CARE COST RECOVERY AUTHORITY.

       Section 1729(a)(2)(E) of title 38, United States Code, is 
     amended by striking out ``before October 1, 1998,'' and 
     inserting ``before October 1, 2002,''.

     SEC. 11013. INCOME VERIFICATION AUTHORITY.

       Section 5317(g) of title 38, United States Code, is amended 
     by striking out ``September 30, 1998'' and inserting in lieu 
     thereof ``September 30, 2002''.

     SEC. 11014. LIMITATION ON PENSION FOR CERTAIN RECIPIENTS OF 
                   MEDICAID-COVERED NURSING HOME CARE.

       Section 5503(f)(7) of title 38, United States Code, is 
     amended by striking out ``September 30, 1998'' and inserting 
     in lieu thereof ``September 30, 2002''.

     SEC. 11015. HOME LOAN FEES.

       Section 3729(a) of title 38, United States Code, is 
     amended--
       (1) in paragraph (4), by striking out ``October 1, 1998'' 
     and inserting in lieu thereof ``October 1, 2002''; and
       (2) in paragraph (5)(C), by striking out ``October 1, 
     1998'' and inserting in lieu thereof ``October 1, 2002''.

     SEC. 11016. PROCEDURES APPLICABLE TO LIQUIDATION SALES ON 
                   DEFAULTED HOME LOANS GUARANTEED BY THE 
                   DEPARTMENT OF VETERANS AFFAIRS.

       Section 3732(c)(11) of title 38, United States Code, is 
     amended by striking out ``October 1, 1998'' and inserting 
     ``October 1, 2002''.
                       Subtitle B--Other Matters

     SEC. 11021. REVISION TO PRESCRIPTION DRUG COPAYMENT.

       (a) Increase in Amount of Copayment.--Section 1722A(a) of 
     title 38, United States Code, is amended--
       (1) in paragraph (1), by striking out ``$2'' and inserting 
     in lieu thereof ``$3'';
       (2) by striking out paragraph (2); and
       (3) by redesignating paragraph (3) as paragraph (2).
       (b) Recovery of Indebtedness.--(1) Section 5302 of such 
     title is amended by adding at the end the following new 
     subsection:
       ``(f) The Secretary may not waive under this section the 
     recovery of any payment or the collection of any indebtedness 
     owed under section 1722A of this title.''.
       (2) The amendment made by paragraph (1) shall apply with 
     respect to amounts that become due to the United States under 
     section 1722A of title 38, United States Code, on or after 
     the date of the enactment of this Act.

     SEC. 11022. ROUNDING DOWN OF COST-OF-LIVING ADJUSTMENTS IN 
                   COMPENSATION AND DIC RATES.

       (a) Fiscal Year 1996 COLA.--(1) Effective as of December 1, 
     1995, the Secretary of Veterans Affairs shall recompute any 
     increase in an adjustment that is otherwise provided by law 
     to be effective during fiscal year 1996 in the rates of 
     disability compensation and dependency and indemnity 
     compensation paid by the Secretary as such rates were in 
     effect on November 30, 1995. The recomputation shall provide 
     for the same percentage increase as provided under such law, 
     but with amounts so recomputed (if not a whole dollar amount) 
     rounded down to the next lower whole dollar amount (rather 
     than to the nearest whole dollar amount) and with each old-
     law DIC rate increased by the amount by which the new-law DIC 
     rate is increased (rather than by a uniform percentage).
       (2) For purposes of paragraph (1):
       (A) The term ``old-law DIC rate'' means a dollar amount in 
     effect under section 1311(a)(3) of title 38, United States 
     Code.
       (B) The term ``new-law DIC rate'' means the dollar amount 
     in effect under section 1311(a)(1) of title 38, United States 
     Code.

[[Page H11081]]

       (b) Out-Year Compensation COLAs.--(1) Chapter 11 of title 
     38, United States Code, is amended by inserting after section 
     1102 the following new section:

     ``Sec. 1103. Cost-of-living adjustments

       ``(a) In the computation of cost-of-living adjustments for 
     fiscal years 1997 through 2002 in the rates of, and dollar 
     limitations applicable to, compensation payable under this 
     chapter, such adjustments shall be made by a uniform 
     percentage that is no more than the percentage equal to 
     the social security increase for that fiscal year, with 
     all increased monthly rates and limitations (other than 
     increased rates or limitations equal to a whole dollar 
     amount) rounded down to the next lower whole dollar 
     amount.
       ``(b) For purposes of this section, the term `social 
     security increase' means the percentage by which benefit 
     amounts payable under title II of the Social Security Act (42 
     U.S.C. 401 et seq.) are increased for any fiscal year as a 
     result of a determination under section 215(i) of such Act 
     (42 U.S.C. 415(i)).''.
       (2) The table of sections at the beginning of such chapter 
     is amended by inserting after the item relating to section 
     1102 the following new item:

``1103. Cost-of-living adjustments.''.

       (c) Out-Year DIC COLAs.--(1) Chapter 13 of title 38, United 
     States Code, is amended by inserting after section 1302 the 
     following new section:

     ``Sec. 1303. Cost-of-living adjustments

       ``(a) In the computation of cost-of-living adjustments for 
     fiscal years 1997 through 2002 in the rates of dependency and 
     indemnity compensation payable under this chapter, such 
     adjustments (except as provided in subsection (b)) shall be 
     made by a uniform percentage that is no more than the 
     percentage equal to the social security increase for that 
     fiscal year, with all increased monthly rates (other than 
     increased rates equal to a whole dollar amount) rounded down 
     to the next lower whole dollar amount.
       ``(b)(1) Cost-of-living adjustments for each of fiscal 
     years 1997 through 2002 in old-law DIC rates shall be in a 
     whole dollar amount that is no greater than the amount by 
     which the new-law DIC rate is increased for that fiscal year 
     as determined under subsection (a).
       ``(2) For purposes of paragraph (1):
       ``(A) The term `old-law DIC rates' means the dollar amounts 
     in effect under section 1311(a)(3) of this title.
       ``(B) The term `new-law DIC rate' means the dollar amount 
     in effect under section 1311(a)(1) of this title.
       ``(c) For purposes of this section, the term `social 
     security increase' means the percentage by which benefit 
     amounts payable under title II of the Social Security Act (42 
     U.S.C. 401 et seq.) are increased for any fiscal year as a 
     result of a determination under section 215(i) of such Act 
     (42 U.S.C. 415(i)).''.
       (2) The table of sections at the beginning of such chapter 
     is amended by inserting after the item relating to section 
     1302 the following new item:

``1303. Cost-of-living adjustments.''.

     SEC. 11023. REVISED STANDARD FOR LIABILITY FOR INJURIES 
                   RESULTING FROM DEPARTMENT OF VETERANS AFFAIRS 
                   TREATMENT.

       (a) Revised Standard.--Section 1151 of title 38, United 
     States Code, is amended--
       (1) by designating the second sentence as subsection (c);
       (2) by striking out the first sentence and inserting in 
     lieu thereof the following:
       ``(a) Compensation under this chapter and dependency and 
     indemnity compensation under chapter 13 of this title shall 
     be awarded for a qualifying additional disability of a 
     veteran or the qualifying death of a veteran in the same 
     manner as if such disability or death were service-connected.
       ``(b)(1) For purposes of this section, a disability or 
     death is a qualifying additional disability or a qualifying 
     death only if the disability or death--
       ``(A) was caused by Department health care and was a 
     proximate result of--
       ``(i) negligence on the part of the Department in 
     furnishing the Department health care; or
       ``(ii) an event not reasonably foreseeable; or
       ``(B) was incurred as a proximate result of the provision 
     of training and rehabilitation services by the Secretary 
     (including by a service-provider used by the Secretary for 
     such purpose under section 3115 of this title) as part of an 
     approved rehabilitation program under chapter 31 of this 
     title.
       ``(2) For purposes of this section, the term `Department 
     health care' means hospital care, medical or surgical 
     treatment, or an examination that is furnished under any law 
     administered by the Secretary to a veteran by a Department 
     employee or in a Department facility (as defined in section 
     1701(3)(A) of this title).
       ``(3) A disability or death of a veteran which is the 
     result of the veteran's willful misconduct is not a 
     qualifying disability or death for purposes of this 
     section.''; and
       (3) by adding at the end the following:
       ``(d) Effective with respect to injuries, aggravations of 
     injuries, and deaths occurring after September 30, 2002, a 
     disability or death is a qualifying additional disability or 
     a qualifying death for purposes of this section 
     (notwithstanding the provisions of subsection (b)(1)) if the 
     disability or death--
       ``(1) was the result of Department health care; or
       ``(2) was the result of the pursuit of a course of 
     vocational rehabilitation under chapter 31 of this title.''.
       (b) Conforming Amendments.--Subsection (c) of such section, 
     as designated by subsection (a)(1), is amended--
       (1) by striking out ``, aggravation,'' both places it 
     appears; and
       (2) by striking out ``sentence'' and inserting in lieu 
     thereof ``subsection''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any administrative or judicial determination 
     of eligibility for benefits under section 1151 of title 38, 
     United States Code, based on a claim that is received by the 
     Secretary on or after October 1, 1995, including any such 
     determination based on an original application or an 
     application seeking to reopen, revise, reconsider, or 
     otherwise readjudicate any claim for benefits under section 
     1151 of that title or any predecessor provision of law.

     SEC. 11024. ENHANCED LOAN ASSET SALE AUTHORITY.

       Section 3720(h)(2) of title 38, United States Code, is 
     amended by striking out ``December 31, 1995'' and inserting 
     in lieu thereof ``September 30, 1996''.

     SEC. 11025. WITHHOLDING OF PAYMENTS AND BENEFITS.

       (a) Notice Required in Lieu of Consent or Court Order.--
     Section 3726 of title 38, United States Code, is amended by 
     striking out ``unless'' and all that follows and inserting in 
     lieu thereof the following: ``unless the Secretary provides 
     such veteran or surviving spouse with notice by certified 
     mail with return receipt requested of the authority of the 
     Secretary to waive the payment of indebtedness under section 
     5302(b) of this title. If the Secretary does not waive the 
     entire amount of the liability, the Secretary shall then 
     determine whether the veteran or surviving spouse should be 
     released from liability under section 3713(b) of this title. 
     If the Secretary determines that the veteran or surviving 
     spouse should not be released from liability, the Secretary 
     shall notify the veteran or surviving spouse of that 
     determination and provide a notice of the procedure for 
     appealing that determination, unless the Secretary has 
     previously made such determination and notified the veteran 
     or surviving spouse of the procedure for appealing the 
     determination.''.
       (b) Conforming Amendment.--Section 5302(b) of such title is 
     amended by inserting ``with return receipt requested'' after 
     ``certified mail''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to any indebtedness to the United 
     States arising pursuant to chapter 37 of title 38, United 
     States Code, before, on, or after the date of the enactment 
     of this Act.
               Subtitle C--Health Care Eligibility Reform

     SEC. 11031. HOSPITAL CARE AND MEDICAL SERVICES.

       (a) Eligibility for Care.--Section 1710(a) of title 38, 
     United States Code, is amended by striking out paragraphs (1) 
     and (2) and inserting the following:
       ``(a)(1) The Secretary shall, to the extent and in the 
     amount provided in advance in appropriations Acts for these 
     purposes, provide hospital care and medical services, and may 
     provide nursing home care, which the Secretary determines is 
     needed to any veteran--
       ``(A) with a compensable service-connected disability;
       ``(B) whose discharge or release from active military, 
     naval, or air service was for a compensable disability that 
     was incurred or aggravated in the line of duty;
       ``(C) who is in receipt of, or who, but for a suspension 
     pursuant to section 1151 of this title (or both a suspension 
     and the receipt of retired pay), would be entitled to 
     disability compensation, but only to the extent that such 
     veteran's continuing eligibility for such care is provided 
     for in the judgment or settlement provided for in such 
     section;
       ``(D) who is a former prisoner of war;
       ``(E) of the Mexican border period or of World War I;
       ``(F) who was exposed to a toxic substance, radiation, or 
     environmental hazard, as provided in subsection (e); and
       ``(G) who is unable to defray the expenses of necessary 
     care as determined under section 1722(a) of this title.
       ``(2) In the case of a veteran who is not described in 
     paragraph (1), the Secretary may, to the extent resources and 
     facilities are available and subject to the provisions of 
     subsection (f), furnish hospital care, medical services, and 
     nursing home care which the Secretary determines is 
     needed.''.
       (b) Conforming Amendments.--(1) Section 1710(e) of such 
     title is amended--
       (A) in paragraph (1), by striking out ``hospital care and 
     nursing home care'' in subparagraphs (A), (B), and (C) and 
     inserting in lieu thereof ``hospital care, medical services, 
     and nursing home care'';
       (B) in paragraph (2), by inserting ``and medical services'' 
     after ``Hospital and nursing home care''; and
       (C) by striking out ``subsection (a)(1)(G) of this 
     section'' each place it appears and inserting in lieu thereof 
     ``subsection (a)(1)(F)''.
       (2) Chapter 17 of such title is amended--
       (A) by redesignating subsection (g) of section 1710 as 
     subsection (h); and
       (B) by transferring subsection (f) of section 1712 of such 
     title to section 1710 so as to appear after subsection (f), 
     redesignating such subsection as subsection (g), and amending 
     such subsection by striking out ``section 1710(a)(2) of this 
     title'' in paragraph (1) and inserting in lieu thereof 
     ``subsection (a)(2) of this section''.

[[Page H11082]]

       (3) Section 1712 of such title is amended--
       (A) by striking out subsections (a) and (i); and
       (B) by redesignating subsections (b), (c), (d), (h) and 
     (j), as subsections (a), (b), (c), (d), and (e), 
     respectively.

     SEC. 11032. EXTENSION OF AUTHORITY TO PRIORITY HEALTH CARE 
                   FOR PERSIAN GULF VETERANS.

       Section 1710(e)(3) of title 38, United States Code, is 
     amended by striking out ``December 31, 1995'' and inserting 
     in lieu thereof ``December 31, 1998''.

     SEC. 11033. PROSTHETICS.

       (a) Eligibility for Prosthetics.--Section 1701(6)(A)(i) of 
     title 38, United States Code, is amended--
       (1) by striking out ``(in the case of a person otherwise 
     receiving care or services under this chapter)'' and 
     ``(except under the conditions described in section 
     1712(a)(5)(A) of this title),'';
       (2) by inserting ``(in the case of a person otherwise 
     receiving care or services under this chapter)'' before 
     ``wheelchairs,''; and
       (3) by inserting ``except that the Secretary may not 
     furnish sensori-neural aids other than in accordance with 
     guidelines which the Secretary shall prescribe,'' after 
     ``reasonable and necessary,''.
       (b) Regulations.--Not later than 30 days after the date of 
     the enactment of this Act, the Secretary of Veterans Affairs 
     shall prescribe the guidelines required by the amendments 
     made by subsection (a) and shall furnish a copy of those 
     guidelines to the Committees on Veterans' Affairs of the 
     Senate and House of Representatives.

     SEC. 11034. MANAGEMENT OF HEALTH CARE.

       (a) In General.--(1) Chapter 17 of title 38, United States 
     Code, is amended by inserting after section 1704 the 
     following new sections:

     ``Sec. 1705. Management of health care: patient enrollment 
       system

       ``(a) In managing the provision of hospital care and 
     medical services under section 1710(a)(1) of this title, the 
     Secretary, in accordance with regulations the Secretary shall 
     prescribe, shall establish and operate a system of annual 
     patient enrollment. The Secretary shall manage the enrollment 
     of veterans in accordance with the following priorities, in 
     the order listed:
       ``(1) Veterans with service-connected disabilities rated 30 
     percent or greater.
       ``(2) Veterans who are former prisoners of war and veterans 
     with service connected disabilities rated 10 percent or 20 
     percent.
       ``(3) Veterans who are in receipt of increased pension 
     based on a need of regular aid and attendance or by reason of 
     being permanently housebound and other veterans who are 
     catastrophically disabled.
       ``(4) Veterans not covered by paragraphs (1) through (3) 
     who are unable to defray the expenses of necessary care as 
     determined under section 1722(a) of this title.
       ``(5) All other veterans eligible for hospital care, 
     medical services, and nursing home care under section 
     1710(a)(1) of this title.
       ``(b) In the design of an enrollment system under 
     subsection (a), the Secretary--
       ``(1) shall ensure that the system will be managed in a 
     manner to ensure that the provision of care to enrollees is 
     timely and acceptable in quality;
       ``(2) may establish additional priorities within each 
     priority group specified in subsection (a), as the Secretary 
     determines necessary; and
       ``(3) may provide for exceptions to the specified 
     priorities where dictated by compelling medical reasons.

     ``Sec. 1706. Management of health care: other requirements

       ``(a) In managing the provision of hospital care and 
     medical services under section 1710(a) of this title, the 
     Secretary shall, to the extent feasible, design, establish 
     and manage health care programs in such a manner as to 
     promote cost-effective delivery of health care services in 
     the most clinically appropriate setting.
       ``(b) In managing the provision of hospital care and 
     medical services under section 1710(a) of this title, the 
     Secretary--
       ``(1) may contract for hospital care and medical services 
     when Department facilities are not capable of furnishing such 
     care and services economically, and
       ``(2) shall make such rules and regulations regarding 
     acquisition procedures or policies as the Secretary considers 
     appropriate to provide such needed care and services.
       ``(c) In managing the provision of hospital care and 
     medical services under section 1710(a) of this title, the 
     Secretary shall ensure that the Department maintains its 
     capacity to provide for the specialized treatment and 
     rehabilitative needs of disabled veterans described in 
     section 1710(a) of this title (including veterans with spinal 
     cord dysfunction, blindness, amputations, and mental illness) 
     within distinct programs or facilities of the Department that 
     are dedicated to the specialized needs of those veterans in a 
     manner that (1) affords those veterans reasonable access to 
     care and services for those specialized needs, and (2) 
     ensures that overall capacity of the Department to provide 
     such services is not reduced below the capacity of the 
     Department, nationwide, to provide those services, as of the 
     date of the enactment of this section.
       ``(d) In managing the provision of hospital care and 
     medical services under section 1710(a) of this title, the 
     Secretary shall ensure that any veteran with a service-
     connected disability is provided all benefits under this 
     chapter for which that veteran was eligible before the date 
     of the enactment of this section.''.
       (2) The table of sections at the beginning of chapter 17 of 
     such title is amended by inserting after the item relating to 
     section 1704 the following new items:

``1705. Management of health care: patient enrollment system.
``1706. Management of health care: other requirements.''.

       (b) Conforming Amendments to Section 1703.--(1) Section 
     1703 of such title is amended--
       (A) by striking out subsections (a) and (b); and
       (B) in subsection (c) by--
       (i) striking out ``(c)'', and
       (ii) striking out ``this section, sections'' and inserting 
     in lieu thereof ``sections 1710,''.
       (2)(A) The heading of such section is amended to read as 
     follows:

     ``Sec. 1703. Annual report on furnishing of care and services 
       by contract''.

       (B) The item relating to such section in the table of 
     sections at the beginning of chapter 17 of such title is 
     amended to read as follows:

``1703. Annual report on furnishing of care and services by 
              contract.''.

     SEC. 11035. IMPROVED EFFICIENCY IN HEALTH CARE RESOURCE 
                   MANAGEMENT.

       (a) Repeal of Sunset Provision.--Section 204 of the 
     Veterans Health Care Act of 1992 (Public Law 102-585; 106 
     Stat. 4950) is repealed.
       (b) Cost Recovery.--Title II of such Act is further amended 
     by adding at the end the following new section:

     ``SEC. 207. AUTHORITY TO BILL HEALTH-PLAN CONTRACTS.

       ``(a) Right To Recover.--In the case of a primary 
     beneficiary (as described in section 201(2)(B)) who has 
     coverage under a health-plan contract, as defined in section 
     1729(i)(1)(A) of title 38, United States Code, and who is 
     furnished care or services by a Department medical facility 
     pursuant to this title, the United States shall have the 
     right to recover or collect charges for such care or services 
     from such health-plan contract to the extent that the 
     beneficiary (or the provider of the care or services) would 
     be eligible to receive payment for such care or services from 
     such health-plan contract if the care or services had not 
     been furnished by a department or agency of the United 
     States. Any funds received from such health-plan contract 
     shall be credited to funds that have been allotted to the 
     facility that furnished the care or services.
       ``(b) Enforcement.--The right of the United States to 
     recover under such a beneficiary's health-plan contract shall 
     be enforceable in the same manner as that provided by 
     subsections (a)(3), (b), (c)(1), (d), (f), (h), and (i) of 
     section 1729 of title 38, United States Code.''.

     SEC. 11036. SHARING AGREEMENTS FOR SPECIALIZED MEDICAL 
                   RESOURCES.

       (a) Repeal of Section 8151.--(1) Subchapter IV of chapter 
     81 of title 38, United States Code, is amended--
       (A) by striking out section 8151; and
       (B) by redesignating sections 8152, 8153, 8154, 8155, 8156, 
     8157, and 8158 as sections 8151, 8152, 8153, 8154, 8155, 
     8156, and 8157, respectively.
       (2) The table of sections at the beginning of chapter 81 is 
     amended--
       (A) by striking out the item relating to section 8151; and
       (B) by revising the items relating to sections 8152, 8153, 
     8154, 8155, 8156, 8157, and 8158 to reflect the 
     redesignations by paragraph (1)(B).
       (b) Revised Authority for Sharing Agreements.--Section 8152 
     of such title, as redesignated by subsection (a)(1)(B), is 
     amended--
       (1) in subsection (a)(1)(A)--
       (A) by striking out ``specialized medical resources'' and 
     inserting in lieu thereof ``health-care resources''; and
       (B) by striking out ``other'' and all that follows through 
     ``medical schools'' and inserting in lieu thereof ``any 
     medical school, health-care provider, health-care plan, 
     insurer, or other entity or individual'';
       (2) in subsection (a)(2) by striking out ``only'' and all 
     that follows through ``are not'' and inserting in lieu 
     thereof ``if such resources are not, or would not be,'';
       (3) in subsection (b), by striking out ``reciprocal 
     reimbursement'' in the first sentence and all that follows 
     through the period at the end of that sentence and inserting 
     in lieu thereof ``payment to the Department in accordance 
     with procedures that provide appropriate flexibility to 
     negotiate payment which is in the best interest of the 
     Government.'';
       (4) in subsection (d), by striking out ``preclude such 
     payment, in accordance with--'' and all that follows through 
     ``to such facility therefor'' and inserting in lieu thereof 
     ``preclude such payment to such facility for such care or 
     services'';
       (5) by redesignating subsection (e) as subsection (f); and
       (6) by inserting after subsection (d) the following new 
     subsection (e):
       ``(e) The Secretary may make an arrangement that authorizes 
     the furnishing of services by the Secretary under this 
     section to individuals who are not veterans only if the 
     Secretary determines--
       ``(1) that such an arrangement will not result in the 
     denial of, or a delay in providing access to, care to any 
     veteran at that facility; and
       ``(2) that such an arrangement--

[[Page H11083]]

       ``(A) is necessary to maintain an acceptable level and 
     quality of service to veterans at that facility; or
       ``(B) will result in the improvement of services to 
     eligible veterans at that facility.''.
       (c) Cross-Reference Amendments.--(1) Section 8110(c)(3)(A) 
     of such title is amended by striking out ``8153'' and 
     inserting in lieu thereof ``8152''.
       (2) Subsection (b) of section 8154 of such title (as 
     redesignated by subsection (a)(1)(B)) is amended by striking 
     out ``section 8154'' and inserting in lieu thereof ``section 
     8153''.
       (3) Section 8156 of such title (as redesignated by 
     subsection (a)(1)(B)) is amended--
       (A) in subsection (a), by striking out ``section 8153(a)'' 
     and inserting in lieu thereof ``section 8152(a)''; and
       (B) in subsection (b)(3), by striking out ``section 8153'' 
     and inserting in lieu thereof ``section 8152''.
       (4) Subsection (a) of section 8157 of such title (as 
     redesignated by subsection (a)(1)(B)) is amended--
       (A) in the matter preceding paragraph (1), by striking out 
     ``section 8157'' and ``section 8153(a)'' and inserting in 
     lieu thereof ``section 8156'' and ``section 8152(a)'', 
     respectively; and
       (B) in paragraph (1), by striking out ``section 
     8157(b)(4)'' and inserting in lieu thereof ``section 
     8156(b)(4)''.

     SEC. 11037. PERSONNEL FURNISHING SHARED RESOURCES.

       Section 712(b)(2) of title 38, United States Code, is 
     amended--
       (1) by striking out ``the sum of--'' and inserting in lieu 
     thereof ``the sum of the following:'';
       (2) by capitalizing the first letter of the first word of 
     each of subparagraphs (A) and (B);
       (3) by striking out ``; and'' at the end of subparagraph 
     (A) and inserting in lieu thereof a period; and
       (4) by adding at the end the following:
       ``(C) The number of such positions in the Department during 
     that fiscal year held by persons involved in providing 
     health-care resources under section 8111 or 8152 of this 
     title.''.
                            TITLE XII--TRADE
  Subtitle A--Technical Corrections and Miscellaneous Trade Provisions

     SEC. 12001. PAYMENT OF DUTIES AND FEES.

       (a) Interest Accrual.--Section 505(c) of the Tariff Act of 
     1930 (19 U.S.C. 1505(c)) is amended in the second sentence by 
     inserting after ``duties, fees, and interest'' the following: 
     ``or, in a case in which a claim is made under section 
     520(d), from the date on which such claim is made,''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to claims made pursuant to section 520(d) of the 
     Tariff Act of 1930 on or after April 25, 1995.

     SEC. 12002. OTHER TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Examination of Books and Witnesses.--Section 509(a)(2) 
     of the Tariff Act of 1930 (19 U.S.C. 1509(a)(2)) is amended 
     by striking ``(c)(1)(A)'' and inserting ``(d)(1)(A)''.
       (b) Requirement for Certificate for Importation of 
     Alcoholic Liquors in Small Vessels.--Section 7 of the Act of 
     August 5, 1935 (19 U.S.C. 1707; 49 Stat. 520), is repealed.
       (c) Manifests.--Section 431(c)(1) of the Tariff Act of 1930 
     (19 U.S.C. 1431(c)(1)) is amended in the matter preceding 
     subparagraph (A) by striking ``such manifest'' and inserting 
     ``a vessel manifest''.
       (d) Documentation for Entry of Merchandise.--Section 
     484(a)(1) of the Tariff Act of 1930 (19 U.S.C. 1484(a)(1)) is 
     amended in the matter preceding subparagraph (A) by striking 
     ``553, and 336(j)'' and inserting ``and 553''.
       (e) Penalties for Certain Violations.--Section 592 of the 
     Tariff Act of 1930 (19 U.S.C. 1592) is amended--
       (1) in subsection (a)(1), by striking ``lawful duty'' and 
     inserting ``lawful duty, tax, or fee''; and
       (2) in subsections (b)(1)(A)(vi), (c)(2)(A)(ii), 
     (c)(3)(A)(ii), (c)(4)(A)(i), and (c)(4)(B) by striking 
     ``lawful duties'' each place it appears and inserting 
     ``lawful duties, taxes, and fees''.
       (f) Deprivation of Lawful Duties, Taxes, or Fees.--Section 
     592(d) of the Tariff Act of 1930 (19 U.S.C. 1592(d)) is 
     amended by striking ``or fees be restored'' and inserting 
     ``and fees be restored''.
       (g) Reconciliation Treated as Entry for Recordkeeping.--
       (1) Section 401(s) of the Tariff Act of 1930 (19 U.S.C. 
     1401(s)) is amended by inserting ``recordkeeping,'' after 
     ``reliquidation,''.
       (2) Section 508(c)(1) of such Act (19 U.S.C. 1508(c)(1)) is 
     amended by inserting ``, filing of a reconciliation,'' after 
     ``entry''.
       (h) Extension of Liquidation.--Section 504(d) of the Tariff 
     Act of 1930 (19 U.S.C. 1504(d)) is amended by inserting ``, 
     unless liquidation is extended under subsection (b),'' after 
     ``shall liquidate the entry''.
       (i) Exemption From Duty for Personal and Household Goods 
     Accompanying Returning Residents.--Section 321(a)(2)(B) of 
     the Tariff Act of 1930 (19 U.S.C. 1321(a)(2)(B)) is amended 
     by inserting ``, 9804.00.65,'' after ``9804.00.30''.
       (j) Debt Collection.--Section 631(a) of the Tariff Act of 
     1930 (19 U.S.C. 1631(a)) is amended--
       (1) by inserting after ``law,'' the following: ``including 
     section 3302 of title 31, United States Code, and subchapters 
     I and II of chapter 37 of such title,''; and
       (2) by inserting ``and the expenses associated with 
     recovering such indebtedness,'' after ``Government,''.
       (k) Examination of Books and Witnesses.--Section 509(b) of 
     the Tariff Act of 1930 (19 U.S.C. 1509(b)) is amended in 
     paragraphs (3) and (4) by striking ``appropriate regional 
     commissioner'' and inserting ``officer designated pursuant to 
     regulations''.
       (l) Review of Protests.--Section 515(d) of the Tariff Act 
     of 1930 (19 U.S.C. 1515(d)) is amended by striking ``district 
     director'' and inserting ``port director''.
       (m) Effective Date.--The amendments made by this section 
     apply as of December 8, 1993.

     SEC. 12003. CLARIFICATION REGARDING THE APPLICATION OF 
                   CUSTOMS USER FEES.

       (a) In General.--Subparagraph (D) of section 13031(b)(8) of 
     the Consolidated Omnibus Budget Reconciliation Act of 1985 
     (19 U.S.C. 58c(b)(8)(D)) is amended--
       (1) in clause (iv)--
       (A) by striking ``subparagraph 9802.00.80 of such 
     Schedules'' and inserting ``heading 9802.00.80 of such 
     Schedule''; and
       (B) by striking ``and'' at the end of clause (iv);
       (2) by striking the period at the end of clause (v) and 
     inserting ``; and''; and
       (3) by inserting after clause (v) the following new clause:
       ``(vi) in the case of merchandise entered from a foreign 
     trade zone (other than merchandise to which clause (v) 
     applies), be applied only to the value of the privileged or 
     nonprivileged foreign status merchandise under section 3 of 
     the Act of June 18, 1934 (commonly known as the Foreign Trade 
     Zones Act, 19 U.S.C. 81c).''.
       (b) Effective Date.--The amendments made by subsection (a) 
     apply to--
       (1) any entry made from a foreign trade zone on or after 
     the 15th day after the date of the enactment of this Act; and
       (2) any entry made from a foreign trade zone after November 
     30, 1986, and before such 15th day if liquidation of the 
     entry was not final before such 15th day.
       (c) Application of Fees to Certain Agricultural Products.--
     The amendment made by section 111(b)(2)(D)(iv) of the Customs 
     and Trade Act of 1990 shall apply to--
       (1) any entry made from a foreign trade zone on or after 
     the 15th day after the date of the enactment of this Act; and
       (2) any entry made from a foreign trade zone after November 
     30, 1986, and before such 15th day if the liquidation of the 
     entry was not final before such 15th day.

     SEC. 12004. TECHNICAL AMENDMENT TO THE CUSTOMS AND TRADE ACT 
                   OF 1990.

       Subsection (b) of section 484H of the Customs and Trade Act 
     of 1990 (19 U.S.C. 1553 note) is amended by striking ``, or 
     withdrawn from warehouse for consumption,'' and inserting 
     ``for transportation in bond''.

     SEC. 12005. TECHNICAL AMENDMENTS REGARDING CERTAIN 
                   BENEFICIARY COUNTRIES.

       (a) Caribbean Basin Economic Recovery Act.--Section 
     213(h)(1) of the Caribbean Basin Economic Recovery Act (19 
     U.S.C. 2703(h)(1)) is amended by adding at the end thereof 
     the following flush sentence:
     ``The duty reductions provided for under this paragraph shall 
     not apply to textile and apparel articles which are subject 
     to textile agreements.''.
       (b) Andean Trade Preference Act.--Section 204(c)(1) of the 
     Andean Trade Preference Act (19 U.S.C. 3203(c)(1)) is amended 
     by adding at the end thereof the following flush sentence:
     ``The duty reductions provided for under this paragraph shall 
     not apply to textile and apparel articles which are subject 
     to textile agreements.''.
       (c) Effective Date.--The amendments made by this section 
     apply with respect to--
       (1) articles entered, or withdrawn from warehouse for 
     consumption, on or after the 15th day after the date of the 
     enactment of this Act, and
       (2) articles entered after December 31, 1991, and before 
     such 15th day, if the liquidation of the entry of such 
     articles was not final before such 15th day.

     SEC. 12006. CLARIFICATION OF FEES FOR CERTAIN CUSTOMS 
                   SERVICES.

       (a) In General.--Section 13031(b)(9)(A) of the Consolidated 
     Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 
     58c(b)(9)(A)) is amended--
       (1) by striking ``centralized hub facility or'' in clause 
     (i); and
       (2) in clause (ii)--
       (A) by striking ``facility--'' and inserting ``facility or 
     centralized hub facility--'',
       (B) by striking ``customs inspectional'' in subclause (I), 
     and
       (C) by striking ``at the facility'' in subclause (I) and 
     inserting ``for the facility''.
       (b) Definitions.--Section 13031(b)(9)(B)(i) of the 
     Consolidated Omnibus Budget Reconciliation Act of 1985 (19 
     U.S.C. 58c(b)(9)(B)(i)) is amended--
       (1) by striking ``, as in effect on July 30, 1990'', and
       (2) by adding at the end thereof the following new 
     sentence: ``Nothing in this paragraph shall be construed as 
     prohibiting the Secretary of the Treasury from processing 
     merchandise that is informally entered or released at any 
     centralized hub facility or express consignment carrier 
     facility during the normal operating hours of the Customs 
     Service, subject to reimbursement and payment under 
     subparagraph (A).''.
       (c) Citation.--Section 13031(b)(9)(B)(ii) of the 
     Consolidated Omnibus Budget Reconciliation Act of 1985 (19 
     U.S.C. 58c(b)(9)(B)(ii)) is amended by striking ``section 236 
     of the Tariff and Trade Act of 1984'' and inserting ``section 
     236 of the Trade and Tariff Act of 1984''.

[[Page H11084]]


     SEC. 12007. SPECIAL RULE FOR EXTENDING TIME FOR FILING 
                   DRAWBACK CLAIMS.

       Section 313(r) of the Tariff Act of 1930 (19 U.S.C. 
     1313(r)) is amended by adding at the end the following:
       ``(3)(A)(i) Subject to clause (ii), the Customs Service 
     may, notwithstanding the limitation set forth in paragraph 
     (1), extend the time for filing a drawback claim for a period 
     not to exceed 18 months, if--
       ``(I) the claimant establishes to the satisfaction of the 
     Customs Service that the claimant was unable to file the 
     drawback claim because of an event declared by the President 
     to be a major disaster on or after January 1, 1994; and
       ``(II) the claimant files a request for such extension with 
     the Customs Service within one year from the last day of the 
     3-year period referred to in paragraph (1).
       ``(ii) In the case of a major disaster occurring on or 
     after January 1, 1994, and before the date of the enactment 
     of this paragraph--
       ``(I) the Customs Service may extend the time for filing 
     the drawback claim for a period not to exceed 1 year; and
       ``(II) the request under clause (i)(II) must be filed not 
     later than 1 year from the date of the enactment of this 
     paragraph.
       ``(B) If an extension is granted with respect to a request 
     filed under this paragraph, the periods of time for retaining 
     records set forth in subsection (t) of this section and 
     section 508(c)(3) shall be extended for an additional 18 
     months or, in a case to which subparagraph (A)(ii) applies, 
     for a period not to exceed 1 year from the date the claim is 
     filed.
       ``(C) For purposes of this paragraph, the term `major 
     disaster' has the meaning given that term in section 102(2) 
     of the Robert T. Stafford Disaster Relief and Emergency 
     Assistance Act (42 U.S.C. 5122(2)).''.

     SEC. 12008. TREATMENT OF CERTAIN ENTRIES.

       (a) Liquidation or Reliquidation of Entries.--
     Notwithstanding sections 514 and 520 of the Tariff Act of 
     1930 (19 U.S.C. 1514 and 1520), and any other provision of 
     law, the United States Customs Service shall liquidate or 
     reliquidate those entry numbers made at New York, New York, 
     which are listed in subsection (c), in accordance with the 
     final results of the administrative review, covering the 
     period from May 1, 1984, through March 31, 1985, undertaken 
     by the International Trade Administration of the Department 
     of Commerce for such entries (case number A-580-008).
       (b) Payment of Amounts Owed.--Any amounts owed by the 
     United States pursuant to the liquidation or reliquidation of 
     an entry under subsection (a) shall be paid by the Customs 
     Service within 90 days after such liquidation or 
     reliquidation.
       (c) Entry List.--The entries referred to in subsection (a) 
     are the following:


                                                                        
            Entry Number                         Date of Entry          
                                                                        
84-4426808..........................  August 29, 1984                   
84-4427823..........................  September 4, 1984                 
84-4077985..........................  July 25, 1984                     
84-4080859..........................  August 3, 1984                    
84-4080817..........................  August 3, 1984                    
84-4077723..........................  August 1, 1984                    
84-4075194..........................  July 10, 1984                     
84-4076481..........................  July 17, 1984                     
84-4080930..........................  August 9, 1984.                   
                                                                        

     SEC. 12009. TEMPORARY DUTY SUSPENSION FOR PERSONAL EFFECTS OF 
                   PARTICIPANTS IN CERTAIN WORLD ATHLETIC EVENTS.

       (a) In General.--Subchapter II of chapter 99 of the 
     Harmonized Tariff Schedule of the United States is amended by 
     inserting in numerical sequence the following new heading:

``9902.98.0  Any of the                                                 
 5.           following articles                                        
              not intended for                                          
              sale or                                                   
              distribution to                                           
              the public:                                               
              personal effects                                          
              of aliens who are                                         
              participants in,                                          
              officials of, or                                          
              accredited members                                        
              of delegations to,                                        
              the 1998 Goodwill                                         
              Games, and of                                             
              persons who are                                           
              immediate family                                          
              members of or                                             
              servants to any of                                        
              the foregoing                                             
              persons; equipment                                        
              and materials                                             
              imported in                                               
              connection with                                           
              the foregoing                                             
              event by or on                                            
              behalf of the                                             
              foregoing persons                                         
              or the organizing                                         
              committee of such                                         
              event; articles to                                        
              be used in                                                
              exhibitions                                               
              depicting the                                             
              culture of a                                              
              country                                                   
              participating in                                          
              such event; and,                                          
              if consistent with                                        
              the foregoing,                                            
              such other                                                
              articles as the                                           
              Secretary of the                                          
              Treasury may allow  Free    No                            
                                           change   Free      On or     
                                                               before 2/
                                                               1/99''.  
                                                                        

       (b) Taxes and Fees Not To Apply.--The articles described in 
     heading 9902.98.05 of the Harmonized Tariff Schedule of the 
     United States (as added by subsection (a)) shall be free of 
     taxes and fees which may be otherwise applicable.
       (c) Effective Date.--The amendment made by this section 
     applies to articles entered, or withdrawn from warehouse for 
     consumption, on or after the 15th day after the date of the 
     enactment of this Act.

     SEC. 12010. MISCELLANEOUS TECHNICAL CORRECTIONS.

       (a) Drawback and Refunds.--Section 313(s)(2)(B) of the 
     Tariff Act of 1930 (19 U.S.C. 1313(s)(2)(B)) is amended by 
     striking ``successor'' the first place it appears and 
     inserting ``predecessor''.
       (b) Trade Act of 1974.--Section 301(c)(4) of the Trade Act 
     of 1974 (19 U.S.C. 2411(c)(4)) is amended by striking 
     ``(1)(C)(iii)'' and inserting ``(1)(D)(iii)''.

     SEC. 12011. URUGUAY ROUND AGREEMENTS ACT.

       Section 405(b) of the Uruguay Round Agreements Act (19 
     U.S.C. 3602(b)) is amended--
       (1) in paragraph (1) by striking ``1(a)'' and inserting 
     ``1(b)''; and
       (2) in paragraph (2) by striking ``1(b)'' and inserting 
     ``1(a)''.

     SEC. 12012. FILING OF CERTIFICATIONS FOR CIVIL AIRCRAFT 
                   PARTS.

       General Note 6 of the Harmonized Tariff Schedule of the 
     United States is amended--
       (1) by inserting ``or electronic'' after ``shall file a 
     written''; and
       (2) by striking ``with the appropriate customs officer'' 
     and inserting ``with the United States Customs Service''.

     SEC. 12013. EXEMPTION REGARDING CERTAIN VESSEL REPAIRS.

       (a) Temporary Exemption Extended.--Section 484E(b)(2)(B) of 
     the Customs and Trade Act of 1990 (19 U.S.C. 1466 note) is 
     amended by striking ``December 31, 1992'' and inserting 
     ``December 31, 1994''.
       (b) Effective Date.--The amendment made by this section 
     applies to any entry made after December 31, 1992, and before 
     January 1, 1995.

     SEC. 12014. FEES FOR CERTAIN CUSTOMS SERVICES.

       (a) In General.--Section 13031(a)(5) of the Consolidated 
     Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 
     58c(a)(5)) is amended--
       (1) in subparagraph (A), by inserting ``a place'' after 
     ``aircraft from''; and
       (2) in subparagraph (B), by striking ``subsection 
     (b)(1)(A)'' and inserting ``subsection (b)(1)(A)(i)''.
       (b) Limitation on Fees.--Section 13031(b)(1) of the 
     Consolidated Omnibus Budget Reconciliation Act of 1985 (19 
     U.S.C. 58c(b)(1)) is amended to read as follows:
       ``(b) Limitations on Fees.--(1)(A) No fee may be charged 
     under subsection (a) of this section for customs services 
     provided in connection with--
       ``(i) the arrival of any passenger whose journey--
       ``(I) originated in--
       ``(aa) Canada,
       ``(bb) Mexico,
       ``(cc) a territory or possession of the United States, or
       ``(dd) any adjacent island (within the meaning of section 
     101(b)(5) of the Immigration and Nationality Act (8 U.S.C. 
     1101(b)(5))), or
       ``(II) originated in the United States and was limited to--
       ``(aa) Canada,
       ``(bb) Mexico,
       ``(cc) territories and possessions of the United States, 
     and
       ``(dd) such adjacent islands;
       ``(ii) the arrival of any railroad car the journey of which 
     originates and terminates in the same country, but only if no 
     passengers board or disembark from the train and no cargo is 
     loaded or unloaded from such car while the car is within any 
     country other than the country in which such car originates 
     and terminates;
       ``(iii) the arrival of any ferry; or
       ``(iv) the arrival of any passenger on board a commercial 
     vessel traveling only between ports which are within the 
     customs territory of the United States.
       ``(B) The exemption provided for in subparagraph (A) shall 
     not apply in the case of the arrival of any passenger on 
     board a commercial vessel whose journey originates and 
     terminates at the same place in the United States if there 
     are no intervening stops.
       ``(C) The exemption provided for in subparagraph (A)(i) 
     shall not apply to fiscal years 1994, 1995, 1996, and 
     1997.''.
       (c) Fee Assessed Only Once.--Section 13031(b)(4) of the 
     Consolidated Omnibus Budget Reconciliation Act of 1985 (19 
     U.S.C. 58c(b)(4)) is amended--
       (1) by redesignating subparagraphs (A) and (B) as clauses 
     (i) and (ii), respectively;
       (2) by striking ``No fee'' and inserting ``(A) No fee''; 
     and
       (3) by adding at the end the following new subparagraph:
       ``(B) In the case of a commercial vessel making a single 
     voyage involving 2 or more United States ports with respect 
     to which the passengers would otherwise be charged a fee 
     pursuant to subsection (a)(5), such fee shall be charged only 
     1 time for each passenger.''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect as if included in the amendments made by 
     section 521 of the North American Free Trade Agreement 
     Implementation Act.

     SEC. 12015. TECHNICAL CORRECTION TO CERTAIN CHEMICAL 
                   DESCRIPTION.

       (a) Amendment to Subheading 2933.90.02.--The article 
     description for subheading 2933.90.02 of the Harmonized 
     Tariff Schedule of the United States is amended by striking 
     ``(Quizalofop ethyl)''.
       (b) Effective Date.--
       (1) General rule.--The amendment made by this section 
     applies to articles entered, or withdrawn from warehouse for 
     consumption, on or after the 15th day after the date of the 
     enactment of this Act.
       (2) Retroactive provision.--Notwithstanding section 514 of 
     the Tariff Act of 1930 or any other provision of law, upon 
     proper request (which includes sufficient information to 
     identify and locate the entry) filed with 

[[Page H11085]]

     the Customs Service on or before the date that is 180 days 
     after the date of the enactment of this Act, any entry, or 
     withdrawal from warehouse for consumption, of an article that 
     occurred--
       (A) after December 31, 1994, and before the date that is 15 
     days after the date of the enactment of this Act, and
       (B) with respect to which there would have been no duty or 
     a lesser duty if the amendment made by subsection (a) applied 
     to such entry or withdrawal,
     shall be liquidated or reliquidated as though such amendment 
     applied to such entry or withdrawal.

     SEC. 12016. MARKING OF IMPORTED ARTICLES AND CONTAINERS.

       (a) In General.--Section 304 of the Tariff Act of 1930 (19 
     U.S.C.1304) is amended--
       (1) by redesignating subsections (f), (g), (h), and (i) as 
     subsections (i), (j), (k), and (l), respectively, and
       (2) by inserting after subsection (e) the following new 
     subsections:
       ``(f) Marking of Metal Forgings.--The marking requirements 
     of subsections (a) and (b) shall not apply to--
       ``(1) metal forgings that--
       ``(A) are imported for processing into finished hand tools 
     in the United States, and
       ``(B) have not been improved in condition beyond rough 
     burring, trimming, grinding, turning, hammering, chiseling, 
     or filing; and
       ``(2) hand tools made from metal forgings described in 
     paragraph (1).
       ``(g) Marking of Certain Coffee and Tea Products.--The 
     marking requirements of subsections (a) and (b) shall not 
     apply to articles described in subheading 0901.21, 0901.22, 
     0902.10, 0902.20, 0902.30, 0902.40, 2101.10, or 2101.20 of 
     the Harmonized Tariff Schedule of the United States, as in 
     effect on January 1, 1995.
       ``(h) Marking of Spices.--The marking requirements of 
     subsections (a) and (b) shall not apply to articles provided 
     for under subheadings 0904.11, 0904.12, 0904.20, 0905.00, 
     0906.10, 0906.20, 0907.00, 0908.10, 0908.20, 0908.30, 
     0909.10, 0909.20, 0909.30, 0909.40, 0909.50, 0910.10, 
     0910.20, 0910.30, 0910.40, 0910.50, 0910.91, 0910.99, 
     1106.20, 1207.40, 1207.50, 1207.91, 1404.90, and 3302.10, and 
     items classifiable in categories 0712.90.60, 0712.90.8080, 
     1209.91.2000, 1211.90.2000, 1211.90.8040, 1211.90.8050, 
     1211.90.8090, 2006.00.3000, 2918.13.2000, 3203.00.8000, 
     3301.90.1010, 3301.90.1020, and 3301.90.1050 of the 
     Harmonized Tariff Schedule of the United States, as in effect 
     on January 1, 1995.''.
       (b) Effective Date.--The amendments made by this section 
     apply to goods entered, or withdrawn from warehouse for 
     consumption, on or after the date of the enactment of this 
     Act.

     SEC. 12017. RELIQUIDATING ENTRY OF WARP KNITTING MACHINES.

       Notwithstanding section 514 of the Tariff Act of 1930 (19 
     U.S.C. 1514) or any other provision of law, upon proper 
     request filed with the Customs Service before the 180th day 
     after the date of the enactment of this Act, the Secretary of 
     the Treasury shall--
       (1) liquidate or reliquidate as duty free Entry No. 100-
     3022436-3, made on July 12, 1989, at the port of Charleston, 
     South Carolina; and
       (2) refund any duties and interest paid with respect to 
     such entry.

     SEC. 12018. IDENTIFICATION OF TRADE EXPANSION PRIORITIES.

       Section 310(a)(1) of the Trade Act of 1974 (19 U.S.C. 
     2420(a)(1)) is amended by striking ``calendar year 1995'' and 
     inserting ``each of calendar years 1995 through 2000''.
             Subtitle B--Generalized System of Preferences

     SEC. 12101. SHORT TITLE.

       This subtitle may be cited as the ``GSP Renewal Act of 
     1995''.

     SEC. 12102. GENERALIZED SYSTEM OF PREFERENCES.

       (a) In General.--Title V of the Trade Act of 1974 is 
     amended to read as follows:
              ``TITLE V--GENERALIZED SYSTEM OF PREFERENCES

     ``SEC. 501. AUTHORITY TO EXTEND PREFERENCES.

       ``The President may provide duty-free treatment for any 
     eligible article from any beneficiary developing country in 
     accordance with the provisions of this title. In taking any 
     such action, the President shall have due regard for--
       ``(1) the effect such action will have on furthering the 
     economic development of developing countries through the 
     expansion of their exports;
       ``(2) the extent to which other major developed countries 
     are undertaking a comparable effort to assist developing 
     countries by granting generalized preferences with respect to 
     imports of products of such countries;
       ``(3) the anticipated impact of such action on United 
     States producers of like or directly competitive products; 
     and
       ``(4) the extent of the beneficiary developing country's 
     competitiveness with respect to eligible articles.

     ``SEC. 502. DESIGNATION OF BENEFICIARY DEVELOPING COUNTRIES.

       ``(a) Authority To Designate Countries.--
       ``(1) Beneficiary developing countries.--The President is 
     authorized to designate countries as beneficiary developing 
     countries for purposes of this title.
       ``(2) Least-developed beneficiary developing countries.--
     The President is authorized to designate any beneficiary 
     developing country as a least-developed beneficiary 
     developing country for purposes of this title, based on the 
     considerations in section 501 and subsection (c) of this 
     section.
       ``(b) Countries Ineligible for Country Designation.--
       ``(1) Specific countries.--The following countries may not 
     be designated as beneficiary developing countries for 
     purposes of this title:
       ``(A) Australia.
       ``(B) Canada.
       ``(C) European Union member states.
       ``(D) Iceland.
       ``(E) Japan.
       ``(F) Monaco.
       ``(G) New Zealand.
       ``(H) Norway.
       ``(I) Switzerland.
       ``(2) Other bases for ineligibility.--The President shall 
     not designate any country a beneficiary developing country 
     under this title if any of the following applies:
       ``(A) Such country is a Communist country, unless--
       ``(i) the products of such country receive 
     nondiscriminatory treatment,
       ``(ii) such country is a WTO Member (as such term is 
     defined in section 2 of the Uruguay Round Agreements Act,) 
     and a member of the International Monetary Fund, and
       ``(iii) such country is not dominated or controlled by 
     international communism.
       ``(B) Such country is a party to an arrangement of 
     countries and participates in any action pursuant to such 
     arrangement, the effect of which is--
       ``(i) to withhold supplies of vital commodity resources 
     from international trade or to raise the price of such 
     commodities to an unreasonable level, and
       ``(ii) to cause serious disruption of the world economy.
       ``(C) Such country affords preferential treatment to the 
     products of a developed country, other than the United 
     States, which has, or is likely to have, a significant 
     adverse effect on United States commerce.
       ``(D)(i) Such country--
       ``(I) has nationalized, expropriated, or otherwise seized 
     ownership or control of property, including patents, 
     trademarks, or copyrights, owned by a United States citizen 
     or by a corporation, partnership, or association which is 50 
     percent or more beneficially owned by United States citizens,
       ``(II) has taken steps to repudiate or nullify an existing 
     contract or agreement with a United States citizen or a 
     corporation, partnership, or association which is 50 percent 
     or more beneficially owned by United States citizens, the 
     effect of which is to nationalize, expropriate, or otherwise 
     seize ownership or control of property, including patents, 
     trademarks, or copyrights, so owned, or
       ``(III) has imposed or enforced taxes or other exactions, 
     restrictive maintenance or operational conditions, or other 
     measures with respect to property, including patents, 
     trademarks, or copyrights, so owned, the effect of which 
     is to nationalize, expropriate, or otherwise seize 
     ownership or control of such property,
     unless clause (ii) applies.
       ``(ii) This clause applies if the President determines 
     that--
       ``(I) prompt, adequate, and effective compensation has been 
     or is being made to the citizen, corporation, partnership, or 
     association referred to in clause (i),
       ``(II) good faith negotiations to provide prompt, adequate, 
     and effective compensation under the applicable provisions of 
     international law are in progress, or the country described 
     in clause (i) is otherwise taking steps to discharge its 
     obligations under international law with respect to such 
     citizen, corporation, partnership, or association, or
       ``(III) a dispute involving such citizen, corporation, 
     partnership, or association over compensation for such a 
     seizure has been submitted to arbitration under the 
     provisions of the Convention for the Settlement of Investment 
     Disputes, or in another mutually agreed upon forum,

     and the President promptly furnishes a copy of such 
     determination to the Senate and House of Representatives.
       ``(E) Such country fails to act in good faith in 
     recognizing as binding or in enforcing arbitral awards in 
     favor of United States citizens or a corporation, 
     partnership, or association which is 50 percent or more 
     beneficially owned by United States citizens, which have been 
     made by arbitrators appointed for each case or by permanent 
     arbitral bodies to which the parties involved have submitted 
     their dispute.
       ``(F) Such country aids or abets, by granting sanctuary 
     from prosecution to, any individual or group which has 
     committed an act of international terrorism.
       ``(G) Such country has not taken or is not taking steps to 
     afford internationally recognized worker rights to workers in 
     the country (including any designated zone in that country).

     Subparagraphs (D), (E), (F), and (G) shall not prevent the 
     designation of any country as a beneficiary developing 
     country under this title if the President determines that 
     such designation will be in the national economic interest of 
     the United States and reports such determination to the 
     Congress with the reasons therefor.
       ``(c) Factors Affecting Country Designation.--In 
     determining whether to designate any country as a beneficiary 
     developing country under this title, the President shall take 
     into account--
       ``(1) an expression by such country of its desire to be so 
     designated;

[[Page H11086]]

       ``(2) the level of economic development of such country, 
     including its per capita gross national product, the living 
     standards of its inhabitants, and any other economic factors 
     which the President deems appropriate;
       ``(3) the extent to which other major developed countries 
     are extending generalized preferential tariff treatment to 
     such country;
       ``(4) the extent to which such country has assured the 
     United States that it will provide equitable and reasonable 
     access to the markets and basic commodity resources of such 
     country and the extent to which such country has assured the 
     United States that it will refrain from engaging in 
     unreasonable export practices;
       ``(5) whether such country is providing adequate and 
     effective protection of intellectual property rights;
       ``(6) the extent to which such country has taken action 
     to--
       ``(A) reduce trade distorting investment practices and 
     policies (including export performance requirements); and
       ``(B) reduce or eliminate barriers to trade in services;
       ``(7) whether or not such country has taken or is taking 
     steps to afford to workers in that country (including any 
     designated zone in that country) internationally recognized 
     worker rights; and
       ``(8) the extent to which such country fails to cooperate 
     with the United States in preventing the proliferation of 
     nuclear weapons, nuclear weapons components, and nuclear 
     weapons delivery systems, or in preventing illegal drug 
     trafficking.

     A country may be found to not provide adequate and effective 
     protection of intellectual property rights under paragraph 
     (5) and section 503(d)(2)(B), notwithstanding the fact that 
     it may be in compliance with the specific obligations of the 
     Agreement on Trade-Related Aspects of Intellectual Property 
     Rights referred to in section 101(d)(15) of the Uruguay Round 
     Agreements Act.
       ``(d) Withdrawal, Suspension, or Limitation of Country 
     Designation.--
       ``(1) In general.--The President may withdraw, suspend, or 
     limit the application of the duty-free treatment accorded 
     under this title with respect to any country. Except in 
     exceptional circumstances, the President, before taking any 
     action under this subsection, shall provide a period for the 
     submission of public comments on the matter under 
     consideration, and in taking any action under this 
     subsection, the President shall consider the factors set 
     forth in section 501 and subsection (c) of this section, and 
     comments received from the public.
       ``(2) Changed circumstances.--The President shall, after 
     complying with the requirements of subsection (f)(2), 
     withdraw or suspend the designation of any country as a 
     beneficiary developing country if, after such designation, 
     the President determines that as the result of changed 
     circumstances such country would be barred from designation 
     as a beneficiary developing country under subsection (b)(2). 
     Such country shall cease to be a beneficiary developing 
     country on the day on which the President issues an Executive 
     order or Presidential proclamation revoking the designation 
     of such country under this title.
       ``(e) Mandatory Graduation of Beneficiary Developing 
     Countries.--If the President determines that a beneficiary 
     developing country has become a `high income' country, as 
     defined by the official statistics of the International Bank 
     for Reconstruction and Development, then the President shall 
     terminate the designation of such country as a beneficiary 
     developing country for purposes of this title, effective on 
     January 1 of the second year following the year in which such 
     determination is made.
       ``(f) Congressional Notification.--
       ``(1) Notification of designation.--
       ``(A) In general.--Before the President designates any 
     country as a beneficiary developing country under this title, 
     the President shall notify the Congress of the President's 
     intention to make such designation, together with the 
     considerations entering into such decision.
       ``(B) Designation as least-developed beneficiary developing 
     country.--At least 60 days before the President designates 
     any country as a least-developed beneficiary developing 
     country, the President shall notify the Congress of the 
     President's intention to make such designation.
       ``(2) Notification of termination.--If the President has 
     designated any country as a beneficiary developing country 
     under this title, the President shall not terminate such 
     designation unless, at least 60 days before such termination, 
     the President has notified the Congress and has notified such 
     country of the President's intention to terminate such 
     designation, together with the considerations entering into 
     such decision.

     ``SEC. 503. DESIGNATION OF ELIGIBLE ARTICLES.

       ``(a) Eligible Articles.--
       ``(1) Designation.--
       ``(A) In general.--Except as provided in subsection (b), 
     the President is authorized to designate articles as eligible 
     articles for all beneficiary developing countries for 
     purposes of this title by Executive order or Presidential 
     proclamation after receiving the advice of the International 
     Trade Commission in accordance with subsection (e).
       ``(B) Least-developed beneficiary developing countries.--
     Except as provided in subsection (b), the President is 
     authorized to designate additional articles as eligible 
     articles only for countries designated as least-developed 
     beneficiary developing countries under section 502(a)(2) if, 
     after receiving the advice of the International Trade 
     Commission in accordance with subsection (e) of this section, 
     the President determines that such articles are not import-
     sensitive in the context of imports from least-developed 
     beneficiary developing countries.
       ``(C) Three-year rule.--If, after receiving the advice of 
     the International Trade Commission under subsection (e), an 
     article has been formally considered for designation as an 
     eligible article under this title and denied such 
     designation, such article may not be reconsidered for such 
     designation for a period of three years after such denial.
       ``(2) Rule of origin.--
       ``(A) General rule.--The duty-free treatment provided under 
     this title shall apply to any eligible article which is the 
     growth, product, or manufacture of a beneficiary developing 
     country if--
       ``(i) that article is imported directly from a beneficiary 
     developing country into the customs territory of the United 
     States; and
       ``(ii) the sum of--

       ``(I) the cost or value of the materials produced in the 
     beneficiary developing country or any two or more countries 
     which are members of the same association of countries which 
     is treated as one country under section 506(2), plus
       ``(II) the direct costs of processing operations performed 
     in such beneficiary developing country or such member 
     countries,

     is not less than 35 percent of the appraised value of such 
     article at the time it is entered.
       ``(B) Exclusions.--An article shall not be treated as the 
     growth, product, or manufacture of a beneficiary developing 
     country by virtue of having merely undergone--
       ``(i) simple combining or packaging operations, or
       ``(ii) mere dilution with water or mere dilution with 
     another substance that does not materially alter the 
     characteristics of the article.
       ``(3) Regulations.--The Secretary of the Treasury, after 
     consulting with the United States Trade Representative, shall 
     prescribe such regulations as may be necessary to carry out 
     paragraph (2), including, but not limited to, regulations 
     providing that, in order to be eligible for duty-free 
     treatment under this title, an article--
       ``(A) must be wholly the growth, product, or manufacture of 
     a beneficiary developing country, or
       ``(B) must be a new or different article of commerce which 
     has been grown, produced, or manufactured in the beneficiary 
     developing country.
       ``(b) Articles That May Not Be Designated As Eligible 
     Articles.--
       ``(1) Import sensitive articles.--The President may not 
     designate any article as an eligible article under subsection 
     (a) if such article is within one of the following categories 
     of import-sensitive articles:
       ``(A) Textile and apparel articles which were not eligible 
     articles for purposes of this title on January 1, 1994, as 
     this title was in effect on such date.
       ``(B) Import-sensitive electronic articles.
       ``(C) Import-sensitive steel articles.
       ``(D) Footwear, handbags, luggage, flat goods, work gloves, 
     and leather wearing apparel which were not eligible articles 
     for purposes of this title on January 1, 1995, as this title 
     was in effect on such date.
       ``(E) Import-sensitive semimanufactured and manufactured 
     glass products.
       ``(F) Any other articles which the President determines to 
     be import-sensitive in the context of the Generalized System 
     of Preferences.
       ``(2) Articles against which other actions taken.--An 
     article shall not be an eligible article for purposes of this 
     title for any period during which such article is the subject 
     of any action proclaimed pursuant to section 203 of this Act 
     (19 U.S.C. 2253) or section 232 or 351 of the Trade Expansion 
     Act of 1962 (19 U.S.C. 1862, 1981).
       ``(3) Agricultural products.--No quantity of an 
     agricultural product subject to a tariff-rate quota that 
     exceeds the in-quota quantity shall be eligible for duty-free 
     treatment under this title.
       ``(c) Withdrawal, Suspension, or Limitation of Duty-Free 
     Treatment; Competitive Need Limitation.--
       ``(1) In general.--The President may withdraw, suspend, or 
     limit the application of the duty-free treatment accorded 
     under this title with respect to any article, except that no 
     rate of duty may be established with respect to any article 
     pursuant to this subsection other than the rate which would 
     apply but for this title. In taking any action under this 
     subsection, the President shall consider the factors set 
     forth in sections 501 and 502(c).
       ``(2) Competitive need limitation.--
       ``(A) Basis for withdrawal of duty-free treatment.--Except 
     as provided in this paragraph and subject to subsection (d), 
     whenever the President determines that a beneficiary 
     developing country has exported (directly or indirectly) to 
     the United States during any calendar year beginning after 
     December 31, 1995--
       ``(i) a quantity of an eligible article having an appraised 
     value in excess of $75,000,000, except that, in applying this 
     clause, the amount of $75,000,000 shall be increased by 
     $5,000,000 on January 1 of each calendar year after calendar 
     year 1995, or
       ``(ii) a quantity of an eligible article equal to or 
     exceeding 50 percent of the appraised value of the total 
     imports of that article into the United States during the 
     calendar year,

[[Page H11087]]

     then the President shall, not later than July 1 of the next 
     calendar year, terminate the duty-free treatment for that 
     article from that beneficiary developing country.
       ``(B) Country defined.--For purposes of this paragraph, the 
     term `country' does not include an association of countries 
     which is treated as one country under section 506(2), but 
     does include a country which is a member of any such 
     association.
       ``(C) Redesignations.--A country which is no longer treated 
     as a beneficiary developing country with respect to an 
     eligible article by reason of subparagraph (A) may be 
     redesignated a beneficiary developing country with respect to 
     such article, subject to the considerations set forth in 
     sections 501 and 502, if imports of such article from such 
     country did not exceed the limitations in subparagraph (A) 
     during the preceding calendar year.
       ``(D) Least-developed beneficiary developing countries.--
     Subparagraph (A) shall not apply to any least-developed 
     beneficiary developing country.
       ``(E) Articles not produced in the united states 
     excluded.--Subparagraph (A)(ii) shall not apply with respect 
     to any eligible article if a like or directly competitive 
     article was not produced in the United States on January 1, 
     1995.
       ``(F) De minimis waivers.--The President may disregard 
     subparagraph (A)(ii) with respect to any eligible article 
     from any beneficiary developing country if the appraised 
     value of the total imports of such article into the United 
     States during calendar year 1995 or any calendar year 
     thereafter does not exceed $13,000,000, except that, in 
     applying this subparagraph, the amount of $13,000,000 shall 
     be increased by $500,000 on January 1 of each calendar year 
     after calendar year 1995.
       ``(d) Waiver of Competitive Need Limitation.--
       ``(1) In general.--The President may waive the application 
     of subsection (c)(2) with respect to any eligible article of 
     any beneficiary developing country if, before July 1 of the 
     calendar year beginning after the calendar year for which a 
     determination described in subsection (c)(2)(A) was made with 
     respect to such eligible article, the President--
       ``(A) receives the advice of the International Trade 
     Commission under section 332 of the Tariff Act of 1930 on 
     whether any industry in the United States is likely to be 
     adversely affected by such waiver,
       ``(B) determines, based on the considerations described in 
     sections 501 and 502(c) and the advice described in 
     subparagraph (A), that such waiver is in the national 
     economic interest of the United States, and
       ``(C) publishes the determination described in subparagraph 
     (B) in the Federal Register.
       ``(2) Considerations by the president.--In making any 
     determination under paragraph (1), the President shall give 
     great weight to--
       ``(A) the extent to which the beneficiary developing 
     country has assured the United States that such country will 
     provide equitable and reasonable access to the markets and 
     basic commodity resources of such country, and
       ``(B) the extent to which such country provides adequate 
     and effective protection of intellectual property rights.
       ``(3) Effective period of waiver.--Any waiver granted under 
     this subsection shall remain in effect until the President 
     determines that such waiver is no longer warranted due to 
     changed circumstances.
       ``(e) International Trade Commission Advice.--Before 
     designating articles as eligible articles under section 
     503(a)(1), the President shall publish and furnish the 
     International Trade Commission with lists of articles which 
     may be considered for designation as eligible articles for 
     purposes of this title. The provisions of sections 131, 132, 
     133, and 134 shall be complied with as though action under 
     section 501 and this section were action under section 123 to 
     carry out a trade agreement entered into under section 123.
       ``(f) Special Rule Concerning Puerto Rico.--No action under 
     this title may affect any tariff duty imposed by the 
     Legislature of Puerto Rico pursuant to section 319 of the 
     Tariff Act of 1930 on coffee imported into Puerto Rico.

     ``SEC. 504. REVIEW AND REPORTS TO CONGRESS.

       ``(a) Report on Operation of Title.--On or before July 31, 
     1997, the President shall submit to the Congress a full and 
     complete report regarding the operation of this title.
       ``(b) Annual Reports on Worker Rights.--The President shall 
     submit an annual report to the Congress on the status of 
     internationally recognized worker rights within each 
     beneficiary developing country.

     ``SEC. 505. DATE OF TERMINATION.

       ``No duty-free treatment provided under this title shall 
     remain in effect after December 31, 1997.

     ``SEC. 506. DEFINITIONS.

       ``For purposes of this title:
       ``(1) Beneficiary developing country.--The term 
     `beneficiary developing country' means any country with 
     respect to which there is in effect an Executive order or 
     Presidential proclamation by the President designating such 
     country as a beneficiary developing country for purposes of 
     this title.
       ``(2) Country.--The term `country' means any foreign 
     country or territory, including any overseas dependent 
     territory or possession of a foreign country, or the Trust 
     Territory of the Pacific Islands. In the case of an 
     association of countries which is a free trade area or 
     customs union, or which is contributing to comprehensive 
     regional economic integration among its members through 
     appropriate means, including, but not limited to, the 
     reduction of duties, the President may by Executive order or 
     Presidential proclamation provide that all members of such 
     association other than members which are barred from 
     designation under section 502(b) shall be treated as one 
     country for purposes of this title.
       ``(3) Entered.--The term `entered' means entered, or 
     withdrawn from warehouse for consumption, in the customs 
     territory of the United States.
       ``(4) Internationally recognized worker rights.--The term 
     `internationally recognized worker rights' includes--
       ``(A) the right of association;
       ``(B) the right to organize and bargain collectively;
       ``(C) a prohibition on the use of any form of forced or 
     compulsory labor;
       ``(D) a minimum age for the employment of children; and
       ``(E) acceptable conditions of work with respect to minimum 
     wages, hours of work, and occupational safety and health.
       ``(5) Least-developed beneficiary developing country.--The 
     term `least-developed beneficiary developing country' means a 
     beneficiary developing country that is designated as a least-
     developed beneficiary developing country under section 
     502(a)(2).''.
       (b) Table of Contents.--The items relating to title V in 
     the table of contents of the Trade Act of 1974 are amended to 
     read as follows:

              ``TITLE V--GENERALIZED SYSTEM OF PREFERENCES

``Sec. 501. Authority to extend preferences.
``Sec. 502. Designation of beneficiary developing countries.
``Sec. 503. Designation of eligible articles.
``Sec. 504. Review and reports to Congress.
``Sec. 505. Date of termination.
``Sec. 506. Definitions.''.

     SEC. 12103. RETROACTIVE APPLICATION FOR CERTAIN LIQUIDATIONS 
                   AND RELIQUIDATIONS.

       (a) In General.--Notwithstanding section 514 of the Tariff 
     Act of 1930 or any other provision of law and subject to 
     subsection (b), the entry--
       (1) of any article to which duty-free treatment under title 
     V of the Trade Act of 1974 would have applied if the entry 
     had been made on July 31, 1995, and
       (2) that was made after July 31, 1995, and before the date 
     of the enactment of this Act,

     shall be liquidated or reliquidated as free of duty, and the 
     Secretary of the Treasury shall refund any duty paid with 
     respect to such entry. As used in this subsection, the term 
     ``entry'' includes a withdrawal from warehouse for 
     consumption.
       (b) Requests.--Liquidation or reliquidation may be made 
     under subsection (a) with respect to an entry only if a 
     request therefor is filed with the Customs Service, within 
     180 days after the date of the enactment of this Act, that 
     contains sufficient information to enable the Customs 
     Service--
       (1) to locate the entry; or
       (2) to reconstruct the entry if it cannot be located.
       (c) Treatment of Certain Entries of Buffalo Leather.--
     Notwithstanding section 514 of the Tariff Act of 1930 or any 
     other provision of law, buffalo leather, provided for under 
     subheading 4104.39.20 of the Harmonized Tariff Schedule of 
     the United States, that is a product of Thailand and entered 
     into the United States under entry numbers M42-1113868-8 and 
     M42-1113939-7, shall be liquidated or reliquidated, as 
     appropriate, as if entered on June 30, 1995.

     SEC. 12104. CONFORMING AMENDMENTS.

       (a) Trade Laws.--
       (1) Section 1211(b) of the Omnibus Trade and 
     Competitiveness Act of 1988 (19 U.S.C. 3011(b)) is amended--
       (A) in paragraph (1), by striking ``(19 U.S.C. 2463(a), 
     2464(c)(3))'' and inserting ``(as in effect on the day before 
     the date of the enactment of the GSP Renewal Act of 1995)''; 
     and
       (B) in paragraph (2), by striking ``(19 U.S.C. 
     2464(c)(1))'' and inserting the following: ``(as in effect on 
     the day before the date of the enactment of the GSP Renewal 
     Act of 1995)''.
       (2) Section 203(c)(7) of the Andean Trade Preference Act 
     (19 U.S.C. 3202(c)(7)) is amended by striking ``502(a)(4)'' 
     and inserting ``506(4)''.
       (3) Section 212(b)(7) of the Caribbean Basin Economic 
     Recovery Act (19 U.S.C. 2702(b)(7)) is amended by striking 
     ``502(a)(4)'' and inserting ``506(4)''.
       (4) General note 3(a)(iv)(C) of the Harmonized Tariff 
     Schedule of the United States is amended by striking 
     ``sections 503(b) and 504(c)'' and inserting ``subsections 
     (a), (c), and (d) of section 503''.
       (b) Other Laws.--
       (1) Section 871(f)(2)(B) of the Internal Revenue Code of 
     1986 is amended by striking ``within the meaning of section 
     502'' and inserting ``under title V''.
       (2) Section 2202(8) of the Export Enhancement Act of 1988 
     (15 U.S.C. 4711(8)) is amended by striking ``502(a)(4)'' and 
     inserting ``506(4)''.
       (3) Section 231A(a) of the Foreign Assistance Act of 1961 
     (22 U.S.C. 2191a(a)) is amended--
       (A) in paragraph (1) by striking ``502(a)(4) of the Trade 
     Act of 1974 (19 U.S.C. 2462(a)(4))'' and inserting ``506(4) 
     of the Trade Act of 1974'';
       (B) in paragraph (2) by striking ``505(c) of the Trade Act 
     of 1974 (19 U.S.C. 2465(c))'' and inserting ``504(b) of the 
     Trade Act of 1974''; and

[[Page H11088]]

       (C) in paragraph (4) by striking ``502(a)(4)'' and 
     inserting ``506(4)''.
                Subtitle C--Trade Adjustment Assistance

     SEC. 12201. MODIFICATION OF TRADE ADJUSTMENT ASSISTANCE.

       (a) Requirement of Training.--(1) Section 231(c) of the 
     Trade Act of 1974 (19 U.S.C. 2291) is amended--
       (A) in paragraph (1)(A) and (B) by striking ``it is not 
     feasible or appropriate to approve a training program'' and 
     inserting ``a training program is not available''; and
       (B) in paragraph (2)(A) and (B) by striking ``it is 
     feasible or appropriate to approve a training program'' and 
     inserting ``a training program is available''.
       (2) Section 233(b) of such Act (19 U.S.C. 2293(b)) is 
     repealed.
       (3) Paragraph (3) of section 250(d) of the Trade Act of 
     1974 (19 U.S.C. 2331(d)) is amended--
       (A) by striking ``it is not feasible or appropriate to 
     approve a training program'' in subparagraph (A) and 
     inserting ``a training program is not available'', and
       (B) by striking ``notwithstanding the provisions of section 
     233(b),'' in subparagraph (B).
       (b) Termination of Relocation Allowances.--(1) Section 238 
     of the Trade Act of 1974 (19 U.S.C. 2298), and the item 
     relating to that section in the table of contents for that 
     Act, are repealed.
       (2) Section 250(d) of the Trade Act of 1974 (19 U.S.C. 
     2331(d)) is amended by striking paragraph (5).
       (c) Termination of Program.--Section 285(c) of the Trade 
     Act of 1974 (19 U.S.C. 2271 preceding note) is amended--
       (1) in paragraph (1), by striking ``1998'' and inserting 
     ``2000''; and
       (2) by amending paragraph (2) to read as follows:
       ``(2) No assistance, vouchers, allowances, or other 
     payments may be provided under subchapter D of chapter 2 
     after September 30, 1998.''.
       (d) Extension of Authorization.--(1) Section 245(a) of the 
     Trade Act of 1974 (19 U.S.C. 2317(a)) is amended by striking 
     ``and 1998'' and inserting ``1998, 1999, and 2000''.
       (2) Section 256(b) of the Trade Act of 1974 (19 U.S.C. 
     2346(a)) is amended by striking ``and 1998'' and inserting 
     ``1998, 1999, and 2000''.
       (e) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall take effect on the date 
     of the enactment of this Act.
       (2) Subsections (a) and (b).--The amendments made by 
     subsections (a) and (b) shall take effect on October 1, 1996.
    TITLE XIII--COMMITTEE ON WAYS AND MEANS--REVENUE RECONCILIATION

     SEC. 13001. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This title may be cited as the ``Revenue 
     Reconciliation Act of 1995''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this title an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents for this 
     title is as follows:

    TITLE XIII--COMMITTEE ON WAYS AND MEANS--REVENUE RECONCILIATION

Sec. 13001. Short title; amendment of 1986 Code.

           Subtitle A--Extension of Expiring Provisions, Etc.

              Part I--Extensions Through December 31, 1997

Sec. 13101. Work opportunity tax credit.
Sec. 13102. Employer-provided educational assistance programs.
Sec. 13103. Research credit.
Sec. 13104. Contributions of stock to private foundations.
Sec. 13105. Credit for clinical testing expenses.

 Part II--Permanent Extension of FUTA Exemption for Alien Agricultural 
                                Workers

Sec. 13106. FUTA exemption for alien agricultural workers.

                   Part III--Commercial Aviation Fuel

Sec. 13111. Delay of scheduled increase in tax on fuel used in 
              commercial aviation.

    Part IV--Extension of Airport and Airway Trust Fund Excise Taxes

Sec. 13116. Extension of Airport and Airway Trust Fund excise taxes.

                  Subtitle B--Medical Savings Accounts

Sec. 13201. Medical savings accounts.

          Subtitle C--Pickle-Johnson Taxpayer Bill of Rights 2

                       Part I--Taxpayer Advocate

Sec. 13301. Establishment of position of taxpayer advocate within 
              Internal Revenue Service.
Sec. 13302. Expansion of authority to issue taxpayer assistance orders.

       Part II--Modifications to Installment Agreement Provisions

Sec. 13306. Notification of reasons for termination of installment 
              agreements.
Sec. 13307. Administrative review of termination of installment 
              agreement.

             Part III--Abatement of Interest and Penalties

Sec. 13311. Expansion of authority to abate interest.
Sec. 13312. Review of IRS failure to abate interest.
Sec. 13313. Extension of interest-free period for payment of tax after 
              notice and demand.

                         Part IV--Joint Returns

Sec. 13316. Studies of joint return-related issues.
Sec. 13317. Joint return may be made after separate returns without 
              full payment of tax.
Sec. 13318. Disclosure of collection activities.

                     Part V--Collection Activities

Sec. 13321. Modifications to lien and levy provisions.
Sec. 13322. Offers-in-compromise.

                      Part VI--Information Returns

Sec. 13326. Civil damages for fraudulent filing of information returns.
Sec. 13327. Requirement to conduct reasonable investigations of 
              information returns.

              Part VII--Awarding of Costs and Certain Fees

Sec. 13331. United States must establish that its position in 
              proceeding was substantially justified.
Sec. 13332. Increased limit on attorney fees.
Sec. 13333. Failure to agree to extension not taken into account.
Sec. 13334. Award of litigation costs permitted in declaratory judgment 
              proceedings.
Sec. 13335. Effective date.

 Part VIII--Modification to Recovery of Civil Damages for Unauthorized 
                           Collection Actions

Sec. 13336. Increase in limit on recovery of civil damages for 
              unauthorized collection actions.
Sec. 13337. Court discretion to reduce award for litigation costs for 
              failure to exhaust administrative remedies.

 Part IX--Modifications to Penalty for Failure to Collect and Pay Over 
                                  Tax

Sec. 13341. Preliminary notice requirement.
Sec. 13342. Disclosure of certain information where more than 1 person 
              liable for penalty for failure to collect and pay over 
              tax.
Sec. 13343. Right of contribution where more than 1 person liable for 
              penalty for failure to collect and pay over tax.
Sec. 13344. Volunteer board members of tax-exempt organizations exempt 
              from penalty for failure to collect and pay over tax.

          Part X--Modifications of Rules Relating to Summonses

Sec. 13346. Enrolled agents included as third-party recordkeepers.
Sec. 13347. Safeguards relating to designated summonses.
Sec. 13348. Annual report to Congress concerning designated summonses.

  Part XI--Relief From Retroactive Application of Treasury Department 
                              Regulations

Sec. 13351. Relief from retroactive application of Treasury Department 
              regulations.

                   Part XII--Miscellaneous Provisions

Sec. 13356. Report on pilot program for appeal of enforcement actions.
Sec. 13357. Phone number of person providing payee Statements required 
              to be shown on such Statement.
Sec. 13358. Required notice of certain payments.
Sec. 13359. Unauthorized enticement of information disclosure.
Sec. 13360. Annual reminders to taxpayers with outstanding delinquent 
              accounts.
Sec. 13361. 5-year extension of authority for undercover operations.
Sec. 13362. Disclosure of form 8300 information on cash transactions.
Sec. 13363. Disclosure of returns and return information to designee of 
              taxpayer.
Sec. 13364. Study of netting of interest on overpayments and 
              liabilities.
Sec. 13365. Credit for expenses of certain TCMP audits.
Sec. 13366. Expenses of detection of underpayments and fraud, etc.

              Subtitle D--Additional Technical Corrections

Sec. 13401. Reporting of real estate transactions.
Sec. 13402. Clarification of denial of deduction for stock redemption 
              expenses.
Sec. 13403. Clarification of depreciation class for certain energy 
              property.
Sec. 13404. Clerical amendment to section 404.
Sec. 13405. Treatment of certain veterans' reemployment rights.

                  Subtitle E--Tax Information Sharing

Sec. 13501. Disclosure of return information for administration of 
              certain veterans programs.

                     Subtitle F--Revenue Increases

               Part I--Provisions Relating to Businesses

Sec. 13601. Tax treatment of certain extraordinary dividends.

[[Page H11089]]

Sec. 13602. Registration of confidential corporate tax shelters.
Sec. 13603. Denial of deduction for interest on loans with respect to 
              company-owned insurance.
Sec. 13604. Termination of suspense accounts for family corporations 
              required to use accrual method of accounting.
Sec. 13605. Termination of Puerto Rico and possession tax credit.
Sec. 13606. Depreciation under income forecast method.
Sec. 13607. Transfers of excess pension assets.

                         Part II--Legal Reforms

Sec. 13611. Repeal of exclusion for punitive damages and for damages 
              not attributable to physical injuries or sickness.
Sec. 13612. Reporting of certain payments made to attorneys.

 Part III--Treatment of Individuals Who Lose United States Citizenship

Sec. 13616. Revision of income, estate, and gift taxes on individuals 
              who lose United States citizenship.
Sec. 13617. Information on individuals losing United States 
              citizenship.
Sec. 13618. Report on tax compliance by United States citizens and 
              residents living abroad.

             Part IV--Reforms Relating to Energy Provisions

Sec. 13621. Termination of credit for electricity produced from certain 
              renewable resources.
Sec. 13622. Exclusion for energy conservation subsidies limited to 
              subsidies with respect to dwelling units.

         Part V--Reforms Relating to Nonrecognition Provisions

Sec. 13626. Basis adjustment to property held by corporation where 
              stock in corporation is replacement property under 
              involuntary conversion rules.
Sec. 13627. Expansion of requirement that involuntarily converted 
              property be replaced with property acquired from an 
              unrelated person.
Sec. 13628. No rollover or exclusion of gain on sale of principal 
              residence which is attributable to depreciation 
              deductions.
Sec. 13629. Nonrecognition of gain on sale of principal residence by 
              noncitizens limited to new residences located in the 
              United States.

             Part VI--Reforms Relating to Gaming Activities

Sec. 13631. Treatment of Indian gaming activities under unrelated 
              business income tax.
Sec. 13632. Repeal of targeted exemption from tax on unrelated trade or 
              business income from gambling in certain States.
Sec. 13633. Extension of withholding to certain gambling winnings.

                        Part VII--Other Reforms

Sec. 13636. Sunset of low-income housing credit.
Sec. 13637. Repeal of credit for contributions to community development 
              corporations.
Sec. 13638. Repeal of diesel fuel tax rebate to purchasers of diesel-
              powered automobiles and light trucks.
Sec. 13639. Application of failure-to-pay penalty to substitute 
              returns.
Sec. 13640. Repeal of special rule for rental use of vacation homes, 
              etc., for less than 15 days.
Sec. 13641. Election to cease status as qualified scholarship funding 
              corporation.
Sec. 13642. Certain amounts derived from foreign corporations treated 
              as unrelated business taxable income.

      Part VIII--Excise Tax on Amounts of Private Excess Benefits

Sec. 13646. Excise taxes for failure by certain charitable 
              organizations to meet certain qualification requirements.
Sec. 13647. Reporting of certain excise taxes and other information.
Sec. 13648. Exempt organizations required to provide copy of return.
Sec. 13649. Certain organizations required to disclose nonexempt 
              status.
Sec. 13650. Increase in penalties on exempt organizations for failure 
              to file complete and timely annual returns.
Sec. 13651. Studies.

           Subtitle G--Reform of the Earned Income Tax Credit

Sec. 13701. Repeal of earned income credit for individuals without 
              qualifying children; modifications to credit phaseout.
Sec. 13702. Modification of adjusted gross income used for phaseout.
Sec. 13703. Earned income tax credit denied to individuals not 
              authorized to be employed in the United States.

               Subtitle H--Increase in Public Debt Limit

Sec. 13801. Increase in public debt limit.

            Subtitle I--Coal Industry Retiree Health Equity

Sec. 13901. Repeal of reachback provisions of coal industry health 
              benefit system.
           Subtitle A--Extension of Expiring Provisions, Etc.

              PART I--EXTENSIONS THROUGH DECEMBER 31, 1997

     SEC. 13101. WORK OPPORTUNITY TAX CREDIT.

       (a) Amount of Credit.--Subsection (a) of section 51 is 
     amended by striking ``40 percent'' and inserting ``35 
     percent''.
       (b) Members of Targeted Groups.--Subsection (d) of section 
     51 is amended to read as follows:
       ``(d) Members of Targeted Groups.--For purposes of this 
     subpart--
       ``(1) In general.--An individual is a member of a targeted 
     group if such individual is--
       ``(A) a qualified AFDC recipient,
       ``(B) a qualified ex-felon,
       ``(C) a high-risk youth,
       ``(D) a vocational rehabilitation referral, or
       ``(E) a qualified summer youth employee.
       ``(2) Qualified afdc recipient.--
       ``(A) In general.--The term `qualified AFDC recipient' 
     means any individual who is certified by the designated local 
     agency as being a member of a family receiving assistance 
     under an AFDC program for at least a 9-month period ending 
     during the 9-month period ending on the hiring date.
       ``(B) AFDC program.--For purposes of this paragraph, the 
     term `AFDC program' means any program providing aid under a 
     State plan approved under part A of title IV of the Social 
     Security Act (relating to aid to families with dependent 
     children) and any successor of such program.
       ``(C) Special rules for veterans.--In the case of a 
     veteran, subparagraph (A) shall be applied by substituting 
     `12-month' for `9-month' the second place it appears.
       ``(D) Veteran.--For purposes of subparagraph (C), the term 
     `veteran' means any individual who is certified by the 
     designated local agency as--
       ``(i)(I) having served on active duty (other than active 
     duty for training) in the Armed Forces of the United States 
     for a period of more than 180 days, or
       ``(II) having been discharged or released from active duty 
     in the Armed Forces of the United States for a service-
     connected disability, and
       ``(ii) not having any day during the 60-day period ending 
     on the hiring date which was a day of extended active duty in 
     the Armed Forces of the United States.

     For purposes of clause (ii), the term `extended active duty' 
     means a period of more than 90 days during which the 
     individual was on active duty (other than active duty for 
     training).
       ``(3) Qualified ex-felon.--The term `qualified ex-felon' 
     means any individual who is certified by the designated local 
     agency--
       ``(A) as having been convicted of a felony under any 
     statute of the United States or any State,
       ``(B) as having a hiring date which is not more than 1 year 
     after the last date on which such individual was so convicted 
     or was released from prison, and
       ``(C) as being a member of a family which had an income 
     during the 6 months immediately preceding the earlier of the 
     month in which such income determination occurs or the month 
     in which the hiring date occurs, which, on an annual basis, 
     would be 70 percent or less of the Bureau of Labor Statistics 
     lower living standard.

     Any determination under subparagraph (C) shall be valid for 
     the 45-day period beginning on the date such determination is 
     made.
       ``(4) High-risk youth.--
       ``(A) In general.--The term `high-risk youth' means any 
     individual who is certified by the designated local agency--
       ``(i) as having attained age 18 but not age 25 on the 
     hiring date, and
       ``(ii) as having his principal place of abode within an 
     empowerment zone or enterprise community.
       ``(B) Youth must continue to reside in zone.--In the case 
     of a high-risk youth, the term `qualified wages' shall not 
     include wages paid or incurred for services performed while 
     such youth's principal place of abode is outside an 
     empowerment zone or enterprise community.
       ``(5) Vocational rehabilitation referral.--The term 
     `vocational rehabilitation referral' means any individual who 
     is certified by the designated local agency as--
       ``(A) having a physical or mental disability which, for 
     such individual, constitutes or results in a substantial 
     handicap to employment, and
       ``(B) having been referred to the employer upon completion 
     of (or while receiving) rehabilitative services pursuant to--
       ``(i) an individualized written rehabilitation plan under a 
     State plan for vocational rehabilitation services approved 
     under the Rehabilitation Act of 1973, or
       ``(ii) a program of vocational rehabilitation carried out 
     under chapter 31 of title 38, United States Code.
       ``(6) Qualified summer youth employee.--
       ``(A) In general.--The term `qualified summer youth 
     employee' means any individual--
       ``(i) who performs services for the employer between May 1 
     and September 15,
       ``(ii) who is certified by the designated local agency as 
     having attained age 16 but not 18 on the hiring date (or if 
     later, on May 1 of the calendar year involved),
       ``(iii) who has not been an employee of the employer during 
     any period prior to the 90- 

[[Page H11090]]

     day period described in subparagraph (B)(i), and
       ``(iv) who is certified by the designated local agency as 
     having his principal place of abode within an empowerment 
     zone or enterprise community.
       ``(B) Special rules for determining amount of credit.--For 
     purposes of applying this subpart to wages paid or incurred 
     to any qualified summer youth employee--
       ``(i) subsection (b)(2) shall be applied by substituting 
     `any 90-day period between May 1 and September 15' for `the 
     1-year period beginning with the day the individual begins 
     work for the employer', and
       ``(ii) subsection (b)(3) shall be applied by substituting 
     `$3,000' for `$6,000'.
     The preceding sentence shall not apply to an individual who, 
     with respect to the same employer, is certified as a member 
     of another targeted group after such individual has been a 
     qualified summer youth employee.
       ``(C) Youth must continue to reside in zone.--Paragraph 
     (4)(B) shall apply for purposes of this paragraph.
       ``(7) Hiring date.--The term `hiring date' means the day 
     the individual is hired by the employer.
       ``(8) Designated local agency.--The term `designated local 
     agency' means a State employment security agency established 
     in accordance with the Act of June 6, 1933, as amended (29 
     U.S.C. 49-49n).
       ``(9) Special rules for certifications.--
       ``(A) In general.--An individual shall not be treated as a 
     member of a targeted group unless--
       ``(i) on or before the day on which such individual begins 
     work for the employer, the employer has received a 
     certification from a designated local agency that such 
     individual is a member of a targeted group, or
       ``(ii)(I) on or before the day the individual is offered 
     employment with the employer, a pre-screening notice is 
     completed with respect to such individual, and
       ``(II) not later than the 14th day after the individual 
     begins work for the employer, the employer submits such 
     notice to the designated local agency as part of a written 
     request for such a certification from such agency.

     For purposes of this paragraph, the term `pre-screening 
     notice' means a document (in such form as the Secretary shall 
     prescribe) which is signed by the employer and the individual 
     under penalties of perjury and which contains information 
     provided by the individual on the basis of which the employer 
     believes that the individual is a member of a targeted group.
       ``(B) Incorrect certifications.--If--
       ``(i) an individual has been certified by a designated 
     local agency as a member of a targeted group, and
       ``(ii) such certification is incorrect because it was based 
     on false information provided by such individual,

     the certification shall be revoked and wages paid by the 
     employer after the date on which notice of revocation is 
     received by the employer shall not be treated as qualified 
     wages.
       ``(C) Explanation of denial of request.--If a designated 
     local agency denies a request for certification of membership 
     in a targeted group, such agency shall provide to the person 
     making such request a written explanation of the reasons for 
     such denial.''
       (c) Minimum Employment Period.--Paragraph (3) of section 
     51(i) is amended to read as follows:
       ``(3) Individuals not meeting minimum employment period.--
     No wages shall be taken into account under subsection (a) 
     with respect to any individual unless such individual 
     either--
       ``(A) is employed by the employer at least 180 days (20 
     days in the case of a qualified summer youth employee), or
       ``(B) has completed at least 500 hours (120 hours in the 
     case of a qualified summer youth employee) of services 
     performed for the employer.''
       (d) Definition of Wages.--Subsection (c) of section 51 is 
     amended by striking paragraph (3).
       (e) Termination.--Paragraph (4) of section 51(c) is amended 
     to read as follows:
       ``(3) Termination.--The term `wages' shall not include any 
     amount paid or incurred to an individual who begins work for 
     the employer--
       ``(A) after December 31, 1994, and before January 1, 1996, 
     or
       ``(B) after December 31, 1997.''
       (f) Redesignation of Credit.--
       (1) Sections 38(b)(2) and 51(a) are each amended by 
     striking ``targeted jobs credit'' and inserting ``work 
     opportunity credit''.
       (2) The subpart heading for subpart F of part IV of 
     subchapter A of chapter 1 is amended by striking ``Targeted 
     Jobs Credit'' and inserting ``Work Opportunity Credit''.
       (3) The table of subparts for such part IV is amended by 
     striking ``targeted jobs credit'' and inserting ``work 
     opportunity credit''.
       (g) Business Awareness Program.--The Secretary of Labor 
     shall implement a program to encourage small businesses to 
     use the services of local agencies to identify individuals 
     who qualify to be certified as members of targeted groups (as 
     defined in section 51 of the Internal Revenue Code of 1986, 
     as amended by this section). Such Secretary, and the heads of 
     other Federal agencies, shall make every effort to encourage 
     small businesses to benefit from the credit allowable under 
     such section by simplifying procedures to the extent 
     possible.
       (h) Technical Amendments.--
       (1) Paragraph (1) of section 51(c) is amended by striking 
     ``, subsection (d)(8)(D),''.
       (2) Paragraph (3) of section 51(i) is amended by striking 
     ``(d)(12)'' each place it appears and inserting ``(d)(6)''.
       (i) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after December 31, 1995.

     SEC. 13102. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE 
                   PROGRAMS.

       (a) Extension.--Subsection (d) of section 127 (relating to 
     educational assistance programs) is amended by striking 
     ``December 31, 1994'' and inserting ``December 31, 1997''.
       (b) Limitation to Education Below Graduate Level.--The last 
     sentence of section 127(c)(1) is amended by inserting before 
     the period ``or at the graduate level''.
       (c) Effective Dates.--
       (1) Extension.--The amendment made by subsection (a) shall 
     apply to taxable years beginning after December 31, 1994.
       (2) Limitation.--The amendment made by subsection (b) shall 
     apply to taxable years beginning after December 31, 1995.

     SEC. 13103. RESEARCH CREDIT.

       (a) In General.--Subsection (h) of section 41 (relating to 
     credit for research activities) is amended--
       (1) by striking ``June 30, 1995'' each place it appears and 
     inserting ``December 31, 1997'', and
       (2) by striking ``July 1, 1995'' each place it appears and 
     inserting ``January 1, 1998''.
       (b) Base Amount for Start-up Companies.--Clause (i) of 
     section 41(c)(3)(B) (relating to start-up companies) is 
     amended to read as follows:
       ``(i)  Taxpayers to which subparagraph applies.--The fixed-
     base percentage shall be determined under this subparagraph 
     if--

       ``(I) the first taxable year in which a taxpayer had both 
     gross receipts and qualified research expenses begins after 
     December 31, 1983, or
       ``(II) there are fewer than 3 taxable years beginning after 
     December 31, 1983, and before January 1, 1989, in which the 
     taxpayer had both gross receipts and qualified research 
     expenses.''

       (c) Election of Alternative Incremental Credit.--Subsection 
     (c) of section 41 is amended by redesignating paragraphs (4) 
     and (5) as paragraphs (5) and (6), respectively, and by 
     inserting after paragraph (3) the following new paragraph:
       ``(4) Election of alternative incremental credit.--
       ``(A) In general.--At the election of the taxpayer, the 
     credit determined under subsection (a)(1) shall be equal to 
     the sum of--
       ``(i) 1.65 percent of so much of the qualified research 
     expenses for the taxable year as exceeds 1 percent of the 
     average described in subsection (c)(1)(B) but does not exceed 
     1.5 percent of such average,
       ``(ii) 2.2 percent of so much of such expenses as exceeds 
     1.5 percent of such average but does not exceed 2 percent of 
     such average, and
       ``(iii) 2.75 percent of so much of such expenses as exceeds 
     2 percent of such average.
       ``(B) Election.--An election under this paragraph may be 
     made only for the first taxable year of the taxpayer 
     beginning after June 30, 1995. Such an election shall apply 
     to the taxable year for which made and all succeeding taxable 
     years unless revoked with the consent of the Secretary.''
       (d) Increased Credit for Contract Research Expenses With 
     Respect to Certain Research Consortia.--Paragraph (3) of 
     section 41(b) is amended by adding at the end the following 
     new subparagraph:
       ``(C) Amounts paid to certain research consortia.--
       ``(i) In general.--Subparagraph (A) shall be applied by 
     substituting `75 percent' for `65 percent' with respect to 
     amounts paid or incurred by the taxpayer to a qualified 
     research consortium for qualified research.
       ``(ii) Qualified research consortium.--The term `qualified 
     research consortium' means any organization described in 
     subsection (e)(6)(B) if--

       ``(I) at least 15 unrelated taxpayers paid (during the 
     calendar year in which the taxable year of the taxpayer 
     begins) amounts to such organization for qualified research,
       ``(II) no 3 persons paid during such calendar year more 
     than 50 percent of the total amounts paid during such 
     calendar year for qualified research, and
       ``(III) no person contributed more than 20 percent of such 
     total amounts.

     For purposes of subclause (I), all persons treated as a 
     single employer under subsection (a) or (b) of section 52 
     shall be treated as related taxpayers.''
       (e) Conforming Amendment.--Subparagraph (D) of section 
     28(b)(1) is amended by striking ``June 30, 1995'' and 
     inserting ``December 31, 1997''.
       (f) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     ending after June 30, 1995.
       (2) Subsections (c) and (d).--The amendments made by 
     subsections (c) and (d) shall apply to taxable years 
     beginning after June 30, 1995.

     SEC. 13104. CONTRIBUTIONS OF STOCK TO PRIVATE FOUNDATIONS.

       (a) In General.--Subparagraph (D) of section 170(e)(5) is 
     amended by striking ``December 31, 1994'' and inserting 
     ``December 31, 1997''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made after December 31, 1994.

[[Page H11091]]


     SEC. 13105. CREDIT FOR CLINICAL TESTING EXPENSES.

       (a) In General.--Subsection (e) of section 28 is amended by 
     striking ``December 31, 1994'' and inserting ``December 31, 
     1997''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years ending after December 31, 1994.

 PART II--PERMANENT EXTENSION OF FUTA EXEMPTION FOR ALIEN AGRICULTURAL 
                                WORKERS

     SEC. 13106. FUTA EXEMPTION FOR ALIEN AGRICULTURAL WORKERS.

       (a) In General.--Subparagraph (B) of section 3306(c)(1) 
     (defining employment) is amended by striking ``before January 
     1, 1995,''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to services performed after December 31, 1994.

                   PART III--COMMERCIAL AVIATION FUEL

     SEC. 13111. DELAY OF SCHEDULED INCREASE IN TAX ON FUEL USED 
                   IN COMMERCIAL AVIATION.

       (a) 2-Year Delay.--Sections 4092(b)(2), 6421(f)(2)(B), and 
     6427(l)(4)(B) are each amended by striking ``September 30, 
     1995'' and inserting ``September 30, 1997''.
       (b) Conforming Amendment.--Section 13245 of the Omnibus 
     Budget Reconciliation Act of 1993 is hereby repealed.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     take effect on September 30, 1995.
       (2) Cross reference.--

  For refund of tax paid on commercial aviation fuel before the date of 
the enactment of this Act, see section 6427(l) of the Internal Revenue 
Code of 1986.

       (d) Floor Stocks Tax.--
       (1) Imposition of tax.--In the case of commercial aviation 
     fuel which is held by any person on October 1, 1997, there is 
     hereby imposed a floor stocks tax equal to 4.3 cents per 
     gallon.
       (2) Liability for tax and method of payment.--
       (A) Liability for tax.--A person holding aviation fuel on 
     October 1, 1997, to which the tax imposed by paragraph (1) 
     applies shall be liable for such tax.
       (B) Method of payment.--The tax imposed by paragraph (1) 
     shall be paid in such manner as the Secretary shall 
     prescribe.
       (C) Time for payment.--The tax imposed by paragraph (1) 
     shall be paid on or before April 30, 1998.
       (3) Definitions.--For purposes of this subsection--
       (A) Held by a person.--Aviation fuel shall be considered as 
     ``held by a person'' if title thereto has passed to such 
     person (whether or not delivery to the person has been made).
       (B) Commercial aviation fuel.--The term ``commercial 
     aviation fuel'' means aviation fuel (as defined in section 
     4093 of such Code) which is held on October 1, 1997, for sale 
     or use in commercial aviation (as defined in section 4092(b) 
     of such Code).
       (C) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury or his delegate.
       (4) Exception for exempt uses.--The tax imposed by 
     paragraph (1) shall not apply to aviation fuel held by any 
     person exclusively for any use for which a credit or refund 
     of the entire tax imposed by section 4091 of such Code (other 
     than the rate imposed by section 4091(b)(2) of such Code) is 
     allowable for aviation fuel so used.
       (5) Exception for certain amounts of fuel.--
       (A) In general.--No tax shall be imposed by paragraph (1) 
     on aviation fuel held on October 1, 1997, by any person if 
     the aggregate amount of commercial aviation fuel held by such 
     person on such date does not exceed 2,000 gallons. The 
     preceding sentence shall apply only if such person submits to 
     the Secretary (at the time and in the manner required by the 
     Secretary) such information as the Secretary shall require 
     for purposes of this paragraph.
       (B) Exempt fuel.--For purposes of subparagraph (A), there 
     shall not be taken into account fuel held by any person which 
     is exempt from the tax imposed by paragraph (1) by reason of 
     paragraph (4).
       (C) Controlled groups.--For purposes of this paragraph--
       (i) Corporations.--

       (I) In general.--All persons treated as a controlled group 
     shall be treated as 1 person.
       (II) Controlled group.--The term ``controlled group'' has 
     the meaning given to such term by subsection (a) of section 
     1563 of such Code; except that for such purposes the phrase 
     ``more than 50 percent'' shall be substituted for the phrase 
     ``at least 80 percent'' each place it appears in such 
     subsection.

       (ii) Nonincorporated persons under common control.--Under 
     regulations prescribed by the Secretary, principles similar 
     to the principles of clause (i) shall apply to a group of 
     persons under common control where 1 or more of such persons 
     is not a corporation.
       (6) Other laws applicable.--All provisions of law, 
     including penalties, applicable with respect to the taxes 
     imposed by section 4091 of such Code shall, insofar as 
     applicable and not inconsistent with the provisions of this 
     subsection, apply with respect to the floor stock taxes 
     imposed by paragraph (1) to the same extent as if such taxes 
     were imposed by such section 4091.
       (f) Study.--The Secretary of the Treasury or his delegate 
     shall, in consultation with the Secretary of Transportation, 
     conduct a study of the Federal excise tax burdens on each of 
     the various modes of transportation and the benefits provided 
     to each such mode from revenues derived from such excise 
     taxes. The results of such study shall be submitted not later 
     than June 30, 1996, to the Committee on Ways and Means of the 
     House of Representatives and the Committee on Finance of the 
     Senate.

    PART IV--EXTENSION OF AIRPORT AND AIRWAY TRUST FUND EXCISE TAXES

     SEC. 13116. EXTENSION OF AIRPORT AND AIRWAY TRUST FUND EXCISE 
                   TAXES.

       (a) Fuel Tax.--
       (1) Subparagraph (A) of section 4091(b)(3) is amended by 
     striking ``January 1, 1996'' and inserting ``October 1, 
     1996''.
       (2) Paragraph (2) of section 4081(d), as amended by section 
     14721 of this Act, is amended by striking ``January 1, 1996'' 
     and inserting ``October 1, 1996''.
       (b) Ticket Taxes.--Sections 4261(g) and 4271(d) are each 
     amended by striking ``January 1, 1996'' and inserting 
     ``October 1, 1996''.
       (c) Transfer to Airport and Airway Trust Fund.--
       (1) Subsection (b) of section 9502 is amended by striking 
     ``January 1, 1996'' each place it appears and inserting 
     ``October 1, 1996''.
       (2) Paragraph (3) of section 9502(f) is amended by striking 
     ``December 31, 1995'' and inserting ``September 30, 1996''.
                  Subtitle B--Medical Savings Accounts

     SEC. 13201. MEDICAL SAVINGS ACCOUNTS.

       (a) In General.--Part VII of subchapter B of chapter 1 
     (relating to additional itemized deductions for individuals) 
     is amended by redesignating section 220 as section 221 and by 
     inserting after section 219 the following new section:

     ``SEC. 220. MEDICAL SAVINGS ACCOUNTS.

       ``(a) Deduction Allowed.--In the case of an individual who 
     is an eligible individual for any month during the taxable 
     year, there shall be allowed as a deduction for the taxable 
     year an amount equal to the aggregate amount paid in cash 
     during such taxable year by such individual to a medical 
     savings account of such individual.
       ``(b) Limitations.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the amount allowable as a deduction under 
     subsection (a) to an individual for the taxable year shall 
     not exceed the lesser of--
       ``(A) $2,500, or
       ``(B) the deductible under the catastrophic health plan 
     covering such individual.

     If the catastrophic health plan covering such individual 
     provides coverage for any other eligible individual who is 
     the spouse or any dependent (as defined in section 152) of 
     the taxpayer, subparagraph (A) shall be applied by 
     substituting `$5,000' for `$2,500'. The preceding sentence 
     shall not apply if the spouse or any dependent (as so 
     defined) of such individual is covered under any other 
     catastrophic health plan.
       ``(2) Special rule for married individuals.--
       ``(A) In general.--This subsection shall be applied 
     separately for each married individual.
       ``(B) Special rule.--If individuals who are married to each 
     other are covered under the same catastrophic health plan, 
     then the amounts applicable under subparagraphs (A) and (B) 
     of paragraph (1) shall be divided equally between them unless 
     they agree on a different division.
       ``(3) Coordination with exclusion for employer 
     contributions.--No deduction shall be allowed under this 
     section for any amount paid for any taxable year to a medical 
     savings account of an individual if--
       ``(A) any amount is paid to any medical savings account of 
     such individual which is excludable from gross income under 
     section 106(b) for such year, or
       ``(B) in a case described in paragraph (2), any amount is 
     paid to any medical savings account of either spouse which is 
     so excludable for such year.
       ``(4) Proration of limitation.--
       ``(A) In general.--The limitation under paragraph (1) shall 
     be the sum of the monthly limitations for months during the 
     taxable year that the individual is an eligible individual 
     if--
       ``(i) such individual is not an eligible individual for all 
     months of the taxable year,
       ``(ii) the deductible under the catastrophic health plan 
     covering such individual is not the same throughout such 
     taxable year, or
       ``(iii) such limitation is determined using the next to the 
     last sentence of paragraph (1) for some but not all months 
     during such taxable year.
       ``(B) Monthly limitation.--The monthly limitation for any 
     month shall be an amount equal to \1/12\ of the limitation 
     which would (but for this paragraph and paragraph (3)) be 
     determined under paragraph (1) if the facts and circumstances 
     as of the first day of such month that such individual is 
     covered under a catastrophic health plan were true for the 
     entire taxable year.
       ``(5) Denial of deduction to dependents.--No deduction 
     shall be allowed under this section to any individual with 
     respect to whom a deduction under section 151 is allowable to 
     another taxpayer for a taxable year beginning in the calendar 
     year in which such individual's taxable year begins.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Eligible individual.--
       ``(A) In general.--The term `eligible individual' means, 
     with respect to any month, any individual--

[[Page H11092]]

       ``(i) who is covered under a catastrophic health plan at 
     any time during such month, and
       ``(ii) who is not, while covered under a catastrophic 
     health plan, covered under any health plan--

       ``(I) which is not a catastrophic health plan, and
       ``(II) which provides coverage for any benefit which is 
     covered under the catastrophic health plan.

       ``(B) Certain coverage disregarded.--Subparagraph (A)(ii) 
     shall be applied without regard to--
       ``(i) coverage for any benefit provided by permitted 
     insurance, and
       ``(ii) coverage (whether through insurance or otherwise) 
     for accidents, dental care, vision care, or long-term care.
       ``(2) Catastrophic health plan.--The term `catastrophic 
     health plan' means any health plan which provides no 
     compensation for an individual's expenses covered by the plan 
     for any calendar year to the extent such expenses for such 
     calendar year do not exceed $1,500 ($3,000 if the 
     catastrophic health plan covering the taxpayer provides 
     coverage for more than 1 individual) or such higher amounts 
     as may be specified by the plan.
       ``(3) Permitted insurance.--The term `permitted insurance' 
     means--
       ``(A) Medicare supplemental insurance,
       ``(B) insurance if substantially all of the coverage 
     provided under such insurance relates to--
       ``(i) liabilities incurred under workers' compensation 
     laws,
       ``(ii) tort liabilities,
       ``(iii) liabilities relating to ownership or use of 
     property,
       ``(iv) credit insurance, or
       ``(v) such other similar liabilities as the Secretary may 
     specify by regulations,
       ``(C) insurance for a specified disease or illness, and
       ``(D) insurance paying a fixed amount per day (or other 
     period) of hospitalization.
       ``(d) Medical Savings Account.--For purposes of this 
     section--
       ``(1) Medical savings account.--The term `medical savings 
     account' means a trust created or organized in the United 
     States exclusively for the purpose of paying the qualified 
     medical expenses of the account holder, but only if the 
     written governing instrument creating the trust meets the 
     following requirements:
       ``(A) Except in the case of a rollover contribution 
     described in subsection (f)(4), no contribution will be 
     accepted unless it is in cash.
       ``(B) The trustee is a bank (as defined in section 408(n)), 
     an insurance company (as defined in section 816), or another 
     person who demonstrates to the satisfaction of the Secretary 
     that the manner in which such person will administer the 
     trust will be consistent with the requirements of this 
     section.
       ``(C) No part of the trust assets will be invested in life 
     insurance contracts.
       ``(D) The assets of the trust will not be commingled with 
     other property except in a common trust fund or common 
     investment fund.
       ``(E) The interest of an individual in the balance in his 
     account is nonforfeitable.
       ``(2) Qualified medical expenses.--
       ``(A) In general.--The term `qualified medical expenses' 
     means, with respect to an account holder, amounts paid by 
     such holder--
       ``(i) for medical care (as defined in section 213(d)) for 
     such individual, the spouse of such individual, and any 
     dependent (as defined in section 152) of such individual, but 
     only to the extent such amounts are not compensated for by 
     insurance or otherwise, or
       ``(ii) for long-term care insurance for such individual, 
     spouse, or dependent.
       ``(B) Health insurance may not be purchased from account.--
     Subparagraph (A)(i) shall not apply to any payment for 
     insurance.
       ``(3) Account holder.--The term `account holder' means the 
     individual on whose behalf the medical savings account was 
     established.
       ``(4) Certain rules to apply.--Rules similar to the 
     following rules shall apply for purposes of this section:
       ``(A) Section 219(d)(2) (relating to no deduction for 
     rollovers).
       ``(B) Section 219(f)(3) (relating to time when 
     contributions deemed made).
       ``(C) Except as provided in section 106(b), section 
     219(f)(5) (relating to employer payments).
       ``(D) Section 408(g) (relating to community property laws).
       ``(E) Section 408(h) (relating to custodial accounts).
       ``(e) Tax Treatment of Accounts.--
       ``(1) Account taxed as grantor trust.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the account holder of a medical savings account shall be 
     treated for purposes of this title as the owner of such 
     account and shall be subject to tax thereon in accordance 
     with subpart E of part I of subchapter J of this chapter 
     (relating to grantors and others treated as substantial 
     owners).
       ``(B) Treatment of capital losses.--With respect to assets 
     held in a medical savings account, any capital loss for a 
     taxable year from the sale or exchange of such an asset shall 
     be allowed only to the extent of capital gains from such 
     assets for such taxable year. Any capital loss which is 
     disallowed under the preceding sentence shall be treated as a 
     capital loss from the sale or exchange of such an asset in 
     the next taxable year. For purposes of this subparagraph, all 
     medical savings accounts of the account holder shall be 
     treated as 1 account.
       ``(2) Account assets treated as distributed in the case of 
     prohibited transactions or account pledged as security for 
     loan.--Rules similar to the rules of paragraphs (2) and (4) 
     of section 408(e) shall apply to medical savings accounts, 
     and any amount treated as distributed under such rules shall 
     be treated as not used to pay qualified medical expenses.
       ``(3) Treatment of account after death of account holder.--
       ``(A) In general.--A trust shall not constitute a medical 
     savings account unless the written governing instrument 
     provides that, if the account holder dies while there is a 
     balance in the account, the entire balance of the account 
     holder will be distributed within 5 years after the death of 
     the account holder.
       ``(B) Exception where spouse becomes account holder.--
     Subparagraph (A) shall not apply if the account is payable to 
     (or for the benefit of) the surviving spouse of the decedent.
       ``(f) Tax Treatment of Distributions.--
       ``(1) Inclusion of amounts not used for qualified medical 
     expenses.--
       ``(A) In general.--No amount shall be included in the gross 
     income of the account holder by reason of a payment or 
     distribution from a medical savings account which is used 
     exclusively to pay the qualified medical expenses of the 
     account holder. Any amount paid or distributed from a medical 
     savings account which is not so used shall be included in the 
     gross income of such holder to the extent such amount does 
     not exceed the excess of--
       ``(i) the aggregate contributions to such account which 
     were allowed as a deduction under this section or which were 
     excluded under section 106(b), over
       ``(ii) the aggregate prior payments or distributions from 
     such account which were includible in gross income under this 
     paragraph.
       ``(B) Special rules.--For purposes of subparagraph (A)--
       ``(i) all medical savings accounts of the account holder 
     shall be treated as 1 account,
       ``(ii) all payments and distributions during any taxable 
     year shall be treated as 1 distribution, and
       ``(iii) any distribution of property shall be taken into 
     account at its fair market value on the date of the 
     distribution.
       ``(2) Penalty for distributions not used for qualified 
     medical expenses.--
       ``(A) In general.--The tax imposed by this chapter for any 
     taxable year in which there is a payment or distribution from 
     a medical savings account which is not used exclusively to 
     pay the qualified medical expenses of the account holder 
     shall be increased by 10 percent of the amount of such 
     payment or distribution which is includible in gross income 
     under paragraph (1).
       ``(B) Exceptions.--Subparagraph (A) shall not apply if the 
     payment or distribution is made on or after the date the 
     account holder--
       ``(i) attains age 59\1/2\,
       ``(ii) becomes disabled within the meaning of section 
     72(m)(7), or
       ``(iii) dies.
       ``(3) Withdrawal of excess contributions.--Paragraph (1) 
     shall not apply to the distribution of any contribution paid 
     during a taxable year to a medical savings account if--
       ``(A) such distribution is received on or before the day 
     prescribed by law (including extensions of time) for filing 
     such individual's return for such taxable year,
       ``(B) no deduction is allowed under this section with 
     respect to such contribution, and
       ``(C) such distribution is accompanied by the amount of net 
     income attributable to such contribution.

     In the case of such a distribution, for purposes of section 
     61, any net income described in subparagraph (C) shall be 
     deemed to have been earned and receivable in the taxable year 
     in which such contribution is made.
       ``(4) Rollovers.--Paragraph (1) shall not apply to any 
     amount paid or distributed out of a medical savings account 
     to the account holder if the entire amount received 
     (including money and any other property) is paid into another 
     medical savings account for the benefit of such holder not 
     later than the 60th day after the day on which he received 
     the payment or distribution.
       ``(5) Coordination with medical expense deduction.--For 
     purposes of section 213, any payment or distribution out of a 
     medical savings account for qualified medical expenses shall 
     not be treated as an expense paid for medical care to the 
     extent of the amount of such payment or distribution which is 
     excludable from gross income solely by reason of paragraph 
     (1)(A).
       ``(g) Cost-of-Living Adjustment.--
       ``(1) In general.--In the case of any taxable year 
     beginning in a calendar year after 1996, each dollar amount 
     in subsection (b)(1) or in subsection (c)(2) shall be 
     increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the medical care cost adjustment for such calendar 
     year.

     If any increase under the preceding sentence is not a 
     multiple of $50, such increase shall be rounded to the 
     nearest multiple of $50.
       ``(2) Medical care cost adjustment.--For purposes of 
     paragraph (1), the medical care cost adjustment for any 
     calendar year is the percentage (if any) by which--

[[Page H11093]]

       ``(A) the medical care component of the Consumer Price 
     Index (as defined in section 1(f)(5)) for August of the 
     preceding calendar year, exceeds
       ``(B) such component for August of 1995.
       ``(h) Reports.--The trustee of a medical savings account 
     shall make such reports regarding such account to the 
     Secretary and to the account holder with respect to 
     contributions, distributions, and such other matters as the 
     Secretary may require under regulations. The reports required 
     by this subsection shall be filed at such time and in such 
     manner and furnished to such individuals at such time and in 
     such manner as may be required by those regulations.''
       (b) Deduction Allowed Whether or Not Individual Itemizes 
     Other Deductions.--Subsection (a) of section 62 is amended by 
     inserting after paragraph (15) the following new paragraph:
       ``(16) Medical savings accounts.--The deduction allowed by 
     section 220.''
       (c) Exclusions for Employer Contributions to Medical 
     Savings Accounts.--
       (1) Exclusion from income tax.--The text of section 106 
     (relating to contributions by employer to accident and health 
     plans) is amended to read as follows:
       ``(a) General Rule.--Gross income of an employee does not 
     include employer-provided coverage under an accident or 
     health plan.
       ``(b) Contributions to Medical Savings Accounts.--
       ``(1) In general.--In the case of an employee who is an 
     eligible individual, gross income does not include amounts 
     contributed by such employee's employer to any medical 
     savings account of such employee.
       ``(2) Coordination with deduction limitation.--The amount 
     excluded from the gross income of an employee under this 
     subsection for any taxable year shall not exceed the 
     limitation under section 220(b)(1) (determined without regard 
     to this subsection) which is applicable to such employee for 
     such taxable year.''
       ``(3) No constructive receipt.--No amount shall be included 
     in the gross income of any employee solely because the 
     employee may choose between the contributions referred to in 
     paragraph (1) and employer contributions to another health 
     plan of the employer.
       ``(4) Special rule for deduction of employer 
     contributions.--Any employer contribution to a medical 
     savings account, if otherwise allowable as a deduction under 
     this chapter, shall be allowed only for the taxable year in 
     which paid.
       ``(5) Definitions.--For purposes of this subsection, the 
     terms `eligible individual' and `medical savings account' 
     have the respective meanings given to such terms by section 
     220.''
       (2) Exclusion from employment taxes.--
       (A) Social security taxes.--
       (i) Subsection (a) of section 3121 is amended by striking 
     ``or'' at the end of paragraph (20), by striking the period 
     at the end of paragraph (21) and inserting ``; or'', and by 
     inserting after paragraph (21) the following new paragraph:
       ``(22) any payment made to or for the benefit of an 
     employee if at the time of such payment it is reasonable to 
     believe that the employee will be able to exclude such 
     payment from income under section 106(b).''
       (ii) Subsection (a) of section 209 of the Social Security 
     Act is amended by striking ``or'' at the end of paragraph 
     (17), by striking the period at the end of paragraph (18) and 
     inserting ``; or'', and by inserting after paragraph (18) the 
     following new paragraph:
       ``(19) any payment made to or for the benefit of an 
     employee if at the time of such payment it is reasonable to 
     believe that the employee will be able to exclude such 
     payment from income under section 106(b) of the Internal 
     Revenue Code of 1986.''
       (B) Railroad retirement tax.--Subsection (e) of section 
     3231 is amended by adding at the end the following new 
     paragraph:
       ``(10) medical savings account contributions.--The term 
     `compensation' shall not include any payment made to or for 
     the benefit of an employee if at the time of such payment it 
     is reasonable to believe that the employee will be able to 
     exclude such payment from income under section 106(b).''
       (C) Unemployment tax.--Subsection (b) of section 3306 is 
     amended by striking ``or'' at the end of paragraph (15), by 
     striking the period at the end of paragraph (16) and 
     inserting ``; or'', and by inserting after paragraph (16) the 
     following new paragraph:
       ``(17) any payment made to or for the benefit of an 
     employee if at the time of such payment it is reasonable to 
     believe that the employee will be able to exclude such 
     payment from income under section 106(b).''
       (D) Withholding tax.--Subsection (a) of section 3401 is 
     amended by striking ``or'' at the end of paragraph (19), by 
     striking the period at the end of paragraph (20) and 
     inserting ``; or'', and by inserting after paragraph (20) the 
     following new paragraph:
       ``(21) any payment made to or for the benefit of an 
     employee if at the time of such payment it is reasonable to 
     believe that the employee will be able to exclude such 
     payment from income under section 106(b).''
       (d) Medical Savings Account Contributions Not Available 
     Under Cafeteria Plans.--Subsection (f) of section 125 is 
     amended by inserting ``106(b),'' before ``117''.
       (e) Tax on Prohibited Transactions.--Section 4975 (relating 
     to tax on prohibited transactions) is amended--
       (1) by adding at the end of subsection (c) the following 
     new paragraph:
       ``(4) Special rule for medical savings accounts.--An 
     individual for whose benefit a medical savings account 
     (within the meaning of section 220(d)) is established shall 
     be exempt from the tax imposed by this section with respect 
     to any transaction concerning such account (which would 
     otherwise be taxable under this section) if, with respect to 
     such transaction, the account ceases to be a medical savings 
     account by reason of the application of section 220(e)(2) to 
     such account.'', and
       (2) by inserting ``or a medical savings account described 
     in section 220(d)'' in subsection (e)(1) after ``described in 
     section 408(a)''.
       (f) Failure To Provide Reports on Medical Savings 
     Accounts.--Section 6693 (relating to failure to provide 
     reports on individual retirement accounts or annuities) is 
     amended--
       (1) by inserting ``OR ON MEDICAL SAVINGS ACCOUNTS'' after 
     ``ANNUITIES'' in the heading of such section, and
       (2) by adding at the end of subsection (a) the following: 
     ``The person required by section 220(h) to file a report 
     regarding a medical savings account at the time and in the 
     manner required by such section shall pay a penalty of $50 
     for each failure to so file unless it is shown that such 
     failure is due to reasonable cause.''
       (g) Clerical Amendments.--
       (1) The table of sections for part VII of subchapter B of 
     chapter 1 is amended by striking the last item and inserting 
     the following:

``Sec. 220. Medical savings accounts.
``Sec. 221. Cross reference.''

       (2) The table of sections for subchapter B of chapter 68 is 
     amended by inserting ``or on medical savings accounts'' after 
     ``annuities'' in the item relating to section 6693.
       (h) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
          Subtitle C--Pickle-Johnson Taxpayer Bill of Rights 2

                       PART I--TAXPAYER ADVOCATE

     SEC. 13301. ESTABLISHMENT OF POSITION OF TAXPAYER ADVOCATE 
                   WITHIN INTERNAL REVENUE SERVICE.

       (a) General Rule.--Section 7802 (relating to Commissioner 
     of Internal Revenue; Assistant Commissioner (Employee Plans 
     and Exempt Organizations)) is amended by adding at the end 
     the following new subsection:
       ``(d) Office of Taxpayer Advocate.--
       ``(1) In general.--There is established in the Internal 
     Revenue Service an office to be known as the `Office of the 
     Taxpayer Advocate'. Such office shall be under the 
     supervision and direction of an official to be known as the 
     `Taxpayer Advocate' who shall be appointed by and report 
     directly to the Commissioner of Internal Revenue. The 
     Taxpayer Advocate shall be entitled to compensation at the 
     same rate as the highest level official reporting directly to 
     the Deputy Commissioner of the Internal Revenue Service.
       ``(2) Functions of office.--
       ``(A) In general.--It shall be the function of the Office 
     of Taxpayer Advocate to--
       ``(i) assist taxpayers in resolving problems with the 
     Internal Revenue Service,
       ``(ii) identify areas in which taxpayers have problems in 
     dealings with the Internal Revenue Service,
       ``(iii) to the extent possible, propose changes in the 
     administrative practices of the Internal Revenue Service to 
     mitigate problems identified under clause (ii), and
       ``(iv) identify potential legislative changes which may be 
     appropriate to mitigate such problems.
       ``(B) Annual reports.--
       ``(i) Objectives.--Not later than June 30 of each calendar 
     year after 1995, the Taxpayer Advocate shall report to the 
     Committee on Ways and Means of the House of Representatives 
     and the Committee on Finance of the Senate on the objectives 
     of the Taxpayer Advocate for the fiscal year beginning in 
     such calendar year. Any such report shall contain full and 
     substantive analysis, in addition to statistical information.
       ``(ii) Activities.--Not later than December 31 of each 
     calendar year after 1995, the Taxpayer Advocate shall report 
     to the Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate on 
     the activities of the Taxpayer Advocate during the fiscal 
     year ending during such calendar year. Any such report shall 
     contain full and substantive analysis, in addition to 
     statistical information, and shall--

       ``(I) identify the initiatives the Taxpayer Advocate has 
     taken on improving taxpayer services and Internal Revenue 
     Service responsiveness,
       ``(II) contain recommendations received from individuals 
     with the authority to issue Taxpayer Assistance Orders under 
     section 7811,
       ``(III) contain a summary of at least 20 of the most 
     serious problems encountered by taxpayers, including a 
     description of the nature of such problems,
       ``(IV) contain an inventory of the items described in 
     subclauses (I), (II), and (III) for which action has been 
     taken and the result of such action,
       ``(V) contain an inventory of the items described in 
     subclauses (I), (II), and (III) for which action remains to 
     be completed and the period during which each item has 
     remained on such inventory,
       ``(VI) contain an inventory of the items described in 
     subclauses (II) and (III) for which 

[[Page H11094]]

     no action has been taken, the period during which each item 
     has remained on such inventory, the reasons for the inaction, 
     and identify any Internal Revenue Service official who is 
     responsible for such inaction,
       ``(VII) identify any Taxpayer Assistance Order which was 
     not honored by the Internal Revenue Service in a timely 
     manner, as specified under section 7811(b),
       ``(VIII) contain recommendations for such administrative 
     and legislative action as may be appropriate to resolve 
     problems encountered by taxpayers,
       ``(IX) describe the extent to which regional problem 
     resolution officers participate in the selection and 
     evaluation of local problem resolution officers, and
       ``(X) include such other information as the Taxpayer 
     Advocate may deem advisable.

       ``(iii) Report to be submitted directly.--Each report 
     required under this subparagraph shall be provided directly 
     to the Committees referred to in clauses (i) and (ii) without 
     any prior review or comment from the Commissioner, the 
     Secretary of the Treasury, any other officer or employee 
     of the Department of the Treasury, or the Office of 
     Management and Budget.
       ``(3) Responsibilities of commissioner.--The Commissioner 
     of Internal Revenue shall establish procedures requiring a 
     formal response to all recommendations submitted to the 
     Commissioner by the Taxpayer Advocate within 3 months after 
     submission to the Commissioner.''
       (b) Conforming Amendments.--
       (1) Section 7811 (relating to Taxpayer Assistance Orders) 
     is amended--
       (A) by striking ``the Office of Ombudsman'' in subsection 
     (a) and inserting ``the Office of the Taxpayer Advocate'', 
     and
       (B) by striking ``Ombudsman'' each place it appears 
     (including in the headings of subsections (e) and (f)) and 
     inserting ``Taxpayer Advocate''.
       (2) The heading for section 7802 is amended to read as 
     follows:

     ``SEC. 7802. COMMISSIONER OF INTERNAL REVENUE; ASSISTANT 
                   COMMISSIONERS; TAXPAYER ADVOCATE.''

       (3) The table of sections for subchapter A of chapter 80 is 
     amended by striking the item relating to section 7802 and 
     inserting the following new item:

``Sec. 7802. Commissioner of Internal Revenue; Assistant Commissioners; 
              Taxpayer Advocate.''

       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 13302. EXPANSION OF AUTHORITY TO ISSUE TAXPAYER 
                   ASSISTANCE ORDERS.

       (a) Terms of Orders.--Subsection (b) of section 7811 
     (relating to terms of Taxpayer Assistance Orders) is 
     amended--
       (1) by inserting ``within a specified time period'' after 
     ``the Secretary'', and
       (2) by inserting ``take any action as permitted by law,'' 
     after ``cease any action,''.
       (b) Limitation on Authority To Modify or Rescind.--Section 
     7811(c) (relating to authority to modify or rescind) is 
     amended to read as follows:
       ``(c) Authority To Modify or Rescind.--Any Taxpayer 
     Assistance Order issued by the Taxpayer Advocate under this 
     section may be modified or rescinded--
       ``(1) only by the Taxpayer Advocate, the Commissioner of 
     Internal Revenue, the Deputy Commissioner of Internal 
     Revenue, or a regional problem resolution officer, and
       ``(2) only if a written explanation of the reasons for the 
     modification or rescission is provided to the Taxpayer 
     Advocate.''
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

       PART II--MODIFICATIONS TO INSTALLMENT AGREEMENT PROVISIONS

     SEC. 13306. NOTIFICATION OF REASONS FOR TERMINATION OF 
                   INSTALLMENT AGREEMENTS.

       (a) Terminations.--Subsection (b) of section 6159 (relating 
     to extent to which agreements remain in effect) is amended by 
     adding at the end the following new paragraph:
       ``(5) Notice requirements.--The Secretary may not take any 
     action under paragraph (2), (3), or (4) unless--
       ``(A) a notice of such action is provided to the taxpayer 
     not later than the day 30 days before the date of such 
     action, and
       ``(B) such notice includes an explanation why the Secretary 
     intends to take such action.

     The preceding sentence shall not apply in any case in which 
     the Secretary believes that collection of any tax to which an 
     agreement under this section relates is in jeopardy.''
       (b) Conforming Amendment.--Paragraph (3) of section 6159(b) 
     is amended to read as follows:
       ``(3) Subsequent change in financial conditions.--If the 
     Secretary makes a determination that the financial condition 
     of a taxpayer with whom the Secretary has entered into an 
     agreement under subsection (a) has significantly changed, the 
     Secretary may alter, modify, or terminate such agreement.''
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date 6 months after the date of the 
     enactment of this Act.

     SEC. 13307. ADMINISTRATIVE REVIEW OF TERMINATION OF 
                   INSTALLMENT AGREEMENT.

       (a) General Rule.--Section 6159 (relating to agreements for 
     payment of tax liability in installments) is amended by 
     adding at the end the following new subsection:
       ``(c) Administrative Review.--The Secretary shall establish 
     procedures for an independent administrative review of 
     terminations of installment agreements under this section for 
     taxpayers who request such a review.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on January 1, 1996.

             PART III--ABATEMENT OF INTEREST AND PENALTIES

     SEC. 13311. EXPANSION OF AUTHORITY TO ABATE INTEREST.

       (a) General Rule.--Paragraph (1) of section 6404(e) 
     (relating to abatement of interest in certain cases) is 
     amended--
       (1) by inserting ``unreasonable'' before ``error'' each 
     place it appears in subparagraphs (A) and (B), and
       (2) by striking ``in performing a ministerial act'' each 
     place it appears and inserting ``in performing a ministerial 
     or managerial act''.
       (b) Clerical Amendment.--The subsection heading for 
     subsection (e) of section 6404 is amended--
       (1) by striking ``Assessments'' and inserting 
     ``Abatement'', and
       (2) by inserting ``Unreasonable'' before ``Errors''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to interest accruing with respect to deficiencies 
     or payments for taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 13312. REVIEW OF IRS FAILURE TO ABATE INTEREST.

       (a) In General.--Section 6404 is amended by adding at the 
     end the following new subsection:
       ``(g) Review of Denial of Request for Abatement of 
     Interest.--The Tax Court shall have jurisdiction over any 
     action brought by a taxpayer who meets the requirements 
     referred to in section 7430(c)(4)(A)(iii) to determine 
     whether the Secretary's failure to abate interest under this 
     section was an abuse of discretion if such action is brought 
     within 6 months after the date of the Secretary's final 
     determination not to abate such interest.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to requests for abatement after the date of the 
     enactment of this Act.

     SEC. 13313. EXTENSION OF INTEREST-FREE PERIOD FOR PAYMENT OF 
                   TAX AFTER NOTICE AND DEMAND.

       (a) General Rule.--Paragraph (3) of section 6601(e) 
     (relating to payments made within 10 days after notice and 
     demand) is amended to read as follows:
       ``(3) Payments made within specified period after notice 
     and demand.--If notice and demand is made for payment of any 
     amount and if such amount is paid within 21 calendar days (10 
     business days if the amount for which such notice and demand 
     is made equals or exceeds $100,000) after the date of such 
     notice and demand, interest under this section on the amount 
     so paid shall not be imposed for the period after the date of 
     such notice and demand.''
       (b) Conforming Amendments.--
       (1) Subparagraph (A) of section 6601(e)(2) is amended by 
     striking ``10 days from the date of notice and demand 
     therefor'' and inserting ``21 calendar days from the date of 
     notice and demand therefor (10 business days if the amount 
     for which such notice and demand is made equals or exceeds 
     $100,000)''.
       (2) Paragraph (3) of section 6651(a) is amended by striking 
     ``10 days of the date of the notice and demand therefor'' and 
     inserting ``21 calendar days from the date of notice and 
     demand therefor (10 business days if the amount for which 
     such notice and demand is made equals or exceeds $100,000)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply in the case of any notice and demand given after 
     June 30, 1996.

                         PART IV--JOINT RETURNS

     SEC. 13316. STUDIES OF JOINT RETURN-RELATED ISSUES.

       The Secretary of the Treasury or his delegate and the 
     Comptroller General of the United States shall each conduct 
     separate studies of--
       (1) the effects of changing the liability for tax on a 
     joint return from being joint and several to being 
     proportionate to the tax attributable to each spouse,
       (2) the effects of providing that, if a divorce decree 
     allocates liability for tax on a joint return filed before 
     the divorce, the Secretary may collect such liability only in 
     accordance with the decree,
       (3) whether those provisions of the Internal Revenue Code 
     of 1986 intended to provide relief to innocent spouses 
     provide meaningful relief in all cases where such relief is 
     appropriate, and
       (4) the effect of providing that community income (as 
     defined in section 66(d) of such Code) which, in accordance 
     with the rules contained in section 879(a) of such Code, 
     would be treated as the income of one spouse is exempt from a 
     levy for failure to pay any tax imposed by subtitle A by the 
     other spouse for a taxable year ending before their marriage.

     The reports of such studies shall be submitted to the 
     Committee on Ways and Means of the House of Representatives 
     and the Committee on Finance of the Senate within 6 months 
     after the date of the enactment of this Act.

[[Page H11095]]


     SEC. 13317. JOINT RETURN MAY BE MADE AFTER SEPARATE RETURNS 
                   WITHOUT FULL PAYMENT OF TAX.

       (a) General Rule.--Paragraph (2) of section 6013(b) 
     (relating to limitations on filing of joint return after 
     filing separate returns) is amended by striking subparagraph 
     (A) and redesignating the following subparagraphs 
     accordingly.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 13318. DISCLOSURE OF COLLECTION ACTIVITIES.

       Subsection (e) of section 6103 (relating to disclosure to 
     persons having material interest) is amended by adding at the 
     end the following new paragraph:
       ``(8) Disclosure of collection activities with respect to 
     joint return.--If any deficiency of tax with respect to a 
     joint return is assessed and the individuals filing such 
     return are no longer married or no longer reside in the same 
     household, upon request in writing by either of such 
     individuals, the Secretary shall disclose in writing to the 
     individual making the request whether the Secretary has 
     attempted to collect such deficiency from such other 
     individual, the general nature of such collection activities, 
     and the amount collected.''

                     PART V--COLLECTION ACTIVITIES

     SEC. 13321. MODIFICATIONS TO LIEN AND LEVY PROVISIONS.

       (a) Withdrawal of Certain Notices.--Section 6323 (relating 
     to validity and priority against certain persons) is amended 
     by adding at the end the following new subsection:
       ``(j) Withdrawal of Notice in Certain Circumstances.--
       ``(1) In general.--The Secretary may withdraw a notice of a 
     lien filed under this section and this chapter shall be 
     applied as if the withdrawn notice had not been filed, if the 
     Secretary determines that--
       ``(A) the filing of such notice was premature or otherwise 
     not in accordance with administrative procedures of the 
     Secretary,
       ``(B) the taxpayer has entered into an agreement under 
     section 6159 to satisfy the tax liability for which the lien 
     was imposed by means of installment payments, unless such 
     agreement provides otherwise,
       ``(C) the withdrawal of such notice will facilitate the 
     collection of the tax liability, or
       ``(D) with the consent of the taxpayer or the Taxpayer 
     Advocate, the withdrawal of such notice would be in the best 
     interests of the taxpayer (as determined by the Taxpayer 
     Advocate) and the United States.

     Any such withdrawal shall be made by filing notice at the 
     same office as the withdrawn notice. A copy of such notice of 
     withdrawal shall be provided to the taxpayer.
       ``(2) Notice to credit agencies, etc.--Upon written request 
     by the taxpayer with respect to whom a notice of a lien was 
     withdrawn under paragraph (1), the Secretary shall promptly 
     make reasonable efforts to notify credit reporting agencies, 
     and any financial institution or creditor whose name and 
     address is specified in such request, of the withdrawal of 
     such notice. Any such request shall be in such form as the 
     Secretary may prescribe.''
       (b) Return of Levied Property in Certain Cases.--Section 
     6343 (relating to authority to release levy and return 
     property) is amended by adding at the end the following new 
     subsection:
       ``(d) Return of Property in Certain Cases.--If--
       ``(1) any property has been levied upon, and
       ``(2) the Secretary determines that--
       ``(A) the levy on such property was premature or otherwise 
     not in accordance with administrative procedures of the 
     Secretary,
       ``(B) the taxpayer has entered into an agreement under 
     section 6159 to satisfy the tax liability for which the levy 
     was imposed by means of installment payments, unless such 
     agreement provides otherwise,
       ``(C) the return of such property will facilitate the 
     collection of the tax liability, or
       ``(D) with the consent of the taxpayer or the Taxpayer 
     Advocate, the return of such property would be in the best 
     interests of the taxpayer (as determined by the Taxpayer 
     Advocate) and the United States,

     the provisions of subsection (b) shall apply in the same 
     manner as if such property had been wrongly levied upon, 
     except that no interest shall be allowed under subsection 
     (c).''
       (c) Modifications in Certain Levy Exemption Amounts.--
       (1) Fuel, etc.--Paragraph (2) of section 6334(a) (relating 
     to fuel, provisions, furniture, and personal effects exempt 
     from levy) is amended--
       (A) by striking ``If the taxpayer is the head of a family, 
     so'' and inserting ``So'',
       (B) by striking ``his household'' and inserting ``the 
     taxpayer's household'', and
       (C) by striking ``$1,650 ($1,550 in the case of levies 
     issued during 1989)'' and inserting ``$2,500''.
       (2) Inflation adjustment.--Section 6334 (relating to 
     property exempt from levy) is amended by adding at the end 
     the following new subsection:
       ``(f) Inflation Adjustment.--
       ``(1) In general.--In the case of any calendar year 
     beginning after 1996, each dollar amount referred to in 
     paragraphs (2) and (3) of subsection (a) shall be increased 
     by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year, by substituting 
     `calendar year 1995' for `calendar year 1992' in subparagraph 
     (B) thereof.
       ``(2) Rounding.--If any dollar amount after being increased 
     under paragraph (1) is not a multiple of $10, such dollar 
     amount shall be rounded to the nearest multiple of $10.''
       (3) Technical amendment.--Paragraph (3) of section 6334(a) 
     is amended by striking ``($1,050 in the case of levies issued 
     during 1989)''.
       (d) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall take effect on the date 
     of the enactment of this Act.
       (2) Exempt amounts.--The amendments made by subsection (c) 
     shall take effect with respect to levies issued after 
     December 31, 1995.

     SEC. 13322. OFFERS-IN-COMPROMISE.

       (a) Review Requirements.--Subsection (b) of section 7122 
     (relating to records) is amended by striking ``$500.'' and 
     inserting ``$100,000. However, such compromise shall be 
     subject to continuing quality review by the Secretary.''
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

                      PART VI--INFORMATION RETURNS

     SEC. 13326. CIVIL DAMAGES FOR FRAUDULENT FILING OF 
                   INFORMATION RETURNS.

       (a) General Rule.--Subchapter B of chapter 76 (relating to 
     proceedings by taxpayers and third parties) is amended by 
     redesignating section 7434 as section 7435 and by inserting 
     after section 7433 the following new section:

     ``SEC. 7434. CIVIL DAMAGES FOR FRAUDULENT FILING OF 
                   INFORMATION RETURNS.

       ``(a) In General.--If any person willfully files a 
     fraudulent information return with respect to payments 
     purported to be made to any other person, such other person 
     may bring a civil action for damages against the person so 
     filing such return.
       ``(b) Damages.--In any action brought under subsection (a), 
     upon a finding of liability on the part of the defendant, the 
     defendant shall be liable to the plaintiff in an amount equal 
     to the greater of $5,000 or the sum of--
       ``(1) any actual damages sustained by the plaintiff as a 
     proximate result of the filing of the fraudulent information 
     return (including any costs attributable to resolving 
     deficiencies asserted as a result of such filing),
       ``(2) the costs of the action, and
       ``(3) in the court's discretion, reasonable attorneys fees.
       ``(c) Period for Bringing Action.--Notwithstanding any 
     other provision of law, an action to enforce the liability 
     created under this section may be brought without regard to 
     the amount in controversy and may be brought only within the 
     later of--
       ``(1) 6 years after the date of the filing of the 
     fraudulent information return, or
       ``(2) 1 year after the date such fraudulent information 
     return would have been discovered by exercise of reasonable 
     care.
       ``(d) Copy of Complaint Filed With IRS.--Any person 
     bringing an action under subsection (a) shall provide a copy 
     of the complaint to the Internal Revenue Service upon the 
     filing of such complaint with the court.
       ``(e) Finding of Court To Include Correct Amount of 
     Payment.--The decision of the court awarding damages in an 
     action brought under subsection (a) shall include a finding 
     of the correct amount which should have been reported in the 
     information return.
       ``(f) Information Return.--For purposes of this section, 
     the term `information return' means any statement described 
     in section 6724(d)(1)(A).''
       (b) Clerical Amendment.--The table of sections for 
     subchapter B of chapter 76 is amended by striking the item 
     relating to section 7434 and inserting the following:

``Sec. 7434. Civil damages for fraudulent filing of information 
              returns.
``Sec. 7435. Cross references.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to fraudulent information returns filed after the 
     date of the enactment of this Act.

     SEC. 13327. REQUIREMENT TO CONDUCT REASONABLE INVESTIGATIONS 
                   OF INFORMATION RETURNS.

       (a) General Rule.--Section 6201 (relating to assessment 
     authority) is amended by redesignating subsection (d) as 
     subsection (e) and by inserting after subsection (c) the 
     following new subsection:
       ``(d) Required Reasonable Verification of Information 
     Returns.--In any court proceeding, if a taxpayer asserts a 
     reasonable dispute with respect to any item of income 
     reported on an information return filed with the Secretary 
     under subpart B or C of part III of subchapter A of chapter 
     61 by a third party and the taxpayer has fully cooperated 
     with the Secretary (including providing, within a reasonable 
     period of time, access to and inspection of all witnesses, 
     information, and documents within the control of the taxpayer 
     as reasonably requested by the Secretary), the Secretary 
     shall have the burden of producing reasonable and probative 
     information concerning such deficiency in addition to such 
     information return.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act.

[[Page H11096]]


              PART VII--AWARDING OF COSTS AND CERTAIN FEES

     SEC. 13331. UNITED STATES MUST ESTABLISH THAT ITS POSITION IN 
                   PROCEEDING WAS SUBSTANTIALLY JUSTIFIED.

       (a) General Rule.--Subparagraph (A) of section 7430(c)(4) 
     (defining prevailing party) is amended by striking clause (i) 
     and by redesignating clauses (ii) and (iii) as clauses (i) 
     and (ii), respectively.
       (b) Burden of Proof on United States.--Paragraph (4) of 
     section 7430(c) is amended by redesignating subparagraph (B) 
     as subparagraph (C) and by inserting after subparagraph (A) 
     the following new subparagraph:
       ``(B) Exception if united states establishes that its 
     position was substantially justified.--
       ``(i) General rule.--A party shall not be treated as the 
     prevailing party in a proceeding to which subsection (a) 
     applies if the United States establishes that the position of 
     the United States in the proceeding was substantially 
     justified.
       ``(ii) Presumption of no justification if internal revenue 
     service didn't follow certain published guidance.--For 
     purposes of clause (i), the position of the United States 
     shall be presumed not to be substantially justified if the 
     Internal Revenue Service did not follow its applicable 
     published guidance in the administrative proceeding. Such 
     presumption may be rebutted.
       ``(iii) Applicable published guidance.--For purposes of 
     clause (ii), the term `applicable published guidance' means--

       ``(I) regulations, revenue rulings, revenue procedures, 
     information releases, notices, and announcements, and
       ``(II) any of the following which are issued to the 
     taxpayer: private letter rulings, technical advice memoranda, 
     and determination letters.''

       (c) Conforming Amendments.--
       (1) Subparagraph (B) of section 7430(c)(2) is amended by 
     striking ``paragraph (4)(B)'' and inserting ``paragraph 
     (4)(C)''.
       (2) Subparagraph (C) of section 7430(c)(4), as redesignated 
     by subsection (b), is amended by striking ``subparagraph 
     (A)'' and inserting ``this paragraph''.
       (3) Sections 6404(g) and 6656(c)(1), as amended by this 
     title, are each amended by striking ``section 
     7430(c)(4)(A)(iii)'' and inserting ``section 
     7430(c)(4)(A)(ii)''.

     SEC. 13332. INCREASED LIMIT ON ATTORNEY FEES.

       Paragraph (1) of section 7430(c) (defining reasonable 
     litigation costs) is amended--
       (1) by striking ``$75'' in clause (iii) of subparagraph (B) 
     and inserting ``$110'',
       (2) by striking ``an increase in the cost of living or'' in 
     clause (iii) of subparagraph (B), and
       (3) by adding after clause (iii) the following:

     ``In the case of any calendar year beginning after 1996, the 
     dollar amount referred to in clause (iii) shall be increased 
     by an amount equal to such dollar amount multiplied by the 
     cost-of-living adjustment determined under section 1(f)(3) 
     for such calendar year, by substituting `calendar year 1995' 
     for `calendar year 1992' in subparagraph (B) thereof. If any 
     dollar amount after being increased under the preceding 
     sentence is not a multiple of $10, such dollar amount shall 
     be rounded to the nearest multiple of $10.''

     SEC. 13333. FAILURE TO AGREE TO EXTENSION NOT TAKEN INTO 
                   ACCOUNT.

       Paragraph (1) of section 7430(b) (relating to requirement 
     that administrative remedies be exhausted) is amended by 
     adding at the end the following new sentence: ``Any failure 
     to agree to an extension of the time for the assessment of 
     any tax shall not be taken into account for purposes of 
     determining whether the prevailing party meets the 
     requirements of the preceding sentence.''

     SEC. 13334. AWARD OF LITIGATION COSTS PERMITTED IN 
                   DECLARATORY JUDGMENT PROCEEDINGS.

       Subsection (b) of section 7430 is amended by striking 
     paragraph (3) and by redesignating paragraph (4) as paragraph 
     (3).

     SEC. 13335. EFFECTIVE DATE.

       The amendments made by this part shall apply in the case of 
     proceedings commenced after the date of the enactment of this 
     Act.

 PART VIII--MODIFICATION TO RECOVERY OF CIVIL DAMAGES FOR UNAUTHORIZED 
                           COLLECTION ACTIONS

     SEC. 13336. INCREASE IN LIMIT ON RECOVERY OF CIVIL DAMAGES 
                   FOR UNAUTHORIZED COLLECTION ACTIONS.

       (a) General Rule.--Subsection (b) of section 7433 (relating 
     to damages) is amended by striking ``$100,000'' and inserting 
     ``$1,000,000''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to actions by officers or employees of the 
     Internal Revenue Service after the date of the enactment of 
     this Act.

     SEC. 13337. COURT DISCRETION TO REDUCE AWARD FOR LITIGATION 
                   COSTS FOR FAILURE TO EXHAUST ADMINISTRATIVE 
                   REMEDIES.

       (a) General Rule.--Paragraph (1) of section 7433(d) 
     (relating to civil damages for certain unauthorized 
     collection actions) is amended to read as follows:
       ``(1) Award for damages may be reduced if administrative 
     remedies not exhausted.--The amount of damages awarded under 
     subsection (b) may be reduced if the court determines that 
     the plaintiff has not exhausted the administrative remedies 
     available to such plaintiff within the Internal Revenue 
     Service.''
       (b) Effective Date.--The amendment made by this section 
     shall apply in the case of proceedings commenced after the 
     date of the enactment of this Act.

 PART IX--MODIFICATIONS TO PENALTY FOR FAILURE TO COLLECT AND PAY OVER 
                                  TAX

     SEC. 13341. PRELIMINARY NOTICE REQUIREMENT.

       (a) In General.--Section 6672 (relating to failure to 
     collect and pay over tax, or attempt to evade or defeat tax) 
     is amended by redesignating subsection (b) as subsection (c) 
     and by inserting after subsection (a) the following new 
     subsection:
       ``(b) Preliminary Notice Requirement.--
       ``(1) In general.--No penalty shall be imposed under 
     subsection (a) unless the Secretary notifies the taxpayer in 
     writing by mail to an address as determined under section 
     6212(b) that the taxpayer shall be subject to an assessment 
     of such penalty.
       ``(2) Timing of notice.--The mailing of the notice 
     described in paragraph (1) shall precede any notice and 
     demand of any penalty under subsection (a) by at least 60 
     days.
       ``(3) Statute of limitations.--If a notice described in 
     paragraph (1) with respect to any penalty is mailed before 
     the expiration of the period provided by section 6501 for the 
     assessment of such penalty (determined without regard to this 
     paragraph), the period provided by such section for the 
     assessment of such penalty shall not expire before the later 
     of--
       ``(A) the date 90 days after the date on which such notice 
     was mailed, or
       ``(B) if there is a timely protest of the proposed 
     assessment, the date 30 days after the Secretary makes a 
     final administrative determination with respect to such 
     protest.
       ``(4) Exception for jeopardy.--This subsection shall not 
     apply if the Secretary finds that the collection of the 
     penalty is in jeopardy.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to proposed assessments made after June 30, 1996.

     SEC. 13342. DISCLOSURE OF CERTAIN INFORMATION WHERE MORE THAN 
                   1 PERSON LIABLE FOR PENALTY FOR FAILURE TO 
                   COLLECT AND PAY OVER TAX.

       (a) In General.--Subsection (e) of section 6103 (relating 
     to disclosure to persons having material interest), as 
     amended by section 13318, is amended by adding at the end the 
     following new paragraph:
       ``(9) Disclosure of certain information where more than 1 
     person subject to penalty under section 6672.--If the 
     Secretary determines that a person is liable for a penalty 
     under section 6672(a) with respect to any failure, upon 
     request in writing of such person, the Secretary shall 
     disclose in writing to such person--
       ``(A) the name of any other person whom the Secretary has 
     determined to be liable for such penalty with respect to such 
     failure, and
       ``(B) whether the Secretary has attempted to collect such 
     penalty from such other person, the general nature of such 
     collection activities, and the amount collected.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act.

     SEC. 13343. RIGHT OF CONTRIBUTION WHERE MORE THAN 1 PERSON 
                   LIABLE FOR PENALTY FOR FAILURE TO COLLECT AND 
                   PAY OVER TAX.

       (a) In General.--Section 6672 (relating to failure to 
     collect and pay over tax, or attempt to evade or defeat tax) 
     is amended by adding at the end the following new subsection:
       ``(d) Right of Contribution Where More Than 1 Person Liable 
     for Penalty.--If more than 1 person is liable for the penalty 
     under subsection (a) with respect to any tax, each person who 
     paid such penalty shall be entitled to recover from other 
     persons who are liable for such penalty an amount equal to 
     the excess of the amount paid by such person over such 
     person's proportionate share of the penalty. Any claim for 
     such a recovery may be made only in a proceeding which is 
     separate from, and is not joined with--
       ``(1) an action for collection of such penalty brought by 
     the United States, or
       ``(2) a proceeding in which the United States files a 
     counterclaim or third-party complaint for the collection of 
     such penalty.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to penalties assessed after the date of the 
     enactment of this Act.

     SEC. 13344. VOLUNTEER BOARD MEMBERS OF TAX-EXEMPT 
                   ORGANIZATIONS EXEMPT FROM PENALTY FOR FAILURE 
                   TO COLLECT AND PAY OVER TAX.

       (a) In General.--Section 6672 is amended by adding at the 
     end the following new subsection:
       ``(e) Exception for Voluntary Board Members of Tax-Exempt 
     Organizations.--No penalty shall be imposed by subsection (a) 
     on any unpaid, volunteer member of any board of trustees or 
     directors of an organization exempt from tax under subtitle A 
     if such member--
       ``(1) is solely serving in an honorary capacity,
       ``(2) does not participate in the day-to-day or financial 
     operations of the organization, and
       ``(3) does not have actual knowledge of the failure on 
     which such penalty is imposed.

     The preceding sentence shall not apply if it results in no 
     person being liable for the penalty imposed by subsection 
     (a).''
       (b) Public Information Requirements.--

[[Page H11097]]

       (1) In general.--The Secretary of the Treasury or the 
     Secretary's delegate (hereafter in this subsection referred 
     to as the ``Secretary'') shall take such actions as may be 
     appropriate to ensure that employees are aware of their 
     responsibilities under the Federal tax depository system, the 
     circumstances under which employees may be liable for the 
     penalty imposed by section 6672 of the Internal Revenue Code 
     of 1986, and the responsibility to promptly report to the 
     Internal Revenue Service any failure referred to in 
     subsection (a) of such section 6672. Such actions shall 
     include--
       (A) printing of a warning on deposit coupon booklets and 
     the appropriate tax returns that certain employees may be 
     liable for the penalty imposed by such section 6672, and
       (B) the development of a special information packet.
       (2) Development of explanatory materials.--The Secretary 
     shall develop materials explaining the circumstances under 
     which board members of tax-exempt organizations (including 
     voluntary and honorary members) may be subject to penalty 
     under section 6672 of such Code. Such materials shall be made 
     available to tax-exempt organizations.
       (3) IRS instructions.--The Secretary shall clarify the 
     instructions to Internal Revenue Service employees on the 
     application of the penalty under section 6672 of such Code 
     with regard to voluntary members of boards of trustees or 
     directors of tax- exempt organizations.

          PART X--MODIFICATIONS OF RULES RELATING TO SUMMONSES

     SEC. 13346. ENROLLED AGENTS INCLUDED AS THIRD-PARTY 
                   RECORDKEEPERS.

       (a) In General.--Paragraph (3) of section 7609(a) (relating 
     to third-party recordkeeper defined) is amended by striking 
     ``and'' at the end of subparagraph (G), by striking the 
     period at the end of subparagraph (H) and inserting ``; 
     and'', and by adding at the end the following the 
     subparagraph:
       ``(I) any enrolled agent.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to summonses issued after the date of the 
     enactment of this Act.

     SEC. 13347. SAFEGUARDS RELATING TO DESIGNATED SUMMONSES.

       (a) Standard of Review.--Subparagraph (A) of section 
     6503(j)(2) (defining designated summons) is amended by 
     redesignating clauses (i) and (ii) as clauses (ii) and (iii), 
     respectively, and by inserting before clause (ii) (as so 
     redesignated) the following new clause:
       ``(i) the issuance of such summons is preceded by a review 
     of such issuance by the regional counsel of the Office of 
     Chief Counsel for the region in which the examination of the 
     corporation is being conducted,''.
       (b) Limitation on Persons to Whom Designated Summons May Be 
     Issued.--Paragraph (1) of section 6503(j) is amended by 
     striking ``with respect to any return of tax by a 
     corporation'' and inserting ``to a corporation (or to any 
     other person to whom the corporation has transferred records) 
     with respect to any return of tax by such corporation for a 
     taxable year (or other period) for which such corporation is 
     being examined under the coordinated examination program (or 
     any successor program) of the Internal Revenue Service''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to summonses issued after the date of the 
     enactment of this Act.

     SEC. 13348. ANNUAL REPORT TO CONGRESS CONCERNING DESIGNATED 
                   SUMMONSES.

       Not later than December 31 of each calendar year after 
     1995, the Secretary of the Treasury or his delegate shall 
     report to the Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate on 
     the number of designated summonses (as defined in section 
     6503(j) of the Internal Revenue Code of 1986) which were 
     issued during the preceding 12 months.

  PART XI--RELIEF FROM RETROACTIVE APPLICATION OF TREASURY DEPARTMENT 
                              REGULATIONS

     SEC. 13351. RELIEF FROM RETROACTIVE APPLICATION OF TREASURY 
                   DEPARTMENT REGULATIONS.

       (a) In General.--Subsection (b) of section 7805 (relating 
     to rules and regulations) is amended to read as follows:
       ``(b) Retroactivity of Regulations.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, no temporary, proposed, or final regulation 
     relating to the internal revenue laws shall apply to any 
     taxable period ending before the earliest of the following 
     dates:
       ``(A) The date on which such regulation is filed with the 
     Federal Register.
       ``(B) In the case of any final regulation, the date on 
     which any proposed or temporary regulation to which such 
     final regulation relates was filed with the Federal Register.
       ``(C) The date on which any notice substantially describing 
     the expected contents of any temporary, proposed, or final 
     regulation is issued to the public.
       ``(2) Exception for promptly issued regulations.--Paragraph 
     (1) shall not apply to regulations filed or issued within 12 
     months of the date of the enactment of the statutory 
     provision to which the regulation relates.
       ``(3) Prevention of abuse.--The Secretary may provide that 
     any regulation may take effect or apply retroactively to 
     prevent abuse.
       ``(4) Correction of procedural defects.--The Secretary may 
     provide that any regulation may apply retroactively to 
     correct a procedural defect in the issuance of any prior 
     regulation.
       ``(5) Internal regulations.--The limitation of paragraph 
     (1) shall not apply to any regulation relating to internal 
     Treasury Department policies, practices, or procedures.
       ``(6) Congressional authorization.--The limitation of 
     paragraph (1) may be superseded by a legislative grant from 
     Congress authorizing the Secretary to prescribe the effective 
     date with respect to any regulation.
       ``(7) Election to apply retroactively.--Paragraph (1) shall 
     not apply to any regulation which the taxpayer elects to 
     apply before the dates specified in paragraph (1) but only if 
     such election applies to all regulations which were issued 
     with such regulation under the statutory provision to which 
     such regulation relates.
       ``(8) Application to rulings.--The Secretary may prescribe 
     the extent, if any, to which any ruling (including any 
     judicial decision or any administrative determination other 
     than by regulation) relating to the internal revenue laws 
     shall be applied without retroactive effect.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply with respect to regulations which relate to 
     statutory provisions enacted on or after the date of the 
     enactment of this Act.

                   PART XII--MISCELLANEOUS PROVISIONS

     SEC. 13356. REPORT ON PILOT PROGRAM FOR APPEAL OF ENFORCEMENT 
                   ACTIONS.

       Not later than March 1, 1996, the Secretary of the Treasury 
     or his delegate shall submit to the Committee on Ways and 
     Means of the House of Representatives and the Committee on 
     Finance of the Senate a report on the pilot program for 
     appeals of enforcement actions (including lien, levy, and 
     seizure actions) to the Appeals Division of the Internal 
     Revenue Service, together with such recommendations as he may 
     deem advisable.

     SEC. 13357. PHONE NUMBER OF PERSON PROVIDING PAYEE STATEMENTS 
                   REQUIRED TO BE SHOWN ON SUCH STATEMENT.

       (a) General Rule.--The following provisions are each 
     amended by striking ``name and address'' and inserting 
     ``name, address, and phone number of the information 
     contact'':
       (1) Section 6041(d)(1).
       (2) Section 6041A(e)(1).
       (3) Section 6042(c)(1).
       (4) Section 6044(e)(1).
       (5) Section 6045(b)(1).
       (6) Section 6049(c)(1)(A).
       (7) Section 6050B(b)(1).
       (8) Section 6050H(d)(1).
       (9) Section 6050I(e)(1).
       (10) Section 6050J(e).
       (11) Section 6050K(b)(1).
       (12) Section 6050N(b)(1).
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to statements required to be furnished after 
     December 31, 1996 (determined without regard to any 
     extension).

     SEC. 13358. REQUIRED NOTICE OF CERTAIN PAYMENTS.

       If any payment is received by the Secretary of the Treasury 
     or his delegate from any taxpayer and the Secretary cannot 
     associate such payment with such taxpayer, the Secretary 
     shall make reasonable efforts to notify the taxpayer of such 
     inability within 60 days after the receipt of such payment.

     SEC. 13359. UNAUTHORIZED ENTICEMENT OF INFORMATION 
                   DISCLOSURE.

       (a) In General.--Subchapter B of chapter 76 (relating to 
     proceedings by taxpayers and third parties), as amended by 
     section 13316(a), is amended by redesignating section 7435 as 
     section 7436 and by inserting after section 7434 the 
     following new section:

     ``SEC. 7435. CIVIL DAMAGES FOR UNAUTHORIZED ENTICEMENT OF 
                   INFORMATION DISCLOSURE.

       ``(a) In General.--If any officer or employee of the United 
     States intentionally compromises the determination or 
     collection of any tax due from an attorney, certified public 
     accountant, or enrolled agent representing a taxpayer in 
     exchange for information conveyed by the taxpayer to the 
     attorney, certified public accountant, or enrolled agent for 
     purposes of obtaining advice concerning the taxpayer's tax 
     liability, such taxpayer may bring a civil action for damages 
     against the United States in a district court of the United 
     States. Such civil action shall be the exclusive remedy for 
     recovering damages resulting from such actions.
       ``(b) Damages.--In any action brought under subsection (a), 
     upon a finding of liability on the part of the defendant, the 
     defendant shall be liable to the plaintiff in an amount equal 
     to the lesser of $500,000 or the sum of--
       ``(1) actual, direct economic damages sustained by the 
     plaintiff as a proximate result of the information 
     disclosure, and
       ``(2) the costs of the action.

     Damages shall not include the taxpayer's liability for any 
     civil or criminal penalties, or other losses attributable to 
     incarceration or the imposition of other criminal sanctions.
       ``(c) Payment Authority.--Claims pursuant to this section 
     shall be payable out of funds appropriated under section 1304 
     of title 31, United States Code.
       ``(d) Period for Bringing Action.--Notwithstanding any 
     other provision of law, an action to enforce liability 
     created under this section may be brought without regard to 
     the amount in controversy and may be brought only within 2 
     years after the date 

[[Page H11098]]

     the actions creating such liability would have been 
     discovered by exercise of reasonable care.
       ``(e) Mandatory Stay.--Upon a certification by the 
     Commissioner or the Commissioner's delegate that there is an 
     ongoing investigation or prosecution of the taxpayer, the 
     district court before which an action under this section is 
     pending, shall stay all proceedings with respect to such 
     action pending the conclusion of the investigation or 
     prosecution.
       ``(f) Crime-Fraud Exception.--Subsection (a) shall not 
     apply to information conveyed to an attorney, certified 
     public accountant, or enrolled agent for the purpose of 
     perpetrating a fraud or crime.''
       (b) Clerical Amendment.--The table of sections for 
     subchapter B of chapter 76, as amended by section 13316(b), 
     is amended by striking the item relating to section 7435 and 
     by adding at the end the following new items:

``Sec. 7435. Civil damages for unauthorized enticement of information 
              disclosure.
``Sec. 7436. Cross references.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to actions after the date of the enactment of 
     this Act.

     SEC. 13360. ANNUAL REMINDERS TO TAXPAYERS WITH OUTSTANDING 
                   DELINQUENT ACCOUNTS.

       (a) In General.--Chapter 77 (relating to miscellaneous 
     provisions) is amended by adding at the end the following new 
     section:

     ``SEC. 7524. ANNUAL NOTICE OF TAX DELINQUENCY.

       ``Not less often than annually, the Secretary shall send a 
     written notice to each taxpayer who has a tax delinquent 
     account of the amount of the tax delinquency as of the date 
     of the notice.''
       (b) Clerical Amendment.--The table of sections for chapter 
     77 is amended by adding at the end the following new item:

``Sec. 7524. Annual notice of tax delinquency.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to calendar years after 1995.

     SEC. 13361. 5-YEAR EXTENSION OF AUTHORITY FOR UNDERCOVER 
                   OPERATIONS.

       (a) In General.--Paragraph (3) of section 7601(c) of the 
     Anti-Drug Abuse Act of 1988 is amended by striking all that 
     follows ``this Act'' and inserting a period.
       (b) Restoration of Authority for 5 Years.--Subsection (c) 
     of section 7608 is amended by adding at the end the following 
     new paragraph:
       ``(6) Application of section.--The provisions of this 
     subsection--
       ``(A) shall apply after November 17, 1988, and before 
     January 1, 1990, and
       ``(B) shall apply after the date of the enactment of this 
     paragraph and before January 1, 2001.

     All amounts expended pursuant to this subsection during the 
     period described in subparagraph (B) shall be recovered to 
     the extent possible, and deposited in the Treasury of the 
     United States as miscellaneous receipts, before January 1, 
     2001.''
       (c) Enhanced Oversight.--
       (1) Additional information required in reports to 
     congress.--Subparagraph (B) of section 7608(c)(4) is 
     amended--
       (A) by striking ``preceding the period'' in clause (ii),
       (B) by striking ``and'' at the end of clause (ii), and
       (C) by striking clause (iii) and inserting the following:
       ``(iii) the number, by programs, of undercover 
     investigative operations closed in the 1-year period for 
     which such report is submitted, and
       ``(iv) the following information with respect to each 
     undercover investigative operation pending as of the end of 
     the 1-year period for which such report is submitted or 
     closed during such 1-year period--

       ``(I) the date the operation began and the date of the 
     certification referred to in the last sentence of paragraph 
     (1),
       ``(II) the total expenditures under the operation and the 
     amount and use of the proceeds from the operation,
       ``(III) a detailed description of the operation including 
     the potential violation being investigated and whether the 
     operation is being conducted under grand jury auspices, and
       ``(IV) the results of the operation including the results 
     of criminal proceedings.''

       (2) Audits required without regard to amounts involved.--
     Subparagraph (C) of section 7608(c)(5) is amended to read as 
     follows:
       ``(C) Undercover investigative operation.--The term 
     `undercover investigative operation' means any undercover 
     investigative operation of the Service; except that, for 
     purposes of subparagraphs (A) and (C) of paragraph (4), such 
     term only includes an operation which is exempt from section 
     3302 or 9102 of title 31, United States Code.''
       (3) Effective date.--The amendments made by this subsection 
     shall take effect on the date of the enactment of this Act.

     SEC. 13362. DISCLOSURE OF FORM 8300 INFORMATION ON CASH 
                   TRANSACTIONS.

       (a) In General.--Subsection (l) of section 6103 (relating 
     to disclosure of returns and return information for purposes 
     other than tax administration) is amended by adding at the 
     end the following new paragraph:
       ``(15) Disclosure of returns filed under section 6050i.--
     The Secretary may, upon written request, disclose to officers 
     and employees of--
       ``(A) any Federal agency,
       ``(B) any agency of a State or local government, or
       ``(C) any agency of the government of a foreign country,

     information contained on returns filed under section 6050I. 
     Any such disclosure shall be made on the same basis, and 
     subject to the same conditions, as apply to disclosures of 
     information on reports filed under section 5313 of title 31, 
     United States Code; except that no disclosure under this 
     paragraph shall be made for purposes of the administration of 
     any tax law.''
       (b) Conforming Amendments.--
       (1) Subsection (i) of section 6103 is amended by striking 
     paragraph (8).
       (2) Subparagraph (A) of section 6103(p)(3) is amended--
       (A) by striking ``(7)(A)(ii), or (8)'' and inserting ``or 
     (7)(A)(ii)'', and
       (B) by striking ``or (14)'' and inserting ``(14), or 
     (15)''.
       (3) The material preceding subparagraph (A) of section 
     6103(p)(4) is amended--
       (A) by striking ``(5), or (8)'' and inserting ``or (5)'',
       (B) by striking ``(i)(3)(B)(i), or (8)'' and inserting 
     ``(i)(3)(B)(i),'', and
       (C) by striking ``or (12)'' and inserting ``(12), or 
     (15)''.
       (4) Clause (ii) of section 6103(p)(4)(F) is amended--
       (A) by striking ``(5), or (8)'' and inserting ``or (5)'', 
     and
       (B) by striking ``or (14)'' and inserting ``(14), or 
     (15)''.
       (5) Paragraph (2) of section 7213(a) is amended by striking 
     ``or (12)'' and inserting ``(12), or (15)''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 13363. DISCLOSURE OF RETURNS AND RETURN INFORMATION TO 
                   DESIGNEE OF TAXPAYER.

       Subsection (c) of section 6103 (relating to disclosure of 
     returns and return information to designee of taxpayer) is 
     amended by striking ``written request for or consent to such 
     disclosure'' and inserting ``request for or consent to such 
     disclosure''.

     SEC. 13364. STUDY OF NETTING OF INTEREST ON OVERPAYMENTS AND 
                   LIABILITIES.

       (a) In General.--The Secretary of the Treasury or his 
     delegate shall--
       (1) conduct a study of the manner in which the Internal 
     Revenue Service has implemented the netting of interest on 
     overpayments and underpayments and of the policy and 
     administrative implications of global netting, and
       (2) before submitting the report of such study, hold a 
     public hearing to receive comments on the matters included in 
     such study.
       (b) Report.--The report of such study shall be submitted 
     not later than 6 months after the date of the enactment of 
     this Act to the Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate.

     SEC. 13365. CREDIT FOR EXPENSES OF CERTAIN TCMP AUDITS.

       (a) In General.--Subchapter B of chapter 65 is amended by 
     adding at the end the following new section:

     ``SEC. 6428. CREDIT FOR EXPENSES OF 1994 TCMP AUDITS.

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     subtitle A an amount equal to the qualified TCMP expenses 
     paid or incurred by the taxpayer during the taxable year.
       ``(b) Limitation.--The amount of the credit allowed by 
     subsection (a) shall not exceed $3,000 with respect to an 
     audit.
       ``(c) Qualified TCMP Expenses.--For purposes of this 
     section, the term `qualified TCMP expenses' means amounts 
     which would (but for subsection (d)) be allowed as a 
     deduction under section 162 or 212(3) in connection with an 
     audit under the Taxpayer Compliance Measurement Program of 
     the taxpayer's return of tax imposed by chapter 1 for any 
     taxable year beginning during 1994. Such term shall not 
     include any expense in connection with an audit of an estate, 
     trust, partnership, or S corporation.
       ``(d) Denial of Double Benefit.--No deduction shall be 
     allowed under chapter 1 for any amount for which a credit is 
     allowed under this section.
       ``(e) Credit Treated as Subpart C Credit.--For purposes of 
     this title, the credit allowed under subsection (a) shall be 
     treated as a credit allowed under subpart C of part IV of 
     subchapter A of chapter 1.''
       (b) Technical Amendments.--
       (1) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``, or 
     from section 6428 of such Code''.
       (2) The table of sections for such subchapter B is amended 
     by adding at the end the following new item:

``Sec. 6428. Credit for expenses of 1994 TCMP audits.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred after December 31, 
     1994, in taxable years ending after such date.

     SEC. 13366. EXPENSES OF DETECTION OF UNDERPAYMENTS AND FRAUD, 
                   ETC.

       (a) In General.--Section 7623 (relating to expenses of 
     deduction and punishment of frauds) is amended to read as 
     follows:

[[Page H11099]]


     ``SEC. 7623. EXPENSES OF DETECTION OF UNDERPAYMENTS AND 
                   FRAUD, ETC.

       ``The Secretary, under regulations prescribed by the 
     Secretary, is authorized to pay such sums as he deem 
     necessary for--
       ``(1) detecting underpayments of tax, and
       ``(2) detecting and bringing to trial and punishment 
     persons guilty of violating the internal revenue laws or 
     conniving at the same,

     in cases where such expenses are not otherwise provided for 
     by law. Any amount payable under the preceding sentence shall 
     be paid from the proceeds of amounts (other than interest) 
     collected by reason of the information provided, and any 
     amount so collected shall be available for such payments.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter B of chapter 78 is amended by striking the item 
     relating to section 7623 and inserting the following new 
     item:

``Sec. 7623. Expenses of detection of underpayments and fraud, etc.''.

       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date which is 6 months after the 
     enactment of this Act.
       (d) Report.--The Secretary of the Treasury or his delegate 
     shall submit an annual report to the Committee on Ways and 
     Means of the House of Representatives and the Committee on 
     Finance of the Senate on the payments under section 7623 of 
     the Internal Revenue Code of 1986 during the year and on the 
     amounts collected for which such payments were made.
              Subtitle D--Additional Technical Corrections

     SEC. 13401. REPORTING OF REAL ESTATE TRANSACTIONS.

       (a) In General.--Paragraph (3) of section 6045(e) (relating 
     to prohibition of separate charge for filing return) is 
     amended by adding at the end the following new sentence: 
     ``Nothing in this paragraph shall be construed to prohibit 
     the real estate reporting person from taking into account its 
     cost of complying with such requirement in establishing its 
     charge (other than a separate charge for complying with such 
     requirement) to any customer for performing services in the 
     case of a real estate transaction.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in section 1015(e)(2)(A) of 
     the Technical and Miscellaneous Revenue Act of 1988.

     SEC. 13402. CLARIFICATION OF DENIAL OF DEDUCTION FOR STOCK 
                   REDEMPTION EXPENSES.

       (a) In General.--Paragraph (1) of section 162(k) is amended 
     by striking ``the redemption of its stock'' and inserting 
     ``the reacquisition of its stock or of the stock of any 
     related person (as defined in section 465(b)(3)(C))''.
       (b) Certain Deductions Permitted.--Subparagraph (A) of 
     section 162(k)(2) is amended by striking ``or'' at the end of 
     clause (i), by redesignating clause (ii) as clause (iii), and 
     by inserting after clause (i) the following new clause:
       ``(ii) deduction for amounts which are properly allocable 
     to indebtedness and amortized over the term of such 
     indebtedness, or''.
       (c) Clerical Amendment.--The subsection heading for 
     subsection (k) of section 162 is amended by striking 
     ``Redemption'' and inserting ``Reacquisition''.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to amounts paid 
     or incurred after September 13, 1995, in taxable years ending 
     after such date.
       (2) Subsection (b).--The amendment made by subsection (b) 
     shall take effect as if included in the amendment made by 
     section 613 of the Tax Reform Act of 1986.

     SEC. 13403. CLARIFICATION OF DEPRECIATION CLASS FOR CERTAIN 
                   ENERGY PROPERTY.

       (a) In General.--Subparagraph (B) of section 168(e)(3) 
     (relating to 5-year property) is amended by adding at the end 
     the following flush sentence:

     ``Nothing in any provision of law shall be construed to treat 
     property as not being described in clause (vi)(I) (or the 
     corresponding provisions of prior law) by reason of being 
     public utility property (within the meaning of section 
     48(a)(3)).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the amendments made by 
     section 11813 of the Revenue Reconciliation Act of 1990.

     SEC. 13404. CLERICAL AMENDMENT TO SECTION 404.

       (a) In General.--Paragraph (1) of section 404(j) is amended 
     by striking ``(10)'' and inserting ``(9)''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the amendments made by 
     section 713(d)(4)(A) of the Deficit Reduction Act of 1984.

     SEC. 13405. TREATMENT OF CERTAIN VETERANS' REEMPLOYMENT 
                   RIGHTS.

       (a) In General.--Section 414 is amended by adding at the 
     end the following new subsection:
       ``(u) Special Rules Relating to Veterans' Reemployment 
     Rights.--
       ``(1) Treatment of certain contributions made pursuant to 
     veterans' reemployment rights.--If any contribution is made 
     by an employer or an employee under an individual account 
     plan with respect to an employee, or by an employee to a 
     defined benefit pension plan that provides for employee 
     contributions, and such contribution is required by reason of 
     such employee's rights under chapter 43 of title 38, United 
     States Code, resulting from qualified military service, 
     then--
       ``(A) such contribution shall not be subject to any 
     otherwise applicable limitation contained in section 402(g), 
     402(h), 403(b), 404(a), 404(h), 408, 415, or 457, and shall 
     not be taken into account in applying such limitations to 
     other contributions or benefits under such plan or any other 
     plan, with respect to the year in which the contribution is 
     made,
       ``(B) such contribution shall be subject to the limitations 
     referred to in subparagraph (A) with respect to the year to 
     which the contribution relates (in accordance with rules 
     prescribed by the Secretary), and
       ``(C) such plan shall not be treated as failing to meet the 
     requirements of section 401(a)(4), 401(a)(26), 401(k)(3), 
     401(m), 403(b)(12), 408(k)(3), 408(k)(6), 410(b), or 416 by 
     reason of the making of such contribution.

     For purposes of the preceding sentence, any elective deferral 
     or employee contribution made under paragraph (2) shall be 
     treated as required by reason of the employee's rights under 
     such chapter.
       ``(2) Reemployment rights with respect to elective 
     deferrals.--
       ``(A) In general.--For purposes of this subchapter and 
     subchapter E, if an employee is entitled to the benefits of 
     chapter 43 of title 38, United States Code, with respect to 
     any plan which provides for elective deferrals, the employer 
     sponsoring the plan shall be treated as meeting the 
     requirements of such chapter 43 with respect to such elective 
     deferrals only if such employer--
       ``(i) permits such employee to make additional elective 
     deferrals under such plan (in the amount determined under 
     subparagraph (B) or such lesser amount as is elected by the 
     employee) during the period which begins on the date of the 
     reemployment of such employee with such employer and has the 
     same length as the lesser of--

       ``(I) the product of 3 and the period of qualified military 
     service which resulted in such rights, and
       ``(II) 5 years, and

       ``(ii) makes a matching contribution with respect to any 
     additional elective deferral made pursuant to clause (i) 
     which would have been required had such deferral actually 
     been made during the period of such qualified military 
     service.
       ``(B) Amount of makeup required.--The amount determined 
     under this subparagraph with respect to any plan is the 
     maximum amount of the elective deferrals that the individual 
     would have been permitted to make under the plan in 
     accordance with the limitations referred to in paragraph 
     (1)(A) during his period of qualified military service if he 
     had continued to be employed by the employer during such 
     period and received compensation as determined under 
     paragraph (7). Proper adjustment shall be made to the amount 
     determined under the preceding sentence for any elective 
     deferrals actually made during the period of such qualified 
     military service.
       ``(C) Elective deferral.--For purposes of this paragraph, 
     the term `elective deferral' has the meaning given such term 
     by section 402(g)(3); except that such term shall include any 
     deferral of compensation under an eligible deferred 
     compensation plan (as defined in section 457(b)).
       ``(D) After-tax employee contributions.--References in 
     subparagraphs (A) and (B) to elective deferrals shall be 
     treated as including references to other employee 
     contributions.
       ``(3) Certain retroactive adjustments not required.--For 
     purposes of this subchapter and subchapter E, no provision of 
     chapter 43 of title 38, United States Code, shall be 
     construed as requiring--
       ``(A) any crediting of earnings to an employee with respect 
     to any contribution before such contribution is actually 
     made, or
       ``(B) any allocation of any forfeiture with respect to the 
     period of qualified military service.
       ``(4) Loan repayment suspensions permitted.--If any plan 
     suspends the obligation to repay any loan made to an employee 
     from such plan for any part of any period during which such 
     employee is performing qualified military service, such 
     suspension shall not be taken into account for purposes of 
     section 72(p), 401(a), or 4975(d)(1).
       ``(5) Qualified military service.--For purposes of this 
     subsection, the term `qualified military service' means any 
     service in the uniformed services (as defined in chapter 43 
     of title 38, United States Code) by any individual if such 
     individual is entitled to reemployment rights under such 
     chapter with respect to such service.
       ``(6) Individual account plan.--For purposes of this 
     subsection, the term `individual account plan' means any 
     defined contribution plan, any tax-sheltered annuity plan 
     under section 403(b), and any eligible deferred compensation 
     plan (as defined in section 457(b)).
       ``(7) Compensation.--For purposes of section 415(c)(3), an 
     employee who is in qualified military service shall be 
     treated as receiving compensation from the employer during 
     such period of qualified military service equal to--
       ``(A) the compensation the employee would have received 
     during such period if the employee were not in qualified 
     military service, 

[[Page H11100]]

     determined based on the rate of pay the employee would have 
     received from the employer but for absence during the period 
     of qualified military service, or
       ``(B) if the compensation of the employee was not based on 
     a fixed rate, the employee's average compensation from the 
     employer during the 12-month period immediately preceding the 
     qualified military service (or, if shorter, the period of 
     employment immediately preceding the qualified military 
     service).
       ``(8) Requirements for qualified retirement plan.--For 
     purposes of this subchapter and subchapter E, an employer 
     sponsoring a plan shall be treated as meeting the 
     requirements of chapter 43 of title 38, United States Code, 
     only if each of the following requirements is met:
       ``(A) An individual reemployed under such chapter is 
     treated with respect to such plan as not having incurred a 
     break in service with the employer maintaining the plan by 
     reason of such individual's period of qualified military 
     service.
       ``(B) Each period of qualified military service served by 
     an individual is, upon reemployment under such chapter, 
     deemed with respect to such plan to constitute service with 
     the employer maintaining the plan for the purpose of 
     determining the nonforfeitability of the individual's accrued 
     benefits under such plan and for the purpose of determining 
     the accrual of benefits under such plan.
       ``(C) An individual reemployed under such chapter is 
     entitled to accrued benefits that are contingent on the 
     making of, or derived from, employee contributions or 
     elective deferrals only to the extent the individual makes 
     payment to the plan with respect to such contributions or 
     deferrals. No such payment may exceed the amount the 
     individual would have been permitted or required to 
     contribute had the individual remained continuously employed 
     by the employer throughout the period of qualified military 
     service. Any payment to such plan shall be made during the 
     period beginning with the date of reemployment and whose 
     duration is 3 times the period of the qualified military 
     service (but not greater than 5 years).
       ``(9) References.--For purposes of this section, any 
     reference to chapter 43 of title 38, United States Code, 
     shall be treated as a reference to such chapter as in effect 
     on December 12, 1994 (without regard to any subsequent 
     amendment).''
       (b) Effective Date.--The amendments made by this section 
     shall be effective as of December 12, 1994.
                  Subtitle E--Tax Information Sharing

     SEC. 13501. DISCLOSURE OF RETURN INFORMATION FOR 
                   ADMINISTRATION OF CERTAIN VETERANS PROGRAMS.

       (a) General Rule.--Subparagraph (D) of section 6103(l)(7) 
     (relating to disclosure of return information to Federal, 
     State, and local agencies administering certain programs) is 
     amended by striking ``Clause (viii) shall not apply after 
     September 30, 1998.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act.
                     Subtitle F--Revenue Increases

               PART I--PROVISIONS RELATING TO BUSINESSES

     SEC. 13601. TAX TREATMENT OF CERTAIN EXTRAORDINARY DIVIDENDS.

       (a) Treatment of Extraordinary Dividends in Excess of 
     Basis.--Paragraph (2) of section 1059(a) (relating to 
     corporate shareholder's basis in stock reduced by nontaxed 
     portion of extraordinary dividends) is amended to read as 
     follows:
       ``(2) Amounts in excess of basis.--If the nontaxed portion 
     of such dividends exceeds such basis, such excess shall be 
     treated as gain from the sale or exchange of such stock for 
     the taxable year in which the extraordinary dividend is 
     received.''
       (b) Treatment of Redemptions Where Options Involved.--
     Paragraph (1) of section 1059(e) (relating to treatment of 
     partial liquidations and non-pro rata redemptions) is amended 
     to read as follows:
       ``(1) Treatment of partial liquidations and certain 
     redemptions.--Except as otherwise provided in regulations--
       ``(A) Redemptions.--In the case of any redemption of 
     stock--
       ``(i) which is part of a partial liquidation (within the 
     meaning of section 302(e)) of the redeeming corporation,
       ``(ii) which is not pro rata as to all shareholders, or
       ``(iii) which would not have been treated (in whole or in 
     part) as a dividend if any options had not been taken into 
     account under section 318(a)(4),

     any amount treated as a dividend with respect to such 
     redemption shall be treated as an extraordinary dividend to 
     which paragraphs (1) and (2) of subsection (a) apply without 
     regard to the period the taxpayer held such stock. In the 
     case of a redemption described in clause (iii), only the 
     basis in the stock redeemed shall be taken into account under 
     subsection (a).
       ``(B) Reorganizations, etc.--An exchange described in 
     section 356(a)(1) which is treated as a dividend under 
     section 356(a)(2) shall be treated as a redemption of stock 
     for purposes of applying subparagraph (A).''
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to distributions after May 3, 1995.
       (2) Transition rule.--The amendments made by this section 
     shall not apply to any distribution made pursuant to the 
     terms of--
       (A) a written binding contract in effect on May 3, 1995, 
     and at all times thereafter before such distribution, or
       (B) a tender offer outstanding on May 3, 1995.
       (3) Certain dividends not pursuant to certain 
     redemptions.--In determining whether the amendment made by 
     subsection (a) applies to any extraordinary dividend other 
     than a dividend treated as an extraordinary dividend under 
     section 1059(e)(1) of the Internal Revenue Code of 1986 (as 
     amended by this Act), paragraphs (1) and (2) shall be applied 
     by substituting ``September 13, 1995'' for ``May 3, 1995''.

     SEC. 13602. REGISTRATION OF CONFIDENTIAL CORPORATE TAX 
                   SHELTERS.

       (a) In General.--Section 6111 (relating to registration of 
     tax shelters) is amended by redesignating subsections (d) and 
     (e) as subsections (e) and (f), respectively, and by 
     inserting after subsection (c) the following new subsection:
       ``(d) Certain Confidential Arrangements Treated as Tax 
     Shelters.--
       ``(1) In general.--For purposes of this section, the term 
     `tax shelter' includes any entity, plan, arrangement, or 
     transaction--
       ``(A) a significant purpose of which is the avoidance or 
     evasion of Federal income tax for a participant which is a 
     corporation,
       ``(B) which is offered to any potential participant under 
     conditions of confidentiality, and
       ``(C) for which the tax shelter organizers may receive fees 
     in excess of $100,000 in the aggregate.
       ``(2) Conditions of confidentiality.--For purposes of 
     paragraph (1)(C), an offer is under conditions of 
     confidentiality if--
       ``(A) the potential participant to whom the offer is made 
     (or any other person acting on behalf of such participant) 
     has an understanding or agreement with or for the benefit of 
     any promoter of the tax shelter that such participant (or 
     other person) will limit disclosure of the tax shelter or any 
     significant tax features of the tax shelter, or
       ``(B) any promoter of the tax shelter--
       ``(i) claims, knows, or has reason to know,
       ``(ii) knows or has reason to know that any other person 
     (other than the potential participant) claims, or
       ``(iii) causes another person to claim,

     that the tax shelter (or any aspect thereof) is proprietary 
     to any person other than the potential participant or is 
     otherwise protected from disclosure to or use by others.

     For purposes of this subsection, the term `promoter' means 
     any person who participates in the organization, management, 
     or sale of the tax shelter.
       ``(3) Persons other than organizer required to register in 
     certain cases.--
       ``(A) In general.--If--
       ``(i) the requirements of subsection (a) are not met with 
     respect to any tax shelter (as defined in paragraph (1)) by 
     any tax shelter organizer, and
       ``(ii) no tax shelter organizer is a United States person,

     then each United States person who discussed participation in 
     such shelter shall register such shelter under subsection 
     (a).
       ``(B) Exception.--Subparagraph (A) shall not apply to a 
     United States person who discussed participation in a tax 
     shelter if--
       ``(i) such person notified the promoter in writing (not 
     later than the close of the day on which such discussions 
     began) that such person would not participate in such 
     shelter, and
       ``(ii) such person does not participate in such shelter.
       ``(4) Offer to participate treated as offer for sale.--For 
     purposes of subsections (a) and (b), an offer to participate 
     in a tax shelter (as defined in paragraph (1)) shall be 
     treated as an offer for sale.''
       (b) Penalty.--Subsection (a) of section 6707 (relating to 
     failure to furnish information regarding tax shelters) is 
     amended by adding at the end the following new paragraph:
       ``(3) Confidential arrangements.--
       ``(A) In general.--In the case of a tax shelter (as defined 
     in section 6111(d)), the penalty imposed under paragraph (1) 
     shall be an amount equal to the greater of--
       ``(i) 50 percent of the fees paid to any promoter of the 
     tax shelter with respect to offerings made before the date 
     such shelter is registered under section 6111, or
       ``(ii) $10,000.

     Clause (i) shall be applied by substituting `75 percent' for 
     `50 percent' in the case of an intentional failure or act 
     described in paragraph (1).
       ``(B) Special rule for participants required to register 
     shelter.--In the case of a person required to register such a 
     tax shelter by reason of section 6111(d)(3)--
       ``(i) such person shall be required to pay the penalty 
     under paragraph (1) only if such person actually participated 
     in such shelter,
       ``(ii) the amount of such penalty shall be determined by 
     taking into account under subparagraph (A)(i) only the fees 
     paid by such person, and
       ``(iii) such penalty shall be in addition to the penalty 
     imposed on any other person for failing to register such 
     shelter.''
       (c) Conforming Amendments.--
       (1) Paragraph (2) of section 6707(a) is amended by striking 
     ``The penalty'' and inserting ``Except as provided in 
     paragraph (3), the penalty''.

[[Page H11101]]

       (2) Subparagraph (A) of section 6707(a)(1) is amended by 
     striking ``paragraph (2)'' and inserting ``paragraph (2) or 
     (3), as the case may be''.
       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to any tax shelter (as defined in section 6111(d) of 
     the Internal Revenue Code of 1986, as amended by this 
     section) interests in which are offered to potential 
     participants after the date of the enactment of this Act.
       (2) Due date for registration.--The due date for 
     registering any tax shelter required to be registered by 
     reason of the amendments made by this section shall be not 
     earlier than the close of a reasonable period after the 
     Secretary of the Treasury prescribes guidance with respect to 
     meeting such requirements.

     SEC. 13603. DENIAL OF DEDUCTION FOR INTEREST ON LOANS WITH 
                   RESPECT TO COMPANY-OWNED INSURANCE.

       (a) In General.--Paragraph (4) of section 264(a) is 
     amended--
       (1) by inserting ``or endowment or annuity contract'' after 
     ``life insurance policies'', and
       (2) by striking all that follows ``carried on by the 
     taxpayer'' and inserting a period.
       (b) Phase-in of Disallowance.--Section 264 is amended by 
     adding at the end the following new subsection:
       ``(d) Phase-in of Disallowance Under Subsection (a)(4).--In 
     the case of calendar years after 1995 and before 2000--
       ``(1) In general.--The amount of interest paid or accrued 
     during any period in any such calendar year with respect to 
     qualified indebtedness which is disallowed by reason of the 
     amendment made by section 13603(a) of the Revenue 
     Reconciliation Act of 1995 (determined without regard to this 
     subsection) shall not exceed the applicable percentage of 
     such interest which is so disallowed.
       ``(2) Qualified indebtedness.--For purposes of paragraph 
     (1), the term `qualified indebtedness' means indebtedness 
     incurred before September 18, 1995, with respect to a life 
     insurance policy covering only the life of the individual who 
     was insured under such policy on such date. Any increase on 
     or after such date in the amount of such indebtedness shall 
     be treated as indebtedness incurred after such date.
       ``(3) Applicable percentage.--For purposes of paragraph 
     (1), the applicable percentage shall be determined in 
     accordance with the following table:

                                               ``In the  The applicable
                                                      in percentage is:
    1996..................................................20 percent   
    1997..................................................40 percent   
    1998..................................................60 percent   
    1999................................................80 percent.''  

       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to interest paid or accrued after December 31, 1995.
       (2) Exception.--The amendments made by this section shall 
     not apply to contracts purchased on or before June 20, 1986.
       (d) 4-Year Spread of Income Inclusion on Surrender, Etc. of 
     Contracts.--
       (1) In general.--In the case of indebtedness with respect 
     to any life insurance policy described in paragraph (4) of 
     section 264(a) of the Internal Revenue Code of 1986, if--
       (A) the interest paid or accrued after December 31, 1995, 
     on such indebtedness is not allowed as a deduction under 
     chapter 1 of such Code by reason of such paragraph (4) (as 
     amended by this section), and
       (B) the entire amount of interest paid or accrued on or 
     before such date on such indebtedness was allowed as a 
     deduction under such chapter 1,

     then (in lieu of any other inclusion in gross income) the 
     qualified amount with respect to such policy shall be 
     includible in gross income ratably over the 4 taxable years 
     beginning with the taxable year such amount would (but for 
     this paragraph) be includible.
       (2) Qualified amount.--For purposes of paragraph (1), the 
     term ``qualified amount'' means, with respect to any policy, 
     the amount received under such policy--
       (A) on the complete surrender, redemption, or maturity of 
     such policy during 1996, or
       (B) in full discharge during 1996 of the obligation under 
     the policy which is in the nature of a refund of the 
     consideration paid for the policy,

     but only to the extent such amount is includible in gross 
     income for the taxable year in which the event described in 
     subparagraph (A) or (B) occurs.
       (3) Special rule.--A contract shall not be treated as 
     failing to meet the requirement of section 264(c)(1) of the 
     Internal Revenue Code of 1986 solely by reason of an 
     occurrence described in subparagraph (A) or (B) of paragraph 
     (2) of this subsection.

     SEC. 13604. TERMINATION OF SUSPENSE ACCOUNTS FOR FAMILY 
                   CORPORATIONS REQUIRED TO USE ACCRUAL METHOD OF 
                   ACCOUNTING.

       (a) In General.--Subsection (i) of section 447 (relating to 
     method of accounting for corporations engaged in farming) is 
     amended by adding at the end the following new paragraph:
       ``(7) Termination.--
       ``(A) In general.--No suspense account may be established 
     under this subsection by any corporation required by this 
     section to change its method of accounting for any taxable 
     year ending after September 13, 1995.
       ``(B) 20-year phaseout of existing suspense accounts.--Each 
     suspense account under this subsection shall be reduced (but 
     not below zero) for each of the first 20 taxable years 
     beginning after September 13, 1995, by an amount equal to the 
     applicable portion of such account. Any reduction in a 
     suspense account under this paragraph shall be included in 
     gross income for the taxable year of the reduction. The 
     amount of the reduction required under this paragraph for any 
     taxable year shall be reduced (but not below zero) by the 
     amount of any reduction required for such taxable year under 
     any other provision of this subsection.
       ``(C) Applicable portion.--For purposes of subparagraph 
     (B), the term `applicable portion' means, for any taxable 
     year, the amount which would ratably reduce the amount in the 
     account (after taking into account prior reductions) to zero 
     over the period consisting of such taxable year and the 
     remaining taxable years in such first 20 taxable years.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years ending after September 13, 1995.

     SEC. 13605. TERMINATION OF PUERTO RICO AND POSSESSION TAX 
                   CREDIT.

       (a) In General.--Section 936 is amended by adding at the 
     end the following new subsection:
       ``(j) Termination.--
       ``(1) In general.--This section shall not apply to any 
     taxable year beginning after December 31, 1995.
       ``(2) Exception for existing claimants.--
       ``(A) In general.--Paragraph (1) shall be applied by 
     substituting `2005' for `1995' in the case of an existing 
     credit claimant.
       ``(B) Exception terminates if new line of business added.--
     If, after September 13, 1995, a corporation which would (but 
     for this subparagraph) be an existing credit claimant adds a 
     substantial new line of business, such corporation shall 
     cease to be treated as an existing credit claimant as of the 
     close of the taxable year ending before the date of such 
     addition.
       ``(C) Existing credit claimant.--For purposes of this 
     subsection, the term `existing credit claimant' means any 
     corporation which satisfied the conditions of both 
     subparagraph (A) and subparagraph (B) of subsection 
     (a)(2) for at least 1 base period year for which such 
     corporation elected the application of this section.
       ``(3) Limit on credit of existing claimants.--
       ``(A) In general.--In the case of an existing credit 
     claimant, the aggregate amount of income taken into account 
     under subsection (a)(1) for any taxable year beginning after 
     December 31, 1995 (hereinafter in this subsection referred to 
     as the `current year'), shall not exceed the adjusted base 
     period income of such claimant.
       ``(B) Coordination with subsection (a)(4).--The amount of 
     income described in subsection (a)(1)(A) which is taken into 
     account in applying subsection (a)(4) shall be such income as 
     reduced under this paragraph. In determining such reduction, 
     any reduction under subparagraph (A) in the amount which 
     would otherwise be taken into account under subsection (a)(1) 
     shall be allocated between the income described in 
     subparagraph (A) thereof and the income described in 
     subparagraph (B) thereof in proportion to the respective 
     amounts of such incomes.
       ``(4) Adjusted base period income.--For purposes of 
     paragraph (3)--
       ``(A) In general.--The term `adjusted base period income' 
     means the average of the inflation-adjusted possession 
     incomes of the corporation for each base period year.
       ``(B) Inflation-adjusted possession income.--For purposes 
     of subparagraph (A), the inflation-adjusted possession income 
     of any corporation for any base period year shall be an 
     amount equal to the possession income of such corporation for 
     such base period year multiplied by the inflation adjustment 
     percentage for such base period year.
       ``(C) Inflation adjustment percentage.--For purposes of 
     subparagraph (B), the inflation adjustment percentage for any 
     base period year means, with respect to the current year, the 
     percentage (if any) by which--
       ``(i) the CPI for last calendar year ending before the 
     beginning of the current year, exceeds
       ``(ii) the CPI for last calendar year ending before the 
     beginning of the base period year.

     For purposes of the preceding sentence, the CPI for any 
     calendar year is the CPI (as defined in section 1(f)(5)) for 
     such year under section 1(f)(4).
       ``(D) Increase in inflation adjustment percentage for 
     growth during base years.--The inflation adjustment 
     percentage (determined under subparagraph (C) without regard 
     to this subparagraph) for each of the 5 taxable years 
     referred to in paragraph (5)(A) shall be increased by--
       ``(i) 5 percentage points in the case of a taxable year 
     ending during the 1-year period ending on September 12, 1995;
       ``(ii) 10.25 percentage points in the case of a taxable 
     year ending during the 1-year period ending on September 12, 
     1994;
       ``(iii) 15.76 percentage points in the case of a taxable 
     year ending during the 1-year period ending on September 12, 
     1993;
       ``(iv) 21.55 percentage points in the case of a taxable 
     year ending during the 1-year period ending on September 12, 
     1992; and
       ``(v) 27.63 percentage points in the case of a taxable year 
     ending during the 1-year period ending on September 12, 1991.
       ``(5) Base period year.--For purposes of this subsection--
       ``(A) In general.--The term `base period year' means each 
     of 3 taxable years which 

[[Page H11102]]

     are among the 5 most recent taxable years of the corporation 
     ending before September 13, 1995, determined by 
     disregarding--
       ``(i) one taxable year for which the corporation had the 
     largest inflation-adjusted possession income, and
       ``(ii) one taxable year for which the corporation had the 
     smallest inflation-adjusted possession income.
       ``(B) Corporations not having significant possession income 
     throughout 5-year period.--
       ``(i) In general.--If a corporation does not have 
     significant possession income for each of the most recent 5 
     taxable years ending before September 13, 1995, then, in lieu 
     of applying subparagraph (A), the term `base period year' 
     means only those taxable years (of such 5 taxable years) 
     for which the corporation has significant possession 
     income; except that, if such corporation has significant 
     possession income for 4 of such 5 taxable years, the rule 
     of subparagraph (A)(ii) shall apply.
       ``(ii) Special rule.--If there is no year (of such 5 
     taxable years) for which a corporation has significant 
     possession income--

       ``(I) the term `base period year' means the first taxable 
     year ending on or after September 13, 1995, but
       ``(II) the amount of possession income for such year which 
     is taken into account under paragraph (4) shall be the amount 
     which would be determined if such year were a short taxable 
     year ending on August 31, 1995.

       ``(iii) Significant possession income.--For purposes of 
     this subparagraph, the term `significant possession income' 
     means possession income which exceeds 2 percent of the 
     possession income of the taxpayer for the taxable year (of 
     the period of 6 taxable years ending with the first taxable 
     year ending on or after September 13, 1995) having the 
     greatest possession income.
       ``(C) Election to use one base period year.--
       ``(i) In general.--At the election of the taxpayer, the 
     term `base period year' means only the last taxable year of 
     the corporation ending in calendar year 1992.
       ``(ii) Election.--An election under this subparagraph by 
     any possession corporation may be made only for the 
     corporation's first taxable year beginning after December 31, 
     1995, for which it is a possession corporation. The rules of 
     subclauses (II) and (III) of subsection (a)(4)(B)(iii) shall 
     apply to the election under this subparagraph.
       ``(D) Acquisitions and dispositions.--Rules similar to the 
     rules of subparagraphs (A) and (B) of section 41(f)(3) shall 
     apply for purposes of this subsection.
       ``(6) Possession income.--For purposes of this subsection, 
     the term `possession income' means the sum of the income 
     referred to in subsection (a)(1)(A) and the income referred 
     to in subsection (a)(1)(B). In no event shall possession 
     income be treated as being less than zero.
       ``(7) Short years.--If the current year or a base period 
     year is a short taxable year, the application of this 
     subsection shall be made with such annualizations as the 
     Secretary shall prescribe.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 13606. DEPRECIATION UNDER INCOME FORECAST METHOD.

       (a) General Rule.--Section 167 (relating to depreciation) 
     is amended by redesignating subsection (g) as subsection (h) 
     and by inserting after subsection (f) the following new 
     subsection:
       ``(g) Depreciation Under Income Forecast Method.--
       ``(1) In general.--If the depreciation deduction allowable 
     under this section to any taxpayer with respect to any 
     property is determined under the income forecast method or 
     any similar method--
       ``(A) in determining the amount of the depreciation 
     deduction under such method, the estimated income from the 
     property shall include all estimated income from use of the 
     property,
       ``(B) the adjusted basis of the property shall only include 
     amounts with respect to which the requirements of section 
     461(h) are satisfied,
       ``(C) the depreciation deduction under such method for the 
     10th taxable year beginning after the taxable year in which 
     the property was placed in service shall be equal to the 
     adjusted basis of such property as of the beginning of such 
     10th taxable year, and
       ``(D) such taxpayer shall pay (or be entitled to receive) 
     interest computed under the look-back method of paragraph (2) 
     for any recomputation year.
       ``(2) Look-back method.--The interest computed under the 
     look-back method of this paragraph for any recomputation year 
     shall be determined by--
       ``(A) first determining the depreciation deductions under 
     this section with respect to such property which would have 
     been allowable for prior taxable years if the 
     determination of the amounts so allowable had been made on 
     the basis of the sum of the following (instead of the 
     estimated income with respect to such property)--
       ``(i) the actual income from such property for periods 
     before the close of the recomputation year, and
       ``(ii) an estimate of the future income with respect to 
     such property for periods after the recomputation year,
       ``(B) second, determining (solely for purposes of computing 
     such interest) the overpayment or underpayment of tax for 
     each such prior taxable year which would result solely from 
     the application of subparagraph (A), and
       ``(C) then using the adjusted overpayment rate (as defined 
     in section 460(b)(7)), compounded daily, on the overpayment 
     or underpayment determined under subparagraph (B).

     For purposes of the preceding sentence, any cost incurred 
     after the property is placed in service (which is not treated 
     as a separate property under paragraph (5)) shall be taken 
     into account by discounting (using the Federal mid-term rate 
     determined under section 1274(d) as of the time such cost is 
     incurred) such cost to its value as of the date the property 
     is placed in service. The taxpayer may elect with respect to 
     any property to have the preceding sentence not apply to such 
     property.
       ``(3) Exception from look-back method.--Paragraph (1)(D) 
     shall not apply with respect to any property which, when 
     placed in service by the taxpayer, had a basis of $100,000 or 
     less.
       ``(4) Recomputation year.--For purposes of this subsection, 
     except as provided in regulations, the term `recomputation 
     year' means, with respect to any property, the third and the 
     10th taxable years beginning after the taxable year in which 
     the property was placed in service, unless the actual income 
     from the property for such third or 10th taxable year (as the 
     case may be) and each prior taxable year is within 10 percent 
     of the estimated income from the property for each such year 
     which was taken into account under paragraph (1)(A).
       ``(5) Special rules.--
       ``(A) Certain costs treated as separate property.--For 
     purposes of this section, the following costs shall be 
     treated as separate properties:
       ``(i) Any costs incurred with respect to any property after 
     the 10th taxable year beginning after the taxable year in 
     which the property was placed in service.
       ``(ii) Any costs incurred after the property is placed in 
     service and before the close of such 10th taxable year if 
     such costs are significant and give rise to a significant 
     increase in the income from the property which was not 
     included in the estimated income from the property.
       ``(B) Syndication income from television series.--In the 
     case of property which is an episode in a television series, 
     estimated income from syndicating such series shall not be 
     required to be taken into account under this subsection 
     before the earlier of--
       ``(i) the 4th taxable year beginning after the date the 
     first episode in such series is placed in service, or
       ``(ii) the earliest taxable year in which the taxpayer had 
     a reasonable expectation that there would be a future 
     syndication of such series.
       ``(C) Collection of interest.--For purposes of subtitle F 
     (other than sections 6654 and 6655), any interest required to 
     be paid by the taxpayer under paragraph (1) for any 
     recomputation year shall be treated as an increase in the tax 
     imposed by this chapter for such year.
       ``(D) Determinations.--For purposes of this subsection, 
     determinations of the amount of income from any property 
     shall be determined in the same manner as for purposes of 
     applying the income forecast method; except that any income 
     from the disposition of such property shall be taken into 
     account.
       ``(E) Treatment of pass-thru entities.--Rules similar to 
     the rules of section 460(b)(4) shall apply for purposes of 
     this subsection.''
       (b) Effective Date.--
       (1) In general.--The amendment made by subsection (a) shall 
     apply to property placed in service after September 13, 1995.
       (2) Binding contracts.--The amendment made by subsection 
     (a) shall not apply to any property produced or acquired by 
     the taxpayer pursuant to a written contract which was binding 
     on September 13, 1995, and at all times thereafter before 
     such production or acquisition.

     SEC. 13607. TRANSFERS OF EXCESS PENSION ASSETS.

       (a) In General.--Section 420 (relating to transfers of 
     excess pension assets to retiree health accounts) is amended 
     by adding at the end the following new subsection:
       ``(f) Similar Rules To Apply to Other Transfers of Excess 
     Plan Assets.--
       ``(1) In general.--If there is a qualified unrestricted 
     transfer of any excess pension assets of a defined benefit 
     plan (other than a multiemployer plan) to an employer--
       ``(A) a trust which is part of such plan shall not be 
     treated as failing to meet the requirements of section 401(a) 
     solely by reason of such transfer (or any other action 
     authorized under this section), and
       ``(B) such transfer shall not be treated as a prohibited 
     transaction for purposes of section 4975.

     The gross income of the employer shall include the amount of 
     any qualified transfer made during the taxable year.
       ``(2) Qualified unrestricted transfer.--For purposes of 
     this section--
       ``(A) In general.--The term `qualified unrestricted 
     transfer' means a transfer--
       ``(i) of excess pension assets of a defined benefit plan to 
     the employer, and
       ``(ii) with respect to which the requirements of subsection 
     (c)(2)(A) are met (determined by treating such transfer as a 
     qualified transfer).
       ``(B) Coordination with transfers to retiree health 
     accounts.--Such term shall not include any qualified transfer 
     (as defined in subsection (b)).

[[Page H11103]]

       ``(C) Expiration.--No transfer in any taxable year 
     beginning after December 31, 2000, shall be treated as a 
     qualified unrestricted transfer.
       ``(3) Definition and special rule.--For purposes of this 
     subsection--
       ``(A) Excess pension assets.--The term `excess pension 
     assets' has the meaning given such term by subsection (e)(2); 
     except that the amount thereof shall be the lesser of--
       ``(i) the amount determined as of the most recent valuation 
     date of the plan preceding the transfer, or
       ``(ii) the amount determined as of January 1, 1995 (or, if 
     January 1, 1995, is not a valuation date, the most recent 
     prior valuation date).
       ``(B) Coordination with section 412.--In the case of a 
     qualified unrestricted transfer--
       ``(i) any assets transferred in a plan year on or before 
     the valuation date for such year (and any income allocable 
     thereto) shall, for purposes of section 412, be treated as 
     assets in the plan as of the valuation date for such year, 
     and
       ``(ii) the plan shall be treated as having a net experience 
     loss under section 412(b)(2)(B)(iv) in an amount equal to the 
     amount of such transfer and for which amortization charges 
     begin for the first plan year after the plan year in which 
     such transfer occurs, except that such section shall be 
     applied to such amount by substituting `10 plan years' for `5 
     plan years'.
       ``(C) Treatment of transfers.--Except for purposes of this 
     section, a qualified unrestricted transfer shall be treated 
     as a qualified transfer to a health benefits account.''
       (b) Reversion Tax.--Section 4980 (relating to tax on 
     reversion of qualified plan assets to employers) is amended 
     by adding at the end the following new subsection:
       ``(e) Special Rules for Qualified Unrestricted Transfers 
     Under Section 420.--In the case of a qualified unrestricted 
     transfer to which section 420(f) applies--
       ``(1) no tax shall be imposed by subsection (a) if such 
     transfer occurs before July 1, 1996,
       ``(2) subsection (a) shall be applied by substituting `6.5 
     percent' for `20 percent' if such transfer occurs after June 
     30, 1996, and
       ``(3) subsection (d) shall not apply.''
       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 1995.

                         PART II--LEGAL REFORMS

     SEC. 13611. REPEAL OF EXCLUSION FOR PUNITIVE DAMAGES AND FOR 
                   DAMAGES NOT ATTRIBUTABLE TO PHYSICAL INJURIES 
                   OR SICKNESS.

       (a) In General.--Paragraph (2) of section 104(a) (relating 
     to compensation for injuries or sickness) is amended to read 
     as follows:
       ``(2) the amount of any damages (other than punitive 
     damages) received (whether by suit or agreement and whether 
     as lump sums or as periodic payments) on account of personal 
     physical injuries or physical sickness;''.
       (b) Emotional Distress as Such Treated as Not Physical 
     Injury or Physical Sickness.--Section 104(a) is amended by 
     striking the last sentence and inserting the following new 
     sentence: ``For purposes of paragraph (2), emotional distress 
     shall not be treated as a physical injury or physical 
     sickness. The preceding sentence shall not apply to an amount 
     of damages not in excess of the amount paid for medical care 
     (described in subparagraph (A) or (B) of section 213(d)(1)) 
     attributable to emotional distress.''
       (c) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to amounts 
     received after December 31, 1995, in taxable years ending 
     after such date.
       (2) Exception.--The amendments made by this section shall 
     not apply to any amount received under a written binding 
     agreement, court decree, or mediation award in effect on (or 
     issued on or before) September 13, 1995.

     SEC. 13612. REPORTING OF CERTAIN PAYMENTS MADE TO ATTORNEYS.

       (a) In General.--Section 6045 (relating to returns of 
     brokers) is amended by adding at the end the following new 
     subsection:
       ``(f) Return Required In The Case of Payments to 
     Attorneys.--
       ``(1) In general.--Any person engaged in a trade or 
     business and making a payment (in the course of such trade or 
     business) to which this subsection applies shall file a 
     return under subsection (a) and a statement under subsection 
     (b) with respect to such payment.
       ``(2) Application of subsection.--
       ``(A) In general.--This subsection shall apply to any 
     payment to an attorney in connection with legal services 
     (whether or not such services are performed for the payor).
       ``(B) Exception.--This subsection shall not apply to the 
     portion of any payment which is required to be reported under 
     section 6041(a) (or would be so required but for the dollar 
     limitation contained therein) or section 6051.''
       (b) Reporting of Attorneys Fees Payable to Corporations.--
     The regulations providing an exception under section 6041 of 
     the Internal Revenue Code of 1986 for payments made to 
     corporations shall not apply to payments of attorneys fees.
       (c) Effective Date.--The amendment made by subsection (a), 
     and subsection (b), shall apply to payments made after 
     December 31, 1995.

 PART III--TREATMENT OF INDIVIDUALS WHO LOSE UNITED STATES CITIZENSHIP

     SEC. 13616. REVISION OF INCOME, ESTATE, AND GIFT TAXES ON 
                   INDIVIDUALS WHO LOSE UNITED STATES CITIZENSHIP.

       (a) In General.--Subsection (a) of section 877 is amended 
     to read as follows:
       ``(a) Treatment of Expatriates.--
       ``(1) In general.--Every nonresident alien individual who, 
     within the 10-year period immediately preceding the close of 
     the taxable year, lost United States citizenship, unless such 
     loss did not have for 1 of its principal purposes the 
     avoidance of taxes under this subtitle or subtitle B, shall 
     be taxable for such taxable year in the manner provided in 
     subsection (b) if the tax imposed pursuant to such subsection 
     exceeds the tax which, without regard to this section, is 
     imposed pursuant to section 871.
       ``(2) Certain individuals treated as having tax avoidance 
     purpose.--For purposes of paragraph (1), an individual shall 
     be treated as having a principal purpose to avoid such taxes 
     if--
       ``(A) the average annual net income tax (as defined in 
     section 38(c)(1)) of such individual for the period of 5 
     taxable years ending before the date of the loss of United 
     States citizenship is greater than $100,000, or
       ``(B) the net worth of the individual as of such date is 
     $500,000 or more.

     In the case of the loss of United States citizenship in any 
     calendar year after 1996, such $100,000 and $500,000 amounts 
     shall be increased by an amount equal to such dollar amount 
     multiplied by the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting `1994' 
     for `1992' in subparagraph (B) thereof. Any increase under 
     the preceding sentence shall be rounded to the nearest 
     multiple of $1,000.''
       (b) Exceptions.--
       (1) In general.--Section 877 is amended by striking 
     subsection (d), by redesignating subsection (c) as subsection 
     (d), and by inserting after subsection (b) the following new 
     subsection:
       ``(c) Tax Avoidance Not Presumed in Certain Cases.--
       ``(1) In general.--Subsection (a)(2) shall not apply to an 
     individual if--
       ``(A) such individual is described in a subparagraph of 
     paragraph (2) of this subsection, and
       ``(B) within the 1-year period beginning on the date of the 
     loss of United States citizenship, such individual submits a 
     ruling request for the Secretary's determination as to 
     whether such loss has for 1 of its principal purposes the 
     avoidance of taxes under this subtitle or subtitle B.
       ``(2) Individuals described.--
       ``(A) Dual citizenship, etc.--An individual is described in 
     this subparagraph if--
       ``(i) the individual became at birth a citizen of the 
     United States and a citizen of another country and continues 
     to be a citizen of such other country, or
       ``(ii) the individual becomes (not later than the close of 
     a reasonable period after loss of United States citizenship) 
     a citizen of the country in which--

       ``(I) such individual was born,
       ``(II) if such individual is married, such individual's 
     spouse was born, or
       ``(III) either of such individual's parents were born.

       ``(B) Long-term foreign residents.--An individual is 
     described in this subparagraph if, for each year in the 10-
     year period ending on the date of loss of United States 
     citizenship, the individual was present in the United States 
     for 30 days or less. The rule of section 7701(b)(3)(D)(ii) 
     shall apply for purposes of this subparagraph.
       ``(C) Renunciation upon reaching age of majority.--An 
     individual is described in this subparagraph if the 
     individual's loss of United States citizenship occurs before 
     such individual attains age 18\1/2\.
       ``(D) Individuals specified in regulations.--An individual 
     is described in this subparagraph if the individual is 
     described in a category of individuals prescribed by 
     regulation by the Secretary.''
       (2) Technical amendment.--Paragraph (1) of section 877(b) 
     of such Code is amended by striking ``subsection (c)'' and 
     inserting ``subsection (d)''.
       (c) Treatment of Property Disposed of in Nonrecognition 
     Transactions; Treatment of Distributions From Certain 
     Controlled Foreign Corporations.--Subsection (d) of section 
     877, as redesignated by subsection (b), is amended to read as 
     follows:
       ``(d) Special Rules for Source, Etc.--For purposes of 
     subsection (b)--
       ``(1) Source rules.--The following items of gross income 
     shall be treated as income from sources within the United 
     States:
       ``(A) Sale of property.--Gains on the sale or exchange of 
     property (other than stock or debt obligations) located in 
     the United States.
       ``(B) Stock or debt obligations.--Gains on the sale or 
     exchange of stock issued by a domestic corporation or debt 
     obligations of United States persons or of the United States, 
     a State or political subdivision thereof, or the District of 
     Columbia.
       ``(C) Income or gain derived from controlled foreign 
     corporation.--Any income or gain derived from stock in a 
     foreign corporation but only--
       ``(i) if the individual losing United States citizenship 
     owned (within the meaning of section 958(a)), or is 
     considered as owning (by applying the ownership rules of 
     section 958(b)), at any time during the 2-year period ending 
     on the date of the loss of United States citizenship, more 
     than 50 percent of--

       ``(I) the total combined voting power of all classes of 
     stock entitled to vote of such corporation, or

[[Page H11104]]

       ``(II) the total value of the stock of such corporation, 
     and

       ``(ii) to the extent such income or gain does not exceed 
     the earnings and profits attributable to such stock which 
     were earned or accumulated before the loss of citizenship and 
     during periods that the ownership requirements of clause (i) 
     are met.
       ``(2) Gain recognition on certain exchanges.--
       ``(A) In general.--In the case of any exchange of property 
     to which this paragraph applies, notwithstanding any other 
     provision of this title, such property shall be treated as 
     sold for its fair market value on the date of such exchange, 
     and any gain shall be recognized for the taxable year which 
     includes such date.
       ``(B) Exchanges to which paragraph applies.--This paragraph 
     shall apply to any exchange during the 10-year period 
     described in subsection (a) if--
       ``(i) gain would not (but for this paragraph) be recognized 
     on such exchange in whole or in part for purposes of this 
     subtitle,
       ``(ii) income derived from such property was from sources 
     within the United States (or, if no income was so derived, 
     would have been from such sources), and
       ``(iii) income derived from the property acquired in the 
     exchange would be from sources outside the United States.
       ``(C) Exception.--Subparagraph (A) shall not apply if the 
     individual enters into an agreement with the Secretary which 
     specifies that any income or gain derived from the property 
     acquired in the exchange (or any other property which has a 
     basis determined in whole or part by reference to such 
     property) during such 10-year period shall be treated as from 
     sources within the United States. If the property transferred 
     in the exchange is disposed of by the person acquiring such 
     property, such agreement shall terminate and any gain which 
     was not recognized by reason of such agreement shall be 
     recognized as of the date of such disposition.
       ``(D) Secretary may extend period.--To the extent provided 
     in regulations prescribed by the Secretary, subparagraph (B) 
     shall be applied by substituting the 15-year period beginning 
     5 years before the loss of United States citizenship for the 
     10-year period referred to therein.
       ``(E) Secretary may require recognition of gain in certain 
     cases.--To the extent provided in regulations prescribed by 
     the Secretary--
       ``(i) the removal of appreciated tangible personal property 
     from the United States, and
       ``(ii) any other occurrence which (without recognition of 
     gain) results in a change in the source of the income or gain 
     from property from sources within the United States to 
     sources outside the United States,

     shall be treated as an exchange to which this paragraph 
     applies.
       ``(3) Substantial diminishing of risks of ownership.--For 
     purposes of determining whether this section applies to any 
     gain on the sale or exchange of any property, the running of 
     the 10-year period described in subsection (a) shall be 
     suspended for any period during which the individual's risk 
     of loss with respect to the property is substantially 
     diminished by--
       ``(A) the holding of a put with respect to such property 
     (or similar property),
       ``(B) the holding by another person of a right to acquire 
     the property, or
       ``(C) a short sale or any other transaction.''
       (d) Credit for Foreign Taxes Imposed on United States 
     Source Income.--
       (1) Subsection (b) of section 877 is amended by adding at 
     the end the following new sentence: ``The tax imposed solely 
     by reason of this section shall be reduced (but not below 
     zero) by the amount of any income, war profits, and excess 
     profits taxes (within the meaning of section 903) paid to any 
     foreign country or possession of the United States on any 
     income of the taxpayer on which tax is imposed solely by 
     reason of this section.''
       (2) Subsection (a) of section 877, as amended by subsection 
     (a), is amended by inserting ``(after any reduction in such 
     tax under the last sentence of such subsection)'' after 
     ``such subsection''.
       (e) Comparable Estate and Gift Tax Treatment.--
       (1) Estate tax.--
       (A) In general.--Subsection (a) of section 2107 is amended 
     to read as follows:
       ``(a) Treatment of Expatriates.--
       ``(1) Rate of tax.--A tax computed in accordance with the 
     table contained in section 2001 is hereby imposed on the 
     transfer of the taxable estate, determined as provided in 
     section 2106, of every decedent nonresident not a citizen of 
     the United States if, within the 10-year period ending with 
     the date of death, such decedent lost United States 
     citizenship, unless such loss did not have for 1 of its 
     principal purposes the avoidance of taxes under this subtitle 
     or subtitle A.
       ``(2) Certain individuals treated as having tax avoidance 
     purpose.--
       ``(A) In general.--For purposes of paragraph (1), an 
     individual shall be treated as having a principal purpose to 
     avoid such taxes if such individual is so treated under 
     section 877(a)(2).
       ``(B) Exception.--Subparagraph (A) shall not apply to a 
     decedent meeting the requirements of section 877(c)(1).''
       (B) Credit for foreign death taxes.--Subsection (c) of 
     section 2107 is amended by redesignating paragraph (2) as 
     paragraph (3) and by inserting after paragraph (1) the 
     following new paragraph:
       ``(2) Credit for foreign death taxes.--
       ``(A) In general.--The tax imposed by subsection (a) shall 
     be credited with the amount of any estate, inheritance, 
     legacy, or succession taxes actually paid to any foreign 
     country in respect of any property which is included in the 
     gross estate solely by reason of subsection (b).
       ``(B) Limitation on credit.--The credit allowed by 
     subparagraph (A) for such taxes paid to a foreign country 
     shall not exceed the lesser of--
       ``(i) the amount which bears the same ratio to the amount 
     of such taxes actually paid to such foreign country in 
     respect of property included in the gross estate as the value 
     of the property included in the gross estate solely by reason 
     of subsection (b) bears to the value of all property 
     subjected to such taxes by such foreign country, or
       ``(ii) such property's proportionate share of the excess 
     of--

       ``(I) the tax imposed by subsection (a), over
       ``(II) the tax which would be imposed by section 2101 but 
     for this section.

       ``(C) Proportionate share.--For purposes of subparagraph 
     (B), a property's proportionate share is the percentage which 
     the value of the property which is included in the gross 
     estate solely by reason of subsection (b) bears to the total 
     value of the gross estate.''
       (C) Expansion of inclusion in gross estate of stock of 
     foreign corporations.--Paragraph (2) of section 2107(b) is 
     amended by striking ``more than 50 percent of'' and all that 
     follows and inserting ``more than 50 percent of--
       ``(A) the total combined voting power of all classes of 
     stock entitled to vote of such corporation, or
       ``(B) the total value of the stock of such corporation,''.
       (2) Gift tax.--
       (A) In general.--Paragraph (3) of section 2501(a) is 
     amended to read as follows:
       ``(3) Exception.--
       ``(A) Certain individuals.--Paragraph (2) shall not apply 
     in the case of a donor who, within the 10-year period ending 
     with the date of transfer, lost United States citizenship, 
     unless such loss did not have for 1 of its principal purposes 
     the avoidance of taxes under this subtitle or subtitle A.
       ``(B) Certain individuals treated as having tax avoidance 
     purpose.--For purposes of subparagraph (A), an individual 
     shall be treated as having a principal purpose to avoid such 
     taxes if such individual is so treated under section 
     877(a)(2).
       ``(C) Exception for certain individuals.--Subparagraph (B) 
     shall not apply to a decedent meeting the requirements of 
     section 877(c)(1).
       ``(D) Credit for foreign gift taxes.--The tax imposed by 
     this section solely by reason of this paragraph shall be 
     credited with the amount of any gift tax actually paid to any 
     foreign country in respect of any gift which is taxable under 
     this section solely by reason of this paragraph.''
       (f) Comparable Treatment of Lawful Permanent Residents Who 
     Cease To Be Taxed as Residents.--
       (1) In general.--Section 877 is amended by redesignating 
     subsection (e) as subsection (f) and by inserting after 
     subsection (d) the following new subsection:
       ``(e) Comparable Treatment of Lawful Permanent Residents 
     Who Cease To Be Taxed as Residents.--
       ``(1) In general.--Any long-term resident of the United 
     States who--
       ``(A) ceases to be a lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)), or
       ``(B) commences to be treated as a resident of a foreign 
     country under the provisions of a tax treaty between the 
     United States and the foreign country and who does not waive 
     the benefits of such treaty applicable to residents of the 
     foreign country,

     shall be treated for purposes of this section and sections 
     2107, 2501, and 6039F in the same manner as if such resident 
     were a citizen of the United States who lost United States 
     citizenship on the date of such cessation or commencement.
       ``(2) Long-term resident.--For purposes of this subsection, 
     the term `long-term resident' means any individual (other 
     than a citizen of the United States) who is a lawful 
     permanent resident of the United States in at least 8 taxable 
     years during the period of 15 taxable years ending with the 
     taxable year during which the event described in subparagraph 
     (A) or (B) of paragraph (1) occurs. For purposes of the 
     preceding sentence, an individual shall not be treated as a 
     lawful permanent resident for any taxable year if such 
     individual is treated as a resident of a foreign country for 
     the taxable year under the provisions of a tax treaty between 
     the United States and the foreign country and does not waive 
     the benefits of such treaty applicable to residents of the 
     foreign country.
       ``(3) Special rules.--
       ``(A) Exceptions not to apply.--Subsection (c) shall not 
     apply to an individual who is treated as provided in 
     paragraph (1).
       ``(B) Step-up in basis.--Solely for purposes of determining 
     any tax imposed by reason of this subsection, property which 
     was held by the long-term resident on the date the individual 
     first became a resident of the United States shall be treated 
     as having a basis on such date of not less than the fair 
     market value of such property on such date. The preceding 
     sentence shall not apply if the individual elects not to have 
     such sentence apply. Such an election, once made, shall be 
     irrevocable.

[[Page H11105]]

       ``(4) Authority to exempt individuals.--This subsection 
     shall not apply to an individual who is described in a 
     category of individuals prescribed by regulation by the 
     Secretary.
       ``(5) Regulations.--The Secretary shall prescribe such 
     regulations as may be appropriate to carry out this 
     subsection, including regulations providing for the 
     application of this subsection in cases where an alien 
     individual becomes a resident of the United States during the 
     10-year period after being treated as provided in paragraph 
     (1).''
       (2) Conforming amendments.--
       (A) Section 2107 is amended by striking subsection (d), by 
     redesignating subsection (e) as subsection (d), and by 
     inserting after subsection (d) (as so redesignated) the 
     following new subsection:
       ``(e) Cross Reference.--

  ``For comparable treatment of long-term lawful permanent residents 
who ceased to be taxed as residents, see section 877(e).''

       (B) Paragraph (3) of section 2501(a) (as amended by 
     subsection (e)) is amended by adding at the end the following 
     new subparagraph:
       ``(E) Cross reference.--

  ``For comparable treatment of long-term lawful permanent residents 
who ceased to be taxed as residents, see section 877(e).''

       (g) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to--
       (A) individuals losing United States citizenship (within 
     the meaning of section 877 of the Internal Revenue Code of 
     1986) on or after February 6, 1995, and
       (B) long-term residents of the United States with respect 
     to whom an event described in subparagraph (A) or (B) of 
     section 877(e)(1) of such Code occurs on or after June 13, 
     1995.
       (2) Special rule.--
       (A) In general.--In the case of an individual who performed 
     an act of expatriation specified in paragraph (1), (2), (3), 
     or (4) of section 349(a) of the Immigration and Nationality 
     Act (8 U.S.C. 1481(a)(1)-(4)) before February 6, 1995, but 
     who did not, on or before such date, furnish to the United 
     States Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of such act, the amendments made by this section 
     shall apply to such individual except that--
       (i) the 10-year period described in section 877(a) of such 
     Code shall not expire before the end of the 10-year period 
     beginning on the date such statement is so furnished, and
       (ii) the 1-year period referred to in section 877(c) of 
     such Code, as amended by this section, shall not expire 
     before the date which is 1 year after the date of the 
     enactment of this Act.
       (B) Exception.--Subparagraph (A) shall not apply if the 
     individual establishes to the satisfaction of the Secretary 
     of the Treasury that such loss of United States citizenship 
     occurred before February 6, 1994.

     SEC. 13617. INFORMATION ON INDIVIDUALS LOSING UNITED STATES 
                   CITIZENSHIP.

       (a) In General.--Subpart A of part III of subchapter A of 
     chapter 61 is amended by inserting after section 6039E the 
     following new section:

     ``SEC. 6039F. INFORMATION ON INDIVIDUALS LOSING UNITED STATES 
                   CITIZENSHIP.

       ``(a) In General.--Notwithstanding any other provision of 
     law, any individual who loses United States citizenship 
     (within the meaning of section 877(a)) shall provide a 
     statement which includes the information described in 
     subsection (b). Such statement shall be--
       ``(1) provided not later than the earliest date of any act 
     referred to in subsection (c), and
       ``(2) provided to the person or court referred to in 
     subsection (c) with respect to such act.
       ``(b) Information To Be Provided.--Information required 
     under subsection (a) shall include--
       ``(1) the taxpayer's TIN,
       ``(2) the mailing address of such individual's principal 
     foreign residence,
       ``(3) the foreign country in which such individual is 
     residing,
       ``(4) the foreign country of which such individual is a 
     citizen,
       ``(5) in the case of an individual having a net worth of at 
     least the dollar amount applicable under section 
     877(a)(2)(B), information detailing the assets and 
     liabilities of such individual, and
       ``(6) such other information as the Secretary may 
     prescribe.
       ``(c) Acts Described.--For purposes of this section, the 
     acts referred to in this subsection are--
       ``(1) the individual's renunciation of his United States 
     nationality before a diplomatic or consular officer of the 
     United States pursuant to paragraph (5) of section 349(a) of 
     the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
       ``(2) the individual's furnishing to the United States 
     Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
       ``(3) the issuance by the United States Department of State 
     of a certificate of loss of nationality to the individual, or
       ``(4) the cancellation by a court of the United States of a 
     naturalized citizen's certificate of naturalization.
       ``(d) Penalty.--Any individual failing to provide a 
     statement required under subsection (a) shall be subject to a 
     penalty for each year (of the 10-year period beginning on the 
     date of loss of United States citizenship) during any portion 
     of which such failure continues in an amount equal to the 
     greater of--
       ``(1) 5 percent of the tax required to be paid under 
     section 877 for the taxable year ending during such year, or
       ``(2) $1,000,

     unless it is shown that such failure is due to reasonable 
     cause and not to willful neglect.
       ``(e) Information To Be Provided To Secretary.--
     Notwithstanding any other provision of law--
       ``(1) any Federal agency or court which collects (or is 
     required to collect) the statement under subsection (a) shall 
     provide to the Secretary--
       ``(A) a copy of any such statement, and
       ``(B) the name (and any other identifying information) of 
     any individual refusing to comply with the provisions of 
     subsection (a),
       ``(2) the Secretary of State shall provide to the Secretary 
     a copy of each certificate as to the loss of American 
     nationality under section 358 of the Immigration and 
     Nationality Act which is approved by the Secretary of State, 
     and
       ``(3) the Federal agency primarily responsible for 
     administering the immigration laws shall provide to the 
     Secretary the name of each lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)) 
     whose status as such has been revoked or has been 
     administratively or judicially determined to have been 
     abandoned.

     Notwithstanding any other provision of law, not later than 30 
     days after the close of each calendar quarter, the Secretary 
     shall publish in the Federal Register the name of each 
     individual losing United States citizenship (within the 
     meaning of section 877(a)) with respect to whom the Secretary 
     receives information under the preceding sentence during such 
     quarter.
       ``(f) Reporting by Long-Term Lawful Permanent Residents Who 
     Cease To Be Taxed as Residents.--In lieu of applying the last 
     sentence of subsection (a), any individual who is required to 
     provide a statement under this section by reason of section 
     877(e)(1) shall provide such statement with the return of tax 
     imposed by chapter 1 for the taxable year during which the 
     event described in such section occurs.
       ``(g) Exemption.--The Secretary may by regulations exempt 
     any class of individuals from the requirements of this 
     section if he determines that applying this section to such 
     individuals is not necessary to carry out the purposes of 
     this section.''
       (b) Clerical Amendment.--The table of sections for such 
     subpart A is amended by inserting after the item relating to 
     section 6039E the following new item:

``Sec. 6039F. Information on individuals losing United States 
              citizenship.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) individuals losing United States citizenship (within 
     the meaning of section 877 of the Internal Revenue Code of 
     1986) after the date of the enactment of this Act, and
       (2) long-term residents of the United States with respect 
     to whom an event described in subparagraph (A) or (B) of 
     section 877(e)(1) of such Code occurs after such date.

     SEC. 13618. REPORT ON TAX COMPLIANCE BY UNITED STATES 
                   CITIZENS AND RESIDENTS LIVING ABROAD.

       Not later than 90 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall prepare and 
     submit to the Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate a 
     report--
       (1) describing the compliance with subtitle A of the 
     Internal Revenue Code of 1986 by citizens and lawful 
     permanent residents of the United States (within the meaning 
     of section 7701(b)(6) of such Code) residing outside the 
     United States, and
       (2) recommending measures to improve such compliance 
     (including improved coordination between executive branch 
     agencies).

             PART IV--REFORMS RELATING TO ENERGY PROVISIONS

     SEC. 13621. TERMINATION OF CREDIT FOR ELECTRICITY PRODUCED 
                   FROM CERTAIN RENEWABLE RESOURCES.

       (a) Facilities Must Be Placed in Service Before September 
     14, 1995.--Paragraph (3) of section 45(c) (defining qualified 
     facility) is amended by striking ``July 1, 1999'' and 
     inserting ``September 14, 1995''.
       (b) Effective Date.--
       (1) In general.--The amendment made by this section shall 
     apply to taxable years ending after September 13, 1995.
       (2) Binding contracts.--The amendment made by this section 
     shall not apply to any facility--
       (A) which is constructed or acquired by the taxpayer 
     pursuant to a written contract which was binding on September 
     13, 1995, and at all times thereafter before such 
     construction or acquisition, and
       (B) which is placed in service before September 14, 1996.

     SEC. 13622. EXCLUSION FOR ENERGY CONSERVATION SUBSIDIES 
                   LIMITED TO SUBSIDIES WITH RESPECT TO DWELLING 
                   UNITS.

       (a) In General.--Paragraph (1) of section 136(c) (defining 
     energy conservation measure) is amended by striking ``energy 
     demand--'' and all that follows and inserting 

[[Page H11106]]

     ``energy demand with respect to a dwelling unit.''
       (b) Conforming Amendments.--
       (1) Subsection (a) of section 136 is amended to read as 
     follows:
       ``(a) Exclusion.--Gross income shall not include the value 
     of any subsidy provided (directly or indirectly) by a public 
     utility to a customer for the purchase or installation of any 
     energy conservation measure.''
       (2) Paragraph (2) of section 136(c) is amended--
       (A) by striking subparagraph (A) and by redesignating 
     subparagraphs (B) and (C) as subparagraphs (A) and (B), 
     respectively, and
       (B) by striking ``and special rules'' in the paragraph 
     heading.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts received after September 13, 1995, 
     unless received pursuant to a written binding contract in 
     effect on September 13, 1995, and at all times thereafter.

         PART V--REFORMS RELATING TO NONRECOGNITION PROVISIONS

     SEC. 13626. BASIS ADJUSTMENT TO PROPERTY HELD BY CORPORATION 
                   WHERE STOCK IN CORPORATION IS REPLACEMENT 
                   PROPERTY UNDER INVOLUNTARY CONVERSION RULES.

       (a) In General.--Subsection (b) of section 1033 is amended 
     to read as follows:
       ``(b) Basis of Property Acquired Through Involuntary 
     Conversion.--
       ``(1) Conversions described in subsection (a)(1).--If the 
     property was acquired as the result of a compulsory or 
     involuntary conversion described in subsection (a)(1), the 
     basis shall be the same as in the case of the property so 
     converted--
       ``(A) decreased in the amount of any money received by the 
     taxpayer which was not expended in accordance with the 
     provisions of law (applicable to the year in which such 
     conversion was made) determining the taxable status of the 
     gain or loss upon such conversion, and
       ``(B) increased in the amount of gain or decreased in the 
     amount of loss to the taxpayer recognized upon such 
     conversion under the law applicable to the year in which such 
     conversion was made.
       ``(2) Conversions described in subsection (a)(2).--In the 
     case of property purchased by the taxpayer in a transaction 
     described in subsection (a)(2) which resulted in the 
     nonrecognition of any part of the gain realized as the result 
     of a compulsory or involuntary conversion, the basis shall be 
     the cost of such property decreased in the amount of the gain 
     not so recognized; and if the property purchased consists of 
     more than 1 piece of property, the basis determined under 
     this sentence shall be allocated to the purchased properties 
     in proportion to their respective costs.
       ``(3) Property held by corporation the stock of which is 
     replacement property.--
       ``(A) In general.--If the basis of stock in a corporation 
     is decreased under paragraph (2), an amount equal to such 
     decrease shall also be applied to reduce the basis of 
     property held by the corporation at the time the taxpayer 
     acquired control (as defined in subsection (a)(2)(E)) of such 
     corporation.
       ``(B) Limitation.--Subparagraph (A) shall not apply to the 
     extent that it would (but for this subparagraph) require a 
     reduction in the aggregate adjusted bases of the property of 
     the corporation below the taxpayer's adjusted basis of the 
     stock in the corporation (determined immediately after such 
     basis is decreased under paragraph (2)).
       ``(C) Allocation of basis reduction.--The decrease required 
     under subparagraph (A) shall be allocated--
       ``(i) first to property which is similar or related in 
     service or use to the converted property,
       ``(ii) second to depreciable property (as defined in 
     section 1017(b)(3)(B)) not described in clause (i), and
       ``(iii) then to other property.
       ``(D) Special rules.--
       ``(i) Reduction not to exceed adjusted basis of property.--
     No reduction in the basis of any property under this 
     paragraph shall exceed the adjusted basis of such property 
     (determined without regard to such reduction).
       ``(ii) Allocation of reduction among properties.--If more 
     than 1 property is described in a clause of subparagraph (C), 
     the reduction under this paragraph shall be allocated among 
     such property in proportion to the adjusted bases of such 
     property (determined without regard to such reduction).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to involuntary conversions occurring after 
     September 13, 1995.

     SEC. 13627. EXPANSION OF REQUIREMENT THAT INVOLUNTARILY 
                   CONVERTED PROPERTY BE REPLACED WITH PROPERTY 
                   ACQUIRED FROM AN UNRELATED PERSON.

       (a) In General.--Subsection (i) of section 1033 is amended 
     to read as follows:
       ``(i) Replacement Property Must Be Acquired From Unrelated 
     Person in Certain Cases.--
       ``(1) In general.--If the property which is involuntarily 
     converted is held by a taxpayer to which this subsection 
     applies, subsection (a) shall not apply if the replacement 
     property or stock is acquired from a related person. The 
     preceding sentence shall not apply to the extent that the 
     related person acquired the replacement property or stock 
     from an unrelated person during the period applicable under 
     subsection (a)(2)(B).
       ``(2) Taxpayers to which subsection applies.--This 
     subsection shall apply to--
       ``(A) a C corporation,
       ``(B) a partnership in which 1 or more C corporations own, 
     directly or indirectly (determined in accordance with section 
     707(b)(3)), more than 50 percent of the capital interest, or 
     profits interest, in such partnership at the time of the 
     involuntary conversion, and
       ``(C) any other taxpayer if, with respect to property which 
     is involuntarily converted during the taxable year, the 
     aggregate of the amount of realized gain on such property on 
     which there is realized gain exceeds $100,000.
     In the case of a partnership, subparagraph (C) shall apply 
     with respect to the partnership and with respect to each 
     partner. A similar rule shall apply in the case of an S 
     corporation and its shareholders.
       ``(3) Related person.--For purposes of this subsection, a 
     person is related to another person if the person bears a 
     relationship to the other person described in section 267(b) 
     or 707(b)(1).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to involuntary conversions occurring after 
     September 13, 1995.

     SEC. 13628. NO ROLLOVER OR EXCLUSION OF GAIN ON SALE OF 
                   PRINCIPAL RESIDENCE WHICH IS ATTRIBUTABLE TO 
                   DEPRECIATION DEDUCTIONS.

       (a) In General.--Subsection (d) of section 1034 (relating 
     to limitations) is amended by adding at the end the following 
     new paragraph:
       ``(3) Recognition of gain attributable to depreciation.--
     Subsection (a) shall not apply to so much of the gain from 
     the sale of any residence as does not exceed the portion of 
     the depreciation adjustments (as defined in section 
     1250(b)(3)) attributable to periods after December 31, 1995, 
     in respect of such residence.''
       (b) Comparable Treatment Under 1-Time Exclusion of Gain on 
     Sale of Principal Residence.--Subsection (d) of section 121 
     is amended by adding at the end the following new paragraph:
       ``(10) Recognition of gain attributable to depreciation.--
       ``(A) In general.--Subsection (a) shall not apply to so 
     much of the gain from the sale of any property as does not 
     exceed the portion of the depreciation adjustments (as 
     defined in section 1250(b)(3)) attributable to periods after 
     December 31, 1995, in respect of such property.
       ``(B) Coordination with paragraph (5).--If this section 
     does not apply to gain attributable to a portion of a 
     residence by reason of paragraph (5), subparagraph (A) shall 
     not apply to depreciation adjustments attributable to such 
     portion.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after December 31, 1995.

     SEC. 13629. NONRECOGNITION OF GAIN ON SALE OF PRINCIPAL 
                   RESIDENCE BY NONCITIZENS LIMITED TO NEW 
                   RESIDENCES LOCATED IN THE UNITED STATES.

       (a) In General.--Subsection (d) of section 1034 (relating 
     to limitations) (as amended by section 13628) is amended by 
     adding at the end the following new paragraph:
       ``(4) New residence must be located in united states in 
     certain cases.--
       ``(A) In general.--In the case of a sale of an old 
     residence by a taxpayer--
       ``(i) who is not a citizen of the United States at the time 
     of sale, and
       ``(ii) who is not a citizen or resident of the United 
     States on the date which is 2 years after the date of the 
     sale of such old residence,

     subsection (a) shall apply only if the new residence is 
     located in the United States or a possession of the United 
     States.
       ``(B) Property held jointly by husband and wife.--
     Subparagraph (A) shall not apply if--
       ``(i) the old residence is held by a husband and wife as 
     joint tenants, tenants by the entirety, or community 
     property,
       ``(ii) such husband and wife make a joint return for the 
     taxable year of the sale or exchange, and
       ``(iii) one spouse is a citizen of the United States at the 
     time of sale.''
       (b) Effective Date.--
       (1) In general.--The amendment made by this section shall 
     apply to sales of old residences after December 31, 1995.
       (2) Treatment of purchases of new residences.--The 
     amendment made by this section shall not apply to new 
     residences--
       (A) purchased before September 13, 1995, or
       (B) purchased on or after such date pursuant to a binding 
     contract in effect on such date and at all times thereafter 
     before such purchase.
       (3) Certain rules to apply.--For purposes of this 
     subsection, the rules of paragraphs (1), (2), and (3) of 
     section 1034(c) of the Internal Revenue Code of 1986 shall 
     apply.

             PART VI--REFORMS RELATING TO GAMING ACTIVITIES

     SEC. 13631. TREATMENT OF INDIAN GAMING ACTIVITIES UNDER 
                   UNRELATED BUSINESS INCOME TAX.

       (a) In General.--Paragraph (2) of section 511(a) (relating 
     to imposition of tax on unrelated business income of 
     charitable, etc., organizations) is amended by adding at the 
     end the following new subparagraph:
       ``(C) Gaming activities of indian tribes.--
       ``(i) In general.--The tax imposed by paragraph (1) shall 
     apply to any Indian tribal organization; except that, 
     notwithstanding any 

[[Page H11107]]

     other provision of this part, in the case of such an 
     organization, the term `unrelated trade or business' means 
     only a trade or business of conducting any class II or class 
     III gaming activity (as defined in section 4 of the Indian 
     Gaming Regulatory Act (25 U.S.C. 2701 et seq.), as in effect 
     on the date of the enactment of this subparagraph), including 
     a gaming activity described in section 513(a)(1).
       ``(ii) Indian tribal organization.--For purposes of clause 
     (i), the term `Indian tribal organization' means any Indian 
     tribe and any organization which is immune or exempt from tax 
     under this subtitle solely by reason of being owned or 
     controlled by an Indian tribe.''
       (b) Treatment of Amounts Paid for Charitable Purposes, 
     Etc., By Reason of State or Federal Law.--Subsection (b) of 
     section 512 is amended by adding at the end the following new 
     paragraph:
       ``(17) In the case of an Indian tribal organization (as 
     defined in section 511(a)(3)), if, by reason of State or 
     Federal law or of a contract with the United States or with 
     any State or political subdivision thereof, such organization 
     is required to use any portion of the net proceeds of any 
     gaming activity for specified purposes, the deduction for so 
     using such proceeds shall be treated as allowed under section 
     170 for purposes of applying paragraph (10). The preceding 
     sentence shall not apply to such proceeds which are paid as 
     general revenues to the United States or to any State or 
     political subdivision thereof.''
       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 1996.
       (d) Study of Gambling Conducted by Tax-Exempt 
     Organizations.--The Secretary of the Treasury or his delegate 
     shall conduct a study on the nature and extent of gaming 
     activities conducted by organizations exempt from tax under 
     section 501(a) of the Internal Revenue Code of 1986, 
     including an examination of--
       (1) the types of gaming activities (including bingo, pull 
     tabs, and casino nights) engaged in by charities and other 
     nonprofit organizations and the frequency of such activities;
       (2) the dollar volume of such gaming activities;
       (3) the nature and extent of the involvement of for-profit 
     entities and private parties in the management or operation 
     of gaming activities of such organizations;
       (4) competition between taxable gaming activities and 
     gaming activities that are exempt from Federal income tax; 
     and
       (5) an analysis of the present law tax treatment of gaming 
     activities of tax-exempt organizations.

     The study may include any recommendations for change, 
     including examination of the South End decision and the 
     special exception for bingo games. The Secretary shall submit 
     the results of the study to the Committee on Ways and Means 
     of the House of Representatives and the Committee on Finance 
     of the Senate not later than July 1, 1996.

     SEC. 13632. REPEAL OF TARGETED EXEMPTION FROM TAX ON 
                   UNRELATED TRADE OR BUSINESS INCOME FROM 
                   GAMBLING IN CERTAIN STATES.

       (a) In General.--Section 311 of the Tax Reform Act of 1984 
     is hereby repealed.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to games of chance conducted after December 31, 
     1995, in taxable years ending after such date.

     SEC. 13633. EXTENSION OF WITHHOLDING TO CERTAIN GAMBLING 
                   WINNINGS.

       (a) Repeal of Exemption for Bingo and Keno.--Paragraph (5) 
     of section 3402(q) is amended to read as follows:
       ``(5) Exemption for slot machines.--The tax imposed under 
     paragraph (1) shall not apply to winnings from a slot 
     machine.''
       (b) Threshold Amount.--Paragraph (3) of section 3402(q) is 
     amended--
       (1) by striking ``(B) and (C)'' in subparagraph (A) and 
     inserting ``(B), (C), and (D)'', and
       (2) by adding at the end the following new subparagraph:
       ``(D) Bingo and keno.--Proceeds of more than $5,000 from a 
     wager placed in a bingo or keno game.''
       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 1996.

                        PART VII--OTHER REFORMS

     SEC. 13636. SUNSET OF LOW-INCOME HOUSING CREDIT.

       (a) Repeal of Reallocation of Unused Credits Among 
     States.--Subparagraph (D) of section 42(h)(3) is amended by 
     adding at the end the following new clause:
       ``(v) Termination.--No amount may be allocated under this 
     paragraph for any calendar year after 1995.''
       (b) Termination.--Section 42 is amended by adding at the 
     end the following new subsection:
       ``(o) Termination.--
       ``(1) In general.--Except as provided in paragraph (2)--
       ``(A) clause (i) of subsection (h)(3)(C) shall not apply to 
     any amount allocated after December 31, 1997, and
       ``(B) subsection (h)(4) shall not apply to any building 
     placed in service after such date.
       ``(2) Exception for bond-financed buildings in progress.--
     For purposes of paragraph (1)(B), a building shall be treated 
     as placed in service before January 1, 1998, if--
       ``(A) the bonds with respect to such building are issued 
     before such date,
       ``(B) the taxpayer's basis in the project (of which the 
     building is a part) as of December 31, 1997, is more than 10 
     percent of the taxpayer's reasonably expected basis in such 
     project as of December 31, 1999, and
       ``(C) such building is placed in service before January 1, 
     2000.''

     SEC. 13637. REPEAL OF CREDIT FOR CONTRIBUTIONS TO COMMUNITY 
                   DEVELOPMENT CORPORATIONS.

       (a) In General.--Section 13311 of the Revenue 
     Reconciliation Act of 1993 (relating to credit for 
     contributions to certain community development corporations) 
     is hereby repealed.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to contributions made after the date of the 
     enactment of this Act (other than contributions made pursuant 
     to a legally enforceable agreement which is effect on the 
     date of the enactment of this Act).

     SEC. 13638. REPEAL OF DIESEL FUEL TAX REBATE TO PURCHASERS OF 
                   DIESEL-POWERED AUTOMOBILES AND LIGHT TRUCKS.

       (a) In General.--Section 6427 is amended by striking 
     subsection (g).
       (b) Conforming Amendments.--
       (1) Paragraph (3) of section 34(a) is amended to read as 
     follows:
       ``(3) under section 6427 with respect to fuels used for 
     nontaxable purposes or resold during the taxable year 
     (determined without regard to section 6427(k)).''
       (2) Paragraphs (1) and (2)(A) of section 6427(i) are each 
     amended--
       (A) by striking ``(g),'', and
       (B) by striking ``(or a qualified diesel powered highway 
     vehicle purchased)'' each place it appears.
       (c) Effective Date.--The amendments made by this section 
     shall apply to vehicles purchased after December 31, 1995.

     SEC. 13639. APPLICATION OF FAILURE-TO-PAY PENALTY TO 
                   SUBSTITUTE RETURNS.

       (a) General Rule.--Section 6651 (relating to failure to 
     file tax return or to pay tax) is amended by adding at the 
     end the following new subsection:
       ``(g) Treatment of Returns Prepared by Secretary Under 
     Section 6020(b).--In the case of any return made by the 
     Secretary under section 6020(b)--
       ``(1) such return shall be disregarded for purposes of 
     determining the amount of the addition under paragraph (1) of 
     subsection (a), but
       ``(2) such return shall be treated as the return filed by 
     the taxpayer for purposes of determining the amount of the 
     addition under paragraphs (2) and (3) of subsection (a).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply in the case of any return the due date for which 
     (determined without regard to extensions) is after the date 
     of the enactment of this Act.

     SEC. 13640. REPEAL OF SPECIAL RULE FOR RENTAL USE OF VACATION 
                   HOMES, ETC., FOR LESS THAN 15 DAYS.

       (a) In General.--Section 280A (relating to disallowance of 
     certain expenses in connection with business use of home, 
     rental of vacation homes, etc.) is amended by striking 
     subsection (g).
       (b) No Basis Reduction Unless Depreciation Claimed.--
     Section 1016 is amended by redesignating subsection (e) as 
     subsection (f) and by inserting after subsection (d) the 
     following new subsection:
       ``(e) Special Rule Where Rental Use of Vacation Home, Etc., 
     for Less Than 15 Days.--If a dwelling unit is used during the 
     taxable year by the taxpayer as a residence and such dwelling 
     unit is actually rented for less than 15 days during the 
     taxable year, the reduction under subsection (a)(2) by reason 
     of such rental use in any taxable year beginning after 
     December 31, 1995, shall not exceed the depreciation 
     deduction allowed for such rental use.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 13641. ELECTION TO CEASE STATUS AS QUALIFIED SCHOLARSHIP 
                   FUNDING CORPORATION.

       (a) In General.--Subsection (d) of section 150 (relating to 
     definitions and special rules) is amended by adding at the 
     end thereof the following new paragraph:
       ``(3) Election to cease status as qualified scholarship 
     funding corporation.--
       ``(A) In general.--Any qualified scholarship funding bond, 
     and qualified student loan bond, outstanding on the date of 
     the issuer's election under this paragraph (and any bond (or 
     series of bonds) issued to refund such a bond) shall not fail 
     to be a tax-exempt bond solely because the issuer ceases to 
     be described in subparagraphs (A) and (B) of paragraph (2) if 
     the issuer meets the requirements of subparagraphs (B) and 
     (C) of this paragraph.
       ``(B) Assets and liabilities of issuer transferred to 
     taxable subsidiary.--The requirements of this subparagraph 
     are met by an issuer if--
       ``(i) all of the student loan notes of the issuer and other 
     assets pledged to secure the repayment of qualified 
     scholarship funding bond indebtedness of the issuer are 
     transferred to another corporation within a reasonable period 
     after the election is made under this paragraph;
       ``(ii) such transferee corporation assumes or otherwise 
     provides for the payment of all 

[[Page H11108]]

     of the qualified scholarship funding bond indebtedness of the 
     issuer within a reasonable period after the election is made 
     under this paragraph;
       ``(iii) to the extent permitted by law, such transferee 
     corporation assumes all of the responsibilities, and succeeds 
     to all of the rights, of the issuer under the issuer's 
     agreements with the Secretary of Education in respect of 
     student loans;
       ``(iv) immediately after such transfer, the issuer, 
     together with any other issuer which has made an election 
     under this paragraph in respect of such transferee, hold all 
     of the senior stock in such transferee corporation; and
       ``(v) such transferee corporation is not exempt from tax 
     under this chapter.
       ``(C) Issuer to operate as independent organization 
     described in section 501(c)(3).--The requirements of this 
     subparagraph are met by an issuer if, within a reasonable 
     period after the transfer referred to in subparagraph (B)--
       ``(i) the issuer is described in section 501(c)(3) and 
     exempt from tax under section 501(a);
       ``(ii) the issuer no longer is described in subparagraphs 
     (A) and (B) of paragraph (2); and
       ``(iii) at least 80 percent of the members of the board of 
     directors of the issuer are independent members.
       ``(D) Senior stock.--For purposes of this paragraph, the 
     term `senior stock' means stock--
       ``(i) which participates pro rata and fully in the equity 
     value of the corporation with all other common stock of the 
     corporation but which has the right to payment of liquidation 
     proceeds prior to payment of liquidation proceeds in respect 
     of other common stock of the corporation;
       ``(ii) which has a fixed right upon liquidation and upon 
     redemption to an amount equal to the greater of--

       ``(I) the fair market value of such stock on the date of 
     liquidation or redemption (whichever is applicable); or
       ``(II) the fair market value of all assets transferred in 
     exchange for such stock and reduced by the amount of all 
     liabilities of the corporation which has made an election 
     under this paragraph assumed by the transferee corporation in 
     such transfer;

       ``(iii) the holder of which has the right to require the 
     transferee corporation to redeem on a date that is not later 
     than 10 years after the date on which an election under this 
     paragraph was made and pursuant to such election such stock 
     was issued; and
       ``(iv) in respect of which, during the time such stock is 
     outstanding, there is not outstanding any equity interest in 
     the corporation having any liquidation, redemption or 
     dividend rights in the corporation which are superior to 
     those of such stock.
       ``(E) Independent member.--The term `independent member' 
     means a member of the board of directors of the issuer who 
     (except for services as a member of such board) receives no 
     compensation directly or indirectly--
       ``(i) for services performed in connection with such 
     transferee corporation, or
       ``(ii) for services as a member of the board of directors 
     or as an officer of such transferee corporation.

     For purposes of clause (ii), the term `officer' includes any 
     individual having powers or responsibilities similar to those 
     of officers.
       ``(F) Coordination with certain private foundation taxes.--
     For purposes of sections 4942 (relating to the excise tax on 
     a failure to distribute income) and 4943 (relating to the 
     excise tax on excess business holdings), the transferee 
     corporation referred to in subparagraph (B) shall be treated 
     as a functionally related business (within the meaning of 
     section 4942(j)(4)) with respect to the issuer during the 
     period commencing with the date on which an election is made 
     under this paragraph and ending on the date that is the 
     earlier of--
       ``(i) the last day of the last taxable year for which more 
     than 50 percent of the gross income of such transferee 
     corporation is derived from, or more than 50 percent of the 
     assets (by value) of such transferee corporation consists of, 
     student loan notes incurred under the Higher Education Act of 
     1965; or
       ``(ii) the last day of the taxable year of the issuer 
     during which occurs the date which is 10 years after the date 
     on which the election under this paragraph is made.
       ``(G) Election.--An election under this paragraph may be 
     revoked only with the consent of the Secretary.''
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 13642. CERTAIN AMOUNTS DERIVED FROM FOREIGN CORPORATIONS 
                   TREATED AS UNRELATED BUSINESS TAXABLE INCOME.

       (a) General Rule.--Subsection (b) of section 512 (relating 
     to modifications) is amended by adding at the end thereof the 
     following new paragraph:
       ``(18) Treatment of certain amounts derived from foreign 
     corporations.--
       ``(A) In general.--Notwithstanding paragraph (1), any 
     amount included in gross income under section 951(a)(1)(A) 
     shall be included as an item of gross income derived from an 
     unrelated trade or business to the extent the amount so 
     included is attributable to insurance income (as defined in 
     section 953) which, if derived directly by the organization, 
     would be treated as gross income from an unrelated trade or 
     business. There shall be allowed all deductions directly 
     connected with amounts included in gross income under the 
     preceding sentence.
       ``(B) Exception.--Subparagraph (A) shall not apply to 
     income attributable to a policy of insurance or reinsurance 
     with respect to which the person (directly or indirectly) 
     insured is--
       ``(i) such organization,
       ``(ii) an affiliate of such organization which is exempt 
     from tax under section 501(a), or
       ``(iii) a director, officer, or employee of such 
     organization or affiliate but only if the insurance covers 
     solely risks associated with the performance of services for 
     the benefit of such organization or affiliate.
       ``(C) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this paragraph, including regulations for the 
     application of this paragraph in the case of income paid 
     through 1 or more entities or between 2 or more chains of 
     entities.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to amounts included in gross income in any 
     taxable year beginning after December 31, 1995.

      PART VIII--EXCISE TAX ON AMOUNTS OF PRIVATE EXCESS BENEFITS

     SEC. 13646. EXCISE TAXES FOR FAILURE BY CERTAIN CHARITABLE 
                   ORGANIZATIONS TO MEET CERTAIN QUALIFICATION 
                   REQUIREMENTS.

       (a) In General.--Chapter 42 (relating to private 
     foundations and certain other tax-exempt organizations) is 
     amended by redesignating subchapter D as subchapter E and by 
     inserting after subchapter C the following new subchapter:
  ``Subchapter D--Failure By Certain Charitable Organizations To Meet 
                   Certain Qualification Requirements

``Sec. 4958. Taxes on excess benefit transactions.

     ``SEC. 4958. TAXES ON EXCESS BENEFIT TRANSACTIONS.

       ``(a) Initial Taxes.--
       ``(1) On the disqualified person.--There is hereby imposed 
     on each excess benefit transaction a tax equal to 25 percent 
     of the excess benefit. The tax imposed by this paragraph 
     shall be paid by any disqualified person referred to in 
     subsection (f)(1) with respect to such transaction.
       ``(2) On the management.--In any case in which a tax is 
     imposed by paragraph (1), there is hereby imposed on the 
     participation of any organization manager in the excess 
     benefit transaction, knowing that it is such a transaction, a 
     tax equal to 10 percent of the excess benefit, unless such 
     participation is not willful and is due to reasonable cause. 
     The tax imposed by this paragraph shall be paid by any 
     organization manager who participated in the excess benefit 
     transaction.
       ``(b) Additional Tax On the Disqualified Person.--In any 
     case in which an initial tax is imposed by subsection (a)(1) 
     on an excess benefit transaction and the excess benefit 
     involved in such transaction is not corrected within the 
     taxable period, there is hereby imposed a tax equal to 200 
     percent of the excess benefit involved. The tax imposed by 
     this subsection shall be paid by any disqualified person 
     referred to in subsection (f)(1) with respect to such 
     transaction.
       ``(c) Excess Benefit Transaction; Excess Benefit.--For 
     purposes of this section--
       ``(1) Excess benefit transaction.--
       ``(A) In general.--The term `excess benefit transaction' 
     means any transaction in which an economic benefit is 
     provided by an applicable tax-exempt organization directly or 
     indirectly to or for the use of any disqualified person if 
     the value of the economic benefit provided exceeds the value 
     of the consideration (including the performance of services) 
     received for providing such benefit. For purposes of the 
     preceding sentence, an economic benefit shall not be treated 
     as consideration for the performance of services unless such 
     organization clearly indicated its intent to so treat such 
     benefit.
       ``(B) Excess benefit.--The term `excess benefit' means the 
     excess referred to in subparagraph (A).
       ``(2) Authority to include certain other private 
     inurement.--To the extent provided in regulations prescribed 
     by the Secretary, the term `excess benefit transaction' 
     includes any transaction in which the amount of any economic 
     benefit provided to or for the use of a disqualified person 
     is determined in whole or in part by the revenues of 1 or 
     more activities of the organization but only if such 
     transaction results in inurement not permitted under 
     paragraph (3) or (4) of section 501(c), as the case may be. 
     In the case of any such transaction, the excess benefit shall 
     be the amount of the inurement not so permitted.
       ``(d) Special Rules.--For purposes of this section--
       ``(1) Joint and several liability.--If more than 1 person 
     is liable for any tax imposed by subsection (a) or subsection 
     (b), all such persons shall be jointly and severally liable 
     for such tax.
       ``(2) Limit for management.--With respect to any 1 excess 
     benefit transaction, the maximum amount of the tax imposed by 
     subsection (a)(2) shall not exceed $10,000.
       ``(e) Applicable Tax-Exempt Organization.--For purposes of 
     this subchapter, the term `applicable tax-exempt 
     organization' 

[[Page H11109]]

     means any organization which (without regard to any excess 
     benefit) would be described in paragraph (3) or (4) of 
     section 501(c) and exempt from tax under section 501(a). Such 
     term shall not include a private foundation (as defined in 
     section 509(a)).
       ``(f) Other Definitions.--For purposes of this section--
       ``(1) Disqualified person.--The term `disqualified person' 
     means, with respect to any transaction--
       ``(A) any person who was, at any time during the 5-year 
     period ending on the date of such transaction--
       ``(i) an organization manager, or
       ``(ii) an individual (other than an organization manager) 
     in a position to exercise substantial influence over the 
     affairs of the organization,
       ``(B) a member of the family of an individual described in 
     subparagraph (A), and
       ``(C) a 35-percent controlled entity.
       ``(2) Organization manager.--The term `organization 
     manager' means, with respect to any applicable tax-exempt 
     organization, any officer, director, or trustee of such 
     organization (or any individual having powers or 
     responsibilities similar to those of officers, directors, or 
     trustees of the organization).
       ``(3) 35-percent controlled entity.--
       ``(A) In general.--The term `35-percent controlled entity' 
     means--
       ``(i) a corporation in which persons described in 
     subparagraph (A) or (B) of paragraph (1) own more than 35 
     percent of the total combined voting power,
       ``(ii) a partnership in which such persons own more than 35 
     percent of the profits interest, and
       ``(iii) a trust or estate in which such persons own more 
     than 35 percent of the beneficial interest.
       ``(B) Constructive ownership rules.--Rules similar to the 
     rules of paragraphs (3) and (4) of section 4946(a) shall 
     apply for purposes of this paragraph.
       ``(4) Family members.--The members of an individual's 
     family shall be determined under section 4946(d); except that 
     such members also shall include the brothers and sisters 
     (whether by the whole or half blood) of the individual and 
     their spouses.
       ``(5) Taxable period.--The term `taxable period' means, 
     with respect to any excess benefit transaction, the period 
     beginning with the date on which the transaction occurs and 
     ending on the earliest of--
       ``(A) the date of mailing a notice of deficiency under 
     section 6212 with respect to the tax imposed by subsection 
     (a)(1), or
       ``(B) the date on which the tax imposed by subsection 
     (a)(1) is assessed.
       ``(6) Correction.--The terms `correction' and `correct' 
     mean, with respect to any excess benefit transaction, undoing 
     the excess benefit to the extent possible, and where fully 
     undoing the excess benefit is not possible, such additional 
     corrective action as is prescribed by the Secretary by 
     regulations.
       ``(g) Treatment of Previously Exempt Organizations.--
       ``(1) In general.--For purposes of this section, the status 
     of any organization as an applicable tax-exempt organization 
     shall be terminated only if--
       ``(A)(i) such organization notifies the Secretary (at such 
     time and in such manner as the Secretary may by regulations 
     prescribe) of its intent to accomplish such termination, or
       ``(ii) there is a final determination by the Secretary that 
     such status has terminated, and
       ``(B)(i) such organization pays the tax imposed by 
     paragraph (2) (or any portion not abated pursuant to 
     paragraph (3)), or
       ``(ii) the entire amount of such tax is abated pursuant to 
     paragraph (3).
       ``(2) Imposition of tax.--There is hereby imposed on each 
     organization referred to in paragraph (1) a tax equal to the 
     lesser of--
       ``(A) the amount which the organization substantiates by 
     adequate records or other corroborating evidence as the 
     aggregate tax benefit resulting from its exemption from tax 
     under section 501(a), or
       ``(B) the value of the net assets of such organization.
       ``(3) Abatement of tax.--The Secretary may abate the unpaid 
     portion of the assessment of any tax imposed by paragraph 
     (2), or any liability in respect thereof, if the applicable 
     tax-exempt organization distributes all of its net assets to 
     1 or more organizations each of which has been in existence, 
     and described in section 501(c)(3), for a continuous period 
     of at least 60 calendar months. If the distributing 
     organization is described in section 501(c)(4), the preceding 
     sentence shall be applied by treating the reference to 
     section 501(c)(3) as including a reference to section 
     501(c)(4).
       ``(4) Certain rules made applicable.--Rules similar to the 
     rules of subsections (d), (e), and (f) of section 507 shall 
     apply for purposes of this subsection.''
       (b) Application of Private Inurement Rule to Tax-Exempt 
     Organizations Described in Section 501(c)(4).--Paragraph (4) 
     of section 501(c) is amended by inserting ``(A)'' after 
     ``(4)'' and by adding at the end the following:
       ``(B) Subparagraph (A) shall not apply to an entity unless 
     no part of the net earnings of such entity inures to the 
     benefit of any private shareholder or individual.''
       (c) Technical and Conforming Amendments.--
       (1) Subsection (e) of section 4955 is amended--
       (A) by striking ``Section 4945'' in the heading and 
     inserting ``Sections 4945 and 4958'', and
       (B) by inserting before the period ``or an excess benefit 
     for purposes of section 4958''.
       (2) Subsections (a), (b), and (c) of section 4963 are each 
     amended by inserting ``4958,'' after ``4955,''.
       (3) Subsection (e) of section 6213 is amended by inserting 
     ``4958 (relating to private excess benefit),'' before 
     ``4971''.
       (4) Paragraphs (2) and (3) of section 7422(g) are each 
     amended by inserting ``4958,'' after ``4955,''.
       (5) Subsection (b) of section 7454 is amended by inserting 
     ``or whether an organization manager (as defined in section 
     4958(f)(2)) has `knowingly' participated in an excess benefit 
     transaction (as defined in section 4958(c)),'' after 
     ``section 4912(b),''.
       (6) The table of subchapters for chapter 42 is amended by 
     striking the last item and inserting the following:

``Subchapter D. Failure by certain charitable organizations to meet 
              certain qualification requirements.
``Subchapter E. Abatement of first and second tier taxes in certain 
              cases.''
       (d) Effective Dates.--
       (1) In general.--The amendments made by this section (other 
     than subsection (b)) shall apply to excess benefit 
     transactions occurring on or after September 14, 1995.
       (2) Binding contracts for personal services.--The 
     amendments referred to in paragraph (1) shall not apply to 
     any transaction pursuant to any written contract for the 
     performance of personal services which was binding on 
     September 13, 1995, and at all times thereafter before such 
     transaction occurred.
       (3) Application of private inurement rule to tax-exempt 
     organizations described in section 501(c)(4).--
       (A) In general.--The amendment made by subsection (b) shall 
     apply to inurement occurring on or after September 14, 1995.
       (B) Binding contracts.--The amendment made by subsection 
     (b) shall not apply to any inurement occurring before January 
     1, 1997, pursuant to a written contract which was binding on 
     September 13, 1995, and at all times thereafter before such 
     inurement occurred.

     SEC. 13647. REPORTING OF CERTAIN EXCISE TAXES AND OTHER 
                   INFORMATION.

       (a) Reporting by Organizations Described in Section 
     501(c)(3).--Subsection (b) of section 6033 (relating to 
     certain organizations described in section 501(c)(3)) is 
     amended by striking ``and'' at the end of paragraph (9), by 
     redesignating paragraph (10) as paragraph (14), and by 
     inserting after paragraph (9) the following new paragraphs:
       ``(10) the respective amounts (if any) of the taxes paid by 
     the organization during the taxable year under the following 
     provisions:
       ``(A) section 4911 (relating to tax on excess expenditures 
     to influence legislation),
       ``(B) section 4912 (relating to tax on disqualifying 
     lobbying expenditures of certain organizations), and
       ``(C) section 4955 (relating to taxes on political 
     expenditures of section 501(c)(3) organizations),
       ``(11) the respective amounts (if any) of the taxes paid by 
     the organization or any disqualified person during the 
     taxable year under section 4958 (relating to taxes on private 
     excess benefit from certain charitable organizations),
       ``(12) such information as the Secretary may require with 
     respect to any excess benefit transaction (as defined in 
     section 4958),
       ``(13) the name of each disqualified person who receives an 
     economic benefit from an applicable tax-exempt organization 
     (as defined in section 4958(e)) and such other information as 
     the Secretary may prescribe with respect to such benefit, 
     and''.
       (b) Organizations Described in Section 501(c)(4).--Section 
     6033 is amended by redesignating subsection (f) as subsection 
     (g) and by inserting after subsection (e) the following new 
     subsection:
       ``(f) Certain Organizations Described in Section 
     501(c)(4).--Every organization described in section 501(c)(4) 
     which is subject to the requirements of subsection (a) shall 
     include on the return required under subsection (a) the 
     information referred to in paragraphs (10), (11), (12) and 
     (13) of subsection (b) with respect to such organization.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns for taxable years beginning after the 
     date of the enactment of this Act.

     SEC. 13648. EXEMPT ORGANIZATIONS REQUIRED TO PROVIDE COPY OF 
                   RETURN.

       (a) General Rule.--
       (1) Subparagraph (A) of section 6104(e)(1) (relating to 
     public inspection of annual returns) is amended to read as 
     follows:
       ``(A) In general.--During the 3-year period beginning on 
     the filing date--
       ``(i) a copy of the annual return filed under section 6033 
     (relating to returns by exempt organizations) by any 
     organization to which this paragraph applies shall be made 
     available by such organization for inspection during regular 
     business hours by any individual at the principal office of 
     such organization and, if such organization regularly 
     maintains 1 or more regional or district offices having 3 or 
     more employees, at each such regional or district office, and
       ``(ii) upon request of an individual made at such principal 
     office or such a regional or district office, a copy of such 
     annual return shall be provided to such individual without 

[[Page H11110]]

     charge other than a reasonable fee for any reproduction and 
     mailing costs.

     If the request under clause (ii) is made in person, such copy 
     shall be provided immediately and, if made other than in 
     person, shall be provided within 30 days.''
       (2) Clause (ii) of section 6104(e)(2)(A) is amended by 
     inserting before the period at the end thereof the following: 
     ``(and, upon request of an individual made at such principal 
     office or such a regional or district office, a copy of the 
     material required to be available for inspection under this 
     subparagraph shall be provided (in accordance with the last 
     sentence of paragraph (1)(A)) to such individual without 
     charge other than a reasonable fee for any reproduction and 
     mailing costs)''.
       (3) Subsection (e) of section 6104 is amended by adding at 
     the end the following new paragraph:
       ``(3) Limitation.--Paragraph (1)(A)(ii) (and the 
     corresponding provision of paragraph (2)) shall not apply to 
     any request if the Secretary determines, upon application by 
     an organization, that such request is part of a harassment 
     campaign and that compliance with such request is not in the 
     public interest.''
       (b) Advertisements Etc., Required To Disclose Availability 
     of Annual Return.--
       (1) Paragraph (1) of section 6104(e) is amended by adding 
     at the end thereof the following new subparagraph:
       ``(E) Advertisements etc., required to disclose 
     availability of annual return.--In the case of an 
     organization required by subparagraph (A) to provide a copy 
     of its annual return under section 6033 upon request to 
     individuals, each written advertisement or solicitation by 
     (or on behalf of) such organization shall contain an express 
     statement (in a conspicuous and easily recognizable format) 
     that such return shall be provided to individuals upon 
     request.''
       (2) Section 6716, as added by section 13649 of this title, 
     is amended--
       (A) by striking ``section 6116'' each place it appears and 
     inserting ``section 6116 or section 6104(e)(1)(E)'',
       (B) by striking ``$1,000'' in subsection (a) and inserting 
     ``$1,000 ($100 in the case of a failure to meet the 
     requirements of 6104(e)(1)(E))'', and
       (C) by inserting before the period at the end of the 
     section heading ``; FAILURE OF CERTAIN EXEMPT ORGANIZATIONS 
     TO DISCLOSE AVAILABILITY OF ANNUAL RETURN''.
       (3) Subparagraph (C) of section 6652(c)(1) is amended by 
     striking ``(e)(1)'' and inserting ``(e)(1) (other than 
     subparagraph (E))'', by striking ``$10'' and inserting 
     ``$20'', and by striking ``$5,000'' and inserting 
     ``$10,000''.
       (4) Subparagraph (D) of section 6652(c)(1) is amended by 
     striking ``$10'' and inserting ``$20''.
       (5) The item relating to section 6716 in the table of 
     sections for part I of subchapter B of chapter 68 is amended 
     by inserting before the period ``; failure of certain exempt 
     organizations to disclose availability of annual return''.
       (c) Increase in Penalty for Willful Failure To Allow Public 
     Inspection of Certain Returns, Etc.--Section 6685 is amended 
     by striking ``$1,000'' and inserting ``$5,000''.
       (d) Copies of Returns of Exempt Organizations Available 
     From Secretary in Certain Cases.--Subsection (b) of section 
     6104 is amended to read as follows:
       ``(b) Inspection of Annual Information Returns.--
       ``(1) In general.--The information required to be furnished 
     by sections 6033, 6034, and 6058, together with the names and 
     addresses of such organizations and trusts, shall be made 
     available to the public at such times and in such places as 
     the Secretary may prescribe. Nothing in this subsection shall 
     authorize the Secretary to disclose the name or address of 
     any contributor to any organization or trust (other than a 
     private foundation, as defined in section 509(a)) which is 
     required to furnish such information.
       ``(2) Copies provided of returns filed under section 6033 
     and applications filed under section 508 in certain cases.--
     The Secretary shall provide copies of returns filed under 
     section 6033 and applications for exemption filed under 
     section 508 by any organization to which subsection (d) or 
     (e)(1) applies to any person who agrees (subject to such 
     conditions as the Secretary shall prescribe)--
       ``(A) to accept broad categories of such returns and 
     applications, and
       ``(B) to provide electronic access to the provided returns 
     and applications on an electronic network available to the 
     general public.

     Such copies shall be provided without charge if such person 
     agrees to provide such access without charge. Otherwise, the 
     Secretary may impose a reasonable fee for any reproduction 
     and mailing costs.
       ``(3) Returns and applications filed before 1996.--
     Paragraph (2) shall apply to returns and applications filed 
     before January 1, 1996, only to the extent provided by the 
     Secretary.''
       (e) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 1996 (or, if later, the 90th 
     day after the date of the enactment of this Act).

     SEC. 13649. CERTAIN ORGANIZATIONS REQUIRED TO DISCLOSE 
                   NONEXEMPT STATUS.

       (a) General Rule.--Subchapter B of chapter 61 (relating to 
     miscellaneous provisions) is amended by redesignating section 
     6116 as section 6117 and by inserting after section 6115 the 
     following new section:

     ``SEC. 6116. CERTAIN ORGANIZATIONS REQUIRED TO DISCLOSE 
                   NONEXEMPT STATUS.

       ``(a) In General.--If--
       ``(1) in an advertisement or solicitation by (or on behalf 
     of) an organization, such organization is referred to as 
     being nonprofit, and
       ``(2) such organization is not exempt from tax under 
     subtitle A,

     such advertisement or solicitation shall contain an express 
     statement (in a conspicuous and easily recognizable format) 
     that such organization is not exempt from Federal income 
     taxes.
       ``(b) Cross Reference.--

  ``For penalties for violation of subsection (a), see section 6716.''
       (b) Penalty.--Part I of subchapter B of chapter 68 is 
     amended by adding at the end thereof the following new 
     section:

     ``SEC. 6716. FAILURE TO DISCLOSE NONEXEMPT STATUS.

       ``(a) Imposition of Penalty.--If there is a failure to meet 
     the requirements of section 6116 with respect to any 
     advertisement or solicitation by (or on behalf of) an 
     organization, such organization shall pay a penalty of $1,000 
     for each day on which such a failure occurred. The maximum 
     penalty imposed under this subsection on failures by any 
     organization during any calendar year shall not exceed 
     $10,000.
       ``(b) Reasonable Cause Exemption.--No penalty shall be 
     imposed under this section with respect to any failure if it 
     is shown that such failure is due to reasonable cause.
       ``(c) $10,000 Limitation Not To Apply Where Intentional 
     Disregard.--If any failure to which subsection (a) applies is 
     due to intentional disregard of the requirements of section 
     6116--
       ``(1) the penalty under subsection (a) for the day on which 
     failure occurred shall be the greater of--
       ``(A) $1,000, or
       ``(B) 50 percent of the aggregate cost of the 
     advertisements and solicitations which occurred on such day 
     and with respect to which there was such failure,
       ``(2) the $10,000 limitation of subsection (a) shall not 
     apply to any penalty under subsection (a) for the day on 
     which such failure occurred, and
       ``(3) such penalty shall not be taken into account in 
     applying such limitation to other penalties under subsection 
     (a).
       ``(d) Day on Which Failure Occurs.--For purposes of this 
     section, rules similar to the rules of section 6710(d) shall 
     apply in determining the day on which any failure occurs.''
       (c) Clerical Amendments.--
       (1) The table of sections for subchapter B of chapter 61 is 
     amended by striking the item relating to section 6116 and 
     inserting the following:

  ``Sec. 6116. Certain organizations required to disclose nonexempt 
              status.
  ``Sec. 6117. Cross reference.''
       (2) The table of sections of part I of subchapter B of 
     chapter 68 is amended by adding at the end thereof the 
     following new item:

  ``Sec. 6716. Failure to disclose nonexempt status.''
       (d) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 1996 (or, if later, the 90th 
     day after the date of the enactment of this Act).

     SEC. 13650. INCREASE IN PENALTIES ON EXEMPT ORGANIZATIONS FOR 
                   FAILURE TO FILE COMPLETE AND TIMELY ANNUAL 
                   RETURNS.

       (a) In General.--Subparagraph (A) of section 6652(c)(1) 
     (relating to annual returns under section 6033) is amended by 
     striking ``$10'' and inserting ``$20'' and by striking 
     ``$5,000'' and inserting ``$10,000''.
       (b) Larger Penalty on Organizations Having Gross Receipts 
     in Excess of $1,000,000.--Subparagraph (A) of section 
     6652(c)(1) is amended by adding at the end the following new 
     sentence: ``In the case of an organization having gross 
     receipts exceeding $1,000,000 for any year, with respect to 
     the return required under section 6033 for such year, the 
     first sentence of this subparagraph shall be applied by 
     substituting `$100' for `$20' and, in lieu of applying the 
     second sentence of this subparagraph, the maximum penalty 
     under this subparagraph shall not exceed $50,000.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns for taxable years ending on or after 
     December 31, 1995.

     SEC. 13651. STUDIES.

       (a) In General.--The Secretary of the Treasury or his 
     delegate shall conduct a study of--
       (1) whether the statutory prohibition on private inurement, 
     and the provisions of section 4958 of the Internal Revenue 
     Code of 1986 (as added by this part), should apply to other 
     tax-exempt organizations,
       (2) whether State officials responsible for overseeing 
     charitable organizations should be provided with Federal tax 
     information in addition to the information available under 
     section 6103 of such Code for purposes of such oversight, and
       (3) whether the return required to be filed by section 6033 
     of such Code should be modified to assure the return's 
     utility to such Secretary and to the public and to reduce any 
     unnecessary reporting burdens.
       (b) Report.--Not later than January 1, 1997, the report of 
     such study shall be submitted to the Committee on Ways and 
     Means 

[[Page H11111]]

     of the House of Representatives and the Committee on Finance 
     of the Senate.
           Subtitle G--Reform of the Earned Income Tax Credit

     SEC. 13701. REPEAL OF EARNED INCOME CREDIT FOR INDIVIDUALS 
                   WITHOUT QUALIFYING CHILDREN; MODIFICATIONS TO 
                   CREDIT PHASEOUT.

       (a) Repeal of Credit for Individuals Without Children.--
     Subparagraph (A) of section 32(c)(1) (defining eligible 
     individual) is amended to read as follows:
       ``(A) In general.--The term `eligible individual' means any 
     individual who has a qualifying child for the taxable year.''
       (b) Modifications to Phaseout.--
       (1) Subsection (b) of section 32 is amended to read as 
     follows:
       ``(b) Percentages.--
       ``(1) In general.--The credit percentage and the phaseout 
     percentage shall be determined as follows:

                                                                        
  ``In the case of an eligible        The credit         The phaseout   
        individual with:            percentage is:      percentage is:  
                                                                        
1 qualifying child..............  34................          18        
2 or more qualifying children...  40................          23        
                                                                        

       
       ``(2) Amounts.--The earned income amount and the phaseout 
     amount shall be determined as follows:


                                                                        
  ``In the case of an eligible     The earned income     The phaseout   
        individual with:              amount is:          amount is:    
                                                                        
1 qualifying child..............  $6,340............        $11,630     
2 or more qualifying children...  $8,910............      $11,630.''    
                                                                        

       
       (2) Subsection (j) of section 32 is amended--
       (A) by striking ``subsection (b)(2)(A)'' and inserting 
     ``subsection (b)(2)'',
       (B) by striking ``1994'' and inserting ``1996'', and
       (C) by striking ``1993'' and inserting ``1995''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 13702. MODIFICATION OF ADJUSTED GROSS INCOME USED FOR 
                   PHASEOUT.

       (a) In General.--Subsections (a)(2)(B), (c)(1)(C), and 
     (f)(2)(B) of section 32 are each amended by striking 
     ``adjusted gross income'' each place it appears and inserting 
     ``modified adjusted gross income''.
       (b) Modified Adjusted Gross Income.--Subsection (c) of 
     section 32 is amended by adding at the end the following new 
     paragraph:
       ``(5) Modified adjusted gross income.--For purposes of this 
     section, the term `modified adjusted gross income' means 
     adjusted gross income increased by--
       ``(A) any amount received as a pension or annuity, and any 
     distribution or payment received from an individual 
     retirement plan, by the taxpayer during the taxable year to 
     the extent not otherwise included in gross income, and
       ``(B) the social security benefits (as defined in section 
     86(d)) received by the taxpayer during the taxable year to 
     the extent not included in gross income.

     Any amount which is not includible in gross income by reason 
     of paragraph (3), (4), or (5) of section 408(d) or section 
     402(c), 403(a)(4), 403(b)(8), or 457(e)(10) shall be treated 
     as not described in subparagraph (A).''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 13703. EARNED INCOME TAX CREDIT DENIED TO INDIVIDUALS 
                   NOT AUTHORIZED TO BE EMPLOYED IN THE UNITED 
                   STATES.

       (a) In General.--Section 32(c)(1) (relating to individuals 
     eligible to claim the earned income tax credit) is amended by 
     adding at the end the following new subparagraph:
       ``(F) Identification number requirement.--The term 
     `eligible individual' does not include any individual who 
     does not include on the return of tax for the taxable year--
       ``(i) such individual's taxpayer identification number, and
       ``(ii) if the individual is married (within the meaning of 
     section 7703), the taxpayer identification number of such 
     individual's spouse.''
       (b) Special Identification Number.--Section 32 is amended 
     by adding at the end the following new subsection:
       ``(l) Identification Numbers.--Solely for purposes of 
     subsections (c)(1)(F) and (c)(3)(D), a taxpayer 
     identification number means a social security number issued 
     to an individual by the Social Security Administration (other 
     than a social security number issued pursuant to clause (II) 
     (or that portion of clause (III) that relates to clause (II)) 
     of section 205(c)(2)(B)(i) of the Social Security Act).''
       (c) Extension of Procedures Applicable to Mathematical or 
     Clerical Errors.--Section 6213(g)(2) (relating to the 
     definition of mathematical or clerical errors) is amended by 
     striking ``and' at the end of subparagraph (D), by striking 
     the period at the end of subparagraph (E) and inserting a 
     comma, and by inserting after subparagraph (E) the following 
     new subparagraphs:
       ``(F) an omission of a correct taxpayer identification 
     number required under section 32 (relating to the earned 
     income tax credit) to be included on a return, and
       ``(G) an entry on a return claiming the credit under 
     section 32 with respect to net earnings from self-employment 
     described in section 32(c)(2)(A) to the extent the tax 
     imposed by section 1401 (relating to self-employment tax) on 
     such net earnings has not been paid.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
               Subtitle H--Increase in Public Debt Limit

     SEC. 13801. INCREASE IN PUBLIC DEBT LIMIT.

       Subsection (b) of section 3101 of title 31, United States 
     Code, is amended by striking the dollar amount contained 
     therein and inserting ``$5,500,000,000,000''.
            Subtitle I--Coal Industry Retiree Health Equity

     SEC. 13901. REPEAL OF REACHBACK PROVISIONS OF COAL INDUSTRY 
                   HEALTH BENEFIT SYSTEM.

       (a) Amendments Related to Definitions.--
       (1) Agreements.--
       (A) In general.--Paragraph (1) of section 9701(b) (relating 
     to agreements) is amended to read as follows:
       ``(1) Coal wage agreements.--
       ``(A) 1988 agreement.--The term `1988 agreement' means the 
     collective bargaining agreement between the settlors which 
     became effective on February 1, 1988.
       ``(B) Coal wage agreement.--The term `coal wage agreement' 
     means any predecessor to the 1988 agreement.''
       (B) Conforming amendment.--Section 9701(b) is amended by 
     striking paragraph (3).
       (2) Operators.--
       (A) Signatory operator.--Paragraph (1) of section 9701(c) 
     (relating to operators) is amended to read as follows:
       ``(1) Signatory operator.--The term `signatory operator' 
     means a 1988 agreement operator.''
       (B) 1988 agreement operator.--Paragraph (3) of section 
     9701(c) is amended to read as follows:
       ``(3) 1988 agreement operator.--The term `1988 agreement 
     operator' means--
       ``(A) an operator which was a signatory to the 1988 
     agreement, or
       ``(B) a person in business which, during the term of the 
     1988 agreement, was a signatory to an agreement (other than 
     the National Coal Mine Construction Agreement and the Coal 
     Haulers' Agreement) containing pension and health care 
     contribution and benefit provisions which are the same as 
     those contained in the 1988 agreement.

     Such term shall not include any operator who was assessed, 
     and did pay the full amount of, contractual withdrawal 
     liability to the 1950 UMWA Benefit Plan, the 1974 UMWA 
     Benefit Plan, or the Combined Fund.''
       (C) Last signatory operator.--Section 9701(c)(4) is amended 
     by inserting ``bituminous'' before ``coal'' each place it 
     appears.
       (b) Combined Benefit Fund.--Section 9702(b)(1) is amended 
     to read as follows:
       ``(b) Board of Trustees.--
       ``(1) In general.--For purposes of subsection (a), the 
     board of trustees for the Combined Fund shall be appointed as 
     follows:
       ``(A) two individuals who represent employers in the coal 
     mining industry shall be designated by the BCOA;
       ``(B) two individuals designated by the United Mine Workers 
     of America; and
       ``(C) three persons selected by the persons appointed under 
     subparagraphs (A) and (B).''
       (c) Assignment of Eligible Beneficiaries.--Subsection (a) 
     of section 9706 is amended by adding at the end the following 
     new flush sentence:

     ``For purposes of assessing premiums on or after October 1, 
     1995, under this chapter, the Commissioner of Social Security 
     shall, effective October 1, 1995, revoke all assignments 
     previously made (and shall make no further assignments and 
     shall terminate all unpaid liabilities for any pending 
     assignments) to all persons other than signatory operators 
     and shall deem each affected coal industry retiree who is an 
     eligible beneficiary to be an unassigned beneficiary under 
     section 9706. The preceding sentence shall not be construed 
     to prevent any transfer, or any treatment of a successor as 
     an assigned operator, under subsection (b)(2).''
       (d) 1992 UMWA Benefit Plan.--Section 9712(d) is amended--
       (1) by striking paragraph (3) and by redesignating 
     paragraphs (4), (5), and (6) as paragraphs (3), (4), and (5), 
     respectively, and
       (2) by striking ``or last signatory operator described in 
     paragraph (3),'' in paragraph (3) (as redesignated under 
     paragraph (1)).
       (e) Information Requirements.--
       (1) In general.--Subsection (h) of section 9704 is amended 
     by adding at the end the following new paragraph:
       ``(2) Information to contributors.--
       ``(A) In general.--The trustees of the Combined Fund shall, 
     within 30 days of a written request, make available to any 
     person required to make contributions to the Combined Fund, 
     or their agent--
       ``(i) all documents which reflect its financial and 
     operational status, including documents under which it is 
     operated, and
       ``(ii) all documents prepared at the request of the 
     trustees or staff of the Combined Fund which form the basis 
     for any of its actions or reports, including the eligibility 
     of participants in predecessor plans.
       ``(B) Fees.--The trustees may charge reasonable fees (not 
     in excess of actual expenses) for providing documents under 
     this paragraph.''
       (2) Conforming amendment.--Subsection (h) of section 9704 
     is amended by striking ``(h) Information.--The'' and 
     inserting the following:
       ``(h) Information.--
       ``(1) Information to secretary.--The''.

[[Page H11112]]

       (f) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after September 30, 1995.
       TITLE XIV--COMMITTEE ON WAYS AND MEANS--TAX SIMPLIFICATION

     SEC. 14001. SHORT TITLE; AMENDMENT TO 1986 CODE.

       (a) Short Title.--This title may be cited as the ``Tax 
     Simplification Act of 1995''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this title an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents for this 
     title is as follows:

       TITLE XIV--COMMITTEE ON WAYS AND MEANS--TAX SIMPLIFICATION

Sec. 14001. Short title; amendment to 1986 Code.

             Subtitle A--Provisions Relating to Individuals

 Part I--Provisions Relating to Rollover of Gain on Sale of Principal 
                               Residence

Sec. 14101. Multiple sales within rollover period.
Sec. 14102. Special rules in case of divorce.
Sec. 14103. One-time exclusion of gain from sale of principal residence 
              for certain spouses.

                       Part II--Other Provisions

Sec. 14111. Payment of tax by commercially acceptable means.
Sec. 14112. Simplified foreign tax credit limitation for individuals.
Sec. 14113. Treatment of personal transactions by individuals under 
              foreign currency rules.
Sec. 14114. Treatment of certain reimbursed expenses of rural mail 
              carriers.
Sec. 14115. Exclusion of combat pay from withholding limited to amount 
              excludable from gross income.
Sec. 14116. Treatment of traveling expenses of certain Federal 
              employees engaged in criminal investigations.

                   Subtitle B--Pension Simplification

                 Part I--Simplified Distribution Rules

Sec. 14201. Repeal of 5-year income averaging for lump-sum 
              distributions.
Sec. 14202. Repeal of $5,000 exclusion of employees' death benefits.
Sec. 14203. Simplified method for taxing annuity distributions under 
              certain employer plans.
Sec. 14204. Required distributions.

               Part II--Increased Access to Pension Plans

Sec. 14211. Modifications of simplified employee pensions.
Sec. 14212. State and local governments and tax-exempt organizations 
              eligible under section 401(k).

                 Part III--Nondiscrimination Provisions

Sec. 14221. Definition of highly compensated employees.
Sec. 14222. Repeal of family aggregation rules.
Sec. 14223. Modification of additional participation requirements.
Sec. 14224. Nondiscrimination rules for qualified cash or deferred 
              arrangements and matching contributions.

                 Part IV--Miscellaneous Simplification

Sec. 14231. Treatment of leased employees.
Sec. 14232. Plans covering self-employed individuals.
Sec. 14233. Elimination of special vesting rule for multiemployer 
              plans.
Sec. 14234. Distributions under rural cooperative plans.
Sec. 14235. Treatment of governmental plans under section 415.
Sec. 14236. Uniform retirement age.
Sec. 14237. Uniform penalty provisions to apply to certain pension 
              reporting requirements.
Sec. 14238. Contributions on behalf of disabled employees.
Sec. 14239. Treatment of deferred compensation plans of State and local 
              governments and tax-exempt organizations.
Sec. 14240. Trust requirement for deferred compensation plans of State 
              and local governments.
Sec. 14241. Transition rule for computing maximum benefits under 
              section 415 limitations.
Sec. 14242. Multiple salary reduction agreements permitted under 
              section 403(b).
Sec. 14243. Waiver of minimum period for joint and survivor annuity 
              explanation before annuity starting date.
Sec. 14244. Repeal of limitation in case of defined benefit plan and 
              defined contribution plan for same employee.
Sec. 14245. Date for adoption of plan amendments.

              Subtitle C--Treatment of Large Partnerships

                       Part I--General Provisions

Sec. 14301. Simplified flow-through for large partnerships.
Sec. 14302. Simplified audit procedures for large partnerships.
Sec. 14303. Due date for furnishing information to partners of large 
              partnerships.
Sec. 14304. Returns may be required on magnetic media.
Sec. 14305. Treatment of partnership items of individual retirement 
              accounts.
Sec. 14306. Effective date.

     Part II--Provisions Related to Certain Partnership Proceedings

Sec. 14311. Treatment of partnership items in deficiency proceedings.
Sec. 14312. Partnership return to be determinative of audit procedures 
              to be followed.
Sec. 14313. Provisions relating to statute of limitations.
Sec. 14314. Expansion of small partnership exception.
Sec. 14315. Exclusion of partial settlements from 1-year limitation on 
              assessment.
Sec. 14316. Extension of time for filing a request for administrative 
              adjustment.
Sec. 14317. Availability of innocent spouse relief in context of 
              partnership proceedings.
Sec. 14318. Determination of penalties at partnership level.
Sec. 14319. Provisions relating to court jurisdiction, etc.
Sec. 14320. Treatment of premature petitions filed by notice partners 
              or 5-percent groups.
Sec. 14321. Bonds in case of appeals from certain proceeding.
Sec. 14322. Suspension of interest where delay in computational 
              adjustment resulting from certain settlements.
Sec. 14323. Special rules for administrative adjustment requests with 
              respect to bad debts or worthless securities.

                     Subtitle D--Foreign Provisions

   Part I--Modifications to Treatment of Passive Foreign Investment 
                               Companies

Sec. 14401. United States shareholders of controlled foreign 
              corporations not subject to PFIC inclusion.
Sec. 14402. Election of mark to market for marketable stock in passive 
              foreign investment company.
Sec. 14403. Modifications to definition of passive income.
Sec. 14404. Effective date.

         Part II--Treatment of Controlled Foreign Corporations

Sec. 14411. Gain on certain stock sales by controlled foreign 
              corporations treated as dividends.
Sec. 14412. Miscellaneous modifications to subpart F.
Sec. 14413. Indirect foreign tax credit allowed for certain lower tier 
              companies.
Sec. 14414. Repeal of inclusion of certain earnings invested in excess 
              passive assets.

                       Part III--Other Provisions

Sec. 14421. Exchange rate used in translating foreign taxes.
Sec. 14422. Election to use simplified section 904 limitation for 
              alternative minimum tax.
Sec. 14423. Modification of section 1491.
Sec. 14424. Modification of section 367(b).
Sec. 14425. Increase in filing thresholds for returns as to 
              organization of foreign corporations and acquisitions of 
              stock in such corporations.
Sec. 14426. Application of uniform capitalization rules to foreign 
              persons.
Sec. 14427. Certain prizes and awards.
Sec. 14428. Treatment for estate tax purposes of short-term obligations 
              held by nonresident aliens.

                Subtitle E--Other Income Tax Provisions

             Part I--Provisions Relating to S Corporations

Sec. 14501. S corporations permitted to have 75 shareholders.
Sec. 14502. Electing small business trusts.
Sec. 14503. Expansion of post-death qualification for certain trusts.
Sec. 14504. Financial institutions permitted to hold safe harbor debt.
Sec. 14505. Rules relating to inadvertent terminations and invalid 
              elections.
Sec. 14506. Agreement to terminate year.
Sec. 14507. Expansion of post-termination transition period.
Sec. 14508. S corporations permitted to hold subsidiaries.
Sec. 14509. Treatment of distributions during loss years.
Sec. 14510. Treatment of S corporations under subchapter C.
Sec. 14511. Elimination of certain earnings and profits.
Sec. 14512. Carryover of disallowed losses and deductions under at-risk 
              rules allowed.
Sec. 14513. Adjustments to basis of inherited S stock to reflect 
              certain items of income.
Sec. 14514. S corporations eligible for rules applicable to real 
              property subdivided for sale by noncorporate taxpayers.
Sec. 14515. Effective date.

     Part II--Provisions Relating to Regulated Investment Companies

Sec. 14521. Repeal of 30-percent gross income limitation.

     Part III--Provisions Relating to Real Estate Investment Trusts

Sec. 14531. Clarification of limitation on maximum number of 
              shareholders.

[[Page H11113]]

Sec. 14532. De minimis rule for tenant services income.
Sec. 14533. Attribution rules applicable to tenant ownership.
Sec. 14534. Credit for tax paid by REIT on retained capital gains.
Sec. 14535. Repeal of 30-percent gross income requirement.
Sec. 14536. Modification of earnings and profits rules for determining 
              whether REIT has earnings and profits from non-REIT year.
Sec. 14537. Treatment of foreclosure property.
Sec. 14538. Payments under hedging instruments.
Sec. 14539. Excess noncash income.
Sec. 14540. Prohibited transaction safe harbor.
Sec. 14541. Shared appreciation mortgages.
Sec. 14542. Wholly owned subsidiaries.
Sec. 14543. Effective date.

                     Part IV--Accounting Provisions

Sec. 14551. Modifications to look-back method for long-term contracts.
Sec. 14552. Application of mark to market accounting method to traders 
              in securities.
Sec. 14553. Modification of ruling amounts for nuclear decommissioning 
              costs.
Sec. 14554. Election of alternative taxable years by partnerships and S 
              corporations.
Sec. 14555. Special rule for crop insurance proceeds and disaster 
              payments.

                   Part V--Tax-Exempt Bond Provisions

Sec. 14561. Repeal of $100,000 limitation on unspent proceeds under 1-
              year exception from rebate.
Sec. 14562. Exception from rebate for earnings on bona fide debt 
              service fund under construction bond rules.
Sec. 14563. Repeal of debt service-based limitation on investment in 
              certain nonpurpose investments.
Sec. 14564. Repeal of expired provisions.
Sec. 14565. Effective dates.

                     Part VI--Insurance Provisions

Sec. 14571. Treatment of certain insurance contracts on retired lives.
Sec. 14572. Treatment of modified guaranteed contracts.
Sec. 14573. Minimum tax treatment of certain property and casualty 
              insurance companies.

                       Part VII--Other Provisions

Sec. 14581. Closing of partnership taxable year with respect to 
              deceased partner, etc.
Sec. 14582. Credit for Social Security taxes paid with respect to 
              employee cash tips.
Sec. 14583. Due date for first quarter estimated tax payments by 
              private foundations.
Sec. 14584. Treatment of dues paid to agricultural or horticultural 
              organizations.

                     Subtitle F--Estates and Trusts

                     Part I--Income Tax Provisions

Sec. 14601. Certain revocable trusts treated as part of estate.
Sec. 14602. Distributions during first 65 days of taxable year of 
              estate.
Sec. 14603. Separate share rules available to estates.
Sec. 14604. Executor of estate and beneficiaries treated as related 
              persons for disallowance of losses, etc.
Sec. 14605. Limitation on taxable year of estates.
Sec. 14606. Repeal of certain throwback rules applicable to domestic 
              trusts.
Sec. 14607. Treatment of funeral trusts.

                Part II--Estate and Gift Tax Provisions

Sec. 14611. Clarification of waiver of certain rights of recovery.
Sec. 14612. Adjustments for gifts within 3 years of decedent's death.
Sec. 14613. Clarification of qualified terminable interest rules.
Sec. 14614. Transitional rule under section 2056A.
Sec. 14615. Opportunity to correct certain failures under section 
              2032A.
Sec. 14616. Unified credit of decedent increased by unified credit of 
              spouse used on split gift included in decedent's gross 
              estate.
Sec. 14617. Reformation of defective bequests, etc. to spouse of 
              decedent.
Sec. 14618. Gifts may not be revalued for estate tax purposes after 
              expiration of statute of limitations.
Sec. 14619. Clarifications relating to disclaimers.
Sec. 14620. Clarification of treatment of survivor annuities under 
              qualified terminable interest rules.
Sec. 14621. Treatment under qualified domestic trust rules of forms of 
              ownership which are not trusts.
Sec. 14622. Authority to waive requirement of United States trustee for 
              qualified domestic trusts.

              Part III--Generation-Skipping Tax Provisions

Sec. 14631. Severing of trusts holding property having an inclusion 
              ratio of greater than zero.
Sec. 14632. Clarification of who is transferor where subsequent gift by 
              reason of power of appointment.
Sec. 14633. Taxable termination not to include direct skips.
Sec. 14634. Expansion of exception from generation-skipping transfer 
              tax for transfers to individuals with deceased parents.

                 Subtitle G--Excise Tax Simplification

    Part I--Provisions Related to Distilled Spirits, Wines, and Beer

Sec. 14701. Credit or refund for imported bottled distilled spirits 
              returned to distilled spirits plant.
Sec. 14702. Authority to cancel or credit export bonds without 
              submission of records.
Sec. 14703. Repeal of required maintenance of records on premises of 
              distilled spirits plant.
Sec. 14704. Fermented material from any brewery may be received at a 
              distilled spirits plant.
Sec. 14705. Repeal of requirement for wholesale dealers in liquors to 
              post sign.
Sec. 14706. Refund of tax on wine returned to bond not limited to 
              unmerchantable wine.
Sec. 14707. Use of additional ameliorating material in certain wines.
Sec. 14708. Domestically produced beer may be withdrawn free of tax for 
              use of foreign embassies, legations, etc.
Sec. 14709. Beer may be withdrawn free of tax for destruction.
Sec. 14710. Authority to allow drawback on exported beer without 
              submission of records.
Sec. 14711. Transfer to brewery of beer imported in bulk without 
              payment of tax.

          Part II--Consolidation of Taxes on Aviation Gasoline

Sec. 14721. Consolidation of taxes on aviation gasoline.

                 Part III--Other Excise Tax Provisions

Sec. 14731. Authority to grant exemptions from registration 
              requirements.
Sec. 14732. Certain combinations not treated as manufacture under 
              retail sales tax on heavy trucks.
Sec. 14733. Exemption from diesel fuel dyeing requirements with respect 
              to certain States.
Sec. 14734. Repeal of expired provisions.

                 Subtitle H--Administrative Provisions

                       Part I--General Provisions

Sec. 14801. Repeal of authority to disclose whether prospective juror 
              has been audited.
Sec. 14802. Clarification of statute of limitations.
Sec. 14803. Certain notices disregarded under provision increasing 
              interest rate on large corporate underpayments.
Sec. 14804. Clarification of authority to withhold Puerto Rico income 
              taxes from salaries of Federal employees.

                     Part II--Tax Court Procedures

Sec. 14811. Overpayment determinations of tax court.
Sec. 14812. Awarding of administrative costs.
Sec. 14813. Redetermination of interest pursuant to motion.
Sec. 14814. Application of net worth requirement for awards of 
              litigation costs.

         Part III--Authority for Certain Cooperative Agreements

Sec. 14821. Cooperative agreements with State tax authorities.
             Subtitle A--Provisions Relating to Individuals

 PART I--PROVISIONS RELATING TO ROLLOVER OF GAIN ON SALE OF PRINCIPAL 
                               RESIDENCE

     SEC. 14101. MULTIPLE SALES WITHIN ROLLOVER PERIOD.

       (a) General Rule.--
       (1) Section 1034 (relating to rollover of gain on sale of 
     principal residence) is amended by striking subsection (d).
       (2) Paragraph (4) of section 1034(c) is amended to read as 
     follows:
       ``(4) If the taxpayer, during the period described in 
     subsection (a), purchases more than 1 residence which is used 
     by him as his principal residence at some time within 2 years 
     after the date of the sale of the old residence, only the 
     first of such residences so used by him after the date of 
     such sale shall constitute the new residence.''
       (3) Subsections (h)(1) and (k) of section 1034 are each 
     amended by striking ``(other than the 2 years referred to in 
     subsection (c)(4))''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to sales of old residences (within the meaning of 
     section 1034 of the Internal Revenue Code of 1986) after the 
     date of the enactment of this Act.

     SEC. 14102. SPECIAL RULES IN CASE OF DIVORCE.

       (a) In General.--Subsection (c) of section 1034 is amended 
     by adding at the end the following new paragraph:
       ``(5) If--
       ``(A) a residence is sold by an individual pursuant to a 
     divorce or marital separation, and
       ``(B) the taxpayer used such residence as his principal 
     residence at any time during the 2-year period ending on the 
     date of such sale,

     for purposes of this section, such residence shall be treated 
     as the taxpayer's principal residence at the time of such 
     sale.''

[[Page H11114]]

       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to sales of old residences (within the meaning of 
     section 1034 of the Internal Revenue Code of 1986) after the 
     date of the enactment of this Act.

     SEC. 14103. ONE-TIME EXCLUSION OF GAIN FROM SALE OF PRINCIPAL 
                   RESIDENCE FOR CERTAIN SPOUSES.

       (a) In General.--Paragraph (2) of section 121(b) (relating 
     to one-time exclusion of gain from sale of principal 
     residence by individual who has attained age 55) is amended 
     by adding at the end the following new sentence: ``For 
     purposes of applying the preceding sentence to individuals 
     who are married to each other, an election by one individual 
     with respect to a sale or exchange occurring before the 
     marriage shall be disregarded for purposes of permitting an 
     election with respect to property owned and used by the other 
     individual as his principal residence throughout the 3-year 
     period ending on the date of the marriage.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply for purposes of determining whether an election 
     may be made under section 121 of the Internal Revenue Code of 
     1986 with respect to a sale or exchange occurring after 
     September 13, 1995.

                       PART II--OTHER PROVISIONS

     SEC. 14111. PAYMENT OF TAX BY COMMERCIALLY ACCEPTABLE MEANS.

       (a) General Rule.--Section 6311 is amended to read as 
     follows:

     ``SEC. 6311. PAYMENT OF TAX BY COMMERCIALLY ACCEPTABLE MEANS.

       ``(a) Authority To Receive.--It shall be lawful for the 
     Secretary to receive for internal revenue taxes (or in 
     payment for internal revenue stamps) any commercially 
     acceptable means that the Secretary deems appropriate to the 
     extent and under the conditions provided in regulations 
     prescribed by the Secretary.
       ``(b) Ultimate Liability.--If a check, money order, or 
     other method of payment, including payment by credit card, 
     debit card, or charge card so received is not duly paid, or 
     is paid and subsequently charged back to the Secretary, the 
     person by whom such check, or money order, or other method of 
     payment has been tendered shall remain liable for the payment 
     of the tax or for the stamps, and for all legal penalties and 
     additions, to the same extent as if such check, money order, 
     or other method of payment had not been tendered.
       ``(c) Liability of Banks and Others.--If any certified, 
     treasurer's, or cashier's check (or other guaranteed draft), 
     or any money order, or any other means of payment that has 
     been guaranteed by a financial institution (such as a credit 
     card, debit card, or charge card transaction which has been 
     guaranteed expressly by a financial institution) so received 
     is not duly paid, the United States shall, in addition to its 
     right to exact payment from the party originally indebted 
     therefor, have a lien for--
       ``(1) the amount of such check (or draft) upon all assets 
     of the financial institution on which drawn,
       ``(2) the amount of such money order upon all the assets of 
     the issuer thereof, or
       ``(3) the guaranteed amount of any other transaction upon 
     all the assets of the institution making such guarantee,

     and such amount shall be paid out of such assets in 
     preference to any other claims whatsoever against such 
     financial institution, issuer, or guaranteeing institution, 
     except the necessary costs and expenses of administration and 
     the reimbursement of the United States for the amount 
     expended in the redemption of the circulating notes of such 
     financial institution.
       ``(d) Payment by Other Means.--
       ``(1) Authority to prescribe regulations.--The Secretary 
     shall prescribe such regulations as the Secretary deems 
     necessary to receive payment by commercially acceptable 
     means, including regulations that--
       ``(A) specify which methods of payment by commercially 
     acceptable means will be acceptable,
       ``(B) specify when payment by such means will be considered 
     received,
       ``(C) identify types of nontax matters related to payment 
     by such means that are to be resolved by persons ultimately 
     liable for payment and financial intermediaries, without the 
     involvement of the Secretary, and
       ``(D) ensure that tax matters will be resolved by the 
     Secretary, without the involvement of financial 
     intermediaries.
       ``(2) Authority to enter into contracts.--Notwithstanding 
     section 3718(f) of title 31, United States Code, the 
     Secretary is authorized to enter into contracts to obtain 
     services related to receiving payment by other means where 
     cost beneficial to the Government. The Secretary may not pay 
     any fee or provide any other consideration under such 
     contracts.
       ``(3) Special provisions for use of credit cards.--If use 
     of credit cards is accepted as a method of payment of taxes 
     pursuant to subsection (a)--
       ``(A) a payment of internal revenue taxes (or a payment for 
     internal revenue stamps) by a person by use of a credit card 
     shall not be subject to section 161 of the Truth-in-Lending 
     Act (15 U.S.C. 1666), or to any similar provisions of State 
     law, if the error alleged by the person is an error relating 
     to the underlying tax liability, rather than an error 
     relating to the credit card account such as a computational 
     error or numerical transposition in the credit card 
     transaction or an issue as to whether the person authorized 
     payment by use of the credit card,
       ``(B) a payment of internal revenue taxes (or a payment for 
     internal revenue stamps) shall not be subject to section 170 
     of the Truth-in-Lending Act (15 U.S.C. 1666i), or to any 
     similar provisions of State law,
       ``(C) a payment of internal revenue taxes (or a payment for 
     internal revenue stamps) by a person by use of a debit card 
     shall not be subject to section 908 of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693f), or to any similar provisions 
     of State law, if the error alleged by the person is an error 
     relating to the underlying tax liability, rather than an 
     error relating to the debit card account such as a 
     computational error or numerical transposition in the debit 
     card transaction or an issue as to whether the person 
     authorized payment by use of the debit card,
       ``(D) the term `creditor' under section 103(f) of the 
     Truth-in-Lending Act (15 U.S.C. 1602(f)) shall not include 
     the Secretary with respect to credit card transactions in 
     payment of internal revenue taxes (or payment for internal 
     revenue stamps), and
       ``(E) notwithstanding any other provision of law to the 
     contrary, in the case of payment made by credit card or debit 
     card transaction of an amount owed to a person as the result 
     of the correction of an error under section 161 of the Truth-
     in-Lending Act (15 U.S.C. 1666) or section 908 of the 
     Electronic Fund Transfer Act (15 U.S.C. 1693f), the Secretary 
     is authorized to provide such amount to such person as a 
     credit to that person's credit card or debit card account 
     through the applicable credit card or debit card system.
       ``(e) Confidentiality of Information.--
       ``(1) In general.--Except as otherwise authorized by this 
     subsection, no person may use or disclose any information 
     relating to credit or debit card transactions obtained 
     pursuant to section 6103(k)(8) other than for purposes 
     directly related to the processing of such transactions, or 
     the billing or collection of amounts charged or debited 
     pursuant thereto.
       ``(2) Exceptions.--
       ``(A) Debit or credit card issuers or others acting on 
     behalf of such issuers may also use and disclose such 
     information for purposes directly related to servicing an 
     issuer's accounts.
       ``(B) Debit or credit card issuers or others directly 
     involved in the processing of credit or debit card 
     transactions or the billing or collection of amounts charged 
     or debited thereto may also use and disclose such information 
     for purposes directly related to--
       ``(i) statistical risk and profitability assessment;
       ``(ii) transferring receivables, accounts, or interest 
     therein;
       ``(iii) auditing the account information;
       ``(iv) complying with Federal, State, or local law; and
       ``(v) properly authorized civil, criminal, or regulatory 
     investigation by Federal, State, or local authorities.
       ``(3) Procedures.--Use and disclosure of information under 
     this paragraph shall be made only to the extent authorized by 
     written procedures promulgated by the Secretary.
       ``(4) Cross reference.--

  ``For provision providing for civil damages for violation of 
paragraph (1), see section 7431.''
       (b) Clerical Amendment.--The table of sections for 
     subchapter B of chapter 64 is amended by striking the item 
     relating to section 6311 and inserting the following:

``Sec. 6311. Payment of tax by commercially acceptable means.''
       (c) Amendments to Sections 6103 and 7431 With Respect to 
     Disclosure Authorization.--
       (1) Subsection (k) of section 6103 (relating to 
     confidentiality and disclosure of returns and return 
     information) is amended by adding at the end the following 
     new paragraph:
       ``(8) Disclosure of information to administer section 
     6311.--The Secretary may disclose returns or return 
     information to financial institutions and others to the 
     extent the Secretary deems necessary for the administration 
     of section 6311. Disclosures of information for purposes 
     other than to accept payments by checks or money orders shall 
     be made only to the extent authorized by written procedures 
     promulgated by the Secretary.''
       (2) Section 7431 (relating to civil damages for 
     unauthorized disclosure of returns and return information) is 
     amended by adding at the end the following new subsection:
       ``(g) Special Rule for Information Obtained Under Section 
     6103(k)(8).--For purposes of this section, any reference to 
     section 6103 shall be treated as including a reference to 
     section 6311(e).''
       (3) Section 6103(p)(3)(A) is amended by striking ``or (6)'' 
     and inserting ``(6), or (8)''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the day 9 months after the date of the 
     enactment of this Act.

     SEC. 14112. SIMPLIFIED FOREIGN TAX CREDIT LIMITATION FOR 
                   INDIVIDUALS.

       (a) General Rule.--Section 904 (relating to limitations on 
     foreign tax credit) is amended by redesignating subsection 
     (j) as subsection (k) and by inserting after subsection (i) 
     the following new subsection:
       ``(j) Simplified Limitation for Certain Individuals.--
       ``(1) In general.--In the case of an individual to whom 
     this subsection applies for any taxable year, the limitation 
     of subsection (a) shall be the lesser of--

[[Page H11115]]

       ``(A) 25 percent of such individual's gross income for the 
     taxable year from sources without the United States, or
       ``(B) the amount of the creditable foreign taxes paid or 
     accrued by the individual during the taxable year (determined 
     without regard to subsection (c)).

     No taxes paid or accrued by the individual during such 
     taxable year may be deemed paid or accrued in any other 
     taxable year under subsection (c).
       ``(2) Individuals to whom subsection applies.--This 
     subsection shall apply to an individual for any taxable year 
     if--
       ``(A) the entire amount of such individual's gross income 
     for the taxable year from sources without the United States 
     consists of qualified passive income,
       ``(B) the amount of the creditable foreign taxes paid or 
     accrued by the individual during the taxable year does not 
     exceed $200 ($400 in the case of a joint return), and
       ``(C) such individual elects to have this subsection apply 
     for the taxable year.
       ``(3) Definitions.--For purposes of this subsection--
       ``(A) Qualified passive income.--The term `qualified 
     passive income' means any item of gross income if--
       ``(i) such item of income is passive income (as defined in 
     subsection (d)(2)(A) without regard to clause (iii) thereof), 
     and
       ``(ii) such item of income is shown on a payee statement 
     furnished to the individual.
       ``(B) Creditable foreign taxes.--The term `creditable 
     foreign taxes' means any taxes for which a credit is 
     allowable under section 901; except that such term shall not 
     include any tax unless such tax is shown on a payee statement 
     furnished to such individual.
       ``(C) Payee statement.--The term `payee statement' has the 
     meaning given to such term by section 6724(d)(2).
       ``(D) Estates and trusts not eligible.--This subsection 
     shall not apply to any estate or trust.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14113. TREATMENT OF PERSONAL TRANSACTIONS BY INDIVIDUALS 
                   UNDER FOREIGN CURRENCY RULES.

       (a) General Rule.--Subsection (e) of section 988 (relating 
     to application to individuals) is amended to read as follows:
       ``(e) Application to Individuals.--
       ``(1) In general.--The preceding provisions of this section 
     shall not apply to any section 988 transaction entered into 
     by an individual which is a personal transaction.
       ``(2) Exclusion for certain personal transactions.--If--
       ``(A) nonfunctional currency is disposed of by an 
     individual in any transaction, and
       ``(B) such transaction is a personal transaction,

     no gain shall be recognized for purposes of this subtitle by 
     reason of changes in exchange rates after such currency was 
     acquired by such individual and before such disposition. The 
     preceding sentence shall not apply if the gain which would 
     otherwise be recognized exceeds $200.
       ``(3) Personal transactions.--For purposes of this 
     subsection, the term `personal transaction' means any 
     transaction entered into by an individual, except that such 
     term shall not include any transaction to the extent that 
     expenses properly allocable to such transaction meet the 
     requirements of section 162 or 212 (other than that part of 
     section 212 dealing with expenses incurred in connection with 
     taxes).''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14114. TREATMENT OF CERTAIN REIMBURSED EXPENSES OF RURAL 
                   MAIL CARRIERS.

       (a) In General.--Section 162 (relating to trade or business 
     expenses) is amended by redesignating subsection (o) as 
     subsection (p) and by inserting after subsection (n) the 
     following new subsection:
       ``(o) Treatment of Certain Reimbursed Expenses of Rural 
     Mail Carriers.--
       ``(1) General rule.--In the case of any employee of the 
     United States Postal Service who performs services involving 
     the collection and delivery of mail on a rural route and who 
     receives qualified reimbursements for the expenses incurred 
     by such employee for the use of a vehicle in performing such 
     services--
       ``(A) the amount allowable as a deduction under this 
     chapter for the use of a vehicle in performing such services 
     shall be equal to the amount of such qualified 
     reimbursements; and
       ``(B) such qualified reimbursements shall be treated as 
     paid under a reimbursement or other expense allowance 
     arrangement for purposes of section 62(a)(2)(A) (and section 
     62(c) shall not apply to such qualified reimbursements).
       ``(2) Definition of qualified reimbursements.--For purposes 
     of this subsection, the term `qualified reimbursements' means 
     the amounts paid by the United States Postal Service to 
     employees as an equipment maintenance allowance under the 
     1991 collective bargaining agreement between the United 
     States Postal Service and the National Rural Letter Carriers' 
     Association. Amounts paid as an equipment maintenance 
     allowance by such Postal Service under later collective 
     bargaining agreements that supersede the 1991 agreement shall 
     be considered qualified reimbursements if such amounts do not 
     exceed the amounts that would have been paid under the 1991 
     agreement, adjusted for changes in the Consumer Price Index 
     (as defined in section 1(f)(5)) since 1991.''
       (b) Technical Amendment.--Section 6008 of the Technical and 
     Miscellaneous Revenue Act of 1988 is hereby repealed.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14115. EXCLUSION OF COMBAT PAY FROM WITHHOLDING LIMITED 
                   TO AMOUNT EXCLUDABLE FROM GROSS INCOME.

       (a) In General.--Paragraph (1) of section 3401(a) (defining 
     wages) is amended by inserting before the semicolon the 
     following: ``to the extent remuneration for such service is 
     excludable from gross income under such section''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to remuneration paid after December 31, 1995.

     SEC. 14116. TREATMENT OF TRAVELING EXPENSES OF CERTAIN 
                   FEDERAL EMPLOYEES ENGAGED IN CRIMINAL 
                   INVESTIGATIONS.

       (a) In General.--Subsection (a) of section 162 is amended 
     by adding at the end the following new sentence: ``The 
     preceding sentence shall not apply to any Federal employee 
     during any period for which such employee is certified by the 
     Attorney General (or the designee thereof) as traveling on 
     behalf of the United States in temporary duty status to 
     investigate, or provide support services for the 
     investigation of, a Federal crime.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.
                   Subtitle B--Pension Simplification

                 PART I--SIMPLIFIED DISTRIBUTION RULES

     SEC. 14201. REPEAL OF 5-YEAR INCOME AVERAGING FOR LUMP-SUM 
                   DISTRIBUTIONS.

       (a) In General.--Subsection (d) of section 402 (relating to 
     taxability of beneficiary of employees' trust) is amended by 
     adding at the end the following new paragraph:
       ``(8) Termination.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     this subsection shall not apply to any taxable year beginning 
     after December 31, 1995.
       ``(B) Retention of certain transition rules.--Subparagraph 
     (A) shall not apply to any distribution for which the 
     taxpayer elects the benefits of section 1122 (h)(3) or (h)(5) 
     of the Tax Reform Act of 1986.''

     SEC. 14202. REPEAL OF $5,000 EXCLUSION OF EMPLOYEES' DEATH 
                   BENEFITS.

       (a) In General.--Subsection (b) of section 101 is hereby 
     repealed.
       (b) Conforming Amendments.--
       (1) Subsection (c) of section 101 is amended by striking 
     ``subsection (a) or (b)'' and inserting ``subsection (a)''.
       (2) Sections 406(e) and 407(e) are each amended by striking 
     paragraph (2) and by redesignating paragraph (3) as paragraph 
     (2).
       (3) Section 7701(a)(20) is amended by striking ``, for the 
     purposes of applying the provisions of section 101(b) with 
     respect to employees' death benefits''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14203. SIMPLIFIED METHOD FOR TAXING ANNUITY 
                   DISTRIBUTIONS UNDER CERTAIN EMPLOYER PLANS.

       (a) General Rule.--Subsection (d) of section 72 (relating 
     to annuities; certain proceeds of endowment and life 
     insurance contracts) is amended to read as follows:
       ``(d) Special Rules for Qualified Employer Retirement 
     Plans.--
       ``(1) Simplified method of taxing annuity payments.--
       ``(A) In general.--In the case of any amount received as an 
     annuity under a qualified employer retirement plan--
       ``(i) subsection (b) shall not apply, and
       ``(ii) the investment in the contract shall be recovered as 
     provided in this paragraph.
       ``(B) Method of recovering investment in contract.--
       ``(i) In general.--Gross income shall not include so much 
     of any monthly annuity payment under a qualified employer 
     retirement plan as does not exceed the amount obtained by 
     dividing--

       ``(I) the investment in the contract (as of the annuity 
     starting date), by
       ``(II) the number of anticipated payments determined under 
     the table contained in clause (iii) (or, in the case of a 
     contract to which subsection (c)(3)(B) applies, the number of 
     monthly annuity payments under such contract).

       ``(ii) Certain rules made applicable.--Rules similar to the 
     rules of paragraphs (2) and (3) of subsection (b) shall apply 
     for purposes of this paragraph.
       ``(iii) Number of anticipated payments.--

``If the age of the                                                    
  primary annuitant                                          The number
  on the annuity                                         of anticipated
  starting date is:                                        payments is:
           Not more than 55.......................................300  
           More than 55 but not more than 60......................260  
           More than 60 but not more than 65......................240  
           More than 65 but not more than 70......................170  
           More than 70...........................................120  
                                                       ================  


[[Page H11116]]

       ``(C) Adjustment for refund feature not applicable.--For 
     purposes of this paragraph, investment in the contract shall 
     be determined under subsection (c)(1) without regard to 
     subsection (c)(2).
       ``(D) Special rule where lump sum paid in connection with 
     commencement of annuity payments.--If, in connection with the 
     commencement of annuity payments under any qualified employer 
     retirement plan, the taxpayer receives a lump sum payment--
       ``(i) such payment shall be taxable under subsection (e) as 
     if received before the annuity starting date, and
       ``(ii) the investment in the contract for purposes of this 
     paragraph shall be determined as if such payment had been so 
     received.
       ``(E) Exception.--This paragraph shall not apply in any 
     case where the primary annuitant has attained age 75 on the 
     annuity starting date unless there are fewer than 5 years of 
     guaranteed payments under the annuity.
       ``(F) Adjustment where annuity payments not on monthly 
     basis.--In any case where the annuity payments are not made 
     on a monthly basis, appropriate adjustments in the 
     application of this paragraph shall be made to take into 
     account the period on the basis of which such payments are 
     made.
       ``(G) Qualified employer retirement plan.--For purposes of 
     this paragraph, the term `qualified employer retirement plan' 
     means any plan or contract described in paragraph (1), (2), 
     or (3) of section 4974(c).
       ``(2) Treatment of employee contributions under defined 
     contribution plans.--For purposes of this section, employee 
     contributions (and any income allocable thereto) under a 
     defined contribution plan may be treated as a separate 
     contract.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply in cases where the annuity starting date is after 
     December 31, 1995.

     SEC. 14204. REQUIRED DISTRIBUTIONS.

       (a) In General.--Section 401(a)(9)(C) (defining required 
     beginning date) is amended to read as follows:
       ``(C) Required beginning date.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `required beginning date' means 
     April 1 of the calendar year following the later of--

       ``(I) the calendar year in which the employee attains age 
     70\1/2\, or
       ``(II) the calendar year in which the employee retires.

       ``(ii) Exception.--Subclause (II) of clause (i) shall not 
     apply--

       ``(I) except as provided in section 409(d), in the case of 
     an employee who is a 5-percent owner (as defined in section 
     416) with respect to the plan year ending in the calendar 
     year in which the employee attains age 70\1/2\, or

       ``(II) for purposes of section 408 (a)(6) or (b)(3).

       ``(iii) Actuarial adjustment.--In the case of an employee 
     to whom clause (i)(II) applies who retires in a calendar year 
     after the calendar year in which the employee attains age 
     70\1/2\, the employee's accrued benefit shall be actuarially 
     increased to take into account the period after age 70\1/2\ 
     in which the employee was not receiving any benefits under 
     the plan.
       ``(iv) Exception for governmental and church plans.--
     Clauses (ii) and (iii) shall not apply in the case of a 
     governmental plan or church plan. For purposes of this 
     clause, the term `church plan' means a plan maintained by a 
     church for church employees, and the term `church' means any 
     church (as defined in section 3121(w)(3)(A)) or qualified 
     church-controlled organization (as defined in section 
     3121(w)(3)(B)).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to years beginning after December 31, 1995.

               PART II--INCREASED ACCESS TO PENSION PLANS

     SEC. 14211. MODIFICATIONS OF SIMPLIFIED EMPLOYEE PENSIONS.

       (a) Increase in Number of Allowable Participants for Salary 
     Reduction Arrangements.--Section 408(k)(6)(B) is amended by 
     striking ``25'' each place it appears in the text and heading 
     thereof and inserting ``100''.
       (b) Repeal of Participation Requirement.--
       (1) In general.--Section 408(k)(6)(A) is amended by 
     striking clause (ii) and by redesignating clauses (iii) and 
     (iv) as clauses (ii) and (iii), respectively.
       (2) Conforming amendments.--Clause (ii) of section 
     408(k)(6)(C) and clause (ii) of section 408(k)(6)(F) are each 
     amended by striking ``subparagraph (A)(iii)'' and inserting 
     ``subparagraph (A)(ii)''.
       (c) Alternative Test.--Clause (ii) of section 408(k)(6)(A), 
     as redesignated by subsection (b)(1), is amended by adding at 
     the end the following new flush sentence:

     ``The requirements of the preceding sentence are met if the 
     employer makes contributions to the simplified employee 
     pension meeting the requirements of sections 401(k)(11) (B) 
     or (C), 401(k)(11)(D), and 401(m)(10)(B).''
       (d) Year for Computing Nonhighly Compensated Employee 
     Percentage.--Clause (ii) of section 408(k)(6)(A), as 
     redesignated by subsection (b)(1), is amended--
       (1) by striking ``such year'' in subclause (I) and 
     inserting ``the preceding year'', and
       (2) by adding at the end the following new flush sentence:

     ``In the case of the first plan year for which an employer 
     makes contributions to a simplified employee pension, rules 
     similar to the rules of section 401(k)(3)(E) shall apply.''
       (e) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1995.

     SEC. 14212. STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT 
                   ORGANIZATIONS ELIGIBLE UNDER SECTION 401(k).

       (a) In General.--Subparagraph (B) of section 401(k)(4) is 
     amended to read as follows:
       ``(B) Eligibility of state and local governments and tax-
     exempt organizations.--Any--
       ``(i) State or local government or political subdivision 
     thereof, or any agency or instrumentality thereof, and
       ``(ii) any organization exempt from tax under this 
     subtitle,

     may include a qualified cash or deferred arrangement as part 
     of a plan maintained by it unless the entity maintains an 
     eligible deferred compensation plan (as defined in section 
     457(b)). This subparagraph shall not apply to a rural 
     cooperative plan.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to plan years beginning after December 31, 1996, 
     but shall not apply to any cash or deferred arrangement to 
     which clause (i) or (ii) of section 1116(f)(2)(B) of the Tax 
     Reform Act of 1986 applies.

                 PART III--NONDISCRIMINATION PROVISIONS

     SEC. 14221. DEFINITION OF HIGHLY COMPENSATED EMPLOYEES.

       (a) In General.--Paragraph (1) of section 414(q) (defining 
     highly compensated employee) is amended to read as follows:
       ``(1) In general.--The term `highly compensated employee' 
     means any employee who--
       ``(A) was a 5-percent owner at any time during the year or 
     the preceding year, or
       ``(B) had compensation for the preceding year from the 
     employer in excess of $80,000.

     The Secretary shall adjust the $80,000 amount under 
     subparagraph (B) at the same time and in the same manner as 
     under section 415(d), except that the base period in applying 
     such section for purposes of this paragraph shall be the 
     calendar quarter ending September 30, 1995.''
       (b) Conforming Amendments.--
       (1)(A) Subsection (q) of section 414 is amended by striking 
     paragraphs (2), (4), (5), (8), and (12) and by redesignating 
     paragraphs (3), (6), (7), (9), (10), and (11) as paragraphs 
     (2) through (7), respectively.
       (B) Section 129(d)(8)(B), 401(a)(5)(D)(ii), 408(k)(2)(C), 
     and 416(i)(1)(D) are each amended by striking ``section 
     414(q)(7)'' and inserting ``section 414(q)(4)''.
       (C) Sections 401(a)(17) and 404(l) are each amended by 
     striking ``section 414(q)(6)'' and inserting ``section 
     414(q)(3)''.
       (D) Section 416(i)(1)(A) is amended by striking ``section 
     414(q)(8)'' and inserting ``section 414(r)(9)''.
       (2)(A) Section 414(r) is amended by adding at the end the 
     following new paragraph:
       ``(9) Excluded employees.--For purposes of paragraph 
     (2)(A), the following employees shall be excluded:
       ``(A) Employees who have not completed 6 months of service.
       ``(B) Employees who normally work less than 17\1/2\ hours 
     per week.
       ``(C) Employees who normally work not more than 6 months 
     during any year.
       ``(D) Employees who have not attained the age of 21.
       ``(E) Except to the extent provided in regulations, 
     employees who are included in a unit of employees covered by 
     an agreement which the Secretary of Labor finds to be a 
     collective bargaining agreement between employee 
     representatives and the employer.

     Except as provided by the Secretary, the employer may elect 
     to apply subparagraph (A), (B), (C), or (D) by substituting a 
     shorter period of service, smaller number of hours or months, 
     or lower age for the period of service, number of hours or 
     months, or age (as the case may be) specified in such 
     subparagraph.''
       (B) Subparagraph (A) of section 414(r)(2) is amended by 
     striking ``subsection (q)(8)'' and inserting ``paragraph 
     (9)''.
       (3) Section 1114(c)(4) of the Tax Reform Act of 1986 is 
     amended by adding at the end the following new sentence: 
     ``Any reference in this paragraph to section 414(q) shall be 
     treated as a reference to such section as in effect before 
     the Tax Simplification Act of 1995''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1995.

     SEC. 14222. REPEAL OF FAMILY AGGREGATION RULES.

       (a) In General.--Paragraph (6) of section 414(q) is hereby 
     repealed.
       (b) Compensation Limit.--Subparagraph (A) of section 
     401(a)(17) is amended by striking the last sentence.
       (c) Deduction.--Subsection (l) of section 404 is amended by 
     striking the last sentence.
       (d) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1995.

     SEC. 14223. MODIFICATION OF ADDITIONAL PARTICIPATION 
                   REQUIREMENTS.

       (a) General Rule.--Section 401(a)(26)(A) (relating to 
     additional participation requirements) is amended to read as 
     follows:
       ``(A) In general.--In the case of a trust which is a part 
     of a defined benefit plan, such trust shall not constitute a 
     qualified trust under this subsection unless on each day of 
     the plan year such trust benefits at least the lesser of--

[[Page H11117]]

       ``(i) 50 employees of the employer, or
       ``(ii) the greater of--

       ``(I) 40 percent of all employees of the employer, or
       ``(II) 2 employees (or if there is only 1 employee, such 
     employee).''

       (b) Separate Line of Business Test.--Section 401(a)(26)(G) 
     (relating to separate line of business) is amended by 
     striking ``paragraph (7)'' and inserting ``paragraph (2)(A) 
     or (7)''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 1995.

     SEC. 14224. NONDISCRIMINATION RULES FOR QUALIFIED CASH OR 
                   DEFERRED ARRANGEMENTS AND MATCHING 
                   CONTRIBUTIONS.

       (a) Alternative Methods of Satisfying Section 401(k) 
     Nondiscrimination Tests.--Section 401(k) (relating to cash or 
     deferred arrangements) is amended by adding at the end the 
     following new paragraph:
       ``(11) Alternative methods of meeting nondiscrimination 
     requirements.--
       ``(A) In general.--A cash or deferred arrangement shall be 
     treated as meeting the requirements of paragraph (3)(A)(ii) 
     if such arrangement--
       ``(i) meets the contribution requirements of subparagraph 
     (B) or (C), and
       ``(ii) meets the notice requirements of subparagraph (D).
       ``(B) Matching contributions.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if, under the arrangement, the employer makes 
     matching contributions on behalf of each employee who is not 
     a highly compensated employee in an amount equal to--

       ``(I) 100 percent of the elective contributions of the 
     employee to the extent such elective contributions do not 
     exceed 3 percent of the employee's compensation, and

       ``(II) 50 percent of the elective contributions of the 
     employee to the extent that such elective contributions 
     exceed 3 percent but do not exceed 5 percent of the 
     employee's compensation.

       ``(ii) Rate for highly compensated employees.--The 
     requirements of this subparagraph are not met if, under the 
     arrangement, the matching contribution with respect to any 
     elective contribution of a highly compensated employee at any 
     level of compensation is greater than that with respect to an 
     employee who is not a highly compensated employee.
       ``(iii) Alternative plan designs.--If the matching 
     contribution with respect to any elective contribution at any 
     specific level of compensation is not equal to the percentage 
     required under clause (i), an arrangement shall not be 
     treated as failing to meet the requirements of clause (i) 
     if--

       ``(I) the level of an employer's matching contribution does 
     not increase as an employee's elective contributions 
     increase, and
       ``(II) the aggregate amount of matching contributions with 
     respect to elective contributions not in excess of such level 
     of compensation is at least equal to the amount of matching 
     contributions which would be made if matching contributions 
     were made on the basis of the percentages described in clause 
     (i).

       ``(C) Nonelective contributions.--The requirements of this 
     subparagraph are met if, under the arrangement, the employer 
     is required, without regard to whether the employee makes an 
     elective contribution or employee contribution, to make a 
     contribution to a defined contribution plan on behalf of each 
     employee who is not a highly compensated employee and who is 
     eligible to participate in the arrangement in an amount equal 
     to at least 3 percent of the employee's compensation.
       ``(D) Notice requirement.--An arrangement meets the 
     requirements of this paragraph if, under the arrangement, 
     each employee eligible to participate is, within a reasonable 
     period before any year, given written notice of the 
     employee's rights and obligations under the arrangement 
     which--
       ``(i) is sufficiently accurate and comprehensive to apprise 
     the employee of such rights and obligations, and
       ``(ii) is written in a manner calculated to be understood 
     by the average employee eligible to participate.
       ``(E) Other requirements.--
       ``(i) Withdrawal and vesting restrictions.--An arrangement 
     shall not be treated as meeting the requirements of 
     subparagraph (B) or (C) unless the requirements of 
     subparagraphs (B) and (C) of paragraph (2) are met with 
     respect to all employer contributions (including matching 
     contributions).
       ``(ii) Social security and similar contributions not taken 
     into account.--An arrangement shall not be treated as meeting 
     the requirements of subparagraph (B) or (C) unless such 
     requirements are met without regard to subsection (l), and, 
     for purposes of subsection (l), employer contributions under 
     subparagraph (B) or (C) shall not be taken into account.
       ``(F) Other plans.--An arrangement shall be treated as 
     meeting the requirements under subparagraph (A)(i) if any 
     other plan maintained by the employer meets such requirements 
     with respect to employees eligible under the arrangement.''
       (b) Alternative Methods of Satisfying Section 401(m) 
     Nondiscrimination Tests.--Section 401(m) (relating to 
     nondiscrimination test for matching contributions and 
     employee contributions) is amended by redesignating paragraph 
     (10) as paragraph (11) and by adding after paragraph (9) the 
     following new paragraph:
       ``(10) Alternative method of satisfying tests.--
       ``(A) In general.--A defined contribution plan shall be 
     treated as meeting the requirements of paragraph (2) with 
     respect to matching contributions if the plan--
       ``(i) meets the contribution requirements of subparagraph 
     (B) or (C) of subsection (k)(11),
       ``(ii) meets the notice requirements of subsection 
     (k)(11)(D), and
       ``(iii) meets the requirements of subparagraph (B).
       ``(B) Limitation on matching contributions.--The 
     requirements of this subparagraph are met if--
       ``(i) matching contributions on behalf of any employee may 
     not be made with respect to an employee's contributions or 
     elective deferrals in excess of 6 percent of the employee's 
     compensation,
       ``(ii) the level of an employer's matching contribution 
     does not increase as an employee's contributions or elective 
     deferrals increase, and
       ``(iii) the matching contribution with respect to any 
     highly compensated employee at a specific level of 
     compensation is not greater than that with respect to an 
     employee who is not a highly compensated employee.''
       (c) Year for Computing Nonhighly Compensated Employee 
     Percentage.--
       (1) Cash or deferred arrangements.--Clause (ii) of section 
     401(k)(3)(A) is amended--
       (A) by striking ``such year'' and inserting ``the plan 
     year'', and
       (B) by striking ``for such plan year'' and inserting ``the 
     preceding plan year''.
       (2) Matching and employee contributions.--Section 
     401(m)(2)(A) is amended--
       (A) by inserting ``for such plan year'' after ``highly 
     compensated employees'', and
       (B) by inserting ``for the preceding plan year'' after 
     ``eligible employees'' each place it appears in clause (i) 
     and clause (ii).
       (d) Special Rule for Determining Average Deferral 
     Percentage for First Plan Year, Etc.--
       (1) Paragraph (3) of section 401(k) is amended by adding at 
     the end the following new subparagraph:
       ``(E) For purposes of this paragraph, in the case of the 
     first plan year of any plan, the amount taken into account as 
     the actual deferral percentage of nonhighly compensated 
     employees for the preceding plan year shall be--
       ``(i) 3 percent, or
       ``(ii) if the employer makes an election under this 
     subclause, the actual deferral percentage of nonhighly 
     compensated employees determined for such first plan year.''
       (2) Paragraph (3) of section 401(m) is amended by adding at 
     the end the following: ``Rules similar to the rules of 
     subsection (k)(3)(E) shall apply for purposes of this 
     subsection.''
       (e) Distribution of Excess Contributions.--
       (1) Subparagraph (C) of section 401(k)(8) (relating to 
     arrangement not disqualified if excess contributions 
     distributed) is amended by striking ``on the basis of the 
     respective portions of the excess contributions attributable 
     to each of such employees'' and inserting ``on the basis of 
     the amount of contributions by, or on behalf of, each of such 
     employees''.
       (2) Subparagraph (C) of section 401(m)(6) (relating to 
     method of distributing excess aggregate contributions) is 
     amended by striking ``on the basis of the respective portions 
     of such amounts attributable to each of such employees'' and 
     inserting ``on the basis of the amount of contributions on 
     behalf of, or by, each such employee''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1995.

                 PART IV--MISCELLANEOUS SIMPLIFICATION

     SEC. 14231. TREATMENT OF LEASED EMPLOYEES.

       (a) General Rule.--Subparagraph (C) of section 414(n)(2) 
     (defining leased employee) is amended to read as follows:
       ``(C) such services are performed under significant 
     direction or control by the recipient.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to years beginning after December 31, 1995, but 
     shall not apply to any relationship determined under an 
     Internal Revenue Service ruling issued before the date of the 
     enactment of this Act pursuant to section 414(n)(2)(C) of the 
     Internal Revenue Code of 1986 (as in effect on the day before 
     such date) not to involve a leased employee.

     SEC. 14232. PLANS COVERING SELF-EMPLOYED INDIVIDUALS.

       (a) Aggregation Rules.--Section 401(d) (relating to 
     additional requirements for qualification of trusts and plans 
     benefiting owner-employees) is amended to read as follows:
       ``(d) Contribution Limit on Owner-Employees.--A trust 
     forming part of a pension or profit-sharing plan which 
     provides contributions or benefits for employees some or all 
     of whom are owner-employees shall constitute a qualified 
     trust under this section only if, in addition to meeting the 
     requirements of subsection (a), the plan provides that 
     contributions on behalf of any owner-employee may be made 
     only with respect to the earned income of such owner-employee 
     which is derived from the trade or business with respect to 
     which such plan is established.''

[[Page H11118]]

       (b) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1995.

     SEC. 14233. ELIMINATION OF SPECIAL VESTING RULE FOR 
                   MULTIEMPLOYER PLANS.

       (a) In General.--Paragraph (2) of section 411(a) (relating 
     to minimum vesting standards) is amended--
       (1) by striking ``subparagraph (A), (B), or (C)'' and 
     inserting ``subparagraph (A) or (B)''; and
       (2) by striking subparagraph (C).
       (b) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning on or after the earlier 
     of--
       (1) the later of--
       (A) January 1, 1996, or
       (B) the date on which the last of the collective bargaining 
     agreements pursuant to which the plan is maintained 
     terminates (determined without regard to any extension 
     thereof after the date of the enactment of this Act), or
       (2) January 1, 1998.

     Such amendments shall not apply to any individual who does 
     not have more than 1 hour of service under the plan on or 
     after the 1st day of the 1st plan year to which such 
     amendments apply.

     SEC. 14234. DISTRIBUTIONS UNDER RURAL COOPERATIVE PLANS.

       (a) Distributions After Certain Age.--Section 401(k)(7) is 
     amended by adding at the end the following new subparagraph:
       ``(C) Special rule for certain distributions.--A rural 
     cooperative plan which includes a qualified cash or deferred 
     arrangement shall not be treated as violating the 
     requirements of section 401(a) merely by reason of a 
     distribution to a participant after attainment of age 59\1/
     2\.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to distributions after December 31, 1995.

     SEC. 14235. TREATMENT OF GOVERNMENTAL PLANS UNDER SECTION 
                   415.

       (a) Definition of Compensation.--Subsection (k) of section 
     415 (regarding limitations on benefits and contributions 
     under qualified plans) is amended by adding immediately after 
     paragraph (2) the following new paragraph:
       ``(3) Definition of compensation for governmental plans.--
     For purposes of this section, in the case of a governmental 
     plan (as defined in section 414(d)), the term `compensation' 
     includes, in addition to the amounts described in subsection 
     (c)(3)--
       ``(A) any elective deferral (as defined in section 
     402(g)(3)), and
       ``(B) any amount which is contributed by the employer at 
     the election of the employee and which is not includible in 
     the gross income of an employee under section 125 or 457.''
       (b) Compensation Limit.--Subsection (b) of section 415 is 
     amended by adding immediately after paragraph (10) the 
     following new paragraph:
       ``(11) Special limitation rule for governmental plans.--In 
     the case of a governmental plan (as defined in section 
     414(d)), subparagraph (B) of paragraph (1) shall not apply.''
       (c) Treatment of Certain Excess Benefit Plans.--
       (1) In general.--Section 415 is amended by adding at the 
     end the following new subsection:
       ``(m) Treatment of Qualified Governmental Excess Benefit 
     Arrangements.--
       ``(1) Governmental plan not affected.--In determining 
     whether a governmental plan (as defined in section 414(d)) 
     meets the requirements of this section, benefits provided 
     under a qualified governmental excess benefit arrangement 
     shall not be taken into account. Income accruing to a 
     governmental plan (or to a trust that is maintained solely 
     for the purpose of providing benefits under a qualified 
     governmental excess benefit arrangement) in respect of a 
     qualified governmental excess benefit arrangement shall 
     constitute income derived from the exercise of an essential 
     governmental function upon which such governmental plan (or 
     trust) shall be exempt from tax under section 115.
       ``(2) Taxation of participant.--For purposes of this 
     chapter--
       ``(A) the taxable year or years for which amounts in 
     respect of a qualified governmental excess benefit 
     arrangement are includible in gross income by a participant, 
     and
       ``(B) the treatment of such amounts when so includible by 
     the participant,

     shall be determined as if such qualified governmental excess 
     benefit arrangement were treated as a plan for the deferral 
     of compensation which is maintained by a corporation not 
     exempt from tax under this chapter and which does not meet 
     the requirements for qualification under section 401.
       ``(3) Qualified governmental excess benefit arrangement.--
     For purposes of this subsection, the term `qualified 
     governmental excess benefit arrangement' means a portion of a 
     governmental plan if--
       ``(A) such portion is maintained solely for the purpose of 
     providing to participants in the plan that part of the 
     participant's annual benefit otherwise payable under the 
     terms of the plan that exceeds the limitations on benefits 
     imposed by this section,
       ``(B) under such portion no election is provided at any 
     time to the participant (directly or indirectly) to defer 
     compensation, and
       ``(C) benefits described in subparagraph (A) are not paid 
     from a trust forming a part of such governmental plan unless 
     such trust is maintained solely for the purpose of providing 
     such benefits.''
       (2) Coordination with section 457.--Subsection (e) of 
     section 457 is amended by adding at the end the following new 
     paragraph:
       ``(15) Treatment of qualified governmental excess benefit 
     arrangements.--Subsections (b)(2) and (c)(1) shall not apply 
     to any qualified governmental excess benefit arrangement (as 
     defined in section 415(m)(3)), and benefits provided under 
     such an arrangement shall not be taken into account in 
     determining whether any other plan is an eligible deferred 
     compensation plan.''
       (3) Conforming amendment.--Paragraph (2) of section 457(f) 
     is amended by striking ``and'' at the end of subparagraph 
     (C), by striking the period at the end of subparagraph (D) 
     and inserting ``, and'', and by inserting immediately 
     thereafter the following new subparagraph:
       ``(E) a qualified governmental excess benefit arrangement 
     described in section 415(m).''
       (d) Exemption for Survivor and Disability Benefits.--
     Paragraph (2) of section 415(b) is amended by adding at the 
     end the following new subparagraph:
       ``(I) Exemption for survivor and disability benefits 
     provided under governmental plans.--Subparagraph (B) of 
     paragraph (1), subparagraph (C) of this paragraph, and 
     paragraph (5) shall not apply to--
       ``(i) income received from a governmental plan (as defined 
     in section 414(d)) as a pension, annuity, or similar 
     allowance as the result of the recipient becoming disabled by 
     reason of personal injuries or sickness, or
       ``(ii) amounts received from a governmental plan by the 
     beneficiaries, survivors, or the estate of an employee as the 
     result of the death of the employee.''
       (e) Revocation of Grandfather Election.--
       (1) In general.--Subparagraph (C) of section 415(b)(10) is 
     amended by adding at the end the following new clause:
       ``(ii) Revocation of election.--An election under clause 
     (i) may be revoked not later than the last day of the third 
     plan year beginning after the date of the enactment of this 
     clause. The revocation shall apply to all plan years to which 
     the election applied and to all subsequent plan years. Any 
     amount paid by a plan in a taxable year ending after the 
     revocation shall be includible in income in such taxable year 
     under the rules of this chapter in effect for such taxable 
     year, except that, for purposes of applying the limitations 
     imposed by this section, any portion of such amount which is 
     attributable to any taxable year during which the election 
     was in effect shall be treated as received in such taxable 
     year.''
       (2) Conforming amendment.--Subparagraph (C) of section 
     415(b)(10) is amended by striking ``This'' and inserting:
       ``(i) In general.--This''.
       (f) Effective Date.--
       (1) In general.--The amendments made by subsections (a), 
     (b), (c), and (d) shall apply to taxable years beginning on 
     or after the date of the enactment of this Act. The amendment 
     made by subsection (e) shall apply with respect to election 
     revocations adopted after the date of the enactment of this 
     Act.
       (2) Treatment for years beginning before date of 
     enactment.--In the case of a governmental plan (as defined in 
     section 414(d) of the Internal Revenue Code of 1986), such 
     plan shall be treated as satisfying the requirements of 
     section 415 of such Code for all taxable years beginning 
     before the date of the enactment of this Act.

     SEC. 14236. UNIFORM RETIREMENT AGE.

       (a) Discrimination Testing.--Paragraph (5) of section 
     401(a) (relating to special rules relating to 
     nondiscrimination requirements) is amended by adding at the 
     end the following new subparagraph:
       ``(F) Social security retirement age.--For purposes of 
     testing for discrimination under paragraph (4)--
       ``(i) the social security retirement age (as defined in 
     section 415(b)(8)) shall be treated as a uniform retirement 
     age, and
       ``(ii) subsidized early retirement benefits and joint and 
     survivor annuities shall not be treated as being unavailable 
     to employees on the same terms merely because such benefits 
     or annuities are based in whole or in part on an employee's 
     social security retirement age (as so defined).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 1995.

     SEC. 14237. UNIFORM PENALTY PROVISIONS TO APPLY TO CERTAIN 
                   PENSION REPORTING REQUIREMENTS.

       (a) Penalties.--
       (1) Statements.--Paragraph (1) of section 6724(d) is 
     amended by striking ``and'' at the end of subparagraph (A), 
     by striking the period at the end of subparagraph (B) and 
     inserting ``, and'', and by inserting after subparagraph (B) 
     the following new subparagraph:
       ``(C) any statement of the amount of payments to another 
     person required to be made to the Secretary under--
       ``(i) section 408(i) (relating to reports with respect to 
     individual retirement accounts or annuities), or
       ``(ii) section 6047(d) (relating to reports by employers, 
     plan administrators, etc.).''
       (2) Reports.--Paragraph (2) of section 6724(d) is amended 
     by striking ``or'' at the end of subparagraph (S), by 
     striking the period at the end of subparagraph (T) and 
     inserting a comma, and by inserting after subparagraph (T) 
     the following new subparagraphs:

[[Page H11119]]

       ``(U) section 408(i) (relating to reports with respect to 
     individual retirement plans) to any person other than the 
     Secretary with respect to the amount of payments made to such 
     person, or
       ``(V) section 6047(d) (relating to reports by plan 
     administrators) to any person other than the Secretary with 
     respect to the amount of payments made to such person.''
       (b) Modification of Reportable Designated Distributions.--
       (1) Section 408.--Subsection (i) of section 408 (relating 
     to individual retirement account reports) is amended by 
     inserting ``aggregating $10 or more in any calendar year'' 
     after ``distributions''.
       (2) Section 6047.--Paragraph (1) of section 6047(d) 
     (relating to reports by employers, plan administrators, etc.) 
     is amended by adding at the end the following new sentence: 
     ``No return or report may be required under the preceding 
     sentence with respect to distributions to any person during 
     any year unless such distributions aggregate $10 or more.''
       (c) Qualifying Rollover Distributions.--Section 6652(i) is 
     amended--
       (1) by striking ``the $10'' and inserting ``$100'', and
       (2) by striking ``$5,000'' and inserting ``$50,000''.
       (d) Conforming Amendments.--
       (1) Paragraph (1) of section 6047(f) is amended to read as 
     follows:

  ``(1) For provisions relating to penalties for failures to file 
returns and reports required under this section, see sections 6652(e), 
6721, and 6722.''

       (2) Subsection (e) of section 6652 is amended by adding at 
     the end the following new sentence: ``This subsection shall 
     not apply to any return or statement which is an information 
     return described in section 6724(d)(1)(C)(ii) or a payee 
     statement described in section 6724(d)(2)(U).''
       (3) Subsection (a) of section 6693 is amended by adding at 
     the end the following new sentence: ``This subsection shall 
     not apply to any report which is an information return 
     described in section 6724(d)(1)(C)(i) or a payee statement 
     described in section 6724(d)(2)(T).''
       (e) Effective Date.--The amendments made by this section 
     shall apply to returns, reports, and other statements the due 
     date for which (determined without regard to extensions) is 
     after December 31, 1995.

     SEC. 14238. CONTRIBUTIONS ON BEHALF OF DISABLED EMPLOYEES.

       (a) All Disabled Participants Receiving Contributions.--
     Section 415(c)(3)(C) is amended by adding at the end the 
     following: ``If a defined contribution plan provides for the 
     continuation of contributions on behalf of all participants 
     described in clause (i) for a fixed or determinable period, 
     this subparagraph shall be applied without regard to clauses 
     (ii) and (iii).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 1995.

     SEC. 14239. TREATMENT OF DEFERRED COMPENSATION PLANS OF STATE 
                   AND LOCAL GOVERNMENTS AND TAX-EXEMPT 
                   ORGANIZATIONS.

       (a) Special Rules for Plan Distributions.--Paragraph (9) of 
     section 457(e) (relating to other definitions and special 
     rules) is amended to read as follows:
       ``(9) Benefits not treated as made available by reason of 
     certain elections, etc.--
       ``(A) Total amount payable is $3,500 or less.--The total 
     amount payable to a participant under the plan shall not be 
     treated as made available merely because the participant may 
     elect to receive such amount (or the plan may distribute such 
     amount without the participant's consent) if--
       ``(i) such amount does not exceed $3,500, and
       ``(ii) such amount may be distributed only if--

       ``(I) no amount has been deferred under the plan with 
     respect to such participant during the 2-year period ending 
     on the date of the distribution, and
       ``(II) there has been no prior distribution under the plan 
     to such participant to which this subparagraph applied.

     A plan shall not be treated as failing to meet the 
     distribution requirements of subsection (d) by reason of a 
     distribution to which this subparagraph applies.
       ``(B) Election to defer commencement of distributions.--The 
     total amount payable to a participant under the plan shall 
     not be treated as made available merely because the 
     participant may elect to defer commencement of distributions 
     under the plan if--
       ``(i) such election is made after amounts may be available 
     under the plan in accordance with subsection (d)(1)(A) and 
     before commencement of such distributions, and
       ``(ii) the participant may make only 1 such election.''
       (b) Cost-of-Living Adjustment of Maximum Deferral Amount.--
     Subsection (e) of section 457 is amended by adding at the end 
     the following new paragraph:
       ``(14) Cost-of-living adjustment of maximum deferral 
     amount.--The Secretary shall adjust the $7,500 amount 
     specified in subsections (b)(2) and (c)(1) at the same time 
     and in the same manner as under section 415(d) (determined 
     without regard to paragraph (4)), except that the base period 
     in applying such section for purposes of this paragraph shall 
     be the calendar quarter ending September 30, 1994.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14240. TRUST REQUIREMENT FOR DEFERRED COMPENSATION PLANS 
                   OF STATE AND LOCAL GOVERNMENTS.

       (a) In General.--Section 457 is amended by adding at the 
     end the following new subsection:
       ``(g) Governmental Plans Must Maintain Set Asides for 
     Exclusive Benefit of Participants.--
       ``(1) In general.--A plan maintained by an eligible 
     employer described in subsection (e)(1)(A) shall not be 
     treated as an eligible deferred compensation plan unless all 
     assets and income of the plan described in subsection (b)(6) 
     are held in trust for the exclusive benefit of participants 
     and their beneficiaries.
       ``(2) Taxability of trusts and participants.--For purposes 
     of this title--
       ``(A) a trust described in paragraph (1) shall be treated 
     as an organization exempt from taxation under section 501(a), 
     and
       ``(B) notwithstanding any other provision of this title, 
     amounts in the trust shall be includible in the gross income 
     of participants and beneficiaries only to the extent, and at 
     the time, provided in this section.
       ``(3) Custodial accounts and contracts.--For purposes of 
     this subsection, custodial accounts and contracts described 
     in section 401(f) shall be treated as trusts under rules 
     similar to the rules under section 401(f).''
       (b) Conforming Amendment.--Paragraph (6) of section 457(b) 
     is amended by inserting ``except as provided in subsection 
     (g),'' before ``which provides that''.
       (c) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to assets and 
     income described in section 457(b)(6) of the Internal Revenue 
     Code of 1986 held by a plan on and after the date of the 
     enactment of this Act.
       (2) Transition rule.--In the case of assets and income 
     described in paragraph (1) held by a plan before the 90th day 
     after the date of the enactment of this Act, a trust need not 
     be established by reason of the amendments made by this 
     section before such 90th day.

     SEC. 14241. TRANSITION RULE FOR COMPUTING MAXIMUM BENEFITS 
                   UNDER SECTION 415 LIMITATIONS.

       (a) In General.--Subparagraph (A) of section 767(d)(3) of 
     the Uruguay Round Agreements Act is amended to read as 
     follows:
       ``(A) Exception.--A plan that was adopted and in effect 
     before December 8, 1994, shall not be required to apply the 
     amendments made by subsection (b) with respect to benefits 
     accrued before the earlier of--
       ``(i) the later of the date a plan amendment applying such 
     amendment is adopted or made effective, or
       ``(ii) the first day of the first limitation year beginning 
     after December 31, 1999.

     Determinations under section 415(b)(2)(E) of the Internal 
     Revenue Code of 1986 shall be made with respect to such 
     benefits on the basis of such section as in effect on 
     December 7, 1994, and the provisions of the plan as in effect 
     on December 7, 1994, but only if such provisions of the plan 
     meet the requirements of such section (as so in effect).''
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the provisions of section 
     767 of the Uruguay Round Agreements Act.
       (c) Transitional Rule.--In the case of a plan that was 
     adopted and in effect before December 8, 1994, if--
       (1) a plan amendment was adopted or made effective on or 
     before the date of the enactment of this Act applying the 
     amendments made by section 767(b) of the Uruguay Round 
     Agreements Act, and
       (2) within 1 year after the date of the enactment of this 
     Act, a plan amendment is adopted which repeals the amendment 
     referred to in paragraph (1),

     the amendment referred to in paragraph (1) shall not be taken 
     into account in applying section 767(d)(3)(A) of the Uruguay 
     Round Agreements Act, as amended by subsection (a).

     SEC. 14242. MULTIPLE SALARY REDUCTION AGREEMENTS PERMITTED 
                   UNDER SECTION 403(b).

       (a) General Rule.--For purposes of section 403(b) of the 
     Internal Revenue Code of 1986, the frequency that an employee 
     is permitted to enter into a salary reduction agreement, the 
     salary to which such an agreement may apply, and the ability 
     to revoke such an agreement shall be determined under the 
     rules applicable to cash or deferred elections under section 
     401(k) of such Code.
       (b) Effective Date.--Subsection (a) shall apply to taxable 
     years beginning after December 31, 1995.

     SEC. 14243. WAIVER OF MINIMUM PERIOD FOR JOINT AND SURVIVOR 
                   ANNUITY EXPLANATION BEFORE ANNUITY STARTING 
                   DATE.

       (a) General Rule.--For purposes of section 417(a)(3)(A) of 
     the Internal Revenue Code of 1986 (relating to plan to 
     provide written explanations), the minimum period prescribed 
     by the Secretary of the Treasury between the date that the 
     explanation referred to in such section is provided and the 
     annuity starting date shall not apply if waived by the 
     participant and, if applicable, the participant's spouse.
       (b) Effective Date.--Subsection (a) shall apply to plan 
     years beginning after December 31, 1995.

     SEC. 14244. REPEAL OF LIMITATION IN CASE OF DEFINED BENEFIT 
                   PLAN AND DEFINED CONTRIBUTION PLAN FOR SAME 
                   EMPLOYEE.

       (a) In General.--Section 415(e) is repealed.

[[Page H11120]]

       (b) Conforming Amendments.--
       (1) Subparagraph (B) of section 415(b)(5) is amended by 
     striking ``and subsection (e)''.
       (2) Paragraph (1) of section 415(f) is amended by striking 
     ``subsections (b), (c), and (e)'' and inserting ``subsections 
     (b) and (c)''.
       (3) Subsection (g) of section 415 is amended by striking 
     ``subsections (e) and (f)'' in the last sentence and 
     inserting ``subsection (f)''.
       (4) Clause (i) of section 415(k)(2)(A) is amended to read 
     as follows:
       ``(i) any contribution made directly by an employee under 
     such an arrangement shall not be treated as an annual 
     addition for purposes of subsection (c), and''.
       (5) Clause (ii) of section 415(k)(2)(A) is amended by 
     striking ``subsections (c) and (e)'' and inserting 
     ``subsection (c)''.
       (6) Section 416 is amended by striking subsection (h).
       (c) Effective Date.--The amendments made by this section 
     shall apply to limitation years beginning after December 31, 
     1996.

     SEC. 14245. DATE FOR ADOPTION OF PLAN AMENDMENTS.

       If any amendment made by this title requires an amendment 
     to any plan, such plan amendment shall not be required to be 
     made before the first day of the first plan year beginning on 
     or after January 1, 1997, if--
       (1) during the period after such amendment takes effect and 
     before such first plan year, the plan is operated in 
     accordance with the requirements of such amendment, and
       (2) such plan amendment applies retroactively to such 
     period.
              Subtitle C--Treatment of Large Partnerships

                       PART I--GENERAL PROVISIONS

     SEC. 14301. SIMPLIFIED FLOW-THROUGH FOR LARGE PARTNERSHIPS.

       (a) General Rule.--Subchapter K (relating to partners and 
     partnerships) is amended by adding at the end the following 
     new part:

            ``PART IV--SPECIAL RULES FOR LARGE PARTNERSHIPS

``Sec. 771. Application of subchapter to large partnerships.
``Sec. 772. Simplified flow-through.
``Sec. 773. Computations at partnership level.
``Sec. 774. Other modifications.
``Sec. 775. Large partnership defined.
``Sec. 776. Special rules for partnerships holding oil and gas 
              properties.
``Sec. 777. Regulations.

     ``SEC. 771. APPLICATION OF SUBCHAPTER TO LARGE PARTNERSHIPS.

       ``The preceding provisions of this subchapter to the extent 
     inconsistent with the provisions of this part shall not apply 
     to a large partnership and its partners.

     ``SEC. 772. SIMPLIFIED FLOW-THROUGH.

       ``(a) General Rule.--In determining the income tax of a 
     partner of a large partnership, such partner shall take into 
     account separately such partner's distributive share of the 
     partnership's--
       ``(1) taxable income or loss from passive loss limitation 
     activities,
       ``(2) taxable income or loss from other activities,
       ``(3) net capital gain (or net capital loss)--
       ``(A) to the extent allocable to passive loss limitation 
     activities, and
       ``(B) to the extent allocable to other activities,
       ``(4) tax-exempt interest,
       ``(5) applicable net AMT adjustment separately computed 
     for--
       ``(A) passive loss limitation activities, and
       ``(B) other activities,
       ``(6) general credits,
       ``(7) low-income housing credit determined under section 
     42,
       ``(8) rehabilitation credit determined under section 47,
       ``(9) foreign income taxes,
       ``(10) the credit allowable under section 29, and
       ``(11) other items to the extent that the Secretary 
     determines that the separate treatment of such items is 
     appropriate.
       ``(b) Separate Computations.--In determining the amounts 
     required under subsection (a) to be separately taken into 
     account by any partner, this section and section 773 shall be 
     applied separately with respect to such partner by taking 
     into account such partner's distributive share of the items 
     of income, gain, loss, deduction, or credit of the 
     partnership.
       ``(c) Treatment at Partner Level.--
       ``(1) In general.--Except as provided in this subsection, 
     rules similar to the rules of section 702(b) shall apply to 
     any partner's distributive share of the amounts referred to 
     in subsection (a).
       ``(2) Income or loss from passive loss limitation 
     activities.--For purposes of this chapter, any partner's 
     distributive share of any income or loss described in 
     subsection (a)(1) shall be treated as an item of income or 
     loss (as the case may be) from the conduct of a trade or 
     business which is a single passive activity (as defined in 
     section 469). A similar rule shall apply to a partner's 
     distributive share of amounts referred to in paragraphs 
     (3)(A) and (5)(A) of subsection (a).
       ``(3) Income or loss from other activities.--
       ``(A) In general.--For purposes of this chapter, any 
     partner's distributive share of any income or loss described 
     in subsection (a)(2) shall be treated as an item of income or 
     expense (as the case may be) with respect to property held 
     for investment.
       ``(B) Deductions for loss not subject to section 67.--The 
     deduction under section 212 for any loss described in 
     subparagraph (A) shall not be treated as a miscellaneous 
     itemized deduction for purposes of section 67.
       ``(4) Treatment of net capital gain or loss.--For purposes 
     of this chapter, any partner's distributive share of any gain 
     or loss described in subsection (a)(3) shall be treated as a 
     long-term capital gain or loss, as the case may be.
       ``(5) Minimum tax treatment.--In determining the 
     alternative minimum taxable income of any partner, such 
     partner's distributive share of any applicable net AMT 
     adjustment shall be taken into account in lieu of making the 
     separate adjustments provided in sections 56, 57, and 58 with 
     respect to the items of the partnership. Except as provided 
     in regulations, the applicable net AMT adjustment shall be 
     treated, for purposes of section 53, as an adjustment or item 
     of tax preference not specified in section 53(d)(1)(B)(ii).
       ``(6) General credits.--A partner's distributive share of 
     the amount referred to in paragraph (6) of subsection (a) 
     shall be taken into account as a current year business 
     credit.
       ``(d) Operating Rules.--For purposes of this section--
       ``(1) Passive loss limitation activity.--The term `passive 
     loss limitation activity' means--
       ``(A) any activity which involves the conduct of a trade or 
     business, and
       ``(B) any rental activity.


     For purposes of the preceding sentence, the term `trade or 
     business' includes any activity treated as a trade or 
     business under paragraph (5) or (6) of section 469(c).
       ``(2) Tax-exempt interest.--The term `tax-exempt interest' 
     means interest excludable from gross income under section 
     103.
       ``(3) Applicable net amt adjustment.--
       ``(A) In general.--The applicable net AMT adjustment is--
       ``(i) with respect to taxpayers other than corporations, 
     the net adjustment determined by using the adjustments 
     applicable to individuals, and
       ``(ii) with respect to corporations, the net adjustment 
     determined by using the adjustments applicable to 
     corporations.
       ``(B) Net adjustment.--The term `net adjustment' means the 
     net adjustment in the items attributable to passive loss 
     activities or other activities (as the case may be) which 
     would result if such items were determined with the 
     adjustments of sections 56, 57, and 58.
       ``(4) Treatment of certain separately stated items.--
       ``(A) Exclusion for certain purposes.--In determining the 
     amounts referred to in paragraphs (1) and (2) of subsection 
     (a), any net capital gain or net capital loss (as the case 
     may be), and any item referred to in subsection (a)(11), 
     shall be excluded.
       ``(B) Allocation rules.--The net capital gain shall be 
     treated--
       ``(i) as allocable to passive loss limitation activities to 
     the extent the net capital gain does not exceed the net 
     capital gain determined by only taking into account gains and 
     losses from sales and exchanges of property used in 
     connection with such activities, and
       ``(ii) as allocable to other activities to the extent such 
     gain exceeds the amount allocated under clause (i).

     A similar rule shall apply for purposes of allocating any net 
     capital loss.
       ``(C) Net capital loss.--The term `net capital loss' means 
     the excess of the losses from sales or exchanges of capital 
     assets over the gains from sales or exchange of capital 
     assets.
       ``(5) General credits.--The term `general credits' means 
     any credit other than the low-income housing credit, the 
     rehabilitation credit, the foreign tax credit, and the credit 
     allowable under section 29.
       ``(6) Foreign income taxes.--The term `foreign income 
     taxes' means taxes described in section 901 which are paid or 
     accrued to foreign countries and to possessions of the United 
     States.
       ``(e) Special Rule for Unrelated Business Tax.--In the case 
     of a partner which is an organization subject to tax under 
     section 511, such partner's distributive share of any items 
     shall be taken into account separately to the extent 
     necessary to comply with the provisions of section 512(c)(1).
       ``(f) Special Rules for Applying Passive Loss 
     Limitations.--If any person holds an interest in a large 
     partnership other than as a limited partner--
       ``(1) paragraph (2) of subsection (c) shall not apply to 
     such partner, and
       ``(2) such partner's distributive share of the partnership 
     items allocable to passive loss limitation activities shall 
     be taken into account separately to the extent necessary to 
     comply with the provisions of section 469.

     The preceding sentence shall not apply to any items allocable 
     to an interest held as a limited partner.

     ``SEC. 773. COMPUTATIONS AT PARTNERSHIP LEVEL.

       ``(a) General Rule.--
       ``(1) Taxable income.--The taxable income of a large 
     partnership shall be computed in the same manner as in the 
     case of an individual except that--
       ``(A) the items described in section 772(a) shall be 
     separately stated, and
       ``(B) the modifications of subsection (b) shall apply.
       ``(2) Elections.--All elections affecting the computation 
     of the taxable income of a large partnership or the 
     computation of any credit of a large partnership shall be 
     made by the partnership; except that the election under 

[[Page H11121]]

     section 901, and any election under section 108, shall be 
     made by each partner separately.
       ``(3) Limitations, etc.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     all limitations and other provisions affecting the 
     computation of the taxable income of a large partnership or 
     the computation of any credit of a large partnership shall be 
     applied at the partnership level (and not at the partner 
     level).
       ``(B) Certain limitations applied at partner level.--The 
     following provisions shall be applied at the partner level 
     (and not at the partnership level):
       ``(i) Section 68 (relating to overall limitation on 
     itemized deductions).
       ``(ii) Sections 49 and 465 (relating to at risk 
     limitations).
       ``(iii) Section 469 (relating to limitation on passive 
     activity losses and credits).
       ``(iv) Any other provision specified in regulations.
       ``(4) Coordination with other provisions.--Paragraphs (2) 
     and (3) shall apply notwithstanding any other provision of 
     this chapter other than this part.
       ``(b) Modifications to Determination of Taxable Income.--In 
     determining the taxable income of a large partnership--
       ``(1) Certain deductions not allowed.--The following 
     deductions shall not be allowed:
       ``(A) The deduction for personal exemptions provided in 
     section 151.
       ``(B) The net operating loss deduction provided in section 
     172.
       ``(C) The additional itemized deductions for individuals 
     provided in part VII of subchapter B (other than section 212 
     thereof).
       ``(2) Charitable deductions.--In determining the amount 
     allowable under section 170, the limitation of section 
     170(b)(2) shall apply.
       ``(3) Coordination with section 67.--In lieu of applying 
     section 67, 70 percent of the amount of the miscellaneous 
     itemized deductions shall be disallowed.
       ``(c) Special Rules for Income From Discharge of 
     Indebtedness.--If a large partnership has income from the 
     discharge of any indebtedness--
       ``(1) such income shall be excluded in determining the 
     amounts referred to in section 772(a), and
       ``(2) in determining the income tax of any partner of such 
     partnership--
       ``(A) such income shall be treated as an item required to 
     be separately taken into account under section 772(a), and
       ``(B) the provisions of section 108 shall be applied 
     without regard to this part.

     ``SEC. 774. OTHER MODIFICATIONS.

       ``(a) Treatment of Certain Optional Adjustments, Etc.--In 
     the case of a large partnership--
       ``(1) computations under section 773 shall be made without 
     regard to any adjustment under section 743(b) or 108(b), but
       ``(2) a partner's distributive share of any amount referred 
     to in section 772(a) shall be appropriately adjusted to take 
     into account any adjustment under section 743(b) or 108(b) 
     with respect to such partner.
       ``(b) Credit Recapture Determined at Partnership Level.--
       ``(1) In general.--In the case of a large partnership--
       ``(A) any credit recapture shall be taken into account by 
     the partnership, and
       ``(B) the amount of such recapture shall be determined as 
     if the credit with respect to which the recapture is made had 
     been fully utilized to reduce tax.
       ``(2) Method of taking recapture into account.--A large 
     partnership shall take into account a credit recapture by 
     reducing the amount of the appropriate current year credit to 
     the extent thereof, and if such recapture exceeds the amount 
     of such current year credit, the partnership shall be liable 
     to pay such excess.
       ``(3) Dispositions not to trigger recapture.--No credit 
     recapture shall be required by reason of any transfer of an 
     interest in a large partnership.
       ``(4) Credit recapture.--For purposes of this subsection, 
     the term `credit recapture' means any increase in tax under 
     section 42(j) or 50(a).
       ``(c) Partnership Not Terminated by Reason of Change in 
     Ownership.--Subparagraph (B) of section 708(b)(1) shall not 
     apply to a large partnership.
       ``(d) Partnership Entitled to Certain Credits.--The 
     following shall be allowed to a large partnership and shall 
     not be taken into account by the partners of such 
     partnership:
       ``(1) The credit provided by section 34.
       ``(2) Any credit or refund under section 852(b)(3)(D).
       ``(e) Treatment of REMIC Residuals.--For purposes of 
     applying section 860E(e)(6) to any large partnership--
       ``(1) all interests in such partnership shall be treated as 
     held by disqualified organizations,
       ``(2) in lieu of applying subparagraph (C) of section 
     860E(e)(6), the amount subject to tax under section 
     860E(e)(6) shall be excluded from the gross income of such 
     partnership, and
       ``(3) subparagraph (D) of section 860E(e)(6) shall not 
     apply.
       ``(f) Special Rules for Applying Certain Installment Sale 
     Rules.--In the case of a large partnership--
       ``(1) the provisions of sections 453(l)(3) and 453A shall 
     be applied at the partnership level, and
       ``(2) in determining the amount of interest payable under 
     such sections, such partnership shall be treated as subject 
     to tax under this chapter at the highest rate of tax in 
     effect under section 1 or 11.

     ``SEC. 775. LARGE PARTNERSHIP DEFINED.

       ``(a) General Rule.--For purposes of this part--
       ``(1) In general.--Except as otherwise provided in this 
     section or section 776, the term `large partnership' means, 
     with respect to any partnership taxable year, any partnership 
     if the number of persons who were partners in such 
     partnership in any preceding partnership taxable year 
     beginning after December 31, 1995, equaled or exceeded 250. 
     To the extent provided in regulations, a partnership shall 
     cease to be treated as a large partnership for any 
     partnership taxable year if in such taxable year fewer than 
     100 persons were partners in such partnership.
       ``(2) Election for partnerships with at least 100 
     partners.--If a partnership makes an election under this 
     paragraph, paragraph (1) shall be applied by substituting 
     `100' for `250'. Such an election shall apply to the taxable 
     year for which made and all subsequent taxable years unless 
     revoked with the consent of the Secretary.
       ``(b) Special Rules for Certain Service Partnerships.--
       ``(1) Certain partners not counted.--For purposes of this 
     section, the term `partner' does not include any individual 
     performing substantial services in connection with the 
     activities of the partnership and holding an interest in such 
     partnership, or an individual who formerly performed 
     substantial services in connection with such activities and 
     who held an interest in such partnership at the time the 
     individual performed such services.
       ``(2) Exclusion.--For purposes of this part, the term 
     `large partnership' does not include any partnership if 
     substantially all the partners of such partnership--
       ``(A) are individuals performing substantial services in 
     connection with the activities of such partnership or are 
     personal service corporations (as defined in section 269A(b)) 
     the owner-employees (as defined in section 269A(b)) of which 
     perform such substantial services,
       ``(B) are retired partners who had performed such 
     substantial services, or
       ``(C) are spouses of partners who are performing (or had 
     previously performed) such substantial services.
       ``(3) Special rule for lower tier partnerships.--For 
     purposes of this subsection, the activities of a partnership 
     shall include the activities of any other partnership in 
     which the partnership owns directly an interest in the 
     capital and profits of at least 80 percent.
       ``(c) Exclusion of Commodity Pools.--For purposes of this 
     part, the term `large partnership' does not include any 
     partnership the principal activity of which is the buying and 
     selling of commodities (not described in section 1221(1)), or 
     options, futures, or forwards with respect to such 
     commodities.
       ``(d) Secretary May Rely on Treatment on Return.--If, on 
     the partnership return of any partnership, such partnership 
     is treated as a large partnership, such treatment shall be 
     binding on such partnership and all partners of such 
     partnership but not on the Secretary.

     ``SEC. 776. SPECIAL RULES FOR PARTNERSHIPS HOLDING OIL AND 
                   GAS PROPERTIES.

       ``(a) Exception for Partnerships Holding Significant Oil 
     and Gas Properties.--
       ``(1) In general.--For purposes of this part, the term 
     `large partnership' shall not include any partnership if the 
     average percentage of assets (by value) held by such 
     partnership during the taxable year which are oil or gas 
     properties is at least 25 percent. For purposes of the 
     preceding sentence, any interest held by a partnership in 
     another partnership shall be disregarded, except that the 
     partnership shall be treated as holding its proportionate 
     share of the assets of such other partnership.
       ``(2) Election to waive exception.--Any partnership may 
     elect to have paragraph (1) not apply. Such an election shall 
     apply to the partnership taxable year for which made and all 
     subsequent partnership taxable years unless revoked with the 
     consent of the Secretary.
       ``(b) Special Rules Where Part Applies.--
       ``(1) Computation of percentage depletion.--In the case of 
     a large partnership, except as provided in paragraph (2)--
       ``(A) the allowance for depletion under section 611 with 
     respect to any partnership oil or gas property shall be 
     computed at the partnership level without regard to any 
     provision of section 613A requiring such allowance to be 
     computed separately by each partner,
       ``(B) such allowance shall be determined without regard to 
     the provisions of section 613A(c) limiting the amount of 
     production for which percentage depletion is allowable and 
     without regard to paragraph (1) of section 613A(d), and
       ``(C) paragraph (3) of section 705(a) shall not apply.
       ``(2) Treatment of certain partners.--
       ``(A) In general.--In the case of a disqualified person, 
     the treatment under this chapter of such person's 
     distributive share of any item of income, gain, loss, 
     deduction, or credit attributable to any partnership oil or 
     gas property shall be determined without regard to this part. 
     Such person's distributive share of any such items shall be 
     excluded for purposes of making determinations under sections 
     772 and 773.

[[Page H11122]]

       ``(B) Disqualified person.--For purposes of subparagraph 
     (A), the term `disqualified person' means, with respect to 
     any partnership taxable year--
       ``(i) any person referred to in paragraph (2) or (4) of 
     section 613A(d) for such person's taxable year in which such 
     partnership taxable year ends, and
       ``(ii) any other person if such person's average daily 
     production of domestic crude oil and natural gas for such 
     person's taxable year in which such partnership taxable year 
     ends exceeds 500 barrels.
       ``(C) Average daily production.--For purposes of 
     subparagraph (B), a person's average daily production of 
     domestic crude oil and natural gas for any taxable year shall 
     be computed as provided in section 613A(c)(2)--
       ``(i) by taking into account all production of domestic 
     crude oil and natural gas (including such person's 
     proportionate share of any production of a partnership),
       ``(ii) by treating 6,000 cubic feet of natural gas as a 
     barrel of crude oil, and
       ``(iii) by treating as 1 person all persons treated as 1 
     taxpayer under section 613A(c)(8) or among whom allocations 
     are required under such section.

     ``SEC. 777. REGULATIONS.

       ``The Secretary shall prescribe such regulations as may be 
     appropriate to carry out the purposes of this part.''
       (b) Clerical Amendment.--The table of parts for subchapter 
     K of chapter 1 is amended by adding at the end the following 
     new item:

``Part IV. Special rules for large partnerships.''

     SEC. 14302. SIMPLIFIED AUDIT PROCEDURES FOR LARGE 
                   PARTNERSHIPS.

       (a) General Rule.--Chapter 63 is amended by adding at the 
     end the following new subchapter:

            ``Subchapter D--Treatment of Large Partnerships

``Part I. Treatment of partnership items and adjustments.
``Part II. Partnership level adjustments.
``Part III. Definitions and special rules.

        ``PART I--TREATMENT OF PARTNERSHIP ITEMS AND ADJUSTMENTS

``Sec. 6240. Application of subchapter.
``Sec. 6241. Partner's return must be consistent with partnership 
              return.
``Sec. 6242. Procedures for taking partnership adjustments into 
              account.

     ``SEC. 6240. APPLICATION OF SUBCHAPTER.

       ``(a) General Rule.--This subchapter shall only apply to 
     large partnerships and partners in such partnerships.
       ``(b) Coordination With Other Partnership Audit 
     Procedures.--
       ``(1) In general.--Subchapter C of this chapter shall not 
     apply to any large partnership other than in its capacity as 
     a partner in another partnership which is not a large 
     partnership.
       ``(2) Treatment where partner in other partnership.--If a 
     large partnership is a partner in another partnership which 
     is not a large partnership--
       ``(A) subchapter C of this chapter shall apply to items of 
     such large partnership which are partnership items with 
     respect to such other partnership, but
       ``(B) any adjustment under such subchapter C shall be taken 
     into account in the manner provided by section 6242.

     ``SEC. 6241. PARTNER'S RETURN MUST BE CONSISTENT WITH 
                   PARTNERSHIP RETURN.

       ``(a) General Rule.--A partner of any large partnership 
     shall, on the partner's return, treat each partnership item 
     attributable to such partnership in a manner which is 
     consistent with the treatment of such partnership item on the 
     partnership return.
       ``(b) Underpayment Due to Inconsistent Treatment Assessed 
     as Math Error.--Any underpayment of tax by a partner by 
     reason of failing to comply with the requirements of 
     subsection (a) shall be assessed and collected in the same 
     manner as if such underpayment were on account of a 
     mathematical or clerical error appearing on the partner's 
     return. Paragraph (2) of section 6213(b) shall not apply to 
     any assessment of an underpayment referred to in the 
     preceding sentence.
       ``(c) Adjustments Not To Affect Prior Year of Partners.--
       ``(1) In general.--Except as provided in paragraph (2), 
     subsections (a) and (b) shall apply without regard to any 
     adjustment to the partnership item under part II.
       ``(2) Certain changes in distributive share taken into 
     account by partner.--
       ``(A) In general.--To the extent that any adjustment under 
     part II involves a change under section 704 in a partner's 
     distributive share of the amount of any partnership item 
     shown on the partnership return, such adjustment shall be 
     taken into account in applying this title to such partner for 
     the partner's taxable year for which such item was required 
     to be taken into account.
       ``(B) Coordination with deficiency procedures.--
       ``(i) In general.--Subchapter B shall not apply to the 
     assessment or collection of any underpayment of tax 
     attributable to an adjustment referred to in subparagraph 
     (A).
       ``(ii) Adjustment not precluded.--Notwithstanding any other 
     law or rule of law, nothing in subchapter B (or in any 
     proceeding under subchapter B) shall preclude the assessment 
     or collection of any underpayment of tax (or the allowance of 
     any credit or refund of any overpayment of tax) attributable 
     to an adjustment referred to in subparagraph (A) and such 
     assessment or collection or allowance (or any notice thereof) 
     shall not preclude any notice, proceeding, or determination 
     under subchapter B.
       ``(C) Period of limitations.--The period for--
       ``(i) assessing any underpayment of tax, or
       ``(ii) filing a claim for credit or refund of any 
     overpayment of tax,

     attributable to an adjustment referred to in subparagraph (A) 
     shall not expire before the close of the period prescribed by 
     section 6248 for making adjustments with respect to the 
     partnership taxable year involved.
       ``(D) Tiered structures.--If the partner referred to in 
     subparagraph (A) is another partnership or an S corporation, 
     the rules of this paragraph shall also apply to persons 
     holding interests in such partnership or S corporation (as 
     the case may be); except that, if such partner is a large 
     partnership, the adjustment referred to in subparagraph (A) 
     shall be taken into account in the manner provided by section 
     6242.
       ``(d) Addition to Tax for Failure To Comply With Section.--

  ``For addition to tax in case of partner's disregard of requirements 
of this section, see part II of subchapter A of chapter 68.

     ``SEC. 6242. PROCEDURES FOR TAKING PARTNERSHIP ADJUSTMENTS 
                   INTO ACCOUNT.

       ``(a) Adjustments Flow Through to Partners for Year in 
     Which Adjustment Takes Effect.--
       ``(1) In general.--If any partnership adjustment with 
     respect to any partnership item takes effect (within the 
     meaning of subsection (d)(2)) during any partnership taxable 
     year and if an election under paragraph (2) does not apply to 
     such adjustment, such adjustment shall be taken into 
     account in determining the amount of such item for the 
     partnership taxable year in which such adjustment takes 
     effect. In applying this title to any person who is 
     (directly or indirectly) a partner in such partnership 
     during such partnership taxable year, such adjustment 
     shall be treated as an item actually arising during such 
     taxable year.
       ``(2) Partnership liable in certain cases.--If--
       ``(A) a partnership elects under this paragraph to not take 
     an adjustment into account under paragraph (1),
       ``(B) a partnership does not make such an election but in 
     filing its return for any partnership taxable year fails to 
     take fully into account any partnership adjustment as 
     required under paragraph (1), or
       ``(C) any partnership adjustment involves a reduction in a 
     credit which exceeds the amount of such credit determined for 
     the partnership taxable year in which the adjustment takes 
     effect,

     the partnership shall pay to the Secretary an amount 
     determined by applying the rules of subsection (b)(4) to the 
     adjustments not so taken into account and any excess referred 
     to in subparagraph (C). A partnership may make an election 
     under subparagraph (A) only if such partnership meets such 
     requirements as the Secretary may prescribe to assure payment 
     of such amount.
       ``(3) Offsetting adjustments taken into account.--If a 
     partnership adjustment requires another adjustment in a 
     taxable year after the adjusted year and before the 
     partnership taxable year in which such partnership adjustment 
     takes effect, such other adjustment shall be taken into 
     account under this subsection for the partnership taxable 
     year in which such partnership adjustment takes effect.
       ``(4) Coordination with part ii.--Amounts taken into 
     account under this subsection for any partnership taxable 
     year shall continue to be treated as adjustments for the 
     adjusted year for purposes of determining whether such 
     amounts may be readjusted under part II.
       ``(b) Partnership Liable for Interest and Penalties.--
       ``(1) In general.--If a partnership adjustment takes effect 
     during any partnership taxable year and such adjustment 
     results in an imputed underpayment for the adjusted year, the 
     partnership--
       ``(A) shall pay to the Secretary interest computed under 
     paragraph (2), and
       ``(B) shall be liable for any penalty, addition to tax, or 
     additional amount as provided in paragraph (3).
       ``(2) Determination of amount of interest.--The interest 
     computed under this paragraph with respect to any partnership 
     adjustment is the interest which would be determined under 
     chapter 67--
       ``(A) on the imputed underpayment determined under 
     paragraph (4) with respect to such adjustment,
       ``(B) for the period beginning on the day after the return 
     due date for the adjusted year and ending on the return due 
     date for the partnership taxable year in which such 
     adjustment takes effect (or, if earlier, in the case of any 
     adjustment to which subsection (a)(2) applies, the date on 
     which the payment under subsection (a)(2) is made).

     Proper adjustments in the amount determined under the 
     preceding sentence shall be made for adjustments required for 
     partnership taxable years after the adjusted year and before 
     the year in which the partnership adjustment takes effect by 
     reason of such partnership adjustment.
       ``(3) Penalties.--A partnership shall be liable for any 
     penalty, addition to tax, or additional amount for which it 
     would have 

[[Page H11123]]

     been liable if such partnership had been an individual 
     subject to tax under chapter 1 for the adjusted year and the 
     imputed underpayment determined under paragraph (4) were an 
     actual underpayment (or understatement) for such year.
       ``(4) Imputed underpayment.--For purposes of this 
     subsection, the imputed underpayment determined under this 
     paragraph with respect to any partnership adjustment is the 
     underpayment (if any) which would result--
       ``(A) by netting all adjustments to items of income, gain, 
     loss, or deduction and by treating any net increase in income 
     as an underpayment equal to the amount of such net increase 
     multiplied by the highest rate of tax in effect under section 
     1 or 11 for the adjusted year, and
       ``(B) by taking adjustments to credits into account as 
     increases or decreases (whichever is appropriate) in the 
     amount of tax.

     For purposes of the preceding sentence, any net decrease in a 
     loss shall be treated as an increase in income and a similar 
     rule shall apply to a net increase in a loss.
       ``(c) Administrative Provisions.--
       ``(1) In general.--Any payment required by subsection 
     (a)(2) or (b)(1)(A)--
       ``(A) shall be assessed and collected in the same manner as 
     if it were a tax imposed by subtitle C, and
       ``(B) shall be paid on or before the return due date for 
     the partnership taxable year in which the partnership 
     adjustment takes effect.
       ``(2) Interest.--For purposes of determining interest, any 
     payment required by subsection (a)(2) or (b)(1)(A) shall be 
     treated as an underpayment of tax.
       ``(3) Penalties.--
       ``(A) In general.--In the case of any failure by any 
     partnership to pay on the date prescribed therefor any amount 
     required by subsection (a)(2) or (b)(1)(A), there is hereby 
     imposed on such partnership a penalty of 10 percent of the 
     underpayment. For purposes of the preceding sentence, the 
     term `underpayment' means the excess of any payment required 
     under this section over the amount (if any) paid on or before 
     the date prescribed therefor.
       ``(B) Accuracy-related and fraud penalties made 
     applicable.--For purposes of part II of subchapter A of 
     chapter 68, any payment required by subsection (a)(2) shall 
     be treated as an underpayment of tax.
       ``(d) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Partnership adjustment.--The term `partnership 
     adjustment' means any adjustment in the amount of any 
     partnership item of a large partnership.
       ``(2) When adjustment takes effect.--A partnership 
     adjustment takes effect--
       ``(A) in the case of an adjustment pursuant to the decision 
     of a court in a proceeding brought under part II, when such 
     decision becomes final,
       ``(B) in the case of an adjustment pursuant to any 
     administrative adjustment request under section 6251, when 
     such adjustment is allowed by the Secretary, or
       ``(C) in any other case, when such adjustment is made.
       ``(3) Adjusted year.--The term `adjusted year' means the 
     partnership taxable year to which the item being adjusted 
     relates.
       ``(4) Return due date.--The term `return due date' means, 
     with respect to any taxable year, the date prescribed for 
     filing the partnership return for such taxable year 
     (determined without regard to extensions).
       ``(5) Adjustments involving changes in character.--Under 
     regulations, appropriate adjustments in the application of 
     this section shall be made for purposes of taking into 
     account partnership adjustments which involve a change in the 
     character of any item of income, gain, loss, or deduction.
       ``(e) Payments Nondeductible.--No deduction shall be 
     allowed under subtitle A for any payment required to be made 
     by a large partnership under this section.

                ``PART II--PARTNERSHIP LEVEL ADJUSTMENTS

``Subpart A. Adjustments by Secretary.
``Subpart B. Claims for adjustments by partnership.

                 ``Subpart A--Adjustments by Secretary

``Sec. 6245. Secretarial authority.
``Sec. 6246. Restrictions on partnership adjustments.
``Sec. 6247. Judicial review of partnership adjustment.
``Sec. 6248. Period of limitations for making adjustments.

     ``SEC. 6245. SECRETARIAL AUTHORITY.

       ``(a) General Rule.--The Secretary is authorized and 
     directed to make adjustments at the partnership level in any 
     partnership item to the extent necessary to have such item be 
     treated in the manner required.
       ``(b) Notice of Partnership Adjustment.--
       ``(1) In general.--If the Secretary determines that a 
     partnership adjustment is required, the Secretary is 
     authorized to send notice of such adjustment to the 
     partnership by certified mail or registered mail. Such notice 
     shall be sufficient if mailed to the partnership at its last 
     known address even if the partnership has terminated its 
     existence.
       ``(2) Further notices restricted.--If the Secretary mails a 
     notice of a partnership adjustment to any partnership for any 
     partnership taxable year and the partnership files a petition 
     under section 6247 with respect to such notice, in the 
     absence of a showing of fraud, malfeasance, or 
     misrepresentation of a material fact, the Secretary shall not 
     mail another such notice to such partnership with respect to 
     such taxable year.
       ``(3) Authority to rescind notice with partnership 
     consent.--The Secretary may, with the consent of the 
     partnership, rescind any notice of a partnership adjustment 
     mailed to such partnership. Any notice so rescinded shall not 
     be treated as a notice of a partnership adjustment, for 
     purposes of this section, section 6246, and section 6247, and 
     the taxpayer shall have no right to bring a proceeding under 
     section 6247 with respect to such notice. Nothing in this 
     subsection shall affect any suspension of the running of any 
     period of limitations during any period during which the 
     rescinded notice was outstanding.

     ``SEC. 6246. RESTRICTIONS ON PARTNERSHIP ADJUSTMENTS.

       ``(a) General Rule.--Except as otherwise provided in this 
     chapter, no adjustment to any partnership item may be made 
     (and no levy or proceeding in any court for the collection of 
     any amount resulting from such adjustment may be made, begun 
     or prosecuted) before--
       ``(1) the close of the 90th day after the day on which a 
     notice of a partnership adjustment was mailed to the 
     partnership, and
       ``(2) if a petition is filed under section 6247 with 
     respect to such notice, the decision of the court has become 
     final.
       ``(b) Premature Action May Be Enjoined.--Notwithstanding 
     section 7421(a), any action which violates subsection (a) may 
     be enjoined in the proper court, including the Tax Court. The 
     Tax Court shall have no jurisdiction to enjoin any action 
     under this subsection unless a timely petition has been filed 
     under section 6247 and then only in respect of the 
     adjustments that are the subject of such petition.
       ``(c) Exceptions to Restrictions on Adjustments.--
       ``(1) Adjustments arising out of math or clerical errors.--
       ``(A) In general.--If the partnership is notified that, on 
     account of a mathematical or clerical error appearing on the 
     partnership return, an adjustment to a partnership item is 
     required, rules similar to the rules of paragraphs (1) and 
     (2) of section 6213(b) shall apply to such adjustment.
       ``(B) Special rule.--If a large partnership is a partner in 
     another large partnership, any adjustment on account of such 
     partnership's failure to comply with the requirements of 
     section 6241(a) with respect to its interest in such other 
     partnership shall be treated as an adjustment referred to in 
     subparagraph (A), except that paragraph (2) of section 
     6213(b) shall not apply to such adjustment.
       ``(2) Partnership may waive restrictions.--The partnership 
     shall at any time (whether or not a notice of partnership 
     adjustment has been issued) have the right, by a signed 
     notice in writing filed with the Secretary, to waive the 
     restrictions provided in subsection (a) on the making of any 
     partnership adjustment.
       ``(d) Limit Where No Proceeding Begun.--If no proceeding 
     under section 6247 is begun with respect to any notice of a 
     partnership adjustment during the 90-day period described in 
     subsection (a), the amount for which the partnership is 
     liable under section 6242 (and any increase in any partner's 
     liability for tax under chapter 1 by reason of any adjustment 
     under section 6242(a)) shall not exceed the amount determined 
     in accordance with such notice.

     ``SEC. 6247. JUDICIAL REVIEW OF PARTNERSHIP ADJUSTMENT.

       ``(a) General Rule.--Within 90 days after the date on which 
     a notice of a partnership adjustment is mailed to the 
     partnership with respect to any partnership taxable year, the 
     partnership may file a petition for a readjustment of the 
     partnership items for such taxable year with--
       ``(1) the Tax Court,
       ``(2) the district court of the United States for the 
     district in which the partnership's principal place of 
     business is located, or
       ``(3) the Claims Court.
       ``(b) Jurisdictional Requirement for Bringing Action in 
     District Court or Claims Court.--
       ``(1) In general.--A readjustment petition under this 
     section may be filed in a district court of the United States 
     or the Claims Court only if the partnership filing the 
     petition deposits with the Secretary, on or before the date 
     the petition is filed, the amount for which the partnership 
     would be liable under section 6242(b) (as of the date of the 
     filing of the petition) if the partnership items were 
     adjusted as provided by the notice of partnership adjustment. 
     The court may by order provide that the jurisdictional 
     requirements of this paragraph are satisfied where there has 
     been a good faith attempt to satisfy such requirement and any 
     shortfall of the amount required to be deposited is timely 
     corrected.
       ``(2) Interest payable.--Any amount deposited under 
     paragraph (1), while deposited, shall not be treated as a 
     payment of tax for purposes of this title (other than chapter 
     67).
       ``(c) Scope of Judicial Review.--A court with which a 
     petition is filed in accordance with this section shall have 
     jurisdiction to determine all partnership items of the 
     partnership for the partnership taxable year to which the 
     notice of partnership adjustment relates and the proper 
     allocation of such 

[[Page H11124]]

     items among the partners (and the applicability of any 
     penalty, addition to tax, or additional amount for which the 
     partnership may be liable under section 6242(b)).
       ``(d) Determination of Court Reviewable.--Any determination 
     by a court under this section shall have the force and effect 
     of a decision of the Tax Court or a final judgment or decree 
     of the district court or the Claims Court, as the case may 
     be, and shall be reviewable as such. The date of any such 
     determination shall be treated as being the date of the 
     court's order entering the decision.
       ``(e) Effect of Decision Dismissing Action.--If an action 
     brought under this section is dismissed other than by reason 
     of a rescission under section 6245(b)(3), the decision of the 
     court dismissing the action shall be considered as its 
     decision that the notice of partnership adjustment is 
     correct, and an appropriate order shall be entered in the 
     records of the court.

     ``SEC. 6248. PERIOD OF LIMITATIONS FOR MAKING ADJUSTMENTS.

       ``(a) General Rule.--Except as otherwise provided in this 
     section, no adjustment under this subpart to any partnership 
     item for any partnership taxable year may be made after the 
     date which is 3 years after the later of--
       ``(1) the date on which the partnership return for such 
     taxable year was filed, or
       ``(2) the last day for filing such return for such year 
     (determined without regard to extensions).
       ``(b) Extension by Agreement.--The period described in 
     subsection (a) (including an extension period under this 
     subsection) may be extended by an agreement entered into by 
     the Secretary and the partnership before the expiration of 
     such period.
       ``(c) Special Rule in Case of Fraud, Etc.--
       ``(1) False return.--In the case of a false or fraudulent 
     partnership return with intent to evade tax, the adjustment 
     may be made at any time.
       ``(2) Substantial omission of income.--If any partnership 
     omits from gross income an amount properly includible therein 
     which is in excess of 25 percent of the amount of gross 
     income stated in its return, subsection (a) shall be 
     applied by substituting `6 years' for `3 years'.
       ``(3) No return.--In the case of a failure by a partnership 
     to file a return for any taxable year, the adjustment may be 
     made at any time.
       ``(4) Return filed by secretary.--For purposes of this 
     section, a return executed by the Secretary under subsection 
     (b) of section 6020 on behalf of the partnership shall not be 
     treated as a return of the partnership.
       ``(d) Suspension When Secretary Mails Notice of 
     Adjustment.--If notice of a partnership adjustment with 
     respect to any taxable year is mailed to the partnership, the 
     running of the period specified in subsection (a) (as 
     modified by the other provisions of this section) shall be 
     suspended--
       ``(1) for the period during which an action may be brought 
     under section 6247 (and, if a petition is filed under section 
     6247 with respect to such notice, until the decision of the 
     court becomes final), and
       ``(2) for 1 year thereafter.

           ``Subpart B--Claims for Adjustments by Partnership

``Sec. 6251. Administrative adjustment requests.
``Sec. 6252. Judicial review where administrative adjustment request is 
              not allowed in full.

     ``SEC. 6251. ADMINISTRATIVE ADJUSTMENT REQUESTS.

       ``(a) General Rule.--A partnership may file a request for 
     an administrative adjustment of partnership items for any 
     partnership taxable year at any time which is--
       ``(1) within 3 years after the later of--
       ``(A) the date on which the partnership return for such 
     year is filed, or
       ``(B) the last day for filing the partnership return for 
     such year (determined without regard to extensions), and
       ``(2) before the mailing to the partnership of a notice of 
     a partnership adjustment with respect to such taxable year.
       ``(b) Secretarial Action.--If a partnership files an 
     administrative adjustment request under subsection (a), the 
     Secretary may allow any part of the requested adjustments.
       ``(c) Special Rule in Case of Extension Under Section 
     6248.--If the period described in section 6248(a) is extended 
     pursuant to an agreement under section 6248(b), the period 
     prescribed by subsection (a)(1) shall not expire before the 
     date 6 months after the expiration of the extension under 
     section 6248(b).

     ``SEC. 6252. JUDICIAL REVIEW WHERE ADMINISTRATIVE ADJUSTMENT 
                   REQUEST IS NOT ALLOWED IN FULL.

       ``(a) In General.--If any part of an administrative 
     adjustment request filed under section 6251 is not allowed by 
     the Secretary, the partnership may file a petition for an 
     adjustment with respect to the partnership items to which 
     such part of the request relates with--
       ``(1) the Tax Court,
       ``(2) the district court of the United States for the 
     district in which the principal place of business of the 
     partnership is located, or
       ``(3) the Claims Court.
       ``(b) Period for Filing Petition.--A petition may be filed 
     under subsection (a) with respect to partnership items for a 
     partnership taxable year only--
       ``(1) after the expiration of 6 months from the date of 
     filing of the request under section 6251, and
       ``(2) before the date which is 2 years after the date of 
     such request.

     The 2-year period set forth in paragraph (2) shall be 
     extended for such period as may be agreed upon in writing by 
     the partnership and the Secretary.
       ``(c) Coordination With Subpart A.--
       ``(1) Notice of partnership adjustment before filing of 
     petition.--No petition may be filed under this section after 
     the Secretary mails to the partnership a notice of a 
     partnership adjustment for the partnership taxable year to 
     which the request under section 6251 relates.
       ``(2) Notice of partnership adjustment after filing but 
     before hearing of petition.--If the Secretary mails to the 
     partnership a notice of a partnership adjustment for the 
     partnership taxable year to which the request under section 
     6251 relates after the filing of a petition under this 
     subsection but before the hearing of such petition, such 
     petition shall be treated as an action brought under section 
     6247 with respect to such notice, except that subsection (b) 
     of section 6247 shall not apply.
       ``(3) Notice must be before expiration of statute of 
     limitations.--A notice of a partnership adjustment for the 
     partnership taxable year shall be taken into account under 
     paragraphs (1) and (2) only if such notice is mailed before 
     the expiration of the period prescribed by section 6248 for 
     making adjustments to partnership items for such taxable 
     year.
       ``(d) Scope of Judicial Review.--Except in the case 
     described in paragraph (2) of subsection (c), a court with 
     which a petition is filed in accordance with this section 
     shall have jurisdiction to determine only those partnership 
     items to which the part of the request under section 6251 not 
     allowed by the Secretary relates and those items with respect 
     to which the Secretary asserts adjustments as offsets to the 
     adjustments requested by the partnership.
       ``(e) Determination of Court Reviewable.--Any determination 
     by a court under this subsection shall have the force and 
     effect of a decision of the Tax Court or a final judgment or 
     decree of the district court or the Claims Court, as the case 
     may be, and shall be reviewable as such. The date of any such 
     determination shall be treated as being the date of the 
     court's order entering the decision.

               ``PART III--DEFINITIONS AND SPECIAL RULES

``Sec. 6255. Definitions and special rules.

     ``SEC. 6255. DEFINITIONS AND SPECIAL RULES.

       ``(a) Definitions.--For purposes of this subchapter--
       ``(1) Large partnership.--The term `large partnership' has 
     the meaning given to such term by section 775 without regard 
     to section 776(a).
       ``(2) Partnership item.--The term `partnership item' has 
     the meaning given to such term by section 6231(a)(3).
       ``(b) Partners Bound by Actions of Partnership, Etc.--
       ``(1) Designation of partner.--Each large partnership shall 
     designate (in the manner prescribed by the Secretary) a 
     partner (or other person) who shall have the sole authority 
     to act on behalf of such partnership under this subchapter. 
     In any case in which such a designation is not in effect, the 
     Secretary may select any partner as the partner with such 
     authority.
       ``(2) Binding effect.--A large partnership and all partners 
     of such partnership shall be bound--
       ``(A) by actions taken under this subchapter by the 
     partnership, and
       ``(B) by any decision in a proceeding brought under this 
     subchapter.
       ``(c) Partnerships Having Principal Place of Business 
     Outside the United States.--For purposes of sections 6247 and 
     6252, a principal place of business located outside the 
     United States shall be treated as located in the District of 
     Columbia.
       ``(d) Treatment Where Partnership Ceases To Exist.--If a 
     partnership ceases to exist before a partnership adjustment 
     under this subchapter takes effect, such adjustment shall be 
     taken into account by the former partners of such partnership 
     under regulations prescribed by the Secretary.
       ``(e) Date Decision Becomes Final.--For purposes of this 
     subchapter, the principles of section 7481(a) shall be 
     applied in determining the date on which a decision of a 
     district court or the Claims Court becomes final.
       ``(f) Partnerships in Cases Under Title 11 of the United 
     States Code.--The running of any period of limitations 
     provided in this subchapter on making a partnership 
     adjustment (or provided by section 6501 or 6502 on the 
     assessment or collection of any amount required to be paid 
     under section 6242) shall, in a case under title 11 of the 
     United States Code, be suspended during the period during 
     which the Secretary is prohibited by reason of such case from 
     making the adjustment (or assessment or collection) and--
       ``(1) for adjustment or assessment, 60 days thereafter, and
       ``(2) for collection, 6 months thereafter.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the provisions 
     of this subchapter, including regulations--
       ``(1) to prevent abuse through manipulation of the 
     provisions of this subchapter, and
       ``(2) providing that this subchapter shall not apply to any 
     case described in section 6231(c)(1) (or the regulations 
     prescribed thereunder) where the application of this 

[[Page H11125]]

     subchapter to such a case would interfere with the effective 
     and efficient enforcement of this title.

     In any case to which this subchapter does not apply by reason 
     of paragraph (2), rules similar to the rules of sections 
     6229(f) and 6255(f) shall apply.''
       (b) Clerical Amendment.--The table of subchapters for 
     chapter 63 is amended by adding at the end the following new 
     item:

           ``Subchapter D. Treatment of large partnerships.''

     SEC. 14303. DUE DATE FOR FURNISHING INFORMATION TO PARTNERS 
                   OF LARGE PARTNERSHIPS.

       (a) General Rule.--Subsection (b) of section 6031 (relating 
     to copies to partners) is amended by adding at the end the 
     following new sentence: ``In the case of a large partnership 
     (as defined in sections 775 and 776(a)), such information 
     shall be furnished on or before the first March 15 following 
     the close of such taxable year.''
       (b) Treatment as Information Return.--Section 6724 is 
     amended by adding at the end the following new subsection:
       ``(e) Special Rule for Certain Partnership Returns.--If any 
     partnership return under section 6031(a) is required under 
     section 6011(e) to be filed on magnetic media or in other 
     machine-readable form, for purposes of this part, each 
     schedule required to be included with such return with 
     respect to each partner shall be treated as a separate 
     information return.''

     SEC. 14304. RETURNS MAY BE REQUIRED ON MAGNETIC MEDIA.

       Paragraph (2) of section 6011(e) (relating to returns on 
     magnetic media) is amended by adding at the end the following 
     new sentence:
     ``Notwithstanding the preceding sentence, the Secretary shall 
     require partnerships having more than 100 partners to file 
     returns on magnetic media.''

     SEC. 14305. TREATMENT OF PARTNERSHIP ITEMS OF INDIVIDUAL 
                   RETIREMENT ACCOUNTS.

       Subsection (b) of section 6012 is amended by adding at the 
     end the following new paragraph:
       ``(6) IRA share of partnership income.--In the case of a 
     trust which is exempt from taxation under section 408(e), for 
     purposes of this section, the trust's distributive share of 
     items of gross income and gain of any partnership to which 
     subchapter C or D of chapter 63 applies shall be treated 
     as equal to the trust's distributive share of the taxable 
     income of such partnership.''

     SEC. 14306. EFFECTIVE DATE.

       The amendments made by this part shall apply to partnership 
     taxable years beginning after December 31, 1995.

     PART II--PROVISIONS RELATED TO CERTAIN PARTNERSHIP PROCEEDINGS

     SEC. 14311. TREATMENT OF PARTNERSHIP ITEMS IN DEFICIENCY 
                   PROCEEDINGS.

       (a) In General.--Subchapter C of chapter 63 is amended by 
     adding at the end the following new section:

     ``SEC. 6234. DECLARATORY JUDGMENT RELATING TO TREATMENT OF 
                   ITEMS OTHER THAN PARTNERSHIP ITEMS WITH RESPECT 
                   TO AN OVERSHELTERED RETURN.

       ``(a) General Rule.--If--
       ``(1) a taxpayer files an oversheltered return for a 
     taxable year,
       ``(2) the Secretary makes a determination with respect to 
     the treatment of items (other than partnership items) of such 
     taxpayer for such taxable year, and
       ``(3) the adjustments resulting from such determination do 
     not give rise to a deficiency (as defined in section 6211) 
     but would give rise to a deficiency if there were no net loss 
     from partnership items,

     the Secretary is authorized to send a notice of adjustment 
     reflecting such determination to the taxpayer by certified or 
     registered mail.
       ``(b) Oversheltered Return.--For purposes of this section, 
     the term `oversheltered return' means an income tax return 
     which--
       ``(1) shows no taxable income for the taxable year, and
       ``(2) shows a net loss from partnership items.
       ``(c) Judicial Review in the Tax Court.--Within 90 days, or 
     150 days if the notice is addressed to a person outside the 
     United States, after the day on which the notice of 
     adjustment authorized in subsection (a) is mailed to the 
     taxpayer, the taxpayer may file a petition with the Tax Court 
     for redetermination of the adjustments. Upon the filing of 
     such a petition, the Tax Court shall have jurisdiction to 
     make a declaration with respect to all items (other than 
     partnership items and affected items which require partner 
     level determinations as described in section 
     6230(a)(2)(A)(i)) for the taxable year to which the notice of 
     adjustment relates, in accordance with the principles of 
     section 6214(a). Any such declaration shall have the force 
     and effect of a decision of the Tax Court and shall be 
     reviewable as such.
       ``(d) Failure To File Petition.--
       ``(1) In general.--Except as provided in paragraph (2), if 
     the taxpayer does not file a petition with the Tax Court 
     within the time prescribed in subsection (c), the 
     determination of the Secretary set forth in the notice of 
     adjustment that was mailed to the taxpayer shall be deemed to 
     be correct.
       ``(2) Exception.--Paragraph (1) shall not apply after the 
     date that the taxpayer--
       ``(A) files a petition with the Tax Court within the time 
     prescribed in subsection (c) with respect to a subsequent 
     notice of adjustment relating to the same taxable year, or
       ``(B) files a claim for refund of an overpayment of tax 
     under section 6511 for the taxable year involved.

     If a claim for refund is filed by the taxpayer, then solely 
     for purposes of determining (for the taxable year involved) 
     the amount of any computational adjustment in connection with 
     a partnership proceeding under this subchapter (other than 
     under this section) or the amount of any deficiency 
     attributable to affected items in a proceeding under section 
     6230(a)(2), the items that are the subject of the notice of 
     adjustment shall be presumed to have been correctly reported 
     on the taxpayer's return during the pendency of the refund 
     claim (and, if within the time prescribed by section 6532 the 
     taxpayer commences a civil action for refund under section 
     7422, until the decision in the refund action becomes final).
       ``(e) Limitations Period.--
       ``(1) In general.--Any notice to a taxpayer under 
     subsection (a) shall be mailed before the expiration of the 
     period prescribed by section 6501 (relating to the period of 
     limitations on assessment).
       ``(2) Suspension when secretary mails notice of 
     adjustment.--If the Secretary mails a notice of adjustment to 
     the taxpayer for a taxable year, the period of limitations on 
     the making of assessments shall be suspended for the period 
     during which the Secretary is prohibited from making the 
     assessment (and, in any event, if a proceeding in respect of 
     the notice of adjustment is placed on the docket of the Tax 
     Court, until the decision of the Tax Court becomes final), 
     and for 60 days thereafter.
       ``(3) Restrictions on assessment.--Except as otherwise 
     provided in section 6851, 6852, or 6861, no assessment of a 
     deficiency with respect to any tax imposed by subtitle A 
     attributable to any item (other than a partnership item or 
     any item affected by a partnership item) shall be made--
       ``(A) until the expiration of the applicable 90-day or 150-
     day period set forth in subsection (c) for filing a petition 
     with the Tax Court, or
       ``(B) if a petition has been filed with the Tax Court, 
     until the decision of the Tax Court has become final.
       ``(f) Further Notices of Adjustment Restricted.--If the 
     Secretary mails a notice of adjustment to the taxpayer for a 
     taxable year and the taxpayer files a petition with the Tax 
     Court within the time prescribed in subsection (c), the 
     Secretary may not mail another such notice to the taxpayer 
     with respect to the same taxable year in the absence of a 
     showing of fraud, malfeasance, or misrepresentation of a 
     material fact.
       ``(g) Coordination With Other Proceedings Under This 
     Subchapter.--
       ``(1) In general.--The treatment of any item that has been 
     determined pursuant to subsection (c) or (d) shall be taken 
     into account in determining the amount of any computational 
     adjustment that is made in connection with a partnership 
     proceeding under this subchapter (other than under this 
     section), or the amount of any deficiency attributable to 
     affected items in a proceeding under section 6230(a)(2), for 
     the taxable year involved. Notwithstanding any other law or 
     rule of law pertaining to the period of limitations on the 
     making of assessments, for purposes of the preceding 
     sentence, any adjustment made in accordance with this section 
     shall be taken into account regardless of whether any 
     assessment has been made with respect to such adjustment.
       ``(2) Special rule in case of computational adjustment.--In 
     the case of a computational adjustment that is made in 
     connection with a partnership proceeding under this 
     subchapter (other than under this section), the provisions of 
     paragraph (1) shall apply only if the computational 
     adjustment is made within the period prescribed by section 
     6229 for assessing any tax under subtitle A which is 
     attributable to any partnership item or affected item for the 
     taxable year involved.
       ``(3) Conversion to deficiency proceeding.--If--
       ``(A) after the notice referred to in subsection (a) is 
     mailed to a taxpayer for a taxable year but before the 
     expiration of the period for filing a petition with the Tax 
     Court under subsection (c) (or, if a petition is filed with 
     the Tax Court, before the Tax Court makes a declaration for 
     that taxable year), the treatment of any partnership item for 
     the taxable year is finally determined, or any such item 
     ceases to be a partnership item pursuant to section 6231(b), 
     and
       ``(B) as a result of that final determination or cessation, 
     a deficiency can be determined with respect to the items that 
     are the subject of the notice of adjustment,

     the notice of adjustment shall be treated as a notice of 
     deficiency under section 6212 and any petition filed in 
     respect of the notice shall be treated as an action brought 
     under section 6213.
       ``(4) Finally determined.--For purposes of this subsection, 
     the treatment of partnership items shall be treated as 
     finally determined if--
       ``(A) the Secretary enters into a settlement agreement 
     (within the meaning of section 6224) with the taxpayer 
     regarding such items,
       ``(B) a notice of final partnership administrative 
     adjustment has been issued and--

[[Page H11126]]

       ``(i) no petition has been filed under section 6226 and the 
     time for doing so has expired, or
       ``(ii) a petition has been filed under section 6226 and the 
     decision of the court has become final, or
       ``(C) the period within which any tax attributable to such 
     items may be assessed against the taxpayer has expired.
       ``(h) Special Rules if Secretary Incorrectly Determines 
     Applicable Procedure.--
       ``(1) Special rule if secretary erroneously mails notice of 
     adjustment.--If the Secretary erroneously determines that 
     subchapter B does not apply to a taxable year of a taxpayer 
     and consistent with that determination timely mails a notice 
     of adjustment to the taxpayer pursuant to subsection (a) of 
     this section, the notice of adjustment shall be treated as a 
     notice of deficiency under section 6212 and any petition that 
     is filed in respect of the notice shall be treated as an 
     action brought under section 6213.
       ``(2) Special rule if secretary erroneously mails notice of 
     deficiency.--If the Secretary erroneously determines that 
     subchapter B applies to a taxable year of a taxpayer and 
     consistent with that determination timely mails a notice of 
     deficiency to the taxpayer pursuant to section 6212, the 
     notice of deficiency shall be treated as a notice of 
     adjustment under subsection (a) and any petition that is 
     filed in respect of the notice shall be treated as an action 
     brought under subsection (c).''
       (b) Treatment of Partnership Items in Deficiency 
     Proceedings.--Section 6211 (defining deficiency) is amended 
     by adding at the end the following new subsection:
       ``(c) Coordination With Subchapter C.--In determining the 
     amount of any deficiency for purposes of this subchapter, 
     adjustments to partnership items shall be made only as 
     provided in subchapter C.''
       (c) Clerical Amendment.--The table of sections for 
     subchapter C of chapter 63 is amended by adding at the end 
     the following new item:

``Sec. 6234. Declaratory judgment relating to treatment of items other 
              than partnership items with respect to an oversheltered 
              return.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to partnership taxable years ending after the 
     date of the enactment of this Act.

     SEC. 14312. PARTNERSHIP RETURN TO BE DETERMINATIVE OF AUDIT 
                   PROCEDURES TO BE FOLLOWED.

       (a) In General.--Section 6231 (relating to definitions and 
     special rules) is amended by adding at the end the following 
     new subsection:
       ``(g) Partnership Return To Be Determinative of Whether 
     Subchapter Applies.--
       ``(1) Determination that subchapter applies.--If, on the 
     basis of a partnership return for a taxable year, the 
     Secretary reasonably determines that this subchapter applies 
     to such partnership for such year but such determination is 
     erroneous, then the provisions of this subchapter are hereby 
     extended to such partnership (and its items) for such taxable 
     year and to partners of such partnership.
       ``(2) Determination that subchapter does not apply.--If, on 
     the basis of a partnership return for a taxable year, the 
     Secretary reasonably determines that this subchapter does not 
     apply to such partnership for such year but such 
     determination is erroneous, then the provisions of this 
     subchapter shall not apply to such partnership (and its 
     items) for such taxable year or to partners of such 
     partnership.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to partnership taxable years ending after the 
     date of the enactment of this Act.

     SEC. 14313. PROVISIONS RELATING TO STATUTE OF LIMITATIONS.

       (a) Suspension of Statute Where Untimely Petition Filed.--
     Paragraph (1) of section 6229(d) (relating to suspension 
     where Secretary makes administrative adjustment) is amended 
     by striking all that follows ``section 6226'' and inserting 
     the following: ``(and, if a petition is filed under section 
     6226 with respect to such administrative adjustment, until 
     the decision of the court becomes final), and''.
       (b) Suspension of Statute During Bankruptcy Proceeding.--
     Section 6229 is amended by adding at the end the following 
     new subsection:
       ``(h) Suspension During Pendency of Bankruptcy 
     Proceeding.--If a petition is filed naming a partner as a 
     debtor in a bankruptcy proceeding under title 11 of the 
     United States Code, the running of the period of limitations 
     provided in this section with respect to such partner shall 
     be suspended--
       ``(1) for the period during which the Secretary is 
     prohibited by reason of such bankruptcy proceeding from 
     making an assessment, and
       ``(2) for 60 days thereafter.''
       (c) Tax Matters Partner in Bankruptcy.--Section 6229(b) is 
     amended by redesignating paragraph (2) as paragraph (3) and 
     by inserting after paragraph (1) the following new paragraph:
       ``(2) Special rule with respect to debtors in title 11 
     cases.--Notwithstanding any other law or rule of law, if an 
     agreement is entered into under paragraph (1)(B) and the 
     agreement is signed by a person who would be the tax matters 
     partner but for the fact that, at the time that the agreement 
     is executed, the person is a debtor in a bankruptcy 
     proceeding under title 11 of the United States Code, such 
     agreement shall be binding on all partners in the partnership 
     unless the Secretary has been notified of the bankruptcy 
     proceeding in accordance with regulations prescribed by the 
     Secretary.''
       (d) Effective Dates.--
       (1) Subsections (a) and (b).--The amendments made by 
     subsections (a) and (b) shall apply to partnership taxable 
     years with respect to which the period under section 6229 of 
     the Internal Revenue Code of 1986 for assessing tax has not 
     expired on or before the date of the enactment of this Act.
       (2) Subsection (c).--The amendment made by subsection (c) 
     shall apply to agreements entered into after the date of the 
     enactment of this Act.

     SEC. 14314. EXPANSION OF SMALL PARTNERSHIP EXCEPTION.

       (a) In General.--Clause (i) of section 6231(a)(1)(B) 
     (relating to exception for small partnerships) is amended to 
     read as follows:
       ``(i) In general.--The term `partnership' shall not include 
     any partnership having 10 or fewer partners each of whom is 
     an individual (other than a nonresident alien), a C 
     corporation, or an estate of a deceased partner. For purposes 
     of the preceding sentence, a husband and wife (and their 
     estates) shall be treated as 1 partner.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to partnership taxable years ending after the 
     date of the enactment of this Act.

     SEC. 14315. EXCLUSION OF PARTIAL SETTLEMENTS FROM 1-YEAR 
                   LIMITATION ON ASSESSMENT.

       (a) In General.--Subsection (f) of section 6229 (relating 
     to items becoming nonpartnership items) is amended--
       (1) by striking ``(f) Items Becoming Nonpartnership 
     Items.--If'' and inserting the following:
       ``(f) Special Rules.--
       ``(1) Items becoming nonpartnership items.--If'',
       (2) by moving the text of such subsection 2 ems to the 
     right, and
       (3) by adding at the end the following new paragraph:
       ``(2) Special rule for partial settlement agreements.--If a 
     partner enters into a settlement agreement with the Secretary 
     with respect to the treatment of some of the partnership 
     items in dispute for a partnership taxable year but other 
     partnership items for such year remain in dispute, the period 
     of limitations for assessing any tax attributable to the 
     settled items shall be determined as if such agreement had 
     not been entered into.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to settlements entered into after the date of the 
     enactment of this Act.

     SEC. 14316. EXTENSION OF TIME FOR FILING A REQUEST FOR 
                   ADMINISTRATIVE ADJUSTMENT.

       (a) In General.--Section 6227 (relating to administrative 
     adjustment requests) is amended by redesignating subsections 
     (b) and (c) as subsections (c) and (d), respectively, and by 
     inserting after subsection (a) the following new subsection:
       ``(b) Special Rule in Case of Extension of Period of 
     Limitations Under Section 6229.--The period prescribed by 
     subsection (a)(1) for filing of a request for an 
     administrative adjustment shall be extended--
       ``(1) for the period within which an assessment may be made 
     pursuant to an agreement (or any extension thereof) under 
     section 6229(b), and
       ``(2) for 6 months thereafter.''
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the amendments made by 
     section 402 of the Tax Equity and Fiscal Responsibility Act 
     of 1982.

     SEC. 14317. AVAILABILITY OF INNOCENT SPOUSE RELIEF IN CONTEXT 
                   OF PARTNERSHIP PROCEEDINGS.

       (a) In General.--Subsection (a) of section 6230 is amended 
     by adding at the end the following new paragraph:
       ``(3) Special rule in case of assertion by partner's spouse 
     of innocent spouse relief.--
       ``(A) Notwithstanding section 6404(b), if the spouse of a 
     partner asserts that section 6013(e) applies with respect to 
     a liability that is attributable to any adjustment to a 
     partnership item, then such spouse may file with the 
     Secretary within 60 days after the notice of computational 
     adjustment is mailed to the spouse a request for abatement of 
     the assessment specified in such notice. Upon receipt of such 
     request, the Secretary shall abate the assessment. Any 
     reassessment of the tax with respect to which an abatement is 
     made under this subparagraph shall be subject to the 
     deficiency procedures prescribed by subchapter B. The period 
     for making any such reassessment shall not expire before the 
     expiration of 60 days after the date of such abatement.
       ``(B) If the spouse files a petition with the Tax Court 
     pursuant to section 6213 with respect to the request for 
     abatement described in subparagraph (A), the Tax Court shall 
     only have jurisdiction pursuant to this section to determine 
     whether the requirements of section 6013(e) have been 
     satisfied. For purposes of such determination, the treatment 
     of partnership items under the settlement, the final 
     partnership administrative adjustment, or the decision of the 
     court (whichever is appropriate) that gave rise to the 
     liability in question shall be conclusive.

[[Page H11127]]

       ``(C) Rules similar to the rules contained in subparagraphs 
     (B) and (C) of paragraph (2) shall apply for purposes of this 
     paragraph.''
       (b) Claims for Refund.--Subsection (c) of section 6230 is 
     amended by adding at the end the following new paragraph:
       ``(5) Rules for seeking innocent spouse relief.--
       ``(A) In general.--The spouse of a partner may file a claim 
     for refund on the ground that the Secretary failed to relieve 
     the spouse under section 6013(e) from a liability that is 
     attributable to an adjustment to a partnership item.
       ``(B) Time for filing claim.--Any claim under subparagraph 
     (A) shall be filed within 6 months after the day on which the 
     Secretary mails to the spouse the notice of computational 
     adjustment referred to in subsection (a)(3)(A).
       ``(C) Suit if claim not allowed.--If the claim under 
     subparagraph (B) is not allowed, the spouse may bring suit 
     with respect to the claim within the period specified in 
     paragraph (3).
       ``(D) Prior determinations are binding.--For purposes of 
     any claim or suit under this paragraph, the treatment of 
     partnership items under the settlement, the final partnership 
     administrative adjustment, or the decision of the court 
     (whichever is appropriate) that gave rise to the liability in 
     question shall be conclusive.''
       (c) Technical Amendments.--
       (1) Paragraph (1) of section 6230(a) is amended by striking 
     ``paragraph (2)'' and inserting ``paragraph (2) or (3)''.
       (2) Subsection (a) of section 6503 is amended by striking 
     ``section 6230(a)(2)(A)'' and inserting ``paragraph (2)(A) or 
     (3) of section 6230(a)''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect as if included in the amendments made by 
     section 402 of the Tax Equity and Fiscal Responsibility Act 
     of 1982.

     SEC. 14318. DETERMINATION OF PENALTIES AT PARTNERSHIP LEVEL.

       (a) In General.--Section 6221 (relating to tax treatment 
     determined at partnership level) is amended by striking 
     ``item'' and inserting ``item (and the applicability of any 
     penalty, addition to tax, or additional amount which relates 
     to an adjustment to a partnership item)''.
       (b) Conforming Amendments.--
       (1) Subsection (f) of section 6226 is amended--
       (A) by striking ``relates and'' and inserting ``relates,'', 
     and
       (B) by inserting before the period ``, and the 
     applicability of any penalty, addition to tax, or additional 
     amount which relates to an adjustment to a partnership 
     item''.
       (2) Clause (i) of section 6230(a)(2)(A) is amended to read 
     as follows:
       ``(i) affected items which require partner level 
     determinations (other than penalties, additions to tax, and 
     additional amounts that relate to adjustments to partnership 
     items), or''.
       (3)(A) Subparagraph (A) of section 6230(a)(3), as added by 
     section 14317, is amended by inserting ``(including any 
     liability for any penalty, addition to tax, or additional 
     amount relating to such adjustment)'' after ``partnership 
     item''.
       (B) Subparagraph (B) of such section is amended by 
     inserting ``(and the applicability of any penalties, 
     additions to tax, or additional amounts)'' after 
     ``partnership items''.
       (C) Subparagraph (A) of section 6230(c)(5), as added by 
     section 14317, is amended by inserting before the period 
     ``(including any liability for any penalties, additions to 
     tax, or additional amounts relating to such adjustment)''.
       (D) Subparagraph (D) of section 6230(c)(5), as added by 
     section 14317, is amended by inserting ``(and the 
     applicability of any penalties, additions to tax, or 
     additional amounts)'' after ``partnership items''.
       (4) Paragraph (1) of section 6230(c) is amended by striking 
     ``or'' at the end of subparagraph (A), by striking the period 
     at the end of subparagraph (B) and inserting ``, or'', and by 
     adding at the end the following new subparagraph:
       ``(C) the Secretary erroneously imposed any penalty, 
     addition to tax, or additional amount which relates to an 
     adjustment to a partnership item.''
       (5) So much of subparagraph (A) of section 6230(c)(2) as 
     precedes ``shall be filed'' is amended to read as follows:
       ``(A) Under paragraph (1) (a) or (c).--Any claim under 
     subparagraph (A) or (C) of paragraph (1)''.
       (6) Paragraph (4) of section 6230(c) is amended by adding 
     at the end the following: ``In addition, the determination 
     under the final partnership administrative adjustment or 
     under the decision of the court (whichever is appropriate) 
     concerning the applicability of any penalty, addition to tax, 
     or additional amount which relates to an adjustment to a 
     partnership item shall also be conclusive. Notwithstanding 
     the preceding sentence, the partner shall be allowed to 
     assert any partner level defenses that may apply or to 
     challenge the amount of the computational adjustment.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to partnership taxable years ending after the 
     date of the enactment of this Act.

     SEC. 14319. PROVISIONS RELATING TO COURT JURISDICTION, ETC.

       (a) Tax Court Jurisdiction To Enjoin Premature Assessments 
     of Deficiencies Attributable to Partnership Items.--
     Subsection (b) of section 6225 is amended by striking ``the 
     proper court.'' and inserting ``the proper court, including 
     the Tax Court. The Tax Court shall have no jurisdiction to 
     enjoin any action or proceeding under this subsection unless 
     a timely petition for a readjustment of the partnership items 
     for the taxable year has been filed and then only in respect 
     of the adjustments that are the subject of such petition.''
       (b) Jurisdiction To Consider Statute of Limitations With 
     Respect to Partners.--Paragraph (1) of section 6226(d) is 
     amended by adding at the end the following new sentence:
     ``Notwithstanding subparagraph (B), any person treated under 
     subsection (c) as a party to an action shall be permitted to 
     participate in such action (or file a readjustment petition 
     under subsection (b) or paragraph (2) of this subsection) 
     solely for the purpose of asserting that the period of 
     limitations for assessing any tax attributable to partnership 
     items has expired with respect to such person, and the court 
     having jurisdiction of such action shall have jurisdiction to 
     consider such assertion.''
       (c) Tax Court Jurisdiction To Determine Overpayments 
     Attributable to Affected Items.--
       (1) Paragraph (6) of section 6230(d) is amended by striking 
     ``(or an affected item)''.
       (2) Paragraph (3) of section 6512(b) is amended by adding 
     at the end the following new sentence:
     ``In the case of a credit or refund relating to an affected 
     item (within the meaning of section 6231(a)(5)), the 
     preceding sentence shall be applied by substituting the 
     periods under sections 6229 and 6230(d) for the periods under 
     section 6511(b)(2), (c), and (d).''
       (d) Venue on Appeal.--
       (1) Paragraph (1) of section 7482(b) is amended by striking 
     ``or'' at the end of subparagraph (D), by striking the period 
     at the end of subparagraph (E) and inserting ``, or'', and by 
     inserting after subparagraph (E) the following new 
     subparagraph:
       ``(F) in the case of a petition under section 6234(c)--
       ``(i) the legal residence of the petitioner if the 
     petitioner is not a corporation, and
       ``(ii) the place or office applicable under subparagraph 
     (B) if the petitioner is a corporation.''
       (2) The last sentence of section 7482(b)(1) is amended by 
     striking ``or 6228(a)'' and inserting ``, 6228(a), or 
     6234(c)''.
       (e) Other Provisions.--
       (1) Subsection (c) of section 7459 is amended by striking 
     ``or section 6228(a)'' and inserting ``, 6228(a), or 
     6234(c)''.
       (2) Subsection (o) of section 6501 is amended by adding at 
     the end the following new paragraph:
       ``(3) For declaratory judgment relating to treatment of 
     items other than partnership items with respect to an 
     oversheltered return, see section 6234.''
       (f) Effective Date.--The amendments made by this section 
     shall apply to partnership taxable years ending after the 
     date of the enactment of this Act.

     SEC. 14320. TREATMENT OF PREMATURE PETITIONS FILED BY NOTICE 
                   PARTNERS OR 5-PERCENT GROUPS.

       (a) In General.--Subsection (b) of section 6226 (relating 
     to judicial review of final partnership administrative 
     adjustments) is amended by redesignating paragraph (5) as 
     paragraph (6) and by inserting after paragraph (4) the 
     following new paragraph:
       ``(5) Treatment of premature petitions.--If--
       ``(A) a petition for a readjustment of partnership items 
     for the taxable year involved is filed by a notice partner 
     (or a 5-percent group) during the 90-day period described in 
     subsection (a), and
       ``(B) no action is brought under paragraph (1) during the 
     60-day period described therein with respect to such taxable 
     year which is not dismissed,

     such petition shall be treated for purposes of paragraph (1) 
     as filed on the last day of such 60-day period.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to petitions filed after the date of the 
     enactment of this Act.

     SEC. 14321. BONDS IN CASE OF APPEALS FROM CERTAIN PROCEEDING.

       (a) In General.--Subsection (b) of section 7485 (relating 
     to bonds to stay assessment of collection) is amended--
       (1) by inserting ``penalties,'' after ``any interest,'', 
     and
       (2) by striking ``aggregate of such deficiencies'' and 
     inserting ``aggregate liability of the parties to the 
     action''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the amendments made by 
     section 402 of the Tax Equity and Fiscal Responsibility Act 
     of 1982.

     SEC. 14322. SUSPENSION OF INTEREST WHERE DELAY IN 
                   COMPUTATIONAL ADJUSTMENT RESULTING FROM CERTAIN 
                   SETTLEMENTS.

       (a) In General.--Subsection (c) of section 6601 (relating 
     to interest on underpayment, nonpayment, or extension of time 
     for payment, of tax) is amended by adding at the end the 
     following new sentence: ``In the case of a settlement under 
     section 6224(c) which results in the conversion of 
     partnership items to nonpartnership items pursuant to section 
     6231(b)(1)(C), the preceding sentence shall apply to a 
     computational adjustment resulting from such settlement in 
     the same 

[[Page H11128]]

     manner as if such adjustment were a deficiency and such 
     settlement were a waiver referred to in the preceding 
     sentence.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to adjustments with respect to partnership 
     taxable years beginning after the date of the enactment of 
     this Act.

     SEC. 14323. SPECIAL RULES FOR ADMINISTRATIVE ADJUSTMENT 
                   REQUESTS WITH RESPECT TO BAD DEBTS OR WORTHLESS 
                   SECURITIES.

       (a) General Rule.--Section 6227 (relating to administrative 
     adjustment requests) is amended by adding at the end the 
     following new subsection:
       ``(e) Requests With Respect to Bad Debts or Worthless 
     Securities.--In the case of that portion of any request for 
     an administrative adjustment which relates to the 
     deductibility by the partnership under section 166 of a debt 
     as a debt which became worthless, or under section 165(g) of 
     a loss from worthlessness of a security, the period 
     prescribed in subsection (a)(1) shall be 7 years from the 
     last day for filing the partnership return for the year with 
     respect to which such request is made (determined without 
     regard to extensions).''
       (b) Effective Date.--
       (1) In general.--The amendment made by subsection (a) shall 
     take effect as if included in the amendments made by section 
     402 of the Tax Equity and Fiscal Responsibility Act of 1982.
       (2) Treatment of requests filed before date of enactment.--
     In the case of that portion of any request (filed before the 
     date of the enactment of this Act) for an administrative 
     adjustment which relates to the deductibility of a debt as a 
     debt which became worthless or the deductibility of a loss 
     from the worthlessness of a security--
       (A) paragraph (2) of section 6227(a) of the Internal 
     Revenue Code of 1986 shall not apply,
       (B) the period for filing a petition under section 6228 of 
     the Internal Revenue Code of 1986 with respect to such 
     request shall not expire before the date 6 months after the 
     date of the enactment of this Act, and
       (C) such a petition may be filed without regard to whether 
     there was a notice of the beginning of an administrative 
     proceeding or a final partnership administrative adjustment.
                     Subtitle D--Foreign Provisions

   PART I--MODIFICATIONS TO TREATMENT OF PASSIVE FOREIGN INVESTMENT 
                               COMPANIES

     SEC. 14401. UNITED STATES SHAREHOLDERS OF CONTROLLED FOREIGN 
                   CORPORATIONS NOT SUBJECT TO PFIC INCLUSION.

       Section 1296 is amended by adding at the end the following 
     new subsection:
       ``(e) Exception for United States Shareholders of 
     Controlled Foreign Corporations.--
       ``(1) In general.--For purposes of this part, a corporation 
     shall not be treated with respect to a shareholder as a 
     passive foreign investment company during the qualified 
     portion of such shareholder's holding period with respect to 
     stock in such corporation.
       ``(2) Qualified portion.--For purposes of this subsection, 
     the term `qualified portion' means the portion of the 
     shareholder's holding period--
       ``(A) which is after December 31, 1995, and
       ``(B) during which the shareholder is a United States 
     shareholder (as defined in section 951(b)) of the corporation 
     and the corporation is a controlled foreign corporation.
       ``(3) New holding period if qualified portion ends.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     if the qualified portion of a shareholder's holding period 
     with respect to any stock ends after December 31, 1995, 
     solely for purposes of this part, the shareholder's holding 
     period with respect to such stock shall be treated as 
     beginning as of the first day following such period.
       ``(B) Exception.--Subparagraph (A) shall not apply if such 
     stock was, with respect to such shareholder, stock in a 
     passive foreign investment company at any time before the 
     qualified portion of the shareholder's holding period with 
     respect to such stock and no election under section 
     1298(b)(1) is made.''

     SEC. 14402. ELECTION OF MARK TO MARKET FOR MARKETABLE STOCK 
                   IN PASSIVE FOREIGN INVESTMENT COMPANY.

       (a) In General.--Part VI of subchapter P of chapter 1 is 
     amended by redesignating subpart C as subpart D, by 
     redesignating sections 1296 and 1297 as sections 1297 and 
     1298, respectively, and by inserting after subpart B the 
     following new subpart:

      ``Subpart C--Election of Mark to Market For Marketable Stock

``Sec. 1296. Election of mark to market for marketable stock.

     ``SEC. 1296. ELECTION OF MARK TO MARKET FOR MARKETABLE STOCK.

       ``(a) General Rule.--In the case of marketable stock in a 
     passive foreign investment company which is owned (or treated 
     under subsection (g) as owned) by a United States person at 
     the close of any taxable year of such person, at the election 
     of such person--
       ``(1) If the fair market value of such stock as of the 
     close of such taxable year exceeds its adjusted basis, such 
     United States person shall include in gross income for such 
     taxable year an amount equal to the amount of such excess.
       ``(2) If the adjusted basis of such stock exceeds the fair 
     market value of such stock as of the close of such taxable 
     year, such United States person shall be allowed a deduction 
     for such taxable year equal to the lesser of--
       ``(A) the amount of such excess, or
       ``(B) the unreversed inclusions with respect to such stock.
       ``(b) Basis Adjustments.--
       ``(1) In general.--The adjusted basis of stock in a passive 
     foreign investment company--
       ``(A) shall be increased by the amount included in the 
     gross income of the United States person under subsection 
     (a)(1) with respect to such stock, and
       ``(B) shall be decreased by the amount allowed as a 
     deduction to the United States person under subsection (a)(2) 
     with respect to such stock.
       ``(2) Special rule for stock constructively owned.--In the 
     case of stock in a passive foreign investment company which 
     the United States person is treated as owning under 
     subsection (g)--
       ``(A) the adjustments under paragraph (1) shall apply to 
     such stock in the hands of the person actually holding such 
     stock but only for purposes of determining the subsequent 
     treatment under this chapter of the United States person with 
     respect to such stock, and
       ``(B) similar adjustments shall be made to the adjusted 
     basis of the property by reason of which the United States 
     person is treated as owning such stock.
       ``(c) Character and Source Rules.--
       ``(1) Ordinary treatment.--
       ``(A) Gain.--Any amount included in gross income under 
     subsection (a)(1), and any gain on the sale or other 
     disposition of marketable stock in a passive foreign 
     investment company (with respect to which an election under 
     this section is in effect), shall be treated as ordinary 
     income.
       ``(B) Loss.--Any--
       ``(i) amount allowed as a deduction under subsection 
     (a)(2), and
       ``(ii) loss on the sale or other disposition of marketable 
     stock in a passive foreign investment company (with respect 
     to which an election under this section is in effect) to the 
     extent that the amount of such loss does not exceed the 
     unreversed inclusions with respect to such stock,

     shall be treated as an ordinary loss. The amount so treated 
     shall be treated as a deduction allowable in computing 
     adjusted gross income.
       ``(2) Source.--The source of any amount included in gross 
     income under subsection (a)(1) (or allowed as a deduction 
     under subsection (a)(2)) shall be determined in the same 
     manner as if such amount were gain or loss (as the case may 
     be) from the sale of stock in the passive foreign investment 
     company.
       ``(d) Unreversed Inclusions.--For purposes of this section, 
     the term `unreversed inclusions' means, with respect to any 
     stock in a passive foreign investment company, the excess (if 
     any) of--
       ``(1) the amount included in gross income of the taxpayer 
     under subsection (a)(1) with respect to such stock for prior 
     taxable years, over
       ``(2) the amount allowed as a deduction under subsection 
     (a)(2) with respect to such stock for prior taxable years.

     The amount referred to in paragraph (1) shall include any 
     amount which would have been included in gross income under 
     subsection (a)(1) with respect to such stock for any prior 
     taxable year but for section 1291.
       ``(e) Marketable Stock.--For purposes of this section--
       ``(1) In general.--The term `marketable stock' means--
       ``(A) any stock which is regularly traded on--
       ``(i) a national securities exchange which is registered 
     with the Securities and Exchange Commission or the national 
     market system established pursuant to section 11A of the 
     Securities and Exchange Act of 1934, or
       ``(ii) any exchange or other market which the Secretary 
     determines has rules adequate to carry out the purposes of 
     this part,
       ``(B) to the extent provided in regulations, stock in any 
     foreign corporation which is comparable to a regulated 
     investment company and which offers for sale or has 
     outstanding any stock of which it is the issuer and which is 
     redeemable at its net asset value, and
       ``(C) to the extent provided in regulations, any option on 
     stock described in subparagraph (A) or (B).
       ``(2) Special rule for regulated investment companies.--In 
     the case of any regulated investment company which is 
     offering for sale or has outstanding any stock of which it is 
     the issuer and which is redeemable at its net asset value, 
     all stock in a passive foreign investment company which it 
     owns directly or indirectly shall be treated as marketable 
     stock for purposes of this section. Except as provided in 
     regulations, similar treatment as marketable stock shall 
     apply in the case of any other regulated investment company 
     which publishes net asset valuations at least annually.
       ``(f) Treatment of Controlled Foreign Corporations Which 
     are Shareholders in Passive Foreign Investment Companies.--In 
     the case of a foreign corporation which is a controlled 
     foreign corporation and which owns (or is treated under 
     subsection (g) as owning) stock in a passive foreign 
     investment company--
       ``(1) this section (other than subsection (c)(2)) shall 
     apply to such foreign corporation in the same manner as if 
     such corporation were a United States person, and

[[Page H11129]]

       ``(2) for purposes of subpart F of part III of subchapter 
     N--
       ``(A) any amount included in gross income under subsection 
     (a)(1) shall be treated as foreign personal holding company 
     income described in section 954(c)(1)(A), and
       ``(B) any amount allowed as a deduction under subsection 
     (a)(2) shall be treated as a deduction allocable to foreign 
     personal holding company income so described.
       ``(g) Stock Owned Through Certain Foreign Entities.--Except 
     as provided in regulations--
       ``(1) In general.--For purposes of this section, stock 
     owned, directly or indirectly, by or for a foreign 
     partnership or foreign trust or foreign estate shall be 
     considered as being owned proportionately by its partners or 
     beneficiaries. Stock considered to be owned by a person by 
     reason of the application of the preceding sentence shall, 
     for purposes of applying such sentence, be treated as 
     actually owned by such person.
       ``(2) Treatment of certain dispositions.--In any case in 
     which a United States person is treated as owning stock in a 
     passive foreign investment company by reason of paragraph 
     (1)--
       ``(A) any disposition by the United States person or by any 
     other person which results in the United States person being 
     treated as no longer owning such stock, and
       ``(B) any disposition by the person owning such stock,

     shall be treated as a disposition by the United States person 
     of the stock in the passive foreign investment company.
       ``(h) Coordination With Section 851(b).--For purposes of 
     paragraphs (2) and (3) of section 851(b), any amount included 
     in gross income under subsection (a) shall be treated as a 
     dividend.
       ``(i) Stock Acquired From a Decedent.--In the case of stock 
     of a passive foreign investment company which is acquired by 
     bequest, devise, or inheritance (or by the decedent's estate) 
     and with respect to which an election under this section was 
     in effect as of the date of the decedent's death, 
     notwithstanding section 1014, the basis of such stock in the 
     hands of the person so acquiring it shall be the adjusted 
     basis of such stock in the hands of the decedent immediately 
     before his death (or, if lesser, the basis which would have 
     been determined under section 1014 without regard to this 
     subsection).
       ``(j) Coordination With Section 1291 For First Year of 
     Election.--
       ``(1) Taxpayers other than regulated investment 
     companies.--
       ``(A) In general.--If the taxpayer elects the application 
     of this section with respect to any marketable stock in a 
     corporation after the beginning of the taxpayer's holding 
     period in such stock, and if the requirements of subparagraph 
     (B) are not satisfied, section 1291 shall apply to--
       ``(i) any distributions with respect to, or disposition of, 
     such stock in the first taxable year of the taxpayer for 
     which such election is made, and
       ``(ii) any amount which, but for section 1291, would have 
     been included in gross income under subsection (a) with 
     respect to such stock for such taxable year in the same 
     manner as if such amount were gain on the disposition of such 
     stock.
       ``(B) Requirements.--The requirements of this subparagraph 
     are met if, with respect to each of such corporation's 
     taxable years for which such corporation was a passive 
     foreign investment company and which begin after December 31, 
     1986, and included any portion of the taxpayer's holding 
     period in such stock, such corporation was treated as a 
     qualified electing fund under this part with respect to the 
     taxpayer.
       ``(2) Special rules for regulated investment companies.--
       ``(A) In general.--If a regulated investment company elects 
     the application of this section with respect to any 
     marketable stock in a corporation after the beginning of the 
     taxpayer's holding period in such stock, then, with respect 
     to such company's first taxable year for which such company 
     elects the application of this section with respect to such 
     stock--
       ``(i) section 1291 shall not apply to such stock with 
     respect to any distribution or disposition during, or amount 
     included in gross income under this section for, such first 
     taxable year, but
       ``(ii) such regulated investment company's tax under this 
     chapter for such first taxable year shall be increased by the 
     aggregate amount of interest which would have been determined 
     under section 1291(c)(3) if section 1291 were applied without 
     regard to this subparagraph.

     Clause (ii) shall not apply if for the preceding taxable year 
     the company elected to mark to market the stock held by such 
     company as of the last day of such preceding taxable year.
       ``(B) Disallowance of deduction.--No deduction shall be 
     allowed to any regulated investment company for the increase 
     in tax under subparagraph (A)(ii).
       ``(k) Election.--This section shall apply to marketable 
     stock in a passive foreign investment company which is held 
     by a United States person only if such person elects to apply 
     this section with respect to such stock. Such an election 
     shall apply to the taxable year for which made and all 
     subsequent taxable years unless--
       ``(1) such stock ceases to be marketable stock, or
       ``(2) the Secretary consents to the revocation of such 
     election.
       ``(l) Transition Rule for Individuals Becoming Subject to 
     United States Tax.--If any individual becomes a United States 
     person in a taxable year beginning after December 31, 1995, 
     solely for purposes of this section, the adjusted basis 
     (before adjustments under subsection (b)) of any marketable 
     stock in a passive foreign investment company owned by such 
     individual on the first day of such taxable year shall be 
     treated as being the greater of its fair market value on such 
     first day or its adjusted basis on such first day.''
       (b) Coordination With Interest Charge, Etc.--
       (1) Paragraph (1) of section 1291(d) is amended by adding 
     at the end the following new flush sentence:

     ``Except as provided in section 1296(j), this section also 
     shall not apply if an election under section 1296(k) is in 
     effect for the taxpayer's taxable year.''
       (2) The subsection heading for subsection (d) of section 
     1291 is amended by striking ``Subpart B'' and inserting 
     ``Subparts B and C''.
       (3) Subparagraph (A) of section 1291(a)(3) is amended to 
     read as follows:
       ``(A) Holding period.--The taxpayer's holding period shall 
     be determined under section 1223; except that--
       ``(i) for purposes of applying this section to an excess 
     distribution, such holding period shall be treated as ending 
     on the date of such distribution, and
       ``(ii) if section 1296 applied to such stock with respect 
     to the taxpayer for any prior taxable year, such holding 
     period shall be treated as beginning on the first day of the 
     first taxable year beginning after the last taxable year for 
     which section 1296 so applied.''
       (c) Conforming Amendments.--
       (1) Sections 532(b)(4) and 542(c)(10) are each amended by 
     striking ``section 1296'' and inserting ``section 1297''.
       (2) Subsection (f) of section 551 is amended by striking 
     ``section 1297(b)(5)'' and inserting ``section 1298(b)(5)''
       (3) Subsections (a)(1) and (d) of section 1293 are each 
     amended by striking ``section 1297(a)'' and inserting 
     ``section 1298(a)''.
       (4) Paragraph (3) of section 1297(b), as redesignated by 
     subsection (a), is hereby repealed.
       (5) The table of sections for subpart D of part VI of 
     subchapter P of chapter 1, as redesignated by subsection (a), 
     is amended to read as follows:

``Sec. 1297. Passive foreign investment company.
``Sec. 1298. Special rules.''

       (6) The table of subparts for part VI of subchapter P of 
     chapter 1 is amended by striking the last item and inserting 
     the following new items:

``Subpart C. Election of mark to market for marketable stock.
``Subpart D. General provisions.''

       (d) Clarification of Gain Recognition Election.--The last 
     sentence of section 1298(b)(1), as so redesignated, is 
     amended by inserting ``(determined without regard to the 
     preceding sentence)'' after ``investment company''.

     SEC. 14403. MODIFICATIONS TO DEFINITION OF PASSIVE INCOME.

       (a) Exception for Same Country Income Not To Apply.--
     Paragraph (1) of section 1297(b) (defining passive income), 
     as redesignated by section 14402, is amended by inserting 
     before the period ``without regard to paragraph (3) 
     thereof''.
       (b) Passive Income Not To Include FSC Income.--Paragraph 
     (2) of section 1297(b), as so redesignated, is amended by 
     striking ``or'' at the end of subparagraph (B), by striking 
     the period at the end of subparagraph (C) and inserting ``, 
     or'', and by inserting after subparagraph (C) the following 
     new subparagraph:
       ``(D) any foreign trade income of a FSC.''

     SEC. 14404. EFFECTIVE DATE.

       The amendments made by this part shall apply to--
       (1) taxable years of United States persons beginning after 
     December 31, 1995, and
       (2) taxable years of foreign corporations ending with or 
     within such taxable years of United States persons.

         PART II--TREATMENT OF CONTROLLED FOREIGN CORPORATIONS

     SEC. 14411. GAIN ON CERTAIN STOCK SALES BY CONTROLLED FOREIGN 
                   CORPORATIONS TREATED AS DIVIDENDS.

       (a) General Rule.--Section 964 (relating to miscellaneous 
     provisions) is amended by adding at the end the following new 
     subsection:
       ``(e) Gain on Certain Stock Sales by Controlled Foreign 
     Corporations Treated as Dividends.--
       ``(1) In general.--If a controlled foreign corporation 
     sells or exchanges stock in any other foreign corporation, 
     gain recognized on such sale or exchange shall be included in 
     the gross income of such controlled foreign corporation as a 
     dividend to the same extent that it would have been so 
     included under section 1248(a) if such controlled foreign 
     corporation were a United States person. For purposes of 
     determining the amount which would have been so includible, 
     the determination of whether such other foreign corporation 
     was a controlled foreign corporation shall be made without 
     regard to the preceding sentence.
       ``(2) Same country exception not applicable.--Clause (i) of 
     section 954(c)(3)(A) shall 

[[Page H11130]]

     not apply to any amount treated as a dividend by reason of 
     paragraph (1).
       ``(3) Clarification of deemed sales.--For purposes of this 
     subsection, a controlled foreign corporation shall be treated 
     as having sold or exchanged any stock if, under any provision 
     of this subtitle, such controlled foreign corporation is 
     treated as having gain from the sale or exchange of such 
     stock.''
       (b) Amendment of Section 904(d).--Clause (i) of section 
     904(d)(2)(E) is amended by striking ``and except as provided 
     in regulations, the taxpayer was a United States shareholder 
     in such corporation''.
       (c) Effective Dates.--
       (1) The amendment made by subsection (a) shall apply to 
     gain recognized on transactions occurring after the date of 
     the enactment of this Act.
       (2) The amendment made by subsection (b) shall apply to 
     distributions after the date of the enactment of this Act.

     SEC. 14412. MISCELLANEOUS MODIFICATIONS TO SUBPART F.

       (a) Section 1248 Gain Taken Into Account in Determining Pro 
     Rata Share.--
       (1) In general.--Paragraph (2) of section 951(a) (defining 
     pro rata share of subpart F income) is amended by adding at 
     the end the following new sentence: ``For purposes of 
     subparagraph (B), any gain included in the gross income of 
     any person as a dividend under section 1248 shall be treated 
     as a distribution received by such person with respect to the 
     stock involved.''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to dispositions after the date of the enactment 
     of this Act.
       (b) Basis Adjustments in Stock Held by Foreign 
     Corporation.--
       (1) In general.--Section 961 (relating to adjustments to 
     basis of stock in controlled foreign corporations and of 
     other property) is amended by adding at the end the following 
     new subsection:
       ``(c) Basis Adjustments in Stock Held by Foreign 
     Corporation.--Under regulations prescribed by the Secretary, 
     if a United States shareholder is treated under section 
     958(a)(2) as owning any stock in a controlled foreign 
     corporation which is actually owned by another controlled 
     foreign corporation, adjustments similar to the adjustments 
     provided by subsections (a) and (b) shall be made to the 
     basis of such stock in the hands of such other controlled 
     foreign corporation, but only for the purposes of determining 
     the amount included under section 951 in the gross income of 
     such United States shareholder (or any other United States 
     shareholder who acquires from any person any portion of the 
     interest of such United States shareholder by reason of which 
     such shareholder was treated as owning such stock, but only 
     to the extent of such portion, and subject to such proof of 
     identity of such interest as the Secretary may prescribe by 
     regulations).''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply for purposes of determining inclusions for 
     taxable years of United States shareholders beginning after 
     December 31, 1995.
       (c) Determination of Previously Taxed Income in Section 304 
     Distributions, Etc.--
       (1) In general.--Section 959 (relating to exclusion from 
     gross income of previously taxed earnings and profits) is 
     amended by adding at the end the following new subsection:
       ``(g) Adjustments for Certain Transactions.--If by reason 
     of--
       ``(1) a transaction to which section 304 applies,
       ``(2) the structure of a United States shareholder's 
     holdings in controlled foreign corporations, or
       ``(3) other circumstances,

     there would be a multiple inclusion of any item in income (or 
     an inclusion or exclusion without an appropriate basis 
     adjustment) by reason of this subpart, the Secretary may 
     prescribe regulations providing such modifications in the 
     application of this subpart as may be necessary to eliminate 
     such multiple inclusion or provide such basis adjustment, as 
     the case may be.''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect on the date of the enactment of this Act.
       (d) Clarification of Treatment of Branch Tax Exemptions or 
     Reductions.--
       (1) In general.--Subsection (b) of section 952 is amended 
     by adding at the end the following new sentence: ``For 
     purposes of this subsection, any exemption (or reduction) 
     with respect to the tax imposed by section 884 shall not be 
     taken into account.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to taxable years beginning after December 31, 
     1986.

     SEC. 14413. INDIRECT FOREIGN TAX CREDIT ALLOWED FOR CERTAIN 
                   LOWER TIER COMPANIES.

       (a) Section 902 Credit.--
       (1) In general.--Subsection (b) of section 902 (relating to 
     deemed taxes increased in case of certain 2nd and 3rd tier 
     foreign corporations) is amended to read as follows:
       ``(b) Deemed Taxes Increased in Case of Certain Lower Tier 
     Corporations.--
       ``(1) In general.--If--
       ``(A) any foreign corporation is a member of a qualified 
     group, and
       ``(B) such foreign corporation owns 10 percent or more of 
     the voting stock of another member of such group from which 
     it receives dividends in any taxable year,

     such foreign corporation shall be deemed to have paid the 
     same proportion of such other member's post-1986 foreign 
     income taxes as would be determined under subsection (a) if 
     such foreign corporation were a domestic corporation.
       ``(2) Qualified group.--For purposes of paragraph (1), the 
     term `qualified group' means--
       ``(A) the foreign corporation described in subsection (a), 
     and
       ``(B) any other foreign corporation if--
       ``(i) the domestic corporation owns at least 5 percent of 
     the voting stock of such other foreign corporation indirectly 
     through a chain of foreign corporations connected through 
     stock ownership of at least 10 percent of their voting stock,
       ``(ii) the foreign corporation described in subsection (a) 
     is the first tier corporation in such chain, and
       ``(iii) such other corporation is not below the sixth tier 
     in such chain.

     The term `qualified group' shall not include any foreign 
     corporation below the third tier in the chain referred to in 
     clause (i) unless such foreign corporation is a controlled 
     foreign corporation (as defined in section 957) and the 
     domestic corporation is a United States shareholder (as 
     defined in section 951(b)) in such foreign corporation. 
     Paragraph (1) shall apply to those taxes paid by a member of 
     the qualified group below the third tier only with respect to 
     periods during which it was a controlled foreign 
     corporation.''
       (2) Conforming amendments.--
       (A) Subparagraph (B) of section 902(c)(3) is amended by 
     adding ``or'' at the end of clause (i) and by striking 
     clauses (ii) and (iii) and inserting the following new 
     clause:
       ``(ii) the requirements of subsection (b)(2) are met with 
     respect to such foreign corporation.''
       (B) Subparagraph (B) of section 902(c)(4) is amended by 
     striking ``3rd foreign corporation'' and inserting ``sixth 
     tier foreign corporation''.
       (C) The heading for paragraph (3) of section 902(c) is 
     amended by striking ``where domestic corporation acquires 10 
     percent of foreign corporation'' and inserting ``where 
     foreign corporation first qualifies''.
       (D) Paragraph (3) of section 902(c) is amended by striking 
     ``ownership'' each place it appears.
       (b) Section 960 Credit.--Paragraph (1) of section 960(a) 
     (relating to special rules for foreign tax credits) is 
     amended to read as follows:
       ``(1) Deemed paid credit.--For purposes of subpart A of 
     this part, if there is included under section 951(a) in the 
     gross income of a domestic corporation any amount 
     attributable to earnings and profits of a foreign corporation 
     which is a member of a qualified group (as defined in section 
     902(b)) with respect to the domestic corporation, then, 
     except to the extent provided in regulations, section 902 
     shall be applied as if the amount so included were a dividend 
     paid by such foreign corporation (determined by applying 
     section 902(c) in accordance with section 904(d)(3)(B)).''
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxes of foreign corporations for taxable years of 
     such corporations beginning after the date of enactment of 
     this Act.
       (2) Special rule.--In the case of any chain of foreign 
     corporations described in clauses (i) and (ii) of section 
     902(b)(2)(B) of the Internal Revenue Code of 1986 (as amended 
     by this section), no liquidation, reorganization, or similar 
     transaction in a taxable year beginning after the date of the 
     enactment of this Act shall have the effect of permitting 
     taxes to be taken into account under section 902 of the 
     Internal Revenue Code of 1986 which could not have been taken 
     into account under such section but for such transaction.

     SEC. 14414. REPEAL OF INCLUSION OF CERTAIN EARNINGS INVESTED 
                   IN EXCESS PASSIVE ASSETS.

       (a) In General.--
       (1) Repeal of inclusion.--Paragraph (1) of section 951(a) 
     (relating to amounts included in gross income of United 
     States shareholders) is amended by striking subparagraph (C), 
     by striking ``; and'' at the end of subparagraph (B) and 
     inserting a period, and by adding ``and'' at the end of 
     subparagraph (A).
       (2) Repeal of inclusion amount.--Section 956A (relating to 
     earnings invested in excess passive assets) is repealed.
       (b) Conforming Amendments.--
       (1) Subparagraph (G) of section 904(d)(3) is amended by 
     striking ``subparagraph (B) or (C) of section 951(a)(1)'' and 
     inserting ``section 951(a)(1)(B)''.
       (2) Paragraph (1) of section 956(b) is amended to read as 
     follows:
       ``(1) Applicable earnings.--For purposes of this section, 
     the term `applicable earnings' means, with respect to any 
     controlled foreign corporation, the sum of--
       ``(A) the amount (not including a deficit) referred to in 
     section 316(a)(1), and
       ``(B) the amount referred to in section 316(a)(2),

     but reduced by distributions made during the taxable year.''
       (3) Paragraph (3) of section 956(b) is amended to read as 
     follows:
       ``(3) Special rule where corporation ceases to be 
     controlled foreign corporation.--If any foreign corporation 
     ceases to be a controlled foreign corporation during any 
     taxable year--
       ``(A) the determination of any United States shareholder's 
     pro rata share shall be made on the basis of stock owned 
     (within the 

[[Page H11131]]

     meaning of section 958(a)) by such shareholder on the last 
     day during the taxable year on which the foreign corporation 
     is a controlled foreign corporation,
       ``(B) the average referred to in subsection (a)(1)(A) for 
     such taxable year shall be determined by only taking into 
     account quarters ending on or before such last day, and
       ``(C) in determining applicable earnings, the amount taken 
     into account by reason of being described in paragraph (2) of 
     section 316(a) shall be the portion of the amount so 
     described which is allocable (on a pro rata basis) to the 
     part of such year during which the corporation is a 
     controlled foreign corporation.''
       (4) Subsection (a) of section 959 (relating to exclusion 
     from gross income of previously taxed earnings and profits) 
     is amended by adding ``or'' at the end of paragraph (1), by 
     striking ``or'' at the end of paragraph (2), and by striking 
     paragraph (3).
       (5) Subsection (a) of section 959 is amended by striking 
     ``paragraphs (2) and (3)'' in the last sentence and inserting 
     ``paragraph (2)''.
       (6) Subsection (c) of section 959 is amended by adding at 
     the end the following flush sentence:

     ``References in this subsection to section 951(a)(1)(C) and 
     subsection (a)(3) shall be treated as references to such 
     provisions as in effect on the day before the date of the 
     enactment of the Tax Simplification Act of 1995.''
       (7) Paragraph (1) of section 959(f) is amended to read as 
     follows:
       ``(1) In general.--For purposes of this section, amounts 
     that would be included under subparagraph (B) of section 
     951(a)(1) (determined without regard to this section) shall 
     be treated as attributable first to earnings described in 
     subsection (c)(2), and then to earnings described in 
     subsection (c)(3).''
       (8) Paragraph (2) of section 959(f) is amended by striking 
     ``subparagraphs (B) and (C) of section 951(a)(1)'' and 
     inserting ``section 951(a)(1)(B)''.
       (9) Subsection (b) of section 989 is amended by striking 
     ``subparagraph (B) or (C) of section 951(a)(1)'' and 
     inserting ``section 951(a)(1)(B)''.
       (10) Paragraph (9) of section 1298(b), as redesignated by 
     section 14402, is amended by striking ``subparagraph (B) or 
     (C) of section 951(a)(1)'' and inserting ``section 
     951(a)(1)(B)''.
       (11) Subsections (d)(3)(B) and (e)(2)(B)(ii) of section 
     1298, as redesignated by section 14402, are each amended by 
     striking ``or section 956A''.
       (c) Clerical Amendment.--The table of sections for subpart 
     F of part III of subchapter N of chapter 1 is amended by 
     striking the item relating to section 956A.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after September 30, 1995, and to taxable years of 
     United States shareholders within which or with which such 
     taxable years of foreign corporations end.

                       PART III--OTHER PROVISIONS

     SEC. 14421. EXCHANGE RATE USED IN TRANSLATING FOREIGN TAXES.

       (a) Accrued Taxes Translated by Using Average Rate for Year 
     to Which Taxes Relate.--
       (1) In general.--Subsection (a) of section 986 (relating to 
     translation of foreign taxes) is amended to read as follows:
       ``(a) Foreign Income Taxes.--
       ``(1) Translation of accrued taxes.--
       ``(A) In general.--For purposes of determining the amount 
     of the foreign tax credit, in the case of a taxpayer who 
     takes foreign income taxes into account when accrued, the 
     amount of any foreign income taxes (and any adjustment 
     thereto) shall be translated into dollars by using the 
     average exchange rate for the taxable year to which such 
     taxes relate.
       ``(B) Exception for taxes not paid within following 2 
     years.--
       ``(i) Subparagraph (A) shall not apply to any foreign 
     income taxes paid after the date 2 years after the close of 
     the taxable year to which such taxes relate.
       ``(ii) Subparagraph (A) shall not apply to taxes paid 
     before the beginning of the taxable year to which such taxes 
     relate.
       ``(C) Exception for inflationary currencies.--Subparagraph 
     (A) shall not apply to any foreign income taxes the liability 
     for which is denominated in any currency determined to be an 
     inflationary currency under regulations prescribed by the 
     Secretary.
       ``(D) Cross reference.--

  ``For adjustments where tax is not paid within 2 years, see section 
905(c).

       ``(2) Translation of taxes to which paragraph (1) does not 
     apply.--For purposes of determining the amount of the foreign 
     tax credit, in the case of any foreign income taxes to which 
     subparagraph (A) of paragraph (1) does not apply--
       ``(A) such taxes shall be translated into dollars using the 
     exchange rates as of the time such taxes were paid to the 
     foreign country or possession of the United States, and
       ``(B) any adjustment to the amount of such taxes shall be 
     translated into dollars using--
       ``(i) except as provided in clause (ii), the exchange rate 
     as of the time when such adjustment is paid to the foreign 
     country or possession, or
       ``(ii) in the case of any refund or credit of foreign 
     income taxes, using the exchange rate as of the time of the 
     original payment of such foreign income taxes.
       ``(3) Foreign income taxes.--For purposes of this 
     subsection, the term `foreign income taxes' means any income, 
     war profits, or excess profits taxes paid or accrued to any 
     foreign country or to any possession of the United States.''
       (2) Adjustment when not paid within 2 years after year to 
     which taxes relate.--Subsection (c) of section 905 is amended 
     to read as follows:
       ``(c) Adjustments to Accrued Taxes.--
       ``(1) In general.--If--
       ``(A) accrued taxes when paid differ from the amounts 
     claimed as credits by the taxpayer,
       ``(B) accrued taxes are not paid before the date 2 years 
     after the close of the taxable year to which such taxes 
     relate, or
       ``(C) any tax paid is refunded in whole or in part,

     the taxpayer shall notify the Secretary, who shall 
     redetermine the amount of the tax for the year or years 
     affected.
       ``(2) Special rule for taxes not paid within 2 years.--In 
     making the redetermination under paragraph (1), no credit 
     shall be allowed for accrued taxes not paid before the date 
     referred to in subparagraph (B) of paragraph (1). Any such 
     taxes if subsequently paid shall be taken into account for 
     the taxable year in which paid and no redetermination under 
     this section shall be made on account of such payment.
       ``(3) Adjustments.--The amount of tax due on any 
     redetermination under paragraph (1) (if any) shall be paid by 
     the taxpayer on notice and demand by the Secretary, and the 
     amount of tax overpaid (if any) shall be credited or refunded 
     to the taxpayer in accordance with subchapter B of chapter 66 
     (section 6511 et seq.).
       ``(4) Bond requirements.--In the case of any tax accrued 
     but not paid, the Secretary, as a condition precedent to the 
     allowance of the credit provided in this subpart, may require 
     the taxpayer to give a bond, with sureties satisfactory to 
     and approved by the Secretary, in such sum as the Secretary 
     may require, conditioned on the payment by the taxpayer of 
     any amount of tax found due on any such redetermination. Any 
     such bond shall contain such further conditions as the 
     Secretary may require.
       ``(5) Other special rules.--In any redetermination under 
     paragraph (1) by the Secretary of the amount of tax due from 
     the taxpayer for the year or years affected by a refund, the 
     amount of the taxes refunded for which credit has been 
     allowed under this section shall be reduced by the amount of 
     any tax described in section 901 imposed by the foreign 
     country or possession of the United States with respect to 
     such refund; but no credit under this subpart, or deduction 
     under section 164, shall be allowed for any taxable year with 
     respect to any such tax imposed on the refund. No interest 
     shall be assessed or collected on any amount of tax due on 
     any redetermination by the Secretary, resulting from a refund 
     to the taxpayer, for any period before the receipt of such 
     refund, except to the extent interest was paid by the foreign 
     country or possession of the United States on such refund for 
     such period.''
       (b) Authority To Use Average Rates.--
       (1) In general.--Subsection (a) of section 986 (as amended 
     by subsection (a)) is amended by redesignating paragraph (3) 
     as paragraph (4) and inserting after paragraph (2) the 
     following new paragraph:
       ``(3) Authority to permit use of average rates.--To the 
     extent prescribed in regulations, the average exchange rate 
     for the period (specified in such regulations) during which 
     the taxes or adjustment is paid may be used instead of the 
     exchange rate as of the time of such payment.''
       (2) Determination of average rates.--Subsection (c) of 
     section 989 is amended by striking ``and'' at the end of 
     paragraph (4), by striking the period at the end of paragraph 
     (5) and inserting ``, and'', and by adding at the end the 
     following new paragraph:
       ``(6) setting forth procedures for determining the average 
     exchange rate for any period.''
       (3) Conforming amendments.--Subsection (b) of section 989 
     is amended by striking ``weighted'' each place it appears.
       (c) Effective Dates.--
       (1) In general.--The amendments made by subsections (a)(1) 
     and (b) shall apply to taxes paid or accrued in taxable years 
     beginning after December 31, 1995.
       (2) Subsection (a)(2).--The amendment made by subsection 
     (a)(2) shall apply to taxes which relate to taxable years 
     beginning after December 31, 1995.

     SEC. 14422. ELECTION TO USE SIMPLIFIED SECTION 904 LIMITATION 
                   FOR ALTERNATIVE MINIMUM TAX.

       (a) General Rule.--Subsection (a) of section 59 (relating 
     to alternative minimum tax foreign tax credit) is amended by 
     adding at the end the following new paragraph:
       ``(3) Election to use simplified section 904 limitation.--
       ``(A) In general.--In determining the alternative minimum 
     tax foreign tax credit for any taxable year to which an 
     election under this paragraph applies--
       ``(i) subparagraph (B) of paragraph (1) shall not apply, 
     and
       ``(ii) the limitation of section 904 shall be based on the 
     proportion which--

       ``(I) the taxpayer's taxable income (as determined for 
     purposes of the regular tax) from sources without the United 
     States (but not in excess of the taxpayer's entire 
     alternative minimum taxable income), bears to

       ``(II) the taxpayer's entire alternative minimum taxable 
     income for the taxable year.

[[Page H11132]]


       ``(B) Election.--
       ``(i) In general.--An election under this paragraph may be 
     made only for the taxpayer's first taxable year which begins 
     after December 31, 1995, and for which the taxpayer claims an 
     alternative minimum tax foreign tax credit.
       ``(ii) Election revocable only with consent.--An election 
     under this paragraph, once made, shall apply to the taxable 
     year for which made and all subsequent taxable years unless 
     revoked with the consent of the Secretary.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14423. MODIFICATION OF SECTION 1491.

       (a) General Rule.--So much of chapter 5 (relating to tax on 
     transfers to avoid income tax) as precedes section 1492 is 
     amended to read as follows:

        ``CHAPTER 5--TREATMENT OF TRANSFERS TO AVOID INCOME TAX

``Sec. 1491. Recognition of gain.
``Sec. 1492. Exceptions.

     ``SEC. 1491. RECOGNITION OF GAIN.

       ``In the case of any transfer of property by a United 
     States person to a foreign corporation as paid-in surplus or 
     as a contribution to capital, to a foreign estate or trust, 
     or to a foreign partnership, for purposes of this subtitle 
     (other than for purposes of section 679), such transfer shall 
     be treated as a sale or exchange for an amount equal to the 
     fair market value of the property transferred, and the 
     transferor shall recognize as gain the excess of--
       ``(1) the fair market value of the property so transferred, 
     over
       ``(2) the adjusted basis (for purposes of determining gain) 
     of such property in the hands of the transferor.''
       (b) Conforming Amendments.--
       (1) Section 1057 is hereby repealed.
       (2) Section 1492 is amended to read as follows:

     ``SEC. 1492. EXCEPTIONS.

       ``The provisions of section 1491 shall not apply--
       ``(1) If the transferee is an organization exempt from 
     income tax under part I of subchapter F of chapter 1 (other 
     than an organization described in section 401(a)),
       ``(2) To a transfer described in section 367, or
       ``(3) To any other transfer, to the extent provided in 
     regulations in accordance with principles similar to the 
     principles of section 367 or otherwise consistent with the 
     purpose of section 1491.''
       (3) Section 1494 is hereby repealed.
       (4) Paragraph (8) of section 6501(c) is amended by 
     inserting ``or on any transfer by reason of section 1491'' 
     after ``section 367''.
       (5) Subsection (a) of section 6038B is amended by striking 
     ``or'' at the end of paragraph (1), by adding ``or'' at the 
     end of paragraph (2), and by inserting after paragraph (2) 
     the following new paragraph:
       ``(3) makes any transfer described in section 1491,''.
       (6) The table of sections for part IV of subchapter O of 
     chapter 1 is amended by striking the item relating to section 
     1057.
       (7) The table of chapters for subtitle A is amended by 
     striking ``Tax on'' in the item relating to chapter 5 and 
     inserting ``Treatment of''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to transfers after December 31, 1995.

     SEC. 14424. MODIFICATION OF SECTION 367(b).

       (a) General Rule.--Paragraph (1) of section 367(b) is 
     amended to read as follows:
       ``(1) In general.--In the case of any transaction described 
     in section 332, 351, 354, 355, 356, or 361 in which the 
     status of a foreign corporation as a corporation is a general 
     condition for nonrecognition by 1 or more of the parties to 
     the transaction, income shall be required to be recognized to 
     the extent provided in regulations prescribed by the 
     Secretary which are necessary or appropriate to prevent the 
     avoidance of Federal income taxes. This subsection shall not 
     apply to a transaction in which the foreign corporation is 
     not treated as a corporation under subsection (a)(1).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to transfers after December 31, 1995.

     SEC. 14425. INCREASE IN FILING THRESHOLDS FOR RETURNS AS TO 
                   ORGANIZATION OF FOREIGN CORPORATIONS AND 
                   ACQUISITIONS OF STOCK IN SUCH CORPORATIONS.

       (a) In General.--Subsection (a) of section 6046 (relating 
     to returns as to organization or reorganization of foreign 
     corporations and as to acquisitions of their stock) is 
     amended to read as follows:
       ``(a) Requirement of return.--
       ``(1) In general.--A return complying with the requirements 
     of subsection (b) shall be made by--
       ``(A) each United States citizen or resident who becomes an 
     officer or director of a foreign corporation if a United 
     States person (as defined in section 7701(a)(30)) meets the 
     stock ownership requirements of paragraph (2) with respect to 
     such corporation,
       ``(B) each United States person--
       ``(i) who acquires stock which, when added to any stock 
     owned on the date of such acquisition, meets the stock 
     ownership requirements of paragraph (2) with respect to a 
     foreign corporation, or
       ``(ii) who acquires stock which, without regard to stock 
     owned on the date of such acquisition, meets the stock 
     ownership requirements of paragraph (2) with respect to a 
     foreign corporation,
       ``(C) each person (not described in subparagraph (B)) who 
     is treated as a United States shareholder under section 
     953(c) with respect to a foreign corporation, and
       ``(D) each person who becomes a United States person while 
     meeting the stock ownership requirements of paragraph (2) 
     with respect to stock of a foreign corporation.
     In the case of a foreign corporation with respect to which 
     any person is treated as a United States shareholder under 
     section 953(c), subparagraph (A) shall be treated as 
     including a reference to each United States person who is an 
     officer or director of such corporation.
       ``(2) Stock ownership requirements.--A person meets the 
     stock ownership requirements of this paragraph with respect 
     to any corporation if such person owns 10 percent or more 
     of--
       ``(A) the total combined voting power of all classes of 
     stock of such corporation entitled to vote, or
       ``(B) the total value of the stock of such corporation.''
       (b) Effective Date.--The amendment made by this section 
     shall take effect on January 1, 1996.

     SEC. 14426. APPLICATION OF UNIFORM CAPITALIZATION RULES TO 
                   FOREIGN PERSONS.

       (a) In General.--Section 263A(c) (relating to exceptions) 
     is amended by adding at the end the following new paragraph:
       ``(7) Foreign persons.--This section shall apply to any 
     taxpayer who is not a United States person only for purposes 
     of--
       ``(A) tax liability with respect to income which is 
     effectively connected with the conduct of a trade or business 
     in the United States, and
       ``(B) tax liability of a United States shareholder (as 
     defined in section 951(b)) with respect to amounts includible 
     in gross income under section 951(a).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1995. Section 481 of the Internal Revenue Code of 1986 shall 
     not apply to any change in a method of accounting by reason 
     of such amendment.

     SEC. 14427. CERTAIN PRIZES AND AWARDS.

       (a) In General.--Section 863 (relating to special rules for 
     determining source) is amended by adding at the end the 
     following new subsection:
       ``(f) Certain Prizes and Awards Associated With Amateur 
     Sports Competitions.--
       ``(1) In general.--A prize or award received by a 
     nonresident alien by reason of participating in an amateur 
     sports competition in the United States shall not be treated 
     as derived from sources within the United States if such 
     alien performs no services for such prize or award.
       ``(2) Amateur sports competition.--For purposes of 
     paragraph (1), the term `amateur sports competition' means 
     any competition in which the only prizes awarded by the 
     sponsors of the competition are of nominal value.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to prizes and awards granted after the date of 
     the enactment of this Act.

     SEC. 14428. TREATMENT FOR ESTATE TAX PURPOSES OF SHORT-TERM 
                   OBLIGATIONS HELD BY NONRESIDENT ALIENS.

       (a) In General.--Subsection (b) of section 2105 is amended 
     by striking ``and'' at the end of paragraph (2), by striking 
     the period at the end of paragraph (3) and inserting ``, 
     and'', and by inserting after paragraph (3) the following new 
     paragraph:
       ``(4) obligations which would be original issue discount 
     obligations as defined in section 871(g)(1) but for 
     subparagraph (B)(i) thereof, if any interest thereon (were 
     such interest received by the decedent at the time of his 
     death) would not be effectively connected with the conduct of 
     a trade or business within the United States.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to estates of decedents dying after the date of 
     the enactment of this Act.
                Subtitle E--Other Income Tax Provisions

             PART I--PROVISIONS RELATING TO S CORPORATIONS

     SEC. 14501. S CORPORATIONS PERMITTED TO HAVE 75 SHAREHOLDERS.

       Subparagraph (A) of section 1361(b)(1) (defining small 
     business corporation) is amended by striking ``35 
     shareholders'' and inserting ``75 shareholders''.

     SEC. 14502. ELECTING SMALL BUSINESS TRUSTS.

       (a) General Rule.--Subparagraph (A) of section 1361(c)(2) 
     (relating to certain trusts permitted as shareholders) is 
     amended by inserting after clause (iv) the following new 
     clause:
       ``(v) An electing small business trust.''
       (b) Current Beneficiaries Treated as Shareholders.--
     Subparagraph (B) of section 1361(c)(2) is amended by adding 
     at the end the following new clause:
       ``(v) In the case of a trust described in clause (v) of 
     subparagraph (A), each potential current beneficiary of such 
     trust shall be treated as a shareholder; except that, if for 
     any period there is no potential current beneficiary of such 
     trust, such trust shall be treated as the shareholder during 
     such period.''
       (c) Electing Small Business Trust Defined.--Section 1361 
     (defining S corporation) is amended by adding at the end the 
     following new subsection:
       ``(e) Electing Small Business Trust Defined.--

[[Page H11133]]

       ``(1) Electing small business trust.--For purposes of this 
     section--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `electing small business trust' means any trust if--
       ``(i) such trust does not have as a beneficiary any person 
     other than (I) an individual, (II) an estate, or (III) an 
     organization described in paragraph (2), (3), (4), or (5) of 
     section 170(c) which holds a contingent interest and is not a 
     potential current beneficiary,
       ``(ii) no interest in such trust was acquired by purchase, 
     and
       ``(iii) an election under this subsection applies to such 
     trust.
       ``(B) Certain trusts not eligible.--The term `electing 
     small business trust' shall not include--
       ``(i) any qualified subchapter S trust (as defined in 
     subsection (d)(3)) if an election under subsection (d)(2) 
     applies to any corporation the stock of which is held by such 
     trust, and
       ``(ii) any trust exempt from tax under this subtitle.
       ``(C) Purchase.--For purposes of subparagraph (A), the term 
     `purchase' means any acquisition if the basis of the property 
     acquired is determined under section 1012.
       ``(2) Potential current beneficiary.--For purposes of this 
     section, the term `potential current beneficiary' means, with 
     respect to any period, any person who at any time during such 
     period is entitled to, or at the discretion of any person may 
     receive, a distribution from the principal or income of the 
     trust. If a trust disposes of all of the stock which it holds 
     in an S corporation, then, with respect to such corporation, 
     the term `potential current beneficiary' does not include any 
     person who first met the requirements of the preceding 
     sentence during the 60-day period ending on the date of such 
     disposition.
       ``(3) Election.--An election under this subsection shall be 
     made by the trustee. Any such election shall apply to the 
     taxable year of the trust for which made and all subsequent 
     taxable years of such trust unless revoked with the consent 
     of the Secretary.
       ``(4) Cross reference.--

  ``For special treatment of electing small business trusts, see 
section 641(d).''

       (d) Taxation of Electing Small Business Trusts.--Section 
     641 (relating to imposition of tax on trusts) is amended by 
     adding at the end the following new subsection:
       ``(d) Special Rules for Taxation of Electing Small Business 
     Trusts.--
       ``(1) In general.--For purposes of this chapter--
       ``(A) the portion of any electing small business trust 
     which consists of stock in 1 or more S corporations shall be 
     treated as a separate trust, and
       ``(B) the amount of the tax imposed by this chapter on such 
     separate trust shall be determined with the modifications of 
     paragraph (2).
       ``(2) Modifications.--For purposes of paragraph (1), the 
     modifications of this paragraph are the following:
       ``(A) Except as provided in section 1(h), the amount of the 
     tax imposed by section 1(e) shall be determined by using the 
     highest rate of tax set forth in section 1(e).
       ``(B) The exemption amount under section 55(d) shall be 
     zero.
       ``(C) The only items of income, loss, deduction, or credit 
     to be taken into account are the following:
       ``(i) The items required to be taken into account under 
     section 1366.
       ``(ii) Any gain or loss from the disposition of stock in an 
     S corporation.
       ``(iii) To the extent provided in regulations, State or 
     local income taxes or administrative expenses to the extent 
     allocable to items described in clauses (i) and (ii).

     No deduction or credit shall be allowed for any amount not 
     described in this paragraph, and no item described in this 
     paragraph shall be apportioned to any beneficiary.
       ``(D) No amount shall be allowed under paragraph (1) or (2) 
     of section 1211(b).
       ``(3) Treatment of remainder of trust and distributions.--
     For purposes of determining--
       ``(A) the amount of the tax imposed by this chapter on the 
     portion of any electing small business trust not treated as a 
     separate trust under paragraph (1), and
       ``(B) the distributable net income of the entire trust,

     the items referred to in paragraph (2)(C) shall be excluded. 
     Except as provided in the preceding sentence, this subsection 
     shall not affect the taxation of any distribution from the 
     trust.
       ``(4) Treatment of unused deductions where termination of 
     separate trust.--If a portion of an electing small business 
     trust ceases to be treated as a separate trust under 
     paragraph (1), any carryover or excess deduction of the 
     separate trust which is referred to in section 642(h) shall 
     be taken into account by the entire trust.
       ``(5) Electing small business trust.--For purposes of this 
     subsection, the term `electing small business trust' has the 
     meaning given such term by section 1361(e)(1).''
       (e) Technical Amendment.--Paragraph (1) of section 1366(a) 
     is amended by inserting ``, or of a trust or estate which 
     terminates,'' after ``who dies''.

     SEC. 14503. EXPANSION OF POST-DEATH QUALIFICATION FOR CERTAIN 
                   TRUSTS.

       Subparagraph (A) of section 1361(c)(2) (relating to certain 
     trusts permitted as shareholders) is amended--
       (1) by striking ``60-day period'' each place it appears in 
     clauses (ii) and (iii) and inserting ``2-year period'', and
       (2) by striking the last sentence in clause (ii).

     SEC. 14504. FINANCIAL INSTITUTIONS PERMITTED TO HOLD SAFE 
                   HARBOR DEBT.

       Clause (iii) of section 1361(c)(5)(B) (defining straight 
     debt) is amended by striking ``or a trust described in 
     paragraph (2)'' and inserting ``a trust described in 
     paragraph (2), or a person which is actively and regularly 
     engaged in the business of lending money.''

     SEC. 14505. RULES RELATING TO INADVERTENT TERMINATIONS AND 
                   INVALID ELECTIONS.

       (a) General Rule.--Subsection (f) of section 1362 (relating 
     to inadvertent terminations) is amended to read as follows:
       ``(f) Inadvertent Invalid Elections or Terminations.--If--
       ``(1) an election under subsection (a) by any corporation--
       ``(A) was not effective for the taxable year for which made 
     (determined without regard to subsection (b)(2)) by reason of 
     a failure to meet the requirements of section 1361(b) or to 
     obtain shareholder consents, or
       ``(B) was terminated under paragraph (2) of subsection (d),
       ``(2) the Secretary determines that the circumstances 
     resulting in such ineffectiveness or termination were 
     inadvertent,
       ``(3) no later than a reasonable period of time after 
     discovery of the circumstances resulting in such 
     ineffectiveness or termination, steps were taken--
       ``(A) so that the corporation is a small business 
     corporation, or
       ``(B) to acquire the required shareholder consents, and
       ``(4) the corporation, and each person who was a 
     shareholder in the corporation at any time during the period 
     specified pursuant to this subsection, agrees to make such 
     adjustments (consistent with the treatment of the corporation 
     as an S corporation) as may be required by the Secretary with 
     respect to such period,

     then, notwithstanding the circumstances resulting in such 
     ineffectiveness or termination, such corporation shall be 
     treated as an S corporation during the period specified by 
     the Secretary.''
       (b) Late Elections.--Subsection (b) of section 1362 is 
     amended by adding at the end the following new paragraph:
       ``(5) Authority to treat late elections as timely.--If--
       ``(A) an election under subsection (a) is made for any 
     taxable year (determined without regard to paragraph (3)) 
     after the date prescribed by this subsection for making such 
     election for such taxable year, and
       ``(B) the Secretary determines that there was reasonable 
     cause for the failure to timely make such election,

     the Secretary may treat such election as timely made for such 
     taxable year (and paragraph (3) shall not apply).''
       (c) Effective Date.--The amendments made by subsection (a) 
     and (b) shall apply with respect to elections for taxable 
     years beginning after December 31, 1982.

     SEC. 14506. AGREEMENT TO TERMINATE YEAR.

       Paragraph (2) of section 1377(a) (relating to pro rata 
     share) is amended to read as follows:
       ``(2) Election to terminate year.--
       ``(A) In general.--Under regulations prescribed by the 
     Secretary, if any shareholder terminates the shareholder's 
     interest in the corporation during the taxable year and all 
     affected shareholders and the corporation agree to the 
     application of this paragraph, paragraph (1) shall be applied 
     to the affected shareholders as if the taxable year consisted 
     of 2 taxable years the first of which ends on the date of the 
     termination.
       ``(B) Affected shareholders.--For purposes of subparagraph 
     (A), the term `affected shareholders' means the shareholder 
     whose interest is terminated and all shareholders to whom 
     such shareholder has transferred shares during the taxable 
     year. If such shareholder has transferred shares to the 
     corporation, the term `affected shareholders' shall include 
     all persons who are shareholders during the taxable year.''

     SEC. 14507. EXPANSION OF POST-TERMINATION TRANSITION PERIOD.

       (a) In General.--Paragraph (1) of section 1377(b) (relating 
     to post-termination transition period) is amended by striking 
     ``and'' at the end of subparagraph (A), by redesignating 
     subparagraph (B) as subparagraph (C), and by inserting after 
     subparagraph (A) the following new subparagraph:
       ``(B) the 120-day period beginning on the date of any 
     determination pursuant to an audit of the taxpayer which 
     follows the termination of the corporation's election and 
     which adjusts a subchapter S item of income, loss, or 
     deduction of the corporation arising during the S period (as 
     defined in section 1368(e)(2)), and''.
       (b) Determination Defined.--Paragraph (2) of section 
     1377(b) is amended by striking subparagraphs (A) and (B), by 
     redesignating subparagraph (C) as subparagraph (B), and by 
     inserting before subparagraph (B) (as so redesignated) the 
     following new subparagraph:
       ``(A) a determination as defined in section 1313(a), or''.
       (c) Repeal of Special Audit Provisions for Subchapter S 
     Items.--
       (1) General rule.--Subchapter D of chapter 63 (relating to 
     tax treatment of subchapter S items) is hereby repealed.
       (2) Consistent treatment required.--Section 6037 (relating 
     to return of S corporation) 

[[Page H11134]]

     is amended by adding at the end the following new subsection:
       ``(c) Shareholder's Return Must Be Consistent With 
     Corporate Return or Secretary Notified of Inconsistency.--
       ``(1) In general.--A shareholder of an S corporation shall, 
     on such shareholder's return, treat a subchapter S item in a 
     manner which is consistent with the treatment of such item on 
     the corporate return.
       ``(2) Notification of inconsistent treatment.--
       ``(A) In general.--In the case of any subchapter S item, 
     if--
       ``(i)(I) the corporation has filed a return but the 
     shareholder's treatment on his return is (or may be) 
     inconsistent with the treatment of the item on the corporate 
     return, or
       ``(II) the corporation has not filed a return, and
       ``(ii) the shareholder files with the Secretary a statement 
     identifying the inconsistency,

     paragraph (1) shall not apply to such item.
       ``(B) Shareholder receiving incorrect information.--A 
     shareholder shall be treated as having complied with clause 
     (ii) of subparagraph (A) with respect to a subchapter S item 
     if the shareholder--
       ``(i) demonstrates to the satisfaction of the Secretary 
     that the treatment of the subchapter S item on the 
     shareholder's return is consistent with the treatment of the 
     item on the schedule furnished to the shareholder by the 
     corporation, and
       ``(ii) elects to have this paragraph apply with respect to 
     that item.
       ``(3) Effect of failure to notify.--In any case--
       ``(A) described in subparagraph (A)(i)(I) of paragraph (2), 
     and
       ``(B) in which the shareholder does not comply with 
     subparagraph (A)(ii) of paragraph (2),

     any adjustment required to make the treatment of the items by 
     such shareholder consistent with the treatment of the items 
     on the corporate return shall be treated as arising out of 
     mathematical or clerical errors and assessed according to 
     section 6213(b)(1). Paragraph (2) of section 6213(b) shall 
     not apply to any assessment referred to in the preceding 
     sentence.
       ``(4) Subchapter s item.--For purposes of this subsection, 
     the term `subchapter S item' means any item of an S 
     corporation to the extent that regulations prescribed by the 
     Secretary provide that, for purposes of this subtitle, such 
     item is more appropriately determined at the corporation 
     level than at the shareholder level.
       ``(5) Addition to tax for failure to comply with section.--

  ``For addition to tax in the case of a shareholder's negligence in 
connection with, or disregard of, the requirements of this section, see 
part II of subchapter A of chapter 68.''

       (3) Conforming amendments.--
       (A) Section 1366 is amended by striking subsection (g).
       (B) Subsection (b) of section 6233 is amended to read as 
     follows:
       ``(b) Similar Rules in Certain Cases.--If a partnership 
     return is filed for any taxable year but it is determined 
     that there is no entity for such taxable year, to the extent 
     provided in regulations, rules similar to the rules of 
     subsection (a) shall apply.''
       (C) The table of subchapters for chapter 63 is amended by 
     striking the item relating to subchapter D.

     SEC. 14508. S CORPORATIONS PERMITTED TO HOLD SUBSIDIARIES.

       (a) In General.--Paragraph (2) of section 1361(b) (defining 
     ineligible corporation) is amended by striking subparagraph 
     (A) and by redesignating subparagraphs (B), (C), (D), and (E) 
     as subparagraphs (A), (B), (C), and (D), respectively.
       (b) Treatment of Certain Wholly Owned S Corporation 
     Subsidiaries.--Section 1361(b) (defining small business 
     corporation) is amended by adding at the end the following 
     new paragraph:
       ``(3) Treatment of certain wholly owned subsidiaries.--
       ``(A) In general.--For purposes of this title--
       ``(i) a corporation which is a qualified subchapter S 
     subsidiary shall not be treated as a separate corporation, 
     and
       ``(ii) all assets, liabilities, and items of income, 
     deduction, and credit of a qualified subchapter S subsidiary 
     shall be treated as assets, liabilities, and such items (as 
     the case may be) of the S corporation.
       ``(B) Qualified subchapter s subsidiary.--For purposes of 
     this paragraph, the term `qualified subchapter S subsidiary' 
     means any domestic corporation which is not an ineligible 
     corporation (as defined in paragraph (2)), if--
       ``(i) 100 percent of the stock of such corporation is held 
     by the S corporation, and
       ``(ii) the S corporation elects to treat such corporation 
     as a qualified subchapter S subsidiary.
       ``(C) Treatment of terminations of qualified subchapter s 
     subsidiary status.--For purposes of this title, if any 
     corporation which was a qualified subchapter S subsidiary 
     ceases to meet the requirements of subparagraph (B), such 
     corporation shall be treated as a new corporation acquiring 
     all of its assets (and assuming all of its liabilities) 
     immediately before such cessation from the S corporation in 
     exchange for its stock.''
       (c) Certain Dividends Not Treated as Passive Investment 
     Income.--Paragraph (3) of section 1362(d) is amended by 
     adding at the end the following new subparagraph:
       ``(F) Treatment of certain dividends.--If an S corporation 
     holds stock in a C corporation meeting the requirements of 
     section 1504(a)(2), the term `passive investment income' 
     shall not include dividends from such C corporation to the 
     extent such dividends are attributable to the earnings and 
     profits of such C corporation derived from the active conduct 
     of a trade or business.''
       (d) Conforming Amendments.--
       (1) Subsection (c) of section 1361 is amended by striking 
     paragraph (6).
       (2) Subsection (b) of section 1504 (defining includible 
     corporation) is amended by adding at the end the following 
     new paragraph:
       ``(8) An S corporation.''

     SEC. 14509. TREATMENT OF DISTRIBUTIONS DURING LOSS YEARS.

       (a) Adjustments for Distributions Taken Into Account Before 
     Losses.--
       (1) Subparagraph (A) of section 1366(d)(1) (relating to 
     losses and deductions cannot exceed shareholder's basis in 
     stock and debt) is amended by striking ``paragraph (1)'' and 
     inserting ``paragraphs (1) and (2)(A)''.
       (2) Subsection (d) of section 1368 (relating to certain 
     adjustments taken into account) is amended by adding at the 
     end the following new sentence:
     ``In the case of any distribution made during any taxable 
     year, the adjusted basis of the stock shall be determined 
     with regard to the adjustments provided in paragraph (1) of 
     section 1367(a) for the taxable year.''
       (b) Accumulated Adjustments Account.--Paragraph (1) of 
     section 1368(e) (relating to accumulated adjustments account) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(C) Net loss for year disregarded.--
       ``(i) In general.--In applying this section to 
     distributions made during any taxable year, the amount in the 
     accumulated adjustments account as of the close of such 
     taxable year shall be determined without regard to any net 
     negative adjustment for such taxable year.
       ``(ii) Net negative adjustment.--For purposes of clause 
     (i), the term `net negative adjustment' means, with respect 
     to any taxable year, the excess (if any) of--
       ``(I) the reductions in the account for the taxable year 
     (other than for distributions), over
       ``(II) the increases in such account for such taxable 
     year.''
       (c) Conforming Amendments.--Subparagraph (A) of section 
     1368(e)(1) is amended--
       (1) by striking ``as provided in subparagraph (B)'' and 
     inserting ``as otherwise provided in this paragraph'', and
       (2) by striking ``section 1367(b)(2)(A)'' and inserting 
     ``section 1367(a)(2)''.

     SEC. 14510. TREATMENT OF S CORPORATIONS UNDER SUBCHAPTER C.

       Subsection (a) of section 1371 (relating to application of 
     subchapter C rules) is amended to read as follows:
       ``(a) Application of Subchapter C Rules.--Except as 
     otherwise provided in this title, and except to the extent 
     inconsistent with this subchapter, subchapter C shall apply 
     to an S corporation and its shareholders.''

     SEC. 14511. ELIMINATION OF CERTAIN EARNINGS AND PROFITS.

       (a) In General.--If--
       (1) a corporation was an electing small business 
     corporation under subchapter S of chapter 1 of the Internal 
     Revenue Code of 1986 for any taxable year beginning before 
     January 1, 1983, and
       (2) such corporation is an S corporation under subchapter S 
     of chapter 1 of such Code for its first taxable year 
     beginning after December 31, 1995,

     the amount of such corporation's accumulated earnings and 
     profits (as of the beginning of such first taxable year) 
     shall be reduced by an amount equal to the portion (if any) 
     of such accumulated earnings and profits which were 
     accumulated in any taxable year beginning before January 1, 
     1983, for which such corporation was an electing small 
     business corporation under such subchapter S.
       (b) Conforming Amendments.--
       (1) Paragraph (3) of section 1362(d) is amended--
       (A) by striking ``Subchapter C'' in the paragraph heading 
     and inserting ``Accumulated'',
       (B) by striking ``subchapter C'' in subparagraph (A)(i)(I) 
     and inserting ``accumulated'', and
       (C) by striking subparagraph (B) and redesignating the 
     following subparagraphs accordingly.
       (2)(A) Subsection (a) of section 1375 is amended by 
     striking ``subchapter C'' in paragraph (1) and inserting 
     ``accumulated''.
       (B) Paragraph (3) of section 1375(b) is amended to read as 
     follows:
       ``(3) Passive investment income, etc.--The terms `passive 
     investment income' and `gross receipts' have the same 
     respective meanings as when used in paragraph (3) of section 
     1362(d).''
       (C) The section heading for section 1375 is amended by 
     striking ``SUBCHAPTER C'' and inserting ``ACCUMULATED''.
       (D) The table of sections for part III of subchapter S of 
     chapter 1 is amended by striking ``subchapter C'' in the item 
     relating to section 1375 and inserting ``accumulated''.
       (3) Clause (i) of section 1042(c)(4)(A) is amended by 
     striking ``section 1362(d)(3)(D)'' and inserting ``section 
     1362(d)(3)(C)''.

[[Page H11135]]


     SEC. 14512. CARRYOVER OF DISALLOWED LOSSES AND DEDUCTIONS 
                   UNDER AT-RISK RULES ALLOWED.

       Paragraph (3) of section 1366(d) (relating to carryover of 
     disallowed losses and deductions to post-termination 
     transition period) is amended by adding at the end the 
     following new subparagraph:
       ``(D) At-risk limitations.--To the extent that any increase 
     in adjusted basis described in subparagraph (B) would have 
     increased the shareholder's amount at risk under section 465 
     if such increase had occurred on the day preceding the 
     commencement of the post-termination transition period, 
     rules similar to the rules described in subparagraphs (A) 
     through (C) shall apply to any losses disallowed by reason 
     of section 465(a).''

     SEC. 14513. ADJUSTMENTS TO BASIS OF INHERITED S STOCK TO 
                   REFLECT CERTAIN ITEMS OF INCOME.

       (a) In General.--Subsection (b) of section 1367 (relating 
     to adjustments to basis of stock of shareholders, etc.) is 
     amended by adding at the end the following new paragraph:
       ``(4) Adjustments in case of inherited stock.--
       ``(A) In general.--If any person acquires stock in an S 
     corporation by reason of the death of a decedent or by 
     bequest, devise, or inheritance, section 691 shall be applied 
     with respect to any item of income of the S corporation in 
     the same manner as if the decedent had held directly his pro 
     rata share of such item.
       ``(B) Adjustments to basis.--The basis determined under 
     section 1014 of any stock in an S corporation shall be 
     reduced by the portion of the value of the stock which is 
     attributable to items constituting income in respect of the 
     decedent.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply in the case of decedents dying after the date of 
     the enactment of this Act.

     SEC. 14514. S CORPORATIONS ELIGIBLE FOR RULES APPLICABLE TO 
                   REAL PROPERTY SUBDIVIDED FOR SALE BY 
                   NONCORPORATE TAXPAYERS.

       (a) In General.--Subsection (a) of section 1237 (relating 
     to real property subdivided for sale) is amended by striking 
     ``other than a corporation'' in the material preceding 
     paragraph (1) and inserting ``other than a C corporation''.
       (b) Conforming Amendment.--Subparagraph (A) of section 
     1237(a)(2) is amended by inserting ``an S corporation which 
     included the taxpayer as a shareholder,'' after ``controlled 
     by the taxpayer,''.

     SEC. 14515. EFFECTIVE DATE.

       (a) In General.--Except as otherwise provided in this part, 
     the amendments made by this part shall apply to taxable years 
     beginning after December 31, 1995.
       (b) Treatment of Certain Elections Under Prior Law.--For 
     purposes of section 1362(g) of the Internal Revenue Code of 
     1986 (relating to election after termination), any 
     termination under section 1362(d) of such Code in a taxable 
     year beginning before January 1, 1996, shall not be taken 
     into account.

     PART II--PROVISIONS RELATING TO REGULATED INVESTMENT COMPANIES

     SEC. 14521. REPEAL OF 30-PERCENT GROSS INCOME LIMITATION.

       (a) General Rule.--Subsection (b) of section 851 (relating 
     to limitations) is amended by striking paragraph (3), by 
     adding ``and'' at the end of paragraph (2), and by 
     redesignating paragraph (4) as paragraph (3).
       (b) Technical Amendments.--
       (1) The material following paragraph (3) of section 851(b) 
     (as redesignated by subsection (a)) is amended--
       (A) by striking out ``paragraphs (2) and (3)'' and 
     inserting ``paragraph (2)'', and
       (B) by striking out the last sentence thereof.
       (2) Subsection (c) of section 851 is amended by striking 
     ``subsection (b)(4)'' each place it appears (including the 
     heading) and inserting ``subsection (b)(3)''.
       (3) Subsection (d) of section 851 is amended by striking 
     ``subsections (b)(4)'' and inserting ``subsections (b)(3)''.
       (4) Paragraph (1) of section 851(e) is amended by striking 
     ``subsection (b)(4)'' and inserting ``subsection (b)(3)''.
       (5) Paragraph (4) of section 851(e) is amended by striking 
     ``subsections (b)(4)'' and inserting ``subsections (b)(3)''.
       (6) Section 851 is amended by striking subsection (g) and 
     redesignating subsection (h) as subsection (g).
       (7) Subsection (g) of section 851 (as redesignated by 
     paragraph (6)) is amended by striking paragraph (3).
       (8) Section 817(h)(2) is amended--
       (A) by striking ``851(b)(4)'' in subparagraph (A) and 
     inserting ``851(b)(3)'', and
       (B) by striking ``851(b)(4)(A)(i)'' in subparagraph (B) and 
     inserting ``851(b)(3)(A)(i)''.
       (9) Section 1092(f)(2) is amended by striking ``Except for 
     purposes of section 851(b)(3), the'' and inserting ``The''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     PART III--PROVISIONS RELATING TO REAL ESTATE INVESTMENT TRUSTS

     SEC. 14531. CLARIFICATION OF LIMITATION ON MAXIMUM NUMBER OF 
                   SHAREHOLDERS.

       (a) Rules Relating to Determination of Ownership.--
       (1) Failure to issue shareholder demand letter not to 
     disqualify reit.--Section 857(a) (relating to requirements 
     applicable to real estate investment trusts) is amended by 
     striking paragraph (2) and by redesignating paragraph (3) as 
     paragraph (2).
       (2) Shareholder demand letter requirement; penalty.--
     Section 857 (relating to taxation of real estate investment 
     trusts and their beneficiaries) is amended by redesignating 
     subsection (f) as subsection (g) and by inserting after 
     subsection (e) the following new subsection:
       ``(f) Real Estate Investment Trusts To Ascertain 
     Ownership.--
       ``(1) In general.--Each real estate investment trust shall 
     each taxable year comply with regulations prescribed by the 
     Secretary for the purposes of ascertaining the actual 
     ownership of the outstanding shares, or certificates of 
     beneficial interest, of such trust.
       ``(2) Failure to comply.--
       ``(A) In general.--If a real estate investment trust fails 
     to comply with the requirements of paragraph (1) for a 
     taxable year, such trust shall pay (on notice and demand by 
     the Secretary and in the same manner as tax) a penalty of 
     $25,000.
       ``(B) Intentional disregard.--If any failure under 
     paragraph (1) is due to intentional disregard of the 
     requirement under paragraph (1), the penalty under 
     subparagraph (A) shall be $50,000.
       ``(C) Failure to comply after notice.--The Secretary may 
     require a real estate investment trust to take such actions 
     as the Secretary determines appropriate to ascertain actual 
     ownership if the trust fails to meet the requirements of 
     paragraph (1). If the trust fails to take such actions, the 
     trust shall pay (on notice and demand by the Secretary and in 
     the same manner as tax) an additional penalty equal to the 
     penalty determined under subparagraph (A) or (B), whichever 
     is applicable.
       ``(D) Reasonable cause.--No penalty shall be imposed under 
     this paragraph with respect to any failure if it is shown 
     that such failure is due to reasonable cause and not to 
     willful neglect.''
       (b) Compliance With Closely Held Prohibition.--
       (1) In general.--Section 856 (defining real estate 
     investment trust) is amended by adding at the end the 
     following new subsection:
       ``(k) Requirement That Entity Not Be Closely Held Treated 
     as Met in Certain Cases.--A corporation, trust, or 
     association--
       ``(1) which for a taxable year meets the requirements of 
     section 857(f)(1), and
       ``(2) which does not know, or exercising reasonable 
     diligence would not have known, whether the entity failed to 
     meet the requirement of subsection (a)(6),

     shall be treated as having met the requirement of subsection 
     (a)(6) for the taxable year.''
       (2) Conforming amendment.--Paragraph (6) of section 856(a) 
     is amended by inserting ``subject to the provisions of 
     subsection (k),'' before ``which is not''.

     SEC. 14532. DE MINIMIS RULE FOR TENANT SERVICES INCOME.

       (a) In General.--Paragraph (2) of section 856(d) (defining 
     rents from real property) is amended by striking subparagraph 
     (C) and the last sentence and inserting:
       ``(C) any impermissible tenant service income (as defined 
     in paragraph (7)).''
       (b) Impermissible Tenant Service Income.--Section 856(d) is 
     amended by adding at the end the following new paragraph:
       ``(7) Impermissible tenant service income.--For purposes of 
     paragraph (2)(C)--
       ``(A) In general.--The term `impermissible tenant service 
     income' means, with respect to any real or personal property, 
     any amount received or accrued directly or indirectly by the 
     real estate investment trust for--
       ``(i) services furnished or rendered by the trust to the 
     tenants of such property, or
       ``(ii) managing or operating such property.
       ``(B) Disqualification of all amounts where more than de 
     minimis amount.--If the amount described in subparagraph (A) 
     with respect to a property for any taxable year exceeds 1 
     percent of all amounts received or accrued during such 
     taxable year directly or indirectly by the real estate 
     investment trust with respect to such property, the 
     impermissible tenant service income of the trust with respect 
     to the property shall include all such amounts.
       ``(C) Exceptions.--For purposes of subparagraph (A)--
       ``(i) services furnished or rendered, or management or 
     operation provided, through an independent contractor from 
     whom the trust itself does not derive or receive any income 
     shall not be treated as furnished, rendered, or provided by 
     the trust, and
       ``(ii) there shall not be taken into account any amount 
     which would be excluded from unrelated business taxable 
     income under section 512(b)(3) if received by an organization 
     described in section 511(a)(2).
       ``(D) Amount attributable to impermissible services.--For 
     purposes of subparagraph (A), the amount treated as received 
     for any service (or management or operation) shall not be 
     less than 150 percent of the direct cost of the trust in 
     furnishing or rendering the service (or providing the 
     management or operation).
       ``(E) Coordination with limitations.--For purposes of 
     paragraphs (2) and (3) of subsection (c), amounts described 
     in subparagraph (A) shall be included in the gross income of 
     the corporation, trust, or association.''

[[Page H11136]]


     SEC. 14533. ATTRIBUTION RULES APPLICABLE TO TENANT OWNERSHIP.

       Section 856(d)(5) (relating to constructive ownership of 
     stock) is amended by adding at the end the following: ``For 
     purposes of paragraph (2)(B), section 318(a)(3)(A) shall be 
     applied under the preceding sentence in the case of a 
     partnership by taking into account only partners who own 
     (directly or indirectly) 25 percent or more of the capital 
     interest, or the profits interest, in the partnership.''

     SEC. 14534. CREDIT FOR TAX PAID BY REIT ON RETAINED CAPITAL 
                   GAINS.

       (a) General Rule.--Paragraph (3) of section 857(b) 
     (relating to capital gains) is amended by redesignating 
     subparagraph (D) as subparagraph (E) and by inserting after 
     subparagraph (C) the following new subparagraph:
       ``(D) Treatment by shareholders of undistributed capital 
     gains.--
       ``(i) Every shareholder of a real estate investment trust 
     at the close of the trust's taxable year shall include, in 
     computing his long-term capital gains in his return for his 
     taxable year in which the last day of the trust's taxable 
     year falls, such amount as the trust shall designate in 
     respect of such shares in a written notice mailed to its 
     shareholders at any time prior to the expiration of 60 days 
     after the close of its taxable year (or mailed to its 
     shareholders or holders of beneficial interests with its 
     annual report for the taxable year), but the amount so 
     includible by any shareholder shall not exceed that part of 
     the amount subjected to tax in subparagraph (A)(ii) which he 
     would have received if all of such amount had been 
     distributed as capital gain dividends by the trust to the 
     holders of such shares at the close of its taxable year.
       ``(ii) For purposes of this title, every such shareholder 
     shall be deemed to have paid, for his taxable year under 
     clause (i), the tax imposed by subparagraph (A)(ii) on the 
     amounts required by this subparagraph to be included in 
     respect of such shares in computing his long-term capital 
     gains for that year; and such shareholders shall be allowed 
     credit or refund as the case may be, for the tax so deemed to 
     have been paid by him.
       ``(iii) The adjusted basis of such shares in the hands of 
     the holder shall be increased with respect to the amounts 
     required by this subparagraph to be included in computing his 
     long-term capital gains, by the difference between the amount 
     of such includible gains and the tax deemed paid by such 
     shareholder in respect of such shares under clause (ii).
       ``(iv) In the event of such designation, the tax imposed by 
     subparagraph (A)(ii) shall be paid by the real estate 
     investment trust within 30 days after the close of its 
     taxable year.
       ``(v) The earnings and profits of such real estate 
     investment trust, and the earnings and profits of any such 
     shareholder which is a corporation, shall be appropriately 
     adjusted in accordance with regulations prescribed by the 
     Secretary.
       ``(vi) As used in this subparagraph, the terms `shares' and 
     `shareholders' shall include beneficial interests and holders 
     of beneficial interests, respectively.''
       (b) Conforming Amendments.--
       (1) Clause (i) of section 857(b)(7)(A) is amended by 
     striking ``subparagraph (B)'' and inserting ``subparagraph 
     (B) or (D)''.
       (2) Clause (iii) of section 852(b)(3)(D) is amended by 
     striking ``by 65 percent'' and all that follows and inserting 
     ``by the difference between the amount of such includible 
     gains and the tax deemed paid by such shareholder in respect 
     of such shares under clause (ii).''

     SEC. 14535. REPEAL OF 30-PERCENT GROSS INCOME REQUIREMENT.

       (a) General Rule.--Subsection (c) of section 856 (relating 
     to limitations) is amended--
       (1) by adding ``and'' at the end of paragraph (3),
       (2) by striking paragraphs (4) and (8), and
       (3) by redesignating paragraphs (5), (6), and (7) as 
     paragraphs (4), (5), and (6), respectively.
       (b) Conforming Amendments.--
       (1) Subparagraph (G) of section 856(c)(5), as redesignated 
     by subsection (a), is amended by striking ``and such 
     agreement shall be treated as a security for purposes of 
     paragraph (4)(A)''.
       (2) Paragraph (5) of section 857(b) is amended by striking 
     ``section 856(c)(7)'' and inserting ``section 856(c)(6)''.
       (3) Subparagraph (C) of section 857(b)(6) is amended by 
     striking ``section 856(c)(6)(B)'' and inserting ``section 
     856(c)(5)(B)''.

     SEC. 14536. MODIFICATION OF EARNINGS AND PROFITS RULES FOR 
                   DETERMINING WHETHER REIT HAS EARNINGS AND 
                   PROFITS FROM NON-REIT YEAR.

       Subsection (d) of section 857 is amended by adding at the 
     end the following new paragraph:
       ``(3) Distributions to meet requirements of subsection 
     (a)(2)(B).--Any distribution which is made in order to comply 
     with the requirements of subsection (a)(2)(B)--
       ``(A) shall be treated for purposes of this subsection and 
     subsection (a)(2)(B) as made from the earliest accumulated 
     earnings and profits (other than earnings and profits to 
     which subsection (a)(2)(A) applies) rather than the most 
     recently accumulated earnings and profits, and
       ``(B) to the extent treated under subparagraph (A) as made 
     from accumulated earnings and profits, shall not be treated 
     as a distribution for purposes of subsection (b)(2)(B).''

     SEC. 14537. TREATMENT OF FORECLOSURE PROPERTY.

       (a) Grace Periods.--
       (1) Initial period.--Paragraph (2) of section 856(e) 
     (relating to special rules for foreclosure property) is 
     amended by striking ``on the date which is 2 years after the 
     date the trust acquired such property'' and inserting ``as of 
     the close of the 3d taxable year following the taxable year 
     in which the trust acquired such property''.
       (2) Extension.--Paragraph (3) of section 856(e) is 
     amended--
       (A) by striking ``or more extensions'' and inserting 
     ``extension'', and
       (B) by striking the last sentence and inserting: ``Any such 
     extension shall not extend the grace period beyond the close 
     of the 3d taxable year following the last taxable year in the 
     period under paragraph (2).''
       (b) Revocation of Election.--Paragraph (5) of section 
     856(e) is amended by striking the last sentence and 
     inserting: ``A real estate investment trust may revoke any 
     such election for a taxable year by filing the revocation (in 
     the manner provided by the Secretary) on or before the due 
     date (including any extension of time) for filing its return 
     of tax under this chapter for the taxable year. If a trust 
     revokes an election for any property, no election may be made 
     by the trust under this paragraph with respect to the 
     property for any subsequent taxable year.''
       (c) Certain Activities Not To Disqualify Property.--
     Paragraph (4) of section 856(e) is amended by adding at the 
     end the following new flush sentence:
     ``For purposes of subparagraph (C), property shall not be 
     treated as used in a trade or business by reason of any 
     activities of the real estate investment trust with respect 
     to such property to the extent that such activities would not 
     result in amounts received or accrued, directly or 
     indirectly, with respect to such property being treated as 
     other than rents from real property.''

     SEC. 14538. PAYMENTS UNDER HEDGING INSTRUMENTS.

       Section 856(c)(5)(G) (relating to treatment of certain 
     interest rate agreements), as redesignated by section 14535, 
     is amended to read as follows:
       ``(G) Treatment of certain hedging instruments.--Except to 
     the extent provided by regulations, any--
       ``(i) payment to a real estate investment trust under an 
     interest rate swap or cap agreement, option, futures 
     contract, forward rate agreement, or any similar financial 
     instrument, entered into by the trust in a transaction to 
     reduce the interest rate risks with respect to any 
     indebtedness incurred or to be incurred by the trust to 
     acquire or carry real estate assets, and
       ``(ii) gain from the sale or other disposition of any such 
     investment,

     shall be treated as income qualifying under paragraph (2).''

     SEC. 14539. EXCESS NONCASH INCOME.

       Section 857(e)(2) (relating to determination of amount of 
     excess noncash income) is amended--
       (1) by striking subparagraph (B),
       (2) by striking the period at the end of subparagraph (C) 
     and inserting a comma,
       (3) by redesignating subparagraph (C) (as amended by 
     paragraph (2)) as subparagraph (B), and
       (4) by adding at the end the following new subparagraphs:
       ``(C) the amount (if any) by which--
       ``(i) the amounts includible in gross income with respect 
     to instruments to which section 860E(a) or 1272 applies, 
     exceed
       ``(ii) the amount of money and the fair market value of 
     other property received during the taxable year under such 
     instruments, and
       ``(D) amounts includible in income by reason of 
     cancellation of indebtedness.''

     SEC. 14540. PROHIBITED TRANSACTION SAFE HARBOR.

       Clause (iii) of section 857(b)(6)(C) (relating to certain 
     sales not to constitute prohibited transactions) is amended 
     by striking ``(other than foreclosure property)'' in 
     subclauses (I) and (II) and inserting ``(other than sales of 
     foreclosure property or sales to which section 1033 
     applies)''.

     SEC. 14541. SHARED APPRECIATION MORTGAGES.

       (a) Bankruptcy Safe Harbor.--Section 856(j) (relating to 
     treatment of shared appreciation mortgages) is amended by 
     redesignating paragraph (4) as paragraph (5) and by inserting 
     after paragraph (3) the following new paragraph:
       ``(4) Coordination with 4-year holding period.--
       ``(A) In general.--For purposes of section 857(b)(6)(C), if 
     a real estate investment trust is treated as having sold 
     secured property under paragraph (3)(A), the trust shall be 
     treated as having held such property for at least 4 years 
     if--
       ``(i) the secured property is sold or otherwise disposed of 
     pursuant to a case under title 11 of the United States Code,
       ``(ii) the seller is under the jurisdiction of the court in 
     such case, and
       ``(iii) the disposition is required by the court or is 
     pursuant to a plan approved by the court.
       ``(B) Exception.--Subparagraph (A) shall not apply if--
       ``(i) the secured property was acquired by the trust with 
     the intent to evict or foreclose, or
       ``(ii) the trust knew or had reason to know that default on 
     the obligation described in paragraph (5)(A) would occur.''

[[Page H11137]]

       (b) Clarification of Definition of Shared Appreciation 
     Provision.--Clause (ii) of section 856(j)(5)(A) is amended by 
     inserting before the period ``or appreciation in value as of 
     any specified date''.

     SEC. 14542. WHOLLY OWNED SUBSIDIARIES.

       Section 856(i)(2) (defining qualified REIT subsidiary) is 
     amended by striking ``at all times during the period such 
     corporation was in existence''.

     SEC. 14543. EFFECTIVE DATE.

       The amendments made by this part shall apply to taxable 
     years beginning after the date of the enactment of this Act.

                     PART IV--ACCOUNTING PROVISIONS

     SEC. 14551. MODIFICATIONS TO LOOK-BACK METHOD FOR LONG-TERM 
                   CONTRACTS.

       (a) Look-Back Method Not To Apply in Certain Cases.--
     Subsection (b) of section 460 (relating to percentage of 
     completion method) is amended by adding at the end the 
     following new paragraph:
       ``(6) Election to have look-back method not apply in de 
     minimis cases.--
       ``(A) Amounts taken into account after completion of 
     contract.--Paragraph (1)(B) shall not apply with respect to 
     any taxable year (beginning after the taxable year in which 
     the contract is completed) if--
       ``(i) the cumulative taxable income (or loss) under the 
     contract as of the close of such taxable year, is within
       ``(ii) 10 percent of the cumulative look-back taxable 
     income (or loss) under the contract as of the close of the 
     most recent taxable year to which paragraph (1)(B) applied 
     (or would have applied but for subparagraph (B)).
       ``(B) De minimis discrepancies.--Paragraph (1)(B) shall not 
     apply in any case to which it would otherwise apply if--
       ``(i) the cumulative taxable income (or loss) under the 
     contract as of the close of each prior contract year, is 
     within
       ``(ii) 10 percent of the cumulative look-back income (or 
     loss) under the contract as of the close of such prior 
     contract year.
       ``(C) Definitions.--For purposes of this paragraph--
       ``(i) Contract year.--The term `contract year' means any 
     taxable year for which income is taken into account under the 
     contract.
       ``(ii) Look-back income or loss.--The look-back income (or 
     loss) is the amount which would be the taxable income (or 
     loss) under the contract if the allocation method set forth 
     in paragraph (2)(A) were used in determining taxable income.
       ``(iii) Discounting not applicable.--The amounts taken into 
     account after the completion of the contract shall be 
     determined without regard to any discounting under the 2nd 
     sentence of paragraph (2).
       ``(D) Contracts to which paragraph applies.--This paragraph 
     shall only apply if the taxpayer makes an election under this 
     subparagraph. Unless revoked with the consent of the 
     Secretary, such an election shall apply to all long-term 
     contracts completed during the taxable year for which 
     election is made or during any subsequent taxable year.''
       (b) Modification of Interest Rate.--
       (1) In general.--Subparagraph (C) of section 460(b)(2) is 
     amended by striking ``the overpayment rate established by 
     section 6621'' and inserting ``the adjusted overpayment rate 
     (as defined in paragraph (7))''.
       (2) Adjusted overpayment rate.--Subsection (b) of section 
     460 is amended by adding at the end the following new 
     paragraph:
       ``(7) Adjusted overpayment rate.--
       ``(A) In general.--The adjusted overpayment rate for any 
     interest accrual period is the overpayment rate in effect 
     under section 6621 for the calendar quarter in which such 
     interest accrual period begins.
       ``(B) Interest accrual period.--For purposes of 
     subparagraph (A), the term `interest accrual period' means 
     the period--
       ``(i) beginning on the day after the return due date for 
     any taxable year of the taxpayer, and
       ``(ii) ending on the return due date for the following 
     taxable year.

     For purposes of the preceding sentence, the term `return due 
     date' means the date prescribed for filing the return of the 
     tax imposed by this chapter (determined without regard to 
     extensions).''
       (c) Effective Date.--The amendments made by this section 
     shall apply to contracts completed in taxable years ending 
     after the date of the enactment of this Act.

     SEC. 14552. APPLICATION OF MARK TO MARKET ACCOUNTING METHOD 
                   TO TRADERS IN SECURITIES.

       (a) In General.--Section 475 (relating to mark to market 
     accounting method for dealers in securities) is amended by 
     redesignating subsection (e) as subsection (f) and by 
     inserting after subsection (d) the following new subsection:
       ``(e) Authority To Extend Method to Traders in 
     Securities.--
       ``(1) In general.--A trader in securities may elect to have 
     the provisions of this section (other than subsection (d)(3)) 
     apply to securities held by the trader. Such election may be 
     made only with the consent of the Secretary.
       ``(2) Trader in securities.--For purposes of this 
     subsection, the term `trader in securities' means a taxpayer 
     who is regularly engaged in trading securities.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending on and after December 31, 
     1995.

     SEC. 14553. MODIFICATION OF RULING AMOUNTS FOR NUCLEAR 
                   DECOMMISSIONING COSTS.

       (a) In General.--Section 468A(d) (relating to ruling 
     amount) is amended by adding at the end the following new 
     paragraph:
       ``(4) Nonsubstantial modifications.--A taxpayer may modify 
     a schedule of ruling amounts under paragraph (1) without a 
     review under paragraph (3) if such modification does not 
     substantially modify the ruling amount. The taxpayer shall 
     notify the Secretary of any such modification.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to modifications after the date of the enactment 
     of this Act.

     SEC. 14554. ELECTION OF ALTERNATIVE TAXABLE YEARS BY 
                   PARTNERSHIPS AND S CORPORATIONS.

       (a) Repeal of Limitation on What Taxable Year May Be 
     Elected.--
       (1) In general.--Section 444(b) (relating to limitations on 
     taxable years which may be elected) is amended by adding at 
     the end the following new paragraph:
       ``(5) Limitations not to apply to certain partnerships and 
     s corporations.--
       ``(A) In general.--In the case of a partnership or an S 
     corporation, this subsection shall not apply to an election 
     under subsection (a) for a taxable year beginning after 
     December 31, 1996.
       ``(B) Special rule for existing elections.--
       ``(i) In general.--If a partnership or S corporation has an 
     election in effect for its last taxable year beginning before 
     January 1, 1997, the partnership or S corporation may elect 
     to have this paragraph apply beginning with any taxable year 
     beginning after December 31, 1996. Such an election may be 
     made without the consent of the Secretary and shall not be 
     treated as a termination of an election for purposes of 
     subsection (d).
       ``(ii) Treatment of required payments.--A partnership or S 
     corporation making an election under clause (i) may elect to 
     have its net required payment balance (within the meaning of 
     section 7519(e)(4))--

       ``(I) credited against its first estimated tax payment 
     under section 6654A for its first full taxable year for which 
     such section applies, or
       ``(II) refunded to it at the time provided in section 
     7519(c)(3).''

       (2) Effect of election.--Paragraph (1) of section 444(c) 
     (relating to effect of election) is amended to read as 
     follows:
       ``(1) in the case of a partnership or S corporation, such 
     entity shall--
       ``(A) make the payments required by section 7519, or
       ``(B) if subsection (b)(5) applies to the election, make 
     the estimated tax payments described in section 6654A, and''.
       (b) Estimated Tax for Partnerships and S Corporations 
     Making Taxable Year Elections.--Part I of subchapter A of 
     chapter 68 (relating to additions to tax and additional 
     amounts) is amended by inserting after section 6654 the 
     following new section:

     ``SEC. 6654A. FAILURE BY ELECTING PARTNERSHIP OR S 
                   CORPORATION TO PAY ESTIMATED TAX.

       ``(a) Penalty.--Except as otherwise provided in this 
     section, in the case of a partnership or S corporation with 
     respect to which an election to which section 444(b)(5) 
     applies is in effect (hereafter referred to as `the entity'), 
     there is hereby imposed a penalty for each quarter for which 
     there is an underpayment in an amount determined by 
     applying--
       ``(1) the underpayment rate established under section 6621,
       ``(2) to the amount of the underpayment,
       ``(3) for the period of the underpayment.
       ``(b) Amount of Underpayment; Period of Underpayment.--For 
     purposes of subsection (a)--
       ``(1) Amount.--The amount of the underpayment shall be the 
     excess of--
       ``(A) the required installment, over
       ``(B) the amount (if any) of the installment paid on or 
     before the due date for the installment.
       ``(2) Period of underpayment.--The period of the 
     underpayment shall run from the due date for the installment 
     to the earlier of--
       ``(A) the first April 15 more than 3 months after the close 
     of the taxable year, or
       ``(B) with respect to any portion of the underpayment, the 
     date on which such portion is paid.
       ``(3) Order of crediting payments.--For purposes of 
     paragraph (2)(B), a payment of estimated tax shall be 
     credited against unpaid required installments in the order in 
     which the installments are required to be paid.
       ``(c) Required Installments.--For purposes of this 
     section--
       ``(1) Number and dates.--An entity shall make 4 required 
     installments which shall be due on the 15th day of the 3d, 
     5th, 8th, and 12th months of the taxable year.
       ``(2) No required payments where entity's liability is less 
     than $5,000.--An entity shall not be required to make 
     estimated payments under this section for any taxable year 
     for which (but for this paragraph) its aggregate liability 
     under this section would be less than $5,000.
       ``(3) Amount.--The amount of each required installment 
     shall be 25 percent of the product of--
       ``(A) the entity's applicable income determined under its 
     applicable method for the quarter for which the installment 
     is being made, and
       ``(B) the applicable rate.
       ``(4) Applicable rate.--

[[Page H11138]]

       ``(A) In general.--The term `applicable rate' means 34 
     percent (39.6 percent in the case of an entity described in 
     subparagraph (B)).
       ``(B) High average income entity.--
       ``(i) In general.--An entity is described in this 
     subparagraph if--

       ``(I) the average applicable income of 2-percent owners of 
     the entity for its base year is $250,000 or more, or
       ``(II) in the case of a partnership, its applicable income 
     for the base year is $10,000,000 or more.

     An entity shall not be treated as so described if it has no 
     base year.
       ``(ii) 2-percent owner.--The term `2-percent owner' means--

       ``(I) in the case of a partnership, any person who owns (or 
     is considered as owning within the meaning of section 318) on 
     any day during the base year more than 2 percent of the 
     capital interests of the partnerships, and
       ``(II) in the case of an S corporation, a 2-percent 
     shareholder (as defined in section 1372(b)).

       ``(5) Adjustments under annualized income method.--An 
     entity using the annualized income method shall adjust its 
     required installment for any quarter to reflect any change in 
     its required installment for any prior quarter in the taxable 
     year which would have been required if the annualized 
     applicable income for the current quarter had been used for 
     the prior quarter.
       ``(d) Applicable Method.--For purposes of this section--
       ``(1) In general.--An entity shall determine its applicable 
     income on the basis of the 100-percent method.
       ``(2) Exceptions.--
       ``(A) Elections.--An entity may determine its applicable 
     income--
       ``(i) for all quarters in a taxable year on the basis of 
     the 110-percent method if it elects such method on or before 
     the due date for the first quarterly installment, or
       ``(ii) for any quarter in a taxable year on the basis of 
     the annualized income method if it elects such method on or 
     before the due date for the quarterly installment for such 
     quarter.

     An election under clause (ii) shall apply for the quarter for 
     which made and all subsequent quarters during the taxable 
     year.
       ``(B) Large increase in income.--If an entity's applicable 
     income for the taxable year exceeds its applicable income for 
     the base year by more than $750,000, the entity may not use 
     the 110-percent method for the taxable year.
       ``(3) Methods.--
       ``(A) 100-percent method.--Under the 100-percent method, an 
     entity's applicable income shall be its applicable income for 
     the taxable year.
       ``(B) 110-percent method.--Under the 110-percent method, an 
     entity's applicable income shall be 110 percent of its 
     applicable income for the base year.
       ``(C) Annualized income method.--Under the annualized 
     income method, the entity's applicable income for purposes of 
     determining the required installment for any quarter shall be 
     an amount equal to the product of--
       ``(i) its applicable income for the period consisting of 
     the months in the taxable year ending before the due date for 
     the quarter, and
       ``(ii) a percentage equal to 12 divided by the number of 
     such months.
       ``(e) Applicable Income.--
       ``(1) In general.--For purposes of this section, the 
     applicable income for any taxable year shall be the net 
     amount (not less than zero) determined--
       ``(A) by taking into account the entity's items in the 
     manner and with the exceptions provided in section 703(a) or 
     1363(b), as the case may be, and
       ``(B) by making the further adjustments provided in 
     paragraphs (2), (3), (4), and (5) of this subsection.
       ``(2) Certain deductions allowed.--In determining 
     applicable income, the following amounts shall be allowed as 
     deductions:
       ``(A) The deduction allowable under section 170 for 
     charitable contributions of the entity.
       ``(B) The deduction allowable under section 901 for taxes 
     described in section 901(c) paid or accrued to foreign 
     countries or possessions of the United States.
       ``(3) Certain limitations disregarded.--For purposes of 
     paragraphs (1) and (2), any limitation on the amount of any 
     item which may be taken into account for purposes of 
     computing the taxable income of a partner or shareholder 
     shall be disregarded.
       ``(4) Guaranteed payments to partners not deducted.--In 
     determining applicable income, a guaranteed payment to a 
     partner shall not be treated as an item of deduction.
       ``(5) Disproportionate applicable payments during deferral 
     period.--
       ``(A) Deduction not allowed.--In determining applicable 
     income, no deduction shall be allowed for disproportionate 
     deferral period applicable payments.
       ``(B) Disproportionate deferral period applicable 
     payments.--For purposes of subparagraph (A), the term 
     `disproportionate deferral period applicable payments' means 
     the excess (if any) of--
       ``(i) the product of the deferral ratio and the aggregate 
     applicable payments made to owners during the entity's entire 
     taxable year, over
       ``(ii) the aggregate applicable payments made to owners 
     during the deferral period.
       ``(C) Definitions.--For purposes of this paragraph--
       ``(i) the term `applicable payments' has the meaning given 
     to such term by section 7519(d)(3), except that in the case 
     of an S corporation only payments to 2-percent shareholders 
     (as defined in section 1372(b)) shall be taken into account,
       ``(ii) the term `deferral period' means the months in the 
     period beginning with the first day of the entity's taxable 
     year and ending on December 31, and
       ``(iii) the term `deferral ratio' means the ratio which the 
     number of months in the deferral period bears to the total 
     number of months in the taxable year.
       ``(6) Special rule where c corporation for base year.--In 
     applying the 110-percent method, if an S corporation was a C 
     corporation for the base year, the S corporation's applicable 
     income shall be the taxable income of the C corporation for 
     the base year.
       ``(f) Coordination Between Entity and Owners.--
       ``(1) Treatment of payments of required installments.--
       ``(A) In general.--For purposes of this title, an owner in 
     an entity shall be treated as having paid, for the owner's 
     first taxable year ending with or after the close of the 
     entity's taxable year, an amount of tax imposed by section 1 
     equal to the owner's allocable share of the entity's payments 
     of required installments under this section (determined 
     without regard to excess payments described in subparagraph 
     (C)(ii)(II) or amounts the entity is treated as paying under 
     paragraph (2)).
       ``(B) Coordination with owner's estimated tax.--For 
     purposes of section 6654, an individual shall be treated as 
     having paid on the due date for the estimated tax installment 
     for each quarter of the individual's taxable year described 
     in subparagraph (A)--
       ``(i) except as provided in clause (ii), 25 percent of the 
     tax deemed paid under subparagraph (A), or
       ``(ii) if the annualized income method was used by the 
     entity for any quarter of the entity's taxable year described 
     in subparagraph (A), an amount for the corresponding quarter 
     in the individuals's taxable year equal to the portion of 
     such tax attributable to the individual's allocable share of 
     the entity's applicable income for the entity's quarter.

     In no event shall the aggregate estimated tax payments 
     treated as paid under this subparagraph exceed the amount of 
     tax determined under subparagraph (A).
       ``(C) Amounts determined on basis of return.--
       ``(i) In general.--The determination of the amount of tax 
     payments under subparagraph (A) shall be made on the basis of 
     amounts shown on the entity's return for the taxable year.
       ``(ii) Reconciliation of differences.--If, as of the first 
     April 15 more than 3 months after the close of the entity's 
     taxable year, the aggregate amounts paid as required 
     installments under this section are less or more than the 
     aggregate amounts described in clause (i) shown on the 
     entity's return of tax for the taxable year, then--

       ``(I) subject to paragraph (2), there is hereby imposed on 
     the entity under chapter 1 an additional tax equal to the 
     amount of the shortfall, the due date for which is such April 
     15, or
       ``(II) the entity shall be treated as having made a payment 
     of tax under chapter 1 on such April 15 in an amount equal to 
     the excess.

       ``(2) Treatment of payments by owners.--For purposes of 
     subsection (b)(2)(B) and paragraph (1)(C), an entity shall be 
     treated as paying any portion of an underpayment attributable 
     to an owner's allocable share of applicable income at the 
     time the tax imposed by chapter 1 on the owner with respect 
     to such income is paid.
       ``(3) Allocable share.--For purposes of this subsection--
       ``(A) In general.--An owner's allocable share of an item 
     for a taxable year shall be an amount which bears the same 
     ratio to the amount of such item as the owner's applicable 
     income for the taxable year bears to the sum of the 
     applicable incomes of all owners. For purposes of this 
     subparagraph, applicable income of an owner shall be 
     determined in the same manner as subsection (e).
       ``(B) Application other than on taxable year basis.--If--
       ``(i) the entity elects the annualized income method for 
     any quarter, subparagraph (A) shall be applied on a quarter-
     by-quarter basis, or
       ``(ii) there is an interim closing of the books of an 
     entity under this title, subparagraph (A) shall be applied 
     separately for the periods before and after the closing.
       ``(g) Special Rules for Short Year Created by Election.--
       ``(1) Additional required installment.--If, by reason of an 
     election under this section, an entity has a taxable year of 
     less than 12 months, the entity shall make a required 
     installment under this section for such taxable year--
       ``(A) which shall be in an amount equal to the applicable 
     rate multiplied by the lesser of--
       ``(i) the entity's applicable income for such taxable year 
     as determined under subsection (e), or
       ``(ii) 110 percent of the entity's applicable income for 
     the base year (as so determined but ratably reduced to 
     reflect the period of such taxable year), and
       ``(B) the due date for which shall be the last day for 
     which an election under this section could be made for the 
     taxable year.

[[Page H11139]]

       ``(2) Treatment of losses.--Any net operating loss arising 
     in the taxable year described in paragraph (1) shall be 
     treated as arising one-third in such taxable year and each of 
     the 2 following taxable years. This paragraph shall not apply 
     to an entity not in existence before such taxable year unless 
     more than one-half of the equity interests in the entity are 
     held by persons who owned another entity carrying on the same 
     business before such taxable year.
       ``(h) Other Definitions and Special Rules.--For purpose of 
     this section--
       ``(1) Base year.--The term `base year' means the most 
     recent preceding taxable year containing 12 months.
       ``(2) Equity interest.--The term `equity interest' means--
       ``(A) in the case of a partnership, the capital interests, 
     and
       ``(B) in the case of an S corporation, the shares of stock 
     in the corporation (whether voting or nonvoting).
       ``(3) Owner.--The term `owner' means a partner in a 
     partnership or a shareholder in an S corporation, whichever 
     is applicable.
       ``(4) Common control.--
       ``(A) In general.--For purposes of subsections (c)(2), 
     (c)(4)(B), and (d)(2)(B), entities under common control shall 
     be treated as 1 entity.
       ``(B) Common control.--Entities shall be treated as under 
     common control under subparagraph (A) if they are treated as 
     a single employee under subsection (a) or (b) of section 52.
       ``(5) Waiver.--No penalty shall be imposed under subsection 
     (a) with respect to any underpayment to the extent the 
     Secretary determines that by reason of casualty, disaster, or 
     other unusual circumstances the imposition of the penalty 
     would be against equity and good conscience.''
       (c) Modification of Elections.--
       (1) Time for making.--Paragraph (1) of section 444(d) is 
     amended by adding at the end the following new sentence: 
     ``Such election may be made at any time on or before the 15th 
     day of the 3d month of the first taxable year of 12 months 
     under the election.''
       (2) Terminations.--Paragraph (2) of section 444(d) is 
     amended by striking subparagraph (B) and inserting:
       ``(B) Terminations.--
       ``(i) Revocation.--An election under subsection (a) may be 
     terminated by revocation but only if owners of more than one-
     half of the equity interests in the entity on the date of the 
     revocation consent to it.
       ``(ii) Entity terminations.--In the case of a partnership 
     or S corporation, an election under subsection (a) terminates 
     when the partnership terminates under section 708(b)(1) or 
     the corporation ceases to be an S corporation.
       ``(C) Subsequent elections.--If an election under 
     subsection (a) has been terminated, no such election may be 
     made with respect to such entity or any successor entity for 
     any taxable year before its 5th taxable year beginning after 
     the 1st taxable year for which the termination was effective, 
     unless the Secretary consents to the election.''
       (d) Conforming Amendments.--
       (1) Section 6665(b) is amended--
       (A) by inserting ``6654A,'' after ``6654,'', and
       (B) by striking ``6654 or'' and inserting ``6654, 6654A, 
     or''.
       (2) The table of sections for part I of subchapter A of 
     chapter 68 is amended by inserting after the item relating to 
     section 6654 the following new item:

``Sec. 6654A. Failure by electing partnership or S corporation to pay 
              estimated tax.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 14555. SPECIAL RULE FOR CROP INSURANCE PROCEEDS AND 
                   DISASTER PAYMENTS.

       (a) In General.--Section 451(d) of the Internal Revenue 
     Code of 1986 (relating to special rule for crop insurance 
     proceeds and disaster payments) is amended to read as 
     follows:
       ``(d) Special Rule for Crop Insurance Proceeds and Disaster 
     Payments.--
       ``(1) General rule.--In the case of any payment described 
     in paragraph (2), a taxpayer reporting on the cash receipts 
     and disbursements method of accounting--
       ``(A) may elect to treat any such payment received in the 
     taxable year of destruction or damage of crops as having been 
     received in the following taxable year if the taxpayer 
     establishes that, under the taxpayer's practice, income from 
     such crops involved would have been reported in a following 
     taxable year, or
       ``(B) may elect to treat any such payment received in a 
     taxable year following the taxable year of the destruction or 
     damage of crops as having been received in the taxable year 
     of destruction or damage, if the taxpayer establishes that, 
     under the taxpayer's practice, income from such crops 
     involved would have been reported in the taxable year of 
     destruction or damage.
       ``(2) Payments described.--For purposes of this subsection, 
     a payment is described in this paragraph if such payment--
       ``(A) is insurance proceeds received on account of 
     destruction or damage to crops, or
       ``(B) is disaster assistance received under any Federal law 
     as a result of--
       ``(i) destruction or damage to crops caused by drought, 
     flood, or other natural disaster, or
       ``(ii) inability to plant crops because of such a 
     disaster.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     applies to payments received after December 31, 1995, as a 
     result of destruction or damage occurring after such date.

                   PART V--TAX-EXEMPT BOND PROVISIONS

     SEC. 14561. REPEAL OF $100,000 LIMITATION ON UNSPENT PROCEEDS 
                   UNDER 1-YEAR EXCEPTION FROM REBATE.

       Subclause (I) of section 148(f)(4)(B)(ii) (relating to 
     additional period for certain bonds) is amended by striking 
     ``the lesser of 5 percent of the proceeds of the issue or 
     $100,000'' and inserting ``5 percent of the proceeds of the 
     issue''.

     SEC. 14562. EXCEPTION FROM REBATE FOR EARNINGS ON BONA FIDE 
                   DEBT SERVICE FUND UNDER CONSTRUCTION BOND 
                   RULES.

       Subparagraph (C) of section 148(f)(4) is amended by adding 
     at the end the following new clause:
       ``(xvii) Treatment of bona fide debt service funds.--If the 
     spending requirements of clause (ii) are met with respect to 
     the available construction proceeds of a construction issue, 
     then paragraph (2) shall not apply to earnings on a bona fide 
     debt service fund for such issue.''

     SEC. 14563. REPEAL OF DEBT SERVICE-BASED LIMITATION ON 
                   INVESTMENT IN CERTAIN NONPURPOSE INVESTMENTS.

       Subsection (d) of section 148 (relating to special rules 
     for reasonably required reserve or replacement fund) is 
     amended by striking paragraph (3).

     SEC. 14564. REPEAL OF EXPIRED PROVISIONS.

       (a) Paragraph (2) of section 148(c) is amended by striking 
     subparagraph (B) and by redesignating subparagraphs (C), (D), 
     and (E) as subparagraphs (B), (C), and (D), respectively.
       (b) Paragraph (4) of section 148(f) is amended by striking 
     subparagraph (E).

     SEC. 14565. EFFECTIVE DATES.

       The amendments made by this part shall apply to bonds 
     issued after the date of the enactment of this Act.

                     PART VI--INSURANCE PROVISIONS

     SEC. 14571. TREATMENT OF CERTAIN INSURANCE CONTRACTS ON 
                   RETIRED LIVES.

       (a) General Rule.--
       (1) Paragraph (2) of section 817(d) (defining variable 
     contract) is amended by striking ``or'' at the end of 
     subparagraph (A), by striking ``and'' at the end of 
     subparagraph (B) and inserting ``or'', and by inserting after 
     subparagraph (B) the following new subparagraph:
       ``(C) provides for funding of insurance on retired lives as 
     described in section 807(c)(6), and''.
       (2) Paragraph (3) of section 817(d) is amended by striking 
     ``or'' at the end of subparagraph (A), by striking the period 
     at the end of subparagraph (B) and inserting ``, or'', and by 
     inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) in the case of funds held under a contract described 
     in paragraph (2)(C), the amounts paid in, or the amounts paid 
     out, reflect the investment return and the market value of 
     the segregated asset account.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14572. TREATMENT OF MODIFIED GUARANTEED CONTRACTS.

       (a) General Rule.--Subpart E of part I of subchapter L of 
     chapter 1 (relating to definitions and special rules) is 
     amended by inserting after section 817 the following new 
     section:

     ``SEC. 817A. SPECIAL RULES FOR MODIFIED GUARANTEED CONTRACTS.

       ``(a) Computation of Reserves.--In the case of a modified 
     guaranteed contract, clause (ii) of section 807(e)(1)(A) 
     shall not apply.
       ``(b) Segregated Assets Under Modified Guaranteed Contracts 
     Marked to Market.--
       ``(1) In general.--In the case of any life insurance 
     company, for purposes of this subtitle--
       ``(A) Any gain or loss with respect to a segregated asset 
     shall be treated as ordinary income or loss, as the case may 
     be.
       ``(B) If any segregated asset is held by such company as of 
     the close of any taxable year--
       ``(i) such company shall recognize gain or loss as if such 
     asset were sold for its fair market value on the last 
     business day of such taxable year, and
       ``(ii) any such gain or loss shall be taken into account 
     for such taxable year.

     Proper adjustment shall be made in the amount of any gain or 
     loss subsequently realized for gain or loss taken into 
     account under the preceding sentence. The Secretary may 
     provide by regulations for the application of this 
     subparagraph at times other than the times provided in this 
     subparagraph.
       ``(2) Segregated asset.--For purposes of paragraph (1), the 
     term `segregated asset' means any asset held as part of a 
     segregated account referred to in subsection (d)(1) under a 
     modified guaranteed contract.
       ``(c) Special Rule in Computing Life Insurance Reserves.--
     For purposes of applying section 816(b)(1)(A) to any modified 
     guaranteed contract, an assumed rate of interest shall 
     include a rate of interest determined, from time to time, 
     with reference to a market rate of interest.
       ``(d) Modified Guaranteed Contract Defined.--For purposes 
     of this section, the 

[[Page H11140]]

     term `modified guaranteed contract' means a contract not 
     described in section 817--
       ``(1) all or part of the amounts received under which are 
     allocated to an account which, pursuant to State law or 
     regulation, is segregated from the general asset accounts of 
     the company and is valued from time to time with reference to 
     market values,
       ``(2) which--
       ``(A) provides for the payment of annuities,
       ``(B) is a life insurance contract, or
       ``(C) is a pension plan contract which is not a life, 
     accident, or health, property, casualty, or liability 
     contract,
       ``(3) for which reserves are valued at market for annual 
     statement purposes, and
       ``(4) which provides for a net surrender value or a 
     policyholder's fund (as defined in section 807(e)(1)).
     If only a portion of a contract is not described in section 
     817, such portion shall be treated for purposes of this 
     section as a separate contract.
       ``(e) Regulations.--The Secretary may prescribe 
     regulations--
       ``(1) to provide for the treatment of market value 
     adjustments under sections 72, 7702, 7702A, and 807(e)(1)(B),
       ``(2) to determine the interest rates applicable under 
     sections 807(c)(3), 807(d)(2)(B), and 812 with respect to a 
     modified guaranteed contract annually, in a manner 
     appropriate for modified guaranteed contracts and, to the 
     extent appropriate for such a contract, to modify or waive 
     the applicability of section 811(d),
       ``(3) to provide rules to limit ordinary gain or loss 
     treatment to assets constituting reserves for modified 
     guaranteed contracts (and not other assets) of the company,
       ``(4) to provide appropriate treatment of transfers of 
     assets to and from the segregated account, and
       ``(5) as may be necessary or appropriate to carry out the 
     purposes of this section.''
       (b) Clerical Amendment.--The table of sections for subpart 
     E of part I of subchapter L of chapter 1 is amended by 
     inserting after the item relating to section 817 the 
     following new item:

``Sec. 817A. Special rules for modified guaranteed contracts.''

       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 1995.
       (2) Treatment of net adjustments.--In the case of any 
     taxpayer required by the amendments made by this section to 
     change its calculation of reserves to take into account 
     market value adjustments and to mark segregated assets to 
     market for any taxable year--
       (A) such changes shall be treated as a change in method of 
     accounting initiated by the taxpayer,
       (B) such changes shall be treated as made with the consent 
     of the Secretary, and
       (C) the adjustments required by reason of section 481 of 
     the Internal Revenue Code of 1986 shall be taken into account 
     as ordinary income or loss by the taxpayer for the taxpayer's 
     first taxable year beginning after December 31, 1995.

     SEC. 14573. MINIMUM TAX TREATMENT OF CERTAIN PROPERTY AND 
                   CASUALTY INSURANCE COMPANIES.

       (a) In General.--Clause (i) of section 56(g)(4)(B) 
     (relating to inclusion of items included for purposes of 
     computing earnings and profits) is amended by adding at the 
     end the following new sentence: ``In the case of any 
     insurance company taxable under section 831(b), this clause 
     shall not apply to any amount not described in section 
     834(b).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1995.

                       PART VII--OTHER PROVISIONS

     SEC. 14581. CLOSING OF PARTNERSHIP TAXABLE YEAR WITH RESPECT 
                   TO DECEASED PARTNER, ETC.

       (a) General Rule.--Subparagraph (A) of section 706(c)(2) 
     (relating to disposition of entire interest) is amended to 
     read as follows:
       ``(A) Disposition of entire interest.--The taxable year of 
     a partnership shall close with respect to a partner whose 
     entire interest in the partnership terminates (whether by 
     reason of death, liquidation, or otherwise).''
       (b) Clerical Amendment.--The paragraph heading for 
     paragraph (2) of section 706(c) is amended to read as 
     follows:
       ``(2) Treatment of dispositions.--''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to partnership taxable years beginning after 
     December 31, 1995.

     SEC. 14582. CREDIT FOR SOCIAL SECURITY TAXES PAID WITH 
                   RESPECT TO EMPLOYEE CASH TIPS.

       (a) Reporting Requirement Not Considered.--Subparagraph (A) 
     of section 45B(b)(1) (relating to excess employer social 
     security tax) is amended by inserting ``(without regard to 
     whether such tips are reported under section 6053)'' after 
     ``section 3121(q)''.
       (b) Taxes Paid.--Subsection (d) of section 13443 of the 
     Revenue Reconciliation Act of 1993 is amended by inserting 
     ``, with respect to services performed before, on, or after 
     such date'' after ``1993''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if included in the amendments made by, 
     and the provisions of, section 13443 of the Revenue 
     Reconciliation Act of 1993.

     SEC. 14583. DUE DATE FOR FIRST QUARTER ESTIMATED TAX PAYMENTS 
                   BY PRIVATE FOUNDATIONS.

       (a) In General.--Paragraph (3) of section 6655(g) is 
     amended by inserting after subparagraph (C) the following new 
     subparagraph:
       ``(D) In the case of any private foundation, subsection 
     (c)(2) shall be applied by substituting `May 15' for `April 
     15' ''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14584. TREATMENT OF DUES PAID TO AGRICULTURAL OR 
                   HORTICULTURAL ORGANIZATIONS.

       (a) General Rule.--Section 512 (defining unrelated business 
     taxable income) is amended by adding at the end thereof the 
     following new subsection:
       ``(d) Treatment of Dues of Agricultural or Horticultural 
     Organizations.--
       ``(1) In general.--If--
       ``(A) an agricultural or horticultural organization 
     described in section 501(c)(5) requires annual dues to be 
     paid in order to be a member of such organization, and
       ``(B) the amount of such required annual dues does not 
     exceed $100,

     in no event shall any portion of such dues be treated as 
     derived by such organization from an unrelated trade or 
     business by reason of any benefits or privileges to which 
     members of such organization are entitled.
       ``(2) Indexation of $100 amount.--In the case of any 
     taxable year beginning in a calendar year after 1995, the 
     $100 amount in paragraph (1) shall be increased by an amount 
     equal to--
       ``(A) $100, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 1994' for 
     `calendar year 1992' in subparagraph (B) thereof.
       ``(3) Dues.--For purposes of this subsection, the term 
     `dues' includes any payment required to be made in order to 
     be recognized by the organization as a member of the 
     organization.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1994.
                     Subtitle F--Estates and Trusts

                     PART I--INCOME TAX PROVISIONS

     SEC. 14601. CERTAIN REVOCABLE TRUSTS TREATED AS PART OF 
                   ESTATE.

       (a) In General.--Subpart A of part I of subchapter J 
     (relating to estates, trusts, beneficiaries, and decedents) 
     is amended by adding at the end the following new section:

     ``SEC. 646. CERTAIN REVOCABLE TRUSTS TREATED AS PART OF 
                   ESTATE.

       ``(a) General Rule.--For purposes of this subtitle, if both 
     the executor of an estate and the trustee of a qualified 
     revocable trust elect the treatment provided in this section, 
     such trust shall be treated and taxed as part of such estate 
     (and not as a separate trust) for all taxable years of the 
     estate ending after the date of the decedent's death and 
     before the applicable date.
       ``(b) Definitions.--For purposes of subsection (a)--
       ``(1) Qualified revocable trust.--The term `qualified 
     revocable trust' means any trust all of which was treated 
     under section 676 as owned by the decedent of the estate 
     referred to in subsection (a).
       ``(2) Applicable date.--The term `applicable date' means--
       ``(A) if no return of tax imposed by chapter 11 is required 
     to be filed, the date which is 2 years after the date of the 
     decedent's death, and
       ``(B) if such a return is required to be filed, the date 
     which is 6 months after the date of the final determination 
     of the liability for tax imposed by chapter 11.
       ``(c) Election.--The election under subsection (a) shall be 
     made not later than the time prescribed for filing the return 
     of tax imposed by this chapter for the first taxable year of 
     the estate (determined with regard to extensions) and, once 
     made, shall be irrevocable.''
       (b) Comparable Treatment Under Generation-Skipping Tax.--
     Paragraph (1) of section 2652(b) is amended by adding at the 
     end the following new sentence: ``Such term shall not include 
     any trust during any period the trust is treated as part of 
     an estate under section 646.''
       (c) Clerical Amendment.--The table of sections for such 
     subpart A is amended by adding at the end the following new 
     item:

``Sec. 646. Certain revocable trusts treated as part of estate.''

       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to estates of decedents dying after 
     the date of the enactment of this Act.

     SEC. 14602. DISTRIBUTIONS DURING FIRST 65 DAYS OF TAXABLE 
                   YEAR OF ESTATE.

       (a) In General.--Subsection (b) of section 663 (relating to 
     distributions in first 65 days of taxable year) is amended by 
     inserting ``an estate or'' before ``a trust'' each place it 
     appears.
       (b) Conforming Amendment.--Paragraph (2) of section 663(b) 
     is amended by striking ``the fiduciary of such trust'' and 
     inserting ``the executor of such estate or the fiduciary of 
     such trust (as the case may be)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

[[Page H11141]]


     SEC. 14603. SEPARATE SHARE RULES AVAILABLE TO ESTATES.

       (a) In General.--Subsection (c) of section 663 (relating to 
     separate shares treated as separate trusts) is amended--
       (1) by inserting before the last sentence the following new 
     sentence: ``Rules similar to the rules of the preceding 
     provisions of this subsection shall apply to treat 
     substantially separate and independent shares of different 
     beneficiaries in an estate having more than 1 beneficiary as 
     separate estates.'', and
       (2) by inserting ``or estates'' after ``trusts'' in the 
     last sentence.
       (b) Conforming Amendment.--The subsection heading of 
     section 663(c) is amended by inserting ``Estates or'' before 
     ``Trusts''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after the date of 
     the enactment of this Act.

     SEC. 14604. EXECUTOR OF ESTATE AND BENEFICIARIES TREATED AS 
                   RELATED PERSONS FOR DISALLOWANCE OF LOSSES, 
                   ETC.

       (a) Disallowance of Losses.--Subsection (b) of section 267 
     (relating to losses, expenses, and interest with respect to 
     transactions between related taxpayers) is amended by 
     striking ``or'' at the end of paragraph (11), by striking the 
     period at the end of paragraph (12) and inserting ``; or'', 
     and by adding at the end the following new paragraph:
       ``(13) Except in the case of a sale or exchange in 
     satisfaction of a pecuniary bequest, an executor of an estate 
     and a beneficiary of such estate.''
       (b) Ordinary Income From Gain From Sale of Depreciable 
     Property.--Subsection (b) of section 1239 is amended by 
     striking the period at the end of paragraph (2) and inserting 
     ``, and'' and by adding at the end the following new 
     paragraph:
       ``(3) except in the case of a sale or exchange in 
     satisfaction of a pecuniary bequest, an executor of an estate 
     and a beneficiary of such estate.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 14605. LIMITATION ON TAXABLE YEAR OF ESTATES.

       (a) In General.--Section 645 (relating to taxable year of 
     trusts) is amended to read as follows:

     ``SEC. 645. TAXABLE YEAR OF ESTATES AND TRUSTS.

       ``(a) Estates.--For purposes of this subtitle, the taxable 
     year of an estate shall be a year ending on October 31, 
     November 30, or December 31.
       ``(b) Trusts.--
       ``(1) In general.--For purposes of this subtitle, the 
     taxable year of any trust shall be the calendar year.
       ``(2) Exception for trusts exempt from tax and charitable 
     trusts.--Paragraph (1) shall not apply to a trust exempt from 
     taxation under section 501(a) or to a trust described in 
     section 4947(a)(1).''
       (b) Clerical Amendment.--The table of sections for subpart 
     A of part I of subchapter J of chapter 1 is amended by 
     striking the item relating to section 645 and inserting the 
     following new item:

``Sec. 645. Taxable year of estates and trusts.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after the date of 
     the enactment of this Act.

     SEC. 14606. REPEAL OF CERTAIN THROWBACK RULES APPLICABLE TO 
                   DOMESTIC TRUSTS.

       (a) Accumulation Distributions.--
       (1) In general.--Section 665 is amended by adding at the 
     end the following new subsection:
       ``(f) Accumulation Distributions After 1995.--For purposes 
     of this subpart, in the case of a trust other than a foreign 
     trust, any distribution in any taxable year beginning after 
     December 31, 1995, shall be computed without regard to any 
     undistributed net income.''
       (2) Conforming amendment.--Subsection (b) of section 665 is 
     amended by inserting ``except as provided in subsection 
     (f),'' after ``subpart,''
       (b) Property Transferred to Trusts.--Subsection (e) of 
     section 644 is amended by striking ``or'' at the end of 
     paragraph (3), by striking the period at the end of paragraph 
     (4) and inserting ``, or '', and by adding at the end the 
     following new paragraph:
       ``(5) in the case of a trust other than a foreign trust, 
     any sale or exchange of property after December 31, 1995.''
       (c) Effective Dates.--
       (1) Accumulation distribution.--The amendments made by 
     subsection (a) shall apply to distributions in taxable years 
     beginning after December 31, 1995.
       (2) Transferred property.--The amendments made by 
     subsection (b) shall apply to sales or exchanges after 
     December 31, 1995.

     SEC. 14607. TREATMENT OF FUNERAL TRUSTS.

       (a) In General.--Subpart F of part I of subchapter J of 
     chapter 1 is amended by adding at the end the following new 
     section:

     ``SEC. 684. TREATMENT OF FUNERAL TRUSTS.

       ``(a) In General.--In the case of a qualified funeral 
     trust--
       ``(1) subparts B, C, D, and E shall not apply, and
       ``(2) no deduction shall be allowed by section 642(b).
       ``(b) Qualified Funeral Trust.--For purposes of this 
     subsection, the term `qualified funeral trust' means any 
     trust (other than a foreign trust) if--
       ``(1) the trust arises as a result of a contract with a 
     person engaged in the trade or business of providing funeral 
     or burial services or property necessary to provide such 
     services,
       ``(2) the sole purpose of the trust is to hold, invest, and 
     reinvest funds in the trust and to use such funds solely to 
     make payments for such services or property for the benefit 
     of the beneficiaries of the trust,
       ``(3) the only beneficiaries of such trust are individuals 
     who have entered into contracts described in paragraph (1) to 
     have such services or property provided at their death,
       ``(4) the only contributions to the trust are contributions 
     by or for the benefit of such beneficiaries,
       ``(5) the trustee elects the application of this 
     subsection, and
       ``(6) the trust would (but for the election described in 
     paragraph (5)) be treated as owned by the beneficiaries under 
     subpart E.
       ``(c) Dollar Limitation on Contributions.--
       ``(1) In general.--The term `qualified funeral trust' shall 
     not include any trust which accepts contributions by or for 
     the benefit of an individual in excess of $5,000.
       ``(2) Related trusts.--For purposes of paragraph (1), all 
     trusts having trustees which are related persons shall be 
     treated as 1 trust. For purposes of the preceding sentence, 
     persons are related if--
       ``(A) the relationship between such persons would result in 
     the disallowance of losses under section 267 or 707(b),
       ``(B) such persons are treated as a single employer under 
     subsection (a) or (b) of section 52, or
       ``(C) the Secretary determines that treating such persons 
     as related is necessary to prevent avoidance of the purposes 
     of this section.
       ``(3) Inflation adjustment.--In the case of any contract 
     referred to in subsection (b)(1) which is entered into during 
     any calendar year after 1996, the dollar amount referred to 
     paragraph (1) shall be increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year, by substituting 
     `calendar year 1995' for `calendar year 1992' in subparagraph 
     (B) thereof.

     If any dollar amount after being increased under the 
     preceding sentence is not a multiple of $100, such dollar 
     amount shall be rounded to the nearest multiple of $100.
       ``(d) Application of Rate Schedule.--Section 1(e) shall be 
     applied to each qualified funeral trust by treating each 
     beneficiary's interest in each such trust as a separate 
     trust.
       ``(e) Treatment of Amounts Refunded to Beneficiary on 
     Cancellation.--No gain or loss shall be recognized to a 
     beneficiary described in subsection (b)(3) of any qualified 
     funeral trust by reason of any payment from such trust to 
     such beneficiary by reason of cancellation of a contract 
     referred to in subsection (b)(1). If any payment referred to 
     in the preceding sentence consists of property other than 
     money, the basis of such property in the hands of such 
     beneficiary shall be the same as the trust's basis in such 
     property immediately before the payment.
       ``(f) Simplified Reporting.--The Secretary may prescribe 
     rules for simplified reporting of all trusts having a single 
     trustee.''
       (b) Clerical Amendment.--The table of sections for subpart 
     F of part I of subchapter J of chapter 1 is amended by adding 
     at the end the following new item:

``Sec. 684. Treatment of funeral trusts.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

                PART II--ESTATE AND GIFT TAX PROVISIONS

     SEC. 14611. CLARIFICATION OF WAIVER OF CERTAIN RIGHTS OF 
                   RECOVERY.

       (a) Amendment to Section 2207A.--Paragraph (2) of section 
     2207A(a) (relating to right of recovery in the case of 
     certain marital deduction property) is amended to read as 
     follows:
       ``(2) Decedent may otherwise direct.--Paragraph (1) shall 
     not apply with respect to any property to the extent that the 
     decedent in his will (or a revocable trust) specifically 
     indicates an intent to waive any right of recovery under this 
     subchapter with respect to such property.''
       (b) Amendment to Section 2207B.--Paragraph (2) of section 
     2207B(a) (relating to right of recovery where decedent 
     retained interest) is amended to read as follows:
       ``(2) Decedent may otherwise direct.--Paragraph (1) shall 
     not apply with respect to any property to the extent that the 
     decedent in his will (or a revocable trust) specifically 
     indicates an intent to waive any right of recovery under this 
     subchapter with respect to such property.''
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to the estates of decedents dying 
     after the date of the enactment of this Act.

     SEC. 14612. ADJUSTMENTS FOR GIFTS WITHIN 3 YEARS OF 
                   DECEDENT'S DEATH.

       (a) General Rule.--Section 2035 is amended to read as 
     follows:

     ``SEC. 2035. ADJUSTMENTS FOR CERTAIN GIFTS MADE WITHIN 3 
                   YEARS OF DECEDENT'S DEATH.

       ``(a) Inclusion of Certain Property in Gross Estate.--If--

[[Page H11142]]

       ``(1) the decedent made a transfer (by trust or otherwise) 
     of an interest in any property, or relinquished a power with 
     respect to any property, during the 3-year period ending on 
     the date of the decedent's death, and
       ``(2) the value of such property (or an interest therein) 
     would have been included in the decedent's gross estate under 
     section 2036, 2037, 2038, or 2042 if such transferred 
     interest or relinquished power had been retained by the 
     decedent on the date of his death,

     the value of the gross estate shall include the value of any 
     property (or interest therein) which would have been so 
     included.
       ``(b) Inclusion of Gift Tax on Gifts Made During 3 Years 
     Before Decedent's Death.--The amount of the gross estate 
     (determined without regard to this subsection) shall be 
     increased by the amount of any tax paid under chapter 12 by 
     the decedent or his estate on any gift made by the decedent 
     or his spouse during the 3-year period ending on the date of 
     the decedent's death.
       ``(c) Other Rules Relating to Transfers Within 3 Years of 
     Death.--
       ``(1) In general.--For purposes of--
       ``(A) section 303(b) (relating to distributions in 
     redemption of stock to pay death taxes),

       ``(B) section 2032A (relating to special valuation of 
     certain farms, etc., real property), and
       ``(C) subchapter C of chapter 64 (relating to lien for 
     taxes),
     the value of the gross estate shall include the value of all 
     property to the extent of any interest therein of which the 
     decedent has at any time made a transfer, by trust or 
     otherwise, during the 3-year period ending on the date of the 
     decedent's death.
       ``(2) Coordination with section 6166.--An estate shall be 
     treated as meeting the 35 percent of adjusted gross estate 
     requirement of section 6166(a)(1) only if the estate meets 
     such requirement both with and without the application of 
     paragraph (1).
       ``(3) Marital and small transfers.--Paragraph (1) shall not 
     apply to any transfer (other than a transfer with respect to 
     a life insurance policy) made during a calendar year to any 
     donee if the decedent was not required by section 6019 (other 
     than by reason of section 6019(2)) to file any gift tax 
     return for such year with respect to transfers to such donee.
       ``(d) Exception.--Subsection (a) shall not apply to any 
     bona fide sale for an adequate and full consideration in 
     money or money's worth.
       ``(e) Treatment of Certain Transfers From Revocable 
     Trusts.--For purposes of this section and section 2038, any 
     transfer from any portion of a trust during any period that 
     such portion was treated under section 676 as owned by the 
     decedent shall be treated as a transfer made directly by the 
     decedent.''
       (b) Clerical Amendment.--The table of sections for part III 
     of subchapter A of chapter 11 is amended by striking 
     ``gifts'' in the item relating to section 2035 and inserting 
     ``certain gifts''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to the estates of decedents dying after the date 
     of the enactment of this Act.

     SEC. 14613. CLARIFICATION OF QUALIFIED TERMINABLE INTEREST 
                   RULES.

       (a) General Rule.--
       (1) Estate tax.--Subparagraph (B) of section 2056(b)(7) 
     (defining qualified terminable interest property) is amended 
     by adding at the end the following new clause:
       ``(vi) Treatment of certain income distributions.--An 
     income interest shall not fail to qualify as a qualified 
     income interest for life solely because income for the period 
     after the last distribution date and on or before the date of 
     the surviving spouse's death is not required to be 
     distributed to the surviving spouse or to the estate of the 
     surviving spouse.''
       (2) Gift tax.--Paragraph (3) of section 2523(f) is amended 
     by striking ``and (iv)'' and inserting ``(iv), and (vi)''.
       (b) Clarification of Subsequent Inclusions.--Section 2044 
     is amended by adding at the end the following new subsection:
       ``(d) Clarification of Inclusion of Certain Income.--The 
     amount included in the gross estate under subsection (a) 
     shall include the amount of any income from the property to 
     which this section applies for the period after the last 
     distribution date and on or before the date of the decedent's 
     death if such income is not otherwise included in the 
     decedent's gross estate.''
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to the estates of decedents dying, and 
     gifts made, after the date of the enactment of this Act.
       (2) Application of section 2044 to transfers before date of 
     enactment.--In the case of the estate of any decedent dying 
     after the date of the enactment of this Act, if there was a 
     transfer of property on or before such date--
       (A) such property shall not be included in the gross estate 
     of the decedent under section 2044 of the Internal Revenue 
     Code of 1986 if no prior marital deduction was allowed with 
     respect to such a transfer of such property to the decedent, 
     but
       (B) such property shall be so included if such a deduction 
     was allowed.

     SEC. 14614. TRANSITIONAL RULE UNDER SECTION 2056A.

       (a) General Rule.--In the case of any trust created under 
     an instrument executed before the date of the enactment of 
     the Revenue Reconciliation Act of 1990, such trust shall be 
     treated as meeting the requirements of paragraph (1) of 
     section 2056A(a) of the Internal Revenue Code of 1986 if the 
     trust instrument requires that all trustees of the trust be 
     individual citizens of the United States or domestic 
     corporations.
       (b) Effective Date.--The provisions of subsection (a) shall 
     take effect as if included in the provisions of section 
     11702(g) of the Revenue Reconciliation Act of 1990.

     SEC. 14615. OPPORTUNITY TO CORRECT CERTAIN FAILURES UNDER 
                   SECTION 2032A.

       (a) General Rule.--Paragraph (3) of section 2032A(d) 
     (relating to modification of election and agreement to be 
     permitted) is amended to read as follows:
       ``(3) Modification of election and agreement to be 
     permitted.--The Secretary shall prescribe procedures which 
     provide that in any case in which the executor makes an 
     election under paragraph (1) (and submits the agreement 
     referred to in paragraph (2)) within the time prescribed 
     therefor, but--
       ``(A) the notice of election, as filed, does not contain 
     all required information, or
       ``(B) signatures of 1 or more persons required to enter 
     into the agreement described in paragraph (2) are not 
     included on the agreement as filed, or the agreement does not 
     contain all required information,

     the executor will have a reasonable period of time (not 
     exceeding 90 days) after notification of such failures to 
     provide such information or signatures.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to the estates of decedents dying after the date 
     of the enactment of this Act.

     SEC. 14616. UNIFIED CREDIT OF DECEDENT INCREASED BY UNIFIED 
                   CREDIT OF SPOUSE USED ON SPLIT GIFT INCLUDED IN 
                   DECEDENT'S GROSS ESTATE.

       (a) In General.--Section 2010 (relating to unified credit 
     against estate tax) is amended by adding at the end the 
     following new subsection:
       ``(d) Treatment of Unified Credit Used By Spouse on Split-
     Gift Included in Decedent's Gross Estate.--If--
       ``(1) the decedent was the donor of any gift one-half of 
     which was considered under section 2513 as made by the 
     decedent's spouse, and
       ``(2) the amount of such gift is includible in the gross 
     estate of the decedent by reason of section 2035, 2036, 2037, 
     or 2038,

     the amount of the credit allowable by subsection (a) to the 
     estate of the decedent shall be increased by the amount of 
     the unified credit allowed against the tax imposed by section 
     2501 on the amount of such gift considered under section 2513 
     as made by such spouse.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to gifts made after the date of the enactment of 
     this Act.

     SEC. 14617. REFORMATION OF DEFECTIVE BEQUESTS, ETC., TO 
                   SPOUSE OF DECEDENT.

       (a) In General.--Subsection (b) of section 2056 (relating 
     to bequests, etc., to surviving spouse) is amended by adding 
     at the end the following new paragraph:
       ``(11) Reformations permitted.--
       ``(A) In general.--In the case of any interest in property 
     with respect to which a deduction would be allowable under 
     subsection (a) but for a provision of this subsection, if--
       ``(i) the surviving spouse is entitled to all of the income 
     from the property for life,
       ``(ii) no person other than such spouse is entitled to any 
     distribution of such property during such spouse's life, and
       ``(iii) there is a change of a governing instrument (by 
     reformation, amendment, construction, or otherwise) as of the 
     applicable date which results in the satisfaction of the 
     requirements of such provision as of the date of the 
     decedent's death,

     the determination of whether such deduction is allowable 
     shall be made as of the applicable date.
       ``(B) Special rule where timely commencement of 
     reformation.--Clauses (i) and (ii) of subparagraph (A) shall 
     not apply to any interest if, not later than the date 
     described in subparagraph (C)(i), a judicial proceeding is 
     commenced to change such interest into an interest which 
     satisfies the requirements of the provision by reason of 
     which (but for this paragraph) a deduction would not be 
     allowable under subsection (a) for such interest.
       ``(C) Applicable date.--For purposes of subparagraph (A), 
     the term `applicable date' means--
       ``(i) the last date (including extensions) for filing the 
     return of tax imposed by this chapter, or
       ``(ii) if a judicial proceeding is commenced to comply with 
     such provision, the time when the changes pursuant to such 
     proceeding are made.
       ``(D) Special rule.--If the change referred to in 
     subparagraph (A)(iii) is to qualify the passage of the 
     interest under paragraph (7), subparagraph (A) shall apply 
     only if the election under subparagraph (B) thereof is made.
       ``(E) Statute of limitations.--If a judicial proceeding 
     described in subparagraph (C)(ii) is commenced with respect 
     to any interest, the period for assessing any deficiency of 
     tax attributable to such interest shall not expire before the 
     date 1 year after the date on 

[[Page H11143]]

     which the Secretary is notified that such provision has been 
     complied with or that such proceeding has been terminated.''
       (b) Comparable Rule for Gift Tax.--Section 2523 (relating 
     to gift to spouse) is amended by adding at the end the 
     following new subsection:
       ``(j) Reformations permitted.--Rules similar to the rules 
     of section 2056(b)(11) shall apply for purposes of this 
     section.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after the date of the enactment of this Act.

     SEC. 14618. GIFTS MAY NOT BE REVALUED FOR ESTATE TAX PURPOSES 
                   AFTER EXPIRATION OF STATUTE OF LIMITATIONS.

       (a) In General.--Section 2001 (relating to imposition and 
     rate of estate tax) is amended by adding at the end the 
     following new subsection:
       ``(f) Valuation of Gifts.--If--
       ``(1) the time has expired within which a tax may be 
     assessed under chapter 12 (or under corresponding provisions 
     of prior laws) on the transfer of property by gift made 
     during a preceding calendar period (as defined in section 
     2502(b)), and
       ``(2) the value of such gift is shown on the return for 
     such preceding calendar period or is disclosed in such 
     return, or in a statement attached to the return, in a manner 
     adequate to apprise the Secretary of the nature of such gift,

     the value of such gift shall, for purposes of computing the 
     tax under this chapter, be the value of such gift as finally 
     determined for purposes of chapter 12.''
       (b) Modification of Application of Statute of 
     Limitations.--Paragraph (9) of section 6501(c) is amended to 
     read as follows:
       ``(9) Gift tax on certain gifts not shown on return.--If 
     any gift of property the value of which (or any increase in 
     taxable gifts required under section 2701(d)) is required to 
     be shown on a return of tax imposed by chapter 12 (without 
     regard to section 2503(b)), and is not shown on such return, 
     any tax imposed by chapter 12 on such gift may be assessed, 
     or a proceeding in court for the collection of such tax may 
     be begun without assessment, at any time. The preceding 
     sentence shall not apply to any item which is disclosed in 
     such return, or in a statement attached to the return, in a 
     manner adequate to apprise the Secretary of the nature of 
     such item. The value of any item which is so disclosed may 
     not be redetermined by the Secretary after the expiration of 
     the period under subsection (a).''
       (c) Declaratory Judgment Procedure for Determining Value of 
     Gift.--
       (1) In general.--Part IV of subchapter C of chapter 76 is 
     amended by inserting after section 7476 the following new 
     section:

     ``SEC. 7477. DECLARATORY JUDGMENTS RELATING TO VALUE OF 
                   CERTAIN GIFTS.

       ``(a) Creation of Remedy.--In a case of an actual 
     controversy involving a determination by the Secretary of the 
     value of any gift shown on the return of tax imposed by 
     chapter 12 or disclosed on such return or in any statement 
     attached to such return, upon the filing of an appropriate 
     pleading, the Tax Court may make a declaration of the value 
     of such gift. Any such declaration shall have the force and 
     effect of a decision of the Tax Court and shall be reviewable 
     as such.
       ``(b) Limitations.--
       ``(1) Petitioner.--A pleading may be filed under this 
     section only by the donor.
       ``(2) Exhaustion of administrative remedies.--The court 
     shall not issue a declaratory judgment or decree under this 
     section in any proceeding unless it determines that the 
     petitioner has exhausted all available administrative 
     remedies within the Internal Revenue Service.
       ``(3) Time for bringing action.--If the Secretary sends by 
     certified or registered mail notice of his determination as 
     described in subsection (a) to the petitioner, no proceeding 
     may be initiated under this section unless the pleading is 
     filed before the 91st day after the date of such mailing.''
       (2) Clerical amendment.--The table of sections for such 
     part IV is amended by inserting after the item relating to 
     section 7476 the following new item:

``Sec. 7477. Declaratory judgments relating to value of certain 
              gifts.''

       (d) Conforming Amendment.--Subsection (c) of section 2504 
     is amended by striking ``, and if a tax under this chapter or 
     under corresponding provisions of prior laws has been 
     assessed or paid for such preceding calendar period''.
       (e) Effective Dates.--
       (1) In general.--The amendments made by subsections (a) and 
     (c) shall apply to gifts made after the date of the enactment 
     of this Act.
       (2) Subsection (b).--The amendment made by subsection (b) 
     shall apply to gifts made in calendar years ending after the 
     date of the enactment of this Act.

     SEC. 14619. CLARIFICATIONS RELATING TO DISCLAIMERS.

       (a) Partial Transfer-Type Disclaimers Permitted.--Paragraph 
     (3) of section 2518(c) (relating to certain transfers treated 
     as disclaimers) is amended by inserting ``(or an undivided 
     portion of such interest)'' after ``entire interest in the 
     property''.
       (b) Retention of Interest by Decedent's Spouse Permitted in 
     Transfer-Type Disclaimers.--Paragraph (3) of section 2518(c) 
     is amended by adding at the end the following new flush 
     sentence:

     ``For purposes of the preceding sentence, a written transfer 
     by the spouse of the decedent of property to a trust shall 
     not fail to be treated as a transfer of such spouse's 
     interest in such property by reason of such spouse having an 
     interest in such trust.''
       (c) Disclaimers Are Effective for Income Tax Purposes.--
     Subsection (a) of section 2518 is amended by inserting ``and 
     subtitle A'' after ``this subtitle'' each place it appears.
       (d) Effective Date.--The amendments made by this section 
     shall apply to transfers creating an interest in the person 
     disclaiming, and disclaimers, made after the date of the 
     enactment of this Act.

     SEC. 14620. CLARIFICATION OF TREATMENT OF SURVIVOR ANNUITIES 
                   UNDER QUALIFIED TERMINABLE INTEREST RULES.

       (a) In General.--Subparagraph (C) of section 2056(b)(7) is 
     amended by inserting ``(or, in the case of an interest in an 
     annuity arising under the community property laws of a State, 
     included in the gross estate of the decedent under section 
     2033)'' after ``section 2039''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to estates of decedents dying after the date of 
     the enactment of this Act.

     SEC. 14621. TREATMENT UNDER QUALIFIED DOMESTIC TRUST RULES OF 
                   FORMS OF OWNERSHIP WHICH ARE NOT TRUSTS.

       (a) In General.--Subsection (c) of section 2056A (defining 
     qualified domestic trust) is amended by adding at the end the 
     following new paragraph:
       ``(3) Trust.--To the extent provided in regulations 
     prescribed by the Secretary, the term `trust' includes other 
     arrangements which have substantially the same effect as a 
     trust.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to estates of decedents dying after the date of 
     the enactment of this Act.

     SEC. 14622. AUTHORITY TO WAIVE REQUIREMENT OF UNITED STATES 
                   TRUSTEE FOR QUALIFIED DOMESTIC TRUSTS.

       (a) In General.--Subparagraph (A) of section 2056A(a)(1) is 
     amended by inserting ``except as provided in regulations 
     prescribed by the Secretary,'' before ``requires''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to estates of decedents dying after the date of 
     the enactment of this Act.

              PART III--GENERATION-SKIPPING TAX PROVISIONS

     SEC. 14631. SEVERING OF TRUSTS HOLDING PROPERTY HAVING AN 
                   INCLUSION RATIO OF GREATER THAN ZERO.

       (a) In General.--Subsection (a) of section 2642 (relating 
     to inclusion ratio) is amended by adding at the end the 
     following new paragraph:
       ``(3) Severing of trusts holding property having an 
     inclusion ratio of greater than zero.--
       ``(A) In general.--If a trust holding property having an 
     inclusion ratio of greater than zero is severed in a 
     qualified severance, at the election of the trustee of such 
     trust, the trusts resulting from such severance shall be 
     treated as separate trusts for purposes of this chapter.
       ``(B) Qualified severance.--For purposes of subparagraph 
     (A), the term `qualified severance' means the creation of 2 
     trusts from a single trust if each property held by the 
     single trust was divided between the 2 created trusts such 
     that one trust received an interest in each such property 
     equal to the applicable fraction of the single trust. Such 
     term includes any other severance permitted under regulations 
     prescribed by the Secretary.
       ``(C) Election.--The election under this paragraph shall be 
     made at the time prescribed by the Secretary. Such an 
     election, once made, shall be irrevocable.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to severances after the date of the enactment of 
     this Act.

     SEC. 14632. CLARIFICATION OF WHO IS TRANSFEROR WHERE 
                   SUBSEQUENT GIFT BY REASON OF POWER OF 
                   APPOINTMENT.

       (a) In General.--Paragraph (1) of section 2652(a) (defining 
     transferor) is amended by adding at the end the following new 
     sentence: ``A transferor described in subparagraph (A) shall 
     not be treated as the transferor of any property if another 
     individual is treated as the transferor of such property 
     under subparagraph (B) by reason of the exercise, release, or 
     lapse of a general power of appointment with respect to such 
     property.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to the exercise, release, or lapse of a general 
     power of appointment after the date of the enactment of this 
     Act.

     SEC. 14633. TAXABLE TERMINATION NOT TO INCLUDE DIRECT SKIPS.

       (a) In General.--Paragraph (1) of section 2612(a) (defining 
     taxable termination) is amended by adding at the end the 
     following new flush sentence:

     ``Such term shall not include a direct skip.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to generation-skipping transfers (as defined in 
     section 2611 of the Internal Revenue Code of 1986) after the 
     date of the enactment of this Act.

[[Page H11144]]


     SEC. 14634. EXPANSION OF EXCEPTION FROM GENERATION-SKIPPING 
                   TRANSFER TAX FOR TRANSFERS TO INDIVIDUALS WITH 
                   DECEASED PARENTS.

       (a) In General.--Section 2651 (relating to generation 
     assignment) is amended by redesignating subsection (e) as 
     subsection (f), and by inserting after subsection (d) the 
     following new subsection:
       ``(e) Special Rule for Persons With a Deceased Parent.--
       ``(1) In general.--For purposes of determining whether any 
     transfer is a generation-skipping transfer, if--
       ``(A) an individual is a descendant of a parent of the 
     transferor (or the transferor's spouse or former spouse), and
       ``(B) such individual's parent who is a lineal descendant 
     of the parent of the transferor (or the transferor's spouse 
     or former spouse) is dead at the time the transfer (from 
     which an interest of such individual is established or 
     derived) is subject to a tax imposed by chapter 11 or 12 upon 
     the transferor (and if there shall be more than 1 such time, 
     then at the earliest such time),

     such individual shall be treated as if such individual were a 
     member of the generation which is 1 generation below the 
     lower of the transferor's generation or the generation 
     assignment of the youngest living ancestor of such individual 
     who is also a descendant of the parent of the transferor (or 
     the transferor's spouse or former spouse), and the generation 
     assignment of any descendant of such individual shall be 
     adjusted accordingly.
       ``(2) Limited application of subsection to collateral 
     heirs.--This subsection shall not apply with respect to a 
     transfer to any individual who is not a lineal descendant of 
     the transferor (or the transferor's spouse or former spouse) 
     if, at the time of the transfer, such transferor has any 
     living lineal descendant.''
       (b) Conforming Amendments.--
       (1) Section 2612(c) (defining direct skip) is amended by 
     striking paragraph (2) and by redesignating paragraph (3) as 
     paragraph (2).
       (2) Section 2612(c)(2) (as so redesignated) is amended by 
     striking ``section 2651(e)(2)'' and inserting ``section 
     2651(f)(2)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to terminations, distributions, and transfers 
     occurring after the date of the enactment of this Act.
                 Subtitle G--Excise Tax Simplification

    PART I--PROVISIONS RELATED TO DISTILLED SPIRITS, WINES, AND BEER

     SEC. 14701. CREDIT OR REFUND FOR IMPORTED BOTTLED DISTILLED 
                   SPIRITS RETURNED TO DISTILLED SPIRITS PLANT.

       (a) In General.--Paragraph (1) of section 5008(c) (relating 
     to distilled spirits returned to bonded premises) is amended 
     by striking ``withdrawn from bonded premises on payment or 
     determination of tax'' and inserting ``on which tax has been 
     determined or paid''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14702. AUTHORITY TO CANCEL OR CREDIT EXPORT BONDS 
                   WITHOUT SUBMISSION OF RECORDS.

       (a) In General.--Subsection (c) of section 5175 (relating 
     to export bonds) is amended by striking ``on the submission 
     of'' and all that follows and inserting ``if there is such 
     proof of exportation as the Secretary may by regulations 
     require.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14703. REPEAL OF REQUIRED MAINTENANCE OF RECORDS ON 
                   PREMISES OF DISTILLED SPIRITS PLANT.

       (a) In General.--Subsection (c) of section 5207 (relating 
     to records and reports) is amended by striking ``shall be 
     kept on the premises where the operations covered by the 
     record are carried on and''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14704. FERMENTED MATERIAL FROM ANY BREWERY MAY BE 
                   RECEIVED AT A DISTILLED SPIRITS PLANT.

       (a) In General.--Paragraph (2) of section 5222(b) (relating 
     to production, receipt, removal, and use of distilling 
     materials) is amended to read as follows:
       ``(2) beer conveyed without payment of tax from brewery 
     premises, beer which has been lawfully removed from brewery 
     premises upon determination of tax, or''.
       (b) Clarification of Authority To Permit Removal of Beer 
     Without Payment of Tax for Use as Distilling Material.--
     Section 5053 (relating to exemptions) is amended by 
     redesignating subsection (f) as subsection (i) and by 
     inserting after subsection (e) the following new subsection:
       ``(f) Removal for Use as Distilling Material.--Subject to 
     such regulations as the Secretary may prescribe, beer may be 
     removed from a brewery without payment of tax to any 
     distilled spirits plant for use as distilling material.''
       (c) Clarification of Refund and Credit of Tax.--Section 
     5056 (relating to refund and credit of tax, or relief from 
     liability) is amended--
       (1) by redesignating subsection (c) as subsection (d) and 
     by inserting after subsection (b) the following new 
     subsection:
       ``(c) Beer Received at a Distilled Spirits Plant.--Any tax 
     paid by any brewer on beer produced in the United States may 
     be refunded or credited to the brewer, without interest, or 
     if the tax has not been paid, the brewer may be relieved of 
     liability therefor, under regulations as the Secretary may 
     prescribe, if such beer is received on the bonded premises of 
     a distilled spirits plant pursuant to the provisions of 
     section 5222(b)(2), for use in the production of distilled 
     spirits.'', and
       (2) by striking ``or rendering unmerchantable'' in 
     subsection (d) (as so redesignated) and inserting ``rendering 
     unmerchantable, or receipt on the bonded premises of a 
     distilled spirits plant''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14705. REPEAL OF REQUIREMENT FOR WHOLESALE DEALERS IN 
                   LIQUORS TO POST SIGN.

       (a) In General.--Section 5115 (relating to sign required on 
     premises) is hereby repealed.
       (b) Conforming Amendments.--
       (1) Subsection (a) of section 5681 is amended by striking 
     ``, and every wholesale dealer in liquors,'' and by striking 
     ``section 5115(a) or''.
       (2) Subsection (c) of section 5681 is amended--
       (A) by striking ``or wholesale liquor establishment, on 
     which no sign required by section 5115(a) or'' and inserting 
     ``on which no sign required by'', and
       (B) by striking ``or wholesale liquor establishment, or 
     who'' and inserting ``or who''.
       (3) The table of sections for subpart D of part II of 
     subchapter A of chapter 51 is amended by striking the item 
     relating to section 5115.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 14706. REFUND OF TAX ON WINE RETURNED TO BOND NOT 
                   LIMITED TO UNMERCHANTABLE WINE.

       (a) In General.--Subsection (a) of section 5044 (relating 
     to refund of tax on unmerchantable wine) is amended by 
     striking ``as unmerchantable''.
       (b) Conforming Amendments.--
       (1) Section 5361 is amended by striking ``unmerchantable''.
       (2) The section heading for section 5044 is amended by 
     striking ``unmerchantable''.
       (3) The item relating to section 5044 in the table of 
     sections for subpart C of part I of subchapter A of chapter 
     51 is amended by striking ``unmerchantable''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14707. USE OF ADDITIONAL AMELIORATING MATERIAL IN 
                   CERTAIN WINES.

       (a) In General.--Subparagraph (D) of section 5384(b)(2) 
     (relating to ameliorated fruit and berry wines) is amended by 
     striking ``loganberries, currants, or gooseberries,'' and 
     inserting ``any fruit or berry with a natural fixed acid of 
     20 parts per thousand or more (before any correction of such 
     fruit or berry)''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14708. DOMESTICALLY PRODUCED BEER MAY BE WITHDRAWN FREE 
                   OF TAX FOR USE OF FOREIGN EMBASSIES, LEGATIONS, 
                   ETC.

       (a) In General.--Section 5053 (relating to exemptions) is 
     amended by inserting after subsection (f) the following new 
     subsection:
       ``(g) Removals for Use of Foreign Embassies, Legations, 
     Etc.--
       ``(1) In general.--Subject to such regulations as the 
     Secretary may prescribe--
       ``(A) beer may be withdrawn from the brewery without 
     payment of tax for transfer to any customs bonded warehouse 
     for entry pending withdrawal therefrom as provided in 
     subparagraph (B), and
       ``(B) beer entered into any customs bonded warehouse under 
     subparagraph (A) may be withdrawn for consumption in the 
     United States by, and for the official and family use of, 
     such foreign governments, organizations, and individuals as 
     are entitled to withdraw imported beer from such warehouses 
     free of tax.

     Beer transferred to any customs bonded warehouse under 
     subparagraph (A) shall be entered, stored, and accounted for 
     in such warehouse under such regulations and bonds as the 
     Secretary may prescribe, and may be withdrawn therefrom by 
     such governments, organizations, and individuals free of tax 
     under the same conditions and procedures as imported beer.
       ``(2) Other rules to apply.--Rules similar to the rules of 
     paragraphs (2) and (3) of section 5362(e) of such section 
     shall apply for purposes of this subsection.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14709. BEER MAY BE WITHDRAWN FREE OF TAX FOR 
                   DESTRUCTION.

       (a) In General.--Section 5053 is amended by inserting after 
     subsection (g) the following new subsection:

[[Page H11145]]

       ``(h) Removals for Destruction.--Subject to such 
     regulations as the Secretary may prescribe, beer may be 
     removed from the brewery without payment of tax for 
     destruction.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14710. AUTHORITY TO ALLOW DRAWBACK ON EXPORTED BEER 
                   WITHOUT SUBMISSION OF RECORDS.

       (a) In General.--The first sentence of section 5055 
     (relating to drawback of tax on beer) is amended by striking 
     ``found to have been paid'' and all that follows and 
     inserting ``paid on such beer if there is such proof of 
     exportation as the Secretary may by regulations require.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14711. TRANSFER TO BREWERY OF BEER IMPORTED IN BULK 
                   WITHOUT PAYMENT OF TAX.

       (a) In General.--Part II of subchapter G of chapter 51 is 
     amended by adding at the end the following new section:

     ``SEC. 5418. BEER IMPORTED IN BULK.

       ``Beer imported or brought into the United States in bulk 
     containers may, under such regulations as the Secretary may 
     prescribe, be withdrawn from customs custody and transferred 
     in such bulk containers to the premises of a brewery without 
     payment of the internal revenue tax imposed on such beer. The 
     proprietor of a brewery to which such beer is transferred 
     shall become liable for the tax on the beer withdrawn from 
     customs custody under this section upon release of the beer 
     from customs custody, and the importer, or the person 
     bringing such beer into the United States, shall thereupon be 
     relieved of the liability for such tax.''
       (b) Clerical Amendment.--The table of sections for such 
     part II is amended by adding at the end the following new 
     item:

``Sec. 5418. Beer imported in bulk.'',000
       (c) Effective Date.--The amendments made by this section 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

          PART II--CONSOLIDATION OF TAXES ON AVIATION GASOLINE

     SEC. 14721. CONSOLIDATION OF TAXES ON AVIATION GASOLINE.

       (a) In General.--Subparagraph (A) of section 4081(a)(2) 
     (relating to imposition of tax on gasoline and diesel fuel) 
     is amended by redesignating clause (ii) as clause (iii) and 
     by striking clause (i) and inserting the following:
       ``(i) in the case of gasoline other than aviation gasoline, 
     18.3 cents per gallon,
       ``(ii) in the case of aviation gasoline, 19.3 cents per 
     gallon, and''.
       (b) Termination.--Subsection (d) of section 4081 is amended 
     by redesignating paragraph (2) as paragraph (3) and by 
     inserting after paragraph (1) the following new paragraph:
       ``(2) Aviation gasoline.--On and after January 1, 1996, the 
     rate specified in subsection (a)(2)(A)(ii) shall be 4.3 cents 
     per gallon.''
       (c) Repeal of Retail Level Tax.--
       (1) Subsection (c) of section 4041 is amended by striking 
     paragraphs (2) and (3) and by redesignating paragraphs (4) 
     and (5) as paragraphs (2) and (3), respectively.
       (2) Paragraph (3) of section 4041(c), as redesignated by 
     paragraph (1), is amended by striking ``paragraphs (1) and 
     (2)'' and inserting ``paragraph (1)''.
       (d) Conforming Amendments.--
       (1) Paragraph (1) of section 4041(k) is amended by adding 
     ``and'' at the end of subparagraph (A), by striking ``, and'' 
     at the end of subparagraph (B) and inserting a period, and by 
     striking subparagraph (C).
       (2) Paragraph (1) of section 4081(d) is amended by striking 
     ``each rate of tax specified in subsection (a)(2)(A)'' and 
     inserting ``the rates of tax specified in clauses (i) and 
     (iii) of subsection (a)(2)(A)''.
       (3) Sections 6421(f)(2)(A) and 9502(f)(1)(A) are each 
     amended by striking ``section 4041(c)(4)'' and inserting 
     ``section 4041(c)(2)''.
       (4) Paragraph (2) of section 9502(b) is amended by striking 
     ``14 cents'' and inserting ``15 cents''.
       (e) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 1996.
       (f) Floor Stocks Tax.--
       (1) Imposition of tax.--In the case of aviation gasoline on 
     which tax was imposed under section 4081 of the Internal 
     Revenue Code of 1986 before January 1, 1996, and which is 
     held on such date by any person, there is hereby imposed a 
     floor stocks tax of 1 cent per gallon of such gasoline.
       (2) Liability for tax and method of payment.--
       (A) Liability for tax.--A person holding aviation gasoline 
     on January 1, 1996, to which the tax imposed by paragraph (1) 
     applies shall be liable for such tax.
       (B) Method of payment.--The tax imposed by paragraph (1) 
     shall be paid in such manner as the Secretary shall 
     prescribe.
       (C) Time for payment.--The tax imposed by paragraph (1) 
     shall be paid on or before June 30, 1996.
       (3) Definitions.--For purposes of this subsection:
       (A) Held by a person.--Gasoline shall be considered as 
     ``held by a person'' if title thereto has passed to such 
     person (whether or not delivery to the person has been made).
       (B) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury or his delegate.
       (4) Exception for exempt uses.--The tax imposed by 
     paragraph (1) shall not apply to gasoline held by any person 
     exclusively for any use to the extent a credit or refund of 
     the tax imposed by section 4081 of such Code is allowable for 
     such use.
       (5) Exception for fuel held in aircraft tank.--No tax shall 
     be imposed by paragraph (1) on aviation gasoline held in the 
     tank of an aircraft.
       (6) Exception for certain amounts of fuel.--
       (A) In general.--No tax shall be imposed by paragraph (1) 
     on aviation gasoline held on January 1, 1996, by any person 
     if the aggregate amount of aviation gasoline held by such 
     person on such date does not exceed 6,000 gallons. The 
     preceding sentence shall apply only if such person submits to 
     the Secretary (at the time and in the manner required by the 
     Secretary) such information as the Secretary shall require 
     for purposes of this paragraph.
       (B) Exempt fuel.--For purposes of subparagraph (A), there 
     shall not be taken into account fuel held by any person which 
     is exempt from the tax imposed by paragraph (1) by reason of 
     paragraph (4) or (5).
       (C) Controlled groups.--
       (i) Corporations.--In the case of a controlled group, the 
     6,000 gallon amount in subparagraph (A) shall be apportioned 
     among the component members of such group in such manner as 
     the Secretary shall by regulations prescribe. For purposes of 
     the preceding sentence, the term ``controlled group'' has the 
     meaning given to such term by subsection (a) of section 1563 
     of such Code; except that for such purposes the phrase ``more 
     than 50 percent'' shall be substituted for the phrase ``at 
     least 80 percent'' each place it appears in such subsection.
       (ii) Nonincorporated persons under common control.--Under 
     regulations prescribed by the Secretary, principles similar 
     to the principles of clause (i) shall apply to a group under 
     common control where 1 or more of the members is not a 
     corporation.
       (7) Other laws applicable.--All provisions of law, 
     including penalties, applicable with respect to the taxes 
     imposed by section 4081 of such Code shall, insofar as 
     applicable and not inconsistent with the provisions of this 
     subsection, apply with respect to the floor stock taxes 
     imposed by paragraph (1) to the same extent as if such taxes 
     were imposed by such section 4081.

                 PART III--OTHER EXCISE TAX PROVISIONS

     SEC. 14731. AUTHORITY TO GRANT EXEMPTIONS FROM REGISTRATION 
                   REQUIREMENTS.

       (a) In General.--The first sentence of section 4222 
     (relating to registration) is amended to read as follows: 
     ``Except as provided in subsection (b), section 4221 shall 
     not apply with respect to the sale of any article by or 
     to any person who is required by the Secretary to be 
     registered under this section and who is not so 
     registered.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to sales after the 180th day after the date of 
     the enactment of this Act.

     SEC. 14732. CERTAIN COMBINATIONS NOT TREATED AS MANUFACTURE 
                   UNDER RETAIL SALES TAX ON HEAVY TRUCKS.

       (a) In General.--Paragraph (2) of section 4052(c) (relating 
     to certain combinations not treated as manufacture) is 
     amended by striking ``or wood or metal floor'' and inserting 
     ``wood or metal floor, or a power take-off and dump body''.
       (b) Removal of Fifth Wheel.--Paragraph (1) of section 
     4052(c) is amended by inserting before the period ``or the 
     removal of any coupling device (including any fifth wheel)''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 14733. EXEMPTION FROM DIESEL FUEL DYEING REQUIREMENTS 
                   WITH RESPECT TO CERTAIN STATES.

       (a) In General.--Section 4082 (relating to exemptions for 
     diesel fuel) is amended by redesignating subsections (c) and 
     (d) as subsections (d) and (e), respectively, and by 
     inserting after subsection (b) the following new subsection:
       ``(c) Exception to Dyeing Requirements.--Paragraph (2) of 
     subsection (a) shall not apply with respect to any diesel 
     fuel--
       ``(1) removed, entered, or sold in a State for ultimate 
     sale or use in an area of such State which is exempted from 
     the fuel dyeing requirements under subsection (i) of section 
     211 of the Clean Air Act (as in effect on the date of the 
     enactment of this subsection) by the Administrator of the 
     Environmental Protection Agency under paragraph (4) of such 
     subsection, and
       ``(2) the use of which is certified pursuant to regulations 
     issued by the Secretary.''
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the first day of the first calendar 
     quarter beginning after the date of the enactment of this 
     Act.

     SEC. 14734. REPEAL OF EXPIRED PROVISIONS.

       (a) Piggy-Back Trailers.--Section 4051 is amended by 
     striking subsection (d) and by redesignating subsection (e) 
     as subsection (d).
       (b) Deep Seabed Mining.--
       (1) Subchapter F of chapter 36 (relating to tax on removal 
     of hard mineral resources from deep seabed) is hereby 
     repealed.

[[Page H11146]]

       (2) The table of subchapters for chapter 36 is amended by 
     striking the item relating to subchapter F.
                 Subtitle H--Administrative Provisions

                       PART I--GENERAL PROVISIONS

     SEC. 14801. REPEAL OF AUTHORITY TO DISCLOSE WHETHER 
                   PROSPECTIVE JUROR HAS BEEN AUDITED.

       (a) In General.--Subsection (h) of section 6103 (relating 
     to disclosure to certain Federal officers and employees for 
     purposes of tax administration, etc.) is amended by striking 
     paragraph (5) and by redesignating paragraph (6) as paragraph 
     (5).
       (b) Conforming Amendment.--Paragraph (4) of section 6103(p) 
     is amended by striking ``(h)(6)'' each place it appears and 
     inserting ``(h)(5)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to judicial proceedings pending on, or commenced 
     after, the date of the enactment of this Act.

     SEC. 14802. CLARIFICATION OF STATUTE OF LIMITATIONS.

       (a) In General.--Subsection (a) of section 6501 (relating 
     to limitations on assessment and collection) is amended by 
     adding at the end the following new sentence: ``For purposes 
     of this chapter, the term `return' means the return required 
     to be filed by the taxpayer (and does not include a return of 
     any person from whom the taxpayer has received an item of 
     income, gain, loss, deduction, or credit).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 14803. CERTAIN NOTICES DISREGARDED UNDER PROVISION 
                   INCREASING INTEREST RATE ON LARGE CORPORATE 
                   UNDERPAYMENTS.

       (a) General Rule.--Subparagraph (B) of section 6621(c)(2) 
     (defining applicable date) is amended by adding at the end 
     the following new clause:
       ``(iii) Exception for letters or notices involving small 
     amounts.--For purposes of this paragraph, any letter or 
     notice shall be disregarded if the amount of the deficiency 
     or proposed deficiency (or the assessment or proposed 
     assessment) set forth in such letter or notice is not greater 
     than $100,000 (determined by not taking into account any 
     interest, penalties, or additions to tax).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply for purposes of determining interest for periods 
     after December 31, 1995.

     SEC. 14804. CLARIFICATION OF AUTHORITY TO WITHHOLD PUERTO 
                   RICO INCOME TAXES FROM SALARIES OF FEDERAL 
                   EMPLOYEES.

       (a) In General.--Subsection (c) of section 5517 of title 5, 
     United States Code, is amended by striking ``or territory or 
     possession'' and inserting ``, territory, possession, or 
     commonwealth''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act.

                     PART II--TAX COURT PROCEDURES

     SEC. 14811. OVERPAYMENT DETERMINATIONS OF TAX COURT.

       (a) Appeal of Order.--Paragraph (2) of section 6512(b) 
     (relating to jurisdiction to enforce) is amended by adding at 
     the end the following new sentence: ``An order of the Tax 
     Court disposing of a motion under this paragraph shall be 
     reviewable in the same manner as a decision of the Tax Court, 
     but only with respect to the matters determined in such 
     order.''
       (b) Denial of Jurisdiction Regarding Certain Credits and 
     Reductions.--Subsection (b) of section 6512 (relating to 
     overpayment determined by Tax Court) is amended by adding at 
     the end the following new paragraph:
       ``(4) Denial of jurisdiction regarding certain credits and 
     reductions.--The Tax Court shall have no jurisdiction under 
     this subsection to restrain or review any credit or reduction 
     made by the Secretary under section 6402.''
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 14812. AWARDING OF ADMINISTRATIVE COSTS.

       (a) Right To Appeal Tax Court Decision.--Subsection (f) of 
     section 7430 (relating to right of appeal) is amended by 
     adding at the end the following new paragraph:
       ``(3) Appeal of tax court decision.--An order of the Tax 
     Court disposing of a petition under paragraph (2) shall be 
     reviewable in the same manner as a decision of the Tax Court, 
     but only with respect to the matters determined in such 
     order.''
       (b) Period for Applying to IRS for Costs.--Subsection (b) 
     of section 7430 (relating to limitations) is amended by 
     adding at the end the following new paragraph:
       ``(5) Period for applying to irs for administrative 
     costs.--An award may be made under subsection (a) by the 
     Internal Revenue Service for reasonable administrative costs 
     only if the prevailing party files an application with the 
     Internal Revenue Service for such costs before the 91st day 
     after the date on which the final decision of the Internal 
     Revenue Service as to the determination of the tax, interest, 
     or penalty is mailed to such party.''
       (c) Period for Petitioning of Tax Court for Review of 
     Denial of Costs.--Paragraph (2) of section 7430(f) (relating 
     to right of appeal) is amended--
       (1) by striking ``appeal to'' and inserting ``the filing of 
     a petition for review with'', and
       (2) by adding at the end the following new sentence: ``If 
     the Secretary sends by certified or registered mail a notice 
     of such decision to the petitioner, no proceeding in the Tax 
     Court may be initiated under this paragraph unless such 
     petition is filed before the 91st day after the date of such 
     mailing.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to civil actions or proceedings commenced after 
     the date of the enactment of this Act.

     SEC. 14813. REDETERMINATION OF INTEREST PURSUANT TO MOTION.

       (a) In General.--Paragraph (3) of section 7481(c) (relating 
     to jurisdiction over interest determinations) is amended by 
     striking ``petition'' and inserting ``motion''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 14814. APPLICATION OF NET WORTH REQUIREMENT FOR AWARDS 
                   OF LITIGATION COSTS.

       (a) In General.--Paragraph (4) of section 7430(c) (defining 
     prevailing party) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Special rules for applying net worth requirement.--In 
     applying the requirements of section 2412(d)(2)(B) of title 
     28, United States Code, for purposes of subparagraph (A)(iii) 
     of this paragraph--
       ``(i) the net worth limitation in clause (i) of such 
     section shall apply to--

       ``(I) an estate but shall be determined as of the date of 
     the decedent's death, and
       ``(II) a trust but shall be determined as of the last day 
     of the taxable year involved in the proceeding, and

       ``(ii) individuals filing a joint return shall be treated 
     as 1 individual for purposes of clause (i) of such section, 
     except in the case of a spouse relieved of liability under 
     section 6013(e).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to proceedings commenced after the date of the 
     enactment of this Act.

         PART III--AUTHORITY FOR CERTAIN COOPERATIVE AGREEMENTS

     SEC. 14821. COOPERATIVE AGREEMENTS WITH STATE TAX 
                   AUTHORITIES.

       (a) General Rule.--Chapter 77 (relating to miscellaneous 
     provisions) is amended by adding at the end the following new 
     section:

     ``SEC. 7524. COOPERATIVE AGREEMENTS WITH STATE TAX 
                   AUTHORITIES.

       ``(a) Authorization of Agreements.--The Secretary is hereby 
     authorized to enter into cooperative agreements with State 
     tax authorities for purposes of enhancing joint tax 
     administration. Such agreements may provide for--
       ``(1) joint filing of Federal and State income tax returns,
       ``(2) single processing of such returns,
       ``(3) joint collection of taxes (other than Federal income 
     taxes), and
       ``(4) such other provisions as may enhance joint tax 
     administration.
       ``(b) Services on Reimbursable Basis.--Any agreement under 
     subsection (a) may require reimbursement for services 
     provided by either party to the agreement.
       ``(c) Availability of Funds.--Any funds appropriated for 
     purposes of the administration of this title shall be 
     available for purposes of carrying out the Secretary's 
     responsibility under an agreement entered into under 
     subsection (a). Any reimbursement received pursuant to such 
     an agreement shall be credited to the amount so appropriated.
       ``(d) State Tax Authority.--For purposes of this section, 
     the term `State tax authority' means agency, body, or 
     commission referred to in section 6103(d)(1).''
       (b) Clerical Amendment.--The table of sections for chapter 
     77 is amended by adding at the end the following new item:

``Sec. 7524. Cooperative agreements with State tax authorities.''
      TITLE XV--PRESERVING, PROTECTING, AND STRENGTHENING MEDICARE
       H.R. 2425 as passed the House of Representatives is hereby 
     enacted into law.
           TITLE XVI--TRANSFORMATION OF THE MEDICAID PROGRAM

     SEC. 16000. SHORT TITLE.

       This title may be cited as the ``Medicaid Transformation 
     Act of 1995''.

     SEC. 16001. TRANSFORMATION OF MEDICAID PROGRAM.

       The Social Security Act is amended by adding at the end the 
     following new title:

 ``TITLE XXI--MEDIGRANT PROGRAM FOR LOW-INCOME INDIVIDUALS AND FAMILIES


                      ``table of contents of title

``Sec. 2100. Purpose; State MediGrant plans.

     ``Part A--Objectives, Goals, and Performance Under State Plans

``Sec. 2101. Description of strategic objectives and performance goals.
``Sec. 2102. Annual reports.
``Sec. 2103. Periodic, independent evaluations.
``Sec. 2104. Description of process for MediGrant plan development.
``Sec. 2105. Consultation in MediGrant plan development.
``Sec. 2106. MediGrant Task Force.

            ``Part B--Eligibility, Benefits, and Set-asides

``Sec. 2111. General description of eligibility and benefits.

[[Page H11147]]

``Sec. 2112. Set-asides of funds for population groups.
``Sec. 2113. Premiums and cost-sharing.
``Sec. 2114. Description of process for developing capitation payment 
              rates.
``Sec. 2115. Preventing spousal impoverishment.
``Sec. 2116. Construction.
``Sec. 2117. Limitations on causes of action.

                      ``Part C--Payments to States

``Sec. 2121. Allotment of funds among States.
``Sec. 2122. Payments to States.
``Sec. 2123. Limitation on use of funds; disallowance.

                ``Part D--Program Integrity and Quality

``Sec. 2131. Use of audits to achieve fiscal integrity.
``Sec. 2132. Fraud prevention program.
``Sec. 2133. Information concerning sanctions taken by State licensing 
              authorities against health care practitioners and 
              providers.
``Sec. 2134. State MediGrant fraud control units.
``Sec. 2135. Recoveries from third parties and others.
``Sec. 2136. Assignment of rights of payment.
``Sec. 2137. Quality assurance standards for nursing facilities.
``Sec. 2138. Other provisions promoting program integrity.

     ``Part E--Establishment and Amendment of State MediGrant Plans

``Sec. 2151. Submittal and approval of MediGrant plans.
``Sec. 2152. Submittal and approval of plan amendments.
``Sec. 2153. Process for State withdrawal from program.
``Sec. 2154. Sanctions for substantial noncompliance.
``Sec. 2155. Secretarial authority.

                      ``Part F--General Provisions

``Sec. 2171. Definitions.
``Sec. 2172. Treatment of territories.
``Sec. 2173. Description of treatment of Indian Health Service 
              facilities.
``Sec. 2174. Application of certain general provisions.
``Sec. 2175. MediGrant master drug rebate agreements.

     ``SEC. 2100. PURPOSE; STATE MEDIGRANT PLANS.

       ``(a) Purpose.--The purpose of this title is to provide 
     block grants to States to enable them to provide medical 
     assistance to low-income individuals and families in a more 
     effective, efficient, and responsive manner.
       ``(b) State Plan Required.--A State is not eligible for 
     payment under section 2122 of this title unless the State has 
     submitted to the Secretary under part E a plan (in this title 
     referred to as a `MediGrant plan') that--
       ``(1) sets forth how the State intends to use the funds 
     provided under this title to provide medical assistance to 
     needy individuals and families consistent with the provisions 
     of this title, and
       ``(2) is approved under such part.
       ``(c) Continued Approval.--An approved MediGrant plan shall 
     continue in effect unless and until--
       ``(1) the State amends the plan under section 2152,
       ``(2) the State terminates participation under this title 
     under section 2153, or
       ``(3) the Secretary finds substantial noncompliance of the 
     plan with the requirements of this title under section 2154.
       ``(d) State Entitlement.--This title constitutes budget 
     authority in advance of appropriations Acts, and represents 
     the obligation of the Federal Government to provide for the 
     payment to States of amounts provided under part C.

     ``Part A--Objectives, Goals, and Performance Under State Plans

     ``SEC. 2101. DESCRIPTION OF STRATEGIC OBJECTIVES AND 
                   PERFORMANCE GOALS.

       ``(a) Description.--A MediGrant plan shall include a 
     description of the strategic objectives and performance goals 
     the State has established for providing health care services 
     to low-income populations under this title, including a 
     general description of the manner in which the plan is 
     designed to meet these objectives and goals.
       ``(b) Certain Objectives and Goals Required.--A MediGrant 
     plan shall include strategic objectives and performance goals 
     relating to rates of childhood immunizations and reductions 
     in infant mortality and morbidity.
       ``(c) Considerations.--In specifying these objectives and 
     goals the State may consider factors such as the following:
       ``(1) The State's priorities with respect to such areas as 
     providing assistance to low-income populations.
       ``(2) The State's priorities with respect to the general 
     public health and the health status of individuals eligible 
     for assistance under the MediGrant plan.
       ``(3) The State's financial resources, the particular 
     economic conditions in the State, and relative adequacy of 
     the health care infrastructure in different regions of the 
     State.
       ``(d) Performance Measures.--To the extent practicable--
       ``(1) one or more performance goals shall be established by 
     the State for each strategic objective identified in the 
     MediGrant plan; and
       ``(2) the MediGrant plan shall describe, how program 
     performance will be--
       ``(A) measured through objective, independently verifiable 
     means, and
       ``(B) compared against performance goals, in order to 
     determine the State's performance under this title.
       ``(e) Period Covered.--
       ``(1) Strategic objectives.--The strategic objectives shall 
     cover a period of not less than 5 years and shall be updated 
     and revised at least every 3 years.
       ``(2) Performance goals.--The performance goals shall be 
     established for dates that are not more than 3 years apart.

     ``SEC. 2102. ANNUAL REPORTS.

       ``(a) In General.--In the case of a State with a MediGrant 
     plan that is in effect for part or all of a fiscal year, no 
     later than March 31 following such fiscal year (or March 31, 
     1998, in the case of fiscal year 1996) the State shall 
     prepare and submit to the Secretary and the Congress a report 
     on program activities and performance under this title for 
     such fiscal year.
       ``(b) Contents.--Each annual report under this section for 
     a fiscal year shall include the following:
       ``(1) Expenditure and beneficiary summary.--
       ``(A) Initial summary.--For the report for fiscal year 1997 
     (and, if applicable, fiscal year 1996), a summary of all 
     expenditures under the MediGrant plan during the fiscal year 
     (and during any portions of fiscal year 1996 during which the 
     MediGrant plan was in effect under this title) as follows:
       ``(i) Aggregate medical assistance expenditures, 
     disaggregated to the extent required to determine compliance 
     with the set-aside requirements of subsections (a) through 
     (c) section 2112 and to compute the case mix index under 
     section 2121(d)(3).
       ``(ii) For each general category of eligible individuals 
     (specified in subsection (c)(1), aggregate medical assistance 
     expenditures and the total and average number of eligible 
     individuals under the MediGrant plan.
       ``(iii) By each general category of eligible individuals, 
     total expenditures for each of the categories of health care 
     items and services (specified in subsection (c)(2)) which are 
     covered under the MediGrant plan and provided on a fee-for-
     service basis.
       ``(iv) By each general category of eligible individuals, 
     total expenditures for payments to capitated health care 
     organizations (as defined in section 2114(c)(1)).
       ``(v) Total administrative expenditures.
       ``(B) Subsequent summaries.--For reports for each 
     succeeding fiscal year, a summary of--
       ``(i) all expenditures under the MediGrant plan consistent 
     with the reporting format specified by the MediGrant Task 
     Force under section 2106(d)(1), and
       ``(ii) the total and average number of eligible individuals 
     under the MediGrant plan for each general category of 
     eligible individuals.
       ``(2) Utilization summary.--
       ``(A) Initial summary.--For the report for fiscal year 1997 
     (and, if applicable, fiscal year 1996), summary statistics on 
     the utilization of health care services under the MediGrant 
     plan during the year (and during any portions of fiscal year 
     1996 during which the MediGrant plan was in effect under this 
     title) as follows:
       ``(i) For each general category of eligible individuals and 
     for each of the categories of health care items and services 
     which are covered under the MediGrant plan and provided on a 
     fee-for-service basis, the number and percentage of persons 
     who received such a type of service or item during the period 
     covered by the report.
       ``(ii) Summary of health care utilization data reported to 
     the State by capitated health care organizations.
       ``(B) Subsequent summaries.--For reports for each 
     succeeding fiscal year, summary statistics on the utilization 
     of health care services under the MediGrant plan consistent 
     with the reporting format specified by the MediGrant Task 
     Force under section 2106(d)(1).
       ``(3) Achievement of performance goals.--With respect to 
     each performance goal established under section 2101 and 
     applicable to the year involved--
       ``(A) a brief description of the goal;
       ``(B) data on the actual performance with respect to the 
     goal;
       ``(C) a review of the extent to which the goal was 
     achieved, based on such data; and
       ``(D) where a performance goal has not been met--
       ``(i) why the goal was not met, and
       ``(ii) actions to be taken in response to such performance 
     (including adjustments in performance goals or program 
     activities for subsequent years).
       ``(4) Program evaluations.--A summary of the findings of 
     evaluations under section 2103 completed during the fiscal 
     year covered by the report.
       ``(5) Fraud and abuse and quality control activities.--A 
     general description of the State's activities under part D 
     to detect and deter fraud and abuse and to assure quality 
     of services provided under the program.
       ``(6) Plan administration.--
       ``(A) A description of the administrative roles and 
     responsibilities of entities in the State responsible for 
     administration of this title.
       ``(B) Organizational charts for each entity in the State 
     primarily responsible for activities under this title.
       ``(C) A brief description of each interstate compact (if 
     any) the State has entered into with other States with 
     respect to activities under this title.
       ``(D) General citations to the State statutes and 
     administrative rules governing the State's activities under 
     this title.

[[Page H11148]]

       ``(7) Inpatient hospital payments.--With respect to 
     inpatient hospital services provided under the MediGrant plan 
     on a fee-for-service basis, a description of the average 
     amount paid per discharge in the fiscal year compared either 
     to the average charge for such services or to the State's 
     estimate of the average amount paid per discharge by 
     commercial health insurers in the State.
       ``(c) Definitions.--In this section:
       ``(1) Each of the following is a general category of 
     eligible individuals:
       ``(A) Children.
       ``(B) Blind or disabled adults under 65 years of age.
       ``(C) Persons 65 years of age or older.
       ``(D) Other adults.
       ``(2) The health care items and services described in each 
     subparagraph of section 2171(a)(1) shall be considered a 
     separate category of health care items and services.

     ``SEC. 2103. PERIODIC, INDEPENDENT EVALUATIONS.

       ``(a) In General.--During fiscal year 1998 and every third 
     fiscal year thereafter, each State shall provide for an 
     evaluation of the operation of its MediGrant plan under this 
     title.
       ``(b) Independent.--Each such evaluation with respect to an 
     activity under the MediGrant plan shall be conducted by an 
     entity that is neither responsible under State law for the 
     submission of the State plan (or part thereof) nor 
     responsible for administering (or supervising the 
     administration of) the activity. If consistent with the 
     previous sentence, such an entity may be a college or 
     university, a State agency, a legislative branch agency in a 
     State, or an independent contractor.
       ``(c) Research Design.--Each such evaluation shall be 
     conducted in accordance with a research design that is based 
     on generally accepted models of survey design and sampling 
     and statistical analysis.

     ``SEC. 2104. DESCRIPTION OF PROCESS FOR MEDIGRANT PLAN 
                   DEVELOPMENT.

       ``Each MediGrant plan shall include a description of the 
     process under which the plan shall be developed and 
     implemented in the State (consistent with section 2105).

     ``SEC. 2105. CONSULTATION IN MEDIGRANT PLAN DEVELOPMENT.

       ``(a) Public Notice Process.--
       ``(1) In general.--Before submitting a MediGrant plan or a 
     plan amendment described in paragraph (3) to the Secretary 
     under part E, a State shall provide--
       ``(A) public notice respecting the submittal of the 
     proposed plan or amendment, including a general description 
     of the plan or amendment;
       ``(B) a means for the public to inspect or obtain a copy 
     (at reasonable charge) of the proposed plan or amendment; and
       ``(C) an opportunity for submittal and consideration of 
     public comments on the proposed plan or amendment.
     The previous sentence shall not apply to a revision of a 
     MediGrant plan (or revision of an amendment to a plan) made 
     by a State under section 2154(c)(1) or to a plan amendment 
     withdrawal described in section 2152(c)(4).
       ``(2) Contents of notice.--A notice under paragraph (1)(A) 
     for a proposed plan or amendment shall include a description 
     of--
       ``(A) the general purpose of the proposed plan or amendment 
     (including applicable effective dates),
       ``(B) where the public may inspect the proposed plan or 
     amendment,
       ``(C) how the public may obtain a copy of the proposed plan 
     or amendment and the applicable charge (if any) for the copy, 
     and
       ``(D) how the public may submit comments on the proposed 
     plan or amendment, including any deadlines applicable to 
     consideration of such comments.
       ``(3) Amendments described.--An amendment to a MediGrant 
     plan described in this paragraph is an amendment which makes 
     a material and substantial change in eligibility under the 
     MediGrant plan or the benefits provided under the plan.
       ``(4) Publication.--Notices under this subsection may be 
     published (as selected by the State) in one or more daily 
     newspapers of general circulation in the State or in any 
     publication used by the State to publish State statutes or 
     rules.
       ``(5) Comparable process.--A separate notice, or notices, 
     shall not be required under this subsection for a State if 
     notice of the MediGrant plan or an amendment to the plan will 
     be provided under a process specified in State law that is 
     substantially equivalent to the notice process specified in 
     this subsection.
       ``(b) Advisory Committee.--
       ``(1) In general.--Each State with a MediGrant plan shall 
     establish and maintain an advisory committee.
       ``(2) Consultation.--The State shall periodically consult 
     with the advisory committee in the development, revision, and 
     monitoring the performance of the MediGrant plan, including--
       ``(A) the development of strategic objectives and 
     performance goals under section 2101,
       ``(B) the annual report under section 2102, and
       ``(C) the research design under section 2103(c).
       ``(3) Geographic diversity.--The composition of the 
     advisory committee shall be chosen in a manner that assures 
     some representation on the advisory committee of the 
     different general geographic regions of the State. Nothing in 
     the previous sentence shall be construed as requiring 
     proportional representation of geographic areas in a State.
       ``(4) Construction.--Nothing in this title shall be 
     construed as preventing a State from establishing more than 
     one advisory committee, including specialized advisory 
     committees that represent the interests of specific 
     population groups, provider groups, or geographic areas.

     ``SEC. 2106. MEDIGRANT TASK FORCE.

       ``(a) In General.--The Secretary shall provide for the 
     establishment of a MediGrant Task Force (in this section 
     referred to as the `Task Force').
       ``(b) Composition.--The Task Force shall consist of 6 
     members appointed by the chair of the National Governors 
     Association and 6 members appointed by the vice chair of the 
     National Governors Association.
       ``(c) Advisory Group for Task Force.--The Secretary shall 
     provide for the establishment of an advisory group to assist 
     the Task Force in carrying out its duties under this section, 
     consisting of one representative appointed by each of the 
     following associations:
       ``(1) National Committee for Quality Assurance.
       ``(2) Joint Commission for the Accreditation of Healthcare 
     Organizations.
       ``(3) Group Health Association of America.
       ``(4) American Managed Care and Review Association.
       ``(5) Association of State and Territorial Health Officers.
       ``(6) American Medical Association.
       ``(7) American Hospital Association.
       ``(8) American Dental Association.
       ``(9) American College of Gerontology.
       ``(10) American Health Care Association.
       ``(11) An association identified by the Secretary as 
     representing the interests of disabled individuals.
       ``(12) An association identified by the Secretary as 
     representing the interests of children.
       ``(13) An association identified by the Secretary as 
     representing the interests of the elderly.
       ``(14) An association identified by the Secretary as 
     representing the interests of mentally ill individuals.

     Any reference in this subsection to a particular group shall 
     be deemed a reference to any successor to such group.
       ``(d) Duties.--
       ``(1) Format for expenditure and utilization summaries.--
     The Task Force shall specify, by not later than December 31, 
     1996, the format of expenditure summaries and utilization 
     summaries required under section 2102. Such format may 
     provide for the reporting of different information from that 
     required under section 2102(a), but shall include the 
     reporting of at least the information described in section 
     2102(b)(1)(A)(i).
       ``(2) Models and suggestions.--The Task Force shall study 
     and report to Congress and the States, by not later than 
     April 1, 1997, recommendations on the following:
       ``(A) Recommended models for strategic objectives and 
     performance goals for consideration by States in the 
     development of such objectives and goals under section 2102, 
     including alternative models for each of the objectives and 
     goals described in section 2101(b).
       ``(B) For each suggested model for a strategic objective or 
     performance goal suggested methodologies for States to 
     consider in measuring and verifying the objective or goal.
       ``(C) An assessment of the potential usefulness to States 
     of quality assurance safeguards, utilization data sets, and 
     accreditation programs that are used or under development in 
     the private sector.
       ``(D) Recommended designs and evaluation methodologies for 
     consideration by States in providing for independent 
     evaluations under section 2103.
       ``(3) Construction.--Nothing in this subsection shall be 
     construed as requiring a State to adopt any of the strategic 
     objectives or performance goals suggested under paragraph 
     (2).
       ``(e) Administrative Assistance.--Administrative support 
     for the Task Force shall be provided by the Agency for Health 
     Care Policy and Research (or, in the absence of such Agency, 
     the Secretary).

            ``Part B--Eligibility, Benefits, and Set-asides

     ``SEC. 2111. GENERAL DESCRIPTION OF ELIGIBILITY AND BENEFITS.

       ``(a) In General.--Each MediGrant plan shall include a 
     description (consistent with this title) of the following:
       ``(1) Eligible population.--The population eligible for 
     medical assistance under the plan, including--
       ``(A) any limitations on categories of such individuals;
       ``(B) any limitations as to the duration of eligibility;
       ``(C) any eligibility standards relating to age, income 
     (including any standards relating to spenddowns), residency, 
     resources, disability status, immigration status, or 
     employment status of individuals;
       ``(D) methods of establishing (and continuing) eligibility 
     and enrollment (including the methodology for computing 
     family income);
       ``(E) the eligibility standards in the plan that protect 
     the income and resources of a married individual who is 
     living in the community and whose spouse is residing in an 
     institution in order to prevent the impoverishment of the 
     community spouse; and
       ``(F) any other standards relating to eligibility for 
     medical assistance under the plan.

[[Page H11149]]

       ``(2) Scope of assistance.--The amount, duration, and scope 
     of health care services and items covered under the plan, 
     including differences among different eligible population 
     groups.
       ``(3) Delivery method.--The State's approach to delivery of 
     medical assistance, including a general description of--
       ``(A) the use (or intended use) of vouchers, fee-for-
     service, or managed care arrangements (such as capitated 
     health care plans, case management, and case coordination), 
     and
       ``(B) utilization control systems.
       ``(4) Fee-for-service benefits.--To the extent that medical 
     assistance is furnished on a fee-for-service basis--
       ``(A) how the State determines the qualifications of health 
     care providers eligible to provide such assistance, and
       ``(B) how the State determines rates of reimbursement for 
     providing such assistance.
       ``(5) Cost-sharing.--Beneficiary cost-sharing (if any), 
     including variations in such cost-sharing by population group 
     or type of service and financial responsibilities of parents 
     of recipients under 21 years of age and the spouses of 
     recipients.
       ``(6) Utilization incentives.--Incentives or requirements 
     (if any) to encourage the appropriate utilization of 
     services.
       ``(7) Treatment of health centers.--
       ``(A) In general.--In the case of a State in which one or 
     more health centers is located, the MediGrant plan shall 
     include a description of--
       ``(i) what provision (if any) has been made for payment for 
     items and services furnished by health centers, and
       ``(ii) the manner in which medical assistance for low-
     income eligible individuals who received health care services 
     at health centers on or before the date of the enactment of 
     this title may be provided, as determined by the State in 
     consultation with the health centers in the State.
       ``(B) Health center defined.--For purposes of subparagraph 
     (A), the term `health center' means an entity that--
       ``(i) is receiving a grant under section 329, 330, 340, or 
     340A of the Public Health Service Act; or
       ``(ii) based on the recommendation of the Health Resources 
     and Services Administration within the Public Health Service, 
     was determined by the Secretary to meet the requirements to 
     receive such a grant.
       ``(8) Support for certain hospitals.--
       ``(A) In general.--With respect to hospitals described in 
     subparagraph (B) located in the State, the MediGrant plan 
     shall includes a description--
       ``(i) of the extent to which provisions have been made for 
     expenditures for items and services furnished by such 
     hospitals and covered under the plan, and
       ``(ii) for individuals who (I) are enrolled for benefits 
     for covered services under the MediGrant plan and (II) were 
     previously receiving benefits for such services under the 
     medicaid program by or through such hospitals, where or how 
     they will receive benefits for such services under the 
     MediGrant plan if the MediGrant plan does not permit such 
     individuals to obtain benefits for those services by or 
     through such hospitals.
       ``(B) Hospitals described.--For purposes of subparagraph 
     (A), a hospital described in this subparagraph is a 
     subsection (d) hospital (as defined in section 1886(d)(1)(B)) 
     that is described in clauses (i) and (ii) of section 
     340B(a)(4)(L) of the Public Health Service Act.
       ``(b) Immunizations for Children.--The MediGrant plan shall 
     provide medical assistance for immunizations for children 
     eligible for any medical assistance under the MediGrant plan, 
     in accordance with a schedule for immunizations established 
     by the Health Department of the State in consultation with 
     the individuals and entities in the State responsible for the 
     administration of the plan.
       ``(c) Equal Payment Rates for Rural Providers.--A State 
     with a MediGrant plan shall establish payment rates for all 
     services of rural providers that are comparable to the 
     payment rates established for like services of such type of 
     providers not in rural areas; except that a State may provide 
     for incentive payments to attract and retain providers to 
     medically underserved areas.
       ``(d) Preexisting Condition Exclusions.--Notwithstanding 
     any other provision of this title--
       ``(1) a MediGrant plan may not deny or exclude coverage of 
     any item or service for an eligible individual for benefits 
     under the MediGrant plan for such item or service on the 
     basis of a preexisting condition; and
       ``(2) if a State contracts or makes other arrangements 
     (through the eligible individual or through another entity) 
     with a capitated health care organization, insurer, or other 
     entity, for the provision of items or services to eligible 
     individuals under the MediGrant plan and the State permits 
     such organization, insurer, or other entity to exclude 
     coverage of a covered item or service on the basis of a 
     preexisting condition, the State shall provide, through its 
     MediGrant plan, for such coverage (through direct payment or 
     otherwise) for any such covered item or service denied or 
     excluded on the basis of a preexisting condition.
       ``(e) Family Responsibility.--A MediGrant plan may not 
     require an adult child of moderate means (as determined by 
     the Secretary) to contribute to the cost of covered nursing 
     facility services and other long-term care services for the 
     child's parent under the plan.

     ``SEC. 2112. SET-ASIDES OF FUNDS FOR POPULATION GROUPS.

       ``(a) For Targeted Low-Income Families.--
       ``(1) In general.--Subject to subsection (e), a MediGrant 
     plan shall provide that the amount of funds expended under 
     the plan for medical assistance for targeted low-income 
     families (as defined in paragraph (3)) for a fiscal year 
     shall be not less than the minimum low-income-family 
     percentage specified in paragraph (2) of the total funds 
     expended under the plan for all medical assistance for the 
     fiscal year.
       ``(2) Minimum low-income-family percentage.--The minimum 
     low-income-family percentage specified in this paragraph for 
     a State is equal to 85 percent of the average percentage of 
     the expenditures under title XIX for medical assistance in 
     the State during Federal fiscal years 1992 through 1994 which 
     were attributable to expenditures for medical assistance for 
     mandated benefits (as defined in subsection (h)) furnished to 
     individuals--
       ``(A) who (at the time of furnishing the assistance) were 
     under 65 years of age,
       ``(B) whose coverage (at such time) under a State plan 
     under title XIX was required under Federal law, and
       ``(C) whose eligibility for such coverage (at such time) 
     was not on a basis directly related to disability status 
     (including being blind).
       ``(3) Targeted low-income family defined.--In this 
     subsection, the term `targeted low-income family' means a 
     family (which may be an individual)--
       ``(A) which includes a child or a pregnant woman, and
       ``(B) the income of which does not exceed 185 percent of 
     the poverty line applicable to a family of the size involved.
       ``(b) For Low-Income Elderly.--
       ``(1) Set-asides.--Subject to subsection (e)--
       ``(A) General set-aside.--A MediGrant plan shall provide 
     that the amount of funds expended under the plan for medical 
     assistance for eligible low-income individuals 65 years of 
     age or older for a fiscal year shall be not less than the 
     minimum low-income-elderly percentage specified in paragraph 
     (2)(A) of the total funds expended under the plan for all 
     medical assistance for the fiscal year.
       ``(B) Set-aside for medicare premium assistance.--A 
     MediGrant plan shall provide that the amount of funds 
     expended under the plan for medical assistance for medicare 
     cost-sharing described in section 2171(c)(1) for a fiscal 
     year shall be not less than the minimum medicare premium 
     assistance percentage specified in paragraph (2)(B) of the 
     total funds expended under the plan for all medical 
     assistance for the fiscal year. The MediGrant plan shall 
     provide priority for such making such assistance available 
     for targeted low-income elderly individuals (as defined in 
     paragraph (3)).
       ``(2) Minimum percentages.--
       ``(A) For general set-aside.--The minimum low-income-
     elderly percentage specified in this subparagraph for a State 
     is equal to 85 percent of the average percentage of the 
     expenditures under title XIX for medical assistance in the 
     State during Federal fiscal years 1992 through 1994 which was 
     attributable to expenditures for medical assistance for 
     mandated benefits furnished to individuals--
       ``(i) whose eligibility for such assistance was based on 
     their being 65 years of age or older; and
       ``(ii)(I) whose coverage (at such time) under a State plan 
     under title XIX was required under Federal law, or (II) who 
     (at such time) were residents of a nursing facility.
       ``(B) For set-aside for medicare premium assistance.--The 
     minimum medicare premium assistance percentage specified in 
     this subparagraph for a State is equal to 90 percent of the 
     average percentage of the expenditures under title XIX for 
     medical assistance in the State during Federal fiscal years 
     1993 through 1995 which was attributable to expenditures for 
     medical assistance for medicare premiums described in section 
     1905(p)(3)(A) for individuals whose coverage (at such time) 
     for such assistance for such premiums under a State plan 
     under title XIX was required under Federal law.
       ``(3) Targeted low-income elderly individual defined.--In 
     this subsection, the term `targeted low-income elderly 
     individual' means an individual who is 65 years of age or 
     older and whose income does not exceed 100 percent of the 
     poverty line applicable to a family of the size involved.
       ``(c) For Low-Income Disabled Persons.--
       ``(1) In general.--Subject to subsection (e), a MediGrant 
     plan shall provide that the percentage of funds expended 
     under the plan for medical assistance for eligible low-income 
     individuals who are under 65 years of age and are eligible 
     for such assistance on the basis of a disability (including 
     being blind) for a fiscal year is not less than the minimum 
     low-income-disabled percentage specified in paragraph (2) of 
     the total funds expended under the plan for medical 
     assistance for the fiscal year.
       ``(2) Minimum low-income-disabled percentage.--The minimum 
     low-income-disabled percentage specified in this paragraph 
     for a State is equal to 85 percent of the average percentage 
     of the expenditures under title XIX for medical assistance in 
     the State during Federal fiscal years 1992 through 1994 which 
     was attributable to expenditures for 

[[Page H11150]]

     medical assistance for mandated benefits furnished to 
     individuals--
       ``(A) whose coverage (at such time) under a State plan 
     under title XIX was required under Federal law, and
       ``(B) whose coverage (at such time) was on a basis directly 
     related to disability status (including being blind).
       ``(d) Use of Residual Funds.--
       ``(1) In general.--Subject to limitations on payment under 
     section 2123, any funds not required to be expended under the 
     set-asides under the previous subsections may be expended 
     under the MediGrant plan for any of the following:
       ``(A) Additional medical assistance.--Medical assistance 
     for eligible low-income individuals (as defined in section 
     2171(b)), in addition to any medical assistance made 
     available under a previous subsection.
       ``(B) Medically-related services.--Payment for medically-
     related services (as defined in paragraph (2)).
       ``(C) Administration.--Payment for the administration of 
     the MediGrant plan.
       ``(2) Medically-related services defined.--In this title, 
     the term `medically-related services' means services 
     reasonably related to, or in direct support of, the State's 
     attainment of one or more of the strategic objectives and 
     performance goals established under section 2101, but does 
     not include items and services included on the list under 
     section 2171(a)(1) (relating to the definition of medical 
     assistance).
       ``(e) Exceptions to Minimum Set-Asides.--
       ``(1) Alternative minimum set-asides.--
       ``(A) In general.--A State may provide in its MediGrant 
     plan (through an amendment to the plan) for a lower dollar 
     amount of expenditures than the minimum amounts specified in 
     any (or all) of paragraphs (2) of subsections (a), (b), and 
     (c) if State determines (and certifies to the Secretary) 
     that--
       ``(i) the health care needs of the low-income populations 
     described in paragraph (1) of the respective subsection who 
     are eligible for medical assistance under the plan during the 
     previous fiscal year (or medicare premium assistance needs 
     described in subsection (b)(1)(B)) can be reasonably met 
     without the expenditure of the amounts otherwise required to 
     be expended, and
       ``(ii) the performance goals established under section 2101 
     relating to the respective population can reasonably be met 
     with such lower amount of funds expended.
       ``(B) Period of application.--The determination and 
     certification under subparagraph (A) shall be made for such 
     period as a State may request, but may not be made for a 
     period of more than 3 consecutive Federal fiscal years 
     (beginning with the first fiscal year for which the lower 
     amount is sought). A new determination and certification must 
     be made under such paragraph for any subsequent period.
       ``(C) No exception permitted before fiscal year 1998.--This 
     paragraph may not apply with respect to a State for a fiscal 
     year before fiscal year 1998.
       ``(2) Independent certification of compliance with goals.--
       ``(A) In general.--For purposes of section 2151(c), a 
     MediGrant plan shall not be considered to be in substantial 
     violation of the requirements of this section if the amount 
     of actual State expenditures specified in any (or all) of 
     paragraphs (1) of subsections (a), (b), and (c) is lower than 
     the minimum amounts specified in any (or all) of paragraphs 
     (2) of subsections (a), (b), and (c) if an independent 
     actuary determines and certifies to the State that the 
     MediGrant plan is reasonably designed to result in a level of 
     expenditures which is consistent with the requirements of 
     such subsections.
       ``(B) Limit on variation.--Subparagraph (A) shall not apply 
     in the case of a MediGrant plan for which the actual State 
     expenditures described in any (or all) of paragraphs (1) of 
     subsections (a), (b), and (c) are less than 95 percent of the 
     expenditures which would be made if the amount of State 
     expenditures specified in any (or all) of such paragraphs was 
     equal to the applicable minimum amount specified in any (or 
     all) of paragraphs (2) of subsections (a), (b), and (c).
       ``(3) Treatment of states with no optional benefits.--In 
     the case of a State for which all expenditures under title 
     XIX for medical assistance in the State during Federal fiscal 
     years 1992 through 1994 were expenditures for medical 
     assistance for mandated benefits, `75 percent' shall be 
     substituted for `85 percent' each place it appears in 
     paragraphs (2) of subsections (a), (b), and (c).
       ``(f) Computations.--
       ``(1) Minimum percentages.--States shall calculate the 
     minimum percentages under subsections (a)(2), (b)(2), and 
     (c)(2) in a reasonable manner consistent with reports 
     submitted to the Secretary for the fiscal years involved.
       ``(2) Exclusion of payments for certain aliens.--For 
     purposes of this section, medical assistance attributable to 
     the exception provided under section 1903(v)(2) shall not be 
     considered to be expenditures for medical assistance.
       ``(g) Benefits Included for Purposes of Computing Set-
     Asides.--In this section, the term `mandated benefits'--
       ``(1) means medical assistance for items and services 
     described in section 1905(a) to the extent such assistance 
     with respect to such items and services was required to be 
     provided under title XIX,
       ``(2) includes medical assistance for medicare cost-sharing 
     only to the extent such assistance was required to be 
     provided under section 1902(a)(10)(E), and
       ``(3) does not include medical assistance attributable to 
     disproportionate share payment adjustments described in 
     section 1923.

     ``SEC. 2113. PREMIUMS AND COST-SHARING.

       ``(a) In General.--Subject to subsection (b), if any 
     charges are imposed under the MediGrant plan for cost-sharing 
     (as defined in subsection (d)), such cost-sharing shall be 
     pursuant to a public cost-sharing schedule.
       ``(b) Limitation on Premium and Certain Cost-Sharing for 
     Low-Income Families Including Children or Pregnant Women.--
       ``(1) In general.--In the case of a family described in 
     paragraph (2)--
       ``(A) the plan shall not impose any premium, and
       ``(B) the plan shall not (except as provided in subsection 
     (c)(1)) impose any cost-sharing with respect to primary and 
     preventive care services (as defined by the State) covered 
     under the MediGrant plan for children or pregnant women 
     unless such cost-sharing is nominal in nature.
       ``(2) Family described.--A family described in this 
     paragraph is a family (which may be an individual) which--
       ``(A) includes a child or a pregnant woman,
       ``(B) is made eligible for medical assistance under the 
     MediGrant plan, and
       ``(C) the income of which does not exceed 100 percent of 
     the poverty line applicable to a family of the size involved.
       ``(c) Certain Cost-Sharing Permitted.--Nothing in this 
     section shall be construed as preventing a MediGrant plan 
     (consistent with subsection (b))--
       ``(1) from imposing cost-sharing to discourage the 
     inappropriate use of emergency medical services (delivered 
     through a hospital emergency room, a medical transportation 
     provider, or otherwise);
       ``(2) from imposing premiums and cost-sharing 
     differentially in order to encourage the use of primary and 
     preventive care and discourage unnecessary or less economical 
     care;
       ``(3) from scaling cost-sharing in a manner that reflects 
     economic factors, employment status, and family size;
       ``(4) from scaling cost-sharing based on the availability 
     to the individual or family of other health insurance 
     coverage; or
       ``(5) from scaling cost-sharing based on participation in 
     employment training program, drug or alcohol abuse treatment, 
     counseling programs, or other programs promoting personal 
     responsibility.
       ``(d) Cost-Sharing Defined.--In this section, the term 
     `cost-sharing' includes copayments, deductibles, coinsurance, 
     and other charges for the provision of health care services.

     ``SEC. 2114. DESCRIPTION OF PROCESS FOR DEVELOPING CAPITATION 
                   PAYMENT RATES.

       ``(a) In General.--If a State contracts (or intends to 
     contract) with a capitated health care organization (as 
     defined in subsection (c)(1)) under which the State makes a 
     capitation payment (as defined in subsection (c)(2)) to the 
     organization for providing or arranging for the provision of 
     medical assistance under the MediGrant plan for a group of 
     services (including at least inpatient hospital services and 
     physicians' services), the plan shall include a description 
     of the following:
       ``(1) Use of actuarial science.--The extent and manner in 
     which the State uses actuarial science--
       ``(A) to analyze and project health care expenditures and 
     utilization for individuals enrolled (or to be enrolled) in 
     such an organization under the MediGrant plan, and
       ``(B) to develop capitation payment rates, including a 
     brief description of the general methodologies used by 
     actuaries.
       ``(2) Qualifications of organizations.--The general 
     qualifications (including any accreditation, State licensure 
     or certification, or provider network standards) required by 
     the State for participation of capitated health care 
     organizations under the MediGrant plan.
       ``(3) Dissemination process.--The process used by the State 
     under subsection (b) and otherwise to disseminate, before 
     entering into contracts with capitated health care 
     organizations, actuarial information to such organizations on 
     the historical fee-for-service costs (or, if not available, 
     other recent financial data associated with providing covered 
     services) and utilization associated with individuals 
     described in paragraph (1)(A).
       ``(b) Public Notice and Comment.--Under the MediGrant plan 
     the State shall provide a process for providing, before the 
     beginning of each contract year--
       ``(1) public notice of--
       ``(A) the amounts of the capitation payments (if any) made 
     under the plan for the contract year preceding the public 
     notice, and
       ``(B)(i) the information described under subsection (a)(1) 
     with respect to capitation payments for the contract year 
     involved or (ii) the amounts of the capitation payments the 
     State expects to make for the contract year involved,

     unless such information is designated as proprietary and not 
     subject to public disclosure under State law; and
       ``(2) an opportunity for receiving public comment on the 
     amounts and information for which notice is provided under 
     paragraph (1).
       ``(c) Definitions.--In this title:

[[Page H11151]]

       ``(1) Capitated health care organization.--The term 
     `capitated health care organization' means a health 
     maintenance organization or any other entity (including a 
     health insuring organization, managed care organization, 
     prepaid health plan, integrated service network, or similar 
     entity) which under State law is permitted to accept 
     capitation payments for providing (or arranging for the 
     provision of) a group of items and services including at 
     least inpatient hospital services and physicians' services.
       ``(2) Capitation payment.--The term `capitation payment' 
     means, with respect to payment, payment on a prepaid 
     capitation basis or any other risk basis to an entity for the 
     entity's provision (or arranging for the provision) of a 
     group of items and services (including at least inpatient 
     hospital services and physicians' services).

     ``SEC. 2115. PREVENTING SPOUSAL IMPOVERISHMENT.

       ``(a) Special Treatment for Institutionalized Spouses.--
       ``(1) Supersedes other provisions.--In determining the 
     eligibility for medical assistance of an institutionalized 
     spouse (as defined in subsection (h)(1)), the provisions of 
     this section supersede any other provision of this title 
     which is inconsistent with them.
       ``(2) Does not affect certain determinations.--Except as 
     this section specifically provides, this section does not 
     apply to--
       ``(A) the determination of what constitutes income or 
     resources, or
       ``(B) the methodology and standards for determining and 
     evaluating income and resources.
       ``(3) No application in commonwealths and territories.--
     This section shall only apply to a State that is one of the 
     50 States or the District of Columbia.
       ``(b) Rules for Treatment of Income.--
       ``(1) Separate treatment of income.--During any month in 
     which an institutionalized spouse is in the institution, 
     except as provided in paragraph (2), no income of the 
     community spouse shall be deemed available to the 
     institutionalized spouse.
       ``(2) Attribution of income.--In determining the income of 
     an institutionalized spouse or community spouse for purposes 
     of the post-eligibility income determination described in 
     subsection (d), except as otherwise provided in this section 
     and regardless of any State laws relating to community 
     property or the division of marital property, the following 
     rules apply:
       ``(A) Non-trust property.--Subject to subparagraphs (C) and 
     (D), in the case of income not from a trust, unless the 
     instrument providing the income otherwise specifically 
     provides--
       ``(i) if payment of income is made solely in the name of 
     the institutionalized spouse or the community spouse, the 
     income shall be considered available only to that respective 
     spouse;
       ``(ii) if payment of income is made in the names of the 
     institutionalized spouse and the community spouse, one-half 
     of the income shall be considered available to each of them; 
     and
       ``(iii) if payment of income is made in the names of the 
     institutionalized spouse or the community spouse, or both, 
     and to another person or persons, the income shall be 
     considered available to each spouse in proportion to the 
     spouse's interest (or, if payment is made with respect to 
     both spouses and no such interest is specified, one-half of 
     the joint interest shall be considered available to each 
     spouse).
       ``(B) Trust property.--In the case of a trust--
       ``(i) except as provided in clause (ii), income shall be 
     attributed in accordance with the provisions of this title, 
     and
       ``(ii) income shall be considered available to each spouse 
     as provided in the trust, or, in the absence of a specific 
     provision in the trust--

       ``(I) if payment of income is made solely to the 
     institutionalized spouse or the community spouse, the income 
     shall be considered available only to that respective spouse;
       ``(II) if payment of income is made to both the 
     institutionalized spouse and the community spouse, one-half 
     of the income shall be considered available to each of them; 
     and
       ``(III) if payment of income is made to the 
     institutionalized spouse or the community spouse, or both, 
     and to another person or persons, the income shall be 
     considered available to each spouse in proportion to the 
     spouse's interest (or, if payment is made with respect to 
     both spouses and no such interest is specified, one-half of 
     the joint interest shall be considered available to each 
     spouse).

       ``(C) Property with no instrument.--In the case of income 
     not from a trust in which there is no instrument establishing 
     ownership, subject to subparagraph (D), one-half of the 
     income shall be considered to be available to the 
     institutionalized spouse and one-half to the community 
     spouse.
       ``(D) Rebutting ownership.--The rules of subparagraphs (A) 
     and (C) are superseded to the extent that an 
     institutionalized spouse can establish, by a preponderance of 
     the evidence, that the ownership interests in income are 
     other than as provided under such subparagraphs.
       ``(c) Rules for Treatment of Resources.--
       ``(1) Computation of spousal share at time of 
     institutionalization.--
       ``(A) Total joint resources.--There shall be computed (as 
     of the beginning of the first continuous period of 
     institutionalization of the institutionalized spouse)--
       ``(i) the total value of the resources to the extent either 
     the institutionalized spouse or the community spouse has an 
     ownership interest, and
       ``(ii) a spousal share which is equal to \1/2\ of such 
     total value.
       ``(B) Assessment.--At the request of an institutionalized 
     spouse or community spouse, at the beginning of the first 
     continuous period of institutionalization of the 
     institutionalized spouse and upon the receipt of relevant 
     documentation of resources, the State shall promptly assess 
     and document the total value described in subparagraph (A)(i) 
     and shall provide a copy of such assessment and documentation 
     to each spouse and shall retain a copy of the assessment for 
     use under this section. If the request is not part of an 
     application for medical assistance under this title, the 
     State may, at its option as a condition of providing the 
     assessment, require payment of a fee not exceeding the 
     reasonable expenses of providing and documenting the 
     assessment. At the time of providing the copy of the 
     assessment, the State shall include a notice indicating that 
     the spouse will have a right to a fair hearing under 
     subsection (e)(2).
       ``(2) Attribution of resources at time of initial 
     eligibility determination.--In determining the resources of 
     an institutionalized spouse at the time of application for 
     medical assistance under this title, regardless of any State 
     laws relating to community property or the division of 
     marital property--
       ``(A) except as provided in subparagraph (B), all the 
     resources held by either the institutionalized spouse, 
     community spouse, or both, shall be considered to be 
     available to the institutionalized spouse, and
       ``(B) resources shall be considered to be available to an 
     institutionalized spouse, but only to the extent that the 
     amount of such resources exceeds the amount computed  under 
     subsection (f)(2)(A) (as of the time of application for 
     medical assistance).
       ``(3) Assignment of support rights.--The institutionalized 
     spouse shall not be ineligible by reason of resources 
     determined under paragraph (2) to be available for the cost 
     of care where--
       ``(A) the institutionalized spouse has assigned to the 
     State any rights to support from the community spouse;
       ``(B) the institutionalized spouse lacks the ability to 
     execute an assignment due to physical or mental impairment 
     but the State has the right to bring a support proceeding 
     against a community spouse without such assignment; or
       ``(C) the State determines that denial of eligibility would 
     work an undue hardship.
       ``(4) Separate treatment of resources after eligibility for 
     medical assistance established.--During the continuous period 
     in which an institutionalized spouse is in an institution and 
     after the month in which an institutionalized spouse is 
     determined to be eligible for medical assistance under this 
     title, no resources of the community spouse shall be deemed 
     available to the institutionalized spouse.
       ``(5) Resources defined.--In this section, the term 
     `resources' does not include--
       ``(A) resources excluded under subsection (a) or (d) of 
     section 1613, and
       ``(B) resources that would be excluded under section 
     1613(a)(2)(A) but for the limitation on total value described 
     in such section.
       ``(d) Protecting Income for Community Spouse.--
       ``(1) Allowances to be offset from income of 
     institutionalized spouse.--After an institutionalized spouse 
     is determined or redetermined to be eligible for medical 
     assistance, in determining the amount of the spouse's income 
     that is to be applied monthly to payment for the costs of 
     care in the institution, there shall be deducted from the 
     spouse's monthly income the following amounts in the 
     following order:
       ``(A) A personal needs allowance (described in paragraph 
     (6)(A)), in an amount not less than the amount specified in 
     paragraph (6)(C).
       ``(B) A community spouse monthly income allowance (as 
     defined in paragraph (2)), but only to the extent income of 
     the institutionalized spouse is made available to (or for the 
     benefit of) the community spouse.
       ``(C) A family allowance, for each family member, equal to 
     at least \1/3\ of the amount by which the amount described in 
     paragraph (3)(A)(i) exceeds the amount of the monthly income 
     of that family member.
       ``(D) Amounts for incurred expenses for medical or remedial 
     care for the institutionalized spouse (as provided under 
     paragraph (7)).

     In subparagraph (C), the term `family member' only includes 
     minor or dependent children, dependent parents, or dependent 
     siblings of the institutionalized or community spouse who are 
     residing with the community spouse.
       ``(2) Community spouse monthly income allowance defined.--
     In this section (except as provided in paragraph (5)), the 
     `community spouse monthly income allowance' for a community 
     spouse is an amount by which--
       ``(A) except as provided in subsection (e), the minimum 
     monthly maintenance needs allowance (established under and in 
     accordance with paragraph (3)) for the spouse, exceeds
       ``(B) the amount of monthly income otherwise available to 
     the community spouse (determined without regard to such an 
     allowance).
       ``(3) Establishment of minimum monthly maintenance needs 
     allowance.--

[[Page H11152]]

       ``(A) In general.--Each State shall establish a minimum 
     monthly maintenance needs allowance for each community spouse 
     which, subject to subparagraph (B), is equal to or exceeds--
       ``(i) 150 percent of \1/12\ of the income official poverty 
     line (defined by the Office of Management and Budget and 
     revised annually in accordance with section 673(2)) for a 
     family unit of 2 members; plus
       ``(ii) an excess shelter allowance (as defined in paragraph 
     (4)).

     A revision of the official poverty line referred to in clause 
     (i) shall apply to medical assistance furnished during and 
     after the second calendar quarter that begins after the date 
     of publication of the revision.
       ``(B) Cap on minimum monthly maintenance needs allowance.--
     The minimum monthly maintenance needs allowance established 
     under subparagraph (A) may not exceed $1,500 (subject to 
     adjustment under subsections (e) and (g)).
       ``(4) Excess shelter allowance defined.--In paragraph 
     (3)(A)(ii), the term `excess shelter allowance' means, for a 
     community spouse, the amount by which the sum of--
       ``(A) the spouse's expenses for rent or mortgage payment 
     (including principal and interest), taxes and insurance and, 
     in the case of a condominium or cooperative, required 
     maintenance charge, for the community spouse's principal 
     residence, and
       ``(B) the standard utility allowance (used by the State 
     under section 5(e) of the Food Stamp Act of 1977) or, if the 
     State does not use such an allowance, the spouse's actual 
     utility expenses,

     exceeds 30 percent of the amount described in paragraph 
     (3)(A)(i), except that, in the case of a condominium or 
     cooperative, for which a maintenance charge is included under 
     subparagraph (A), any allowance under subparagraph (B) shall 
     be reduced to the extent the maintenance charge includes 
     utility expenses.
       ``(5) Court ordered support.--If a court has entered an 
     order against an institutionalized spouse for monthly 
     income for the support of the community spouse, the 
     community spouse monthly income allowance for the spouse 
     shall be not less than the amount of the monthly income so 
     ordered.
       ``(6) Personal needs allowance.--
       ``(A) In general.--The State MediGrant plan must provide 
     that, in the case of an institutionalized individual or 
     couple described in subparagraph (B), in determining the 
     amount of the individual's or couple's income to be applied 
     monthly to payment for the cost of care in an institution, 
     there shall be deducted from the monthly income (in addition 
     to other allowances otherwise provided under the plan) a 
     monthly personal needs allowance--
       ``(i) which is reasonable in amount for clothing and other 
     personal needs of the individual (or couple) while in an 
     institution, and
       ``(ii) which is not less (and may be greater) than the 
     minimum monthly personal needs allowance described in 
     subparagraph (C).
       ``(B) Institutionalized individual or couple defined.--In 
     this paragraph, the term `institutionalized individual or 
     couple' means an individual or married couple--
       ``(i) who is an inpatient (or who are inpatients) in a 
     medical institution or nursing facility for which payments 
     are made under this title throughout a month, and
       ``(ii) who is or are determined to be eligible for medical 
     assistance under the State MediGrant plan.
       ``(C) Minimum allowance.--The minimum monthly personal 
     needs allowance described in this subparagraph is $40 for an 
     institutionalized individual and $80 for an institutionalized 
     couple (if both are aged, blind, or disabled, and their 
     incomes are considered available to each other in determining 
     eligibility).
       ``(7) Treatment of incurred expenses.--With respect to the 
     post-eligibility treatment of income under this section, 
     there shall be taken into account amounts for incurred 
     expenses for medical or remedial care that are not subject to 
     payment by a third party, including--
       ``(A) medicare and other health insurance premiums, 
     deductibles, or coinsurance, and
       ``(B) necessary medical or remedial care recognized under 
     State law but not covered under the State MediGrant plan 
     under this title, subject to reasonable limits the State may 
     establish on the amount of these expenses.
       ``(e) Notice and Hearing.--
       ``(1) Notice.--Upon--
       ``(A) a determination of eligibility for medical assistance 
     of an institutionalized spouse, or
       ``(B) a request by either the institutionalized spouse, or 
     the community spouse, or a representative acting on behalf of 
     either spouse,

     each State shall notify both spouses (in the case described 
     in subparagraph (A)) or the spouse making the request (in the 
     case described in subparagraph (B)) of the amount of the 
     community spouse monthly income allowance (described in 
     subsection (d)(1)(B)), of the amount of any family allowances 
     (described in subsection (d)(1)(C)), of the method for 
     computing the amount of the community spouse resources 
     allowance permitted under subsection (f), and of the spouse's 
     right to a hearing under the MediGrant plan respecting 
     ownership or availability of income or resources, and the 
     determination of the community spouse monthly income or 
     resource allowance.
       ``(2) Results of hearing.--
       ``(A) Revision of minimum monthly maintenance needs 
     allowance.--If either such spouse establishes in a hearing 
     under this subsection that the community spouse needs income, 
     above the level otherwise provided by the minimum monthly 
     maintenance needs allowance, due to exceptional circumstances 
     resulting in significant financial duress, there shall be 
     substituted, for the minimum monthly maintenance needs 
     allowance in subsection (d)(2)(A), an amount adequate to 
     provide such additional income as is necessary.
       ``(B) Revision of community spouse resource allowance.--If 
     either such spouse establishes in such a hearing that the 
     community spouse resource allowance (in relation to the 
     amount of income generated by such an allowance) is 
     inadequate to raise the community spouse's income to the 
     minimum monthly maintenance needs allowance, there shall be 
     substituted, for the community spouse resource allowance 
     under subsection (f)(2), an amount adequate to provide such a 
     minimum monthly maintenance needs allowance.
       ``(f) Permitting Transfer of Resources to Community 
     Spouse.--
       ``(1) In general.--An institutionalized spouse may, without 
     regard to any other provision of the MediGrant plan to 
     contrary, transfer an amount equal to the community spouse 
     resource allowance (as defined in paragraph (2)), but only to 
     the extent the resources of the institutionalized spouse are 
     transferred to (or for the sole benefit of) the community 
     spouse. The transfer under the preceding sentence shall be 
     made as soon as practicable after the date of the initial 
     determination of eligibility, taking into account such time 
     as may be necessary to obtain a court order under paragraph 
     (3).
       ``(2) Community spouse resource allowance defined.--In 
     paragraph (1), the `community spouse resource allowance' for 
     a community spouse is an amount (if any) by which--
       ``(A) the greatest of--
       ``(i) $12,000 (subject to adjustment under subsection (g)), 
     or, if greater (but not to exceed the amount specified in 
     clause (ii)(II)) an amount specified under the State plan,
       ``(ii) the lesser of (I) the spousal share computed under 
     subsection (c)(1), or (II) $60,000 (subject to adjustment 
     under subsection (g)),
       ``(iii) the amount established under subsection (e)(2); or
       ``(iv) the amount transferred under a court order under 
     paragraph (3);

     exceeds
       ``(B) the amount of the resources otherwise available to 
     the community spouse (determined without regard to such an 
     allowance).
       ``(g) Indexing Dollar Amounts.--For services furnished 
     during a calendar year after 1989, the dollar amounts 
     specified in subsections (d)(3)(C), (f)(2)(A)(i), and 
     (f)(2)(A)(ii)(II) shall be increased by the same percentage 
     as the percentage increase in the consumer price index for 
     all urban consumers (all items; U.S. city average) between 
     September 1988 and the September before the calendar year 
     involved.
       ``(h) Definitions.--In this section:
       ``(1) The term `institutionalized spouse' means an 
     individual--
       ``(A)(i) who is in a medical institution or nursing 
     facility, or
       ``(ii) at the option of the State (I) who would be eligible 
     under the MediGrant plan under this title if they were in a 
     medical institution, (II) with respect to whom there has been 
     a determination that but for the provision of home or 
     community-based services they would require the level of care 
     provided in a hospital, nursing facility or intermediate care 
     facility for the mentally retarded the cost of which could be 
     reimbursed under the plan, and (III) who will receive home or 
     community-based services pursuant the plan, and
       ``(B) is married to a spouse who is not in a medical 
     institution or nursing facility;

     but does not include any such individual who is not likely to 
     meet the requirements of subparagraph (A) for at least 30 
     consecutive days.
       ``(2) The term `community spouse' means the spouse of an 
     institutionalized spouse.

     ``SEC. 2116. CONSTRUCTION.

       ``(a) No Federal Entitlement.--Nothing in this title 
     (including section 2112) shall be construed as creating an 
     entitlement under Federal law in any individual or category 
     of individuals for medical assistance under a MediGrant plan.
       ``(b) State Flexibility in Benefits, Provider Payments, 
     Geographical Coverage Area, and Selection of Providers.--
     Nothing in this title (other than section 2111(b)) shall be 
     construed as requiring a State--
       ``(1) to provide medical assistance for any particular 
     items or services;
       ``(2) subject to section 2111(c), to provide for any 
     payments with respect to any specific health care providers 
     or any level of payments for any services;
       ``(3) to provide for the same medical assistance in all 
     geographical areas or political subdivisions of the State;
       ``(4) to provide that the medical assistance made available 
     to any individual eligible for medical assistance must not be 
     less in amount, duration, or scope than the medical 
     assistance made available to any other such individual; or
       ``(5) to provide that any individual eligible for medical 
     assistance with respect to an item or service may choose to 
     obtain such 

[[Page H11153]]

     assistance from any institution, agency, or person qualified 
     to provide the item or service.
       ``(c) State Flexibility With Respect to Managed Care.--
     Nothing in this title shall be construed--
       ``(1) to limit a State's ability to contract with, on a 
     capitated basis or otherwise, health care plans or individual 
     health care providers for the provision or arrangement of 
     medical assistance;
       ``(2) to limit a State's ability to contract with health 
     care plans or other entities for case management services or 
     for coordination of medical assistance; or
       ``(3) to restrict a State from establishing capitation 
     rates on the basis of competition among health care plans or 
     negotiations between the State and one or more health care 
     plans.

     ``SEC. 2117. LIMITATIONS ON CAUSES OF ACTION.

       ``(a) In General.--Notwithstanding any other provision of 
     this Act (including section 1130A), no person (including an 
     applicant, beneficiary, provider, or health plan) shall have 
     a cause of action under Federal law against a State in 
     relation to a State's compliance (or failure to comply) with 
     the provisions of this title or of a MediGrant plan.
       ``(b) No Effect on State Law.--Nothing in subsection (a) 
     may be construed as affecting any actions brought under State 
     law.

                      ``Part C--Payments to States

     ``SEC. 2121. ALLOTMENT OF FUNDS AMONG STATES.

       ``(a) Allotments.--
       ``(1) Computation.--The Secretary shall provide for the 
     computation of State obligation and outlay allotments in 
     accordance with this section for each fiscal year beginning 
     with fiscal year 1996.
       ``(2) Limitation on obligations.--
       ``(A) In general.--Subject to subparagraph (B), the 
     Secretary shall not enter into obligations with any State 
     under this title for a fiscal year in excess of the 
     obligation allotment for that State for the fiscal year under 
     paragraph (4). The sum of such obligation allotments for all 
     States in any fiscal year (excluding amounts carried over 
     under subparagraph (B) and excluding changes in allotments 
     effected under paragraph (4)(D)) shall not exceed the 
     aggregate limit on new obligation authority specified in 
     paragraph (3) for that fiscal year.
       ``(B) Adjustments.--
       ``(i) Carryover of allotment permitted.--If the amount of 
     obligations entered into under this part with a State for 
     quarters in a fiscal year is less than the amount of the 
     obligation allotment under this section to the State for the 
     fiscal year, the amount of the difference shall be added to 
     the amount of the State obligation allotment otherwise 
     provided under this section for the succeeding fiscal year.
       ``(ii) Reduction for post-enactment new obligations under 
     title xix in fiscal year 1996.--The amount of the obligation 
     allotment otherwise provided under this section for fiscal 
     year 1996 for a State shall be reduced by the amount of the 
     obligations entered into with respect to the State under 
     section 1903(a) after the date of the enactment of this Act.
       ``(3) Aggregate limit on new obligation authority.--
       ``(A) In general.--For purposes of this subsection, subject 
     to subparagraph (C), the `aggregate limit on new obligation 
     authority', for a fiscal year, is the pool amount under 
     subsection (b) for the fiscal year, divided by the payout 
     adjustment factor (described in subparagraph (B)) for the 
     fiscal year.
       ``(B) Payout adjustment factor.--For purposes of this 
     subsection, the `payout adjustment factor'--
       ``(i) for fiscal year 1996 is .950,
       ``(ii) for fiscal year 1997 is .986, and
       ``(iii) for a subsequent fiscal year is .998.
       ``(C) Transitional adjustment for pre-enactment-obligation 
     outlays.--In order to account for pre-enactment-obligation 
     outlays described in paragraph (4)(C)(iv), in determining the 
     aggregate limit on new obligation authority under 
     subparagraph (A) for fiscal year 1996, the pool amount for 
     such fiscal year is equal to--
       ``(i) the pool amount for such year, reduced by
       ``(ii) $24.624 billion.
       ``(4) Obligation allotments.--
       ``(A) General rule for 50 states and the district of 
     columbia.--Except as provided in this paragraph, the 
     `obligation allotment' for any of the 50 States or the 
     District of Columbia for a fiscal year (beginning with fiscal 
     year 1997) is an amount that bears the same ratio to the 
     outlay allotment under subsection (c)(2) for such State or 
     District (not taking into account any adjustment due to an 
     election under paragraph (4)) for the fiscal year as the 
     ratio of--
       ``(i) the aggregate limit on new obligation authority (less 
     the total of the obligation allotments under subparagraph 
     (B)) for the fiscal year, to
       ``(ii) the pool amount (less the sum of the outlay 
     allotments for the territories) for such fiscal year.
       ``(B) Territories.--The obligation allotment for each of 
     the Commonwealths and territories for a fiscal year is the 
     outlay allotment for such Commonwealth or territory (as 
     determined under subsection (c)(5)) for the fiscal year 
     divided by the payout adjustment factor for the fiscal year 
     (as defined in paragraph (3)(B)).
       ``(C) Transitional rule for fiscal year 1996.--
       ``(i) In general.--The obligation amount for fiscal year 
     1996 for any State (including the District, a Commonwealth, 
     or territory) is determined according to the formula: A=(B-
     C)/D, where--

       ``(I) `A' is the obligation amount for such State;
       ``(II) `B' is the outlay allotment of such State for fiscal 
     year 1996, as determined under subsection (c);
       ``(III) `C' is the amount of the pre-enactment-obligation 
     outlays (as established for such State under clause (ii)); 
     and
       ``(IV) `D' is the payout adjustment factor for such fiscal 
     year (as defined in paragraph (3)(B)).

       ``(ii) Pre-enactment-obligation outlay amounts.--Within 30 
     days after the date of the enactment of this title, the 
     Secretary shall estimate (based on the best data available) 
     and publish in the Federal Register the amount of the pre-
     enactment-obligation outlays (as defined in clause (iv)) for 
     each State (including the District, Commonwealths, and 
     territories). The total of such amounts shall equal the 
     dollar amount specified in paragraph (3)(C)(ii).
       ``(iii) Agreement.--The submission of a MediGrant plan by a 
     State under this title is deemed to constitute the State's 
     acceptance of the obligation allotment limitations under this 
     subsection (including the formula for computing the amount of 
     such obligation allotment).
       ``(iv) Pre-enactment-obligation outlays defined.--In this 
     subsection, the term `pre-enactment-obligation outlays' 
     means, for a State, the outlays of the Federal Government 
     that result from obligations that have been incurred under 
     title XIX with respect to the State before the date of the 
     enactment of this title, but for which payments to States 
     have not been made as of such date of enactment.
       ``(D) Adjustment to reflect adoption of alternative growth 
     formula.--Any State that has elected an alternative growth 
     formula under subsection (c)(4) which increases or decreases 
     the dollar amount of an outlay allotment for a fiscal year is 
     deemed to have increased or decreased, respectively, its 
     obligation amount for such fiscal year by the amount of such 
     increase or decrease.
       ``(b) Pool of Available Funds.--
       ``(1) In general.--For purposes of this section, the `pool 
     amount' under this subsection for--
       ``(A) fiscal year 1996 is $95,662,990,500;
       ``(B) fiscal year 1997 is $102,748,012,797;
       ``(C) fiscal year 1998 is $107,268,354,400;
       ``(D) fiscal year 1999 is $111,826,877,512;
       ``(E) fiscal year 2000 is 116,472,575,350;
       ``(F) fiscal year 2001 is $121,311,325,403;
       ``(G) fiscal year 2002 is $126,351,055,338; and
       ``(H) each subsequent fiscal year is the pool amount under 
     this paragraph for the previous fiscal year increased by the 
     lesser of 4.1546 percent or the annual percentage increase in 
     the consumer price index for all urban consumers (U.S. city 
     average) for the 12-month period ending in June before the 
     beginning of that subsequent fiscal year.
       ``(2) National medigrant growth percentage.--For purposes 
     of this section for a fiscal year (beginning with fiscal year 
     1997), the `national MediGrant growth percentage' is the 
     percentage by which--
       ``(A) the pool amount under paragraph (1) for the fiscal 
     year, exceeds
       ``(B) such pool amount for the previous fiscal year.
       ``(c) State Outlay Allotments.--
       ``(1) Fiscal year 1996.--
       ``(A) In general.--For each of the 50 States and the 
     District of Columbia, the amount of the State outlay 
     allotment under this subsection for fiscal year 1996 is, 
     subject to paragraph (4), equal to--
       ``(i) the total amount of Federal expenditures made to the 
     State under title XIX for the 4 quarters in fiscal year 1994, 
     increased by
       ``(ii) the percentage by which (I) $95,529,490,500 (which 
     represents the total amount of outlay allotments for such 
     States and District for fiscal year 1996), exceeds (II) 
     $83,213,431,458 (which represents Federal medicaid 
     expenditures for such States and District for fiscal year 
     1994).
       ``(B) Computation of expenditures.--The amount of Federal 
     expenditures described in subparagraph (A)(i) shall be 
     computed, using data reported on the HCFA Form 64 as of 
     September 1, 1995, based on--
       ``(i) the amount reported on line 11, or
       ``(ii) on the amount reported on line 6 multiplied by the 
     ratio of (I) the sum of the amounts so reported on line 11 of 
     such Form for fiscal year 1994 for the 50 States and the 
     District of Columbia, to (II) the sum of the amounts so 
     reported on line 6 of such Form for fiscal year 1994 for such 
     States and District,

     whichever is greater.
       ``(C) Limitation on adjustment.--The amount computed under 
     subparagraph (B) shall not be subject to adjustment (based on 
     any subsequent disallowances or otherwise).
       ``(2) Computation of state outlay allotments.--
       ``(A) In general.--Subject to the succeeding provisions of 
     this subsection, the amount of the State outlay allotment 
     under this subsection for one of the 50 States and the 
     District of Columbia for a fiscal year (beginning with fiscal 
     year 1997) is equal to the product of--
       ``(i) the needs-based amount determined under subparagraph 
     (B) for the State for the fiscal year, and
       ``(ii) the scalar factor described in subparagraph (C) for 
     the fiscal year.

[[Page H11154]]

       ``(B) Needs-based amount.--The needs-based amount under 
     this subparagraph for a State for a fiscal year is equal to 
     the product of--
       ``(i) the State's aggregate expenditure need for the fiscal 
     year (as determined under subsection (d)), and
       ``(ii) the State's old Federal medical assistance 
     percentage (as defined in section 2122(d)) for the previous 
     fiscal year (or, in the case of fiscal year 1997, the Federal 
     medical assistance percentage determined under section 
     1905(b) for fiscal year 1996).
       ``(C) Scalar factor.--The scalar factor under this 
     subparagraph for a fiscal year is such proportion so that, 
     when it is applied under subparagraph (A)(ii) for the fiscal 
     year (taking into account the floors and ceilings under 
     paragraph (3)), the total of the outlay allotments under this 
     subsection for all the 50 States and the District of Columbia 
     for the fiscal year (not taking into account any increase in 
     an outlay allotment for a fiscal year attributable to the 
     election of an alternative growth formula under paragraph 
     (4)) is equal to the amount by which (i) the pool amount for 
     the fiscal year (as determined under subsection (b)), exceeds 
     (ii) the sum of the outlay allotments provided under 
     paragraph (5) for the Commonwealths and territories for the 
     fiscal year.
       ``(3) Floors and ceilings.--
       ``(A) Floors.--In no case shall the amount of the State 
     outlay allotment under paragraph (2) for a fiscal year be 
     less than the following:
       ``(i) Floor based on previous year's outlay allotment.--
     Subject to clause (ii)--
       ``(I) Fiscal year 1997.--For fiscal year 1997, 103.5 
     percent of the amount of the State outlay allotment under 
     this subsection for fiscal year 1996.
       ``(II) Fiscal year 1998.--For fiscal year 1998, 103 percent 
     of the amount of the State outlay allotment under this 
     subsection for fiscal year 1997.
       ``(III) Fiscal year 1999.--For fiscal year 1999, 102.5 
     percent of the amount of the State outlay allotment under 
     this subsection for fiscal year 1998.
       ``(IV) Subsequent fiscal years.--For a fiscal year after 
     1999, 102 percent of the amount of the State outlay allotment 
     under this subsection for the previous fiscal year.
       ``(ii) Floor based on outlay allotment growth rate in first 
     year.--Beginning with fiscal year 1998, in the case of a 
     State for which the outlay allotment under this subsection 
     for fiscal year 1997 exceeded its outlay allotment under this 
     subsection for the previous fiscal year by--
       ``(I) more than 120 percent of the national MediGrant 
     growth percentage for fiscal year 1997, 104 percent of the 
     amount of the State outlay allotment under this subsection 
     for the previous fiscal year; or
       ``(II) less than 120 percent (but more than 75 percent) of 
     the national MediGrant growth percentage for fiscal year 
     1997, 103 percent of the amount of the State outlay allotment 
     under this subsection for the previous fiscal year.
       ``(B) Ceilings.--
       ``(i) In general.--In no case shall the amount of the State 
     outlay allotment under paragraph (2) for a fiscal year be 
     greater than the product of--
       ``(I) the State outlay allotment under this subsection for 
     the State for the preceding fiscal year, and
       ``(II) the factor specified in clause (ii) (or, if 
     applicable, in clause (iii)) for the fiscal year.
       ``(ii) Factor described.--The factor described in this 
     clause for--
       ``(I) fiscal year 1997 is 1.09, and
       ``(II) each subsequent fiscal year is 1.0533.
       ``(iii) Special rule.--For a fiscal year after fiscal year 
     1997, in the case of a State (among the 50 States and the 
     District of Columbia) that is one of the 10 States with the 
     lowest Federal MediGrant spending per resident-in-poverty 
     rates (as determined under clause (iv)) for the fiscal year, 
     the factor that shall be applied under clause (i)(II) shall 
     be the following:
       ``(I) For each of fiscal years 1998 and 1999, 1.06.
       ``(II) For fiscal year 2000, 1.060657.
       ``(III) For fiscal year 2001, 1.061488.
       ``(IV) For any subsequent fiscal year, 1.062319.
       ``(iv) Determination of federal medigrant spending per 
     resident-in-poverty rate.--For purposes of clause (iii), the 
     `Federal MediGrant spending per resident-in-poverty rate' for 
     a State for a fiscal year is equal to--
       ``(I) the State's outlay allotment under this subsection 
     for the previous fiscal year (determined without regard to 
     paragraph (4)), divided by
       ``(II) the average annual number of residents of the State 
     in poverty (as defined in subsection (d)(2)) with respect to 
     the fiscal year.
       ``(4) Election of alternative growth formula.--
       ``(A) Election.--In order to reduce variations in increases 
     in outlay allotments over time, any of the 50 States or the 
     District of Columbia may elect (by notice provided to the 
     Secretary by not later than April 1, 1996) to adopt an 
     alternative growth rate formula under this paragraph for the 
     determination of the State's outlay allotment in fiscal year 
     1996 and for the increase in the amount of such allotment in 
     subsequent fiscal years.
       ``(B) Formula.--The alternative growth formula under this 
     paragraph may be any formula under which a portion of the 
     State outlay allotment for fiscal year 1996 under paragraph 
     (1) is deferred and applied to increase the amount of its 
     outlay allotment for one or more subsequent fiscal years, so 
     long as the total amount of such increases for all such 
     subsequent fiscal years does not exceed the amount of the 
     outlay allotment deferred from fiscal year 1996.
       ``(5) Commonwealths and territories.--The outlay allotment 
     for each of the Commonwealths and territories for a fiscal 
     year is the maximum amount that could have been certified 
     under section 1108(c) with respect to the Commonwealth or 
     territory for the fiscal year with respect to title XIX, if 
     the national MediGrant growth percentage (as determined under 
     subsection (b)(2)) for the fiscal year had been substituted 
     (beginning with fiscal year 1997) for the percentage increase 
     referred to in section 1108(c)(1)(B).
       ``(d) State Aggregate Expenditure Need Determined.--
       ``(1) In general.--For purposes of subsection (c), the 
     `State aggregate expenditure need' for a State for a fiscal 
     year is equal to the product of the following 4 factors:
       ``(A) Residents in poverty.--The average annual number of 
     residents in poverty of the State with respect to the fiscal 
     year (as determined under paragraph (2)).
       ``(B) Case mix index.--The average of the case mix indexes 
     for the State (as determined under paragraph (3)) for the 3 
     most recent fiscal years for which data are available, but in 
     no case less than .9 or greater than 1.15.
       ``(C) Input cost index.--The average of the input cost 
     indexes for the State (as determined under paragraph (4)) for 
     the 3 most recent fiscal years for which data are available.
       ``(D) National average spending per resident in poverty.--
     The national average spending per resident in poverty (as 
     determined under paragraph (5)).
       ``(2) Residents in poverty.--In this section--
       ``(A) In general.--The term `average annual number of 
     residents in poverty' means, with respect to a State and a 
     fiscal year, the average annual number of residents in 
     poverty (as defined in subparagraph (B)) in the State (based 
     on data made generally available by the Bureau of the Census 
     from the Current Population Survey) for the most recent 3-
     calendar-year period (ending before the fiscal year) for 
     which such data are available.
       ``(B) Resident in poverty defined.--The term `resident in 
     poverty' means an individual whose family income does not 
     exceed the poverty threshold (as such terms are defined by 
     the Office of Management and Budget and are generally 
     interpreted and applied by the Bureau of the Census for the 
     year involved).
       ``(3) Case mix index.--
       ``(A) In general.--In this subsection, the `case mix index' 
     for a State for a fiscal year is equal to--
       ``(i) the sum of--

       ``(I) the projected per recipient expenditures with respect 
     to elderly individuals in the State for the fiscal year 
     (determined under subparagraph (B)),
       ``(II) the projected per recipient expenditures with 
     respect to the blind and disabled individuals in the State 
     for the fiscal year (determined under subparagraph (C)), and
       ``(III) the projected per recipient expenditures with 
     respect to other individuals in the State (determined under 
     subparagraph (D));

     divided by--

       ``(ii) the national average spending per recipient 
     determined under subparagraph (E) for the fiscal year 
     involved.
       ``(B) Projected per recipient expenditures for the 
     elderly.--For purposes of subparagraph (A)(I)(i), the 
     `projected per recipient expenditures with respect to 
     elderly individuals' in a State for a fiscal year is equal 
     to the product of--
       ``(i) the national average per recipient expenditures under 
     this title in the 50 States and the District of Columbia for 
     the most recent fiscal year for which data are available for 
     individuals who are 65 years of age or older, and
       ``(ii) the proportion, of all individuals who received 
     medical assistance under this title in the State in the most 
     recent fiscal year referred to in clause (i), that were 
     individuals described in such clause.
       ``(C) Projected per recipient expenditures for the blind 
     and disabled.--For purposes of subparagraph (A)(i)(II), the 
     `projected per recipient expenditures with respect to blind 
     and disabled individuals' in a State for a fiscal year is 
     equal to the product of--
       ``(i) the national average per recipient expenditures under 
     this title in the 50 States and the District of Columbia for 
     the most recent fiscal year for which data are available for 
     individuals who are eligible for medical assistance because 
     they are blind or disabled and under 65 years of age, and
       ``(ii) the proportion, of all individuals who received 
     medical assistance under this title in the State in the most 
     recent fiscal year referred to in clause (i), that were 
     individuals described in such clause.
       ``(D) Projected per recipient expenditures for other 
     individuals.--For purposes of subparagraph (A)(i)(III), the 
     `projected per recipient expenditures with respect to other 
     individuals' in a State for a fiscal year is equal to the 
     product of--
       ``(i) the national average per recipient expenditures under 
     this title in the 50 States and the District of Columbia for 
     the most recent fiscal year for which data are available for 
     individuals who are not described in subparagraph (B)(i) or 
     (C)(i), and
       ``(ii) the proportion, of all individuals who received 
     medical assistance under this title 

[[Page H11155]]

     in the State in the most recent fiscal year referred to in 
     clause (i), that were individuals described in such clause.
       ``(E) National average spending per recipient.--For 
     purposes of this paragraph, the `national average 
     expenditures per recipient' for a fiscal year is equal to the 
     sum of--
       ``(i) the product of (I) the national average described in 
     subparagraph (B)(i), and (II) the proportion, of all 
     individuals who received medical assistance under this title 
     in any of the 50 States or the District of Columbia in the 
     fiscal year referred to in such subparagraph, who are 
     described in such subparagraph;
       ``(ii) the product of (I) the national average described in 
     subparagraph (C)(i), and (II) the proportion, of all 
     individuals who received medical assistance under this title 
     in any of the 50 States or the District of Columbia in the 
     fiscal year referred to in such subparagraph, who are 
     described in such subparagraph; and
       ``(iii) the product of (I) the national average described 
     in subparagraph (D)(i), and (II) the proportion, of all 
     individuals who received medical assistance under this title 
     in any of the 50 States or the District of Columbia in the 
     fiscal year referred to in such subparagraph, who are 
     described in such subparagraph.
       ``(F) Determination of national averages and proportions.--
       ``(i) In general.--The national averages per recipient and 
     the proportions referred to in clauses (i) and (ii), 
     respectively, of subparagraphs (B), (C), and (D) and 
     subparagraph (E) shall be determined by the Secretary using 
     the most recent data available.
       ``(ii) Use of medicaid data.--If for a fiscal year there is 
     inadequate data to compute such averages and proportions 
     based on expenditures and numbers of individuals receiving 
     medical assistance under this title, the Secretary may 
     compute such averages based on expenditures and numbers of 
     such individuals under title XIX for the most recent fiscal 
     year for which data are available and, for this purpose--

       ``(I) any reference in subparagraph (B)(i) to `individuals 
     65 years of age or older' is deemed a reference to 
     `individuals whose eligibility for medical assistance is 
     based on being 65 years of age or older',
       ``(II) the reference in subparagraph (C)(i) to `and under 
     65 years of age' shall be considered to be deleted, and
       ``(III) individuals whose basis for eligibility for medical 
     assistance was reported as unknown shall not be counted as 
     individuals under subparagraph (D)(i).

       ``(4) Input cost index.--
       ``(A) In general.--In this section, the `input cost index' 
     for a State for a fiscal year is the sum of--
       ``(i) 0.15, and
       ``(ii) 0.85 multiplied by the ratio of (I) the annual 
     average wages for hospital employees in the State for the 
     fiscal year (as determined under subparagraph (B)), to (II) 
     the annual average wages for hospital employees in the 50 
     States and the District of Columbia for such year (as 
     determined under such subparagraph).
       ``(B) Determination of annual average wages of hospital 
     employees.--The Secretary shall provide for the determination 
     of annual average wages for hospital employees in a State 
     and, collectively, in the 50 States and the District of 
     Columbia for a fiscal year based on the area wage index 
     applicable to hospitals under 1886(d)(2)(E) (or, if such 
     index no longer exists, a comparable index of hospital wages) 
     for discharges occurring during the fiscal year involved.
       ``(5) National average spending per resident in poverty.--
     For purposes of this subsection, the `national average 
     spending per resident in poverty'--
       ``(A) for fiscal year 1997 is equal to--
       ``(i) the sum (for each of the 50 States and the District 
     of Columbia) of the total of the Federal and State 
     expenditures under title XIX for calendar quarters in fiscal 
     year 1994, increased by the percentage specified in 
     subsection (c)(1)(A)(ii), divided by
       ``(ii) the sum of the number of residents in poverty (as 
     defined in paragraph (2)(A)) for all of the 50 States and the 
     District of Columbia for fiscal year 1994;
       ``(B) for a succeeding fiscal year is equal to the national 
     average spending per resident in poverty under this paragraph 
     for the preceding fiscal year increased by the national 
     MediGrant growth percentage (as defined in subsection (b)(2)) 
     for the fiscal year involved.
       ``(e) Publication of Obligation and Outlay Allotments.--
       ``(1) Notice of preliminary allotments.--Not later than 
     April 1 before the beginning of each fiscal year (beginning 
     with fiscal year 1997), the Secretary shall initially 
     compute, after consultation with the Comptroller General, and 
     publish in the Federal Register notice of the proposed 
     obligation and outlay allotments for each State under this 
     section (not taking into account subsection (a)(2)(B)) for 
     the fiscal year. The Secretary shall include in the notice a 
     description of the methodology and data used in deriving such 
     allotments for the year.
       ``(2) Review by gao.--The Comptroller General shall submit 
     to Congress by not later than May 15 of each such fiscal 
     year, a report analyzing such allotments and the extent to 
     which they comply with the precise requirements of this 
     section.
       ``(3) Notice of final allotments.--Not later than July 1 
     before the beginning of each such fiscal year, the Secretary, 
     taking into consideration the analysis contained in the 
     report of the Comptroller General under paragraph (2), shall 
     compute and publish in the Federal Register notice of the 
     final allotments under this section (both taking into account 
     and not taking into account subsection (a)(2)(B)) for the 
     fiscal year. The Secretary shall include in the notice a 
     description of any changes in such allotments from the 
     initial allotments published under paragraph (1) for the 
     fiscal year and the reasons for such changes. Once published 
     under this paragraph, the Secretary is not authorized to 
     change such allotments.
       ``(4) GAO report on final allotments.--The Comptroller 
     General shall submit to Congress by not later than August 1 
     of each such fiscal year, a report analyzing the final 
     allotments under paragraph (3) and the extent to which they 
     comply with the precise requirements of this section.
       Section 2121 of the Social Security Act (as added by 
     section 16001 of the bill) is amended by adding at the end 
     the following:
       ``(f) Supplemental Allotment for Emergency Health Care 
     Services to Certain Aliens.--
       ``(1) In general.--Notwithstanding the previous provisions 
     of this section, the amount of the State outlay allotment for 
     a fiscal year for each supplemental allotment eligible State 
     shall be increased by the amount of the supplemental outlay 
     allotment provided under paragraph (2) for the State for that 
     year. The amount of such increased allotment may only be used 
     for the purpose of providing medical assistance for care and 
     services for aliens described in paragraph (1) of section 
     2123(e) and for which the exception described in paragraph 
     (2) of such section applies. Section 2122(f)(3) shall apply 
     to such assistance in the same manner as it applies to 
     medical assistance described in such section.
       ``(2) Supplemental outlay allotment.--
       ``(A) In general.--For purposes of paragraph (1), the 
     amount of the supplemental outlay allotment for a 
     supplemental allotment eligible State for a fiscal year is 
     equal to the supplemental allotment ratio (as defined in 
     subparagraph (C)) multiplied by the supplemental pool amount 
     (specified in subparagraph (D)) for the fiscal year.
       ``(B) Supplemental allotment eligible state.--In this 
     subsection, the term `supplemental allotment eligible State' 
     means one of the 12 States with the highest number of 
     undocumented aliens of all the States.
       ``(C) Supplemental allotment ratio.--In this paragraph, the 
     `supplemental allotment ratio' for a State is the ratio of--
       ``(i) the number of undocumented aliens for the State, to
       ``(ii) the sum of such numbers for all supplemental 
     allotment eligible States.
       ``(D) Supplemental pool amount.--In this paragraph, the 
     `supplemental pool amount'--
       ``(i) for each of fiscal years 1996 through 2002, is an 
     amount so that, if the amount were increased for each such 
     fiscal year beginning with fiscal year 1996 by the national 
     MediGrant growth percentage for the year involved, the total 
     of such amounts for all such fiscal years would be $3 
     billion; and
       ``(ii) for a subsequent year is the supplemental pool 
     amount for the previous fiscal year increased by the national 
     MediGrant growth percentage for such subsequent year.
       ``(E) Determination of number.--The number of undocumented 
     aliens in a State under this paragraph shall be determined 
     based on estimates of the resident illegal alien population 
     residing in each State prepared by the Statistics Division of 
     the Immigration and Naturalization Service as of October 1992 
     (or as of such later date if such date is at least 1 year 
     before the beginning of the fiscal year involved).
       ``(3) Treatment for obligation purposes.--For purposes of 
     computing obligation allotments under subsection (a)--
       ``(A) the amount of the supplemental pool amount for a 
     fiscal year shall be added to the pool amount under 
     subsection (b) for that fiscal year, and
       ``(B) the amount supplemental allotment to a State provided 
     under paragraph (1) shall be added to the outlay allotment of 
     the State for that fiscal year.
       ``(4) Sequence of obligations.--For purposes of carrying 
     out this title, payments to a supplemental allotment eligible 
     State under section 2122 that are attributable to 
     expenditures for medical assistance described in the second 
     sentence of paragraph (1) shall first be counted toward the 
     supplemental outlay allotment provided under this subsection, 
     rather than toward the outlay allotment otherwise provided 
     under this section.
       ``(g) Special Adjustments for Fiscal Year 1996.--
     Notwithstanding the previous provisions of this section--
       ``(1) the State outlay allotment for Oregon for fiscal year 
     1996 is increased by $155,682,700, and
       ``(2) the State outlay allotment for Tennessee for fiscal 
     year 1996 is increased by $195,468,000.
     The increases provided under this subsection shall not apply 
     to or affect the computation of State outlay allotments of 
     any other States and shall not apply for any fiscal year 
     other than fiscal year 1996.

     ``SEC. 2122. PAYMENTS TO STATES.

       ``(a) Amount of Payment.--From the allotment of a State 
     under section 2121 for a fiscal year, subject to the 
     succeeding provisions of this title, the Secretary shall pay 
     to each State which has a MediGrant plan approved under part 
     E, for each quarter in the fiscal year--

[[Page H11156]]

       ``(1) an amount equal to the applicable Federal medical 
     assistance percentage (as defined in subsection (c)) of the 
     total amount expended during such quarter as medical 
     assistance under the plan; plus
       ``(2) an amount equal to the applicable Federal medical 
     assistance percentage of the total amount expended during 
     such quarter for medically-related services (as defined in 
     section 2112(e)(2)); plus
       ``(3) subject to section 2123(c)--
       ``(A) an amount equal to 90 percent of the amounts expended 
     during such quarter for the design, development, and 
     installation of information systems and for providing 
     incentives to promote the enforcement of medical support 
     orders, plus
       ``(B) an amount equal to 75 percent of the amounts expended 
     during such quarter for medical personnel, administrative 
     support of medical personnel, operation and maintenance of 
     information systems, modification of information systems, 
     quality assurance activities, utilization review, medical and 
     peer review, anti-fraud activities, independent evaluations, 
     coordination of benefits, and meeting reporting requirements 
     under this title, plus
       ``(C) an amount equal to 50 percent of so much of the 
     remainder of the amounts expended during such quarter as are 
     expended by the State in the administration of the State 
     plan.
       ``(b) Payment Process.--
       ``(1) Quarterly estimates.--Prior to the beginning of each 
     quarter, the Secretary shall estimate the amount to which a 
     State will be entitled under subsection (a) for such quarter, 
     such estimates to be based on (A) a report filed by the State 
     containing its estimate of the total sum to be expended in 
     such quarter in accordance with the provisions of such 
     subsections, and stating the amount appropriated or made 
     available by the State and its political subdivisions for 
     such expenditures in such quarter, and if such amount is less 
     than the State's proportionate share of the total sum of such 
     estimated expenditures, the source or sources from which the 
     difference is expected to be derived, and (B) such other 
     investigation as the Secretary may find necessary.
       ``(2) Payment.--
       ``(A) In general.--The Secretary shall then pay to the 
     State, in such installments as the Secretary may determine 
     and in accordance with section 6503(a) of title 31, United 
     States Code, the amount so estimated, reduced or increased to 
     the extent of any overpayment or underpayment which the 
     Secretary determines was made under this section (or section 
     1903) to such State for any prior quarter and with respect to 
     which adjustment has not already been made under this 
     subsection (or under section 1903(d)).
       ``(B) Treatment as overpayments.--Expenditures for which 
     payments were made to the State under subsection (a) shall be 
     treated as an overpayment to the extent that the State or 
     local agency administering such plan has been reimbursed for 
     such expenditures by a third party pursuant to the provisions 
     of its plan in compliance with section 2135.
       ``(C) Recovery of overpayments.--For purposes of this 
     subsection, when an overpayment is discovered, which was made 
     by a State to a person or other entity, the State shall have 
     a period of 60 days in which to recover or attempt to recover 
     such overpayment before adjustment is made in the Federal 
     payment to such State on account of such overpayment. Except 
     as otherwise provided in subparagraph (D), the adjustment in 
     the Federal payment shall be made at the end of the 60 days, 
     whether or not recovery was made.
       ``(D) No adjustment for uncollectables.--In any case where 
     the State is unable to recover a debt which represents an 
     overpayment (or any portion thereof) made to a person or 
     other entity on account of such debt having been discharged 
     in bankruptcy or otherwise being uncollectable, no adjustment 
     shall be made in the Federal payment to such State on account 
     of such overpayment (or portion thereof).
       ``(3) Federal share of recoveries.--The pro rata share to 
     which the United States is equitably entitled, as determined 
     by the Secretary, of the net amount recovered during any 
     quarter by the State or any political subdivision thereof 
     with respect to medical assistance furnished under the State 
     plan shall be considered an overpayment to be adjusted under 
     this subsection.
       ``(4) Timing of obligation of funds.--Upon the making of 
     any estimate by the Secretary under this subsection, any 
     appropriations available for payments under this section 
     shall be deemed obligated.
       ``(5) Disallowances.--In any case in which the Secretary 
     estimates that there has been an overpayment under this 
     section to a State on the basis of a claim by such State that 
     has been disallowed by the Secretary under section 1116(d), 
     and such State disputes such disallowance, the amount of the 
     Federal payment in controversy shall, at the option of the 
     State, be retained by such State or recovered by the 
     Secretary pending a final determination with respect to such 
     payment amount. If such final determination is to the effect 
     that any amount was properly disallowed, and the State chose 
     to retain payment of the amount in controversy, the Secretary 
     shall offset, from any subsequent payments made to such State 
     under this title, an amount equal to the proper amount of the 
     disallowance plus interest on such amount disallowed for the 
     period beginning on the date such amount was disallowed and 
     ending on the date of such final determination at a rate 
     (determined by the Secretary) based on the average of the 
     bond equivalent of the weekly 90-day treasury bill auction 
     rates during such period.
       ``(c) Applicable Federal Medical Assistance Percentage 
     Defined.--In this section, except as provided in subsection 
     (f), the term `applicable Federal medical assistance 
     percentage' means, with respect to one of the 50 States or 
     the District of Columbia, at the State's or District's 
     option--
       ``(1) the old Federal medical assistance percentage (as 
     determined in subsection (d)), or
       ``(2) the new Federal medical assistance percentage (as 
     determined under subsection (e)) or, if less, the old Federal 
     medical assistance percentage plus 10 percentage points.
       ``(d) Old Federal Medical Assistance Percentage.--
       ``(1) In general.--Except as provided in paragraph (2) and 
     subsection (f), the term `old Federal medical assistance 
     percentage' for any State is 100 percent less the State 
     percentage; and the State percentage is that percentage which 
     bears the same ratio to 45 percent as the square of the per 
     capita income of such State bears to the square of the per 
     capita income of the continental United States (including 
     Alaska) and Hawaii.
       ``(2) Limitation on range.--In no case shall the old 
     Federal medical assistance percentage be less than 50 percent 
     or more than 83 percent.
       ``(3) Promulgation.--The old Federal medical assistance 
     percentage for any State shall be determined and promulgated 
     in accordance with the provisions of section 1101(a)(8)(B).
       ``(e) New Federal Medical Assistance Percentage Defined.--
       ``(1) In general.--
       ``(A) Term defined.--Except as provided in paragraph (3) 
     and subsection (f), the term `new Federal medical assistance 
     percentage' means, for each of the 50 States and the District 
     of Columbia, 100 percent reduced by the product 0.39 and the 
     ratio of--
       ``(i)(I) for each of the 50 States, the total taxable 
     resources (TTR) ratio of the State specified in subparagraph 
     (B), or
       ``(II) for the District of Columbia, the per capita income 
     ratio specified in subparagraph (C),

     to--
       ``(ii) the aggregate expenditure need ratio of the State or 
     District, as described in subparagraph (D).
       ``(B) Total taxable resources (ttr) ratio.--For purposes of 
     subparagraph (A)(i)(I), the total taxable resources (TTR) 
     ratio for each of the 50 States is--
       ``(i) an amount equal to the most recent 3-year average of 
     the total taxable resources (TTR) of the State, as determined 
     by the Secretary of the Treasury, divided by
       ``(ii) an amount equal to the sum of the 3-year averages 
     determined under clause (i) for each of the 50 States.
       ``(C) Per capita income ratio.--For purposes of 
     subparagraph (A)(i)(II), the per capita income ratio of the 
     District of Columbia is--
       ``(i) an amount equal to the most recent 3-year average of 
     the total personal income of the District of Columbia, as 
     determined in accordance with the provisions of section 
     1101(a)(8)(B), divided by
       ``(ii) an amount equal to the total personal income of the 
     continental United States (including Alaska) and Hawaii, as 
     determined under section 1101(a)(8)(B).
       ``(D) Aggregate expenditure need ratio.--For purposes of 
     subparagraph (A), with respect to each of the 50 States and 
     the District of Columbia for a fiscal year, the aggregate 
     expenditure need ratio is--
       ``(i) the State aggregate expenditure need (as defined in 
     section 2121(d)) for the State for the fiscal year, divided 
     by
       ``(ii) the such of such State aggregate expenditure needs 
     for the 50 States and the District of Columbia for the fiscal 
     year.
       ``(2) Limitation on range.--Except as provided in 
     subsection (f), the new Federal medical assistance percentage 
     shall in no case be less than 40 percent or greater than 83 
     percent.
       ``(3) Promulgation.--The new Federal medical assistance 
     percentage for any State shall be promulgated in a timely 
     manner consistent with the promulgation of the old Federal 
     medical assistance percentage under section 1101(a)(8)(B).
       ``(f) Special Rules.--For purposes of this title--
       ``(1) Commonwealths and territories.--In the case of Puerto 
     Rico, the Virgin Islands, Guam, the Northern Mariana Islands, 
     and American Samoa, the old and new Federal medical 
     assistance percentages are 50 percent.
       ``(2) Indian health service facilities.--
       ``(A) In general.--The old and new Federal medical 
     assistance percentages shall be 100 percent with respect to 
     the amounts expended as medical assistance for services which 
     are received through a facility described in subparagraph (B) 
     of an Indian tribe or tribal organization or through an 
     Indian Health Service facility whether operated by the Indian 
     Health Service or by an Indian tribe or tribal organization 
     (as defined in section 4 of the Indian Health Care 
     Improvement Act).
       ``(B) Facility described.--For purposes of subparagraph 
     (A), a facility described in this subparagraph is a facility 
     of an Indian tribe if--

[[Page H11157]]

       ``(i) the facility is located in a State which, as of the 
     date of the enactment of this title, was not operating its 
     State plan under title XIX pursuant to a Statewide waiver 
     approved under section 1115,
       ``(ii) the facility is not an Indian Health Service 
     facility,
       ``(iii) the tribe owns at least 2 such facilities, and
       ``(iv) the tribe has at least 50,000 members (as of the 
     date of the enactment of this title).
       ``(3) No state matching required for certain 
     expenditures.--In applying subsection (a)(1) with respect to 
     medical assistance provided to unlawful aliens pursuant to 
     the exception specified in section 2123(e)(2), payment shall 
     be made for the amount of such assistance without regard to 
     any need for a State match.

     ``SEC. 2123. LIMITATION ON USE OF FUNDS; DISALLOWANCE.

       ``(a) In General.--Funds provided to a State under this 
     title shall only be used to carry out the purposes of this 
     title.
       ``(b) Disallowances for Excluded Providers.--
       ``(1) In general.--Payment shall not be made to a State 
     under this part for expenditures for items and services 
     furnished--
       ``(A) by a provider who was excluded from participation 
     under title V, XVIII, or XX or under this title pursuant to 
     section 1128, 1128A, 1156, or 1842(j)(2), or
       ``(B) under the medical direction or on the prescription of 
     a physician who was so excluded, if the provider of the 
     services knew or had reason to know of the exclusion.
       ``(2) Exception for emergency services.--Paragraph (1) 
     shall not apply to emergency items or services, not including 
     hospital emergency room services.
       ``(c) Limitations.--
       ``(1) In general.--No Federal financial assistance is 
     available for expenditures under the MediGrant plan for--
       ``(A) medically-related services for a quarter to the 
     extent such expenditures exceed 5 percent of the total 
     expenditures under the plan for the quarter; or
       ``(B) total administrative expenses (other than expenses 
     described in paragraph (2) during the first 8 quarters in 
     which the plan is in effect under this title) for quarters in 
     a fiscal year to the extent such expenditures exceed the sum 
     of $20,000,000 plus 10 percent of the total expenditures 
     under the plan for the year.
       ``(2) Administrative expenses not subject to limitation.--
     The administrative expenses referred to in this paragraph are 
     expenditures under the MediGrant plan for the following 
     activities:
       ``(A) Quality assurance.
       ``(B) The development and operation of the certification 
     program for nursing facilities and intermediate care 
     facilities for the mentally retarded under section 
     2137(a)(2).
       ``(C) Utilization review activities, including medical 
     activities and activities of peer review organizations.
       ``(D) Inspection and oversight of providers and capitated 
     health care organizations.
       ``(E) Anti-fraud activities.
       ``(F) Independent evaluations.
       ``(G) Activities required to meet reporting requirements 
     under this title.
       ``(d) Treatment of Third Party Liability.--No payment shall 
     be made to a State under this part for expenditures for 
     medical assistance provided for an individual under its 
     MediGrant plan to the extent that a private insurer (as 
     defined by the Secretary by regulation and including a 
     group health plan (as defined in section 607(1) of the 
     Employee Retirement Income Security Act of 1974), a 
     service benefit plan, and a health maintenance 
     organization) would have been obligated to provide such 
     assistance but for a provision of its insurance contract 
     which has the effect of limiting or excluding such 
     obligation because the individual is eligible for or is 
     provided medical assistance under the plan.
       ``(e) Limitation on Payments to Emergency Services for 
     Nonlawful Aliens.--
       ``(1) In general.--Notwithstanding the preceding provisions 
     of this section, except as provided in paragraph (2), no 
     payment may be made to a State under this part for medical 
     assistance furnished to an alien who is not lawfully admitted 
     for permanent residence or otherwise permanently residing in 
     the United States under color of law.
       ``(2) Exception for emergency services.--Payment may be 
     made under this section for care and services that are 
     furnished to an alien described in paragraph (1) only if--
       ``(A) such care and services are necessary for the 
     treatment of an emergency medical condition of the alien,
       ``(B) such alien otherwise meets the eligibility 
     requirements for medical assistance under the MediGrant plan 
     (other than a requirement of the receipt of aid or assistance 
     under title IV, supplemental security income benefits under 
     title XVI, or a State supplementary payment), and
       ``(C) such care and services are not related to an organ 
     transplant procedure.
       ``(3) Emergency medical condition defined.--For purposes of 
     this subsection, the term `emergency medical condition' means 
     a medical condition (including emergency labor and delivery) 
     manifesting itself by acute symptoms of sufficient severity 
     (including severe pain) such that the absence of immediate 
     medical attention could reasonably be expected to result in--
       ``(A) placing the patient's health in serious jeopardy,
       ``(B) serious impairment to bodily functions, or
       ``(C) serious dysfunction of any bodily organ or part.
       ``(f) Limitation on Payment for Certain Outpatient 
     Prescription Drugs.--
       ``(1) In general.--No payment may be made to a State under 
     this part for medical assistance for covered outpatient drugs 
     (as defined in section 2175(i)(2)) of a manufacturer provided 
     under the MediGrant plan unless the manufacturer (as defined 
     in section 2175(i)(4)) of the drug--
       ``(A) has entered into a MediGrant master rebate agreement 
     with the Secretary under section 2175; and
       ``(B) is complying with the provisions of section 8126 of 
     title 38, United States Code, including the requirement of 
     entering into a master agreement with the Secretary of 
     Veterans Affairs under such section.
       ``(2) Construction.--Nothing in this subsection shall be 
     construed as requiring a State to participate in the 
     MediGrant master rebate agreement under section 2175.
       ``(3) Effect of subsequent amendments.--For purposes of 
     paragraph (1)(B), in determining whether a manufacturer is in 
     compliance with the requirements of section 8126 of title 38, 
     United States Code--
       ``(A) the Secretary shall not take into account any 
     amendments to such section that are enacted after the 
     enactment of title VI of the Veterans Health Care Act of 
     1992; and
       ``(B) a manufacturer is deemed to meet such requirements if 
     the manufacturer establishes to the satisfaction of the 
     Secretary that the manufacturer would comply (and has offered 
     to comply) with the provisions of section 8126 of title 38, 
     United States Code (as in effect immediately after the 
     enactment of the Veterans Health Care Act of 1992) and would 
     have entered into an agreement under such section (as such 
     section was in effect at such time), but for a legislative 
     change in such section after the date of the enactment of the 
     Veterans Health Care Act of 1992.
       ``(g) Limitation on Payment for Abortions.--
       ``(1) In general.--Payment shall not be made to a State 
     under this part for any amount expended under the MediGrant 
     plan to pay for any abortion or to assist in the purchase, in 
     whole or in part, of health benefit coverage that includes 
     coverage of abortion.
       ``(2) Exception.--Paragraph (1) shall not apply to an 
     abortion--
       ``(A) if the pregnancy is the result of an act of rape or 
     incest, or
       ``(B) in the case where a woman suffers from a physical 
     disorder, illness, or injury that would, as certified by a 
     physician, place the woman in danger of death unless an 
     abortion is performed.
       ``(h) Limitation on Payment for Assisting Deaths.--Payment 
     shall not be made to a State under this part for amounts 
     expended under the MediGrant plan to pay for, or to assist in 
     the purchase, in whole or in part, of health benefit coverage 
     that includes payment for any drug, biological product, or 
     service which was furnished for the purpose of causing, or 
     assisting in causing, the death, suicide, euthanasia, or 
     mercy killing of a person.

                ``Part D--Program Integrity and Quality

     ``SEC. 2131. USE OF AUDITS TO ACHIEVE FISCAL INTEGRITY.

       ``(a) Financial Audits of Program.--
       ``(1) In general.--Each MediGrant plan shall provide for an 
     annual audit of the State's expenditures from amounts 
     received under this title, in compliance with chapter 75 of 
     title 31, United States Code.
       ``(2) Verification audits.--If, after consultation with the 
     State and the Comptroller General and after a fair hearing, 
     the Secretary determines that a State's audit under 
     paragraph (1) was performed in substantial violation of 
     chapter 75 of title 31, United States Code, the Secretary 
     may--
       ``(A) require that the State provide for a verification 
     audit in compliance with such chapter, or
       ``(B) conduct such a verification audit.
       ``(3) Availability of audit reports.--Within 30 days after 
     completion of each audit or verification audit under this 
     subsection, the State shall--
       ``(A) provide the Secretary with a copy of the audit 
     report, including the State's response to any recommendations 
     of the auditor, and
       ``(B) make the audit report available for public inspection 
     in the same manner as proposed MediGrant plan amendments are 
     made available under section 2105.
       ``(b) Fiscal Controls.--
       ``(1) In general.--With respect to the accounting and 
     expenditure of funds under this title, each State shall adopt 
     and maintain such fiscal controls, accounting procedures, and 
     data processing safeguards as the State deems reasonably 
     necessary to assure the fiscal integrity of the State's 
     activities under this title.
       ``(2) Consistency with generally accepted accounting 
     principles.--Such controls and procedures shall be generally 
     consistent with generally accepted accounting principles as 
     recognized by the Governmental Accounting Standards Board or 
     the Comptroller General.
       ``(c) Audits of Providers.--Each MediGrant plan shall 
     provide that the records of any entity providing items or 
     services for which payment may be made under the plan may be 
     audited as necessary to ensure that proper payments are made 
     under the plan.

[[Page H11158]]


     ``SEC. 2132. FRAUD PREVENTION PROGRAM.

       ``(a) Establishment.--Each MediGrant plan shall provide for 
     the establishment and maintenance of an effective program for 
     the detection and prevention of fraud and abuse by 
     beneficiaries, providers, and others in connection with the 
     operation of the program.
       ``(b) Program Requirements.--The program established 
     pursuant to subsection (a) shall include at least the 
     following requirements:
       ``(1) Disclosure of information.--Any disclosing entity (as 
     defined in section 1124(a)) receiving payments under the 
     MediGrant plan shall comply with the requirements of section 
     1124.
       ``(2) Supply of information.--An entity (other than an 
     individual practitioner or a group of practitioners) that 
     furnishes, or arranges for the furnishing of, an item or 
     service under the MediGrant plan shall supply upon request 
     specifically addressed to the entity by the Secretary or the 
     State agency the information described in section 1128(b)(9).
       ``(3) Exclusion.--
       ``(A) In general.--The MediGrant plan shall exclude any 
     specified individual or entity from participation in the plan 
     for the period specified by the Secretary when required by 
     the Secretary to do so pursuant to section 1128 or section 
     1128A, and provide that no payment may be made under the plan 
     with respect to any item or service furnished by such 
     individual or entity during such period.
       ``(B) Authority.--In addition to any other authority, a 
     State may exclude any individual or entity for purposes of 
     participating under the MediGrant plan for any reason for 
     which the Secretary could exclude the individual or entity 
     from participation in a program under title XVIII or under 
     section 1128, 1128A, or 1866(b)(2).
       ``(4) Notice.--The MediGrant plan shall provide that 
     whenever a provider of services or any other person is 
     terminated, suspended, or otherwise sanctioned or prohibited 
     from participating under the plan, the State agency 
     responsible for administering the plan shall promptly notify 
     the Secretary and, in the case of a physician, the State 
     medical licensing board of such action.
       ``(5) Access to information.--The MediGrant plan shall 
     provide that the State will provide information and access to 
     certain information respecting sanctions taken against health 
     care practitioners and providers by State licensing 
     authorities in accordance with section 2133.

     ``SEC. 2133. INFORMATION CONCERNING SANCTIONS TAKEN BY STATE 
                   LICENSING AUTHORITIES AGAINST HEALTH CARE 
                   PRACTITIONERS AND PROVIDERS.

       ``(a) Information Reporting Requirement.--The requirement 
     referred to in section 2132(b)(5) is that the State must 
     provide for the following:
       ``(1) Information reporting system.--The State must have in 
     effect a system of reporting the following information with 
     respect to formal proceedings (as defined by the Secretary in 
     regulations) concluded against a health care practitioner or 
     entity by any authority of the State (or of a political 
     subdivision thereof) responsible for the licensing of health 
     care practitioners (or any peer review organization or 
     private accreditation entity reviewing the services provided 
     by health care practitioners) or entities:
       ``(A) Any adverse action taken by such licensing authority 
     as a result of the proceeding, including any revocation or 
     suspension of a license (and the length of any such 
     suspension), reprimand, censure, or probation.
       ``(B) Any dismissal or closure of the proceedings by reason 
     of the practitioner or entity surrendering the license or 
     leaving the State or jurisdiction.
       ``(C) Any other loss of the license of the practitioner or 
     entity, whether by operation of law, voluntary surrender, or 
     otherwise.
       ``(D) Any negative action or finding by such authority, 
     organization, or entity regarding the practitioner or entity.
       ``(2) Access to documents.--The State must provide the 
     Secretary (or an entity designated by the Secretary) with 
     access to such documents of the authority described in 
     paragraph (1) as may be necessary for the Secretary to 
     determine the facts and circumstances concerning the actions 
     and determinations described in such paragraph for the 
     purpose of carrying out this Act.
       ``(b) Form of Information.--The information described in 
     subsection (a)(1) shall be provided to the Secretary (or to 
     an appropriate private or public agency, under suitable 
     arrangements made by the Secretary with respect to receipt, 
     storage, protection of confidentiality, and dissemination of 
     information) in such a form and manner as the Secretary 
     determines to be appropriate in order to provide for 
     activities of the Secretary under this Act and in order to 
     provide, directly or through suitable arrangements made by 
     the Secretary, information--
       ``(1) to agencies administering Federal health care 
     programs, including private entities administering such 
     programs under contract,
       ``(2) to licensing authorities described in subsection 
     (a)(1),
       ``(3) to State agencies administering or supervising the 
     administration of State health care programs (as defined in 
     section 1128(h)),
       ``(4) to utilization and quality control peer review 
     organizations described in part B of title XI and to 
     appropriate entities with contracts under section 
     1154(a)(4)(C) with respect to eligible organizations reviewed 
     under the contracts,
       ``(5) to State MediGrant fraud control units (as defined in 
     section 2134),
       ``(6) to hospitals and other health care entities (as 
     defined in section 431 of the Health Care Quality Improvement 
     Act of 1986), with respect to physicians or other licensed 
     health care practitioners that have entered (or may be 
     entering) into an employment or affiliation relationship 
     with, or have applied for clinical privileges or appointments 
     to the medical staff of, such hospitals or other health care 
     entities (and such information shall be deemed to be 
     disclosed pursuant to section 427 of, and be subject to the 
     provisions of, that Act),
       ``(7) to the Attorney General and such other law 
     enforcement officials as the Secretary deems appropriate, and
       ``(8) upon request, to the Comptroller General,

     in order for such authorities to determine the fitness of 
     individuals to provide health care services, to protect the 
     health and safety of individuals receiving health care 
     through such programs, and to protect the fiscal integrity of 
     such programs.
       ``(c) Confidentiality of Information Provided.--The 
     Secretary shall provide for suitable safeguards for the 
     confidentiality of the information furnished under subsection 
     (a). Nothing in this subsection shall prevent the disclosure 
     of such information by a party which is otherwise authorized, 
     under applicable State law, to make such disclosure.
       ``(d) Appropriate Coordination.--The Secretary shall 
     provide for the maximum appropriate coordination in the 
     implementation of subsection (a) of this section and section 
     422 of the Health Care Quality Improvement Act of 1986.

     ``SEC. 2134. STATE MEDIGRANT FRAUD CONTROL UNITS.

       ``(a) In General.--Each MediGrant plan shall provide for a 
     State MediGrant fraud control unit described in subsection 
     (b) that effectively carries out the functions and 
     requirements described in such subsection, unless the State 
     demonstrates to the satisfaction of the Secretary that the 
     effective operation of such a unit in the State would not be 
     cost-effective because minimal fraud exists in connection 
     with the provision of covered services to eligible 
     individuals under the plan, and that beneficiaries under the 
     plan will be protected from abuse and neglect in connection 
     with the provision of medical assistance under the plan 
     without the existence of such a unit
       ``(b) Units Described.--For purposes of this subsection, 
     the term `State MediGrant fraud control unit' means a single 
     identifiable entity of the State government which meets the 
     following requirements:
       ``(1) Organization.--The entity--
       ``(A) is a unit of the office of the State Attorney General 
     or of another department of State government which possesses 
     statewide authority to prosecute individuals for criminal 
     violations;
       ``(B) is in a State the constitution of which does not 
     provide for the criminal prosecution of individuals by a 
     statewide authority and has formal procedures that--
       ``(i) assure its referral of suspected criminal violations 
     relating to the program under this title to the appropriate 
     authority or authorities in the State for prosecution, and
       ``(ii) assure its assistance of, and coordination with, 
     such authority or authorities in such prosecutions; or
       ``(C) has a formal working relationship with the office of 
     the State Attorney General and has formal procedures 
     (including procedures for its referral of suspected criminal 
     violations to such office) which provide effective 
     coordination of activities between the entity and such office 
     with respect to the detection, investigation, and prosecution 
     of suspected criminal violations relating to the program 
     under this title.
       ``(2) Independence.--The entity is separate and distinct 
     from any State agency that has principal responsibilities for 
     administering or supervising the administration of the 
     MediGrant plan.
       ``(3) Function.--The entity's function is conducting a 
     statewide program for the investigation and prosecution of 
     violations of all applicable State laws regarding any and all 
     aspects of fraud in connection with any aspect of the 
     provision of medical assistance and the activities of 
     providers of such assistance under the MediGrant plan.
       ``(4) Review of complaints.--The entity has procedures for 
     reviewing complaints of the abuse and neglect of patients of 
     health care facilities which receive payments under the 
     MediGrant plan under this title, and, where appropriate, for 
     acting upon such complaints under the criminal laws of the 
     State or for referring them to other State agencies for 
     action.
       ``(5) Overpayments.--The entity provides for the 
     collection, or referral for collection to a single State 
     agency, of overpayments that are made under the MediGrant 
     plan to health care providers and that are discovered by the 
     entity in carrying out its activities.
       ``(6) Personnel.--The entity employs such auditors, 
     attorneys, investigators, and other necessary personnel and 
     is organized in such a manner as is necessary to promote the 
     effective and efficient conduct of the entity's activities.

[[Page H11159]]


     ``SEC. 2135. RECOVERIES FROM THIRD PARTIES AND OTHERS.

       ``(a) Third Party Liability.--Each MediGrant plan shall 
     provide for reasonable steps--
       ``(1) to ascertain the legal liability of third parties to 
     pay for care and services available under the plan, including 
     the collection of sufficient information to enable States to 
     pursue claims against third parties; and
       ``(2) to seek reimbursement for medical assistance provided 
     to the extent legal liability is establish where the amount 
     expected to be recovered exceeds the costs of the recovery.
       ``(b) Beneficiary Protection.--
       ``(1) In general.--Each MediGrant plan shall provide that 
     in the case of a person furnishing services under the plan 
     for which a third party may be liable for payment--
       ``(A) the person may not seek to collect from the 
     individual (or financially responsible relative) payment of 
     an amount for the service more than could be collected under 
     the plan in the absence of such third party liability, and
       ``(B) may not refuse to furnish services to such an 
     individual because of a third party's potential liability for 
     payment for the service.
       ``(2) Penalty.--A MediGrant plan may provide for a 
     reduction of any payment amount otherwise due with respect to 
     a person who furnishes services under the plan in an amount 
     equal to up to three times the amount of any payment sought 
     to be collected by that person in violation of paragraph 
     (1)(A).
       ``(c) General Liability.--The State shall prohibit any 
     health insurer (including a group health plan as defined in 
     section 607 of the Employee Retirement Income Security Act of 
     1974, a service benefit plan, or a health maintenance 
     organization), in enrolling an individual or in making any 
     payments for benefits to the individual or on the 
     individual's behalf, from taking into account that the 
     individual is eligible for or is provided medical assistance 
     under a MediGrant plan for any State.
       ``(d) Acquisition of Rights of Beneficiaries.--To the 
     extent that payment has been made under a MediGrant plan in 
     any case where a third party has a legal liability to make 
     payment for such assistance, the State shall have in effect 
     laws under which, to the extent that payment has been made 
     under the plan for health care items or services furnished to 
     an individual, the State is considered to have acquired the 
     rights of such individual to payment by any other party for 
     such health care items or services.
       ``(e) Assignment of Medical Support Rights.--The MediGrant 
     plan shall provide for mandatory assignment of rights of 
     payment for medical support and other medical care owed to 
     recipients in accordance with section 2136.
       ``(f) Required Laws Relating to Medical Child Support.--
       ``(1) In general.--Each State with a MediGrant plan shall 
     have in effect the following laws:
       ``(A) A law that prohibits an insurer from denying 
     enrollment of a child under the health coverage of the 
     child's parent on the ground that--
       ``(i) the child was born out of wedlock,
       ``(ii) the child is not claimed as a dependent on the 
     parent's Federal income tax return, or
       ``(iii) the child does not reside with the parent or in the 
     insurer's service area.
       ``(B) In any case in which a parent is required by a court 
     or administrative order to provide health coverage for a 
     child and the parent is eligible for family health coverage 
     through an insurer, a law that requires such insurer--
       ``(i) to permit such parent to enroll under such family 
     coverage any such child who is otherwise eligible for such 
     coverage (without regard to any enrollment season 
     restrictions);
       ``(ii) if such a parent is enrolled but fails to make 
     application to obtain coverage of such child, to enroll such 
     child under such family coverage upon application by the 
     child's other parent or by the State agency administering the 
     program under this title or part D of title IV; and
       ``(iii) not to disenroll (or eliminate coverage of) such a 
     child unless the insurer is provided satisfactory written 
     evidence that--

       ``(I) such court or administrative order is no longer in 
     effect, or
       ``(II) the child is or will be enrolled in comparable 
     health coverage through another insurer which will take 
     effect not later than the effective date of such 
     disenrollment.

       ``(C) In any case in which a parent is required by a court 
     or administrative order to provide health coverage for a 
     child and the parent is eligible for family health coverage 
     through an employer doing business in the State, a law that 
     requires such employer--
       ``(i) to permit such parent to enroll under such family 
     coverage any such child who is otherwise eligible for such 
     coverage (without regard to any enrollment season 
     restrictions);
       ``(ii) if such a parent is enrolled but fails to make 
     application to obtain coverage of such child, to enroll such 
     child under such family coverage upon application by the 
     child's other parent or by the State agency administering the 
     program under this title or part D of title IV; and
       ``(iii) not to disenroll (or eliminate coverage of) any 
     such child unless--

       ``(I) the employer is provided satisfactory written 
     evidence that such court or administrative order is no longer 
     in effect, or the child is or will be enrolled in comparable 
     health coverage which will take effect not later than the 
     effective date of such disenrollment, or

       ``(II) the employer has eliminated family health coverage 
     for all of its employees; and

       ``(iv) to withhold from such employee's compensation the 
     employee's share (if any) of premiums for health coverage 
     (except that the amount so withheld may not exceed the 
     maximum amount permitted to be withheld under section 303(b) 
     of the Consumer Credit Protection Act), and to pay such share 
     of premiums to the insurer, except that the Secretary may 
     provide by regulation for appropriate circumstances under 
     which an employer may withhold less than such employee's 
     share of such premiums.
       ``(D) A law that prohibits an insurer from imposing 
     requirements on a State agency, which has been assigned the 
     rights of an individual eligible for medical assistance under 
     this title and covered for health benefits from the insurer, 
     that are different from requirements applicable to an agent 
     or assignee of any other individual so covered.
       ``(E) A law that requires an insurer, in any case in which 
     a child has health coverage through the insurer of a 
     noncustodial parent--
       ``(i) to provide such information to the custodial parent 
     as may be necessary for the child to obtain benefits through 
     such coverage;
       ``(ii) to permit the custodial parent (or provider, with 
     the custodial parent's approval) to submit claims for covered 
     services without the approval of the noncustodial parent; and
       ``(iii) to make payment on claims submitted in accordance 
     with clause (ii) directly to such custodial parent, the 
     provider, or the State agency.
       ``(F) A law that permits the State agency under this title 
     to garnish the wages, salary, or other employment income of, 
     and requires withholding amounts from State tax refunds to, 
     any person who--
       ``(i) is required by court or administrative order to 
     provide coverage of the costs of health services to a child 
     who is eligible for medical assistance under this title,
       ``(ii) has received payment from a third party for the 
     costs of such services to such child, but
       ``(iii) has not used such payments to reimburse, as 
     appropriate, either the other parent or guardian of such 
     child or the provider of such services,

     to the extent necessary to reimburse the State agency for 
     expenditures for such costs under its plan under this title, 
     but any claims for current or past-due child support shall 
     take priority over any such claims for the costs of such 
     services.
       ``(2) Definition.--For purposes of this subsection, the 
     term `insurer' includes a group health plan, as defined in 
     section 607(1) of the Employee Retirement Income Security Act 
     of 1974, a health maintenance organization, and an entity 
     offering a service benefit plan.
       ``(g) Estate Recoveries and Liens Permitted.--A State may 
     take such actions as it considers appropriate to adjust or 
     recover from the individual or the individual's estate any 
     amounts paid as medical assistance to or on behalf of the 
     individual under the MediGrant plan, including through the 
     imposition of liens against the property or estate of the 
     individual.

     ``SEC. 2136. ASSIGNMENT OF RIGHTS OF PAYMENT.

       ``(a) In General.--For the purpose of assisting in the 
     collection of medical support payments and other payments for 
     medical care owed to recipients of medical assistance under 
     the MediGrant plan, each MediGrant plan shall--
       ``(1) provide that, as a condition of eligibility for 
     medical assistance under the plan to an individual who has 
     the legal capacity to execute an assignment for himself, the 
     individual is required--
       ``(A) to assign the State any rights, of the individual or 
     of any other person who is eligible for medical assistance 
     under the plan and on whose behalf the individual has the 
     legal authority to execute an assignment of such rights, to 
     support (specified as support for the purpose of medical care 
     by a court or administrative order) and to payment for 
     medical care from any third party,
       ``(B) to cooperate with the State (i) in establishing the 
     paternity of such person (referred to in subparagraph (A)) if 
     the person is a child born out of wedlock, and (ii) in 
     obtaining support and payments (described in subparagraph 
     (A)) for himself and for such person, unless (in either case) 
     the individual is a pregnant woman or the individual is found 
     to have good cause for refusing to cooperate as determined by 
     the State, and
       ``(C) to cooperate with the State in identifying, and 
     providing information to assist the State in pursuing, any 
     third party who may be liable to pay for care and services 
     available under the plan, unless such individual has good 
     cause for refusing to cooperate as determined by the State; 
     and
       ``(2) provide for entering into cooperative arrangements 
     (including financial arrangements), with any appropriate 
     agency of any State (including, with respect to the 
     enforcement and collection of rights of payment for medical 
     care by or through a parent, with a State's agency 
     established or designated under section 454(3)) and with 
     appropriate courts and law enforcement officials, to assist 
     the agency or agencies administering the plan with respect 
     to--

[[Page H11160]]

       ``(A) the enforcement and collection of rights to support 
     or payment assigned under this section, and
       ``(B) any other matters of common concern.
       ``(b) Use of Amounts Collected.--Such part of any amount 
     collected by the State under an assignment made under the 
     provisions of this section shall be retained by the State as 
     is necessary to reimburse it for medical assistance payments 
     made on behalf of an individual with respect to whom such 
     assignment was executed (with appropriate reimbursement of 
     the Federal Government to the extent of its participation in 
     the financing of such medical assistance), and the remainder 
     of such amount collected shall be paid to such individual.

     ``SEC. 2137. QUALITY ASSURANCE STANDARDS FOR NURSING 
                   FACILITIES.

       ``(a) Standards for and Certification of Certain 
     Facilities.--
       ``(1) Standards for facilities.--
       ``(A) In general.--Each MediGrant plan shall provide for 
     the establishment and maintenance of standards consistent 
     with the contents described in subparagraph (B) for nursing 
     facilities which furnish services under the plan. Such 
     standards shall provide that nursing facilities must care for 
     residents in such a manner and in such an environment as will 
     promote maintenance or enhancement of the quality of life of 
     each resident.
       ``(B) Contents of standards.--The standards established for 
     facilities under this paragraph shall contain provisions 
     relating to the following items:
       ``(i) The treatment of resident medical records.
       ``(ii) Policies, procedures, and bylaws for operation.
       ``(iii) Quality assurance systems.
       ``(iv) Resident assessment procedures, including care 
     planning and outcome evaluation.
       ``(v) The assurance of a safe and adequate physical plant 
     for the facility.
       ``(vi) Qualifications for staff sufficient to provide 
     adequate care, as defined by the State.
       ``(vii) Utilization review.
       ``(viii) The protection and enforcement of resident rights 
     described in paragraph (2)(A).
       ``(C) Process for establishment.--The standards established 
     by the State for facilities under this paragraph shall be 
     promulgated either through the State's legislative, 
     regulatory, or other process, and may only take effect after 
     the State has provided the public with notice and an 
     opportunity for comment.
       ``(2) Residents' rights.--
       ``(A) In general.--The resident rights described in this 
     paragraph are the rights of residents to the following:
       ``(i) To exercise the individual's rights as a resident of 
     the facility and as a citizen or resident of the United 
     States.
       ``(ii) To receive notice of rights and services.
       ``(iii) To be protected against the misuse of resident 
     funds.
       ``(iv) To be provided privacy and confidentiality.
       ``(v) To voice grievances.
       ``(vi) To examine the results of State certification 
     program inspections.
       ``(vii) To refuse to perform services for the facility.
       ``(viii) To be provided privacy in communications and to 
     receive mail.
       ``(ix) To have the facility provide immediate access to any 
     resident by any representative of the certification program, 
     the resident's individual physician, the State long term care 
     ombudsman, and any person the resident has designated as a 
     visitor.
       ``(x) To retain and use personal property.
       ``(xi) To be free from abuse, including verbal, sexual, 
     physical and mental abuse, corporal punishment, and 
     involuntary seclusion and not to have any physical or 
     chemical restraints imposed for purposes of discipline or 
     convenience unless required to treat the resident's medical 
     symptoms.
       ``(xii) To be provided with prior written notice of a 
     pending transfer or discharge.
       ``(xiii) To organize and participate in resident groups in 
     the facility and to have family members meet in the facility 
     with the families of other residents in the facility.
       ``(xiv) To participate in social, religious, and community 
     activities that do not interfere with the rights of other 
     residents in the facility.
       ``(xv) To choose a personal attending physician, to be 
     fully informed in advance about care and treatment, and 
     (except with respect to a resident adjudged incompetent) to 
     participate in planning care and treatment or changes in care 
     and treatment.
       ``(xvi) To not have psycho- pharmacologic drugs 
     administered except under the orders of a physician and as 
     part of a plan designed to eliminate or modify the symptoms 
     for which the drugs are prescribed.
       ``(B) Rights of incompetent residents.--In the case of a 
     resident adjudged incompetent under the laws of a State, the 
     rights of the resident under the MediGrant plan shall devolve 
     upon, and, to the extent judged necessary by a court of 
     competent jurisdiction, be exercised by, the person appointed 
     under State law to act on the resident's behalf.
       ``(3) Certification program.--
       ``(A) In general.--Each MediGrant plan shall provide for 
     the establishment and operation of a program consistent with 
     the requirements of subparagraph (B) for the certification of 
     nursing facilities which meet the standards established under 
     paragraph (1) and the decertification of facilities which 
     fail to meet such standards.
       ``(B) Requirements for program.--In addition to any other 
     requirements the State may impose, in establishing and 
     operating the certification program under subparagraph (A), 
     the State shall ensure the following:
       ``(i) The State shall ensure public access (as defined by 
     the State) to the certification program's evaluations of 
     participating facilities, including compliance records and 
     enforcement actions and other reports by the State regarding 
     the ownership, compliance histories, and services provided 
     by certified facilities.
       ``(ii) Not less often than every 4 years, the State shall 
     audit its expenditures under the program, through an entity 
     designated by the State which is not affiliated with the 
     program, as designated by the State.
       ``(b) Intermediate Sanction Authority.--
       ``(1) Authority.--In addition to any other authority under 
     State law, where a State determines that a nursing facility 
     which is certified for participation under the MediGrant plan 
     no longer substantially meets the requirements for such a 
     facility under this title and further determines that the 
     facility's deficiencies--
       ``(A) immediately jeopardize the health and safety of its 
     residents, the State shall at least provide for the 
     termination of the facility's certification for participation 
     under the plan, or
       ``(B) do not immediately jeopardize the health and safety 
     of its residents, the State may, in lieu of providing for 
     terminating the facility's certification for participation 
     under the plan, provide lesser sanctions including one that 
     provides that no payment will be made under the plan with 
     respect to any individual admitted to such facility after a 
     date specified by the State.
       ``(2) Notice.--The State shall not make such a decision 
     with respect to a facility until the facility has had a 
     reasonable opportunity, following the initial determination 
     that it no longer substantially meets the requirements for 
     such a facility under the plan, to correct its deficiencies, 
     and, following this period, has been given reasonable notice 
     and opportunity for a hearing.
       ``(3) Effectiveness.--The State's decision to deny payment 
     may be made effective only after such notice to the public 
     and to the facility as may be provided for by the State, and 
     its effectiveness shall terminate (A) when the State finds 
     that the facility is in substantial compliance (or is making 
     good faith efforts to achieve substantial compliance) with 
     the requirements for such a facility under this title, or (B) 
     in the case described in paragraph (1)(B), with the end of 
     the eleventh month following the month such decision is made 
     effective, whichever occurs first. If a facility to which 
     clause (B) of the previous sentence applies still fails to 
     substantially meet the provisions of the respective section 
     on the date specified in such clause, the State shall 
     terminate such facility's certification for participation 
     under the MediGrant plan effective with the first day of the 
     first month following the month specified in such clause.

     ``SEC. 2138. OTHER PROVISIONS PROMOTING PROGRAM INTEGRITY.

       ``(a) Public Access to Survey Results.--Each MediGrant plan 
     shall provide that upon completion of a survey of any health 
     care facility or organization by a State agency to carry out 
     the plan, the agency shall make public in readily available 
     form and place the pertinent findings of the survey relating 
     to the compliance of the facility or organization with 
     requirements of law.
       ``(b) Record Keeping.--Each MediGrant plan shall provide 
     for agreements with persons or institutions providing 
     services under the plan under which the person or institution 
     agrees--
       ``(1) to keep such records (including ledgers, books, and 
     original evidence of costs) as are necessary to fully 
     disclose the extent of the services provided to individuals 
     receiving assistance under the plan; and
       ``(2) to furnish the State agency with such information 
     regarding any payments claimed by such person or institution 
     for providing services under the plan, as the State agency 
     may from time to time request.

        ``Part E--Establishment and Amendment of MediGrant Plans

     ``SEC. 2151. SUBMITTAL AND APPROVAL OF MEDIGRANT PLANS.

       ``(a) Submittal.--As a condition of receiving funding under 
     part C, each State shall submit to the Secretary a MediGrant 
     plan that meets the applicable requirements of this title.
       ``(b) Approval.--Except as the Secretary may provide under 
     section 2154, a MediGrant plan submitted under subsection 
     (a)--
       ``(1) shall be approved for purposes of this title, and
       ``(2) shall be effective beginning with a calendar quarter 
     that is specified in the plan, but in no case earlier than 
     the first calendar quarter that begins at least 60 days after 
     the date the plan is submitted.
       ``(c) Approval of Legislature for Submittal.--In the case 
     of a State which has a State allotment under section 
     2121(c)(1) for fiscal year 1996 of more than $10 billion, the 
     State may not submit a MediGrant plan under this section 
     unless the State legislature, by law, has specifically 
     authorized such submittal.

[[Page H11161]]


     ``SEC. 2152. SUBMITTAL AND APPROVAL OF PLAN AMENDMENTS.

       ``(a) Submittal of Amendments.--A State may amend, in whole 
     or in part, its MediGrant plan at any time through 
     transmittal of a plan amendment under this section.
       ``(b) Approval.--Except as the Secretary may provide under 
     section 2154, an amendment to a MediGrant plan submitted 
     under subsection (a)--
       ``(1) shall be approved for purposes of this title, and
       ``(2) shall be effective as provided in subsection (c).
       ``(c) Effective Dates for Amendments.--
       ``(1) In general.--Subject to the succeeding provisions of 
     this subsection, an amendment to MediGrant plan shall take 
     effect on one or more effective dates specified in the 
     amendment.
       ``(2) Amendments relating to eligibility or benefits.--
     Except as provided in paragraph (4)--
       ``(A) Notice requirement.--Any plan amendment that 
     eliminates or restricts eligibility or benefits under the 
     plan may not take effect unless the State certifies that it 
     has provided prior or contemporaneous public notice of the 
     change, in a form and manner provided under applicable State 
     law.
       ``(B) Timely transmittal.--Any plan amendment that 
     eliminates or restricts eligibility or benefits under the 
     plan shall not be effective for longer than a 60 day period 
     unless the amendment has been transmitted to the Secretary 
     before the end of such period.
       ``(3) Other amendments.--Subject to paragraph (4), any plan 
     amendment that is not described in paragraph (2) becomes 
     effective in a State fiscal year may not remain in effect 
     after the end of such fiscal year (or, if later, the end of 
     the 90-day period on which it becomes effective) unless the 
     amendment has been transmitted to the Secretary.
       ``(4) Exception.--The requirements of paragraphs (2) and 
     (3) shall not apply to a plan amendment that is submitted on 
     a timely basis pursuant to a court order or an order of the 
     Secretary.

     ``SEC. 2153. PROCESS FOR STATE WITHDRAWAL FROM PROGRAM.

       ``(a) In General.--A State may rescind its MediGrant plan 
     and discontinue participation in the program under this title 
     at any time after providing--
       ``(1) the public with 90 days prior notice in a publication 
     in one or more daily newspapers of general circulation in the 
     State or in any publication used by the State to publish 
     State statutes or rules, and
       ``(2) the Secretary with 90 days prior written notice.
       ``(b) Effective Date.--Such discontinuation shall not apply 
     to payments under part C for expenditures made for items and 
     services furnished under the MediGrant plan before the 
     effective date of the discontinuation.
       ``(c) Proration of Allotments.--In the case of any 
     withdrawal under this section other than at the end of a 
     Federal fiscal year, notwithstanding any provision of section 
     2121 to the contrary, the Secretary shall provide for such 
     appropriate proration of the application of allotments under 
     section 2121 as is appropriate.

     ``SEC. 2154. SANCTIONS FOR SUBSTANTIAL NONCOMPLIANCE.

       ``(a) Prompt Review of Plan Submittals.--The Secretary 
     shall promptly review MediGrant plans and plan amendments 
     submitted under this part to determine if they substantially 
     comply with the requirements of this title.
       ``(b) Determinations of Substantial Noncompliance.--
       ``(1) At time of plan or amendment submittal.--
       ``(A) In general.--If the Secretary, during the 30-day 
     period beginning on the date of submittal of a MediGrant plan 
     or plan amendment--
       ``(i) determines that the plan or amendment substantially 
     violates (within the meaning of subsection (c)) a requirement 
     of this title, and
       ``(ii) provides written notice of such determination to the 
     State,
     the Secretary shall issue an order specifying that the plan 
     or amendment, insofar as it is in substantial violation of 
     such a requirement, shall not be effective, except as 
     provided in subsection (c), beginning at the end of a period 
     of not less than 30 days, or 120 days in the case of the 
     initial submission of the MediGrant plan) specified in the 
     order beginning on the date of the notice of the 
     determination.
       ``(B) Extension of time periods.--The time periods 
     specified in subparagraph (A) may be extended by written 
     agreement of the Secretary and the State involved.
       ``(2) Violations in administration of plan.--
       ``(A) In general.--If the Secretary determines, after 
     reasonable notice and opportunity for a hearing for the 
     State, that in the administration of a MediGrant plan there 
     is a substantial violation of a requirement of this title, 
     the Secretary shall provide the State with written notice of 
     the determination and with an order to remedy such violation. 
     Such an order shall become effective prospectively, as 
     specified in the order, after the date of receipt of such 
     written notice. Such an order may include the withholding of 
     funds, consistent with subsection (f), for parts of the 
     MediGrant plan affected by such violation, until the 
     Secretary is satisfied that the violation has been corrected.
       ``(B) Effectiveness.--If the Secretary issues an order 
     under paragraph (1), the order shall become effective, except 
     as provided in subsection (c), beginning at the end of a 
     period (of not less than 30 days) specified in the order 
     beginning on the date of the notice of the determination to 
     the State.
       ``(C) Timeliness of determinations relating to report-based 
     compliance.--The Secretary shall make determinations under 
     this paragraph respecting violations relating to information 
     contained in an annual report under section 2102, an 
     independent evaluation under section 2103, or an audit report 
     under section 2131 not later than 30 days after the date of 
     transmittal of the report or evaluation to the Secretary.
       ``(3) Consultation with state.--Before making a 
     determination adverse to a State under this section, the 
     Secretary shall (within any time periods provided under this 
     section)--
       ``(A) reasonably consult with the State involved,
       ``(B) offer the State a reasonable opportunity to clarify 
     the submission and submit further information to substantiate 
     compliance with the requirements of this title, and
       ``(C) reasonably consider any such clarifications and 
     information submitted.
       ``(4) Justification of any inconsistencies in 
     determinations.--If the Secretary makes a determination under 
     this section that is, in whole or in part, inconsistent with 
     any previous determination issued by the Secretary under this 
     title, the Secretary shall include in the determination a 
     detailed explanation and justification for any such 
     difference.
       ``(5) Substantial violation defined.--For purposes of this 
     title, a MediGrant plan (or amendment to such a plan) or the 
     administration of the MediGrant plan is considered to 
     `substantially violate' a requirement of this title if a 
     provision of the plan or amendment (or an omission from the 
     plan or amendment) or the administration of the plan--
       ``(A) is material and substantial in nature and effect, and
       ``(B) is inconsistent with an express requirement of this 
     title.

     A failure to meet a strategic objective or performance goal 
     (as described in section 2101) shall not be considered to 
     substantially violate a requirement of this title.
       ``(c) State Response to Orders.--
       ``(1) State response by revising plan.--
       ``(A) In general.--Insofar as an order under subsection 
     (b)(1) relates to a substantial violation by a MediGrant plan 
     or plan amendment, a State may respond (before the date the 
     order becomes effective) to such an order by submitting a 
     written revision of the plan or plan amendment to 
     substantially comply with the requirements of this part.
       ``(B) Review of revision.--In the case of submission of 
     such a revision, the Secretary shall promptly review the 
     submission and shall withhold any action on the order during 
     the period of such review.
       ``(C) Secretarial response.--The revision shall be 
     considered to have corrected the deficiency (and the order 
     rescinded insofar as it relates to such deficiency) unless 
     the Secretary determines and notifies the State in writing, 
     within 15 days after the date the Secretary receives the 
     revision, that the plan or amendment, as proposed to be 
     revised, still substantially violates a requirement of this 
     title. In such case the State may respond by seeking 
     reconsideration or a hearing under paragraph (2).
       ``(D) Revision retroactive.--If the revision provides for 
     substantial compliance, the revision may be treated, at the 
     option of the State, as being effective either as of the 
     effective date of the provision to which it relates or such 
     later date as the State and Secretary may agree.
       ``(2) State response by seeking reconsideration or an 
     administrative hearing.--A State may respond to an order 
     under subsection (b) by filing a request with the Secretary 
     for--
       ``(A) a reconsideration of the determination, pursuant to 
     subsection (d)(1), or
       ``(B) a review of the determination through an 
     administrative hearing, pursuant to subsection (d)(2).
     In such case, the order shall not take effect before the 
     completion of the reconsideration or hearing.
       ``(3) State response by corrective action plan.--
       ``(A) In general.--In the case of an order described in 
     subsection (b)(2) that relates to a substantial violation in 
     the administration of the MediGrant plan, a State may respond 
     to such an order by submitting a corrective action plan with 
     the Secretary to correct deficiencies in the administration 
     of the plan which are the subject of the order.
       ``(B) Review of corrective action plan.--In such case, the 
     Secretary shall withhold any action on the order for a period 
     (not to exceed 30 days) during which the Secretary reviews 
     the corrective action plan.
       ``(C) Secretarial response.--The corrective action plan 
     shall be considered to have corrected the deficiency (and the 
     order rescinded insofar as it relates to such deficiency) 
     unless the Secretary determines and notifies the State in 
     writing, within 15 days after the date the Secretary receives 
     the corrective action plan, that the State's administration 
     of the MediGrant plan, as proposed to be corrected in the 
     plan, will still substantially violate a requirement of this 
     title. In such case the State may respond by seeking 
     reconsideration or a hearing under paragraph (2).

[[Page H11162]]

       ``(4) State response by withdrawal of plan amendment; 
     failure to respond.--Insofar as an order relates to a 
     substantial violation in a plan amendment submitted, a State 
     may respond to such an order by withdrawing the plan 
     amendment and the MediGrant plan shall be treated as though 
     the amendment had not been made.
       ``(d) Administrative Review and Hearing.--
       ``(1) Reconsideration.--Within 30 days after the date of 
     receipt of a request under subsection (b)(2)(A), the 
     Secretary shall notify the State of the time and place at 
     which a hearing will be held for the purpose of reconsidering 
     the Secretary's determination. The hearing shall be held not 
     less than 20 days nor more than 60 days after the date notice 
     of the hearing is furnished to the State, unless the 
     Secretary and the State agree in writing to holding the 
     hearing at another time. The Secretary shall affirm, modify, 
     or reverse the original determination within 60 days of the 
     conclusion of the hearing.
       ``(2) Administrative hearing.--Within 30 days after the 
     date of receipt of a request under subsection (b)(2)(B), an 
     administrative law judge shall schedule a hearing for the 
     purpose of reviewing the Secretary's determination. The 
     hearing shall be held not less than 20 days nor more than 60 
     days after the date notice of the hearing is furnished to the 
     State, unless the Secretary and the State agree in writing to 
     holding the hearing at another time. The administrative law 
     judge shall affirm, modify, or reverse the determination 
     within 60 days of the conclusion of the hearing.
       ``(e) Judicial Review.--
       ``(1) In general.--A State which is dissatisfied with a 
     final determination made by the Secretary under subsection 
     (d)(1) or a final determination of an administrative law 
     judge under subsection (d)(2) may, within 60 days after it 
     has been notified of such determination, file with the United 
     States court of appeals for the circuit in which the State is 
     located a petition for review of such determination. A copy 
     of the petition shall be forthwith transmitted by the clerk 
     of the court to the Secretary and, in the case of a 
     determination under subsection (d)(2), to the administrative 
     law judge involved. The Secretary (or judge involved) 
     thereupon shall file in the court the record of the 
     proceedings on which the final determination was based, as 
     provided in section 2112 of title 28, United States Code.
       ``(2) Standard for review.--The findings of fact by the 
     Secretary or administrative law judge, if supported by 
     substantial evidence, shall be conclusive, but the court, for 
     good cause shown, may remand the case to the Secretary or 
     judge to take further evidence, and the Secretary or judge 
     may thereupon make new or modified findings of fact and 
     may modify a previous determination, and shall certify to 
     the court the transcript and record of the further 
     proceedings. Such new or modified findings of fact shall 
     likewise be conclusive if supported by substantial 
     evidence.
       ``(3) Jurisdiction of appellate court.--The court shall 
     have jurisdiction to affirm the action of the Secretary or 
     judge or to set it aside, in whole or in part. The judgment 
     of the court shall be subject to review by the Supreme Court 
     of the United States upon certiorari or certification as 
     provided in section 1254 of title 28, United States Code.
       ``(f) Withholding of Funds.--
       ``(1) In general.--Any order under this section relating to 
     the withholding of funds shall be effective not earlier than 
     the effective date of the order and shall only relate to the 
     portions of a MediGrant plan or administration thereof which 
     substantially violate a requirement of this title. In the 
     case of a failure to meet a set-aside requirement under 
     section 2112, any withholding shall only apply to the extent 
     of such failure.
       ``(2) Suspension of withholding.--The Secretary may suspend 
     withholding of funds under paragraph (1) during the period 
     reconsideration or administrative and judicial review is 
     pending under subsection (d) or (e).
       ``(3) Restoration of funds.--Any funds withheld under this 
     subsection under an order shall be immediately restored to a 
     State--
       ``(A) to the extent and at the time the order is--
       ``(i) modified or withdrawn by the Secretary upon 
     reconsideration,
       ``(ii) modified or reversed by an administrative law judge, 
     or
       ``(iii) set aside (in whole or in part) by an appellate 
     court; or
       ``(B) when the Secretary determines that the deficiency 
     which was the basis for the order is corrected;
       ``(C) when the Secretary determines that violation which 
     was the basis for the order is resolved or the amendment 
     which was the basis for the order is withdrawn; or
       ``(D) at any time upon the initiative of the Secretary.

     ``SEC. 2155. SECRETARIAL AUTHORITY.

       ``(a) Negotiated Agreement and Dispute Resolution.--
       ``(1) Negotiations.--Nothing in this part shall be 
     construed as preventing the Secretary and a State from at any 
     time negotiating a satisfactory resolution to any dispute 
     concerning the approval of a MediGrant plan (or amendments to 
     a MediGrant plan) or the compliance of a MediGrant plan 
     (including its administration) with requirements of this 
     title.
       ``(2) Cooperation.--The Secretary shall act in a 
     cooperative manner with the States in carrying out this 
     title. In the event of a dispute between a State and the 
     Secretary, the Secretary shall, whenever practicable, engage 
     in informal dispute resolution activities in lieu of formal 
     enforcement or sanctions under section 2154.
       ``(b) Limitations on Delegation of Decision-making 
     Authority.--The Secretary may not delegate (other than to the 
     Administrator of the Health Care Financing Administration) 
     the authority to make determinations or reconsiderations 
     respecting the approval of MediGrant plans (or amendments to 
     such plans) or the compliance of a MediGrant plan (including 
     its administration) with requirements of this title. Such 
     Administrator may not further delegate such authority to any 
     individual, including any regional official of such 
     Administration.
       ``(c) Requiring Formal Rulemaking for Changes in 
     Secretarial Administration.--The Secretary shall carry out 
     the administration of the program under this title only 
     through a prospective formal rulemaking process, including 
     issuing notices of proposed rule making, publishing proposed 
     rules or modifications to rules in the Federal Register, and 
     soliciting public comment.

                      ``Part F--General Provisions

     ``SEC. 2171. DEFINITIONS.

       ``(a) Medical Assistance.--
       ``(1) In general.--For purposes of this title, except as 
     provided in paragraph (2), the term `medical assistance' 
     means payment of part or all the cost of any of the following 
     for eligible low-income individuals (as defined in subsection 
     (b)) as specified under the MediGrant plan:
       ``(A) Inpatient hospital services.
       ``(B) Outpatient hospital services.
       ``(C) Physician services.
       ``(D) Surgical services.
       ``(E) Clinic services and other ambulatory health care 
     services.
       ``(F) Nursing facility services.
       ``(G) Intermediate care facility services for the mentally 
     retarded.
       ``(H) Prescription drugs and biologicals.
       ``(I) Over-the-counter medications.
       ``(J) Laboratory and radiological services.
       ``(K) Family planning services and supplies.
       ``(L) Inpatient mental health services, including services 
     furnished in a State-operated mental hospital and including 
     residential or other 24-hour therapeutically planned 
     structured services in the case of a child.
       ``(M) Outpatient mental health services, including services 
     furnished in a State-operated mental hospital and including 
     community-based services in the case of a child.
       ``(N) Durable medical equipment and other medically-related 
     or remedial devices (such as prosthetic devices, implants, 
     eyeglasses, hearing aids, dental devices, and adaptive 
     devices).
       ``(O) Disposable medical supplies.
       ``(P) Home and community-based health care services and 
     related supportive services (such as home health nursing 
     services, home health aide services, personal 
     care, assistance with activities of daily living, chore 
     services, day care services, respite care services, and 
     training for family members).
       ``(Q) Community supported living arrangements.
       ``(R) Nursing care services (such as private duty nursing 
     care, nurse midwife services, respiratory care services, 
     pediatric nurse services, and advanced practice nurse 
     services) in a home, school, or other setting.
       ``(S) Dental services.
       ``(T) Inpatient substance abuse treatment services and 
     residential substance abuse treatment services.
       ``(U) Outpatient substance abuse treatment services.
       ``(V) Case management services.
       ``(W) Care coordination services.
       ``(X) Physical therapy, occupational therapy, and services 
     for individuals with speech, hearing, and language disorders.
       ``(Y) Hospice care.
       ``(Z) Any other medical, diagnostic, screening, preventive, 
     restorative, remedial, therapeutic, or rehabilitative 
     services (whether in a facility, home, school, or other 
     setting) if recognized by State law and if the service is--
       ``(i) prescribed by or furnished by a physician or other 
     licensed or registered practitioner within the scope of 
     practice as defined by State law,
       ``(ii) performed under the general supervision or at the 
     direction of a physician, or
       ``(iii) furnished by a health care facility that is 
     operated by a State or local government or is licensed under 
     State law and operating within the scope of the license.
       ``(AA) Premiums for private health care insurance coverage, 
     including private long-term care insurance coverage.
       ``(BB) Medical transportation.
       ``(CC) Medicare cost-sharing (as defined in subsection 
     (c)).
       ``(DD) Enabling services (such as transportation, 
     translation, and outreach services) designed to increase the 
     accessibility of primary and preventive health care services 
     for eligible low-income individuals.
       ``(EE) Any other health care services or items specified by 
     the Secretary.
       ``(2) Exclusion of certain payments.--Such term does not 
     include the payment with respect to care or services for--
       ``(A) any individual who is an inmate of a public 
     institution (except as a patient in a State psychiatric 
     hospital); and
       ``(B) any individual who is not an eligible low-income 
     individual.
       ``(b) Eligible Low-Income Individual.--The term `eligible 
     low-income individual' 

[[Page H11163]]

     means an individual who has been determined eligible by the 
     State for medical assistance under the MediGrant plan and 
     whose family income (as determined under the plan) does not 
     exceed a percentage (specified in the MediGrant plan and not 
     to exceed 300 percent) of the poverty line for a family of 
     the size involved. In determining the amount of income under 
     the previous sentence, a State may exclude costs incurred for 
     medical care or other types of remedial care recognized by 
     the State.
       ``(c) Medicare Cost-Sharing.--For purposes of this title, 
     the term `medicare cost-sharing' means any of the following:
       ``(1)(A) Premiums under section 1839.
       ``(B) Premiums under section 1818 or 1818A.
       ``(2) Coinsurance under title XVIII (including coinsurance 
     described in section 1813).
       ``(3) Deductibles established under title XVIII (including 
     those described in section 1813 and section 1833(b)).
       ``(4) The difference between the amount that is paid under 
     section 1833(a) and the amount that would be paid under such 
     section if any reference to `80 percent' therein were deemed 
     a reference to `100 percent'.
       ``(5) Premiums for enrollment of an individual with an 
     eligible organization under section 1876 or with a 
     MedicarePlus organization under part C of title XVIII.
       ``(d) Additional Definitions.--For purposes of this title:
       ``(1) Child.--The term `child' means an individual under 19 
     years of age.
       ``(2) Poverty line defined.--The term `poverty line' means 
     the income official poverty line (as defined by the Office of 
     Management and Budget and revised annually in accordance with 
     section 673(2) of the Omnibus Budget Reconciliation Act of 
     1981).
       ``(3) Pregnant woman.--The term `pregnant woman' includes a 
     woman during the 60-day period beginning on the last day of 
     the pregnancy.

     ``SEC. 2172. TREATMENT OF TERRITORIES.

       ``Notwithstanding any other requirement of this title, the 
     Secretary may waive or modify any requirement of this title 
     with respect to the medical assistance program a State other 
     than the 50 States and the District of Columbia, other than a 
     waiver of--
       ``(1) the applicable Federal medical assistance percentage,
       ``(2) the limitation on total payments in a fiscal year to 
     the amount of the allotment under section 2121(c), or
       ``(3) the requirement that payment may be made for medical 
     assistance only with respect to amounts expended by the State 
     for care and services described in paragraph (1) of section 
     2171(a) and medically-related services (as defined in section 
     2112(e)(2)).

     ``SEC. 2173. DESCRIPTION OF TREATMENT OF INDIAN HEALTH 
                   SERVICE FACILITIES.

       ``In the case of a State in which one or more facilities of 
     the Indian Health Service are located, the MediGrant plan 
     shall include a description of--
       ``(1) what provision (if any) has been made for payment for 
     items and services furnished by such facilities, and
       ``(2) the manner in which medical assistance for low-income 
     eligible individuals who are Indians will be provided, 
     as determined by the State in consultation with the 
     appropriate Indian tribes and tribal organizations.

     ``SEC. 2174. APPLICATION OF CERTAIN GENERAL PROVISIONS.

       ``The following sections in part A of title XI shall apply 
     to States under this title in the same manner as they applied 
     to a State under title XIX:
       ``(1) Section 1101(a)(1) (relating to definition of State).
       ``(2) Section 1116 (relating to administrative and judicial 
     review), but only insofar as consistent with the provisions 
     of part C.
       ``(3) Section 1124 (relating to disclosure of ownership and 
     related information).
       ``(4) Section 1126 (relating to disclosure of information 
     about certain convicted individuals).
       ``(5) Section 1128B(d) (relating to criminal penalties for 
     certain additional charges).
       ``(6) Section 1132 (relating to periods within which claims 
     must be filed).

     ``SEC. 2175. MEDIGRANT MASTER DRUG REBATE AGREEMENTS.

       ``(a) Requirement for Manufacturer to Enter Into 
     Agreement.--
       ``(1) In general.--Pursuant to section 2123(f), in order 
     for payment to be made to a State under part C for medical 
     assistance for covered outpatient drugs of a manufacturer, 
     the manufacturer shall enter into and have in effect an 
     MediGrant master rebate agreement described in subsection (b) 
     with the Secretary on behalf of States electing to 
     participate in the agreement.
       ``(2) State participation in master agreement optional.--
     Nothing in this section shall be construed to--
       ``(A) require a State to participate in an MediGrant master 
     rebate agreement under this section; or
       ``(B) prohibit a State from entering into an agreement with 
     a manufacturer of covered outpatient drugs (under such terms 
     as the State and manufacturer may agree upon) regarding the 
     amount of payment for such drugs under the MediGrant plan.
       ``(3) Coverage of drugs not covered under rebate 
     agreements.--Nothing in this section shall be construed to 
     prohibit a State in its discretion from providing coverage 
     under its MediGrant plan of a covered outpatient drug for 
     which no rebate agreement is in effect under this section.
       ``(4) Effect on existing agreements.--If a State has a 
     rebate agreement in effect with a manufacturer on the date of 
     the enactment of this section which provides for a minimum 
     aggregate rebate equal to or greater than the minimum 
     aggregate rebate which would otherwise be paid under the 
     MediGrant master agreement under this section, at the option 
     of the State--
       ``(A) such agreement shall be considered to meet the 
     requirements of the MediGrant master rebate agreement; and
       ``(B) the State shall be considered to have elected to 
     participate in the MediGrant master rebate agreement.
       ``(b) Terms of Rebate Agreement.--
       ``(1) Periodic rebates.--The MediGrant master rebate 
     agreement under this section shall require the manufacturer 
     to provide, to the MediGrant plan of each State participating 
     in the agreement, a rebate for a rebate period in an amount 
     specified in subsection (c) for covered outpatient drugs of 
     the manufacturer dispensed after the effective date of the 
     agreement, for which payment was made under the plan for such 
     period. Such rebate shall be paid by the manufacturer not 
     later than 30 days after the date of receipt of the 
     information described in paragraph (2) for the period 
     involved.
       ``(2) State provision of information.--
       ``(A) State responsibility.--Each State participating in 
     the MediGrant master rebate agreement shall report to each 
     manufacturer not later than 60 days after the end of each 
     rebate period and in a form consistent with a standard 
     reporting format established by the Secretary, information on 
     the total number of units of each dosage form and strength 
     and package size of each covered outpatient drug, for which 
     payment was made under the MediGrant plan for the period, and 
     shall promptly transmit a copy of such report to the 
     Secretary.
       ``(B) Audits.--A manufacturer may audit the information 
     provided (or required to be provided) under subparagraph (A). 
     Adjustments to rebates shall be made to the extent that 
     information indicates that utilization was greater or less 
     than the amount previously specified.
       ``(3) Manufacturer provision of price information.--
       ``(A) In general.--Each manufacturer which is subject to 
     the MediGrant master rebate agreement under this section 
     shall report to the Secretary--
       ``(i) not later than 30 days after the last day of each 
     rebate period under the agreement (beginning on or after 
     January 1, 1991), on the average manufacturer price (as 
     defined in subsection (i)(1)) and, for single source drugs 
     and innovator multiple source drugs, the manufacturer's best 
     price (as defined in subsection (c)(1)(C)) for each covered 
     outpatient drug for the rebate period under the agreement, 
     and
       ``(ii) not later than 30 days after the date of entering 
     into an agreement under this section, on the average 
     manufacturer price (as defined in subsection (i)(1)) as of 
     October 1, 1990, for each of the manufacturer's covered 
     outpatient drugs.
       ``(B) Verification surveys of average manufacturer price.--
     The Secretary may survey wholesalers and manufacturers that 
     directly distribute their covered outpatient drugs, when 
     necessary, to verify manufacturer prices reported under 
     subparagraph (A). The Secretary may impose a civil monetary 
     penalty in an amount not to exceed $10,000 on a wholesaler, 
     manufacturer, or direct seller, if the wholesaler, 
     manufacturer, or direct seller of a covered outpatient drug 
     refuses a request for information by the Secretary in 
     connection with a survey under this subparagraph. The 
     provisions of section 1128A (other than subsections (a) (with 
     respect to amounts of penalties or additional assessments) 
     and (b)) shall apply to a civil money penalty under this 
     subparagraph in the same manner as such provisions apply 
     to a penalty or proceeding under section 1128A(a).
       ``(C) Penalties.--
       ``(i) Failure to provide timely information.--In the case 
     of a manufacturer which is subject to the MediGrant master 
     rebate agreement that fails to provide information required 
     under subparagraph (A) on a timely basis, the amount of the 
     penalty shall be $10,000 for each day in which such 
     information has not been provided and such amount shall be 
     paid to the Treasury. If such information is not reported 
     within 90 days of the deadline imposed, the agreement shall 
     be suspended for services furnished after the end of such 90-
     day period and until the date such information is reported 
     (but in no case shall such suspension be for a period of less 
     than 30 days).
       ``(ii) False information.--Any manufacturer which is 
     subject to the MediGrant master rebate agreement, or a 
     wholesaler or direct seller, that knowingly provides false 
     information under subparagraph (A) or (B) is subject to a 
     civil money penalty in an amount not to exceed $100,000 for 
     each item of false information. Any such civil money penalty 
     shall be in addition to other penalties as may be prescribed 
     by law. The provisions of section 1128A (other than 
     subsections (a) and (b)) shall apply to a civil money penalty 
     under this subparagraph in the same manner as such provisions 
     apply to a penalty or proceeding under section 1128A(a).
       ``(D) Confidentiality of information.--Notwithstanding any 
     other provision of law, information disclosed by 
     manufacturers or wholesalers under this paragraph or under an 
     agreement with the Secretary of Veterans Affairs described in 
     section 2123(f) is confidential and shall not be disclosed by 
     the 

[[Page H11164]]

     Secretary or the Secretary of Veterans Affairs or a State 
     agency (or contractor therewith) in a form which discloses 
     the identity of a specific manufacturer or wholesaler or the 
     prices charged for drugs by such manufacturer or wholesaler, 
     except--
       ``(i) as the Secretary determines to be necessary to carry 
     out this section,
       ``(ii) to permit the Comptroller General to review the 
     information provided, and
       ``(iii) to permit the Director of the Congressional Budget 
     Office to review the information provided.
       ``(4) Length of agreement.--
       ``(A) In general.--The MediGrant master rebate agreement 
     under this section shall be effective for an initial period 
     of not less than 1 year and shall be automatically renewed 
     for a period of not less than one year unless terminated 
     under subparagraph (B).
       ``(B) Termination.--
       ``(i) By the secretary.--The Secretary may provide for 
     termination of the MediGrant master rebate agreement with 
     respect to a manufacturer for violation of the requirements 
     of the agreement or other good cause shown. Such termination 
     shall not be effective earlier than 60 days after the date of 
     notice of such termination. The Secretary shall provide, upon 
     request, a manufacturer with a hearing concerning such a 
     termination, but such hearing shall not delay the effective 
     date of the termination. Failure of a State to provide any 
     advance notice of such a termination as required by 
     regulation shall not affect the State's right to terminate 
     coverage of the drugs affected by such termination as of the 
     effective date of such termination.
       ``(ii) By a manufacturer.--A manufacturer may terminate its 
     participation in the MediGrant master rebate agreement under 
     this section for any reason. Any such termination shall not 
     be effective until the calendar quarter beginning at least 60 
     days after the date the manufacturer provides notice to the 
     Secretary.
       ``(iii) Effectiveness of termination.--Any termination 
     under this subparagraph shall not affect rebates due under 
     the agreement before the effective date of its termination.
       ``(iv) Notice to states.--In the case of a termination 
     under this subparagraph, the Secretary shall provide notice 
     of such termination to the States within not less than 30 
     days before the effective date of such termination.
       ``(v) Application to terminations of other agreements.--The 
     provisions of this subparagraph shall apply to the 
     terminations of master agreements described in section 
     8126(a) of title 38, United States Code.
       ``(C) Delay before reentry.--In the case of any rebate 
     agreement with a manufacturer under this section which is 
     terminated, another such agreement with the manufacturer (or 
     a successor manufacturer) may not be entered into until a 
     period of 1 calendar quarter has elapsed since the date of 
     the termination, unless the Secretary finds good cause for an 
     earlier reinstatement of such an agreement.
       ``(c) Determination of Amount of Rebate.--
       ``(1) Basic rebate for single source drugs and innovator 
     multiple source drugs.--
       ``(A) In general.--Except as provided in paragraph (2), the 
     amount of the rebate specified in this subsection with 
     respect to a State participating in the MediGrant master 
     rebate agreement for a rebate period (as defined in 
     subsection (i)(8)) with respect to each dosage form 
     and strength of a single source drug or an innovator 
     multiple source drug shall be equal to the product of--
       ``(i) the total number of units of each dosage form and 
     strength paid for under the State plan in the rebate period 
     (as reported by the State); and
       ``(ii) the greater of--

       ``(I) the difference between the average manufacturer price 
     and the best price (as defined in subparagraph (C)) for the 
     dosage form and strength of the drug, or
       ``(II) the minimum rebate percentage (specified in 
     subparagraph (B)) of such average manufacturer price,

     for the rebate period.
       ``(B) Minimum rebate percentage.--For purposes of 
     subparagraph (A)(ii)(II), the `minimum rebate percentage' is 
     15.1 percent.
       ``(C) Best price defined.--For purposes of this section--
       ``(i) In general.--The term `best price' means, with 
     respect to a single source drug or innovator multiple source 
     drug of a manufacturer, the lowest price available from the 
     manufacturer during the rebate period to any wholesaler, 
     retailer, provider, health maintenance organization, 
     nonprofit entity, or governmental entity within the United 
     States, excluding--

       ``(I) any prices charged on or after October 1, 1992, to 
     the Indian Health Service, the Department of Veterans 
     Affairs, a State home receiving funds under section 1741 of 
     title 38, United States Code, the Department of Defense, the 
     Public Health Service, or a covered entity described in 
     section 340B(a)(4) of the Public Health Service Act;
       ``(II) any prices charged under the Federal Supply Schedule 
     of the General Services Administration;
       ``(III) any prices used under a State pharmaceutical 
     assistance program; and
       ``(IV) any depot prices and single award contract prices, 
     as defined by the Secretary, of any agency of the Federal 
     Government.

       ``(ii) Special rules.--The term `best price'--

       ``(I) shall be inclusive of cash discounts, free goods that 
     are contingent on any purchase requirement, volume discounts, 
     and rebates (other than rebates under this section);
       ``(II) shall be determined without regard to special 
     packaging, labeling, or identifiers on the dosage form or 
     product or package;
       ``(III) shall not take into account prices that are merely 
     nominal in amount; and
       ``(IV) shall exclude rebates paid under this section or any 
     other rebates paid to a State participating in the MediGrant 
     master rebate agreement.

       ``(2) Additional rebate for single source and innovator 
     multiple source drugs.--
       ``(A) In general.--The amount of the rebate specified in 
     this subsection with respect to a State participating in the 
     MediGrant master rebate agreement for a rebate period, with 
     respect to each dosage form and strength of a single source 
     drug or an innovator multiple source drug, shall be increased 
     by an amount equal to the product of--
       ``(i) the total number of units of such dosage form and 
     strength dispensed after December 31, 1990, for which payment 
     was made under the MediGrant plan for the rebate period; and
       ``(ii) the amount (if any) by which--

       ``(I) the average manufacturer price for the dosage form 
     and strength of the drug for the period, exceeds
       ``(II) the average manufacturer price for such dosage form 
     and strength for the calendar quarter beginning July 1, 1990 
     (without regard to whether or not the drug has been sold or 
     transferred to an entity, including a division or subsidiary 
     of the manufacturer, after the first day of such quarter), 
     increased by the percentage by which the consumer price index 
     for all urban consumers (United States city average) for the 
     month before the month in which the rebate period begins 
     exceeds such index for September 1990.

       ``(B) Treatment of subsequently approved drugs.--In the 
     case of a covered outpatient drug approved by the Food and 
     Drug Administration after October 1, 1990, clause (ii)(II) of 
     subparagraph (A) shall be applied by substituting `the first 
     full calendar quarter after the day on which the drug was 
     first marketed' for `the calendar quarter beginning July 1, 
     1990' and `the month prior to the first month of the first 
     full calendar quarter after the day on which the drug was 
     first marketed' for `September 1990'.
       ``(3) Rebate for other drugs.--
       ``(A) In general.--The amount of the rebate paid to a State 
     participating in the MediGrant master rebate agreement for a 
     rebate period with respect to each dosage form and strength 
     of covered outpatient drugs (other than single source drugs 
     and innovator multiple source drugs) shall be equal to the 
     product of--
       ``(i) the applicable percentage (as described in 
     subparagraph (B)) of the average manufacturer price for the 
     dosage form and strength for the rebate period, and
       ``(ii) the total number of units of such dosage form and 
     strength dispensed after December 31, 1990, for which payment 
     was made under the MediGrant plan for the rebate period.
       ``(B) Applicable percentage defined.--For purposes of 
     subparagraph (A)(i), the `applicable percentage' is 11 
     percent.
       ``(4) Limitation on amount of rebate to amounts paid for 
     certain drugs.--Upon request of a manufacturer of a covered 
     outpatient drug for which a majority of the estimated number 
     of units of such dosage form and strength that are subject to 
     rebates under this section were dispensed to inpatients of 
     nursing facilities (including drugs which are exempt from the 
     requirements of the MediGrant master rebate agreement under 
     this section under subsection (h)(1)(B)), the Secretary shall 
     limit the amount of the rebate under this subsection with 
     respect to a dosage form and strength of the drug for a 
     rebate period to the amount paid under the MediGrant plan 
     with respect to such dosage form and strength of the drug in 
     the rebate period (without consideration of any dispensing 
     fees paid).
       ``(d) Limitations on Coverage of Drugs by States 
     Participating in Master Agreement.--
       ``(1) Permissible restrictions.--A State participating in 
     the MediGrant master rebate agreement under this section 
     may--
       ``(A) subject to prior authorization under its MediGrant 
     plan any covered outpatient drug so long as any such prior 
     authorization program complies with the requirements of 
     paragraph (5); and
       ``(B) exclude or otherwise restrict coverage under its plan 
     of a covered outpatient drug if--
       ``(i) the prescribed use is not for a medically accepted 
     indication (as defined in subsection (i)(5));
       ``(ii) the drug is contained in the list referred to in 
     paragraph (2);
       ``(iii) the drug is subject to such restrictions pursuant 
     to the MediGrant master rebate agreement or any agreement 
     described in subsection (a)(4); or
       ``(iv) the State has excluded coverage of the drug from its 
     formulary established in accordance with paragraph (4).
       ``(2) List of drugs subject to restriction.--The following 
     drugs or classes of drugs, or their medical uses, may be 
     excluded from coverage or otherwise restricted by a State 
     participating in the MediGrant master rebate agreement:
       ``(A) Agents when used for anorexia, weight loss, or weight 
     gain.

[[Page H11165]]

       ``(B) Agents when used to promote fertility.
       ``(C) Agents when used for cosmetic purposes or hair 
     growth.
       ``(D) Agents when used for the symptomatic relief of cough 
     and colds.
       ``(E) Agents when used to promote smoking cessation.
       ``(F) Prescription vitamins and mineral products, except 
     prenatal vitamins and fluoride preparations.
       ``(G) Nonprescription drugs.
       ``(H) Covered outpatient drugs which the manufacturer seeks 
     to require as a condition of sale that associated tests or 
     monitoring services be purchased exclusively from the 
     manufacturer or its designee.
       ``(I) Barbiturates.
       ``(J) Benzodiazepines.
       ``(3) Additions to drug listings.--The Secretary shall, by 
     regulation, periodically update the list of drugs or classes 
     of drugs described in paragraph (2), or their medical uses, 
     which the Secretary has determined to be subject to clinical 
     abuse or inappropriate use.
       ``(4) Requirements for formularies.--A State participating 
     in the MediGrant master rebate agreement may establish a 
     formulary if the formulary meets the following requirements:
       ``(A) The formulary is developed by a committee consisting 
     of physicians, pharmacists, and other appropriate individuals 
     appointed by the Governor of the State.
       ``(B) Except as provided in subparagraph (C), the formulary 
     includes the covered outpatient drugs of any manufacturer 
     which has entered into and complies with the agreement under 
     subsection (a) (other than any drug excluded from coverage or 
     otherwise restricted under paragraph (2)).
       ``(C) A covered outpatient drug may be excluded with 
     respect to the treatment of a specific disease or condition 
     for an identified population (if any) only if, based on the 
     drug's labeling (or, in the case of a drug the prescribed use 
     of which is not approved under the Federal Food, Drug, and 
     Cosmetic Act but is a medically accepted indication, based on 
     information from the appropriate compendia described in 
     subsection (i)(5)), the excluded drug does not have a 
     significant, clinically meaningful therapeutic advantage in 
     terms of safety, effectiveness, or clinical outcome of such 
     treatment for such population over other drugs included in 
     the formulary and there is a written explanation (available 
     to the public) of the basis for the exclusion.
       ``(D) The State plan permits coverage of a drug excluded 
     from the formulary (other than any drug excluded from 
     coverage or otherwise restricted under paragraph (2)) 
     pursuant to a prior authorization program that is consistent 
     with paragraph (5).
       ``(E) The formulary meets such other requirements as the 
     Secretary may impose in order to achieve program savings 
     consistent with protecting the health of program 
     beneficiaries.

     A prior authorization program established by a State under 
     paragraph (5) is not a formulary subject to the requirements 
     of this paragraph.
       ``(5) Requirements of prior authorization programs.--The 
     MediGrant plan of a State participating in the MediGrant 
     master rebate agreement may require, as a condition of 
     coverage or payment for a covered outpatient drug for which 
     Federal financial participation is available in accordance 
     with this section the approval of the drug before its 
     dispensing for any medically accepted indication (as 
     defined in subsection (i)(5)) only if the system providing 
     for such approval--
       ``(A) provides response by telephone or other 
     telecommunication device within 24 hours of a request for 
     prior authorization; and
       ``(B) except with respect to the drugs on the list referred 
     to in paragraph (2), provides for the dispensing of at least 
     a 72-hour supply of a covered outpatient prescription drug in 
     an emergency situation (as defined by the Secretary).
       ``(6) Other permissible restrictions.--A State 
     participating in the MediGrant master rebate agreement may 
     impose limitations, with respect to all such drugs in a 
     therapeutic class, on the minimum or maximum quantities per 
     prescription or on the number of refills, if such limitations 
     are necessary to discourage waste, and may address instances 
     of fraud or abuse by individuals in any manner authorized 
     under this Act.
       ``(e) Drug Use Review.--
       ``(1) In general.--A State participating in the MediGrant 
     master rebate agreement may provide for a drug use review 
     program to educate physicians and pharmacists to identify and 
     reduce the frequency of patterns of fraud, abuse, gross 
     overuse, or inappropriate or medically unnecessary care, 
     among physicians, pharmacists, and patients, or associated 
     with specific drugs or groups of drugs, as well as potential 
     and actual severe adverse reactions to drugs.
       ``(2) Application of state standards.--A State with a drug 
     use review program under this subsection shall establish and 
     operate the program under such standards as it may establish.
       ``(f) Electronic Claims Management.--In accordance with 
     chapter 35 of title 44, United States Code (relating to 
     coordination of Federal information policy), the Secretary 
     shall encourage each State to establish, as its principal 
     means of processing claims for covered outpatient drugs under 
     its MediGrant plan, a point-of-sale electronic claims 
     management system, for the purpose of performing on-line, 
     real time eligibility verifications, claims data capture, 
     adjudication of claims, and assisting pharmacists (and other 
     authorized persons) in applying for and receiving payment.
       ``(g) Annual Report.--
       ``(1) In general.--Not later than May 1 of each year, the 
     Secretary shall transmit to the Committee on Finance of the 
     Senate, the Committee on Commerce of the House of 
     Representatives, and the Committee on Aging of the Senate a 
     report on the operation of this section in the preceding 
     fiscal year.
       ``(2) Details.--Each report shall include information on--
       ``(A) ingredient costs paid under this title for single 
     source drugs, multiple source drugs, and nonprescription 
     covered outpatient drugs;
       ``(B) the total value of rebates received and number of 
     manufacturers providing such rebates;
       ``(C) the effect of inflation on the value of rebates 
     required under this section;
       ``(D) trends in prices paid under this title for covered 
     outpatient drugs; and
       ``(E) Federal and State administrative costs associated 
     with compliance with the provisions of this title.
       ``(h) Exemption for Capitated Health Care Organizations, 
     Hospitals, and Nursing Facilities.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     requirements of the MediGrant master rebate agreement under 
     this section shall not apply with respect to covered 
     outpatient drugs dispensed by or through--
       ``(A) a capitated health care organization (as defined in 
     section 2114(c)(1)); or
       ``(B) a hospital or nursing facility that dispenses covered 
     outpatient drugs using a drug formulary system and bills the 
     State no more than the hospital's purchasing costs for 
     covered outpatient drugs.
       ``(2) Construction in determining best price.--Nothing in 
     paragraph (1) shall be construed as excluding amounts paid by 
     the entities described in such paragraph for covered 
     outpatient drugs from the determination of the best price (as 
     defined in subsection (c)(1)(C)) for such drugs.
       ``(i) Definitions.--In the section--
       ``(1) Average manufacturer price.--The term `average 
     manufacturer price' means, with respect to a covered 
     outpatient drug of a manufacturer for a rebate period, the 
     average price paid to the manufacturer for the drug in the 
     United States by wholesalers for drugs distributed to the 
     retail pharmacy class of trade, after deducting customary 
     prompt pay discounts.
       ``(2) Covered outpatient drug.--Subject to the exceptions 
     in subparagraph (D), the term `covered outpatient drug' 
     means--
       ``(A) of those drugs which are treated as prescribed drugs 
     for purposes of section 2171(a)(1)(H), a drug which may be 
     dispensed only upon prescription (except as provided in 
     paragraph (7)), and--
       ``(i) which is approved as a prescription drug under 
     section 505 or 507 of the Federal Food, Drug, and Cosmetic 
     Act;
       ``(ii)(I) which was commercially used or sold in the United 
     States before the date of the enactment of the Drug 
     Amendments of 1962 or which is identical, similar, or related 
     (within the meaning of section 310.6(b)(1) of title 21 of the 
     Code of Federal Regulations) to such a drug, and (II) which 
     has not been the subject of a final determination by the 
     Secretary that it is a `new drug' (within the meaning of 
     section 201(p) of the Federal Food, Drug, and Cosmetic Act) 
     or an action brought by the Secretary under section 301, 
     302(a), or 304(a) of such Act to enforce section 502(f) or 
     505(a) of such Act; or
       ``(iii)(I) which is described in section 107(c)(3) of the 
     Drug Amendments of 1962 and for which the Secretary has 
     determined there is a compelling justification for its 
     medical need, or is identical, similar, or related (within 
     the meaning of section 310.6(b)(1) of title 21 of the Code of 
     Federal Regulations) to such a drug, and (II) for which the 
     Secretary has not issued a notice of an opportunity for a 
     hearing under section 505(e) of the Federal Food, Drug, and 
     Cosmetic Act on a proposed order of the Secretary to withdraw 
     approval of an application for such drug under such section 
     because the Secretary has determined that the drug is less 
     than effective for some or all conditions of use prescribed, 
     recommended, or suggested in its labeling;
       ``(B) a biological product, other than a vaccine which--
       ``(i) may only be dispensed upon prescription,
       ``(ii) is licensed under section 351 of the Public Health 
     Service Act, and
       ``(iii) is produced at an establishment licensed under such 
     section to produce such product;
       ``(C) insulin certified under section 506 of the Federal 
     Food, Drug, and Cosmetic Act; and
       ``(D) a drug which may be sold without a prescription 
     (commonly referred to as an `over-the-counter drug'), if the 
     drug is prescribed by a physician (or other person authorized 
     to prescribe under State law).
       ``(3) Limiting definition.--The term `covered outpatient 
     drug' does not include any drug, biological product, or 
     insulin provided as part of, or as incident to and in the 
     same setting as, any of the following (and for which payment 
     may be made under a MediGrant plan as part of payment for the 
     following and not as direct reimbursement for the drug):

[[Page H11166]]

       ``(A) Inpatient hospital services.
       ``(B) Hospice services.
       ``(C) Dental services, except that drugs for which the 
     MediGrant plan authorizes direct reimbursement to the 
     dispensing dentist are covered outpatient drugs.
       ``(D) Physicians' services.
       ``(E) Outpatient hospital services.
       ``(F) Nursing facility services and services provided by an 
     intermediate care facility for the mentally retarded.
       ``(G) Other laboratory and x-ray services.
       ``(H) Renal dialysis services.

     Such term also does not include any such drug or product for 
     which a National Drug Code number is not required by the Food 
     and Drug Administration or a drug or biological used for a 
     medical indication which is not a medically accepted 
     indication. Any drug, biological product, or insulin excluded 
     from the definition of such term as a result of this 
     paragraph shall be treated as a covered outpatient drug for 
     purposes of determining the best price (as defined in 
     subsection (c)(1)(C)) for such drug, biological product, or 
     insulin.
       ``(4) Manufacturer.--The term `manufacturer' means, with 
     respect to a covered outpatient drug, the entity holding 
     legal title to or possession of the National Drug Code number 
     for such drug.
       ``(5) Medically accepted indication.--The term `medically 
     accepted indication' means any use for a covered outpatient 
     drug which is approved under the Federal Food, Drug, and 
     Cosmetic Act, or the use of which is supported by one or more 
     citations included or approved for inclusion in any of the 
     following compendia:
       ``(A) American Hospital Formulary Service Drug Information.
       ``(B) United States Pharmacopeia-Drug Information.
       ``(C) American Medical Association Drug Evaluations.
       ``(D) The peer-reviewed medical literature.
       ``(6) Multiple source drug; innovator multiple source drug; 
     noninnovator multiple source drug; single source drug.--
       ``(A) Defined.--
       ``(i) Multiple source drug.--The term `multiple source 
     drug' means, with respect to a rebate period, a covered 
     outpatient drug (not including any drug described in 
     paragraph (2)(D)) for which there are 2 or more drug products 
     which--

       ``(I) are rated as therapeutically equivalent (under the 
     Food and Drug Administration's most recent publication of 
     `Approved Drug Products with Therapeutic Equivalence 
     Evaluations'),
       ``(II) except as provided in subparagraph (B), are 
     pharmaceutically equivalent and bioequivalent, as defined in 
     subparagraph (C) and as determined by the Food and Drug 
     Administration, and
       ``(III) are sold or marketed in the State during the 
     period.

       ``(ii) Innovator multiple source drug.--The term `innovator 
     multiple source drug' means a multiple source drug that was 
     originally marketed under an original new drug application or 
     product licensing application approved by the Food and Drug 
     Administration.
       ``(iii) Noninnovator multiple source drug.--The term 
     `noninnovator multiple source drug' means a multiple source 
     drug that is not an innovator multiple source drug.
       ``(iv) Single source drug.--The term `single source drug' 
     means a covered outpatient drug which is produced or 
     distributed under an original new drug application approved 
     by the Food and Drug Administration, including a drug product 
     marketed by any cross-licensed producers or distributors 
     operating under the new drug application or product licensing 
     application.
       ``(B) Exception.--Subparagraph (A)(i)(II) shall not apply 
     if the Food and Drug Administration changes by regulation the 
     requirement that, for purposes of the publication described 
     in subparagraph (A)(i)(I), in order for drug products to be 
     rated as therapeutically equivalent, they must be 
     pharmaceutically equivalent and bioequivalent, as defined in 
     subparagraph (C).
       ``(C) Definitions.--For purposes of this paragraph--
       ``(i) drug products are pharmaceutically equivalent if the 
     products contain identical amounts of the same active drug 
     ingredient in the same dosage form and meet compendial or 
     other applicable standards of strength, quality, purity, and 
     identity;
       ``(ii) drugs are bioequivalent if they do not present a 
     known or potential bioequivalence problem, or, if they do 
     present such a problem, they are shown to meet an appropriate 
     standard of bioequivalence; and
       ``(iii) a drug product is considered to be sold or marketed 
     in a State if it appears in a published national listing of 
     average wholesale prices selected by the Secretary, if the 
     listed product is generally available to the public through 
     retail pharmacies in that State.
       ``(7) Nonprescription drugs.--If the MediGrant plan of a 
     State participating in the MediGrant master rebate agreement 
     under this section includes coverage of prescribed drugs as 
     described in section 2171(a)(1)(H) and permits coverage of 
     drugs which may be sold without a prescription (commonly 
     referred to as `over-the-counter' drugs), if they are 
     prescribed by a physician (or other person authorized to 
     prescribe under State law), such a drug shall be regarded as 
     a covered outpatient drug for purposes of the State's 
     participation in the agreement.
       ``(8) Rebate period.--The term `rebate period' means, with 
     respect to an agreement under subsection (a), a calendar 
     quarter or other period specified by the Secretary with 
     respect to the payment of rebates under such agreement.''.

     SEC. 16002. TERMINATION OF CURRENT PROGRAM AND TRANSITION.

       (a) Termination of Current Program; Limitation on Medicaid 
     Payments in Fiscal Year 1996.--Title XIX of the Social 
     Security Act is amended--
       (1) by redesignating section 1931 as section 1932; and
       (2) by inserting after section 1930 the following new 
     section:


    ``termination of medicaid program; limitation on new obligation 
                               authority

       ``Sec. 1931. (a) Elimination of Individual Entitlement.--
     Effective on the date of the enactment of this section--
       ``(1) except as provided in subsection (b), the Federal 
     Government has no obligation to provide payment with respect 
     to items and services provided under this title, and
       ``(2) this title shall not be construed as providing for an 
     entitlement, under Federal law in relation to the Federal 
     Government, in an individual or person (including any 
     provider) at the time of provision or receipt of services.
       ``(b) Limitation on Obligation Authority.--Notwithstanding 
     any other provision of this title--
       ``(1) Post-enactment, pre-medigrant.--Subject to paragraph 
     (2), the Secretary is authorized to enter into obligations 
     with any State under this title for expenses incurred after 
     the date of the enactment of this Act and during fiscal year 
     1996, but not in excess of the obligation allotment for that 
     State for fiscal year 1996 under section 2121(b)(4).
       ``(2) None after medigrant.--The Secretary is not 
     authorized to enter into any obligation with any State under 
     this title for expenses incurred on or after the earlier of--
       ``(A) October 1, 1996; or
       ``(B) the first day of the first quarter on which the State 
     plan under title XXI is first effective.
       ``(3) Agreement.--A State's submission of claims for 
     payment under section 1903 after the date of the enactment of 
     this title with respect to which the limitation described in 
     paragraph (1) applies is deemed to constitute the State's 
     acceptance of the obligation limitation under such paragraph 
     (including the formula for computing the amount of such 
     obligation limitation).
       ``(c) Requirement for Timely Submittal of Claims.--No 
     payment shall be made to a State under this title with 
     respect to an obligation incurred before the date of the 
     enactment of this section, unless the State has submitted to 
     the Secretary, by not later than June 30, 1996, a claim for 
     Federal financial participation for expenses paid by the 
     State with respect to such obligations. Nothing in subsection 
     (a) or (b) shall be construed as affecting the obligation of 
     the Federal Government to pay claims described in the 
     previous sentence.''.
       (b) Medicaid Transition.--
       (1) Treatment of certain causes of action.--No cause of 
     action under title XIX of the Social Security Act which seeks 
     to require a State to establish or maintain minimum payment 
     rates under such title and which has not become final as of 
     the date of the enactment of this Act shall be brought or 
     continued.
       (2) Treatment of certain disallowances.--Notwithstanding 
     any provision of law, in the case where payment has been made 
     under section 1903(a) of the Social Security Act to a State 
     before October 1, 1995, and for which a disallowance has not 
     been taken as of such date (or, if so taken, has not been 
     completed by such date), the Secretary of Health and Human 
     Services shall discontinue the disallowance proceeding and, 
     if such disallowance has been taken as of the date of the 
     enactment of this Act, any payment reductions effected shall 
     be rescinded and the payments returned to the State.
       (3) Extension of moratorium.--Section 6408(a)(3) of the 
     Omnibus Budget Reconciliation Act of 1989, as amended by 
     section 13642 of the Omnibus Budget Reconciliation Act of 
     1993, is amended by striking ``December 31, 1995'' and 
     inserting ``the first day of the first quarter on which the 
     MediGrant plan for the State of Michigan is first effective 
     under title XXI of such Act''.
       (c) No Application of Prior Medicaid Judgments to MediGrant 
     Program.--No judicial or administrative decision rendered 
     regarding requirements imposed under title XIX of the Social 
     Security Act with respect to a State shall have any 
     application to the MediGrant plan of the State title XXI of 
     such Act. A State may, pursuant to the previous sentence, 
     seek the abrogation or modification of any such decision 
     after the date of termination of the State plan under title 
     XIX of such Act.
       (d) Termination of Program for Distribution of Pediatric 
     Vaccines
       (1) In general.--Subject to paragraph (2), section 1928 of 
     the Social Security Act (42 U.S.C. 1396s) is repealed, 
     effective on the date of the enactment of this Act.
       (2) Transition.--(A) Such repeal shall not affect the 
     distribution of vaccines purchased and delivered to the 
     States before the date of the enactment of this Act.
       (B) No vaccine may be purchased after such date by the 
     Federal Government or any State under any contract under 
     section 1928(d) of the Social Security Act.
       (e) Anti-Fraud Provisions.--

[[Page H11167]]

       (1) In general.--Section 1128(h)(1) of the Social Security 
     Act (42 U.S.C. 1320a-7(h)(1)) is amended by inserting ``or a 
     MediGrant plan under title XXI'' after ``title XIX''.
       (2) Continued role of inspector general.--The Inspector 
     General in the Department of Health and Human Services shall 
     have the same responsibilities and duties in relation to 
     fraud and abuse and related matters under the MediGrant 
     program under title XXI of the Social Security Act as such 
     Inspector General has had in relation to the medicaid program 
     under title XIX of such Act before the date of the enactment 
     of this Act.
       (f) Final Extension of Medicaid Waiver for Dayton Area 
     Health Plan.--Section 2 of Public Law 102-276, as amended by 
     section 13644 of the Omnibus Budget Reconciliation Act of 
     1993, is amended by striking ``December 31, 1995'' and 
     inserting ``the last day of the last calendar quarter in 
     which a State medicaid plan is in effect in Ohio under title 
     XIX of the Social Security Act''.
           TITLE XVII--ABOLISHMENT OF DEPARTMENT OF COMMERCE

     SEC. 17001. SHORT TITLE.

       This title may be cited as the ``Department of Commerce 
     Dismantling Act''.

     SEC. 17002. TABLE OF CONTENTS.

       The table of contents for this title is as follows:

           TITLE XVII--ABOLISHMENT OF DEPARTMENT OF COMMERCE

Sec. 17001. Short title.
Sec. 17002. Table of contents.

           Subtitle A--Abolishment of Department of Commerce

Sec. 17101. Abolishment of Department of Commerce.
Sec. 17102. Resolution and termination of Department functions.
Sec. 17103. Responsibilities of the Director of the Office of 
              Management and Budget.
Sec. 17104. Office of Programs Resolution.
Sec. 17105. Personnel.
Sec. 17106. Plans and reports.
Sec. 17107. GAO audit and access to records.
Sec. 17108. Conforming amendments.
Sec. 17109. Privatization framework.
Sec. 17110. Priority placement programs for Federal employees affected 
              by a reduction in force attributable to this title.
Sec. 17111. Funding reductions for transferred functions.
Sec. 17112. Definitions.

Subtitle B--Disposition of Various Programs, Functions, and Agencies of 
                         Department of Commerce

Sec. 17201. Abolishment of Economic Development Administration and 
              transfer of functions.
Sec. 17202. Technology Administration.
Sec. 17203. Reorganization of the Bureau of the Census.
Sec. 17204. Bureau of Economic Analysis.
Sec. 17205. Terminated functions of NTIA.
Sec. 17206. National Oceanic and Atmospheric Administration.
Sec. 17207. National Institute for Science and Technology.
Sec. 17208. Miscellaneous terminations; moratorium on program 
              activities.
Sec. 17209. Effective date.

        Subtitle C--Office of United States Trade Representative

                     Chapter 1--General Provisions

Sec. 17301. Definitions.

        Chapter 2--Office Of United States Trade Representative


                      SUBCHAPTER A--ESTABLISHMENT

Sec. 17311. Establishment of the Office.
Sec. 17312. Functions of the USTR.


                         SUBCHAPTER B--OFFICERS

Sec. 17321. Deputy Administrator of the Office.
Sec. 17322. Deputy United States Trade Representatives.
Sec. 17323. Assistant Administrators.
Sec. 17324. Director General for Export Promotion.
Sec. 17325. General Counsel.
Sec. 17326. Inspector General.
Sec. 17327. Chief Financial Officer.


                 SUBCHAPTER C--TRANSFERS TO THE OFFICE

Sec. 17331. Office of the United States Trade Representative.
Sec. 17332. Transfers from the Department of Commerce.
Sec. 17333. Trade and Development Agency.
Sec. 17334. Export-Import Bank.
Sec. 17335. Overseas Private Investment Corporation.
Sec. 17336. Consolidation of export promotion and financing activities.
Sec. 17337. Additional trade functions.


                SUBCHAPTER D--ADMINISTRATIVE PROVISIONS

Sec. 17341. Personnel provisions.
Sec. 17342. Delegation and assignment.
Sec. 17343. Succession.
Sec. 17344. Reorganization.
Sec. 17345. Rules.
Sec. 17346. Funds transfer.
Sec. 17347. Contracts, grants, and cooperative agreements.
Sec. 17348. Use of facilities.
Sec. 17349. Gifts and bequests.
Sec. 17350. Working capital fund.
Sec. 17351. Service charges.
Sec. 17352. Seal of Office.


                     SUBCHAPTER E--RELATED AGENCIES

Sec. 17361. Interagency Trade Organization.
Sec. 17362. National Security Council.
Sec. 17363. International Monetary Fund.


                  SUBCHAPTER F--CONFORMING AMENDMENTS

Sec. 17371. Amendments to general provisions.
Sec. 17372. Repeals.
Sec. 17373. Conforming amendments relating to Executive Schedule 
              positions.


                      SUBCHAPTER G--MISCELLANEOUS

Sec. 17381. Effective date.
Sec. 17382. Interim appointments.
Sec. 17383. Funding reductions resulting from reorganization.

          Subtitle D--Patent and Trademark Office Corporation

Sec. 17401. Short title.

                 Chapter 1--Patent And Trademark Office

Sec. 17411. Establishment of Patent and Trademark Office as a 
              corporation.
Sec. 17412. Powers and duties.
Sec. 17413. Organization and management.
Sec. 17414. Management Advisory Board.
Sec. 17415. Independence from Department of Commerce.
Sec. 17416. Trademark trial and appeal board.
Sec. 17417. Board of patent appeals and interferences.
Sec. 17418. Suits by and against the corporation.
Sec. 17419. Annual report of Commissioner.
Sec. 17420. Suspension or exclusion from practice.
Sec. 17421. Funding.
Sec. 17422. Audits.
Sec. 17423. Transfers.

            Chapter 2--Effective Date; Technical Amendments

Sec. 17431. Effective date.
Sec. 17432. Technical and conforming amendments.

                  Subtitle E--Miscellaneous Provisions

Sec. 17501. References.
Sec. 17502. Exercise of authorities.
Sec. 17503. Savings provisions.
Sec. 17504. Transfer of assets.
Sec. 17505. Delegation and assignment.
Sec. 17506. Authority of director of the office of management and 
              budget with respect to functions transferred.
Sec. 17507. Certain vesting of functions considered transfers.
Sec. 17508. Availability of existing funds.
Sec. 17509. Definitions.
           Subtitle A--Abolishment of Department of Commerce

     SEC. 17101. ABOLISHMENT OF DEPARTMENT OF COMMERCE.

       (a) Abolishment of Department.--The Department of Commerce 
     is abolished effective on the abolishment date specified in 
     subsection (c).
       (b) Transfer of Department Functions to OMB.--Except as 
     otherwise provided in this title, all functions that 
     immediately before the abolishment date specified in 
     subsection (c) are authorized to be performed by the 
     Secretary of Commerce, any other officer or employee of the 
     Department acting in that capacity, or any agency or office 
     of the Department, are transferred to the Director of the 
     Office of Management and Budget effective on that abolishment 
     date.
       (c) Abolishment Date.--The abolishment date referred to in 
     subsections (a) and (b) is the earlier of--
       (1) the last day of the 6-month period beginning on the 
     date of the enactment of this Act; or
       (2) September 30, 1996.

     SEC. 17102. RESOLUTION AND TERMINATION OF DEPARTMENT 
                   FUNCTIONS.

       (a) Resolution of Functions.--During the period beginning 
     on the date of enactment of this Act and ending on the 
     functions termination date specified in subsection (c)--
       (1) the disposition and resolution of functions of the 
     Department of Commerce shall be completed in accordance with 
     this title; and
       (2) the Director shall resolve all functions that are 
     transferred to the Director under section 17101(b) and are 
     not otherwise continued under this title.
       (b) Termination of Functions.--All functions that are 
     transferred to the Director under section 17101(b) that are 
     not otherwise continued by this title shall terminate on the 
     functions termination date specified in subsection (c).
       (c) Functions Termination Date.--The functions termination 
     date referred to in subsections (a) and (b) is the last day 
     of the 3-year period beginning on the date of the enactment 
     of this Act.

     SEC. 17103. RESPONSIBILITIES OF THE DIRECTOR OF THE OFFICE OF 
                   MANAGEMENT AND BUDGET.

       The Director of the Office of Management and Budget, acting 
     through the Administrator of the Office of Programs 
     Resolution, shall be responsible for the implementation of 
     this subtitle, including--
       (1) the administration and wind-up, during the wind-up 
     period, of all functions transferred to the Director under 
     section 17101(b);
       (2) the administration and wind-up, during the wind-up 
     period, of any outstanding obligations of the Federal 
     Government under any programs terminated by this title; and
       (3) taking such other actions as may be necessary to wind-
     up any outstanding affairs of the Department of Commerce 
     before the end of the wind-up period.

     SEC. 17104. OFFICE OF PROGRAMS RESOLUTION.

       (a) Establishment of Office.--There is established in the 
     Office of Management and Budget an office to be known as the 
     Office of Programs Resolution.

[[Page H11168]]

       (b) Administrator.--There shall be at the head of the 
     Office an Administrator who shall be appointed by the 
     President, by and with the advice and consent of the Senate. 
     The Administrator shall receive compensation at the rate 
     prescribed for level III of the Executive Schedule under 
     section 5314 of title 5, United States Code. The 
     Administrator shall serve as principal adviser to the 
     Director on Government organization and reorganization 
     matters, and shall report directly to the Director.
       (c) Functions.--The Administrator shall perform such 
     functions as are vested in the Administrator by this title or 
     delegated to the Administrator by the Director.
       (d) Authorities of the Administrator.--For purposes of 
     performing the functions of the Administrator under 
     subsection (c) and subject to the availability of 
     appropriations, the Administrator may--
       (1) enter into contracts;
       (2) employ experts and consultants in accordance with 
     section 3109 of title 5, United States Code, at rates for 
     individuals not to exceed the per diem rate equivalent to the 
     rate for level IV of the Executive Schedule; and
       (3) utilize, on a reimbursable basis, the services, 
     facilities, and personnel of other Federal agencies.
       (e) Auditor General.--
       (1) In general.--There shall be in the Office an Auditor 
     General, who shall be appointed by and report to the 
     Administrator.
       (2) Functions.--The Auditor General shall--
       (A) conduct audits and investigations with respect to 
     activities of the Office; and
       (B) submit to the Administrator and the Director reports on 
     the findings of those audits and investigations.
       (f) Reorganization.--The Administrator may allocate or 
     reallocate among the officers of the Office any function 
     vested in the Administrator or the Office, and may establish, 
     consolidate, alter, or discontinue in the Office any 
     organizational entities that were entities of the Department 
     of Commerce, as the Administrator considers necessary or 
     appropriate.
       (g) Annual Authorization Required.--No sums may be 
     appropriated for any fiscal year for the Office except as 
     specifically authorized for that fiscal year by law.

     SEC. 17105. PERSONNEL.

       Effective on the abolishment date specified in section 
     17101(c), there are transferred to the Office all individuals 
     who--
       (1) immediately before the abolishment date, were officers 
     or employees of the Department of Commerce; and
       (2) in their capacity as such an officer or employee, 
     performed functions that are transferred to the Director 
     under section 17101(b).

     SEC. 17106. PLANS AND REPORTS.

       (a) Initial Implementation Plan.--
       (1) In general.--Not later than 90 days after the date of 
     enactment of this Act, the Director shall submit a report, 
     through the President, to the Congress specifying those 
     actions taken and necessary to be taken--
       (A) to resolve those programs and functions terminated on 
     the date of enactment of this Act; and
       (B) to implement the additional transfers and other program 
     dispositions provided for in this title.
       (2) Contents.--The report shall include--
       (A) a description of the anticipated size and composition 
     of the Programs Resolution Office,
       (B) recommendations for additional legislation, if any, 
     needed to reflect or otherwise to implement the abolishments, 
     transfers, terminations, and other dispositions of programs 
     and functions under this title; and
       (C) a description of actions planned and taken to comply 
     with limitations imposed by this Act on future spending for 
     continued functions.
       (b) Annual Status Reports.--At the end of each of the 
     first, second, and third years following the date of 
     enactment of this Act, the Director shall submit a report, 
     through the President, to the Congress which--
       (1) specifies the status and progress of actions taken to 
     implement this title and to wind-up the affairs of the 
     Department of Commerce by the functions termination date 
     specified in section 17102(c);
       (2) includes a summary of reports submitted to the Director 
     under section 17104(e)(2)(B) during the period covered by the 
     report by the Auditor General of the Office;
       (3) includes any recommendations the Director may have for 
     additional legislation; and
       (4) describes actions taken to comply with limitations 
     imposed by this Act on future spending for continued 
     functions.
       (c) GAO Reports.--Not later than 60 days after issuance of 
     each report under subsections (a) and (b), the Comptroller 
     General of the United States shall submit to the Congress a 
     report which--
       (1) evaluates the report under that subsection; and
       (2) includes any recommendations the Comptroller General 
     considers appropriate.

     SEC. 17107. GAO AUDIT AND ACCESS TO RECORDS.

       (a) Audit of Persons Performing Functions Pursuant to This 
     Act.--All agencies, corporations, organizations, and other 
     persons of any description which under the authority of the 
     United States perform any function or activity pursuant to 
     this title shall be subject to audit by the Comptroller 
     General of the United States with respect to such function or 
     activity.
       (b) Audit of Persons Providing Certain Goods or Services.--
     All persons and organizations which, by contract, grant, or 
     otherwise, provide goods or services to, or receive financial 
     assistance from, any agency or other person performing 
     functions or activities under or referred to by this title 
     shall be subject to audit by the Comptroller General of the 
     United States with respect to such provision of goods or 
     services or receipt of financial assistance.
       (c) Provisions Applicable to audits Under This Section.--
       (1) Nature and scope of audit.--The Comptroller General of 
     the United States shall determine the nature, scope, terms, 
     and conditions of audits conducted under this section.
       (2) Coordination with other provisions of law.--The 
     authority of the Comptroller General of the United States 
     under this section shall be in addition to any audit 
     authority available to the Comptroller General under other 
     provisions of this title or any other law.
       (3) Rights of access, examination, and copying.--The 
     Comptroller General of the United States, and any duly 
     authorized representative of the Comptroller General, shall 
     have access to, and the right to examine and copy, all 
     records and other recorded information in any form, and to 
     examine any property within the possession or control of any 
     agency or person which is subject to audit under this 
     section, which the Comptroller General considers relevant to 
     an audit conducted under this section.
       (4) Enforcement of right of access.--The right of access of 
     the Comptroller General of the United States to information 
     under this section shall be enforceable under section 716 of 
     title 31, United States Code.
       (5) Maintenance of confidential records.--Section 716(e) of 
     title 31, United States Code, shall apply to information 
     obtained by the Comptroller General under this section.

     SEC. 17108. CONFORMING AMENDMENTS.

       (a) Presidential Succession.--Section 19(d)(1) of title 3, 
     United States Code, is amended by striking ``Secretary of 
     Commerce,''.
       (b) Executive Departments.--Section 101 of title 5, United 
     States Code, is amended by striking the following item: ``The 
     Department of Commerce.''.
       (c) Secretary's Compensation.--Section 5312 of title 5, 
     United States Code, is amended by striking the following 
     item: ``Secretary of Commerce.''.
       (d) Compensation for Positions at Level III.--Section 5314 
     of title 5, United States Code, is amended--
       (1) by striking the following item:
       ``Under Secretary of Commerce, Under Secretary of Commerce 
     for Economic Affairs, Under Secretary of Commerce for Export 
     Administration and Under Secretary of Commerce for Travel and 
     Tourism.'';
       (2) by striking the following item:
       ``Under Secretary of Commerce for Oceans and Atmosphere, 
     the incumbent of which also serves as Administrator of the 
     National Oceanic and Atmospheric Administration.'';
       (3) by striking the following item:
       ``Under Secretary of Commerce for Technology.''; and
       (4) by adding at the end the following item:
       ``Administrator, Office of Programs Resolution''.
       (e) Compensation for Positions at Level IV.--Section 5315 
     of title 5, United States Code, is amended--
       (1) by striking the following item:
       ``Assistant Secretaries of Commerce (11).'';
       (2) by striking the following item:
       ``General Counsel of the Department of Commerce.'';
       (3) by striking the following item:
       ``Assistant Secretary of Commerce for Oceans and 
     Atmosphere, the incumbent of which also serves as Deputy 
     Administrator of the National Oceanic and Atmospheric 
     Administration.'';
       (4) by striking the following item:
       ``Director, National Institute of Standards and Technology, 
     Department of Commerce.'';
       (5) by striking the following item:
       ``Inspector General, Department of Commerce.'';
       (6) by striking the following item:
       ``Chief Financial Officer, Department of Commerce.''; and
       (7) in the item relating to the Bureau of the Census, by 
     striking ``, Department of Commerce''.
       (f) Compensation for Positions at Level V.--Section 5316 of 
     title 5, United States Code, is amended--
       (1) by striking the following item:
       ``Director, United States Travel Service, Department of 
     Commerce.''; and
       (2) by striking the following item:
       ``National Export Expansion Coordinator, Department of 
     Commerce.''.
       (g) Inspector General Act of 1978.--The Inspector General 
     Act of 1978 (5 U.S.C. App.) is amended--
       (1) in section 9(a)(1), by striking subparagraph (B);
       (2) in section 11(1), by striking ``Commerce,''; and
       (3) in section 11(2), by striking ``Commerce,''.
       (h) Effective Date.--The amendments made by this section 
     shall be effective on the abolishment date specified in 
     section 17101(c).

[[Page H11169]]


     SEC. 17109. PRIVATIZATION FRAMEWORK.

       (a) In General.--The Office of Management and Budget shall 
     privatize each function designated for privatization under 
     subtitle B within 18 months of the date the transfer of such 
     function to the Office. The Office shall pursue such forms of 
     privatization arrangements as the Office considers 
     appropriate to best serve the interests of the United States. 
     If the Office is unable to privatize a function within 18 
     months, the Office shall report its inability to the Congress 
     with its recommendations as to the appropriate disposition of 
     the function and its assets.
       (b) Role of the Federal Government.--No privatization 
     arrangement made under subsection (a) shall include any 
     future role for, or accountability to, the Federal Government 
     unless it is necessary to assure the continued accomplishment 
     of a specific Federal objective. The Federal role should be 
     the minimum necessary to accomplish Federal objectives.
       (c) Assets.--In privatizing a function, the Office of 
     Management and Budget shall take any action necessary to 
     preserve the value of the assets of a function during the 
     period the Office holds such assets and to continue the 
     performance of the function to the extent necessary to 
     preserve the value of the assets or to accomplish core 
     Federal objectives.

     SEC. 17110. PRIORITY PLACEMENT PROGRAMS FOR FEDERAL EMPLOYEES 
                   AFFECTED BY A REDUCTION IN FORCE ATTRIBUTABLE 
                   TO THIS TITLE.

       (a) In General.--Subchapter I of chapter 33 of title 5, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 3329b. Priority placement programs for employees 
       affected by a reduction in force attributable to the 
       Department of Commerce Dismantling Act

       ``(a)(1) For the purpose of this section, the term 
     `affected agency'--
       ``(A) except as provided in subparagraph (B), means an 
     Executive agency to which personnel are transferred in 
     connection with a transfer of function under the Department 
     of Commerce Dismantling Act, and
       ``(B) with respect to employees of the Department of 
     Commerce in general administration, the Inspector General's 
     office, or the General Council's office, or who provided 
     overhead support to other components of the Department on a 
     reimbursable basis, means all agencies to which functions of 
     those employees are transferred under the Department of 
     Commerce Dismantling Act.
       ``(2) This section applies with respect to any reduction in 
     force that--
       ``(A) occurs within 12 months after the date of the 
     enactment of this section; and
       ``(B) is due to--
       ``(i) the termination of any function of the Department of 
     Commerce or the Office of Programs Resolution, as the case 
     may be; or
       ``(ii) the agency's having excess personnel as a result of 
     a transfer of function described in paragraph (1), as 
     determined by--
       ``(I) the Administrator of the Office of Programs 
     Resolution, in the case of a function transferred to the 
     Office of Management and Budget; or
       ``(II) the head of the agency, in the case of any other 
     function.
       ``(b) As soon as practicable after the date of the 
     enactment of this section, each affected agency shall 
     establish an agencywide priority placement program to 
     facilitate employment placement for employees who--
       ``(1) are scheduled to be separated from service due to a 
     reduction in force described in subsection (a)(2); or
       ``(2) are separated from service due to such a reduction in 
     force.
       ``(c)(1) Each agencywide priority placement program shall 
     include provisions under which a vacant position shall not be 
     filled by the appointment or transfer of any individual from 
     outside of that agency if--
       ``(A) there is then available any individual described in 
     paragraph (2) who is qualified for the position; and
       ``(B) the position--
       ``(i) is at the same grade (or pay level) or not more than 
     1 grade (or pay level) below that of the position last held 
     by such individual before placement in the new position; and
       ``(ii) is within the same commuting area as the 
     individual's last-held position (as referred to in clause 
     (i)) or residence.
       ``(2) For purposes of an agencywide priority placement 
     program, an individual shall be considered to be described in 
     this paragraph if such individual's most recent performance 
     evaluation was at least fully successful (or the equivalent), 
     and such individual is either--
       ``(A) an employee of such agency who is scheduled to be 
     separated, as described in subsection (b)(1); or
       ``(B) an individual who became a former employee of such 
     agency as a result of a separation, as described in 
     subsection (b)(2).
       ``(d)(1) Nothing in this section shall affect any priority 
     placement program of the Department of Defense which is in 
     operation as of the date of the enactment of this section.
       ``(2) Nothing in this section shall impair placement 
     programs within agencies subject to reductions in force 
     resulting from causes other than the Department of Commerce 
     Dismantling Act.
       ``(e) An individual shall cease to be eligible to 
     participate in a program under this section on the earlier 
     of--
       ``(1) the conclusion of the 12-month period beginning on 
     the date on which that individual first became eligible to 
     participate under subsection (c)(2); or
       ``(2) the date on which the individual declines a bona fide 
     offer (or if the individual does not act on the offer, the 
     last day for accepting such offer) from the affected agency 
     of a position described in subsection (c)(1)(B).''.
       (b) Technical and Conforming Amendments.--(1) Title 5, 
     United States Code, is amended by redesignating the second 
     section which is designated as section 3329 as section 3329a.
       (2) The table of sections for chapter 33 of title 5, United 
     States Code, is amended by striking the item relating to the 
     second section which is designated as section 3329 and 
     inserting the following:

``3329a.  Government-wide list of vacant positions.
``3329b.  Priority placement programs for employees affected by a 
              reduction in force attributable to the Department of 
              Commerce Dismantling Act.''.

     SEC. 17111. FUNDING REDUCTIONS FOR TRANSFERRED FUNCTIONS.

       (a) Funding Reductions.--Except as provided in subsection 
     (b), for each fiscal year that begins on or after the date of 
     the enactment of this Act, the total amount obligated or 
     expended by the United States in performing functions 
     transferred under this title to the Director or to the Office 
     from the Department of Commerce, or any of its officers or 
     components, may not exceed 75 percent of the total amount 
     obligated or expended by the United States in performing such 
     functions for fiscal year 1995.
       (b) Exceptions.--Subsection (a) shall not apply to--
       (1) functions transferred to the Director under section 
     17203 (relating to the Bureau of the Census); or
       (2) obligations or expenditures incurred as a direct 
     consequence of the termination, transfer, or other 
     disposition of functions described in subsection (a) pursuant 
     to this title.
       (c) Rule of Construction.--This section shall take 
     precedence over any other provision of law unless such 
     provision explicitly refers to this section and makes an 
     exception to it.
       (d) Responsibilities of the Director.--The Director shall--
       (1) ensure compliance with the requirements of this 
     section; and
       (2) include in each report under sections 17106 (a) and (b) 
     a description of actions taken to comply with such 
     requirements.

     SEC. 17112. DEFINITIONS.

       For purposes of this subtitle, the following definitions 
     apply:
       (1) Administrator.--The term ``Administrator'' means the 
     Administrator of the Office of Programs Resolution.
       (2) Director.--The term ``Director'' means the Director of 
     the Office of Management and Budget.
       (3) Office.--The term ``Office'' means the Office of 
     Programs Resolution.
       (4) Wind-up period.--The term ``wind-up period'' means the 
     period beginning on the date of the enactment of this Act and 
     ending on the functions termination date specified in section 
     17102(c).
Subtitle B--Disposition of Various Programs, Functions, and Agencies of 
                         Department of Commerce

     SEC. 17201. ABOLISHMENT OF ECONOMIC DEVELOPMENT 
                   ADMINISTRATION AND TRANSFER OF FUNCTIONS.

       (a) In General.--The Public Works and Economic Development 
     Act of 1965 (40 U.S.C. 3131 et seq.) is amended by striking 
     all after the first section and inserting the following:

     ``SEC. 2. ADMINISTRATOR DEFINED.

       ``In this Act, the term `Administrator' means the 
     Administrator of the Small Business Administration.
                    ``TITLE I--STATEMENT OF PURPOSE

     ``SEC. 101. FINDINGS AND DECLARATION.

       ``(a) Findings.--Congress finds that--
       ``(1) the maintenance of the national economy at a high 
     level is vital to the best interests of the United States, 
     but that some of our regions, counties, and communities are 
     suffering substantial and persistent unemployment and 
     underemployment that cause hardship to many individuals and 
     their families, and waste invaluable human resources;
       ``(2) to overcome this problem the Federal Government, in 
     cooperation with the States, should help areas and regions of 
     substantial and persistent unemployment and underemployment 
     to take effective steps in planning and financing their 
     public works and economic development;
       ``(3) Federal financial assistance, including grants for 
     public works and development facilities to communities, 
     industries, enterprises, and individuals in areas needing 
     development should enable such areas to help themselves 
     achieve lasting improvement and enhance the domestic 
     prosperity by the establishment of stable and diversified 
     local economies and improved local conditions, if such 
     assistance is preceded by and consistent with sound, long-
     range economic planning; and
       ``(4) under the provisions of this Act, new employment 
     opportunities should be created by developing and expanding 
     new and existing public works and other facilities and 
     resources rather than by merely transferring jobs from one 
     area of the United States to another.
       ``(b) Declaration.--Congress declares that, in furtherance 
     of maintaining the national economy at a high level--

[[Page H11170]]

       ``(1) the assistance authorized by this Act should be made 
     available to both rural and urban areas;
       ``(2) such assistance should be made available for planning 
     for economic development prior to the actual occurrences of 
     economic distress in order to avoid such condition; and
       ``(3) such assistance should be used for long-term economic 
     rehabilitation in areas where long-term economic 
     deterioration has occurred or is taking place.
     ``TITLE II--GRANTS FOR PUBLIC WORKS AND DEVELOPMENT FACILITIES

     ``SEC. 201. DIRECT AND SUPPLEMENTARY GRANTS.

       ``(a) In General.--Upon the application of any eligible 
     recipient, the Administrator may--
       ``(1) make direct grants for the acquisition or development 
     of land and improvements for public works, public service, or 
     development facility usage, and the acquisition, design and 
     engineering, construction, rehabilitation, alteration, 
     expansion, or improvement of such facilities, including 
     related machinery and equipment, within an area described in 
     section 502(a), if the Administrator finds that--
       ``(A) the project for which financial assistance is sought 
     will directly or indirectly--
       ``(i) tend to improve the opportunities, in the area where 
     such project is or will be located, for the successful 
     establishment or expansion of industrial or commercial plants 
     or facilities;
       ``(ii) otherwise assist in the creation of additional long-
     term employment opportunities for such area; or
       ``(iii) primarily benefit the long-term unemployed and 
     members of low-income families;
       ``(B) the project for which a grant is requested will 
     fulfill a pressing need of the area, or part thereof, in 
     which it is, or will be, located; and
       ``(C) the area for which a project is to be undertaken has 
     an approved investment strategy as provided by section 503 
     and such project is consistent with such strategy;
       ``(2) make supplementary grants in order to enable the 
     States and other entities within areas described in section 
     502(a) to take maximum advantage of designated Federal grant-
     in-aid programs (as defined in subsection (c)(4)), direct 
     grants-in-aid authorized under this section, and Federal 
     grant-in-aid programs authorized by the Watershed Protection 
     and Flood Prevention Act (68 Stat. 666), and the 11 
     watersheds authorized by the Flood Control Act of December 
     22, 1944 (58 Stat. 887), for which they are eligible but for 
     which, because of their economic situation, they cannot 
     supply the required matching share.
       ``(b) Cost Sharing.--Subject to subsection (c), the amount 
     of any direct grant under this subsection for any project 
     shall not exceed 50 percent of the cost of such project.
       ``(c) Requirements Applicable to Supplementary Grants.--
       ``(1) Amount of supplementary grants.--
       ``(A) In general.--Except as provided by subparagraph (B), 
     the amount of any supplementary grant under this section for 
     any project shall not exceed the applicable percentage 
     established by regulations promulgated by the Administrator, 
     but in no event shall the non-Federal share of the aggregate 
     cost of any such project (including assumptions of debt) be 
     less than 20 percent of such cost.
       ``(B) Exception.--Notwithstanding subparagraph (A), in the 
     case of an Indian tribe, a State (or a political subdivision 
     of the State), or a community development corporation which 
     the Administrator determines has exhausted its effective 
     taxing and borrowing capacity, the Administrator shall reduce 
     the non-Federal share below the percentage specified in 
     subparagraph (A) or shall waive the non-Federal share in the 
     case of such a grant for a project in an area described in 
     section 502(a)(4).
       ``(2) Form of supplementary grants.--Supplementary grants 
     shall be made by the Administrator, in accordance with such 
     regulations as the Administrator may prescribe, by increasing 
     the amounts of direct grants authorized under this section or 
     by the payment of funds appropriated under this Act to the 
     heads of the departments, agencies, and instrumentalities of 
     the Federal Government responsible for the administration of 
     the applicable Federal programs.
       ``(3) Federal share limitations specified in other laws.--
     Notwithstanding any requirement as to the amount or sources 
     of non-Federal funds that may otherwise be applicable to the 
     Federal program involved, funds provided under this 
     subsection shall be used for the sole purpose of increasing 
     the Federal contribution to specific projects in areas 
     described in section 502(a) under such programs above the 
     fixed maximum portion of the cost of such project otherwise 
     authorized by the applicable law.
       ``(4) Designated federal grant-in-aid programs defined.--In 
     this subsection, the term `designated Federal grant-in-aid 
     programs' means such existing or future Federal grant-in-aid 
     programs assisting in the construction or equipping of 
     facilities as the Administrator may, in furtherance of the 
     purposes of this Act, designate as eligible for allocation of 
     funds under this section.
       ``(5) Consideration of relative need in determining 
     amount.--In determining the amount of any supplementary grant 
     available to any project under this section, the 
     Administrator shall take into consideration the relative 
     needs of the area and the nature of the projects to be 
     assisted.
       ``(d) Regulations.--The Administrator shall prescribe 
     rules, regulations, and procedures to carry out this section 
     which will assure that adequate consideration is given to the 
     relative needs of eligible areas. In prescribing such rules, 
     regulations, and procedures the Administrator shall consider 
     among other relevant factors--
       ``(1) the severity of the rates of unemployment in the 
     eligible areas and the duration of such unemployment; and
       ``(2) the income levels of families and the extent of 
     underemployment in eligible areas.
       ``(e) Review and Comment Upon Projects by Local 
     Governmental Authorities.--The Administrator shall prescribe 
     regulations which will assure that appropriate local 
     governmental authorities have been given a reasonable 
     opportunity to review and comment upon proposed projects 
     under this section.

     ``SEC. 202. CONSTRUCTION COST INCREASES.

       ``In any case where a grant (including a supplemental 
     grant) has been made by the Administrator under this title 
     for a project and after such grant has been made but before 
     completion of the project, the cost of such project based 
     upon the designs and specifications which were the basis of 
     the grant has been increased because of increases in costs, 
     the amount of such grant may be increased by an amount equal 
     to the percentage increase, as determined by the 
     Administrator, in such costs, but in no event shall the 
     percentage of the Federal share of such project exceed that 
     originally provided for in such grant.

     ``SEC. 203. USE OF FUNDS IN PROJECTS CONSTRUCTED UNDER 
                   PROJECTED COST.

       ``In any case where a grant (including a supplemental 
     grant) has been made by the Administrator under this title 
     for a project, and after such grant has been made but before 
     completion of the project, the cost of such project based 
     upon the designs and specifications which were the basis of 
     the grant has decreased because of decreases in costs, such 
     underrun funds may be used to improve the project either 
     directly or indirectly as determined by the Administrator.

     ``SEC. 204. CHANGED PROJECT CIRCUMSTANCES.

       ``In any case where a grant (including a supplemental 
     grant) has been made by the Administrator under this title 
     for a project, and after such grant has been made but before 
     completion of the project, the purpose or scope of such 
     project based upon the designs and specifications which were 
     the basis of the grant has changed, the Administrator may 
     approve the use of grant funds on such changed project if the 
     Administrator determines that such changed project meets the 
     requirements of this title and that such changes are 
     necessary to enhance economic development in the area.
  ``TITLE III--SPECIAL ECONOMIC DEVELOPMENT AND ADJUSTMENT ASSISTANCE

     ``SEC. 301. STATEMENT OF PURPOSE.

       ``The purpose of this title to provide special economic 
     development and adjustment assistance programs to help State 
     and local areas meet special needs arising from actual or 
     threatened severe unemployment arising from economic 
     dislocation (including unemployment arising from actions of 
     the Federal Government, from defense base closures and 
     realignments, and from compliance with environmental 
     requirements which remove economic activities from a 
     locality) and economic adjustment problems resulting from 
     severe changes in economic conditions (including long-term 
     economic deterioration), and to encourage cooperative 
     intergovernmental action to prevent or solve economic 
     adjustment problems. Nothing in this title is intended to 
     replace the efforts of the economic adjustment program of the 
     Department of Defense.

     ``SEC. 302. SPECIAL ECONOMIC DEVELOPMENT AND ADJUSTMENT 
                   ASSISTANCE.

       ``(a) In General.--The Administrator is authorized to make 
     grants directly to any eligible recipient in an area which 
     the Administrator determines, in accordance with criteria to 
     be established by the Administrator by regulation--
       ``(1) has experienced, or may reasonably be foreseen to be 
     about to experience, a special need to meet an expected rise 
     in unemployment, or other economic adjustment problems 
     (including those caused by any action or decision of the 
     Federal Government); or
       ``(2) has demonstrated long-term economic deterioration.
       ``(b) Purposes.--Amounts from grants under subsection (a) 
     shall be used by an eligible recipient to carry out or 
     develop an investment strategy which--
       ``(1) meets the requirements of section 503; and
       ``(2) is approved by the Administrator.
       ``(c) Types of Assistance.--In carrying out an investment 
     strategy using amounts from grants under subsection (a), an 
     eligible recipient may provide assistance for any of the 
     following:
       ``(1) Public facilities.
       ``(2) Public services.
       ``(3) Business development.
       ``(4) Planning.
       ``(5) Research and technical assistance.
       ``(6) Administrative expenses.
       ``(7) Training.
       ``(8) Relocation of individuals and businesses.
       ``(9) Other assistance which demonstrably furthers the 
     economic adjustment objectives of this title.

[[Page H11171]]

       ``(d) Direct Expenditure or Redistribution by Recipient.--
     Amounts from grants under subsection (a) may be used in 
     direct expenditures by the eligible recipient or through 
     redistribution by the eligible recipient to public and 
     private entities in grants, loans, loan guarantees, payments 
     to reduce interest on loan guarantees, or other appropriate 
     assistance, but no grant shall be made by an eligible 
     recipient to a private profit-making entity.
       ``(e) Coordination.--The Administrator to the extent 
     practicable shall coordinate the activities relating to the 
     requirements for investment strategies and making grants and 
     loans under this title with other Federal programs, States, 
     economic development districts, and other appropriate 
     planning and development organizations.
       ``(f) Base Closings and Realignments.--
       ``(1) Location of projects.--In any case in which the 
     Administrator determines a need for assistance under 
     subsection (a) due to the closure or realignment of a 
     military installation, the Administrator may make such 
     assistance available for projects to be carried out on the 
     military installation and for projects to be carried out in 
     communities adversely affected by the closure or realignment.
       ``(2) Interest in property.--Notwithstanding any other 
     provision of law, the Administrator may provide to an 
     eligible recipient any assistance available under this Act 
     for a project to be carried out on a military installation 
     that is closed or scheduled for closure or realignment 
     without requiring that the eligible recipient have title to 
     the property or a leasehold interest in the property for any 
     specified term.

     ``SEC. 303. ANNUAL REPORTS BY RECIPIENT.

       ``Each eligible recipient which receives assistance under 
     this title from the Administrator shall annually during the 
     period such assistance continue to make a full and complete 
     report to the Administrator, in such manner as the 
     Administrator shall prescribe, and such report shall contain 
     an evaluation of the effectiveness of the economic assistance 
     provided under this title in meeting the need it was designed 
     to alleviate and the purposes of this title.

     ``SEC. 304. SALE OF FINANCIAL INSTRUMENTS IN REVOLVING LOAN 
                   FUNDS.

       ``Any loan, loan guarantee, equity, or other financial 
     instrument in the portfolio of a revolving loan fund, 
     including any financial instrument made available using 
     amounts from a grant made before the effective date specified 
     in section 802, may be sold, encumbered, or pledged at the 
     discretion of the grantee of the Fund, to a third party 
     provided that the net proceeds of the transaction--
       ``(1) shall be deposited into the Fund and may only be used 
     for activities which are consistent with the purposes of this 
     title; and
       ``(2) shall be subject to the financial management, 
     accounting, reporting, and auditing standards which were 
     originally applicable to the grant.

     ``SEC. 305. TREATMENT OF REVOLVING LOAN FUNDS.

       ``(a) In General.--Amounts from grants made under this 
     title which are used by an eligible recipient to establish a 
     revolving loan fund shall not be treated, except as provided 
     by subsection (b), as amounts derived from Federal funds for 
     the purposes of any Federal law after such amounts are loaned 
     from the fund to a borrower and repaid to the fund.
       ``(b) Exceptions.--Amounts described in subsection (a) 
     which are loaned from a revolving loan fund to a borrower and 
     repaid to the fund--
       ``(1) may only be used for activities which are consistent 
     with the purposes of this title; and
       ``(2) shall be subject to the financial management, 
     accounting, reporting, and auditing standards which were 
     originally applicable to the grant.
       ``(c) Regulations.--Not later than 30 days after the 
     effective date specified in section 802, the Administrator 
     shall issue regulations to carry out subsection (a).
       ``(d) Public Review and Comment.--Before issuing any final 
     guidelines or administrative manuals governing the operation 
     of revolving loan funds established using amounts from grants 
     under this title, the Administrator shall provide reasonable 
     opportunity for public review of and comment on such 
     guidelines and administrative manuals.
       ``(e) Applicability to Past Grants.--The requirements of 
     this section applicable to amounts from grants made under 
     this title shall also apply to amounts from grants made, 
     before the effective date specified in section 802, under 
     title I of this Act, as in effect on the day before such 
     effective date.
      ``TITLE IV--TECHNICAL ASSISTANCE, RESEARCH, AND INFORMATION

     ``SEC. 401. TECHNICAL ASSISTANCE.

       ``(a) In General.--In carrying out its duties under this 
     Act, the Administrator may provide technical assistance which 
     would be useful in alleviating or preventing conditions of 
     excessive unemployment or underemployment to areas which the 
     Administrator finds have substantial need for such 
     assistance. Such assistance shall include project planning 
     and feasibility studies, management and operational 
     assistance, establishment of business outreach centers, and 
     studies evaluating the needs of, and development 
     potentialities for, economic growth of such areas.
       ``(b) Procedures and Terms.--
       ``(1) Manner of providing assistance.--Assistance may be 
     provided by the Administrator through--
       ``(A) members of the Administrator's staff;
       ``(B) the payment of funds authorized for this section to 
     departments or agencies of the Federal Government;
       ``(C) the employment of private individuals, partnerships, 
     firms, corporations, or suitable institutions under contracts 
     entered into for such purposes; or
       ``(D) grants-in-aid to appropriate public or private 
     nonprofit State, area, district, or local organizations.
       ``(2) Repayment terms.--The Administrator, in the 
     Administrator's discretion, may require the repayment of 
     assistance provided under this subsection and prescribe the 
     terms and conditions of such repayment.
       ``(c) Grants Covering Administrative Expenses.--
       ``(1) In general.--The Administrator may make grants to 
     defray not to exceed 50 percent of the administrative 
     expenses of organizations which the Administrator determines 
     to be qualified to receive grants-in-aid under subsections 
     (a) and (b); except that in the case of a grant under this 
     subsection to an Indian tribe, the Administrator is 
     authorized to defray up to 100 percent of such expenses.
       ``(2) Determination of non-federal share.--In determining 
     the amount of the non-Federal share of such costs or 
     expenses, the Administrator shall give due consideration to 
     all contributions both in cash and in kind, fairly evaluated, 
     including contributions of space, equipment, and services.
       ``(3) Use of grants with planning grants.--Where 
     practicable, grants-in-aid authorized under this subsection 
     shall be used in conjunction with other available planning 
     grants to assure adequate and effective planning and 
     economical use of funds.
       ``(d) Availability of Technical Information; Federal 
     Procurement.--The Administrator shall aid areas described in 
     section 502(a) and other areas by furnishing to interested 
     individuals, communities, industries, and enterprises within 
     such areas any assistance, technical information, market 
     research, or other forms of assistance, information, or 
     advice which would be useful in alleviating or preventing 
     conditions of excessive unemployment or underemployment 
     within such areas. The Administrator may furnish the 
     procurement divisions of the various departments, agencies, 
     and other instrumentalities of the Federal Government with a 
     list containing the names and addresses of business firms 
     which are located in areas described in section 502(a) and 
     which are desirous of obtaining Government contracts for the 
     furnishing of supplies or services, and designating the 
     supplies and services such firms are engaged in providing.

     ``SEC. 402. ECONOMIC DEVELOPMENT PLANNING.

       ``(a) Direct Grants.--
       ``(1) In general.--The Administrator may make, upon 
     application of any State, or city, or other political 
     subdivision of a State, or sub-State planning and development 
     organization (including an area described in section 502(a) 
     or an economic development district), direct grants to such 
     State, city, or other political subdivision, or organization 
     to pay up to 50 percent of the cost for economic development 
     planning.
       ``(2) Planning projects specifically included.--The 
     planning for cities, other political subdivisions, and sub-
     State planning and development organizations (including areas 
     described in section 502(a) and economic development 
     districts) assisted under this section shall include 
     systematic efforts to reduce unemployment and increase 
     incomes.
       ``(3) Planning process.--The planning shall be a continuous 
     process involving public officials and private citizens in 
     analyzing local economies, defining development goals, 
     determining project opportunities, and formulating and 
     implementing a development program.
       ``(4) Coordination of assistance under section 401(c).--The 
     assistance available under this section may be provided in 
     addition to assistance available under section 401(c) but 
     shall not supplant such assistance.
       ``(b) Compliance With Review Procedure.--The planning 
     assistance authorized under this title shall be used in 
     conjunction with any other available Federal planning 
     assistance to assure adequate and effective planning and 
     economical use of funds.
            ``TITLE V--ELIGIBILITY AND INVESTMENT STRATEGIES

                         ``PART A--ELIGIBILITY

     ``SEC. 501. ELIGIBLE RECIPIENT DEFINED.

       ``In this Act, the term `eligible recipient' means an area 
     described in section 502(a), an economic development district 
     designated under section 510, an Indian tribe, a State, a 
     city or other political subdivision of a State, or a 
     consortium of such political subdivisions, or a public or 
     private nonprofit organization or association acting in 
     cooperation with officials of such political subdivisions.

     ``SEC. 502. AREA ELIGIBILITY.

       ``(a) Certification.--In order to be eligible for 
     assistance under title II, an applicant seeking assistance to 
     undertake a project in an area shall certify, as part of an 
     application for such assistance, that the area on the date of 
     submission of such application meets 1 or more of the 
     following criteria:
       ``(1) The area has a per capita income of 80 percent or 
     less of the national average.

[[Page H11172]]

       ``(2) The area has an unemployment rate 1 percent above the 
     national average percentage for the most recent 24-month 
     period for which statistics are available.
       ``(3) The area has experienced or is about to experience a 
     sudden economic dislocation resulting in job loss that is 
     significant both in terms of the number of jobs eliminated 
     and the effect upon the employment rate of the area.
       ``(4) The area is a community or neighborhood (defined 
     without regard to political or other subdivisions or 
     boundaries) which the Administrator determines has one or 
     more of the following conditions:
       ``(A) A large concentration of low-income persons.
       ``(B) Rural areas having substantial out-migration.
       ``(C) Substantial unemployment.
       ``(b) Documentation.--A certification made under subsection 
     (a) shall be supported by Federal data, when available, and 
     in other cases by data available through the State 
     government. Such documentation shall be accepted by the 
     Administrator unless it is determined to be inaccurate. The 
     most recent statistics available shall be used.
       ``(c) Prior Designations.--Any designation of a 
     redevelopment area made before the effective date specified 
     in section 802 shall not be effective after such effective 
     date.

     ``SEC. 503. INVESTMENT STRATEGY.

       ``The Administrator may provide assistance under titles II 
     and III to an applicant for a project only if the applicant 
     submits to the Administrator, as part of an application for 
     such assistance, and the Administrator approves an investment 
     strategy which--
       ``(1) identifies the economic development problems to be 
     addressed using such assistance;
       ``(2) identifies past, present, and projected future 
     economic development investments in the area receiving such 
     assistance and public and private participants and sources of 
     funding for such investments;
       ``(3) sets forth a strategy for addressing the economic 
     problems identified pursuant to paragraph (1) and describes 
     how the strategy will solve such problems;
       ``(4) provides a description of the project necessary to 
     implement the strategy, estimates of costs, and timetables; 
     and
       ``(5) provides a summary of public and private resources 
     expected to be available for the project.

     ``SEC. 504. APPROVAL OF PROJECTS.

       ``Only applications for grants or other assistance under 
     this Act for specific projects shall be approved which are 
     certified by the State representing such applicant and 
     determined by the Administrator--
       ``(1) to be included in a State investment strategy;
       ``(2) to have adequate assurance that the project will be 
     properly administered, operated, and maintained; and
       ``(3) to otherwise meet the requirements for assistance 
     under this Act.

                ``PART B--ECONOMIC DEVELOPMENT DISTRICTS

     ``SEC. 510. DESIGNATION OF ECONOMIC DEVELOPMENT DISTRICTS AND 
                   ECONOMIC DEVELOPMENT CENTERS.

       ``(a) In General.--In order that economic development 
     projects of broader geographic significance may be planned 
     and carried out, the Administrator may--
       ``(1) designate appropriate `economic development 
     districts' within the United States with the concurrence of 
     the States in which such districts will be wholly or 
     partially located, if--
       ``(A) the proposed district is of sufficient size or 
     population, and contains sufficient resources, to foster 
     economic development on a scale involving more than a single 
     area described in section 502(a);
       ``(B) the proposed district contains at least 1 area 
     described in section 502(a);
       ``(C) the proposed district contains 1 or more areas 
     described in section 502(a) or economic development centers 
     identified in an approved district investment strategy as 
     having sufficient size and potential to foster the economic 
     growth activities necessary to alleviate the distress of the 
     areas described in section 502(a) within the district; and
       ``(D) the proposed district has a district investment 
     strategy which includes adequate land use and transportation 
     planning and contains a specific program for district 
     cooperation, self-help, and public investment and is approved 
     by the State or States affected and by the Administrator;
       ``(2) designate as `economic development centers', in 
     accordance with such regulations as the Administrator shall 
     prescribe, such areas as the Administrator may deem 
     appropriate, if--
       ``(A) the proposed center has been identified and included 
     in an approved district investment strategy and recommended 
     by the State or States affected for such special designation;
       ``(B) the proposed center is geographically and 
     economically so related to the district that its economic 
     growth may reasonably be expected to contribute significantly 
     to the alleviation of distress in the areas described in 
     section 502(a) of the district; and
       ``(C) the proposed center does not have a population in 
     excess of 250,000 according to the most recent Federal 
     census.
       ``(3) provide financial assistance in accordance with the 
     criteria of this Act, except as may be herein otherwise 
     provided, for projects in economic development centers 
     designated under subsection (a)(2), if--
       ``(A) the project will further the objectives of the 
     investment strategy of the district in which it is to be 
     located;
       ``(B) the project will enhance the economic growth 
     potential of the district or result in additional long-term 
     employment opportunities commensurate with the amount of 
     Federal financial assistance requested; and
       ``(C) the amount of Federal financial assistance requested 
     is reasonably related to the size, population, and economic 
     needs of the district;
       ``(4) subject to the 50 percent non-Federal share required 
     for any project by section 201(c), increase the amount of 
     grant assistance authorized by section 201 for projects 
     within areas described in section 502(a), by an amount not to 
     exceed 10 percent of the aggregate cost of any such project, 
     in accordance with such regulations as the Administrator 
     shall prescribe if--
       ``(A) the area described in section 502(a) is situated 
     within a designated economic development district and is 
     actively participating in the economic development activities 
     of the district; and
       ``(B) the project is consistent with an approved investment 
     strategy.
       ``(b) Authorities.--In designating economic development 
     districts and approving district investment strategies under 
     subsection (a), the Administrator may, under regulations 
     prescribed by the Administrator--
       ``(1) invite the several States to draw up proposed 
     district boundaries and to identify potential economic 
     development centers;
       ``(2) cooperate with the several States--
       ``(A) in sponsoring and assisting district economic 
     planning and development groups; and
       ``(B) in assisting such district groups to formulate 
     district investment strategies; and
       ``(3) encourage participation by appropriate local 
     governmental authorities in such economic development 
     districts.
       ``(c) Termination or Modification of Designations.--The 
     Administrator shall by regulation prescribe standards for the 
     termination or modification of economic development districts 
     and economic development centers designated under the 
     authority of this section.
       ``(d) Definitions.--In this Act, the following definitions 
     apply:
       ``(1) Economic development district.--The term `economic 
     development district' refers to any area within the United 
     States composed of cooperating areas described in section 
     502(a) and, where appropriate, designated economic 
     development centers and neighboring counties or communities, 
     which has been designated by the Administrator as an economic 
     development district. Such term includes any economic 
     development district designated under section 403 of this 
     Act, as in effect on the day before the effective date 
     specified in section 802.
       ``(2) Economic development center.--The term `economic 
     development center' refers to any area within the United 
     States which has been identified as an economic development 
     center in an approved investment strategy and which has been 
     designated by the Administrator as eligible for financial 
     assistance under this Act in accordance with the provisions 
     of this section.
       ``(3) Local government.--The term `local government' means 
     any city, county, town, parish, village, or other general-
     purpose political subdivision of a State.
       ``(e) Parts of Economic Development Districts Not Within 
     Areas Described in Section 502(a).--The Administrator is 
     authorized to provide the financial assistance which is 
     available to an area described in section 502(a) under this 
     Act to those parts of an economic development district which 
     are not within an area described in section 502(a), when such 
     assistance will be of a substantial direct benefit to an area 
     described in section 502(a) within such district. Such 
     financial assistance shall be provided in the same manner and 
     to the same extent as is provided in this Act for an area 
     described in section 502(a); except that nothing in this 
     subsection shall be construed to permit such parts to receive 
     the increase in the amount of grant assistance authorized in 
     subsection (a)(4).
                       ``TITLE VI--ADMINISTRATION

     ``SEC. 601. APPOINTMENT OF ASSOCIATE ADMINISTRATOR; FULL TIME 
                   EQUIVALENT EMPLOYEES.

       ``(a) Appointment.--The Administrator shall carry out the 
     duties vested in the Administrator by this Act acting through 
     an Associate Administrator of the Small Business 
     Administration, who shall be appointed by the President by 
     and with the advice and consent of the Senate.
       ``(b) Pay.--The Associate Administrator shall be 
     compensated by the Federal Government at the rate prescribed 
     for level V of the Executive Schedule under section 5316 of 
     title 5, United States Code.
       ``(c) Full Time Equivalent Employees.--The Administrator 
     shall assign not to exceed 25 full time equivalent employees 
     of the Small Business Administration (excluding the Associate 
     Administrator) to assist the Administrator in the carrying 
     out the duties vested in the Administrator by this Act.

     ``SEC. 602. REGIONAL COOPERATIVE AGREEMENTS.

       ``(a) In General.--The Administrator shall make grants and 
     carry out such other functions under this Act as the 
     Administrator considers appropriate by entering into 
     cooperative agreements with 1 or more States on 

[[Page H11173]]

     a regional basis. Each State entering into such an agreement 
     shall be represented by the chief executive officer of the 
     State.
       ``(b) Terms and Conditions.--A cooperative agreement 
     entered into under subsection (a) shall include such terms 
     and conditions as the Administrator determines are necessary 
     to carry out the provisions of this Act. Such terms and 
     conditions at a minimum shall provide that no decision 
     concerning regional policies or approval of project or grant 
     applications may be made without the consent of the 
     Administrator and a majority of the States participating in 
     the cooperative agreement.
       ``(c) Participation Not Required.--No State shall be 
     required to enter into a cooperative agreement under this 
     section or to participate in any program established by this 
     Act.

     ``SEC. 603. ADMINISTRATIVE EXPENSES.

       ``(a) Payment by States.--Fifty percent of the 
     administrative expenses incurred by States in participating 
     in a cooperative agreement entered into under section 602 
     shall be paid by such States and the remaining 50 percent of 
     such expenses shall be paid by the Federal Government.
       ``(b) Determination of State Share.--The share of the 
     administrative expenses to be paid by each State 
     participating in a cooperative agreement shall be determined 
     by a majority vote of such States. The Administrator may not 
     participate or vote in such determination.
       ``(c) Delinquent Payments.--No assistance authorized by 
     this Act shall be furnished to any State or to any political 
     subdivision or resident of a State, nor shall the State 
     participate or vote in any decision described in section 
     602(b), while such State is delinquent in the payment of such 
     State's share of the administrative expenses described in 
     subsection (a).

     ``SEC. 604. FEDERAL SHARE.

       ``Except as otherwise expressly provided by this Act, the 
     Federal share of the cost of any project funded with amounts 
     made available under this Act shall not exceed 50 percent of 
     such cost.

     ``SEC. 605. COOPERATION OF FEDERAL AGENCIES.

       ``Each Federal department and agency, in accordance with 
     applicable laws and within the limits of available funds, 
     shall cooperate with the Administrator in order to assist the 
     Administrator in carrying out the functions of the 
     Administrator.

     ``SEC. 606. CONSULTATION WITH OTHER PERSONS AND AGENCIES.

       ``(a) Consultation on Problems Relating to Employment.--The 
     Administrator is authorized from time to time to call 
     together and confer with any persons, including 
     representatives of labor, management, agriculture, and 
     government, who can assist in meeting the problems of area 
     and regional unemployment or underemployment.
       ``(b) Consultation on Administration of Act.--The 
     Administrator may make provisions for such consultation with 
     interested departments and agencies as the Administrator may 
     deem appropriate in the performance of the functions vested 
     in the Administrator by this Act.

     ``SEC. 607. ADMINISTRATION, OPERATION, AND MAINTENANCE.

       ``No Federal assistance shall be approved under this Act 
     unless the Administrator is satisfied that the project for 
     which Federal assistance is granted will be properly and 
     efficiently administered, operated, and maintained.
                       ``TITLE VII--MISCELLANEOUS

     ``SEC. 701. POWERS OF ADMINISTRATOR.

       ``(a) In General.--In performing the Administrator's duties 
     under this Act, the Administrator is authorized to--
       ``(1) adopt, alter, and use a seal, which shall be 
     judicially noticed;
       ``(2) subject to the civil-service and classification laws, 
     select, employ, appoint, and fix the compensation of such 
     personnel as may be necessary to carry out the provisions of 
     this Act;
       ``(3) hold such hearings, sit and act at such times and 
     places, and take such testimony, as the Administrator may 
     deem advisable;
       ``(4) request directly from any executive department, 
     bureau, agency, board, commission, office, independent 
     establishment, or instrumentality information, suggestions, 
     estimates, and statistics needed to carry out the purposes of 
     this Act; and each department, bureau, agency, board, 
     commission, office, establishment, or instrumentality is 
     authorized to furnish such information, suggestions, 
     estimates, and statistics directly to the Administrator;
       ``(5) under regulations prescribed by the Administrator, 
     assign or sell at public or private sale, or otherwise 
     dispose of for cash or credit, in the Administrator's 
     discretion and upon such terms and conditions and for such 
     consideration as the Administrator determines to be 
     reasonable, any evidence of debt, contract, claim, personal 
     property, or security assigned to or held by the 
     Administrator in connection with assistance extended under 
     this Act, and collect or compromise all obligations assigned 
     to or held by the Administrator in connection with such 
     assistance until such time as such obligations may be 
     referred to the Attorney General for suit or collection;
       ``(6) deal with, complete, renovate, improve, modernize, 
     insure, rent, or sell for cash or credit, upon such terms and 
     conditions and for such consideration as the Administrator 
     determines to be reasonable, any real or personal property 
     conveyed to, or otherwise acquired by the Administrator in 
     connection with assistance extended under this Act;
       ``(7) pursue to final collection, by way of compromise or 
     other administrative action, prior to reference to the 
     Attorney General, all claims against third parties assigned 
     to the Administrator in connection with assistance extended 
     this Act;
       ``(8) acquire, in any lawful manner and in accordance with 
     the requirements of the Federal Property and Administrative 
     Services Act of 1949, any property (real, personal, or mixed, 
     tangible or intangible), whenever necessary or appropriate to 
     the conduct of the activities authorized under this Act;
       ``(9) in addition to any powers, functions, privileges, and 
     immunities otherwise vested in the Administrator, take any 
     action, including the procurement of the services of 
     attorneys by contract, determined by the Administrator to be 
     necessary or desirable in making, purchasing, servicing, 
     compromising, modifying, liquidating, or otherwise 
     administratively dealing with assets held in connection with 
     financial assistance extended under this Act;
       ``(10) employ experts and consultants or organizations as 
     authorized by section 3109 of title 5, United States Code, 
     compensate individuals so employed at rates not in excess of 
     $100 per diem, including travel time, and allow them, while 
     away from their homes or regular places of business, travel 
     expenses (including per diem in lieu of subsistence) as 
     authorized by section 5703 of title 5, United States Code, 
     for persons in the Government service employed 
     intermittently, while so employed, except that contracts for 
     such employment may be renewed annually;
       ``(11) sue and be sued in any court of record of a State 
     having general jurisdiction or in any United States district 
     court, and jurisdiction is conferred upon such district court 
     to determine such controversies without regard to the amount 
     in controversy; but no attachment, injunction, garnishment, 
     or other similar process, mesne or final, shall be issued 
     against the Administrator or the Administrator's property;
       ``(12) make discretionary grants, pursuant to authorities 
     otherwise available to the Administrator under this Act and 
     without regard to the requirements of section 504, to 
     implement significant regional initiatives, to take advantage 
     of special development opportunities, or to respond to 
     emergency economic distress in a region from the funds 
     withheld from distribution by the Administrator; except that 
     the aggregate amount of such discretionary grants in any 
     fiscal year may not exceed 10 percent of the amounts 
     appropriated under title VIII for such fiscal year;
       ``(13) allow a State to use not to exceed 5 percent of the 
     total of amounts received by the State in a fiscal year in 
     grants under this Act for reasonable expenses incurred by the 
     State in administering such amounts; and
       ``(14) establish such rules, regulations, and procedures as 
     the Administrator considers appropriate in carrying out the 
     provisions of this Act.
       ``(b) Deficiency Judgments.--The authority under subsection 
     (a)(7) to pursue claims shall include the authority to obtain 
     deficiency judgments or otherwise in the case of mortgages 
     assigned to the Administrator.
       ``(c) Inapplicability of Certain Other Requirements.--
     Section 3709 of the Revised Statutes of the United States 
     shall not apply to any contract of hazard insurance or to any 
     purchase or contract for services or supplies on account of 
     property obtained by the Administrator as a result of 
     assistance extended under this Act if the premium for the 
     insurance or the amount of the insurance does not exceed 
     $1,000.
       ``(d) Powers of Conveyance and Execution.--The power to 
     convey and to execute, in the name of the Administrator, 
     deeds of conveyance, deeds of release, assignments and 
     satisfactions of mortgages, and any other written instrument 
     relating to real or personal property or any interest therein 
     acquired by the Administrator pursuant to the provisions of 
     this Act may be exercised by the Administrator, or by any 
     officer or agent appointed by the Administrator for such 
     purpose, without the execution of any express delegation of 
     power or power of attorney.

     ``SEC. 702. ESTABLISHMENT OF CLEARINGHOUSE.

       ``In carrying out the Administrator's duties under this 
     Act, the Administrator shall ensure that the Small Business 
     Administration--
       ``(1) serves as a central information clearinghouse on 
     matters relating to economic development, economic 
     adjustment, disaster recovery, and defense conversion 
     programs and activities of the Federal and State governments, 
     including political subdivisions of the States; and
       ``(2) helps potential and actual applicants for economic 
     development, economic adjustment, disaster recovery, and 
     defense conversion assistance under Federal, State, and local 
     laws in locating and applying for such assistance, including 
     financial and technical assistance.

     ``SEC. 703. PERFORMANCE MEASURES.

       ``The Administrator shall establish performance measures 
     for grants and other assistance provided under this Act. Such 
     performance measures shall be used to evaluate project 
     proposals and conduct evaluations of projects receiving such 
     assistance.

     ``SEC. 704. MAINTENANCE OF STANDARDS.

       ``The Administrator shall continue to implement and enforce 
     the provisions of section 712 of this Act, as in effect on 
     the day before the effective date specified in section 802.

[[Page H11174]]


     ``SEC. 705. TRANSFER OF FUNCTIONS.

       ``The functions, powers, duties, and authorities and the 
     assets, funds, contracts, loans, liabilities, commitments, 
     authorizations, allocations, and records which are vested in 
     or authorized to be transferred to the Secretary of the 
     Treasury under section 29(b) of the Area Redevelopment Act, 
     and all functions, powers, duties, and authorities under 
     section 29(c) of such Act are hereby vested in the 
     Administrator.

     ``SEC. 706. DEFINITION OF STATE.

       ``In this Act, the terms `State', `States', and `United 
     States' include the several States, the District of Columbia, 
     Puerto Rico, the Virgin Islands, American Samoa, Guam, the 
     Marshall Islands, Micronesia, and the Northern Mariana 
     Islands.

     ``SEC. 707. ANNUAL REPORT TO CONGRESS.

       ``The Administrator shall transmit to Congress a 
     comprehensive and detailed annual report of the 
     Administrator's operations under this Act for each fiscal 
     year beginning with the fiscal year ending September 30, 
     1996. Such report shall be printed and shall be transmitted 
     to Congress not later than April 1 of the year following the 
     fiscal year with respect to which such report is made.

     ``SEC. 708. USE OF OTHER FACILITIES.

       ``(a) Delegation of Functions to Other Federal Departments 
     and Agencies.--The Administrator may delegate to the heads of 
     other departments and agencies of the Federal Government any 
     of the Administrator's functions, powers, and duties under 
     this Act as the Administrator may deem appropriate, and to 
     authorize the redelegation of such functions, powers, and 
     duties by the heads of such departments and agencies.
       ``(b) Department and Agency Execution of Delegated 
     Authority.--Departments and agencies of the Federal 
     Government shall exercise their powers, duties, and functions 
     in such manner as will assist in carrying out the objectives 
     of this Act.
       ``(c) Transfer Between Departments.--Funds authorized to be 
     appropriated under this Act may be transferred between 
     departments and agencies of the Government, if such funds are 
     used for the purposes for which they are specifically 
     authorized and appropriated.
       ``(d) Funds Transferred From Other Departments and 
     Agencies.--In order to carry out the objectives of this Act, 
     the Administrator may accept transfers of funds from other 
     departments and agencies of the Federal Government if the 
     funds are used for the purposes for which (and in accordance 
     with the terms under which) the funds are specifically 
     authorized and appropriated. Such transferred funds shall 
     remain available until expended, and may be transferred to 
     and merged with the appropriations under the heading 
     `salaries and expenses' by the Administrator to the extent 
     necessary to administer the program.

     ``SEC. 709. EMPLOYMENT OF EXPEDITERS AND ADMINISTRATIVE 
                   EMPLOYEES.

       ``No financial assistance shall be extended by the 
     Administrator under this Act to any business enterprise 
     unless the owners, partners, or officers of such business 
     enterprise--
       ``(1) certify to the Administrator the names of any 
     attorneys, agents, and other persons engaged by or on behalf 
     of such business enterprise for the purpose of expediting 
     applications made to the Administrator for assistance of any 
     sort, under this Act, and the fees paid or to be paid to any 
     such person; and
       ``(2) execute an agreement binding such business 
     enterprise, for a period of 2 years after such assistance is 
     rendered by the Administrator to such business enterprise, to 
     refrain from employing, tendering any office or employment 
     to, or retaining for professional services, any person who, 
     on the date such assistance or any part thereof was rendered, 
     or within the 1-year period ending on such date, shall have 
     served as an officer, attorney, agent, or employee, occupying 
     a position or engaging in activities which the Administrator 
     determines involves discretion with respect to the granting 
     of assistance under this Act.

     ``SEC. 710. MAINTENANCE OF RECORDS OF APPROVED APPLICATIONS 
                   FOR FINANCIAL ASSISTANCE; PUBLIC INSPECTION.

       ``(a) Maintenance of Record Required.--The Administrator 
     shall maintain as a permanent part of the records of the 
     Small Business Administration a list of applications approved 
     for financial assistance under this Act, which shall be kept 
     available for public inspection during the regular business 
     hours of the Small Business Administration.
       ``(b) Posting to List.--The following information shall be 
     posted in such list as soon as each application is approved:
       ``(1) The name of the applicant and, in the case of 
     corporate applications, the names of the officers and 
     directors thereof.
       ``(2) The amount and duration of the financial assistance 
     for which application is made.
       ``(3) The purposes for which the proceeds of the financial 
     assistance are to be used.

     ``SEC. 711. RECORDS AND AUDIT.

       ``(a) Recordkeeping and Disclosure Requirements.--Each 
     recipient of assistance under this Act shall keep such 
     records as the Administrator shall prescribe, including 
     records which fully disclose the amount and the disposition 
     by such recipient of the proceeds of such assistance, the 
     total cost of the project or undertaking in connection with 
     which such assistance is given or used, and the amount and 
     nature of that portion of the cost of the project or 
     undertaking supplied by other sources, and such other records 
     as will facilitate an effective audit.
       ``(b) Access to Books for Examination and Audit.--The 
     Administrator and the Comptroller General of the United 
     States, or any of their duly authorized representatives, 
     shall have access for the purpose of audit and examination to 
     any books, documents, papers, and records of the recipient 
     that are pertinent to assistance received under this Act.

     ``SEC. 712. PROHIBITION AGAINST A STATUTORY CONSTRUCTION 
                   WHICH MIGHT CAUSE DIMINUTION IN OTHER FEDERAL 
                   ASSISTANCE.

       ``All financial and technical assistance authorized under 
     this Act shall be in addition to any Federal assistance 
     previously authorized, and no provision of this Act shall be 
     construed as authorizing or permitting any reduction or 
     diminution in the proportional amount of Federal assistance 
     to which any State or other entity eligible under this Act 
     would otherwise be entitled under the provisions of any other 
     Act.

     ``SEC. 713. ACCEPTANCE OF APPLICANTS' CERTIFICATIONS.

       ``The Administrator may accept, when deemed appropriate, 
     the applicants' certifications to meet the requirements of 
     this Act.
                 ``TITLE VIII--FUNDING; EFFECTIVE DATE

     ``SEC. 801. AUTHORIZATION OF APPROPRIATIONS

       ``There is authorized to be appropriated to carry out this 
     Act $340,000,000 per fiscal year for each of fiscal years 
     1996, 1997, 1998, 1999, and 2000. Such sums shall remain 
     available until expended.

     ``SEC. 802. EFFECTIVE DATE.

       ``The effective date specified in this section is the 
     abolishment date specified in section 17101(c) of the 
     Department of Commerce Dismantling Act.''.
       (b) Conforming Amendments to Title 5.--Section 5316 of 
     title 5, United States Code, is amended--
       (1) by striking ``Associate Administrators of the Small 
     Business Administration (4)'' and inserting ``Associate 
     Administrators of the Small Business Administration (5)''; 
     and
       (2) by striking ``Administrator for Economic 
     Development.''.
       (c) GAO Study.--On or before December 30, 1996, the 
     Comptroller General shall submit to Congress a plan or plans 
     for consolidating economic development programs throughout 
     the Federal Government. The plan or plans shall focus on, but 
     not be limited to, consolidating programs included in the 
     Catalogue of Federal Domestic Assistance with similar 
     purposes and target populations. The plan or plans shall 
     detail how consolidation can lead to improved grant or 
     program management, improvements in achieving program goals, 
     and reduced costs.

     SEC. 17202. TECHNOLOGY ADMINISTRATION.

       (a) Technology Administration.--
       (1) General rule.--Except as otherwise provided in this 
     section, the Technology Administration is terminated.
       (2) Office of technology policy.--The Office of Technology 
     Policy is terminated.
       (b) National Institute of Standards and Technology.--
       (1) Redesignation.--The National Institute of Standards and 
     Technology is hereby redesignated as the National Bureau of 
     Standards, and all references to the National Institute of 
     Standards and Technology in Federal law or regulations are 
     deemed to be references to the National Bureau of Standards.
       (2) General rule.--The National Bureau of Standards (in 
     this subsection referred to as the ``Bureau'') is transferred 
     to the National Institute for Science and Technology, 
     established under section 17207.
       (3) Functions of director.--Except as otherwise provided in 
     this section or section 17208, upon the transfer under 
     paragraph (2), the Director of the Bureau shall perform all 
     functions relating to the Bureau that, immediately before the 
     effective date specified in section 17209(a), were functions 
     of the Secretary of Commerce or the Under Secretary of 
     Commerce for Technology.
       (c) National Technical Information Service.--
       (1) Privatization.--All functions of the National Technical 
     Information Service are transferred to the Director of the 
     Office of Management and Budget for privatization in 
     accordance with section 17109 before the end of the 18-month 
     period beginning on the date of the enactment of this Act.
       (2) Transfer to national institute for science and 
     technology.--If an appropriate arrangement for the 
     privatization of functions of the National Technical 
     Information Service under paragraph (1) has not been made 
     before the end of the period described in that paragraph, the 
     National Technical Information Service shall be transferred 
     as of the end of such period to the National Institute for 
     Science and Technology established by section 17207.
       (3) Government corporation.--If an appropriate arrangement 
     for privatization of functions of the National Technical 
     Information Service under paragraph (1) has not been made 
     before the end of the period described in that paragraph, the 
     Director of the Office of Management and Budget shall, within 
     6 months after the end of such period, submit to Congress a 
     proposal for legislation to establish the National Technical 
     Information Service as a wholly owned Government corporation. 
     The proposal should provide for the corporation to perform 
     substantially the same functions that, as of the date of 
     enactment of this Act, are performed by the National 
     Technical Information Service.

[[Page H11175]]

       (4) Funding.--No funds are authorized to be appropriated 
     for the National Technical Information Service or any 
     successor corporation established pursuant to a proposal 
     under paragraph (3).
       (d) Amendments.--
       (1) National institute of standards and technology act.--
     The National Institute of Standards and Technology Act (15 
     U.S.C. 271 et seq.) is amended--
       (A) in section 2(b), by striking paragraph (1) and 
     redesignating paragraphs (2) through (11) as paragraphs (1) 
     through (10), respectively;
       (B) in section 2(d), by striking ``, including the programs 
     established under sections 25, 26, and 28 of this Act'';
       (C) in section 10, by striking ``Advanced'' in both the 
     section heading and subsection (a), and inserting in lieu 
     thereof ``Standards and''; and
       (D) by striking sections 24, 25, 26, and 28.
       (2) Stevenson-wydler technology innovation act of 1980.--
     The Stevenson-Wydler Technology Innovation Act of 1980 (15 
     U.S.C. 3701 et seq.) is amended--
       (A) in section 3, by striking paragraph (2) and 
     redesignating paragraphs (3) through (5) as paragraphs (2) 
     through (4), respectively;
       (B) in section 4, by striking paragraphs (1), (4), and (13) 
     and redesignating paragraphs (2), (3), (5), (6), (7), (8), 
     (9), (10), (11), and (12) as paragraphs (1) through (10), 
     respectively;
       (C) by striking sections 5, 6, 7, 8, 9, and 10;
       (D) in section 11--
       (i) by striking ``, the Federal Laboratory Consortium for 
     Technology Transfer,'' in subsection (c)(3);
       (ii) by striking ``and the Federal Laboratory Consortium 
     for Technology Transfer'' in subsection (d)(2);
       (iii) by striking ``, and refer such requests'' and all 
     that follows through ``available to the Service'' in 
     subsection (d)(3); and
       (iv) by striking subsection (e); and
       (E) in section 17--
       (i) by striking ``Subject to paragraph (2), separate'' in 
     subsection (c)(1) and inserting in lieu thereof ``Separate'';
       (ii) by striking paragraph (2) of subsection (c) and 
     redesignating paragraph (3) as paragraph (2);
       (iii) by striking ``funds to carry out'' in subsection (f), 
     and inserting in lieu thereof ``funds only to pay the salary 
     of the Director of the Office of Quality Programs, who shall 
     be responsible for carrying out''; and
       (iv) by adding at the end the following new subsection:
       ``(h) Voluntary and Uncompensated Services.--The Director 
     of the Office of Quality Programs may accept voluntary and 
     uncompensated services notwithstanding the provisions of 
     section 1342 of title 31, United States Code.''.
       (3) Miscellaneous amendments.--Section 3 of Public Law 94-
     168 (15 U.S.C. 205b) is amended--
       (A) by striking paragraph (2);
       (B) by redesignating paragraphs (3) and (4) as paragraphs 
     (2) and (3), respectively; and
       (C) in paragraph (3), as so redesignated by subparagraph 
     (B) of this paragraph, by striking ``in nonbusiness 
     activities''.

     SEC. 17203. REORGANIZATION OF THE BUREAU OF THE CENSUS.

       (a) Provisions Relating to Interim Period.--
       (1) Functions of the secretary of commerce.--During the 6-
     month period beginning on the abolishment date specified in 
     section 17101(c), the Director of the Office of Management 
     and Budget shall perform all functions that, immediately 
     before such effective date, were functions of the Secretary 
     of Commerce under title 13, United States Code.
       (2) Reorganization authority under section 17104(f) not to 
     apply.--Section 17104(f) shall not apply with respect to the 
     Bureau of the Census or any function to be performed by the 
     appropriate official pursuant to paragraph (1).
       (b) Transfer of Functions.--
       (1) In general.--Notwithstanding any provision of section 
     17209, effective as of the first day following the end of the 
     6-month period referred to in subsection (a)(1)--
       (A) the Bureau of the Census shall be transferred to the 
     Department of Labor; and
       (B) all functions that, immediately before such first day, 
     were functions of the Director of the Office of Management 
     and Budget by reason of subsection (a)(1) shall be 
     transferred to the Secretary of Labor.
       (2) Continuation of service of the director of the 
     census.--The individual serving as the Director of the Census 
     at the end of the 6-month period referred to in subsection 
     (a)(1) may continue serving in that capacity, after the end 
     of such period, until a successor has taken office.
       (c) Amendments.--Effective as of the first day following 
     the end of the 6-month period referred to in subsection 
     (a)(1)--
       (1) Transfer of the bureau of the census to the department 
     of labor.--(A) Section 2 of title 13, United States Code, is 
     amended by striking ``is continued as'' through the period 
     and inserting ``is an agency within, and under the 
     jurisdiction of, the Department of Labor.''.
       (B) Subsection (e) of section 12 of the Act of February 14, 
     1903 (15 U.S.C. 1511(e)) is repealed.
       (2) Definition of secretary.--Title 13, United States Code, 
     is amended in section 1(2) by striking ``Secretary of 
     Commerce'' and inserting ``Secretary of Labor''.
       (3) References to the department of commerce.--Title 13, 
     United States Code, is amended in sections 4, 9(a), 23(b), 
     24(e), 44, 103, 132, 211, 213(b)(2), 221, 222, 223, 224, 
     225(a), and 241 by striking ``Department of Commerce'' each 
     place it appears and inserting ``Department of Labor''.
       (4) References to the secretary of commerce.--(A) Section 
     304(a) of title 13, United States Code, is amended by 
     striking ``Secretary of Commerce'' and inserting ``Secretary 
     of Labor''.
       (B)(i) Section 401(a) of title 13, United States Code, is 
     amended by striking ``Secretary of Commerce'' and inserting 
     ``Secretary''.
       (ii) Section 8(e) of the Foreign Direct Investment and 
     International Financial Data Improvements Act of 1990 (22 
     U.S.C. 3144(e)) is amended by striking ``Secretary of 
     Commerce'' and inserting ``Secretary of Labor''.
       (iii) Section 401(a) of title 13, United States Code, is 
     amended by striking ``Department of Commerce'' and inserting 
     ``Federal Reserve System''.
       (5) Compensation for the position of director of the 
     census.--Section 5315 of title 5, United States Code, as 
     amended by section 17108(e)(7), is further amended by 
     striking ``Census.'' and inserting ``Census, Department of 
     Labor.''.
       (6) Confidentiality.--Section 9 of title 13, United States 
     Code, is amended by adding at the end the following:
       ``(c)(1) Nothing in subsection (a)(3) shall be considered 
     to permit the disclosure of any matter or information to an 
     officer or employee of the Department of Labor who is not 
     referred to in subchapter II if, immediately before the start 
     of the 6-month period referred to in section 17203(a)(1) of 
     the Department of Commerce Dismantling Act, such disclosure 
     (if then made by an officer or employee of the Department of 
     Commerce) would have been impermissible under this section 
     (as then in effect).
       ``(2) Paragraph (1) shall not apply with respect to any 
     disclosure made to the Secretary.''.
       (d) Sense of the Congress.--It is the sense of the Congress 
     that the Bureau of the Census should--
       (1) make appropriate use of any authority afforded to it by 
     the Census Address List Improvement Act of 1994 (Public Law 
     103-430; 108 Stat. 4393), and take measures to ensure the 
     timely implementation of such Act; and
       (2) streamline census questionnaires to promote savings in 
     the collection and tabulation of data.
       (e) Rule of Construction.--For purposes of subtitle E, the 
     reorganization of the Bureau of the Census pursuant to 
     subsections (b) and (c) shall be treated as if it involved a 
     transfer of functions.

     SEC. 17204. BUREAU OF ECONOMIC ANALYSIS.

       (a) In General.--(1) The functions of the Bureau of 
     Economic Analysis are transferred to the Secretary of Labor.
       (2) All functions which, immediately before such date, are 
     functions of the Secretary of Commerce with respect to the 
     Bureau of Economic Analysis are transferred to the Secretary 
     of Labor.
       (b) Consolidation With the Bureau of Labor Statistics.--The 
     Secretary of Labor shall consolidate the functions 
     transferred under subsection (a) with the Bureau of Labor 
     Statistics within the Department of Labor.
       (c) Reports.--Not later than 18 months after the date of 
     the enactment of this Act, the Secretary of Labor, after 
     consultation with the Director of the Office of Management 
     and Budget, shall submit to the Congress a written report 
     on--
       (1) the availability of any private sector resources that 
     may be capable of performing any or all of the functions of 
     the Bureau of Economic Analysis, and the feasibility of 
     having any such functions so performed; and
       (2) the feasibility of implementing a system under which 
     fees may be assessed by the Bureau of Economic Analysis in 
     order to defray the costs of any services performed by the 
     Bureau of Economic Analysis, when such services are performed 
     other than on behalf of the Federal Government or an agency 
     or instrumentality thereof.
       (d) Rule of Construction.--For purposes of subtitle E, the 
     reorganization of the Bureau of Economic Analysis under this 
     section shall be treated as if it involved a transfer of 
     functions.
       (e) Limitation on Annual Obligations and Expenditures for 
     Continued Functions.--
       (1) In general.--Except as provided in paragraph (2), for 
     each fiscal year that begins on or after the effective date 
     of this section, the total of amounts obligated or expended 
     by the United States each fiscal year for performance of 
     functions which immediately before the date of the enactment 
     of this Act were authorized to be performed by the Secretary 
     of Commerce with respect to the Bureau of Economic Analysis, 
     or by or an agency, officer, or employee of the Department of 
     Commerce with respect to that bureau, may not exceed 75 
     percent of the total of amounts obligated or expended by the 
     United States for performance of such functions for fiscal 
     year 1995.
       (2) Exception.--Paragraph (1) shall not apply to 
     obligations or expenditures incurred as a direct consequence 
     of the termination, transfer, or other disposition of 
     funtions pursuant to this section.
       (3) Rule of construction.--This subsection shall take 
     precedence over any other provision of law unless such 
     provision explicitly refers to this section and makes an 
     exception to it.
       (4) Responsibilities of the director of the office of 
     management and budget.-- 

[[Page H11176]]

     The Director of the Office of Management and Budget shall--
       (A) ensure compliance with the requirements of this 
     subsection; and
       (B) include in each report under sections 17106(a) and (b) 
     a description of actions taken to comply with such 
     requirements.

     SEC. 17205. TERMINATED FUNCTIONS OF NTIA.

       (a) Repeals.--The following provisions of law are repealed:
       (1) Subpart A of part IV of title III of the Communications 
     Act of 1934 (47 U.S.C. 390 et seq.), relating to assistance 
     for public telecommunications facilities.
       (2) Subpart B of part IV of title III of the Communications 
     Act of 1934 (47 U.S.C. 394 et seq.), relating to the 
     Endowment for Children's Educational Television.
       (3) Subpart C of part IV of title III of the Communications 
     Act of 1934 (47 U.S.C. 395 et seq.), relating to 
     Telecommunications Demonstration grants.
       (b) Disposal of NTIA Laboratories.--
       (1) Privatization.--All laboratories of the National 
     Telecommunications and Information Administration are 
     transferred to the Director of the Office of Management and 
     Budget for privatization in accordance with section 17109.
       (2) Transfer of functions.--The functions of the National 
     Telecommunications and Information Administration concerning 
     research and analysis of the electromagnetic spectrum 
     described in section 5112(b) of the Omnibus Trade and 
     Competitiveness Act of 1988 (15 U.S.C. 1532) are transferred 
     to the Director of the National Bureau of Standards.
       (c) Transfer of National Telecommunications and Information 
     Administration Functions.--
       (1) Transfer to ustr.--Except as provided in subsection 
     (b)(2), the functions of the National Telecommunications and 
     Information Administration, and of the Secretary of Commerce 
     and the Assistant Secretary for Communications and 
     Information of the Department of Commerce with respect to the 
     National Telecommunications and Information Administration, 
     are transferred to the United States Trade Representative.
       (2) References.--References in any provision of law 
     (including the National Telecommunications and Information 
     Administration Organization Act) to the Secretary of Commerce 
     or the Assistant Secretary for Communications and Information 
     of the Department of Commerce--
       (A) with respect to a function vested pursuant to this 
     section in the United States Trade Representative shall be 
     deemed to refer to the United States Trade Representative; 
     and
       (B) with respect to a function vested pursuant to this 
     section in the Director of the National Bureau of Standards 
     shall be deemed to refer to the Director of the National 
     Bureau of Standards.
       (3) Termination of ntia.--Effective on the abolishment date 
     specified in section 17101(c), the National 
     Telecommunications and Information Administration is 
     abolished.

     SEC. 17206. NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION.

       (a) Termination of Miscellaneous Research Programs and 
     Accounts.--
       (1) In general.--No funds may be appropriated in any fiscal 
     year for the following programs and accounts of the National 
     Oceanic and Atmospheric Administration:
       (A) The National Undersea Research Program.
       (B) The Fleet Modernization Program.
       (C) The Charleston, South Carolina, Special Management 
     Plan.
       (D) Chesapeake Bay Observation Buoys (as of September 30, 
     1996).
       (E) Federal/State Weather Modification Grants.
       (F) The Southeast Storm Research Account.
       (G) The Southeast United States Caribbean Fisheries 
     Oceanographic Coordinated Investigations Program.
       (H) National Institute for Environmental Renewal.
       (I) The Lake Champlain Study.
       (J) The Maine Marine Research Center.
       (K) The South Carolina Cooperative Geodetic Survey Account.
       (L) Pacific Island Technical Assistance.
       (M) Sea Grant Oyster Disease Account.
       (N) Sea Grant Zebra Mussel Account.
       (O) VENTS program.
       (P) National Weather Service non-Federal, non-wildfire 
     Weather Service.
       (Q) National Weather Service Regional Climate Centers.
       (R) National Weather Service Samoa Weather Forecast Office 
     Repair and Upgrade Account.
       (S) Dissemination of Weather Charts (Marine Facsimile 
     Service).
       (T) The Climate and Global Change Account.
       (U) The Global Learning and Observations to Benefit the 
     Environment Program.
       (V) Great Lakes nearshore research.
       (W) Mussel watch.
       (2) Repeals.--The following provisions of law are repealed:
       (A) The Ocean Thermal Conversion Act of 1980 (42 U.S.C. 
     9101 et seq.).
       (B) Title IV of the Marine Protection, Research, and 
     Sanctuaries Act of 1972 (16 U.S.C. 1447 et seq.).
       (C) Title V of the Marine Protection, Research, and 
     Sanctuaries Act of 1972 (33 U.S.C. 2801 et seq.).
       (D) The Great Lakes Shoreline Mapping Act of 1987 (33 
     U.S.C. 883a note).
       (E) The Great Lakes Fish and Wildlife Tissue Bank Act (16 
     U.S.C. 943 et seq.).
       (F) The Nonindigenous Aquatic Nuisance Prevention and 
     Control Act of 1990 (16 U.S.C. 4701 et seq.), except for 
     those provisions affecting the Assistant Secretary of the 
     Army (civil works) and the Secretary of the department in 
     which the Coast Guard is operating.
       (G) Section 3 of the Sea Grant Program Improvement Act of 
     1976 (33 U.S.C. 1124a).
       (H) Section 208(c) of the National Sea Grant College 
     Program Act (33 U.S.C. 1127(c)).
       (I) Section 305 of the Coastal Zone Management Act of 1972 
     (16 U.S.C. 1454) is repealed effective October 1, 1998.
       (J) The NOAA Fleet Modernization Act (33 U.S.C. 891 et 
     seq.).
       (K) Public Law 85-342 (72 Stat. 35; 16 U.S.C. 778 et seq.), 
     relating to fish research and experimentation.
       (L) The first section of the Act of August 8, 1956 (70 
     Stat. 1126; 16 U.S.C. 760d), relating to grants for 
     commercial fishing education.
       (M) Public Law 86-359 (16 U.S.C. 760e et seq.), relating to 
     the study of migratory marine gamefish.
       (N) The Act of August 15, 1914 (Chapter 253; 38 Stat. 692; 
     16 U.S.C. 781 et seq.), prohibiting the taking of sponges in 
     the Gulf of Mexico and the Straits of Florida.
       (b) Aeronautical Mapping and Charting.--
       (1) In general.--The aeronautical mapping and charting 
     functions of the National Oceanic and Atmospheric 
     Administration are transferred to the Defense Mapping Agency.
       (2) Termination of certain functions.--The Defense Mapping 
     Agency shall terminate any functions transferred under 
     paragraph (1) that are performed by the private sector.
       (3) Functions requested by federal aviation 
     administration.--(A) Notwithstanding paragraph (2), the 
     Director of the Defense Mapping Agency shall carry out such 
     aeronautical charting functions as may be requested by the 
     Administrator of the Federal Aviation Administration.
       (B) In carrying out aeronautical mapping functions 
     requested by the Administrator under subparagraph (A), the 
     Director shall--
       (i) publish and distribute to the public and to the 
     Administrator any aeronautical charts requested by the 
     Administrator; and
       (ii) provide to the Administrator such other air traffic 
     control products and services as may be requested by the 
     Administrator,

     in such manner and including such information as the 
     Administrator determines is necessary for, or will promote, 
     the safe and efficient movement of aircraft in air commerce.
       (4) Continuing applicability.--The requirements of section 
     1307 of title 44, United States Code, shall continue to apply 
     with respect to all aeronautical products created or 
     published by the Director of the Defense Mapping Agency in 
     carrying out the functions transferred to the Director under 
     this paragraph; except that the prices for such products 
     shall be established jointly by the Director and the 
     Secretary of Transportation on an annual basis.
       (c) Transfer of Mapping, Charting, and Geodesy Functions to 
     the United States Geological Survey.--
       (1) In general.--Except as provided in subsection (b), 
     there are hereby transferred to the Director of the United 
     States Geological Survey the functions relating to mapping, 
     charting, and geodesy authorized under the Act of August 7, 
     1947 (61 Stat. 787; 33 U.S.C. 883a).
       (2) Termination of certain functions.--The Director of the 
     United States Geological Survey shall terminate any functions 
     transferred under paragraph (1) that are performed by the 
     private sector.
       (d) NESDIS.--There are transferred to the National 
     Institute for Science and Technology all functions and assets 
     of the National Oceanic and Atmospheric Administration that 
     on the date immediately before the effective date of this 
     section were authorized to be performed by the National 
     Environmental Satellite, Data, and Information System.
       (e) OAR.--There are transferred to the National Institute 
     for Science and Technology all functions and assets of the 
     National Oceanic and Atmospheric Administration (including 
     global programs) that on the date immediately before the 
     effective date of this section were authorized to be 
     performed by the Office of Oceanic and Atmospheric Research.
       (f) NWS.--
       (1) In general.--There are transferred to the National 
     Institute for Science and Technology all functions and assets 
     of the National Oceanic and Atmospheric Administration that 
     on the date immediately before the effective date of this 
     section were authorized to be performed by the National 
     Weather Service.
       (2) Duties.--To protect life and property and enhance the 
     national economy, the Administrator of Science and 
     Technology, through the National Weather Service, except as 
     outlined in paragraph (3), shall be responsible for the 
     following:
       (A) Forecasts. The Administrator of Science and Technology, 
     through the National Weather Service, shall serve as the sole 
     official source of severe weather warnings.
       (B) Issuance of storm warnings.
       (C) The collection, exchange, and distribution of 
     meteorological, hydrological, climatic, and oceanographic 
     data and information.

[[Page H11177]]

       (D) The preparation of hydro-meteorological guidance and 
     core forecast information.
       (3) Limitations on competition.--The National Weather 
     Service may not compete, or assist other entities to compete, 
     with the private sector to provide a service when that 
     service is currently provided or can be provided by a 
     commercial enterprise unless--
       (A) the Administrator of Science and Technology finds that 
     the private sector is unwilling or unable to provide the 
     service; or
       (B) the Administrator of Science and Technology finds that 
     the service provides vital weather warnings and forecasts for 
     the protection of lives and property of the general public.
       (4) Organic act amendments.--
       (A) Amendments.--The Act of 1890 is amended--
       (i) by striking section 3 (15 U.S.C. 313); and
       (ii) in section 9 (15 U.S.C. 317), by striking ``Department 
     of'' and all that follows thereafter and inserting ``National 
     Institute for Science and Technology.''.
       (B) Definition.--For purposes of this paragraph, the term 
     ``Act of 1890'' means the Act entitled ``An Act to increase 
     the efficiency and reduce the expenses of the Signal Corps of 
     the Army, and to transfer the Weather Bureau to the 
     Department of Agriculture'', approved October 1, 1890 (26 
     Stat. 653).
       (5) Repeal.--Sections 706 and 707 of the Weather Service 
     Modernization Act (15 U.S.C. 313 note) are repealed.
       (6) Conforming Amendments.--The Weather Service 
     Modernization Act (15 U.S.C. 313 note) is amended--
       (A) in section 702, by striking paragraph (3) and 
     redesignating paragraphs (4) through (10) as paragraphs (3) 
     through (9), respectively; and
       (B) in section 703--
       (i) by striking ``(a) National Implementation Plan.--'';
       (ii) by striking paragraph (3) and redesignating paragraphs 
     (4), (5), and (6) as paragraphs (3), (4), and (5), 
     respectively; and
       (iii) by striking subsections (b) and (c).
       (g) Termination of the National Oceanic and Atmospheric 
     Administration Corps of Commissioned Officers.--
       (1) Number of officers.--Notwithstanding section 8 of the 
     Act of June 3, 1948 (33 U.S.C. 853g), the total number of 
     commissioned officers on the active list of the National 
     Oceanic and Atmospheric Administration shall not exceed 358 
     for fiscal year 1996. No commissioned officers are authorized 
     for any fiscal year after fiscal year 1996.
       (2) Separation pay.--(A) Commissioned officers may be 
     separated from the active list of the National Oceanic and 
     Atmospheric Administration. Any officer so separated because 
     of paragraph (1) shall, subject to subparagraph (B) and the 
     availability of appropriations, be eligible for separation 
     pay under section 9 of the Act of June 3, 1948 (33 U.S.C. 
     853h) to the same extent as if such officer had been 
     separated under section 8 of such Act (33 U.S.C. 853g).
       (B) Any officer who, under paragraph (4), transfers to 
     another of the uniformed services or becomes employed in a 
     civil service position shall not be eligible for separation 
     pay under this paragraph.
       (C)(i) Any officer who receives separation pay under this 
     paragraph shall be required to repay the amount received if, 
     within 1 year after the date of the separation on which the 
     payment is based, such officer is reemployed in a civil 
     service position in the National Oceanic and Atmospheric 
     Administration, the duties of which position would formerly 
     have been performed by a commissioned officer, as determined 
     by the Administrator of the National Oceanic and Atmospheric 
     Administration.
       (ii) A repayment under this subparagraph shall be made in a 
     lump sum or in such installments as the Administrator may 
     specify.
       (D) In the case of any officer who makes a repayment under 
     subparagraph (C)--
       (i) the National Oceanic and Atmospheric Administration 
     shall pay into the Civil Service Retirement and Disability 
     Fund, on such officer's behalf, any deposit required under 
     section 8422(e)(1) of title 5, United States Code, with 
     respect to any prior service performed by that individual as 
     such an officer; and
       (ii) if the amount paid under clause (i) is less than the 
     amount of the repayment under subparagraph (C), the National 
     Oceanic and Atmospheric Administration shall pay into the 
     Government Securities Investment Fund (established under 
     section 8438(b)(1)(A) of title 5, United States Code), on 
     such individual's behalf, an amount equal to the difference.

     The provisions of paragraph (5)(C)(iv) shall apply with 
     respect to any contribution to the Thrift Savings Plan made 
     under clause (ii).
       (3) Priority placement program.--A priority placement 
     program similar to the programs described in section 3329b of 
     title 5, United States Code, as amended by section 17110, 
     shall be established by the National Oceanic and Atmospheric 
     Administration to assist commissioned officers who are 
     separated from the active list of the National Oceanic and 
     Atmospheric Administration because of paragraph (1).
       (4) Transfer.--(A) Subject to the approval of the Secretary 
     of Defense and under terms and conditions specified by the 
     Secretary, commissioned officers subject to paragraph (1) may 
     transfer to the Armed Forces under section 716 of title 10, 
     United States Code.
       (B) Subject to the approval of the Secretary of 
     Transportation and under terms and conditions specified by 
     the Secretary, commissioned officers subject to paragraph (1) 
     may transfer to the United States Coast Guard under section 
     716 of title 10, United States Code.
       (C) Subject to the approval of the Administrator of the 
     National Oceanic and Atmospheric Administration and under 
     terms and conditions specified by that Administrator, 
     commissioned officers subject to paragraph (1) may be 
     employed by the National Oceanic and Atmospheric 
     Administration as members of the civil service.
       (5) Retirement provisions.--(A) For commissioned officers 
     who transfer under paragraph (4)(A) to the Armed Forces, the 
     National Oceanic and Atmospheric Administration shall pay 
     into the Department of Defense Military Retirement Fund an 
     amount, to be calculated by the Secretary of Defense in 
     consultation with the Secretary of the Treasury, equal to 
     the actuarial present value of any retired or retainer pay 
     they will draw upon retirement, including full credit for 
     service in the NOAA Corps. Any payment under this 
     subparagraph shall, for purposes of paragraph (2) of 
     section 17207(g), be considered to be an expenditure 
     described in such paragraph.
       (B) For commissioned officers who transfer under paragraph 
     (4)(B) to the United States Coast Guard, full credit for 
     service in the NOAA Corps shall be given for purposes of any 
     annuity or other similar benefit under the retirement system 
     for members of the United States Coast Guard, entitlement to 
     which is based on the separation of such officer.
       (C)(i) For a commissioned officer who becomes employed in a 
     civil service position pursuant to paragraph (4)(C) and 
     thereupon becomes subject to the Federal Employees' 
     Retirement System, the National Oceanic and Atmospheric 
     Administration shall pay, on such officer's behalf--
       (I) into the Civil Service Retirement and Disability Fund, 
     the amounts required under clause (ii); and
       (II) into the Government Securities Investment Fund, the 
     amount required under clause (iii).
       (ii)(I) The amount required under this subclause is the 
     amount of any deposit required under section 8422(e)(1) of 
     such title 5 with respect to any prior service performed by 
     the individual as a commissioned officer of the National 
     Oceanic and Atmospheric Administration.
       (II) To determine the amount required under this subclause, 
     first determine, for each year of service with respect to 
     which the deposit under subclause (I) relates, the product of 
     the normal-cost percentage for such year (as determined under 
     the last sentence of this subclause) multiplied by basic pay 
     received by the individual for any such service performed in 
     such year. Second, take the sum of the amounts determined for 
     the respective years under the first sentence. Finally, 
     subtract from such sum the amount of the deposit under 
     subclause (I). For purposes of the first sentence, the 
     normal-cost percentage for any year shall be as determined 
     for such year under the provisions of section 8423(a)(1) of 
     title 5, United States Code, except that, in the case of any 
     year before the first year for which any normal-cost 
     percentage was determined under such provisions, the normal-
     cost percentage for such first year shall be used.
       (iii) The amount required under this clause is the amount 
     by which the separation pay to which the officer would have 
     been entitled under the second sentence of paragraph (2)(A) 
     (assuming the conditions for receiving such separation pay 
     have been met) exceeds the amount of the deposit under clause 
     (ii)(I), if at all.
       (iv)(I) Any contribution made under this subparagraph to 
     the Thrift Savings Plan shall not be subject to any otherwise 
     applicable limitation on contributions contained in the 
     Internal Revenue Code of 1986, and shall not be taken into 
     account in applying any such limitation to other 
     contributions or benefits under the Thrift Savings Plan, with 
     respect to the year in which the contribution is made.
       (II) Such plan shall not be treated as failing to meet any 
     nondiscrimination requirement by reason of the making of such 
     contribution.
       (6) Repeals.--(A) The following provisions of law are 
     repealed:
       (i) The Coast and Geodetic Survey Commissioned Officers' 
     Act of 1948 (33 U.S.C. 853a-853o, 853p-853u).
       (ii) The Act of February 16, 1929 (Chapter 221, section 5; 
     45 Stat. 1187; 33 U.S.C. 852a).
       (iii) The Act of January 19, 1942 (Chapter 6; 56 Stat. 6).
       (iv) Section 9 of Public Law 87-649 (76 Stat. 495).
       (v) The Act of May 22, 1917 (Chapter 20, section 16; 40 
     Stat. 87; 33 U.S.C. 854 et seq.).
       (vi) The Act of December 3, 1942 (Chapter 670; 56 Stat. 
     1038.
       (vii) Sections 1 through 5 of Public Law 91-621 (84 Stat. 
     1863; 33 U.S.C. 857-1 et seq.).
       (viii) The Act of August 10, 1956 (Chapter 1041, section 3; 
     70A Stat. 619; 33 U.S.C. 857a).
       (ix) The Act of May 18, 1920 (Chapter 190, section 11; 41 
     Stat. 603; 33 U.S.C. 864).
       (x) The Act of July 22, 1947 (Chapter 286; 61 Stat. 400; 33 
     U.S.C. 873, 874).
       (xi) The Act of August 3, 1956 (Chapter 932; 70 Stat. 988; 
     33 U.S.C. 875, 876).
       (xii) All other Acts inconsistent with this subsection.

[[Page H11178]]

     No repeal under this subparagraph shall affect any annuity or 
     other similar benefit payable, under any provision of law so 
     repealed, based on the separation of any individual from the 
     NOAA Corps on or before September 30, 1996. Any authority 
     exercised by the Secretary of Commerce or his designee with 
     respect to any such benefits shall be exercised by the 
     Administrator of the National Oceanic and Atmospheric 
     Administration, and any authorization of appropriations 
     relating to those benefits, which is in effect as of 
     September 30, 1996, shall be considered to have remained in 
     effect.
       (B) The effective date of the repeals under subparagraph 
     (A) shall be October 1, 1996.
       (7) Creditability of noaa service for purposes relating to 
     reductions in force.--A commissioned officer who is separated 
     from the active list of the National Oceanic and Atmospheric 
     Administration because of paragraph (1) shall, for purposes 
     of any subsequent reduction in force, receive credit for any 
     period of service performed as such an officer before 
     separation from such list to the same extent and in the same 
     manner as if it had been a period of active service in the 
     Armed Forces.
       (8) Abolition.--The Office of the National Oceanic and 
     Atmospheric Administration Corps of Operations and the 
     Commissioned Personnel Center are abolished effective 
     September 30, 1996.
       (h) NOAA Fleet.--
       (1) Service contracts.--Notwithstanding any other provision 
     of law and subject to the availability of appropriations, the 
     Administrator of the National Institute for Science and 
     Technology shall enter into contracts, including multiyear 
     contracts, subject to paragraph (3), for the use of vessels 
     to conduct oceanographic research and fisheries research, 
     monitoring, enforcement, and management, and to acquire other 
     data necessary to carry out the missions of the National 
     Oceanic and Atmospheric Administration. The Administrator of 
     the National Institute for Science and Technology shall enter 
     into these contracts unless--
       (A) the cost of the contract is more than the cost 
     (including the cost of vessel operation, maintenance, and all 
     personnel) to the National Oceanic and Atmospheric 
     Administration of obtaining those services on vessels of the 
     National Oceanic and Atmospheric Administration;
       (B) the contract is for more than 7 years; or
       (C) the data is acquired through a vessel agreement 
     pursuant to paragraph (4).
       (2) Vessels.--The Administrator of the National Institute 
     for Science and Technology may not enter into any contract 
     for the construction, lease-purchase, upgrade, or service 
     life extension of any vessel.
       (3) Multiyear contracts.--
       (A) In general.--Subject to subparagraphs (B) and (C), and 
     notwithstanding section 1341 of title 31, United States Code, 
     and section 11 of title 41, United States Code, the 
     Administrator of the National Institute for Science and 
     Technology may acquire data under multiyear contracts.
       (B) Required findings.--The Administrator of the National 
     Institute for Science and Technology may not enter into a 
     contract pursuant to this paragraph unless such Administrator 
     finds with respect to that contract that there is a 
     reasonable expectation that throughout the contemplated 
     contract period the Administrator will request from Congress 
     funding for the contract at the level required to avoid 
     contract termination.
       (C) Required provisions.--The Administrator of the National 
     Institute for Science and Technology may not enter into a 
     contract pursuant to this paragraph unless the contract 
     includes--
       (i) a provision under which the obligation of the United 
     States to make payments under the contract for any fiscal 
     year is subject to the availability of appropriations 
     provided in advance for those payments;
       (ii) a provision that specifies the term of effectiveness 
     of the contract; and
       (iii) appropriate provisions under which, in case of any 
     termination of the contract before the end of the term 
     specified pursuant to clause (ii), the United States shall 
     only be liable for the lesser of--

       (I) an amount specified in the contract for such a 
     termination; or
       (II) amounts that were appropriated before the date of the 
     termination for the performance of the contract or for 
     procurement of the type of acquisition covered by the 
     contract and are unobligated on the date of the termination.

       (4) Vessel agreements.--The Administrator of the National 
     Institute for Science and Technology shall use excess 
     capacity of University National Oceanographic Laboratory 
     System vessels where appropriate and may enter into memoranda 
     of agreement with the operators of these vessels to carry out 
     this requirement.
       (5) Transfer of excess vessels.--The Administrator of the 
     National Institute for Science and Technology shall transfer 
     any vessels that are excess to the needs of the National 
     Oceanic and Atmospheric Administration to the National 
     Defense Reserve Fleet. Notwithstanding any other provision of 
     law, these vessels may be scrapped in accordance with section 
     510(i) of the Merchant Marine Act, 1936 (46 App. U.S.C. 
     1160(i)).
       (i) National Marine Fisheries Service.--(1) There are 
     transferred to the National Institute for Science and 
     Technology all functions that on the day before the effective 
     date of this section were authorized by law to be performed 
     by the National Marine Fisheries Service.
       (2) Notwithstanding any other provision of law, the 
     National Marine Fisheries Service may not affect on-land 
     activities under the Endangered Species Act of 1973 for 
     salmon recovery in the State of Idaho (16 U.S.C. 1531 et 
     seq.).
       (j) National Ocean Service.--Except as otherwise provided 
     in this title, there are transferred to the National 
     Institute for Science and Technology all functions and assets 
     of the National Oceanic and Atmospheric Administration that 
     on the date immediately before the effective date of this 
     section were authorized to be performed by the National Ocean 
     Service (including the Coastal Ocean Program).
       (k) Transfer of Coastal Nonpoint Pollution Control 
     Functions.--There are transferred to the Administrator of the 
     Environmental Protection Agency the functions under section 
     6217 of the Omnibus Budget Reconciliation Act of 1990 (16 
     U.S.C. 1455b) that on the day before the effective date of 
     this section were vested in the Secretary of Commerce.

     SEC. 17207. NATIONAL INSTITUTE FOR SCIENCE AND TECHNOLOGY.

       (a) Establishment.--There is established as an independent 
     agency in the Executive Branch the National Institute for 
     Science and Technology (in this section referred to as the 
     ``Institute''). The Institute, and all functions and offices 
     transferred to it under this title, shall be administered 
     under the supervision and direction of an Administrator of 
     Science and Technology. The Administrator of Science and 
     Technology shall be appointed by the President, by and with 
     the advice and consent of the Senate, and shall receive basic 
     pay at the rate payable for level II of the Executive 
     Schedule under section 5313 of title 5, United States Code.
       (b) Principal Officers.--There shall be in the Institute, 
     on the transfer of functions and offices under this title--
       (1) an Administrator of the National Oceanic and 
     Atmospheric Administration, who shall be appointed by the 
     President, by and with the advice and consent of the Senate, 
     and who shall receive basic pay at the rate payable for level 
     III of the Executive Schedule under section 5314 of title 5, 
     United States Code; and
       (2) a Director of the National Bureau of Standards, who 
     shall be appointed by the President, by and with the advice 
     and consent of the Senate, and who shall receive basic pay at 
     the rate payable for level IV of the Executive Schedule under 
     section 5315 of title 5, United States Code.
       (c) Additional Officers.--There shall be in the Institute--
       (1) a Chief Financial Officer of the Institute, to be 
     appointed by the President, by and with the advice and 
     consent of the Senate;
       (2) a Chief of External Affairs, to be appointed by the 
     President, by and with the advice and consent of the Senate;
       (3) a General Counsel, to be appointed by the President, by 
     and with the advice and consent of the Senate; and
       (4) an Inspector General, to be appointed in accordance 
     with the Inspector General Act of 1978.

     Each Officer appointed under this subsection shall receive 
     basic pay at the rate payable for level IV of the Executive 
     Schedule under section 5315 of title 5, United States Code.
       (d) Transfer of Functions and Offices.--Except as otherwise 
     provided in this title, there are transferred to the 
     Institute--
       (1) the National Oceanic and Atmospheric Administration, 
     along with its functions and offices, as provided in section 
     17206;
       (2) the National Bureau of Standards, along with its 
     functions and offices, as provided in section 17202; and
       (3) the Office of Space Commerce, along with its functions 
     and offices.
       (e) Elimination of Positions.--The Administrator of Science 
     and Technology may eliminate positions that are no longer 
     necessary because of the termination of functions under this 
     section, section 17202, and section 17206.
       (f) Agency Terminations.--
       (1) Terminations.--On the date specified in section 
     17209(a), the following shall terminate:
       (A) The Office of the Deputy Administrator and Assistant 
     Secretary of the National Oceanic and Atmospheric 
     Administration.
       (B) The Office of the Deputy Under Secretary of the 
     National Oceanic and Atmospheric Administration.
       (C) The Office of the Chief Scientist of the National 
     Oceanic and Atmospheric Administration.
       (D) The position of Deputy Assistant Secretary for Oceans 
     and Atmosphere.
       (E) The position of Deputy Assistant Secretary for 
     International Affairs.
       (F) Any office of the National Oceanic and Atmospheric 
     Administration or the National Bureau of Standards whose 
     primary purpose is to perform high performance computing 
     communications, legislative, personnel, public relations, 
     budget, constituent, intergovernmental, international, policy 
     and strategic planning, sustainable development, 
     administrative, financial, educational, legal and 
     coordination functions. These functions shall, as necessary, 
     be performed only by officers described in subsection (c).
       (G) The position of Associate Director of the National 
     Institute of Standards and Technology.

[[Page H11179]]

       (2) Termination of executive schedule positions.--Each 
     position which was expressly authorized by law, or the 
     incumbent of which was authorized to receive compensation at 
     the rate prescribed for levels I through V of the Executive 
     Schedule under sections 5312 through 5315 of title 5, United 
     States Code, in an office terminated pursuant to this 
     section, section 17202, and section 17206 shall also 
     terminate.
       (g) Funding Reductions Resulting From Reorganization.--
       (1) Funding reductions.--For each fiscal year that begins 
     on or after the effective date of this section, the amount 
     obligated or expended by the United States in performing all 
     functions vested in the National Institute for Science and 
     Technology pursuant to this subtitle may not exceed 75 
     percent of the total of the amounts obligated or expended by 
     the United States in performing, during fiscal year 1995, all 
     functions vested in the National Oceanic and Atmospheric 
     Administration, the National Institute of Standards and 
     Technology, and the Office of Space Commerce, except for 
     those functions transferred under section 17206 to agencies 
     or departments other than the National Institute for Science 
     and Technology.
       (2) Exception.--Paragraph (1) shall not apply to 
     obligations or expenditures incurred as a direct consequence 
     of the termination, transfer, or other disposition of 
     functions described in paragraph (1) pursuant to this 
     subtitle.
       (3) Rule of construction.--This subsection shall take 
     precedence over any other provision of law unless such 
     provision explicitly refers to this section and makes an 
     exception to it.
       (4) Responsibilities of the director of the office of 
     management and budget.--The Director of the Office of 
     Management and Budget shall--
       (A) ensure compliance with the requirements of this 
     subsection; and
       (B) include in each report under section 17106 (a) and (b) 
     of this title a description of actions taken to comply with 
     such requirements.

     SEC. 17208. MISCELLANEOUS TERMINATIONS; MORATORIUM ON PROGRAM 
                   ACTIVITIES.

       (a) Terminations.--The following agencies and programs of 
     the Department of Commerce are terminated:
       (1) The Minority Business Development Administration.
       (2) The United States Travel and Tourism Administration.
       (3) The programs and activities of the National 
     Telecommunications and Information Administration referred to 
     in section 17205(a).
       (4) The Advanced Technology Program under section 28 of the 
     National Institute of Standards and Technology Act (15 U.S.C. 
     278n).
       (5) The Manufacturing Extension Programs under sections 25 
     and 26 of the National Institute of Standards and Technology 
     Act (15 U.S.C. 278k and 278l).
       (6) The National Institute of Standards and Technology 
     METRIC Program.
       (b) Moratorium on Program Activities.--The authority to 
     make grants, enter into contracts, provide assistance, incur 
     obligations, or provide commitments (including any 
     enlargement of existing obligations or commitments, except if 
     required by law) with respect to the agencies and programs 
     described in subsection (a) is terminated effective on the 
     date of the enactment of this title.

     SEC. 17209. EFFECTIVE DATE.

       (a) In General.--Except as provided in subsection (b), this 
     subtitle shall take effect on the abolishment date specified 
     in section 17101(c).
       (b) Provisions Effective on Date of Enactment.--The 
     following provisions of this subtitle shall take effect on 
     the date of the enactment of this Act:
       (1) Section 17201.
       (2) Section 17206(g), except as otherwise provided in that 
     section.
       (3) Section 17208(b).
       (4) This section.
        Subtitle C--Office of United States Trade Representative

                     CHAPTER 1--GENERAL PROVISIONS

     SEC. 17301. DEFINITIONS.

       For purposes of this subtitle--
       (1) the term ``Office'' means the Office of the United 
     States Trade Representative;
       (2) the term ``Federal agency'' has the meaning given to 
     the term ``agency'' by section 551(1) of title 5, United 
     States Code; and
       (3) the term ``USTR'' means the United States Trade 
     Representative as provided for under section 17311.

        CHAPTER 2--OFFICE OF UNITED STATES TRADE REPRESENTATIVE

                      Subchapter A--Establishment

     SEC. 17311. ESTABLISHMENT OF THE OFFICE.

       (a) In General.--The Office of the United States Trade 
     Representative is established as an independent establishment 
     in the executive branch of Government as defined under 
     section 104 of title 5, United States Code. The United States 
     Trade Representative shall be the head of the Office and 
     shall be appointed by the President, by and with the advice 
     and consent of the Senate.
       (b) Ambassador Status.--The USTR shall have the rank and 
     status of Ambassador and shall represent the United States in 
     all trade negotiations conducted by the Office.
       (c) Continued Service of Current USTR.--The individual 
     serving as United States Trade Representative on the date 
     immediately preceding the effective date of this subtitle may 
     continue to serve as USTR under subsection (a).
       (d) Successor to the Department of Commerce.--The Office 
     shall be the successor to the Department of Commerce for 
     purposes of protocol.

     SEC. 17312. FUNCTIONS OF THE USTR.

       (a) In General.--In addition to the functions transferred 
     to the USTR by this subtitle, such other functions as the 
     President may assign or delegate to the USTR, and such other 
     functions as the USTR may, after the effective date of this 
     subtitle, be required to carry out by law, the USTR shall--
       (1) serve as the principal advisor to the President on 
     international trade policy and advise the President on the 
     impact of other policies of the United States Government on 
     international trade;
       (2) exercise primary responsibility, with the advice of the 
     interagency organization established under section 242 of the 
     Trade Expansion Act of 1962, for developing and implementing 
     international trade policy, including commodity matters and, 
     to the extent related to international trade policy, direct 
     investment matters and, in exercising such responsibility, 
     advance and implement, as the primary mandate of the Office, 
     the goals of the United States to--
       (A) maintain United States leadership in international 
     trade liberalization and expansion efforts;
       (B) reinvigorate the ability of the United States economy 
     to compete in international markets and to respond flexibly 
     to changes in international competition; and
       (C) expand United States participation in international 
     trade through aggressive promotion and marketing of goods and 
     services that are products of the United States;
       (3) exercise lead responsibility for the conduct of 
     international trade negotiations, including negotiations 
     relating to commodity matters and, to the extent that such 
     negotiations are related to international trade, direct 
     investment negotiations;
       (4) exercise lead responsibility for the establishment of a 
     national export strategy, including policies designed to 
     implement such strategy;
       (5) with the advice of the interagency organization 
     established under section 242 of the Trade Expansion Act of 
     1962, issue policy guidance to other Federal agencies on 
     international trade, commodity, and direct investment 
     functions to the extent necessary to assure the coordination 
     of international trade policy;
       (6) seek and promote new opportunities for United States 
     products and services to compete in the world marketplace;
       (7) assist small businesses in developing export markets;
       (8) enforce the laws of the United States relating to 
     trade;
       (9) analyze economic trends and developments;
       (10) report directly to the Congress--
       (A) on the administration of, and matters pertaining to, 
     the trade agreements program under the Omnibus Trade and 
     Competitiveness Act of 1988, the Trade Act of 1974, the Trade 
     Expansion Act of 1962, section 350 of the Tariff Act of 1930, 
     and any other provision of law enacted after this Act; and
       (B) with respect to other important issues pertaining to 
     international trade;
       (11) keep each official adviser to the United States 
     delegations to international conferences, meetings, and 
     negotiation sessions relating to trade agreements who is 
     appointed from the Committee on Finance of the Senate or the 
     Committee on Ways and Means of the House of Representatives 
     under section 161 of the Trade Act of 1974 currently informed 
     on United States negotiating objectives with respect to trade 
     agreements, the status of negotiations in progress with 
     respect to such agreements, and the nature of any changes in 
     domestic law or the administration thereof which the USTR may 
     recommend to the Congress to carry out any trade agreement;
       (12) consult and cooperate with State and local governments 
     and other interested parties on international trade matters 
     of interest to such governments and parties, and to the 
     extent related to international trade matters, on investment 
     matters, and, when appropriate, hold informal public 
     hearings;
       (13) serve as the principal advisor to the President on 
     Government policies designed to contribute to enhancing the 
     ability of United States industry and services to compete in 
     international markets;
       (14) develop recommendations for national strategies and 
     specific policies intended to enhance the productivity and 
     international competitiveness of United States industries;
       (15) serve as the principal advisor to the President in 
     identifying and assessing the consequences of any Government 
     policies that adversely affect, or have the potential to 
     adversely affect, the international competitiveness of United 
     States industries and services;
       (16) promote cooperation between business, labor, and 
     Government to improve industrial performance and the ability 
     of United States industries to compete in international 
     markets and to facilitate consultation and communication 
     between the Government and the private sector about domestic 
     industrial performance and prospects and the performance and 
     prospects of foreign competitors; and
       (17) monitor and enforce foreign government compliance with 
     international trade 

[[Page H11180]]

     agreements to protect United States interests.
       (b) Interagency Organization.--The USTR shall be the 
     chairperson of the interagency organization established under 
     section 242 of the Trade Expansion Act of 1962.
       (c) National Security Council.--The USTR shall be a member 
     of the National Security Council.
       (d) Advisory Council.--The USTR shall be Deputy Chairman of 
     the National Advisory Council on International Monetary and 
     Financial Policies established under Executive Order 11269, 
     issued February 14, 1966.
       (e) Agriculture.--(1) The USTR shall consult with the 
     Secretary of Agriculture or the designee of the Secretary of 
     Agriculture on all matters that potentially involve 
     international trade in agricultural products.
       (2) If an international meeting for negotiation or 
     consultation includes discussion of international trade in 
     agricultural products, the USTR or the designee of the USTR 
     shall be Chairman of the United States delegation to such 
     meeting and the Secretary of Agriculture or the designee of 
     such Secretary shall be Vice Chairman. The provisions of this 
     paragraph shall not limit the authority of the USTR under 
     subsection (h) to assign to the Secretary of Agriculture 
     responsibility for the conduct of, or participation in, any 
     trade negotiation or meeting.
       (f) Trade Promotion.--The USTR shall be the chairperson of 
     the Trade Promotion Coordinating Committee.
       (g) National Economic Council.--The USTR shall be a member 
     of the National Economic Council established under Executive 
     Order No. 12835, issued January 25, 1993.
       (h) International Trade Negotiations.--Except where 
     expressly prohibited by law, the USTR, at the request or with 
     the concurrence of the head of any other Federal agency, may 
     assign the responsibility for conducting or participating in 
     any specific international trade negotiation or meeting to 
     the head of such agency whenever the USTR determines that the 
     subject matter of such international trade negotiation is 
     related to the functions carried out by such agency.

                         Subchapter B--Officers

     SEC. 17321. DEPUTY ADMINISTRATOR OF THE OFFICE.

       (a) Establishment.--There shall be in the Office the Deputy 
     Administrator of the Office of the United States Trade 
     Representative, who shall be appointed by the President, by 
     and with the advice and consent of the Senate.
       (b) Absence, Disability, or Vacancy of USTR.--The Deputy 
     Administrator of the Office of the United States Trade 
     Representative shall act for and exercise the functions of 
     the USTR during the absence or disability of the USTR or in 
     the event the office of the USTR becomes vacant. The Deputy 
     Administrator shall act for and exercise the functions of the 
     USTR until the absence or disability of the USTR no longer 
     exists or a successor to the USTR has been appointed by the 
     President and confirmed by the Senate.
       (c) Functions of Deputy Administrator.--The Deputy 
     Administrator of the Office of the United States Trade 
     Representative shall exercise all functions, under the 
     direction of the USTR, transferred to or established in the 
     Office, except those functions exercised by the Deputy United 
     States Trade Representatives, the Director General for Export 
     Promotion, the Inspector General, and the General Counsel of 
     the Office, as provided by this subtitle.

     SEC. 17322. DEPUTY UNITED STATES TRADE REPRESENTATIVES.

       (a) Establishment.--There shall be in the Office 2 Deputy 
     United States Trade Representatives, who shall be appointed 
     by the President, by and with the advice and consent of the 
     Senate. The Deputy United States Trade Representatives shall 
     exercise all functions under the direction of the USTR, and 
     shall include--
       (1) the Deputy United States Trade Representative for 
     Negotiations; and
       (2) the Deputy United States Trade Representative to the 
     World Trade Organization.
       (b) Functions of Deputy United States Trade 
     Representatives.--(1) The Deputy United States Trade 
     Representative for Negotiations shall exercise all functions 
     transferred under section 17331 and shall have the rank and 
     status of Ambassador.
       (2) The Deputy United States Trade Representative to the 
     World Trade Organization shall exercise all functions 
     relating to representation to the World Trade Organization 
     and shall have the rank and status of Ambassador.

     SEC. 17323. ASSISTANT ADMINISTRATORS.

       (a) Establishment.--There shall be in the Office 3 
     Assistant Administrators, who shall be appointed by the 
     President, by and with the advice and consent of the Senate. 
     The Assistant Administrators shall exercise all functions 
     under the direction of the Deputy Administrator of the Office 
     of the United States Trade Representative and include--
       (1) the Assistant Administrator for Export Administration;
       (2) the Assistant Administrator for Import Administration; 
     and
       (3) the Assistant Administrator for Trade and Policy 
     Analysis.
       (b) Functions of Assistant Administrators.--(1) The 
     Assistant Administrator for Export Administration shall 
     exercise all functions transferred under section 17332(1)(C).
       (2) The Assistant Administrator for Import Administration 
     shall exercise all functions transferred under section 
     17332(1)(D).
       (3) The Assistant Administrator for Trade and Policy 
     Analysis shall exercise all functions transferred under 
     section 17332(1)(B) and all functions transferred under 
     section 17332(2).

     SEC. 17324. DIRECTOR GENERAL FOR EXPORT PROMOTION.

       (a) Establishment.--There shall be a Director General for 
     Export Promotion, who shall be appointed by the President, by 
     and with the advice and consent of the Senate.
       (b) Functions.--The Director General for Export Promotion 
     shall exercise, under the direction of the USTR, all 
     functions transferred under sections 17332(1)(A) (relating to 
     functions of the United States and Foreign Commercial 
     Service) and 17333 and shall have the rank and status of 
     Ambassador.

     SEC. 17325. GENERAL COUNSEL.

       There shall be in the Office a General Counsel, who shall 
     be appointed by the President, by and with the advice and 
     consent of the Senate. The General Counsel shall provide 
     legal assistance to the USTR concerning the activities, 
     programs, and policies of the Office.

     SEC. 17326. INSPECTOR GENERAL.

       There shall be in the Office an Inspector General who shall 
     be appointed in accordance with the Inspector General Act of 
     1978, as amended by section 17371(b) of this Act.

     SEC. 17327. CHIEF FINANCIAL OFFICER.

       There shall be in the Office a Chief Financial Officer who 
     shall be appointed in accordance with section 901 of title 
     31, United States Code, as amended by section 17371(e) of 
     this Act. The Chief Financial Officer shall perform all 
     functions prescribed by the Deputy Administrator of the 
     Office of the United States Trade Representative, under the 
     direction of the Deputy Administrator.

                 Subchapter C--Transfers to the Office

     SEC. 17331. OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE.

       There are transferred to the USTR all functions of the 
     United States Trade Representative and the Office of the 
     United States Trade Representative in the Executive Office of 
     the President and all functions of any officer or employee of 
     such Office.

     SEC. 17332. TRANSFERS FROM THE DEPARTMENT OF COMMERCE.

       There are transferred to the USTR the following functions:
       (1) All functions of, and all functions performed under the 
     direction of, the following officers and employees of the 
     Department of Commerce:
       (A) The Under Secretary of Commerce for International 
     Trade, and the Director General of the United States and 
     Foreign Commercial Service, relating to all functions 
     exercised by the Service.
       (B) The Assistant Secretary of Commerce for International 
     Economic Policy and the Assistant Secretary of Commerce for 
     Trade Development.
       (C) The Under Secretary of Commerce for Export 
     Administration.
       (D) The Assistant Secretary of Commerce for Import 
     Administration.
       (2) All functions of the Secretary of Commerce relating to 
     the National Trade Data Bank.
       (3) All functions of the Secretary of Commerce under the 
     Tariff Act of 1930, the Uruguay Round Agreements Act, the 
     Trade Act of 1974, and other trade-related Acts for which 
     responsibility is not otherwise assigned under this subtitle.

     SEC. 17333. TRADE AND DEVELOPMENT AGENCY.

       There are transferred to the Director General for Export 
     Promotion all functions of the Director of the Trade and 
     Development Agency. There are transferred to the Office of 
     the Director General for Export Promotion all functions of 
     the Trade and Development Agency.

     SEC. 17334. EXPORT-IMPORT BANK.

       (a) In General.--(1) There are transferred to the USTR all 
     functions of the Secretary of Commerce relating to the 
     Export-Import Bank of the United States.
       (2) Section 3(c)(1) of the Export-Import Bank Act of 1945 
     (12 U.S.C. 635a(c)(1)) is amended to read as follows:
       ``(c)(1) There shall be a Board of Directors of the Bank 
     consisting of the United States Trade Representative (who 
     shall serve as Chairman), the President of the Export-Import 
     Bank of the United States (who shall serve as Vice Chairman), 
     the first Vice President, and 2 additional persons appointed 
     by the President of the United States, by and with the advice 
     and consent of the Senate.''.
       (b) Ex Officio Member of Export-Import Bank Board of 
     Directors.--The Director General for Export Promotion shall 
     serve as an ex officio nonvoting member of the Board of 
     Directors of the Export-Import Bank.
       (c) Amendments to Related Banking and Trade Acts.--Section 
     2301(h) of the Omnibus Trade and Competitiveness Act of 1988 
     (15 U.S.C. 4721(h)) is amended to read as follows:
       ``(h) Assistance to Export-Import Bank.--The Commercial 
     Service shall provide such services as the Director General 
     for Export Promotion of the Office of the United States Trade 
     Representative determines necessary to assist the Export-
     Import Bank of the United States to carry out the lending, 
     loan guarantee, insurance, and other activities of the 
     Bank.''.

     SEC. 17335. OVERSEAS PRIVATE INVESTMENT CORPORATION.

       (a) Board of Directors.--The second and third sentences of 
     section 233(b) of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2193(b)) 

[[Page H11181]]

     are amended to read as follows: ``The United States Trade 
     Representative shall be the Chairman of the Board. The 
     Administrator of the Agency for International Development 
     (who shall serve as Vice Chairman) shall serve on the 
     Board.''.
       (b) Ex Officio Member of Overseas Private Investment 
     Corporation Board of Directors.--The Director General for 
     Export Promotion shall serve as an ex officio nonvoting 
     member of the Board of Directors of the Overseas Private 
     Investment Corporation.

     SEC. 17336. CONSOLIDATION OF EXPORT PROMOTION AND FINANCING 
                   ACTIVITIES.

       (a) Submission of Plan.--Within 180 days after the date of 
     the enactment of this Act, the President shall transmit to 
     the Congress a comprehensive plan to consolidate Federal 
     nonagricultural export promotion activities and export 
     financing activities and to transfer those functions to the 
     Office. The plan shall provide for--
       (1) the elimination of the overlap and duplication among 
     all Federal nonagricultural export promotion activities and 
     export financing activities;
       (2) a unified budget for Federal nonagricultural export 
     promotion activities which eliminates funding for the areas 
     of overlap and duplication identified under paragraph (1); 
     and
       (3) a long-term agenda for developing better cooperation 
     between local, State and Federal programs and activities 
     designed to stimulate or assist United States businesses in 
     exporting nonagricultural goods or services that are products 
     of the United States, including sharing of facilities, costs, 
     and export market research data.
       (b) Plan Elements.--The plan under subsection (a) shall--
       (1) place all Federal nonagricultural export promotion 
     activities and export financing activities within the Office;
       (2) provide clear authority for the USTR to use the 
     expertise and assistance of other United States Government 
     agencies;
       (3) achieve an overall 25 percent reduction in the amount 
     of funding for all Federal nonagricultural export promotion 
     activities within 2 years after the enactment of this Act; 
     and
       (4) include any functions of the Department of Commerce not 
     transferred by this subtitle, or of other Federal departments 
     the transfer of which to the Office would be necessary to the 
     competitiveness of the United States in international trade.
       (c) Definition.--As used in this section, the term 
     ``Federal nonagricultural export promotion activities'' means 
     all programs or activities of any department or agency of the 
     Federal Government (including, but not limited to, 
     departments and agencies with representatives on the Trade 
     Promotion Coordinating Committee established under section 
     2312 of the Export Enhancement Act of 1988 (15 U.S.C. 4727)) 
     that are designed to stimulate or assist United States 
     businesses in exporting nonagricultural goods or services 
     that are products of the United States, including trade 
     missions.

     SEC. 17337. ADDITIONAL TRADE FUNCTIONS.

       (a) Termination of Authorizations of Appropriations.--
       (1) NAFTA secretariat.--Section 105(b) of the North 
     American Free Trade Agreement Implementation Act (19 U.S.C. 
     3315(b)) is amended by striking ``each fiscal year after 
     fiscal year 1993'' and inserting ``each of fiscal years 1994 
     and 1995''.
       (2) Border environment cooperation commission.--Section 
     533(a)(2) of the North American Free Trade Agreement 
     Implementation Act (19 U.S.C. 3473(a)(2)) is amended by 
     striking ``and each fiscal year thereafter'' and inserting 
     ``fiscal year 1995''.
       (b) Functions Related to Textile Agreements.--
       (1) Functions of cita.--(A) Subject to subparagraph (B), 
     those functions delegated to the Committee for the 
     Implementation of Textile Agreements established under 
     Executive Order 11651 (7 U.S.C. 1854 note) (hereafter in this 
     subsection referred to as ``CITA'') are transferred to the 
     USTR.
       (B) Those functions delegated to CITA that relate to the 
     assessment of the impact of textile imports on domestic 
     industry are transferred to the International Trade 
     Commission.
       (2) Abolition of cita.--CITA is abolished.

                Subchapter D--Administrative Provisions

     SEC. 17341. PERSONNEL PROVISIONS.

       (a) Appointments.--The USTR may appoint and fix the 
     compensation of such officers and employees, including 
     investigators, attorneys, and administrative law judges, as 
     may be necessary to carry out the functions of the USTR and 
     the Office. Except as otherwise provided by law, such 
     officers and employees shall be appointed in accordance with 
     the civil service laws and their compensation fixed in 
     accordance with title 5, United States Code.
       (b) Positions Above GS-15.--(1) At the request of the USTR, 
     the Director of the Office of Personnel Management shall, 
     under section 5108 of title 5, United States Code, provide 
     for the establishment in a grade level above GS-15 of the 
     General Service, and in the Senior Executive Service, of a 
     number of positions in the Office equal to the number of 
     positions in that grade level which were used primarily for 
     the performance of functions and offices transferred by this 
     subtitle and which were assigned and filled on the day before 
     the effective date of this subtitle.
       (2) Appointments to positions provided for under this 
     subsection may be made without regard to the provisions of 
     section 3324 of title 5, United States Code, if the 
     individual appointed in such position is an individual who is 
     transferred in connection with the transfer of functions and 
     offices under this subtitle and, on the day before the 
     effective date of this subtitle, holds a position and 
     has duties comparable to those of the position to which 
     appointed under this subsection.
       (3) The authority under this subsection with respect to any 
     position established at a grade level above GS-15 shall 
     terminate when the person first appointed to fill such 
     position ceases to hold such position.
       (4) For purposes of section 414(a)(3)(A) of the Civil 
     Service Reform Act of 1978, an individual appointed under 
     this subsection shall be deemed to occupy the same position 
     as the individual occupied on the day before the effective 
     date of this subtitle.
       (c) Experts and Consultants.--The USTR may obtain the 
     services of experts and consultants in accordance with 
     section 3109 of title 5, United States Code, and compensate 
     such experts and consultants for each day (including 
     traveltime) at rates not in excess of the maximum rate of pay 
     for a position above GS-15 of the General Schedule under 
     section 5332 of such title. The USTR may pay experts and 
     consultants who are serving away from their homes or regular 
     place of business travel expenses and per diem in lieu of 
     subsistence at rates authorized by sections 5702 and 5703 of 
     such title for persons in Government service employed 
     intermittently.
       (d) Voluntary Services.--(1)(A) The USTR is authorized to 
     accept voluntary and uncompensated services without regard to 
     the provisions of section 1342 of title 31, United States 
     Code, if such services will not be used to displace Federal 
     employees employed on a full-time, part-time, or seasonal 
     basis.
       (B) The USTR is authorized to accept volunteer service in 
     accordance with the provisions of section 3111 of title 5, 
     United States Code.
       (2) The USTR is authorized to provide for incidental 
     expenses, including but not limited to transportation, 
     lodging, and subsistence for individuals who provide 
     voluntary services under subparagraph (A) or (B) of paragraph 
     (1).
       (3) An individual who provides voluntary services under 
     paragraph (1)(A) shall not be considered a Federal employee 
     for any purpose other than for purposes of chapter 81 of 
     title 5, United States Code, relating to compensation for 
     work injuries, and chapter 171 of title 28, United States 
     Code, relating to tort claims.
       (e) Foreign Service Positions.--In order to assure United 
     States representation in trade matters at a level 
     commensurate with the level of representation maintained by 
     industrial nations which are major trade competitors of the 
     United States, the Secretary of State shall classify certain 
     positions at Foreign Service posts as commercial minister 
     positions and shall assign members of the Foreign Service 
     performing functions of the Office, with the concurrence of 
     the USTR, to such positions in nations which are major trade 
     competitors of the United States. The Secretary of State 
     shall obtain and use the recommendations of the USTR with 
     respect to the number of positions to be so classified under 
     this subsection.

     SEC. 17342. DELEGATION AND ASSIGNMENT.

       Except where otherwise expressly prohibited by law or 
     otherwise provided by this subtitle, the USTR may delegate 
     any of the functions transferred to the USTR by this subtitle 
     and any function transferred or granted to the USTR after the 
     effective date of this subtitle to such officers and 
     employees of the Office as the USTR may designate, and may 
     authorize successive redelegations of such functions as may 
     be necessary or appropriate. No delegation of functions by 
     the USTR under this section or under any other provision of 
     this subtitle shall relieve the USTR of responsibility for 
     the administration of such functions.

     SEC. 17343. SUCCESSION.

       (a) Order of Succession.--Subject to the authority of the 
     President, and except as provided in section 17321(b), the 
     USTR shall prescribe the order by which officers of the 
     Office who are appointed by the President, by and with the 
     advice and consent of the Senate, shall act for, and perform 
     the functions of, the USTR or any other officer of the Office 
     appointed by the President, by and with the advice and 
     consent of the Senate, during the absence or disability of 
     the USTR or such other officer, or in the event of a vacancy 
     in the office of the USTR or such other officer.
       (b) Continuation.--Notwithstanding any other provision of 
     law, and unless the President directs otherwise, an 
     individual acting for the USTR or another officer of the 
     Office pursuant to subsection (a) shall continue to serve in 
     that capacity until the absence or disability of the USTR or 
     such other officer no longer exists or a successor to the 
     USTR or such other officer has been appointed by the 
     President and confirmed by the Senate.

     SEC. 17344. REORGANIZATION.

       (a) In General.--Subject to subsection (b), the USTR is 
     authorized to allocate or reallocate functions among the 
     officers of the Office, and to establish, consolidate, alter, 
     or discontinue such organizational entities in the Office as 
     may be necessary or appropriate.

[[Page H11182]]

       (b) Exception.--The USTR may not exercise the authority 
     under subsection (a) to establish, consolidate, alter, or 
     discontinue any organizational entity in the Office or 
     allocate or reallocate any function of an officer or employee 
     of the Office that is inconsistent with any specific 
     provision of this subtitle.

     SEC. 17345. RULES.

       The USTR is authorized to prescribe, in accordance with the 
     provisions of chapters 5 and 6 of title 5, United States 
     Code, such rules and regulations as the USTR determines 
     necessary or appropriate to administer and manage the 
     functions of the USTR or the Office.

     SEC. 17346. FUNDS TRANSFER.

       The USTR may, when authorized in an appropriation Act in 
     any fiscal year, transfer funds from one appropriation to 
     another within the Office, except that no appropriation for 
     any fiscal year shall be either increased or decreased by 
     more than 10 percent and no such transfer shall result in 
     increasing any such appropriation above the amount authorized 
     to be appropriated therefor.

     SEC. 17347. CONTRACTS, GRANTS, AND COOPERATIVE AGREEMENTS.

       (a) In General.--Subject to the provisions of the Federal 
     Property and Administrative Services Act of 1949, the USTR 
     may make, enter into, and perform such contracts, leases, 
     cooperative agreements, grants, or other similar transactions 
     with public agencies, private organizations, and persons, and 
     make payments (in lump sum or installments, and by way of 
     advance or reimbursement, and, in the case of any grant, with 
     necessary adjustments on account of overpayments and 
     underpayments) as the USTR considers necessary or appropriate 
     to carry out the functions of the USTR or the Office.
       (b) Exception.--Notwithstanding any other provision of this 
     subtitle, the authority to enter into contracts or to make 
     payments under this subchapter shall be effective only to 
     such extent or in such amounts as are provided in advance in 
     appropriation Acts. This subsection does not apply with 
     respect to the authority granted under section 17349.

     SEC. 17348. USE OF FACILITIES.

       (a) Use by USTR.--With their consent, the USTR, with or 
     without reimbursement, may use the research, services, 
     equipment, and facilities of--
       (1) an individual,
       (2) any public or private nonprofit agency or organization, 
     including any agency or instrumentality of the United States 
     or of any State, the District of Columbia, the Commonwealth 
     of Puerto Rico, or any territory or possession of the United 
     States,
       (3) any political subdivision of any State, the District of 
     Columbia, the Commonwealth of Puerto Rico, or any territory 
     or possession of the United States, or
       (4) any foreign government,

     in carrying out any function of the USTR or the Office.
       (b) Use of USTR Facilities.--The USTR, under terms, at 
     rates, and for periods that the USTR considers to be in the 
     public interest, may permit the use by public and private 
     agencies, corporations, associations or other organizations, 
     or individuals, of any real property, or any facility, 
     structure or other improvement thereon, under the custody of 
     the USTR. The USTR may require permittees under this section 
     to maintain or recondition, at their own expense, the real 
     property, facilities, structures, and improvements used by 
     such permittees.

     SEC. 17349. GIFTS AND BEQUESTS.

       (a) In General.--The USTR is authorized to accept, hold, 
     administer, and utilize gifts and bequests of property, both 
     real and personal, for the purpose of aiding or facilitating 
     the work of the Office. Gifts and bequests of money and the 
     proceeds from sales of other property received as gifts or 
     bequests shall be deposited in the United States Treasury in 
     a separate fund and shall be disbursed on order of the USTR. 
     Property accepted pursuant to this subsection, and the 
     proceeds thereof, shall be used as nearly as possible in 
     accordance with the terms of the gift or bequest.
       (b) Tax Treatment.--For the purpose of Federal income, 
     estate, and gift taxes, and State taxes, property accepted 
     under subsection (a) shall be considered a gift or bequest to 
     or for the use of the United States.
       (c) Investment.--Upon the request of the USTR, the 
     Secretary of the Treasury may invest and reinvest in 
     securities of the United States or in securities guaranteed 
     as to principal and interest by the United States any moneys 
     contained in the fund provided for in subsection (a). Income 
     accruing from such securities, and from any other property 
     held by the USTR pursuant to subsection (a), shall be 
     deposited to the credit of the fund, and shall be disbursed 
     upon order of the USTR.

     SEC. 17350. WORKING CAPITAL FUND.

       (a) Establishment.--The USTR is authorized to establish for 
     the Office a working capital fund, to be available without 
     fiscal year limitation, for expenses necessary for the 
     maintenance and operation of such common administrative 
     services as the USTR shall find to be desirable in the 
     interest of economy and efficiency, including--
       (1) a central supply service for stationery and other 
     supplies and equipment for which adequate stocks may be 
     maintained to meet in whole or in part the requirements of 
     the Office and its components;
       (2) central messenger, mail, and telephone service and 
     other communications services;
       (3) office space and central services for document 
     reproduction and for graphics and visual aids;
       (4) a central library service; and
       (5) such other services as may be approved by the Director 
     of the Office of Management and Budget.
       (b) Operation of Fund.--The capital of the fund shall 
     consist of any appropriations made for the purpose of 
     providing working capital and the fair and reasonable value 
     of such stocks of supplies, equipment, and other assets and 
     inventories on order as the USTR may transfer to the fund, 
     less the related liabilities and unpaid obligations. The fund 
     shall be reimbursed in advance from available funds of 
     agencies and offices in the Office, or from other sources, 
     for supplies and services at rates which will approximate the 
     expense of operation, including the accrual of annual leave 
     and the depreciation of equipment. The fund shall also be 
     credited with receipts from sale or exchange of property and 
     receipts in payment for loss or damage to property owned by 
     the fund. There shall be covered into the United States 
     Treasury as miscellaneous receipts any surplus of the fund 
     (all assets, liabilities, and prior losses considered) above 
     the amounts transferred or appropriated to establish and 
     maintain the fund. There shall be transferred to the fund the 
     stocks of supplies, equipment, other assets, liabilities, and 
     unpaid obligations relating to those services which the USTR 
     determines will be performed.

     SEC. 17351. SERVICE CHARGES.

       (a) Authority.--Notwithstanding any other provision of law, 
     the USTR may establish reasonable fees and commissions with 
     respect to applications, documents, awards, loans, grants, 
     research data, services, and assistance administered by the 
     Office, and the USTR may change and abolish such fees and 
     commissions. Before establishing, changing, or abolishing any 
     schedule of fees or commissions under this section, the USTR 
     may submit such schedule to the Congress.
       (b) Deposits.--The USTR is authorized to require a deposit 
     before the USTR provides any item, information, service, or 
     assistance for which a fee or commission is required under 
     this section.
       (c) Deposit of Moneys.--Moneys received under this section 
     shall be deposited in the Treasury in a special account for 
     use by the USTR and are authorized to be appropriated and 
     made available until expended.
       (d) Factors in Establishing Fees and Commissions.--In 
     establishing reasonable fees or commissions under this 
     section, the USTR may take into account--
       (1) the actual costs which will be incurred in providing 
     the items, information, services, or assistance concerned;
       (2) the efficiency of the Government in providing such 
     items, information, services, or assistance;
       (3) the portion of the cost that will be incurred in 
     providing such items, information, services, or assistance 
     which may be attributed to benefits for the general public 
     rather than exclusively for the person to whom the items, 
     information, services, or assistance is provided;
       (4) any public service which occurs through the provision 
     of such items, information, services, or assistance; and
       (5) such other factors as the USTR considers appropriate.
       (e) Refunds of Excess Payments.--In any case in which the 
     USTR determines that any person has made a payment which is 
     not required under this section or has made a payment which 
     is in excess of the amount required under this section, the 
     USTR, upon application or otherwise, may cause a refund to be 
     made from applicable funds.

     SEC. 17352. SEAL OF OFFICE.

       The USTR shall cause a seal of office to be made for the 
     Office of such design as the USTR shall approve. Judicial 
     notice shall be taken of such seal.

                     Subchapter E--Related Agencies

     SEC. 17361. INTERAGENCY TRADE ORGANIZATION.

       Section 242(a)(3) of the Trade Expansion Act of 1962 (19 
     U.S.C. 1872(a)(3)) is amended to read as follows:
       ``(3)(A) The interagency organization established under 
     subsection (a) shall be composed of--
       ``(i) the United States Trade Representative, who shall be 
     the chairperson,
       ``(ii) the Secretary of Agriculture,
       ``(iii) the Secretary of the Treasury,
       ``(iv) the Secretary of Labor,
       ``(v) the Secretary of State, and
       ``(vi) the representatives of such other departments and 
     agencies as the United States Trade Representative shall 
     designate.
       ``(B) The United States Trade Representative may invite 
     representatives from other agencies, as appropriate, to 
     attend particular meetings if subject matters of specific 
     functional interest to such agencies are under consideration. 
     It shall meet at such times and with respect to such matters 
     as the President or the chairperson shall direct.''.

     SEC. 17362. NATIONAL SECURITY COUNCIL.

       The fourth paragraph of section 101(a) of the National 
     Security Act of 1947 (50 U.S.C. 402(a)) is amended--
       (1) by redesignating clauses (5), (6), and (7) as clauses 
     (6), (7), and (8), respectively; and
       (2) by inserting after clause (4) the following new clause:
       ``(5) the United States Trade Representative;''.

[[Page H11183]]


     SEC. 17363. INTERNATIONAL MONETARY FUND.

       Section 3 of the Bretton Woods Agreement Act is amended by 
     adding at the end the following new subsection:
       ``(e) The United States executive director of the Fund 
     shall consult with the United States Trade Representative 
     with respect to matters under consideration by the Fund which 
     relate to trade.''.

                  Subchapter F--Conforming Amendments

     SEC. 17371. AMENDMENTS TO GENERAL PROVISIONS.

       (a) Inspector General.--The Inspector General Act of 1978 
     is amended--
       (1) in subsection 9(a)(1) by inserting after subparagraph 
     (W) the following:
       ``(X) of the United States Trade Representative, all 
     functions of the Inspector General of the Department of 
     Commerce and the Office of the Inspector General of the 
     Department of Commerce relating to the functions transferred 
     to the United States Trade Representative by section 17332 of 
     the Department of Commerce Dismantling Act; and''; and
       (2) in section 11--
       (A) in paragraph (1) by inserting ``the United States Trade 
     Representative;'' after ``the Attorney General;''; and
       (B) in paragraph (2) by inserting ``the Office of the 
     United States Trade Representative,'' after ``Treasury;''.
       (b) Amendment to the Trade Act of 1974.--(1) Chapter 4 of 
     title I of the Trade Act of 1974 is amended to read as 
     follows:

           ``CHAPTER 4--REPRESENTATION IN TRADE NEGOTIATIONS

     ``SEC. 141. FUNCTIONS OF THE UNITED STATES TRADE 
                   REPRESENTATIVE.

       ``The United States Trade Representative established under 
     section 17311 of the Department of Commerce Dismantling Act 
     shall--
       ``(1) be the chief representative of the United States for 
     each trade negotiation under this title or chapter 1 of title 
     III of this Act, or subtitle A of title I of the Omnibus 
     Trade and Competitiveness Act of 1988, or any other provision 
     of law enacted after the Department of Commerce Dismantling 
     Act;
       ``(2) report directly to the President and the Congress, 
     and be responsible to the President and the Congress for the 
     administration of trade agreements programs under this Act, 
     the Omnibus Trade and Competitiveness Act of 1988, the Trade 
     Expansion Act of 1962, section 350 of the Tariff Act of 1930, 
     and any other provision of law enacted after the Department 
     of Commerce Dismantling Act;
       ``(3) advise the President and the Congress with respect to 
     nontariff barriers to international trade, international 
     commodity agreements, and other matters which are related to 
     the trade agreements programs; and
       ``(4) be responsible for making reports to Congress with 
     respect to the matters set forth in paragraphs (1) and 
     (2).''.
       (2) The table of contents in the first section of the Trade 
     Act of 1974 is amended by striking the items relating to 
     chapter 4 and section 141 and inserting the following:

           ``Chapter 4--Representation in Trade Negotiations

``Sec. 141. Functions of the United States Trade Representative.''.
       (d) Foreign Service Personnel.--The Foreign Service Act of 
     1980 is amended by striking paragraph (3) of section 202(a) 
     (22 U.S.C. 3922(a)) and inserting the following:
       ``(3) The United States Trade Representative may utilize 
     the Foreign Service personnel system in accordance with this 
     Act--
       ``(A) with respect to the personnel performing functions--
       ``(i) which were transferred to the Department of Commerce 
     from the Department of State by Reorganization Plan No. 3 of 
     1979; and
       ``(ii) which were subsequently transferred to the United 
     States Trade Representative by section 17332 of the 
     Department of Commerce Dismantling Act; and
       ``(B) with respect to other personnel of the Office of 
     United States Trade Representative to the extent the 
     President determines to be necessary in order to enable the 
     Office of the United States Trade Representative to carry out 
     functions which require service abroad.''.
       (e) Chief Financial Officers.--Section 901(b)(1) of title 
     31, United States Code, is amended by adding at the end the 
     following:
       ``(Q) The Office of the United States Trade 
     Representative.''.

     SEC. 17372. REPEALS.

       Sections 1 and 2 of the Act of June 5, 1939 (15 U.S.C. 1502 
     and 1503; 53 Stat. 808), relating to the Under Secretary of 
     Commerce, are repealed.

     SEC. 17373. CONFORMING AMENDMENTS RELATING TO EXECUTIVE 
                   SCHEDULE POSITIONS.

       (a) Positions at Level I.--Section 5312 of title 5, United 
     States Code, is amended by amending the item relating to the 
     United States Trade Representative to read as follows:
       ``United States Trade Representative, Office of the United 
     States Trade Representative.''.
       (b) Positions at Level II.--Section 5313 of title 5, United 
     States Code, is amended by adding at the end the following:
       ``Deputy Administrator of the Office of the United States 
     Trade Representative.
       ``Deputy United States Trade Representatives, Office of the 
     United States Trade Representative (2).''.
       (c) Positions at Level III.--Section 5314 of title 5, 
     United States Code, is amended by adding at the end the 
     following:
       ``Assistant Administrators, Office of the United States 
     Trade Representative (3).
       ``Director General for Export Promotion, Office of the 
     United States Trade Representative.''.
       (d) Positions at Level IV.--Section 5315 of title 5, United 
     States Code, is amended--
       (1) by striking the item relating to the Assistant 
     Secretary of Commerce and Director General of the United 
     States and Foreign Commercial Service; and
       (2) by adding at the end the following:
       ``General Counsel, Office of the United States Trade 
     Representative.
       ``Inspector General, Office of the United States Trade 
     Representative.
       ``Chief Financial Officer, Office of the United States 
     Trade Representative.''.

                      Subchapter G--Miscellaneous

     SEC. 17381. EFFECTIVE DATE.

       (a) In General.--This subtitle shall take effect on the 
     effective date specified in section 17209(a), except that--
       (1) section 17336 shall take effect on the date of the 
     enactment of this Act; and
       (2) at any time after the date of the enactment of this Act 
     the officers provided for in subchapter B may be nominated 
     and appointed, as provided in such subchapter.
       (b) Interim Compensation and Expenses.--Funds available to 
     the Department of Commerce or the Office of the United States 
     Trade Representative (or any official or component thereof), 
     with respect to the functions transferred by this subtitle, 
     may be used, with approval of the Director of the Office of 
     Management and Budget, to pay the compensation and expenses 
     of an officer appointed under subsection (a) who will carry 
     out such functions until funds for that purpose are otherwise 
     available.

     SEC. 17382. INTERIM APPOINTMENTS.

       (a) In General.--If one or more officers required by this 
     subtitle to be appointed by and with the advice and consent 
     of the Senate have not entered upon office on the effective 
     date of this subtitle and notwithstanding any other provision 
     of law, the President may designate any officer who was 
     appointed by and with the advice and consent of the Senate, 
     and who was such an officer on the day before the effective 
     date of this subtitle, to act in the office until it is 
     filled as provided by this subtitle.
       (b) Compensation.--Any officer acting in an office pursuant 
     to subsection (a) shall receive compensation at the rate 
     prescribed by this subtitle for such office.

     SEC. 17383. FUNDING REDUCTIONS RESULTING FROM REORGANIZATION.

       (a) Funding Reductions.--Except as provided in subsection 
     (b), for each fiscal year that begins on or after the 
     effective date of this section, the total of amounts 
     obligated or expended by the United States in performing all 
     functions vested in the USTR and the Office pursuant to this 
     subtitle may not exceed 75 percent of the total amount 
     obligated or expended by the United States in performing all 
     such functions for fiscal year 1995.
       (b) Exception.--Subsection (a) shall not apply to 
     obligations or expenditures incurred as a direct consequence 
     of the termination, transfer, or other disposition of 
     functions described in subsection (a) pursuant to this title.
       (c) Rule of Construction.--This section shall take 
     precedence over any other provision of law unless such 
     provision explicitly refers to this section and makes an 
     exception to it.
       (d) Responsibilities of the Director of the Office of 
     Management and Budget.--The Director of the Office of 
     Management and Budget shall--
       (1) ensure compliance with the requirements of this 
     section; and
       (2) include in each report under sections 17106(a) and (b) 
     a description of actions taken to comply with such 
     requirements.
          Subtitle D--Patent and Trademark Office Corporation

     SEC. 17401. SHORT TITLE.

       This subtitle may be cited as the ``Patent and Trademark 
     Office Corporation Act of 1995''.

                 CHAPTER 1--PATENT AND TRADEMARK OFFICE

     SEC. 17411. ESTABLISHMENT OF PATENT AND TRADEMARK OFFICE AS A 
                   CORPORATION.

       Section 1 of title 35, United States Code, is amended to 
     read as follows:

     ``Sec. 1. Establishment

       ``(a) Establishment.--The Patent and Trademark Office is 
     established as a wholly owned Government corporation subject 
     to chapter 91 of title 31, except as otherwise provided in 
     this title.
       ``(b) Offices.--The Patent and Trademark Office shall 
     maintain an office in the District of Columbia, or the 
     metropolitan area thereof, for the service of process and 
     papers and shall be deemed, for purposes of venue in civil 
     actions, to be a resident of the district in which its 
     principal office is located. The Patent and Trademark Office 
     may establish offices in such other places as it considers 
     necessary or appropriate in the conduct of its business.
       ``(c) Reference.--For purposes of this title, the Patent 
     and Trademark Office shall also be referred to as the 
     `Office'.''.

     SEC. 17412. POWERS AND DUTIES.

       Section 2 of title 35, United States Code, is amended to 
     read as follows:

     ``Sec. 2. Powers and Duties

       ``(a) In General.--The Patent and Trademark Office shall be 
     responsible for--

[[Page H11184]]

       ``(1) the granting and issuing of patents and the 
     registration of trademarks;
       ``(2) conducting studies, programs, or exchanges of items 
     or services regarding domestic and international patent and 
     trademark law or the administration of the Office, including 
     programs to recognize, identify, assess, and forecast the 
     technology of patented inventions and their utility to 
     industry;
       ``(3) authorizing or conducting studies and programs 
     cooperatively with foreign patent and trademark offices and 
     international organizations, in connection with the granting 
     and issuing of patents and the registration of trademarks; 
     and
       ``(4) disseminating to the public information with respect 
     to patents and trademarks.
       ``(b) Specific Powers.--The Office--
       ``(1) shall have perpetual succession;
       ``(2) shall adopt and use a corporate seal, which shall be 
     judicially noticed and with which letters patent, 
     certificates of trademark registrations, and papers issued by 
     the Office shall be authenticated;
       ``(3) may sue and be sued in its corporate name and be 
     represented by its own attorneys in all judicial and 
     administrative proceedings, subject to the provisions of 
     section 8 of this title;
       ``(4) may indemnify the Commissioner of Patents and 
     Trademarks, and other officers, attorneys, agents, and 
     employees (including members of the Management Advisory Board 
     established in section 5) of the Office for liabilities and 
     expenses incurred within the scope of their employment;
       ``(5) may adopt, amend, and repeal bylaws, rules, and 
     regulations, governing the manner in which its business will 
     be conducted and the powers granted to it by law will be 
     exercised;
       ``(6) may acquire, construct, purchase, lease, hold, 
     manage, operate, improve, alter, and renovate any real, 
     personal, or mixed property, or any interest therein, as it 
     considers necessary to carry out its functions;
       ``(7)(A) may make such purchases, contracts for the 
     construction, maintenance, or management and operation of 
     facilities, and contracts for supplies or services, without 
     regard to section 111 of the Federal Property and 
     Administrative Services Act of 1949 (40 U.S.C. 759); and
       ``(B) may enter into and perform such purchases and 
     contracts for printing services, including the process of 
     composition, platemaking, presswork, silk screen processes, 
     binding, microform, and the products of such processes, as it 
     considers necessary to carry out the functions of the Office, 
     without regard to sections 501 through 517 and 1101 through 
     1123 of title 44;
       ``(8) may use, with their consent, services, equipment, 
     personnel, and facilities of other departments, agencies, and 
     instrumentalities of the Federal Government, on a 
     reimbursable basis, and cooperate with such other 
     departments, agencies, and instrumentalities in the 
     establishment and use of services, equipment, and facilities 
     of the Office;
       ``(9) may obtain from the Administrator of General Services 
     such services as the Administrator is authorized to provide 
     to other agencies of the United States, on the same basis as 
     those services are provided to other agencies of the United 
     States;
       ``(10) may use, with the consent of the United States and 
     the agency, government, or international organization 
     concerned, the services, records, facilities, or personnel of 
     any State or local government agency or instrumentality or 
     foreign government or international organization to perform 
     functions on its behalf;
       ``(11) may determine the character of and the necessity for 
     its obligations and expenditures and the manner in which they 
     shall be incurred, allowed, and paid, subject to the 
     provisions of this title and the Act of July 5, 1946 
     (commonly referred to as the `Trademark Act of 1946');
       ``(12) may retain and use all of its revenues and receipts, 
     including revenues from the sale, lease, or disposal of any 
     real, personal, or mixed property, or any interest therein, 
     of the Office, in carrying out the functions of the Office, 
     including for research and development and capital 
     investment, subject to the provisions of section 10101 of the 
     Omnibus Budget Reconciliation Act of 1990 (35 U.S.C. 41 
     note);
       ``(13) shall have the priority of the United States with 
     respect to the payment of debts from bankrupt, insolvent, and 
     decedents' estates;
       ``(14) may accept monetary gifts or donations of services, 
     or of real, personal, or mixed property, in order to carry 
     out the functions of the Office;
       ``(15) may execute, in accordance with its bylaws, rules, 
     and regulations, all instruments necessary and appropriate in 
     the exercise of any of its powers;
       ``(16) may provide for liability insurance and insurance 
     against any loss in connection with its property, other 
     assets, or operations either by contract or by self-
     insurance; and
       ``(17) shall pay any settlement or judgment entered against 
     it from the funds of the Office and not from amounts 
     available under section 1304 of title 31.''.

     SEC. 17413. ORGANIZATION AND MANAGEMENT.

       Section 3 of title 35, United States Code, is amended to 
     read as follows:

     ``Sec. 3. Officers and employees

       ``(a) Commissioner.--
       ``(1) In general.--The management of the Patent and 
     Trademark Office shall be vested in a Commissioner of Patents 
     and Trademarks (hereafter in this title referred to as the 
     `Commissioner'), who shall be a citizen of the United States 
     and who shall be appointed by the President, by and with the 
     advice and consent of the Senate. The Commissioner shall be a 
     person who, by reason of professional background and 
     experience in patent and trademark law, is especially 
     qualified to manage the Office.
       ``(2) Duties.--
       ``(A) In general.--The Commissioner shall be responsible 
     for the management and direction of the Office, including the 
     issuance of patents and the registration of trademarks.
       ``(B) Advising the president.--The Commissioner shall 
     advise the President of all activities of the Patent and 
     Trademark Office undertaken in response to obligations of the 
     United States under treaties and executive agreements, or 
     which relate to cooperative programs with those authorities 
     of foreign governments that are responsible for granting 
     patents or registering trademarks. The Commissioner shall 
     also recommend to the President changes in law or policy 
     which may improve the ability of United States citizens to 
     secure and enforce patent rights or trademark rights in the 
     United States or in foreign countries.
       ``(C) Consulting with the management advisory board.--The 
     Commissioner shall consult with the Management Advisory Board 
     established in section 5 on a regular basis on matters 
     relating to the operation of the Patent and Trademark Office, 
     and shall consult with the Board before submitting budgetary 
     proposals to the Office of Management and Budget or changing 
     or proposing to change patent or trademark user fees or 
     patent or trademark regulations.
       ``(D) Security clearances.--The Commissioner, in 
     consultation with the Director of the Office of Personnel 
     Management, shall maintain a program for identifying national 
     security positions and providing for appropriate security 
     clearances.
       ``(3) Term.--The Commissioner shall serve a term of 5 
     years, and may continue to serve after the expiration of the 
     Commissioner's term until a successor is appointed and 
     assumes office. The Commissioner may be reappointed to 
     subsequent terms.
       ``(4) Oath.--The Commissioner shall, before taking office, 
     take an oath to discharge faithfully the duties of the 
     Office.
       ``(5) Compensation.--The Commissioner shall receive 
     compensation at the rate of pay in effect for Level III of 
     the Executive Schedule under section 5314 of title 5.
       ``(6) Removal.--The Commissioner may be removed from office 
     by the President only for cause.
       ``(7) Designee of commissioner.--The Commissioner shall 
     designate an officer of the Office who shall be vested with 
     the authority to act in the capacity of the Commissioner in 
     the event of the absence or incapacity of the Commissioner.
       ``(b) Officers and Employees of the Office.--
       ``(1) Deputy commissioners.--The Commissioner shall appoint 
     a Deputy Commissioner for Patents and a Deputy Commissioner 
     for Trademarks for terms that shall expire on the date on 
     which the Commissioner's term expires. The Deputy 
     Commissioner for Patents shall be a person with demonstrated 
     experience in patent law and the Deputy Commissioner for 
     Trademarks shall be a person with demonstrated experience in 
     trademark law. The Deputy Commissioner for Patents and the 
     Deputy Commissioner for Trademarks shall be the principal 
     policy advisors to the Commissioner on all aspects of the 
     activities of the Office that affect the administration of 
     patent and trademark operations, respectively.
       ``(2) Other officers and employees.--The Commissioner 
     shall--
       ``(A) appoint an Inspector General and such other officers, 
     employees (including attorneys), and agents of the Office as 
     the Commissioner considers necessary to carry out its 
     functions;
       ``(B) fix the compensation of such officers and employees; 
     and
       ``(C) define the authority and duties of such officers and 
     employees and delegate to them such of the powers vested in 
     the Office as the Commissioner may determine.

     The Office shall not be subject to any administratively or 
     statutorily imposed limitation on positions or personnel, and 
     no positions or personnel of the Office shall be taken into 
     account for purposes of applying any such limitation, except 
     to the extent otherwise specifically provided by statute with 
     respect to the Office.
       ``(c) Limits on Compensation.--Except as otherwise provided 
     in this title or any other provision of law, the basic pay of 
     an officer or employee of the Office for any calendar year 
     may not exceed the annual rate of basic pay in effect for 
     level IV of the Executive Schedule under section 5315 of 
     title 5. The Commissioner shall by regulation establish a 
     limitation on the total compensation payable to officers or 
     employees of the Office, which may not exceed the annual rate 
     of basic pay in effect for level I of the Executive Schedule 
     under section 5312 of title 5.
       ``(d) Inapplicability of Title 5 Generally.--Except as 
     otherwise provided in this section, officers and employees of 
     the Office shall not be subject to the provisions of title 5 
     relating to Federal employees.
       ``(e) Continued Applicability of Certain Provision of Title 
     5.--The following provisions of title 5 shall apply to the 
     Office and its officers and employees:
       ``(1) Section 3110 (relating to employment of relatives; 
     restrictions).

[[Page H11185]]

       ``(2) Subchapter II of chapter 55 (relating to withholding 
     pay).
       ``(3) Subchapter II of chapter 73 (relating to employment 
     limitations).
       ``(f) Provisions of Title 5 Relating to Certain Benefits.--
       ``(1) Retirement.--(A)(i) Any individual who becomes an 
     officer or employee of the Office pursuant to subsection (h) 
     shall, if such individual has at least 3 years of creditable 
     service (within the meaning of section 8332 or 8411 of title 
     5) as of the effective date of the Patent and Trademark 
     Office Corporation Act of 1995, remain subject to subchapter 
     III of chapter 83 or chapter 84 of such title, as the case 
     may be, so long as such individual continues to hold an 
     office or position in or under the Office without a break in 
     service.
       ``(ii)(I) Except as provided in subclause (II), with 
     respect to an individual described in clause (i), the Office 
     shall make the appropriate withholding from pay and shall pay 
     the contributions required of an employing agency into the 
     Civil Service Retirement and Disability Fund and, if 
     applicable, the Thrift Savings Fund in accordance with 
     applicable provisions of subchapter III of chapter 83 or 
     chapter 84 of title 5, as the case may be.
       ``(II) In the case of an officer or employee who remains 
     subject to subchapter III of chapter 83 of such title by 
     virtue of this subparagraph, the Office shall, instead of the 
     amount which would otherwise be required under the second 
     sentence of section 8334(a)(1) of title 5, contribute an 
     amount equal to the normal-cost percentage (determined with 
     respect to officers and employees of the Office using dynamic 
     assumptions, as defined by section 8401(9) of such title) of 
     the individual's basic pay, minus the amount required to be 
     withheld from such pay under such section 8334(a)(1).
       ``(B)(i) Notwithstanding subsection (d), the provisions of 
     subchapter III of chapter 83 or chapter 84 of title 5 (as 
     applicable) which relate to disability shall be considered to 
     remain in effect, with respect to an individual who becomes 
     an officer or employee of the Office pursuant to 
     subsection (h), until the end of the 2-year period 
     beginning on the effective date of the Patent and 
     Trademark Office Corporation Act of 1995 or, if earlier, 
     until such individual satisfies the prerequisites for 
     coverage under any program offered by the Office to 
     replace the disability retirement program under chapter 83 
     or 84 of title 5.
       ``(ii) This clause applies with respect to any officer or 
     employee of the Office who is receiving disability coverage 
     under this subparagraph and has completed the service 
     requirement specified in the first sentence of section 
     8337(a) or 8451(a)(1)(A) of title 5 (as applicable), but who 
     is not described in subparagraph (A)(i). In the case of any 
     individual to whom this clause applies, the Office shall pay 
     into the Civil Service Retirement and Disability Fund an 
     amount equal to that portion of the normal-cost percentage 
     (determined in the same manner as under subparagraph 
     (A)(ii)(II)) of the basic pay of such individual (for service 
     performed during the period during which such individual is 
     receiving such coverage) allocable to such coverage. Any 
     amounts payable under this clause shall be paid at such time 
     and in such manner as mutually agreed to by the Office and 
     the Office of Personnel Management, and shall be in lieu of 
     any individual or agency contributions otherwise required.
       ``(2) Health benefits.--(A) Officers and employees of the 
     Office shall not become ineligible to participate in the 
     health benefits program under chapter 89 of title 5 by reason 
     of subsection (d) until the effective date of elections made 
     during the first election period (under section 8905(f) of 
     title 5) beginning after the end of the 2-year period 
     beginning on the effective date of the the Patent and 
     Trademark Office Corporation Act of 1995.
       ``(B)(i) With respect to any individual who becomes an 
     officer or employee of the Office pursuant to subsection (h), 
     the eligibility of such individual to participate in such 
     program as an annuitant (or of any other person to 
     participate in such program as an annuitant based on the 
     death of such individual) shall be determined disregarding 
     the requirements of section 8905(b) of title 5. The preceding 
     sentence shall not apply if the individual ceases to be an 
     officer or employee of the Office for any period of time 
     after becoming an officer or employee of the Office pursuant 
     to subsection (h) and before separation.
       ``(ii) The Government contributions authorized by section 
     8906 for health benefits for anyone participating in the 
     health benefits program pursuant to this subparagraph shall 
     be made by the Office in the same manner as provided under 
     section 8906(g)(2) of title 5 with respect to the United 
     States Postal Service for individuals associated therewith.
       ``(iii) For purposes of this subparagraph, the term 
     `annuitant' has the meaning given such term by section 
     8901(3) of title 5.
       ``(3) Life insurance.--(A) Officers and employees of the 
     Office shall not become ineligible to participate in the life 
     insurance program under chapter 87 of title 5 by reason of 
     subsection (d) until the first day after the end of the 2-
     year period beginning on the effective date of the the Patent 
     and Trademark Office Corporation Act of 1995.
       ``(B)(i) Eligibility for life insurance coverage after 
     retirement or while in receipt of compensation under 
     subchapter I of chapter 81 of title 5 shall be determined, in 
     the case of any individual who becomes an officer or employee 
     of the Office pursuant to subsection (h), without regard to 
     the requirements of section 8706(b) (1) or (2), but subject 
     to the condition specified in the last sentence of paragraph 
     (2)(B)(i) of this subsection.
       ``(ii) Government contributions under section 8708(d) on 
     behalf of any such individual shall be made by the Office in 
     the same manner as provided under paragraph (3) thereof with 
     respect to the United States Postal Service for individuals 
     associated therewith.
       ``(4) Employees' compensation fund.--The Office shall 
     remain responsible for reimbursing the Employees' 
     Compensation Fund, pursuant to section 8147 of title 5, for 
     compensation paid or payable after the effective date of the 
     Patent and Trademark Office Corporation Act of 1995 in 
     accordance with chapter 81 of title 5 with regard to any 
     injury, disability, or death due to events arising before 
     such date, whether or not a claim has been filed or is final 
     on such date.
       ``(5) Requirement that the office offer certain minimum 
     number of life and health insurance policies.--The Office 
     shall offer at least 1 life insurance policy and at least 3 
     health insurance policies to its officers and employees, 
     comparable to existing Federal benefits, beginning on the 
     first day after the end of the 2-year period beginning on the 
     effective date of the Patent and Trademark Office Corporation 
     Act of 1995.
       ``(g) Labor-Management Relations.--
       ``(1) Labor relations and employee relations programs.--The 
     Office shall develop labor relations and employee relations 
     programs with the objective of improving productivity and 
     efficiency, incorporating the following principles:
       ``(A) Such programs shall be consistent with the merit 
     principles in section 2301(b) of title 5.
       ``(B) Such programs shall provide veterans preference 
     protections equivalent to those established by sections 2801, 
     3308-3318, and 3320 of title 5.
       ``(C)(i) In order to maximize individual freedom of choice 
     in the pursuit of employment and to encourage an economic 
     climate conducive to economic growth, the right to work shall 
     not be subject to undue restraint or coercion. The right to 
     work shall not be infringed or restricted in any way based on 
     membership in, affiliation with, or financial support of a 
     labor organization.
       ``(ii) No person shall be required, as a condition of 
     employment or continuation of employment:
       ``(I) To resign or refrain from voluntary membership in, 
     voluntary affiliation with, or voluntary financial support of 
     a labor organization.
       ``(II) To become or remain a member of a labor 
     organization.
       ``(III) To pay any dues, fees, assessments, or other 
     charges of any kind or amount to a labor organization.
       ``(IV) To pay to any charity or other third party, in lieu 
     of such payments, any amount equivalent to or a pro-rata 
     portion of dues, fees, assessments, or other charges 
     regularly required of members of a labor organization.
       ``(V) To be recommended, approved, referred, or cleared by 
     or through a labor organization.
       ``(iii) This subparagraph shall not apply to a person 
     described in section 7103(a)(2)(v) of title 5 or a 
     `supervisor', `management official', or `confidential 
     employee' as those terms are defined in 7103(a)(10), (11), 
     and (13) of such title.
       ``(iv) Any labor organization recognized by the Office as 
     the exclusive representative of a unit of employees of the 
     Office shall represent the interests of all employees in that 
     unit without discrimination and without regard to labor 
     organization membership.
       ``(2) Adoption of existing labor agreements.--The Office 
     shall adopt all labor agreements which are in effect, as of 
     the day before the effective date of the Patent and Trademark 
     Office Corporation Act of 1995, with respect to such Office 
     (as then in effect). Each such agreement shall remain in 
     effect for the 2-year period commencing on such date, unless 
     the agreement provides for a shorter duration or the parties 
     agree otherwise before such period ends.
       ``(h) Carryover of Personnel.--
       ``(1) From pto.--Effective as of the effective date of the 
     Patent and Trademark Office Corporation Act of 1995, all 
     officers and employees of the Patent and Trademark Office on 
     the day before such effective date shall become officers and 
     employees of the Office, without a break in service.
       ``(2) Other personnel.--Any individual who, on the day 
     before the effective date of the Patent and Trademark Office 
     Corporation Act of 1995, is an officer or employee of the 
     Department of Commerce (other than an officer or employee 
     under paragraph (1)) shall be transferred to the Office if--
       ``(A) such individual serves in a position for which a 
     major function is the performance of work reimbursed by the 
     Patent and Trademark Office, as determined by the Secretary 
     of Commerce;
       ``(B) such individual serves in a position that performed 
     work in support of the Patent and Trademark Office during at 
     least half of the incumbent's work time, as determined by the 
     Secretary of Commerce; or
       ``(C) such transfer would be in the interest of the Office, 
     as determined by the Secretary of Commerce in consultation 
     with the Commissioner of Patents and Trademarks.

[[Page H11186]]

     Any transfer under this paragraph shall be effective as of 
     the same effective date as referred to in paragraph (1), and 
     shall be made without a break in service.
       ``(3) Accumulated leave.--The amount of sick and annual 
     leave and compensatory time accumulated under title 5 before 
     the effective date described in paragraph (1), by officers or 
     employees of the Patent and Trademark Office who so become 
     officers or employees of the Office, are obligations of the 
     Office.
       ``(4) Termination rights.--Any employee referred to in 
     paragraph (1) or (2) of this subsection whose employment with 
     the Office is terminated during the 2-year period beginning 
     on the effective date of the Patent and Trademark Office 
     Corporation Act of 1995 shall be entitled to rights and 
     benefits, to be afforded by the Office, similar to those such 
     employee would have had under Federal law if termination had 
     occurred immediately before such date. An employee who would 
     have been entitled to appeal any such termination to the 
     Merit Systems Protection Board, if such termination had 
     occurred immediately before such effective date, may appeal 
     any such termination occurring within this 2-year period to 
     the Board under such procedures as it may prescribe.
       ``(5) Continuation in office of certain officers.--(A) The 
     individual serving as the Commissioner of Patents and 
     Trademarks on the day before the effective date of the Patent 
     and Trademark Office Corporation Act of 1995 may serve as the 
     Commissioner until the earlier of 1 year after the effective 
     date of that Act or the date on which a Commissioner is 
     appointed under subsection (a).
       ``(B) The individual serving as the Assistant Commissioner 
     for Patents on the day before the effective date of the 
     Patent and Trademark Office Corporation Act of 1995 may serve 
     as the Deputy Commissioner for Patents until the earlier of 1 
     year after the effective date of that Act or the date on 
     which a Deputy Commissioner for Patents is appointed under 
     subsection (b).
       ``(C) The individual serving as the Assistant Commissioner 
     for Trademarks on the day before the effective date of the 
     Patent and Trademark Office Corporation Act of 1995 may serve 
     as the Deputy Commissioner for Trademarks until the earlier 
     of 1 year after the effective date of that Act or the date on 
     which a Deputy Commissioner for Trademarks is appointed under 
     subsection (b).
       ``(i) Competitive Status.--For purposes of appointment to a 
     position in the competitive service for which an officer or 
     employee of the Office is qualified, such officer or employee 
     shall not forfeit any competitive status, acquired by such 
     officer or employee before the effective date of the 
     Patent and Trademark Office Corporation Act of 1995, by 
     reason of becoming an officer or employee of the Office 
     pursuant to subsection (h).
       ``(j) Savings Provisions.--All orders, determinations, 
     rules, and regulations regarding compensation and benefits 
     and other terms and conditions of employment, in effect for 
     the Office and its officers and employees immediately before 
     the effective date of the Patent and Trademark Office 
     Corporation Act of 1995, shall continue in effect with 
     respect to the Office and its officers and employees until 
     modified, superseded, or set aside by the Office or a court 
     of appropriate jurisdiction or by operation of law.''.

      SEC. 17414. MANAGEMENT ADVISORY BOARD.

       Chapter 1 of part I of title 35, United States Code, is 
     amended by inserting after section 4 the following:

     ``Sec. 5. Patent and Trademark Office Management Advisory 
       Board

       ``(a) Establishment of Management Advisory Board.--
       ``(1) Appointment.--The Patent and Trademark Office shall 
     have a Management Advisory Board (hereafter in this title 
     referred to as the `Board') of 12 members, 4 of whom shall be 
     appointed by the President, 4 of whom shall be appointed by 
     the Speaker of the House of Representatives, and 4 of whom 
     shall be appointed by the President pro tempore of the 
     Senate. Not more than 3 of the 4 members appointed by each 
     appointing authority shall be members of the same political 
     party.
       ``(2) Terms.--Members of the Board shall be appointed for a 
     term of 4 years each, except that of the members first 
     appointed by each appointing authority, 1 shall be for a term 
     of 1 year, 1 shall be for a term of 2 years, and 1 shall be 
     for a term of 3 years. No member may serve more than 1 term.
       ``(3) Chair.--The President shall designate the chair of 
     the Board, whose term as chair shall be for 3 years.
       ``(4) Timing of appointments.--Initial appointments to the 
     Board shall be made within 3 months after the effective date 
     of the Patent and Trademark Office Corporation Act of 1995, 
     and vacancies shall be filled within 3 months after they 
     occur.
       ``(5) Vacancies.--Vacancies shall be filled in the manner 
     in which the original appointment was made under this 
     subsection. Members appointed to fill a vacancy occurring 
     before the expiration of the term for which the member's 
     predecessor was appointed shall be appointed only for the 
     remainder of that term. A member may serve after the 
     expiration of that member's term until a successor is 
     appointed.
       ``(b) Basis for Appointments.--Members of the Board shall 
     be citizens of the United States who shall be chosen so as to 
     represent the interests of diverse users of the Patent and 
     Trademark Office, and shall include individuals with 
     substantial background and achievement in corporate finance 
     and management.
       ``(c) Applicability of Certain Ethics Laws.--Members of the 
     Board shall be special Government employees within the 
     meaning of section 202 of title 18.
       ``(d) Meetings.--The Board shall meet at the call of the 
     chair to consider an agenda set by the chair.
       ``(e) Duties.--The Board shall--
       ``(1) review the policies, goals, performance, budget, and 
     user fees of the Patent and Trademark Office, and advise the 
     Commissioner on these matters; and
       ``(2) within 60 days after the end of each fiscal year, 
     prepare an annual report on the matters referred to in 
     paragraph (1), transmit the report to the President and the 
     Committees on the Judiciary of the Senate and the House of 
     Representatives, and publish the report in the Patent and 
     Trademark Office Official Gazette.
       ``(f) Staff.--The Board shall employ a staff of not more 
     than 10 members and shall procure support services for the 
     staff adequate to enable the Board to carry out its 
     functions, using funds available to the Commissioner under 
     section 42 of this title. The Board shall ensure that members 
     of the staff, other than clerical staff, are especially 
     qualified in the areas of patents, trademarks, or management 
     of public agencies. Persons employed by the Board shall 
     receive compensation as determined by the Board, which may 
     not exceed the limitations set forth in section 3(c) of this 
     title, shall serve in accordance with terms and conditions of 
     employment established by the Board, and shall be subject 
     solely to the direction of the Board, notwithstanding any 
     other provision of law.
       ``(g) Compensation.--Members of the Board shall be 
     compensated for each day (including travel time) during which 
     they are attending meetings or conferences of the Board or 
     otherwise engaged in the business of the Board, at the rate 
     which is the daily equivalent of the annual rate of basic pay 
     in effect for level III of the Executive Schedule under 
     section 5314 of title 5, and while away from their homes or 
     regular places of business they may be allowed travel 
     expenses, including per diem in lieu of subsistence, as 
     authorized by section 5703 of title 5.
       ``(h) Access to Information.--Members of the Board shall be 
     provided access to records and information in the Patent and 
     Trademark Office, except for personnel or other privileged 
     information and information concerning patent applications 
     required to be kept in confidence by section 122 of this 
     title.''.

      SEC. 17415. INDEPENDENCE FROM DEPARTMENT OF COMMERCE.

       (a) Duties of Commissioner.--Section 6 of title 35, United 
     States Code, is amended--
       (1) by striking ``, under the direction of the Secretary of 
     Commerce,'' each place it appears; and
       (2) by striking ``, subject to the approval of the 
     Secretary of Commerce,''.
       (b) Regulations for Agents and Attorneys.--Section 31 of 
     title 35, United States Code, is amended by striking ``, 
     subject to the approval of the Secretary of Commerce,''.

     SEC. 17416. TRADEMARK TRIAL AND APPEAL BOARD.

       Section 17 of the Act of July 5, 1946 (commonly referred to 
     as the ``Trademark Act of 1946'') (15 U.S.C. 1067) is amended 
     to read as follows:
       ``Sec. 17. (a) In every case of interference, opposition to 
     registration, application to register as a lawful concurrent 
     user, or application to cancel the registration of a mark, 
     the Commissioner shall give notice to all parties and shall 
     direct a Trademark Trial and Appeal Board to determine and 
     decide the respective rights of registration.
       ``(b) The Trademark Trial and Appeal Board shall include 
     the Commissioner, the Deputy Commissioner for Patents, the 
     Deputy Commissioner for Trademarks, and members competent in 
     trademark law who are appointed by the Commissioner.''.

     SEC. 17417. BOARD OF PATENT APPEALS AND INTERFERENCES.

       Section 7 of title 35, United States Code, is amended to 
     read as follows:

     ``Sec. 7. Board of Patent Appeals and Interferences

       ``(a) Establishment and Composition.--There shall be in the 
     Patent and Trademark Office a Board of Patent Appeals and 
     Interferences. The Commissioner, the Deputy Commissioner for 
     Patents, the Deputy Commissioner for Trademarks, and the 
     examiners-in-chief shall constitute the Board. The examiners-
     in-chief shall be persons of competent legal knowledge and 
     scientific ability.
       ``(b) Duties.--The Board of Patent Appeals and 
     Interferences shall, on written appeal of an applicant, 
     review adverse decisions of examiners upon applications for 
     patents and shall determine priority and patentability of 
     invention in interferences declared under section 135(a) of 
     this title. Each appeal and interference shall be heard by at 
     least 3 members of the Board, who shall be designated by the 
     Commissioner. Only the Board of Patent Appeals and 
     Interferences may grant rehearings.''.

     SEC. 17418. SUITS BY AND AGAINST THE CORPORATION.

       Chapter 1 of part I of title 35, United States Code, is 
     amended--
       (1) by redesignating sections 8 through 14 as sections 9 
     through 15; and
       (2) by inserting after section 7 the following new section:

[[Page H11187]]


     ``Sec. 8. Suits by and against the Corporation

       ``(a) In General.--
       ``(1) Actions under united states law.--Any civil action or 
     proceeding to which the Patent and Trademark Office is a 
     party is deemed to arise under the laws of the United States. 
     The Federal courts shall have exclusive jurisdiction over all 
     civil actions by or against the Office.
       ``(2) Contract claims.--Any action or proceeding against 
     the Office in which any claim is cognizable under the 
     Contract Disputes Act of 1978 (41 U.S.C. 601 and following) 
     shall be subject to that Act. For purposes of that Act, the 
     Commissioner shall be deemed to be the agency head with 
     respect to contract claims arising with respect to the 
     Office. Any other action or proceeding against the Office 
     founded upon contract may be brought in an appropriate 
     district court, notwithstanding any provision of title 28.
       ``(3) Tort claims.--(A) Any action or proceeding against 
     the Office in which any claim is cognizable under the 
     provisions of section 1346(b) and chapter 171 of title 28, 
     shall be governed by those provisions.
       ``(B) Any other action or proceeding against the Office 
     founded upon tort may be brought in an appropriate district 
     court without regard to the provisions of section 1346(b) and 
     chapter 171 of title 28.
       ``(4) Prohibition on attachment, liens, etc.--No 
     attachment, garnishment, lien, or similar process, 
     intermediate or final, in law or equity, may be issued 
     against property of the Office.
       ``(5) Substitution of office as party.--The Office shall be 
     substituted as defendant in any civil action or proceeding 
     against an officer or employee of the Office, if the Office 
     determines that the officer or employee was acting within the 
     scope of his or her employment with the Office. If the Office 
     refuses to certify scope of employment, the officer or 
     employee may at any time before trial petition the court to 
     find and certify that the officer or employee was acting 
     within the scope of his or her employment. Upon certification 
     by the court, the Office shall be substituted as the party 
     defendant. A copy of the petition shall be served upon the 
     Office. In any such civil action or proceeding to which 
     paragraph (3)(A) applies, the provisions of section 1346(b) 
     and chapter 171 of title 28 shall apply in lieu of this 
     paragraph.
       ``(b) Relationship With Justice Department.--
       ``(1) Exercise by office of attorney general's 
     authorities.--Except as provided in this section, with 
     respect to any action or proceeding in which the Office is a 
     party or an officer or employee thereof is a party in his or 
     her official capacity, the Office, officer, or employee may 
     exercise, without prior authorization from the Attorney 
     General, the authorities and duties that otherwise would be 
     exercised by the Attorney General on behalf of the Office, 
     officer, or employee under title 28 and other laws.
       ``(2) Appearances by attorney general.--Notwithstanding 
     paragraph (1), at any time the Attorney General may, in any 
     action or proceeding described in paragraph (1), file an 
     appearance on behalf of the Office or the officer or employee 
     involved, without the consent of the Office or the officer or 
     employee. Upon such filing, the Attorney General shall 
     represent the Office or such officer or employee with 
     exclusive authority in the conduct, settlement, or compromise 
     of that action or proceeding.
       ``(3) Consultations with and assistance by attorney 
     general.--The Office may consult with the Attorney General 
     concerning any legal matter, and the Attorney General shall 
     provide advice and assistance to the Office, including 
     representing the Office in litigation, if requested by the 
     Office.
       ``(4) Representation before supreme court.--The Attorney 
     General shall represent the Office in all cases before the 
     United States Supreme Court.
       ``(5) Qualifications of attorneys.--An attorney admitted to 
     practice to the bar of the highest court of at least one 
     State in the United States or the District of Columbia and 
     employed by the Office may represent the Office in any legal 
     proceeding in which the Office or an officer or employee of 
     the Office is a party or interested, regardless of whether 
     the attorney is a resident of the jurisdiction in which the 
     proceeding is held and notwithstanding any other 
     prerequisites of qualification or appearance required by the 
     court or administrative body before which the proceeding is 
     conducted.''.

      SEC. 17419. ANNUAL REPORT OF COMMISSIONER.

       Section 15 of title 35, United States Code, as redesignated 
     by section 17418 of this Act, is amended to read as follows:

     ``Sec. 15. Annual report to Congress

       ``The Commissioner shall report to the Congress, not later 
     than 180 days after the end of each fiscal year, the moneys 
     received and expended by the Office, the purposes for which 
     the moneys were spent, the quality and quantity of the work 
     of the Office, and other information relating to the Office. 
     The report under this section shall also meet the 
     requirements of section 9106 of title 31, to the extent that 
     such requirements are not inconsistent with the preceding 
     sentence. The report required under this section shall be 
     deemed to be the report of the Patent and Trademark Office 
     under section 9106 of title 31, and the Commissioner shall 
     not file a separate report under such section.''.

     SEC. 17420. SUSPENSION OR EXCLUSION FROM PRACTICE.

       Section 32 of title 35, United States Code, is amended by 
     inserting before the last sentence the following: ``The 
     Commissioner shall have the discretion to designate any 
     attorney who is an officer or employee of the Patent and 
     Trademark Office to conduct the hearing required by this 
     section.''.

     SEC. 17421. FUNDING.

       Section 42 of title 35, United States Code, is amended to 
     read as follows:

     ``Sec. 42. Patent and Trademark Office funding

       ``(a) Fees Payable to the Office.--All fees for services 
     performed by or materials furnished by the Patent and 
     Trademark Office shall be payable to the Office.
       ``(b) Use of Moneys.--Moneys of the Patent and Trademark 
     Office not otherwise used to carry out the functions of the 
     Office shall be kept in cash on hand or on deposit, or 
     invested in obligations of the United States or guaranteed by 
     the United States, or in obligations or other instruments 
     which are lawful investments for fiduciary, trust, or public 
     funds. Fees available to the Commissioner under this title 
     shall be used exclusively for the processing of patent 
     applications and for other services and materials relating to 
     patents. Fees available to the Commissioner under section 31 
     of the Act of July 5, 1946 (commonly referred to as the 
     `Trademark Act of 1946'; 15 U.S.C. 1113), shall be used 
     exclusively for the processing of trademark registrations and 
     for other services and materials relating to trademarks.
       ``(c) Borrowing Authority.--The Patent and Trademark Office 
     is authorized to issue from time to time for purchase by the 
     Secretary of the Treasury its debentures, bonds, notes, and 
     other evidences of indebtedness (hereafter in this subsection 
     referred to as `obligations') to assist in financing its 
     activities. Borrowing under this subsection shall be subject 
     to prior approval in appropriation Acts. Such borrowing shall 
     not exceed amounts approved in appropriation Acts. Any such 
     borrowing shall be repaid only from fees paid to the Office 
     and surcharges appropriated by the Congress. Such obligations 
     shall be redeemable at the option of the Office before 
     maturity in the manner stipulated in such obligations and 
     shall have such maturity as is determined by the Office with 
     the approval of the Secretary of the Treasury. Each such 
     obligation issued to the Treasury shall bear interest at a 
     rate not less than the current yield on outstanding 
     marketable obligations of the United States of comparable 
     maturity during the month preceding the issuance of the 
     obligation as determined by the Secretary of the Treasury. 
     The Secretary of the Treasury shall purchase any obligations 
     of the Office issued under this subsection and for such 
     purpose the Secretary of the Treasury is authorized to use as 
     a public-debt transaction the proceeds of any securities 
     issued under chapter 31 of title 31, and the purposes for 
     which securities may be issued under that chapter are 
     extended to include such purpose. Payment under this 
     subsection of the purchase price of such obligations of the 
     Patent and Trademark Office shall be treated as public debt 
     transactions of the United States.''.

     SEC. 17422. AUDITS.

       Chapter 4 of part I of title 35, United States Code, is 
     amended by adding at the end the following new section:

     ``Sec. 43. Audits

       ``(a) In General.--Financial statements of the Patent and 
     Trademark Office shall be prepared on an annual basis in 
     accordance with generally accepted accounting principles. 
     Such statements shall be audited by an independent certified 
     public accountant chosen by the Commissioner. The audit shall 
     be conducted in accordance with standards that are consistent 
     with generally accepted Government auditing standards and 
     other standards established by the Comptroller General, and 
     with the generally accepted auditing standards of the private 
     sector, to the extent feasible. The Commissioner shall 
     transmit to the Committees on the Judiciary of the House of 
     Representatives and the Senate the results of each audit 
     under this subsection.
       ``(b) Review by Comptroller General.--The Comptroller 
     General may review any audit of the financial statement of 
     the Patent and Trademark Office that is conducted under 
     subsection (a). The Comptroller General shall report to the 
     Congress and the Office the results of any such review and 
     shall include in such report appropriate recommendations.
       ``(c) Audit by Comptroller General.--The Comptroller 
     General may audit the financial statements of the Office and 
     such audit shall be in lieu of the audit required by 
     subsection (a). The Office shall reimburse the Comptroller 
     General for the cost of any audit conducted under this 
     subsection.
       ``(d) Access to Office Records.--All books, financial 
     records, report files, memoranda, and other property that the 
     Comptroller General deems necessary for the performance of 
     any audit shall be made available to the Comptroller 
     General.
       ``(e) Applicability in Lieu of Title 31 Provisions.--This 
     section applies to the Office in lieu of the provisions of 
     section 9105 of title 31.''.

     SEC. 17423. TRANSFERS.

       (a) Transfer of Functions.--Except as otherwise provided in 
     this Act, there are transferred to, and vested in, the Patent 
     and Trademark Office all functions, powers, and duties vested 
     by law in the Secretary of Commerce or the Department of 
     Commerce or in the officers or components in the Department 
     of Commerce with respect to the authority to grant patents 
     and register 

[[Page H11188]]

     trademarks, and in the Patent and Trademark Office, as in 
     effect on the day before the effective date of this subtitle, 
     and in the officers and components of such Office.
       (b) Transfer of Funds and Property.--The Secretary of 
     Commerce shall transfer to the Patent and Trademark Office, 
     on the effective date of this subtitle, so much of the 
     assets, liabilities, contracts, property, records, and 
     unexpended and unobligated balances of appropriations, 
     authorizations, allocations, and other funds employed, held, 
     used, arising from, available to, or to be made available to 
     the Department of Commerce, including funds set aside for 
     accounts receivable which are related to functions, powers, 
     and duties which are vested in the Patent and Trademark 
     Office by this subtitle.

            CHAPTER 2--EFFECTIVE DATE; TECHNICAL AMENDMENTS

      SEC. 17431. EFFECTIVE DATE.

       This subtitle shall take effect 6 months after the date of 
     the enactment of this Act.

     SEC. 17432. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Amendments to Title 35.--
       (1) The table of contents for part I of title 35, United 
     States Code, is amended by amending the item relating to 
     chapter 1 to read as follows:

``1. Establishment, Officers and Employees, Functions..........1.''....

       (2) The table of sections for chapter 1 of title 35, United 
     States Code, is amended to read as follows:

     ``CHAPTER 1--ESTABLISHMENT, OFFICERS AND EMPLOYEES, FUNCTIONS

``Sec.
 ``1. Establishment.
 ``2. Powers and duties.
 ``3. Officers and employees.
 ``4. Restrictions on officers and employees as to interest in patents.
 ``5. Patent and Trademark Office Management Advisory Board.
 ``6. Duties of Commissioner.
 ``7. Board of Patent Appeals and Interferences.
 ``8. Suits by and against the Corporation.
 ``9. Library.
``10. Classification of patents.
``11. Certified copies of records.
``12. Publications.
``13. Exchange of copies of patents with foreign countries.
``14. Copies of patents for public libraries.
``15. Annual report to Congress.''.
       (3) The table of contents for chapter 4 of part I of title 
     35, United States Code, is amended by adding at the end the 
     following new item:

``43. Audits.''.

       (b) Other Provisions of Law.--
       (1) Section 9101(3) of title 31, United States Code, is 
     amended by adding at the end the following:
       ``(O) the Patent and Trademark Office.''.
       (2) Section 500(e) of title 5, United States Code, is 
     amended by striking ``Patent Office'' and inserting ``Patent 
     and Trademark Office''.
       (3) Section 5102(c)(23) of title 5, United States Code, is 
     amended by striking ``Department of Commerce''.
       (4) Section 5316 of title 5, United States Code (5 U.S.C. 
     5316) is amended by striking ``Commissioner of Patents, 
     Department of Commerce.'', ``Deputy Commissioner of Patents 
     and Trademarks.'', ``Assistant Commissioner for Patents.'', 
     and ``Assistant Commissioner for Trademarks.''.
       (5) Section 12 of the Act of February 14, 1903 (15 U.S.C. 
     1511) is amended by striking ``(d) Patent and Trademark 
     Office;'' and redesignating subsections (a) through (g) as 
     paragraphs (1) through (6), respectively.
       (6) The Act of April 12, 1892 (27 Stat. 395; 20 U.S.C. 91) 
     is amended by striking ``Patent Office'' and inserting 
     ``Patent and Trademark Office''.
       (7) Sections 505(m) and 512(o) of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 355(m) and 360b(o)) are each 
     amended by striking ``of the Department of Commerce''.
       (8) Section 105(e) of the Federal Alcohol Administration 
     Act (27 U.S.C. 205(e)) is amended by striking ``Patent 
     Office'' and inserting ``Patent and Trademark Office''.
       (9) Section 1744 of title 28, United States Code is 
     amended--
       (A) by striking ``Patent Office'' each place it appears and 
     inserting ``Patent and Trademark Office''; and
       (B) by striking ``Commissioner of Patents'' and inserting 
     ``Commissioner of Patents and Trademarks''.
       (10) Section 1745 of title 28, United States Code, is 
     amended by striking ``United States Patent Office'' and 
     inserting ``Patent and Trademark Office''.
       (11) Section 1928 of title 28, United States Code, is 
     amended by striking ``Patent Office'' and inserting ``Patent 
     and Trademark Office''.
       (12) Section 160 of the Atomic Energy Act of 1954 (42 
     U.S.C. 2190) is amended--
       (A) by striking ``United States Patent Office'' and 
     inserting ``Patent and Trademark Office''; and
       (B) by striking ``Commissioner of Patents'' and inserting 
     ``Commissioner of Patents and Trademarks''.
       (13) Section 305(c) of the National Aeronautics and Space 
     Act of 1958 (42 U.S.C. 2457(c)) is amended by striking 
     ``Commissioner of Patents'' and inserting ``Commissioner of 
     Patents and Trademarks''.
       (14) Section 12(a) of the Solar Heating and Cooling 
     Demonstration Act of 1974 (42 U.S.C. 5510(a)) is amended by 
     striking ``Commissioner of the Patent Office'' and inserting 
     ``Commissioner of Patents and Trademarks''.
       (15) Section 1111 of title 44, United States Code, is 
     amended by striking ``the Commissioner of Patents,''.
       (16) Section 1114 of title 44, United States Code, is 
     amended by striking ``the Commissioner of Patents,''.
       (17) Section 1123 of title 44, United States Code, is 
     amended by striking ``the Patent Office.''.
       (18) Sections 1337 and 1338 of title 44, United States 
     Code, and the items relating to those sections in the table 
     of contents for chapter 13 of such title, are repealed.
       (19) Section 10(i) of the Trading With the Enemy Act (50 
     U.S.C. App. 10(i)) is amended by striking ``Commissioner of 
     Patents'' and inserting ``Commissioner of Patents and 
     Trademarks''.
       (20) Section 8G(a)(2) of the Inspector General Act of 1978 
     (5 U.S.C. App.) is amended by inserting ``the Patent and 
     Trademark Office,'', after ``the Panama Canal Commission,''.
                  Subtitle E--Miscellaneous Provisions

     SEC. 17501. REFERENCES.

       Any reference in any other Federal law, Executive order, 
     rule, regulation, or delegation of authority, or any document 
     of or pertaining to a department or office from which a 
     function is transferred by this title--
       (1) to the head of such department or office is deemed to 
     refer to the head of the department or office to which such 
     function is transferred; or
       (2) to such department or office is deemed to refer to the 
     department or office to which such function is transferred.

     SEC. 17502. EXERCISE OF AUTHORITIES.

       Except as otherwise provided by law, a Federal official to 
     whom a function is transferred by this title may, for 
     purposes of performing the function, exercise all authorities 
     under any other provision of law that were available with 
     respect to the performance of that function to the official 
     responsible for the performance of the function immediately 
     before the effective date of the transfer of the function 
     under this title.

     SEC. 17503. SAVINGS PROVISIONS.

       (a) Legal Documents.--All orders, determinations, rules, 
     regulations, permits, grants, loans, contracts, agreements, 
     certificates, licenses, and privileges--
       (1) that have been issued, made, granted, or allowed to 
     become effective by the President, the Secretary of Commerce, 
     the United States Trade Representative, any officer or 
     employee of any office transferred by this title, or any 
     other Government official, or by a court of competent 
     jurisdiction, in the performance of any function that is 
     transferred by this title, and
       (2) that are in effect on the effective date of such 
     transfer (or become effective after such date pursuant to 
     their terms as in effect on such effective date),

     shall continue in effect according to their terms until 
     modified, terminated, superseded, set aside, or revoked in 
     accordance with law by the President, any other authorized 
     official, a court of competent jurisdiction, or operation of 
     law.
       (b) Proceedings.--This title shall not affect any 
     proceedings or any application for any benefits, service, 
     license, permit, certificate, or financial assistance pending 
     on the date of the enactment of this Act before an office 
     transferred by this title, but such proceedings and 
     applications shall be continued. Orders shall be issued in 
     such proceedings, appeals shall be taken therefrom, and 
     payments shall be made pursuant to such orders, as if this 
     Act had not been enacted, and orders issued in any such 
     proceeding shall continue in effect until modified, 
     terminated, superseded, or revoked by a duly authorized 
     official, by a court of competent jurisdiction, or by 
     operation of law. Nothing in this subsection shall be 
     considered to prohibit the discontinuance or modification of 
     any such proceeding under the same terms and conditions and 
     to the same extent that such proceeding could have been 
     discontinued or modified if this title had not been enacted.
       (c) Suits.--This title shall not affect suits commenced 
     before the date of the enactment of this Act, and in all such 
     suits, proceeding shall be had, appeals taken, and judgments 
     rendered in the same manner and with the same effect as if 
     this title had not been enacted.
       (d) Nonabatement of Actions.--No suit, action, or other 
     proceeding commenced by or against the Department of Commerce 
     or the Secretary of Commerce, or by or against any individual 
     in the official capacity of such individual as an officer or 
     employee of an office transferred by this title, shall abate 
     by reason of the enactment of this title.
       (e) Continuance of Suits.--If any Government officer in the 
     official capacity of such officer is party to a suit with 
     respect to a function of the officer, and under this title 
     such function is transferred to any other officer or office, 
     then such suit shall be continued with the other officer or 
     the head of such other office, as applicable, substituted or 
     added as a party.
       (f) Administrative Procedure and Judicial Review.--Except 
     as otherwise provided by this title, any statutory 
     requirements relating to notice, hearings, action upon the 
     record, or administrative or judicial review that apply to 
     any function transferred by 

[[Page H11189]]

     this title shall apply to the exercise of such function by 
     the head of the Federal agency, and other officers of the 
     agency, to which such function is transferred by this title.

     SEC. 17504. TRANSFER OF ASSETS.

       Except as otherwise provided in this title, so much of the 
     personnel, property, records, and unexpended balances of 
     appropriations, allocations, and other funds employed, used, 
     held, available, or to be made available in connection with a 
     function transferred to an official or agency by this title 
     shall be available to the official or the head of that 
     agency, respectively, at such time or times as the Director 
     of the Office of Management and Budget directs for use in 
     connection with the functions transferred.

     SEC. 17505. DELEGATION AND ASSIGNMENT.

       Except as otherwise expressly prohibited by law or 
     otherwise provided in this title, an official to whom 
     functions are transferred under this title (including the 
     head of any office to which functions are transferred under 
     this title) may delegate any of the functions so transferred 
     to such officers and employees of the office of the official 
     as the official may designate, and may authorize successive 
     redelegations of such functions as may be necessary or 
     appropriate. No delegation of functions under this section or 
     under any other provision of this title shall relieve the 
     official to whom a function is transferred under this title 
     of responsibility for the administration of the function.

     SEC. 17506. AUTHORITY OF DIRECTOR OF THE OFFICE OF MANAGEMENT 
                   AND BUDGET WITH RESPECT TO FUNCTIONS 
                   TRANSFERRED.

       (a) Determinations.--If necessary, the Director shall make 
     any determination of the functions that are transferred under 
     this title.
       (b) Incidental Transfers.--The Director, at such time or 
     times as the Director shall provide, may make such 
     determinations as may be necessary with regard to the 
     functions transferred by this title, and to make such 
     additional incidental dispositions of personnel, assets, 
     liabilities, grants, contracts, property, records, and 
     unexpended balances of appropriations, authorizations, 
     allocations, and other funds held, used, arising from, 
     available to, or to be made available in connection with such 
     functions, as may be necessary to carry out the provisions of 
     this title. The Director shall provide for the termination of 
     the affairs of all entities terminated by this title and for 
     such further measures and dispositions as may be necessary to 
     effectuate the purposes of this title.

     SEC. 17507. CERTAIN VESTING OF FUNCTIONS CONSIDERED 
                   TRANSFERS.

       For purposes of this title, the vesting of a function in a 
     department or office pursuant to reestablishment of an office 
     shall be considered to be the transfer of the function.

     SEC. 17508. AVAILABILITY OF EXISTING FUNDS.

       Existing appropriations and funds available for the 
     performance of functions, programs, and activities terminated 
     pursuant to this title shall remain available, for the 
     duration of their period of availability, for necessary 
     expenses in connection with the termination and resolution of 
     such functions, programs, and activities.

     SEC. 17509. DEFINITIONS.

       For purposes of this title--
       (1) the term ``function'' includes any duty, obligation, 
     power, authority, responsibility, right, privilege, activity, 
     or program; and
       (2) the term `office' includes any office, administration, 
     agency, bureau, institute, council, unit, organizational 
     entity, or component thereof.
                      TITLE XVIII--WELFARE REFORM

     SEC. 18001. ENACTMENT OF THE PERSONAL RESPONSIBILITY ACT OF 
                   1995.

       H.R. 4, as passed by the House of Representatives on March 
     24, 1995, is hereby enacted with the following amendments:
       (1) In section 101, insert
     ``(a) In General.--'' before ``Title IV of the Social 
     Security Act''.
       (2) At the end of section 101, add the following:
       (b) Submission of State Plan for Fiscal Year 1996 Deemed 
     Acceptance of Grant Limitations and Formula.--The submission 
     of a plan by a State under section 402(a) of the Social 
     Security Act (as in effect pursuant to the amendment made by 
     subsection (a) of this section) for fiscal year 1996 is 
     deemed to constitute the State's acceptance of the grant 
     limitations under section 403(a)(1)(A)(i) of such Act (as so 
     in effect) for fiscal year 1996 (including the formula for 
     computing the amount of the grant).
       (3) Strike section 403(a)(1)(A) of the Social Security Act, 
     as proposed to be added by section 101, and insert the 
     following:
       ``(A) In general.--Each eligible State shall be entitled to 
     receive from the Secretary--
       ``(i) for fiscal year 1996, a grant in an amount equal to--

       ``(I) the State family assistance grant for fiscal year 
     1996; minus
       ``(II) the total amount of obligations to the State under 
     part A of this title (as in effect before the effective date 
     of this part) for fiscal year 1996, other than with respect 
     to amounts expended for child care pursuant to subsection (g) 
     or (i) of section 402 of this title (as so in effect); and

       ``(ii) for each of fiscal years 1997, 1998, 1999, and 2000, 
     a grant in an amount equal to the State family assistance 
     grant for the fiscal year.
       (4) In section 201, insert

     ``(a) In General.--'' before ``Part B of title IV of the 
     Social Security Act''.
       (5) At the end of section 201, add the following:
       (b) Submission of State Plan for Fiscal Year 1996 Deemed 
     Acceptance of Grant Limitations and Formula.--The submission 
     of a plan by a State under section 422(a) of the Social 
     Security Act (as in effect pursuant to the amendment made by 
     subsection (a) of this section) for fiscal year 1996 is 
     deemed to constitute the State's acceptance of the grant 
     limitations under section 423(a)(1)(A) of such Act (as so in 
     effect) for fiscal year 1996 (including the formula for 
     computing the amount of the grant).
       (6) Strike section 423(a)(1) of the Social Security Act, as 
     proposed to be added by section 201, and insert the 
     following:
       ``(1) In general.--Each eligible State shall be entitled to 
     receive from the Secretary--
       ``(A) for fiscal year 1996, a grant in an amount equal to--
       ``(i) the State share of the child protection amount for 
     fiscal year 1996; minus
       ``(ii) the total amount of obligations to the State under 
     parts B and E of this title (as in effect before the 
     effective date of this part) for fiscal year 1996; and
       ``(B) for each subsequent fiscal year specified in 
     subsection (b)(1), a grant in an amount equal to the State 
     share of the child protection amount for the fiscal year.
       (7) Strike section 301(b) and insert the following:
       (b) Authorization of Appropriations.--Section 658B of the 
     Child Care and Development Block Grant Act of 1990 (42 U.S.C. 
     9858B) is amended to read as follows:

     ``SEC. 658B. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated to carry out this 
     subchapter $1,804,000,000 for fiscal year 1996 and 
     $2,093,000,000 for each of the fiscal years 1997, 1998, 1999, 
     2000, 2001, and 2002.''.
       (8) In the matter preceding paragraph (1) of section 3 of 
     the Child Nutrition Act of 1966, as proposed to be amended by 
     section 321, strike ``The Secretary'' and insert ``(a) In 
     General.--The Secretary''.
       (9) At the end of section 3 of the Child Nutrition Act of 
     1966, as proposed to be amended by section 321, add the 
     following:
       ``(b) Additional Requirements.--
       ``(1) Restriction on allotments.--
       ``(A) Computation.--The Secretary shall provide for the 
     computation of State obligation allotments in accordance with 
     this section for each of the fiscal years 1996 through 2000.
       ``(B) Limitation on obligations.--The Secretary shall not 
     enter into obligations with any State under this Act for a 
     fiscal year in excess of the obligation allotment for that 
     State for the fiscal year, as determined under subsection 
     (a). The sum of such obligation allotments for all States in 
     any fiscal year shall not exceed the amount appropriated to 
     carry out this Act for that fiscal year.
       ``(2) Agreement.--The submission of an application by a 
     State under section 4 is deemed to constitute the State's 
     acceptance of the obligation allotment limitations under this 
     section (including the formula for computing the amount of 
     such obligation allotment).
       (10) In the matter preceding paragraph (1) of section 3 of 
     the National School Lunch Act, as proposed to be amended by 
     section 341, strike ``The Secretary'' and insert ``(a) In 
     General.--The Secretary''.
       (11) At the end of section 3 of the National School Lunch 
     Act, as proposed to be amended by section 341, add the 
     following:
       ``(b) Additional Requirements.--
       ``(1) Restriction on allotments.--
       ``(A) Computation.--The Secretary shall provide for the 
     computation of State obligation allotments in accordance with 
     this section for each of the fiscal years 1996 through 2000.
       ``(B) Limitation on obligations.--
       ``(i) In general.--Subject to clause (ii), the Secretary 
     shall not enter into obligations with any State under this 
     Act for a fiscal year in excess of the obligation allotment 
     for that State for the fiscal year, as determined under 
     subsection (a). The sum of such obligation allotments for all 
     States in any fiscal year shall not exceed the school-based 
     nutrition amount for that fiscal year.
       ``(ii) Reduction for post-enactment new obligations in 
     fiscal year 1996.--

       ``(I) In general.--The amount of the obligation allotment 
     otherwise provided under this section for fiscal year 1996 
     for a State under this Act (as in effect on and after the 
     date of the enactment of the Personal Responsibility Act of 
     1995) shall be reduced by the amount of the obligations 
     described in subclause (II) that are entered into under this 
     Act or under the Child Nutrition Act of 1966 on or after 
     October 1, 1995, but prior to the date of the enactment of 
     the Personal Responsibility Act of 1995.
       ``(II) Amount of obligations described.--(aa) Except as 
     provided in division (bb), the amount of the obligations 
     described in this subclause are 100 percent of the amount of 
     the obligations entered into under this Act and under the 
     Child Nutrition Act of 1966 (except obligations entered into 
     under section 17 of such Act).
       ``(bb) For purposes of obligations entered into under the 
     summer food service program for children under section 13 of 
     this Act, the child and adult care food program under section 
     17 of this Act, and the special milk program under section 3 
     of the Child Nutrition 

[[Page H11190]]

     Act of 1966, the amount of the obligations described in this 
     subclause are 12.5 percent of the amount the obligations 
     entered into under each such program.

       ``(2) Agreement.--The submission of an application by a 
     State under section 4 is deemed to constitute the State's 
     acceptance of the obligation allotment limitations under this 
     section (including the formula for computing the amount of 
     such obligation allotment).
       ``(3) Termination of programs; limitation on new obligation 
     authority.--
       ``(A) Elimination of individual entitlement.--Effective on 
     the date of the enactment of the Personal Responsibility Act 
     of 1995--
       ``(i) except as provided in subparagraph (B), the Federal 
     Government has no obligation to provide payment with respect 
     to items and services provided under this Act (as in effect 
     on and after the date of the enactment of the Personal 
     Responsibility Act of 1995); and
       ``(ii) this Act (as in effect on and after the date of the 
     enactment of the Personal Responsibility Act of 1995) shall 
     not be construed as providing for an entitlement, under 
     Federal law in relation to the Federal Government, in an 
     individual or person at the time of provision or receipt of 
     services.
       ``(B) Limitation on obligation authority.--Notwithstanding 
     any other provision of this Act, the Secretary is authorized 
     to enter into obligations with any State under this Act for 
     expenses incurred after the date of the enactment of the 
     Personal Responsibility Act and during fiscal year 1996, but 
     not in excess of the obligation allotment for that State for 
     fiscal year 1996, as determined under subsection (a).
              TITLE XIX--CONTRACT WITH AMERICA-TAX RELIEF

     SEC. 19001. ENACTMENT OF CONTRACT WITH AMERICA TAX RELIEF ACT 
                   OF 1995.

       (a) In General.--Title VI of H.R. 1215 of the 104th 
     Congress, as passed by the House of Representatives, is 
     hereby enacted with the following modifications to such 
     title:
       (1) Strike subtitle E (relating to social security earnings 
     test) and redesignate subtitles F and G as subtitles E and F, 
     respectively.
       (2) Strike subsections (c)(2) and (d)(2) of section 6201.
       (3) Strike the amendment contained in paragraph (2) of 
     section 6301(d) and insert the following: ``Subsection (h) of 
     section 1 is amended by adding at the end the following new 
     sentence: `For purposes of this subsection, taxable income 
     shall be computed without regard to the deduction allowed by 
     section 1202.'''
       (4) Strike section 6321 (relating to depreciation 
     adjustment for certain property placed in service after 
     December 31, 1994).
       (5) Strike part III of subtitle C (relating to alternative 
     minimum tax relief).
       (6) Strike subtitle F (as redesignated by paragraph (1)) 
     and insert the following:
      ``Subtitle F--Tax Reduction Contingent on Deficit Reduction

     ``SEC. 6701. TAX REDUCTION CONTINGENT ON DEFICIT REDUCTION.

       ``This title, which is contained within the Act that--
       ``(1) carries out the concurrent resolution on the budget 
     for fiscal year 1996 that provides that the budget of the 
     United States will be in balance by fiscal year 2002; and
       ``(2) achieves a level of deficit reduction pursuant to the 
     reconciliation instructions of that concurrent resolution 
     that will result in a budget of the United States that will 
     be in balance by fiscal year 2002; and
       ``(B) is certified pursuant to the requirements set forth 
     in section 210 of that concurrent resolution,

     shall take effect as so provided by its effective date 
     provisions.

     ``SEC. 6702. MONITORING.

       ``The Committees on the Budget of the House of 
     Representatives and the Senate shall each monitor progress on 
     achieving a balanced budget consistent with the most recently 
     agreed to concurrent resolution on the budget for fiscal year 
     1996 or any subsequent fiscal year (and the reconciliation 
     Act for that resolution) or the most recently agreed to 
     concurrent resolution on the budget that would achieve a 
     balanced budget by fiscal year 2002 (and the reconciliation 
     Act for that resolution). After consultation with the 
     Director of the Congressional Budget Office, each such 
     committee shall submit a report of its findings to its House 
     and the President on or before December 15, 1995, and 
     annually thereafter. Each such report shall contain the 
     following:
       ``(1) Estimates of the deficit levels (based on legislation 
     enacted through the date of the report) for each fiscal year 
     through fiscal year 2002.
       ``(2) An analysis of the variance (if any) between those 
     estimated deficit levels and the levels set forth in the 
     concurrent resolution on the budget for fiscal year 1996 or 
     the most recently agreed to concurrent resolution on the 
     budget that would achieve a balanced budget by fiscal year 
     2002.
       ``(3) Policy options to achieve the additional levels of 
     deficit reduction necessary to balance the budget of the 
     United States by fiscal year 2002.

     ``SEC. 6703. CONGRESSIONAL ACTION.

       ``Each House of Congress shall incorporate the policy 
     options included in the report of its Committee on the Budget 
     under section 6702(a)(3) (or other policy options) in 
     developing a concurrent resolution on the budget for any 
     fiscal year that achieves the additional levels of deficit 
     reduction necessary to balance the budget of the United 
     States by fiscal year 2002.

     ``SEC. 6704. PRESIDENTIAL ACTION.

       ``If the President submits a budget under section 1105(a) 
     of title 31, United States Code, that does not provide for a 
     balanced budget for the United States by fiscal year 2002, 
     then the President shall include with that submission a 
     complete budget that balances the budget by that fiscal 
     year.''
       (7) Conform the table of contents accordingly.
       (b) Technical Correction.--Effective with respect to 
     taxable years ending after December 31, 1994, paragraph (1) 
     of section 1201(b) of the Internal Revenue Code of 1986, as 
     added by such title VI, is amended to read as follows:
       ``(1) In general.--In the case of any taxable year ending 
     after December 31, 1994, and beginning before January 1, 
     1996, in applying subsection (a), net capital gain for such 
     taxable year shall not exceed such net capital gain 
     determined by taking into account only gain or loss properly 
     taken into account for the portion of the taxable year after 
     December 31, 1994.''

     SEC. 19002. COMPLIANCE WITH CONCURRENT RESOLUTION ON THE 
                   BUDGET.

       (a) In General.--For purposes of the Internal Revenue Code 
     of 1986, the taxpayer's net modified chapter 1 liability for 
     any taxable year shall be such liability determined without 
     regard to this section--
       (1) increased by 27 percent of the excess (if any) of--
       (A) the amount which would be the taxpayer's net modified 
     chapter 1 liability for such year if such liability were 
     determined without regard to the amendments made by subtitles 
     A, B, C, and D of title VI of H.R. 1215 of the 104th 
     Congress, as passed by the House of Representatives, over
       (B) the taxpayer's net modified chapter 1 liability for 
     such year determined without regard to this section, or
       (2) reduced by 27 percent of the excess (if any) of the 
     amount described in paragraph (1)(B) over the liability 
     described in paragraph (1)(A).
       (b) Net Modified Chapter 1 Liability.--For purposes of 
     subsection (a), the term ``net modified chapter 1 liability'' 
     means the liability for tax under chapter 1 of the Internal 
     Revenue Code of 1986 determined--
       (1) without regard to sections 1201 and 1202 of such Code, 
     as amended by such title VI,
       (2) without regard to the amendments made by sections 6103 
     and 6104 of such title VI,
       (3) after the application of any credit against such tax 
     other than the credits under sections 31, 33, and 34 of such 
     Code, and
       (4) before crediting any payment of estimated tax for the 
     taxable year.
       (c) Capital Gains.--
       (1) Capital gains deduction for taxpayers other than 
     corporations.--For purposes of applying section 1202 of the 
     Internal Revenue Code of 1986, as added by such title VI--
       (A) in the case of taxable years ending before January 1, 
     1996, ``42.5 percent'' shall be substituted for ``50 
     percent'' in subsection (a) thereof, and
       (B) in the case of taxable years ending after December 31, 
     1995, ``34.5 percent'' shall be substituted for ``50 
     percent'' in subsection (a) thereof.
       (2) Alternative capital gains tax for corporations.--
       (A) For purposes of applying section 1201 of such Code, as 
     amended by such title VI--
       (i) in the case of taxable years ending before January 1, 
     1996, ``26.5 percent'' shall be substituted for ``25 
     percent'' in subsection (a)(2) thereof, and
       (ii) in the case of taxable years ending after December 31, 
     1995, ``31.9 percent'' shall be substituted for ``25 
     percent'' in subsection (a)(2) thereof.
       (B) For purposes of applying section 852(b)(3)(D)(iii) of 
     such Code, as amended by such title VI--
       (i) in the case of taxable years ending before January 1, 
     1996, ``73.5 percent'' shall be substituted for ``75 
     percent'' in subsection (a)(2) thereof, and
       (ii) in the case of taxable years ending after December 31, 
     1995, ``68.1 percent'' shall be substituted for ``75 
     percent'' in subsection (a)(2) thereof.
       (3) Indexing.--For purposes of applying section 1022 of 
     such Code, as added by such title VI, only 69 percent of the 
     applicable inflation adjustment under subsection (c)(2) of 
     such section 1022 shall be taken into account.
       (4) Conforming changes.--Proper adjustments shall be made 
     to the percentages and fractions in the following provisions 
     to reflect the percentages in paragraphs (1) and (2):
       (A) Sections 170(c), 1445(e), and 7518(g)(6)(A) of such 
     Code.
       (B) Section 607(h)(6)(A) of the Merchant Marine Act, 1936.
       (d) American Dream Savings Accounts.--For purposes of 
     applying section 408A of such Code, as added by such title 
     VI--
       (1) only 69 percent of the income on the assets held in an 
     American Dream Savings Account (which would otherwise be 
     includible in gross income) shall be excludible from gross 
     income,
       (2) only 69 percent of any distribution attributable to 
     amounts not previously included in gross income shall be 
     entitled to the treatment described in subsection (d)(1) of 
     such section 408A, and

[[Page H11191]]

       (3) only 69 percent of any payment or distribution referred 
     to in subsection (d)(3)(B) of such section 408A shall be 
     entitled to the treatment described in such subsection.
       (e) Spousal Individual Retirement Accounts.--For purposes 
     of applying sections 219 and 408 of such Code--
       (1) only 69 percent of the contributions to an individual 
     retirement plan which are allowable as a deduction solely by 
     reason of the amendments made by section 6104 of such title 
     VI shall be allowed as a deduction, and
       (2) only 69 percent of the income on the assets held in an 
     individual retirement plan which are attributable to 
     contributions permitted solely by reason of the amendments 
     made by section 6104 of such title VI (which would otherwise 
     be includible in gross income) shall be excludible from gross 
     income.
       (f) Alternative Minimum Tax.--
       (1) In general.--In the case of taxable years beginning 
     after December 31, 1994--
       (A) in the case of a taxpayer other than a corporation, the 
     tax imposed by section 55 of such Code shall be determined 
     without regard to paragraph (1) of section 56(a) of such 
     Code, and
       (B) in the case of a corporation, the tentative minimum tax 
     under section 55 of such Code shall be zero.
       (2) Delay in benefit of repeal for taxable years 1995 and 
     1996.--
       (A) In general.--Paragraph (1) shall not apply to any 
     taxable year beginning before January 1, 1997, but there 
     shall be allowed as a credit against the tax imposed by 
     subtitle A of such Code for each taxable year referred to in 
     subparagraph (C) an amount equal to the credit determined 
     under subparagraph (B).
       (B) Amount of credit.--The credit determined under this 
     subparagraph for any taxable year to which this paragraph 
     applies is an amount equal to \1/3\ of the excess (if any) 
     of--
       (i) the aggregate tax paid under section 55 of such Code 
     for taxable years beginning after December 31, 1994, and 
     before January 1, 1997, over
       (ii) the amount of tax which would have been imposed by 
     such section 55 for such taxable years had paragraph (1) 
     applied to such taxable years.
       (C) Years credit allowed.--The taxable years referred to in 
     this subparagraph are the first 3 taxable years of the 
     taxpayer beginning after December 31, 1996.
       (D) Coordination with other provisions.--For purposes of 
     the Internal Revenue Code of 1986, the credit allowed under 
     paragraph (1) shall be treated as a credit allowed under 
     subpart C of part IV of subchapter A of chapter 1 of such 
     Code and as referred to in paragraph (2) of 1324(b) of title 
     31, United States Code, immediately before the period at the 
     end thereof.
       (g) Comparable Treatment for Estate and Gift Tax Changes.--
     A rule similar to the rule of subsection (a) shall apply to 
     any reduction in liability for tax under subtitle B of such 
     Code by reason of the amendments made by section 6351 of such 
     title VI.
                      TITLE XX--BUDGET ENFORCEMENT

     SEC. 20001. SHORT TITLE; PURPOSE.

       (a) Short Title.--This title may be cited as the ``Seven-
     Year Balanced Budget Enforcement Act of 1995''.
       (b) Purpose.--This title extends and reduces the 
     discretionary spending limits and extends the pay-as-you-go 
     requirements.

     SEC. 20002. DISCRETIONARY SPENDING LIMITS.

       (a) Limits.--Section 601(a)(2) of the Congressional Budget 
     Act of 1974 is amended by striking subparagraphs (A), (B), 
     (C), (D), and (F), by redesignating subparagraph (E) as 
     subparagraph (A) and by striking ``and'' at the end of that 
     subparagraph, and by inserting after subparagraph (A) the 
     following new subparagraphs:
       ``(B) with respect to fiscal year 1996, for the 
     discretionary category: $485,074,000,000 in new budget 
     authority and $531,768,000,000 in outlays;
       ``(C) with respect to fiscal year 1997, for the 
     discretionary category: $481,423,000,000 in new budget 
     authority and $519,288,000,000 in outlays;
       ``(D) with respect to fiscal year 1998, for the 
     discretionary category: $489,233,000,000 in new budget 
     authority and $511,173,000,000 in outlays;
       ``(E) with respect to fiscal year 1999, for the 
     discretionary category: $480,420,000,000 in new budget 
     authority and $508,695,000,000 in outlays;
       ``(F) with respect to fiscal year 2000, for the 
     discretionary category: $487,347,000,000 in new budget 
     authority and $512,202,000,000 in outlays;
       ``(G) with respect to fiscal year 2001, for the 
     discretionary category: $494,307,000,000 in new budget 
     authority and $514,109,000,000 in outlays; and
       ``(H) with respect to fiscal year 2002, for the 
     discretionary category: $496,188,000,000 in new budget 
     authority and $512,426,000,000 in outlays;''.
       (b) Committee Allocations and Enforcement.--Section 602 of 
     the Congressional Budget Act of 1974 is amended--
       (1) in subsection (c), by striking ``1995'' and inserting 
     ``2002'' and by striking the last sentence; and
       (2) in subsection (d), by striking ``1992 to 1995'' in the 
     side heading and inserting ``1996 to 2002'' and by striking 
     ``1992 through 1995'' and inserting ``1996 through 2002''.
       (c) Term of Budget Resolutions.--Section 606 of the 
     Congressional Budget Act of 1974 is amended--
       (1) in its section heading by striking ``5-YEAR'' and 
     inserting ``TERM OF'';
       (2) in the sideheading of subsection (a), by striking ``5-
     Year'' and inserting ``Term of'';
       (3) in subsection (a), by striking ``1992, 1993, 1994, or 
     1995'' and inserting ``1996 or any fiscal year thereafter 
     through 2002'' and by inserting ``at least'' before ``each''; 
     and
       (4) in subsection (d)(1), by striking ``1992, 1993, 1994, 
     and 1995'' and inserting ``1996 or any fiscal year thereafter 
     through 2002'', and by striking ``(i) and (ii)''.
       (d) Effective Date.--Section 607 of the Congressional 
     Budget Act of 1974 is amended by striking ``1991 to 1998'' 
     and inserting ``1996 to 2002''.
       (e) Sequestration Regarding Violent Crime Reduction Trust 
     Fund.--(1) Section 251A(b)(1) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended by striking 
     subparagraphs (B), (C), and (D) and its last sentence and 
     inserting the following:
       ``(B) For fiscal year 1996, $2,227,000,000.
       ``(C) For fiscal year 1997, $3,846,000,000.
       ``(D) For fiscal year 1998, $4,901,000,000.
       ``(E) For fiscal year 1999, $5,639,000,000.
       ``(F) For fiscal year 2000, $6,225,000,000.''.
       (2) Section 310002 of the Violent Crime Control and Law 
     Enforcement Act of 1994 (42 U.S.C. 14212) is repealed.
       (f) Conforming Amendment.--The item relating to section 606 
     in the table of contents set forth in section 1(b) of the 
     Congressional Budget and Impoundment Control Act of 1974 is 
     amended by striking ``5-year'' and inserting ``Term of''.

     SEC. 20003. GENERAL STATEMENT AND DEFINITIONS.

       (a) General Statement.--Section 250(b) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 is amended 
     by striking the first two sentences and inserting the 
     following: ``This part provides for the enforcement of 
     deficit reduction by reducing and extending the discretionary 
     spending limits though fiscal year 2002 and permanently 
     extending pay-as-you-go requirements.''.
       (b) Definitions.--Section 250(c) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended--
       (1) by striking paragraph (4) and inserting the following:
       ``(4) The term `category' means:
       ``(A) For fiscal years 1996 through 2000, all discretionary 
     appropriations except those subject to section 251A; and
       ``(B) For fiscal year 2001 and any subsequent fiscal year, 
     all discretionary appropriations.'';
       (2) by striking paragraph (6) and inserting the following:
       ``(6) The term `budgetary resources' means new budget 
     authority, unobligated balances, direct spending authority, 
     and obligation limitations.'';
       (3) in paragraph (9), by striking ``1992'' and inserting 
     ``1996''; and
       (4) in paragraph (14), by striking ``through fiscal year 
     1995''.

     SEC. 20004. ENFORCING DISCRETIONARY SPENDING LIMITS.

       Section 251 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended--
       (1) in the side heading of subsection (a), by striking 
     ``1991-1998'' and inserting ``1996-2002'';
       (2) in the first sentence of subsection (b)(1), by striking 
     ``1992, 1993, 1994, 1995, 1996, 1997 or 1998'' and inserting 
     ``1997 or any fiscal year thereafter through 2002'' and by 
     striking ``through 1998'' and inserting ``through 2002'';
       (3) in subsection (b)(1), by striking ``the following:'' 
     and all that follows through ``The adjustments'' and 
     inserting ``the following: the adjustments'' and by striking 
     subparagraphs (B) and (C);
       (4) in subsection (b)(2), by striking ``1991, 1992, 1993, 
     1994, 1995, 1996, 1997, or 1998'' and inserting ``1996 or any 
     fiscal year thereafter through 2002'' and by striking 
     ``through 1998'' and inserting ``through 2002'';
       (5) in subsection (b)(2)(E), by striking clauses (i), (ii), 
     and (iii) and by striking ``(iv) if, for fiscal years 1994, 
     1995, 1996, 1997, and 1998'' and inserting ``If, for fiscal 
     years 1996 through 2002''; and
       (6) in subsection (b)(2)(F), by striking everything after 
     ``the adjustment in outlays'' and inserting ``for a category 
     for a fiscal year is the amount of the excess but not to 
     exceed 0.5 percent of the adjusted discretionary spending 
     limit on outlays for that fiscal year in fiscal year 1996 or 
     any fiscal year thereafter through 2002.''.

     SEC. 20005. ENFORCING PAY-AS-YOU-GO.

       (a) Extension.--(1) Section 252 of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended--
       (A) in the side heading of subsection (a), by striking 
     ``Fiscal Years 1992-1998''; and
       (B) in subsection (e), by striking ``, for any fiscal year 
     from 1991 through 1998,'' and by striking ``through 1995''.
       (b) Rolling Pay-As-You-Go Scorecard.--Section 252(d) of the 
     Balanced Budget and Emergency Deficit Control Act of 1985 is 
     amended by striking ``each fiscal year through fiscal year 
     1998'' each place it appears and inserting ``the current year 
     (if applicable), the budget year, and each of the first 4 
     outyears''.

     SEC. 20006. REPORTS AND ORDERS.

       Section 254 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended--
       (1) in subsection (d)(2), by striking ``1998'' and 
     inserting ``2002''; and
       (2)(A) in subsection (g)(2)(A), by striking ``1998'' and 
     inserting ``2002''; and

[[Page H11192]]

       (B) in subsection (g)(3), by striking ``in each outyear 
     through 1998'' and inserting ``in each of the 4 ensuing 
     outyears''.

     SEC. 20007. TECHNICAL CORRECTION.

       Section 258 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985, entitled ``Modification of Presidential 
     Order'', is repealed.

     SEC. 20008. SPECIAL RULE ON INTERRELATIONSHIP BETWEEN CHANGES 
                   IN DISCRETIONARY SPENDING LIMITS AND PAY-AS-
                   YOU-GO REQUIREMENTS.

       (a)(1) Section 252 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 is amended by adding at the end 
     the following new subsection:
       ``(f) Special Rule on Interrelationship Between Sections 
     251, 251A, and 252.--Whenever legislation is enacted during 
     the 104th Congress that decreases the discretionary spending 
     limits for budget authority and outlays for a fiscal year 
     under section 601(a)(2) of the Congressional Budget Act of 
     1974 or in section 251A(b) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985, or both, then, for 
     purposes of subsection (b), an amount equal to that decrease 
     in the discretionary spending limit for outlays shall be 
     treated as direct spending legislation decreasing the deficit 
     for that fiscal year.''.
       (2) Section 310(a) of the Congressional Budget Act of 1974 
     is amended by striking ``or'' at the end of paragraph (3), by 
     redesignating paragraph (4) as paragraph (5) and by striking 
     ``and (3)'' in such redesignated paragraph (5) and inserting 
     ``(3), and (4)'', and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) carry out section 252(f) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985; or''.
       (b) For purposes of section 252(f) of the Balanced Budget 
     and Emergency Deficit Control Act of 1985 (as amended by 
     subsection (a)(1))--
       (1) reductions in the discretionary spending limit for 
     outlays under section 601(a)(2) of the Congressional Budget 
     Act of 1974 for each of fiscal years 1999 through 2002 under 
     section 20002 shall be measured as reductions from the 
     discretionary spending limit for outlays for fiscal year 1998 
     as in effect immediately before the enactment of this Act; 
     and
       (2) reductions in the discretionary spending limit for 
     outlays under section 251A(b) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 for each of fiscal 
     years 1996 through 2000 under section 20002 shall be measured 
     as reductions in outlays for that fiscal year under section 
     251A(b) as in effect immediately before the enactment of this 
     Act.

     SEC. 20009. MEDICARE SAVINGS CANNOT BE USED TO PAY FOR TAX 
                   CUTS.

       Any net savings in direct spending and receipts in the 
     Medicare program for any fiscal year resulting from the 
     enactment of this Act or H.R. 2425 (as applicable) shall not 
     be counted for purposes of section 252 of the Balanced Budget 
     and Emergency Deficit Control Act of 1985.

     SEC. 20010. EFFECTIVE DATE.

       (a) Expiration.--Section 275(b) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended--
       (1) by striking ``Part C of this title, section'' and 
     inserting ``Sections 251, 253, 258B, and''; and
       (2) by striking ``1995'' and inserting ``2002''.
       (b) Expiration.--Section 14002(c)(3) of the Omnibus Budget 
     Reconciliation Act of 1993 (2 U.S.C. 900 note) is repealed.

     SEC. 20011. APPLICATION OF SECTION 251 ADJUSTMENTS.

       Section 251(b)(2) of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 is amended by adding at the end 
     the following new subparagraph:
       ``(H) Special allowance for welfare reform.--If, for any 
     fiscal year, appropriations are enacted for accounts 
     specified in clauses (i) and (ii), the adjustment shall be 
     the sum of:
       ``(i) the excess of the appropriation for the fiscal year 
     for the Child Care and Development Block Grant over 
     $1,082,000,000, but not to exceed $722,000,000 in fiscal year 
     1996 or $1,011,000,000 in fiscal year 1997 through 2002; and
       ``(ii) the excess of the appropriation for the fiscal year 
     for the Family Nutrition Block Grant Program over 
     $3,470,000,000, but not to exceed $692,000,000 in fiscal year 
     1996, $1,307,000,000 in fiscal year 1997, $1,466,000,000 in 
     fiscal year 1998, $1,650,000,000 in fiscal year 1999, 
     $1,838,000,000 in fiscal year 2000, $2,075,000,000 in fiscal 
     year 2001, or $2,324,000,000 in fiscal year 2002;

     and the outlays flowing in all years from such excess 
     appropriations (as reduced pursuant to the limitations in 
     clauses (i) and (ii).''.

     SEC. 20012. SPECIAL RULES APPLICABLE TO DEPARTMENT OF DEFENSE 
                   SEQUESTRATION.

       Section 255 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended by striking subsection (h) 
     (relating to optional exemption of military personnel) and 
     adding at the end the following new subsection:
       ``(j) Optional Exemption for Military Personnel.--
       ``(1) Authority for exemption.--The President may, with 
     respect to any military personnel account, exempt that 
     account from sequestration or provide for a lower uniform 
     percentage reduction than would otherwise apply.
       ``(B) The President may not use the authority provided by 
     subparagraph (A) unless he notifies the Congress of the 
     manner in which such authority will be exercised on or before 
     the initial snapshot date for the budget year.
       ``(2) Authority for Military Technicians and Medical 
     Personnel.--
       ``(A) Whenever the President exempts a military personnel 
     account from sequestration under paragraph (1) and after all 
     other sequestrations to Department of Defense account have 
     been made, the Secretary of Defense may transfer amounts to 
     any appropriation for operation and maintenance for the 
     current fiscal year from amounts available under any other 
     appropriation to the Department of Defense, but--
       ``(i) amounts so transferred shall be available only for 
     the pay of military technicians, the pay of medical 
     personnel, and other expenses of medical programs (including 
     CHAMPUS); and
       ``(ii) the total amount transferred to any operations and 
     maintenance appropriation shall not exceed the amount 
     sequestered from such appropriation.
       ``(C) The authority to make transfers pursuant to 
     subparagraph (A) is in addition to any authority of the 
     Secretary of Defense to make transfers of appropriated funds 
     under any other provision of law.
       ``(D) The Secretary of Defense may carry out a transfer of 
     funds under subparagraph (A) only after notifying the 
     Committees on Appropriations of the Senate and House of 
     Representatives of the proposed transfer and a period of 20 
     calendar days in session has elapsed after such notice is 
     received.''.

     SEC. 20013. TREATMENT OF DIRECT STUDENT LOANS.

       Section 504 of the Federal Credit Reform Act of 1990 is 
     amended by adding at the end the following new subsection:
       ``(h) Treatment of Direct Student Loans.--The cost of a 
     direct loan under the Federal direct student loan program 
     shall be the net present value, at the time when the direct 
     loan is disbursed, of the following cash flows for the 
     estimated life of the loan:
       ``(1) Loan disbursements.
       ``(2) Repayments of principal.
       ``(3) Payments of interest and other payments by or to the 
     Government over the life of the loan after adjusting for 
     estimated defaults, prepayments, fees, penalties, and other 
     recoveries.
       ``(4) Direct expenses, including--
       ``(A) activities related to credit extension, loan 
     origination, loan servicing, management of contractors, and 
     payments to contractors, other government entities, and 
     program participants;
       ``(B) collection of delinquent loans; and
       ``(C) writeoff and closeout of loans.''.

     SEC. 20014. DEFINITION OF PROGRAMS, PROJECTS, AND ACTIVITIES 
                   FOR DEPARTMENT OF DEFENSE APPROPRIATIONS.

       For purposes of the Balanced Budget and Emergency Deficit 
     Control Act of 1985, the term program, project, and activity 
     for appropriations contained in any Department of Defense 
     appropriation Act shall be defined as the most specific level 
     of budget items identified in the most recent Department of 
     Defense appropriation Act, the accompanying House and Senate 
     Committee reports, the conference report and accompanying 
     joint explanatory statement of the managers of the committee 
     of conference, the related classified annexes and reports, 
     and the P-1 and R-1 budget justification documents as 
     subsequently modified by congressional action: Provided, That 
     the following exception to the above definition shall apply:
       For the Military Personnel and the Operation and 
     Maintenance accounts, the term ``program, project, and 
     activity'' is defined as the appropriation accounts contained 
     in the most recent Department of Defense appropriation Act: 
     Provided further, That at the time the President submits his 
     budget for any fiscal year, the Department of Defense shall 
     transmit to the Committees on Appropriations and the 
     Committees on Armed Services of the Senate and the House of 
     Representatives a budget justification document to be known 
     as the ``O-1'' which shall identify, at the budget activity, 
     activity group, and subactivity group level, the amounts 
     requested by the President to be appropriated to the 
     Department of Defense for operation and maintenance in any 
     budget request, or amended budget request, for that fiscal 
     year.
  Ms. PELOSI. Mr. Chairman, I rise in opposition to the budget 
reconciliation bill before the House today. In my view, the Republican 
plan brings nightmares to the American dream of a better life for our 
children and sets the wrong priorities for the Nation.
  While I support the goal of a balanced budget, I do not support the 
specific provisions of the Republican budget. The bill is shaped by the 
Republican priority of promoting the interests of the advantaged over 
the disadvantaged and average working Americans. In my view, a 
bipartisan budget bill, rather than this highly partisan and 
ideological budget, would better serve the American people.


                             tax priorities

  The Republican budget cuts taxes for corporations and the wealthiest 
Americans by $245 billion. More than half of these tax breaks go to 
those making over $100,000 a year, including major tax giveaways for 
wealthy investors and corporations.

[[Page H11193]]

  Rather than asking corporations to be part of the shared sacrifice, 
the budget calls for expanded business tax subsidies of $37 billion. At 
the same time, the budget would raise taxes by $23 billion on 14 
million low-wage workers and their families by cutting the Earned 
Income Tax Credit. Thus, low-income working families supporting more 
than 23 million children will have their taxes raised.
  In fact, under this budget, taxes go up for families with incomes 
below $30,000. Taxes should not be raised on working families in order 
to finance tax breaks for businesses and those who are well-off.


                                medicare

  By far, the largest portion of the spending cuts in the Republican 
budget come from an assault on the two major Federal health care 
programs, Medicare and Medicaid, which together account for half of the 
spending cuts in the budget.
  The Republican Medicare plan cuts $180 billion more than what is 
needed to make the trust fund solvent, inflicts excessive new premiums 
on beneficiaries, forces low-income seniors into managed care, repeals 
important Federal nursing home standards, decimates safety-net and 
teaching hospitals, and weakens fraud and abuse protections.
  The Democratic Medicare alternative, which was defeated in the House, 
would have protected the financial stability of the Medicare Program, 
kept premiums affordable, provided seniors a choice of responsible 
plans, maintained safety-net and teaching hospitals, expanded 
preventive health benefits, and strengthened anti-fraud and abuse 
protection.
  Medicaid cuts compound the problems caused by the Medicare cuts. Poor 
or near-poor elderly (those with monthly incomes below $625 per month) 
may no longer be assured that Medicaid will provide cost-sharing 
protection for their Medicare premiums, copayments and deductibles. 
These low-income elderly are doubly hurt because Medicare premiums and 
copayments will increase substantially at the same time that the 
Medicaid Program stops paying for them.
  The bill also repeals Federal nursing home standards and directs 
States to adopt whatever standards they choose. With the magnitude of 
spending cuts, States will be unlikely to develop and enforce standards 
comparable to current Federal guidelines. The last thing we need to do 
is go back to the dark days of nursing home abuses that led to the 
current Federal standards.


                                medicaid

  The Republican budget repeals the Medicaid Program which provides 
health security to 36 million low-income Americans. Half of the 
beneficiaries are children, 15 percent are people with disabilities, 
and 12 percent are elderly. Medicaid currently pays for more than half 
of all nursing home care.
  The Medicaid Program is replaced by a block grant program where 
States would determine eligibility requirements and the types of 
benefits to be provided. Federal payments to States would be cut by 
$182 million or 30 percent from projected spending under current law.
  Consumers Union estimates that the Medicaid provisions in this budget 
will result in 12 million Americans losing health insurance coverage. 
Because public hospitals and trauma centers are dependent on the 
Medicaid Program, all Americans would suffer a loss of essential health 
care when they need it most, while experiencing a serious, medical 
emergency.
  The last Congress engaged in an intensive debate on how to provide 
universal health care coverage. Unfortunately, due to the complexity of 
the issue and the partisan nature of much of the opposition, no 
legislation was adopted.
  Nonetheless, there was a shared goal by most Members of Congress to 
expand health care coverage. Now, the Republican majority is about to 
take the most dramatic step backwards for guaranteed health coverage in 
American history.


                                welfare

  The welfare provisions in this budget bill would cut off benefits to 
4.8 million children. These cuts are mean-spirited and cheat children 
out of good health, good nutrition, and a bright future.
  This budget cuts food stamps for families with children by $28 
billion, in my home State of California, the Food Stamp Program would 
be cut by $3.7 billion.
  The Republican budget would cut foster care and adoption for 
vulnerable children in the United States by over $6 billion. Where is 
our commitment to help our poorest and most vulnerable children? The 
Republicans would have us balance our budget on their backs, which are 
not strong enough to carry that terrible weight.


                                housing

  The Republican budget would dramatically heighten the crisis in 
America's cities. A walk down the street of any American city today 
presents a graphic portrait of how we need to be increasing our 
commitment to providing affordable housing. Homelessness is on the rise 
and America's working families are the fastest growing portion of the 
homeless population.
  And what impact will this Republican budget have? It will decrease 
the availability of affordable housing by decreasing the tools used by 
the private and non-profit sectors in the battle to end homelessness.
  For example, the Republican budget sunsets the low-income housing tax 
credit. This credit has played a critical role in the production and 
rehabilitation of affordable housing across the country.
  This year's appropriations bill passed by the House cuts housing 
programs by at least 26 percent overall and homeless assistance 
programs by 40 percent. In the absence of Federal funding to provide 
access to safe, decent, and affordable housing for all Americans, the 
tax credit is an essential tool for local communities and non-profit 
organization struggling to house our population.
  But the Republican budget does not stop here. It essentially guts the 
Community Reinvestment Act, one of the most effective tools we 
currently have to promote investment in low-income communities. This 
program has increased self-sufficiency in low-income communities around 
the country and it has had tangible results. There are more small 
businesses, more jobs, and more housing in communities throughout 
America as a result of this program. This budget will have an adverse 
impact on the ability of American communities to build and to rebuild 
themselves.


                             student loans

  A college education used to be a part of the American dream. In 
today's economy, it has become an absolute necessity. And not every 
young person has the means to achieve this. Nearly one-half of all the 
Nation's college students depend on tuition loans to help pay their 
way.
  Yet provisions in this legislation would result in penalties to those 
who take advantage of these aid programs. Elimination or drastic 
reduction of the Direct Student Loan Program would have a devastating 
effect on a great number of schools. Direct loans are being praised by 
students and administrators for speed, efficiency and lack of 
bureaucracy. It is a program that is good for our students and good for 
the country.
  The bill increases the cost of education for parents by increasing 
the variable interest rate on parent loans. An increase in student loan 
fees makes it virtually impossible for schools not to pass on the cost 
of their loan volume fees to the students.
  The Republican majority is attempting to give tax cuts to 
corporations and the rich at the expense of our Nation's children and 
our Nation's future. These extreme cuts could completely undermine the 
stability of the student loan program.


                             pension assets

  The Republican budget allows corporations to siphon billions of 
dollars out of worker's pension funds. The Joint Committee on Taxation 
estimates companies would take up to $40 billion of workers' pension 
funds through this new corporate loophole.
  Only last year, the administration proposed--and Congress on a 
bipartisan basis enacted--safeguards to tighten pension fund security 
in underfunded plans by preventing manipulation of the funding rules. 
The Republican budget undermines these important reforms by encouraging 
companies to deplete pension assets dramatically.
  If companies remove pension assets, thereby jeopardizing the 
retirement years of American workers, the Pension Benefit Guaranty 
Corporation has to pay them. This huge gift to corporations would 
increase risk to American taxpayers.
  We cannot afford another huge Government bailout. Taxpayers have 
already bailed out the Savings and Loan industry. Yet, the Republican 
budget would endanger American taxpayers and threaten the security of 
pensions for American workers in order to provide yet another tax break 
for big business.


                            The Environment

  The devastation to our Nation's public lands and natural resources in 
this bill is beyond understanding. Under the guise of balancing the 
budget, programs to protect the environment have been fleeced while 
great Government give-aways remain cloaked and untouched.
  The Republicans can open up, sell, and privatize our resources, but 
they are unable to reach into the deep pockets that pad Federal 
subsidies to make the cuts that truly should be made. There are plenty 
of other alternatives available to achieve this balancing act. Mining 

[[Page H11194]]

law, grazing law, and timber sales are all areas where fair cuts could 
have been made. But, instead, this budget yields to special interests 
and continues Government giveaways to those who should share in the 
sacrifice necessary to balance the budget.
  How can we truly reconcile these costs to the American taxpayer that 
will not, but should be cut--the millions of dollars in subsidies and 
lost revenues from the private use of our public lands and resources?
  This is a strange way to do business: Sell your assets at fire sale 
prices and then get below-market rates for the major assets you keep.
  The American taxpayer owns our natural resources--they belong to us 
today and to our children tomorrow. But, the American taxpayer loses in 
this bill. We lose the investment we have made for scores of years to 
protect our resources, and we lose our investment in the future.


                          Statement of Values

  Mr. Chairman, the Federal budget should be a statement of our 
national values. This budget does not meet the test of fairness 
demanded by the American people. It reaffirms the Republican Party as 
the party of wealth, power, and privilege. This bill raises taxes on 
average American families in order to provide tax breaks for 
corporations and the wealthiest Americans.
  Whether its Medicare, Medicaid, welfare, student loans, pension 
assets, housing or the environment, the values expressed in this bill 
do not reflect the fairness of the American people. To adopt his budget 
would be to move this country in the wrong direction. I urge a vote 
against this budget.
  Mrs. MALONEY. Mr. Chairman, when speaking about Medicare this week, 
the Speaker said, and I quote, ``Now, we don't get rid of it in round 
one because we don't think that's politically smart and we don't think 
that's the right way to go through a transition. But we believe it's 
going to wither on the vine because we think people are voluntarily 
going to leave it.''
  How can you both be trying to save Medicare and talk about getting 
rid of it at the same time?
  The answer is: you cannot.
  The only true way to save Medicare is to vote against this 
destructive Republican budget bill.
  In fact, between the slashes to both Medicare and Medicaid, $50 
billion will be torn from New York State's economy over the next 7 
years.
  And $12 billion of that will come directly out of New York City 
hospitals.
  These are the same hospitals that are responsible for caring for the 
citizens of America's largest city; that train a disproportionate 
number of our next generation of health care professionals; and that 
conduct cutting-edge research to save and improve our lives.
  This plan will eliminate 140,000 jobs--everyone from doctors and 
nurses to janitors--that maintain the quality of health care and 
training at these institutions.
  This degradation of our hospitals endangers the health care of every 
American.
  However, our seniors and poor children will unfortunately be hurt the 
most.
  More than a quarter of New York's children rely on Medicaid funding 
for their most basic health care needs. This means things like 
immunizations and regular checkups--care that no child in this country 
should be denied. Yet the Republican budget will deny that basic care 
to half-a-million children in New York. That is a disgrace.
  This same budget will deny SSI payments to 65,000 disabled children 
in New York, children whose parents are already struggling to make ends 
meet.
  Some parents may have to choose between poverty and 
institutionalizing their children.
  Our seniors will see their premiums go up more than $400, forcing 
many to choose between basics like food and health care. After all our 
parents have done to build this country and give us opportunities, we 
owe them better than that.
  Mr. Chairman, this budget is destructive to every New Yorker, and I 
urge my colleagues to vote against it.
  Mr. KANJORSKI. Mr. Chairman, I want to express my strong opposition 
to the Republican reconciliation plan and do my part to help explain to 
the American people why the bill is bad for our country and our future, 
particularly in northeastern Pennsylvania. It is appropriate to discuss 
the future of our country in the context of this budget because the 
Republican majority has attempted to sell its plan as the fix for all 
that ails this great Nation. Nothing could be further from the truth, 
and in fact, this legislation will make our problems much worse.
  There are so many things bad about this budget, it is hard to know 
where to start. Let me begin by stating what I believe is good. The 
only redeeming feature of this bill is that it presents a comprehensive 
plan to help reduce our Federal budget deficit. It finally puts on the 
table a detailed Republican budget plan. For all of those years of talk 
by Republicans about the need to balance the budget without actually 
putting forward a detailed, balanced budget plan, including the 12 
years they were in power during the Reagan and Bush administrations, I 
must say: It is about time.
  The hard truth, however, is that for average, hard-working Americans, 
children, and senior citizens, there is little to be happy about. 
Republicans say their plan will balance the budget, but it won't. This 
bill does not actually balance the budget because it continues to rely 
on the surplus of the Social Security trust fund. Without the trust 
fund, the Republican budget would not be balanced
  Republicans claim the budget will benefit senior citizens, but the 
truth is this budget is certain to hurt them. They claim the budget 
will provide more economic opportunity in our country, but it actually 
does nothing to generate jobs and higher wages. Empty claims are made 
that the budget will somehow provide a more promising future for our 
children, but it cuts education, housing, and low-income tax credits 
for working families which make it possible for people to work their 
way out of poverty.
  Who does the budget help? It helps wealthy individuals and large 
international corporations who beg the Congress for massive tax cuts 
and subsidies but who are increasingly investing more of their money, 
and sending jobs, out of the country. It helps corporations who want 
exemptions from important environmental laws. It helps companies who 
want to compensate taxpayers little or nothing for exploiting our 
limited natural resources. Truly, it is a special interest mishmash of 
gigantic proportion hidden behind a wall of rhetoric in support of a 
balanced-budget agenda.
  It is an understatement to say there are many problems with the 
Republican budget. I would like to comment on at least a few of the 
more onerous aspects.


                            senior citizens

  First, let address the effect on seniors in northeastern Pennsylvania 
and around the country. For your information, Mr. Chairman, my district 
has the 11th highest proportion of senior citizens of all congressional 
districts. About 20 percent of my district's population, or 120,000 
citizens, depend on Medicare.

  We held a separate vote on the Republican Medicare plan last week, 
but there is no hiding the fact that Medicare and Medicaid are being 
cut to pay for the giveaways in this budget bill. In fact, the single 
largest part of budget savings in this plan comes from the Medicare and 
Medicaid Programs--more than $450 billion over 7 years, the largest 
cuts in the history of these programs.
  Republicans say that the cuts in Medicare are needed to preserve the 
Medicare trust fund. These words ring hollow from those who opposed the 
creation of Medicare and Medicaid. The truth is that according to the 
Medicare Trustees, cuts of just $89 billion, not $270 billion, are 
needed to preserve the trust fund. Clearly, Republicans are picking the 
pockets of our senior citizens to the tune of $181 billion, to pay for 
their tax cuts and other special interest giveaways. Beneficiaries and 
hospitals in my district could lose up to $1 billion in Medicare 
losses.
  I cannot support such massive cuts in these programs. The best way to 
save money in Medicare and Medicaid is to reform our total health care 
system. Otherwise, the rising cost of providing care to seniors will be 
shifted to working families already struggling to pay for the cost of 
medical care, forcing many more to drop coverage. With more than 53,000 
citizens in my district and 40 million Americans around the country 
currently without health insurance, that outcome is unacceptable.
  I also cannot accept placing huge new financial burdens on seniors by 
doubling the part B Medicare premium. Many seniors can barely afford 
paying for food and rent. We cannot ask low-income seniors to pay more 
for the cost of medical care, when most already can barely pay the 
current cost. We also should not chip away at the quality of health 
care seniors receive by pushing them into managed care, forcing small 
hospitals to close, and reducing regulation on doctors and health 
insurance plans.
  Equally as troubling are massive cuts in Federal spending for nursing 
home care under the Medicaid Program and the elimination of crucial 
Federal protections for nursing home residents. Medicaid pays for the 
care of more than 64 percent of Pennsylvania nursing home residents. 
Pennsylvania will be forced either to raise taxes to make up for lost 
Federal assistance, or lower standards and deny care to the elderly and 
disabled. Seniors and their families must have the security that they 
will not be bankrupt by the health care system as they face old age and 
debilitating illnesses.


                            working families

  Working families will also suffer under this budget. In addition to 
the possibility that they may be forced to bear a greater burden of 
paying for the long-term care of their parents, 

[[Page H11195]]

many will have their taxes raised immediately. The earned income tax 
credit [EITC], which rewards work over welfare, and which was strongly 
supported by Republican and Democratic administrations, is being cut 
back. In Pennsylvania, reductions in the credit mean a tax increase to 
over 455,000 taxpayers at an average rate of $137 per taxpayer.
  In my district, the tax increase on almost 27,000 taxpayers receiving 
the EITC will total more $3.6 million next year, and $25 million over 7 
years.
  Another hit comes from $10 billion in cuts to Federal student loans. 
Interest rates charged to parents to take loans out on behalf of their 
children are increased, and students will have to begin to pay back 
loans sooner, regardless of the fact that it is taking longer and 
longer for graduates to find jobs.


                                children

  Pennsylvania is hit with one of the largest cuts in the Medicaid 
Program, 22 percent, a program which has children as its largest number 
of beneficiaries. More than 18 percent of Pennsylvania children rely on 
Medicaid for their basic health needs. Coverage may have to be 
eliminated for as many as 114,892 Pennsylvania children with these 
cuts.
  Combining these cuts with budget cuts in appropriation bills levy a 
heavy toll on Pennsylvania children. Other budget cuts will, for 
example, deny important new Head Start education funding and cut 
nutrition assistance for 551,000 children just in my State of 
Pennsylvania. Cuts will deny child care to more than 17,000 children 
and reduce foster care and adoption assistance to our State by $390 
million over 7 years. Child protection funds for abused and neglected 
children are cut by a full 21 percent by the year 2002.


                                tax cuts

  Perhaps the most outrageous part of this budget is a $245 billion tax 
cut which benefits mostly the wealthiest Americans. At a time when the 
Republican majority in Congress is proposing to raise taxes on working 
families, cut health care for the elderly, cut education, and cut 
nutrition assistance and child care for children, this is no time to be 
providing a tax windfall to those who do not need tax relief.
  The benefit of more than 52 percent of the tax cuts in the Republican 
plan will go to taxpayers earning more than $100,000 per year, only 1.7 
percent of households in my district. Taxpayers earning more than 
$350,000 a year will get an average tax break of $18,925 per year. 
Astonishingly, taxpayers with incomes below $10,000 will get a tax 
increase of about 2 percent.
  Some Republicans think that making almost $200,000 per year qualifies 
a taxpayer as lower-middle class; one member from North Carolina 
actually said so last week. In fact, he went on to claim that taxpayers 
making between $300,000 and $750,000 per year are middle class. I have 
news for him, there are precious few families in northeastern 
Pennsylvania that make that much; most earn only a small fraction of 
these amounts. This shows how out of touch Republicans are with the 
real world. At the very least, any tax cuts should be targeted to help 
truly middle-class, working Americans.


                           corporate welfare

  Large corporations, of course, are big winners under the Republican 
budget. Corporations would be allowed to more easily withdraw 
contributions made to employee pension funds. Some 22,000 pension 
plans, covering 11 million workers and 2 million retirees are at risk. 
This is nothing more than stealing from the pensions of working 
families. Companies will not even have to notify employees and 
retirees.

  In the long run, the loss of pensions for workers will mean a lower 
standard of living for senior citizens and an even higher level of 
Federal spending on Medicare, Medicaid, and other programs if companies 
default on pension plans. Default could easily occur because present 
pension surpluses are based on inflated stock market prices. 
Government, and therefore taxpayers, will ultimately have to step in 
and make up for pension shortfalls resulting from corporate greed.
  Corporations would also get relief from the repeal of the Federal 
alternative minimum tax, which currently makes sure that companies 
cannot take excessive deductions and credit to eliminate tax liability. 
At least 130 companies between 1981 and 1985 had years where they paid 
no Federal taxes. These companies included General Electric, Boeing, 
and Lockheed, some of the largest in our country. In eliminating the 
minimum tax, multibillion dollar companies can again use loopholes and 
accounting gimmicks to pay less in taxes than most working families.
  Big oil companies would be allowed to drill for oil in 
environmentally-sensitive areas of Alaska, just 6 years after the worst 
oil spill disaster in our history in Valdez, AK. Grazing fees imposed 
in response to environmental degradation on public lands in the west 
will be reduced to the benefit of large, profitable cattle companies.
  Foreign mining companies will continue to be permitted to reap 
billions of dollars off Federal lands, while paying taxpayers pennies. 
One South African firm is seeking to mine Jerritt Canyon in Nevada, a 
project with recoverable resources worth $1.1 billion, and the company 
will pay just $5,080. A Canadian firm will soon mine McCoy Cove in 
Nevada for just $1,000, even though the mine's recoverable resources 
are worth $1.4 billion.


                          economic development

  The Republican budget proposes to eliminate the Commerce Department, 
but in its place establish seven new bureaucracies. Somehow, 
Republicans think that this will save the Government money when 
independent studies of the proposal have concluded that it will 
actually cost more to take this action.
  Worse, the budget decimates funding for important programs of the 
Economic Development Administration [EDA] of the Commerce Department 
which allocates some of the already very small amounts of economic 
development assistance this country spends each year. The EDA has 
helped my district tremendously in the last few years through grants to 
secure new jobs and industries that are economic development anchors in 
Nanticoke, Wilkes-Barre, and Hazleton. In May, the EDA provided an 
important grant for the expansion of Humboldt Industrial Park in the 
greater Hazleton area. The EDA is clearly very important to 
northeastern Pennsylvania and other regions struggling to create jobs 
and economic opportunity for their citizens.


                           what must be done

  Mr. Chairman, I want to reiterate that this bill does not provide 
solutions to our Nation's problems. Few Americans understand that this 
budget does not even truly balance the budget--the primary goal of the 
bill. The only reason the Republican budget reaches a balance under 
budget scoring rules is that it borrows $115 billion from the Social 
Security trust fund. Even worse, it pushes the cost of much of the tax 
cuts off into the long-term future, worsening the budget after the year 
2002.
  This budget is a fraud and a disgrace. Americans should not have to 
rely on the President to stop these measures nor wait for Democrats to 
take control of the Congress to responsibly get our fiscal house in 
order. Yes, we must pass a budget. But we must pass a good budget, 
regardless of what party is in control. A good budget is balanced and 
fair, and this budget clearly fails in both of these respects.
  Working together, I am confident that Republicans and Democrats can 
accomplish many great things in this Congress, including producing a 
budget plan that balances the federal budget. Working together with the 
Bush administration in 1990 the Democratic Congress averted disaster 
and put together a bipartisan deficit reduction bill. Because of our 
deficit reduction efforts both in 1990 and 1993, the deficit has fallen 
from $290 billion in 1992, to $165 billion this year. The deficit is at 
its lowest level as a percentage of the economy since 1979.
  More must be done, and on this issue Republicans and Democrats agree. 
There is an alternative before us which shows that there is clearly 
room for compromise on many of the most difficult issues. I urge my 
colleagues therefore to reject the majority budget bill and work with 
the President and the Democratic minority to produce a good balanced 
budget.
  Mr. LANTOS. Mr. Chairman, many of my colleagues have described the 
fundamental flaws of this disastrous bill--this bill makes huge cuts in 
Medicare, Medicaid, and other programs for low- and middle-income 
Americans in order to finance tax breaks for the wealthy. More than 
half of the $245 billion in Republican tax cuts will go to those who 
earn over $100,000 per year, and at the same time almost seven-eighths 
of middle-income families will actually pay more in taxes or will see 
no benefit at all from this disastrous plan.
  The $270 billion cut in Medicare, which is included in this bill, is 
three times greater than the amount recommended by the Medicare 
trustees--and this provision will force American seniors to pay more, 
limit their choice of doctors, and lead to a reduction in health care 
quality. This legislation abolishes minimum quality standards for 
nursing homes. Another provision of this calamitous legislation allows 
corporations to take $40 billion out of worker pension funds and use 
them for any purpose those corporations choose.
  Mr. Chairman, as I have just enumerated briefly, there are a whole 
host of fatal flaws in this ill-conceived piece of legislation. But in 
the interest of time, I would like to concentrate on a single problem 
in the bill. This one problem is only a single small example of the 
horrendous fundamental defects of this legislation. The problem I am 
talking about is the great pension fund raid of 1995.
  Sometimes, Mr. Chairman, the Congress makes a decision which shows 
remarkable long-term foresight and wisdom. Sometimes, however, it makes 
a decision which shows awesome short-term irresponsibility. Today, 

[[Page H11196]]

we are about to witness such short-term irresponsibility. The 
Republican majority--first on the House Ways and Means Committee and 
now in the full House of Representatives--is marching in lock-step to 
approve a provision which clearly qualifies as one of the most mind-
boggling examples of shortsightedness I have seen since I have served 
in the Congress.
  The Republican's self-imposed deadline to balance the Federal budget 
by the year 2002 has run into the brick wall of no new taxes and 
constituent support for continuing existing Federal programs. Now, the 
Republicans are desperately searching for the magic bullet that will 
balance the budget without cutting Government programs.
  In this atmosphere, some Republicans think they have found such a 
magic bullet. They have proposed a change in pension reserves that will 
raise an estimated $9.5 billion in tax revenue. The proposal does 
indeed sound too good to be true.
  Companies which maintain their own pension programs are required to 
fund the programs at 150 percent of current liabilities. The Republican 
proposal would allow them to fund their programs at only 125 percent of 
current liabilities. The excess in the pension funds could be withdrawn 
by the companies for any purpose, and taxes would be paid on those 
funds. The $9.5 billion in revenues are the estimated taxes that would 
be paid on those funds that would be withdrawn.

  The shortsightedness of that proposal is incredible, particularly 
because there is a massive potential cost to the Federal Government. If 
the companies are unable to fund their own pensions, the American 
taxpayers are left holding the bag. An agency of the Federal 
Government--the Pension Benefit Guarantee Corporation [PBGC]--is the 
ultimate guarantor of all of these private pension programs. If a 
pension plan goes belly up, for whatever reason, the PBGC has the 
obligation to continue funding those pensions.
  As the former chairman of the congressional Subcommittee on 
Employment and Housing, I held a series of hearings on the ability of 
the PBGC to handle potential defaults in private pension programs. The 
conclusion of my subcommittee hearings and the thorough review we 
undertook--as well as the review by independent Government auditors of 
these programs--is that the PBGC could face potentially serious 
unfunded liabilities if there are major pension program defaults. A 
modest increase in pension plan defaults will overwhelm the PGBC's 
resources, and the American taxpayer will be left holding a very large 
bag.
  How better to turn solemn warnings into dire reality than to reduce 
the corporate funding requirements of those pension plans. The short-
term gain of less than $10 billion over the next 7 years--which will 
make a minimal contribution to balancing the Federal budget--could 
result in pension defaults which could cost the American taxpayer in 
the long run many times the minimal amount gained in the short run.
  This is typical of the Republican social and economic legislation 
that we have seen this year. The beneficiaries of this program are the 
corporate fat cats, who will reap a windfall because they will put away 
considerably less for future pension needs. The little people are the 
ones who will suffer. When the PBGC assumes the increased burden that 
will follow as more pension programs go into default, pension 
recipients will be cut. If the PGBC cannot meet its increased 
liabilities, the taxpayers--again working American men and women--will 
have to foot the bill.
  Mr. Chairman, the corporate pension windfall provision of this 
legislation is in and of itself amply reason for rejecting this entire 
budget reconciliation package. But this is only a small example of the 
short-term irresponsibility and reckless policy that this single bill 
contains. I urge my colleagues to reject this bill.
  Mr. Chairman, I ask consent to include in the Record a statement 
issued yesterday by Secretary of Labor Robert B. Reich, who is also the 
Chairman of the Board of the Pension Benefit Guaranty Corporation. 
Secretary Reich's statement clearly and concisely identifies the 
problems with this horrendous provision of the budget reconciliation 
bill.

            Statement of Secretary of Labor Robert B. Reich

       The legislation that Congress is considering this week is 
     exactly the wrong thing to do. At a time when there is 
     widespread agreement that we need to strengthen pensions and 
     increase the savings rate, this legislation sends absolutely 
     the wrong signal.
       I strongly support Congressman Matsui's proposal to strip 
     this pension grab out of the reconciliation bill that will be 
     on the House floor tomorrow. And I support efforts to do the 
     same thing in the Senate.
       I called this a pension grab and that's what it is, pure 
     and simple. It's an attempt to turn the clock back to the 
     1980s, when companies raided tens of billions of dollars from 
     the private pension system and undermined confidence in the 
     system. During those years, there were no restrictions on 
     pension plans and we saw the result--billions of dollars were 
     taken out of the pension system, and much of the money went 
     to pay for corporate takeovers.
       The practice continued until Congress wisely put a stop to 
     it with excise taxes. Now, Congress is about to remove the 
     safeguards which have strengthened the pension system.
       And let's remember whose money will be taken--it will be 
     the money earned by America's working people to pay for their 
     retirement, money they will need to take care of themselves.
       The fact is simple and bears repeating: a plan which is 
     overfunded today can quickly become underfunded next week. 
     Changes in asset values and interest rates can reduce funding 
     levels. Companies in financial trouble will have an incentive 
     to strip assets from pension plans.
       As Congress considers this legislation, one fact should be 
     kept in mind--last year, the pension insurance system was 
     already running a deficit of $1.2 billion.
       When this administration took office, we moved quickly to 
     address the serious problems we found with underfunded 
     pensions. And last year, Congress acted on a bipartisan basis 
     to pass our Pension Protection Act. This legislation would 
     undo the protections in that legislation. This proposal 
     should be rejected.
       As chairman of the board of the Pension Benefit Guaranty 
     Corporation, I'm worried about the pensions of 41 million 
     Americans. For that reason, I urge the House and Senate to 
     halt this pension raid--and I commend the members here today 
     for protecting America's working men and women.
  Mr. TORRES. Mr. Chairman, the effects of this budget on our Nation's 
children are disastrous. These cuts create a system that hits our 
children around every corner: in the classroom, in the home, and on the 
street.
  When our children go to school, they won't find help through unique 
programs. And if your child has special needs or is disadvantaged, this 
budget says ``sorry, we have nothing for you.''
  The tragedy does not end with education. Even the most basic health 
care and nutritional assistance will be denied to millions of children.
  And why?
  Because they had the misfortune of being born into poverty and this 
bill refuses to recognize their innocence.
  My home State of California stands to lose more than any State in the 
Nation. Roughly a quarter of a million disadvantaged students will be 
denied special help with reading, writing, and math.
  And let's not forget the 26 percent of California children who will 
go without basic health care with the reduction of Medicaid.
  What kind of a foundation will our Nation's children have to grow 
from when this Congress refuses to give them stable ground?
  Mr. Chairman, the proponents of this budget can sugar-coat the 
effects of these cuts and swindle the American public; the reality is, 
this budget puts a noose around the neck of every child in America. I, 
for one, will not keep it a secret.
  Mr. de la GARZA. Mr. Chairman, there are many reasons to oppose the 
Gingrich reconciliation legislation. The most tragic aspects of the 
bill are those which are targeted to compromise the well-being of our 
Nation's children. The bill's cuts in Medicaid, Supplemental Security 
Income, education, housing, and nutrition assistance programs are 
terribly misguided. History has shown us that the short-term savings 
attained by undermining the health and well-being of our children will 
come back to haunt us in the future through lost productivity and 
increased health care costs.
  The following administration analysis details the impact the 
Republicans' human services program cuts will have on children in the 
State of Texas.

         IMPACT OF REPUBLICAN BUDGET CUTS ON CHILDREN IN TEXAS


            impact of health care cuts on children in texas

       Eliminates Medicaid coverage for as many as 206,641 
     children in Texas and 4.4 million children nationwide in 
     2002. Currently, 20% of children in Texas rely on Medicaid 
     for their basic health needs. Medicaid pays for 
     immunizations, regular check-ups, and intensive care in case 
     of emergencies for about 1,407,000 children in Texas.
       The Republican budget cuts federal Medicaid funding to 
     Texas by $7 billion over seven years and by 20% in 2002 
     alone.
       Even if Texas could absorb half of the cuts by reducing 
     services and provider payments, it would still have to 
     eliminate coverage for 360,097 people, including 206,641 
     children in 2002.
       Among the children in Texas who could be denied coverage, 
     many are disabled. Medicaid often makes the difference 
     between whether or not a disabled child lives at home with 
     their parents. Medicaid provides valuable services for many 
     disabled children, often making the difference that allows 
     them to live at home with their parents. Medicaid provides 
     for items such as wheelchairs, communication devices, therapy 
     at home, respite care and home modifications. Without these 
     services, parents may be forced to give up their jobs of seek 
     institutional placement for children.

[[Page H11197]]

       Jeopardizes immunizations for children in Texas. The 
     Republican budget repeals the Vaccines for Children program, 
     putting at risk at least $1.5 billion over seven years that 
     would otherwise provide vaccinations for children in Texas 
     and across the nation.
       Cuts Dallas infant mortality project by 52% in 1996. This 
     Healthy Start project provides vital prenatal and health care 
     services to women in the Dallas community of childbearing 
     age. Nationwide, the House cut would deny 1 million women 
     services, affecting the births of 74,000 infants each year.


         impact of cuts on children with disabilities in Texas

       Denies as many as 44,070 disabled children in Texas SSI 
     cash benefits in 2002. The House welfare bill eliminates 
     federal Supplemental Security Income benefits for as many as 
     54% of the disabled children in Texas expected to receive SSI 
     cash benefits in 2002 under current law. Federal SSI cash 
     benefits for children with disabilities in Texas will be cut 
     by $1.2 billion over seven years, affecting as many as 
     755,000 disabled children nationwide in 2002.


        tax increase on working families with children in texas

       2.5 million children in Texas live in working families that 
     will have their taxes raised by an average of $430 in 2002 
     under the Republican budget. The Senate has passed a $43 
     billion tax increase on working families by reducing the 
     Earned Income Tax Credit.
       Families with two or more children in Texas will face an 
     average tax increase of $500.


             impact of education cuts on children in texas

       Denies Head Start to 12,512 children in Texas and 180,000 
     children nationwide in 2002, compared with 1995.
       Denies 100,100 Texas children basic and advanced skills in 
     1996. The Republican budget cuts Title I by $1.1 billion--a 
     17% cut in 1996--denying Title I funding for 1.1 million 
     students in the poorest communities nationwide, including 
     100,100 children in Texas. Title I funds in Texas will be cut 
     by $97.8 million in 1996.
       Cuts Safe and Drug Free Schools, which 1,043 out of 1,053 
     school districts in Texas use to keep crime, violence, and 
     drugs away from 2.0 million children, their schools, and 
     their communities.
       Eliminates Goals 2000, denying improved teaching and 
     learning for as many as 413,000 school children in Texas in 
     1996. By 2002, 949,800 children in Texas would be denied 
     improved education, compared with the President's balanced 
     budget.
       Eliminates the AmeriCorps National Service program, denying 
     3,171 young people in Texas the opportunity to serve their 
     communities in 1996.
       Eliminates summer jobs for 42,491 youths in Texas in 1996 
     and 297,437 youths over seven years. The Republican budget 
     eliminates the summer youth employment program which provides 
     job experience and skills to 600,000 youths each summer.


             impact of nutrition cuts on children in texas

       Cuts nutrition assistance for 1.4 million children in Texas 
     in 2002. The House Republican budget cuts food stamp benefits 
     for families with children in Texas by $3.1 billion over 
     seven years and by 25.7% in 2002.
       Jeopardizes child nutrition programs on which 2.7 million 
     children in Texas depend. The House Republican budget block 
     grants funding for the school lunch and WIC program. 
     Nationally, their budget reduces funding for child nutrition 
     programs by more than $10 billion over seven years and 11% in 
     2002, compared with current law.


  impact of public health and environmental cuts on children in texas

       Allows sewage to flow into waters where children in Texas 
     live and play. The Republican budget reduces new funding to 
     keep water clean by 33% compared with the President's budget.
       Texas will lose $16.7 million to treat waste water 
     pollution and protect public health. The cuts means that raw 
     sewage will pour into local waters--waters that our children 
     often swim and play in--from outdated treatments systems in 
     Texas.
       Jeopardizes the water that children in Texas drink. 
     Republicans are cutting low-interest loans to cities and 
     towns in Texas for drinking water treatment facilities by 
     $42.9 million in 1996.
       Pollutes the air that children living near 32 oil 
     refineries in Texas breathe. These refineries emitted more 
     than 27 million pounds of toxic air pollution in 1993, 
     putting children in the surrounding communities at risk of 
     serious health problems, including cancer and respiratory 
     illnesses such as asthma. The Republican budget halts the 
     President's effort to protect the health and safety of 
     children living near these refineries.
       Exposes children in Texas to hazardous waste. The 
     Republican budget cuts spending on toxic waste cleanups by 
     36%--$560 million--below the President's balanced budget in 
     1996.
       Nationally, five million children under the age of four 
     live within four miles of a Superfund site. These cuts will 
     stop or slow the clean-up of sites nationwide that pose a 
     threat to public health and the environment.
       The Republican cuts will stop or slow the clean-up of at 
     least 4 toxic waste sites in Texas. The Republican cuts will 
     stop or slow the clean-up sites near the following 
     communities in Texas: Jasper, Houston, Texarkana, and 
     Arlington


           impact of cuts on safety net for children in texas

       Denies 30,540 children in Texas child care assistance in 
     2002. The House welfare bill block grants and cuts federal 
     child care funding for low-income children in Texas by $222.6 
     million over seven years, cutting child care assistance to 
     30,540 children in Texas.
       Cuts foster care and adoption for vulnerable Texas children 
     by $359.5 million over seven years compared with current law. 
     The House welfare bill cuts child protection for abused and 
     neglected children in Texas by 24% in 2002.
       Eliminates cash assistance for 5,260 children in Texas 
     simply because they were born to unmarried mothers under 18, 
     when the House welfare bill is fully implemented in 2005.
       Cuts assistance for 222,000 children in Texas simply 
     because their paternity has not been established, when the 
     House welfare bill is fully implemented in 2005.


               impact of energy cuts on children in texas

       Eliminates home energy assistance for 22,325 children in 
     Texas. The Republican budget eliminates $29.1 million that 
     helps low-income families in Texas with their home heating 
     and cooling bills. Lower energy bills allow families to spend 
     more money on basic needs.
       Denies about 1,472 children in Texas protection from bad 
     weather conditions. The Republican budget cuts weatherization 
     assistance for families' homes in Texas by $2.7 million in 
     1996.


              impact of housing cuts on children in texas

       Forces families of 204,700 children in Texas to pay more 
     rent. The Republican budget raises rents by an average of 
     $200 a year for the 1.4 million low-income families with 
     children assisted by Section 8 nationally. The median income 
     of these families is only $6,800.
       Denies families of 5,092 children in Texas the opportunity 
     to move from public housing to renting their own home. The 
     Republican budget eliminates funding for new Section 8 
     certifications and vouchers, denying rental assistance to 
     low-income families and children who wish to live in 
     privately-owned housing.
       Eliminates protection for 4,744 children in Texas from 
     drugs and drug-related crimes in public housing. The 
     Republican budget zeroes-out the Public Housing Drug 
     Elimination program which protects more than 1 million 
     children living in public housing nationwide from drugs and 
     drug-related crimes. Funds will be eliminated for public 
     housing tenant patrols, local law enforcement activities, 
     security personnel, and physical improvements to improve 
     security.
       7,990 children in Texas will be forced to remain in poor 
     and unsafe housing conditions. The Republican budget cuts 
     public housing modernization in Texas by $12.9 million in 
     1996, severely hindering efforts by housing agencies to 
     rehabilitate run down public housing projects and provide 
     much needed security and anti-crime programs.
       10,716 children in Texas will have to go without basic 
     housing needs. The Republican budget cuts public housing 
     operating subsidies in Texas by $13.3 million--a cut of 14% 
     in 1996--forcing local agencies to neglect basic housing 
     needs, such as fixing leaking ceilings and broken windows and 
     providing security and social services.
       Denies assistance to 1,143 homeless children in Texas. The 
     Republican budget cuts homeless assistance by 40% in 1996, 
     cutting funding for the homeless in Texas by $30.3 million in 
     1996.
  Mr. LaFALCE. Mr. Chairman, I rise in opposition to the reconciliation 
bill.
  Balancing the budget and reducing the Federal deficit are worthy 
goals--goals the Clinton administration is aggressively pursuing. But 
there are many ways to achieve those goals, and the Republican package 
before us today chooses the wrong path.
  Any effort to balance the budget must be crafted carefully so as to 
place any new burdens where they can best be borne. The proposal before 
us does precisely the opposite. It is filled with instances in which 
programs which aid working Americans and assist local communities are 
being sacrified so that tax breaks or other advantages can be given to 
the well-off and the privileged.
  I will confine my remarks at this point to the banking portions of 
this bill. But I would note that these provisions are symptomatic of 
what has occurred in the bill overall. The thrust of these provisions 
is to serve the interests of the banks, not the interests of the local 
communities and small businesses those banks are supposed to serve.
  The Community Reinvestment Act [CRA] has been an important means of 
ensuring that lenders make a real commitment to meeting the credit 
needs of the local communities from which they draw their funds. 
Provisions in the banking portion of the reconciliation bill totally 
undermine the CRA program by effectively exempting the vast majority of 
banks from the law's coverage; largely eliminating the only enforcement 
mechanism available; and insulating the vast majority of the Nation's 
banks from public comment on corporate plans that can adversely affect 
the community.
  As ranking Democrat on the Small Business Committee, I particularly 
object to the unnecessary and unjustified prohibition on small 

[[Page H11198]]

business data collection included among the CRA provisions. The 
development of locally based small businesses is critical to the 
economic growth of our communities. Yet we are all aware of the 
problems local small businesses have obtaining capital, and smaller 
firms have always been underserved by traditional lenders. We badly 
need better information in order to objectively assess banks' claims 
that they are adequately serving local businesses and to press for 
greater outreach.
  The gutting of the CRA program was totally unnecessary. The 
Republican proposal actually effected savings substantially in excess 
of the savings required under the Budget Resolution requirements. Yet 
the package then gratuitiously proceeded to gut the Community 
Reinvestment Act program, which brought about only the most minimal 
additional savings.
  This issue simply does not belong in this reconciliation package. 
Some reform of the CRA program has certainly been in order to reduce 
unnecessary regulatory burdens on our smaller financial institutions. 
But we have new CRA regulations that meet the need--they streamline 
bank reporting requirements without eliminating the obligation for 
banks to comply with this important program. The CRA provisions in the 
budget reconciliation bill are simply a gratuitous effort to 
effectively eliminate the program through the back door before recent 
reforms are even given a chance to work.
  This package has the right goal, but the choices made reflect values 
I cannot accept. I would urge my colleagues to vote against this 
legislation.
  Mr. MOAKLEY. Mr. Chairman, I rise today in strong opposition to this 
Republican assault on our Nation's children. It is cruel, it is 
shortsighted, and it is just plain wrong.
  This Republican budget which rewards the rich in our society, cuts 
Medicaid by $182 billion over the next 7 years, and ends its 
entitlement status, leaving it up to the States to decide whether or 
not they want to provide basic health care to children, the disabled, 
and the low-income elderly. Medicaid is a safety net for America's 
children. Although most people view Medicaid as a welfare program, 
nearly 60 percent of Medicaid children are from low-income working 
families. Medicaid actually supports employment since low-income 
working families don't have to choose between working and ensuring that 
their kids receive checkups, immunizations, and basic health care. The 
Medicaid Program gives parents an incentive to stay in the work force 
and not go on welfare in order to qualify for Medicaid. Even Presidents 
Reagan and Bush thought this was a good idea, and expanded the program 
to working families. But today, Mr. Speaker, we are cutting this 
important safety net from America's children. My Republican colleagues 
keep talking about priorities and securing a better America for our 
children and grandchildren, but this bill does nothing of the sort. 
This budget will cripple the future of our children and grandchildren.
  My State of Massachusetts, where we have some of the finest 
hospitals, physicians, and research facilities in the world, will lose 
$4 billion over the next 7 years. These cuts will eliminate Medicaid 
coverage for 113,644 children in Massachusetts by 2002. It will deny 
12,370 disabled children from receiving benefits by 2002. Kids with 
severe disabilities will be denied access to specialty care and their 
parents will not be able to afford to pay for their expensive health 
care bills. 227,000 children in Massachusetts will not receive food 
stamps by 2002, and 582,000 children who depend on WIC will be 
vulnerable when the State decides to use the resources for other 
purposes than ensuring kids get good nutrition. And I could go on and 
on and on.
  But as we debate this draconian budget package and as I listen to the 
Republicans blame the poor, the disabled, and children for our 
country's dire financial straits--I remain confused. How come we can 
still afford a $245 billion big fat juicy tax break and throw the 
Pentagon an extra $7 billion that they did not even ask for? Mr. 
Speaker, this clearly represents the priorities and the tough choices 
of the Republican party. Reward your wealthy friends and step on the 
little guy.
  I urge my colleagues to reject this stealth attack on America's 
children and defeat this budget.
  Mrs. KENNELLY. Mr. Chairman, I am very concerned that section 936 is 
phased out in reconciliation. Section 936 has played a critical role in 
economic development in Puerto Rico--creating and keeping good, high-
quality, well-paying jobs on the island. Many of my constituents in 
Hartford, CT, have friends and relatives employed by section 936 
companies in Puerto Rico.
  I am also greatly concerned that we consider this drastic measure 
just 2 years after dramatic reform of the 936 program and without 
consultation with the Puerto Rican Government. We have barely had time 
to examine the impact of the 1993 changes and yet we are poised to 
eliminate the program. Such actions surely don't facilitate business 
planning.
  I am concerned about the impact on the island as 936 disappears. 
Poverty is already very high and good jobs scarce. What will remain for 
the people of Puerto Rico? I'm afraid that we will only fully realize 
just how effective it has been when the companies that have enjoyed 
section 936 begin to leave for other parts of the Caribbean or Ireland.
  It is because of these concerns that I am supporting Governor 
Rossello's new proposal for economic development in Puerto Rico. The 
Governor has proposed an economic incentive program that would replace 
section 936 with a wage credit to help spur job creation on the island. 
This proposal was presented after the committee mark was drafted, and 
thus was not considered by the Ways and Means Committee. It is my hope 
that Governor Rossello's proposal will be given serious consideration 
in conference and ultimately adopted.
  Mr. RAHALL. Mr. Chairman, I rise in strong opposition to H.R. 2491, 
the so-called Seven Year Budget Reconciliation Act.
  It never ceases to amaze me that, just when you think you've heard it 
all--you hear just one more piece of rhetoric that again, you think 
caps everything else you've ever heard.
  Now as if the changes and cuts in Medicare were not bad enough, I 
read in this morning's Post that just yesterday, Senate majority leader 
and Presidential candidate Dole expressed his pride in his vote, 30 
years ago, against Medicare's enactment. He says he knew even then it 
would not work. He bragged about fighting the fight against Medicare. 
Dole said: ``I am against Government-run health care.''
  So as not to be upstaged and left out of the Presidential hopeful 
limelight, Speaker of the House Gingrich spoke right up about his round 
of massive cuts to Medicare by stating:

       ``Now we don't get rid of it (Medicare) in round one 
     because we don't think that's politically smart and we don't 
     think that's the right way to go through a transition. But we 
     believe it (Medicare) is going to wither on the vine because 
     we think people are voluntarily going to leave it.''

  People--seniors--are not going to voluntarily leave the program, they 
are going to be starved out of their fee for service plans they are now 
in due to a lack of funding, and forced into managed care--and boy, 
wait till seniors find out about managed care. It would be helpful if 
the Republicans would just say what they mean. Not managed care--but 
rationed care for the elderly.
  H.R. 2491 is, without a doubt, the most onerous, burdensome, hurtful 
bill I have ever witnessed in this House in my 19 years service here. 
There are more than 30 major-major changes in existing laws in this 
bill--major-major-changes--reforms that will change the face of how 
this Nation treats children, women who are pregnant and poor, senior 
citizens who are tiresome because they are old, the unemployed and the 
underemployed who are desperately seeking work and a dignity of life; 
young people in search of a college education and a better life for 
themselves and their children; children in need of day care, and their 
parents who would work if it could be found instead of taking welfare; 
for the disabled child and adult--losing coverage under Medicaid and 
Medicare.
  I am deeply concerned for the hundreds of people in my district who 
have written to me about a 40-percent cut in Medicare reimbursement for 
home-delivered oxygen therapy--without which they would not be able to 
breathe. There used to be a joke about taxes--that if it keeps up, 
folks said, first thing you know they will be taxing the air we 
breathe. Well, today's the day.
  As I said, there are over 30 major changes in current law in this 
bill, not the least of them is the decimation of the Earned Income Tax 
Credit for working families with children. Not the least of them is a 
provision that invites, encourages corporations to raid workers' 
pension funds. Let us hope that, when those workers retire, the money 
will be there to pay their pensions--but do not hold your breath. Just 
one investment gone bad can wipe out a company's pension plan 
overnight.
  And lest anyone forget--veterans are also mistreated under this so-
called budget reconciliation bill--let me just say that cutting $6.5 
billion from veterans health, housing, education and other programs is 
no small amount.
  This bill codifies into law the massive cuts in Medicare and 
Medicaid, and it codifies into law the so-called Welfare reform bill 
passed by the House earlier this year.
  There will be no cash assistance to teens who have babies--and this 
is an unacceptable encouragement and incentive for these young women to 
get abortions--to kill their unborn babies. This is unconscionable.
  Mr. Speaker, this bill decimates at least 30 major programs. I call 
this the Republican Judas bill. Republicans have brought this bill to 
the floor for 30 pieces of silver.
  The bill specifically does the following things, and I am providing 
estimated impacts on various programs and populations in West 

[[Page H11199]]

Virginia and in my Third District as available to me:
  1. Cuts $270 billion from Medicare (but we still have not seen the 
language--text to be supplied they say--325,000 seniors in West 
Virginia will be hurt by this cut, paying up to $1,800 more per 
individual and $3,600 for couples for health care by increasing 
premiums to $93 a month; requiring a 20 percent copayment for home 
care; by increasing the $100 deductible to $150 and above in the out 
years; by starving the fee for service program, forcing seniors into 
managed care plans.
  2. Cuts the wealthiest Americans taxes by $245 billion--giving them a 
tax break of up to $20,000 a year, but only approximately $159 for 
families with incomes between $20,000 and $30,000 a year (while 
increasing taxes by up to $2,600 a year for families earning $28,500 or 
less by repealing the EITC).
  It is important to note here that this bill also repeals the 
Alternative Minimum Tax [AMT] for huge corporations, which means that 
more than 130 of largest U.S. companies in the United States will not 
have to pay any taxes.
  3. Cuts $182 billion from Medicaid and block grants it, hurting 
children, the elderly, the poor and the disabled (West Virginia's 
Medicaid cuts by 2002 will amount to 42 percent of its funds, 
terminating benefits by 2002) for an estimated 140,000 out of current 
367,000 recipients of Medicaid for a total of $4.5 billion over 7 years 
(and out of approximately 548,958 seniors who will be eligible in WV by 
2002). It includes terminating benefits also to children and disabled 
persons, and will deny long-term nursing care to 26,000 seniors.
  4. Reduces the Earned Income Tax Credit by $23 billion, raising taxes 
on the most vulnerable among us (there are 38,500 families eligible for 
EITC in WV's Third Congressional District, and 93,834 families 
throughout the State). Eligible families can lose up to $2,600 per year 
depending upon income and number of children.
  5. Allows corporations to raid worker pension funds to the tune of 
$40 billion; (bad investment of pension funds could wipe out workers' 
pensions overnight; the plan raises revenue for first few years but is 
estimated to increase the deficit by $32 billion in the out years of 
the 7 year budget). Welcome to the revolution all corporate raiders.
  6. Terminates the low-income housing tax credit (to save $3.5 
billion).
  7. Eliminates the student loan interest exemption, costing students 
$3.5 billion (in West Virginia 39,500 students will pay as much as 
$2,111 more for college loans, and as much as $9,424 for 5,600 graduate 
students; it denies Pell grants to 2,600 students in our State in 1996 
alone).
  8. Cuts $1.1 billion from the title 1 education program for poor 
elementary school children in need of remedial instruction in reading 
and math (5,999 West Virginia children will be cast aside when the 
State loses more than $12 million in title funds).
  9. Cuts $6.4 billion in veterans benefits by rounding down their 
COLA's repealing automatic compensation, and increasing copayments for 
their drugs. (This will affect 62,700 veterans in the Third 
Congressional district in WV).
  10. Terminates the Federal Direct Student Loan Program, eliminates 
service improvement and costing schools already in the program 
additional money. (There are 25 colleges, universities, and trade 
schools currently in the direct lending program, six of which are in 
the Third District).
  11. Raises interest rates on education loans to parents.
  12. Cuts $1 billion in funds to oversee the Federal Student Loan 
Program.
  13. Dismantles the Commerce Department, replacing it with 7 new 
agencies (new costs of 7 new agencies to be supplied according to the 
Republicans).
  14. Increases HUD rental payments by $4 billion.
  15. Increases contributions for GI bill benefits by $1 billion.
  16. Block grants and cuts welfare spending by $102 billion (WV would 
lose approximately $90 million, affecting 17,000 children who will be 
dropped because they are current recipients of AFDC, and 47,000 
children because they are in families who have been on AFDC more than 
60 months; $134 million in food stamp assistance affecting 62,500 
persons; a loss of $17 million in child protective/foster care 
services; loss of $10 million for WIC services to pregnant women).
  17. Repeals the school lunch/breakfast programs (WV loses $4.2 
million a year, affecting 195,130 West Virginia children).
  18. Open Alaska's Arctic National Wildlife Refuge to oil exploration 
for $2.3 billion.
  19. Giveaways to western mining companies that pay for land but not 
silver and gold beneath it.
  20. Allows ranchers to pay less for grazing fees.
  21. Weakens community reinvestment act by allowing banks to self 
certify that they are in compliance with CRA.
  22. Eliminates Federal Housing Administration's foreclosure relief 
program.
  23. Eliminates affordable housing programs run by the RTC and FDIC 
(reduces spending on public housing capital 46 percent below the 
President's request, by cutting $2.7 million in 1996 alone, and cuts 40 
percent from assistance to homeless persons at a cost of $1.4 million 
in West Virginia).
  24. Extracts $10 billion from Federal worker retirement.
  25. Repeals Service Contract Act giving prevailing wages to workers 
such as janitors, laundry helpers, and security guard personnel 
creating a real underclass of working Americans who already earn very 
low wages.
  26. Makes $13 billion in unspecified agriculture savings (text to be 
supplied, they say) (from what we know, West Virginia loses $3 million 
in farm spending along with drastic reductions in support for commodity 
programs).
  27. Taxes innovation by diverting fees paid by users of the Patent 
and Trademark office.
  28. Increases electric rates for rural consumers by selling power 
marketing administrations.
  29. Exempts special tariffs for imported Timex watches--competing 
against our own industry and its workers.
  30. Summer jobs are elminated, cutting West Virginia by $9,342,000 
affecting 6,460 youths; dislocated worker training cut by $3,646,000 
affecting 1,490 West Virginians; adult training dollars cut by 
$1,848,000 in WV affecting 690 adults; older American employment 
programs in WV cut by $330,000 affecting 80 senior citizens; safe and 
drug-free schools funding in WV cut by $1,812,000 affecting 52 out of 
55 county programs; senior nutrition programs in WV cut by $189,000 
affecting 122,900 seniors; Head Start is cut by $1,073,000 affecting 
420 Head Start children (if not more), denies 6,850 disabled children 
SSI cash benefits in 2002 (55 percent of those now eligible) by cutting 
$195 million.
  Mr. BORSKI. Mr. Chairman, I rise today to express my deepest 
opposition to H.R. 2491, the Republican Budget Reconciliation Act. This 
legislation robs retired and working Americans of their hard-earned 
benefits and pay in order to lavish huge tax breaks for the wealthiest 
Americans.
  The majority's plan cuts $270 billion from Medicare and $170 billion 
from Medicaid over the next 7 years in order to pay for $245 billion in 
tax breaks for the wealthy.
  In Pennsylvania, the second oldest State in the Nation, one out of 
six residents is a Medicare recipient and one out of seven is a 
Medicaid recipient. In the third congressional district, the 20th 
oldest district in the Nation, approximately 100,000 residents rely on 
Medicare. Not only will the senior citizens in my district suffer, but 
all citizens, our health care system and the entire Philadelphia 
economy will be endangered by these insidious cuts. As a result of the 
majority's plan to gut Medicare and Medicaid, an astounding $531 
million in revenue will be withdrawn from the hospitals in the third 
congressional district over the next 7 years. Hospitals in Philadelphia 
will lose over two billion dollars, and across Pennsylvania, seven and 
a half billion dollars will no longer be available to protect the 
health of our citizens.
  Let me give you an example of one particularly vulnerable hospital. 
At Episcopal Hospital in Philadelphia, 88 percent of the people who 
enter the hospital are Medicare or Medicaid beneficiaries. This puts 
Episcopal Hospital at the top of the critical list, a record of 
hospitals in danger of closing due to these cuts. Eleven hospitals in 
Philadelphia, including three in my district, are on that dreaded list. 
In Pennsylvania, a total of 54 of our 238 hospitals have the misfortune 
of making the list. If these cuts are approved, I don't know how 
Episcopal Hospital, or the other endangered hospitals, will survive.
  The closing of these local hospitals would cause some 348,000 
patients across Pennsylvania to lose access to vital health care 
services. Health care workers--as many as 40,000 in Pennsylvania, over 
25,000 in Philadelphia and up to 6,000 in the third district alone, 
will be at risk of losing their jobs. This devastating job loss means 
pain for individuals, as well as ruinous economic consequences for 
their communities.
  Will these cuts improve Medicare for senior citizens. The answer is a 
resounding, ``no''. Senior citizens will pay more for their health 
care, have less choice regarding their doctor, and receive a lower 
quality of care. Balance billing protection, which prohibits healthcare 
providers from charging seniors more than 15 percent above the Medicare 
reimbursement rate, will be eliminated. Seniors who enroll in HMO's 
because it has become financially impossible to remain with their 
family doctor and will have no protection against additional charges 
once they are locked into an HMO. That's the bad news. There is no good 
news in this Republican plan for Medicare.
  But what this plan does to Medicaid is even worse. Everyone knows 
that Medicaid is primarily for those who are less fortunate. But 

[[Page H11200]]

what people across America don't realize is that Medicaid also pays for 
nursing home care of senior citizens. In Pennsylvania, 65 percent of 
all long-term care costs in nursing homes are paid for by Medicaid.
  What happens to a senior citizen who needs to go into a nursing home? 
First, you learn that the cost of a modest nursing home averages about 
$4,000 a month. Then, you learn you must exhaust all your savings, 
which you have worked so hard to accumulate over your lifetime, to pay 
for nursing home care. Then, when your savings are gone, Medicaid 
provides the nursing home care and safety net you so desperately need.
  Under this Republican plan, this critically needed safety net that 
Medicaid provides is gone.
  The loss of the Medicaid safety net will harm not only seniors, but 
their families as well. Medicaid has always made sure not only that 
seniors would be cared for, but that their grown children, struggling 
to provide for their own families, would not be financially devastated 
by exorbitant nursing home costs. As a result of these cuts, this 
safety net for families is gone, too.
  Certain laws that enable the Government to stop fraud, waste, and 
abuse are gone as well. For those who are still able to afford nursing 
home care, the guarantee that they will receive quality care is now 
gone, because the Republican plan eliminates standards for nursing 
homes, formulated in 1987, which protect nursing home residents from 
negligence and abuse.
  In America, 40 million Americans, many of them working people, have 
no faith insurance. Our goal should be to help all people--especially 
our seniors, children, the disabled, and those who go to work each and 
every day--obtain health care coverage. Under the Republican plan, the 
only thing we are guaranteeing is that the number of uninsured 
Americans will grow by at least 8.8 million.
  These exorbitant and heartless cuts are not designed to fix or save 
Medicare. They are being enacted in order to give $245 billion in tax 
breaks to the country's wealthiest individuals. Despite all the 
rhetoric from the majority, one fact is clear: the savings from 
Medicare will not go back into the Medicare trust fund. They will pay 
for tax breaks for the wealthy. Our senior citizens on fixed incomes 
cannot afford these increased costs. The Medicare system cannot afford 
these excessive cuts.

  I have traveled my district and asked hundreds and hundreds of my 
constituents if they support $270 billion in Medicare cuts and $170 
billion in Medicaid cuts in order to provide $245 billion in tax breaks 
for the wealthiest in our country. The answer is always the same--No.
  Mr. Chairman, the Republican majority is not content with their 
attack on America's senior citizens. They have expanded their assault 
to include our Nation's hard-working families. The majority has 
proposed drastic cuts and allocation formula changes in the highly 
successful earned income tax [EITC] program. This program provides a 
refundable tax credit to lower income, working Americans in order to 
keep them off welfare and in the work force.
  At a time when the real earnings of the American working class are 
sinking to historic lows, these EITC changes in the Republican budget 
reconciliation effectively raises taxes by $22 billion for more than 14 
million hard-working families. In northeast Philadelphia alone, 21,000 
individuals will be impacted by the cuts at a loss of over $31 million.
  Under the measure, non-taxable Social Security benefits and 
retirement income would be counted for purposes of determining if 
someone is eligible for EITC, effectively limiting the possibility of a 
great number of American families from participation in the EITC 
program. In addition, this proposal phases out the earned income tax 
credit faster than under current law, so that certain families eligible 
under current law would be denied the credit because their income would 
be too high, while other families would receive a smaller credit than 
they would under current law. For example, a working family of four 
making approximately $27,000 a year will no longer be eligible for the 
EITC credit, effectively raising taxes on hard working families.
  For two decades, the EITC program has enjoyed strong bipartisan 
support. It has been the most effective work-promoting program of the 
Federal Government. Although the Republicans praise the virtues of 
self-reliance, their actions in this bill will severely reduce work 
incentives for the segment of the work force that must struggle to 
maintain stable work and family lives.
  Mr. Chairman, the Republican majority speaks about building a secure 
future for our children, yet their budget reconciliation proposal will 
slam the door of educational opportunity on young people across the 
country. This proposal unfairly targets middle-class American families 
by eliminating over $10.2 billion from valuable Federal student aid 
programs.
  In this modern day, where an advanced educational degree is essential 
for success in the global marketplace, the Republican budget proposal 
would effectively take a college education out of reach for middle and 
working class families.
  The majority's proposal would terminate the Federal direct student 
loan program and eliminate the provision of current law under which the 
Federal Government pays the interest costs of student loans during the 
first six months after graduation. As a result, the cost of a college 
education would rise by as much as $3,100 for undergraduate students 
and $9,400 for graduate students.
  In addition, this proposal would increase the interest paid by 
parents on Parents' Loans for Undergraduate Students [PLUS] that they 
take out to help finance their children's education. In Pennsylvania's 
Third Congressional District alone, over 10,000 PLUS loan recipients 
would be forced into higher interest rates, while at the same time, the 
Republican proposal caps the amount which American families can borrow 
from the Federal Government to pay for the education of their children.
  At a time when we should be placing great emphasis on the education 
of our children, who are our Nation's future, the Republican budget 
reconciliation will make it harder for American children to succeed in 
the global marketplace.
  Mr. Chairman, we all want to balance the budget. But there is a right 
way to do it and a wrong way to do it. The Republican reconciliation 
bill is the wrong way to do it. The Republican majority is inflicting 
this pain on the American people not just to balance the budget, but 
also to allow them to enact the crown jewel of their Contract With 
America's wealthy and corporate interests--tax breaks for the wealthy.
  The majority speaks of family values, but, it is clear that the only 
families the majority really values are wealthiest ones. Most American 
families--those earning under $50,000 a year--will lose $648 or more 
under the GOP plan. Meanwhile the wealthiest American families--who 
earning over $350,000 a year--will gain over $14,0000 under this plan.
  Mr. Chairman, where I come from in Philadelphia, anybody earning 
$350,000 a year is a very wealthy person. They are in the upper class, 
not the middle class. And they do not need a huge tax break.
  And Mr. Chairman, in Philadelphia, where the large majority of the 
people are in the hard-working middle class, struggling to make ends 
meet, the last thing they need is to see their taxes increase in order 
to benefit the wealthy. What the workers and families of my district 
need is fairness and equity and compassion--not more taxes to finance 
tax cuts for the rich, and not devastating cuts in education and 
Medicare and Medicaid.
  I will vote against this mean-spirited legislation and I urge my 
colleagues to do the same.
  Mr. QUINN. Mr. Chairman, as a leader in the movement to eliminate 
wasteful government spending, I rise today in support of H.R. 2491, the 
Seven Year Balanced Budget Reconciliation Act.
  This measure will achieve the first balanced budget in more than a 
quarter of a century, and is the right thing for America's families. 
This is a historic vote and one that will be remembered as the first 
step to ensuring the future of our children and our grandchildren.
  I promised in my first campaign more than 3 years ago to fight for 
reform and to balance the budget. This bill goes a long way in 
accomplishing both those goals. We have reached a crisis point. The 
current Federal debt is approximately $4.9 trillion, amounting to 
$19,000 for every man, woman, and child in America.
  This bill means real money for America's families. It allows the 
working men and women of this country to keep more of their hard earned 
money in their own pocket, instead of sending more and more of it to 
Washington.
  It simply boils down to doing the right thing for America and its 
families. By balancing the budget, we'll go a long way toward ensuring 
that the American dream--the dream that our children will be better off 
than we are--will continue for generations to come.
  The Seven Year Balanced Budget Reconciliation Act overhauls nearly 
every major Federal spending program except Social Security. The 
measure also includes a plan to preserve, protect and strengthen the 
Medicare Program which still allows Medicare spending to increase for 
every senior, every year.
  The bill also includes genuine welfare reform which emphasizes work, 
families, and hope for the future. Under welfare reform, States are 
given the authority to punish food stamp traffickers. We finally will 
be able to protect our innocent children from criminal activity that 
threatens their health and well-being.
  As a strong advocate for reforming the Medicaid Program to allow 
States like New York to reinvent Medicaid, with other members of the 
New York delegation, I was able to obtain significant improvements for 
the State. In a move that will literally mean billions of dollars for 
New York, congressional leaders agreed to 

[[Page H11201]]

change the provision and gradually reduce the rates of growth so that 
the State has more time to reform its system. An additional $5.8 
billion will be made available for Northeastern States, particularly 
New York and New Jersey.
  Although I see this improvement as a step in the right direction, 
I'll be working for additional improvements in the Medicaid formula.
  We cannot turn our backs on the future to continue the failed 
policies of the past. The most significant gift we can leave our 
children is a legacy of sound government.
  Mr. MONTGOMERY. I want to commend the Ways and Means Committee for 
reporting legislation which ensures that employers who reemploy 
veterans after military service are not penalized for restoring their 
pension benefits. Last year, the Congress enacted the Uniformed 
Services Employment and Reemployment Rights Act of 1994 [USERRA]. This 
law guarantees that reservists and other persons who go on active 
military duty will be restored to their civilian jobs without any loss 
of seniority.
  This law originated in 1940 and has been the subject of a number of 
Supreme Court decisions. The Supreme Court has held that one of the 
most important benefits of seniority, the right to a pension, is a 
protected benefit to which a veteran is entitled.
  In discussions with various pension experts last year, it was pointed 
out that technical amendments to the Internal Revenue Code were needed. 
The existing law limits employer and employee contributions to tax-
favored pension plans as well as benefits payable to reemployed 
veterans. Other requirements for which there is no special provision 
for contributions with respect to a reemployed veteran include the 
limit on deductible contributions and the qualified plan non-
discrimination, coverage, minimum participation, and top-heavy rules.
  Earlier this year, I introduced legislation, H.R. 1469, to allow 
employers who reemploy veterans to comply with both USERRA and the 
Internal Revenue Code when they endeavor to restore veterans' pension 
benefits as required by USERRA. The bill would provide assurance to 
employers that such contributions would not in any way disqualify a 
tax-favored plan. I am pleased that the bill before the House today 
includes the text of H.R. 1469.
  It is very important to note that the legislation before the House 
today would allow employers and pension plans to make contributions for 
any veteran--World War II, Korea, Vietnam, as well as Persian Gulf. In 
essence, this provision corrects an oversight contained in the 1974 
ERISA legislation which failed to take into consideration the rights of 
reemployed veterans, and is a good measure for employers as well as 
veterans.
  Mr. MOAKLEY. Mr. Chairman, I rise in opposition to the Republican 
budget reconciliation bill. The bill makes unprecedented cuts in the 
Federal Government's investment in education, health care, and job 
training in order to give wealthy Americans a very big tax break.
  Over the next 7 years, the Republicans will cut funding for education 
programs by 33 percent. That means 2,622 students in Massachusetts will 
be denied Head Start, 16,200 Massachusetts students won't get remedial 
education for basic and advanced skills, 98,900 school children in 
Massachusetts will not benefit from Goals 2000, and 12,100 students in 
Massachusetts won't have summer jobs.
  The Republicans went to cut funding for the Safe and Drug Free 
Schools Program. This reduction will cripple our efforts to curtail 
drug use and keep drug related violence out of our schools. Nearly 
every school district in my home State of Massachusetts reaps the 
benefits of this program.
  Despite several decades of Federal investment in elementary and 
secondary education, many classes are still overcrowded, many school 
buildings are deteriorating, and many classrooms don't have books, 
pens, and paper. Clearly, this is not the time to cut Federal funding 
for education.
  In terms of higher education, the Republicans propose to eliminate 
and scale back many Federal financial aid programs. Many parents in my 
congressional district work very hard to send their children to college 
in the hopes of attaining a better life. Without Federal financial 
assistance, the cost of higher education would be prohibitive. Do my 
colleagues understand that the cutbacks in the Republican budget will 
betray the hopes and dreams of millions of high school seniors?
  I can not in good faith vote for a bill that cuts funding for 
education in order to pay for a very big tax break for the wealthy. 
These cuts are short sighted and will lead to embarrassingly low 
educational standards, higher property taxes, and many social problems 
caused by a poorly educated society.
  Mr. BUYER. Mr. Chairman, we have kept our commitment to the American 
people and brought an end to the Washington tax and spend practices of 
old--which have saddled our Nation with almost $5 trillion of debt.
  The question about balancing the budget is not simply about financial 
practices, but rather a question of fiscal morality. We cannot continue 
to spend money that we simply do not have and pass the bill on to our 
children.
  On October 20, 1995, the Chairman of the Federal Reserve Board, Alan 
Greenspan, again called for Congress to balance the Federal budget. He 
said doing so would have a positive effect on America's economy. A 
balanced budget will mean lower mortgage rates and lower interest 
rates. It means lifting our children from their growing share of the 
national debt. In fact, a child born today will pay and average of 
$187,000 in interest alone on the debt.
  We have put America on the path to a balanced budget by eliminating 
wasteful and bureaucratic programs. We have returned programs back to 
the State and local governments where they can be run more efficiently 
and effectively.
  The debate is clear: Those who think wasteful Government programs 
should be cut or eliminated, inefficient programs reformed, and 
Americans given tax relief, will vote for this balanced budget. Those 
do not, will vote against this historic balanced budget plan and 
continue the status quo.
  Ms. KAPTUR. Mr. Chairman, I rise today in strong opposition to the 
Gingrich budget reconciliation bill.
  First, let me state at the outset that I support a balanced budget. I 
voted in favor of the balanced budget amendment that passed in January 
1995. I am committed to putting our fiscal house in order by supporting 
further cuts in spending to reduce the deficit. However, I cannot in 
good conscience support this budget bill, which would unfairly place 
the burden of deficit reduction on the backs of our Nation's seniors, 
children, disabled citizens, students, veterans, and working families, 
in order to provide a tax cut to the privileged few.
  Overall, middle-income working families earning less than $50,000 
will lose $648 a year as a result of the tax provisions and cuts in 
programs under this bill, while wealthy families will receive an 
average tax cut of $14,050 per household. This bill imposes a $23.3 
billion tax increase on 14.2 million working families with incomes 
under $28,553. Two-thirds of the $900 billion in program reductions in 
H.R. 2491 come from programs that are absolutely vital to the health, 
welfare, and safety of working men and women, their children and 
families--$270 billion from Medicare; $170 billion from Medicaid; and 
$200 billion in education, health and safety, and job training 
programs.


                                medicare

  The Republican bill makes deep cuts of $270 billion and sweeping 
changes in the Medicare Program, which provides medical insurance to 
more than 36 million older and disabled people in our country. This 
body should have held comprehensive hearings on how best to structure 
the most extensive changes to the program since its inception 30 years 
ago--but did that happen? No, it did not. The legislative process used 
to move the Republican Medicare plan is a disgrace. Their plan was 
introduced on September 29, and one day of hearings was held before it 
was even distributed to Members. The House then left town for a 10-day 
recess. Upon returning on October 9, around-the-clock markups in two 
committees proceeded quickly. The very people who will be affected the 
most by these cuts, our Nation's seniors, were subject to arrest and 
silenced as the Republican leadership rushed their plan through the 
committees. We have spent 48 days holding hearings on Whitewater, Ruby 
Ridge, and Waco; why couldn't we manage to hold more than 1 day of 
hearings on Medicare?
  The trustees of the Medicare Program signalled earlier this year that 
reform is needed. I agree. There is a short-term financing crisis in 
the part A hospital insurance trust fund and a long-term financing 
challenge that needs much more careful consideration. But, for 
starters, the Republican proposal makes three times more in cuts than 
are immediately necessary to make Medicare solvent in the short term. 
Thus, premiums will increase by about $400 per senior. One-third of all 
senior citizens in our Nation basically live on Social Security. If 
costs go up, they will have to choose between health care and other 
essentials. Seniors will have to give up their own doctors as they are 
herded into HMO's with which seniors have little experience, as only 9 
percent of current seniors participate in HMO's. Seniors will be kicked 
out of nursing homes, or their families will be bankrupted paying their 
$40,000 a year tab, due to deep cuts in long-term care.

  The Gingrich plan makes Medicare solvent only until 2006--the same as 
Democratic plans that cut only one-third as much. This much is clear: 
The Republicans had to slash Medicare to pay for their $245 billion tax 
break for the privileged few--but not a single penny goes to shore up 
the Medicare trust fund.
  One of the most unsettling aspects of the Republican plan is its 
utter failure to address waste, fraud, and abuse. Their plan will make 

[[Page H11202]]

it easier for unscrupulous medical practitioners and insurance 
providers to beat the system, and harder for prosecutors to convict 
them. It will weaken existing laws that punish fraud and abuse, and 
raise the burden of proof that the Government would have to meet in 
order to prove such cases. This bill would weaken the law that 
currently requires providers to ensure that the claims they submit to 
Medicare are true and accurate. It also creates new exemptions for 
those who offer incentives to physicians for patient referrals. 
Moreover, this bill would mean an even larger decrease in the already-
insufficient number of fraud inspectors at the Department of Health and 
Human Services, at a time when over half the States in our country have 
no fraud inspectors whatsoever, and 11 States have only two.
  I recently met in my district with a group of citizens representing 
health professions, business, labor, retirees, insurance, and 
hospitals. The consensus of that group was that these cuts are 
draconian. They told me that any changes in Medicare that result in 
savings should be used for the preservation of Medicare, not tax cuts 
for the privileged few. They said we must fight waste, fraud, and 
abuse, as well as the spiraling costs of prescription drugs, labs, 
dental care, and durable medical equipment. Based on their assessment, 
it is clear that the Republican plan does not address the needed 
reforms in Medicare.


                                medicaid

  The Republican Medicaid plan is shocking. Not only does their plan 
slash $170 billion from the program, eliminating health care coverage 
for millions of children, elderly, and disabled people in our Nation. 
But it also completely abolishes national standards for nursing homes 
and institutions caring for the mentally retarded. The Republicans want 
to leave this matter up to the States. The majority party must have 
forgotten why these Federal standards were created in the first place. 
It was because the States had failed so miserably in maintaining decent 
conditions and health care in many of these facilities. With their 
plan, we are faced with the prospect of returning to the days when 
patients' basic nutritional and medical needs were not met and when 
caregivers regularly abused patients with inhumane practices, such as 
tying them down or drugging them up. Their plan also eliminates spousal 
asset protection in the law, which means that States could require 
spouses of nursing home residents to sell their homes and cars to pay 
for their spouses' care. This plan will force spouses into poverty. It 
will also allow States to require adult children to pay for their 
parents' nursing home bills, forcing families to make the impossible 
choice of nursing home care for their parents or education for their 
children.


                                veterans

  This bill would be a major blow to America's veterans and their 
families. It would force veterans to pay more for health care benefits 
through the year 2002, by raising prescription copayments, tightening 
collection procedures, and increasing per-diem charges for nursing home 
and hospital care. And the Republican bill would limit to $90 per month 
need-based pension benefits paid to nonservice connected veterans and 
surviving spouses who do not have children and who are in Medicaid-
participating nursing homes.


                        earned income tax credit

  I strongly oppose the provision in this bill that would raise taxes 
on working Americans earning under $50,000 a year by cutting the earned 
income tax credit by $20 billion. Millions of working Americans who are 
playing by the rules and paying taxes, but still earning so little that 
they and their families struggle to make ends meet will be hurt by this 
legislation. The ironic tragedy is that their sacrifice will go to pay 
for tax benefits for those who do not need them, to the wealthiest 
corporations and individuals of our Nation. It is the height of 
dishonesty to propose a $20 billion cut in a program intended to reward 
honest labor--to make sure that work is more profitable than welfare--
and then to hand the benefits of those cuts to multinational 
corporations and the privileged few.


                               education

  The Republican bill jeopardizes the ability of young people in our 
country to invest in their own future. This bill would repeal the 
direct student loan program, and would cut other student loan 
programs--which are so vital to the educations of children from working 
families--by a total of $10.2 billion, in order to finance tax breaks 
for the well-to-do. The bill eliminates the interest-free grace period 
for new student loans, increases loan origination fees, adds new rebate 
fees, reduces the loan guarantee to 95 percent, and increases the 
interest rate for PLUS loans. Their bill also eliminates the direct 
student loan program at the request of the banking industry. This 
program is popular with students because they get their money faster, 
and with college administrators because the loans are simpler to 
administer. In short, this program works. Banks, however, preferring 
the profits and low risk of the guaranteed student loan program, 
demanded that the competition from the direct student loan program be 
eliminated. The Republicans have delivered a handout to the private 
financial institutions at the expense of students and colleges across 
our Nation.


                           Corporate Welfare

  Tempted by the cover that this massive, multibillion-dollar bill 
gives them, the Republicans have added special interest corporate 
welfare provisions that would have little chance of becoming law if 
considered on their own, and have missed an opportunity to end $800 
billion in already-existing corporate welfare programs. In fact, this 
reconciliation package doles out more new corporate welfare than it 
cuts.
  The repeal of the alternative minimum tax.--One new form of corporate 
welfare that can be found in this bill is the repeal of the alternative 
minimum tax, created in 1986 at the behest of President Reagan when it 
was learned that about half of large profitable United States and 
foreign companies avoided paying any taxes through loopholes. The 
Republican plan to repeal the alternative minimum tax would add an 
estimated $36 billion to the budget deficit, according to the GOP's own 
estimates.
  Currently, the alternative minimum tax levies a 20-percent tax on 
profits, before adjusting for certain tax preferences, to help ensure 
that all businesses and individuals earning substantial profits cannot 
entirely avoid paying taxes by using various deductions, exemptions, 
and exclusions. If the alternative minimum tax is repealed, it is 
estimated that 76,000 profitable corporations would pay no taxes by the 
year 2005.
  Corporate raids on workers' pension funds.--Perhaps the most 
egregious example of the Republicans putting corporate interests ahead 
of the interests of workers and taxpayers is the measure in this bill 
that would allow corporations to raid billions of dollars from workers' 
pension funds, jeopardizing the futures of millions of Americans. This 
legislation would remove steep tax penalties that currently discourage 
most companies from draining employees' pensions. Under this measure, 
businesses with pension plans holding at least 125 percent of the 
assets needed to meet anticipated pension liabilities would be able to 
drain their employees' pensions--for any purpose, for mergers or even 
to pay for perks like executive limousines--without even giving workers 
advance notice.
  The new plan would undo most of those restrictions--which were passed 
because in the 1980's, about $20 billion was drained from private 
pensions as corporate executives tapped them to finance takeovers and 
leveraged buyouts. Congress put a stop to such raiding in the late 
1980's with a 50-percent tax penalty and other restrictions.

  At a time when our Nation's private pension plans are underfunded by 
$71 billion, we simply cannot afford to allow big business to raid the 
pension funds of working Americans, jeopardizing their retirement 
security and those of their families. Who will be left holding the bag 
when these pensions go belly-up? American taxpayers.


                          what should be done

  I support tax fairness and a balanced budget. In fact, I wanted to 
support the alternative budget proposed by a coalition of my 
colleagues. However, three sections need further refinement. First, we 
need an entirely reformed medicare financing system. We do not need to 
force all these savings from seniors. Second, this alternative does not 
do nearly enough to close loopholes for corporate welfare. Third, the 
changes to Consumer Price Index need further study as to their effect 
nationwide and on seniors in my District and State.
  Furthermore, any reasonable budget bill should begin with closing 
existing tax loopholes that allow billionaires to avoid paying a 
significant portion of their U.S. tax liability by renouncing their 
U.S. citizenship and relocating to foreign countries. This is a 
loophole that benefits only about two dozen people a year; however, the 
Joint Committee on Taxation estimates that ending this practice could 
provide our country with an additional $3.6 billion over 10 years--
which I believe should be applied toward deficit reduction. 
Furthermore, if the majority is serious about balancing the budget, 
then it should get serious about weaning big businesses off corporate 
welfare and tax subsidies financed on the backs of American families. 
We should dedicate all of the spending cuts we have been making toward 
deficit reduction, not tax breaks for the well-to-do.
  I cannot support the mean-spirited cuts in this budget bill that 
would realize the most vulnerable in our society--like the elimination 
of low income energy assistance--while continuing tax policies that 
encourage multinational companies to move overseas and provide foreign 
companies doing business in the United States with tax breaks. Let us 
eliminate the transfer pricing loophole that allows foreign-owned 
corporations to move profits earned in 

[[Page H11203]]

America overseas to avoid U.S. taxes. That could save up to $143.5 
billion.
  Let us eliminate the foreign tax credit. Why should corporations get 
a credit for taxes paid to a foreign country but only a tax deduction 
for State taxes paid in the United States? Why not save $82.5 billion 
and put our States on an even playing field with foreign countries?
  Let us repeal the U.S. territorial possessions tax credit that 
entices our companies offshore. That would save $19.7 billion. With 
that we could avoid Gingrich's tax increases on working families 
through cuts in the earned income tax credit.
  Above all, let us pass comprehensive campaign finance reform, so that 
America will know that its elected representatives are acting in the 
best interests of American citizens rather than at the beck and call of 
multinational corporations, megabanks, and special interests. To that 
end, I have introduced House Joint Resolution 114, a constitutional 
amendment that would, for the first time, allow Congress and the States 
to enact reasonable limits on Campaign spending in Federal, State and 
local elections, ending the current practice of allowing elections to 
be bought by the highest bidder. I have also introduced H.R. 2499, the 
Ethics in Foreign Lobbying Act of 1995, which would ban campaign 
contributions by foreign corporations so that they could no longer 
purchase favorable influence with legislators, selling the future of 
America's working families overseas. In addition, I have introduced 
H.R. 2498, the FACE-IT bill, which would close the revolving door that 
currently exists between government service and foreign lobbying.
  Let us achieve a balanced budget by having everyone pull their load 
in ways that strengthen America and our ability to create good jobs. 
Let us secure a better economic future for working Americans, not put 
an even heavier burden on the middle class. Newt Gingrich and his 
allies are looking for cuts in all the wrong places.
  Mr. HASTINGS of Washington. Mr. Chairman, I rise in strong support of 
this package.
  Balancing the Federal budget is critical to the future of our 
country. As a direct result of decades of deficit spending, each child 
born in America today will be burdened with a tax bill for $187,000, 
just to pay for the interest on the national debt over his or her 
lifetime.
  By leading directly to lower interest rates, this package will lower 
housing costs, reduce car expenses, lower college costs, cut taxes, and 
provide more jobs for all Americans. For those of us who represent 
rural communities, lower interest rates will save family farmers nearly 
$15 billion during the next 7 years by reducing farm debt.
  Mr. Speaker, I ran and was elected on a pledge to balance the budget 
in 7 years. That was my promise to the people of Washington State's 
Fourth Congressional District. I am proud to cast my vote today to keep 
our commitment to the American people and urge each of my colleagues to 
do the same.
  Mr. BALLENGER. Mr. Chairman, this week, I joined my Republican 
colleagues in taking another step toward delivering a balanced budget 
and fulfilling yet another campaign promise. This week's action 
centered on the Seven Year Balanced Budget Reconciliation Act of 1995, 
which contains real world solutions toward cutting overall Federal 
spending, providing much needed tax relief for all Americans, and of 
course setting the pace for a balanced budget within 7 years.
  As you know, Mr. Chairman, budget reconciliation is the final part of 
the budget process where all spending recommendations made by the 
various House committees are combined into one giant budget proposal 
compiled by the House Budget Committee. This legislation is designed to 
meet the spending blueprint laid out in the budget resolution we passed 
in May. The budget resolution is a viable 7 year plan that will 
culminate with a balanced Federal budget by the year 2002.
  The overall spending cap for fiscal year 1996 was set at $1.59 
trillion. Although this cap is the bottom line, specific cuts in 
Federal programs were based on the recommendations made by the 
individual House committees, with the final decisions being made by the 
House Budget Committee.
  Mr. Chairman, preparing a budget this size is a monumental task, 
certainly more complicated than almost anything I have done since 
coming to Washington. But, let me say that this budget is the right 
remedy for what ills our Nation. The budget crisis we have endured for 
so long is the result of out-of-control Federal spending, bloated 
Federal programs, and tax increases created by the Democrat leadership. 
These irresponsible practices have left us nearly $5 trillion in debt, 
or more than $19,000 for every man, woman, and child in America. But, 
since January of this year, Republican Members of the House have been 
bound and determined to correct the poor spending habits of the 
Government and get us out of debt.
  The unmistakable message of last year's election was that it was time 
to reduce the size, scope, and cost of the Federal Government. We heard 
the message. This year's budget will produce overall savings of nearly 
$1 trillion over 7 years. These savings will come by eliminating 
hundreds of Federal programs, closing or combining several Federal 
agencies, and eliminating many no longer needed commissions. Under our 
proposal foreign aid alone will be cut by $29 billion over 7 years. The 
current welfare system will be reformed, producing many more savings, 
specifically by providing block grants to the States. However, no cuts 
in Social Security appear in this bill and Medicare will only be 
preserved, protected, and strengthened by this legislation.
  Mr. Chairman, balancing the budget is critical to the economic future 
of this Nation. But, listening to the Democrats may leave Americans 
concerned how this balanced budget will affect them. Let me put it this 
way. If a man or woman plans to purchase a house, a balanced budget 
will provide him or her with lower interest rates. In most cases, these 
interest rates will be 2.7 percent lower than today's rates. That 
means, taking out a 30 year mortgage of $50,000 at an annual rate of 
8.23 percent, will save more than $32,000 over the life of the loan. 
Likewise, a loan of $100,000 will allow a borrower to save almost 
$65,000 over 30 years. The money saved could be better used for 
college, retirement, a new car or home improvements. Interest rates on 
car loans will see similar reductions.

  Under this bill American students will find it easier to get 
education loans and even more importantly make them easier to pay off. 
A balanced budget would reduce interest rates on student loans by 2 
percent. A college student who now borrows $11,000 at the new 8 percent 
annual interest rate will save $2,200 over the life of the loan. 
Students can apply these savings toward another semester of school or 
for other future expenses.
  By balancing the budget and lowering the interest rates, businesses 
will be more likely to invest in new equipment, new factories, and 
office buildings. Within 10 years, the more attractive business climate 
will help to create 6.1 million new jobs over 10 years. People from all 
educational and skill levels will be given new economic opportunities, 
benefiting the Nation overall. Lower interest rates will also help our 
farmers retire the farm debt. By decreasing the farm loan interest rate 
by 1.5 percent, farmers will save $15 billion over 7 years, allowing a 
faster debt retirement.
  Mr. Speaker, last week President Clinton admitted that he raised 
taxes too much in 1993. That shouldn't be news to anyone. High taxes 
have left the American taxpayer with fewer dollars to buy a house, save 
for college, build a nest egg for retirement, or start a new business. 
Critics of our reconciliation bill are saying that the tax cuts 
contained in our bill will only benefit the wealthiest Americans. How 
untrue this is. Mr. Speaker, the reconciliation bill calls for tax cuts 
for all Americans, from all income levels, including individuals, 
couples, and families with children. The tax cuts we Republicans have 
made will not benefit one group at the expense of another. All 
Americans will benefit, especially the middle class. Families with 
children will receive a $500 per child tax credit and families who care 
for an elderly relative at home will also receive a tax credit, just 
like we promised in the Contract With America.
  Mr. Speaker, the Democrats have claimed that this bill will hurt our 
senior citizens, but the truth is the Clinton tax hike of 1993 raised 
taxes on Social Security benefits by 70 percent for seniors making as 
low as $34,000 a year. Our reconciliation bill repeals this unfair tax 
by reducing this tax liability for seniors by an average of $662 a year 
by the year 2000. In addition, reductions in the capital gains tax will 
further benefit seniors when they begin to cash in their nest eggs 
during their retirement years.
  Tax cuts for American businesses will mean much needed upgrades in 
equipment and other new investments leading to unprecedented growth. 
Business expansion will lead to new jobs and economic opportunities and 
increased wages for millions of Americans. New businesses will spring 
up all around the country, and our now stagnating economy will once 
again start to move in many new and prosperous directions.
  I would like to add a few comments about two labor provisions: The 
Davis-Bacon Act and the Service Contract Act.
  The Davis-Bacon Act has long outlived any usefulness that it may have 
had, yet it remains law, adding billions to Federal construction costs 
and wasting precious taxpayer dollars. The Congressional Budget Office 
estimates that repeal would save taxpayers $2.7 billion over 5 years. 
For example, electricians in Chicago who are working on a Davis-Bacon 
project are paid about $31.32 an hour compared with electricians on a 
private contract who are paid an average of $18.72 an hour. Companies 
can't stay in business paying $12 an hour more than the market demands, 
and neither can government

[[Page H11204]]


  An investigative report by the Oklahoma Department of Labor uncovered 
fraud, abuse, fictitious employees, and ghost projects. The Oklahoma 
report uncovers a systematic problem with the Davis-Bacon Act which 
must be addressed. As a recent TV report entitled ``The Fleecing of 
America,'' there is ``growing concern that the system of setting wages 
on U.S. government construction projects is so flawed that it's 
fleecing taxpayers of hundreds of millions of dollars.'' Scandals like 
this only serve to erode public confidence in the Government 
procurement process.
  Much to my regret and disappointment, the reconciliation bill before 
us today fails to repeal the Davis-Bacon Act. However, let me assure 
the taxpayers that it is only a matter of time before this special 
interest subsidy that has been fleecing them for years is removed from 
the books.
  The reconciliation bill does include repeal of the Service Contract 
Act. The Service Contract Act, like the Davis-Bacon Act, inflates the 
cost of services procured by the Federal Government. The Service 
Contract Act requirements add millions per year to the cost of Federal 
contracts for services such as computer programming, building security, 
travel services, or university research. Although it began modestly, 
today the Service Contract Act impacts a broad spectrum of businesses 
and employees ranging far beyond the original intent of the law. Repeal 
of the Service Contract Act saves over $3 billion over 5 years 
according to the Congressional Budget Office.
  Mr. Speaker, It is not so difficult to see how important this 
legislation really is to our Nation and to future generations. I know 
that opponents of this bill have been telling the American public how 
Republicans are taking away their future, but, let me assure you, this 
historic piece of legislation only cuts out the fat of Government, 
reduces unneeded spending, and sets the pace for reaching a balanced 
budget. Passage of this bill only means a better Government and a 
brighter future for all Americans.
  I yield back the balance of my time.
  Mr. STUMP. Mr. Chairman, I ask unanimous consent to revise and extend 
my remarks.
  Mr. Chairman, I rise in strong support of H.R. 2491, which will make 
the changes necessary to balance the Federal budget by the year 2002.
  I believe the rising national debt and interest on that debt have 
created a crisis which Congress must face now.
  I supported the balanced budget amendment because it is truly a 
matter of saving our country from financial ruin.
  Our children and grandchildren will either inherit a declining 
standard of living caused by congressional irresponsibility--or gain 
freedom from the financial excesses of current generations.
  Mr. Chairman, America is culminating a 5-year commemoration of the 
50th anniversary of World War II.
  The World War II generation's legacy to our Nation includes victory 
over tyranny, winning the cold war to make the world safe for 
democracy, and creation of world's greatest industrial power.
  As a World War II veteran, I cannot imagine my generation allowing 
history to also record that we mortgaged our grandchildren's future for 
the sake of our own comfort.
  Mr. Chairman, as chairman of the House Committee on Veterans' 
Affairs, I want to assure Members on both sides of the aisle that H.R. 
2491 balances the Federal budget over 7 years, while maintaining our 
Nation's commitment to veterans of military service.
  As in previous years, veterans' programs have been included in the 
reconciliation process.
  The VA Committee met its targets on a bipartisan basis, without 
unfairly singling out veterans for any new cuts.
  In fact, we substantially met the target by taking provisions from 
the 1993 reconciliation bill and extending them through the year 2002.
  President Clinton signed the 1993 bill and this year included many of 
those provisions in his fiscal year 1996 budget proposal.
  Members who are overly concerned with the veterans' portion of this 
bill should note that the Clinton 10-year plan would take nearly three 
times as much from veterans' programs, without balancing the budget.
  The Clinton plan cuts $17.1 billion from veterans over 10 years, H.R. 
2491 only requires savings of $6.4 billion over 7 years.
  Mr. Chairman, the Republican budget plan allows veterans' spending to 
rise.
  According to the House Budget Committee, veterans' spending increases 
from $36.9 billion in fiscal year 1996 to $41.8 billion in fiscal year 
2002.
  During the next 7 years, more than $275 billion will be spent on 
veterans' programs--$40 billion more than during the previous 7 years.
  This increased spending will occur during a time when the veteran 
population will be declining by 6 million or 23 percent between 1995 
and the year 2010.
  Yet top VA officials and numerous veterans' publications have scared 
veterans with dire predictions about attacks on veterans' benefits and 
breaking our Contract With America's veterans.
  Those predictions have claimed that Congress would either means test 
all service-connected benefits, or cut compensation for disabled 
veterans, or tax veterans' benefits.
  Mr. Chairman, this bill does none of those things.
  It is hypocritical for administration officials to demagogue the 
Republican budget when their own budget is worse.
  The administration has predicted numerous VA hospital closures 
resulting from the Republican budget proposal.
  However, the GAO has stated that during the next 5 years: ``Under the 
President's budget proposal, total VA medical care funding would be 
$336 million less than the amount provided in the House proposal.''
  In fact, the House fiscal year 1996 VA/HUD appropriation bill 
contains a $563 million increase over the fiscal year 1995 level for VA 
medical care.
  Additionally, H.R. 2491 includes provisions to reform VA health care 
eligibility.
  The bill would move VA from an expensive inpatient model of health 
care to a modern ambulatory and primary care approach.
  It greatly improve VA's ability to provide better quality and access 
to care within available resources.
  These provisions are strongly supported by the major veterans 
organizations.
  Mr. Chairman, without a balanced Federal budget, rising interest 
payments on the debt will soon crowd out ability to continue providing 
for our Nations' veterans and other high priority programs as well.
  Mr. Chairman, I want to commend the chairman of the Budget Committee, 
Mr. Kasich, for all his work on this bill.
  Contrary to those who would demagogue these matters, Mr. Kasich and 
the members of the Budget Committee have acknowledged the high priority 
Congress traditionally gives to veterans' programs.
  The Budget Committee set a deficit reduction target that the 
Veterans' Affairs Committee could reasonably reach.
  We have done so, and the Budget Committee members, who have had to 
make extremely difficult decisions about Federal spending priorities, 
should be given credit for protecting veterans' programs while 
achieving a balanced budget.
  Mr. Chairman, I urge all my colleagues to vote ``yes'' on the bill.
  Thank you Mr. Speaker.
  Mr. GONZALEZ. Mr. Chairman, I am compelled to comment on some of the 
provisions in this ill-conceived bill that embody recommendations of 
the Committee on Banking and Financial Services.


                     the community reinvestment act

  The bill before us contains a gratuitous and needless attack on the 
Community Reinvestment Act [CRA]. Without directly repealing the CRA, 
the bill nonetheless wipes out the CRA. It is clear that the less than 
$30 million in savings achieved by these amendments to the CRA is not 
the reason they were contained in the Banking Committee's 
recommendations--in fact, the committee exceeded its budget targets by 
billions of dollars--the amendments' inclusion in the reconciliation 
package was part of a failed scheme by the chairman to free another, 
wholly unrelated piece of legislation from these gutting amendments 
because they were sure to incur a veto.
  The CRA is a law that simply requires regulated financial 
institutions to help meet the credit needs of the communities they are 
chartered to serve, including low and moderate income communities. It 
is reported that this law has resulted in the infusion of $60 billion 
into credit-starved communities across our nation.
  As a result of complaints from the banking industry about the burden 
of demonstrating compliance with the CRA, President Clinton ordered the 
regulators to revise CRA regulations, with an emphasis on performance 
over paperwork. After a nearly 2 year effort by the Federal Reserve 
Board, the Office of the Comptroller of the Currency, the Federal 
Deposit Insurance Corporation, and the Office of Thrift Supervision the 
regulations have been issued and have just gone into effect. Each of 
these regulators have objected to the committee's action to destroy the 
CRA. Clearly, we should give these regulations a chance to work before 
we reevaluate the CRA.
  Most importantly, at a time when this Congress is slashing the 
funding that has assisted low and moderate income Americans, it is 
critical that we save a tried-and-true program that relies on private 
dollars. To do otherwise would be tragic for communities across this 
country. Moreover, to dismantle the CRA under the ruse that it is a 
necessary measure to save money is simply shameful.

[[Page H11205]]



                           housing provisions

  The lion's share of the committee's savings comes from affordable 
housing programs in the Republican majority's relentless political 
pursuit of savings at the expense of our nation's low income families.
  The bill before us gratuitously wipes out the Resolution Trust 
Corporation [RTC] Affordable Housing Programs for a paltry $31 million 
savings--again a savings that completely unnecessary to meet the 
targets of the Banking Committee for budget reconciliation. This home 
ownership program has been a real success story for the RTC. More than 
104,000 dwellings have been sold at a value of $1.5 billion under the 
RTC Affordable Housing Program, providing shelter to hard-pressed 
working families of modest means. Although the RTC shuts down after 
this year, there will still be property to dispose of after December 
31. Once the RTC is shut down, these properties and the Affordable 
Housing Program will be transferred to the Federal Deposit Insurance 
Corporation. To wipe out this program will have serious consequences 
for low income family home ownership opportunities far beyond the 
meager savings gained, particularly as direct Federal spending for 
affordable housing dwindles.
  The bill also will permit HUD to sell all HUD owned multifamily 
property without providing tenant protections or making any effort to 
preserve affordable housing. Last year we made significant reforms to 
the multifamily property disposition program with an overwhelming 
bipartisan vote of 413 to 9. The reforms balanced the need to preserve 
affordable rental housing, protect low income tenants from displacement 
and outlandish rent increases, accelerate the property disposition 
process and save the Federal Government as much as $475 million. 
Nothing has changed since then. The committee's contribution to 
reconciliation saves more than enough money without including the 
virtual repeal of the Multifamily Property Disposition Reform Act and 
without harming low income families who will surely be displaced with 
no assistance and no place to go.
  Finally, the bill requires section 502 single family rural housing 
borrowers to repay Federal subsidies at the time a home is refinanced. 
While I concur with the requirement that borrowers repay Federal 
assistance at the time of sale, I believe that the provision in the 
committee recommendations provides the best evidence yet that we are 
engaging in policy by the numbers. Simply to raise $39 million from low 
income families, this bill would discourage families from graduating 
from a Federal loan program. A low income family which has scrimped and 
saved to purchase a home in our rural communities may be forced to pay 
not only the principal and interest on a refinanced first mortgage, but 
would have to pay at least interest on the interest credit subsidy that 
would now be recaptured upon refinancing.
  Like so much else about this bill, much of what is in the Banking 
title makes no sense and is indefensible from any reasonable point of 
view.
  Mr. FRANKS of Connecticut. Mr. Chairman, today is an historic day 
which marks the end of the tax-and-spend ways of the Democrats and 
heralds in the pro-taxpayer ways of the Republicans.
  The Seven Year Budget Reconciliation Act provides less spending, less 
taxation, and less government. It provides real welfare reform and it 
protects our Medicare system for today's and tomorrow's seniors. It 
strives to better manage our Medicaid system and it works toward 
strengthening families.
  A balanced budget will lower the interest rates for all Americans by 
at least two percentage points and will thus allow all Americans to 
improve their standard of living.
  Mr. Chairman, I am pleased to rise in support of a balanced budget 
plan, in support of fiscal responsibility, in support of tough choices, 
in support of keeping promises, and in support of H.R. 2491.
  For years, Mr. Chairman, there has been something of a racket going 
on for some elected officials in the Nation's Capital to play games 
with the budget process. These officials would tell their constituents 
that they were for a balanced Federal budget but then they would turn 
around and vote against resolutions which would provide a 
constitutionally-imposed balanced budget.
  When asked why they took such action, they would reply that they did 
not need a balanced budget amendment to make the tough choices.
  However, when the time arrived to make those tough decisions, the 
same people would balk on their previously stated commitments. Rather 
than support efforts to reduced spending and taxation, past members of 
Congress have let our Federal deficit balloon up to a point to where a 
person could stamp the word ``GOODYEAR'' on it. Rather than support 
fiscal austerity, many of my colleagues have opted to promote 
initiatives which would saddle a newborn infant, circa 1995, with 
$187,000 in taxes to pay the interest on the national debt. Mr. 
Chairman, the way the Congress goes about its fiscal business much 
change.

  Mr. Chairman, make no mistake -- H.R. 2491 provides the innovative 
harbinger of change in American government that many citizens have been 
clamoring for years.
  This reconciliation bill will reform Medicare to ensure its solvency 
well into the 21st century and give our parents the enhanced 
opportunity of health care and insurance choices they deserve.
  H.R. 2491 will also provide Americans with much-needed tax relief and 
reform. This bill will reduce taxes by $245 billion over the next 7 
years--a figure which would include a reduction in the capital gains 
tax, a $500-per-child tax credit and a repeal of President Clinton's 
confiscatory tax increase of 1993 while closing over $30 billion in 
corporate tax loopholes.
  We will change our welfare system to ensure that no more of our 
children are forced to grow up in wretched squalor of the welfare state 
of 1995 America while providing help to the States to implement their 
own health care assistance program. Candidate Bill Clinton promised to 
``end welfare as we know it'' in 1992, the Republicans are delivering 
on that promise.
  We will also abolish, privatize or sell wasteful agencies and 
bureaucracies which have acted like a fiscal albatross around the neck 
of American taxpayer of the past two decades.
  Will this reconciliation plan be totally painless? No, in fact there 
will be meritorious programs which will certainly be effected by this 
reconciliation bill. However, we have reached a point in our history 
where we need to show great care in our budget and fiscal priorities. 
We need to ask ourselves ``Do we need that agency or program or is 
there a better way?'' And, Mr. Chairman, that is the point of H.R. 
2491. A vote for this bill is a vote to guarantee a future in which our 
children do not have to live under an inherited mountain of debt or 
within a governmental system which deems itself more important then the 
people it is supposed to serve. A vote for H.R. 2491 is a vote to make 
the hard choices and to find a better way for our children.
  I consider this an extremely positive action which will benefit all 
constituents in my district as well as all Americans.
  I encourage my colleagues to vote for H.R. 2491.
  Mr. ALLARD. Mr. Chairman, today I am introducing legislation designed 
to reduce the regulatory burden on America's farmers and ranchers. This 
Congress has for too long cut commodity programs while not providing 
any regulatory relief. This year agriculture is once again taking 
spending reductions, but for a good purpose--balancing the budget and 
reducing the tax burden on rural America. But this year we are going to 
provide relief from rules regulations, and mandates that have grown 
while Government benefits have shrunk.
  This legislation will continue to protect the environment, but will 
provide the necessary flexibility to meet environmental goals. This 
legislation will not rely upon one size fits all mandates that stifle a 
producers ability to wisely use the land to earn a living.
  Specifically, in this legislation we will reform the current highly 
erodible land provisions created in the 1985 Food Security Act. While 
these provisions were well intended they have not manifested themselves 
in a farmer friendly manner. All of us who have districts that include 
rural areas have heard the stories of how this has become a law 
spinning out of control. In some areas practices required to reduce 
erosion on the land are more expensive than the land itself. The law 
itself did not require the Department to take into account local 
resource conditions, the economic or technical feasibility of practices 
they require. The legislation I am introducing today recognizes that 
these are realities in the real world. They should be requirements 
placed on the Department in the law and in the field guides NRCS 
employees use when assisting a farmer.
  In this legislation I would also like to ease back on requirements 
because we are reducing Government benefits. Acres that are designated 
nonpayment will not be subject to Government mandates. When these 
programs were created there was a clear linkage, payments for 
compliance. However, in subsequent years when payments were reduced, 
regulations were not. This legislation would also create a new cost 
share program aimed at water quality. This program would assist 
livestock operations that are facing Federal and State mandates that 
are very expensive. This program would attempt to assist them in 
meeting those mandates and other practices to improve water quality. In 
order to pay for this program we are changing the Wetland Reserve 
Program to 15 year contracts from permanent easements.

[[Page H11206]]

  I would also like to consolidate various cost share programs that 
have been authorized and appropriated for separately over the years. 
Most of these programs have been cut dramatically recently. It's my 
hope that by consolidating and refocusing we can have one program to 
support in appropriations. This will also reduce paperwork on those who 
apply. Instead of filling out two sets of application forms if they 
want money from two different programs, they will only have to fill out 
one form to receive assistance.

  I would also like to consolidate the Natural Resource Conservation 
Service into the consolidated farm service agency. This move will 
streamline the policy making process and return NRCS to its main 
function, providing voluntary technical assistance to farmers.
  As many will notice this legislation does not deal with swampbuster. 
It is not included because reaching agreement with interested parties 
has been difficult. I feel that repealing swampbuster is a better 
alternative than many of the ``reforms'' that have been placed before 
me. Between now and subcommittee markup I will continue to try and work 
with all interested parties. However, they need to understand that it 
must be a common sense proposal for me to take it seriously.
  Finally, this legislation would protect the interests of private 
water users from the extortion of Federal agencies. This legislation 
outlines that Federal agencies cannot, as condition of permitting, 
require water users to give up a right in their property. It's my 
belief this will end a long standing controversy.
  While all of these proposals are important to me, I am willing to 
work with everyone to make them better. They are my best attempts at 
reform. However, I am willing to listen and adopt better ideas.
  Mr. KENNEDY of Rhode Island. Mr. Chairman, today the race to the 
bottom begins, and soon what it means to be an American will change. We 
have before us a plan from the other side of the aisle for balancing 
the budget.
  Why do we want a balanced budget? What is intrinsically good about a 
balanced budget per se? It is important to note that there was a year 
when the budget was balanced. The year was 1930, and it marked the 
greatest depression this country has ever known.
  So balancing the budget for the sake of balancing the budget is not 
the goal. We want a balanced budget because of what we hope it will do 
for us in terms of spurring our economy, growing our prosperity, and 
servicing the people rather than servicing the debt.
  The approach that this balanced budget reconciliation act takes will 
send the country into the opposite direction from where a balanced 
budget should take the country. Instead of growing the economy and 
serving the people, the abrupt and vicious nature of this budget 
threatens these goals.
  The scope of these cuts are so dramatic and the timetable so short, 
it begs the question of whether we want the positive results which we 
expect a balanced budget to bring us, or are we just happy with the 
politics of saying we have a balanced budget?
  Just take one of many examples of where the reality of this so-called 
balanced budget belies their stated intent. They say they want to 
balance the budget in order to ease the interest payments that young 
people pay on the national debt, but to do so they propose to raise the 
interest payments on student loans so that the same young people will 
have to pay more to open the doors of opportunity.
  When you look at where the cuts are coming from, there is nothing 
balanced about this budget. In fact, the poorest fifth of American 
families will shoulder half of the total cuts in benefit programs, and 
would receive no tax cut.
  We face serious choices over what should be our priorities when we 
set out to bring our budget into balance.
  Are we going to take a path that looks after the most vulnerable in 
society, that keeps promises, that invests in our future, that calls 
for shared sacrifice, and does not provide favors to people who already 
amply enjoy the rewards of this great country?
  Or are we going to take a path that ignores the needs of senior 
citizens, children, and working families, that calls for sacrifice from 
the vulnerable while handing out tax cuts we can't afford to people who 
don't need them, that cripples our ability to prepare for tomorrow, 
that threatens the environment through underhanded deals, that takes 
the tax dollars of immigrants we have welcomed but denies them the very 
benefits their tax dollars have gone to support, and walks away from 
promises made to the American people?
  This is a debate about numbers--cuts, slowed growth, caps, tax cuts, 
subsidies, and every other way we have to count money--but more 
important than any numbers are the principles at stake. American values 
should be reflected in the budget. But with the haste to only count 
cost in numerical terms, we've lost how to measure the cost on our 
society in human terms.
  And that is where this bill fails. It fails seniors. It fails working 
families. It fails children. It fails the disabled. It fails the 
working poor. It fails students. It fails the environment. It fails our 
constituents. It fails to prepare America for tomorrow.
  We have spoken about and debated the impact the Medicare provisions 
will have on senior citizens, and last week this Chamber voted to take 
a devastating $270 billion out of the Medicare Program, double premiums 
on seniors, and shred a program that has kept millions of seniors 
healthy and out of poverty since its inception in 1965.
  Today we have before us the other half of their assault on health 
care. Faster than you can say block grant, the Republicans have killed 
a program that takes care of children when they are most vulnerable and 
seniors when they are most in need.
  Now with their plan, all of the decisions and all of the 
responsibility will be handed over to the States without enough money 
to do the job. My own State of Rhode Island will suffer grievous harm 
under the Medicaid proposal. Over the next 7 years, Rhode Island will 
receive $1.6 billion less to take care of its poor children, mothers, 
and senior citizens. In the year 2002, Rhode Island will receive 42 
percent less Medicaid assistance than it would under current law. Only 
two other States stand to be hit harder than Rhode Island.
  Let's remember what Medicaid is all about and why it was created as a 
national program. Medicaid simply told people: You are citizens of the 
United States and have a common right to basic health care that you 
share with your fellow citizens. Now that common ground is lost. Soon 
it will not matter that you are an American. It will matter more what 
side of the State line you live on. Will you get preventive care? Will 
your nursing home require well-trained staff and forbid the use of 
restraints and drugging patients? Will your disabled child get the care 
to live a fulfilling life? These decisions will be made in 50 different 
States in 50 different ways.
  In the DisUnited States created by this proposal, it will not matter 
that you are an American. We have taken an entitlement to basic care 
and replaced it with a lottery system. Well, everyone who plays the 
lottery knows--most people end up losing.

  The 127,306 Rhode Islanders on Medicaid will lose under this lottery. 
It is possible that almost 22,000 Rhode Island children will lose 
coverage.
  More than 7,000, or three-quarters of the more than 9,300 elderly 
Rhode Islanders in nursing homes, rely on the Medicaid Program to pay 
for their care. Rhode Island nursing homes will lose more than $400 
million over the next 7 years under this plan.
  This cannot be made up by my State, which already is experiencing 
financial difficulties. This is not a hole that seniors can fill. And 
to look to the next generation, as the Republicans propose through 
their repeal of the adult child exclusion, is to cut off our hope for 
the future before it has even begun to take shape.
  The opposition likes to say this bill is about the future. But a look 
at the fine print shows that it will produce an America of less 
opportunity and less promise.
  This bill will put an empty plate in front of school children at 
breakfast and lunch. We all know students can not learn if they are 
hungry, if they are distracted by wondering where their next decent 
meal is coming from.
  Our children are a national resource. But with this bill we wash our 
hands of our commitment to feeding hungry children, tell States to pick 
up the slack, and don't give them enough money for even one more glass 
of milk when new poor children show up at the classroom door each 
morning too hungry to learn.
  Students who make it to college are having the rug pulled out from 
under them. Due to more than $10 billion in student loan cuts, 
undergraduate students will see their loan payments increase as much as 
$700, and costs for graduate students will jump by as much as $2,500.
  This will construct an insurmountable barrier for thousands of Rhode 
Island students who will have to give up on their dream of attending 
one of the fine institutions of higher education in Rhode Island. 
Higher education will sadly become a privilege only enjoyed by the very 
few.
  Borrowers in the Parent Loans for Undergraduate Students will face a 
$5,000 increase in loan repayments.
  In Rhode Island as many as 1,600 students will lose some or all of 
their Pell Grant benefits due to the cutbacks. The 6-month interest 
exemption grace period for all borrowers of student loans is ended.

[[Page H11207]]

  And from the people who often trumpet the fact that this bill will 
lower interest rates, there is a hike on interest rates on student 
loans.
  Is this how you help the next generation? Is this a budget about 
tomorrow? No. It is all about paying for $245 billion in tax breaks 
today, tax breaks that will overwhelmingly benefit those who are 
already doing very well.
  Fifty-two percent of the benefits of the tax cut in this bill go to 
families making $100,000 or more. The top 1 percent, those earning 
$350,000 and over, will get a tax break of almost $20,000. This 
injustice, this blatant favoritism of the fortunate few, is compounded 
by the fact that those at the bottom will actually see their taxes 
rise.
  Almost 37,000 working poor Rhode Islanders will see their taxes go 
up. They will shoulder the burden of a $5.1 million tax increase on 
working families in my State. Nothing reveals the motives of those who 
have crafted this budget more clearly than the war they have waged on 
the earned income tax credit.
  Mr. Chairman, the damage caused by this bill is so great one hardly 
knows where to begin. I have highlighted some of the most egregious 
measures. But as I said before, this vote is not about numbers. It is 
about who we are as a nation. And that is why I am so dismayed.
  Mr. VENTO. Mr. Chairman, I rise in strong opposition to the 
Republican budget reconciliation legislation. The bill we have before 
us today represents a reckless restructuring of national priorities and 
advocates a shift of resources and commitment taken from working 
American families and granted to the most affluent segments of our 
society.
  I have supported in the past and will continue to support responsible 
deficit reduction policies. Over the past two years, we have made 
steady progress in cutting the deficit with nearly $600 billion in 
deficit reduction over a five year schedule beginning in 1993. We 
passed the deficit reduction bill last session without a single 
Republican vote. As a result of these initiatives, the latest figures 
on Fiscal Year 1995 show that this is the first time since 1948 that 
the deficit has declined for three years in a row. The $164 billion 
deficit is much too high, but it's below the 1993 projected numbers on 
performance and nearly half the 1993 annual deficit.
  This year, Republicans are trying to sell their budget plans, 
including this reconciliation bill and the various appropriations 
bills, in terms of deficit reduction, but when you look at their plans 
you see through the transparent goals the real effect of the Republican 
actions.
  The Republican budget scheme and true goals are to pull back from 
proven policies for health care, housing, education and the 
environment, in order to give tax breaks to corporations and affluent 
Americans, increase defense spending, and give assorted benefits to 
special interests.
  Policy makers who are serious about deficit reduction do not push a 
package which includes $245 billion in tax breaks, benefitting mainly 
the wealthiest of our society. Not only is it unwise to reduce revenues 
in this time of fiscal constraints, but it is unfair to dole out 
benefits to the well-heeled when everyone else in society is being told 
they must sacrifice. The Republicans continue to insist on a cut in the 
capital gains tax rate, a repeal of the alternative minimum tax for 
corporations, a limited child tax credit which is denied 34% of the 
kids, and many lavish tax breaks for upper-income individuals and 
corporations.
  One of the most convincing pieces of evidence that shows the 
Republican claims of tax breaks for all Americans is all smoke and 
mirrors came out of the non-partisan Congressional Joint Committee on 
Taxation last week. The Joint Committee on Taxation incredibly reported 
that the effect of the Republican budget scheme actually will be a tax 
increase on workers earning less than $30,000 a year. This is 
principally because the Republican proposal drastically cuts the Earned 
Income Tax Credit [EITC], a working family benefit program that has 
been praised for its effectiveness in assisting low-income families and 
rewarding work and the denial of the child credit to low income 
families. By 2002, 172,000 Minnesota households would pay more taxes 
due to cuts in the Federal EITC existing law and the resulting cut in 
Minnesota's matching credit. With the EITC, participants receive a 
reduction in their Federal Income Tax liability or rebate in order to 
raise their income above the poverty line. The EITC gives working 
families living in poverty an alternative to entering the welfare 
system, an incentive to remain in the workforce, and assists them as 
they work to lift themselves out of poverty. These families should be 
encouraged to continue their efforts to achieve self-sufficiency and 
not be forced to choose between welfare and poverty.
  One of the most shameful aspects of the reconciliation legislation is 
the treatment of Medicare and Medicaid. The new Republican majority in 
the House has made the Medicare and Medicaid programs its target for 
nearly 50 percent of its total spending cuts. Medicare is one of our 
nation's most successful programs. It was established over 30 years ago 
as a national commitment to assure seniors health care coverage. The 
Republican scheme is going to destroy seniors' health care security. 
With $270 billion in cuts, overall Medicare spending will be cut by a 
cumulative $6,795 per senior over the next seven years, meaning that in 
2002 there will be $1,747 less in Medicare dollars per senior in that 
year itself! Republicans' excuse for slashing Medicare is to save the 
Medicare trust fund, but even the trustees of the Medicare trust fund 
strongly oppose the Republican plan because the extensive cuts go far 
beyond program reform or deficit reduction. The Republicans' proposed 
changes include raising premiums, cutting payments to providers 
and shifting seniors into untested forms of care. The bottom line is 
that seniors are going to pay more for less health care coverage.

  Republicans are going to turn over complete control of the Medicaid 
program to the states, stripping away assurances that guarantee 
coverage to children, the elderly and the disabled. The Republican 
Medicaid scheme cuts the program by $170 billion in seven years, nearly 
a 20 percent reduction. Minnesota was one of the biggest losers in the 
restructuring of the House Medicaid formula and is projected to lose 
$3.4 billion over the next seven years under the House formula. This is 
a cut of over 21 percent! Illustrated as to the impact on people, these 
cuts would mean loss of health coverage for 80,000 Minnesota children, 
loss of eligibility for 5,900 nursing home residents and loss of health 
care coverage for over 100,000 Minnesotans by the end of the decade.
  The Republicans proposed Medicaid plan eliminates nursing home 
regulations, taking us back to a bleak history of institutionalization 
without consumer protections from abuse and neglect. It eliminates 
provisions for home and community-based services. People with 
disabilities who are now able to remain at home with their families 
because of home and community-based care could have to enter costly 
institutions under this plan.
  What a difference a year makes. Last fall 1994, the Congress was 
struggling to expand health care to those without Medicare, Medicaid or 
private coverage. However, in 1995 Congress has designs to renege on 
existing Medicare and Medicaid programs. Then there were 40 million 
uninsured Americans from working families but today the number has 
jumped by another 1.4 million people in the past year. Congress is not 
even addressing the issue of those without health care, but pulling 
back and punching holes in the American health care programs, Medicare 
and Medicaid, that help well over 60 million Americans. What a shame 
and what a disgrace that the modest programs that provide dignity to 
the elderly and the disabled, and compassion and empathy for those 
without means, in fact 18 million children, are being bled of their 
health benefits as the Republicans prioritize tax breaks for the 
wealthy ahead of health care for the needy.
  These changes will affect every person in this Nation, whether 
indirectly through their health care costs increases due to the rising 
number of uninsured people, or directly if they have to deal with the 
cutbacks in their coverage or their parents', spouse's or child's 
coverage.
  Medicare and Medicaid represent our nation at it's best. They 
represent the desire on the part of the American people to pull 
together and care for those who otherwise might not have enough 
resources to have access to health care. Instead of building upon this 
success, by responsibly managing Medicare and expanding health care 
coverage to all Americans, this Republican bill rolls back on the 
progress that has been made.
  At the same time they are working to shred the health care safety net 
and destroy retirement security, Republicans are pushing a measure to 
jeopardize the hard-earned pensions of working Americans. The 
reconciliation bill includes a devious provision allowing corporations 
to de-fund and transfer money from pension funds to be used for any 
purpose the corporation may choose. According to the Pension Benefit 
Guaranty Corporation, the Republican fund raid potentially affects 
22,000 pensions funds covering 11 million active workers and even 2 
million retirees. This provision shows a blatant disregard for the 
lives and future livelihood of working Americans, not only because it 
jeopardizes their pensions, but because taxpayers in the final analysis 
could be required to step in and bail out companies' pension programs 
in the future.

[[Page H11208]]

  On the environmental front, the reconciliation bill evokes the 
tradition of 19th century robber barons who exploited the west. From 
the bill, one would think the only good tree is a horizontal tree and 
that our nation has been endowed with vast and wonderful resources so a 
few could make a profit. This legislation amounts to a wholesale 
exploitation and degradation of America's natural resource legacy. We 
see the imprint of special interests, including the mining, timber, oil 
and gas industries, throughout the bill.
  This legislation enshrines private park concessions in our National 
Parks with big profits in a power position over the public visitor and 
park rangers and stewards. Special interest giveaways are extensive: 
below cost timber sales, private control of rivers and waters, grazing 
fees below the already scandalously low prices, and public mineral 
rights giveaways to mining interests are all included in the bill. 
Masked as positive revenue gains, they put our national heritage on the 
auction block, with rigged bidding rules designed to benefit the 
special interests.
  The decision to destroy forever the Arctic National Wildlife Refuge 
[ANWR] by permitting oil and gas exploration and drilling demonstrates 
the true spirit of the majority. The last great piece of American 
wilderness, the Arctic plain, ANWR is birthing home to the 160,000 
member Porcupine Caribou herd. Grizzly and polar bears, arctic foxes 
and numerous other species conspicuous and inconspicuous abound. A 
clear majority of the American people oppose drilling for oil in ANWR, 
but the GOP leadership is not listening. Opening the refuge area to 
drilling will assure destruction of this pristine wilderness. The 
Republicans know better. The Arctic plain has been untouched for 40,000 
years since the ice age. A unique Native American culture, the Gwich'in 
people, live by subsistence hunting and are absolutely dependent on the 
Porcupine Caribou herd.
  Opening ANWR is a serious policy decision which should be openly 
debated on its merits, not as part of a reconciliation bill. Folding 
this measure into this bill is a sleight of hand way to circumvent the 
process and force this wholesale policy change upon the American 
public.
  The reconciliation bill is also an inappropriate place to include 
provisions which essentially gut the Community Reinvestment Act [CRA], 
which attempts to insure bank credit in our cities. These provisions 
will exempt close to 90 percent of banks and thrifts from CRA coverage. 
The bill also provides a safe harbor for institutions with a 
satisfactory or higher rating (95 percent of the industry) and 
eliminates the sole enforcement mechanism in the CRA. Without using a 
dime of taxpayer funds, the CRA every year helps steer $6 billion of 
private funds into housing, small business an economic development in 
communities across this country. The CRA is an engine of economic 
development and social justice, and if it did not exist, we would need 
to invent it today. Furthermore, any measure which undercuts the CRA at 
least deserves a separate vote on the House floor.
  The reconciliation bill includes several dubious provisions which 
will limit Americans' access to affordable housing. The RTC and FDIC 
affordable housing programs are eliminated. These are programs that 
obtain properties through bank and thrift failures and allow low- and 
moderate-income families, nonprofit housing groups, and public housing 
authorities to purchase these properties. These programs work; under 
the RTC affordable housing program, more than 104,000 dwellings have 
been sold at a value of $1.5 billion. Republicans also eliminate the 
Low Income Housing Tax Credit, which has been responsible for more than 
100,000 units of affordable housing per year, $15 billion in economic 
activity and 90,000 jobs. Cutting this highly targeted and successful 
program will devastate affordable housing opportunities in the future. 
The ultimate losers with these GOP proposals are the prospective 
tenants and homeowners.

  We have heard many people talk about balancing the budget so that the 
next generation will inherit a smaller financial burden. I find it 
difficult to believe, however, that included in a budget plan designed 
to give our children a better future, there are such drastic cuts in 
education programs, which are critical to providing and empowering our 
nation's youth with the tools and opportunities they require to succeed 
in this increasingly competitive world. A balanced budget will not mean 
much if America's children do not have the knowledge and skills they 
need to continue America's leadership role in the world economy.
  The bill takes particular aim at higher education, which are the 
institutions that produce our engineers, doctors, scientists and other 
personnel critical to this nation's progress and competitiveness. 
Federal programs comprise nearly the whole higher education financial 
aid support system. This legislation eliminates the interest subsidy 
for students during their first six months after graduation at a time 
when college graduates are having trouble finding jobs and more and 
more parents are unable to help with these financial liabilities. The 
measure also eliminates the Direct Loan program, which has been 
successfully utilized by 24 educational institutions in Minnesota 
alone. Parents who help their children with the costs of acquiring a 
higher education will also see their financial burden increase as this 
measure increases the interest rate that parents pay on PLUS loans. In 
addition, a myriad of new fees and the increases in existing fees will 
add to the cost of higher education even further because lenders and 
educational institutions will without doubt pass these costs down to 
students in the form of increases in tuition and higher costs of 
borrowing funds. In point of fact $10 billion dollars will be cut from 
programs to help families achieve post secondary education programs.
  We cannot and shouldn't steal from the very programs that allow our 
children to succeed in order to secure a smaller budget in their 
future. America's children are our greatest resource, and we must 
ensure that every child has the opportunity to receive the education 
they require and deserve to be successful in the world of work and our 
communities.
  At the same time Republicans make all these cuts to people programs, 
defense spending spirals upward in the overall Republican budget plan 
for weapons and spending that the defense dept has not sought. 
Misaligned Republican priorities include $1.4 billion for B-2 stealth 
bombers, not requested by the Pentagon. Republicans also sink hundreds 
of millions into funding for the Seawolf submarine and Star Wars 
missile defense. The security of the United States cannot be provided 
for by simply increasing the number of planes, bombers, and submarines. 
Economic security, safety at work, and access to quality health care 
are also real elements of national security. How can we say the U.S. is 
more secure with nearly $7 billion more than the Pentagon requested, 
while Medicare is being cut; while funds are reduced for occupational 
safety for American workers; while educational programs are gutted? Can 
smart weapons replace smart soldiers and sailors? The answer is 
obvious--investment in people is essential to our security, whether in 
a military uniform or part of the private economic.
  The question really is about the direction our nation should be 
heading and what values we want to cultivate to enhance America's 
future. This reconciliation bill reveals a dramatic change in national 
priorities under the GOP leadership. This new Republican majority 
values the bottom line above all else, in order to give tax breaks to 
the wealthy and placate special interest spending project, apparently 
the GOP message is claim to balance the budget and anything goes--but 
they are wrong--people care. The American people don't want an 
abandonment of principles and policies which allow the most vulnerable 
in our society to live with dignity and afford opportunity. They also 
do not want a redistribution of wealth which makes it more difficult 
for working American families to get ahead while giving special 
benefits to corporations and special interests. This bill is an affront 
to all who believe in the concept of community and the commitment of 
the Federal government to protect Americans' health, environment and 
economic security. I urge my colleagues to vote against this bill.
  Mr. PAYNE of New Jersey. Mr. Speaker, I rise in strong opposition to 
H.R. 2491. I am particularly disappointed about the impact this 
legislation has on the Earned Income Tax Credit. Under this measure the 
Earned Income Tax Credit will be cut by $23 billion. This legislation 
will have a very negative impact on the State of New Jersey. Provided 
only to those who work, the Earned Income Tax Credit is a valuable tool 
in encouraging work over welfare. In my State of New Jersey the Earned 
Income Tax Credit helps 513,808 low-income workers and their families 
in their struggle to stay afloat in our society. That translates into 
13.1 percent of all New Jersey taxpayers. In the past, this tax credit 
has received bipartisan acclaim under the Presidencies of Ronald Reagan 
and George Bush. I find it perplexing that despite the success of the 
tax credit, it would be slashed under this current proposal, thereby 
increasing taxes on millions of working Americans.
  I find it ironic that while my colleagues on the other side of the 
aisle talk about the need 

[[Page H11209]]

for welfare reform and personal responsibility, they are willing to 
decimate the program that helps people rise from dependency. The Earned 
Income Tax Credit encourages families to move from welfare to work by 
making work profitable. The tax credit rewards employment for working 
families, so parents who work full-time do not have to raise their 
children in poverty--and families with modest means do not suffer from 
eroding incomes. The Earned Income Tax Credit is a nonbureaucratic way 
to encourage work over welfare. There are no middlemen or service 
providers. There are no long lines at Government offices. The tax 
refund is provided by the IRS directly to the working families. I ask 
my colleagues who support this measure and have low- and moderate-
income families in their districts to explain why it is necessary to 
slash a tax credit to low- and moderate-income families whose income 
has deteriorated since 1979. Payroll taxes increased five times between 
1983 and 1990, while in 1996 the real value of the minimum wage will 
decline to its lowest real value in 40 years. The poverty rate for 
working families with children grew by nearly half from 1979 to 1993. 
The bottom 40 percent of American families, by income--those earning 
less than $30,000 in 1993--made 10 percent less in real terms in 1993 
than in 1979.

  In light of these grim statistics, I would like to know how my 
colleagues on the other side of the aisle are going to explain to the 
American people the fact that they are prepared to cut millions of 
dollars away from poor, working families, then turn around and provide 
a tax cut for the wealthy. I cannot begin to understand how many of my 
colleagues justify this type of action especially in light of that fact 
that the income gap between wealthy and nonwealthy Americans is at 
record levels.
  In addition, the budget reconciliation bill before us today punishes 
poor children by eliminating key child nutrition programs, including 
the highly successful WIC Program--women, infants, and children. It 
repeals school lunch and school breakfast programs and denies benefits 
to legal immigrants who have faithfully complied with the law and gone 
through all the proper channels to enter our country.
  Our Nation has always valued education as the ticket to achieving the 
American dream. This bill attacks student loan programs, cutting a 
total of over $10 billion over 7 years. Is it fair to tell our young 
people that they will just have to abandon the dream that we all 
shared?
  As chairman of the Congressional Black Caucus, I am outraged that the 
Republican Congress has once again reversed the clock, turning back 
progress by eliminating the Minority Development Agency which 
coordinates minority business and development programs and gives a fair 
chance to those who were shut out of the system for years.
  Our seniors are hurt by the reductions in section 8 housing; veterans 
who served our Nation are now told that they are part of the budget 
problem.
  Once again, Federal employees and retirees are given harsh and unfair 
treatment. Those who have chosen careers in public service are now 
being told they will have to pay more and get less.
  This is a hidden tax whether the authors of this budget want to admit 
it or not.
  This budget will be disastrous for the working people of our Nation, 
for children, for students, and for seniors. I urge my colleagues to 
oppose H.R. 2491.
  Mr. UPTON. Mr. Chairman, I have had extensive discussions with the 
chairman of the House Commerce Committee concerning the fact that 
teaching hospitals and academic medical centers have traditionally had 
higher costs. This is due to the special mission that these 
institutions have providing specialty patient care, conducting clinical 
research, and training new physicians to treat our poor.
  After these discussions, I have been assured that it should be the 
policy of the States, when creating their new MediGrant programs, to 
take it into account. Obviously, it is in the best interest of this 
Nation's health care to ensure top quality doctors and research 
facilities, along with continuing specialty care. This can be done if 
the States recognize that additional reimbursements will be required to 
these types of facilities.
  Mr. HOYER. Mr. Chairman, I rise in strong opposition to this omnibus 
bill that I believe is a major step backward for our Nation.
  I am committed to insuring our Nation's fiscal integrity. Our 
obligation to our future and our children and to their children demands 
decisive and decidedly different action to affect a disciplined conduct 
of the fiscal business of this country.
  But this Republican package is not the answer. It is an attack on the 
middle class and poor Americans.
  I supported the balanced budget amendment to the Constitution. I 
voted for the Stenholm budget which would have achieved a surplus by 
the year 2002. I will also support the alternative reconciliation 
developed by Mr. Orton, Mr. Stenholm, Mr. Peterson, Mr. Sabo, and other 
Democrats. In a responsible and fair way, their alternative puts us on 
a glidepath to a balanced budget by 2002.
  In my view Thomas Jefferson was right when he said:

       The question whether one generation has the right to bind 
     another by the deficit it imposes is a question of such 
     consequence as to place it among the fundamental principles 
     of government. We should consider ourselves unauthorized to 
     saddle posterity with our debts and morally bound to pay them 
     ourselves.

  Reducing the deficit is of such importance that I do not believe we 
should approve tax cuts until we get our fiscal house in order. In my 
view, we must balance the budget first, then consider tax reductions.
  The Republicans are steadfast in their efforts to give tax breaks to 
the wealthy. That is why the provisions in this bill are so draconian 
and is part of the reason why this bill is so unacceptable compared to 
the Orton-Peterson-Stenholm-Sabo substitute.
  One example of the Republican bill's attack on the middle class are 
its provisions on Federal employees. The measure saves more than $10 
billion from increased taxes on Federal employees and other provisions 
that will dramatically decrease their benefit packages.
  The Republican leadership, despite loud and persistent rhetoric about 
reform of Congressional procedures, put this package together with few 
hearings and no markup by the Government Reform and Oversight 
Committee.
  Mr. Chairman, I know of no precedent for making this magnitude of 
changes in Federal benefits without full and open discussion of the 
issue. As my colleagues will recall, the creation of FERS, the Federal 
Employees Retirement System, was done in the mid-1980's at the 
conclusion of nearly 2 years of bipartisan hearings with dozens of 
witnesses.
  The Democrats and Republicans charged with review of this issue do 
not support what is in this bill. A vote was not allowed in the 
Government Reform and Oversight Committee or its Civil Service 
Subcommittee because the majority of Members on those committees do not 
support these provisions.
  Federal workers have already contributed more than their share to 
efforts to balance our Federal budget--about $200 billion over the last 
15 years. We must stop this erosion of pay and benefits or we will 
witness a deterioration in the quality of young men and women that we 
attract to and retain in Federal service.
  I am pleased that the provision to require Federal employees to pay 
fair market value for parking have been dropped. That was the right 
thing to do. What remains, however, is still unfair and unwarranted.
  These proposals are representative of this bill's impact on middle 
and lower income citizens. It is an attack on those groups and it 
should be rejected.
  In addition to dramatic reductions in the Earned Income Tax Credit, 
this bill makes dramatic cuts in Medicare and Medicaid--over $450 
billion in health care cuts.
  Under the Kasich proposal, Maryland will lose $2.5 billion of 
Medicaid funding that it uses to provide medical care to poor children, 
the disabled, and seniors in nursing homes.
  The result of these provisions, if adopted, is clear. Maryland would 
be forced to raise State income taxes just to retain very basic 
benefits. Other benefits, for adults and children, would simply have to 
be abandoned.
  More than 60,000 Maryland children would be forced to go without 
health care coverage--without immunizations, health screenings, and 
medical treatments that will keep them healthy and ready to go to 
school.
  Mr. Chairman, when people voted for change last November, they did 
not vote to bankrupt families. They did not vote to leave children 
languishing in foster care. They did not vote to throw children off 
Medicaid. That would not be responsible.
  Children and their families would also suffer from the welfare 
provision of the Kasich bill.
  We cannot promote our national economic security if taxpayers are 
required to support able bodied Americans who simply choose not to 
work. Even so, our economic future is lost if we fail to provide for 
the Nation's children.
  The Republican proposals for welfare reform are weak on work and 
tough on kids--tougher on kids than they are on the deadbeat dads who 
walked out on them.
  There is a better way to end welfare as we know it and to create a 
system that puts parents to work and protects the well-being of the 
kids who depend upon them. The welfare provisions in the Democratic 
substitute, which 204 Members of this body supported, represent true 
reform. They require those who can work, to work.
  These are just a few examples of what I believe our priorities must 
be. Not tax cuts in the face of deficits, but fiscally responsible 
policies that serve the needs of all Americans, promote America's 
economy, and move us to a balanced budget in the year 2002.
  The alternative is a responsible approach and a real approach. While 
I do not agree with 

[[Page H11210]]

every provision, I find it an acceptable alternative to solidify 
America's economic future.
  Our deficit threatens our health as a nation and our ability to be 
competitive in our global economy. The Orton-Peterson-Stenholm-Sabo 
alternative would balance the budget and get us back on track.
  The Gingrich/Kasich bill uses a meat ax and leaves the patient its 
trying to cure badly scarred. The substitute uses a scalpal and leaves 
the patient whole and cured.
  Mr. SERRANO. Mr. Chairman, I rise in strong opposition to the budget 
reconciliation bill that is before the House this week.
  I hardly know where to start in denouncing this misguided bill, but 
several themes are apparent.
  It makes vast, untested changes in the way our country does business.
  It abandons federal commitments to the most vulnerable among us--
children, families, the elderly, immigrants, the working poor, the 
sick--and makes many of them the subjects of State-run experiments in 
providing health care, education, jobs, and other services.
  It needlessly cuts taxes on corporations and wealthy investors while 
it raises taxes on more than half the population--the half with incomes 
under $30,000 a year.
  It dumps huge new responsibilities on the States but gives them 
little time to plan, establish new programs and bureaucracies, or hire 
and train State employees.
  It makes changes in programs across the Federal Government; while 
some may be useful, many are probably not or they wouldn't have to be 
rammed through the House in this manner.
  It tramples on the procedures the House has established to permit 
full and open debate on important issues by inserting provisions never 
considered by a committee or actually rejected by a committee.
  Of course, the bill has been a moving target as the Republican 
leadership cut deal after deal to buy the votes they need to pass this 
massive nightmare of a bill.
  The real targets and beneficiaries of this bill are shockingly clear 
from a couple of the tax provisions. The bill provides for $245 billion 
in tax cuts that go mostly to wealthy investors and corporations. 
According to the Office of Management and Budget, the top 1 percent of 
families, those with annual incomes over $350,000, will see their taxes 
cut by $14,050 per year.
  The $500 tax credit per child would go to families with annual 
incomes up to $200,000. But the credit is nonrefundable, which means 
that a family of four would receive a reduced credit or no credit at 
all until its annual income reached about $30,000.
  At the same time, the Republicans propose to save $23 Billion from 
the Earned Income Tax Credit [EITC], which offsets payroll taxes and 
the failure of the minimum wage to keep pace with inflation, permitting 
low-income working families to keep more of their earned income, or, if 
their income is very low, providing a modest income supplement.
  The result of these two provisions--the non-refundable per child tax 
credit and the EITC cuts--is that fully half of America's working 
families, those with annual incomes below $30,000, face increases in 
their taxes.
  The EITC cuts will have a particularly serious impact on New Yorkers. 
New York has a State EITC, which is tied to the Federal credit. Nearly 
one million low- and moderate-income working families will see 
increases in their State taxes as well as their Federal taxes from the 
cuts in budget reconciliation.
  We discussed the Republicans' huge and dangerous cuts to Medicare 
last week, although without enough time for debate or opportunity for 
amendments to improve that deeply flawed bill. It came up last week, of 
course, because the Republicans hoped to fool the American people into 
thinking there is no connection between the $270 Billion in Medicare 
cuts and the $245 Billion in tax cuts. But here it is again, as title 
XV of this bill.
  Another reason that considering Medicare last week was a mistake is 
that it is so closely related to Medicaid. Changes in one program 
affect the other in ways that have not, in my view, been sufficiently 
studied. Moreover, cuts in both programs, taken together, will have 
devastating effects on our health care system, patients and providers 
alike.
  Mr. Chairman, on Friday, I met with a group of providers in my South 
Bronx district to discuss the cuts' impacts on their facilities and 
hear their views. One participant, representing the Daughters of Jacob 
Geriatric Center informed us that between 90 percent and 95 percent of 
the center's residents are supported by the Federal health programs and 
that 75 percent of its budget goes to labor costs. Clearly, cuts in 
Medicare and Medicaid will have serious, harmful effects on the health 
and well-being of the seniors at the center.
  Apart from the cuts in Medicaid funding, provisions ending the 
entitlement of eligible individuals to coverage and converting Medicaid 
to a shrinking block grant are alarming. Medicaid is a national program 
precisely because some States were unwilling or unable to meet the 
health care needs of the poor. To assume that every State will have the 
will and the resources to meet these needs, especially as Federal 
contributions decline so sharply, is dangerous wishful thinking.
  On Tuesday, my constituent, David Tuzo spoke about the importance of 
Medicaid at a rally on the Capitol Grounds. David, who is HIV-positive, 
has four sons, three of whom are foster children he has saved from 
abuse and abandonment. In closing his remarks, he said, ``I guess there 
are two reasons my health is so good and I feel so optimistic: my life 
with my kids gives me hope and Medicaid is my lifeline. Without 
Medicaid, I'd lose my kids and my life.'' But there is no guarantee 
that the medical services David receives now with Medicaid coverage 
will continue to be covered, or even that he and his sons will continue 
to be eligible.

  Welfare reform is another empty, to be added title of this bill, 
although conferees are now meeting to resolve differences between the 
versions of H.R. 4 that passed the Senate and House. But I think 
anything born of H.R. 4 ought to be rejected, not hidden away in this 
huge bill.
  My outrage has not diminished since the House voted to take away the 
Federal guarantee that some modest assistance will be available for 
those children and families whose desperate circumstances make them 
eligible. That is not just bad public policy, it is immoral.
  I also continue to be angry at the ongoing immigrant-bashing that 
began with H.R. 4, which would deny public assistance on the basis of 
legal immigration status. We know that immigrants don't come here for 
public assistance; they come to join family members and to provide a 
better life for their children. They work, they pay taxes, they 
participate in community life, and they play by the rules. Why should 
they be targeted, except to save money?
  Mr. Chairman, there is a great deal more to condemn about this bill, 
but I am nearly out of time. Let me just mention a few more outrages.
  The bill repeals the alternative minimum tax on corporations, letting 
corporations get away with paying no Federal income taxes at all.
  The bill permits businesses to raid their pension funds of as much as 
$40 billion, threatening the retirement security of millions of current 
workers.
  The bill amends the Community Reinvestment Act to make it easier for 
banks to avoid investing and lending in communities from which they 
take deposits and to make it harder for community groups to challenge a 
bank's CRA compliance.
  The bill terminates the RTC and FDIC affordable housing programs and 
repeals the low-income housing tax credit, reducing the already small 
stock of affordable housing for low- and moderate-income families at a 
time of increasing homelessness.
  The bill eliminates the direct loan program and the graduation grace 
period, putting a college education, which is the most effective 
vehicle for success, beyond the reach of most people.
  The bill incorporates the provisions of H.R. 927, the Cuban Liberty 
and Democratic Solidarity Act, an extreme bill that would enhance 
policies that have never worked, increase the suffering of the Cuban 
people, and adversely affect United States businesses, the United 
States court system, and our relations with our closest allies.
  The bill ignores reforms made just 2 years ago to the tax exemption 
of certain income from investments in U.S. possessions such as Puerto 
Rico, known as section 936, and, instead, phases it out over 10 years. 
I believe section 936 should be left alone, but if it must be changed 
there are better ways.
  Mr. Chairman, all thinking Members agree that we must bring the 
Federal deficit under control, if not actually balance the budget.
  There is wider disagreement over the number of years it should take. 
I personally think 7 years is too short and requires the kind of 
mindless slashing of spending the Republicans propose rather than 
thoughtful adjustments, but the Republicans insist on 7 years.
  Cutting taxes before the deficit is under control makes the required 
spending cuts that much greater.
  And the specific cuts chosen, aimed mostly at low- and middle-income 
families, and the refusal to curb corporate welfare, add to the 
outrages in this bill.
  Mr. Chairman, I urge my colleagues to reject this terrible bill.
  Mr. NEAL. Mr. Chairman, I join with Representatives Rangel, Johnson, 
and Kennelly to express my concerns about the tax changes to section 
936 included in budget reconciliation legislation.
  The bill recognizes that section 936 cannot remain in effect 
indefinitely and must be terminated within a reasonable time. However, 
the termination of section 936 in this legislation would eliminate 
totally all Federal incentives for new job creation in Puerto Rico. 
This provision provides protection for the companies 

[[Page H11211]]

doing business in Puerto Rico, but not for the working people of Puerto 
Rico.
  The Governor of Puerto Rico has suggested an economic incentive 
program that would replace section 936 with a wage credit provision to 
help spur job creation in Puerto Rico. The provision included in budget 
reconciliation was not debated thoroughly and the Governor did not have 
time to submit an alternative proposal. The Conference Committee on 
budget reconciliation should adopt the Governor's proposal or some 
other reasonable replacement program to help with investment and job 
creation in Puerto Rico.
  I urge the House to thoroughly review this issue.
  Mr. WICKER. Mr. Chairman, I am pleased to share with my colleagues 
the following remarks from October 23, 1995 by R. Bruce Josten, Senior 
Vice President for the Chamber of Commerce of the United States of 
America.
         Chamber of Commerce of the United States of America,
                                  Washington, DC, October 23, 1995
       Members of the U.S. House of Representatives: In the next 
     few days, you will be voting on H.R. 2491, the ``Seven-Year 
     Balanced Budget Reconciliation Act of 1995,'' this year's 
     omnibus balanced budget reconciliation bill. This historic 
     measure will lead to a balanced federal budget within the 
     next seven years, cut taxes for American families and 
     businesses, streamline welfare systems and provide for 
     stronger economic growth. The U.S. Chamber of Commerce--the 
     world's largest business federation, representing 215,000 
     businesses, 3,000 state and local Chambers of Commerce, 1,200 
     trade and professional associations, and 73 American Chambers 
     of Commerce abroad--urges you to vote YES on the 
     reconciliation bill.
       H.R. 2491 offers us the chance to switch tracks, from the 
     usual tax-and-spend mentality to an emphasis on less 
     government, lower taxes, and increased economic growth. 
     Eliminating the deficit in seven years will lower interest 
     rates, boost savings and investment, increase productivity 
     growth, and lead to more and better jobs and a higher 
     standard of living. The reconciliation bill also takes a 
     courageous step in addressing runaway entitlement spending 
     while ensuring more effective services to those in need.
       The tax cuts contained in the reconciliation bill provide 
     incentives for job creation and return some of the taxpayer's 
     earnings to where they rightfully belong--the taxpayers's 
     pocket. As part of a comprehensive balanced budget package, 
     the tax cuts make the process of eliminating the deficit 
     easier on the economy at the same time they make achievement 
     of the goal more likely.
       The reconciliation bill before you deserves your support. 
     The business community will be closely following the outcome 
     of this vote, which the U.S. Chamber will count as a key vote 
     in its annual ``How They Voted'' tabulation. Passage of the 
     reconciliation bill is crucial to re-establishing the 
     historic trust between the government and the governed. The 
     U.S. Chamber membership urges you to vote YES on H.R. 2491.
           Sincerely,
                                                  R. Bruce Josten.


      balancing the federal budget--the nation's greatest priority

       With all the hoopla over Medicare, Medicaid, welfare 
     reform, and tax cuts it is easy to lose sight of the forest 
     for the trees. Therefore, it is important now to reiterate 
     and reemphasize where we are headed. The single overarching 
     goal of this legislation is to put the economy on a new track 
     by balancing the budget through spending restraint, reducing 
     taxes, and getting the government out of the everyday lives 
     of its citizens. The message is simple: Balance the Budget 
     Now!!!
       Why is it so important to balance the budget? Balancing the 
     budget is the single most important act that congress can 
     take to boost savings in this country. This in turn will lead 
     to lower interest rates, higher investment, greater 
     productivity growth, and a higher standard of living. 
     Achieving this balance will also increase our competitiveness 
     in international markets.
       In a June 1995 U.S. Chamber survey, more than 96 percent of 
     those responding would like to have the federal budget 
     balanced in seven years
       There is no doubt that balancing the budget is a clear 
     winner for the economy--but it is more than an economic 
     issue; it is an issue of generational fairness. Deficits not 
     only burden future generations with higher taxes required to 
     service the debt but also deny future generations the basic 
     right to make their own decisions and choose their own 
     destiny.
       While it is true that balancing the budget involves some 
     short-run pain, the long-run cost of failure to balance the 
     budget is the virtual impoverishment of America's future. 
     Unless we make some tough decisions to reduce spending and 
     eliminate the deficit, we will soon find ourselves in a 
     position of bankruptcy, and totally ill-equipped to provide 
     for the retirement needs of the baby-boom generation. Without 
     immediate program changes, by 2012 entitlement spending and 
     interest payments on the debt will consume all tax revenue. 
     If unreformed, Medicare will be insolvent in seven years.
       The balanced budget reconciliation package also includes a 
     tax cut for America's households and businesses. By improving 
     the incentives for individuals to work and businesses to 
     create new jobs, the proposed tax cuts will spur economic 
     growth. These beneficial effects not only will mitigate the 
     short-run fiscal drag from the spending restraint but also 
     will generate tax receipts to help offset the revenue loss 
     from the tax cuts themselves.
       Eliminating the deficit and balancing the budget is sound 
     public policy. It will benefit individuals of all ages and 
     socio-economics groups, it will encourage savings and 
     investments and foster job growth, and ultimately will place 
     America in a sound financial position to deal with the 
     complexities of its aging population. Failure to do so is 
     simply irresponsible.


          balanced budget reconciliation bill--Myths vs. Facts

       Myth: Balancing the budget is going to harm the economy.
       Fact: The congressional Budget Office has estimated that 
     balancing the budget within five to ten years provides enough 
     time for the economy to adjust without providing undue stress 
     to economic growth. By producing a plan that splits the 
     difference--balancing the budget in seven years--the 
     Republicans place the economy on as gentle a transition path 
     as possible that still preserves the plan's credibility. 
     That's important because a vote of no confidence in the 
     financial markets would send interest rates up, which could 
     unravel the entire plan by slowing the economy and forcing 
     the government to spend more on its debt service.
       Myth: The Republicans are slashing programs for the poor 
     and the elderly.
       Fact: Actually, total government spending over the next 
     seven years under the Republican plan would continue to grow, 
     averaging 3.0% per year. Social Security spending is slated 
     to rise about 5% per year, and Medicare growth will average 
     6.4%.
       Myth: It's irresponsible to cut taxes at the same time 
     we're trying to balance the federal budget.
       Fact: The tax-cut package will help achieve a balanced 
     budget by improving the incentives for Americans to work, 
     save and invest. These activities will generate private-
     sector growth that will offset the economic drag caused by 
     reduced government spending.
       Myth: The Republicans are slashing Medicare.
       Fact: The Republican plan for Medicare calls for program 
     expenditures to rise an average of 6.4% per year for the next 
     seven years--more than twice the rate of inflation. Medicare 
     spending over the past five years has grown at the 
     unsustainable average annual rate of 10.4% over the past five 
     years. Critics of the Republican plan usually fail to note 
     that expenditures per beneficiary are projected to climb from 
     $4,800 today to $6,700 by 2002 under the Republican proposal.
       Myth: The Republican tax cuts are for the wealthy.
       Fact: Most of the tax relief goes to the American family as 
     the child tax credit. Under the Senate Finance Committee tax 
     cut bill, 62 percent of tax reduction is accounted for by the 
     child tax credit, which has income limits (the full amount is 
     available to single filers earning $75,000 or less and to 
     married joint filers earning $110,000 or less). Only about 
     one-sixth of the tax package's $245 billion in tax relief 
     goes for reductions in capital gains tax.
       Myth: The cuts in Medicare spending are funding the tax 
     cut.
       Fact: These are two separate issues. Tax cuts or not, 
     balanced budget or not--the Medicare trust fund will be 
     bankrupt by 2002, according to the best estimates of the 
     Medicare Trustees (four of the six trustees are Clinton 
     appointees). Action on Medicare is required now. The problem 
     can only truly be solved by addressing the explosive growth 
     of Medicare, which has averaged 10.5 percent per year over 
     the past five years. Moreover, because any changes to 
     Medicare Part A will accrue directly to the Medicare Hospital 
     Insurance Trust Fund, the savings cannot be used to provide 
     for tax cuts.
       Myth: President Clinton's plan to balance the budget in ten 
     years offers a preferred path to fiscal balance.
       Fact: Actually, the president's path doesn't lead anywhere. 
     According to the CBO, the federal deficits under the 
     Administration's June 1995 proposal remain lodged around the 
     $200 billion level for the next decade. The Administrations 
     rosier underlying economic assumptions play a big role in 
     getting the deficit to zero, but when the CBO figures are 
     used instead, the deficit shows little improvement. CBO's 
     scoring of the Republican plan, on the other hand, shows 
     balance. Which numbers should be used? The president answered 
     this question himself, when in February 1993 he argued that 
     lawmakers should stick to one set of economic assumptions--
     CBO's--so that ``the American people will think we're 
     shooting straight with them.''


                  medicare reform--the right solution

       Medicare reform is at the crux of the balanced budget 
     battle. Medicare--the national health insurance program for 
     seniors--will run out of money in seven years, according to 
     The Board of Trustees. Spending on Medicare and other 
     entitlements threatens to crowd out all other budget 
     priorities and increase the budget deficit.
       Previous approaches to Medicare reform have failed to slow 
     Medicare's growth. Worse, these approaches have increased the 
     burden on businesses and their employees through higher 
     payroll taxes and higher insurance premiums.
       Since 1970, Congress has raised payroll taxes over 20 times 
     and the Medicare Trustees 1995 Report pointed out that 
     payroll 

[[Page H11212]]

     taxes would have to be raised by another 1.3 to 3.5 
     percentage points to bring the system into balance. When you 
     consider that many small-and medium-sized businesses already 
     pay more in payroll taxes than income taxes and that payroll 
     taxes must be paid regardless of economic conditions, it 
     becomes clear why Medicare requires solutions other than tax 
     increases.
       The House and Senate Majority has proposed market-oriented 
     alternatives to traditional Medicare reform, an approach that 
     modernizes the 30-year-old Medicare program by increasing 
     competition while restraining the growth in spending. Key 
     elements include:
       New choices for Medicare beneficiaries. Beneficiaries will 
     have the right to choose traditional Medicare, as well as the 
     right to choose from a range of private health plan options 
     including managed care and medical savings accounts. These 
     options will provide beneficiaries access to expanded 
     benefits--such as prescription drugs, preventative care, 
     vision and hearing care.
       Restrained growth in Medicare spending. Increases in 
     Medicare spending are inevitable, given the growing Medicare 
     population and the advance of medical technology. However, 
     controlling the rate at which Medicare spending increases is 
     as important to our nation's future financial health as 
     Medicare itself is to seniors' health care. Introducing 
     competition to Medicare through beneficiary choice of health 
     plans will help control costs and allocate resources more 
     fairly and efficiently than Washington bureaucrats.
       Accountability. The Republican plan allows seniors to take 
     responsibility for making their own health care decisions. 
     Instead of relying on a bureaucratic, one-size-fits-all 
     approach, seniors will decide which health plans are best for 
     them. Doctors and hospitals are also held accountable. The 
     bill rewards beneficiaries who report incidences of waste, 
     fraud and abuse, and strengthens penalties for anyone who 
     defrauds Medicare.
       By passing this legislation Congress will have taken 
     timely, critical action that will avert the program's 
     bankruptcy and preserve and protect it for current recipients 
     and future generations.


                    medicare reform--myths vs. facts

       Myth: The House and Senate Republican Medicare reform plans 
     will cut $270 billion from Medicare in order to finance a tax 
     cut for the wealthy.
       Fact: The Medicare Trustees' 1995 Annual Report urged 
     Congress to take ``prompt and decisive action'' to address 
     the solvency of the Medicare Part A (hospital insurance) 
     Trust Fund and the continued growth of Medicare Part B 
     (supplemental medical insurance).
       The House and Senate Majority has proposed market-oriented 
     alternatives to traditional Medicare reform, an approach that 
     modernizes the 30-year-old Medicare program by increasing 
     competition while restraining the growth in spending. Under 
     the Republican plan, spending per beneficiary will still 
     increase 40% by 2002 ($4,800 to $6,700).
       Tax cuts provided for in the budget resolution were 
     considered and passed independent of Medicare. Whether or not 
     taxes are cut, Medicare will still go broke in 2002.
       Myth: It's not fair for Congress to take away benefits from 
     seniors who have faithfully paid into the system.
       Fact: The average Medicare beneficiaries receive far more 
     than they put in. The average two-earner couple receives 
     $117,200 more in benefits than it contributes to the program. 
     The average singe-earner couple receives $126,700 more.
       By encouraging competition among private health plans based 
     on quality and innovation, the Republican plan may lead to 
     increased benefits.
       Myth: The business community is a latecomer to the Medicare 
     debate.
       Fact: Medicare's influence is felt throughout the business 
     community--from payroll taxes paid to finance the system to 
     insurance premiums inflated by consistent shortfalls in 
     Medicare reimbursements to providers who in turn shift the 
     cost to private health plans.
       Myth: Medicare is in trouble because doctors and hospitals 
     charge too much. The Republican plan fails to address this 
     problem.
       Fact: Solving the Medicare crisis will require the 
     participation of all--doctors, hospitals, seniors and other 
     taxpayers--particularly the business community. Just as no 
     one factor led to the Medicare crisis, a single-minded focus 
     on providers won't get us out. Further, cost controls have 
     failed miserably whenever they have been tried--particulary 
     in the context of health care.


                   welfare reform--a call for action

       Efforts to reform the nation's welfare system continue to 
     gain momentum and could be included in the budget bill. Other 
     legislation supported by the U.S. Chamber of Commerce has 
     been passed by both the House and Senate. A final compromise 
     will be sent to President Clinton for his signature once 
     differences between the bills are resolved by a House-Senate 
     conference committee.
       Overhaul of the welfare program is critical to control 
     spending costs and provide effective, streamlined services to 
     those who truly warrant such assistance. To achieve this end, 
     the bills eliminate the federal guarantee of benefits for all 
     eligible Americans by turning responsibility for welfare 
     programs to the states in the form of block grants. A 
     substantial reduction in federal spending is anticipated--
     from $65 to $100 billion over seven years. There is much 
     commonality between the House and Senate proposals:
       Both bills replace federal welfare programs with lump-sum 
     payments to the states for cash assistance to the poor (AFDC) 
     and child care. (The House bill also includes family 
     nutrition, Supplemental Security Income, and school lunches.) 
     Block grants to the states are capped; no state match is 
     required.
       The legislation places a limit of five years on the 
     duration of time that individuals may receive welfare 
     benefits. States have the option of lowering the limit to two 
     years.
       States must move half of all welfare recipients into work 
     by either 2003 (House bill) or 2000 (Senate bill). Both bills 
     repeal the JOBS program.
       But key differences with respect to illegitimacy, ``family 
     caps,'' and aid to immigrants remain. The House bill 
     prohibits states from providing benefits to women who have 
     additional children while on welfare, teenagers who have 
     babies of out of wedlock, and most non-U.S. citizens. The 
     Senate bill does not contain these prohibitions.
       Business has a strong stake in the welfare reform issue. If 
     people are to exit the welfare rolls, they must be prepared 
     and able to find and keep a job. In response, many welfare 
     reformers look to the private sector as the primary source of 
     job creation.
       Chamber members understand the need to be centrally 
     involved in the welfare reform debate. In a survey to 
     construct the 1995-1996 National Business Agenda, welfare 
     reform was ranked as the second highest priority (behind 
     unfunded mandates). The June, 1995 ``Where I Stand'' Nation's 
     Business questionnaire on welfare generated 6,319 responses, 
     the fourth-highest return ever.
       In November, 1994, the Chamber became the first business 
     organization to adopt policy on welfare reform. The Chamber 
     supports immediate and intensive job placement services for 
     welfare recipients; a time limit on welfare benefits; work 
     requirements; and incentives for businesses to hire welfare 
     recipients. Above all, it is imperative that former welfare 
     recipients possess the knowledge and skills to succeed in the 
     modern workplace.


                    welfare reform--myths vs. facts

       Myth: Business will not hire welfare recipients.
       Fact: Private companies will hire welfare recipients, but 
     practical incentives need to be offered. Examples include 
     flexible wage scales, relief from certain labor law 
     requirements, and/or tax incentives. Equally important is 
     ensuring that recipients possess the skills and attitudes to 
     succeed in today's workplace.
       Myth: The legislation recklessly endangers the well-being 
     of the poorest children and families.
       Fact: America's welfare system eats up billions of dollars 
     of taxpayers' money annually. Without incentives like time 
     limits and work requirements, many persons will continue to 
     make an easy living off welfare. Reliance on public 
     assistance must to an end.
       Myth: Moving to a block grant system will cripple state 
     budgets and lead to a ``mish-mash'' of state welfare 
     programs. The federal government needs to maintain authority.
       Fact: Block grants deserve strong consideration; they will 
     help maximize state and local flexibility and allow states to 
     design welfare programs that best reflect their public 
     assistance needs. Moreover, block grants will put an end to 
     unfunded mandates and burdensome regulations associated with 
     federal welfare programs.
       Myth: Increasing the minimum wage is the only way to ensure 
     that welfare mothers can live on entry-level earnings. 
     Otherwise, the work requirement will never be effective.
       Fact: Quite the contrary. An increase in the minimum wage 
     would cost many Americans their jobs and deter employers from 
     hiring welfare recipients. The key to increased job 
     opportunities is an abolishment of the minimum wage and 
     allowing the marketplace to work.
       A Congressional Budget Office study has shown that 70 
     percent of workers who entered the workforce at $5 an hour or 
     less were still employed after one year. Forty-five had 
     received wage increases of 20 percent or more.
  Mr. RAMSTAD. Mr. Chairman, I want to express my deep concern about 
the 4.3 cent per gallon aviation fuel tax which was imposed in the 
massive 1993 tax increase signed into law by President Clinton.
  While I would have preferred a full repeal of this damaging tax, I am 
pleased the reconciliation bill before the House today includes a 
provision to extend the current exemption from this tax for 2 years.
  But I am deeply concerned the other body has only chosen to extend 
the exemption for 17 months, and I strongly urge my colleagues on the 
reconciliation conference committee to support the full 2-year 
exemption.
  Without the certainty of a long exemption, it is impossible for the 
airline industry to make the long-term decisions needed to keep this 
critical sector of our economy healthy.
  The airline industry is already under an enormous tax burden. Federal 
taxes imposed on the airlines include a 10 percent excise tax on 
airline tickets, a 6.25 percent excise tax on cargo shipments, a $6 per 
passenger international departure tax, special taxes to support 
customs, immigration, and agricultural inspection services, and a $3 
passenger facilitation charge at many major airports. These 

[[Page H11213]]

taxes impose costs of $6.7 billion a year on an industry with total 
revenues of $64 billion a year.
  Mr. Chairman, I urge continued commitment to the 2-year exemption 
during conference committee consideration of this provision.
  Mr. BARCIA. Mr. Chairman, I came here following the 1992 election to 
do on the Federal level what I have done for my entire time in public 
service: serve the good people who elected me, make tough choices to 
secure a sound future, and make tough choices to guarantee a fair 
treatment for the people I represent. I came here to bring the 
discipline of a balanced budget, just like the one I followed as a 
member of the Michigan State Legislature, to Washington.
  Since coming here, I have supported the balance budget amendment, and 
the line-item veto. I have voted for many spending cuts--over $900 
billion in my first term.
  Today, I find myself facing three choices. First, I can vote for the 
Republican budget plan which according to a recent New York Times poll 
only 12 percent of people believe will balance the budget, and 
which guts Medicare and other programs important to a significant 
number of people that I represent.

  Secondly, I can support the Conservative Coalition proposal which 
responsibly lessens the impact on Medicare recipients by $100 billion, 
and which delays tax cuts until the budget is balanced, in line with 
what 60 percent of Americans believe should be the case.
  Thirdly, I can find fault with both proposals, vote for neither, and 
accept responsibility for perpetuating budget deficits.
  Clearly, this last alternative is unacceptable. The first option, 
slashing spending haphazardly like scissor-fingered Freddie in another 
``Nightmare on Elm Street'' movie, is breaking faith with the many 
people in my district who believe that while spending should be cut, we 
should not take assistance away from those least able to absorb those 
losses. We should not expect seniors who have paid taxes all their 
lives to pay even more by losing benefits they cannot afford to lose.
  As a result, I will vote for the Conservative Coalition proposal. It 
balances the budget in 7 years. It concentrates in eliminating waste, 
fraud, and abuse. It doesn't punish seniors like the Republican 
alternative does. It brings the debate from whether or not we should 
balance the budget to how do we balance the budget.
  I came here to balance the budget. My vote today does just that.
  Mr. JOHNSON of South Dakota. Mr. Chairman, we can balance the Federal 
budget without attacking education, the elderly, veterans and rural 
America--and for that reason, I must rise to express my strong 
opposition to H.R. 2491, the Omnibus Budget Reconciliation bill. I must 
also express my opposition to the parliamentary rules under which this 
legislation is being considered. Under the rule passed by this House, 
no amendments to the reconciliation bill will be allowed other than for 
one alternative which is a better but still flawed bill. In this way, 
the House is being asked to vote on drastic and unecessary reductions 
in Medicare and Medicaid, farm programs, education, VA and other vital 
concerns without any ability to cast a vote up or down on any of these 
issues.
  It is time to get our priorities straight. I've been a strong 
supporter of a balanced budget amendment and line-item veto as well as 
for budget spending caps. But this bill raises income taxes on families 
making less than $30,000 per year, slashes our investment in education, 
cuts agricultural programs three deeper than is needed to balance the 
budget, and cuts Medicare three times deeper than is needed to 
stabilize the Medicare Trust Fund. If that weren't bad enough, this 
bill spends billions on defense weapon pork the Pentagon doesn't even 
want, and gives tax breaks that primarily benefit the wealthiest 1 
percent of families.
  A recent analysis from our Joint Committee on Taxation finds that 
under H.R. 2491, families making less than $10,000 per year will pay a 
cumulative $879 million more in taxes, while families making more than 
$200,000 per year will get a $2.8 billion tax cut. This amounts to a 
$43 billion tax increase for families making less than $30,000--51 
percent of all taxpayers.
  It is my hope that this bill is either defeated or vetoed by the 
President so that we can commence a meaningful bipartisan effort to 
balance the budget with sane priorities and values. I will continue to 
support tough choices on the budget, but I will absolutely not be a 
part of this reverse-Robin Hood budget effort. South Dakotans and the 
American public deserve better.
  Mr. COSTELLO. Mr. Chairman, the process of this reconciliation bill 
is such that I have not witnessed during my tenure on the Budget 
Committee. First, over half of the committees did not meet their 
reconciliation instructions, as directed under the budget resolution, 
to submit them to the Budget Committee. This has been the most 
convoluted process since my tenure began on the Budget Committee. At 
the very least, the mark-up of the budget reconciliation bill should 
have been postponed until all spending measures were completed and 
received by the Budget Committee.
  While I was disappointed with the process of reporting the budget 
reconciliation legislation, I also disagree with many parts of this 
enormous package. This month, the Census Bureau released data for 1994 
showing the income-gap between the wealthy and all other Americans is 
large and still growing. I am disappointed but not surprised that the 
Republican leadership's agenda is to reinforce this growing disparity 
in economic equality. The $245 billion tax cut mostly coming from the 
$270 cut out of Medicare will benefit primarily wealthy Americans. More 
than 50 percent of the benefit of the tax cut will go to the less than 
3 percent of households with incomes over $200,000. We must get our 
fiscal house in order before we dismantle critical programs to pay for 
a tax cut. I fully support a tax cut for American taxpayers; however, 
such relief should come after we reach a balanced budget. A tax cut 
that is financed on the backs of he elderly, poor and disabled in our 
society will not benefit our Nation. It is not good economic practice 
and it is clearly harmful public policy.
  Finally, in addition to my opposition to Medicare and Medicaid cuts, 
I find it outrageous that this legislation would:
  Repeal national nursing home standards which exist through Medicare, 
which provide patients a basic minimum of safety, care and training in 
nursing homes;
  Repeal the spousal impoverishment provisions of Medicaid, which 
ensure that spouses of long-term care patients do not become 
impoverished when the spouse is institutionalized; and
  Repeal of a program instituted in 1992 to keep the coal health 
benefits program solvent. Over 100,000 retired coal miners rely on this 
fund, which could be jeopardized with repeal of this program.
  For these and other reasons, I urge my colleagues to vote no on the 
Republican reconciliation plan.
  Mr. RICHARDSON. Mr. Chairman, this budget reconciliation bill will 
undermine our commitments to educate our children, provide incentives 
for hardworking Americans, preserve our environment and most 
importantly ensure health care for poor children and the elderly.
  This bill makes drastic cuts in Medicaid funding.
  My State will lose about 30 percent of its Medicaid funding. New 
Mexico will have $1 billion less to spend on Medicaid over the next 7 
years.
  Let me remind you that the program we are cutting by $170 billion in 
this bill provides health care to children and pregnant women, the 
disabled and elderly in nursing homes.
  Let us be clear that voting for this bill means millions of Americans 
will have no health care--while millionaires will get a tax break.
  I have supported and will continue to support balanced, reasonable, 
reforms in Medicaid--but I cannot support irresponsible cuts to finance 
a tax cut. I do not support decimating the program that provides a 
safety net for poor children, pregnant women, the disabled and nursing 
home patients.
  This bill also sacrifices the quality of health care for 40 million 
elderly who depend on Medicare.
  The hospital association in my State has identified 11 hospitals that 
they believe will close because of the drastic Medicare cuts in this 
bill.
  Nothing, especially a tax cut for the wealthy, is worth sacrificing 
the health of our children and over 40 million elderly in this country.
  Mr. BARRETT of Nebraska. Mr. Chairman, I rise in support of the 
Republican Balanced Budget Reconciliation bill. I regret that meetings 
in my office prevented me from being on the floor earlier when Members 
on the other side of the aisle rose to denounce the agriculture title 
of this bill.
  By passing this Reconciliation bill today, we are dramatically 
changing the 1930's depression-era-based Federal farm programs.
  I believe that farm policy should be based on less government and 
free market principles; regulatory relief and simplification; 
aggressive, consistent export strategies; and fiscal responsibility.
  The Freedom to Farm bill is the first step in accomplishing these 
goals.
  This legislation provides for more planting flexibility, promotes 
full production, and allows farmers to manage their own businesses 
based on economic factors without government intervention.
  Earlier this year, almost every political journalist questioned 
whether the New Republican majority would take a walk when it came to 
farm programs.
  Well, as a part of this new majority, I'm proud that the Freedom to 
Farm bill meets the budget agreement target. Agriculture will do its 
fair share to help balance the budget by 2002 and the programs are 
indeed reformed.

[[Page H11214]]

  By passing the Freedom to Farm provisions, the Republicans are saying 
good bye to the past--when Federal farm policies micro-managed farmers; 
and hello to the future--a future of world markets, and freeing farmers 
to seize the opportunities to capture these new markets.
  I urge the body to support the Reconciliation bill.
  Mr. UNDERWOOD. Mr. Chairman, I rise in opposition to H.R. 2491, the 
Omnibus Budget Reconciliation Act. I have been on record on previous 
occasions opposing the changes to Federal programs that have an unfair 
impact on the elderly, students, and the working poor. I share the 
commitment to fiscal responsibility that other Members have, but I 
remain unconvinced that this bill is fair burden-sharing.
  I also call attention to the provision which would eliminate covenant 
funding for the Commonwealth of the Northern Mariana Islands [CNMI]. 
This funding was amended in December 1992 by an agreement negotiated by 
the Bush administration and the CNMI. To eliminate the funding now, 
without renegotiating the agreement, is a serious breach of faith with 
the covenant. The word of the U.S. Government should mean something, 
and commitments made by a President, whether Republication or Democrat, 
should be honored by Congress.
  During the reconciliation resolution markup in the Committee on 
Resources, I noted that Congress has other insular issues that demand 
attention and that require funding. This includes the Rongelap 
resettlement funding, compact-impact reimbursement for Guam and the 
Northern Marianas, and the capital infrastructure needs of American 
Samoa, the Virgin Islands, and other insular territories.
  The conference report on the fiscal year 1996 Interior Appropriations 
(H.R. 1977) offers a compromise solution to these issues. It is a 
compromise solution that the insular territories can accept, and one 
that I support. However, this compromise is contingent on continued 
CNMI covenant funding, and proposes that funds be made available for 
these other needs while still honoring CNMI covenant commitments. The 
budget reconciliation provision for the CNMI funding would therefore 
not only harm the CNMI, but in making the compromise solution 
unworkable, also harms all the insular territories.
  Mr. COLEMAN. Mr. Chairman, I rise in strong opposition to this 
Republican reconciliation bill. After months of waiting for the 
majority to reveal its plans to balance the budget and finance a $245 
billion tax cut, we finally have them in all its gruesome detail.
  This bill does so much. The great majority of it bad. Even with the 
American people acknowledging that Republican legislative efforts 
disproportionately benefit upper income families and hurt those with 
lower incomes, the majority plunges on with cut after cut. There is no 
abating its destruction of anything that working Americans, the 
elderly, the children, and the poor hold so dear.
  Let us begin with tax cuts. In the face of overwhelming evidence, 
Republicans refuse to back down from the huge tax cuts they are giving 
to corporations and wealthy individuals. This includes provisions which 
reduce taxes on capital gains, repeal the alternative minimum tax on 
corporations, increase business deductions, and give tax credits to 
upper income families. The majority of these tax cuts go to the heart 
of upper income America, as the U.S. Treasury Department has found.
  Last week, the majority slashed $270 billion from Medicare which was 
incorporated into this reconciliation bill. As everyone knows, this cut 
was unnecessary for the Medicare Program to remain solvent. Its plan 
makes Medicare solvent only until 2006--exactly the same year as 
Democratic plans that only cost one-third as much. Why the extra cuts? 
To pay for a $245 billion tax break for the wealthy.
  On the floor of the House, I hear Republican Members state that they 
were actually spending more per Medicare beneficiary. I heard them say 
that they were giving seniors more choices. But they never acknowledged 
the fact that seniors' premiums would increase by about $400. They 
grudgingly acknowledged that they would be herding our senior citizens 
into Health Maintenance Organizations [HMO's], thereby limiting choice 
of doctors.
  The bill also guts the Earned Income Tax Credit [EITC]. Republicans 
have targeted the EITC for $23 billion in cuts. Savings also come from 
proposals to include Social Security and other retirement income as 
income for purposes of the EITC phaseout and increasing the EITC 
phaseout rate.
  In the past, the EITC has been supported by both Democrats and 
Republicans as a program which promotes work over welfare and helps 
move or keep low-income working families out of poverty. President 
Reagan in 1986 called the EITC ``the best antipoverty, the best pro-
family, the best job creation measure to come out of Congress.'' As 
recently as this February, the EITC was praised by House majority 
leader Dick Armey for ``rewarding work . . . without destroying jobs.'' 
Yet still they decimate this program.
  These cuts hit my district particularly hard. The 48,647 families 
currently claiming the EITC in my district will face a tax increase of 
$7.4 million in 1996. Many of these families will no longer be able to 
qualify for the credit.
  This bill also decimates the Medicaid Program. This bill cuts $182 
billion from the Federal-State program that provides health insurance 
for the poor and disabled. H.R. 2491 replaces this important program 
with a capped block grant. States would receive a fixed amount of money 
with very few Federal requirements attached.
  Texas would be profoundly impacted. My State could lose between $10 
billion and $14 billion in Federal Medicaid funds between 1996 and 
2002. Such losses will inevitably be passed along to local hospitals, 
nursing homes, doctors, and, ultimately, local Texas taxpayers.
  In welfare reform, the cuts exacerbate the inequities that already 
exist. Currently, Texas has more than 7 percent of the U.S. population, 
yet receives less than 3 percent of the total U.S. expenditures on Aid 
to Families with Dependent Children. Michigan, with roughly half the 
population of Texas, gets twice as much Federal money for AFDC 
recipients as does Texas.
  This situation would be made even worse under the current block grant 
proposals contained in this bill--the previously approved welfare 
reform legislation--H.R. 4. A preliminary analysis shows, for example, 
that block grant proposals for AFDC would hit Texas harder than any 
other State costing us $4.3 billion over 5 years. Michigan, at an 
average AFDC payment of $457 per month, and Wisconsin, at $517 per 
month, each pay their recipients two-and-a-half times as much as Texas, 
where the average monthly check is $188.
  Yet, those and other high benefit States will receive more money 
under this bill, not less money--even though they have declining 
populations and higher per capital incomes.
  While cutting welfare for the most needy, this legislation continues 
welfare for the rich. Under this legislation, companies would be 
allowed to withdraw excess funds from their pension plans without 
penalty. Currently, companies are required to fund pension plans at a 
minimum level but many experts consider this minimum inadequate. The 
penalty for withdrawal of excess funds protects workers pensions.

  By letting companies put pension funding at risk, this bill 
undermines the security of workers pensions. Ultimately, this puts 
taxpayers at risk, as it is the taxpayer who gets stuck if pensions are 
not funded. In addition, this provision gives new opportunities to 
corporate raiders and takeover artists. Historically, corporate raiders 
have seen well-funded pension plans as a source of cash with which to 
finance the cost of a takeover. Congress imposed penalty taxes on these 
withdrawals not only to protect funds that belong to workers, but also 
to cut down on corporate takeovers and leveraged buyouts.
  In the arena of education, the Republican reconciliation calls for 
student loan cuts of $10.1 billion over the next 7 years. This will 
mean fewer loans and fewer banks participating in the program. The 
student aid cuts follow already devastating cuts to this program. 
Student loans were cut by $477 million in 1986, $295 million in 1989, 
$2 billion in 1990, and $4.3 billion in 1993. This program has been cut 
by more than $7 billion in the past 10 years. And the Republicans want 
to cut it more.
  The bill also terminates the very successful Direct Lending Program. 
This is the second student-aid program that House Republicans have 
voted to eliminate in the last 2 months. In addition, this bill also 
does away with the interest subsidy to college students during the 
first 6 months after a student leaves school. Eliminating this subsidy 
will increase students' costs by $3.5 billion, a pretty hefty tax on 
student borrowing. The provision ignores one of the principal reasons 
this 6-month grace period was put in the law in the first place: to 
help reduce potential defaults.
  Proving that this bill is the anathema to the working class, the bill 
eliminates the Davis-Bacon Act and the Service Contract Act. Both these 
two pieces of law have served to protect workers in the service sector 
and the construction industries. In my congressional district of El 
Paso, the Davis-Bacon Act ensures that unscrupulous developers do not 
undercut wages paid to construction workers. Laws like Davis-Bacon and 
the Service Contract Act provide a stable foundation for workers in 
their respective industries. The savings from the repeal of these two 
laws come directly from the pockets of hard-working Americans.
  I will tell you, Mr. Chairman, this bill leaves nothing untouched. 
Everyone knows about the provision to allow drilling in the Alaska 
National Wildlife Refuge which should be cause for concern. But do you 
know that this legislation also includes a hidden-away provision to 

[[Page H11215]]

remove the authorization for the Border Environmental Cooperation 
Commission? This organization, which was created by the NAFTA to work 
alongside the North American Development Bank to address environmental 
problems on both sides of the United States/Mexico border, is being 
tampered with in this bill. Funding for this agency would have to come 
from authorizations for other trade functions. Representing a portion 
of the United States/Mexico border, this affects my area of the 
country, Mr. Chairman. It makes me wonder if the majority carefully 
looks at what it is doing.
  There are some good parts to this bill, Mr. Chairman. But the good 
far outweighs the bad. I have previously supported provisions like the 
$500-per-child tax credit, the elimination of the marriage tax, the 
raising of the Social Security earnings limit to $30,000, and the 
repealing of the 1993 tax increase on Social Security benefits.
  Yet even with these good elements, the Republicans insist on giving 
some provisions a bitter edge. For example, people with incomes of up 
to $200,000 can claim the child tax credit. I submit to you, Mr. 
Chairman, that these are the last individuals that should be receiving 
this tax credit. Better that the child tax credit go to working 
families with two earners struggling to make ends meet. It is my hope 
that the Senate will reduce this high threshold.
  Mr. Chairman, the President has already stated that he will veto this 
bill and I support him in that endeavor. I believe it is unconscionable 
to cut health care for the poor, slash student loans, and increase 
taxes on low income working families, in order to pay for these new tax 
breaks for the most privileged segments of society. It is my hope that 
the majority will come back with a budget balancing bill that is fairer 
and more equitable for the American people. This bill is not, and I 
cannot support it.
  Mr. GEJDENSON. Mr. Chairman, I rise in strong opposition to this far-
reaching and destructive measure. This bill is perhaps the greatest 
transfer of wealth from the poor to the rich this country has ever 
experienced. This measure is a grab bag of giveaways to narrow special 
interests at the expense of the vast majority of our citizens, 
including seniors, middle class and low-income families, students, and 
the disabled. Among other things, this bill slashes Medicare by $270 
billion, it abolishes Medicaid, Aid to Families with Dependent Children 
[AFDC], and the Department of Commerce, and contains numerous 
provisions attacking our most important and unspoiled natural 
resources. Each and every one of these provisions have been included in 
order to provide $245 billion in tax cuts to the wealthiest Americans 
and corporations. I urge my colleagues to carefully consider the 
ramifications of this measure. Indiscriminate cuts of nearly $1 
trillion from the Federal budget will have tangible and profound 
adverse impacts on citizens and our economy in the near future and well 
beyond the arbitrary deadline of 2002. We can achieve substantial 
deficit reduction and move toward a balance budget without jeopardizing 
economic growth, income security and quality of life for tens of 
millions of Americans. If members consider these ramifications, they 
will join me in voting no.
  While I have concerns about each and every title of this massive 
package, I will concentrate on several areas which are especially 
egregious to the people of eastern Connecticut and the Nation. The 
health care cuts contained in H.R. 2517 are extreme. With only one 
hearing, the Republicans have proposed a bill which cuts $270 billion 
from Medicare and $182 from the Medicaid Program. The reductions to 
these programs, which predominately serve seniors and low-income 
families with children, represent 50 percent of the total cuts in this 
bill. This is unfair.
  It is ironic that the elimination of Medicaid has been included in 
the same piece of legislation as the ``crown jewel'' of the 
Republicans' Contract With America--a $20,000 tax break for the 
wealthiest Americans--because the Medicaid provisions break a contract 
between the government and the American people. This bill removes the 
Federal Government's guarantee of basic health care and long-term care 
services for uninsured, elderly, and disabled Americans.
  The measure eliminates the current Medicaid Program and replaces it 
with State-controlled block grants called MediGrants. The bill also 
relaxes regulations on nursing homes, which currently ensure that 
patients receive appropriate care. Many of us remember the not-to-
distant past when nursing home patients were unnecessarily restrained 
or heavily sedated against their will. This bill returns us to those 
dark ages of health care.
  Perhaps the most appalling provisions of the bill, as approved by the 
House Commerce Committee, were two sections that repealed protections 
in current law regarding the families of nursing home patients. If Newt 
Gingrich had had his way, he would have permitted the Government to 
take away the homes of adult children in order to force them to pay for 
their parents' nursing home care. Mr. Gingrich would also have 
preferred to require the spouse of a nursing home resident to spend 
down his or her assets, including the individual's home, before the ill 
partner could be eligible for Medicaid coverage. Only after the 
Democrats in Congress exposed these cruel provisions and the public 
rebelled did the Republicans agree to remove them.
  Further, this bill is bad for my State of Connecticut. Under the 
Republican's plan, Connecticut will lose between $1.6 and $3 billion in 
funding for Medicaid. Proponents of the legislation may claim that the 
increased administrative flexibility given to the States under this 
plan will generate enough savings to ensure that eligibility cuts will 
not be necessary. That is simply not true. On the contrary, in an 
independent analysis of the Republicans plan, the Urban Institute 
concluded that aggressive cost containment strategies employed by the 
States would not alone produce the savings needed to meet the $182 
billion target.
  In addition, H.R. 2517 contains provisions of the so-called Medicare 
Preservation Act which was considered by the House last week. I voted 
against this shortsighted legislation. While no one would argue that 
the Medicare program needs reforming to ensure the trust funds remain 
viable into the next century, there is significant disagreement 
surrounding the magnitude of cuts necessary to accomplish this goal.
  Under the majority's plan, Medicare costs will go up. By the year 
2002, the monthly premium will increase from the current $46.10 to $87. 
In addition, choice of doctors will be limited as a result of the 
financial incentives hidden in the bill which entice physicians to stop 
serving traditional Medicare patients.
  Further, many provisions of current law designed to protect Medicare 
beneficiaries will be relaxed. If the Republican bill is enacted, under 
certain conditions, Medigap policies will be unregulated, insurance 
companies will be allowed to choose who they want to cover, and doctors 
will not be limited in the amount they can charge patients over the 
total amount that Medicare will pay for a procedure.
  Title I, the so-called Freedom to Farm Act, fundamentally alters 
dairy policy in a manner which will be devastating to producers in my 
State and across the Northeast. While my mother, father, and brother 
continue to make their living on the family dairy farm, I raise these 
concerns on behalf of hundreds of dairy farmers across the second 
district. Under current law, 34 milk marketing orders, covering 99 
percent of grade A milk produced in this country, help to guarantee 
farmers receive a minimum price for their product. The order system 
ensures efficient market operation and is administered at no cost to 
the Federal Government. No one in this body would argue the order 
system is perfect or without its detractors, but it has been reasonably 
successful in stabilizing markets for farmers and consumers.

  Under this bill, marketing orders will be abolished on July 1, 1996. 
This will send the dairy industry into chaos, possibly disrupt supplies 
and drive down producer income. As most of my colleagues know, dairy 
farmers are not wealthy and struggle each and every year to make ends 
meet. Orders ensure that all farmers, regardless of whether their farm 
happens to be 10 or 100 miles from Boston, receive the same basic price 
for their product. Orders guarantee farmers with high production costs 
can compete with those who have easy access to feed and grain and are 
not faced with high tax burdens shouldered by most of my constituents. 
Certain producers in the upper Midwest argue the order system provides 
farmers in the Northeast and Southeast with unfairly high prices for 
their product. While the blend price in New England is higher than in 
the upper Midwest, the mailbox price, the price farmers actually 
receive when all expenses are deducted, was lower in New England in the 
first 3 months of this year than in virtually any other region of the 
Nation. While farmers in my area received a mailbox price of $11.89 per 
hundred weight, producers in the upper Midwest received $12.26.
  Mr. Chairman, States will not be able to step in and replace Federal 
orders. As most economists will agree, markets do not respect political 
boundaries. Moreover, milksheds, which supply markets, often cover 
multiple States and are usually not served by single co-op. Moreover, 
orders are even more important in light of the fact that this bill 
eliminates price supports for milk at the end of this year. 
Interestingly, the bill maintains high price supports for peanuts and 
sugar. Economists familiar with the dairy industry have documented the 
interaction between price supports and Federal orders. Neither is 
sufficient to guarantee producers a fair return for their product, but 
together they help to ensure equitable prices are distributed to all 
producers.
  Milk marketing orders represent a voluntary system, supported by 
producers and handlers, and financed by the industry which benefit 
farmers and consumers alike. By eliminating orders, this bill 
guarantees that farmers in my State will see their income reduced by 
nearly $7 million in 1996. This cut will be devastating 

[[Page H11216]]

to the rural economy as it will reverberate from producers to haulers, 
suppliers, and processors.
  Title 9, written by Republicans on the Resources Committee, is among 
the most egregious. As ranking member George Miller described during 
markup on September 19, this title represents an early Christmas 
present for miners, loggers, ranchers, multinational oil and gas 
interests, subsidized irrigators, and major concession operators. The 
American people won't find any presents under the tree, but plenty of 
coal in their stockings. This package affects virtually every aspect of 
our natural resource policy and benefits narrow special interest at the 
expense of the American people who own these resources and hope to 
enjoy their recreational, aesthetic, and economic benefits.

  In spite of the fact that we import about 50 percent of our oil, 
title 9 contains the text of legislation passed earlier this year 
lifting the ban on exporting oil from Alaska. It makes absolutely no 
sense to me to lift the ban when we are unable to meet more than one-
half of our energy needs. I wouldn't be surprised to see reports in a 
year or two about how Americans are buying oil from Japan which 
ultimately came from Prudhoe Bay.
  In devastating attack on one of our Nation's most pristine and 
productive wildlife areas, the bill opens the coastal plain of the 
Arctic National Wildlife Refuge [ANWR] to oil and gas exploration. As 
many Members know, the coastal plain has been protected in one form or 
another since 1960 and serves as the primary calving ground for 160,000 
caribou and provides vital habitat for polar bears, musk oxen, and snow 
geese. This measure forces the Secretary of Interior to begin leasing 
tracts in ANWR within 12 months of enactment. While the coastal plain 
encompasses 1.5 million acres, the Secretary is barred from setting 
aside more than 30,000 acres--merely 2 percent of the total area--to 
protect important habitat. Virtually every environmental law is 
suspended and public comment is sharply curtailed. In fact, the bill 
deems an outdated environmental impact statement [EIS] prepared by the 
Reagan administration ``to be adequate and legally sufficient for all 
actions authorized pursuant to this section, including all phases of 
oil and gas leasing, exploration, development, production, 
transportation, and related activities.'' This language is so sweeping 
that it insulates every action from the first lease sale to 
transportation of oil to tankers from environmental review and any 
mitigation measures not mentioned in the EIS. This provision is even 
more alarming because the Fish and Wildlife Service [FWS] recently 
updated the EIS and determined oil and gas exploration will have 
serious negative effects on caribou and other wildlife species, water 
quality and the arctic environment in general.
  While the environmental consequences of this provision are 
devastating, the financial provisions should also cause Members concern 
because they are built like a house of cards. The bill assumes oil and 
gas leasing will generate $1.3 billion in revenue over 7 years. This 
figure is based on the Government receiving 50 percent of all lease and 
royalty income. However, the Alaska Statehood Act guarantees the State 
90 percent of all revenue from oil and gas activities. The committee 
leadership was well aware of the 90 to 10 split when it crafted this 
provision. The State has made it clear it will go to court to enforce 
the split set forth in the Statehood Act. If the State is successful, 
the American people will receive only $260 million for opening this 
national treasure to the oil barons.
  This title includes numerous provisions for special interests which 
threaten environment and fail to generate any appreciable revenue. It 
bars the Secretary of Interior from implementing reasonable grazing 
reform designed to protect sensitive environmental areas and ensure the 
American people receive a fair return on the use of their resources. In 
its place, it includes language which virtually guarantees Federal 
grazing fees will not increase and is completely devoid of any 
environmental standards.

  It incorporates sham mining reform which gives taxpayers the 
``shaft.'' Overwhelming majorities of this body have voted repeatedly 
to eliminate patenting. In fact, the conference report on the Interior 
appropriations bill was recently sent back to committee because it 
failed to include a moratorium on patenting. While proponents of this 
bill will tell you patenting has been reformed by requiring miners to 
pay ``fair market value,'' they fail to inform Members this term is 
based on the value of the surface estate and specifically excludes 
consideration of the minerals below. Desert land in the middle of 
nowhere isn't worth much more than $5 per acre if one fails to consider 
the gold, silver, and platinum which lies below the surface. Proponents 
will tell Members their approach includes a Royalty which will generate 
revenue for the taxpayers. They fail to mention there are 13 
deductions, including the cost of insurance for employees and 
environmental compliance, which can be taken before the royalty is 
assessed. The CBO determined this royalty would not generate any 
revenue for the Federal Government. Once again, the taxpayers take a 
hit while miners get a great deal.
  In one small victory for the American people, Budget Chairman Kasich 
stripped the text of H.R. 260, which is designed to close national 
parks, monuments, and recreation areas, from this package. I worked 
very closely with the gentleman from New Mexico, Mr. Richardson, and 
the gentlemen from New Jersey, Mr. Pallone, to remove this ill-
conceived measure from the bill. As many of my colleagues know, the 
House defeated H.R. 260 by a vote 180 to 231 on September 19. However, 
about 6 hours later, several Republican members on the Resources 
Committee offered it as an amendment to the reconciliation bill. This 
was a blatant attack on the will of the majority and could not be 
allowed to stand. I believe Chairman Kasich's action demonstrates 
majority rule is still the most important rule of the House.
  In perhaps the most blatant example of legislative ``trophy 
hunting,'' title 17 abolishes the Department of Commerce by September 
30, 1996. In an attempt to score cheap political points, the majority 
is eliminating the only Department which is aggressively working to 
open foreign markets, create new business opportunities at home, and 
prepare our economy for the challenges of the 21st century. This action 
is completely contrary to the national interest because it threatens 
the competitive position of this country. If this title is enacted into 
law, the United States will be the only developed country in the world 
without a cabinet-level agency responsible for trade promotion and 
development. Once again, extremists in the Republican Party are putting 
the narrow interest of some freshman Members ahead of the interests of 
the American people.

  This title abolishes the Economic Development Administration, U.S. 
Travel and Tourism Administration [USTTA], International Trade 
Administration, and many other smaller, but worthwhile, programs. Many 
of the proposed terminations and transfers make no sense from a policy 
process or fiscal perspective. The EDA assists thousands of communities 
nationwide in developing infrastructure necessary to support economic 
growth and job creation. While combining the trade promotion functions 
of Commerce with the trade enforcement functions of the U.S. Trade 
Representative may appear to make sense, in fact, proponents of this 
approach are forcing the Trade Representative to carry out functions 
which are inherently at odds. Eliminating the USTTA is among the most 
shortsighted provisions of this bill. Tourism is our largest service 
export and generated a trade surplus of $21.6 billion in 1994. Travel 
and tourism is America's second largest employer, providing 14.3 
million direct and indirect jobs. In addition, it generated $417 
billion in sales last year. While governments of other nations around 
the world are aggressively promoting tourism, this provision undermines 
of competitive position in the global market place.
  Moreover, this title guts the National Oceanic and Atmospheric 
Administration [NOAA] by terminating many nationally significant 
programs and scattering remaining NOAA functions across the Federal 
Government. Under these provisions, research of vital importance to our 
coastal communities, fishermen and every American will be eliminated or 
sharply curtailed. Cuts in NOAA will hinder our efforts to rebuild 
fisheries in New England, the Pacific Northwest, and the Gulf of 
Mexico, assess the implications of global warming on coastal 
communities and curb pollution of the marine environment.
  I am also terribly concerned about the vicious attacks on Federal 
employees in this legislation. The bill raises employee contributions 
to their retirement systems and delays cost-of-living adjustments. The 
Government promised Federal workers adequate health and retirement 
benefits when they chose to enter the civil service. Federal employees 
have upheld their end of the contract by serving their country. It's 
wrong for the Government to now suddenly change the terms of the 
agreement in order to pay for tax cuts for the wealthy.
  Republicans say they can save $10 billion from student loan programs. 
Cutting out programs and raising interest rates may look good on paper, 
but the real effects on American families will be very different.
  Changes in student financial aid programs will be devastating to 
middle-class Americans trying to send their children to college. It is 
an outrage that the Direct Loan Program is being legislated out of 
existence just when hundreds of additional schools were ready to help 
ease the bureaucratic nightmare for students and their parents. The 
real beneficiary of direct loan's demise is not the American people, 
but the banking industry that was beginning to feel some competition.

  The elimination of the grace period will not result in the savings 
projected by the Republicans. After graduation, it often takes at least 


[[Page H11217]]

6 months to find a permanent position. Without the grace period, many 
students will start out unable to begin repaying their loans. As the 
unpaid debt continues to accumulate, the likelihood of default 
increases.
  Limiting the PLUS Loan Program to a fixed amount per child will force 
many parents to take out loans from other sources. Many will have to 
resort to home equity loans at very high interest rates. Families with 
several children may be burdened beyond the breaking point, leaving 
huge debts and no means to provide for younger children. Under the 
current program, parents could be confident that, even if other forms 
of aid were unavailable, PLUS loans would enable their children could 
go to college.
  Finally, the ``crown jewel'' of the bill--$245 billion in tax cuts--
is a windfall for the rich and large corporations. The wealthiest 1 
percent of our citizens, those making more than $350,000 per year, will 
see their taxes reduced by more than $14,000 per year. At the same 
time, 70 percent of the American people will see their taxes go up or 
stay the same. Perhaps the greatest injustice is visited on those 
people at the bottom of the economic latter, the working poor who are 
struggling to do the ``right'' thing by working to support themselves 
and their families, will see their taxes increase due to massive 
reductions in the earned income tax credit. The 150 page tax section of 
this bill reads like a wish list for corporate America: 50 percent 
capital gains reduction, 25 percent corporate alternative tax for 
capital gains, and repeal of corporate alternative minimum tax. These 
provisions are ``Robin Hood'' in reverse--they take from the poor and 
give to the rich.
  Mr. Chairman, this package sets the wrong direction for this country. 
It fails to invest in our future, it jeopardizes the health of millions 
of senior and low-income Americans, and it provides unnecessary tax 
breaks to the wealthiest among us at the expense of the least 
fortunate. Moreover, many of its revenue assumptions are based on rosy 
scenarios or simple delusions which will never materialize. As a 
result, the American people will be left with the fallout of failed 
policies as well as empty pockets. Republicans are hurtling along this 
devastating course because they signed a contract with themselves to 
achieve certain arbitrary goals and deadlines set forth in an election 
year stunt. Rather than admitting that election year rhetoric should 
not be the basis for our economic and social policy into the next 
century, Members of the majority are repeating over and over ``the 
contract says, the contract says.'' I urge may colleagues to consider 
the unprecedented effects of this measure and defeat it.
  Mr. RUSH. Mr. Chairman, I rise today to address the most egregious 
assault on the American people by the Republican majority to date. It 
comes in the form of the budget reconciliation package. We have seen 
the missiles fired throughout the year. Medicaid has been cut by $182 
billion. Medicare has been cut by $270 million. Ironically, the 
Republicans have proposed a tax cut for the wealthiest Americans at a 
cost of $245 billion. Now that the enemy has pillaged these areas, they 
now seek to launch an all out offensive on any and all areas that serve 
the needs of American people.
  The great injustices of history have been committed in the name of 
unchecked and unbridled majority rule. The Framers of the Constitution 
warned us about the tyranny of the majority. Their fears have become 
reality. This bill is tyranny in the truest sense. Programs which 
assist people in achieving some of the goals we relish as a society are 
under attack. Affordable housing programs within the RTC and FDIC have 
been terminated. Student loans have been cut by $10 billion. As the 
Republicans march along to achieve their ultimate victory--a tax cut 
for the wealthiest of Americans--the safety net for the rest of America 
is being pulled from under them. The earned income tax credit, which 
helps the poorest of Americans will be reduced by 18 percent. Keep in 
mind, that individuals who receive EITC have an average salary of 
$11,000. The Republican majority has turned its back on the people who 
chose them to represent their best interests. This measure is 
tantamount to thievery--the theft of the sanctity of the American 
people.
  Mr. STOKES. Mr. Chairman, I rise in strong opposition to H.R. 2491, 
the 7-year balanced budget reconciliation act of 1995. The Republican 
championed budget, H.R. 2491, is firm evidence that there is no end to 
their attack on the weakest in our society--children and seniors. There 
is no question that they and their families will be worse off under the 
Republican budget. H.R. 2491 is just one in the series of--Republican 
escalating assault, after assault, on the children and seniors of this 
Nation, and is consistent with the majority's sentiment that the 
American peoples' knees would buckle once they knew what cuts the 
Republicans would make.
  H.R. 2491 takes away families' hope, takes away their opportunity for 
a better life, and takes away their ability to achieve the American 
dream. In return, the Republican measure burdens them with endless 
suffering, pain, and despair. What an astronomical price the American 
people are being forced to pay just to give a tax break to the rich. 
Keep in mind that this price tag has been levied on the American people 
by a self-proclaimed family friendly--promises made promises kept 
touted--Republican majority Congress.
  Let's be up front with the American people. Tell them exactly what 
H.R. 2491 is taking away from them, their parents, their children, and 
their family. The hardship that is buried in the nearly 1,600 page 
coldhearted Republican championed budget, H.R. 2491, is one nightmare 
that should never see the light of day.
  In addition to dismantling Medicare, gutting it by $270 billion, 
doubling seniors health care premiums, forcing seniors to give up their 
personal physician, and denying seniors nursing home care and nursing 
home protection, the Republicans' budget repeals Medicaid and guts the 
program by $182 billion. The guaranteed coverage for basic health and 
long-term health care for 36 million poor children, poor pregnant women 
and infants, and seniors is taken away. Coverage for elderly with 
Alzheimer's; and coverage for women with breast cancer is taken away. 
Where can they turn for health care services when under the 
Republicans' Medicaid Block Grant the States are permitted to deny and 
ration coverage by geographical area or political subdivision, and the 
safety net is shattered?

  The Republican budget destroys children's opportunity for a good 
education and restricts their academic achievement. H.R. 2491 takes 
away Head Start from 180,000 disadvantaged children; takes away basic 
assistance in reading and math from over 1 million disadvantaged 
children; deprives over 32 million students the safety of a drug-free 
and violence-free classroom; denies summer jobs to over 600,000 
students each year; and saddles college students and their families 
with higher college loans.
  The Republican budget jeopardizes the health of millions of children. 
H.R. 2491 takes away health care for over 4 million needy and disabled 
children; threatens hundreds of thousands of children's receipt of 
critical immunizations by repealing the vaccines for children program; 
threatens the availability of school lunches and other nutritious meals 
for 32 million hungry children; takes away vital prenatal infant 
mortality prevention services from 1 million women; and exposes 
children to hazardous waste, toxic air, lead poisoning, contaminated 
drinking water, and unsafe housing.
  The Republican budget erodes the quality of life for millions of 
families. H.R. 2491 drastically reduces the earned income tax credit 
for 17 million low income working families; increase taxes for families 
with two or more children by an average of $483; forces over 2 million 
families to go hungry by taking away their food stamps; takes away 
heating assistance from 6 million children and their families; reduces 
dislocated worker assistance and employment training; denies families 
with disabled children the assistance they desperately need; denies 
housing assistance to hundreds of thousands of needy hard working 
families; and places millions of hard working families at risk for 
homelessness and domestic abuse.
  The Republican budget weakens the Nation's economy. The abolishment 
of the U.S. Department of Commerce jeopardizes the Nation's 
effectiveness in the world trade market, reduces jobs and venture 
opportunities, and drastically reduces minority business development 
opportunities.
  Mr. Chairman, is there no end to the Republicans' attack on the most 
vulnerable in our society? What could poor little innocent children, 
frail and weak seniors, and hard working families have done to warrant 
the Republicans' coldhearted attack? How much more will the Republicans 
take away from children and seniors in order to pay for a tax break for 
the wealthy? Let's stand up for the needs of those who cannot defend 
themselves, and for those who entrust us with their future--the 
children, seniors, and hard working families. I strongly urge my 
colleagues to join with me in voting against the Republicans' callous 
assault. Vote no to H.R. 2491.
  Mr. HAMILTON. Mr. Chairman, I am deeply concerned about the process 
the House has followed in considering the Omnibus Reconciliation bill. 
Those concerns are outlined in my statement before the Committee on 
Rules on this bill.
  I believe that this process represents an unprecedented attach on 
this institution. I hope my colleagues will keep in mind the concerns 
outlined in my statement during consideration of this bill.

Statement of the Hon. Lee H. Hamilton Before the Committee on Rules on 
               H.R. 2517, the Omnibus Reconciliation Bill

       Mr. Chairman, Mr. Moakley, and other members of the 
     Committee on Rules, I appreciate the opportunity to appear 
     before you on H.R. 2517, the omnibus reconciliation package.

[[Page H11218]]

       I am here today because I am troubled by the pattern of 
     abuse of the legislative process that has been developing 
     during this Congress. This bill exemplifies that abuse.
       Now I know that reconciliation bills under Democratic 
     majorities were not pure. Problems with the process have been 
     growing over the years, given that the original 
     reconciliation bill dealt with $8 billion, and today we 
     cannot even estimate the total sums both ``reconciled'' and 
     authorized in this package.
       This reconciliation bill enters a new universe in its 
     breadth, the sheer number and complexity of proposals, and 
     the extent to which committees of jurisdiction--and thus, all 
     Members of the minority--were shut out of developing this 
     package.
       The reconciliation package contains three large items and 
     several smaller provisions that fall within the jurisdiction 
     of the International Relations Committee.
       First, H.R. 2517 contains a major legislative proposal 
     dramatically changing the configuration of the Commerce 
     Department. The Committee has jurisdiction over international 
     trade issues, so the dismantlement of the Commerce Department 
     causes great concern. The Committee never considered the 
     measure.
       Second, this bill ``deems'' enacted the entire foreign 
     affairs agencies' reorganization bill. Action has not yet 
     been completed in the Senate.
       Third, the bill contains the text of H.R. 927, the Cuban 
     Liberty and Democratic Solidarity Act, approved by the House 
     last month. This bill was altered substantially by the 
     Senate, and should be scheduled for conference.
       The purpose of a reconciliation bill is to bring direct 
     spending in line with the targets set by the budget 
     resolution. Among the many problems with this bill, these 
     items in the jurisdiction of the International Relations 
     Committee have nothing to do with budget reconciliation. 
     These items will cost money.
       Quite simply, this is the wrong way for the House to go 
     about its business.


                       Problems with the process

       (1) This process places enormous power in the Leadership, 
     who will consult only with those persons and groups they want 
     to include.
       The Committee is bypassed, an entire House of the Congress 
     is bypassed. All decisionmaking about the issues occurs 
     behind closed doors in a group formed by the leaders of the 
     majority. Final decisions are made by the Speaker. You have 
     created a largely secret system.
       This is a system which reduces accountability. It is an 
     entirely closed process. The average American has no way of 
     learning which Members are involved, which special interest 
     groups are consulted or locked out, and what positions 
     Members have taken on a proposal until it is too late and the 
     House has voted.
       Many members of both parties with significant expertise 
     were simply not welcome to contribute to the process.
       (2) This process bypasses and undermines the entire 
     committee system.
       When the Chairman decides to waive consideration of bills 
     that are central to the committee's jurisdiction, most 
     Members--including, all Members of the minority--are shut 
     out. The Commerce proposal is a case in point. Our Committee 
     had no role in developing that proposal. We held no hearings 
     on this proposal, there was no debate, we had no markup, no 
     amendments were permitted, we did not vote. We defaulted on 
     our responsibilities.
       The Committee is also stripped of its responsibilities when 
     items that is has considered and moved through the House are 
     included in the reconciliation package. Moving the 
     Committee's foreign affairs reorganization bill or the Cuba 
     bill through the reconciliation bill removes the Committee 
     from meaningful participation in a conference. It puts these 
     major foreign policy bills into a conference with a mix of 
     1000 other domestic items. The substance of these bills will 
     not likely be discussed in a reconciliation conference.
       In the last Congress, Republicans and Democrats working on 
     congressional reform talked about streamlining, modernizing, 
     rationalizing, and enhancing the committee system. 
     Congressman Dreier and I worked many long hours on these 
     issues. But we did not talk about what has come to be in this 
     Congress: bypassing committees on major policy issues.
       (3) This process produces a monster bill.
       This bill is simply overwhelming. What we have before us--
     all 1754 pages--is not really the entire bill. It does not 
     yet include the Medicare package. There are several other 
     bills that are hundreds of pages themselves--such as H.R. 
     1561 and the welfare reform package--that this bill 
     incorporates by reference.
       This reconciliation package will include that majority 
     votes in committees rejected. The ``Freedom to Farm'' bill, 
     for example.
       It includes bills the bulk of which the House has rejected, 
     such as the mining patents and national park concessions 
     proposals.
       It includes bills such as the Cuba bill, that have passed 
     the House and Senate in very different forms. There is every 
     reason to send this bill to conference under regular process.
       It includes bills--for instance, the Commerce proposal--
     created by a task force made up only of Members of the 
     majority party, after committees have reported out different 
     measures and some committees--such as the International 
     Relations Committee--were apparently instructed by the 
     Leadership not to act at all.
       (4) This process will include a tightly constrained rule.
       Reconciliation bills traditionally impose severe 
     constraints on time for debate and the opportunity to amend. 
     You will undoubtedly prescribe a restrictive rule, a rule 
     designed to keep the package intact.
       The Senate accords only 20 hours of debate (12 minutes per 
     Member) on the bill. In this bill, that means just over one 
     minute per page.
       We have had only a few days to digest this enormous bill. 
     And the contents of the bill we take up on the floor are 
     anyone's guess--I expect your rule will include significant 
     ``self-executing'' changes.
       We will probably know even less about the contents of the 
     reconciliation conference report before we must vote on it.
       (5) This process is not defensible because the ends do not 
     justify the means.
       I understand that the current Leadership has a very 
     different view of the committee system. If the Leadership is 
     driven only by outcome then process is irrelevant. Having the 
     votes at the end of the day is all that matters.
       I believe that the essence of democracy is process, and 
     that the end does not justify the means, the means is as 
     important as the end.
       That means a process that guarantees that all Members will 
     have an opportunity to be heard, even if they do not have the 
     chance to prevail.
       It means a process that allows every Member to offer 
     amendments and to vote, and every constituent to track how 
     their representative has voted as a bill winds it way from 
     committee, to the floor, to conference, and to the President.
       It means a process that allows those who have spent time 
     developing expertise in a particular area to have a seat at 
     the negotiating table.
       Eliminating consideration by committees, by one House, 
     silencing voices, reducing the number of people at the 
     negotiating table may get bills through the House faster. You 
     may get bills out of conference more quickly. But in the end 
     we will not get better laws. And we will erode the 
     foundations of this institution.


                               Conclusion

       We are subverting the entire legislative process here, 
     decision by decision. We are taking bills to the Floor that 
     have not been written or even considered by the committees of 
     jurisdiction and expertise.
       Protecting the committee system in this House should not be 
     a partisan issue. Safeguarding the legislative process is not 
     partisan.
       For these reasons, I urge you to support Mr. Hall's efforts 
     to strip the foreign affairs reorganization provisions from 
     H.R. 2517. I would also support any efforts to strip the 
     Commerce and Cuba provisions from this bill.
       And I ask that you think very seriously about the entire 
     way you're planning to move this reconciliation package. 
     Subverting the legislative process does a grave disservice to 
     this body, and to the American people.
  Mr. TOWNS. Mr. Chairman, make no mistake about the measure before us 
today. It is a major setback for nursing home care in this country. In 
my district alone, cuts in Medicaid will result in a $32 million loss 
to just Cobble Hill Nursing Home, and that figure is just for one 
nursing home.
  Not only are the cuts devastating to nursing homes, the elimination 
of minimum care standards add insult to injury. These standards were 
passed in 1987 precisely because of widespread abuse, neglect and 
indecent conditions in the Nation's nursing homes. Under this bill, all 
these protections are wiped out:
  Gone are the curbs on misuse of physical restraints and abuse of 
drugs;
  Gone is the requirement for round-the-clock licensed nursing 
services;
  Gone is the prohibition against evicting patients on financial 
reasons. Patients now will be subject to eviction or transfer from 
nursing homes after their private funds have been depleted and before 
Medicaid assumes payment.
  And finally, this bill contains no guarantee of healthy, appropriate 
meals.
  There is not question that nursing home care will return to the dark 
ages. Mr. Chairman, if we can not protect ``those who are the least of 
these,'' like nursing home residents, then who can we protect?
  Mr. RICHARDSON. Mr Chairman, this budget reconciliation bill will 
undermine our commitments to educate our children, provide incentives 
for hardworking Americans, preserve our environment, and most 
importantly ensure health care for poor children and the elderly.
  This bill makes drastic cuts in Medicaid funding.
  My State will lose about 30 percent of its Medicaid funding. New 
Mexico will have $1 billion less to spend on Medicaid over the next 7 
years.
  Let me remind you that the program we are cutting by $170 billion in 
this bill provides health care to children and pregnant women, the 
disabled and elderly in nursing homes.

[[Page H11219]]

  Let us be clear that voting for this bill means millions of Americans 
will have no health care--while millionaires will get a tax break.
  I have supported and will continue to support balanced, reasonable, 
reforms in Medicaid--but I cannot support irresponsible cuts to finance 
a tax cut. I do not support decimating the program that provides a 
safety net for poor children, pregnant women, the disabled, and nursing 
home patients.
  This bill also sacrifices the quality of health care for 40 million 
elderly who depend on Medicare.
  The hospital association in my State has identified 11 hospitals that 
they believe will close because of the drastic Medicare cuts in this 
bill.
  Nothing, especially at tax cut for wealthy, is worth sacrificing the 
health of our children and over 40 million elderly in this country.
  Mr. BILBRAY. Mr. Chairman, as county supervisor in 1994, I asked the 
Clinton administration to declare a Federal emergency over illegal 
immigration in San Diego County.
  That year my county reduced its contract with UCSD Medical center to 
provide emergency services to indigent patients by 50 percent or a 
total of $5 million.
  The Board of Supervisors implemented this reduction based on 
estimates that half of the indigent patients receiving emergency care 
at UCSD were illegal immigrants, and that these costs should not be the 
burden of local government.
  President Clinton, who denied my request to declare a state of 
emergency in 1994, is now threatening to veto our balanced budget 
package.
  He should think long and hard about denying hospitals funds to ensure 
that they can keep providing services to our most vulnerable citizens.
  His veto threat particularly jeopardizes California hospitals keeping 
their emergency room doors open to everyone.
  President Clinton allocated only $150 million in his budget to States 
nationwide for health care for illegal immigrants.
  The 7 year Balanced Budget Reconciliation Act, contains funding to 
reimburse hospitals for health care which they are required to provide 
to illegal immigrants.
  An approximately $3 billion trust fund will be made available to 
States most severely impacted by illegal immigration; California will 
receive the largest share since it has the highest population of 
illegals in the Nation.
  What we have created is a pot of money to pay hospitals for the 
services the Federal Government requires them to provide.
  It is unprecedented. Previously, the State and local governments and 
hospitals have borne the responsibility for the Federal Government's 
failure to secure our borders.
  Now, for the first time, hospitals will send the bill for illegal 
immigrants health care where it rightfully belongs: to Washington, DC.
  What we have seen in California is a direct consequence of the 
Federal Government's failure to secure our borders.
  Our ability to provide health care to our poor and disabled citizens 
is being jeopardized by the increasing costs of providing health care 
to illegal aliens.
  I would point to Los Angeles County health care system's near 
collapse as an example of the strain providing care to illegal 
immigrants places on emergency rooms already stretched beyond their 
resources.
  An estimated 96,000 babies will be born to undocumented women covered 
by Medi-Cal, California's Medicaid program, at a cost of $230 million 
in medical bills this year.
  Because hospital workers are prohibited by law from asking a 
patient's immigration status, these costs are absorbed and paid for out 
of other parts of the hospital's budget.
  An increasing share of these dollars must cover the costs of 
California's large, and growing, illegal immigration population.
  The trust fund we are creating today represents the first time that 
Congress accepts that providing emergency health care services to 
illegal immigrants is a Federal responsibility, not a State 
responsibility.
  Past Congresses have failed in this regard.
  Today, we take the first step toward addressing this problem. I look 
forward to working with Speaker Gingrich and Senator Dole as we toward 
reconciling the differences between the House and Senate budget bills 
and allocating California, and other States, their fair share of these 
funds.

         [From the Blade-Citizen, La Costa, CA, Aug. 26, 1994]

              Wilson, Bilbray ask Clinton for Declaration

                        (By Michael J. Williams)

       San Diego.--First District Supervisor Brian Bilbray, with 
     the support of Gov. Pete Wilson, on Thursday called for 
     President Clinton to declare a federal emergency over illegal 
     immigration in San Diego County.
       The demand, made at a press conference at the UCSD Medical 
     Center, comes in the midst of publicity surrounding a wave of 
     Cuban immigrants to Florida.
       The flood of immigrants inspired Florida Gov. Lawton Chiles 
     to declare a state of emergency and mobilize National Guard 
     troops in his state.
       But illegal immigration into San Diego County is as 
     chronically heavy as Florida influxes like the Mariel boat 
     lift in 1980, said Bilbray, the Republican candidate for the 
     49th Congressional District.
       According to Bilbray, the influx of Cubans and Haitians to 
     Florida's shores pales compared to the wave of immigrants 
     crossing the international border into San Diego County.
       ``There are 500 people a day coming into Florida, the 
     governor declared an emergency and the president responded,'' 
     Bilbray said in an interview following the press conference. 
     ``We've got three times that number every night. If you're 
     going to hold the line in Miami, doggone it, we're part of 
     the country too.''
       In the press conference, Bilbray announced that he intends 
     to ask his colleagues on the Board of Supervisors on Sept. 20 
     to adopt a resolution declaring a state of emergency.
       The resolution also asks the governor to seek federal 
     interdiction of illegal immigrants at the border and 
     reiterates a demand of reimbursement to the state and county 
     for the cost of providing services to illegal immigrants.
       ``The president said that the days of ignoring this problem 
     are over with,'' Bilbray said. ``He's doing it in Miami, and 
     he ought to be doing it in California. We have the just right 
     to make sure our resources are being used to stop illegal 
     aliens and drugs from crossing the border here.''
       Wilson, who is campaigning to keep his gubernatorial seat, 
     stated his support for the resolution, which echoes demands 
     he made of the federal government earlier this year.
       Immigrant rights advocates have decried the demands as 
     campaign tactics and disputed the claims that immigrants are 
     costing the state billions of dollars in health and social 
     services.
                                                                    ____


       [From the Blade-Citizen, North County, CA, Sep. 24, 1994]

                         Bilbray Presses Onward


        Wants aggressive approach to halting illegal immigration

                        (By Michael J. Williams)

       San Diego.--Despite a rebuff from the Clinton 
     administration, county Supervisor Brian Bilbray said Friday 
     he will continue demanding a declaration of emergency over 
     illegal immigration here.
       Bilbray said it was hypocritical for the Federal Government 
     to reject the county Board of Supervisors' demand, while 
     honoring a similar demand made recently by Florida Gov. 
     Lawton Chiles in response to the flight of Cubans to his 
     State. The government used the Navy, Coast Guard and other 
     agencies to stop Cubans trying to sail to Florida on rafts.
       ``We're supposed to be grateful for what they did in 
     Florida?'' Bilbray asked. ``We deserve the same attention 
     that they have given down there. We may be 3,000 miles away, 
     but we're citizens too. It's like rubbing salt in the wound 
     to those of us who have to live with the illegal-immigration 
     problems.''
       After county supervisors approved their resolution with the 
     support of Gov. Pete Wilson, Attorney General Janet Reno 
     responded Wednesday with a letter to the governor rejecting 
     the county's plea.
       Reno said the Clinton administration has already taken 
     steps to address the county's and state's problems with 
     illegal immigration through Operation Gatekeeper, a plan 
     she announced last weeekend.
       Under that plan, the federal government would allocate 
     hundreds of additional Border Patrol agents to the 
     Southwestern borders, place high-powered lights at the 
     border, install a fingerprinting system to detect illegals, 
     launch a crackdown on immigrant smugglers and add 110 new 
     inspectors at border entry ports.
       Additionally, Reno announced the state will be reimbursed 
     for $130 million in immigration costs.
       ``I don't argue that they're starting to move in the right 
     direction,'' said Bilbray, who is running for Congress in the 
     South Bay. ``What I argue is that they're approaching this 
     with a double standard--they're using a slow, methodical 
     approach to the border here, when they used an aggressive, 
     dynamic approach in Florida. We have three times the amount 
     of illegal immigration that Florida has.''
       Reno also suggested the county can receive federal 
     emergency immigration funding without a formally recognized 
     declaration of emergency.
       Though the county has without success sent a $64 million 
     bill to the White House for the estimated cost of providing 
     services to illegal immigrants, there has been no response to 
     date, said Assistant Auditor and Controller William Kelly.
       Reno said in her letter that neither the state nor the 
     county has applied for the funds through her office, which is 
     authorized to distribute them. Kelly said he is preparing 

[[Page H11220]]

     to send out a new bill, this time directly to Reno.
       Meanwhile, the county's declaration has fueled indignation 
     from the Mexican foreign ministry.
       The ministry sent a letter Wednesday to Bilbray stating 
     that the county's tactic will damage relations between the 
     two countries and undermine the campaign against racism and 
     xenophobia in California.
       Bilbray said he was surprised and shocked by the response.
                                                                    ____


                              Case Studies

       In October 1994, a 19-year-old male was crossing the border 
     to visit his children, who live with their mother in San 
     Diego. Witnesses state he was hit by a border patrol vehicle, 
     but the Border Patrol denies responsibility. The man has been 
     in a coma at UCSD Medical Center ever since. He has been 
     denied Medi-Cal because he is not a resident. His family in 
     Mexico has retained an attorney and refuses to allow transfer 
     of the patient to a facility in Mexico. They are suing the 
     Border Patrol. As we have pursued legal authorization to 
     transfer the patient, we have provided over $400,000 in care 
     for which there is no funding.
       A patient of unknown age was struck by an automobile and 
     admitted in October 1994. No liability was acknowledged by 
     the driver, and the patient has a closed head injury and 
     cannot provide information about herself. It appears that the 
     individual was homeless and living in an encampment. The 
     patient was referred to the Medi-Cal program, and the case 
     approved at the end of February for long-term care only. 
     Since the patient was unable to validate residence to obtain 
     Medi-Cal coverage for hospital charges incurred up until her 
     discharge in March, there is not funding for hospital charges 
     of over $345,000.
       An undocumented immigrant who is a 27-year-old quadriplegic 
     with a tracheal tube was granted legal status as Prucol 
     (Patient Residing Under Cover of Law) so that the patient 
     could be cared for in a Skilled Nursing Facility (SNF) and 
     receive Medi-Cal benefits. At some point, the benefits 
     granted under Prucol status were reduced so that while SNF 
     and inpatient hospitalization would be covered, physician 
     services would not. The SNF which had been providing care 
     transferred to the patient to USCD Medical Center, and now 
     refuses to take the patient back because of the curtailment 
     of Medi-Cal to cover the physician fees. The patient remains 
     at UCSD while we investigate alternatives. So far, charges 
     total $215,180.
       A 24-year-old Ethiopian with a large facial mass arrived in 
     the United States with a valid passport, supposedly after 
     making arrangements with a local physician for treatment 
     prior to leaving Ethiopia. Somehow, the contact with the 
     community physician was never made, and the patient was 
     admitted to UCSD with complications arising from the tumor. 
     UCSD has treated the patient and is facilitating ongoing care 
     with the City of Hope. There is no funding for charges of 
     $62,141.

                          UCSD Medical Center


                ILLEGAL IMMIGRANTS: AN UNFUNDED MANDATE

       The issue of undocumented immigrants using publicly funded 
     services has become a subject of intense public and political 
     debate. The problem was brought into focus during the 1994 
     election year. Proposition 187 was on the California ballot, 
     and the issue of illegal immigration became a campaign theme 
     for many seeking election or re-election.
       For hospitals like UCSD Medical Center, the primary issue 
     is one of funding. Control of the borders is clearly the 
     purview of the federal government. Who has the responsibility 
     for these individuals once they are in the United States is 
     another question.
       State and federal laws require hospitals to provide 
     emergency treatment to all individual, regardless of their 
     ability to pay, or their legal status. This includes trauma 
     care, labor and delivery for women giving birth, and 
     appropriate assessment, treatment and follow-up for children 
     and adults with emergency medical needs.
       Of ethical and professional importance to physicians is the 
     Hippocratic Oath, taken upon graduation from medical school, 
     which includes the vow that ``. . . The health and life on my 
     patient will be my first consideration . . . I will not 
     permit consideration of race, religion, nationality, 
     ideology, or social standing to intervene between my duty and 
     my patient . . .''
       As a trauma center serving a region that extends south to 
     the U.S./Mexico border; as a hospital that traditionally 
     provides care to a large percentage of the county's indigent 
     patients; and as a facility housing specialized services such 
     as the San Diego Regional Burn Center and Infant Special Care 
     Center, UCSD Medical Center has assumed a large share of the 
     burden of caring for undocumented immigrants. While numbers 
     are estimates based on assumptions reached from evaluating 
     patient records:
       An estimated 3,600 inpatients at UCSD Medical Center in 
     1994 were undocumented aliens, or approximately 17 percent of 
     total inpatients. About 84 percent of these were 
     undercompensated; others were eligible for some form of 
     support or were able to pay for their care.
       Of all undocumented immigrants admitted to UCSD Medical 
     Center in 1994 through the emergency room, trauma or some 
     other service mandated by state and federal law, 99 percent 
     were undercompensated patients.
       Of all undercompensated illegal immigrants admitted to the 
     Medical Center in 1994, 85 percent were admitted through the 
     emergency room, trauma, or through some other service 
     mandated by state and federal law. The others were admitted 
     through various mechanisms; for example, for follow-up to a 
     previous emergency visit.
       In 1993, UCSD provided inpatient care costing between $27 
     million and $37 million to undocumented persons; $11 million 
     to $15 million was not reimbursed.
       In 1994, the County of San Diego reduced its contract with 
     UCSD to provide emergency services to indigent patients by 50 
     percent, or a total of $5 million. The Board of Supervisors 
     implemented this reduction based on County staff estimates 
     that half of indigent patients receiving emergency care at 
     UCSD Medical center were illegal immigrants, and that these 
     costs should not be the burden of local government.
                                                                    ____


        [From the San Diego (CA) Union Tribune, Sept. 30, 1995]

 Bilbray Fights Illegal-Immigrant Care Plan That Would Stiff Hospitals

                           (By Stephen Green)

       When Rep. Brian Bilbray, R-Imperial Beach, served on the 
     San Diego County Board of Supervisors, he didn't mince words 
     in telling President Clinton that the federal government 
     should pay the entire cost of providing services to 
     undocumented immigrants.
       During a trip to San Diego, Clinton readily agreed, saying 
     the county should just sent the tab to Washington.
       Taking Clinton up on his offer, county officials calculated 
     a bill totaling about $1 billion and mailed it to the White 
     House. The amount, Bilbray recalled, represented the annual 
     cost of providing medical, criminal justice and other public 
     services to undocumented immigrants in San Diego County.
       While Clinton may have agreed in principle, the bill never 
     was paid. California's politicians still are trying to get 
     the federal government to reimburse the state for the impact 
     of illegal immigration.
       Now, Bilbray, along with his colleagues in the House of 
     Representatives from California and other border states, has 
     won a modest victory concerning the long sought federal 
     compensation.
       The Medicaid reform bill produced by the House Commerce 
     Committee would do something, for the first time, about the 
     cost to states and local governments of providing emergency 
     medical services to undocumented immigrants.
       In California, emergency medical services to undocumented 
     immigrants make up a sizable chunk of the state's Medicaid 
     costs, Bilbray said.
       As now written, the legislation recently approved by the 
     Commerce Committee would exempt states from having to match--
     as they do now--the federal Medicaid money that goes to 
     provide emergency medical services to undocumented 
     immigrants.
       So, on the surface, the bill to revamp the federal medical 
     insurance program for the poor would seem to be a big money 
     saver for California and the other states adversely affected 
     by illegal immigration.
       But there is a catch--and it's likely to be expensive.
       The portion of hospitals' costs of giving emergency medical 
     care to undocumented immigrants that now is financed by the 
     states' contributions to Medicaid would have to be made up 
     from someplace else.
       As matters now stand, it appears that local hospitals would 
     be stuck with the portion of the bills that heretofore have 
     been picked up by the states.
       That would translate into higher hospital costs, which 
     probably would mean increasing the cost of hospital car for 
     nonindigent patients.
       House Commerce Committee Chairman Thomas J. Bliley Jr., R-
     Va., credits Bilbray and other panel members from California, 
     Texas and Florida for gaining approval of the provisions 
     easing the impact of illegal immigration on state finances.
       But Bilbray is far from satisfied, saying the issue of 
     costs to the hospitals must be addressed.
       ``I am continually hounding the federal government as the 
     biggest deadbeat in the county,'' Bilbray said.
       A meeting of House Republicans from California authorized 
     Bilbray to continue the fight for complete reimbursement for 
     emergency medical services.
       Bilbray, who addressed the GOP delegation about the 
     problem, said he and the two other GOP Commerce Committee 
     members from the state--Reps. Carlos J. Moorhead of Glendale 
     and Christopher Cox of Newport Beach--will carry the ball.
       ``I got all the support in the world from other delegation 
     members to hang tough,'' Bilbray said.
       When Medicare comes to the House floor as part of the 
     omnibus budget reconciliation bill, Bilbray hopes to offer an 
     amendment that would require the federal government--and 
     taxpayers nationwide, not just Californians--to pick up the 
     entire tab for the cost of emergency medical services to 
     undocumented immigrants.
       Winning this fight won't be easy. Procedural rules 
     frequently make it difficult to amend reconciliation bills.
       But Bilbray expects to have a key ally in this battle in 
     the person of another Californian--Rep. David Dreier, R-San 
     Dimas.
       As a senior member of the House Rules Committee, Dreier 
     will have a lot to say about the format for the Medicaid 
     reform debate on the House floor.

[[Page H11221]]

       Even if Bilbray is able to offer an amendment, there is no 
     assurance it will be approved. But it seems a breach in the 
     resistance to federal compensation finally has been made in 
     the Medicaid reform bill. Other openings many follow.
       It is the federal government's own failure to enforce the 
     immigration laws that has resulted in fiscal adversity for 
     California. It is clear to Bilbray and his allies that the 
     federal government has an absolute obligation to remedy the 
     problem that it has created.
  Mr. TAUZIN. Mr. Chairman, while I am in support of Chapter 2 (FCC 
Authorization) of Subtitle A in Title III of H.R. 2491, the Seven-Year 
Balanced Budget Reconciliation Act of 1995, I would like to bring to 
the attention of my colleagues three concerns in the statutory language 
which I hope will be addressed in conference with the Senate.
  First, Section 3017, giving the FCC the authority to reject tariffs, 
in whole or part, would disserve the public interest as it would 
inhibit the introduction of new services, impede competition, and 
complicate the FCC's processes by adding an additional unnecessary 
layer of regulation. Carriers seeking to introduce new services would 
be hesitant to introduce new services if the FCC were to put tariffs on 
public notice, invite opposition, and then reject them. Authority to 
reject part of a tariff, while requiring the carrier to continue to 
offer the service, is contrary to the concept of carrier-initiated 
rates.
  This process of public notice and comment (including oppositions) 
before a service can be provided is followed with respect to Section 
214 applications. The Section 214 process significantly inhibits 
telephone company provision of cable services; this provision would 
extend a similar obstacle to all common carrier services. This obstacle 
would similarly impede competition by slowing the introduction of 
services designed to respond to competition, and giving competitors an 
opportunity to use and/or abuse Commission processes and impose costs 
on other competitors.
  This tariff rejection authority is unnecessary to protect ratepayers. 
The Communications Act already provides for hearings as to the 
lawfulness of new rates, terms and conditions; rates found unlawful can 
be suspended, and subject to an accounting order at the beginning of 
such proceedings. See 47 U.S.C. Sec. 204(a),(b). If the rates are later 
found to be unlawful, the accounting order permits refunds to be made. 
Notice and comment proceedings as to the lawfulness of tariffs add 
nothing to this ratepayer protection, and create an additional 
regulatory burden.
  Secondly, in part because the Commission can order refunds for rates 
found to be unlawful, it is unnecessary to give the Commission 
authority to order refunds for rule violations which may affect rates, 
as proposed by Section 3018. Additionally, since there is no rate 
element necessarily involved nor an accounting order associated with 
application of rules to a particular rate, calculation of the impact on 
rates of any of the violations described (e.g., violations of 
depreciation and other accounting rules), is likely to be difficult and 
arbitrary. The provision essentially appears to serve as a device by 
which the Commission can intimidate carriers. This type of device is 
particularly unnecessary since common carriers are already subject to 
substantial forfeitures of $100,000 for each violation--up to 
$1,000,000. See 47 U.S.C. Sec. 503(a)(2)(B).
  Finally, the legislation would amend Section 503(b)(6) of the 
Communications Act of 1934 (Section 3023) to extend the statute of 
limitations on forfeitures, and permit the Commission to impose 
forfeitures on common carriers even when discovered five years after 
the fact. This provision, intended to permit the Commission to impose 
forfeitures for rule violations discovered during audits, is 
unnecessary for two reasons. First, direct review of rates which would 
be affected by such violations is already available, as described 
above. Therefore, this provision adds little in the way of ratepayer 
protections. Additionally, such discriminatory treatment of common 
carriers is unwarranted.
  The statute of limitations applicable to other entities subject to 
forfeiture authority is one year. It would be unnecessarily 
discriminatory to extend the period to five years for common carriers 
alone. Moreover, we recommend that the forfeiture authority itself be 
revised to end unnecessary discrimination against common carriers.
  Presently, Section 503 of the Communications Act provides that 
broadcasters are subject to potential forfeitures of $25,000 for each 
violation, other parties $10,000, while common carriers are subject to 
potential forfeitures of $100,000. The legislative history of this 
provision suggests that the increased authority for common carriers was 
intended to permit the FCC to impose meaningful fines, in proportion to 
the size of the violator. Yet, there is no reason to discriminate 
between large non-common carriers, e.g. Time Warner (subject only to a 
$10,000 maximum) and small telephone companies (subject to a $100,000 
maximum) on that basis. Accordingly, Section 503 should be amended to 
provide for a single dollar maximum for any type of entity--the FCC 
would still be permitted to tailor the fine as appropriate.
  Additionally, we recommend that rather than being permitted to assess 
penalties for violations of the FCC-prescribed rate of depreciation, 
the FCC should not have the authority to regulate depreciation. In a 
competitive environment, carriers will need to depreciate assets at 
faster rates than allowed by the FCC. Under price regulation, a carrier 
has no incentive to depreciate assets faster than appropriate, since 
any additional booked costs do not permit the carrier to obtain a 
corresponding rate increase.
  Mr. Speaker, I look forward to working on these issues in the next 
few weeks.
  The CHAIRMAN. No further amendment is in order except the further 
amendment in the nature of a substitute consisting of the text of H.R. 
2530, which may be offered only by the gentleman from Missouri [Mr. 
Gephardt] or his designee, is considered read and debatable for 1 hour, 
equally divided and controlled by the proponent and an opponent of the 
amendment and is not subject to amendment.


      amendment in the nature of a substitute offered by mr. orton

  Mr. ORTON. Mr. Chairman, I offer an amendment in the nature of a 
substitute.
  The CHAIRMAN. The Clerk will designate the amendment in the nature of 
a substitute.
  The text of the amendment in the nature of a substitute is as 
follows:

       Amendment in the nature of a substitute offered by Mr. 
     Orton:

                               H.R. 2530

       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.

       (a) Short Title.--This Act may be cited as the ``Common 
     Sense Balanced Budget Act of 1995''.
       (b) Table of Contents.--

           TITLE I--ENERGY, NATURAL RESOURCES AND ENVIRONMENT

                           Subtitle A--Energy

Sec. 1101. Privatization of uranium enrichment.
Sec. 1102. Making permanent Nuclear Regulatory Commission annual 
              charges.
Sec. 1103. Cogeneration.
Sec. 1104. FEMA radiological emergency preparedness fees.

                        Subtitle B--Central Utah

Sec. 1121. Prepayment of certain repayment contracts between the United 
              States and the Central Utah Water Conservancy District.

                  Subtitle C--Army Corps of Engineers

Sec. 1131. Regulatory Program Fund.

                       Subtitle D--Helium Reserve

Sec. 1141. Sale of helium processing and storage facility.

                        Subtitle E--Territories

Sec. 1151. Termination of annual direct assistance to Northern Mariana 
              Islands.

                    TITLE II--AGRICULTURAL PROGRAMS

Sec. 2001. Short title.

  Subtitle A--Extension and Modification of Various Commodity Programs

Sec. 2101. Extension of loans, payments, and acreage reduction programs 
              for wheat through 2002.
Sec. 2102. Extension of loans, payments, and acreage reduction programs 
              for feed grains through 2002.
Sec. 2103. Extension of loans, payments, and acreage reduction programs 
              for cotton through 2002.
Sec. 2104. Extension of loans, payments, and acreage reduction programs 
              for rice through 2002.
Sec. 2105. Extension of loans and payments for oilseeds through 2002.
Sec. 2106. Increase in flex acres.
Sec. 2107. Reduction in 50/85 and 0/85 programs.

                           Subtitle B--Sugar

Sec. 2201. Extension and modification of sugar program.

                          Subtitle C--Peanuts

Sec. 2301. Extension of price support program for peanuts and related 
              programs.
Sec. 2302. National poundage quotas and acreage allotments.
Sec. 2303. Sale, lease, or transfer of farm poundage quota.
Sec. 2304. Penalty for reentry of exported peanut products.
Sec. 2305. Price support program for peanuts.
Sec. 2306. Referendum regarding poundage quotas.
Sec. 2307. Regulations.

                          Subtitle D--Tobacco

Sec. 2401. Elimination of Federal budgetary outlays for tobacco 
              programs.
Sec. 2402. Establishment of farm yield for Flue-cured tobacco based on 
              individual farm production history.
Sec. 2403. Removal of farm reconstitution exception for Burley tobacco.

[[Page H11222]]

Sec. 2404. Reduction in percentage threshold for transfer of Flue-cured 
              tobacco quota in cases of disaster.
Sec. 2405. Expansion of types of tobacco subject to no net cost 
              assessment.
Sec. 2406. Repeal of reporting requirements relating to export of 
              tobacco.
Sec. 2407. Repeal of limitation on reducing national marketing quota 
              for Flue-cured and Burley tobacco.
Sec. 2408. Application of civil penalties under Tobacco Inspection Act.
Sec. 2409. Transfers of quota or allotment across county lines in a 
              State.
Sec. 2410. Calculation of national marketing quota.
Sec. 2411. Clarification of authority to access civil money penalties.
Sec. 2412. Lease and transfer of farm marketing quotas for Burley 
              tobacco.
Sec. 2413. Limitation on transfer of acreage allotments of other 
              tobacco.
Sec. 2414. Good faith reliance on actions or advice of Department 
              representatives.
Sec. 2415. Uniform forfeiture dates for Flue-cured and Burley tobacco.
Sec. 2416. Sale of Burley and Flue-cured tobacco marketing quotas for a 
              farm by recent purchasers.

                    Subtitle E--Planting Flexibility

Sec. 2501. Definitions.
Sec. 2502. Crop and total acreage bases.
Sec. 2503. Planting flexibility.
Sec. 2504. Farm program payment yields.
Sec. 2505. Application of provisions.

                  Subtitle F--Miscellaneous Provisions

Sec. 2601. Limitations on amount of deficiency payments and land 
              diversion payments.
Sec. 2602. Sense of Congress regarding certain Canadian trade 
              practices.

                          TITLE III--COMMERCE

Sec. 3101. Spectrum auctions.
Sec. 3102. Federal Communications Commission fee collections
Sec. 3103. Auction of recaptured analog licenses.
Sec. 3104. Patent and trademark fees.
Sec. 3105. Repeal of authorization of transitional appropriations for 
              the United States Postal Service.

                        TITLE IV--TRANSPORTATION

Sec. 4101. Extension of railroad safety fees.
Sec. 4102. Permanent extension of vessel tonnage duties.
Sec. 4103. Sale of Governors Island, New York.
Sec. 4104. Sale of air rights.

                      TITLE V--HOUSING PROVISIONS

Sec. 5101. Reduction of section 8 annual adjustment factors for units 
              without tenant turnover.
Sec. 5102. Maximum mortgage amount floor for single family mortgage 
              insurance.
Sec. 5103. Foreclosure avoidance and borrower assistance.

 TITLE VI--INDEXATION AND MISCELLANEOUS ENTITLEMENT-RELATED PROVISIONS

Sec. 6101. Consumer Price Index.
Sec. 6102. Reduction in title XX block grants to States for social 
              services.
Sec. 6103. Matching rate requirement for title XX block grants to 
              States for social services.
Sec. 6104. Denial of unemployment insurance to certain high-income 
              individuals.
Sec. 6105. Denial of unemployment insurance to individuals who 
              voluntarily leave military service.

                       TITLE VII--MEDICAID REFORM

                 Subtitle A--Per Capita Spending Limit

Sec. 7001. Limitation on expenditures recognized for purposes of 
              Federal financial participation.

                   Subtitle B--Medicaid Managed Care

Sec. 7101. Permitting greater flexibility for States to enroll 
              beneficiaries in managed care arrangements.
Sec. 7102. Removal of barriers to provision of medicaid services 
              through managed care.
Sec. 7103. Additional requirements for medicaid managed care plans.
Sec. 7104. Preventing fraud in medicaid managed care.
Sec. 7105. Assuring adequacy of payments to medicaid managed care plans 
              and providers.
Sec. 7106. Sanctions for noncompliance by eligible managed care 
              providers.
Sec. 7107. Report on public health services.
Sec. 7108. Report on payments to hospitals.
Sec. 7109. Conforming amendments.
Sec. 7110. Effective date; status of waivers.

     Subtitle C--Additional Reforms of Medicaid Acute Care Program

Sec. 7201. Permitting increased flexibility in medicaid cost-sharing.
Sec. 7202. Limits on required coverage of additional treatment services 
              under EPSDT.
Sec. 7203. Delay in application of new requirements.
Sec. 7204. Deadline on action on waivers.

       Subtitle D--National Commission on Medicaid Restructuring

Sec. 7301. Establishment of commission.
Sec. 7302. Duties of commission.
Sec. 7303. Administration.
Sec. 7304. Authorization of appropriations.
Sec. 7305. Termination.

      Subtitle E--Restrictions on Disproportionate Share Payments

Sec. 7401. Reforming disproportionate share payments under State 
              medicaid programs.

                      Subtitle F--Fraud Reduction

Sec. 7501. Monitoring payments for dual eligibles.
Sec. 7502. Improved identification systems.

                          TITLE VIII--MEDICARE

Sec. 8000. Short title; references in title.

                  Subtitle A--Medicare Choice Program

          Part 1--Increasing Choice Under the Medicare Program

Sec. 8001. Increasing choice under medicare.
Sec. 8002. Medicare Choice program.

            ``Part C--Provisions Relating to Medicare Choice

``Sec. 1851. Requirements for Medicare Choice organizations.
``Sec. 1852. Requirements relating to benefits, provision of services, 
              enrollment, and premiums.
``Sec. 1853. Patient protection standards.
``Sec. 1854. Provider-sponsored organizations.
``Sec. 1855. Payments to Medicare Choice organizations.
``Sec. 1856. Establishment of standards for Medicare Choice 
              organizations and products.
``Sec. 1857. Medicare Choice certification.
``Sec. 1858. Contracts with Medicare Choice organizations.
``Sec. 1859. Demonstration project for high deductible/medisave 
              products.
Sec. 8003. Reports.
Sec. 8004. Transitional rules for current medicare HMO program.

   Part 2--Special Rules for Medicare Choice Medical Savings Accounts

Sec. 8011. Medicare choice MSA's.
Sec. 8012. Certain rebates excluded from gross income.

      Part 3--Special Antitrust Rule for Provider Service Networks

Sec. 8021. Application of antitrust rule of reason to provider service 
              networks.

                          Part 4--Commissions

Sec. 8031. Medicare Payment Review Commission.
Sec. 8032. Commission on the Effect of the Baby Boom Generation on the 
              Medicare Program.

           Part 5--Preemption of State Anti-Managed Care Laws

Sec. 8041. Preemption of State law restrictions on managed care 
              arrangements.
Sec. 8042. Preemption of State laws restricting utilization review 
              programs.

          Subtitle B--Provisions Relating to Regulatory Relief

    Part 1--Provisions Relating to Physician Financial Relationships

Sec. 8101. Repeal of prohibitions based on compensation arrangements.
Sec. 8102. Revision of designated health services subject to 
              prohibition.
Sec. 8103. Delay in implementation until promulgation of regulations.
Sec. 8104. Exceptions to prohibition.
Sec. 8105. Repeal of reporting requirements.
Sec. 8106. Preemption of State law.
Sec. 8107. Effective date.

                        Part 2--Antitrust Reform

Sec. 8111. Publication of antitrust guidelines on activities of health 
              plans.
Sec. 8112. Issuance of health care certificates of public advantage.
Sec. 8113. Study of impact on competition.
Sec. 8114. Antitrust exemption.
Sec. 8115. Requirements.
Sec. 8116. Definition.

                       Part 3--Malpractice Reform


          SUBPART A--UNIFORM STANDARDS FOR MALPRACTICE CLAIMS.

Sec. 8121. Applicability.
Sec. 8122. Requirement for initial resolution of action through 
              alternative dispute resolution.
Sec. 8123. Optional application of practice guidelines.
Sec. 8124. Treatment of noneconomic and punitive damages.
Sec. 8125. Periodic payments for future losses.
Sec. 8126. Treatment of attorney's fees and other costs.
Sec. 8127. Uniform statute of limitations.
Sec. 8128. Special provision for certain obstetric services.
Sec. 8129. Jurisdiction of Federal courts.
Sec. 8130. Preemption.


   SUBPART B--REQUIREMENTS FOR STATE ALTERNATIVE DISPUTE RESOLUTION 
                             SYSTEMS (ADR)

Sec. 8131. Basic requirements.
Sec. 8132. Certification of State systems; applicability of alternative 
              Federal system.
Sec. 8133. Reports on implementation and effectiveness of alternative 
              dispute resolution systems.


                         SUBPART C--DEFINITIONS

Sec. 8141. Definitions.

     Part 4--Payment Areas for Physicians' Services Under Medicare

Sec. 8151. Modification of payment areas used to determine payments for 
              physicians' services under medicare.

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         Subtitle C--Medicare Payments to Health Care Providers

               Part 1--Provisions Affecting All Providers

Sec. 8201. One-year freeze in payments to providers.

                  Part 2--Provisions Affecting Doctors

Sec. 8211. Payments for physicians' services.

                 Part 3--Provisions Affecting Hospitals

Sec. 8221. Reduction in update for inpatient hospital services.
Sec. 8222. Elimination of formula-driven overpayments for certain 
              outpatient hospital services.
Sec. 8223. Establishment of prospective payment system for outpatient 
              services.
Sec. 8224. Reduction in medicare payments to hospitals for inpatient 
              capital-related costs.
Sec. 8225. Moratorium on PPS exemption for long-term care hospitals.

              Part 4--Provisions Affecting Other Providers

Sec. 8231. Revision of payment methodology for home health services.
Sec. 8232. Limitation of home health coverage under part A.
Sec. 8233. Reduction in fee schedule for durable medical equipment.
Sec. 8234. Nursing home billing.
Sec. 8235. Freeze in payments for clinical diagnostic laboratory tests.

       Part 5--Graduate Medical Education and Teaching Hospitals

Sec. 8241. Teaching hospital and graduate medical education trust fund.
Sec. 8242. Reduction in payment adjustments for indirect medical 
              education.

       Subtitle D--Provisions Relating to Medicare Beneficiaries

Sec. 8301. Part B premium.
Sec. 8302. Full cost of medicare part B coverage payable by high-income 
              individuals.
Sec. 8303. Expanded coverage of preventive benefits.

                  Subtitle E--Medicare Fraud Reduction

Sec. 8401. Increasing beneficiary awareness of fraud and abuse.
Sec. 8402. Beneficiary incentives to report fraud and abuse.
Sec. 8403. Elimination of home health overpayments.
Sec. 8404. Skilled nursing facilities.
Sec. 8405. Direct spending for anti-fraud activities under medicare.
Sec. 8406. Fraud reduction demonstration project.
Sec. 8407. Report on competitive pricing.

              Subtitle F--Improving Access to Health Care

                 Part 1--Assistance for Rural Providers


                       SUBPART A--RURAL HOSPITALS

Sec. 8501. Sole community hospitals.
Sec. 8502. Clarification of treatment of EAC and RPC hospitals.
Sec. 8503. Establishment of rural emergency access care hospitals.
Sec. 8504. Classification of rural referral centers.
Sec. 8505. Floor on area wage index.
Sec. 8506. Medical education.


            SUBPART B--RURAL PHYSICIANS AND OTHER PROVIDERS

Sec. 8511. Provider incentives.
Sec. 8512. National Health Service Corps loan repayments excluded from 
              gross income.
Sec. 8513. Telemedicine payment methodology.
Sec. 8514. Demonstration project to increase choice in rural areas.

                      Part 2--Medicare Subvention

Sec. 8521. Medicare program payments for health care services provided 
              in the military health services system.

                      Subtitle G--Other Provisions

Sec. 8601. Extension and expansion of existing secondary payer 
              requirements.
Sec. 8602. Repeal of medicare and medicaid coverage data bank.
Sec. 8603. Clarification of medicare coverage of items and services 
              associated with certain medical devices approved for 
              investigational use.
Sec. 8604. Additional exclusion from coverage.
Sec. 8605. Extending medicare coverage of, and application of hospital 
              insurance tax to, all State and local government 
              employees.

      Subtitle H--Monitoring Achievement of Medicare Reform Goals

Sec. 8701. Establishment of budgetary and program goals.
Sec. 8702. Medicare Reform Commission.

Subtitle I--Lock-Box Provisions for Medicare Part B Savings from Growth 
                               Reductions

Sec. 8801. Establishment of Medicare Growth Reduction Trust Fund for 
              part B savings.

                   Subtitle J--Clinical Laboratories

Sec. 8901. Exemption of physician office laboratories.

                        TITLE IX--WELFARE REFORM

Sec. 9000. Amendment of the Social Security Act.

              Subtitle A--Temporary Employment Assistance

Sec. 9101. State plan.

                       Subtitle B--Make Work Pay

Sec. 9201. Transitional medicaid benefits.
Sec. 9202. Notice of availability required to be provided to applicants 
              and former recipients of temporary family assistance, 
              food stamps, and medicaid.
Sec. 9203. Notice of availability of earned income tax credit and 
              dependent care tax credit to be included on W-4 form.
Sec. 9204. Advance payment of earned income tax credit through State 
              demonstration programs.
Sec. 9205. Funding of child care services.
Sec. 9206. Certain Federal assistance includible in gross income.
Sec. 9207. Dependent care credit to be refundable; high-income 
              taxpayers ineligible for credit.

                         Subtitle C--Work First

Sec. 9301. Work first program.
Sec. 9302. Regulations.
Sec. 9303. Applicability to States.

     Subtitle D--Family Responsibility And Improved Child Support 
                              Enforcement

Chapter 1--Eligibility and Other Matters Concerning Title IV-D Program 
                                Clients

Sec. 9401. State obligation to provide paternity establishment and 
              child support enforcement services.
Sec. 9402. Distribution of payments.
Sec. 9403. Due process rights.
Sec. 9404. Privacy safeguards.

             Chapter 2--Program Administration and Funding

Sec. 9411. Federal matching payments.
Sec. 9412. Performance-based incentives and penalties.
Sec. 9413. Federal and State reviews and audits.
Sec. 9414. Required reporting procedures.
Sec. 9415. Automated data processing requirements.
Sec. 9416. Director of CSE program; staffing study.
Sec. 9417. Funding for Secretarial assistance to State programs.
Sec. 9418. Reports and data collection by the Secretary.

                  Chapter 3--Locate and Case Tracking

Sec. 9421. Central State and case registry.
Sec. 9422. Centralized collection and disbursement of support payments.
Sec. 9423. Amendments concerning income withholding.
Sec. 9424. Locator information from interstate networks.
Sec. 9425. Expanded Federal parent locator service.
Sec. 9426. Use of social security numbers.

          Chapter 4--Streamlining and Uniformity of Procedures

Sec. 9431. Adoption of uniform State laws.
Sec. 9432. Improvements to full faith and credit for child support 
              orders.
Sec. 9433. State laws providing expedited procedures.

                   Chapter 5--Paternity Establishment

Sec. 9441. Sense of the Congress.
Sec. 9442. Availability of parenting social services for new fathers.
Sec. 9443. Cooperation requirement and good cause exception.
Sec. 9444. Federal matching payments.
Sec. 9445. State laws concerning paternity establishment.
Sec. 9446. Outreach for voluntary paternity establishment.

      Chapter 6--Establishment and Modification of Support Orders

Sec. 9451. National Child Support Guidelines Commission.
Sec. 9452. Simplified process for review and adjustment of child 
              support orders.

                Chapter 7--Enforcement of Support Orders

Sec. 9461. Federal income tax refund offset.
Sec. 9462. Internal Revenue Service collection of arrears.
Sec. 9463. Authority to collect support from Federal employees.
Sec. 9464. Enforcement of child support obligations of members of the 
              Armed Forces.
Sec. 9465. Motor vehicle liens.
Sec. 9466. Voiding of fraudulent transfers.
Sec. 9467. State law authorizing suspension of licenses.
Sec. 9468. Reporting arrearages to credit bureaus.
Sec. 9469. Extended statute of limitation for collection of arrearages.
Sec. 9470. Charges for arrearages.
Sec. 9471. Denial of passports for nonpayment of child support.
Sec. 9472. International child support enforcement.
Sec. 9473. Seizure of lottery winnings, settlements, payouts, awards, 
              and bequests, and sale of forfeited property, to pay 
              child support arrearages.
Sec. 9474. Liability of grandparents for financial support of children 
              of their minor children.
Sec. 9475. Sense of the Congress regarding programs for noncustodial 
              parents unable to meet child support obligations.

                       Chapter 8--Medical Support

Sec. 9481. Technical correction to ERISA definition of medical child 
              support order.

[[Page H11224]]


               Chapter 9--Food Stamp Program Requirements

Sec. 9491. Cooperation with child support agencies.
Sec. 9492. Disqualification for child support arrears.

                    Chapter 10--Effect of Enactment

Sec. 9498. Effective dates.
Sec. 9499. Severability.

            Subtitle E--Teen Pregnancy And Family Stability

Sec. 9501. State option to deny temporary employment assistance for 
              additional children.
Sec. 9502. Supervised living arrangements for minors.
Sec. 9503. National clearinghouse on adolescent pregnancy.
Sec. 9504. Required completion of high school or other training for 
              teenage parents.
Sec. 9505. Denial of Federal housing benefits to minors who bear 
              children out-of-wedlock.
Sec. 9506. State option to deny temporary employment assistance to 
              minor parents.

                         Subtitle F--SSI Reform

Sec. 9601. Definition and eligibility rules.
Sec. 9602. Eligibility redeterminations and continuing disability 
              reviews.
Sec. 9603. Additional accountability requirements.
Sec. 9604. Denial of SSI benefits by reason of disability to drug 
              addicts and alcoholics.
Sec. 9605. Denial of SSI benefits for 10 years to individuals found to 
              have fraudulently misrepresented residence in order to 
              obtain benefits simultaneously in 2 or more States.
Sec. 9606. Denial of SSI benefits for fugitive felons and probation and 
              parole violators.
Sec. 9607. Reapplication requirements for adults receiving SSI benefits 
              by reason of disability.
Sec. 9608. Reduction in unearned income exclusion.

                      Subtitle G--Food Assistance

                     Chapter 1--Food Stamp Program

Sec. 9701. Application of amendments.
Sec. 9702. Amendments to the Food Stamp Act of 1977.
Sec. 9703. Authority to establish authorization periods.
Sec. 9704. Specific period for prohibiting participation of stores 
              based on lack of business integrity.
Sec. 9705. Information for verifying eligibility for authorization.
Sec. 9706. Waiting period for stores that initially fail to meet 
              authorization criteria.
Sec. 9707. Bases for suspensions and disqualifications.
Sec. 9708. Authority to suspend stores violating program requirements 
              pending administrative and judicial review.
Sec. 9709. Disqualification of retailers who are disqualified from the 
              WIC program.
Sec. 9710. Permanent debarment of retailers who intentionally submit 
              falsified applications.
Sec. 9711. Expanded civil and criminal forfeiture for violations of the 
              food Stamp Act.
Sec. 9712. Expanded authority for sharing information provided by 
              retailers.
Sec. 9713. Expanded definition of ``coupon''.
Sec. 9714. Doubled penalties for violating food stamp program 
              requirements.
Sec. 9715. Mandatory claims collection methods.
Sec. 9716. Promoting expansion of electronic benefits transfer.
Sec. 9717. Reduction of basic benefit level.
Sec. 9718. 2-year freeze of standard deduction.
Sec. 9719. Pro-rating benefits after interruptions in participation.
Sec. 9720. Disqualification for participating in 2 or more States.
Sec. 9721. Disqualification relating to child support arrears.
Sec. 9722. State authorization to assist law enforcement officers in 
              locating fugitive felons.
Sec. 9723. Work requirement for able-bodied recipients.
Sec. 9724. Coordination of employment and training programs.
Sec. 9725. Extending current claims retention rates.
Sec. 9726. Nutrition assistance for Puerto Rico.
Sec. 9727. Treatment of children living at home.

                   Chapter 2--Commodity Distribution

Sec. 9751. Short title.
Sec. 9752. Availability of commodities.
Sec. 9753. State, local and private supplementation of commodities.
Sec. 9754. State plan.
Sec. 9755. Allocation of commodities to States.
Sec. 9756. Priority system for State distribution of commodities.
Sec. 9757. Initial processing costs.
Sec. 9758. Assurances; anticipated use.
Sec. 9759. Authorization of appropriations.
Sec. 9760. Commodity supplemental food program.
Sec. 9761. Commodities not income.
Sec. 9762. Prohibition against certain State charges.
Sec. 9763. Definitions.
Sec. 9764. Regulations.
Sec. 9765. Finality of determinations.
Sec. 9766. Relationship to other programs.
Sec. 9767. Settlement and adjustment of claims.
Sec. 9768. Repealers; amendments.

                       Chapter 3--Other Programs

Sec. 9781. Child and adult care food program.
Sec. 9782. Resumption of discretionary funding for nutrition education 
              and training program.

                    Subtitle H--Treatment of Aliens

Sec. 9801. Extension of deeming of income and resources under TEA, SSI, 
              and food stamp programs.
Sec. 9802. Requirements for sponsor's affidavits of support.
Sec. 9803. Extending requirement for affidavits of support to family-
              related and diversity immigrants.

                  Subtitle I--Earned Income Tax Credit

Sec. 9901. Earned income tax credit denied to individuals not 
              authorized to be employed in the United States.

    TITLE X--REDUCTIONS IN CORPORATE TAX SUBSIDIES AND OTHER REFORMS

Sec. 10001. Short title.

               Subtitle A--Tax Treatment of Expatriation

Sec. 10101. Revision of tax rules on expatriation.
Sec. 10102. Basis of assets of nonresident alien individuals becoming 
              citizens or residents.

            Subtitle B--Modification to Earned Income Credit

Sec. 10201. Earned income tax credit denied to individuals with 
              substantial capital gain net income.

Subtitle C--Alternative Minimum Tax on Corporations Importing Products 
         into the United States at Artificially Inflated Prices

Sec. 10301. Alternative minimum tax on corporations importing products 
              into the United States at artificially inflated prices.

      Subtitle D--Tax Treatment of Certain Extraordinary Dividends

Sec. 10401. Tax treatment of certain extraordinary dividends.

                Subtitle E--Foreign Trust Tax Compliance

Sec. 10501. Improved information reporting on foreign trusts.
Sec. 10502. Modifications of rules relating to foreign trusts having 
              one or more United States beneficiaries.
Sec. 10503. Foreign persons not to be treated as owners under grantor 
              trust rules.
Sec. 10504. Information reporting regarding foreign gifts.
Sec. 10505. Modification of rules relating to foreign trusts which are 
              not grantor trusts.
Sec. 10506. Residence of estates and trusts, etc.

              Subtitle F--Limitation on Section 936 Credit

Sec. 10601. Limitation on section 936 credit.

                      TITLE XI--VETERANS' AFFAIRS

Sec. 11001. Short title.

        Subtitle A--Permanent Extension of Temporary Authorities

Sec. 11011. Authority to require that certain veterans agree to make 
              copayments in exchange for receiving health-care 
              benefits.
Sec. 11012. Medical care cost recovery authority.
Sec. 11013. Income verification authority.
Sec. 11014. Limitation on pension for certain recipients of medicaid-
              covered nursing home care.
Sec. 11015. Home loan fees.
Sec. 11016. Procedures applicable to liquidation sales on defaulted 
              home loans guaranteed by the Department of Veterans 
              Affairs.

                       Subtitle B--Other Matters

Sec. 11021. Revised standard for liability for injuries resulting from 
              Department of Veterans Affairs treatment.
Sec. 11022. Enhanced loan asset sale authority.
Sec. 11023. Withholding of payments and benefits.

               Subtitle C--Health Care Eligibility Reform

Sec. 11031. Hospital care and medical services.
Sec. 11032. Extension of authority to priority health care for Persian 
              Gulf veterans.
Sec. 11033. Prosthetics.
Sec. 11034. Management of health care.
Sec. 11035. Improved efficiency in health care resource management.
Sec. 11036. Sharing agreements for specialized medical resources.
Sec. 11037. Personnel furnishing shared resources.

                     TITLE XII--LEGISLATIVE BRANCH

Sec. 12101. Requirement that excess funds provided for official 
              allowances of Members of the House of Representatives be 
              dedicated to deficit reduction.

                  TITLE XIII--MISCELLANEOUS PROVISIONS

Sec. 13101. Elimination of disparity between effective dates for 
              military and civilian retiree cost-of-living adjustments 
              for fiscal years 1996, 1997, and 1998.

[[Page H11225]]

Sec. 13102. Disposal of certain materials in National Defense Stockpile 
              for deficit reduction.
Sec. 13103. Requirement that certain agencies prefund Government health 
              benefits contributions for their annuitants.
Sec. 13104. Application of OMB Circular a-129.
Sec. 13105. 7-year extension of Hazardous Substance Superfund excise 
              taxes.

                  TITLE XIV--BUDGET PROCESS PROVISIONS

                    Chapter 1--Short Title; Purpose

Sec. 14001. Short title.
Sec. 14002. Purpose.

                      Chapter 2--Budget Estimates

Sec. 14051. Board of Estimates.

               Subtitle B--Discretionary Spending Limits

Sec. 14101. Discretionary spending limits.
Sec. 14102. Technical and conforming changes.
Sec. 14103. Elimination of certain adjustments to discretionary 
              spending limits.

                  Subtitle C--Pay-As-You-Go Procedures

Sec. 14201. Permanent extension of pay-as-you-go procedures; ten-year 
              scorekeeping.
Sec. 14202. Elimination of emergency exception.

                       Subtitle D--Miscellaneous

Sec. 14301. Technical correction.
Sec. 14302. Repeal of expiration date.

                      Subtitle E--Deficit Control

Sec. 14401. Deficit control.
Sec. 14402. Sequestration process.

                       Subtitle F--Line Item Veto

Sec. 14501. Line item veto authority.
Sec. 14502. Line item veto effective unless disapproved.
Sec. 14503. Definitions.
Sec. 14504. Congressional consideration of line item vetoes.
Sec. 14505. Report of the General Accounting Office.
Sec. 14506. Judicial review.

                 Subtitle G--Enforcing Points of Order

Sec. 14601. Points of order in the Senate.
Sec. 14602. Points of order in the House of Representatives.

                 Subtitle H--Deficit Reduction Lock-box

Sec. 14701. Deficit reduction lock-box provisions of appropriation 
              measures.
Sec. 14702. Downward adjustments.
Sec. 14703. CBO tracking.

Subtitle I--Emergency Spending; Baseline Reform; Continuing Resolutions 
                                 Reform

                     Chapter 1--Emergency Spending

Sec. 14801. Establishment of budget reserve account.
Sec. 14802. Congressional budget process changes.
Sec. 14803. Reporting.

                       Chapter 2--Baseline Reform

Sec. 14851. The baseline.
Sec. 14852. The President's budget.
Sec. 14853. The congressional budget.
Sec. 14854. Congressional Budget Office reports to committees.

          Chapter 3--Restricted Uses of Continuing Resolutions

Sec. 14871. Restrictions respecting continuing resolutions.

            Subtitle J--Technical and Conforming Amendments

Sec. 14901. Amendments to the Congressional Budget and Impoundment 
              Control Act of 1974.
Sec. 14902. Technical and conforming amendments to the Rules of the 
              House of representatives.
Sec. 14903. President's budget.

                    Subtitle K--Truth in Legislating

Sec. 14951. Identity, sponsor, and cost of certain provisions required 
              to be reported.
           TITLE I--ENERGY, NATURAL RESOURCES AND ENVIRONMENT
                           Subtitle A--Energy

     SEC. 1101. PRIVATIZATION OF URANIUM ENRICHMENT.

       (a) Reference.--Except as otherwise expressly provided, 
     whenever in this section an amendment or repeal is expressed 
     in terms of an amendment to, or repeal of, a section or other 
     provision, the reference shall be considered to be made to a 
     section or other provision of the Atomic Energy Act of 1954 
     (42 U.S.C. 2011 et seq.).
       (b) Production Facility.--Paragraph v. of section 11 (42 
     U.S.C. 2014 v.) is amended by striking ``or the construction 
     and operation of a uranium enrichment production facility 
     using Atomic Vapor Laser Isotope Separation technology''.
       (c) Definitions.--Section 1201 (42 U.S.C. 2297) is 
     amended--
       (1) in paragraph (4), by inserting before the period the 
     following: ``and any successor corporation established 
     through privatization of the Corporation'';
       (2) by redesignating paragraphs (10) through (13) as 
     paragraphs (14) through (17), respectively, and by inserting 
     after paragraph (9) the following new paragraphs:
       ``(10) The term `low-level radioactive waste' has the 
     meaning given such term in section 102(9) of the Low-Level 
     Radioactive Waste Policy Amendments Act of 1985 (42 U.S.C. 
     2021b(9)).
       ``(11) The term `mixed waste' has the meaning given such 
     term in section 1004(41) of the Solid Waste Disposal Act (42 
     U.S.C. 6903(41)).
       ``(12) The term `privatization' means the transfer of 
     ownership of the Corporation to private investors pursuant to 
     chapter 25.
       ``(13) The term `privatization date' means the date on 
     which 100 percent of ownership of the Corporation has been 
     transferred to private investors.'';
       (3) by inserting after paragraph (17) (as redesignated) the 
     following new paragraph:
       ``(18) The term `transition date' means July 1, 1993.''; 
     and
       (4) by redesignating the unredesignated paragraph (14) as 
     paragraph (19).
       (d) Employees of the Corporation.--
       (1) Paragraph (2).--Paragraphs (1) and (2) of section 
     1305(e) (42 U.S.C. 2297b-4(e)(1)(2)) are amended to read as 
     follows:
       ``(A) In general.--It is the purpose of this subsection to 
     ensure that the privatization of the Corporation shall not 
     result in any adverse effects on the pension benefits of 
     employees at facilities that are operated, directly or under 
     contract, in the performance of the functions vested in the 
     Corporation.
       ``(B) Applicability of existing collective bargaining 
     agreement.--The Corporation shall abide by the terms of the 
     collective bargaining agreement in effect on the 
     privatization date at each individual facility.''.
       (2) Paragraph (4).--Paragraph (4) of section 1305(e) (42 
     U.S.C. 2297b-4(e)(4)) is amended--
       (A) by striking ``and detailees'' in the heading;
       (B) by striking the first sentence;
       (C) in the second sentence, by inserting ``from other 
     Federal employment'' after ``transfer to the Corporation''; 
     and
       (D) by striking the last sentence.
       (e) Marketing and Contracting Authority.--
       (1) Marketing authority.--Section 1401(a) (42 U.S.C. 
     2297c(a)) is amended effective on the privatization date (as 
     defined in section 1201(13) of the Atomic Energy Act of 
     1954)--
       (A) by amending the subsection heading to read ``Marketing 
     Authority.--''; and
       (B) by striking the first sentence.
       (2) Transfer of contracts.--Section 1401(b) (42 U.S.C. 
     2297c(b)) is amended--
       (A) in paragraph (2)(B), by adding at the end the 
     following: ``The privatization of the Corporation shall not 
     affect the terms of, or the rights or obligations of the 
     parties to, any such power purchase contract.''; and
       (B) by adding at the end the following:
       ``(3) Effect of transfer.--
       ``(A) As a result of the transfer pursuant to paragraph 
     (1), all rights, privileges, and benefits under such 
     contracts, agreements, and leases, including the right to 
     amend, modify, extend, revise, or terminate any of such 
     contracts, agreements, or leases were irrevocably assigned to 
     the Corporation for its exclusive benefit.
       ``(B) Notwithstanding the transfer pursuant to paragraph 
     (1), the United States shall remain obligated to the parties 
     to the contracts, agreements, and leases transferred pursuant 
     to paragraph (1) for the performance of the obligations of 
     the United States thereunder during the term thereof. The 
     Corporation shall reimburse the United States for any amount 
     paid by the United States in respect of such obligations 
     arising after the privatization date to the extent such 
     amount is a legal and valid obligation of the Corporation 
     then due.
       ``(C) After the privatization date, upon any material 
     amendment, modification, extension, revision, replacement, or 
     termination of any contract, agreement, or lease transferred 
     under paragraph (1), the United States shall be released from 
     further obligation under such contract, agreement, or lease, 
     except that such action shall not release the United States 
     from obligations arising under such contract, agreement, or 
     lease prior to such time.''.
       (3) Pricing.--Section 1402 (42 U.S.C. 2297c-1) is amended 
     to read as follows:

     ``SEC. 1402. PRICING.

       ``The Corporation shall establish prices for its products, 
     materials, and services provided to customers on a basis that 
     will allow it to attain the normal business objectives of a 
     profitmaking corporation.''.
       (4) Leasing of gaseous diffusion facilities of 
     department.--Effective on the privatization date (as defined 
     in section 1201(13) of the Atomic Energy Act of 1954), 
     section 1403 (42 U.S.C. 2297c-2) is amended by adding at the 
     end the following:
       ``(h) Low-Level Radioactive Waste and Mixed Waste.--
       ``(1) Responsibility of the department; costs.--
       ``(A) With respect to low-level radioactive waste and mixed 
     waste generated by the Corporation as a result of the 
     operation of the facilities and related property leased by 
     the Corporation pursuant to subsection (a) or as a result 
     of treatment of such wastes at a location other than the 
     facilities and related property leased by the Corporation 
     pursuant to subsection (a) the Department, at the request 
     of the Corporation, shall--
       ``(i) accept for treatment or disposal of all such wastes 
     for which treatment or disposal technologies and capacities 
     exist, whether within the Department or elsewhere; and
       ``(ii) accept for storage (or ultimately treatment or 
     disposal) all such wastes for which treatment and disposal 
     technologies or capacities do not exist, pending development 
     of such technologies or availability of such capacities for 
     such wastes.
       ``(B) All low-level wastes and mixed wastes that the 
     Department accepts for treatment, 

[[Page H11226]]

     storage, or disposal pursuant to subparagraph (A) shall, for 
     the purpose of any permits, licenses, authorizations, 
     agreements, or orders involving the Department and other 
     Federal agencies or State or local governments, be deemed to 
     be generated by the Department and the Department shall 
     handle such wastes in accordance with any such permits, 
     licenses, authorizations, agreements, or orders. The 
     Department shall obtain any additional permits, licenses, or 
     authorizations necessary to handle such wastes, shall amend 
     any such agreements or orders as necessary to handle such 
     wastes, and shall handle such wastes in accordance therewith.
       ``(C) The Corporation shall reimburse the Department for 
     the treatment, storage, or disposal of low-level radioactive 
     waste or mixed waste pursuant to subparagraph (A) in an 
     amount equal to the Department's costs but in no event 
     greater than an amount equal to that which would be charged 
     by commercial, State, regional, or interstate compact 
     entities for treatment, storage, or disposal of such waste.
       ``(2) Agreements with other persons.--The Corporation may 
     also enter into agreements for the treatment, storage, or 
     disposal of low-level radioactive waste and mixed waste 
     generated by the Corporation as a result of the operation of 
     the facilities and related property leased by the Corporation 
     pursuant to subsection (a) with any person other than the 
     Department that is authorized by applicable laws and 
     regulations to treat, store, or dispose of such wastes.''.
       (5) Liabilities.--
       (A) Subsection (a) of section 1406 (42 U.S.C. 2297c-5(a)) 
     is amended--
       (i) by inserting ``and Privatization'' after ``Transition'' 
     in the heading; and
       (ii) by adding at the end the following: ``As of the 
     privatization date, all liabilities attributable to the 
     operation of the Corporation from the transition date to the 
     privatization date shall be direct liabilities of the United 
     States.''.
       (B) Subsection (b) of section 1406 (42 U.S.C. 2297c-5(b)) 
     is amended--
       (i) by inserting ``and Privatization'' after ``Transition'' 
     in the heading; and
       (ii) by adding at the end the following: ``As of the 
     privatization date, any judgment entered against the 
     Corporation imposing liability arising out of the operation 
     of the Corporation from the transition date to the 
     privatization date shall be considered a judgment against the 
     United States.''.
       (C) Subsection (d) of section 1406 (42 U.S.C. 2297c-5(d)) 
     is amended--
       (i) by inserting ``and Privatization'' after ``Transition'' 
     in the heading; and
       (ii) by striking ``the transition date'' and inserting 
     ``the privatization date (or, in the event the privatization 
     date does not occur, the transition date)''.
       (6) Transfer of uranium.--Title II (42 U.S.C. 2297 et seq.) 
     is amended by redesignating section 1408 as section 1409 and 
     by inserting after section 1407 the following:

     ``SEC. 1408. TRANSFER OF URANIUM.

       ``The Secretary may, before the privatization date, 
     transfer to the Corporation without charge raw uranium, low-
     enriched uranium, and highly enriched uranium.''.
       (f) Privatization of the Corporation.--
       (1) Establishment of private corporation.--Chapter 25 (42 
     U.S.C. 2297d et seq.) is amended by adding at the end the 
     following new section:

     ``SEC. 1503. ESTABLISHMENT OF PRIVATE CORPORATION.

       ``(a) Establishment.--
       ``(1) In general.--In order to facilitate privatization, 
     the Corporation may provide for the establishment of a 
     private corporation organized under the laws of any of the 
     several States. Such corporation shall have among its 
     purposes the following:
       ``(A) To help maintain a reliable and economical domestic 
     source of uranium enrichment services.
       ``(B) To undertake any and all activities as provided in 
     its corporate charter.
       ``(2) Authorities.--The corporation established pursuant to 
     paragraph (1) shall be authorized to--
       ``(A) enrich uranium, provide for uranium to be enriched by 
     others, or acquire enriched uranium (including low-enriched 
     uranium derived from highly enriched uranium);
       ``(B) conduct, or provide for conducting, those research 
     and development activities related to uranium enrichment and 
     related processes and activities the corporation considers 
     necessary or advisable to maintain itself as a commercial 
     enterprise operating on a profitable and efficient basis;
       ``(C) enter into transactions regarding uranium, enriched 
     uranium, or depleted uranium with--
       ``(i) persons licensed under section 53, 63, 103, or 104 in 
     accordance with the licenses held by those persons;
       ``(ii) persons in accordance with, and within the period 
     of, an agreement for cooperation arranged under section 123; 
     or
       ``(iii) persons otherwise authorized by law to enter into 
     such transactions;
       ``(D) enter into contracts with persons licensed under 
     section 53, 63, 103, or 104, for as long as the corporation 
     considers necessary or desirable, to provide uranium or 
     uranium enrichment and related services;
       ``(E) enter into contracts to provide uranium or uranium 
     enrichment and related services in accordance with, and 
     within the period of, an agreement for cooperation arranged 
     under section 123 or as otherwise authorized by law; and
       ``(F) take any and all such other actions as are permitted 
     by the law of the jurisdiction of incorporation of the 
     corporation.
       ``(3) Transfer of assets.--For purposes of implementing the 
     privatization, the Corporation may transfer some or all of 
     its assets and obligations to the corporation established 
     pursuant to this section, including--
       ``(A) all of the Corporation's assets, including all 
     contracts, agreements, and leases, including all uranium 
     enrichment contracts and power purchase contracts;
       ``(B) all funds in accounts of the Corporation held by the 
     Treasury or on deposit with any bank or other financial 
     institution;
       ``(C) all of the Corporation's rights, duties, and 
     obligations, accruing subsequent to the privatization date, 
     under the power purchase contracts covered by section 
     1401(b)(2)(B); and
       ``(D) all of the Corporation's rights, duties, and 
     obligations, accruing subsequent to the privatization date, 
     under the lease agreement between the Department and the 
     Corporation executed by the Department and the Corporation 
     pursuant to section 1403.
       ``(4) Merger or consolidation.--For purposes of 
     implementing the privatization, the Corporation may merge or 
     consolidate with the corporation established pursuant to 
     subsection (a)(1) if such action is contemplated by the plan 
     for privatization approved by the President under section 
     1502(b). The Board shall have exclusive authority to approve 
     such merger or consolidation and to take all further actions 
     necessary to consummate such merger or consolidation, and no 
     action by or in respect of shareholders shall be required. 
     The merger or consolidation shall be effected in accordance 
     with, and have the effects of a merger or consolidation 
     under, the laws of the jurisdiction of incorporation of the 
     surviving corporation, and all rights and benefits provided 
     under this title to the Corporation shall apply to the 
     surviving corporation as if it were the Corporation.
       ``(5) Tax treatment of privatization.--
       ``(A) Transfer of assets or merger.--No income, gain, or 
     loss shall be recognized by any person by reason of the 
     transfer of the Corporation's assets to, or the Corporation's 
     merger with, the corporation established pursuant to 
     subsection (a)(1) in connection with the privatization.
       ``(B) Cancellation of debt and common stock.--No income, 
     gain, or loss shall be recognized by any person by reason of 
     any cancellation of any obligation or common stock of the 
     Corporation in connection with the privatization.
       ``(b) OSHA Requirements.--For purposes of the regulation of 
     radiological and nonradiological hazards under the 
     Occupational Safety and Health Act of 1970, the corporation 
     established pursuant to subsection (a)(1) shall be treated in 
     the same manner as other employers licensed by the Nuclear 
     Regulatory Commission. Any interagency agreement entered into 
     between the Nuclear Regulatory Commission and the 
     Occupational Safety and Health Administration governing the 
     scope of their respective regulatory authorities shall apply 
     to the corporation as if the corporation were a Nuclear 
     Regulatory Commission licensee.
       ``(c) Legal Status of Private Corporation.--
       ``(1) Not federal agency.--The corporation established 
     pursuant to subsection (a)(1) shall not be an agency, 
     instrumentality, or establishment of the United States 
     Government and shall not be a Government corporation or 
     Government-controlled corporation.
       ``(2) No recourse against united states.--Obligations of 
     the corporation established pursuant to subsection (a)(1) 
     shall not be obligations of, or guaranteed as to principal or 
     interest by, the Corporation or the United States, and the 
     obligations shall so plainly state.
       ``(3) No claims court jurisdiction.--No action under 
     section 1491 of title 28, United States Code, shall be 
     allowable against the United States based on the actions of 
     the corporation established pursuant to subsection (a)(1).
       ``(d) Board of Director's Election After Public Offering.--
     In the event that the privatization is implemented by means 
     of a public offering, an election of the members of the board 
     of directors of the Corporation by the shareholders shall be 
     conducted before the end of the 1-year period beginning the 
     date shares are first offered to the public pursuant to such 
     public offering.
       ``(e) Adequate Proceeds.--The Secretary of Energy shall not 
     allow the privatization of the Corporation unless before the 
     sale date the Secretary determines that the estimated sum of 
     the gross proceeds from the sale of the Corporation will be 
     an adequate amount.''.
       (2) Ownership limitations.--Chapter 25 (as amended by 
     paragraph (1)) is amended by adding at the end the following 
     new section:

     ``SEC. 1504. OWNERSHIP LIMITATIONS.

       ``(a) Securities Limitation.--In the event that the 
     privatization is implemented by means of a public offering, 
     during a period of 3 years beginning on the privatization 
     date, no person, directly or indirectly, may acquire or hold 
     securities representing more than 10 percent of the total 
     votes of all outstanding voting securities of the 
     Corporation.
       ``(b) Application.--Subsection (a) shall not apply--
       ``(1) to any employee stock ownership plan of the 
     Corporation,

[[Page H11227]]

       ``(2) to underwriting syndicates holding shares for resale, 
     or
       ``(3) in the case of shares beneficially held for others, 
     to commercial banks, broker-dealers, clearing corporations, 
     or other nominees.
       ``(c) No director, officer, or employee of the Corporation 
     may acquire any securities, or any right to acquire 
     securities, of the Corporation--
       ``(1) in the public offering of securities of the 
     Corporation in the implementation of the privatization,
       ``(2) pursuant to any agreement, arrangement, or 
     understanding entered into before the privatization date, or
       ``(3) before the election of directors of the Corporation 
     under section 1503(d) on any terms more favorable than those 
     offered to the general public.''.
       (3) Exemption from liability.--Chapter 25 (as amended by 
     paragraph (2)) is amended by adding at the end the following 
     new section:

     ``SEC. 1505. EXEMPTION FROM LIABILITY.

       ``(a) In General.--No director, officer, employee, or agent 
     of the Corporation shall be liable, for money damages or 
     otherwise, to any party if, with respect to the subject 
     matter of the action, suit, or proceeding, such person was 
     fulfilling a duty, in connection with any action taken in 
     connection with the privatization, which such person in good 
     faith reasonably believed to be required by law or vested in 
     such person.
       ``(b) Exception.--The privatization shall be subject to the 
     Securities Act of 1933 and the Securities Exchange Act of 
     1934. The exemption set forth in subsection (a) shall not 
     apply to claims arising under such Acts or under the 
     Constitution or laws of any State, territory, or possession 
     of the United States relating to transactions in securities, 
     which claims are in connection with a public offering 
     implementing the privatization.''.
       (4) Resolution of certain issues.--Chapter 25 (as amended 
     by paragraph (3)) is amended by adding at the end the 
     following new section:

     ``SEC. 1506. RESOLUTION OF CERTAIN ISSUES.

       ``(a) Corporation Actions.--Notwithstanding any provision 
     of any agreement to which the Corporation is a party, the 
     Corporation shall not be considered to be in breach, default, 
     or violation of any such agreement because of any provision 
     of this chapter or any action the Corporation is required to 
     take under this chapter.
       ``(b) Right To Sue Withdrawn.--The United States hereby 
     withdraws any stated or implied consent for the United 
     States, or any agent or officer of the United States, to be 
     sued by any person for any legal, equitable, or other relief 
     with respect to any claim arising out of, or resulting from, 
     acts or omissions under this chapter.''.
       (5) Application of privatization proceeds.--Chapter 25 (as 
     amended by paragraph (4)) is amended by adding at the end the 
     following new section:

     ``SEC. 1507. APPLICATION OF PRIVATIZATION PROCEEDS.

       ``The proceeds from the privatization shall be included in 
     the budget baseline required by the Balanced Budget and 
     Emergency Deficit Control Act of 1985 and shall be counted as 
     an offset to direct spending for purposes of section 252 of 
     such Act, notwithstanding section 257(e) of such Act.''.
       (6) Conforming amendment.--The table of contents for 
     chapter 25 is amended by inserting after the item for section 
     1502 the following:

``Sec. 1503. Establishment of private corporation.
``Sec. 1504. Ownership limitations.
``Sec. 1505. Exemption from liability.
``Sec. 1506. Resolution of certain issues.
``Sec. 1507. Application of privatization proceeds.''.

       (7) Section 193 (42 U.S.C. 2243) is amended by adding at 
     the end the following:
       ``(f) Limitation.--If the privatization of the United 
     States Enrichment Corporation results in the Corporation 
     being--
       ``(1) owned, controlled, or dominated by a foreign 
     corporation or a foreign government, or
       ``(2) otherwise inimical to the common defense or security 
     of the United States,

     any license held by the Corporation under sections 53 and 63 
     shall be terminated.''.
       (8) Period for congressional review.--Section 1502(d) (42 
     U.S.C. 2297d-1(d)) is amended by striking ``less than 60 days 
     after notification of the Congress'' and inserting ``less 
     than 60 days after the date of the report to Congress by the 
     Comptroller General under subsection (c)''.
       (g) Periodic Certification of Compliance.--Section 
     1701(c)(2) (42 U.S.C. 2297f(c)(2)) is amended by striking 
     ``Annual application for certificate of compliance.--The 
     Corporation shall apply at least annually to the Nuclear 
     Regulatory Commission for a certificate of compliance under 
     paragraph (1).'' and inserting ``Periodic application for 
     certificate of compliance.--The Corporation shall apply to 
     the Nuclear Regulatory Commission for a certificate of 
     compliance under paragraph (1) periodically, as determined by 
     the Nuclear Regulatory Commission, but not less than every 5 
     years.''.
       (h) Licensing of Other Technologies.--Subsection (a) of 
     section 1702 (42 U.S.C. 2297f-1(a)) is amended by striking 
     ``other than'' and inserting ``including''.
       (i) Conforming Amendments.--
       (1) Repeals in atomic energy act of 1954 as of the 
     privatization date.--
       (A) Repeals.--As of the privatization date (as defined in 
     section 1201(13) of the Atomic Energy Act of 1954), the 
     following sections (as in effect on such privatization date) 
     of the Atomic Energy Act of 1954 are repealed:
       (i) Section 1202.
       (ii) Sections 1301 through 1304.
       (iii) Sections 1306 through 1316.
       (iv) Sections 1404 and 1405.
       (v) Section 1601.
       (vi) Sections 1603 through 1607.
       (B) Conforming amendment.--The table of contents of such 
     Act is amended by repealing the items referring to sections 
     repealed by paragraph (1).
       (2) Statutory modifications.--As of such privatization 
     date, the following shall take effect:
       (A) For purposes of title I of the Atomic Energy Act of 
     1954, all references in such Act to the ``United States 
     Enrichment Corporation'' shall be deemed to be references to 
     the corporation established pursuant to section 1503 of the 
     Atomic Energy Act of 1954 (as added by subsection (f)(1)).
       (B) Section 1018(1) of the Energy Policy Act of 1992 (42 
     U.S.C. 2296b-7(1)) is amended by striking ``the United 
     States'' and all that follows through the period and 
     inserting ``the corporation referred to in section 1201(4) of 
     the Atomic Energy Act of 1954.''.
       (C) Section 9101(3) of title 31, United States Code, is 
     amended by striking subparagraph (N), as added by section 
     902(b) of Public Law 102-486.
       (3) Revision of section 1305.--As of such privatization 
     date, section 1305 of the Atomic Energy Act of 1954 (42 U.S.C 
     2297b-4) is amended--
       (A) by repealing subsections (a), (b), (c), and (d), and
       (B) in subsection (e)--
       (i) by striking the subsection designation and heading,
       (ii) by redesignating paragraphs (1) and (2) (as added by 
     subsection (d)(1)) as subsections (a) and (b) and by moving 
     the margins 2-ems to the left,
       (iii) by striking paragraph (3), and
       (iv) by redesignating paragraph (4) (as amended by 
     subsection (d)(2)) as subsection (c), and by moving the 
     margins 2-ems to the left.

     SEC. 1102. MAKING PERMANENT NUCLEAR REGULATORY COMMISSION 
                   ANNUAL CHARGES.

       Paragraph (3) of section 6101(a)(3) of the Omnibus Budget 
     Reconciliation Act of 1990 (42 U.S.C. 2214(a)(3)) is 
     repealed.

     SEC. 1103. COGENERATION.

       Section 804(2)(B) of the National Energy Conservation 
     Policy Act (42 U.S.C. 8287c(2)(B)) is amended by striking ``, 
     excluding any cogeneration process for other than a federally 
     owned building or buildings or other federally owned 
     facilities''.

     SEC. 1104. FEMA RADIOLOGICAL EMERGENCY PREPAREDNESS FEES.

       (a) In General.--The Director of the Federal Emergency 
     Management Agency may assess and collect fees applicable to 
     persons subject to radiological emergency preparedness 
     regulations issued by the Director.
       (b) Requirements.--The assessment and collection of fees by 
     the Director under subsection (a) shall be fair and equitable 
     and shall reflect the full amount of costs to the Agency of 
     providing radiological emergency planning, preparedness, 
     response, and associated services. Such fees shall be 
     assessed by the Director in a manner which reflects the use 
     of resources of the Agency for classes of regulated persons 
     and the administrative costs of collecting such fees.
       (c) Amount of Fees.--The aggregate amount of fees assessed 
     under subsection (a) in a fiscal year shall approximate, but 
     not be less than, 100 percent of the amounts anticipated by 
     the Director to be obligated for the radiological emergency 
     preparedness program of the Agency for such fiscal year.
       (d) Deposit of Fees in Treasury.--Fees received pursuant to 
     subsection (a) shall be deposited in the general fund of the 
     Treasury as offsetting receipts.
                        Subtitle B--Central Utah

     SEC. 1121. PREPAYMENT OF CERTAIN REPAYMENT CONTRACTS BETWEEN 
                   THE UNITED STATES AND THE CENTRAL UTAH WATER 
                   CONSERVANCY DISTRICT.

       The second sentence of section 210 of the Central Utah 
     Project Completion Act (106 Stat. 4624) is amended to read as 
     follows: ``The Secretary of the Interior shall allow for 
     prepayment of the repayment contract between the United 
     States and the Central Utah Water Conservancy District dated 
     December 28, 1965, and supplemented on November 26, 1985, 
     providing for repayment of the municipal and industrial water 
     delivery facilities for which repayment is provided pursuant 
     to such contract, under such terms and conditions as the 
     Secretary deems appropriate to protect the interest of the 
     United States, which shall be similar to the terms and 
     conditions contained in the supplemental contract that 
     provided for the prepayment of the Jordan Aqueduct dated 
     October 28, 1993. The District shall exercise its right to 
     prepayment pursuant to this section by the end of fiscal year 
     2002.''.
                  Subtitle C--Army Corps of Engineers

     SEC. 1131. REGULATORY PROGRAM FUND.

       (a) Establishment.--There is established in the Treasury of 
     the United States the ``Army Civil Works Regulatory Program 
     Fund'' (hereinafter in this section referred to as the 
     ``Regulatory Program Fund'') into which shall be deposited 
     fees collected by the 

[[Page H11228]]

     Secretary of the Army pursuant to subsection (b). Amounts 
     deposited into the Regulatory Program Fund are authorized to 
     be appropriated to the Secretary of the Army to cover a 
     portion of the expenses incurred by the Department of the 
     Army in administering laws pertaining to the regulation of 
     the navigable waters of the United States, including 
     wetlands.
       (b) Regulatory Fees.--
       (1) Collection.--Not later than 60 days after the date of 
     the enactment of this Act, the Secretary of the Army shall 
     establish fees for the evaluation of commercial permit 
     applications, for the recovery of costs associated with the 
     preparation of environmental impact statements required by 
     the National Environmental Policy Act of 1969, and for the 
     recovery of costs associated with wetlands delineations for 
     major developments affecting wetlands. The Secretary shall 
     collect such fees and deposit amounts collected pursuant to 
     this paragraph into the Regulatory Program Fund.
       (2) Fees.--The fees described in paragraph (1) shall be 
     established by the Secretary of the Army at rates that will 
     allow for the recovery of receipts at amounts sufficient to 
     cover the costs for which the fees are established under 
     paragraph (1).
                       Subtitle D--Helium Reserve

     SEC. 1141. SALE OF HELIUM PROCESSING AND STORAGE FACILITY.

       (a) Short Title.--This section may be cited as the ``Helium 
     Act of 1995''.
       (b) References.--Except as otherwise expressly provided, 
     whenever in this section an amendment or repeal is expressed 
     in terms of an amendment to, or repeal of, a section or other 
     provision, the reference shall be considered to be made to a 
     section or other provision of the Helium Act (50 U.S.C. 167 
     to 167n).
       (c) Authority of Secretary.--Sections 3, 4, and 5 are 
     amended to read as follows:

     ``SEC. 3. AUTHORITY OF SECRETARY.

       ``(a) Extraction and Disposal of Helium on Federal Lands.--
     (1) The Secretary may enter into agreements with private 
     parties for the recovery and disposal of helium on Federal 
     lands upon such terms and conditions as he deems fair, 
     reasonable and necessary. The Secretary may grant leasehold 
     rights to any such helium. The Secretary may not enter into 
     any agreement by which the Secretary sells such helium other 
     than to a private party with whom the Secretary has an 
     agreement for recovery and disposal of helium. Such 
     agreements may be subject to such rules and regulations as 
     may be prescribed by the Secretary.
       ``(2) Any agreement under this subsection shall be subject 
     to the existing rights of any affected Federal oil and gas 
     lessee. Each such agreement (and any extension or renewal 
     thereof) shall contain such terms and conditions as deemed 
     appropriate by the Secretary.
       ``(3) This subsection shall not in any manner affect or 
     diminish the rights and obligations of the Secretary and 
     private parties under agreements to dispose of helium 
     produced from Federal lands in existence at the enactment of 
     the Helium Act of 1995 except to the extent that such 
     agreements are renewed or extended after such date.
       ``(b) Storage, Transportation, and Sale.--The Secretary is 
     authorized to store, transport, and sell helium only in 
     accordance with this Act.
       ``(c) Monitoring and Reporting.--The Secretary is 
     authorized to monitor helium production and helium reserves 
     in the United States and to periodically prepare reports 
     regarding the amounts of helium produced and the quantity of 
     crude helium in storage in the United States.

     ``SEC. 4. STORAGE AND TRANSPORTATION OF CRUDE HELIUM.

       ``(a) Storage and Transportation.--The Secretary is 
     authorized to store and transport crude helium and to 
     maintain and operate existing crude helium storage at the 
     Bureau of Mines Cliffside Field, together with related helium 
     transportation and withdrawal facilities.
       ``(b) Cessation of Production, Refining, and Marketing.--
     Effective one year after the date of enactment of the Helium 
     Act of 1995, the Secretary shall cease producing, refining, 
     and marketing refined helium and shall cease carrying out all 
     other activities relating to helium which the Secretary was 
     authorized to carry out under this Act before the date of 
     enactment of the Helium Act of 1995, except those activities 
     described in subsection (a).
       ``(c) Disposal of Facilities.--(1) Within one year after 
     the date of enactment of the Helium Act of 1995, the 
     Secretary shall dispose of all facilities, equipment, and 
     other real and personal property, together with all interests 
     therein, held by the United States for the purpose of 
     producing, refining, and marketing refined helium. The 
     disposal of such property shall be in accordance with the 
     provisions of law governing the disposal of excess or surplus 
     properties of the United States.
       ``(2) All proceeds accruing to the United States by reason 
     of the sale or other disposal of such property shall be 
     treated as moneys received under this chapter for purposes of 
     section 6(f). All costs associated with such sale and 
     disposal (including costs associated with termination of 
     personnel) and with the cessation of activities under 
     subsection (b) shall be paid from amounts available in the 
     helium production fund established under section 6(f).
       ``(3) Paragraph (1) shall not apply to any facilities, 
     equipment, or other real or personal property, or any 
     interest therein, necessary for the storage and 
     transportation of crude helium.
       ``(d) Existing Contracts.--All contracts which were entered 
     into by any person with the Secretary for the purchase by 
     such person from the Secretary of refined helium and which 
     are in effect on the date of the enactment of the Helium Act 
     of 1995 shall remain in force and effect until the date on 
     which the facilities referred to in subsection (c) are 
     disposed of. Any costs associated with the termination of 
     such contracts shall be paid from the helium production fund 
     established under section 6(f).

     ``SEC. 5. FEES FOR STORAGE, TRANSPORTATION AND WITHDRAWAL.

       ``Whenever the Secretary provides helium storage, 
     withdrawal, or transportation services to any person, the 
     Secretary is authorized and directed to impose fees on such 
     person to reimburse the Secretary for the full costs of 
     providing such storage, transportation, and withdrawal. All 
     such fees received by the Secretary shall be treated as 
     moneys received under this Act for purposes of section 
     6(f).''.
       (d) Sale of Crude Helium.--Section 6 is amended as follows:
       (1) Subsection (a) is amended by striking out ``from the 
     Secretary'' and inserting ``from persons who have entered 
     into enforceable contracts to purchase an equivalent amount 
     of crude helium from the Secretary''.
       (2) Subsection (b) is amended by inserting ``crude'' before 
     ``helium'' and by adding the following at the end thereof: 
     ``Except as may be required by reason of subsection (a), the 
     Secretary shall not make sales of crude helium under this 
     section in such amounts as will disrupt the market price of 
     crude helium.''.
       (3) Subsection (c) is amended by inserting ``crude'' before 
     ``helium'' after the words ``Sales of'' and by striking 
     ``together with interest as provided in this subsection'' and 
     all that follows down through the period at the end of such 
     subsection and inserting the following: ``all funds required 
     to be repaid to the United States as of October 1, 1994 under 
     this section (hereinafter referred to as `repayable 
     amounts'). The price at which crude helium is sold by the 
     Secretary shall not be less than the amount determined by the 
     Secretary as follows:
       ``(1) Divide the outstanding amount of such repayable 
     amounts by the volume (in mcf) of crude helium owned by the 
     United States and stored in the Bureau of Mines Cliffside 
     Field at the time of the sale concerned.
       ``(2) Adjust the amount determined under paragraph (1) by 
     the Consumer Price Index for years beginning after December 
     31, 1994.''.
       (4) Subsection (d) is amended to read as follows:
       ``(d) Extraction of Helium From Deposits on Federal 
     Lands.--All moneys received by the Secretary from the sale or 
     disposition of helium on Federal lands shall be paid to the 
     Treasury and credited against the amounts required to be 
     repaid to the Treasury under subsection (c) of this 
     section.''.
       (5) Subsection (e) is repealed.
       (6) Subsection (f) is amended by inserting ``(1)'' after 
     ``(f)'' and by adding the following at the end thereof:
       ``(2) Within 7 days after the commencement of each fiscal 
     year after the disposal of the facilities referred to in 
     section 4(c), all amounts in such fund in excess of 
     $2,000,000 (or such lesser sum as the Secretary deems 
     necessary to carry out this Act during such fiscal year) 
     shall be paid to the Treasury and credited as provided in 
     paragraph (1). Upon repayment of all amounts referred to in 
     subsection (c), the fund established under this section shall 
     be terminated and all moneys received under this Act shall be 
     deposited in the Treasury as General Revenues.''.
       (e) Elimination of Stockpile.--Section 8 is amended to read 
     as follows:

     ``SEC. 8. ELIMINATION OF STOCKPILE.

       ``(a) Review of Reserves.--Not later than January 1, 2014 
     the Secretary shall review the known helium reserves in the 
     United States and make a determination as to the expected 
     life of the domestic helium reserves (other than federally 
     owned helium stored at the Cliffside Reservoir) at that time.
       ``(b) Reserves Below 1 BCF in 2014.--Not later than January 
     1, 2014, if the Secretary determines that domestic helium 
     reserves (other than federally owned helium stored at the 
     Cliffside Reservoir) are less than 1 billion cubic feet 
     (bcf), the Secretary shall commence making sales of crude 
     helium from helium reserves owned by the United States in 
     such amounts as may be necessary to dispose of all such 
     helium reserves in excess of 600 million cubic feet (mcf) by 
     January 1, 2019. The sales shall be at such times and in such 
     lots as the Secretary determines, in consultation with the 
     helium industry, necessary to carry out this subsection. The 
     price for all such sales, as determined by the Secretary in 
     consultation with the helium industry, shall be such as will 
     ensure repayment of the amounts required to be repaid to the 
     Treasury under section 6(c) by the year 2019 with minimum 
     market disruption. The date specified in this subsection for 
     completion of such sales and for repayment of debt may be 
     extended by the Secretary for a period of not to exceed 5 
     additional years if necessary in order to assure repayment of 
     such debt with minimum market disruption.
       ``(c) Reserves Above 1 BCF in 2014.--Not later than January 
     1, 2014, if the Secretary determines that domestic helium 
     reserves 

[[Page H11229]]

     (other than federally owned helium stored at the Cliffside 
     Reservoir) are more than 1 billion cubic feet (bcf), the 
     Secretary shall commence making sales of crude helium from 
     helium reserves owned by the United States in such amounts as 
     may be necessary to dispose of all such helium reserves in 
     excess of 600 million cubic feet (mcf) by January 1, 2024. 
     The sales shall be at such times and in such lots as the 
     Secretary determines, in consultation with the helium 
     industry, necessary to carry out this subsection with minimum 
     disruption of the market for crude helium.
       ``(d) Discovery of Additional Reserves.--The discovery of 
     additional helium reserves after the year 2014 shall not 
     affect the duty of the Secretary to make sales of helium as 
     provided in subsection (b) or (c), as the case may be.''.
       (f) Repeal of Authority To Borrow.--Sections 12 and 15 are 
     repealed.
                        Subtitle E--Territories

     SEC. 1151. TERMINATION OF ANNUAL DIRECT ASSISTANCE TO 
                   NORTHERN MARIANA ISLANDS.

       (a) In General.--No annual payment may be made under 
     section 701, 702, or 704 of the Covenant to Establish a 
     Commonwealth of the Northern Mariana Islands in Political 
     Union with the United States of America (48 U.S.C. 1681 
     note), for any fiscal year beginning after September 30, 
     1995.
       (b) Elimination of 7-Year Extensions.--
       (1) In general.--The Act of March 24, 1976 (90 Stat. 263; 
     16 U.S.C. 1681 note), is amended by striking sections 3 and 
     4.
       (2) Conforming changes.--(A) Section 5 of the Act of March 
     24, 1976 (90 Stat. 263; 16 U.S.C. 1681 note) is redesignated 
     as section 3.
       (B) Section 3 of such Act, as redesignated by subparagraph 
     (A) of this paragraph, is amended--
       (i) by striking ``agreement identified in section 3 of this 
     Act'' and inserting ``Agreement of the Special 
     Representatives on Future United States Financial Assistance 
     for the Government of the Northern Mariana Islands, executed 
     June 10, 1985, between the special representative of the 
     President of the United States and the special 
     representatives of the Governor of the Northern Mariana 
     Islands''; and
       (ii) by striking ``Interior and Insular Affairs'' and 
     inserting ``Resources''.
                    TITLE II--AGRICULTURAL PROGRAMS

     SEC. 2001. SHORT TITLE.

       This title may be cited as the ``Agricultural 
     Reconciliation Act of 1995''.
  Subtitle A--Extension and Modification of Various Commodity Programs

     SEC. 2101. EXTENSION OF LOANS, PAYMENTS, AND ACREAGE 
                   REDUCTION PROGRAMS FOR WHEAT THROUGH 2002.

       (a) Agricultural Act of 1949.--Section 107B of the 
     Agricultural Act of 1949 (7 U.S.C. 1445b-3a) is amended--
       (1) in the section heading by striking ``1995'' and 
     inserting ``2002'';
       (2) in subsections (a)(1), (a)(4)(C), (b)(1), (c)(1)(A), 
     (c)(1)(B)(iii), (e)(1)(G), (e)(3)(A), (e)(3)(C)(iii), (f)(1), 
     (q), by striking ``1995'' each place it appears and inserting 
     ``2002'';
       (3) in the heading of subsection (c)(1)(B)(ii), by striking 
     ``and 1995'' and inserting ``through 2002'';
       (4) in subsection (c)(1)(B)(ii), by striking ``and 1995'' 
     and inserting ``through 2002'';
       (5) in subsection (c)(1)(E)(vii), by striking ``1997'' and 
     inserting ``2002'';
       (6) in the heading of subsection (e)(1)(G), by striking 
     ``1995'' and inserting ``2002''; and
       (7) in subsection (g)(1), by striking ``and 1995'' and 
     inserting ``through 2002''.
       (b) Food Security Wheat Reserve.--Section 302(i) of the 
     Food Security Wheat Reserve Act of 1980 (7 U.S.C. 1736f-1(i)) 
     is amended by striking ``1995'' both places it appears and 
     inserting ``2002''.
       (c) Nonapplicability of Certificate Requirements.--Sections 
     379d through 379j of the Agricultural Adjustment Act of 1938 
     (7 U.S.C. 1379d-1379j) shall not be applicable to wheat 
     processors or exporters during the period June 1, 1996, 
     through May 31, 2003.
       (d) Suspension of Land Use, Wheat Marketing Allocation, and 
     Producer Certificate Provisions.--Sections 331 through 339, 
     379b, and 379c of the Agricultural Adjustment Act of 1938 (7 
     U.S.C. 1331 through 1339, 1379b, and 1379c) shall not be 
     applicable to the 1996 through 2002 crops of wheat.
       (e) Suspension of Certain Quota Provisions.--The joint 
     resolution entitled ``A joint resolution relating to corn and 
     wheat marketing quotas under the Agricultural Adjustment Act 
     of 1938, as amended'', approved May 26, 1941 (7 U.S.C. 1330 
     and 1340), shall not be applicable to the crops of wheat 
     planted for harvest in the calendar years 1996 through 2002.
       (f) Nonapplicability of Section 107 of Agricultural Act of 
     1949.--Section 107 of the Agricultural Act of 1949 (7 U.S.C. 
     1445a) shall not be applicable to the 1996 through 2002 crops 
     of wheat.

     SEC. 2102. EXTENSION OF LOANS, PAYMENTS, AND ACREAGE 
                   REDUCTION PROGRAMS FOR FEED GRAINS THROUGH 
                   2002.

       (a) Agricultural Act of 1949.--Section 105B of the 
     Agricultural Act of 1949 (7 U.S.C. 1444f) is amended--
       (1) in the section heading, by striking ``1995'' and 
     inserting ``2002'';
       (2) in subsections (a)(1), (a)(4)(C), (a)(6), (b)(1), 
     (c)(1)(A), (c)(1)(B)(iii), (e)(1)(G), (e)(1)(H), (e)(2)(H), 
     (e)(3)(A), (e)(3)(C)(iii), (f)(1), (p)(1), (q)(1), and (r), 
     by striking ``1995'' each place it appears and inserting 
     ``2002'';
       (3) in the heading of subsection (c)(1)(B)(ii), by striking 
     ``and 1995'' and inserting ``through 2002'';
       (4) in subsection (c)(1)(B)(ii), by striking ``and 1995'' 
     and inserting ``through 2002'';
       (5) in subsection (c)(1)(E)(vii), by striking ``1997'' and 
     inserting ``2002'';
       (6) in the headings of subsections (e)(1)(G) and (e)(1)(H), 
     by striking ``1995'' both places it appears and inserting 
     ``2002''; and
       (7) in subsection (g)(1), by striking ``and 1995'' and 
     inserting ``through 2002''.
       (b) Recourse Loan Program For Silage.--Section 403 of the 
     Food Security Act of 1985 (7 U.S.C. 1444e-1) is amended by 
     striking ``1996'' and inserting ``2002''.
       (c) Nonapplicability of Section 105 of Agricultural Act of 
     1949.--Section 105 of the Agricultural Act of 1949 (7 U.S.C. 
     1444b) shall not be applicable to the 1996 through 2002 crops 
     of feed grains.

     SEC. 2103. EXTENSION OF LOANS, PAYMENTS, AND ACREAGE 
                   REDUCTION PROGRAMS FOR COTTON THROUGH 2002.

       (a) Extra Long Staple Cotton.--Section 103(h)(16) of the 
     Agricultural Act of 1949 (7 U.S.C. 1444(h)(16)) is amended by 
     striking ``1996'' and inserting ``2003''.
       (b) Upland Cotton.--Section 103B of the Agricultural Act of 
     1949 (7 U.S.C. 1444-2) is amended--
       (1) in the section heading, by striking ``1997'' and 
     inserting ``2002'';
       (2) in subsections (a)(1), (b)(1), (c)(1)(A), 
     (c)(1)(B)(ii), (c)(1)(D)(v)(II), and (o), by striking 
     ``1997'' each place it appears and inserting ``2002'';
       (3) in the heading of subsection (c)(1)(D)(v)(II), by 
     striking ``1997 crops'' and inserting ``2002 crops'';
       (4) in subsection (e)(1)(D), by striking ``the 1997 crop'' 
     and inserting ``each of the 1997 through 2002 crops'';
       (5) in subsections (e)(3)(A) and (f)(1), by striking 
     ``1995'' each place it appears and inserting ``2002''; and
       (6) in subparagraphs (B)(i), (D)(i), (E)(i), and (F)(i) of 
     subsection (a)(5), by striking ``1998'' each place it appears 
     and inserting ``2003''.
       (c) Cottonseed and Cottonseed Oil.--Section 203(b) of the 
     Agricultural Act of 1949 (7 U.S.C. 1446d(b)) is amended by 
     striking ``1995'' and inserting ``2002''.
       (d) Agricultural Adjustment Act of 1938.--Section 374(a) of 
     the Agricultural Adjustment Act of 1938 (7 U.S.C. 1374(a)) is 
     amended by striking ``1995'' each place it appears and 
     inserting ``2002''.
       (e) Suspension of Base Acreage Allotments, Marketing 
     Quotas, and Related Provisions.--Sections 342, 343, 344, 345, 
     346, and 377 of the Agricultural Adjustment Act of 1938 (7 
     U.S.C. 1342-1346 and 1377) shall not be applicable to any of 
     the 1996 through 2002 crops of upland cotton.
       (f) Suspension of Miscellaneous Cotton Provisions.--Section 
     103(a) of the Agricultural Act of 1949 (7 U.S.C. 1444(a)) 
     shall not be applicable to the 1996 through 2002 crops.
       (g) Preliminary Allotments for 2003 Crop of Upland 
     Cotton.--Notwithstanding any other provision of law, the 
     permanent State, county, and farm base acreage allotments for 
     the 1977 crop of upland cotton, adjusted for any 
     underplantings in 1977 and reconstituted as provided in 
     section 379 of the Agricultural Adjustment Act of 1938 (7 
     U.S.C. 1379), shall be the preliminary allotments for the 
     2003 crop.
       (h) Cotton Classification Services.--The first sentence of 
     section 3a of the Act of March 3, 1927 (commonly known as the 
     ``Cotton Statistics and Estimates Act'') (chapter 337; 7 
     U.S.C. 473a), is amended by striking ``1996'' and inserting 
     ``2002''.

     SEC. 2104. EXTENSION OF LOANS, PAYMENTS, AND ACREAGE 
                   REDUCTION PROGRAMS FOR RICE THROUGH 2002.

       Section 101B of the Agricultural Act of 1949 (7 U.S.C. 
     1441-2) is amended--
       (1) in the section heading, by striking ``1995'' and 
     inserting ``2002'';
       (2) in subsections (a)(1), (a)(3), (b)(1), (c)(1)(A), 
     (c)(1)(B)(iii), (e)(3)(A), (f)(1), and (n), by striking 
     ``1995'' each place it appears and inserting ``2002'';
       (3) in subsection (a)(5)(D)(i), by striking ``1996'' and 
     inserting ``2001'';
       (4) in the heading of subsection (c)(1)(B)(ii), by striking 
     ``and 1995'' and inserting ``through 2002'';
       (5) in subsection (c)(1)(B)(ii), by striking ``and 1995'' 
     and inserting ``through 2002'';
       (6) in subsection (c)(1)(D)(v)(II), by striking ``1997'' 
     and inserting ``2002''; and
       (7) in the heading of subsection (c)(1)(D)(v)(II), by 
     striking ``1997 crops'' and inserting ``2002 crops''.

     SEC. 2105. EXTENSION OF LOANS AND PAYMENTS FOR OILSEEDS 
                   THROUGH 2002.

       Section 205 of the Agricultural Act of 1949 (7 U.S.C. 
     1446f) is amended--
       (1) in the section heading, by striking ``1995'' and 
     inserting ``2002'';
       (2) in subsections (b), (c), (e)(1), and (n), by striking 
     ``1995'' each place it appears and inserting ``2002''; and
       (3) in subsections (c) and (h)(2), by striking ``1997'' 
     each places it appears and inserting ``2002''.

     SEC. 2106. INCREASE IN FLEX ACRES.

       (a) Wheat.--Subsection (c)(1)(C)(ii) of section 107B of the 
     Agricultural Act of 1949 (7 U.S.C. 1445b-3a) is amended by 
     striking ``85 percent'' and inserting ``85 percent (through 
     the 1995 crop of wheat) and 77 percent (for the 1996 through 
     2002 crops)''.
       (b) Feed Grains.--Subsection (c)(1)(C)(ii) of section 105B 
     of such Act (7 U.S.C. 1444f) is 

[[Page H11230]]

     amended by striking ``85 percent'' and inserting ``85 percent 
     (through the 1995 crop) and 77 percent (for the 1996 through 
     2002 crops)''.
       (c) Upland Cotton.--Subsection (c)(1)(C)(ii) of section 
     103B of such Act (7 U.S.C. 1444-2) is amended by striking 
     ``85 percent'' and inserting ``85 percent (through the 1995 
     crop of upland cotton) and 77 percent (for the 1996 through 
     2002 crops)''.
       (d) Rice.--Subsection (c)(1)(C)(ii) of section 101B of such 
     Act (7 U.S.C. 1441-2) is amended by striking ``85 percent'' 
     and inserting ``85 percent (through the 1995 crop of rice) 
     and 77 percent (for the 1996 through 2002 crops)''.

     SEC. 2107. REDUCTION IN 50/85 AND 0/85 PROGRAMS.

       (a) Rice.--Section 101B(c)(1)(D) of the Agricultural Act of 
     1949 (7 U.S.C. 1441-2(c)(1)(D)) is amended--
       (1) in the subparagraph heading, by striking ``50/85 
     program'' and inserting ``50/80 program''; and
       (2) in clause (i), by striking ``8 percent for each of the 
     1991 through 1993 crops, and 15 percent for each of the 1994 
     through 1997 crops'' both places it appears and inserting 
     ``20 percent for each of the 1996 through 2002 crops''.
       (b) Cotton.--Section 103B(c)(1)(D) of such Act (7 U.S.C. 
     1444-2(c)(1)(D)) is amended--
       (1) in the subparagraph heading, by striking ``50/85 
     program'' and inserting ``50/80 program''; and
       (2) in clause (i), by striking ``8 percent for each of the 
     1991 through 1993 crops, and 15 percent for each of the 1994 
     through 1997 crops'' both places it appears and inserting 
     ``20 percent for each of the 1996 through 2002 crops''.
       (c) Feed Grains.--Section 105B(c)(1)(E) of such Act (7 
     U.S.C. 1444f(c)(1)(E)) is amended--
       (1) in the subparagraph heading, by striking ``0/85 
     program'' and inserting ``0/80 program''; and
       (2) in clause (i), by striking ``8 percent for each of the 
     1991 through 1993 crops, and 15 percent for each of the 1994 
     through 1997 crops'' both places it appears and inserting 
     ``20 percent for each of the 1996 through 2002 crops''.
       (d) Wheat.--Section 107B(c)(1)(E) of such Act (7 U.S.C. 
     1445-3a(c)(1)(E)) is amended--
       (1) in the subparagraph heading, by striking ``0/85 
     program'' and inserting ``0/80 program''; and
       (2) in clause (i), by striking ``8 percent for each of the 
     1991 through 1993 crops, and 15 percent for each of the 1994 
     through 1997 crops'' both places it appears and inserting 
     ``20 percent for each of the 1996 through 2002 crops''.
       (e) Effect of Amendments on Prior Crop Years.--Sections 
     101B(c)(1)(D), 103B(c)(1)(D), 105B(c)(1)(E), and 
     107B(c)(1)(E) of the Agricultural Act of 1949, as in effect 
     on the day before the date of the enactment of this Act, 
     shall continue to apply with respect to the 1991 through 1995 
     crops covered by such sections.
                           Subtitle B--Sugar

     SEC. 2201. EXTENSION AND MODIFICATION OF SUGAR PROGRAM.

       (a) Assurance of Sugar Supply.--Section 206 of the 
     Agricultural Act of 1949 (7 U.S.C. 1446g, et seq.) is amended 
     to read as follows:

     ``SEC. 206. ASSURANCE OF SUGAR SUPPLY.

       ``(a) In General.--The price of each crop of sugar beets 
     and sugarcane, respectively, shall be supported in accordance 
     with this section.
       ``(b) Sugarcane.--Subject to subsection (d), the Secretary 
     shall support the price of domestically grown sugarcane 
     through loans at 18 cents per pound for raw cane sugar.
       ``(c) Sugar Beets.--Subject to subsection (d), the 
     Secretary shall support the price of each crop of 
     domestically grown sugar beets through loans at the level 
     provided for refined beet sugar produced from the 1995 crop 
     of domestically grown sugar beets.
       ``(d) Adjustment in Support Level.--
       ``(1) Downward adjustment in support level.--
       ``(A) In general.--The Secretary shall decrease the support 
     price of domestically grown sugarcane and sugar beets from 
     the price determined for the preceding crop, as established 
     under this section, if negotiated reductions in export 
     subsidies and domestic subsidies provided for sugar of the 
     European Union and other major sugar growing, producing, and 
     exporting countries (`major countries') in the aggregate 
     exceed the commitments made as part of the Uruguay Round 
     Agreements.
       ``(B) Extent of reduction.--The Secretary shall not reduce 
     the support price under this section below a level that 
     provides an equal measure of support to that provided by any 
     other major country or customs union based on an examination 
     of both domestic and export subsidies subject to reduction in 
     the Agreement on Agriculture referenced in 19 U.S.C. 
     3511(d)(2).
       ``(C) Major countries.--For purposes of this subsection, 
     the term `major countries' includes all countries allocated a 
     share of the tariff rate quota for imported sugars and syrups 
     by the United States Trade Representative pursuant to 
     additional U.S. note 5 of chapter 17 of the Harmonized Tariff 
     Schedule, all countries of the European Union, and the 
     People's Republic of China.
       ``(2) Increases in support level.--The Secretary may 
     increase the support level for each crop of domestically 
     grown sugarcane and sugar beets from the level determined for 
     the preceding crop based on such factors as the Secretary 
     determines appropriate, including changes (during the 2 crop 
     years immediately preceding the crop year for which the 
     determination is made) in the cost of sugar products, the 
     cost of domestic sugar production, the amount of any 
     applicable assessments, and other factors or circumstances 
     that may adversely affect domestic sugar production.
       ``(e) Loan Type; Processor Assurances.--
       ``(1) In general.--Subject to paragraph (2), the Secretary 
     shall carry out this section through the use of recourse 
     loans.
       ``(2) Modification.--During any fiscal year in which the 
     tariff rate quota for imports of sugar into the United States 
     is set at, or is increased to, a level that exceeds the 
     minimum level for such imports committed to by the United 
     States under the Agreement on Agriculture contained in the 
     Uruguay Round of Agreements of the General Agreement on 
     Tariffs and Trade, the Secretary shall carry out this section 
     by making available nonrecourse loans. Any recourse loan 
     previously made available by the Secretary under this section 
     during such fiscal year shall be modified by the Secretary 
     into a nonrecourse loan.
       ``(3) Processor assurances.--In order to effectively 
     support the prices of sugar beets and sugarcane received by 
     the producer, the Secretary shall obtain from each processor 
     that receives a loan under this section such assurances as 
     the Secretary considers adequate that, if the Secretary is 
     required under paragraph (2) to make nonrecourse loans 
     available, or modify recourse loans into nonrecourse loans, 
     each producer served by the processor will receive the 
     appropriate minimum payment for sugar beets and sugarcane 
     delivered by the producer, as determined by the Secretary.
       ``(f) Announcements.--In order to ensure the efficient 
     administration of the program under this section and the 
     effective support of the price of sugar, the Secretary shall 
     announce the type of loans available and the loan rates for 
     beet sugar and cane sugar for any fiscal year under this 
     section as far in advance as is practicable.
       ``(g) Loan Term.--
       ``(1) In general.--Except as provided in paragraph (2) and 
     subsection (h), loans under this section during any fiscal 
     year shall be made available not earlier than the beginning 
     of the fiscal year and shall mature at the end of 3 months.
       ``(2) Extension.--The maturity of a loan under this section 
     may be extended for up to 2 additional 3-month periods, at 
     the option of the borrower, upon written request to the 
     Commodity Credit Corporation. The maturity of a loan may not 
     be extended under this paragraph beyond the end of the fiscal 
     year.
       ``(h) Supplementary Loans.--Subject to subsection (d), the 
     Secretary shall make available to eligible processors price 
     support loans with respect to sugar processed from sugar 
     beets and sugarcane harvested in the last 3 months of a 
     fiscal year. Such loans shall mature at the end of the fiscal 
     year. The processor may repledge the sugar as collateral for 
     a price support loan in the subsequent fiscal year, except 
     that the second loan shall--
       ``(1) be made at the loan rate in effect at the time the 
     second loan is made; and
       ``(2) mature in not more than 9 months less the quantity of 
     time that the first loan was in effect.
       ``(i) Use of Commodity Credit Corporation.--The Secretary 
     shall use the funds, facilities, and authorities of the 
     Commodity Credit Corporation to carry out this section.
       ``(j) Marketing Assessments.--The following assessments 
     shall be collected with respect to all sugar marketed within 
     the United States during the 1996 through 2003 fiscal years:
       ``(1) Beet sugar.--The first seller of beet sugar produced 
     from sugar beets or sugar beet molasses, or refined sugar 
     refined outside of the United States, shall remit to the 
     Commodity Credit Corporation a nonrefundable marketing 
     assessment in an amount equal to 1.1794 percent of the loan 
     level established under subsection (b) per pound of sugar 
     marketed.
       ``(2) Cane sugar.--The first seller of raw cane sugar 
     produced from sugarcane or sugarcane molasses, shall remit to 
     the Commodity Credit Corporation a nonrefundable marketing 
     assessment in an amount equal to 1.1 percent of the loan 
     level established under subsection (b) per pound of sugar 
     marketed (including the transfer or delivery of the sugar to 
     a refinery for further processing or marketing).
       ``(3) Collection.--
       ``(A) Timing.--Marketing assessments required under this 
     subsection shall be collected and remitted to the Commodity 
     Credit Corporation within 30 days of the date that the sugar 
     is marketed.
       ``(B) Manner.--Subject to subparagraph (A), marketing 
     assessments shall be collected under this subsection in the 
     manner prescribed by the Secretary and shall be 
     nonrefundable.
       ``(4) Penalties.--If any person fails to remit an 
     assessment required by this subsection or fails to comply 
     with such requirements for recordkeeping or otherwise as are 
     required by the Secretary to carry out this subsection, the 
     person shall be liable to the Secretary for a civil penalty 
     up to an amount determined by multiplying--
       ``(A) the quantity of sugar involved in the violation; by
       ``(B) the loan level for the applicable crop of sugarcane 
     or sugar beets from which the sugar is produced.
       For the purposes of this paragraph, refined sugar shall be 
     treated as produced from sugar beets.

[[Page H11231]]

       ``(5) Enforcement.--The Secretary may enforce this 
     subsection in the courts of the United States.
       ``(6) Regulations.--The Secretary shall promulgate 
     regulations to carry out this subsection.
       ``(k) Information Reporting.--
       ``(1) Duty of processors and refiners to report.--All 
     sugarcane processors, cane sugar refiners, and sugar beet 
     processors shall furnish the Secretary, on a monthly basis, 
     such information as the Secretary may require to administer 
     sugar programs, including the quantity of purchases of 
     sugarcane, sugar beets, and sugar, and production, 
     importation, distribution, and stock levels of sugar.
       ``(2) Duty of producers to report.--In order to efficiently 
     and effectively carry out the program under this section, the 
     Secretary may require a producer of sugarcane or sugar beets 
     to report, in the manner prescribed by the Secretary, the 
     producer's sugarcane or sugar beet yields and acres planted 
     to sugarcane or sugar beets, respectively.
       ``(3) Penalty.--Any person willfully failing or refusing to 
     furnish the information, or furnishing willfully any false 
     information, shall be subject to a civil penalty of not more 
     than $10,000 for each such violation.
       ``(4) Monthly reports.--Taking into consideration the 
     information received under paragraph (1), the Secretary shall 
     publish on a monthly basis composite data on production, 
     imports, distribution, and stock levels of sugar.
       ``(l) Sugar Estimates.--
       ``(1) Domestic requirement.--Before the beginning of each 
     fiscal year, the Secretary shall estimate the domestic sugar 
     requirement of the United States equal to Total Estimated 
     Disappearance minus the quantity of sugar that will be 
     available from carry-in stocks.
       ``(2) Total disappearance.--For the purposes of this 
     subsection, the term ``Total Estimated Disappearance'' means 
     the quantity of sugar, as estimated by the Secretary, that 
     will be consumed in the United States during the fiscal year 
     (other than sugar imported for the production of polyhydric 
     alcohol or to be refined and reexported in refined form or in 
     sugar containing products) plus the quantity of sugar that 
     would provide for adequate carryover stocks.
       ``(3) Quarterly reestimates.--The Secretary shall make 
     quarterly reestimates of sugar consumption, stocks, 
     production, and imports for a fiscal year no later than the 
     beginning of each of the second through fourth quarters of 
     the fiscal year.
       ``(m) Definition of Market.--For purposes of this section, 
     the term `market' means to sell or otherwise dispose of in 
     commerce in the United States (including, with respect to any 
     integrated processor and refiner, the movement of raw cane 
     sugar into the refining process) and deliver to a buyer.
       ``(n) Crops.--This section shall be effective only for the 
     1996 through 2002 crops of sugar beets and sugarcane.''.
       (b) Conforming Amendment.--Part VII of subtitle B of title 
     III of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
     1359aa et seq.) is repealed.
                          Subtitle C--Peanuts

     SEC. 2301. EXTENSION OF PRICE SUPPORT PROGRAM FOR PEANUTS AND 
                   RELATED PROGRAMS.

       (a) Agricultural Act of 1949.--Section 108B of the 
     Agricultural Act of 1949 (7 U.S.C. 1445c-3) is amended--
       (1) in the section heading, by striking ``1997'' and 
     inserting ``2002'';
       (2) in subsection (a)(1), (a)(2), (b)(1), and (h), by 
     striking ``1997'' each place it appears and inserting 
     ``2002''; and
       (3) in subsection (g)(1), by striking ``1997 crops'' the 
     first place it appears and inserting ``2002 crops''.
       (b) Agricultural Adjustment Act of 1938.--Part VI of 
     subtitle B of title III of the Agricultural Adjustment Act of 
     1938 is amended--
       (1) in section 358-1 (7 U.S.C. 1358-1)--
       (A) in the section heading, by striking ``1997'' and 
     inserting ``2002'';
       (B) in subsection (a)(3), by striking ``1990'' and 
     inserting ``1990, for the 1991 through 1995 marketing years, 
     and 1995, for the 1996 through 2002 marketing years'';
       (C) in subsection (b)(1)(A)--
       (i) by striking ``1997'' and inserting ``2002''; and
       (ii) in clause (i), by inserting before the semicolon the 
     following: ``, for the 1991 through 1995 marketing years, and 
     the 1995 marketing year, for the 1996 through 2002 marketing 
     years''; and
       (D) in subsections (b)(1)(B), (b)(2)(A), (b)(2)(C), 
     (b)(3)(A), and (f), by striking ``1997'' each place it 
     appears and inserting ``2002'';
       (2) in section 358b (7 U.S.C. 1358b)--
       (A) in the section heading, by striking ``1995'' and 
     inserting ``2002''; and
       (B) in subsection (c), by striking ``1995'' and inserting 
     ``2002'';
       (3) in section 358c(d) (7 U.S.C. 1358c(d)), by striking 
     ``1995'' and inserting ``2002''; and
       (4) in section 358e (7 U.S.C. 1359a)--
       (A) in the section heading, by striking ``1997'' and 
     inserting ``2002''; and
       (B) in subsection (i), by striking ``1997'' and inserting 
     ``2002''.
       (c) Food, Agriculture, Conservation, and Trade Act of 
     1990.--Title VIII of the Food, Agriculture, Conservation, and 
     Trade Act of 1990 (Public Law 101-624; 104 Stat. 3459) is 
     amended--
       (1) in section 801 (104 Stat. 3459), by striking ``1995'' 
     and inserting ``2002'';
       (2) in section 807 (104 Stat. 3478), by striking ``1995'' 
     and inserting ``2002''; and
       (3) in section 808 (7 U.S.C. 1441 note), by striking 
     ``1995'' and inserting ``2002''.

     SEC. 2302. NATIONAL POUNDAGE QUOTAS AND ACREAGE ALLOTMENTS.

       (a) Establishment.--Subsection (a)(1) of section 358-1 of 
     the Agricultural Adjustment Act of 1938 (7 U.S.C. 1358-1) is 
     amended to read as follows:
       ``(1) Establishment.--The national poundage quota for 
     peanuts for each of the 1991 through 2002 marketing years 
     shall be established by the Secretary at a level that is 
     equal to the quantity of peanuts (in tons) that the Secretary 
     estimates will be devoted in each such marketing year to 
     domestic edible and related uses. Beginning with the 1996 
     marketing year, the Secretary shall exclude seed uses from 
     the estimate of domestic edible and related uses, but shall 
     include the estimated quantity of peanuts and peanut products 
     to be imported into the United States for the marketing year 
     for which the quota is being established.''.
       (b) Exclusions From Farm Poundage Quota.--Subsection (b) of 
     such section is amended--
       (1) in paragraph (1)(B), by striking clauses (i) and (ii) 
     and inserting the following new clauses:
       ``(i) through the 1995 marketing year, any increases for 
     undermarketings from previous years; or
       ``(ii) through the 2002 marketing year, any increases 
     resulting from the allocation of quotas voluntarily released 
     for 1 year under paragraph (7).''; and
       (2) in paragraph (3)(B), by striking clauses (i) and (ii) 
     and inserting the following new clauses:
       ``(i) through the 1995 marketing year, any increases for 
     undermarketings of quota peanuts from previous years; or
       ``(ii) through the 2002 marketing year, any increase 
     resulting from the allocation of quotas voluntarily released 
     for 1 year under paragraph (7).''.
       (c) Temporary Quota Allocation.--Subsection (b)(2) of such 
     section is amended--
       (1) in subparagraph (A), by striking ``subparagraph (B) and 
     subject to''; and
       (2) by striking subparagraph (B) and inserting the 
     following new subparagraph:
       ``(B) Temporary quota allocation.--
       ``(i) Allocation related to seed peanuts.--Temporary 
     allocation of quota pounds for the marketing year only in 
     which the crop is planted shall be made to producers for each 
     of the 1996 through 2002 marketing years as provided in this 
     subparagraph. The temporary quota allocation shall be equal 
     to the pounds of seed peanuts planted on the farm, as may be 
     adjusted under regulations prescribed by the Secretary. The 
     temporary allocation of quota pounds under this paragraph 
     shall be in addition to the farm poundage quota otherwise 
     established under this subsection and shall be credited for 
     the applicable marketing year only, in total to the producer 
     of the peanuts on the farm in a manner prescribed by the 
     Secretary.
       ``(ii) Condition on allocation.--The allocation of quota 
     pounds to producers under this subparagraph shall be 
     performed in such a manner so that such allocation will not 
     result in a net decrease in the farm poundage quota for a 
     farm in excess of 3 percent, after temporary seed quota is 
     added, from the basic farm quota in 1996. Such decrease shall 
     occur one time only and shall be applicable to the 1996 
     marketing year only.
       ``(iii) Term of provision.--Application of this 
     subparagraph may continue so long as doing so does not result 
     in increased cost to the Commodity Credit Corporation by 
     displacement of quota peanuts by additional peanuts in the 
     domestic market, increased losses in the Association loan 
     pools, or other such increases in cost.
       ``(iv) Effect of other requirements.--Nothing in this 
     section shall alter or change in any way the requirements 
     regarding the use of quota and additional peanuts established 
     by section 359a(b) of the Agricultural Act of 1949 (7 U.S.C. 
     1359a(b)), as added by section 804 of the Food, Agriculture, 
     Conservation, and Trade Act of 1990.''.
       (d) Quota Considered Produced.--Subsection (b)(4) of such 
     section is amended to read as follows:
       ``(4) Quota considered produced.--
       ``(A) Natural disaster.--For purposes of this subsection, 
     the farm poundage quota shall be considered produced on a 
     farm if the farm poundage quota was not produced on the farm 
     because of drought, flood, or any other natural disaster, or 
     any other condition beyond the control of the producer, as 
     determined by the Secretary.
       ``(B) Lease or release of quota.--Such farm poundage quota 
     shall also be considered produced on a farm if the farm 
     poundage quota was either leased to another owner or operator 
     of a farm within the same county for transfer to such farm 
     for only 1 of the 3 marketing years immediately preceding the 
     marketing year for which the determination is being made or 
     the farm poundage quota was released voluntarily under 
     paragraph (7) for only 1 of the 3 marketing years immediately 
     preceding the marketing year for which the determination is 
     being made. The farm poundage quota leased or released under 
     this subparagraph shall be considered produced for only 1 of 
     the 3 marketing years immediately preceding the marketing 
     year for which the determination is being made. The farm 
     shall not receive considered produced credit for more than 1 
     marketing year 

[[Page H11232]]

     out of the 3 immediately preceding marketing years under the 
     options in this subparagraph.''.
       (e) Allocation of Quotas Reduced or Released to Farms 
     Without Quotas.--Subsection (b)(6) of such section is amended 
     to read as follows:
       ``(6) Allocation of quotas reduced or released.--
       ``(A) In general.--The total quantity of the farm poundage 
     quotas reduced or voluntarily released from farms in a State 
     for any marketing year under paragraphs 3 and (5) shall be 
     allocated under subparagraph (B), as the Secretary may by 
     regulation prescribe, to other farms in the State on which 
     peanuts were produced in at least 2 of the 3 crop years 
     immediately preceding the year for which the allocation is 
     being made.
       ``(B) Set-aside for farms with no quota.--The total amount 
     of farm poundage quota to be allocated in the State under 
     subparagraph (A) shall be allocated to farms in the State for 
     which no farm poundage quota was established for the 
     immediately preceding year's crop. The allocation to any such 
     farm shall not exceed the average farm production of peanuts 
     for the 3 immediately preceding years during which peanuts 
     were produced on the farm. Any farm quota pounds remaining 
     after allocation to farms under this subparagraph shall be 
     allocated to farms in the State on which poundage quotas were 
     established for the immediately preceding crop year.''.
       (f) Transfer of Additional Peanuts.--Subsection (b) of such 
     section is amended by striking paragraphs (8) and (9) and 
     inserting the following new paragraph:
       ``(8) Transfer of additional peanuts.--Additional peanuts 
     on a farm from which the quota poundage was not harvested and 
     marketed may be transferred to the quota loan pool for 
     pricing purposes on such basis as the Secretary shall by 
     regulation provide, except that the poundage of such peanuts 
     so transferred shall not exceed the difference in the total 
     peanuts meeting quality requirements for domestic edible use 
     as determined by the Secretary marketed from the farm and the 
     total farm poundage quota, excluding quota pounds transferred 
     to the farm in the fall. Peanuts transferred under this 
     paragraph shall be supported at a total of not less than 70 
     percent of the quota support rate for the marketing years in 
     which such transfers occur and such transfers for a farm 
     shall not exceed 25 percent of the total farm quota pounds, 
     excluding pounds transferred in the fall.''.

     SEC. 2303. SALE, LEASE, OR TRANSFER OF FARM POUNDAGE QUOTA.

       (a) Transfers Authorized Under Certain Circumstances.--
     Subsection (a) of section 358b of the Agricultural Adjustment 
     Act of 1938 (7 U.S.C. 1358b) is amended--
       (1) in paragraph (1)--
       (A) by striking ``(including any applicable under 
     marketings)'' both places it appears;
       (B) in subparagraph (A), by striking ``undermarketings 
     and''; and
       (C) by adding at the end the following new sentences: ``In 
     the case of a fall transfer only, poundage quota from a farm 
     may be leased to another owner or operator of a farm within 
     the same county or to another owner or operator of a farm in 
     any other county within the State. Fall transfers of quota 
     pounds shall not affect the farm quota history for the 
     transferring or receiving farm and shall not result in 
     reducing the farm poundage quota on the transferring farm.'';
       (2) by striking paragraph (2) and inserting the following 
     new paragraph:
       ``(2) Transfers to other self-owned farms.--The owner or 
     operator of a farm may transfer all or any part of the farm 
     poundage quota for the farm to any other farm owned or 
     controlled by the owner or operator that is in the same 
     county or any other county within the same State and that had 
     a farm poundage quota for the preceding crop year, if both 
     the transferring and the receiving farms were under the 
     control of the owner or operator for at least 3 crop years 
     prior to the crop year in which the farm poundage quota is 
     transferred. Any farm poundage quota transferred under this 
     paragraph shall not result in any reduction in the farm 
     poundage quota for the transferring farm if sufficient 
     acreage is planted on the receiving farm to produce the quota 
     pounds transferred.'';
       (3) in paragraph (3), by striking ``(including any 
     applicable undermarketings)''; and
       (4) by adding at the end the following new paragraph:
       ``(4) Transfers by sale in states having quotas of 10,000 
     tons or more.--Subject to such terms and conditions as the 
     Secretary may prescribe, the owner, or operator with 
     permission of the owner, of any farm for which a farm quota 
     has been established and which is located in a State having a 
     quota of 10,000 tons or more may sell poundage quota to any 
     other eligible owner or operator of a farm within the same 
     State. The Secretary shall ensure that no more than 15 
     percent of the total poundage quota within a county as of 
     January 1, 1996, is sold and transferred in 1996 under this 
     paragraph and that no more than 5 percent of the quota pounds 
     remaining in a county as of January 1 in each of the next 4 
     years are sold and transferred in any such year. 
     Notwithstanding any other provision of this paragraph, no 
     more than 30 percent of the total poundage quota within a 
     county may be sold and transferred. Quota pounds sold and 
     transferred under this paragraph may not be leased or sold 
     from the farm to which transferred to another farm owner or 
     operator within the same State for a period of 5 years 
     following the original transfer to the farm.''.
       (b) Conditions.--Subsection (b) of such section is 
     amended--
       (1) in paragraph (1), by inserting before the period at the 
     end the following: ``, except that no such agreement shall be 
     necessary in the event of fall lease, if the operator had the 
     lienholder's agreement for a previous spring cash lease''; 
     and
       (2) by striking paragraph (3) and inserting the following 
     new paragraph:
       ``(3) Record.--No transfer of the farm poundage quota shall 
     be effective until a record thereof is filed with the county 
     committees of the counties from which transferred and to 
     which transferred and the committees determine that the 
     transfer complies with this section.''.

     SEC. 2304. PENALTY FOR REENTRY OF EXPORTED PEANUT PRODUCTS.

       Section 358e(d)(6)(A) of the Agricultural Adjustment Act of 
     1938 (7 U.S.C. 1359a(d)(6)(A)) is amended by inserting ``or 
     peanut products manufactured from additional peanuts'' after 
     ``any additional peanuts''.

     SEC. 2305. PRICE SUPPORT PROGRAM FOR PEANUTS.

       (a) Support Rates.--Subsection (a)(2) Section 108B of the 
     Agricultural Act of 1949 (7 U.S.C. 1445c-3) is amended--
       (1) by striking ``any increase'' and inserting ``any 
     increase or decrease''; and
       (2) by striking ``, except that'' and all that follows 
     through ``preceding crop'' and inserting the following: ``In 
     no event shall the national average quota support rate be 
     increased by more than 5 percent of the national average 
     quota support rate for the preceding crop. In no event shall 
     the national average quota support rate be decreased by more 
     than 5 percent of the national average quota support rate for 
     the preceding crop.''.
       (b) Special Rule Regarding New Mexico Pools.--Subsection 
     (c)(2)(A) of such section is amended by inserting after the 
     first sentence the following new sentence: ``Peanuts 
     physically produced outside the State of New Mexico shall not 
     be eligible for entry into or participation in the New Mexico 
     pools even though the farm on which the peanuts are produced 
     is considered to be a New Mexican farm for administrative 
     purposes.''.
       (c) Losses in Area Quota Pools.--Subsection (d)(2) of such 
     section is amended--
       (1) by redesignating subparagraph (B) as subparagraph (D);
       (2) by inserting after subparagraph (A) the following new 
     paragraphs:
       ``(B) Reduction of gains of other producers in same pool.--
     If use of the authority provided in subparagraph (A) is not 
     sufficient to cover losses in an area quota pool, the 
     additional losses shall be offset by reducing the gain of any 
     producer in such pool by the amount of pool gains attributed 
     to the same producer from the sale of additional peanuts for 
     domestic and export edible use.
       ``(C) Use of marketing assessments.--If use of the 
     authority provided in subparagraphs (A) and (B) is not 
     sufficient to cover losses in area quota pools, the Secretary 
     shall use funds collected under subsection (g) to offset such 
     losses. At the end of each year, the Secretary shall deposit 
     in the Treasury those funds collected under subsection (g) 
     that the Secretary determines are not required to cover 
     losses in area quota pools for that year.''; and
       (3) in subparagraph (D), as redesignated by paragraph (1), 
     by adding at the end the following new sentence: ``This 
     subparagraph shall apply only to the extent that use of the 
     authority provided in subparagraphs (A), (B), and (C) is not 
     sufficient to cover losses in an area quota pool.''.
       (d) Compliance With Quality Standards.--Subsection (f)(2) 
     of such section is amended to read as follows:
       ``(2) Exports and other peanuts.--The Secretary shall 
     require that all peanuts in the domestic market, including 
     peanuts imported into the United States, meet all United 
     States quality standards under Marketing Agreement No. 146 
     and that importers of such peanuts fully comply with 
     inspection, handling, storage, and processing requirements 
     implemented under Marketing Agreement No. 146. The Secretary 
     shall ensure that peanuts produced for the export market meet 
     quality, inspection, handling, storage, and processing 
     requirements under Marketing Agreement No. 146.''.
       (e) Assessment Rates.--Subsection (g) of such section is 
     amended--
       (1) in paragraph (1), by striking ``1.15 percent'' the 
     first place it appears and all that follows through the 
     period at the end of such paragraph and inserting ``and 1.2 
     percent for the 1996 through 2002 crops, of the applicable 
     support rate under this subsection.'';
       (2) in paragraph (2)(A)(i)--
       (A) by inserting ``and'' at the end of subclause (II); and
       (B) by striking subclauses (III) and (IV) and inserting the 
     following new subclause:

       ``(III) in the case of each of the 1996 through 2002 crops, 
     .6 percent of the applicable national average support 
     rate;''; and

       (3) in paragraph (2)(A)(ii)--
       (A) by striking ``and'' at the end of subclause (I);
       (B) in subclause (II), by striking ``through 1997 crops'' 
     and inserting ``and 1995 crops''; and
       (C) by adding at the end the following new subclause:

[[Page H11233]]


       ``(III) in the case of each of the 1996 through 2002 crops, 
     .6 percent of the applicable national average support rate; 
     and''.

       (f) Assessment on Imports.--Subsection (g) of such section 
     is further amended--
       (1) by redesignating paragraphs (3), (4), (5), and (6) as 
     paragraphs (4), (5), (6), and (7), respectively; and
       (2) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) Imports.--Each importer of peanuts produced outside 
     of the United States and imported into the United States 
     after the date of the enactment of this paragraph shall remit 
     to the Commodity Credit Corporation a nonrefundable marketing 
     assessment in an amount equal to the product obtained by 
     multiplying the number of pounds of peanuts imported by the 
     importer by 1.2 percent of the national average support rate 
     for additional peanuts.''.

     SEC. 2306. REFERENDUM REGARDING POUNDAGE QUOTAS.

       Section 358-1(d) of the Agricultural Adjustment Act of 1938 
     (7 U.S.C. 13581(d)) is amended by striking paragraph (1) and 
     inserting the following new paragraph:
       ``(1) In general.--Each calendar year, the Secretary shall 
     conduct a referendum of producers engaged in the production 
     of quota peanuts in the calendar year in which the referendum 
     is held to determine whether the producers are in favor of or 
     opposed to poundage quotas with respect to the crops of 
     peanuts produced in the seven calendar years immediately 
     following the year in which the referendum is held, except 
     that, if as many as two-thirds of the producers voting in any 
     referendum vote in favor of poundage quotas, no referendum 
     shall be held with respect to quotas for the next six years 
     of the period. In the case of the referendum required in 
     1995, the Secretary shall conduct the referendum as soon as 
     practicable after the date of the enactment of the 
     Agricultural Reconciliation Act of 1995. In the case of any 
     referendum required in calendar years 1996 through 2002, the 
     Secretary shall conduct the referendum not later than 
     December 15 of the calendar year in which the referendum is 
     required.''.

     SEC. 2307. REGULATIONS.

       The Secretary of Agriculture shall issue such regulations 
     as are necessary to carry out this title and the amendments 
     made by this title. In issuing the regulations, the 
     Secretary--
       (1) is encouraged to comply with subchapter II of chapter 5 
     of title 5, United States Code;
       (2) shall provide public notice through the Federal 
     Register of any such proposed regulations; and
       (3) shall allow adequate time for written public comment 
     prior to the formulation and issuance of any final 
     regulations.
                          Subtitle D--Tobacco

     SEC. 2401. ELIMINATION OF FEDERAL BUDGETARY OUTLAYS FOR 
                   TOBACCO PROGRAMS.

       Section 106(g)(1) of the Agricultural Act of 1949 (7 U.S.C. 
     1445(g)(1)) is amended--
       (1) by striking ``1998'' and inserting ``2002''; and
       (2) by inserting after ``equal to'' the following: ``a pro 
     rata share of the total amount of the costs of other 
     Department of Agriculture programs related to tobacco 
     production or processing that are not required to be covered 
     by user fees or by contributions or assessments under section 
     106A(d)(1) or 106B(d)(1), but in no event less than''.

     SEC. 2402. ESTABLISHMENT OF FARM YIELD FOR FLUE-CURED TOBACCO 
                   BASED ON INDIVIDUAL FARM PRODUCTION HISTORY.

       (a) Method of Determining Farm Acreage Allotments.--
     Subsection (a) of section 317 of the Agricultural Adjustment 
     Act of 1938 (7 U.S.C. 1314c) is amended by striking 
     paragraphs (2) through (8) and inserting the following new 
     paragraphs:
       ``(2) Farm acreage allotments.--The term `farm acreage 
     allotment' for a tobacco farm, other than a new tobacco farm, 
     means the acreage allotment determined by dividing the farm 
     marketing quota by the farm yield.
       ``(3) Farm yield.--The term `farm yield' means the yield 
     per acre for a farm determined according to regulations 
     issued by the Secretary and which would be expected to result 
     in a quality of tobacco acceptable to the tobacco trade.
       ``(4) Farm marketing quota.--
       ``(A) In general.--The term `farm marketing quota' for a 
     farm for a marketing year means a number that is equal to the 
     number of pounds of tobacco determined by multiplying--
       ``(i) the farm marketing quota for the farm for the 
     previous marketing year (prior to any adjustment for 
     undermarketing or over-marketing); by
       ``(ii) the national factor.
       ``(B) Adjustment.--The farm marketing quota determined 
     under subparagraph (A) for a marketing year shall be 
     increased for under- marketing or decreased for overmarketing 
     by the number of pounds by which marketings of tobacco from 
     the farm during the immediate preceding marketing year (if 
     marketing quotas were in effect for that year under the 
     program established by this section) is less than or exceeds 
     the farm marketing quota for such year. Notwithstanding the 
     preceding sentence, the farm marketing quota for a marketing 
     year shall not be increased under this subparagraph for 
     undermarketing by an amount in excess of the farm marketing 
     quota determined for the farm for the immediately preceding 
     year prior to any increase for undermarketing or decrease for 
     overmarketing. If due to excess marketing in the preceding 
     marketing year, the farm marketing quota for the marketing 
     year is reduced to zero pounds without reflecting the entire 
     reduction required, the additional reduction shall be made 
     for the subsequent marketing year or years.
       ``(5) National factor.--The term `national factor' for a 
     marketing year means a number obtained by dividing--
       ``(A) the national marketing quota (less the reserve 
     provided for under subsection (e)); by
       ``(B) the sum of the farm marketing quotas (prior to any 
     adjustments for undermarketing or overmarketing) for the 
     immediate preceding marketing year for all farms for which 
     marketing quotas for the kind of tobacco involved will be 
     determined for such succeeding marketing year.''.
       (b) Conforming Amendments.--Such section is further 
     amended--
       (1) in the first sentence of subsection (b), by striking 
     ``and the national acreage allotment and national average 
     yield goal for the 1965 crop of Flue-cured tobacco,'';
       (2) in the first sentence of subsection (c), by striking 
     ``and at the same time announce the national acreage 
     allotment and national average yield goal'';
       (3) in subsection (d)--
       (A) in the sixth sentence, by striking ``, national acreage 
     allotment, and national average yield goal'';
       (B) in the eighth sentence, by striking ``, national 
     acreage allotment and national average yield goal''; and
       (C) in the ninth sentence, by striking ``, national acreage 
     allotment, and national average goal are'' and inserting 
     ``is'';
       (4) in subsection (e)--
       (A) in the first sentence, by striking ``No farm acreage 
     allotment or farm yield shall be established'' and inserting 
     ``A farm marketing quota and farm yield shall not be 
     established'';
       (B) in the second sentence, by striking ``acreage 
     allotment'' both places it appears and inserting ``marketing 
     quota'';
       (C) in the second sentence, by striking ``acreage 
     allotments'' both places it appears and inserting ``marketing 
     quotas''; and
       (D) in the last sentence, by striking ``acreage allotment'' 
     and inserting ``marketing quota''; and
       (5) in subsection (g)--
       (A) in paragraph (1), by striking ``paragraph (a)(8)'' and 
     inserting ``subsection (a)(4)''; and
       (B) in paragraph (3), by striking ``subsection (a)(8)'' and 
     inserting ``subsection (a)(4)''.
       (c) Farm Marketing Quota Reductions.--Subsection (f) of 
     such section is amended to read as follows:
       ``(f) Causes for Farm Marketing Quota Reduction.--(1) When 
     an acreage-poundage program is in effect for any kind of 
     tobacco under this section, the farm marketing quota next 
     established for a farm shall be reduced by the amount of such 
     kind of tobacco produced on the farm--
       ``(A) which was marketed as having been produced on a 
     different farm;
       ``(B) for which proof of disposition is not furnished as 
     required by the Secretary;
       ``(C) on acreage equal to the difference between the 
     acreage reported by the farm operator or a duly authorized 
     representative and the determined acreage for the farm; and
       ``(D) as to which any producer on the farm filed, or aids, 
     or acquiesces, in the filing of any false report with respect 
     to the production or marketing of tobacco.
       ``(2) If the Secretary, through the local committee, find 
     that no person connected with a farm caused, aided, or 
     acquiesced in any irregularity described in paragraph (1), 
     the next established farm marketing quota shall not be 
     reduced under this subsection.
       ``(3) The reduction required under this subsection shall be 
     in addition to any other adjustments made pursuant to this 
     section.
       ``(4) In establishing farm marketing quotas for other farms 
     owned by the owner displaced by acquisition of the owner's 
     land by any agency, as provided in section 378 of this Act, 
     increases or decreases in such farm marketing quotas as 
     provided in this section shall be made on account of 
     marketings below or in excess of the farm marketing quotas 
     for the farm acquired by the agency.
       ``(5) Acreage allotments and farm marketing quotas 
     determined under this section may (except in the case of 
     kinds of tobacco not subject to section 316) be leased and 
     sold under the terms and conditions in section 316 of this 
     Act, except that any credit for undermarketing or charge for 
     overmarketing shall be attributed to the farm to which 
     transferred.''.
       (d) Effect of Amendments on Current Tobacco Crop.--Section 
     317 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
     1314c), as in effect on the day before the date of the 
     enactment of this Act, shall continue to apply with respect 
     to the 1995 crop of Flue-cured tobacco.

     SEC. 2403. REMOVAL OF FARM RECONSTITUTION EXCEPTION FOR 
                   BURLEY TOBACCO.

       Section 379(a)(6) of the Agricultural Adjustment Act of 
     1938 (7 U.S.C. 1379(a)(6)) is amended by striking ``, but 
     this clause (6) shall not be applicable in the case of burley 
     tobacco''.

     SEC. 2404. REDUCTION IN PERCENTAGE THRESHOLD FOR TRANSFER OF 
                   FLUE-CURED TOBACCO QUOTA IN CASES OF DISASTER.

       The second subsection (h) in section 316 of the 
     Agricultural Adjustment Act of 1938 (7 

[[Page H11234]]

     U.S.C. 1314b) is amended by striking ``90 percent'' in 
     paragraph (1)(A) and inserting ``80 percent''.

     SEC. 2405. EXPANSION OF TYPES OF TOBACCO SUBJECT TO NO NET 
                   COST ASSESSMENT.

       (a) No Net Cost Tobacco Fund.--Section 106A(d)(1)(A) of the 
     Agricultural Act of 1949 (7 U.S.C. 1445-1(d)(1)(A)) is 
     amended--
       (1) in clause (ii), by inserting after ``Burley quota 
     tobacco'' the following: ``and cigar-type quota tobacco''; 
     and
       (2) in clause (iii)--
       (A) in the matter preceding the subclauses, by striking 
     ``Flue-cured or Burley tobacco'' and inserting ``each kind of 
     tobacco for which price support is made available under this 
     Act, and each kind of like tobacco,''; and
       (B) by striking subclause (II) and inserting the following 
     new subclause:
       ``(II) the sum of the amount of the per pound producer 
     contribution and purchaser assessment (if any) for such kind 
     of tobacco payable under clauses (i) and (ii); and''.
       (b) No Net Cost Tobacco Account.--Section 106B(d)(1) of the 
     Agricultural Act of 1949 (7 U.S.C. 1445-2(d)(1)) is amended--
       (1) in subparagraph (B), by inserting after ``Burley quota 
     tobacco'' the following: ``and cigar-type quota tobacco''; 
     and
       (2) in subparagraph (C), by striking ``Flue-cured and 
     Burley tobacco'' and inserting ``each kind of tobacco for 
     which price support is made available under this Act, and 
     each kind of like tobacco,''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect 60 days after the date of the enactment of 
     this Act.

     SEC. 2406. REPEAL OF REPORTING REQUIREMENTS RELATING TO 
                   EXPORT OF TOBACCO.

       Section 214 of the Tobacco Adjustment Act of 1983 (7 U.S.C. 
     509) is repealed.

     SEC. 2407. REPEAL OF LIMITATION ON REDUCING NATIONAL 
                   MARKETING QUOTA FOR FLUE-CURED AND BURLEY 
                   TOBACCO.

       (a) Flue-cured Tobacco.--Section 317(a)(1) of the 
     Agricultural Adjustment Act of 1938 (7 U.S.C. 1314c(a)(1)) is 
     amended by striking subparagraph (C).
       (b) Burley Tobacco.--Section 319(c)(3) of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1314e(c)(3)) is amended by 
     striking subparagraph (C).

     SEC. 2408. APPLICATION OF CIVIL PENALTIES UNDER TOBACCO 
                   INSPECTION ACT.

       Section 12 of the Tobacco Inspection Act (7 U.S.C. 511k) is 
     amended--
       (1) by inserting ``(a) Fine for Viola- tions.--'' after 
     ``That any person''; and
       (2) by adding at the end the following new subsections:
       ``(b) Jurisdiction.--The district courts of the United 
     States are vested with jurisdiction specifically to enforce, 
     and to prevent and restrain any person from violating, any 
     rule or regulation issued under this Act.
       ``(c) Referral to Attorney General.--A civil action 
     authorized to be commenced under this section shall be 
     referred to the Attorney General for appropriate action, 
     except that the Secretary shall not be required to refer to 
     the Attorney General a violation of this Act, if the 
     Secretary believes that the administration and enforcement of 
     this Act would be adequately served by providing a suitable 
     written notice or warning to the person who committed such 
     violation or administrative action.
       ``(d) Civil Penalties and Orders.--
       ``(1) Civil penalties.--Any person who willfully violates 
     any provision of this Act or any of the regulations issued by 
     the Secretary under this Act may be assessed a civil penalty 
     by the Secretary of not less than $500 or more than $5,000 
     for each such violation. Each violation shall be a separate 
     offense.
       ``(2) Cease and desist orders.--In addition to, or in lieu 
     of, a civil penalty under paragraph (1), the Secretary may 
     issue an order requiring a person to cease and desist from 
     continuing any such violation.
       ``(3) Notice and hearing.--No penalty shall be assessed or 
     cease-and-desist order issued by the Secretary under this 
     subsection unless the person against whom the penalty is 
     assessed or the order is issued is given notice and 
     opportunity for a hearing before the Secretary with respect 
     to such violation.
       ``(4) Finality.--The order of the Secretary assessing a 
     penalty or imposing a cease-and-desist order under this 
     subsection shall be final and conclusive unless the affected 
     person files an appeal of the Secretary's order with the 
     appropriate district court of the United States, in 
     accordance with subsection (e).
       ``(e) Review by District Court.--
       ``(1) Commencement of action.--Any person who has been 
     determined to be in violation of this Act, or against whom a 
     civil penalty has been assessed or a cease-and-desist order 
     issued under subsection (d), may obtain review of the penalty 
     or order--
       ``(A) by filing, within the 30-day period beginning on the 
     date the penalty is assessed or order issued, a notice of 
     appeal in--
       ``(i) the district court of the United States for the 
     district in which the person resides or conducts business; or
       ``(ii) the United States District Court for the District of 
     Columbia; and
       ``(B) by sending, within the same period, a copy of such 
     notice by certified mail to the Secretary.
       ``(2) Record.--The Secretary shall file promptly in the 
     appropriate court referred to in paragraph (1), a certified 
     copy of the record on which the Secretary has determined that 
     the person had committed a violation.
       ``(3) Standard of review.--A finding of the Secretary under 
     this section shall be set aside only if such finding is found 
     to be unsupported by substantial evidence.
       ``(f) Failure To Obey Orders.--Any person who fails to obey 
     a cease-and-desist order under this section after such order 
     has become final and unappealable, or after the appropriate 
     United States district court has entered a final judgment in 
     favor of the Secretary, shall be subject to a civil penalty 
     assessed by the Secretary, after opportunity for hearing and 
     for a judicial review under the procedures specified in 
     subsection (e), of not more than $500 for each offense. Each 
     day during which such failure continues shall be considered 
     as a separate violation of such order.
       ``(g) Failure To Pay Penalties.--If any person fails to pay 
     an assessment of a civil penalty under this section after it 
     has become a final and unappealable order, or after the 
     appropriate United States district court has entered final 
     judgment in favor of the Secretary, the Secretary shall refer 
     the matter to the Attorney General for recovery of the amount 
     assessed in the district court of the United States for the 
     district in which the person resides or conducts business. In 
     such action, the validity and appropriateness of the final 
     order imposing the civil penalty shall not be subject to 
     review.
       ``(h) Additional Remedies.--The remedies provided in this 
     section shall be in addition to, and not exclusive of, other 
     remedies that may be available.''.

     SEC. 2409. TRANSFERS OF QUOTA OR ALLOTMENT ACROSS COUNTY 
                   LINES IN A STATE.

       (a) Transfers Allowed by Referendum.--
       (1) Flue-cured tobacco.--Section 316(g) of the Agricultural 
     Adjustment Act of 1938 (7 U.S.C. 1314b(g)) is amended by 
     adding at the end the following:
       ``(3) Notwithstanding paragraph (1), the Secretary may 
     permit the sale of a Flue-cured tobacco allotment or quota 
     from one farm in a State to any other farm in the State if a 
     majority of active Flue-cured tobacco producers within the 
     State approve of such sales by a state-wide referendum to be 
     conducted by the Secretary.''.
       (2) Other tobacco.--Section 318(b) of such Act (7 U.S.C. 
     1314d(b)) is amended in the proviso by inserting after ``same 
     State'' the following: ``and, in the case of other kinds of 
     tobacco, any such transfer may be made to a farm in another 
     county in the same State if transfers of such type are 
     approved by a majority of the active producers of that kind 
     of tobacco in the State who vote in a referendum held on the 
     subject''.
       (3) Burley tobacco.--Section 319(l) of such Act (7 U.S.C. 
     1314e(l)) is amended by striking the last sentence.
       (b) Same Grower in Contiguous Counties.--Section 379(b) of 
     such Act (7 U.S.C. 1379(b)) is amended by striking ``Burley 
     tobacco poundage quota'' and inserting ``tobacco quota or 
     allotment''.

     SEC. 2410. CALCULATION OF NATIONAL MARKETING QUOTA.

       (a) Flue-Cured Tobacco.--Section 317(a)(1)(B)(ii) of the 
     Agricultural Adjustment Act of 1938 (7 U.S.C. 
     1314c(a)(1)(B)(ii)) is amended by inserting before the 
     semicolon the following: ``, but excluding any exports of 
     unmanufactured tobacco counted under clause (i)''.
       (b) Burley Tobacco.--Section 319(c)(3)(A)(ii) of such Act 
     (7 U.S.C. 1314e(l)) is amended by inserting before the 
     semicolon the following: ``, but excluding any exports of 
     unmanufactured tobacco counted under clause (i)''.
       (c) Application of Amendments.--The amendments made by this 
     section shall apply with respect to the 1996 and subsequent 
     crops of Flue-cured and Burley tobacco.

     SEC. 2411. CLARIFICATION OF AUTHORITY TO ACCESS CIVIL MONEY 
                   PENALTIES.

       Section 314 of the Agricultural Adjustment Act of 1938 (7 
     U.S.C. 1314) is amended--
       (1) by redesignating subsection (c) as subsection (d); and
       (2) by inserting after subsection (b) the following new 
     subsection:
       ``(c) The failure by a person to comply with regulations 
     issued by the Secretary governing the marketing, disposition, 
     or handling of tobacco under this part shall subject the 
     person to a penalty at the rate provided in subsection 
     (a).''.

     SEC. 2412. LEASE AND TRANSFER OF FARM MARKETING QUOTAS FOR 
                   BURLEY TOBACCO.

       Section 319(g) of the Agricultural Adjustment Act of 1938 
     (7 U.S.C. 1314e(g)) is amended--
       (1) in paragraph (1), by striking ``July 1'' each place it 
     appears and inserting ``September 1''; and
       (2) in paragraph (3)--
       (A) by striking ``within the three immediately preceding 
     crop years'' in the first sentence and inserting ``during the 
     current crop year or either of the two immediately preceding 
     crop years''; and
       (B) by striking ``July 1'' in the second sentence and 
     inserting ``September 1''.

     SEC. 2413. LIMITATION ON TRANSFER OF ACREAGE ALLOTMENTS OF 
                   OTHER TOBACCO.

       Section 318(g) of the Agricultural Adjustment Act of 1938 
     (7 U.S.C. 1314d(g)) is amended by striking ``ten acres'' and 
     inserting ``20 acres''.

[[Page H11235]]


     SEC. 2414. GOOD FAITH RELIANCE ON ACTIONS OR ADVICE OF 
                   DEPARTMENT REPRESENTATIVES.

       The Agricultural Adjustment Act of 1938 is amended by 
     inserting after section 314A (7 U.S.C. 1314-1) the following 
     new section:

     ``SEC. 315. GOOD FAITH RELIANCE ON ACTIONS OR ADVICE OF 
                   DEPARTMENT REPRESENTATIVES.

       ``Notwithstanding any other provision of law, the 
     performance rendered in good faith by a person in good faith 
     in reliance upon action or advice of an authorized 
     representative of the Secretary may be accepted as meeting 
     the requirements of this part.''.

     SEC. 2415. UNIFORM FORFEITURE DATES FOR FLUE-CURED AND BURLEY 
                   TOBACCO.

       (a) Sale or Forfeiture of Flue-Cured Tobacco Allotment or 
     Quota.--The first subsection (h) of section 316 of the 
     Agricultural Adjustment Act of 1938 (7 U.S.C. 1314b) is 
     amended--
       (1) in paragraph (1), by striking ``before the expiration 
     of the eighteen month period beginning on July 1 of the year 
     in which such crop is planted'' and inserting ``before 
     February 15 of the year after the end of the marketing year 
     for the planted crop''; and
       (2) in paragraph (2), by striking ``July 1'' and inserting 
     ``February 15''.
       (b) Mandatory Sale of Flue-Cured Tobacco Allotment or 
     Quota.--Section 316A of such Act (7 U.S.C. 1314b-1) is 
     amended--
       (1) in subsection (a), by striking ``December 1 of the 
     year'' and inserting ``February 15 of the year''; and
       (2) in subsection (b), by striking ``July 1'' and inserting 
     ``February 15''.
       (c) Mandatory Sale of Burley Tobacco Allotment or Quota.--
     Section 316B of such Act (7 U.S.C. 1314b-2) is amended--
       (1) in subsection (a), by striking ``December 1 of the 
     year'' and inserting ``February 15 of the year''; and
       (2) in subsection (c)(1), by striking ``before the 
     expiration of the eighteen month period beginning on July 1 
     of the year in which such crop is planted'' and inserting 
     ``before February 15 of the year after the end of the 
     marketing year for the planted crop''.

     SEC. 2416. SALE OF BURLEY AND FLUE-CURED TOBACCO MARKETING 
                   QUOTAS FOR A FARM BY RECENT PURCHASERS.

       The Agricultural Adjustment Act of 1938 is amended by 
     inserting after section 316B (7 U.S.C. 1314b-2) the following 
     new section:

     ``SEC. 316C. AUTHORITY FOR RECENT PURCHASER OF A FARM TO SELL 
                   BURLEY TOBACCO OR FLUE-CURED TOBACCO MARKETING 
                   QUOTAS FOR THE FARM.

       ``A new owner of a farm that has purchase history of Burley 
     tobacco or Flue-cured tobacco may sell the purchased tobacco 
     quota notwithstanding any limitations on such a sale 
     contained in this part if the sale is completed not later 
     than one year after the purchase date of the farm.''.
                    Subtitle E--Planting Flexibility

     SEC. 2501. DEFINITIONS.

       Section 502 of the Agricultural Act of 1949 (7 U.S.C. 1462) 
     is amended by adding at the end the following:
       ``(4) Acreage conservation reserve, reduced acreage.--The 
     terms `acreage conservation reserve' and `reduced acreage' 
     mean the number of acres on a farm to be devoted to 
     conservation uses on the farm, which must be protected from 
     weeds and erosion. Such number shall be determined by 
     multiplying the specific crop acreage base for a crop on the 
     farm by the percentage acreage reduction required by the 
     Secretary.
       ``(5) Permitted acreage.--The term `permitted acreage' 
     means the crop acreage base for a program crop for the farm 
     less the acreage conservation reserve. If an acreage 
     reduction program is not in effect for a program crop, for 
     purposes of administering this title, the permitted acreage 
     of such a crop on a farm shall be equal to the crop acreage 
     base for the crop for the farm.
       ``(6) Payment acreage.--The term `payment acreage' means 
     the lesser of--
       ``(A) the number of acres planted and considered planted to 
     an eligible crop, as determined in sections 503(c) and 
     504(b)(1), for harvest within the permitted acreage; or
       ``(B) 77 percent of the crop acreage base for the crop for 
     the farm less the acreage conservation reserve.
       ``(7) Resource-conserving crop.--The term `resource-
     conserving crop' means legumes, legume-grass mixtures, 
     legume-small grain mixtures, legume-grass-small grain 
     mixtures, and experimental and industrial crops, crops 
     planted for special conservation practices, biomass 
     production, intensive rotational grazing, and non-legume 
     crops, as determined by the Secretary, to satisfy program 
     objectives.
       ``(8) Resource-conserving crop rotation.--The term 
     `resource-conserving crop rotation' means a crop rotation 
     that includes at least one resource-conserving crop and that 
     reduces erosion, maintains or improves soil fertility and 
     tilth, interrupts pest cycles, or conserves water.
       ``(9) Farming operations and practices.--The term `farming 
     operations and practices' means practices which include the 
     integration of crops and crop-plant variety selection, 
     rotation practices, tillage systems, soil conserving and soil 
     building practices, nutrient management strategies, 
     biological control and integrated pest management strategies, 
     livestock production and management systems, animal waste 
     management systems, water and energy conservation measures, 
     and health and safety considerations.
       ``(10) Integrated farm management plan.--The term 
     `integrated farm management plan' means a comprehensive, 
     multiyear, site-specific plan that meets the requirements of 
     section 1451 of the Food, Agriculture, Conservation, and 
     Trade Act of 1990 (7 U.S.C. 5822).
       ``(11) Grass.--The term `grass' means any perennial grasses 
     commonly used for haying or grazing.
       ``(12) Legume.--The term `legume' means any forage legumes 
     (such as alfalfa or clover) or any legume grown for use as a 
     forage or green manure, but not including any bean crop from 
     which the seeds are harvested.
       ``(13) Small grain.--The term `small grain' does not 
     include malting barley or wheat, except for wheat 
     interplanted with other small grain crops for nonhuman 
     consumption.''.

     SEC. 2502. CROP AND TOTAL ACREAGE BASES.

       Section 503 of the Agricultural Act of 1949 (7 U.S.C. 1463) 
     is amended--
       (1) in the section heading, by inserting ``and total'' 
     after ``crop'';
       (2) at the end of subsection (a), by adding the following 
     new paragraph:
       ``(4) Total acreage base.--The total acreage base for a 
     farm shall equal the sum of the crop acreage bases 
     established for program crops on the farm that are enrolled 
     in the acreage reduction programs established by the 
     Secretary.'';
       (3) in the heading for subsection (b) by adding ``of Crop 
     Acreage Bases'' after ``Calculation'';
       (4) in subsection (b)(2)--
       (A) by striking ``(A) In general'';
       (B) by striking ``except as provided in subparagraph 
     (B),''; and
       (C) by striking subparagraph (B); and
       (5) in subsection (c)(1), by striking ``reduced acreage'' 
     and inserting ``acreage conservation reserve''.

     SEC. 2503. PLANTING FLEXIBILITY.

       (a) Specified Commodities.--Subsection (b) of section 504 
     of the Agricultural Act of 1949 (7 U.S.C. 1464) is amended--
       (1) in paragraph (1)--
       (A) by striking ``and'' at the end of subparagraph (D);
       (B) by redesignating subparagraph (E) as subparagraph (F); 
     and
       (C) by inserting the following new subparagraph after 
     subparagraph (D):
       ``(E) any cover crop (including maintenance of native 
     cover) and summer fallow which, as determined by the 
     Secretary, will protect the land from weeds and erosion; 
     and'';
       (2) by striking paragraph (2) and inserting the following 
     new paragraph:
       ``(2) Limitations on crops.--
       ``(A) In general.--For purposes of this section, the 
     Secretary may restrict the planting on a crop acreage base of 
     any crop specified in paragraph (1).
       ``(B) Effect of acreage reduction program.--If an acreage 
     reduction program is in effect for any specific program crop, 
     the Secretary may limit the plantings of the specific program 
     crop for which there is an acreage reduction program in 
     effect to no more than the sum of--
       ``(i) the permitted acreage for the specific program crop 
     for which there is an acreage reduction program in effect; 
     plus
       ``(ii) 23 percent of other crop acreage bases which are 
     included in the total acreage base for a farm.
       ``(C) Minimum planting.--The Secretary may require that, as 
     a condition for eligibility for loans, deficiency payments 
     and any other program benefits authorized by this Act, a 
     minimum percentage not to exceed 50 percent of a specific 
     permitted acreage, be planted to the specific program 
     crop.''; and
       (3) in paragraph (3) by striking ``make a determination in 
     each crop year of'' and inserting ``determine''.
       (b) Limitation on Plantings.--Subsection (c) of such 
     section is amended by striking paragraphs (1) and (2) and 
     inserting the following:
       ``The quantity of the total acreage base that may be 
     planted to program crops enrolled in an acreage reduction 
     program shall not exceed 100 percent of the total acreage 
     base, less the acreage conservation reserve for the 
     farm.''.
       (c) Plantings in Excess of Permitted Acreage.--Subsection 
     (d) of such section is amended to read as follows:
       ``(d) Plantings in Excess of Permitted Acreage.--
     Notwithstanding any other provision of this Act, except as 
     provided in section 504(b)(2)(B), producers of a program crop 
     who are participating in the acreage reduction program for 
     that crop shall be allowed to plant that program crop in a 
     quantity that exceeds the permitted acreage for that crop 
     without losing their eligibility for loans or payments with 
     respect to that crop if--
       ``(1) the acreage planted to that program crop on the farm 
     in excess of the permitted acreage for that crop does not 
     exceed the permitted acreage of other program crops on the 
     farm; and
       ``(2) the producer agrees to a reduction in permitted 
     acreage for the other program crops produced on the farm by a 
     quantity equal to the overplanting.''.
       (d) Loan Eligibility.--Subsection (e) of such section is 
     amended to read as follows:
       ``(e) Loan Eligibility.--Producers of a specific program 
     crop (referred to in this subsection as the `original program 
     crop') who plant for harvest on the crop acreage base 
     established for such original program crop another program 
     crop in accordance with this section and who are participants 
     in the program established for such other program 

[[Page H11236]]

     crop shall be eligible to receive loans or loan deficiency 
     payments for such other program crop on the same terms and 
     conditions as are provided to participants in a acreage 
     reduction program established for such other program crop if 
     the producers--
       ``(1) plant such other program crop in an amount that does 
     not exceed 100 percent of the permitted acreage established 
     for the original program crop; and
       ``(2) agree to a reduction in the permitted acreage for the 
     original program crop for the particular crop year.''.

     SEC. 2504. FARM PROGRAM PAYMENT YIELDS.

       Section 505 of the Agricultural Act of 1949 (7 U.S.C. 1465) 
     is amended to read as follows:

     ``SEC. 505. FARM PROGRAM PAYMENT YIELDS.

       ``(a) Establishment.--The Secretary shall provide for the 
     establishment of a farm program payment yield for each farm 
     for each program crop for each crop year in accordance with 
     subsection (b) or (c).
       ``(b) Farm Program Payment Yields Based on 1995 Crop 
     Year.--
       ``(1) In general.--If the Secretary determines that farm 
     program payment yields shall be established in accordance 
     with this subsection, except as provided in paragraph (2), 
     the farm program payment yield for each of the 1996 through 
     2002 crop years shall be the farm program payment yield for 
     the 1995 crop year for the farm.
       ``(2) Additional yield payments.--In the case of each of 
     the 1991 through 2002 crop years for a commodity, if the farm 
     program payment yield for a farm is reduced more than 10 
     percent below the farm program payment yield for the 1985 
     crop year, the Secretary shall make available to producers 
     established price payments for the commodity in such amount 
     as the Secretary determines is necessary to provide the same 
     total return to producers as if the farm program payment 
     yield had not been reduced more than 10 percent below the 
     farm program payment yield for the 1985 crop year. The 
     payments shall be made available not later than the time 
     final deficiency payments are made.
       ``(3) No yield available.--If no farm program payment yield 
     was established for the farm for 1995 crop, the farm program 
     payment yield shall be established on the basis of the 
     average farm program payment yield for the crop years for 
     similar farms in the area.
       ``(4) National, state, or county yields.--If the Secretary 
     determines the action is necessary, the Secretary may 
     establish national, State, or county program payment yields 
     on the basis of--
       ``(A) historical yields, as adjusted by the Secretary to 
     correct for abnormal factors affecting the yields in the 
     historical period; or
       ``(B) the Secretary's estimate of actual yields for the 
     crop year involved if historical yield data is not available.
       ``(5) Balancing yields.--If national, State, or county 
     program payment yields are established, the farm program 
     payment yields shall balance to the national, State, or 
     county program payment yields.
       ``(c) Determination of Yields.--
       ``(1) Actual yields.--With respect to the 1996 and 
     subsequent crop years, the Secretary may--
       ``(A) establish the farm program payment yield as provided 
     in subsection (a); or
       ``(B) establish a farm program payment yield for any 
     program crop for any farm on the basis of the average of the 
     yield per harvested acre for the crop for the farm for each 
     of the 5 crop years immediately preceding the crop year, 
     excluding the crop year with the highest yield per harvested 
     acre, the crop year with the lowest yield per harvested acre, 
     and any crop year in which such crop was not planted on the 
     farm.
       ``(2) Prior yields.--For purposes of the preceding 
     sentence, the farm program payment yield for the 1996 crop 
     year and the actual yield per harvested acre with respect to 
     the 1997 and subsequent crop years shall be used in 
     determining farm program payment yields.
       ``(3) Reduction limitation.--Notwithstanding any other 
     provision of this subsection, for purposes of establishing a 
     farm program payment yield for any program crop for any farm 
     for the 1991 and subsequent crop years, the farm program 
     payment yield for the 1986 crop year may not be reduced more 
     than 10 percent below the farm program payment yield for the 
     farm for the 1985 crop year.
       ``(4) Adjustment of yields.--The county committee, in 
     accordance with regulations prescribed by the Secretary, may 
     adjust any farm program payment yield for any program crop 
     for any farm if the farm program payment yield for the crop 
     on the farm does not accurately reflect the productive 
     potential of the farm.
       ``(d) Assignment of Yields.--In the case of any farm for 
     which the actual yield per harvested acre for any program 
     crop referred to in subsection (c) for any crop year is not 
     available, the county committee may assign the farm a yield 
     for the crop for the crop year on the basis of actual yields 
     for the crop for the crop year on similar farms in the area.
       ``(e) Actual Yield Data.--
       ``(1) Provision.--The Secretary shall, under such terms and 
     conditions as the Secretary may prescribe, allow producers to 
     provide to county committees data with respect to the actual 
     yield for each farm for each program crop.
       ``(2) Maintenance.--The Secretary shall maintain the data 
     for at least 5 crop years after receipt in a manner that will 
     permit the data to be used, if necessary, in the 
     administration of the commodity programs.''.

     SEC. 2505. APPLICATION OF PROVISIONS.

       Section 509 of the Agricultural Act of 1949 (7 U.S.C. 1469) 
     is amended to read as follows:

     ``SEC. 509. APPLICATION OF TITLE.

       ``Except as provided in section 406, this title shall apply 
     only with respect to the 1996 through 2002 crops.''.
                  Subtitle F--Miscellaneous Provisions

     SEC. 2601. LIMITATIONS ON AMOUNT OF DEFICIENCY PAYMENTS AND 
                   LAND DIVERSION PAYMENTS.

       Section 1001(1)(A) of the Food Security Act of 1985 (7 
     U.S.C. 1308(1)(A)) is amended by striking ``$50,000'' and 
     inserting ``$47,000''.

     SEC. 2602. SENSE OF CONGRESS REGARDING CERTAIN CANADIAN TRADE 
                   PRACTICES.

       (a) Findings.--The Congress finds the following:
       (1) On October 15, 1993, in response to a request from the 
     National Potato Council, the Foreign Agricultural Service of 
     the Department of Agriculture listed several Canadian 
     nontariff barriers that violate the national treatment 
     principle of the General Agreement on Tariffs and Trade, 
     including the prohibition on bulk shipments, container size 
     limitations on processed products, and prohibitions on 
     consignment sales.
       (2) Current Government-to-Government and direct grower-to-
     grower discussions with Canada have failed to result in 
     changes in Canadian trade practices.
       (b) Sense of Congress.--It is the sense of the Congress 
     that the Secretary of Agriculture and the United States Trade 
     Representative should intensify efforts to resolve the 
     Canadian potato trade concerns and begin to consider formal 
     action under the dispute resolution procedures of the North 
     American Free Trade Agreement or the General Agreement on 
     Tariffs and Trade.
                          TITLE III--COMMERCE

     SEC. 3101. SPECTRUM AUCTIONS.

       (a) Extension and Expansion of Auction Authority.--
       (1) Amendments.--Section 309(j) of the Communications Act 
     of 1934 (47 U.S.C. 309(j)) is amended--
       (A) by striking paragraphs (1) and (2) and inserting in 
     lieu thereof the following:
       ``(1) General authority.--If, consistent with the 
     obligations described in paragraph (6)(E), mutually exclusive 
     applications are accepted for any initial license or 
     construction permit which will involve an exclusive use of 
     the electromagnetic spectrum, then the Commission shall grant 
     such license or permit to a qualified applicant through a 
     system of competitive bidding that meets the requirements of 
     this subsection.
       ``(2) Exemptions.--The competitive bidding authority 
     granted by this subsection shall not apply to licenses or 
     construction permits issued by the Commission--
       ``(A) that, as the result of the Commission carrying out 
     the obligations described in paragraph (6)(E), are not 
     mutually exclusive;
       ``(B) for public safety radio services, including non-
     Government uses that protect the safety of life, health, and 
     property and that are not made commercially available to the 
     public; or
       ``(C) for initial licenses or construction permits for new 
     terrestrial digital television services assigned by the 
     Commission to existing terrestrial broadcast licensees to 
     replace their current television licenses.''; and
       (B) by striking ``1998'' in paragraph (11) and inserting 
     ``2002''.
       (2) Conforming amendment.--Subsection (i) of section 309 of 
     such Act is repealed.
       (3) Effective date.--The amendment made by paragraph (1)(A) 
     shall not apply with respect to any license or permit for 
     which the Federal Communications Commission has accepted 
     mutually exclusive applications on or before the date of 
     enactment of this Act.
       (b) Commission Obligation To Make Additional Spectrum 
     Available by Auction.--
       (1) In general.--The Federal Communications Commission 
     shall complete all actions necessary to permit the 
     assignment, by September 30, 2002, by competitive bidding 
     pursuant to section 309(j) of the Communications Act of 1934 
     (47 U.S.C. 309(j)) of licenses for the use of bands of 
     frequencies that--
       (A) individually span not less than 25 megahertz, unless a 
     combination of smaller bands can, notwithstanding the 
     provisions of paragraph (7) of such section, reasonably be 
     expected to produce greater receipts;
       (B) in the aggregate span not less than 100 megahertz;
       (C) are located below 3 gigahertz; and
       (D) have not, as of the date of enactment of this Act--
       (i) been designated by Commission regulation for assignment 
     pursuant to such section; or
       (ii) been identified by the Secretary of Commerce pursuant 
     to section 113 of the National Telecommunications and 
     Information Administration Organization Act.
     The Commission shall conduct the competitive bidding for not 
     less than one-half of such aggregate spectrum by September 
     30, 2001.
       (2) Criteria for reassignment.--In making available bands 
     of frequencies for competitive bidding pursuant to paragraph 
     (1), the Commission shall--
       (A) seek to promote the most efficient use of the spectrum;
       (B) take into account the cost to incumbent licensees of 
     relocating existing uses to other bands of frequencies or 
     other means of communication;

[[Page H11237]]

       (C) take into account the needs of public safety radio 
     services; and
       (D) comply with the requirements of international 
     agreements concerning spectrum allocations.
       (3) Notification to ntia.--The Commission shall notify the 
     Secretary of Commerce if--
       (A) the Commission is not able to provide for the effective 
     relocation of incumbent licensees to bands of frequencies 
     that are available to the Commission for assignment; and
       (B) the Commission has identified bands of frequencies that 
     are--
       (i) suitable for the relocation of such licensees; and
       (ii) allocated for Federal Government use, but that could 
     be reallocated pursuant to part B of the National 
     Telecommunications and Information Administration 
     Organization Act (as amended by this Act).
       (c) Identification and Reallocation of Frequencies.--The 
     National Telecommunications and Information Administration 
     Organization Act (47 U.S.C. 901 et seq.) is amended--
       (1) in section 113, by adding at the end the following new 
     subsection:
       ``(f) Additional Reallocation Report.--If the Secretary 
     receives a notice from the Commission pursuant to section 
     3001(b)(3) of the Seven-Year Balanced Budget Reconciliation 
     Act of 1995, the Secretary shall prepare and submit to the 
     President and the Congress a report recommending for 
     reallocation for use other than by Federal Government 
     stations under section 305 of the 1934 Act (47 U.S.C. 305), 
     bands of frequencies that are suitable for the uses 
     identified in the Commission's notice.'';
       (2) in section 114(a)(1), by striking ``(a) or (d)(1)'' and 
     inserting ``(a), (d)(1), or (f)''.
       (d) Completion of C-Block PCS Auction.--The Federal 
     Communications Commission shall commence the Broadband 
     Personal Communications Services C-Block auction described in 
     the Commission's Sixth Report and Order in DP Docket 93-253 
     (FCC 93-510, released July 18, 1995) not later than December 
     4, 1995. The Commission's competitive bidding rules governing 
     such auction, as set forth in such Sixth Report and Order, 
     are hereby ratified and adopted as a matter of Federal law.
       (e) Modification of Auction Policy To Preserve Auction 
     Value of Spectrum.--The voluntary negotiation period for 
     relocating fixed microwave licensees to frequency bands other 
     than those allocated for licensed emerging technology 
     services (including licensed personal communications 
     services), established by the Commission's Third Report and 
     Order in ET Docket No. 92-9, shall expire one year after the 
     date of acceptance by the Commission of applications for such 
     licensed emerging technology services. The mandatory 
     negotiation period for relocating fixed microwave licensees 
     to frequency bands other than those allocated for licensed 
     emerging technology services (including licensed personal 
     communications services), established in such Third Report 
     and Order, shall expire two years after the date of 
     acceptance by the Commission of applications for such 
     licensed emerging technology services.
       (f) Identification and Reallocation of Auctionable 
     Frequencies.--The National Telecommunications and Information 
     Administration Organization Act (47 U.S.C. 901 et seq.) is 
     amended--
       (1) in section 113(b)--
       (A) by striking the heading of paragraph (1) and inserting 
     ``Initial reallocation report'';
       (B) by inserting ``in the first report required by 
     subsection (a)'' after ``recommend for reallocation'' in 
     paragraph (1);
       (C) by inserting ``or (3)'' after ``paragraph (1)'' each 
     place it appears in paragraph (2); and
       (D) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) Second reallocation report.--In accordance with the 
     provisions of this section, the Secretary shall recommend for 
     reallocation in the second report required by subsection (a), 
     for use other than by Federal Government stations under 
     section 305 of the 1934 Act (47 U.S.C. 305), a single 
     frequency band that spans not less than an additional 20 
     megahertz, that is located below 3 gigahertz, and that meets 
     the criteria specified in paragraphs (1) through (5) of 
     subsection (a).''; and
       (2) in section 115--
       (A) in subsection (b), by striking ``the report required by 
     section 113(a)'' and inserting ``the initial reallocation 
     report required by section 113(a)''; and
       (B) by adding at the end the following new subsection:
       ``(c) Allocation and Assignment of Frequencies Identified 
     in the Second Reallocation Report.--With respect to the 
     frequencies made available for reallocation pursuant to 
     section 113(b)(3), the Commission shall, not later than 1 
     year after receipt of the second reallocation report required 
     by such section, prepare, submit to the President and the 
     Congress, and implement, a plan for the allocation and 
     assignment under the 1934 Act of such frequencies. Such plan 
     shall propose the immediate allocation and assignment of all 
     such frequencies in accordance with section 309(j).''.

     SEC. 3102. FEDERAL COMMUNICATIONS COMMISSION FEE COLLECTIONS

       (a) Application Fees.--
       (1) Adjustment of application fee schedule.--Section 8(b) 
     of the Communications Act of 1934 (47 U.S.C. 158(b)) is 
     amended to read as follows:
       ``(b)(1) For fiscal year 1996 and each fiscal year 
     thereafter, the Commission shall, by regulation, modify the 
     application fees by proportionate increases or decreases so 
     as to result in estimated total collections for the fiscal 
     year equal to--
       ``(A) $40,000,000; plus
       ``(B) an additional amount, specified in an appropriation 
     Act for the Commission for that fiscal year to be collected 
     and credited to such appropriation, not to exceed the amount 
     by which the necessary expenses for the costs described in 
     paragraph (5) exceeds $40,000,000.
       ``(2) In making adjustments pursuant to this paragraph the 
     Commission may round such fees to the nearest $5.00 in the 
     case of fees under $100, or to the nearest $20 in the case of 
     fees of $100 or more. The Commission shall transmit to the 
     Congress notification of any adjustment made pursuant to this 
     paragraph immediately upon the adoption of such adjustment.
       ``(3) The Commission is authorized to continue to collect 
     fees at the prior year's rate until the effective date of fee 
     adjustments or amendments made pursuant to paragraphs (1) and 
     (4).
       ``(4) The Commission shall, by regulation, add, delete, or 
     reclassify services, categories, applications, or other 
     filings subject to application fees to reflect additions, 
     deletions, or changes in the nature of its services or 
     authorization of service processes as a consequence of 
     Commission rulemaking proceedings or changes in law.
       ``(5) Any modified fees established under paragraph (4) 
     shall be derived by determining the full-time equivalent 
     number of employees performing application activities, 
     adjusted to take into account other expenses that are 
     reasonably related to the cost of processing the application 
     or filing, including all executive and legal costs incurred 
     by the Commission in the discharge of these functions, and 
     other factors that the Commission determines are necessary in 
     the public interest. The Commission shall--
       ``(A) transmit to the Congress notification of any proposed 
     modification made pursuant to this paragraph immediately upon 
     adoption of such proposal; and
       ``(B) transmit to the Congress notification of any 
     modification made pursuant to this paragraph immediately upon 
     adoption of such modification.
       ``(6) Increases or decreases in application fees made 
     pursuant to this subsection shall not be subject to judicial 
     review.''.
       (2) Treatment of additional collections.--Section 8(e) of 
     such Act is amended to read as follows:
       ``(e) Of the moneys received from fees authorized under 
     this section--
       ``(1) $40,000,000 shall be deposited in the general fund of 
     the Treasury to reimburse the United States for amounts 
     appropriated for use by the Commission in carrying out its 
     functions under this Act; and
       ``(2) the remainder shall be deposited as an offsetting 
     collection in, and credited to, the account providing 
     appropriations to carry out the functions of the 
     Commission.''.
       (3) Schedule of application fees for PCS.--The schedule of 
     application fees in section 8(g) of such Act is amended by 
     adding, at the end of the portion under the heading ``common 
     carrier services'', the following new item:

``23.  Personal communications services
    ``a. Initial or new application................................230 
    ``b. Amendment to pending application...........................35 
    ``c. Application for assignment or transfer of control.........230 
    ``d. Application for renewal of license.........................35 
    ``e. Request for special temporary authority...................200 
    ``f. Notification of completion of construction.................35 
    ``g. Request to combine service areas.........................50''.

       (4) Vanity call signs.--
       (A) Lifetime license fees.--
       (i) Amendment.--The schedule of application fees in section 
     8(g) of such Act is further amended by adding, at the end of 
     the portion under the heading ``private radio services'', the 
     following new item:

  ``11.  Amateur vanity call signs............................150.00''.

       (ii) Treatment of receipts.--Moneys received from fees 
     established under the amendment made by this subsection shall 
     be deposited as an offsetting collection in, and credited to, 
     the account providing appropriations to carry out the 
     functions of the Commission.
       (B) Termination of annual regulatory fees.--The schedule of 
     regulatory fees in section 9(g) of such Act (47 U.S.C. 
     159(g)) is amended by striking the following item from the 
     fees applicable to the Private Radio Bureau:

``Amateur vanity call-signs........................................7''.

       (b) Regulatory Fees.--
       (1) Executive and legal costs.--Section 9(a)(1) of the 
     Communications Act of 1934 (47 U.S.C. 159(a)(1)) is amended 
     by inserting before the period at the end the following: ``, 
     and all executive and legal costs incurred by the Commission 
     in the discharge of these functions''.
       (2) Establishment and adjustment.--Section 9(b) of such Act 
     is amended--
       (A) in paragraph (4)(B), by striking ``90 days'' and 
     inserting ``45 days''; and
       (B) by adding at the end the following new paragraph:

[[Page H11238]]

       ``(5) Effective date of adjustments.--The Commission is 
     authorized to continue to collect fees at the prior year's 
     rate until the effective date of fee adjustments or 
     amendments made pursuant to paragraph (2) or (3).''.
       (3) Regulatory fees for satellite tv operations.--The 
     schedule of regulatory fees in section 9(g) of such Act is 
     amended, in the fees applicable to the Mass Media Bureau, by 
     inserting after each of the items pertaining to construction 
     permits in the fees applicable to VHF commercial and UHF 
     commercial TV the following new item:

``Terrestrial television satellite operations....................500''.

       (4) Governmental entities use for common carrier 
     purposes.--Section 9(h) of such Act is amended by adding at 
     the end the following new sentence: ``The exceptions provided 
     by this subsection for governmental entities shall not be 
     applicable to any services that are provided on a commercial 
     basis in competition with another carrier.''.
       (5) Information required in connection with adjustment of 
     regulatory fees.--Title I of such Act is amended--
       (A) in section 9, by striking subsection (i); and
       (B) by inserting after section 9 the following new section:

     ``SEC. 10. ACCOUNTING SYSTEM AND ADJUSTMENT INFORMATION.

       ``(a) Accounting System Required.--The Commission shall 
     develop accounting systems for the purposes of making the 
     adjustments authorized by sections 8 and 9. The Commission 
     shall annually prepare and submit to the Congress an analysis 
     of such systems and shall annually afford interested persons 
     the opportunity to submit comments concerning the allocation 
     of the costs of performing the functions described in section 
     8(a)(5) and 9(a)(1) in making such adjustments in the 
     schedules required by sections 8 and 9.
       ``(b) Information Required in Connection With Adjustment of 
     Application and Regulatory Fees.--
       ``(1) Schedule of requested amounts.--No later than May 1 
     of each calendar year, the Commission shall prepare and 
     transmit to the Committees of Congress responsible for the 
     Commission's authorization and appropriations a detailed 
     schedule of the amounts requested by the President's budget 
     to be appropriated for the ensuing fiscal year for the 
     activities described in sections 8(a)(5) and 9(a)(1), 
     allocated by bureaus, divisions, and offices of the 
     Commission.
       ``(2) Explanatory statement.--If the Commission anticipates 
     increases in the application fees or regulatory fees 
     applicable to any applicant, licensee, or unit subject to 
     payment of fees, the Commission shall submit to the Congress 
     by May 1 of such calendar year a statement explaining the 
     relationship between any such increases and either (A) 
     increases in the amounts requested to be appropriated for 
     Commission activities in connection with such applicants, 
     licensees, or units subject to payment of fees, or (B) 
     additional activities to be performed with respect to such 
     applicants, licensees, or units.
       ``(3) Definition.--For purposes of this subsection, the 
     term `amount requested by the President's budget' shall 
     include any adjustments to such requests that are made by May 
     1 of such calendar year. If any such adjustment is made after 
     May 1, the Commission shall provide such Committees with 
     updated schedules and statements containing the information 
     required by this subsection within 10 days after the date of 
     any such adjustment.''.

     SEC. 3103. AUCTION OF RECAPTURED ANALOG LICENSES.

       (a) Limitations on Terms of Analog Television Licenses 
     (``Reversion Date'').--The Commission shall not renew any 
     analog television license for a period that extends beyond 
     the earlier of December 31, 2005, or one year after the date 
     the Commission finds, based on annual surveys conducted 
     pursuant to subsection (b), that at least 95 percent of 
     households in the United States have the capability to 
     receive and display video signals, other than video signals 
     transmitted pursuant to an analog television license. After 
     such date, the Commission shall not issue any television 
     licenses other than advanced television licenses.
       (b) Annual Survey.--The Secretary of Commerce shall, each 
     calendar year from 1998 to 2005, conduct a survey to estimate 
     the percentage of households in the United States that have 
     the capability to receive and display video signals other 
     than signals transmitted pursuant to an analog television 
     license.
       (c) Spectrum Reversion.--The Commission shall ensure that, 
     as analog television licenses expire pursuant to subsection 
     (a), spectrum previously used for the broadcast of analog 
     television signals is reclaimed and reallocated in such 
     manner as to maximize the deployment of new services. 
     Licensees for new services shall be selected by competitive 
     bidding. The Commission shall complete the competitive 
     bidding procedure by May 1, 2002.
       (d) Minimum Service Obligation.--
       (1) Provision of capability to receive advanced services.--
     The Commission shall, by regulation, establish procedures to 
     ensure that, within the year prior to the reversion date 
     defined in subsection (a), the advanced television licensees 
     shall provide each household with the capability to receive 
     and display video signals for advanced television services if 
     such household requests such capability.
       (2) Provision of nonsubscription services.--Each advanced 
     television service licensee shall provide, for at least a 
     minimum of 5 years from the date identified in subsection 
     (a), at least one nonsubscription video service that meets or 
     exceeds minimum technical standards established by the 
     Commission. In setting such minimum technical standards, the 
     Commission shall, to the extent technically feasible, ensure 
     that picture and audio quality are at least as good as that 
     provided to recipients within the Grade B contour of an 
     analog television license. The Commission shall revoke the 
     license of any advanced television licensee who fails to meet 
     this condition of the license.
       (e) Definitions.--As used in this section:
       (1) The term ``Commission'' means the Federal 
     Communications Commission.
       (2) The term ``advanced television services'' means 
     television services provided using digital or other advanced 
     technology to enhance audio quality and video resolution, as 
     further defined in the Opinion, Report, and Order of the 
     Commission entitled ``Advanced Television Systems and Their 
     Impact Upon the Existing Television Service,'' MM Docket No. 
     87-268.
       (3) The term ``analog television licenses'' means licenses 
     issued pursuant to 47 C.F.R. 73.682 et seq.

     SEC. 3104. PATENT AND TRADEMARK FEES.

       Section 10101 of the Omnibus Budget Reconciliation Act of 
     1990 (35 U.S.C. 41 note) is amended--
       (1) in subsection (a) by striking ``1998'' and inserting 
     ``2002'';
       (2) in subsection (b)(2) by striking ``1998'' and inserting 
     ``2002''; and
       (3) in subsection (c)--
       (A) by striking ``through 1998'' and inserting ``through 
     2002''; and
       (B) by adding at the end the following:
       ``(9) $119,000,000 in fiscal year 1999.
       ``(10) $119,000,000 in fiscal year 2000.
       ``(11) $119,000,000 in fiscal year 2001.
       ``(12) $119,000,000 in fiscal year 2002.''.

     SEC. 3105. REPEAL OF AUTHORIZATION OF TRANSITIONAL 
                   APPROPRIATIONS FOR THE UNITED STATES POSTAL 
                   SERVICE.

       (a) In General.--(1) Section 2004 of title 39, United 
     States Code, is repealed.
       (2)(A) The table of sections for chapter 20 of such title 
     is amended by repealing the item relating to section 2004.
       (B) Section 2003(e)(2) of such title is amended by striking 
     ``sections 2401 and 2004'' each place it appears and 
     inserting ``section 2401''.
       (b) Clarification That Liabilities Formerly Paid Pursuant 
     to Section 2004 Remain Liabilities Payable by the Postal 
     Service.--Section 2003 of title 39, United States Code, is 
     amended by adding at the end the following:
       ``(h) Liabilities of the former Post Office Department to 
     the Employees' Compensation Fund (appropriations for which 
     were authorized by former section 2004, as in effect before 
     the effective date of this subsection) shall be liabilities 
     of the Postal Service payable out of the Fund.''.
                        TITLE IV--TRANSPORTATION

     SEC. 4101. EXTENSION OF RAILROAD SAFETY FEES.

       Subsection (e) of section 20115 of title 49, United States 
     Code, is repealed.

     SEC. 4102. PERMANENT EXTENSION OF VESSEL TONNAGE DUTIES.

       (a) Extension of Duties.--Section 36 of the Act of August 
     5, 1909 (36 Stat. 111; 46 App. U.S.C. 121), is amended--
       (1) by striking ``for fiscal years 1991, 1992, 1993, 1994, 
     1995, 1996, 1997, 1998, and 2 cents per ton not to exceed in 
     the aggregate 10 cents per tone in any one year, for each 
     fiscal year thereafter''; and
       (2) by striking ``for fiscal years 1991, 1992, 1993, 1994, 
     1995, 1996, 1997, 1998, and 6 cents per ton, not to exceed 30 
     cents per ton for each fiscal year thereafter''.
       (b) Conforming Amendment.--The Act entitled ``An Act 
     concerning tonnage duties on vessels entering otherwise than 
     by sea'', approved March 8, 1910 (36 Stat. 234; 46 App. 
     U.S.C. 132), is amended by striking ``for fiscal years 1991, 
     1992, 1993, 1994, 1995, 1996, 1997, and 1998, and 2 cents per 
     ton, not to exceed in the aggregate 10 cents per ton in any 1 
     year, for each fiscal year thereafter,''.

     SEC. 4103. SALE OF GOVERNORS ISLAND, NEW YORK.

       (a) In General.--Notwithstanding any other provision of 
     law, the Administrator of General Services shall dispose of 
     by sale at fair market value all rights, title, and interests 
     of the United States in and to the land of, and improvements 
     to, Governors Island, New York.
       (b) Right of First Refusal.--Before a sale is made under 
     subsection (a) to any other parties, the State of New York 
     and the city of New York shall be given the right of first 
     refusal to purchase all or part of Governors Island. Such 
     right may be exercised by either the State of New York or the 
     city of New York or by both parties acting jointly.
       (c) Proceeds.--Proceeds from the disposal of Governors 
     Island under subsection (a) shall be deposited in the general 
     fund of the Treasury and credited as miscellaneous receipts.

     SEC. 4104. SALE OF AIR RIGHTS.

       (a) In General.--Notwithstanding any other provision of 
     law, the Administrator of General Services shall sell, at 
     fair market 

[[Page H11239]]

     value and in a manner to be determined by the Administrator, 
     the air rights adjacent to Washington Union Station described 
     in subsection (b), including air rights conveyed to the 
     Administrator under subsection (d). The Administrator shall 
     complete the sale by such date as is necessary to ensure that 
     the proceeds from the sale will be deposited in accordance 
     with subsection (c).
       (b) Description.--The air rights referred to in subsection 
     (a) total approximately 16.5 acres and are depicted on the 
     plat map of the District of Columbia as follows:
       (1) Part of lot 172, square 720.
       (2) Part of lots 172 and 823, square 720.
       (3) Part of lot 811, square 717.
       (c) Proceeds.--Before September 30, 1996, proceeds from the 
     sale of air rights under subsection (a) shall be deposited in 
     the general fund of the Treasury and credited as 
     miscellaneous receipts.
       (d) Conveyance of Amtrak Air Rights.--
       (1) General rule.--As a condition of future Federal 
     financial assistance, Amtrak shall convey to the 
     Administrator of General Services on or before December 31, 
     1995, at no charge, all of the air rights of Amtrak described 
     in subsection (b).
       (2) Failure to comply.--If Amtrak does not meet the 
     condition established by paragraph (1), Amtrak shall be 
     prohibited from obligating Federal funds after March 1, 1996.
                      TITLE V--HOUSING PROVISIONS

     SEC. 5101. REDUCTION OF SECTION 8 ANNUAL ADJUSTMENT FACTORS 
                   FOR UNITS WITHOUT TENANT TURNOVER.

       Paragraph (2)(A) of section 8(c) of the United States 
     Housing Act of 1937 (42 U.S.C. 1437f(c)(2)(A)) is amended by 
     striking the last sentence.

     SEC. 5102. MAXIMUM MORTGAGE AMOUNT FLOOR FOR SINGLE FAMILY 
                   MORTGAGE INSURANCE.

       Subparagraph (A) of the first sentence of section 203(b)(2) 
     of the National Housing Act (12 U.S.C. 1709(b)(2)(A)) is 
     amended by striking ``the greater of'' and all that follows 
     through ``applicable size'' and inserting the following: ``50 
     percent of the dollar amount limitation determined under 
     section 305(a)(2) of the Federal Home Loan Mortgage 
     Corporation Act (as adjusted annually under such section) for 
     a residence of the applicable size''.

     SEC. 5103. FORECLOSURE AVOIDANCE AND BORROWER ASSISTANCE.

       (a) Foreclosure Avoidance.--The last sentence of section 
     204(a) of the National Housing Act (12 U.S.C. 1710(a)) is 
     amended by inserting before the period the following: ``: And 
     provided further, That the Secretary may pay insurance 
     benefits to the mortgagee to recompense the mortgagee for its 
     actions to provide an alternative to foreclosure of a 
     mortgage that is in default, which actions may include such 
     actions as special forbearance, loan modification, and deeds 
     in lieu of foreclosure, all upon such terms and conditions as 
     the mortgagee shall determine in the mortgagee's sole 
     discretion within guidelines provided by the Secretary, but 
     which may not include assignment of a mortgage to the 
     Secretary: And provided further, That for purposes of the 
     preceding proviso, no action authorized by the Secretary and 
     no action taken, nor any failure to act, by the Secretary or 
     the mortgagee shall be subject to judicial review''.
       (b) Authority to Assist Mortgagors in Default.--Section 230 
     of the National Housing Act (12 U.S.C. 1715u) is amended to 
     read as follows:


              ``authority to assist mortgagors in default

       ``Sec. 230. (a) Payment of Partial Claim.--The Secretary 
     may establish a program for payment of a partial insurance 
     claim to a mortgagee that agrees to apply the claim amount to 
     payment of a mortgage on a 1- to 4-family residence that is 
     in default. Any such payment under such program to the 
     mortgagee shall be made in the Secretary's sole discretion 
     and on terms and conditions acceptable to the Secretary, 
     except that--
       ``(1) the amount of the payment shall be in an amount 
     determined by the Secretary, which shall not exceed an amount 
     equivalent to 12 monthly mortgage payments and any costs 
     related to the default that are approved by the Secretary; 
     and
       ``(2) the mortgagor shall agree to repay the amount of the 
     insurance claim to the Secretary upon terms and conditions 
     acceptable to the Secretary.
     The Secretary may pay the mortgagee, from the appropriate 
     insurance fund, in connection with any activities that the 
     mortgagee is required to undertake concerning repayment by 
     the mortgagor of the amount owed to the Secretary.
       ``(b) Assignment.--
       ``(1) Program authority.--The Secretary may establish a 
     program for assignment to the Secretary, upon request of the 
     mortgagee, of a mortgage on a 1- to 4-family residence 
     insured under this Act.
       ``(2) Program requirements.--The Secretary may accept 
     assignment of a mortgage under a program under this 
     subsection only if--
       ``(A) the mortgage was in default;
       ``(B) the mortgagee has modified the mortgage to cure the 
     default and provide for mortgage payments within the 
     reasonable ability of the mortgagor to pay at interest rates 
     not exceeding current market interest rates; and
       ``(C) the Secretary arranges for servicing of the assigned 
     mortgage by a mortgagee (which may include the assigning 
     mortgagee) through procedures that the Secretary has 
     determined to be in the best interests of the appropriate 
     insurance fund.
       ``(3) Payment of insurance benefits.--Upon accepting 
     assignment of a mortgage under the program under this 
     subsection, the Secretary may pay insurance benefits to the 
     mortgagee from the appropriate insurance fund in an amount 
     that the Secretary determines to be appropriate, but which 
     may not exceed the amount necessary to compensate the 
     mortgagee for the assignment and any losses resulting from 
     the mortgage modification.
       ``(c) Prohibition of Judicial Review.--No decision by the 
     Secretary to exercise or forego exercising any authority 
     under this section shall be subject to judicial review.''.
       (c) Savings Provision.--Any mortgage for which the 
     mortgagor has applied to the Secretary of Housing and Urban 
     Development, before the date of the enactment of this Act, 
     for assignment pursuant to section 230(b) of the National 
     Housing Act shall continue to be governed by the provisions 
     of such section, as in effect immediately before such date of 
     enactment.
       (d) Applicability of Other Laws.--No provision of the 
     National Housing Act or any other law shall be construed to 
     require the Secretary of Housing and Urban Development to 
     provide an alternative to foreclosure for mortgagees with 
     mortgages on 1- to 4-family residences insured by the 
     Secretary under the National Housing Act, or to accept 
     assignments of such mortgages.
 TITLE VI--INDEXATION AND MISCELLANEOUS ENTITLEMENT-RELATED PROVISIONS

     SEC. 6101. CONSUMER PRICE INDEX.

       (a) Adjustments Applicable to Internal Revenue Code 
     Provisions.--
       (1) In general.--Paragraph (3) of section 1(f) of the 
     Internal Revenue Code of 1986 (defining cost-of-living 
     adjustment) is amended by striking the period at the end and 
     inserting a comma and by inserting at the end the following 
     flush material:
     ``reduced by the number of percentage points determined under 
     paragraph (8) for the calendar year for which such adjustment 
     is being determined.''
       (2) Limitation on increases.--Subsection (f) of section 1 
     of such Code is amended by adding at the end the following 
     new paragraph:
       ``(8) Limitation on increases in cpi.--
       ``(A) In general.--The number of percentage points 
     determined under this paragraph for any calendar year is--
       ``(i) in the case of calendar years 1996, 1997, and 1998, 
     0.5 percentage point, and
       ``(ii) in the case of calendar years 1999, 2000, 2001, and 
     2002, 0.3 percentage point.
       ``(B) Computation of base to reflect limitation.--The 
     Secretary shall adjust the number taken into account under 
     paragraph (3)(B) so that any increase which is not taken into 
     account by reason of subparagraph (A) shall not be taken into 
     account at any time so as to allow such increase for any 
     period.''
       (b) Adjustments Applicable to Certain Entitlement 
     Programs.--
       (1) In general.--For purposes of determining the amount of 
     any cost-of-living adjustment which takes effect for benefits 
     payable after December 31, 1995, with respect to any benefit 
     described in paragraph (5)--
       (A) any increase in the relevant index (determined without 
     regard to this subsection) shall be reduced by the number of 
     percentage points determined under paragraph (2), and
       (B) the amount of the increase in such benefit shall be 
     equal to the product of--
       (i) the increase in the relevant index (as reduced under 
     subparagraph (A)), and
       (ii) the average such benefit for the preceding calendar 
     year under the program described in paragraph (5) which 
     provides such benefit.
       (2) Limitation on increases.--
       (A) In general.--The number of percentage points determined 
     under this paragraph for any calendar year is--
       (i) in the case of calendar years 1996, 1997, and 1998, 0.5 
     percentage point, and
       (ii) in the case of calendar years 1999, 2000, 2001, and 
     2002, 0.3 percentage point.
       (B) Computation of base to reflect limitation.--Any 
     increase which is not taken into account by reason of 
     subparagraph (A) shall not be taken into account at any time 
     so as to allow such increase for any period.
       (3) Paragraph (1) to apply only to computation of benefit 
     amounts.--Paragraph (1) shall apply only for purposes of 
     determining the amount of benefits and not for purposes of 
     determining--
       (A) whether a threshold increase in the relevant index has 
     been met, or
       (B) increases in amounts under other provisions of law not 
     described in paragraph (5) which operate by reference to 
     increases in such benefits.
       (4) Definitions.--For purposes of this subsection--
       (A) Cost-of-living adjustment.--The term ``cost-of-living 
     adjustment'' means any adjustment in the amount of benefits 
     described in paragraph (5) which is determined by reference 
     to changes in an index.
       (B) Index.--
       (i) Index.--The term ``index'' means the Consumer Price 
     Index and any other index of price or wages.
       (ii) Relevant index.--The term ``relevant index'' means the 
     index on the basis of which the amount of the cost-of-living 
     adjustment is determined.

[[Page H11240]]

       (5) Benefits to which subsection applies.--For purposes of 
     this subsection, the benefits described in this paragraph 
     are--
       (A) old age, survivors, and disability insurance benefits 
     subject to adjustment under section 215(i) of the Social 
     Security Act (but the limitation under paragraph (1) shall 
     not apply to supplemental security income benefits under 
     title XVI of such Act);
       (B) retired and retainer pay subject to adjustment under 
     section 1401a of title 10, United States Code;
       (C) civil service retirement benefits under section 8340 of 
     title 5, United States Code, foreign service retirement 
     benefits under section 826 of the Foreign Service Act of 
     1980, Central Intelligence Agency retirement benefits under 
     part J of the Central Intelligence Agency Retirement Act of 
     1964 for certain employees, and any other benefits under any 
     similar provision under any retirement system for employees 
     of the government of the United States;
       (D) Federal workers' compensation under section 8146a of 
     title 5, United States Code;
       (E) benefits under section 3(a), 4(a), or 4(f) of the 
     Railroad Retirement Act of 1974; and
       (F) benefits and expenditure limits under title XVIII or 
     XIX of the Social Security Act.
       (6) Benefit.--For purposes of this section, the term 
     ``benefit'' includes a payment.

     SEC. 6102. REDUCTION IN TITLE XX BLOCK GRANTS TO STATES FOR 
                   SOCIAL SERVICES.

       Section 2003(c) of the Social Security Act (42 U.S.C. 
     1397b(c)) is amended--
       (1) by striking ``and'' at the end of paragraph (4);
       (2) in paragraph (5), by striking ``fiscal year after 
     fiscal year 1989.'' and inserting ``of fiscal years 1990 
     through 1995; and''; and
       (3) by adding at the end the following:
       ``(6) $2,520,000,000 for fiscal year 1996 and each 
     succeeding fiscal year.''.

     SEC. 6103. MATCHING RATE REQUIREMENT FOR TITLE XX BLOCK 
                   GRANTS TO STATES FOR SOCIAL SERVICES.

       Section 2002(a)(1) of the Social Security Act (42 U.S.C. 
     1397a(a)(1)) is amended by striking ``Each State'' and all 
     that follows through the period and inserting the following: 
     ``(A) Each State shall be entitled to payment under this 
     title for each fiscal year in an amount equal to the lesser 
     of--
       ``(i) 80 percent of the total amount expended by the State 
     during the fiscal year for services referred to in 
     subparagraph (B); or
       ``(ii) the allotment of the State for the fiscal year.
       ``(B) A State to which a payment is made under this title 
     shall use the payment for services directed at the goals set 
     forth in section 2001, subject to the requirements of this 
     title.''.

     SEC. 6104. DENIAL OF UNEMPLOYMENT INSURANCE TO CERTAIN HIGH-
                   INCOME INDIVIDUALS.

       (a) General Rule.--Subsection (a) of section 3304 of the 
     Internal Revenue Code of 1986, as amended by section 10101, 
     is further amended by striking ``and'' at the end of 
     paragraph (18), by redesignating paragraph (19) as paragraph 
     (20), and by inserting after paragraph (18) the following new 
     paragraph:
       ``(19) compensation shall not be payable to any individual 
     for any benefit year if the taxable income of such individual 
     for such individual's most recent taxable year ending before 
     the beginning of such benefit year exceeded $120,000; and''.
       (b) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendment made by this section shall apply to benefit years 
     beginning after December 31, 1995.
       (2) Special rule.--In the case of any State the legislature 
     of which has not been in session for at least 30 calendar 
     days (whether or not successive) between the date of the 
     enactment of this Act and December 31, 1995, the amendments 
     made by this section shall apply to benefit years beginning 
     after the day 30 calendar days after the first day on which 
     such legislature is in session on or after December 31, 1995.

     SEC. 6105. DENIAL OF UNEMPLOYMENT INSURANCE TO INDIVIDUALS 
                   WHO VOLUNTARILY LEAVE MILITARY SERVICE.

       (a) General Rule.--Paragraph (1) of section 8521(a) of 
     title 5, United States Code, is amended to read as follows:
       ``(1) `Federal service' means active service (not including 
     active duty in a reserve status unless for a continuous 
     period of 45 days or more) in the armed forces or the 
     commissioned corps of the National Oceanic and Atmospheric 
     Administration if with respect to that service the 
     individual--
       ``(A) was discharged or released under honorable 
     conditions,
       ``(B) did not resign or voluntarily leave the service, and
       ``(C) was not discharged or released for cause as defined 
     by the Secretary of Defense;''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply in the case of a discharge or release after the 
     date of the enactment of this Act.
                       TITLE VII--MEDICAID REFORM
                 Subtitle A--Per Capita Spending Limit

     SEC. 7001. LIMITATION ON EXPENDITURES RECOGNIZED FOR PURPOSES 
                   OF FEDERAL FINANCIAL PARTICIPATION.

       (a) In General.--Title XIX of the Social Security Act is 
     amended--
       (1) in section 1903(a), by striking ``From'' and inserting 
     ``Subject to section 1931, from'';
       (2) by redesignating section 1931 as section 1932; and
       (3) by inserting after section 1930 the following new 
     section:


     ``limitation on federal financial participation based on per 
                          beneficiary spending

       ``Sec. 1931. (a) In General.--Subject to subsection (e), 
     the total amount of State expenditures for medical assistance 
     for which Federal financial participation may be made under 
     section 1903(a) for quarters in a fiscal year (beginning with 
     fiscal year 1997) may not exceed the sum of the following:
       ``(1) Nondisabled medicaid children.--The product of--
       ``(A) the number of full-year equivalent nondisabled 
     medicaid children (described in subsection (b)(1)) in the 
     State in the fiscal year, and
       ``(B) the per capita medical assistance limit established 
     under subsection (c)(1) for such category of individuals for 
     the fiscal year.
       ``(2) Nondisabled medicaid adults.--The product of--
       ``(A) the number of full-year equivalent nondisabled 
     medicaid adults (described in subsection (b)(2)) in the State 
     in the fiscal year, and
       ``(B) the per capita medical assistance limit established 
     under subsection (c)(1) for such category individuals for the 
     fiscal year.
       ``(3) Nondisabled elderly medicaid beneficiaries.--The 
     product of--
       ``(A) the number of full-year equivalent nondisabled 
     elderly medicaid beneficiaries (described in subsection 
     (b)(3)) in the State in the fiscal year, and
       ``(B) the per capita medical assistance limit established 
     under subsection (c)(1) for such category of individuals for 
     the fiscal year.
       ``(4) Disabled medicaid beneficiaries.--The product of--
       ``(A) the number of full-year equivalent disabled medicaid 
     beneficiaries (described in subsection (b)(4)) in the State 
     in the fiscal year, and
       ``(B) the per capita medical assistance limit established 
     under subsection (c)(1) for such category individuals for the 
     fiscal year.
       ``(5) Administrative expenditures.--The product of--
       ``(A) the number of full-year equivalent medicaid 
     beneficiaries who are in any category of beneficiaries in the 
     State in the fiscal year, and
       ``(B) the per capita limit established under subsection 
     (c)(1) for administrative expenditures for the fiscal year.

     This section shall not apply to expenditures for which no 
     Federal financial participation is available under this 
     title.
       ``(b) Definitions Relating to Categories of Individuals.--
     In this section:
       ``(1) Nondisabled medicaid children.--The term `nondisabled 
     medicaid child' means an individual entitled to medical 
     assistance under the State plan under this title who is not 
     disabled (as such term is used under paragraph (4)) and is 
     under 21 years of age.
       ``(2) Nondisabled medicaid adults.--The term `nondisabled 
     medicaid adult' means an individual entitled to medical 
     assistance under the State plan under this title who is not 
     disabled (as such term is used under paragraph (4)) and is at 
     least 21 years of age but under 65 years of age.
       ``(3) Nondisabled elderly medicaid beneficiary.--The term 
     `nondisabled medicaid adult' means an individual entitled to 
     medical assistance under the State plan under this title who 
     is not disabled (as such term is used under paragraph (4)) 
     and is at least 65 years of age.
       ``(4) Disabled medicaid beneficiaries.--The term `disabled 
     medicaid beneficiary' means an individual entitled to medical 
     assistance under the State plan under this title who is 
     entitled to such assistance solely on the basis of blindness 
     or disability.

     For purposes of this section, nondisabled medicaid children, 
     nondisabled medicaid adults, nondisabled elderly medicaid 
     beneficiaries, and disabled medicaid beneficiaries each 
     constitutes a separate category of medicaid beneficiaries.
       ``(c) Establishment of Per Capita Limits.--
       ``(1) In general.--The Secretary shall establish for each 
     State a per capita medical assistance limit for each category 
     of medicaid beneficiaries described in subsection (b) and for 
     administrative expenditures for a fiscal year equal to the 
     product of the following:
       ``(A) Previous expenditures.--The average of the amount of 
     the per capita matchable medical assistance expenditures 
     (determined under paragraph (2)(A)) for such category (or the 
     per capita matchable adminstrative expenditures determined 
     under paragraph (2)(B)) for such State for each of the 3 
     previous fiscal years.
       ``(B) Inflation factor.--The rolling 2-year CPI increase 
     factor (determined under paragraph (3)(A)) for the fiscal 
     year involved.
       ``(C) Transitional allowance.--The transitional allowance 
     factor (if any) applicable under paragraph (3)(B) to such 
     limit for the previous fiscal year and for the fiscal year 
     involved.
       ``(2) Per capita matchable medical assistance 
     expenditures.--For purposes of this section--
       ``(A) Medical assistance expenditures.--The `per capita 
     matchable medical assistance expenditures', for a category of 
     medicaid beneficiaries for a State for a fiscal year, is 
     equal to--
       ``(i) the amount of expenditures for which Federal 
     financial participation is (or may be) provided (consistent 
     with this section) to the 

[[Page H11241]]

     State under paragraphs (1) and (5) of section 1903(a) (other 
     than expenditures excluded under subsection (e)) with respect 
     to medical assistance furnished with respect to individuals 
     in such category during the fiscal year, divided by
       ``(ii) the number of full-year equivalent individuals in 
     such category in the State in such fiscal year.
       ``(B) Per capita matchable administrative expenditures.--
     The `per capita matchable administrative expenditures', for a 
     State for a fiscal year, is equal to--
       ``(i) the amount of expenditures for which Federal 
     financial participation is (or may be) provided (consistent 
     with this section) to the State under section 1903(a) (under 
     paragraphs (1) and (5) of such section) during the fiscal 
     year, divided by
       ``(ii) the number of full-year equivalent individuals in 
     any category of medicaid beneficiary in the State in such 
     fiscal year.
       ``(3) Increase factors.--In this subsection--
       ``(A) Rolling 2-year cpi increase factor.--The `rolling 2-
     year CPI increase factor' for a fiscal year is 1 plus the 
     percentage by which--
       ``(i) the Secretary's estimate of the average value of the 
     consumer price index for all urban consumers (all items, U.S. 
     city average) for months in the particular fiscal year, 
     exceeds
       ``(ii) the average value of such index for months in the 3 
     previous fiscal years.
       ``(B) Transitional allowance factors.--
       ``(i) Fiscal year 1996.--The `transitional allowance 
     factor' for fiscal year 1996--

       ``(I) for the category of nondisabled medicaid children, is 
     1.051;
       ``(II) for the category of nondisabled medicaid adults, is 
     1.067;
       ``(III) for the category of nondisabled elderly medicaid 
     beneficiaries is 1.031;
       ``(IV) for the category of disabled medicaid beneficiaries 
     is 1.015; and
       ``(V) for administrative expenditures is 1.046.

       ``(ii) Subsequent fiscal years for nondisabled children and 
     adults and for disabled categories.--The `transitional 
     allowance factor' for the categories of nondisabled medicaid 
     children, nondisabled medicaid adults, and disabled medicaid 
     beneficiaries--

       ``(I) for fiscal year 1997 is 1.01, and
       ``(II) for each subsequent fiscal year is 1.0.

       ``(iii) Subsequent fiscal years for the elderly and 
     administrative expenditures.--The `transitional allowance 
     factor' for the category of nondisabled elderly medicaid 
     beneficiaries and for administrative expenditures for fiscal 
     years after fiscal year 1996 is 1.0.
       ``(4) Notice.--The Secretary shall notify each State before 
     the beginning of each fiscal year of the per capita limits 
     established under this subsection for the State for the 
     fiscal year.
       ``(d) Special Rules and Exceptions.--For purposes of this 
     section, expenditures attributable to any of the following 
     shall not be subject to the limits established under this 
     section and shall not be taken into account in establishing 
     per capita medical assistance limits under subsection (c)(1):
       ``(1) DSH.--Payment adjustments under section 1923.
       ``(2) Medicare cost-sharing.--Payments for medical 
     assistance for medicare cost-sharing (as defined in section 
     1905(p)(3)).
       ``(3) Services through ihs and tribal providers.--Payments 
     for medical assistance for services described in the last 
     sentence of section 1905(b).

     Nothing in this section shall be construed as applying any 
     limitation to expenditures for the purchase and delivery of 
     qualified pediatric vaccines under section 1928.
       ``(e) Definitions.--In this section, the term `medicaid 
     beneficiary' means an individual entitled to medical 
     assistance under the State plan under this title.
       ``(f) Estimations and Notice.--
       ``(1) In general.--The Secretary shall--
       ``(A) establish a process for estimating the limits 
     established under subsection (a) for each State at the 
     beginning of each fiscal year and adjusting such estimate 
     during such year; and
       ``(B) notifying each State of the estimations and 
     adjustments referred to in subparagraph (A).
       ``(2) Determination of number of full-year equivalent 
     individuals.--For purposes of this section, the number of 
     full-year equivalent individuals in each category described 
     in subsection (b) for a State for a year shall be determined 
     based on actual reports submitted by the State to the 
     Secretary. In the case of individuals who were not entitled 
     to benefits under a State plan for the entire fiscal year (or 
     are within a group of individuals for only part of a fiscal 
     year), the number shall take into account only the portion of 
     the year in which they were so entitled or within such group. 
     The Secretary may audit such reports.
       ``(g) Anti-Gaming Adjustment to Reflect Changes in 
     Eligibility.--
       ``(1) Report on per capita expenditures.--If a State makes 
     a change (on or after October 15, 1995) relating to 
     eligibility for medical assistance in its State plan that 
     results in the addition or deletion of individuals eligible 
     for such assistance, the State shall submit to the Secretary 
     with such change such information as the Secretary may 
     require in order to carry out paragraph (2).
       ``(2) Adjustment for certain additions.--If a State makes a 
     change described in paragraph (1) that the Secretary believes 
     will result in making medical assistance available for 
     additional individuals (within a category described in 
     subsection (b)) with respect to whom the Secretary estimates 
     the per capita average medical assistance expenditures will 
     be less the applicable per capita limit established under 
     subsection (c)(1) for such category, the Secretary shall 
     apply the per capita limits under such subsection separately 
     with respect to individuals who are eligible for medical 
     assistance without regard to such addition and with respect 
     to the individuals so added.
       ``(3) Adjustment for certain deletions.--If a State makes a 
     change described in paragraph (1) that the Secretary believes 
     will result in denial of medical assistance for individuals 
     (within a category described in subsection (b)) with respect 
     to whom the Secretary estimates the per capita average 
     medical assistance expenditures is greater than the 
     applicable per capita limit established under subsection 
     (c)(1) for such catetory, the Secretary shall adjust the 
     payment limits under subsection (a) to reflect any decrease 
     in average per beneficiary expenditures that would result 
     from such change.
       ``(h) Treatment of States Operating Under Waivers.--The 
     Secretary shall provide for such adjustments to the per 
     capita limits under subsection (c) for a fiscal year as may 
     be appropriate to take into account the case of States which 
     either--
       ``(1) during any of the 3 previous fiscal years was 
     providing medical assistance to its residents under a waiver 
     granted under section 1115, section 1915, or other provision 
     of law, and, in the fiscal year involved is no longer 
     providing such medical assistance under such waiver; or
       ``(2) during any of the 3 previous fiscal years was not 
     providing medical assistance to its residents under a waiver 
     granted under section 1115, section 1915, or other provision 
     of law, and, in the fiscal year involved is providing such 
     medical assistance under such a waiver.''.
       (b) Enforcement-Related Provisions.--
       (1) Assuring actual payments to states consistent with 
     limitation.--Section 1903(d) of such Act (42 U.S.C. 1396b(d)) 
     is amended--
       (A) in paragraph (2)(A), by striking ``The Secretary'' and 
     inserting ``Subject to paragraph (7), the Secretary'', and
       (B) by adding at the end the following new paragraph:
       ``(7)(A) The Secretary shall take such steps as are 
     necessary to assure that payments under this subsection for 
     quarters in a fiscal year are consistent with the payment 
     limits established under section 1931 for the fiscal year. 
     Such steps may include limiting such payments for one or more 
     quarters in a fiscal year based on--
       ``(i) an appropriate proportion of the payment limits for 
     the fiscal year involved, and
       ``(ii) numbers of individuals within each category, as 
     reported under subparagraph (B) for a recent previous 
     quarter.
       ``(B) Each State shall include, in its report filed under 
     paragraph (1)(A) for a calendar quarter--
       ``(i) the actual number of individuals within each category 
     described in section 1931(b) for the second previous calendar 
     quarter and (based on the data available) for the previous 
     calendar quarter, and
       ``(ii) an estimate of such numbers for the calendar quarter 
     involved.''.
       (2) Restriction on authority of states to apply less 
     restrictive income and resource methodologies.--Section 
     1902(r)(2) of such Act (42 U.S.C. 1396a(r)(2)) is amended by 
     adding at the end the following new subparagraph:
       ``(C) Subparagraph (A) shall not apply to plan amendments 
     made on or after October 15, 1995.''.
       (c) Conforming Amendment.--Section 1903(i) of such Act (42 
     U.S.C. 1396b(i)) is amended--
       (1) by striking ``or'' at the end of paragraph (14),
       (2) by striking the period at the end of paragraph (15) and 
     inserting ``; or'', and
       (3) by inserting after paragraph (15) the following:
       ``(16) in accordance with section 1931, with respect to 
     amounts expended to the extent they exceed applicable limits 
     established under section 1931(a).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to payments for calendar quarters beginning on or 
     after October 1, 1996.
                   Subtitle B--Medicaid Managed Care

     SEC. 7101. PERMITTING GREATER FLEXIBILITY FOR STATES TO 
                   ENROLL BENEFICIARIES IN MANAGED CARE 
                   ARRANGEMENTS.

       (a) In General.--Title XIX of the Social Security Act (42 
     U.S.C. 1396 et seq.), as amended by section 7001(a), is 
     amended--
       (1) by redesignating section 1932 as section 1933; and
       (2) by inserting after section 1931 the following new 
     section:


    ``state options for enrollment of beneficiaries in managed care 
                              arrangements

       ``Sec. 1932. (a) Mandatory Enrollment.--
       ``(1) In general.--Subject to the succeeding provisions of 
     this section and notwithstanding paragraphs (1), (10)(B), and 
     (23) of section 1902(a), a State may require an individual 
     eligible for medical assistance under the State plan under 
     this title to enroll with an eligible managed care provider 
     as a condition of receiving such assistance and, with respect 
     to assistance furnished by or under arrangements with such 
     provider, to receive such assistance through the provider, if 
     the following provisions are met:

[[Page H11242]]

       ``(A) The provider meets the requirements of section 1933.
       ``(B) The provider enters into a contract with the State to 
     provide services for the benefit of individuals eligible for 
     benefits under this title under which prepaid payments to 
     such provider are made on an actuarially sound basis.
       ``(C) There is sufficient capacity among all providers 
     meeting such requirements to enroll and serve the individuals 
     required to enroll with such providers.
       ``(D) The individual is not a special needs individual (as 
     defined in subsection (c)).
       ``(E) The State--
       ``(i) permits an individual to choose an eligible managed 
     care provider--

       ``(I) from among not less than 2 medicaid managed care 
     plans; or
       ``(II) between a medicaid managed care plan and a primary 
     care case management provider;

       ``(ii) provides the individual with the opportunity to 
     change enrollment among eligible managed care providers not 
     less than once annually and notifies the individual of such 
     opportunity not later than 60 days prior to the first date on 
     which the individual may change enrollment;
       ``(iii) establishes a method for establishing enrollment 
     priorities in the case of an eligible managed care provider 
     that does not have sufficient capacity to enroll all such 
     individuals seeking enrollment under which individuals 
     already enrolled with the provider are given priority in 
     continuing enrollment with the provider;
       ``(iv) establishes a default enrollment process which meets 
     the requirements described in paragraph (2) and under which 
     any such individual who does not enroll with an eligible 
     managed care provider during the enrollment period specified 
     by the State shall be enrolled by the State with such a 
     provider in accordance with such process; and
       ``(v) establishes the sanctions provided for in section 
     1934.
       ``(2) Default enrollment process requirements.--The default 
     enrollment process established by a State under paragraph 
     (1)(E)(iv) shall--
       ``(A) provide that the State may not enroll individuals 
     with an eligible managed care provider which is not in 
     compliance with the requirements of section 1933; and
       ``(B) provide for an equitable distribution of individuals 
     among all eligible managed care providers available to enroll 
     individuals through such default enrollment process, 
     consistent with the enrollment capacities of such providers.
       ``(b) Reenrollment of Individuals Who Regain Eligibility.--
       ``(1) In general.--If an individual eligible for medical 
     assistance under a State plan under this title and enrolled 
     with an eligible managed care provider with a contract under 
     subsection (a)(1)(B) ceases to be eligible for such 
     assistance for a period of not greater than 2 months, the 
     State may provide for the automatic reenrollment of the 
     individual with the provider as of the first day of the month 
     in which the individual is again eligible for such 
     assistance.
       ``(2) Conditions.--Paragraph (1) shall only apply if--
       ``(A) the month for which the individual is to be 
     reenrolled occurs during the enrollment period covered by the 
     individual's original enrollment with the eligible managed 
     care provider;
       ``(B) the eligible managed care provider continues to have 
     a contract with the State agency under subsection (a)(1)(B) 
     as of the first day of such month; and
       ``(C) the eligible managed care provider complies with the 
     requirements of section 1933.
       ``(3) Notice of reenrollment.--The State shall provide 
     timely notice to an eligible managed care provider of any 
     reenrollment of an individual under this subsection.
       ``(c) Special Needs Individuals Described.--In this 
     section, a `special needs individual' means any of the 
     following:
       ``(1) Special needs child.--An individual who is under 19 
     years of age who --
       ``(A) is eligible for supplemental security income under 
     title XVI;
       ``(B) is described under section 501(a)(1)(D);
       ``(C) is a child described in section 1902(e)(3); or
       ``(D) is in foster care or is otherwise in an out-of-home 
     placement.
       ``(2) Homeless individuals.--An individual who is homeless 
     (without regard to whether the individual is a member of a 
     family), including--
       ``(A) an individual whose primary residence during the 
     night is a supervised public or private facility that 
     provides temporary living accommodations; or
       ``(B) an individual who is a resident in transitional 
     housing.
       ``(3) Migrant agricultural workers.--A migratory 
     agricultural worker or a seasonal agricultural worker (as 
     such terms are defined in section 329 of the Public Health 
     Service Act), or the spouse or dependent of such a worker.
       ``(4) Indians.--An Indian (as defined in section 4(c) of 
     the Indian Health Care Improvement Act (25 U.S.C. 
     1603(c))).''.
       (b) Conforming Amendment.--Section 1902(a)(23) of such Act 
     (42 U.S.C. 1396a(a)(23)) is amended--
       (1) in the matter preceding subparagraph (A), by striking 
     ``subsection (g) and in section 1915'' and inserting 
     ``subsection (g), section 1915, and section 1931,''; and
       (2) in subparagraph (B)--
       (A) by striking ``a health maintenance organization, or a'' 
     and inserting ``or with an eligible managed care provider, as 
     defined in section 1933(g)(1), or''.

     SEC. 7102. REMOVAL OF BARRIERS TO PROVISION OF MEDICAID 
                   SERVICES THROUGH MANAGED CARE.

       (a) Repeal of Current Barriers.--Except as provided in 
     subsection (b), section 1903(m) of the Social Security Act 
     (42 U.S.C. 1396b(m)) is repealed on the date of the enactment 
     of this Act.
       (b) Existing Contracts.--In the case of any contract under 
     section 1903(m) of such Act which is in effect on the day 
     before the date of the enactment of this Act, the provisions 
     of such section shall apply to such contract until the 
     earlier of--
       (1) the day after the date of the expiration of the 
     contract; or
       (2) the date which is 1 year after the date of the 
     enactment of this Act.
       (c) Eligible Managed Care Providers Described.--Title XIX 
     of such Act (42 U.S.C. 1396 et seq.), as amended by sections 
     7001(a) and 7101(a), is amended--
       (1) by redesignating section 1933 as section 1934; and
       (2) by inserting after section 1932 the following new 
     section:


                   ``eligible managed care providers

       ``Sec. 1933. (a) Definitions.--In this section, the 
     following definitions shall apply:
       ``(1) Eligible managed care provider.--The term `eligible 
     managed care provider' means--
       ``(A) a medicaid managed care plan; or
       ``(B) a primary care case management provider.
       ``(2) Medicaid managed care plan.--The term `medicaid 
     managed care plan' means a health maintenance organization, 
     an eligible organization with a contract under Section 1876, 
     a provider sponsored network or any other plan which provides 
     or arranges for the provision of one or more items and 
     services to individuals eligible for medical assistance under 
     the State plan under this title in accordance with a contract 
     with the State under section 1932(a)(1)(B).
       ``(3) Primary care case management provider.--
       ``(A) In general.--The term `primary care case management 
     provider' means a health care provider that--
       ``(i) is a physician, group of physicians, a Federally-
     qualified health center, a rural health clinic, or an entity 
     employing or having other arrangements with physicians that 
     provides or arranges for the provision of one or more items 
     and services to individuals eligible for medical assistance 
     under the State plan under this title in accordance with a 
     contract with the State under section 1932(a)(1)(B);
       ``(ii) receives payment on a fee-for-service basis (or, in 
     the case of a Federally-qualified health center or a rural 
     health clinic, on a reasonable cost per encounter basis) for 
     the provision of health care items and services specified in 
     such contract to enrolled individuals;
       ``(iii) receives an additional fixed fee per enrollee for a 
     period specified in such contract for providing case 
     management services (including approving and arranging for 
     the provision of health care items and services specified in 
     such contract on a referral basis) to enrolled individuals; 
     and
       ``(iv) is not an entity that is at risk.
       ``(B) At risk.--In subparagraph (A)(iv), the term `at risk' 
     means an entity that--
       ``(i) has a contract with the State under which such entity 
     is paid a fixed amount for providing or arranging for the 
     provision of health care items or services specified in such 
     contract to an individual eligible for medical assistance 
     under the State plan and enrolled with such entity, 
     regardless of whether such items or services are furnished to 
     such individual; and
       ``(ii) is liable for all or part of the cost of furnishing 
     such items or services, regardless of whether such cost 
     exceeds such fixed payment.
       ``(b) Enrollment.--
       ``(1) Nondiscrimination.--An eligible managed care provider 
     may not discriminate on the basis of health status or 
     anticipated need for services in the enrollment, 
     reenrollment, or disenrollment of individuals eligible to 
     receive medical assistance under a State plan under this 
     title or by discouraging enrollment (except as permitted by 
     this section) by eligible individuals.
       ``(2) Termination of enrollment.--
       ``(A) In general.--An eligible managed care provider shall 
     permit an individual eligible for medical assistance under 
     the State plan under this title who is enrolled with the 
     provider to terminate such enrollment for cause at any time, 
     and without cause during the 60-day period beginning on the 
     date the individual receives notice of enrollment, and shall 
     notify each such individual of the opportunity to terminate 
     enrollment under these conditions.
       ``(B) Fraudulent inducement or coercion as grounds for 
     cause.--For purposes of subparagraph (A), an individual 
     terminating enrollment with an eligible managed care provider 
     on the grounds that the enrollment was based on fraudulent 
     inducement or was obtained through coercion shall be 
     considered to terminate such enrollment for cause.
       ``(C) Notice of termination.--
       ``(i) Notice to state.--

       ``(I) By individuals.--Each individual terminating 
     enrollment with an eligible managed care provider under 
     subparagraph (A) 

[[Page H11243]]

     shall do so by providing notice of the termination to an 
     office of the State agency administering the State plan under 
     this title, the State or local welfare agency, or an 
     office of an eligible managed care provider.

       ``(II) By plans.--Any eligible managed care provider which 
     receives notice of an individual's termination of enrollment 
     with such provider through receipt of such notice at an 
     office of an eligible managed care provider shall provide 
     timely notice of the termination to the State agency 
     administering the State plan under this title.

       ``(ii) Notice to plan.--The State agency administering the 
     State plan under this title or the State or local welfare 
     agency which receives notice of an individual's termination 
     of enrollment with an eligible managed care provider under 
     clause (i) shall provide timely notice of the termination to 
     such provider.
       ``(D) Reenrollment.--Each State shall establish a process 
     under which an individual terminating enrollment under this 
     paragraph shall be promptly enrolled with another eligible 
     managed care provider and notified of such enrollment.
       ``(3) Provision of enrollment materials in understandable 
     form.--Each eligible managed care provider shall provide all 
     enrollment materials in a manner and form which may be easily 
     understood by a typical adult enrollee of the provider who is 
     eligible for medical assistance under the State plan under 
     this title.
       ``(c) Quality Assurance.--
       ``(1) Access to services.--Each eligible managed care 
     provider shall provide or arrange for the provision of all 
     medically necessary medical assistance under this title which 
     is specified in the contract entered into between such 
     provider and the State under section 1932(a)(1)(B) for 
     enrollees who are eligible for medical assistance under the 
     State plan under this title.
       ``(2) Timely delivery of services.--Each eligible managed 
     care provider shall respond to requests from enrollees for 
     the delivery of medical assistance in a manner which --
       ``(A) makes such assistance --
       ``(i) available and accessible to each such individual, 
     within the area served by the provider, with reasonable 
     promptness and in a manner which assures continuity; and
       ``(ii) when medically necessary, available and accessible 
     24 hours a day and 7 days a week; and
       ``(B) with respect to assistance provided to such an 
     individual other than through the provider, or without prior 
     authorization, in the case of a primary care case management 
     provider, provides for reimbursement to the individual (if 
     applicable under the contract between the State and the 
     provider) if --
       ``(i) the services were medically necessary and immediately 
     required because of an unforeseen illness, injury, or 
     condition; and
       ``(ii) it was not reasonable given the circumstances to 
     obtain the services through the provider, or, in the case of 
     a primary care case management provider, with prior 
     authorization.
       ``(3) External independent review of eligible managed care 
     provider activities.--
       ``(A) Review of medicaid managed care plan contract.--
       ``(i) In general.--Except as provided in subparagraph (B), 
     each medicaid managed care plan shall be subject to an annual 
     external independent review of the quality and timeliness of, 
     and access to, the items and services specified in such 
     plan's contract with the State under section 1932(a)(1)(B). 
     Such review shall specifically evaluate the extent to which 
     the medicaid managed care plan provides such services in a 
     timely manner.
       ``(ii) Contents of review.--An external independent review 
     conducted under this paragraph shall include the following:

       ``(I) a review of the entity's medical care, through 
     sampling of medical records or other appropriate methods, for 
     indications of quality of care and inappropriate utilization 
     (including overutilization) and treatment,
       ``(II) a review of enrollee inpatient and ambulatory data, 
     through sampling of medical records or other appropriate 
     methods, to determine trends in quality and appropriateness 
     of care,
       ``(III) notification of the entity and the State when the 
     review under this paragraph indicates inappropriate care, 
     treatment, or utilization of services (including 
     overutilization), and
       ``(IV) other activities as prescribed by the Secretary or 
     the State.

       ``(iii) Availability of results.--The results of each 
     external independent review conducted under this subparagraph 
     shall be available to participating health care providers, 
     enrollees, and potential enrollees of the medicaid managed 
     care plan, except that the results may not be made available 
     in a manner that discloses the identity of any individual 
     patient.
       ``(B) Deemed compliance.--
       ``(i) Medicare plans.--The requirements of subparagraph (A) 
     shall not apply with respect to a medicaid managed care plan 
     if the plan is an eligible organization with a contract in 
     effect under section 1876.
       ``(ii) Private accreditation.--

       ``(I) In general.--The requirements of subparagraph (A) 
     shall not apply with respect to a medicaid managed care plan 
     if--

       ``(aa) the plan is accredited by an organization meeting 
     the requirements described in clause (iii); and
       ``(bb) the standards and process under which the plan is 
     accredited meet such requirements as are established under 
     subclause (II), without regard to whether or not the time 
     requirement of such subclause is satisfied.

       ``(II) Standards and process.--Not later than 180 days 
     after the date of the enactment of this Act, the Secretary 
     shall specify requirements for the standards and process 
     under which a medicaid managed care plan is accredited by an 
     organization meeting the requirements of clause (iii).

       ``(iii) Accrediting organization.--An accrediting 
     organization meets the requirements of this clause if the 
     organization--

       ``(I) is a private, nonprofit organization;
       ``(II) exists for the primary purpose of accrediting 
     managed care plans or health care providers; and
       ``(III) is independent of health care providers or 
     associations of health care providers.

       ``(C) Review of primary care case management provider 
     contract.--Each primary care case management provider shall 
     be subject to an annual external independent review of the 
     quality and timeliness of, and access to, the items and 
     services specified in the contract entered into between the 
     State and the primary care case management provider under 
     section 1932(a)(1)(B).
       ``(4) Federal monitoring responsibilities.--The Secretary 
     shall review the external independent reviews conducted 
     pursuant to paragraph (3) and shall monitor the effectiveness 
     of the State's monitoring and followup activities required 
     under subparagraph (A) of paragraph (2). If the Secretary 
     determines that a State's monitoring and followup activities 
     are not adequate to ensure that the requirements of paragraph 
     (2) are met, the Secretary shall undertake appropriate 
     followup activities to ensure that the State improves its 
     monitoring and followup activities.
       ``(5) Providing information on services.--
       ``(A) Requirements for medicaid managed care plans.--
       ``(i) Information to the state.--Each medicaid managed care 
     plan shall provide to the State (at such frequency as the 
     Secretary may require), complete and timely information 
     concerning the following:

       ``(I) The services that the plan provides to (or arranges 
     to be provided to) individuals eligible for medical 
     assistance under the State plan under this title.
       ``(II) The identity, locations, qualifications, and 
     availability of participating health care providers.
       ``(III) The rights and responsibilities of enrollees.
       ``(IV) The services provided by the plan which are subject 
     to prior authorization by the plan as a condition of coverage 
     (in accordance with paragraph (6)(A)).
       ``(V) The procedures available to an enrollee and a health 
     care provider to appeal the failure of the plan to cover a 
     service.
       ``(VI) The performance of the plan in serving individuals 
     eligible for medical assistance under the State plan under 
     this title.

       ``(ii) Information to health care providers, enrollees, and 
     potential enrollees.--Each medicaid managed care plan shall--

       ``(I) upon request, make the information described in 
     clause (i) available to participating health care providers, 
     enrollees, and potential enrollees in the plan's service 
     area; and
       ``(II) provide to enrollees and potential enrollees 
     information regarding all items and services that are 
     available to enrollees under the contract between the State 
     and the plan that are covered either directly or through a 
     method of referral and prior authorization.

       ``(B) Requirements for primary care case management 
     providers.--Each primary care case management provider 
     shall--
       ``(i) provide to the State (at such frequency as the 
     Secretary may require), complete and timely information 
     concerning the services that the primary care case management 
     provider provides to (or arranges to be provided to) 
     individuals eligible for medical assistance under the State 
     plan under this title;
       ``(ii) make available to enrollees and potential enrollees 
     information concerning services available to the enrollee for 
     which prior authorization by the primary care case management 
     provider is required; and
       ``(iii) provide enrollees and potential enrollees 
     information regarding all items and services that are 
     available to enrollees under the contract between the State 
     and the primary care case management provider that are 
     covered either directly or through a method of referral and 
     prior authorization.
       ``(iv) provide assurances that such entities and their 
     professional personnel are licensed as required by State law 
     and qualified to provide case management services, through 
     methods such as ongoing monitoring of compliance with 
     applicable requirements and providing information and 
     technical assistance.
       ``(C) Requirements for both medicaid managed care plans and 
     primary care case management providers.--Each eligible 
     managed care provider shall provide the State with aggregate 
     encounter data for early and periodic screening, diagnostic, 
     and treatment services under section 1905(r) furnished to 
     individuals under 21 years of age. Any such data provided may 
     be audited by the State and the Secretary.
       ``(6) Timeliness of payment.--An eligible managed care 
     provider shall make payment to health care providers for 
     items and services which are subject to the contract under 
     section 1931(a)(1)(B) and which are furnished to individuals 
     eligible for medical assistance under the State plan under 
     this title who are enrolled with the provider on a timely 
     basis 

[[Page H11244]]

     and under the claims payment procedures described in section 
     1902(a)(37)(A), unless the health care provider and the 
     eligible managed care provider agree to an alternate payment 
     schedule.
       ``(7) Additional quality assurance requirements for 
     medicaid managed care plans.--
       ``(A) Conditions for prior authorization.--A medicaid 
     managed care plan may require the approval of medical 
     assistance for nonemergency services before the assistance is 
     furnished to an enrollee only if the system providing for 
     such approval--
       ``(i) provides that such decisions are made in a timely 
     manner, depending upon the urgency of the situation; and
       ``(ii) permits coverage of medically necessary medical 
     assistance provided to an enrollee without prior 
     authorization in the event of an emergency.
       ``(B) Internal grievance procedure.--Each medicaid managed 
     care plan shall establish an internal grievance procedure 
     under which a plan enrollee or a provider on behalf of such 
     an enrollee who is eligible for medical assistance under the 
     State plan under this title may challenge the denial of 
     coverage of or payment for such assistance.
       ``(C) Use of unique physician identifier for participating 
     physicians.--Each medicaid managed care plan shall require 
     each physician providing services to enrollees eligible for 
     medical assistance under the State plan under this title to 
     have a unique identifier in accordance with the system 
     established under section 1902(x).
       ``(D) Patient encounter data.--
       ``(i) In general.--Each medicaid managed care plan shall 
     maintain sufficient patient encounter data to identify the 
     health care provider who delivers services to patients and to 
     otherwise enable the State plan to meet the requirements of 
     section 1902(a)(27). The plan shall incorporate such 
     information in the maintenance of patient encounter data with 
     respect to such health care provider.
       ``(ii) Compliance.--A medicaid managed care plan shall--

       ``(I) submit the data maintained under clause (i) to the 
     State; or
       ``(II) demonstrate to the State that the data complies with 
     managed care quality assurance guidelines established by the 
     Secretary in accordance with clause (iii).
       ``(iii) Standards.--In establishing managed care quality 
     assurance guidelines under clause (ii)(II), the Secretary 
     shall consider--

       ``(I) managed care industry standards for--

       ``(aa) internal quality assurance; and
       ``(bb) performance measures; and

       ``(II) any managed care quality standards established by 
     the National Association of Insurance Commissioners.

       (E) Payments to hospitals.--A medicaid managed care plan 
     shall--
       ``(i) provide the State with assurances that payments for 
     hospital services are reasonable and adequate to meet the 
     costs which must be incurred by efficiently and economically 
     operated facilities in order to provide such services to 
     individuals enrolled with the plan under this title in 
     conformity with applicable State and Federal laws, 
     regulations, and quality and safety standards;
       ``(ii) report to the State at least annually--

       ``(I) the rates paid to hospitals by the plan for items and 
     services furnished to such individuals,
       ``(II) an explanation of the methodology used to compute 
     such rates, and
       ``(III) a comparison of such rates with the rates used by 
     the State to pay for hospital services furnished to 
     individuals who are eligible for benefits under the program 
     established by the State under this title but are not 
     enrolled in a medicaid managed care plan; and

       ``(iii) if the rates paid by the plan are lower than the 
     rates paid by the State (as described in clause (ii)(III)), 
     an explanation of why the rates paid by the plan nonetheless 
     meet the standard described in clause (i).
       ``(d) Due Process Requirements for Eligible Managed Care 
     Providers.--
       ``(1) Denial of or unreasonable delay in determining 
     coverage as grounds for hearing.--If an eligible managed care 
     provider--
       ``(A) denies coverage of or payment for medical assistance 
     with respect to an enrollee who is eligible for such 
     assistance under the State plan under this title; or
       ``(B) fails to make any eligibility or coverage 
     determination sought by an enrollee or, in the case of a 
     medicaid managed care plan, by a participating health care 
     provider or enrollee, in a timely manner, depending upon the 
     urgency of the situation, the enrollee or the health care 
     provider furnishing such assistance to the enrollee (as 
     applicable) may obtain a hearing before the State agency 
     administering the State plan under this title in accordance 
     with section 1902(a)(3), but only, with respect to a medicaid 
     managed care plan, after completion of the internal grievance 
     procedure established by the plan under subsection (c)(6)(B).
       ``(2) Completion of internal grievance procedure.--Nothing 
     in this subsection shall require completion of an internal 
     grievance procedure if such procedure does not exist or if 
     the procedure does not provide for timely review of health 
     needs considered by the enrollee's health care provider to be 
     of an urgent nature.
       ``(e) Miscellaneous.--
       ``(1) Protecting enrollees against the insolvency of 
     eligible managed care providers and against the failure of 
     the state to pay such providers.--Each eligible managed care 
     provider shall provide that an individual eligible for 
     medical assistance under the State plan under this title who 
     is enrolled with the provider may not be held liable--
       ``(A) for the debts of the eligible managed care provider, 
     in the event of the provider's insolvency;
       ``(B) for services provided to the individ- ual--
       ``(i) in the event of the provider failing to receive 
     payment from the State for such services; or
       ``(ii) in the event of a health care provider with a 
     contractual or other arrangement with the eligible managed 
     care provider failing to receive payment from the State or 
     the eligible managed care provider for such services; or
       ``(C) for the debts of any health care provider with a 
     contractual or other arrangement with the provider to provide 
     services to the individual, in the event of the insolvency of 
     the health care provider.
       ``(2) Treatment of children with special health care 
     needs.--
       ``(A) In general.--In the case of an enrollee of an 
     eligible managed care provider who is a child with special 
     health care needs--
       ``(i) if any medical assistance specified in the contract 
     with the State is identified in a treatment plan prepared for 
     the enrollee by a program described in subparagraph (C), the 
     eligible managed care provider shall provide (or arrange to 
     be provided) such assistance in accordance with the treatment 
     plan either--

       ``(I) by referring the enrollee to a pediatric health care 
     provider who is trained and experienced in the provision of 
     such assistance and who has a contract with the eligible 
     managed care provider to provide such assistance; or
       ``(II) if appropriate services are not available through 
     the eligible managed care provider, permitting such enrollee 
     to seek appropriate specialty services from pediatric health 
     care providers outside of or apart from the eligible managed 
     care provider; and

       ``(ii) the eligible managed care provider shall require 
     each health care provider with whom the eligible managed care 
     provider has entered into an agreement to provide medical 
     assistance to enrollees to furnish the medical assistance 
     specified in such enrollee's treatment plan to the extent the 
     health care provider is able to carry out such treatment 
     plan.
       ``(B) Prior authorization.--An enrollee referred for 
     treatment under subparagraph (A)(i)(I), or permitted to seek 
     treatment outside of or apart from the eligible managed care 
     provider under subparagraph (A)(i)(II) shall be deemed to 
     have obtained any prior authorization required by the 
     provider.
       ``(C) Child with special health care needs.--For purposes 
     of subparagraph (A), a child with special health care needs 
     is a child who is receiving services under--
       ``(i) a program administered under part B or part H of the 
     Individuals with Disabilities Education Act;
       ``(ii) a program for children with special health care 
     needs under title V;
       ``(iii) a program under part B or part D of title IV; or
       ``(iv) any other program for children with special health 
     care needs identified by the Secretary.
       ``(3) Physician incentive plans.--Each medicaid managed 
     care plan shall require that any physician incentive plan 
     covering physicians who are participating in the medicaid 
     managed care plan shall meet the requirements of section 
     1876(i)(8).
       ``(4) Incentives for high quality eligible managed care 
     providers.--The Secretary and the State may establish a 
     program to reward, through public recognition, incentive 
     payments, or enrollment of additional individuals (or 
     combinations of such rewards), eligible managed care 
     providers that provide the highest quality care to 
     individuals eligible for medical assistance under the State 
     plan under this title who are enrolled with such providers. 
     For purposes of section 1903(a)(7), proper expenses incurred 
     by a State in carrying out such a program shall be considered 
     to be expenses necessary for the proper and efficient 
     administration of the State plan under this title.''.
       (d) Clarification of Application of FFP Denial Rules to 
     Payments Made Pursuant to Medicaid Managed Care Plans.--
     Section 1903(i) of such Act (42 U.S.C. 1396b(i)) is amended 
     by adding at the end the following sentence: ``Paragraphs 
     (1)(A), (1)(B), (2), (5), and (12) shall apply with respect 
     to items or services furnished and amounts expended by or 
     through an eligible managed care provider (as defined in 
     section 1933(a)(1)) in the same manner as such paragraphs 
     apply to items or services furnished and amounts expended 
     directly by the State.''.
       (e) Clarification of Certification Requirements for 
     Physicians Providing Services to Children and Pregnant 
     Women.--Section 1903(i)(12) of such Act (42 U.S.C. 
     1396b(i)(12)) is amended --
       (1) in subparagraph (A)(i), to read as follows:
       ``(i) is certified in family practice or pediatrics by the 
     medical specialty board recognized by the American Board of 
     Medical Specialties for family practice or pediatrics or is 
     certified in general practice or pediatrics by the medical 
     specialty board recognized by the American Osteopathic 
     Association,'';
       (2) in subparagraph (B)(i), to read as follows:

[[Page H11245]]

       ``(i) is certified in family practice or obstetrics by the 
     medical specialty board recognized by the American Board of 
     Medical Specialties for family practice or obstetrics or is 
     certified in family practice or obstetrics by the medical 
     specialty board recognized by the American Osteopathic 
     Association,''; and
       (3) in both subparagraphs (A) and (B) --
       (A) by striking ``or'' at the end of clause (v);
       (B) by redesignating clause (vi) as clause (vii); and
       (C) by inserting after clause (v) the following new clause:
       ``(vi) delivers such services in the emergency department 
     of a hospital participating in the State plan approved under 
     this title, or''.

     SEC. 7103. ADDITIONAL REQUIREMENTS FOR MEDICAID MANAGED CARE 
                   PLANS.

       Section 1933 of the Social Security Act, as added by 
     section 7102(c)(2), is amended--
       (1) by redesignating subsections (d) and (e) as subsections 
     (e) and (f), respectively; and
       (2) by inserting after subsection (c) the following new 
     subsection:
       ``(d) Additional Requirements for Medicaid Managed Care 
     Plans.--
       ``(1) Demonstration of adequate capacity and services.--
       ``(A) In general.--Subject to subparagraph (C), each 
     medicaid managed care plan shall provide the State and the 
     Secretary with adequate assurances (as determined by the 
     Secretary) that the plan, with respect to a service area --
       ``(i) has the capacity to serve the expected enrollment in 
     such service area;
       ``(ii) offers an appropriate range of services for the 
     population expected to be enrolled in such service area, 
     including transportation services and translation services 
     consisting of the principal languages spoken in the service 
     area;
       ``(iii) maintains sufficient numbers of providers of 
     services included in the contract with the State to ensure 
     that services are available to individuals receiving medical 
     assistance and enrolled in the plan to the same extent that 
     such services are available to individuals enrolled in the 
     plan who are not recipients of medical assistance under the 
     State plan under this title;
       ``(iv) maintains extended hours of operation with respect 
     to primary care services that are beyond those maintained 
     during a normal business day;
       ``(v) provides preventive and primary care services in 
     locations that are readily accessible to members of the 
     community; and
       ``(vi) provides information concerning educational, social, 
     health, and nutritional services offered by other programs 
     for which enrollees may be eligible.
       ``(vii) complies with such other requirements relating to 
     access to care as the Secretary or the State may impose.
       ``(B) Proof of adequate primary care capacity and 
     services.--Subject to subparagraph (C), a medicaid managed 
     care plan that contracts with a reasonable number of primary 
     care providers (as determined by the Secretary) and whose 
     primary care membership includes a reasonable number (as so 
     determined) of the following providers will be deemed to have 
     satisfied the requirements of subparagraph (A):
       ``(i) Rural health clinics, as defined in section 
     1905(l)(1).
       ``(ii) Federally-qualified health centers, as defined in 
     section 1905(l)(2)(B).
       ``(iii) Clinics which are eligible to receive payment for 
     services provided under title X of the Public Health Service 
     Act.
       ``(C) Sufficient providers of specialized services.--
     Notwithstanding subparagraphs (A) and (B), a medicaid managed 
     care plan may not be considered to have satisfied the 
     requirements of subparagraph (A) if the plan does not have a 
     sufficient number (as determined by the Secretary) of 
     providers of specialized services, including perinatal and 
     pediatric specialty care, to ensure that such services are 
     available and accessible.
       ``(2) Written provider participation agreements for certain 
     providers.--Each medicaid managed care plan that enters into 
     a written provider participation agreement with a provider 
     described in paragraph (1)(B) shall--
       ``(A) include terms and conditions that are no more 
     restrictive than the terms and conditions that the medicaid 
     managed care plan includes in its agreements with other 
     participating providers with respect to--
       ``(i) the scope of covered services for which payment is 
     made to the provider;
       ``(ii) the assignment of enrollees by the plan to the 
     provider;
       ``(iii) the limitation on financial risk or availability of 
     financial incentives to the provider;
       ``(iv) accessibility of care;
       ``(v) professional credentialing and recredentialing;
       ``(vi) licensure;
       ``(vii) quality and utilization management;
       ``(viii) confidentiality of patient records;
       ``(ix) grievance procedures; and
       ``(x) indemnification arrangements between the plans and 
     providers; and
       ``(B) provide for payment to the provider on a basis that 
     is comparable to the basis on which other providers are 
     paid.''.

     SEC. 7104. PREVENTING FRAUD IN MEDICAID MANAGED CARE.

       (a) In General.--Section 1933 of the Social Security Act, 
     as added by section 7102(c)(2) and amended by section 7103, 
     is amended--
       (1) by redesignating subsection (f) as subsection (g); and
       (2) by inserting after subsection (e) the following new 
     subsection:
       ``(f) Anti-Fraud Provisions.--
       ``(1) Provisions applicable to eligible managed care 
     providers.--
       ``(A) Prohibiting affiliations with individuals debarred by 
     Federal agencies.--
       ``(i) In general.--An eligible managed care provider may 
     not knowingly--

       ``(I) have a person described in clause (iii) as a 
     director, officer, partner, or person with beneficial 
     ownership of more than 5 percent of the plan's equity; or
       ``(II) have an employment, consulting, or other agreement 
     with a person described in clause (iii) for the provision of 
     items and services that are significant and material to the 
     organization's obligations under its contract with the State.

       ``(ii) Effect of noncompliance.--If a State finds that an 
     eligible managed care provider is not in compliance with 
     subclause (I) or (II) of clause (i), the State--

       ``(I) shall notify the Secretary of such noncompliance;
       ``(II) may continue an existing agreement with the provider 
     unless the Secretary (in consultation with the Inspector 
     General of the Department of Health and Human Services) 
     directs otherwise; and
       ``(III) may not renew or otherwise extend the duration of 
     an existing agreement with the provider unless the Secretary 
     (in consultation with the Inspector General of the Department 
     of Health and Human Services) provides to the State and to 
     the Congress a written statement describing compelling 
     reasons that exist for renewing or extending the agreement.

       ``(iii) Persons described.--A person is described in this 
     clause if such person--

       ``(I) is debarred or suspended by the Federal Government, 
     pursuant to the Federal acquisition regulation, from 
     Government contracting and subcontracting;
       ``(II) is an affiliate (within the meaning of the Federal 
     acquisition regulation) of a person described in clause (i); 
     or
       ``(III) is excluded from participation in any program under 
     title XVIII or any State health care program, as defined in 
     section 1128(h).

       ``(B) Restrictions on marketing.--
       ``(i) Distribution of materials.--

       ``(I) In general.--An eligible managed care provider may 
     not distribute marketing materials within any State--

       ``(aa) without the prior approval of the State; and
       ``(bb) that contain false or materially misleading 
     information.

       ``(II) Prohibition.--The State may not enter into or renew 
     a contract with an eligible managed care provider for the 
     provision of services to individuals enrolled under the State 
     plan under this title if the State determines that the 
     provider intentionally distributed false or materially 
     misleading information in violation of subclause (I)(bb).

       ``(ii) Service market.--An eligible managed care provider 
     shall distribute marketing materials to the entire service 
     area of such provider.
       ``(iii) Prohibition of tie-ins.--An eligible managed care 
     provider, or any agency of such provider, may not seek to 
     influence an individual's enrollment with the provider in 
     conjunction with the sale of any other insurance.
       ``(iv) Prohibiting marketing fraud.--Each eligible managed 
     care provider shall comply with such procedures and 
     conditions as the Secretary prescribes in order to ensure 
     that, before an individual is enrolled with the provider, the 
     individual is provided accurate and sufficient information to 
     make an informed decision whether or not to enroll.
       ``(2) Provisions applicable only to medicaid managed care 
     plans.--
       ``(A) State conflict-of-interest safeguards in medicaid 
     risk contracting.--A medicaid managed care plan may not enter 
     into a contract with any State under section 1932(a)(1)(B) 
     unless the State has in effect conflict-of-interest 
     safeguards with respect to officers and employees of the 
     State with responsibilities relating to contracts with such 
     plans or to the default enrollment process described in 
     section 1932(a)(1)(D)(iv) that are at least as effective as 
     the Federal safeguards provided under section 27 of the 
     Office of Federal Procurement Policy Act (41 U.S.C. 423), 
     against conflicts of interest that apply with respect to 
     Federal procurement officials with comparable 
     responsibilities with respect to such contracts.
       ``(B) Requiring disclosure of financial information.--In 
     addition to any requirements applicable under section 
     1902(a)(27) or 1902(a)(35), a medicaid managed care plan 
     shall--
       ``(i) report to the State (and to the Secretary upon the 
     Secretary's request) such financial information as the State 
     or the Secretary may require to demonstrate that--

       ``(I) the plan has the ability to bear the risk of 
     potential financial losses and otherwise has a fiscally sound 
     operation;
       ``(II) the plan uses the funds paid to it by the State and 
     the Secretary for activities consistent with the requirements 
     of this title and the contract between the State and plan; 
     and
       ``(III) the plan does not place an individual physician, 
     physician group, or other health care provider at substantial 
     risk (as determined by the Secretary) for services not 
     provided by such physician, group, or health care provider, 
     by providing adequate protection (as determined by the 
     Secretary) to limit the liability of such physician, group, 

[[Page H11246]]

     or health care provider, through measures such as stop loss 
     insurance or appropriate risk corridors;
       ``(ii) agree that the Secretary and the State (or any 
     person or organization designated by either) shall have the 
     right to audit and inspect any books and records of the plan 
     (and of any subcontractor) relating to the information 
     reported pursuant to clause (i) and any information required 
     to be furnished under section paragraphs (27) or (35) of 
     section 1902(a);
       ``(iii) make available to the Secretary and the State a 
     description of each transaction described in subparagraphs 
     (A) through (C) of section 1318(a)(3) of the Public Health 
     Service Act between the plan and a party in interest (as 
     defined in section 1318(b) of such Act); and
       ``(iv) agree to make available to its enrollees upon 
     reasonable request--

       ``(I) the information reported pursuant to clause (i); and
       ``(II) the information required to be disclosed under 
     sections 1124 and 1126.

       ``(C) Adequate provision against risk of insolvency.--
       ``(i) Establishment of standards.--The Secretary shall 
     establish standards, including appropriate equity standards, 
     under which each medicaid managed care plan shall make 
     adequate provision against the risk of insolvency.
       ``(ii) Consideration of other standards.--In establishing 
     the standards described in clause (i), the Secretary shall 
     consider solvency standards applicable to eligible 
     organizations with a risk-sharing contract under section 
     1876.
       ``(iii) Model contract on solvency.--At the earliest 
     practicable time after the date of enactment of this section, 
     the Secretary shall issue guidelines and regulations 
     concerning solvency standards for risk contracting entities 
     and subcontractors of such risk contracting entities. Such 
     guidelines and regulations shall take into account 
     characteristics that may differ among risk contracting 
     entities including whether such an entity is at risk for 
     inpatient hospital services.
       ``(D) Requiring report on net earnings and additional 
     benefits.--Each medicaid managed care plan shall submit a 
     report to the State and the Secretary not later than 12 
     months after the close of a contract year containing--
       ``(i) the most recent audited financial statement of the 
     plan's net earnings, in accordance with guidelines 
     established by the Secretary in consultation with the States, 
     and consistent with generally accepted accounting principles; 
     and
       ``(ii) a description of any benefits that are in addition 
     to the benefits required to be provided under the contract 
     that were provided during the contract year to members 
     enrolled with the plan and entitled to medical assistance 
     under the State plan under this title.''.

     SEC. 7105. ASSURING ADEQUACY OF PAYMENTS TO MEDICAID MANAGED 
                   CARE PLANS AND PROVIDERS.

       Title XIX of the Social Security Act, as amended by 
     sections 7001, 7101(a), and 7102(c), is further amended--
       (1) by redesignating section 1934 as section 1935; and
       (2) by inserting after section 1933 the following new 
     section:


  ``assuring adequacy of payments to medicaid managed care plans and 
                               providers

       ``Sec. 1934. As a condition of approval of a State plan 
     under this title, a State shall--
       ``(1) find, determine, and make assurances satisfactory to 
     the Secretary that--
       ``(A) the rates it pays medicaid managed care plans for 
     individuals eligible under the State plan are reasonable and 
     adequate to assure access to services meeting professionally 
     recognized quality standards, taking into account--
       ``(i) the items and services to which the rate applies,
       ``(ii) the eligible population, and
       ``(iii) the rate the State pays providers for such items 
     and services; and
       ``(B) the methodology used to adjust the rate adequately 
     reflects the varying risks associated with individuals 
     actually enrolling in each medicaid managed care plan; and
       ``(2) report to the Secretary, at least annually, on--
       ``(A) the rates the States pays to medicaid managed care 
     plans, and
       ``(B) the rates medicaid managed care plans pay for 
     hospital services (and such other information as medicaid 
     managed care plans are required to submit to the State 
     pursuant to section 1933(c)(5)(E).''.

     SEC. 7106. SANCTIONS FOR NONCOMPLIANCE BY ELIGIBLE MANAGED 
                   CARE PROVIDERS.

       (a) Sanctions Described.--Title XIX of such Act (42 U.S.C. 
     1396 et seq.), as previously amended, is further amended--
       (1) by redesignating section 1934 as section 1935; and
       (2) by inserting after section 1934 the following new 
     section:


    ``sanctions for noncompliance by eligible managed care providers

       ``Sec. 1935. (a) Use of Intermediate Sanctions by the State 
     To Enforce Requirements.--Each State shall establish 
     intermediate sanctions, which may include any of the types 
     described in subsection (b) other than the termination of a 
     contract with an eligible managed care provider, which the 
     State may impose against an eligible managed care provider 
     with a contract under section 1932(a)(1)(B) if the provider--
       ``(1) fails substantially to provide medically necessary 
     items and services that are required (under law or under such 
     provider's contract with the State) to be provided to an 
     enrollee covered under the contract, if the failure has 
     adversely affected (or has a substantial likelihood of 
     adversely affecting) the enrollee;
       ``(2) imposes premiums on enrollees in excess of the 
     premiums permitted under this title;
       ``(3) acts to discriminate among enrollees on the basis of 
     their health status or requirements for health care services, 
     including expulsion or refusal to reenroll an individual, 
     except as permitted by sections 1932 and 1933, or engaging in 
     any practice that would reasonably be expected to have the 
     effect of denying or discouraging enrollment with the 
     provider by eligible individuals whose medical condition or 
     history indicates a need for substantial future medical 
     services;
       ``(4) misrepresents or falsifies information that is 
     furnished--
       ``(A) to the Secretary or the State under section 1932 or 
     1933; or
       ``(B) to an enrollee, potential enrollee, or a health care 
     provider under such sections; or
       ``(5) fails to comply with the requirements of section 
     1876(i)(8).
       ``(b) Intermediate Sanctions.--The sanctions described in 
     this subsection are as follows:
       ``(1) Civil money penalties as follows:
       ``(A) Except as provided in subparagraph (B), (C), or (D), 
     not more than $25,000 for each determination under subsection 
     (a).
       ``(B) With respect to a determination under paragraph (3) 
     or (4)(A) of subsection (a), not more than $100,000 for each 
     such determination.
       ``(C) With respect to a determination under subsection 
     (a)(2), double the excess amount charged in violation of such 
     subsection (and the excess amount charged shall be deducted 
     from the penalty and returned to the individual concerned).
       ``(D) Subject to subparagraph (B), with respect to a 
     determination under subsection (a)(3), $15,000 for each 
     individual not enrolled as a result of a practice described 
     in such subsection.
       ``(2) The appointment of temporary management to oversee 
     the operation of the eligible managed care provider and to 
     assure the health of the provider's enrollees, if there is a 
     need for temporary management while--
       ``(A) there is an orderly termination or reorganization of 
     the eligible managed care provider; or
       ``(B) improvements are made to remedy the violations found 
     under subsection (a), except that temporary management under 
     this paragraph may not be terminated until the State has 
     determined that the eligible managed care provider has the 
     capability to ensure that the violations shall not recur.
       ``(3) Permitting individuals enrolled with the eligible 
     managed care provider to terminate enrollment without cause, 
     and notifying such individuals of such right to terminate 
     enrollment.
       ``(c) Treatment of Chronic Substandard Providers.--In the 
     case of an eligible managed care provider which has 
     repeatedly failed to meet the requirements of section 1932 or 
     1933, the State shall (regardless of what other sanctions are 
     provided) impose the sanctions described in paragraphs (2) 
     and (3) of subsection (b).
       ``(d) Authority To Terminate Contract.--In the case of an 
     eligible managed care provider which has failed to meet the 
     requirements of section 1932 or 1933, the State shall have 
     the authority to terminate its contract with such provider 
     under section 1932(a)(1)(B) and to enroll such provider's 
     enrollees with other eligible managed care providers (or to 
     permit such enrollees to receive medical assistance under the 
     State plan under this title other than through an eligible 
     managed care provider).
       ``(e) Availability of Sanctions to the Secretary.--
       ``(1) Intermediate sanctions.--In addition to the sanctions 
     described in paragraph (2) and any other sanctions available 
     under law, the Secretary may provide for any of the sanctions 
     described in subsection (b) if the Secretary determines 
     that--
       ``(A) an eligible managed care provider with a contract 
     under section 1932(a)(1)(B) fails to meet any of the 
     requirements of section 1932 or 1933; and
       ``(B) the State has failed to act appropriately to address 
     such failure.
       ``(2) Denial of payments to the state.--The Secretary may 
     deny payments to the State for medical assistance furnished 
     under the contract under section 1932(a)(1)(B) for 
     individuals enrolled after the date the Secretary notifies an 
     eligible managed care provider of a determination under 
     subsection (a) and until the Secretary is satisfied that the 
     basis for such determination has been corrected and is not 
     likely to recur.
       ``(f) Due Process for Eligible Managed Care Providers.--
       ``(1) Availability of hearing prior to termination of 
     contract.--A State may not terminate a contract with an 
     eligible managed care provider under section 1932(a)(1)(B) 
     unless the provider is provided with a hearing prior to the 
     termination.
       ``(2) Notice to enrollees of termination hearing.--A State 
     shall notify all individuals enrolled with an eligible 
     managed care provider which is the subject of a hearing to 
     terminate the provider's contract with the State of the 
     hearing and that the enrollees 

[[Page H11247]]

     may immediately disenroll with the provider for cause.
       ``(3) Other protections for eligible managed care providers 
     against sanctions imposed by state.--Before imposing any 
     sanction against an eligible managed care provider other than 
     termination of the provider's contract, the State shall 
     provide the provider with notice and such other due process 
     protections as the State may provide, except that a State may 
     not provide an eligible managed care provider with a 
     pretermination hearing before imposing the sanction described 
     in subsection (b)(2).
       ``(4) Imposition of civil monetary penalties by 
     secretary.--The provisions of section 1128A (other than 
     subsections (a) and (b)) shall apply with respect to a civil 
     money penalty imposed by the Secretary under subsection 
     (b)(1) in the same manner as such provisions apply to a 
     penalty or proceeding under section 1128A.''.
       (b) Conforming Amendment Relating to Termination of 
     Enrollment for Cause.--Section 1933(b)(2)(B) of the Social 
     Security Act, as added by this part, is amended by inserting 
     after ``coercion'' the following: ``, or pursuant to the 
     imposition against the eligible managed care provider of the 
     sanction described in section 1935(b)(3),''.

     SEC. 7107. REPORT ON PUBLIC HEALTH SERVICES.

       (a) In General.--Not later than January 1, 1994, the 
     Secretary of Health and Human Services (in this subtitle 
     referred to as the ``Secretary'') shall report to the 
     Committee on Finance of the Senate and the Committee on 
     Commerce of the House of Representatives on the effect of 
     risk contracting entities (as defined in section 1932(a)(3) 
     of the Social Security Act) and primary care case management 
     entities (as defined in section 1932(a)(1) of such Act) on 
     the delivery of and payment for the services listed in 
     subsection (f)(2)(C)(ii) of section 1932 of such Act.
       (b) Contents of Report.--The report referred to in 
     subsection (a) shall include--
       (1) information on the extent to which enrollees with risk 
     contracting entities and primary care case management 
     programs seek services at local health departments, public 
     hospitals, and other facilities that provide care without 
     regard to a patient's ability to pay;
       (2) information on the extent to which the facilities 
     described in paragraph (1) provide services to enrollees with 
     risk contracting entities and primary care case management 
     programs without receiving payment;
       (3) information on the effectiveness of systems implemented 
     by facilities described in paragraph (1) for educating such 
     enrollees on services that are available through the risk 
     contracting entities or primary care case management programs 
     with which such enrollees are enrolled;
       (4) to the extent possible, identification of the types of 
     services most frequently sought by such enrollees at such 
     facilities; and
       (5) recommendations about how to ensure the timely delivery 
     of the services listed in subsection (f)(2)(C)(ii) of 
     section 1931 of the Social Security Act to enrollees of 
     risk contracting entities and primary care case management 
     entities and how to ensure that local health departments, 
     public hospitals, and other facilities are adequately 
     compensated for the provision of such services to such 
     enrollees.

     SEC. 7108. REPORT ON PAYMENTS TO HOSPITALS.

       (a) In General.--Not later than October 1 of each year, 
     beginning with October 1, 1996, the Secretary and the 
     Comptroller General shall analyze and submit a report to the 
     Committee on Finance of the Senate and the Committee on 
     Commerce of the House of Representatives on rates paid for 
     hospital services under coordinated care programs described 
     in section 1932 of the Social Security Act.
       (b) Contents of Report.--The information in the report 
     described in subsection (a) shall--
       (1) be organized by State, type of hospital, type of 
     service, and
       (2) include a comparison of rates paid for hospital 
     services under coordinated care programs with rates paid for 
     hospital services furnished to individuals who are entitled 
     to benefits under a State plan under title XIX of the Social 
     Security Act and are not enrolled in such coordinated care 
     programs.
       (c) Reports by States.--Each State shall transmit to the 
     Secretary, at such time and in such manner as the Secretary 
     determines appropriate, the information on hospital rates 
     submitted to such State under section 1932(b)(3)(P) of such 
     Act.

     SEC. 7109. CONFORMING AMENDMENTS.

       (a) Exclusion of Certain Individuals and Entities From 
     Participation in Program.--Section 1128(b)(6)(C) of the 
     Social Security Act (42 U.S.C. 1320a-7(b)(6)(C)) is amended--
       (1) in clause (i), by striking ``a health maintenance 
     organization (as defined in section 1903(m))'' and inserting 
     ``an eligible managed care provider, as defined in section 
     1933(a)(1),''; and
       (2) in clause (ii), by inserting ``section 1115 or'' after 
     ``approved under''.
       (b) State Plan Requirements.--Section 1902 of such Act (42 
     U.S.C. 1396a) is amended--
       (1) in subsection (a)(30)(C), by striking ``section 
     1903(m)'' and inserting ``section 1932(a)(1)(B)''; and
       (2) in subsection (a)(57), by striking ``hospice program, 
     or health maintenance organization (as defined in section 
     1903(m)(1)(A))'' and inserting ``or hospice program'';
       (3) in subsection (e)(2)(A), by striking ``or with an 
     entity described in paragraph (2)(B)(iii), (2)(E), (2)(G), or
       (6) of section 1903(m) under a contract described in 
     section 1903(m)(2)(A);
       (4) in subsection (p)(2)--
       (A) by striking ``a health maintenance organization (as 
     defined in section 1903(m))'' and inserting ``an eligible 
     managed care provider, as defined in section 1933(a)(1),'';
       (B) by striking ``an organization'' and inserting ``a 
     provider''; and
       (C) by striking ``any organization'' and inserting ``any 
     provider''; and
       (5) in subsection (w)(1), by striking ``sections 
     1903(m)(1)(A) and'' and inserting ``section''.
       (c) Payment to States.--Section 1903(w)(7)(A)(viii) of such 
     Act (42 U.S.C. 1396b(w)(7)(A)(viii)) is amended to read as 
     follows:
       ``(viii) Services of an eligible managed care provider with 
     a contract under section 1932(a)(1)(B).''.
       (d) Use of Enrollment Fees and Other Charges.--Section 1916 
     of such Act (42 U.S.C. 1396o) is amended in subsections 
     (a)(2)(D) and (b)(2)(D) by striking ``a health maintenance 
     organization (as defined in section 1903(m))'' and inserting 
     ``an eligible managed care provider, as defined in section 
     1933(a)(1),'' each place it appears.
       (e) Extension of Eligibility for Medical Assistance.--
     Section 1925(b)(4)(D)(iv) of such Act (42 U.S.C. 1396r-
     6(b)(4)(D)(iv)) is amended to read as follows:
       ``(iv) Enrollment with eligible managed care provider.--
     Enrollment of the caretaker relative and dependent children 
     with an eligible managed care provider, as defined in section 
     1933(a)(1), less than 50 percent of the membership (enrolled 
     on a prepaid basis) of which consists of individuals who are 
     eligible to receive benefits under this title (other than 
     because of the option offered under this clause). The option 
     of enrollment under this clause is in addition to, and not in 
     lieu of, any enrollment option that the State might offer 
     under subparagraph (A)(i) with respect to receiving services 
     through an eligible managed care provider in accordance with 
     sections 1932, 1933, and 1934.''.
       (f) Assuring Adequate Payment Levels for Obstetrical and 
     Pediatric Services.--Section 1926(a) of such Act (42 U.S.C. 
     1396r-7(a)) is amended in paragraphs (1) and (2) by striking 
     ``health maintenance organizations under section 1903(m)'' 
     and inserting ``eligible managed care providers under 
     contracts entered into under section 1932(a)(1)(B)'' each 
     place it appears.
       (g) Payment for Covered Outpatient Drugs.--Section 
     1927(j)(1) of such Act (42 U.S.C. 1396r-8(j)(1)) is amended 
     by striking ``***Health Maintenance Organizations, including 
     those organizations that contract under section 1903(m),'' 
     and inserting ``health maintenance organizations and medicaid 
     managed care plans, as defined in section 1933(a)(2),''.
       (h) Demonstration Projects To Study Effect of Allowing 
     States To Extend Medicaid Coverage for Certain Families.--
     Section 4745(a)(5)(A) of the Omnibus Budget Reconciliation 
     Act of 1990 (42 U.S.C. 1396a note) is amended by striking 
     ``(except section 1903(m)'' and inserting ``(except sections 
     1932, 1933, and 1934)''.

     SEC. 7110. EFFECTIVE DATE; STATUS OF WAIVERS.

       (a) Effective Date.--Except as provided in subsection (b), 
     the amendments made by this subtitle shall apply to medical 
     assistance furnished--
       (1) during quarters beginning on or after October 1, 1996; 
     or
       (2) in the case of assistance furnished under a contract 
     described in section 7102(b), during quarters beginning after 
     the earlier of--
     (A) the date of the expiration of the contract; or
       (B) the expiration of the 1-year period which begins on the 
     date of the enactment of this Act.
       (b) Application to Waivers.--
       (1) Existing waivers.--If any waiver granted to a State 
     under section 1115 or 1915 of the Social Security Act (42 
     U.S.C. 1315, 1396n) or otherwise which relates to the 
     provision of medical assistance under a State plan under 
     title XIX of the such Act (42 U.S.C. 1396 et seq.), is in 
     effect or approved by the Secretary of Health and Human 
     Services as of the applicable effective date described in 
     subsection (a), the amendments made by this subtitle shall 
     not apply with respect to the State before the expiration 
     (determined without regard to any extensions) of the waiver 
     to the extent such amendments are inconsistent with the terms 
     of the waiver.
       (2) Secretarial evaluation and report for existing waivers 
     and extensions.--
       (A) Prior to approval.--On and after the applicable 
     effective date described in subsection (a), the Secretary, 
     prior to extending any waiver granted under section 1115 or 
     1915 of the Social Security Act (42 U.S.C. 1315, 1396n) or 
     otherwise which relates to the provision of 
     medical assistance under a State plan under title XIX of 
     the such Act (42 U.S.C. 1396 et seq.), shall--
       (i) conduct an evaluation of--

       (I) the waivers existing under such sections or other 
     provision of law as of the date of the enactment of this Act; 
     and
       (II) any applications pending, as of the date of the 
     enactment of this Act, for extensions of waivers under such 
     sections or other provision of law; and

[[Page H11248]]


       (ii) submit a report to the Congress recommending whether 
     the extension of a waiver under such sections or provision of 
     law should be conditioned on the State submitting the request 
     for an extension complying with the provisions of sections 
     1932, 1933, and 1934 of the Social Security Act (as added by 
     this subtitle).
       (B) Deemed approval.--If the Congress has not enacted 
     legislation based on a report submitted under subparagraph 
     (A)(ii) within 120 days after the date such report is 
     submitted to the Congress, the recommendations contained in 
     such report shall be deemed to be approved by the Congress.
     Subtitle C--Additional Reforms of Medicaid Acute Care Program

     SEC. 7201. PERMITTING INCREASED FLEXIBILITY IN MEDICAID COST-
                   SHARING.

       (a) In General.--Subsections (a)(3) and (b)(3) of section 
     1916 of the Social Security Act (42 U.S.C. 1396o) are amended 
     by striking everything that follows ``other care and 
     services'' and inserting the following: ``will be established 
     pursuant to a public schedule of charges and will be adjusted 
     to reflect the income, resources, and family size of the 
     individual provided the item or service.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to items and services furnished on or after the 
     first day of the first calendar quarter beginning after the 
     date of the enactment of this Act.

     SEC. 7202. LIMITS ON REQUIRED COVERAGE OF ADDITIONAL 
                   TREATMENT SERVICES UNDER EPSDT.

       (a) Regulations.--The Secretary of Health and Human 
     Services shall define, by regulation promulgated after 
     consultation with States and organizations representing 
     health care providers, those treatment services (in addition 
     to those otherwise covered under a State plan under title XIX 
     of the Social Security Act) that must be covered under 
     section 1905(r)(5) of such Act.
       (b) Construction.--Nothing in subsection (a) shall be 
     construed as limiting the scope of such treatment services a 
     State may cover under such section.

     SEC. 7203. DELAY IN APPLICATION OF NEW REQUIREMENTS.

       (a) Delay in Implementation.--
       (1) In general.--Notwithstanding any other provision of 
     law, no change in law--
       (A) which has the effect of imposing a requirement on a 
     State under a State plan under title XIX of the Social 
     Security Act, and
       (B) with respect to the Secretary of Health and Human 
     Services is required to issue regulations to carry out such 
     requirement,
     shall take effect until the date the Secretary promulgates 
     such regulation as a final regulation.
       (2) State option.--Except as otherwise provided by the 
     Secretary, a State may elect to have a change in a law 
     described in paragraph (1) apply with respect to the State 
     during the period (or portion thereof) in which the change 
     would have taken effect but for paragraph (1).
       (b) Prohibition of Changes in Final Regulations During a 
     Fiscal Year.--
       (1) In general.--Except as provided in paragraph (2), any 
     change in a regulation of the Secretary of Health and Human 
     Services relating to the medicaid program under title XIX of 
     the Social Security Act shall not become effective until the 
     beginning of the fiscal year following the fiscal year in 
     which the change was promulgated.
       (2) State option.--Except as otherwise provided by the 
     Secretary, a State may elect to have a change in a regulation 
     described in paragraph (1) apply with respect to the State 
     during the period (or portion thereof) in which the change 
     would have taken effect but for paragraph (1).
       (c) Sense of Congress Regarding Federal Payment for New 
     Medicaid Mandates.--It is the sense of Congress that if a 
     State is required by future legislation to provide for 
     additional services, eligible individuals, or otherwise incur 
     additional costs under its medicaid program under title XIX 
     of the Social Security Act, the Federal Government shall 
     provide for full payment of any such additional costs for at 
     least the first two years in which such requirement applies.

     SEC. 7204. DEADLINE ON ACTION ON WAIVERS.

       (a) In General.--In considering applications for medicaid 
     waivers--
       (1) the application shall be deemed granted unless the 
     Secretary of Health and Human Services, within ninety days 
     after the date of the submission of the application of the 
     Secretary, either denies the application in writing or 
     informs the applicant in writing with respect to any 
     additional information which is needed in order to make a 
     final determination with respect to the application, and
       (2) after the date the Secretary receives such additional 
     information, the application shall be deemed granted unless 
     the Secretary within ninety days of such date, denies such 
     application.
       (b) Medicaid Waivers.--In this section, the term ``medicaid 
     waiver'' means the request of a State for a waiver of a 
     provision of title XIX of the Social Security Act (or of 
     another provision of law that applies to State plans under 
     such title), and includes such a waiver under the authority 
     of section 1115 or section 1915 of the Social Security Act or 
     under section 222 of the Social Security Amendments of 1972 
     and section 402(a) of the Social Security Amendments of 1967.
       Subtitle D--National Commission on Medicaid Restructuring

     SEC. 7301. ESTABLISHMENT OF COMMISSION.

       (a) In General.--There is hereby established the National 
     Commission on Medicaid Restructuring (in this subtitle 
     referred to as the ``Commission'').
       (b) Composition.--The Commission shall be composed as 
     follows:
       (1) 2 federal officials.--The President shall appoint 2 
     Federal officials, one of whom the President shall designate 
     as chairperson of the Commission.
       (2) 4 members of congress.--(A) The Speaker of the House of 
     Representatives shall appoint one Member of the House as a 
     member.
       (B) The minority leader of the House of Representatives 
     shall appoint one Member of the House as a member.
       (C) The majority leader of the Senate shall appoint one 
     Member of the Senate as a member.
       (D) The minority leader of the Senate shall appoint one 
     Member of the Senate as a member.
       (3) 6 state government representatives.--(A) The majority 
     leaders of the House of Representatives and the Senate shall 
     jointly appoint 3 individuals who are governors, State 
     legislators, or State medicaid officials.
       (B) The minority leaders of the House of Representatives 
     and the Senate shall jointly appoint 3 individuals who are 
     governors, State legislators, or State medicaid officials.
       (4) 6 experts.--(A) The majority leaders of the House of 
     Representatives and the Senate shall jointly appoint 4 
     individuals who are not officials of the Federal or State 
     governments and who have expertise in a health-related field, 
     such as medicine, public health, or delivery and financing of 
     health care services.
       (B) The President shall appoint 2 individuals who are not 
     officials of the Federal or State governments and who have 
     expertise in a health-related field, such as medicine, public 
     health, or delivery and financing of health care services.
       (c) Initial Appointment.--Members of the Commission shall 
     first be appointed by not later than February 1, 1996.
       (d) Compensation and Expenses.--
       (1) Compensation.--Each member of the Commission shall 
     serve without compensation.
       (2) Travel expenses.--Members of the Commission shall be 
     allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of services for the Commission.

     SEC. 7302. DUTIES OF COMMISSION.

       (a) Study of Medicaid Program.--
       (1) In general.--The Commission shall study and make 
     recommendations to the Congress, the President, and the 
     Secretary regarding the need for changes (in addition to the 
     changes effected under this title) in the laws and 
     regulations regarding the medicaid program under title XIX of 
     the Social Security Act.
       (2) Specific concerns.--The Commission shall specifically 
     address each of the following:
       (A) Changes needed to ensure adequate access to health care 
     for low-income individuals.
       (B) Promotion of quality care.
       (C) Deterrence of fraud and abuse.
       (D) Providing States with additional flexibility in 
     implementing their medicaid plans.
       (E) Methods of containing Federal and State costs.
       (b) Reports.--
       (1) First report.--The Commission shall issue a first 
     report to Congress by not later than December 31, 1996.
       (2) Subsequent reports.--The Commission shall issue 
     subsequent reports to Congress by not later than December 31, 
     1997, and December 31, 1998.

     SEC. 7303. ADMINISTRATION.

       (a) Appointment of Staff.--
       (1) Executive director.--The Commission shall have an 
     Executive Director who shall be appointed by the Chairperson 
     with the approval of the Commission. The Executive Director 
     shall be paid at a rate not to exceed the rate of basic pay 
     payable for level III of the Executive Schedule.
       (2) Staff.--With the approval of the Commission, the 
     Executive Director may appoint and determine the compensation 
     of such staff as may be necessary to carry out the duties of 
     the Commission. Such appointments and compensation may be 
     made without regard to the provisions of title 5, United 
     States Code, that govern appointments in the competitive 
     services, and the provisions of chapter 51 and subchapter III 
     of chapter 53 of such title that relate to classifications 
     and the General Schedule pay rates.
       (3) Consultants.--The Commission may procure such temporary 
     and intermittent services of consultants under section 
     3109(b) of title 5, United States Code, as the Commission 
     determines to be necessary to carry out the duties of the 
     Commission.
       (b) Provision of Administrative Support Services by HHS.--
     Upon the request of the Commission, the Secretary of Health 
     and Human Services shall provide to the Commission on a 
     reimbursable basis such administrative support services as 
     the Commission may request.

     SEC. 7304. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to carry out this 
     subtitle $3,000,000 for fiscal year 1996, $4,000,000 for each 
     of fiscal years 1997 and 1998, and $2,000,000 for fiscal year 
     1999.

[[Page H11249]]


     SEC. 7305. TERMINATION.

       The Commission shall terminate on December 31, 1998.
      Subtitle E--Restrictions on Disproportionate Share Payments

     SEC. 7401. REFORMING DISPROPORTIONATE SHARE PAYMENTS UNDER 
                   STATE MEDICAID PROGRAMS.

       (a) Targeting Payments.--Section 1923 of the Social 
     Security Act (42 U.S.C.1396r-3) is amended--
       (1) in subsection (a)(1)--
       (A) by redesignating subparagraphs (A) and (B) as clauses 
     (i) and (ii),
       (B) by striking ``(1)'' and inserting ``(1)(A)'',
       (C) in clause (i) (as so redesignated) by striking 
     ``(b)(1)'' and inserting ``(b)(1)(A)'', and
       (D) by adding at the end the following:
       ``(B) A State plan under this title shall not be considered 
     to meet the requirement of section 1902(a)(13)(A) (insofar as 
     it requires payments to hospitals to take into account the 
     situation of hospitals that serve a disproportionate number 
     of low-income patients with special needs), as of July 1, 
     1996, unless the State has submitted to the Secretary, by not 
     later than such date, an amendment to such plan that utilizes 
     the definition of such hospitals specified in subsection 
     (b)(1)(B) in lieu of the definition established by the State 
     under subparagraph (a)(i).'';
       (2) in subsection (a)(2)(A)--
       (A) by inserting ``(i)'' after ``(2)(A)'',
       (B) by striking ``paragraph (1)'' and inserting ``paragraph 
     (1)(A)(i)'', and
       (C) by adding at the end the following:
       ``(ii) In order to be considered to have met such 
     requirement of section 1902(a)(13)(A) as of July 1, 1996, the 
     State must submit to the Secretary by not later than April 1, 
     1996, the State plan amendment described in paragraph (1)(B), 
     consistent with subsection (c), effective for inpatient 
     hospital services furnished on or after July 1, 1996.'';
       (3) in subsection (b)--
       (A) in the heading, by striking ``Hospitals Deemed 
     Disproportionate Share'' and inserting ``Disproportionate 
     Share Hospitals'',
       (B) in paragraph (1)--
       (i) by redesignating subparagraphs (A) and (B) as clauses 
     (i) and (ii),
       (ii) by striking ``(1) For purposes of subsection (a)(1)'' 
     and inserting ``(1)(A) For purposes of subsection 
     (a)(1)(A)'', and
       (iii) by adding at the end the following:
       ``(B) For purposes of subsection (a)(1)(B), a hospital that 
     meets the requirements of subsection (d) is a 
     disproportionate share hospital only if--
       ``(i) in the case of a hospital that is not described in 
     subsection (d)(2)(A)(i), the hospital's low-income 
     utilization rate (as defined in paragraph (3)) exceeds 25 
     percent; or
       ``(ii) in the case of a hospital that is described in 
     subsection (d)(2)(A)(i)--
       ``(I) the hospital meets the requirement of clause (i), or
       ``(II) the hospital's medicaid inpatient utilization rate 
     (as defined in paragraph (2)) exceeds 20 percent.'';
       (C) in paragraph (2) by striking ``(1)(A)'' and inserting 
     ``(1)'',
       (D) in paragraph (3) by striking ``(1)(B)'' and inserting 
     ``(1)'', and
       (E) by striking paragraph (4);
       (4) in subsection (c)--
       (A) in paragraph (2), by striking ``subparagraph (A) or (B) 
     of subsection (b)(1)'' and inserting ``clause (i) or (ii) of 
     subsection (b)(1)(A)'',
       (B) by striking paragraph (3), and
       (C) in the matter following paragraph (3)--
       (i) by striking ``(1)(B)'' each place it appears and 
     inserting ``(1)(A)(ii)'', and
       (ii) by striking ``(2)(A)'' each place it appears and 
     inserting ``(2)(A)(i)'' ; and
       (5) in subsection (e)--
       (A) in paragraph (1)(C), by striking ``meets the 
     requirement of subsection (d)(3)'' and inserting ``makes 
     payments under this section only to hospitals described in 
     subsection (b)(1)(B)'', and
       (B) in paragraph (2)--
       (i) by inserting ``and'' at the end of subparagraph (B), 
     and
       (ii) by striking subparagraph (C).
       (b) Direct Payment by State.--Section 1923(a) of such Act 
     (42 U.S.C. 1396r-4(a)), as amended by subsection (a), is 
     further amended--
       (1) in paragraph (1), by adding at the end the following
       ``(C) A State plan under this title shall not be considered 
     to meet the requirement of section 1902(a)(13)(A) (insofar as 
     it requires payments to hospitals to take into account the 
     situation of hospitals that serve a disproportionate number 
     of low-income patients with special needs), as of July 1, 
     1996, unless the State provides that any payments made under 
     this section with respect to individuals who are--
       ``(i) entitled to benefits under the State plan, and
       ``(ii) enrolled with a health maintenance organization or 
     other managed care plan,
     are, at the option of the hospital, made directly to such 
     hospital by the State.''; and
       (2) in paragraph (2)(A)(ii), by striking ``amendment 
     described in paragraph (1)(B)'' and inserting ``amendments 
     described in subparagraphs (B) and (C) of paragraph (1)''.
       (c) Adjustment to National DSH Limit; State Allocations.--
       (1) In general.--Section 1923(f) (42 U.S.C. 1396r-4(f)) is 
     amended--
       (A) in paragraph (1)(B), by striking ``for a fiscal year'' 
     and all that follows and inserting the following: ``for--
       ``(i) each of fiscal years 1997 and 1998, is $6.5 billion,
       ``(ii) each of fiscal years 1999 and 2000, is $5.5 billion,
       ``(iii) each succeeding fiscal year is $5.0 billion.'';
       (B) by striking subparagraphs (D) and (E) of paragraph (1); 
     and
       (C) by amending paragraph (2) to read as follows:
       ``(2) Determination of state dsh allotments.--
       ``(A) In general.--The State DSH allotment for a fiscal 
     year is equal to the State's share (as determined under 
     subparagraph (B)) of the national DSH limit for the fiscal 
     year established under paragraph (1)(B).
       ``(B) State share.--For purposes of subparagraph (A), the 
     `State share' is equal to the ratio of--
       ``(i) the total number low-income patient days (as defined 
     in subparagraph (C)) for all hospitals described in 
     subsection (b)(1)(B) in the State for the fiscal year, to
       ``(ii) the total number of such low-income patient days for 
     all such hospitals for all States for the fiscal year.
     The Secretary shall determine the State share based on the 
     Secretary's best estimate of patient days and hospitals.
       ``(C) Low-income patient day.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `low-income patient day' means, for a hospital, a patient day 
     (as defined in clause (ii)) attributable to an individual who 
     either is eligible for medical assistance under the State 
     plan or has no health insurance (or other source of third 
     party coverage) for services furnished by the hospital.
       ``(ii) Patient days defined.--For purposes of this 
     subparagraph, the term `patient day' includes each day in 
     which--

       ``(I) an individual (including a new-born) is an inpatient 
     in the hospital, whether or not the individual is in a 
     specialized ward and whether or not the individual remains in 
     the hospital for lack of suitable placement elsewhere, and
       ``(II) an individual makes one or more outpatient visits to 
     the hospital.''.

       (2) Effective date.--The amendments made by paragraph (1) 
     shall apply to fiscal years beginning with fiscal year 1997.
       (d) Effective Date.--Except as provided in subsection 
     (c)(2), the amendments made by this section shall apply to 
     payments to States under section 1903(a) of the Social 
     Security Act for payments to hospitals made under State plans 
     after--
       (1) July 1, 1996, or
       (2) in the case of a State with a State legislature that is 
     not scheduled to have a regular legislative session in 1996, 
     July 1, 1997.
                      Subtitle F--Fraud Reduction

     SEC. 7501. MONITORING PAYMENTS FOR DUAL ELIGIBLES.

       The Administrator of the Health Care Financing 
     Administration shall develop mechanisms to better monitor and 
     prevent inappropriate payments under the medicaid program in 
     the case of individuals who are dually eligible for benefits 
     under such program and under the medicare program.

     SEC. 7502. IMPROVED IDENTIFICATION SYSTEMS.

       The Administrator of the Health Care Financing 
     Administration shall develop improved mechanisms, such as 
     picture identification documents and smart documents, to 
     provide methods of improved identification and tracking of 
     beneficiaries and providers that perpetrate fraud against the 
     medicaid program.
                          TITLE VIII--MEDICARE

     SEC. 8000. SHORT TITLE; REFERENCES IN TITLE.

       (a) Short Title of Title.--This title may be cited as the 
     ``Medicare Preservation Act of 1995''.
       (b) Amendments to Social Security Act.--Except as otherwise 
     specifically provided, whenever in this title an amendment is 
     expressed in terms of an amendment to or repeal of a section 
     or other provision, the reference shall be considered to be 
     made to that section or other provision of the Social 
     Security Act.
       (c) References to OBRA.--In this title, the terms ``OBRA-
     1986'', ``OBRA-1987'', ``OBRA-1989'', ``OBRA-1990'', and 
     ``OBRA-1993'' refer to the Omnibus Budget Reconciliation Act 
     of 1986 (Public Law 99-509), the Omnibus Budget 
     Reconciliation Act of 1987 (Public Law 100-203), the Omnibus 
     Budget Reconciliation Act of 1989 (Public Law 101-239), the 
     Omnibus Budget Reconciliation Act of 1990 (Public Law 101-
     508), and the Omnibus Budget Reconciliation Act of 1993 
     (Public Law 103-66), respectively.
                  Subtitle A--Medicare Choice Program

          PART 1--INCREASING CHOICE UNDER THE MEDICARE PROGRAM

     SEC. 8001. INCREASING CHOICE UNDER MEDICARE.

       (a) In General.--Title XVIII is amended by inserting after 
     section 1804 the following new section:


                   ``providing for choice of coverage

       ``Sec. 1805. (a) Choice of Coverage.--
       ``(1) In general.--Subject to the provisions of this 
     section, every individual who is entitled to benefits under 
     part A and enrolled under part B shall elect to receive 
     benefits under this title through one of the following:
       ``(A) Through fee-for-service system.--Through the 
     provisions of parts A and B.
       ``(B) Through a medicare choice product.--Through a 
     Medicare Choice product (as defined in paragraph (2)), which 
     may be--

[[Page H11250]]

       ``(i) a product offered by a provider-sponsored 
     organization,
       ``(ii) a product offered by an organization that is a 
     union, Taft-Hartley plan, or association, or
       ``(iii) a product providing for benefits on a fee-for-
     service or other basis.
     Such a product may be a high deductible/medisave product (and 
     a contribution into a Medicare Choice medical savings account 
     (MSA)) under the demonstration project provided under section 
     1859.
       ``(2) Medicare choice product defined.--For purposes of 
     this section and part C, the term `Medicare Choice product' 
     means health benefits coverage offered under a policy, 
     contract, or plan by a Medicare Choice organization (as 
     defined in section 1851(a)) pursuant to and in accordance 
     with a contract under section 1858.
       ``(3) Terminology relating to options.--For purposes of 
     this section and part C--
       ``(A) Non-medicare-choice option.--An individual who has 
     made the election described in paragraph (1)(A) is considered 
     to have elected the `Non-Medicare Choice option'.
       ``(B) Medicare choice option.--An individual who has made 
     the election described in paragraph (1)(B) to obtain coverage 
     through a Medicare Choice product is considered to have 
     elected the `Medicare Choice option' for that product.
       ``(b) Special Rules.--
       ``(1) Residence requirement.--Except as the Secretary may 
     otherwise provide, an individual is eligible to elect a 
     Medicare Choice product offered by a Medicare Choice 
     organization only if the organization in relation to the 
     product serves the geographic area in which the individual 
     resides.
       ``(2) Affiliation requirements for certain products.--
       ``(A) In general.--Subject to subparagraph (B), an 
     individual is eligible to elect a Medicare Choice product 
     offered by a limited enrollment Medicare Choice organization 
     (as defined in section 1852(c)(4)(D)) only if--
       ``(i) the individual is eligible under section 1852(c)(4) 
     to make such election, and
       ``(ii) in the case of a Medicare Choice organization that 
     is a union sponsor or Taft-Hartley sponsor (as defined in 
     section 1852(c)(4)), the individual elected under this 
     section a Medicare Choice product offered by the sponsor 
     during the first enrollment period in which the individual 
     was eligible to make such election with respect to such 
     sponsor.
       ``(B) No reelection after disenrollment for certain 
     products.--An individual is not eligible to elect a Medicare 
     Choice product offered by a Medicare Choice organization that 
     is a union sponsor or Taft-Hartley sponsor if the individual 
     previously had elected a Medicare Choice product offered by 
     the organization and had subsequently discontinued to elect 
     such a product offered by the organization.
       ``(c) Process for Exercising Choice.--
       ``(1) In general.--The Secretary shall establish a process 
     through which elections described in subsection (a) are made 
     and changed, including the form and manner in which such 
     elections are made and changed. Such elections shall be made 
     or changed only during coverage election periods specified 
     under subsection (e) and shall become effective as provided 
     in subsection (f).
       ``(2) Expedited implementation.--The Secretary shall 
     establish the process of electing coverage under this section 
     during the transition period (as defined in subsection 
     (e)(1)(B)) in such an expedited manner as will permit such an 
     election for Medicare Choice products in an area as soon as 
     such products become available in that area.
       ``(3) Coordination through medicare choice organizations.--
       ``(A) Enrollment.--Such process shall permit an individual 
     who wishes to elect a Medicare Choice product offered by a 
     Medicare Choice organization to make such election through 
     the filing of an appropriate election form with the 
     organization.
       ``(B) Disenrollment.--Such process shall permit an 
     individual, who has elected a Medicare Choice product offered 
     by a Medicare Choice organization and who wishes to terminate 
     such election, to terminate such election through the filing 
     of an appropriate election form with the organization.
       ``(4) Default.--
       ``(A) Initial election.--
       ``(i) In general.--Subject to clause (ii), an individual 
     who fails to make an election during an initial election 
     period under subsection (e)(1) is deemed to have chosen the 
     Non-Medicare Choice option.
       ``(ii) Seamless continuation of coverage.--The Secretary 
     shall establish procedures under which individuals who are 
     enrolled with a Medicare Choice organization at the time of 
     the initial election period and who fail to elect to 
     receive coverage other than through the organization are 
     deemed to have elected an appropriate Medicare Choice 
     product offered by the organization.
       ``(B) Continuing periods.--An individual who has made (or 
     deemed to have made) an election under this section is 
     considered to have continued to make such election until such 
     time as--
       ``(i) the individual changes the election under this 
     section, or
       ``(ii) a Medicare Choice product is discontinued, if the 
     individual had elected such product at the time of the 
     discontinuation.
       ``(5) Agreements with commissioner of social security to 
     promote efficient administration.--In order to promote the 
     efficient administration of this section and the Medicare 
     Choice program under part C, the Secretary may enter into an 
     agreement with the Commissioner of Social Security under 
     which the Commissioner performs administrative 
     responsibilities relating to enrollment and disenrollment in 
     Medicare Choice products under this section.
       ``(d) Provision of Beneficiary Information to Promote 
     Informed Choice.--
       ``(1) In general.--The Secretary shall provide for 
     activities under this subsection to disseminate broadly 
     information to medicare beneficiaries (and prospective 
     medicare beneficiaries) on the coverage options provided 
     under this section in order to promote an active, informed 
     selection among such options. Such information shall be made 
     available on such a timely basis (such as 6 months before the 
     date an individual would first attain eligibility for 
     medicare on the basis of age) as to permit individuals to 
     elect the Medicare Choice option during the initial election 
     period described in subsection (e)(1).
       ``(2) Use of nonfederal entities.--The Secretary shall, to 
     the maximum extent feasible, enter into contracts with 
     appropriate non-Federal entities to carry out activities 
     under this subsection.
       ``(3) Specific activities.--In carrying out this 
     subsection, the Secretary shall provide for at least the 
     following activities in all areas in which Medicare Choice 
     products are offered:
       ``(A) Information booklet.--
       ``(i) In general.--The Secretary shall publish an 
     information booklet and disseminate the booklet to all 
     individuals eligible to elect the Medicare Choice option 
     under this section during coverage election periods.
       ``(ii) Information included.--The booklet shall include 
     information presented in plain English and in a standardized 
     format regarding--

       ``(I) the benefits (including cost-sharing) and premiums 
     for the various Medicare Choice products in the areas 
     involved;
       ``(II) the quality of such products, including consumer 
     satisfaction information; and
       ``(III) rights and responsibilities of medicare 
     beneficiaries under such products.

       ``(iii) Periodic updating.--The booklet shall be updated on 
     a regular basis (not less often than once every 12 months) to 
     reflect changes in the availability of Medicare Choice 
     products and the benefits and premiums for such products.
       ``(B) Toll-free number.--The Secretary shall maintain a 
     toll-free number for inquiries regarding Medicare Choice 
     options and the operation of part C.
       ``(C) General information in medicare handbook.--The 
     Secretary shall include information about the Medicare Choice 
     option provided under this section in the annual notice of 
     medicare benefits under section 1804.
       ``(e) Coverage Election Periods.--
       ``(1) Initial choice upon eligibility to make election.--
       ``(A) In general.--In the case of an individual who first 
     becomes entitled to benefits under part A and enrolled under 
     part B after the beginning of the transition period (as 
     defined in subparagraph (B)), the individual shall make the 
     election under this section during a period (of a duration 
     and beginning at a time specified by the Secretary) at the 
     first time the individual both is entitled to benefits under 
     part A and enrolled under part B. Such period shall be 
     specified in a manner so that, in the case of an individual 
     who elects a Medicare Choice product during the period, 
     coverage under the product becomes effective as of the first 
     date on which the individual may receive such coverage.
       ``(B) Transition period defined.--In this subsection, the 
     term `transition period' means, with respect to an individual 
     in an area, the period beginning on the first day of the 
     first month in which a Medicare Choice product is first made 
     available to individuals in the area and ending with the 
     month preceding the beginning of the first annual, 
     coordinated election period under paragraph (3).
       ``(2) During transition period.--Subject to paragraph (6)--
       ``(A) Continuous open enrollment into a medicare choice 
     option.--During the transition period, an individual who is 
     eligible to make an election under this section and who has 
     elected the non-Medicare Choice option may change such 
     election to a Medicare Choice option at any time.
       ``(B) Open disenrollment before end of transition period.--
     During the transition period, an individual who has elected a 
     Medicare Choice option for a Medicare Choice product may 
     change such election to another Medicare Choice product or to 
     the non-Medicare Choice option.
       ``(3) Annual, coordinated election period.--
       ``(A) In general.--Subject to paragraph (5), each 
     individual who is eligible to make an election under this 
     section may change such election during annual, coordinated 
     election periods.
       ``(B) Annual, coordinated election period.--For purposes of 
     this section, the term `annual, coordinated election period' 
     means, with respect to a calendar year (beginning with 1998), 
     the month of October before such year.
       ``(C) Medicare choice health fair during october, 1996.--In 
     the month of October, 1996, the Secretary shall provide for a 
     nationally coordinated educational and publicity campaign to 
     inform individuals, who are eligible to elect Medicare Choice 
     products, about 

[[Page H11251]]

     such products and the election process provided under this 
     section (including the annual, coordinated election periods 
     that occur in subsequent years).
       ``(4) Special 90-day disenrollment option.--
       ``(A) In general.--In the case of the first time an 
     individual elects a Medicare Choice option under this 
     section, the individual may discontinue such election through 
     the filing of an appropriate notice during the 90-day period 
     beginning on the first day on which the individual's coverage 
     under the Medicare Choice product under such option becomes 
     effective.
       ``(B) Effect of discontinuation of election.--An individual 
     who discontinues an election under this paragraph shall be 
     deemed at the time of such discontinuation to have elected 
     the Non-Medicare Choice option.
       ``(5) Special election periods.--An individual may 
     discontinue an election of a Medicare Choice product offered 
     by a Medicare Choice organization other than during an 
     annual, coordinated election period and make a new election 
     under this section if--
       ``(A) the organization's or product's certification under 
     part C has been terminated or the organization has terminated 
     or otherwise discontinued providing the product;
       ``(B) in the case of an individual who has elected a 
     Medicare Choice product offered by a Medicare Choice 
     organization, the individual is no longer eligible to elect 
     the product because of a change in the individual's place of 
     residence or other change in circumstances (specified by the 
     Secretary, but not including termination of membership in a 
     qualified association in the case of a product offered by a 
     qualified association or termination of the individual's 
     enrollment on the basis described in clause (i) or (ii) 
     section 1852(c)(3)(B));
       ``(C) the individual demonstrates (in accordance with 
     guidelines established by the Secretary) that--
       ``(i) the organization offering the product substantially 
     violated a material provision of the organization's contract 
     under part C in relation to the individual and the product; 
     or
       ``(ii) the organization (or an agent or other entity acting 
     on the organization's behalf) materially misrepresented the 
     product's provisions in marketing the product to the 
     individual; or
       ``(D) the individual meets such other conditions as the 
     Secretary may provide.
       ``(f) Effectiveness of Elections.--
       ``(1) During initial coverage election period.--An election 
     of coverage made during the initial coverage election period 
     under subsection (e)(1)(A) shall take effect upon the date 
     the individual becomes entitled to benefits under part A and 
     enrolled under part B, except as the Secretary may provide 
     (consistent with section 1838) in order to prevent 
     retroactive coverage.
       ``(2) During transition; 90-day disenrollment option.--An 
     election of coverage made under subsection (e)(2) and an 
     election to discontinue a Medicare Choice option under 
     subsection (e)(4) at any time shall take effect with the 
     first calendar month following the date on which the election 
     is made.
       ``(3) Annual, coordinated election period and medisave 
     election.--An election of coverage made during an annual, 
     coordinated election period (as defined in subsection 
     (e)(3)(B)) in a year shall take effect as of the first day of 
     the following year.
       ``(4) Other periods.--An election of coverage made during 
     any other period under subsection (e)(5) shall take effect in 
     such manner as the Secretary provides in a manner consistent 
     (to the extent practicable) with protecting continuity of 
     health benefit coverage.
       ``(g) Effect of Election of Medicare Choice Option.--
     Subject to the provisions of section 1855(f), payments under 
     a contract with a Medicare Choice organization under section 
     1858(a) with respect to an individual electing a Medicare 
     Choice product offered by the organization shall be instead 
     of the amounts which (in the absence of the contract) would 
     otherwise be payable under parts A and B for items and 
     services furnished to the individual.
       ``(h) Demonstration Projects.--The Secretary shall conduct 
     demonstration projects to test alternative approaches to 
     coordinated open enrollments in different markets, including 
     different annual enrollment periods and models of rolling 
     open enrollment periods. The Secretary may waive previous 
     provisions of this section in order to carry out such 
     projects.''.

     SEC. 8002. MEDICARE CHOICE PROGRAM.

       (a) In General.--Title XVIII is amended by redesignating 
     part C as part D and by inserting after part B the following 
     new part:

            ``Part C--Provisions Relating to Medicare Choice


            ``requirements for medicare choice organizations

       ``Sec. 1851. (a) Medicare Choice Organization Defined.--In 
     this part, subject to the succeeding provisions of this 
     section, the term `Medicare Choice organization' means a 
     public or private entity that is certified under section 1857 
     as meeting the requirements and standards of this part for 
     such an organization.
       ``(b) Organized and Licensed Under State Law.--
       ``(1) In general.--A Medicare Choice organization shall be 
     organized and licensed under State law to offer health 
     insurance or health benefits coverage in each State in which 
     it offers a Medicare Choice product.
       ``(2) Exception for union and taft-hartley sponsors.--
     Paragraph (1) shall not apply to an Medicare Choice 
     organization that is a union sponsor or Taft-Hartley sponsor 
     (as defined in section 1852(c)(4)).
       ``(3) Exception for provider-sponsored organizations.--
     Subject to paragraph (5), paragraph (1) shall not apply to a 
     Medicare Choice organization that is a provider-sponsored 
     organization (as defined in section 1854(a)).
       ``(4) Exception for qualified associations.--Paragraph (1) 
     shall not apply to a Medicare Choice organization that is a 
     qualified association (as defined in section 1852(c)(4)(B)).
       ``(5) Limitation.--Effective on and after January 1, 2000, 
     paragraph (1) shall only apply (and paragraph (3) shall no 
     longer apply) to a Medicare Choice organization in a State if 
     the standards for licensure of the organization under the law 
     of the State are identical to the standards established under 
     section 1856(b).
       ``(c) Prepaid Payment.--A Medicare Choice organization 
     shall be compensated (except for deductibles, coinsurance, 
     and copayments) for the provision of health care services to 
     enrolled members by a payment which is paid on a periodic 
     basis without regard to the date the health care services are 
     provided and which is fixed without regard to the frequency, 
     extent, or kind of health care service actually provided to a 
     member.
       ``(d) Assumption of Full Financial Risk.--The Medicare 
     Choice organization shall assume full financial risk on a 
     prospective basis for the provision of the health care 
     services (other than hospice care) for which benefits are 
     required to be provided under section 1852(a)(1), except that 
     the organization--
       ``(1) may obtain insurance or make other arrangements for 
     the cost of providing to any enrolled member such services 
     the aggregate value of which exceeds $5,000 in any year,
       ``(2) may obtain insurance or make other arrangements for 
     the cost of such services provided to its enrolled members 
     other than through the organization because medical necessity 
     required their provision before they could be secured through 
     the organization,
       ``(3) may obtain insurance or make other arrangements for 
     not more than 90 percent of the amount by which its costs for 
     any of its fiscal years exceed 115 percent of its income for 
     such fiscal year, and
       ``(4) may make arrangements with physicians or other health 
     professionals, health care institutions, or any combination 
     of such individuals or institutions to assume all or part of 
     the financial risk on a prospective basis for the provision 
     of basic health services by the physicians or other health 
     professionals or through the institutions.
     In the case of a Medicare Choice organization that is a union 
     sponsor or Taft-Hartley sponsor (as defined in section 
     1852(c)(4)) or a qualified association (as defined in section 
     1852(c)(4)(B)), this subsection shall not apply with 
     respect to Medicare Choice products offered by such 
     organization and issued by an organization to which 
     subsection (b)(1) applies or by a provider-sponsored 
     organization (as defined in section 1854(a)).
       ``(e) Provision Against Risk of Insolvency.--
       ``(1) In general.--Each Medicare Choice organization shall 
     meet standards under section 1856 relating to the financial 
     solvency and capital adequacy of the organization. Such 
     standards shall take into account the nature and type of 
     Medicare Choice products offered by the organization.
       ``(2) Treatment of taft-hartley sponsors.--An entity that 
     is a Taft-Hartley sponsor is deemed to meet the requirement 
     of paragraph (1).
       ``(3) Treatment of certain qualified associations.--An 
     entity that is a qualified association is deemed to meet the 
     requirement of paragraph (1) with respect to Medicare Choice 
     products offered by such association and issued by an 
     organization to which subsection (b)(1) applies or by a 
     provider-sponsored organization.
       ``(f) Organizations Treated as MedicarePlus Organizations 
     During Transition.--Any of the following organizations shall 
     be considered to qualify as a MedicarePlus organization for 
     contract years beginning before January 1, 1997:
       ``(1) Health maintenance organizations.--An organization 
     that is organized under the laws of any State and that is a 
     qualified health maintenance organization (as defined in 
     section 1310(d) of the Public Health Service Act), an 
     organization recognized under State law as a health 
     maintenance organization, or a similar organization regulated 
     under State law for solvency in the same manner and to the 
     same extent as such a health maintenance organization.
       ``(2) Licensed insurers.--An organization that is organized 
     under the laws of any State and--
       ``(A) is licensed by a State agency as an insurer for the 
     offering of health benefit coverage, or
       ``(B) is licensed by a State agency as a service benefit 
     plan,
     but only for individuals residing in an area in which the 
     organization is licensed to offer health insurance coverage.
       ``(3) Current risk-contractors.--An organization that is an 
     eligible organization (as defined in section 1876(b)) and 
     that has a risk-sharing contract in effect under section 

[[Page H11252]]

     1876 as of the date of the enactment of this section.


``requirements relating to benefits, provision of services, enrollment, 
                              and premiums

       ``Sec. 1852. (a) Benefits Covered.--
       ``(1) In general.--Each Medicare Choice product offered 
     under this part shall provide benefits for at least the items 
     and services for which benefits are available under parts A 
     and B consistent with the standards for coverage of such 
     items and services applicable under this title.
       ``(2) Organization as secondary payer.--Notwithstanding any 
     other provision of law, a Medicare Choice organization may 
     (in the case of the provision of items and services to an 
     individual under this part under circumstances in which 
     payment under this title is made secondary pursuant to 
     section 1862(b)(2)) charge or authorize the provider of such 
     services to charge, in accordance with the charges allowed 
     under such law or policy--
       ``(A) the insurance carrier, employer, or other entity 
     which under such law, plan, or policy is to pay for the 
     provision of such services, or
       ``(B) such individual to the extent that the individual has 
     been paid under such law, plan, or policy for such services.
       ``(3) Satisfaction of requirement.--A Medicare Choice 
     product offered by a Medicare Choice organization satisfies 
     paragraph (1) with respect to benefits for items and services 
     if the following requirements are met:
       ``(A) Fee for service providers.--In the case of benefits 
     furnished through a provider that does not have a contract 
     with the organization, the product provides for at least the 
     dollar amount of payment for such items and services as would 
     otherwise be provided under parts A and B.
       ``(B) Participating providers.--In the case of benefits 
     furnished through a provider that has such a contract, the 
     individual's liability for payment for such items and 
     services does not exceed (after taking into account any 
     deductible, which does not exceed any deductible under parts 
     A and B) the lesser of the following:
       ``(i) Non-medicare choice liability.--The amount of the 
     liability that the individual would have had (based on the 
     provider being a participating provider) if the individual 
     had elected the non-Medicare Choice option.
       ``(ii) Medicare coinsurance applied to product payment 
     rates.--The applicable coinsurance or copayment rate (that 
     would have applied under the non-Medicare Choice option) of 
     the payment rate provided under the contract.
       ``(b) Antidiscrimination.--A Medicare Choice organization 
     may not deny, limit, or condition the coverage or provision 
     of benefits under this part based on the health status, 
     claims experience, receipt of health care, medical history, 
     or lack of evidence of insurability, of an individual.
       ``(c) Guaranteed Issue and Renewal.--
       ``(1) In general.--Except as provided in this subsection, a 
     Medicare Choice organization shall provide that at any time 
     during which elections are accepted under section 1805 with 
     respect to a Medicare Choice product offered by the 
     organization, the organization will accept without 
     restrictions individuals who are eligible to make such 
     election.
       ``(2) Priority.--If the Secretary determines that a 
     Medicare Choice organization, in relation to a Medicare 
     Choice product it offers, has a capacity limit and the number 
     of eligible individuals who elect the product under section 
     1805 exceeds the capacity limit, the organization may limit 
     the election of individuals of the product under such section 
     but only if priority in election is provided--
       ``(A) first to such individuals as have elected the product 
     at the time of the determination, and
       ``(B) then to other such individuals in such a manner that 
     does not discriminate among the individuals (who seek to 
     elect the product) on a basis described in subsection (b).
       ``(3) Limitation on termination of election.--
       ``(A) In general.--Subject to subparagraph (B), a Medicare 
     Choice organization may not for any reason terminate the 
     election of any individual under section 1805 for a Medicare 
     Choice product it offers.
       ``(B) Basis for termination of election.--A Medicare Choice 
     organization may terminate an individual's election under 
     section 1805 with respect to a Medicare Choice product it 
     offers if--
       ``(i) any premiums required with respect to such product 
     are not paid on a timely basis (consistent with standards 
     under section 1856 that provide for a grace period for late 
     payment of premiums),
       ``(ii) the individual has engaged in disruptive behavior 
     (as specified in such standards), or
       ``(iii) the product is terminated with respect to all 
     individuals under this part.
     Any individual whose election is so terminated is deemed to 
     have elected the Non-Medicare Choice option (as defined in 
     section 1805(a)(3)(A)).
       ``(C) Organization obligation with respect to election 
     forms.--Pursuant to a contract under section 1858, each 
     Medicare Choice organization receiving an election form under 
     section 1805(c)(2) shall transmit to the Secretary (at such 
     time and in such manner as the Secretary may specify) a copy 
     of such form or such other information respecting the 
     election as the Secretary may specify.
       ``(4) Special rules for limited enrollment Medicare choice 
     organizations.--
       ``(A) Taft-hartley sponsors.--
       ``(i) In general.--Subject to subparagraph (D), a Medicare 
     Choice organization that is a Taft-Hartley sponsor (as 
     defined in clause (ii)) shall limit eligibility of enrollees 
     under this part for Medicare Choice products it offers to 
     individuals who are entitled to obtain benefits through such 
     products under the terms of an applicable collective 
     bargaining agreement.
       ``(ii) Taft-hartley sponsor.--In this part and section 
     1805, the term `Taft-Hartley sponsor' means, in relation to a 
     group health plan that is established or maintained by two or 
     more employers or jointly by one or more employers and one or 
     more employee organizations, the association, committee, 
     joint board of trustees, or other similar group of 
     representatives of parties who establish or maintain the 
     plan.
       ``(B) Qualified associations.--
       ``(i) In general.--Subject to subparagraph (D), a Medicare 
     Choice organization that is a qualified association (as 
     defined in clause (iii)) shall limit eligibility of 
     individuals under this part for products it offers to 
     individuals who are members of the association (or who are 
     spouses of such individuals).
       ``(ii) Limitation on termination of coverage.--Such a 
     qualifying association offering a Medicare Choice product to 
     an individual may not terminate coverage of the individual on 
     the basis that the individual is no longer a member of the 
     association except pursuant to a change of election during an 
     open election period occurring on or after the date of the 
     termination of membership.
       ``(iii) Qualified association.--In this part and section 
     1805, the term `qualified association' means an association, 
     religious fraternal organization, or other organization 
     (which may be a trade, industry, or professional association, 
     a chamber of commerce, or a public entity association) that 
     the Secretary finds--

       ``(I) has been formed for purposes other than the sale of 
     any health insurance and does not restrict membership based 
     on the health status, claims experience, receipt of health 
     care, medical history, or lack of evidence of insurability, 
     of an individual,
       ``(II) does not exist solely or principally for the purpose 
     of selling insurance, and
       ``(III) has at least 1,000 individual members or 200 
     employer members.

     Such term includes a subsidiary or corporation that is wholly 
     owned by one or more qualified organizations.
       ``(C) Unions.--
       ``(i) In general.--Subject to subparagraph (D), a union 
     sponsor (as defined in clause (ii)) shall limit eligibility 
     of enrollees under this part for Medicare Choice products it 
     offers to individuals who are members of the sponsor and 
     affiliated with the sponsor through an employment 
     relationship with any employer or are the spouses of such 
     members.
       ``(ii) Union sponsor.--In this part and section 1805, the 
     term `union sponsor' means an employee organization in 
     relation to a group health plan that is established or 
     maintained by the organization other than pursuant to a 
     collective bargaining agreement.
       ``(D) Limitation.--Rules of eligibility to carry out the 
     previous subparagraphs of this paragraph shall not have the 
     effect of denying eligibility to individuals on the basis of 
     health status, claims experience, receipt of health care, 
     medical history, or lack of evidence of insurability.
       ``(E) Limited enrollment medicare choice organization.--In 
     this part and section 1805, the term `limited enrollment 
     Medicare Choice organization' means a Medicare Choice 
     organization that is a union sponsor, a Taft-Hartley sponsor, 
     or a qualified association.
       ``(F) Employer, etc.--In this paragraph, the terms 
     `employer', `employee organization', and `group health plan' 
     have the meanings given such terms for purposes of part 6 of 
     subtitle B of title I of the Employee Retirement Income 
     Security Act of 1974.
       ``(d) Submission and Charging of Premiums.--
       ``(1) In general.--Each Medicare Choice organization shall 
     file with the Secretary each year, in a form and manner and 
     at a time specified by the Secretary--
       ``(A) the amount of the monthly premiums for coverage under 
     each Medicare Choice product it offers under this part in 
     each payment area (as determined for purposes of section 
     1855) in which the product is being offered; and
       ``(B) the enrollment capacity in relation to the product in 
     each such area.
       ``(2) Amounts of premiums charged.--The amount of the 
     monthly premium charged by a Medicare Choice organization for 
     a Medicare Choice product offered in a payment area to an 
     individual under this part shall be equal to the amount (if 
     any) by which--
       ``(A) the amount of the monthly premium for the product for 
     the period involved, as established under paragraph (3) and 
     submitted under paragraph (1), exceeds
       ``(B) \1/12\ of the annual Medicare Choice capitation rate 
     specified in section 1855(b)(2) for the area and period 
     involved.
       ``(3) Uniform premium.--The premiums charged by a Medicare 
     Choice organization under this part may not vary among 
     individuals who reside in the same payment area.
       ``(4) Terms and conditions of imposing premiums.--Each 
     Medicare Choice organization shall permit the payment of 
     monthly premiums on a monthly basis and may terminate 
     election of individuals for a Medicare 

[[Page H11253]]

     Choice product for failure to make premium payments only in 
     accordance with subsection (c)(3)(B).
       ``(5) Relation of premiums and cost-sharing to benefits.--
     In no case may the portion of a Medicare Choice 
     organization's premium rate and the actuarial value of its 
     deductibles, coinsurance, and copayments charged (to the 
     extent attributable to the minimum benefits described in 
     subsection (a)(1) and not counting any amount attributable to 
     balance billing) to individuals who are enrolled under this 
     part with the organization exceed the actuarial value of the 
     coinsurance and deductibles that would be applicable on the 
     average to individuals enrolled under this part with the 
     organization (or, if the Secretary finds that adequate data 
     are not available to determine that actuarial value, the 
     actuarial value of the coinsurance and deductibles 
     applicable on the average to individuals in the area, in 
     the State, or in the United States, eligible to enroll 
     under this part with the organization, or other 
     appropriate data) and entitled to benefits under part A 
     and enrolled under part B if they were not members of a 
     Medicare Choice organization.
       ``(e) Requirement for Additional Benefits, Part B Premium 
     Discount Rebates, or Both.--
       ``(1) Requirement.--
       ``(A) In general.--Each Medicare Choice organization (in 
     relation to a Medicare Choice product it offers) shall 
     provide that if there is an excess amount (as defined in 
     subparagraph (B)) for the product for a contract year, 
     subject to the succeeding provisions of this subsection, the 
     organization shall provide to individuals such additional 
     benefits (as the organization may specify), a monetary rebate 
     (paid on a monthly basis) of the part B monthly premium, or a 
     combination thereof, in an total value which is at least 
     equal to the adjusted excess amount (as defined in 
     subparagraph (C)).
       ``(B) Excess amount.--For purposes of this paragraph, the 
     `excess amount', for an organization for a product, is the 
     amount (if any) by which--
       ``(i) the average of the capitation payments made to the 
     organization under this part for the product at the beginning 
     of contract year, exceeds
       ``(ii) the actuarial value of the minimum benefits 
     described in subsection (a)(1) under the product for 
     individuals under this part, as determined based upon an 
     adjusted community rate described in paragraph (5) (as 
     reduced for the actuarial value of the coinsurance and 
     deductibles under parts A and B).
       ``(C) Adjusted excess amount.--For purposes of this 
     paragraph, the `adjusted excess amount', for an organization 
     for a product, is the excess amount reduced to reflect any 
     amount withheld and reserved for the organization for the 
     year under paragraph (3).
       ``(D) Uniform application.--This paragraph shall be applied 
     uniformly for all enrollees for a product in a service area.
       ``(E) Construction.--Nothing in this subsection shall be 
     construed as preventing a Medicare Choice organization from 
     providing health care benefits that are in addition to the 
     benefits otherwise required to be provided under this 
     paragraph and from imposing a premium for such additional 
     benefits.
       ``(2) Limitation on amount of part b premium discount 
     rebate.--In no case shall the amount of a part B premium 
     discount rebate under paragraph (1)(A) exceed, with respect 
     to a month, the amount of premiums imposed under part B (not 
     taking into account section 1839(b) (relating to penalty for 
     late enrollment) or 1839(h) (relating to affluence testing)), 
     for the individual for the month. Except as provided in the 
     previous sentence, a Medicare Choice organization is not 
     authorized to provide for cash or other monetary rebates as 
     an inducement for enrollment or otherwise.
       ``(3) Stabilization fund.--A Medicare Choice organization 
     may provide that a part of the value of an excess actuarial 
     amount described in paragraph (1) be withheld and reserved in 
     the Federal Hospital Insurance Trust Fund and in the Federal 
     Supplementary Medical Insurance Trust Fund (in such 
     proportions as the Secretary determines to be appropriate) by 
     the Secretary for subsequent annual contract periods, to the 
     extent required to stabilize and prevent undue fluctuations 
     in the additional benefits and rebates offered in those 
     subsequent periods by the organization in accordance with 
     such paragraph. Any of such value of amount reserved which is 
     not provided as additional benefits described in paragraph 
     (1)(A) to individuals electing the Medicare Choice product in 
     accordance with such paragraph prior to the end of such 
     periods, shall revert for the use of such trust funds.
       ``(4) Determination based on insufficient data.--For 
     purposes of this subsection, if the Secretary finds that 
     there is insufficient enrollment experience (including no 
     enrollment experience in the case of a provider-sponsored 
     organization) to determine an average of the capitation 
     payments to be made under this part at the beginning of a 
     contract period, the Secretary may determine such an average 
     based on the enrollment experience of other contracts entered 
     into under this part.
       ``(5) Adjusted community rate.--
       ``(A) In general.--For purposes of this subsection, subject 
     to subparagraph (B), the term `adjusted community rate' for a 
     service or services means, at the election of a Medicare 
     Choice organization, either--
       ``(i) the rate of payment for that service or services 
     which the Secretary annually determines would apply to an 
     individual electing a Medicare Choice product under this part 
     if the rate of payment were determined under a `community 
     rating system' (as defined in section 1302(8) of the Public 
     Health Service Act, other than subparagraph (C)), or
       ``(ii) such portion of the weighted aggregate premium, 
     which the Secretary annually estimates would apply to such an 
     individual, as the Secretary annually estimates is 
     attributable to that service or services,
     but adjusted for differences between the utilization 
     characteristics of the individuals electing coverage under 
     this part and the utilization characteristics of the other 
     enrollees with the organization (or, if the Secretary finds 
     that adequate data are not available to adjust for those 
     differences, the differences between the utilization 
     characteristics of individuals selecting other Medicare 
     Choice coverage, or individuals in the area, in the State, or 
     in the United States, eligible to elect Medicare Choice 
     coverage under this part and the utilization characteristics 
     of the rest of the population in the area, in the State, or 
     in the United States, respectively).
       ``(B) Special rule for provider-sponsored organizations.--
     In the case of a Medicare Choice organization that is a 
     provider-sponsored organization, the adjusted community rate 
     under subparagraph (A) for a Medicare Choice product may be 
     computed (in a manner specified by the Secretary) using data 
     in the general commercial marketplace or (during a transition 
     period) based on the costs incurred by the organization in 
     providing such a product.
       ``(f) Rules Regarding Physician Participation.--
       ``(1) Procedures.--Each Medicare Choice organization shall 
     establish reasonable procedures relating to the participation 
     (under an agreement between a physician and the organization) 
     of physicians under Medicare Choice products offered by the 
     organization under this part. Such procedures shall include--
       ``(A) providing notice of the rules regarding 
     participation,
       ``(B) providing written notice of participation decisions 
     that are adverse to physicians, and
       ``(C) providing a process within the organization for 
     appealing adverse decisions, including the presentation of 
     information and views of the physician regarding such 
     decision.
       ``(2) Consultation in medical policies.--A Medicare Choice 
     organization shall consult with physicians who have entered 
     into participation agreements with the organization regarding 
     the organization's medical policy, quality, and medical 
     management procedures.
       ``(3) Limitations on physician incentive plans.--
       ``(A) In general.--Each Medicare Choice organization may 
     not operate any physician incentive plan (as defined in 
     subparagraph (B)) unless the following requirements are met:
       ``(i) No specific payment is made directly or indirectly 
     under the plan to a physician or physician group as an 
     inducement to reduce or limit medically necessary services 
     provided with respect to a specific individual enrolled with 
     the organization.
       ``(ii) If the plan places a physician or physician group at 
     substantial financial risk (as determined by the Secretary) 
     for services not provided by the physician or physician 
     group, the organization--

       ``(I) provides stop-loss protection for the physician or 
     group that is adequate and appropriate, based on standards 
     developed by the Secretary that take into account the number 
     of physicians placed at such substantial financial risk in 
     the group or under the plan and the number of individuals 
     enrolled with the organization who receive services from the 
     physician or the physician group, and
       ``(II) conducts periodic surveys of both individuals 
     enrolled and individuals previously enrolled with the 
     organization to determine the degree of access of such 
     individuals to services provided by the organization and 
     satisfaction with the quality of such services.

       ``(iii) The organization provides the Secretary with 
     descriptive information regarding the plan, sufficient to 
     permit the Secretary to determine whether the plan is in 
     compliance with the requirements of this subparagraph.
       ``(B) Physician incentive plan defined.--In this paragraph, 
     the term `physician incentive plan' means any compensation 
     arrangement between a Medicare Choice organization and a 
     physician or physician group that may directly or indirectly 
     have the effect of reducing or limiting services provided 
     with respect to individuals enrolled with the organization 
     under this part.
       ``(4) Exception for certain fee-for-service plans.--The 
     previous provisions of this subsection shall not apply in the 
     case of a Medicare Choice organization in relation to a 
     Medicare Choice product if the organization does not have 
     agreements between physicians and the organization for the 
     provision of benefits under the product.
       ``(g) Provision of Information.--A Medicare Choice 
     organization shall provide the Secretary with such 
     information on the organization and each Medicare Choice 
     product it offers as may be required for the preparation of 
     the information booklet described in section 1805(d)(3)(A).
       ``(h) Coordinated Acute and Long-term Care Benefits Under a 
     Medicare Choice 

[[Page H11254]]

     Product.--Nothing in this part shall be construed as 
     preventing a State from coordinating benefits under its 
     medicaid program under title XIX with those provided under a 
     Medicare Choice product in a manner that assures continuity 
     of a full-range of acute care and long-term care services to 
     poor elderly or disabled individuals eligible for benefits 
     under this title and under such program.


                     ``patient protection standards

       ``Sec. 1853. (a) Disclosure to Enrollees.--A Medicare 
     Choice organization shall disclose in clear, accurate, and 
     standardized form, information regarding all of the following 
     for each Medicare Choice product it offers:
       ``(1) Benefits under the Medicare Choice product offered, 
     including exclusions from coverage.
       ``(2) Rules regarding prior authorization or other review 
     requirements that could result in nonpayment.
       ``(3) Potential liability for cost-sharing for out-of-
     network services.
       ``(4) The number, mix, and distribution of participating 
     providers.
       ``(5) The financial obligations of the enrollee, including 
     premiums, deductibles, co-payments, and maximum limits on 
     out-of-pocket losses for items and services (both in and out 
     of network).
       ``(6) Statistics on enrollee satisfaction with the product 
     and organization, including rates of reenrollment.
       ``(7) Enrollee rights and responsibilities, including the 
     grievance process provided under subsection (f).
       ``(8) A statement that the use of the 911 emergency 
     telephone number is appropriate in emergency situations and 
     an explanation of what constitutes an emergency situation.
       ``(9) A description of the organization's quality assurance 
     program under subsection (d).
     Such information shall be disclosed to each enrollee under 
     this part at the time of enrollment and at least annually 
     thereafter.
       ``(b) Access to Services.--
       ``(1) In general.--A Medicare Choice organization offering 
     a Medicare Choice product may restrict the providers from 
     whom the benefits under the product are provided so long as--
       ``(A) the organization makes such benefits available and 
     accessible to each individual electing the product within the 
     product service area with reasonable promptness and in a 
     manner which assures continuity in the provision of benefits;
       ``(B) when medically necessary the organization makes such 
     benefits available and accessible 24 hours a day and 7 days a 
     week;
       ``(C) the product provides for reimbursement with respect 
     to services which are covered under subparagraphs (A) and (B) 
     and which are provided to such an individual other than 
     through the organization, if--
       ``(i) the services were medically necessary and immediately 
     required because of an unforeseen illness, injury, or 
     condition, and
       ``(ii) it was not reasonable given the circumstances to 
     obtain the services through the organization; and
       ``(D) coverage is provided for emergency services (as 
     defined in paragraph (5)) without regard to prior 
     authorization or the emergency care provider's contractual 
     relationship with the organization.
       ``(2) Minimum payment levels where providing point-of-
     service coverage.--If a Medicare Choice product provides 
     benefits for items and services (not described in paragraph 
     (1)(C)) through a network of providers and also permits 
     payment to be made under the product for such items and 
     services not provided through such a network, the payment 
     level under the product with respect to such items and 
     services furnished outside the network shall be at least 70 
     percent (or, if the effective cost-sharing rate is 50 
     percent, at least 35 percent) of the lesser of--
       ``(A) the payment basis (determined without regard to 
     deductibles and cost-sharing) that would have applied for 
     such items and services under parts A and B, or
       ``(B) the amount charged by the entity furnishing such 
     items and services.
       ``(3) Protection of enrollees for certain out-of-network 
     services.--
       ``(A) Participating providers.--In the case of physicians' 
     services or renal dialysis services described in subparagraph 
     (C) which are furnished by a participating physician or 
     provider of services or renal dialysis facility to an 
     individual enrolled with a Medicare Choice organization under 
     this section, the applicable participation agreement is 
     deemed to provide that the physician or provider of services 
     or renal dialysis facility will accept as payment in full 
     from the organization the amount that would be payable to the 
     physician or provider of services or renal dialysis facility 
     under part B and from the individual under such part, if the 
     individual were not enrolled with such an organization under 
     this part.
       ``(B) Nonparticipating providers.--In the case of 
     physicians' services described in subparagraph (C) which are 
     furnished by a nonparticipating physician, the limitations on 
     actual charges for such services otherwise applicable under 
     part B (to services furnished by individuals not enrolled 
     with a Medicare Choice organization under this section) shall 
     apply in the same manner as such limitations apply to 
     services furnished to individuals not enrolled with such an 
     organization.
       ``(C) Services described.--The physicians' services or 
     renal dialysis services described in this subparagraph are 
     physicians' services or renal dialysis services which are 
     furnished to an enrollee of a Medicare Choice organization 
     under this part by a physician, provider of services, or 
     renal dialysis facility who is not under a contract with the 
     organization.
       ``(4) Protection for needed services.--A Medicare Choice 
     organization that provides covered services through a network 
     of providers shall provide coverage of services provided by a 
     provider that is not part of the network if the service 
     cannot be provided by a provider that is part of the network 
     and the organization authorized the service directly or 
     through referral by the primary care physician who is 
     designated by the organization for the individual involved.
       ``(5) Emergency services.--In this subsection, the term 
     `emergency services' means--
       ``(A) health care items and services furnished in the 
     emergency department of a hospital, and
       ``(B) ancillary services routinely available to such 
     department,
     to the extent they are required to evaluate and treat an 
     emergency medical condition (as defined in paragraph (6)) 
     until the condition is stabilized.
       ``(6) Emergency medical condition.--In paragraph (5), the 
     term `emergency medical condition' means a medical condition, 
     the onset of which is sudden, that manifests itself by 
     symptoms of sufficient severity, including severe pain, that 
     a prudent layperson, who possesses an average knowledge of 
     health and medicine, could reasonably expect the absence of 
     immediate medical attention to result in--
       ``(A) placing the person's health in serious jeopardy,
       ``(B) serious impairment to bodily functions, or
       ``(C) serious dysfunction of any bodily organ or part.
       ``(7) Protection against balance billing.--The limitations 
     on billing that apply to a provider (including a physician) 
     under parts A and B in the case of an individual electing the 
     non-Medicare Choice option shall apply to an individual who 
     elects the Medicare Choice option in the case of any provider 
     that (under the Medicare Choice option) may bill the enrollee 
     directly for services.
       ``(c) Confidentiality and Accuracy of Enrollee Records.--
     Each Medicare Choice organization shall establish 
     procedures--
       ``(1) to safeguard the privacy of individually identifiable 
     enrollee information, and
       ``(2) to maintain accurate and timely medical records for 
     enrollees.
       ``(d) Quality Assurance Program.--
       ``(1) In general.--Each Medicare Choice organization must 
     have arrangements, established in accordance with regulations 
     of the Secretary, for an ongoing quality assurance program 
     for health care services it provides to such individuals.
       ``(2) Elements of program.--The quality assurance program 
     shall--
       ``(A) stress health outcomes;
       ``(B) provide for the establishment of written protocols 
     for utilization review, based on current standards of medical 
     practice;
       ``(C) provide review by physicians and other health care 
     professionals of the process followed in the provision of 
     such health care services;
       ``(D) monitors and evaluates high volume and high risk 
     services and the care of acute and chronic conditions;
       ``(E) evaluates the continuity and coordination of care 
     that enrollees receive;
       ``(F) has mechanisms to detect both underutilization and 
     overutilization of services;
       ``(G) after identifying areas for improvement, establishes 
     or alters practice parameters;
       ``(H) takes action to improve quality and assesses the 
     effectiveness of such action through systematic follow-up;
       ``(I) makes available information on quality and outcomes 
     measures to facilitate beneficiary comparison and choice of 
     health coverage options (in such form and on such quality and 
     outcomes measures as the Secretary determines to be 
     appropriate);
       ``(J) is evaluated on an ongoing basis as to its 
     effectiveness; and
       ``(K) provide for external accreditation or review, by a 
     utilization and quality control peer review organization 
     under part B of title XI or other qualified independent 
     review organization, of the quality of services furnished by 
     the organization meets professionally recognized standards of 
     health care (including providing adequate access of enrollees 
     to services).
       ``(3) Exception for certain fee-for-service plans.--
     Paragraph (1) and subsection (c)(2) shall not apply in the 
     case of a Medicare Choice organization in relation to a 
     Medicare Choice product to the extent the organization 
     provides for coverage of benefits without restrictions 
     relating to utilization and without regard to whether the 
     provider has a contract or other arrangement with the plan 
     for the provision of such benefits.
       ``(4) Treatment of accreditation.--The Secretary shall 
     provide that a Medicare Choice organization is deemed to meet 
     the requirements of paragraphs (1) and (2) of this subsection 
     and subsection (c) if the organization is accredited (and 
     periodically reaccredited) by a private organization under a 
     process that the Secretary has determined assures that the 
     organization meets standards that are no less stringent than 
     the 

[[Page H11255]]

     standards established under section 1856 to carry out this 
     subsection and subsection (c).
       ``(e) Coverage Determinations.--
       ``(1) Decisions on nonemergency care.--A Medicare Choice 
     organization shall make determinations 
     regarding authorization requests for nonemergency care on 
     a timely basis, depending on the urgency of the situation.
       ``(2) Appeals.--
       ``(A) In general.--Appeals from a determination of an 
     organization denying coverage shall be decided within 30 days 
     of the date of receipt of medical information, but not later 
     than 60 days after the date of the decision.
       ``(B) Physician decision on certain appeals.--Appeal 
     decisions relating to a determination to deny coverage based 
     on a lack of medical necessity shall be made only by a 
     physician.
       ``(C) Emergency cases.--Appeals from such a determination 
     involving a life-threatening or emergency situation shall be 
     decided on an expedited basis.
       ``(f) Grievances and Appeals.--
       ``(1) Grievance mechanism.--Each Medicare Choice 
     organization must provide meaningful procedures for hearing 
     and resolving grievances between the organization (including 
     any entity or individual through which the organization 
     provides health care services) and enrollees under this part.
       ``(2) Appeals.--An enrollee with an organization under this 
     part who is dissatisfied by reason of the enrollee's failure 
     to receive any health service to which the enrollee believes 
     the enrollee is entitled and at no greater charge than the 
     enrollee believes the enrollee is required to pay is 
     entitled, if the amount in controversy is $100 or more, to a 
     hearing before the Secretary to the same extent as is 
     provided in section 205(b), and in any such hearing the 
     Secretary shall make the organization a party. If the amount 
     in controversy is $1,000 or more, the individual or 
     organization shall, upon notifying the other party, be 
     entitled to judicial review of the Secretary's final decision 
     as provided in section 205(g), and both the individual and 
     the organization shall be entitled to be parties to that 
     judicial review. In applying sections 205(b) and 205(g) as 
     provided in this subparagraph, and in applying section 205(l) 
     thereto, any reference therein to the Commissioner of Social 
     Security or the Social Security Administration shall be 
     considered a reference to the Secretary or the Department of 
     Health and Human Services, respectively.
       ``(3) Coordination with secretary of labor.--The Secretary 
     shall consult with the Secretary of Labor so as to ensure 
     that the requirements of this subsection, as they apply in 
     the case of grievances referred to in paragraph (1) to which 
     section 503 of the Employee Retirement Income Security Act of 
     1974 applies, are applied in a manner consistent with the 
     requirements of such section 503.
       ``(g) Information on Advance Directives.--Each Medicare 
     Choice organization shall meet the requirement of section 
     1866(f) (relating to maintaining written policies and 
     procedures respecting advance directives).
       ``(h) Approval of Marketing Materials.--
       ``(1) Submission.--Each Medicare Choice organization may 
     not distribute marketing materials unless--
       ``(A) at least 45 days before the date of distribution the 
     organization has submitted the material to the Secretary for 
     review, and
       ``(B) the Secretary has not disapproved the distribution of 
     such material.
       ``(2) Review.--The standards established under section 1856 
     shall include guidelines for the review of all such material 
     submitted and under such guidelines the Secretary shall 
     disapprove such material if the material is materially 
     inaccurate or misleading or otherwise makes a material 
     misrepresentation.
       ``(3) Deemed approval (1-stop shopping).--In the case of 
     material that is submitted under paragraph (1)(A) to the 
     Secretary or a regional office of the Department of Health 
     and Human Services and the Secretary or the office has not 
     disapproved the distribution of marketing materials under 
     paragraph (1)(B) with respect to a Medicare Choice product in 
     an area, the Secretary is deemed not to have disapproved such 
     distribution in all other areas covered by the product and 
     organization.
       ``(4) Prohibition of certain marketing practices.--Each 
     Medicare Choice organization shall conform to fair marketing 
     standards in relation to Medicare Choice products offered 
     under this part, included in the standards established under 
     section 1856. Such standards shall include a prohibition 
     against an organization (or agent of such an organization) 
     completing any portion of any election form under section 
     1805 on behalf of any individual.
       ``(i) Additional Standardized Information on Quality, 
     Outcomes, and Other Factors.--
       ``(1) In general.--In addition to any other information 
     required to be provided under this part, each Medicare Choice 
     organization shall provide the Secretary (at a time, not less 
     frequently than annually, and in an electronic, standardized 
     form and manner specified by the Secretary) such information 
     as the Secretary determines to be necessary, consistent with 
     this part, to evaluate the performance of the organization in 
     providing benefits to enrollees.
       ``(2) Information to be included.--Subject to paragraph 
     (3), information to be provided under this subsection shall 
     include at least the following:
       ``(A) Information on the characteristics of enrollees that 
     may affect their need for or use of health services and the 
     determination of risk-adjusted payments under section 1855.
       ``(B) Information on the types of treatments and outcomes 
     of treatments with respect to the clinical health, functional 
     status, and well-being of enrollees.
       ``(C) Information on health care expenditures and the 
     volume and prices of procedures.
       ``(D) Information on the flexibility permitted by plans to 
     enrollees in their selection of providers.
       ``(3) Special treatment.--The Secretary may waive the 
     provision of such information under paragraph (2), or require 
     such other information, as the Secretary finds appropriate in 
     the case of a newly established Medicare Choice organization 
     for which such information is not available.
       ``(j) Demonstration Projects.--The Secretary shall provide 
     for demonstration projects to determine the effectiveness, 
     cost, and impact of alternative methods of providing 
     comparative information about the performance of Medicare 
     Choice organizations and products and the performance of 
     medicare supplemental policies in relation to such products. 
     Such projects shall include information about health care 
     outcomes resulting from coverage under different products and 
     policies.


                   ``provider-sponsored organizations

       ``Sec. 1854. (a) Provider-Sponsored Organization Defined.--
       ``(1) In general.--In this part, the term `provider-
     sponsored organization' means a public or private entity that 
     (in accordance with standards established under subsection 
     (b)) is a provider, or group of affiliated providers, that 
     provides a substantial proportion (as defined by the 
     Secretary under such standards) of the health care items and 
     services under the contract under this part directly through 
     the provider or affiliated group of providers.
       ``(2) Substantial proportion.--In defining what is a 
     `substantial proportion' for purposes of paragraph (1), the 
     Secretary--
       ``(A) shall take into account the need for such an 
     organization to assume responsibility for a substantial 
     proportion of services in order to assure financial stability 
     and the practical difficulties in such an organization 
     integrating a very wide range of service providers; and
       ``(B) may vary such proportion based upon relevant 
     differences among organizations, such as their location in an 
     urban or rural area.
       ``(3) Affiliation.--For purposes of this subsection, a 
     provider is `affiliated' with another provider if, through 
     contract, ownership, or otherwise--
       ``(A) one provider, directly or indirectly, controls, is 
     controlled by, or is under common control with the other,
       ``(B) each provider is a participant in a lawful 
     combination under which each provider shares, directly or 
     indirectly, substantial financial risk in connection with 
     their operations,
       ``(C) both providers are part of a controlled group of 
     corporations under section 1563 of the Internal Revenue Code 
     of 1986, or
       ``(D) both providers are part of an affiliated service 
     group under section 414 of such Code.
       ``(4) Control.--For purposes of paragraph (3), control is 
     presumed to exist if one party, directly or indirectly, owns, 
     controls, or holds the power to vote, or proxies for, not 
     less than 51 percent of the voting rights or governance 
     rights of another.
       ``(b) Preemption of State Insurance Licensing 
     Requirements.--
       ``(1) In general.--This section supersedes any State law 
     which--
       ``(A) requires that a provider-sponsored organization meet 
     requirements for insurers of health services or health 
     maintenance organizations doing business in the State with 
     respect to initial capitalization and establishment of 
     financial reserves against insolvency, or
       ``(B) imposes requirements that would have the effect of 
     prohibiting the organization from complying with the 
     applicable requirements of this part,

     insofar as such the law applies to individuals enrolled with 
     the organization under this part.
       ``(2) Exception for identical standards.--Paragraph (1) 
     shall not apply with respect to any State law to the extent 
     that such law provides the application of standards that are 
     identical to the standards established for provider-sponsored 
     organizations under this part.
       ``(3) Construction.--Nothing in this subsection shall be 
     construed as affecting the operation of section 514 of the 
     Employee Retirement Income Security Act of 1974.


              ``payments to medicare choice organizations

       ``Sec. 1855. (a) Payments.--
       ``(1) In general.--Under a contract under section 1858 the 
     Secretary shall pay to each Medicare Choice organization, 
     with respect to coverage of an individual under this part in 
     a payment area for a month, an amount equal to the monthly 
     adjusted Medicare Choice capitation rate (as provided under 
     subsection (b)) with respect to that individual for that 
     area.
       ``(2) Annual announcement.--The Secretary shall annually 
     determine, and shall announce (in a manner intended to 
     provide 

[[Page H11256]]

     notice to interested parties) not later than September 7 
     before the calendar year concerned--
       ``(A) the annual Medicare Choice capitation rate for each 
     payment area for the year, and
       ``(B) the factors to be used in adjusting such rates under 
     subsection (b) for payments for months in that year.
       ``(3) Advance notice of methodological changes.--At least 
     45 days before making the announcement under paragraph (2) 
     for a year, the Secretary shall provide for notice to 
     Medicare Choice organizations of proposed changes to be made 
     in the methodology or benefit coverage assumptions from the 
     methodology and assumptions used in the previous announcement 
     and shall provide such organizations an opportunity to 
     comment on such proposed changes.
       ``(4) Explanation of assumptions.--In each announcement 
     made under paragraph (2) for a year, the Secretary shall 
     include an explanation of the assumptions (including any 
     benefit coverage assumptions) and changes in methodology used 
     in the announcement in sufficient detail so that Medicare 
     Choice organizations can compute monthly adjusted Medicare 
     Choice capitation rates for classes of individuals located in 
     each payment area which is in whole or in part within the 
     service area of such an organization.
       ``(b) Monthly Adjusted Medicare Choice Capitation Rate.--
       ``(1) In general.--For purposes of this section, the 
     `monthly adjusted Medicare Choice capitation rate' under this 
     subsection, for a month in a year for an individual in a 
     payment area (specified under paragraph (3)) and in a class 
     (established under paragraph (4)), is \1/12\ of the annual 
     Medicare Choice capitation rate specified in paragraph (2) 
     for that area for the year, adjusted to reflect the actuarial 
     value of benefits under this title with respect to 
     individuals in such class compared to the national average 
     for individuals in all classes.
       ``(2) Annual medicare choice capitation rates.--
       ``(A) In general.--For purposes of this section, the annual 
     Medicare Choice capitation rate for a payment area for a year 
     is equal to the annual Medicare Choice capitation rate for 
     the area for the previous year (or, in the case of 1996, the 
     average annual per capita rate of payment described in 
     section 1876(a)(1)(C) for the area for 1995) increased by the 
     per capita growth rate for that area and year (as determined 
     under subsection (c)).
       ``(B) Special rules for 1996.--
       ``(i) Floor at 85 percent of national average.--In no case 
     shall the annual Medicare Choice capitation rate for a 
     payment area for 1996 be less than 85 percent of the national 
     average of such rates for such year for all payment areas 
     (weighted to reflect the number of medicare beneficiaries in 
     each such area).
       ``(ii) Removal of medical education and disproportionate 
     share hospital payments from calculation of adjusted average 
     per capita cost.--In determining the annual Medicare Choice 
     capitation rate for 1996, the average annual per capita rate 
     of payment described in section 1876(a)(1)(C) for 1995 shall 
     be determined as though the Secretary had excluded from such 
     rate any amounts which the Secretary estimated would have 
     been payable under this title during the year for--

       ``(I) payment adjustments under section 1886(d)(5)(F) for 
     hospitals serving a disproportionate share of low-income 
     patients; and
       ``(II) the indirect costs of medical education under 
     section 1886(d)(5)(B) or for direct graduate medical 
     education costs under section 1886(h).

       ``(3) Payment area defined.--
       ``(A) In general.--In this section, the term `payment area' 
     means--
       ``(i) a metropolitan statistical area, or
       ``(ii) all areas of a State outside of such an area.
       ``(B) Special rule for esrd beneficiaries.--Such term 
     means, in the case of the population group described in 
     paragraph (5)(C), each State.
       ``(4) Classes.--
       ``(A) In general.--For purposes of this section, the 
     Secretary shall define appropriate classes of enrollees, 
     consistent with paragraph (5), based on age, gender, welfare 
     status, institutionalization, and such other factors as the 
     Secretary determines to be appropriate, so as to ensure 
     actuarial equivalence. The Secretary may add to, modify, or 
     substitute for such classes, if such changes will improve the 
     determination of actuarial equivalence.
       ``(B) Research.--The Secretary shall conduct such research 
     as may be necessary to provide for greater accuracy in the 
     adjustment of capitation rates under this subsection. Such 
     research may include research into the addition or 
     modification of classes under subparagraph (A). The Secretary 
     shall submit to Congress a report on such research by not 
     later than January 1, 1997.
       ``(5) Division of medicare population.--In carrying out 
     paragraph (4) and this section, the Secretary shall recognize 
     the following separate population groups:
       ``(A) Aged.--Individuals 65 years of age or older who are 
     not described in subparagraph (C).
       ``(B) Disabled.--Disabled individuals who are under 65 
     years of age and not described in subparagraph (C).
       ``(C) Individuals with end stage renal disease.--
     Individuals who are determined to have end stage renal 
     disease.
       ``(c) Per Capita Growth Rates.--
       ``(1) For 1996.--
       ``(A) In general.--For purposes of this section and subject 
     to subparagraph (B), the per capita growth rates for 1996, 
     for a payment area assigned to a service utilization cohort 
     under subsection (d), shall be the following:
       ``(i) Below average service utilization cohort.--For areas 
     assigned to the below average service utilization cohort, 9.6 
     percent.
       ``(ii) Above average service utilization cohort.--For areas 
     assigned to the above average service utilization cohort, 4.8 
     percent.
       ``(iii) Highest service utilization cohort.--For areas 
     assigned to the highest service utilization cohort, 2.1 
     percent.
       ``(B) Budget neutral adjustment.--The Secretary shall 
     adjust the per capita growth rates specified in subparagraph 
     (A) for all the areas by such uniform factor as may be 
     necessary to assure that the total capitation payments under 
     this section during 1996 are the same as the amount such 
     payments would have been if the per capita growth rate for 
     all such areas for 1996 were equal to the national average 
     per capita growth rate, specified in paragraph (3) for 1996.
       ``(2) For subsequent years.--
       ``(A) In general.--For purposes of this section and subject 
     to subparagraph (B), the Secretary shall compute a per capita 
     growth rate for each year after 1996, for each payment area 
     as assigned to a service utilization cohort under subsection 
     (d), consistent with the following rules:
       ``(i) Below average service utilization cohort set at 143 
     percent of national average per capita growth rate.--The per 
     capita growth rate for areas assigned to the below average 
     service utilization cohort for the year shall be 160 percent 
     of the national average per capita growth rate for the year 
     (as specified under paragraph (3)).
       ``(ii) Above average service utilization cohort set at 80 
     percent of national average per capita growth rate.--The per 
     capita growth rate for areas assigned to the above average 
     service utilization cohort for the year shall be 80 percent 
     of the national average per capita growth rate for the year.
       ``(iii) Highest service utilization cohort set at 40 
     percent of national average per capita growth rate.--The per 
     capita growth rate for areas assigned to the highest service 
     utilization cohort for the year shall be 35 percent of the 
     national average per capita growth rate for the year.
       ``(B) Average per capita growth rate at national average to 
     assure budget neutrality.--The Secretary shall compute per 
     capita growth rates for a year under subparagraph (A) in a 
     manner so that the weighted average per capita growth rate 
     for all areas for the year (weighted to reflect the number of 
     medicare beneficiaries in each area) is equal to the national 
     average per capita growth rate under paragraph (3) for the 
     year.
       ``(3) National average per capita growth rates.--In this 
     subsection, the `national average per capita growth rate' 
     for--
       ``(A) 1996 is 6.0 percent,
       ``(B) 1997 is 6.0 percent,
       ``(C) 1998 is 6.0 percent,
       ``(D) 1999 is 5.5 percent,
       ``(E) 2000 is 5.5 percent,
       ``(F) 2001 is 5.5 percent,
       ``(G) 2002 is 5.5 percent, and
       ``(H) each subsequent year is 5.5 percent.
       ``(d) Assignment of Payment Areas to Service Utilization 
     Cohorts.--
       ``(1) In general.--For purposes of determining per capita 
     growth rates under subsection (c) for areas for a year, the 
     Secretary shall assign each payment area to a service 
     utilization cohort (based on the service utilization index 
     value for that area determined under paragraph (2)) as 
     follows:
       ``(A) Below average service utilization cohort.--Areas with 
     a service utilization index value of less than 1.00 shall be 
     assigned to the below average service utilization cohort.
       ``(B) Above average service utilization cohort.--Areas with 
     a service utilization index value of at least 1.00 but less 
     than 1.20 shall be assigned to the above average service 
     utilization cohort.
       ``(C) Highest service utilization cohort.--Areas with a 
     service utilization index value of at least 1.20 shall be 
     assigned to the highest service utilization cohort.
       ``(2) Determination of service utilization index values.--
     In order to determine the per capita growth rate for a 
     payment area for each year (beginning with 1996), the 
     Secretary shall determine for such area and year a service 
     utilization index value, which is equal to--
       ``(A) the annual Medicare Choice capitation rate under this 
     section for the area for the year in which the determination 
     is made (or, in the case of 1996, the average annual per 
     capita rate of payment (described in section 1876(a)(1)(C)) 
     for the area for 1995); divided by
       ``(B) the input-price-adjusted annual national Medicare 
     Choice capitation rate (as determined under paragraph (3)) 
     for that area for the year in which the determination is 
     made.
       ``(3) Determination of input-price-adjusted rates.--
       ``(A) In general.--For purposes of paragraph (2), the 
     `input-price-adjusted annual national Medicare Choice 
     capitation rate' for a payment area for a year is equal to 
     the sum, for all the types of medicare services 

[[Page H11257]]

     (as classified by the Secretary), of the product (for each 
     such type) of--
       ``(i) the national standardized Medicare Choice capitation 
     rate (determined under subparagraph (B)) for the year,
       ``(ii) the proportion of such rate for the year which is 
     attributable to such type of services, and
       ``(iii) an index that reflects (for that year and that type 
     of services) the relative input price of such services in the 
     area compared to the national average input price of such 
     services.

     In applying clause (iii), the Secretary shall, subject to 
     subparagraph (C), apply those indices under this title that 
     are used in applying (or updating) national payment rates for 
     specific areas and localities.
       ``(B) National standardized medicare choice capitation 
     rate.--In this paragraph, the `national standardized Medicare 
     Choice capitation rate' for a year is equal to--
       ``(i) the sum (for all payment areas) of the product of (I) 
     the annual Medicare Choice capitation rate for that year for 
     the area under subsection (b)(2), and (II) the average number 
     of medicare beneficiaries residing in that area in the year; 
     divided by
       ``(ii) the total average number of medicare beneficiaries 
     residing in all the payment areas for that year.
       ``(C) Special rules for 1996.--In applying this paragraph 
     for 1996--
       ``(i) medicare services shall be divided into 2 types of 
     services: part A services and part B services;
       ``(ii) the proportions described in subparagraph (A)(ii) 
     for such types of services shall be--

       ``(I) for part A services, the ratio (expressed as a 
     percentage) of the average annual per capita rate of payment 
     for the area for part A for 1995 to the total average annual 
     per capita rate of payment for the area for parts A and B for 
     1995, and
       ``(II) for part B services, 100 percent minus the ratio 
     described in subclause (I);

       ``(iii) for the part A services, 70 percent of payments 
     attributable to such services shall be adjusted by the index 
     used under section 1886(d)(3)(E) to adjust payment rates for 
     relative hospital wage levels for hospitals located in the 
     payment area involved;
       ``(iv) for part B services--

       ``(I) 66 percent of payments attributable to such services 
     shall be adjusted by the index of the geographic area factors 
     under section 1848(e) used to adjust payment rates for 
     physicians' services furnished in the payment area, and
       ``(II) of the remaining 34 percent of the amount of such 
     payments, 70 percent shall be adjusted by the index described 
     in clause (iii);

       ``(v) the index values shall be computed based only on the 
     beneficiary population described in subsection (b)(5)(A).
     The Secretary may continue to apply the rules described in 
     this subparagraph (or similar rules) for 1997.
       ``(e) Payment Process.--
       ``(1) In general.--Subject to section 1859(f), the 
     Secretary shall make monthly payments under this section in 
     advance and in accordance with the rate determined under 
     subsection (a) to the plan for each individual enrolled with 
     a Medicare Choice organization under this part.
       ``(2) Adjustment to reflect number of enrollees.--
       ``(A) In general.--The amount of payment under this 
     subsection may be retroactively adjusted to take into account 
     any difference between the actual number of individuals 
     enrolled with an organization under this part and the number 
     of such individuals estimated to be so enrolled in 
     determining the amount of the advance payment.
       ``(B) Special rule for certain enrollees.--
       ``(i) In general.--Subject to clause (ii), the Secretary 
     may make retroactive adjustments under subparagraph (A) to 
     take into account individuals enrolled during the period 
     beginning on the date on which the individual enrolls with a 
     Medicare Choice organization under a product operated, 
     sponsored, or contributed to by the individual's employer or 
     former employer (or the employer or former employer of the 
     individual's spouse) and ending on the date on which the 
     individual is enrolled in the organization under this part, 
     except that for purposes of making such retroactive 
     adjustments under this subparagraph, such period may not 
     exceed 90 days.
       ``(ii) Exception.--No adjustment may be made under clause 
     (i) with respect to any individual who does not certify that 
     the organization provided the individual with the disclosure 
     statement described in section 1853(a) at the time the 
     individual enrolled with the organization.
       ``(f) Payments From Trust Fund.--The payment to a Medicare 
     Choice organization under this section for individuals 
     enrolled under this part with the organization, and payments 
     to a Medicare Choice MSA under subsection (f)(1)(B), shall be 
     made from the Federal Hospital Insurance Trust Fund and the 
     Federal Supplementary Medical Insurance Trust Fund in such 
     proportion as the Secretary determines reflects the relative 
     weight that benefits under part A and under part B represents 
     of the actuarial value of the total benefits under this 
     title.
       ``(g) Special Rule for Certain Inpatient Hospital Stays.--
     In the case of an individual who is receiving inpatient 
     hospital services from a subsection (d) hospital (as defined 
     in section 1886(d)(1)(B)) as of the effective date of the 
     individual's--
       ``(1) election under this part of a Medicare Choice product 
     offered by a Medicare Choice organization--
       ``(A) payment for such services until the date of the 
     individual's discharge shall be made under this title through 
     the Medicare Choice product or Non-Medicare Choice option (as 
     the case may be) elected before the election with such 
     organization,
       ``(B) the elected organization shall not be financially 
     responsible for payment for such services until the date 
     after the date of the individual's discharge, and
       ``(C) the organization shall nonetheless be paid the full 
     amount otherwise payable to the organization under this part; 
     or
       ``(2) termination of election with respect to a Medicare 
     Choice organization under this part--
       ``(A) the organization shall be financially responsible for 
     payment for such services after such date and until the date 
     of the individual's discharge,
       ``(B) payment for such services during the stay shall not 
     be made under section 1886(d) or by any succeeding Medicare 
     Choice organization, and
       ``(C) the terminated organization shall not receive any 
     payment with respect to the individual under this part during 
     the period the individual is not enrolled.


  ``establishment of standards for medicare choice organizations and 
                                products

       ``Sec. 1856. (a) Interim Standards.--
       ``(1) In general.--The Secretary shall issue regulations 
     regarding standards for Medicare Choice organizations and 
     products within 180 days after the date of the enactment of 
     this section. Such regulations shall be issued on an interim 
     basis, but shall become effective upon publication and shall 
     be effective through the end of 1999.
       ``(2) Solicitation of views.--In developing standards under 
     this subsection relating to solvency of Medicare Choice 
     organizations, the Secretary shall solicit the views of the 
     American Academy of Actuaries.
       ``(3) Effect on state regulations.--Regulations under this 
     subsection shall not preempt State regulations for Medicare 
     Choice organizations for products not offered under this 
     part.
       ``(b) Permanent Standards.--
       ``(1) In general.--The Secretary shall develop permanent 
     standards under this subsection.
       ``(2) Consultation.--In developing standards under this 
     subsection, the Secretary shall consult with the National 
     Association of Insurance Commissioners, associations 
     representing the various types of Medicare Choice 
     organizations, and medicare beneficiaries.
       ``(3) Effectiveness.--The standards under this subsection 
     shall take effect for periods beginning on or after January 
     1, 2000.
       ``(c) Solvency.--In establishing interim and permanent 
     standards under this section relating to solvency of 
     organizations, the Secretary shall recognize the multiple 
     means of demonstrating solvency, including--
       ``(1) reinsurance purchased through a recognized commerce 
     company or through a capitive company owned directly or 
     indirectly by 3 or more provider-sponsored organizations,
       ``(2) unrestricted surplus,
       ``(3) guarantees, and
       ``(4) letters of credit.

     In such standards, the Secretary may treat as admitted assets 
     the assets used by a provider-sponsored organization in 
     delivering covered services.
       ``(d) Application of New Standards to Entities with a 
     Contract.--In the case of a Medicare Choice organization with 
     a contract in effect under this part at the time standards 
     applicable to the organization under this section are 
     changed, the organization may elect not to have such changes 
     apply to the organization until the end of the current 
     contract year (or, if there is less than 6 months remaining 
     in the contract year, until 1 year after the end of the 
     current contract year).
       ``(e) Relation to State Laws.--The standards established 
     under this section shall supersede any State law. The 
     standard or regulation with respect to Medicare Choice 
     products which are offered by Medicare Choice organizations 
     and are issued by organizations to which section 1851(b)(1) 
     applies, to the extent such law or regulation is inconsistent 
     with such standards.


                    ``medicare choice certification

       ``Sec. 1857. (a) In General.--
       ``(1) Establishment.--The Secretary shall establish a 
     process for the certification of organizations and products 
     offered by organizations as meeting the applicable standards 
     for Medicare Choice organizations and Medicare Choice 
     products established under section 1856.
       ``(2) Involvement of secretary of labor.--Such process 
     shall be established and operated in cooperation with the 
     Secretary of Labor with respect to union sponsors and Taft-
     Hartley sponsors.
       ``(3) Use of private accreditation processes.--
       ``(A) In general.--The process under this subsection shall, 
     to the maximum extent practicable, provide that Medicare 
     Choice organizations and products that are licensed or 
     certified through a qualified private accreditation process 
     that the Secretary finds applies standards that are no less 
     stringent than the requirements of this part are deemed to 
     meet the corresponding requirements of this part for such an 
     organization or product.

[[Page H11258]]

       ``(B) Periodic accreditation.--The use of an accreditation 
     under subparagraph (A) shall be valid only for such period as 
     the Secretary specifies.
       ``(4) User fees.--The Secretary may impose user fees on 
     entities seeking certification under this subsection in such 
     amounts as the Secretary deems sufficient to finance the 
     costs of such certification.
       ``(b) Notice to Enrollees in Case of Decertification.--If a 
     Medicare Choice organization or product is decertified under 
     this section, the organization shall notify each enrollee 
     with the organization and product under this part of such 
     decertification.
       ``(c) Qualified Associations.--In the case of Medicare 
     Choice products offered by a Medicare Choice organization 
     that is a qualified association (as defined in section 
     1854(c)(4)(C)) and issued by an organization to which section 
     1851(b)(1) applies or by a provider-sponsored organization 
     (as defined in section 1854(a)), nothing in this section 
     shall be construed as limiting the authority of States to 
     regulate such products.


             ``contracts with medicare choice organizations

       ``Sec. 1858. (a) In General.--The Secretary shall not 
     permit the election under section 1805 of a Medicare Choice 
     product offered by a Medicare Choice organization under this 
     part, and no payment shall be made under section 1856 to an 
     organization, unless the Secretary has entered into a 
     contract under this section with an organization with respect 
     to the offering of such product. Such a contract with an 
     organization may cover more than one Medicare Choice product. 
     Such contract shall provide that the organization agrees to 
     comply with the applicable requirements and standards of this 
     part and the terms and conditions of payment as provided for 
     in this part.
       ``(b) Enrollment Requirements.--
       ``(1)(A) Minimum enrollment requirement.--Subject to 
     subparagraphs (B) and (C), the Secretary may not enter into a 
     contract under this section with a Medicare Choice 
     organization (other than a union sponsor or Taft-Hartley 
     sponsor) unless the organization has at least 5,000 
     individuals (or 1,500 individuals in the case of an 
     organization that is a provider-sponsored organization) who 
     are receiving health benefits through the organization, 
     except that the standards under section 1856 may permit the 
     organization to have a lesser number of beneficiaries (but 
     not less than 500 in the case of an organization that is a 
     provider-sponsored organization) if the organization 
     primarily serves individuals residing outside of urbanized 
     areas.
       ``(B) Allowing transition.--The Secretary may waive the 
     requirement of subparagraph (A) during the first 3 contract 
     years with respect to an organization.
       ``(C) Treatment of areas with low managed care 
     penetration.--The Secretary may waive the requirement of 
     subparagraph (A) in the case of organizations operating in 
     areas in which there is a low proportion of medicare 
     beneficiaries who have made the Medicare Choice election.
       ``(2) Requirement for enrollment of non-medicare 
     beneficiaries.--
       ``(A) In general.--Each Medicare Choice organization with 
     which the Secretary enters into a contract under this section 
     shall have, for the duration of such contract, an enrolled 
     membership at least one-half of which consists of individuals 
     who are not entitled to benefits under this title or under a 
     State plan approved under title XIX.
       ``(B) Exception.--Subparagraph (A) shall not apply to--
       ``(i) an organization that has been certified by a national 
     organization recognized by the Secretary and has been found 
     to have met performance standards established by the 
     Secretary for at least 2 years, or
       ``(ii) a provider-sponsored organization for which 
     commercial payments to providers participating in the 
     organization exceed the payments to the organization under 
     this part.
       ``(C) Modification and waiver.--The Secretary may modify or 
     waive the requirement imposed by subparagraph (A)--
       ``(i) to the extent that more than 50 percent of the 
     population of the area served by the organization consists of 
     individuals who are entitled to benefits under this title or 
     under a State plan approved under title XIX, or
       ``(ii) in the case of an organization that is owned and 
     operated by a governmental entity, only with respect to a 
     period of three years beginning on the date the organization 
     first enters into a contract under this section, and only if 
     the organization has taken and is making reasonable efforts 
     to enroll individuals who are not entitled to benefits under 
     this title or under a State plan approved under title XIX.
       ``(D) Enforcement.--If the Secretary determines that an 
     organization has failed to comply with the requirements of 
     this paragraph, the Secretary may provide for the suspension 
     of enrollment of individuals under this part or of payment to 
     the organization under this part for individuals newly 
     enrolled with the organization, after the date the Secretary 
     notifies the organization of such noncompliance.
       ``(c) Contract Period and Effectiveness.--
       ``(1) Period.--Each contract under this section shall be 
     for a term of at least one year, as determined by the 
     Secretary, and may be made automatically renewable from term 
     to term in the absence of notice by either party of intention 
     to terminate at the end of the current term.
       ``(2) Termination authority.--In accordance with procedures 
     established under subsection (h), the Secretary may at any 
     time terminate any such contract or may impose the 
     intermediate sanctions described in an applicable paragraph 
     of subsection (g) on the Medicare Choice organization if the 
     Secretary determines that the organization--
       ``(A) has failed substantially to carry out the contract;
       ``(B) is carrying out the contract in a manner inconsistent 
     with the efficient and effective administration of this part;
       ``(C) is operating in a manner that is not in the best 
     interests of the individuals covered under the contract; or
       ``(D) no longer substantially meets the applicable 
     conditions of this part.
       ``(3) Effective date of contracts.--The effective date of 
     any contract executed pursuant to this section shall be 
     specified in the contract.
       ``(4) Previous terminations.--The Secretary may not enter 
     into a contract with a Medicare Choice organization if a 
     previous contract with that organization under this section 
     was terminated at the request of the organization within the 
     preceding five-year period, except in circumstances which 
     warrant special consideration, as determined by the 
     Secretary.
       ``(5) No contracting authority.--The authority vested in 
     the Secretary by this part may be performed without regard to 
     such provisions of law or regulations relating to the making, 
     performance, amendment, or modification of contracts of the 
     United States as the Secretary may determine to be 
     inconsistent with the furtherance of the purpose of this 
     title.
       ``(d) Protections Against Fraud and Beneficiary 
     Protections.--
       ``(1) Inspection and audit.--Each contract under this 
     section shall provide that the Secretary, or any person or 
     organization designated by the Secretary--
       ``(A) shall have the right to inspect or otherwise evaluate 
     (i) the quality, appropriateness, and timeliness of services 
     performed under the contract and (ii) the facilities of the 
     organization when there is reasonable evidence of some need 
     for such inspection, and
       ``(B) shall have the right to audit and inspect any books 
     and records of the Medicare Choice organization that pertain 
     (i) to the ability of the organization to bear the risk of 
     potential financial losses, or (ii) to services performed or 
     determinations of amounts payable under the contract.
       ``(2) Enrollee notice at time of termination.--Each 
     contract under this section shall require the organization to 
     provide (and pay for) written notice in advance of the 
     contract's termination, as well as a description of 
     alternatives for obtaining benefits under this title, to each 
     individual enrolled with the organization under this part.
       ``(3) Disclosure.--
       ``(A) In general.--Each Medicare Choice organization shall, 
     in accordance with regulations of the Secretary, report to 
     the Secretary financial information which shall include the 
     following:
       ``(i) Such information as the Secretary may require 
     demonstrating that the organization has a fiscally sound 
     operation.
       ``(ii) A copy of the report, if any, filed with the Health 
     Care Financing Administration containing the information 
     required to be reported under section 1124 by disclosing 
     entities.
       ``(iii) A description of transactions, as specified by the 
     Secretary, between the organization and a party in interest. 
     Such transactions shall include--

       ``(I) any sale or exchange, or leasing of any property 
     between the organization and a party in interest;
       ``(II) any furnishing for consideration of goods, services 
     (including management services), or facilities between the 
     organization and a party in interest, but not including 
     salaries paid to employees for services provided in the 
     normal course of their employment and health services 
     provided to members by hospitals and other providers and by 
     staff, medical group (or groups), individual practice 
     association (or associations), or any combination thereof; 
     and
       ``(III) any lending of money or other extension of credit 
     between an organization and a party in interest.

     The Secretary may require that information reported 
     respecting an organization which controls, is controlled by, 
     or is under common control with, another entity be in the 
     form of a consolidated financial statement for the 
     organization and such entity.
       ``(B) Party in interest defined.--For the purposes of this 
     paragraph, the term `party in interest' means--
       ``(i) any director, officer, partner, or employee 
     responsible for management or administration of a Medicare 
     Choice organization, any person who is directly or indirectly 
     the beneficial owner of more than 5 percent of the equity of 
     the organization, any person who is the beneficial owner of a 
     mortgage, deed of trust, note, or other interest secured by, 
     and valuing more than 5 percent of the organization, and, in 
     the case of a Medicare Choice organization organized as a 
     nonprofit corporation, an incorporator or member of such 
     corporation under applicable State corporation law;
       ``(ii) any entity in which a person described in clause 
     (i)--

       ``(I) is an officer or director;

[[Page H11259]]

       ``(II) is a partner (if such entity is organized as a 
     partnership);
       ``(III) has directly or indirectly a beneficial interest of 
     more than 5 percent of the equity; or
       ``(IV) has a mortgage, deed of trust, note, or other 
     interest valuing more than 5 percent of the assets of such 
     entity;

       ``(iii) any person directly or indirectly controlling, 
     controlled by, or under common control with an organization; 
     and
       ``(iv) any spouse, child, or parent of an individual 
     described in clause (i).
       ``(C) Access to information.--Each Medicare Choice 
     organization shall make the information reported pursuant to 
     subparagraph (A) available to its enrollees upon reasonable 
     request.
       ``(4) Loan information.--The contract shall require the 
     organization to notify the Secretary of loans and other 
     special financial arrangements which are made between the 
     organization and subcontractors, affiliates, and related 
     parties.
       ``(f) Additional Contract Terms.--The contract shall 
     contain such other terms and conditions not inconsistent with 
     this part (including requiring the organization to provide 
     the Secretary with such information) as the Secretary may 
     find necessary and appropriate.
       ``(g) Intermediate Sanctions.--
       ``(1) In general.--If the Secretary determines that a 
     Medicare Choice organization with a contract under this 
     section--
       ``(A) fails substantially to provide medically necessary 
     items and services that are required (under law or under the 
     contract) to be provided to an individual covered under the 
     contract, if the failure has adversely affected (or has 
     substantial likelihood of adversely affecting) the 
     individual;
       ``(B) imposes premiums on individuals enrolled under this 
     part in excess of the premiums permitted;
       ``(C) acts to expel or to refuse to re-enroll an individual 
     in violation of the provisions of this part;
       ``(D) engages in any practice that would reasonably be 
     expected to have the effect of denying or discouraging 
     enrollment (except as permitted by this part) by eligible 
     individuals with the organization whose medical condition or 
     history indicates a need for substantial future medical 
     services;
       ``(E) misrepresents or falsifies information that is 
     furnished--
       ``(i) to the Secretary under this part, or
       ``(ii) to an individual or to any other entity under this 
     part;
       ``(F) fails to comply with the requirements of section 
     1852(f)(3); or
       ``(G) employs or contracts with any individual or entity 
     that is excluded from participation under this title under 
     section 1128 or 1128A for the provision of health care, 
     utilization review, medical social work, or administrative 
     services or employs or contracts with any entity for the 
     provision (directly or indirectly) through such an excluded 
     individual or entity of such services;

     the Secretary may provide, in addition to any other remedies 
     authorized by law, for any of the remedies described in 
     paragraph (2).
       ``(2) Remedies.--The remedies described in this paragraph 
     are--
       ``(A) civil money penalties of not more than $25,000 for 
     each determination under paragraph (1) or, with respect to a 
     determination under subparagraph (D) or (E)(i) of such 
     paragraph, of not more than $100,000 for each such 
     determination, plus, with respect to a determination under 
     paragraph (1)(B), double the excess amount charged in 
     violation of such paragraph (and the excess amount charged 
     shall be deducted from the penalty and returned to the 
     individual concerned), and plus, with respect to a 
     determination under paragraph (1)(D), $15,000 for each 
     individual not enrolled as a result of the practice involved,
       ``(B) suspension of enrollment of individuals under this 
     part after the date the Secretary notifies the organization 
     of a determination under paragraph (1) and until the 
     Secretary is satisfied that the basis for such determination 
     has been corrected and is not likely to recur, or
       ``(C) suspension of payment to the organization under this 
     part for individuals enrolled after the date the Secretary 
     notifies the organization of a determination under paragraph 
     (1) and until the Secretary is satisfied that the basis for 
     such determination has been corrected and is not likely to 
     recur.
       ``(3) Other intermediate sanctions.--In the case of a 
     Medicare Choice organization for which the Secretary makes a 
     determination under subsection (c)(2) the basis of which is 
     not described in paragraph (1), the Secretary may apply the 
     following intermediate sanctions:
       ``(A) civil money penalties of not more than $25,000 for 
     each determination under subsection (c)(2) if the deficiency 
     that is the basis of the determination has directly adversely 
     affected (or has the substantial likelihood of adversely 
     affecting) an individual covered under the organization's 
     contract;
       ``(B) civil money penalties of not more than $10,000 for 
     each week beginning after the initiation of procedures by the 
     Secretary under subsection (h) during which the deficiency 
     that is the basis of a determination under subsection (c)(2) 
     exists; and
       ``(C) suspension of enrollment of individuals under this 
     part after the date the Secretary notifies the organization 
     of a determination under subsection (c)(2) and until the 
     Secretary is satisfied that the deficiency that is the basis 
     for the determination has been corrected and is not likely to 
     recur.
       ``(4) Procedures for imposing sanctions.--The provisions of 
     section 1128A (other than subsections (a) and (b)) shall 
     apply to a civil money penalty under paragraph (1) or (2) 
     in the same manner as they apply to a civil money penalty 
     or proceeding under section 1128A(a).
       ``(h) Procedures for Imposing Sanctions.--The Secretary may 
     terminate a contract with a Medicare Choice organization 
     under this section or may impose the intermediate sanctions 
     described in subsection (g) on the organization in accordance 
     with formal investigation and compliance procedures 
     established by the Secretary under which--
       ``(1) the Secretary provides the organization with the 
     opportunity to develop and implement a corrective action plan 
     to correct the deficiencies that were the basis of the 
     Secretary's determination under subsection (c)(2);
       ``(2) the Secretary shall impose more severe sanctions on 
     organizations that have a history of deficiencies or that 
     have not taken steps to correct deficiencies the Secretary 
     has brought to their attention;
       ``(3) there are no unreasonable or unnecessary delays 
     between the finding of a deficiency and the imposition of 
     sanctions; and
       ``(4) the Secretary provides the organization with 
     reasonable notice and opportunity for hearing (including the 
     right to appeal an initial decision) before imposing any 
     sanction or terminating the contract.


     ``demonstration project for high deductible/medisave products

       ``Sec. 1859. (a) Permitting Demonstration Projects.--
       ``(1) In general.--The Secretary shall permit, on a 
     demonstration project basis, the offering of high deductible/
     medisave products under this part, subject to the special 
     rules provided under this section.
       ``(2) Limitation on number and duration of projects.--The 
     Secretary shall not permit under this section the offering of 
     more than 10 demonstration projects and each such project 
     shall not exceed 7 years in duration.
       ``(b) High Deductible/Medisave Product Defined.--
       ``(1) In general.--In this part, the term `high deductible/
     medisave product' means a Medicare Choice product that--
       ``(A) provides reimbursement for at least the items and 
     services described in section 1852(a)(1) in a year but only 
     after the enrollee incurs countable expenses (as specified 
     under the product) equal to the amount of a deductible 
     (described in paragraph (2));
       ``(B) counts as such expenses (for purposes of such 
     deductible) at least all amounts that would have been payable 
     under parts A and B or by the enrollee if the enrollee had 
     elected to receive benefits through the provisions of such 
     parts; and
       ``(C) provides, after such deductible is met for a year and 
     for all subsequent expenses for benefits referred to in 
     subparagraph (A) in the year, for a level of reimbursement 
     that is not less than--
       ``(i) 100 percent of such expenses, or
       ``(ii) 100 percent of the amounts that would have been paid 
     (without regard to any deductibles or coinsurance) under 
     parts A and B with respect to such expenses,
     whichever is less. Such term does not include the Medicare 
     Choice MSA itself or any contribution into such account.
       ``(2) Deductible.--The amount of deductible under a high 
     deductible/medisave product--
       ``(A) for contract year 1997 shall be not more than 
     $10,000; and
       ``(B) for a subsequent contract year shall be not more than 
     the maximum amount of such deductible for the previous 
     contract year under this paragraph increased by the national 
     average per capita growth rate under section 1855(c)(3) for 
     the year.
     If the amount of the deductible under subparagraph (B) is not 
     a multiple of $50, the amount shall be rounded to the nearest 
     multiple of $50.
       ``(c) Special Rules Relating to Enrollment.--The rule under 
     section 1805 relating to election of medicare choice products 
     shall apply to election of high deductible/medisave products 
     offered under the demonstration project under this section, 
     except as follows:
       ``(1) Special rule for certain annuitants.--An individual 
     is not eligible to elect a high deductible/medisave product 
     under section 1805 if the individual is entitled to benefits 
     under chapter 89 of title 5, United States Code, as an 
     annuitant or spouse of an annuitant.
       ``(2) Transition period rule.--During the transition period 
     (as defined in section 1805(e)(1)(B)), an individual who has 
     elected a high deductible/medisave product may not change 
     such election to a Medicare Choice product that is not a high 
     deductible/medisave product unless the individual has had 
     such election in effect for 12 months.
       ``(3) No 90-day disenrollment option.--Paragraph (4)(A) of 
     section 1805(e) shall not apply to an individual who elects a 
     high deductible/medisave product.
       ``(4) Timing of election.--An individual may elect a high 
     deductible/medisave product only during an annual, 
     coordinated election period described in section 
     1805(e)(3)(B) or during the month of October, 1996.
       ``(5) Effectiveness of election.--An election of coverage 
     for a high deductible/medisave product made in a year shall 
     take effect as of the first day of the following year.

[[Page H11260]]

       ``(d) Special Rules Relating to Benefits.--
       ``(1) In general.--Paragraphs (1) and (3) of section 
     1852(a) shall not apply to high deductible/medisave products.
       ``(2) Premiums.--
       ``(A) Application of alternative premium.--In applying 
     section 1852(d)(2) in the case of a high deductible/medisave 
     product, instead of the amount specified in subparagraph (B) 
     there shall be substituted the monthly adjusted Medicare 
     Choice capitation rate specified in section 1855(b)(1) for 
     the individual and period involved.
       ``(B) Class adjusted premiums.--Notwithstanding section 
     1852(d)(3), a Medicare Choice organization shall establish 
     premiums for any high deductible/medisave product it offers 
     in a payment area based on each of the risk adjustment 
     categories established for purposes of determining the amount 
     of the payment to Medicare Choice organizations under section 
     1855(b)(1) and using the identical demographic and other 
     adjustments among such categories as are used for such 
     purposes.
       ``(C) Requirement for additional benefits not applicable.--
     Section 1852(e)(1)(A) shall not apply to a high deductible/
     medisave product.
       ``(e) Additional Disclosure.--In any disclosure made 
     pursuant to section 1853(a)(1) for a high deductible/medisave 
     product, the disclosure shall include a comparison of 
     benefits under such a product with benefits under other 
     Medicare Choice products.
       ``(f) Special Rules for Individuals Electing High 
     Deductible/Medisave Product.--
       ``(1) In general.--In the case of an individual who has 
     elected a high deductible/medisave product, notwithstanding 
     the provisions of section 1855--
       ``(A) the amount of the payment to the Medicare Choice 
     organization offering the high deductible/medisave product 
     shall not exceed the premium for the product, and
       ``(B) subject to paragraph (2), the difference between the 
     amount of payment that would otherwise be made and the amount 
     of payment to such organization shall be made directly into a 
     Medicare Choice MSA established (and, if applicable, 
     designated) by the individual under paragraph (2).
       ``(2) Establishment and designation of medicare choice 
     medical savings account as requirement for payment of 
     contribution.--In the case of an individual who has elected 
     coverage under a high deductible/medisave product, no payment 
     shall be made under paragraph (1)(B) on behalf of an 
     individual for a month unless the individual--
       ``(A) has established before the beginning of the month (or 
     by such other deadline as the Secretary may specify) a 
     Medicare Choice MSA (as defined in section 137(b) of the 
     Internal Revenue Code of 1986), and
       ``(B) if the individual has established more than one 
     Medicare Choice MSA, has designated one of such accounts as 
     the individual's Medicare Choice MSA for purposes of this 
     part.

     Under rules under this section, such an individual may change 
     the designation of such account under subparagraph (B) for 
     purposes of this part.
       ``(3) Lump sum deposit of medical savings account 
     contribution.--In the case of an individual electing a high 
     deductible/medisave product effective beginning with a month 
     in a year, the amount of the contribution to the Medicare 
     Choice MSA on behalf of the individual for that month and all 
     successive months in the year shall be deposited during that 
     first month. In the case of a termination of such an election 
     as of a month before the end of a year, the Secretary shall 
     provide for a procedure for the recovery of deposits 
     attributable to the remaining months in the year.
       ``(g) Special Contract Rules.--
       ``(1) Enrollment requirements waived.--Subsection (b) of 
     section 1858 shall not apply with respect to a contract that 
     relates only to one or more high deductible/medisave 
     products.
       ``(2) Effective date of contracts.--In no case shall a 
     contract under section 1858 which provides for coverage under 
     a high deductible/medisave account be effective before 
     January 1997 with respect to such coverage.''.
       (b) Conforming References to Previous Part C.--Any 
     reference in law (in effect before the date of the enactment 
     of this Act) to part C of title XVIII of the Social Security 
     Act is deemed a reference to part D of such title (as in 
     effect after such date).
       (c) Use of Interim, Final Regulations.--In order to carry 
     out the amendment made by subsection (a) in a timely manner, 
     the Secretary of Health and Human Services may promulgate 
     regulations that take effect on an interim basis, after 
     notice and pending opportunity for public comment.
       (d) Advance Directives.--Section 1866(f)(1) (42 U.S.C. 
     1395cc(f)(1)) is amended--
       (1) in paragraph (1)--
       (A) by inserting ``1853(g),'' after ``1833(s),'', and
       (B) by inserting ``, Medicare Choice organization,'' after 
     ``provider of services'', and
       (2) by adding at the end the following new paragraph:
       ``(4) Nothing in this subsection shall be construed to 
     require the provision of information regarding assisted 
     suicide, euthanasia, or mercy killing.''.
       (e) Conforming Amendment.--Section 1866(a)(1)(O) (42 U.S.C. 
     1395cc(a)(1)(O)) is amended by inserting before the semicolon 
     at the end the following: ``and in the case of hospitals to 
     accept as payment in full for inpatient hospital services 
     that are covered under this title and are furnished to any 
     individual enrolled under part C with a Medicare Choice 
     organization which does not have a contract establishing 
     payment amounts for services furnished to members of the 
     organization the amounts that would be made as a payment in 
     full under this title if the individuals were not so 
     enrolled''.

     SEC. 8003. REPORTS.

       (a) Alternative Payment Approaches.--By not later than 18 
     months after the date of the enactment of this Act, the 
     Secretary of Health and Human Services (in this title 
     referred to as the ``Secretary'') shall submit to Congress a 
     report on alternative provider payment approaches under the 
     medicare program, including--
       (1) combined hospital and physician payments per admission,
       (2) partial capitation models for subsets of medicare 
     benefits, and
       (3) risk-sharing arrangements in which the Secretary 
     defines the risk corridor and shares in gains and losses.

     Such report shall include recommendations for implementing 
     and testing such approaches and legislation that may be 
     required to implement and test such approaches.
       (b) Coverage of Retired Workers.--
       (1) In general.--The Secretary shall work with employers 
     and health benefit plans to develop standards and payment 
     methodologies to allow retired workers to continue to 
     participate in employer health plans instead of participating 
     in the medicare program. Such standards shall also cover 
     workers covered under the Federal Employees Health Benefits 
     Program under chapter 89 of title 5, United States Code.
       (2) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Secretary shall submit to Congress 
     a report on the development of such standards and payment 
     methodologies. The report shall include recommendations 
     relating to such legislation as may be necessary.

     SEC. 8004. TRANSITIONAL RULES FOR CURRENT MEDICARE HMO 
                   PROGRAM.

       (a) Transition from Current Contracts.--
       (1) Limitation on new contracts.--The Secretary of Health 
     and Human Services (in this section referred to as the 
     ``Secretary'') shall not enter into any risk-sharing or cost 
     reimbursement contract under section 1876 of the Social 
     Security Act with an eligible organization for any contract 
     year beginning on or after the date standards for Medicare 
     Choice organizations and products are first established under 
     section 1856(a) of such Act with respect to Medicare Choice 
     organizations that are insurers or health maintenance 
     organizations unless such a contract had been in effect under 
     section 1876 of such Act for the organization for the 
     previous contract year.
       (2) Termination of current contracts.--
       (A) Risk-sharing contracts.--Notwithstanding any other 
     provision of law, the Secretary shall not extend or continue 
     any risk-sharing contract with an eligible organization under 
     section 1876 of the Social Security Act (for which a contract 
     was entered into consistent with paragraph (1)(A)) for any 
     contract year beginning on or after 1 year after the date 
     standards described in paragraph (1)(A) are established.
       (B) Cost reimbursement contracts.--The Secretary shall not 
     extend or continue any reasonable cost reimbursement contract 
     with an eligible organization under section 1876 of the 
     Social Security Act for any contract year beginning on or 
     after January 1, 1998.
       (b) Conforming Payment Rates Under Risk-Sharing 
     Contracts.--Notwithstanding any other provision of law, the 
     Secretary shall provide that payment amounts under risk-
     sharing contracts under section 1876(a) of the Social 
     Security Act for months in a year (beginning with January 
     1996) shall be computed--
       (1) with respect to individuals entitled to benefits under 
     both parts A and B of title XVIII of such Act, by 
     substituting payment rates under section 1855(a) of such Act 
     for the payment rates otherwise established under section 
     1876(a) of such Act, and
       (2) with respect to individuals only entitled to benefits 
     under part B of such title, by substituting an appropriate 
     proportion of such rates (reflecting the relative proportion 
     of payments under such title attributable to such part) for 
     the payment rates otherwise established under section 1876(a) 
     of such Act.

     For purposes of carrying out this paragraph for payment for 
     months in 1996, the Secretary shall compute, announce, and 
     apply the payment rates under section 1855(a) of such Act 
     (notwithstanding any deadlines specified in such section) in 
     as timely a manner as possible and may (to the extent 
     necessary) provide for retroactive adjustment in payments 
     made not in accordance with such rates.

   PART 2--SPECIAL RULES FOR MEDICARE CHOICE MEDICAL SAVINGS ACCOUNTS

     SEC. 8011. MEDICARE CHOICE MSA'S.

       (a) In General.--Part III of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to amounts 
     specifically excluded from gross income) is amended by 
     redesignating section 137 as section 138 and by inserting 
     after section 136 the following new section:

     ``SEC. 137. MEDICARE CHOICE MSA'S.

       ``(a) Exclusion.--Gross income shall not include any 
     payment to the Medicare Choice 

[[Page H11261]]

     MSA of an individual by the Secretary of Health and Human 
     Services under section 1859(f)(1)(B) of the Social Security 
     Act.
       ``(b) Medicare Choice MSA.--For purposes of this section--
       ``(1) Medicare choice msa.--The term `Medicare Choice MSA' 
     means a trust created or organized in the United States 
     exclusively for the purpose of paying the qualified medical 
     expenses of the account holder, but only if the written 
     governing instrument creating the trust meets the following 
     requirements:
       ``(A) Except in the case of a trustee-to-trustee transfer 
     described in subsection (d)(4), no contribution will be 
     accepted unless it is made by the Secretary of Health and 
     Human Services under section 1859(f)(1)(B) of the Social 
     Security Act.
       ``(B) The trustee is a bank (as defined in section 408(n)), 
     an insurance company (as defined in section 816), or another 
     person who demonstrates to the satisfaction of the Secretary 
     that the manner in which such person will administer the 
     trust will be consistent with the requirements of this 
     section.
       ``(C) No part of the trust assets will be invested in life 
     insurance contracts.
       ``(D) The assets of the trust will not be commingled with 
     other property except in a common trust fund or common 
     investment fund.
       ``(E) The interest of an individual in the balance in his 
     account is nonforfeitable.
       ``(F) Trustee-to-trustee transfers described in subsection 
     (d)(4) may be made to and from the trust.
       ``(2) Qualified medical expenses.--
       ``(A) In general.--The term `qualified medical expenses' 
     means, with respect to an account holder, amounts paid by 
     such holder--
       ``(i) for medical care (as defined in section 213(d)) for 
     the account holder, but only to the extent such amounts are 
     not compensated for by insurance or otherwise, or
       ``(ii) for long-term care insurance for the account holder.
       ``(B) Health insurance may not be purchased from account.--
     Subparagraph (A)(i) shall not apply to any payment for 
     insurance.
       ``(3) Account holder.--The term `account holder' means the 
     individual on whose behalf the Medicare Choice MSA is 
     maintained.
       ``(4) Certain rules to apply.--Rules similar to the rules 
     of subsections (g) and (h) of section 408 shall apply for 
     purposes of this section.
       ``(c) Tax Treatment of Accounts.--
       ``(1) In general.--A Medicare Choice MSA is exempt from 
     taxation under this subtitle unless such MSA has ceased to be 
     a Medicare Choice MSA by reason of paragraph (2). 
     Notwithstanding the preceding sentence, any such MSA is 
     subject to the taxes imposed by section 511 (relating to 
     imposition of tax on unrelated business income of charitable, 
     etc. organizations).
       ``(2) Account assets treated as distributed in the case of 
     prohibited transactions or account pledged as security for 
     loan.--Rules similar to the rules of paragraphs (2) and (4) 
     of section 408(e) shall apply to Medicare Choice MSA's, and 
     any amount treated as distributed under such rules shall be 
     treated as not used to pay qualified medical expenses.
       ``(d) Tax Treatment of Distributions.--
       ``(1) Inclusion of amounts not used for qualified medical 
     expenses.--No amount shall be included in the gross income of 
     the account holder by reason of a payment or distribution 
     from a Medicare Choice MSA which is used exclusively to pay 
     the qualified medical expenses of the account holder. Any 
     amount paid or distributed from a Medicare Choice MSA which 
     is not so used shall be included in the gross income of such 
     holder.
       ``(2) Penalty for distributions not used for qualified 
     medical expenses if minimum balance not maintained.--
       ``(A) In general.--The tax imposed by this chapter for any 
     taxable year in which there is a payment or distribution from 
     a Medicare Choice MSA which is not used exclusively to pay 
     the qualified medical expenses of the account holder shall be 
     increased by 50 percent of the excess (if any) of--
       ``(i) the amount of such payment or distribution, over
       ``(ii) the excess (if any) of--

       ``(I) the fair market value of the assets in the Medicare 
     Choice MSA as of the close of the calendar year preceding the 
     calendar year in which the taxable year begins, over
       ``(II) an amount equal to 60 percent of the deductible 
     under the catastrophic health plan covering the account 
     holder as of January 1 of the calendar year in which the 
     taxable year begins.

       ``(B) Exceptions.--Subparagraph (A) shall not apply if the 
     payment or distribution is made on or after the date the 
     account holder--
       ``(i) becomes disabled within the meaning of section 
     72(m)(7), or
       ``(ii) dies.
       ``(C) Special rules.--For purposes of subparagraph (A)--
       ``(i) all Medicare Choice MSA's of the account holder shall 
     be treated as 1 account,
       ``(ii) all payments and distributions not used exclusively 
     to pay the qualified medical expenses of the account holder 
     during any taxable year shall be treated as 1 distribution, 
     and
       ``(iii) any distribution of property shall be taken into 
     account at its fair market value on the date of the 
     distribution.
       ``(3) Withdrawal of erroneous contributions.--Paragraphs 
     (1) and (2) shall not apply to any payment or distribution 
     from a Medicare Choice MSA to the Secretary of Health and 
     Human Services of an erroneous contribution to such MSA and 
     of the net income attributable to such contribution.
       ``(4) Trustee-to-trustee transfers.--Paragraphs (1) and (2) 
     shall not apply to any trustee-to-trustee transfer from a 
     Medicare Choice MSA of an account holder to another Medicare 
     Choice MSA of such account holder.
       ``(5) Coordination with medical expense deduction.--For 
     purposes of section 213, any payment or distribution out of a 
     Medicare Choice MSA for qualified medical expenses shall not 
     be treated as an expense paid for medical care.
       ``(e) Treatment of Account After Death of Account Holder.--
       ``(1) Treatment if designated beneficiary is spouse.--
       ``(A) In general.--In the case of an account holder's 
     interest in a Medicare Choice MSA which is payable to (or for 
     the benefit of) such holder's spouse upon the death of such 
     holder, such Medicare Choice MSA shall be treated as a 
     Medicare Choice MSA of such spouse as of the date of such 
     death.
       ``(B) Special rules if spouse not medicare eligible.--If, 
     as of the date of such death, such spouse is not entitled to 
     benefits under title XVIII of the Social Security Act, then 
     after the date of such death--
       ``(i) the Secretary of Health and Human Services may not 
     make any payments to such Medicare Choice MSA, other than 
     payments attributable to periods before such date,
       ``(ii) in applying subsection (b)(2) with respect to such 
     Medicare Choice MSA, references to the account holder shall 
     be treated as including references to any dependent (as 
     defined in section 152) of such spouse and any subsequent 
     spouse of such spouse, and
       ``(iii) in lieu of applying subsection (d)(2), the rules of 
     section 220(f)(2) shall apply.
       ``(2) Treatment if designated beneficiary is not spouse.--
     In the case of an account holder's interest in a Medicare 
     Choice MSA which is payable to (or for the benefit of) any 
     person other than such holder's spouse upon the death of such 
     holder--
       ``(A) such account shall cease to be a Medicare Choice MSA 
     as of the date of death, and
       ``(B) an amount equal to the fair market value of the 
     assets in such account on such date shall be includible--
       ``(i) if such person is not the estate of such holder, in 
     such person's gross income for the taxable year which 
     includes such date, or
       ``(ii) if such person is the estate of such holder, in such 
     holder's gross income for last taxable year of such holder.
       ``(f) Reports.--
       ``(1) In general.--The trustee of a Medicare Choice MSA 
     shall make such reports regarding such account to the 
     Secretary and to the account holder with respect to--
       ``(A) the fair market value of the assets in such Medicare 
     Choice MSA as of the close of each calendar year, and
       ``(B) contributions, distributions, and other matters,
     as the Secretary may require by regulations.
       ``(2) Time and manner of reports.--The reports required by 
     this subsection--
       ``(A) shall be filed at such time and in such manner as the 
     Secretary prescribes in such regulations, and
       ``(B) shall be furnished to the account holder--
       ``(i) not later than January 31 of the calendar year 
     following the calendar year to which such reports relate, and
       ``(ii) in such manner as the Secretary prescribes in such 
     regulations.''
       (b) Exclusion of Medicare Choice MSA's From Estate Tax.--
     Part IV of subchapter A of chapter 11 of such Code is amended 
     by adding at the end the following new section:

     ``SEC. 2057. MEDICARE CHOICE MSA'S.

       ``For purposes of the tax imposed by section 2001, the 
     value of the taxable estate shall be determined by deducting 
     from the value of the gross estate an amount equal to the 
     value of any Medicare Choice MSA (as defined in section 
     137(b)) included in the gross estate.''
       (c) Tax on Prohibited Transactions.--
       (1) Section 4975 of such Code (relating to tax on 
     prohibited transactions) is amended by adding at the end of 
     subsection (c) the following new paragraph:
       ``(5) Special rule for Medicare Choice MSA's.--An 
     individual for whose benefit a Medicare Choice MSA (within 
     the meaning of section 137(b)) is established shall be exempt 
     from the tax imposed by this section with respect to any 
     transaction concerning such account (which would otherwise be 
     taxable under this section) if, with respect to such 
     transaction, the account ceases to be a Medicare Choice MSA 
     by reason of the application of section 137(c)(2) to such 
     account.''
       (2) Paragraph (1) of section 4975(e) of such Code is 
     amended to read as follows:
       ``(1) Plan.--For purposes of this section, the term `plan' 
     means--
       ``(A) a trust described in section 401(a) which forms a 
     part of a plan, or a plan described in section 403(a), which 
     trust or plan is exempt from tax under section 501(a),
       ``(B) an individual retirement account described in section 
     408(a),
       ``(C) an individual retirement annuity described in section 
     408(b),
       ``(D) a medical savings account described in section 
     220(d),
       ``(E) a Medicare Choice MSA described in section 137(b), or

[[Page H11262]]

       ``(F) a trust, plan, account, or annuity which, at any 
     time, has been determined by the Secretary to be described in 
     any preceding subparagraph of this paragraph.''
       (d) Failure To Provide Reports on Medicare Choice MSA's.--
       (1) Subsection (a) of section 6693 of such Code (relating 
     to failure to provide reports on individual retirement 
     accounts or annuities) is amended to read as follows:
       ``(a) Reports.--
       ``(1) In general.--If a person required to file a report 
     under a provision referred to in paragraph (2) fails to file 
     such report at the time and in the manner required by such 
     provision, such person shall pay a penalty of $50 for each 
     failure unless it is shown that such failure is due to 
     reasonable cause.
       ``(2) Provisions.--The provisions referred to in this 
     paragraph are--
       ``(A) subsections (i) and (l) of section 408 (relating to 
     individual retirement plans),
       ``(B) section 220(h) (relating to medical savings 
     accounts), and
       ``(C) section 137(f) (relating to Medicare Choice MSA's).''
       (2) The section heading for section 6693 of such Code is 
     amended to read as follows:

     ``SEC. 6693. FAILURE TO FILE REPORTS ON INDIVIDUAL RETIREMENT 
                   PLANS AND CERTAIN OTHER TAX-FAVORED ACCOUNTS; 
                   PENALTIES RELATING TO DESIGNATED NONDEDUCTIBLE 
                   CONTRIBUTIONS.''

       (e) Clerical Amendments.--
       (1) The table of sections for part III of subchapter B of 
     chapter 1 of such Code is amended by striking the last item 
     and inserting the following:

``Sec. 137. Medicare Choice MSA's.
``Sec. 138. Cross references to other Acts.''
       (2) The table of sections for subchapter B of chapter 68 of 
     such Code is amended by striking the item relating to section 
     6693 and inserting the following new item:

``Sec. 6693. Failure to file reports on individual retirement plans and 
              certain other tax-favored accounts; penalties relating to 
              designated nondeductible contributions.''
       (3) The table of sections for part IV of subchapter A of 
     chapter 11 of such Code is amended by adding at the end the 
     following new item:

``Sec. 2057. Medicare Choice MSA's.''
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 8012. CERTAIN REBATES EXCLUDED FROM GROSS INCOME.

       (a) In General.--Section 105 of the Internal Revenue Code 
     of 1986 (relating to amounts received under accident and 
     health plans) is amended by adding at the end the following 
     new subsection:
       ``(j) Certain Rebates Under Social Security Act.--Gross 
     income does not include any rebate received under section 
     1852(e)(1)(A) of the Social Security Act during the taxable 
     year.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to amounts received after the date of the 
     enactment of this Act.

      PART 3--SPECIAL ANTITRUST RULE FOR PROVIDER SERVICE NETWORKS

     SEC. 8021. APPLICATION OF ANTITRUST RULE OF REASON TO 
                   PROVIDER SERVICE NETWORKS.

       (a) Rule of Reason Standard.--In any action under the 
     antitrust laws, or under any State law similar to the 
     antitrust laws--
       (1) the conduct of a provider service network in 
     negotiating, making, or performing a contract (including the 
     establishment and modification of a fee schedule and the 
     development of a panel of physicians), to the extent such 
     contract is for the purpose of providing health care services 
     to individuals under the terms of a Medicare Choice PSO 
     product, and
       (2) the conduct of any member of such network for the 
     purpose of providing such health care services under such 
     contract to such extent,

     shall not be deemed illegal per se. Such conduct shall be 
     judged on the basis of its reasonableness, taking into 
     account all relevant factors affecting competition, including 
     the effects on competition in properly defined markets.
       (b) Definitions.--For purposes of subsection (a):
       (1) Antitrust laws.--The term ``antitrust laws'' has the 
     meaning given it in subsection (a) of the first section of 
     the Clayton Act (15 U.S.C. 12), except that such term 
     includes section 5 of the Federal Trade Commission Act (15 
     U.S.C. 45) to the extent that such section 5 applies to 
     unfair methods of competition.
       (2) Health care provider.--The term ``health care 
     provider'' means any individual or entity that is engaged in 
     the delivery of health care services in a State and that is 
     required by State law or regulation to be licensed or 
     certified by the State to engage in the delivery of such 
     services in the State.
       (3) Health care service.--The term ``health care service'' 
     means any service for which payment may be made under a 
     Medicare Choice PSO product including services related to the 
     delivery or administration of such service.
       (4) Medicare choice program.--The term ``Medicare Choice 
     program'' means the program under part C of title XVIII of 
     the Social Security Act.
       (5) Medicare choice pso product.--The term ``Medicare 
     Choice PSO product'' means a Medicare Choice product offered 
     by a provider-sponsored organization under part C of title 
     XVIII of the Social Security Act.
       (6) Provider service network.--The term ``provider service 
     network'' means an organization that--
       (A) is organized by, operated by, and composed of members 
     who are health care providers and for purposes that include 
     providing health care services,
       (B) is funded in part by capital contributions made by the 
     members of such organization,
       (C) with respect to each contract made by such organization 
     for the purpose of providing a type of health care service to 
     individuals under the terms of a Medicare Choice PSO 
     product--
       (i) requires all members of such organization who engage in 
     providing such type of health care service to agree to 
     provide health care services of such type under such 
     contract,
       (ii) receives the compensation paid for the health care 
     services of such type provided under such contract by such 
     members, and
       (iii) provides for the distribution of such compensation,
       (D) has established, consistent with the requirements of 
     the Medicare Choice program for provider-sponsored 
     organizations, a program to review, pursuant to written 
     guidelines, the quality, efficiency, and appropriateness of 
     treatment methods and setting of services for all health care 
     providers and all patients participating in such product, 
     along with internal procedures to correct identified 
     deficiencies relating to such methods and such services,
       (E) has established, consistent with the requirements of 
     the Medicare Choice program for provider-sponsored 
     organizations, a program to monitor and control utilization 
     of health care services provided under such product, for the 
     purpose of improving efficient, appropriate care and 
     eliminating the provision of unnecessary health care 
     services,
       (F) has established a management program to coordinate the 
     delivery of health care services for all health care 
     providers and all patients participating in such product, for 
     the purpose of achieving efficiencies and enhancing the 
     quality of health care services provided, and
       (G) has established, consistent with the requirements of 
     the Medicare Choice program for provider-sponsored 
     organizations, a grievance and appeal process for such 
     organization designed to review and promptly resolve 
     beneficiary or patient grievances and complaints.

     Such term may include a provider-sponsored organization.
       (7) Provider-sponsored organization.--The term ``provider-
     sponsored organization'' means a Medicare Choice organization 
     under the Medicare Choice program that is a provider-
     sponsored organization (as defined in section 1854(a)(1) of 
     the Social Security Act).
       (8) State.--The term ``State'' has the meaning given it in 
     section 4G(2) of the Clayton Act (15 U.S.C. 15g(2)).
       (c) Issuance of Guidelines.--Not later than 120 days after 
     the date of the enactment of this Act, the Attorney General 
     and the Federal Trade Commission shall issue jointly 
     guidelines specifying the enforcement policies and analytical 
     principles that will be applied by the Department of Justice 
     and the Commission with respect to the operation of 
     subsection (a).

                          PART 4--COMMISSIONS

     SEC. 8031. MEDICARE PAYMENT REVIEW COMMISSION.

       (a) In General.--Title XVIII, as amended by section 
     8001(a), is amended by inserting after section 1805 the 
     following new section:


                  ``medicare payment review commission

       ``Sec. 1806. (a) Establishment.--There is hereby 
     established the Medicare Payment Review Commission (in this 
     section referred to as the `Commission').
       ``(b) Duties.--
       ``(1) General duties and reports.--The Commission shall 
     review, and make recommendations to Congress concerning, 
     payment policies under this title. By not later than June 1 
     of each year, the Commission shall submit a report to 
     Congress containing an examination of issues affecting the 
     medicare program, including the implications of changes in 
     health care delivery in the United States and in the market 
     for health care services on the medicare program. The 
     Commission may submit to Congress from time to time such 
     other reports as the Commission deems appropriate. The 
     Secretary shall respond to recommendations of the Commission 
     in notices of rulemaking proceedings under this title.
       ``(2) Specific duties relating to medicare choice 
     program.--Specifically, the Commission shall review, with 
     respect to the Medicare Choice program under part C--
       ``(A) the appropriateness of the methodology for making 
     payment to plans under such program, including the making of 
     differential payments and the distribution of differential 
     updates among different payment areas,
       ``(B) the appropriateness of the mechanisms used to adjust 
     payments for risk and the need to adjust such mechanisms to 
     take into account health status of beneficiaries,
       ``(C) the implications of risk selection both among 
     Medicare Choice organizations and 

[[Page H11263]]

     between the Medicare Choice option and the non-Medicare 
     Choice option,
       ``(D) in relation to payment under part C, the development 
     and implementation of mechanisms to assure the quality of 
     care for those enrolled with Medicare Choice organizations,
       ``(E) the impact of the Medicare Choice program on access 
     to care for medicare beneficiaries, and
       ``(F) other major issues in implementation and further 
     development of the Medicare Choice program.
       ``(3) Specific duties relating to the fee-for-service 
     system.--Specifically, the Commission shall review payment 
     policies under parts A and B, including--
       ``(A) the factors affecting expenditures for services in 
     different sectors, including the process for updating 
     hospital, physician, and other fees,
       ``(B) payment methodologies; and
       ``(C) the impact of payment policies on access and quality 
     of care for medicare beneficiaries.
       ``(4) Specific duties relating to interaction of payment 
     policies with health care delivery generally.--Specifically 
     the Commission shall review the effect of payment policies 
     under this title on the delivery of health care services 
     under this title and assess the implications of changes in 
     the health services market on the medicare program.
       ``(c) Membership.--
       ``(1) Number and appointment.--The Commission shall be 
     composed of 15 members appointed by the Comptroller General.
       ``(2) Qualifications.--The membership of the Commission 
     shall include individuals with national recognition for their 
     expertise in health finance and economics, actuarial science, 
     health facility management, health plans and integrated 
     delivery systems, reimbursement of health facilities, 
     physicians, and other providers of services, and other 
     related fields, who provide a mix of different professionals, 
     broad geographic representation, and a balance between urban 
     and rural representatives, including physicians and other 
     health professionals, employers, third party payors, 
     individuals skilled in the conduct and interpretation of 
     biomedical, health services, and health economics research 
     and expertise in outcomes and effectiveness research and 
     technology assessment. Such membership shall also include 
     representatives of consumers and the elderly.
       ``(3) Considerations in initial appointment.--To the extent 
     possible, in first appointing members to the Commission the 
     Comptroller General shall consider appointing individuals who 
     (as of the date of the enactment of this section) were 
     serving on the Prospective Payment Assessment Commission or 
     the Physician Payment Review Commission.
       ``(4) Terms.--
       ``(A) In general.--The terms of members of the Commission 
     shall be for 3 years except that the Comptroller General 
     shall designate staggered terms for the members first 
     appointed.
       ``(B) Vacancies.--Any member appointed to fill a vacancy 
     occurring before the expiration of the term for which the 
     member's predecessor was appointed shall be appointed only 
     for the remainder of that term. A member may serve after the 
     expiration of that member's term until a successor has taken 
     office. A vacancy in the Commission shall be filled in the 
     manner in which the original appointment was made.
       ``(5) Compensation.--While serving on the business of the 
     Commission (including traveltime), a member of the Commission 
     shall be entitled to compensation at the per diem equivalent 
     of the rate provided for level IV of the Executive Schedule 
     under section 5315 of title 5, United States Code; and while 
     so serving away from home and member's regular place of 
     business, a member may be allowed travel expenses, as 
     authorized by the Chairman of the Commission. Physicians 
     serving as personnel of the Commission may be provided a 
     physician comparability allowance by the Commission in the 
     same manner as Government physicians may be provided such an 
     allowance by an agency under section 5948 of title 5, United 
     States Code, and for such purpose subsection (i) of such 
     section shall apply to the Commission in the same manner as 
     it applies to the Tennessee Valley Authority. For purposes of 
     pay (other than pay of members of the Commission) and 
     employment benefits, rights, and privileges, all personnel of 
     the Commission shall be treated as if they were employees of 
     the United States Senate.
       ``(6) Chairman; vice chairman.--The Comptroller General 
     shall designate a member of the Commission, at the time 
     of appointment of the member, as Chairman and a member as 
     Vice Chairman for that term of appointment.
       ``(7) Meetings.--The Commission shall meet at the call of 
     the Chairman.
       ``(d) Director and Staff; Experts and Consultants.--Subject 
     to such review as the Comptroller General deems necessary to 
     assure the efficient administration of the Commission, the 
     Commission may--
       ``(1) employ and fix the compensation of an Executive 
     Director (subject to the approval of the Comptroller General) 
     and such other personnel as may be necessary to carry out its 
     duties (without regard to the provisions of title 5, United 
     States Code, governing appointments in the competitive 
     service);
       ``(2) seek such assistance and support as may be required 
     in the performance of its duties from appropriate Federal 
     departments and agencies;
       ``(3) enter into contracts or make other arrangements, as 
     may be necessary for the conduct of the work of the 
     Commission (without regard to section 3709 of the Revised 
     Statutes (41 U.S.C. 5));
       ``(4) make advance, progress, and other payments which 
     relate to the work of the Commission;
       ``(5) provide transportation and subsistence for persons 
     serving without compensation; and
       ``(6) prescribe such rules and regulations as it deems 
     necessary with respect to the internal organization and 
     operation of the Commission.
       ``(e) Powers.--
       ``(1) Obtaining official data.--The Commission may secure 
     directly from any department or agency of the United States 
     information necessary to enable it to carry out this section. 
     Upon request of the Chairman, the head of that department or 
     agency shall furnish that information to the Commission on an 
     agreed upon schedule.
       ``(2) Data collection.--In order to carry out its 
     functions, the Commission shall collect and assess 
     information.
       ``(A) utilize existing information, both published and 
     unpublished, where possible, collected and assessed either by 
     its own staff or under other arrangements made in accordance 
     with this section,
       ``(B) carry out, or award grants or contracts for, original 
     research and experimentation, where existing information is 
     inadequate, and
       ``(C) adopt procedures allowing any interested party to 
     submit information for the Commission's use in making reports 
     and recommendations.
       ``(3) Access of gao to information.--The Comptroller 
     General shall have unrestricted access to all deliberations, 
     records, and data of the Commission, immediately upon 
     request.
       ``(4) Periodic audit.--The Commission shall be subject to 
     periodic audit by the General Accounting Office.
       ``(f) Authorization of Appropriations.--
       ``(1) Request for appropriations.--The Commission shall 
     submit requests for appropriations in the same manner as the 
     Comptroller General submits requests for appropriations, but 
     amounts appropriated for the Commission shall be separate 
     from amounts appropriated for the Comptroller General.
       ``(2) Authorization.--There are authorized to be 
     appropriated such sums as may be necessary to carry out the 
     provisions of this section. 60 percent of such appropriation 
     shall be payable from the Federal Hospital Insurance Trust 
     Fund, and 40 percent of such appropriation shall be payable 
     from the Federal Supplementary Medical Insurance Trust 
     Fund.''.
       (b) Abolition of ProPAC and PPRC.--
       (1) ProPAC.--
       (A) In general.--Section 1886(e) (42 U.S.C. 1395ww(e)) is 
     amended--
       (i) by striking paragraphs (2) and (6); and
       (ii) in paragraph (3), by striking ``(A) The Commission'' 
     and all that follows through ``(B)''.
       (B) Conforming amendment.--Section 1862 (42 U.S.C. 1395y) 
     is amended by striking ``Prospective Payment Assessment 
     Commission'' each place it appears in subsection (a)(1)(D) 
     and subsection (i) and inserting ``Medicare Payment Review 
     Commission''.
       (2) PPRC.--
       (A) In general.--Title XVIII is amended by striking section 
     1845 (42 U.S.C. 1395w-1).
       (B) Conforming amendments.--
       (i) Section 1834(b)(2) (42 U.S.C. 1395m(b)(2)) is amended 
     by striking ``Physician Payment Review Commission'' and 
     inserting ``Medicare Payment Review Commission''.
       (ii) Section 1842(b) (42 U.S.C. 1395u(b)) is amended by 
     striking ``Physician Payment Review Commission'' each place 
     it appears in paragraphs (2)(C), (9)(D), and (14)(C)(i) and 
     inserting ``Medicare Payment Review Commission''.
       (iii) Section 1848 (42 U.S.C. 1395w@4) is amended by 
     striking ``Physician Payment Review Commission'' and 
     inserting ``Medicare Payment Review Commission'' each place 
     it appears in paragraph (2)(A)(ii), (2)(B)(iii), and (5) of 
     subsection (c), subsection (d)(2)(F), paragraphs (1)(B), (3), 
     and (4)(A) of subsection (f), and paragraphs (6)(C) and 
     (7)(C) of subsection (g).
       (c) Effective Date; Transition.--
       (1) In general.--The Comptroller General shall first 
     provide for appointment of members to the Medicare Payment 
     Review Commission (in this subsection referred to as 
     ``MPRC'') by not later than March 31, 1996.
       (2) Transition.--Effective on a date (not later than 30 
     days after the date a majority of members of the MPRC have 
     first been appointed, the Prospective Payment Assessment 
     Commission (in this subsection referred to as ``ProPAC'') and 
     the Physician Payment Review Commission (in this subsection 
     referred to as ``PPRC''), and amendments made by subsection 
     (b), are terminated. The Comptroller General, to the maximum 
     extent feasible, shall provide for the transfer to the MPRC 
     of assets and staff of ProPAC and PPRC, without any loss of 
     benefits or seniority by virtue of such transfers. Fund 
     balances available to the ProPAC or PPRC for any period shall 
     be available to the MPRC for such period for like purposes.
       (3) Continuing responsibility for reports.--The MPRC shall 
     be responsible for the preparation and submission of reports 
     required by law to be submitted (and which 

[[Page H11264]]

     have not been submitted by the date of establishment of the 
     MPRC) by the ProPAC and PPRC, and, for this purpose, any 
     reference in law to either such Commission is deemed, after 
     the appointment of the MPRC, to refer to the MPRC.

     SEC. 8032. COMMISSION ON THE EFFECT OF THE BABY BOOM 
                   GENERATION ON THE MEDICARE PROGRAM.

       (a) Establishment.--There is established a commission to be 
     known as the Commission on the Effect of the Baby Boom 
     Generation on the Medicare Program (in this section referred 
     to as the ``Commission'').
       (b) Duties.--
       (1) In general.--The Commission shall--
       (A) examine the financial impact on the medicare program of 
     the significant increase in the number of medicare eligible 
     individuals which will occur beginning approximately during 
     2010 and lasting for approximately 25 years, and
       (B) make specific recommendations to the Congress 
     respecting a comprehensive approach to preserve the medicare 
     program for the period during which such individuals are 
     eligible for medicare.
       (2) Considerations in making recommendations.--In making 
     its recommendations, the Commission shall consider the 
     following:
       (A) The amount and sources of Federal funds to finance the 
     medicare program, including the potential use of innovative 
     financing methods.
       (B) The most efficient and effective manner of 
     administering the program, including the appropriateness of 
     continuing the enforcement of medicare budget targets under 
     section 8701 for fiscal years after fiscal year 2002 and the 
     appropriate long-term growth rates for contributions electing 
     coverage under Medicare Choice under part C of title XVIII of 
     such Act.
       (C) Methods used by other nations to respond to comparable 
     demographic patterns in eligibility for health care benefits 
     for elderly and disabled individuals.
       (D) Modifying age-based eligibility to correspond to 
     changes in age-based eligibility under the OASDI program.
       (E) Trends in employment-related health care for retirees, 
     including the use of medical savings accounts and similar 
     financing devices.
       (c) Membership.--
       (1) Appointment.--The Commission shall be composed of 15 
     members appointed as follows:
       (A) The President shall appoint 3 members.
       (B) The Majority Leader of the Senate shall appoint, after 
     consultation with the minority leader of the Senate, 6 
     members, of whom not more than 4 may be of the same political 
     party.
       (C) The Speaker of the House of Representatives shall 
     appoint, after consultation with the minority leader of the 
     House of Representatives, 6 members, of whom not more than 4 
     may be of the same political party.
       (2) Chairman and vice chairman.--The Commission shall elect 
     a Chairman and Vice Chairman from among its members.
       (3) Vacancies.--Any vacancy in the membership of the 
     Commission shall be filled in the manner in which the 
     original appointment was made and shall not affect the power 
     of the remaining members to execute the duties of the 
     Commission.
       (4) Quorum.--A quorum shall consist of 8 members of the 
     Commission, except that 4 members may conduct a hearing under 
     subsection (e).
       (5) Meetings.--The Commission shall meet at the call of its 
     Chairman or a majority of its members.
       (6) Compensation and reimbursement of expenses.--Members of 
     the Commission are not entitled to receive compensation for 
     service on the Commission. Members may be reimbursed for 
     travel, subsistence, and other necessary expenses incurred in 
     carrying out the duties of the Commission.
       (d) Staff and Consultants.--
       (1) Staff.--The Commission may appoint and determine the 
     compensation of such staff as may be necessary to carry out 
     the duties of the Commission. Such appointments and 
     compensation may be made without regard to the provisions of 
     title 5, United States Code, that govern appointments in the 
     competitive services, and the provisions of chapter 51 and 
     subchapter III of chapter 53 of such title that relate to 
     classifications and the General Schedule pay rates.
       (2) Consultants.--The Commission may procure such temporary 
     and intermittent services of consultants under section 
     3109(b) of title 5, United States Code, as the Commission 
     determines to be necessary to carry out the duties of the 
     Commission.
       (e) Powers.--
       (1) Hearings and other activities.--For the purpose of 
     carrying out its duties, the Commission may hold such 
     hearings and undertake such other activities as the 
     Commission determines to be necessary to carry out its 
     duties.
       (2) Studies by gao.--Upon the request of the Commission, 
     the Comptroller General shall conduct such studies or 
     investigations as the Commission determines to be necessary 
     to carry out its duties.
       (3) Cost estimates by congressional budget office.--
       (A) Upon the request of the Commission, the Director of the 
     Congressional Budget Office shall provide to the Commission 
     such cost estimates as the Commission determines to be 
     necessary to carry out its duties.
       (B) The Commission shall reimburse the Director of the 
     Congressional Budget Office for expenses relating to the 
     employment in the office of the Director of such additional 
     staff as may be necessary for the Director to comply with 
     requests by the Commission under subparagraph (A).
       (4) Detail of federal employees.--Upon the request of the 
     Commission, the head of any Federal agency is authorized to 
     detail, without reimbursement, any of the personnel of such 
     agency to the Commission to assist the Commission in carrying 
     out its duties. Any such detail shall not interrupt or 
     otherwise affect the civil service status or privileges of 
     the Federal employee.
       (5) Technical assistance.--Upon the request of the 
     Commission, the head of a Federal agency shall provide such 
     technical assistance to the Commission as the Commission 
     determines to be necessary to carry out its duties.
       (6) Use of mails.--The Commission may use the United States 
     mails in the same manner and under the same conditions as 
     Federal agencies and shall, for purposes of the frank, be 
     considered a commission of Congress as described in section 
     3215 of title 39, United States Code.
       (7) Obtaining information.--The Commission may secure 
     directly from any Federal agency information necessary to 
     enable it to carry out its duties, if the information may be 
     disclosed under section 552 of title 5, United States Code. 
     Upon request of the Chairman of the Commission, the head of 
     such agency shall furnish such information to the Commission.
       (8) Administrative support services.--Upon the request of 
     the Commission, the Administrator of General Services shall 
     provide to the Commission on a reimbursable basis such 
     administrative support services as the Commission may 
     request.
       (9) Acceptance of donations.--The Commission may accept, 
     use, and dispose of gifts or donations of services or 
     property.
       (10) Printing.--For purposes of costs relating to printing 
     and binding, including the cost of personnel detailed from 
     the Government Printing Office, the Commission shall be 
     deemed to be a committee of the Congress.
       (f) Report.--Not later than May 1, 1997, the Commission 
     shall submit to Congress a report containing its findings and 
     recommendations regarding how to protect and preserve the 
     medicare program in a financially solvent manner until 2030 
     (or, if later, throughout the period of projected solvency of 
     the Federal Old-Age and Survivors Insurance Trust Fund). The 
     report shall include detailed recommendations for 
     appropriate legislative initiatives respecting how to 
     accomplish this objective.
       (g) Termination.--The Commission shall terminate 60 days 
     after the date of submission of the report required in 
     subsection (f).
       (h) Authorization of Appropriations.--There are authorized 
     to be appropriated $1,500,000 to carry out this section. 
     Amounts appropriated to carry out this section shall remain 
     available until expended.

           PART 5--PREEMPTION OF STATE ANTI-MANAGED CARE LAWS

     SEC. 8041. PREEMPTION OF STATE LAW RESTRICTIONS ON MANAGED 
                   CARE ARRANGEMENTS.

       (a) Limitation on Restrictions on Network Plans.--Effective 
     as of January 1, 1997--
       (1) a State may not prohibit or limit a carrier or group 
     health plan providing health coverage from including 
     incentives for enrollees to use the services of participating 
     providers;
       (2) a State may not prohibit or limit such a carrier or 
     plan from limiting coverage of services to those provided by 
     a participating provider, except as provided in section 1013;
       (3) a State may not prohibit or limit the negotiation of 
     rates and forms of payments for providers by such a carrier 
     or plan with respect to health coverage;
       (4) a State may not prohibit or limit such a carrier or 
     plan from limiting the number of participating providers;
       (5) a State may not prohibit or limit such a carrier or 
     plan from requiring that services be provided (or authorized) 
     by a practitioner selected by the enrollee from a list of 
     available participating providers or, except for services of 
     a physician who specializes in obstetrics and gynecology, 
     from requiring enrollees to obtain referral in order to have 
     coverage for treatment by a specialist or health institution; 
     and
       (6) a State may not prohibit or limit the corporate 
     practice of medicine.
       (b) Definitions.--In this section:
       (1) Managed care coverage.--The term ``managed care 
     coverage'' means health coverage to the extent the coverage 
     is provided through a managed care arrangement (as defined in 
     paragraph (3)) that meets the applicable requirements of such 
     section.
       (2) Participating provider.--The term ``participating 
     provider'' means an entity or individual which provides, 
     sells, or leases health care services as part of a provider 
     network (as defined in paragraph (4)).
       (3) Managed care arrangement.--The term ``managed care 
     arrangement'' means, with respect to a group health plan or 
     under health insurance coverage, an arrangement under such 
     plan or coverage under which providers agree to provide items 
     and services covered under the arrangement to individuals 
     covered under the plan or who have such coverage.
       (4) Provider network.--The term ``provider network'' means, 
     with respect to a 

[[Page H11265]]

     group health plan or health insurance coverage, providers who 
     have entered into an agreement described in paragraph (3).

     SEC. 8042. PREEMPTION OF STATE LAWS RESTRICTING UTILIZATION 
                   REVIEW PROGRAMS.

       (a) In General.--Effective January 1, 1997, no State law or 
     regulation shall prohibit or regulate activities under a 
     utilization review program (as defined in subsection (b)).
       (b) Utilization Review Program Defined.--In this section, 
     the term ``utilization review program'' means a system of 
     reviewing the medical necessity and appropriateness of 
     patient services (which may include inpatient and outpatient 
     services) using specified guidelines. Such a system may 
     include preadmission certification, the application of 
     practice guidelines, continued stay review, discharge 
     planning, preauthorization of ambulatory procedures, and 
     retrospective review.
       (c) Exemption of Laws Preventing Denial of Lifesaving 
     Medical Treatment Pending Transfer to Another Health Care 
     Provider.--Nothing in this subtitle shall be construed to 
     invalidate any State law that has the effect of preventing 
     involuntary denial of life-preserving medical treatment when 
     such denial would cause the involuntary death of the patient 
     pending transfer of the patient to a health care provider 
     willing to provide such treatment.
          Subtitle B--Provisions Relating to Regulatory Relief

    PART 1--PROVISIONS RELATING TO PHYSICIAN FINANCIAL RELATIONSHIPS

     SEC. 8101. REPEAL OF PROHIBITIONS BASED ON COMPENSATION 
                   ARRANGEMENTS.

       (a) In General.--Section 1877(a)(2) (42 U.S.C. 
     1395nn(a)(2)) is amended by striking ``is--'' and all that 
     follows through ``equity,'' and inserting the following: ``is 
     (except as provided in subsection (c)) an ownership or 
     investment interest in the entity through equity,''.
       (b) Conforming Amendments.--Section 1877 (42 U.S.C. 1395nn) 
     is amended as follows:
       (1) In subsection (b)--
       (A) in the heading, by striking ``to Both Ownership and 
     Compensation Arrangement Provisions'' and inserting ``Where 
     Financial Relationship Exists''; and
       (B) by redesignating paragraph (4) as paragraph (7).
       (2) In subsection (c)--
       (A) by amending the heading to read as follows: ``Exception 
     for Ownership or Investment Interest in Publicly Traded 
     Securities and Mutual Funds''; and
       (B) in the matter preceding paragraph (1), by striking 
     ``subsection (a)(2)(A)'' and inserting ``subsection (a)(2)''.
       (3) In subsection (d)--
       (A) by striking the matter preceding paragraph (1);
       (B) in paragraph (3), by striking ``paragraph (1)'' and 
     inserting ``paragraph (4)''; and
       (C) by redesignating paragraphs (1), (2), and (3) as 
     paragraphs (4), (5), and (6), and by transferring and 
     inserting such paragraphs after paragraph (3) of subsection 
     (b).
       (4) By striking subsection (e).
       (5) In subsection (f)(2), as amended by section 152(a) of 
     the Social Security Act Amendments of 1994--
       (A) in the matter preceding paragraph (1), by striking 
     ``ownership, investment, and compensation'' and inserting 
     ``ownership and investment'';
       (B) in paragraph (2), by striking ``subsection (a)(2)(A)'' 
     and all that follows through ``subsection (a)(2)(B)),'' and 
     inserting ``subsection (a)(2),''; and
       (C) in paragraph (2), by striking ``or who have such a 
     compensation relationship with the entity''.
       (6) In subsection (h)--
       (A) by striking paragraphs (1), (2), and (3);
       (B) in paragraph (4)(A), by striking clauses (iv) and (vi);
       (C) in paragraph (4)(B), by striking ``rules.--'' and all 
     that follows through ``(ii) Faculty'' and inserting ``rules 
     for faculty; and
       (D) by adding at the end of paragraph (4) the following new 
     subparagraph:
       ``(C) Member of a group.--A physician is a `member' of a 
     group if the physician is an owner or a bona fide employee, 
     or both, of the group.''.

     SEC. 8102. REVISION OF DESIGNATED HEALTH SERVICES SUBJECT TO 
                   PROHIBITION.

       (a) In General.--Section 1877(h)(6) (42 U.S.C. 
     1395nn(h)(6)) is amended by striking subparagraphs (B) 
     through (K) and inserting the following:
       ``(B) Items and services furnished by a community pharmacy 
     (as defined in paragraph (1)).
       ``(C) Magnetic resonance imaging and computerized 
     tomography services.
       ``(D) Outpatient physical therapy services.''.
       (b) Community Pharmacy Defined.--Section 1877(h) (42 U.S.C. 
     1395nn(h)), as amended by section 8101(b)(6), is amended by 
     inserting before paragraph (4) the following new paragraph:
       ``(1) Community pharmacy.--The term `community pharmacy' 
     means any entity licensed or certified to dispense 
     prescription drugs by the State in which the entity is 
     located (including an entity which dispenses such drugs by 
     mail order).''.
       (c) Conforming Amendments.--
       (1) Section 1877(b)(2) (42 U.S.C. 1395nn(b)(2)) is amended 
     in the matter preceding subparagraph (A) by striking 
     ``services'' and all that follows through ``supplies)--'' and 
     inserting ``services--''.
       (2) Section 1877(h)(5)(C) (42 U.S.C. 1395nn(h)(5)(C)) is 
     amended--
       (A) by striking ``, a request by a radiologist for 
     diagnostic radiology services, and a request by a radiation 
     oncologist for radiation therapy,'' and inserting ``and a 
     request by a radiologist for magnetic resonance imaging or 
     for computerized tomography'', and
       (B) by striking ``radiologist, or radiation oncologist'' 
     and inserting ``or radiologist''.

     SEC. 8103. DELAY IN IMPLEMENTATION UNTIL PROMULGATION OF 
                   REGULATIONS.

       (a) In General.--Section 13562(b) of OBRA-1993 (42 U.S.C. 
     1395nn note) is amended--
       (1) in paragraph (1), by striking ``paragraph (2)'' and 
     inserting ``paragraphs (2) and (3)''; and
       (2) by adding at the end the following new paragraph:
       ``(3) Promulgation of regulations.--Notwithstanding 
     paragraphs (1) and (2), the amendments made by this section 
     shall not apply to any referrals made before the effective 
     date of final regulations promulgated by the Secretary of 
     Health and Human Services to carry out such amendments.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect as if included in the enactment of OBRA-
     1993.

     SEC. 8104. EXCEPTIONS TO PROHIBITION.

       (a) Revisions to Exception for In-office Ancillary 
     Services.--
       (1) Repeal of site-of-service requirement.--Section 1877 
     (42 U.S.C. 1395nn) is amended--
       (A) by amending subparagraph (A) of subsection (b)(2) to 
     read as follows:
       ``(A) that are furnished personally by the referring 
     physician, personally by a physician who is a member of the 
     same group practice as the referring physician, or personally 
     by individuals who are under the general supervision of the 
     physician or of another physician in the group practice, 
     and'', and
       (B) by adding at the end of subsection (h) the following 
     new paragraph:
       ``(7) General supervision.--An individual is considered to 
     be under the `general supervision' of a physician if the 
     physician (or group practice of which the physician is a 
     member) is legally responsible for the services performed by 
     the individual and for ensuring that the individual meets 
     licensure and certification requirements, if any, applicable 
     under other provisions of law, regardless of whether or not 
     the physician is physically present when the individual 
     furnishes an item or service.''.
       (2) Clarification of treatment of physician owners of group 
     practice.--Section 1877(b)(2)(B) (42 U.S.C. 1395nn(b)(2)(B)) 
     is amended by striking ``physician or such group practice'' 
     and inserting ``physician, such group practice, or the 
     physician owners of such group practice''.
       (3) Conforming amendment.--Section 1877(b)(2) (42 U.S.C. 
     1395nn(b)(2)) is amended by amending the heading to read as 
     follows: ``Ancillary services furnished personally or through 
     group practice.--''.
       (b) Clarification of Exception for Services Furnished in a 
     Rural Area.--Paragraph (5) of section 1877(b) (42 U.S.C. 
     1395nn(b)), as transferred by section 8101(b)(3)(C), is 
     amended by striking ``substantially all'' and inserting ``not 
     less than 75 percent''.
       (c) Revision of Exception for Certain Managed Care 
     Arrangements.--Section 1877(b)(3) (42 U.S.C. 1395nn(b)(3)) is 
     amended--
       (1) in the heading by inserting ``managed care 
     arrangements'' after ``Prepaid plans'';
       (2) in the matter preceding subparagraph (A), by striking 
     ``organization--'' and inserting ``organization, directly or 
     through contractual arrangements with other entities, to 
     individuals enrolled with the organization--'';
       (3) in subparagraph (A), by inserting ``or part C'' after 
     ``section 1876'';
       (4) by striking ``or'' at the end of subparagraph (C);
       (5) by striking the period at the end of subparagraph (D) 
     and inserting a comma; and
       (6) by adding at the end the following new subparagraphs:
       ``(E) with a contract with a State to provide services 
     under the State plan under title XIX (in accordance with 
     section 1903(m)) or a State MediGrant plan under title XXI; 
     or
       ``(F) which--
       ``(i) provides health care items or services directly or 
     through one or more subsidiary entities or arranges for the 
     provision of health care items or services substantially 
     through the services of health care providers under contract 
     with the organization, and
       ``(ii)(I) assumes financial risk for the provision of 
     health services through mechanisms (such as capitation, risk 
     pools, withholds, and per diem payments) or offers its 
     network of contract health providers to an entity (including 
     self-insured employers and indemnity plans) which assumes 
     financial risk for the provision of such health services, or
       ``(II) has in effect a written agreement with the provider 
     of services under which the provider is at significant 
     financial risk (whether through a withhold, capitation, 
     incentive pool, per diem payments, or similar risk sharing 
     arrangement) for the cost or utilization of services that the 
     provider is obligated to provide.''.
       (d) New Exception for Shared Facility Services.--

[[Page H11266]]

       (1) In general.--Section 1877(b) (42 U.S.C. 1395nn(b)), as 
     amended by section 8101(b)(3)(C), is amended--
       (A) by redesignating paragraphs (4) through (7) as 
     paragraphs (5) through (8); and
       (B) by inserting after paragraph (3) the following new 
     paragraph:
       ``(4) Shared facility services.--In the case of a 
     designated health service consisting of a shared facility 
     service of a shared facility--
       ``(A) that is furnished--
       ``(i) personally by the referring physician who is a shared 
     facility physician or personally by an individual directly 
     employed or under the general supervision of such a 
     physician,
       ``(ii) by a shared facility in a building in which the 
     referring physician furnishes substantially all of the 
     services of the physician that are unrelated to the 
     furnishing of shared facility services, and
       ``(iii) to a patient of a shared facility physician; and
       ``(B) that is billed by the referring physician or a group 
     practice of which the physician is a member.''.
       (2) Definitions.--Section 1877(h) (42 U.S.C. 1395nn(h)), as 
     amended by section 8101(b)(6) and section 8102(b), is amended 
     by inserting after paragraph (1) the following new paragraph:
       ``(2) Shared facility related definitions.--
       ``(A) Shared facility service.--The term `shared facility 
     service' means, with respect to a shared facility, a 
     designated health service furnished by the facility to 
     patients of shared facility physicians.
       ``(B) Shared facility.--The term `shared facility' means an 
     entity that furnishes shared facility services under a shared 
     facility arrangement.
       ``(C) Shared facility physician.--The term `shared facility 
     physician' means, with respect to a shared facility, a 
     physician (or a group practice of which the physician is a 
     member) who has a financial relationship under a shared 
     facility arrangement with the facility.
       ``(D) Shared facility arrangement.--The term `shared 
     facility arrangement' means, with respect to the provision of 
     shared facility services in a building, a financial 
     arrangement--
       ``(i) which is only between physicians who are providing 
     services (unrelated to shared facility services) in the same 
     building,
       ``(ii) in which the overhead expenses of the facility are 
     shared, in accordance with methods previously determined by 
     the physicians in the arrangement, among the physicians in 
     the arrangement, and
       ``(iii) which, in the case of a corporation, is wholly 
     owned and controlled by shared facility physicians.''.
       (e) New Exception for Services Furnished in Communities 
     With No Alternative Providers.--Section 1877(b) (42 U.S.C. 
     1395nn(b)), as amended by section 8101(b)(3)(C) and 
     subsection (d)(1), is amended--
       (1) by redesignating paragraphs (5) through (8) as 
     paragraphs (6) through (9); and
       (2) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) No alternative providers in area.--In the case of a 
     designated health service furnished in any area with respect 
     to which the Secretary determines that individuals residing 
     in the area do not have reasonable access to such a 
     designated health service for which subsection (a)(1) does 
     not apply.''.
       (f) New Exception for Services Furnished in Ambulatory 
     Surgical Centers.--Section 1877(b) (42 U.S.C. 1395nn(b)), as 
     amended by section 8101(b)(3)(C), subsection (d)(1), and 
     subsection (e)(1), is amended--
       (1) by redesignating paragraphs (6) through (9) as 
     paragraphs (7) through (10); and
       (2) by inserting after paragraph (5) the following new 
     paragraph:
       ``(6) Services furnished in ambulatory surgical centers.--
     In the case of a designated health service furnished in an 
     ambulatory surgical center described in section 
     1832(a)(2)(F)(i).''.
       (g) New Exception for Services Furnished in Renal Dialysis 
     Facilities.--Section 1877(b) (42 U.S.C. 1395nn(b)), as 
     amended by section 8101(b)(3)(C), subsection (d)(1), 
     subsection (e)(1), and subsection (f), is amended--
       (1) by redesignating paragraphs (7) through (10) as 
     paragraphs (8) through (11); and
       (2) by inserting after paragraph (6) the following new 
     paragraph:
       ``(7) Services furnished in renal dialysis facilities.--In 
     the case of a designated health service furnished in a renal 
     dialysis facility under section 1881.''.
       (h) New Exception for Services Furnished in a Hospice.--
     Section 1877(b) (42 U.S.C. 1395nn(b)), as amended by section 
     8101(b)(3)(C), subsection (d)(1), subsection (e)(1), 
     subsection (f), and subsection (g), is amended--
       (1) by redesignating paragraphs (8) through (11) as 
     paragraphs (9) through (12); and
       (2) by inserting after paragraph (7) the following new 
     paragraph:
       ``(8) Services furnished by a hospice program.--In the case 
     of a designated health service furnished by a hospice program 
     under section 1861(dd)(2).''.
       (i) New Exception for Services Furnished in a Comprehensive 
     Outpatient Rehabilitation Facility.--Section 1877(b) (42 
     U.S.C. 1395nn(b)), as amended by section 8101(b)(3)(C), 
     subsection (d)(1), subsection (e)(1), subsection (f), 
     subsection (g), and subsection (h), is amended--
       (1) by redesignating paragraphs (9) through (12) as 
     paragraphs (10) through (13); and
       (2) by inserting after paragraph (8) the following new 
     paragraph:
       ``(9) Services furnished in a comprehensive outpatient 
     rehabilitation facility.--In the case of a designated health 
     service furnished in a comprehensive outpatient 
     rehabilitation facility (as defined in section 
     1861(cc)(2)).''.
       (i) Definition of Referral.--Section 1877(h)(5)(A) (42 
     U.S.C. 1395nn(h)(5)(A)) is amended--
       (1) by striking ``an item or service'' and inserting ``a 
     designated health service'', and
       (2) by striking ``the item or service'' and inserting ``the 
     designated health service''.

     SEC. 8105. REPEAL OF REPORTING REQUIREMENTS.

       Section 1877 (42 U.S.C. 1395nn) is amended--
       (1) by striking subsection (f); and
       (2) by striking subsection (g)(5).

     SEC. 8106. PREEMPTION OF STATE LAW.

       Section 1877 (42 U.S.C. 1395nn) is amended by adding at the 
     end the following new subsection:
       ``(i) Preemption of State Law.--This section preempts State 
     law to the extent State law is inconsistent with this 
     section.''.

     SEC. 8107. EFFECTIVE DATE.

       Except as provided in section 8103(b), the amendments made 
     by this part shall apply to referrals made on or after August 
     14, 1995, regardless of whether or not regulations are 
     promulgated to carry out such amendments.

                        PART 2--ANTITRUST REFORM

     SEC. 8111. PUBLICATION OF ANTITRUST GUIDELINES ON ACTIVITIES 
                   OF HEALTH PLANS.

       (a) In General.--The Attorney General shall provide for the 
     development and publication of explicit guidelines on the 
     application of antitrust laws to the activities of health 
     plans. The guidelines shall be designed to facilitate 
     development and operation of plans, consistent with the 
     antitrust laws.
       (b) Review Process.--The Attorney General shall establish a 
     review process under which the administrator or sponsor of a 
     health plan (or organization that proposes to administer or 
     sponsor a health plan) may submit a request to the Attorney 
     General to obtain a prompt opinion (but in no event later 
     than 90 days after the Attorney General receives the request) 
     from the Department of Justice on the plan's conformity with 
     the Federal antitrust laws.

     SEC. 8112. ISSUANCE OF HEALTH CARE CERTIFICATES OF PUBLIC 
                   ADVANTAGE.

       (a) Issuance and Effect of Certificate.--The Attorney 
     General, after consultation with the Secretary, shall issue 
     in accordance with this section a certificate of public 
     advantage to each eligible health care collaborative activity 
     that complies with the requirements in effect under this 
     section on or after the expiration of the 1-year period that 
     begins on the date of the enactment of this Act (without 
     regard to whether or not the Attorney General has promulgated 
     regulations to carry out this section by such date). Such 
     activity, and the parties to such activity, shall not be 
     liable under any of the antitrust laws for conduct described 
     in such certificate and engaged in by such activity if such 
     conduct occurs while such certificate is in effect.
       (b) Requirements Applicable to Issuance of Certificates.--
       (1) Standards to be met.--The Attorney General shall issue 
     a certificate to an eligible health care collaborative 
     activity if the Attorney General finds that--
       (A) the benefits that are likely to result from carrying 
     out the activity outweigh the reduction in competition (if 
     any) that is likely to result from the activity, and
       (B) such reduction in competition is necessary to obtain 
     such benefits.
       (2) Factors to be considered.--
       (A) Weighing of benefits against reduction in 
     competition.--For purposes of making the finding described in 
     paragraph (1)(A), the Attorney General shall consider whether 
     the activity is likely--
       (i) to maintain or to increase the quality of health care 
     by providing new services not currently offered in the 
     relevant market,
       (ii) to increase access to health care,
       (iii) to achieve cost efficiencies that will be passed on 
     to health care consumers, such as economies of scale, reduced 
     transaction costs, and reduced administrative costs, that 
     cannot be achieved by the provision of available services and 
     facilities in the relevant market,
       (iv) to preserve the operation of health care facilities 
     located in underserved geographical areas,
       (v) to improve utilization of health care resources, and
       (vi) to reduce inefficient health care resource 
     duplication.
       (B) Necessity of reduction in competition.--For purposes of 
     making the finding described in paragraph (1)(B), the 
     Attorney General shall consider--
       (i) the ability of the providers of health care services 
     that are (or likely to be) affected by the health care 
     collaborative activity and the entities responsible for 
     making payments to such providers to negotiate societally 
     optimal payment and service arrangements,
       (ii) the effects of the health care collaborative activity 
     on premiums and other charges imposed by the entities 
     described in clause (i), and
       (iii) the availability of equally efficient, less 
     restrictive alternatives to achieve the 

[[Page H11267]]

     benefits that are intended to be achieved by carrying out the 
     activity.
       (c) Establishment of Criteria and Procedures.--Subject to 
     subsections (d) and (e), not later than 1 year after the date 
     of the enactment of this Act, the Attorney General and the 
     Secretary shall establish jointly by rule the criteria and 
     procedures applicable to the issuance of certificates under 
     subsection (a). The rules shall specify the form and content 
     of the application to be submitted to the Attorney General to 
     request a certificate, the information required to be 
     submitted in support of such application, the procedures 
     applicable to denying and to revoking a certificate, and the 
     procedures applicable to the administrative appeal (if such 
     appeal is authorized by rule) of the denial and the 
     revocation of a certificate. Such information may include the 
     terms of the health care collaborative activity (in the case 
     of an activity in existence as of the time of the 
     application) and implementation plan for the collaborative 
     activity.
       (d) Eligible Health Care Collaborative Activity.--To be an 
     eligible health care collaborative activity for purposes of 
     this section, a health care collaborative activity shall 
     submit to the Attorney General an application that complies 
     with the rules in effect under subsection (c) and that 
     includes--
       (1) an agreement by the parties to the activity that the 
     activity will not foreclose competition by entering into 
     contracts that prevent health care providers from providing 
     health care in competition with the activity,
       (2) an agreement that the activity will submit to the 
     Attorney General annually a report that describes the 
     operations of the activity and information regarding the 
     impact of the activity on health care and on competition in 
     health care, and
       (3) an agreement that the parties to the activity will 
     notify the Attorney General and the Secretary of the 
     termination of the activity not later than 30 days after such 
     termination occurs.
       (e) Review of Applications for Certificates.--Not later 
     than 90 days after an eligible health care collaborative 
     activity submits to the Attorney General an application that 
     complies with the rules in effect under subsection (c) and 
     with subsection (d), the Attorney General shall issue or deny 
     the issuance of such certificate. If, before the expiration 
     of such 90-day period, the Attorney General may extend the 
     time for issuance for good cause.
       (f) Revocation of Certificate.--Whenever the Attorney 
     General finds that a health care collaborative activity with 
     respect to which a certificate is in effect does not meet the 
     standards specified in subsection (b), the Attorney General 
     shall revoke such certificate.
       (g) Written Reasons; Judicial Review.--
       (1) Denial and revocation of certificates.--If the Attorney 
     General denies an application for a certificate or revokes a 
     certificate, the Attorney General shall include in the notice 
     of denial or revocation a statement of the reasons relied 
     upon for the denial or revocation of such certificate.
       (2) Judicial review.--
       (A) After administrative proceeding.--(i) If the Attorney 
     General denies an application submitted or revokes a 
     certificate issued under this section after an opportunity 
     for hearing on the record, then any party to the health care 
     collaborative activity involved may commence a civil action, 
     not later than 60 days after receiving notice of the denial 
     or revocation, in an appropriate district court of the United 
     States for review of the record of such denial or revocation.
       (ii) As part of the Attorney General's answer, the Attorney 
     General shall file in such court a certified copy of the 
     record on which such denial or revocation is based. The 
     findings of fact of the Attorney General may be set aside 
     only if found to be unsupported by substantial evidence in 
     such record taken as a whole.
       (B) Denial or revocation without administrative 
     proceeding.--If the Attorney General denies an application 
     submitted or revokes a certificate issued under this section 
     without an opportunity for hearing on the record, then any 
     party to the health care collaborative activity involved may 
     commence a civil action, not later than 60 days after 
     receiving notice of the denial or revocation, in an 
     appropriate district court of the United States for de novo 
     review of such denial or revocation.
       (h) Exemption.--A person shall not be liable under any of 
     the antitrust laws for conduct necessary--
       (1) to prepare, agree to prepare, or attempt to agree to 
     prepare an application to request a certificate under this 
     section, or
       (2) to attempt to enter into any health care collaborative 
     activity with respect to which such a certificate is in 
     effect.
       (i) Definitions.--In this section:
       (1) The term ``certificate'' means a certificate of public 
     advantage authorized to be issued under subsection (a).
       (2) The term ``health care collaborative activity'' means 
     an agreement (whether existing or proposed) between 2 or more 
     providers of health care services that is entered into solely 
     for the purpose of sharing in the provision and coordination 
     of health care services and that involves substantial 
     integration and financial risk-sharing between the parties, 
     but does not include the exchanging of information, the 
     entering into of any agreement, or the engagement in any 
     other conduct that is not reasonably required to carry out 
     such agreement.
       (3) The term ``health care services'' includes services 
     related to the delivery or administration of health care 
     services.
       (4) The term ``liable'' means liable for any civil or 
     criminal violation of the antitrust laws.
       (5) The term ``provider of health care services'' means any 
     individual or entity that is engaged in the delivery of 
     health care services in a State and that is required by State 
     law or regulation to be licensed or certified by the State to 
     engage in the delivery of such services in the State.

     SEC. 8113. STUDY OF IMPACT ON COMPETITION.

       The Attorney General, in consultation with the Chairman of 
     the Federal Trade Commission, annually shall submit to the 
     Congress a report as part of the annual budget oversight 
     proceedings concerning the Antitrust Division of the 
     Department of Justice. The report shall enable the Congress 
     to determine how enforcement of antitrust laws is affecting 
     the formation of efficient, cost-saving joint ventures and if 
     the certificate of public advantage procedure set forth in 
     section 8112 has resulted in undesirable reduction in 
     competition in the health care marketplace. The report shall 
     include an evaluation of the factors set forth in paragraphs 
     (2)(A) and (2)(B) of section 8112(b).

     SEC. 8114. ANTITRUST EXEMPTION.

       The antitrust laws shall not apply with respect to--
       (1) the merger of, or the attempt to merge, 2 or more 
     hospitals,
       (2) a contract entered into solely by 2 or more hospitals 
     to allocate hospital services, or
       (3) the attempt by only 2 or more hospitals to enter into a 
     contract to allocate hospital services,
     if each of such hospitals satisfies all of the requirements 
     of section 8115 at the time such hospitals engage in the 
     conduct described in paragraph (1), (2), or (3), as the case 
     may be.

     SEC. 8115. REQUIREMENTS.

       The requirements referred to in section 8114 are as 
     follows:
       (1) The hospital is located outside of a city, or in a city 
     that has less than 150,000 inhabitants, as determined in 
     accordance with the most recent data available from the 
     Bureau of the Census.
       (2) In the most recently concluded calendar year, the 
     hospital received more than 40 percent of its gross revenue 
     from payments made under Federal programs.
       (3) There is in effect with respect to the hospital a 
     certificate issued by the Health Care Financing 
     Administration specifying that such Administration has 
     determined that Federal expenditures would be reduced, 
     consumer costs would not increase, and access to health care 
     services would not be reduced, if the hospital and the other 
     hospitals that requested such certificate merge, or allocate 
     the hospital services specified in such request, as the case 
     may be.

     SEC. 8116. DEFINITION.

       For purposes of this subtitle, the term ``antitrust laws'' 
     has the meaning given such term in subsection (a) of the 
     first section of the Clayton Act (15 U.S.C. 12), except that 
     such term includes section 5 of the Federal Trade Commission 
     Act (15 U.S.C. 45) to the extent that such section 5 applies 
     with respect to unfair methods of competition.

                       PART 3--MALPRACTICE REFORM

          Subpart A--Uniform Standards for Malpractice Claims

     SEC. 8121. APPLICABILITY.

       Except as provided in section 8131, this subpart shall 
     apply to any medical malpractice liability action brought in 
     a Federal or State court, and to any medical malpractice 
     claim subject to an alternative dispute resolution system, 
     that is initiated on or after January 1, 1996.

     SEC. 8122. REQUIREMENT FOR INITIAL RESOLUTION OF ACTION 
                   THROUGH ALTERNATIVE DISPUTE RESOLUTION.

       (a) In General.--
       (1) State cases.--A medical malpractice liability action 
     may not be brought in any State court during a calendar year 
     unless the medical malpractice liability claim that is the 
     subject of the action has been initially resolved under an 
     alternative dispute resolution system certified for the year 
     by the Secretary under section 8132(a), or, in the case of a 
     State in which such a system is not in effect for the year, 
     under the alternative Federal system established under 
     section 8132(b).
       (2) Federal diversity actions.--A medical malpractice 
     liability action may not be brought in any Federal court 
     under section 1332 of title 28, United States Code, during a 
     calendar year unless the medical malpractice liability claim 
     that is the subject of the action has been initially resolved 
     under the alternative dispute resolution system referred to 
     in paragraph (1) that applied in the State whose law applies 
     in such action.
       (3) Claims against united states.--
       (A) Establishment of process for claims.--The Attorney 
     General shall establish an alternative dispute resolution 
     process for the resolution of tort claims consisting of 
     medical malpractice liability claims brought against the 
     United States under chapter 171 of title 28, United States 
     Code. Under such process, the resolution of a claim shall 
     occur after the completion of the administrative claim 
     process applicable to the claim under section 2675 of such 
     title.
       (B) Requirement for initial resolution under process.--A 
     medical malpractice liability action based on a medical 
     malpractice liability claim described in subparagraph (A) may 
     not be brought in any Federal 

[[Page H11268]]

     court unless the claim has been initially resolved under the 
     alternative dispute resolution process established by the 
     Attorney General under such subparagraph.
       (b) Initial Resolution of Claims Under ADR.--For purposes 
     of subsection (a), an action is ``initially resolved'' under 
     an alternative dispute resolution system if--
       (1) the ADR reaches a decision on whether the defendant is 
     liable to the plaintiff for damages; and
       (2) if the ADR determines that the defendant is liable, the 
     ADR reaches a decision on the amount of damages assessed 
     against the defendant.
       (c) Procedures for Filing Actions.--
       (1) Notice of intent to contest decision.--Not later than 
     60 days after a decision is issued with respect to a medical 
     malpractice liability claim under an alternative dispute 
     resolution system, each party affected by the decision shall 
     submit a sealed statement to a court of competent 
     jurisdiction indicating whether or not the party intends to 
     contest the decision.
       (2) Deadline for filing action.--A medical malpractice 
     liability action may not be brought by a party unless--
       (A) the party has filed the notice of intent required by 
     paragraph (1); and
       (B) the party files the action in a court of competent 
     jurisdiction not later than 90 days after the decision 
     resolving the medical malpractice liability claim that is the 
     subject of the action is issued under the applicable 
     alternative dispute resolution system.
       (3) Court of competent jurisdiction.--For purposes of this 
     subsection, the term ``court of competent jurisdiction'' 
     means--
       (A) with respect to actions filed in a State court, the 
     appropriate State trial court; and
       (B) with respect to actions filed in a Federal court, the 
     appropriate United States district court.
       (d) Legal Effect of Uncontested ADR Decision.--The decision 
     reached under an alternative dispute resolution system shall, 
     for purposes of enforcement by a court of competent 
     jurisdiction, have the same status in the court as the 
     verdict of a medical malpractice liability action adjudicated 
     in a State or Federal trial court. The previous sentence 
     shall not apply to a decision that is contested by a party 
     affected by the decision pursuant to subsection (c)(1).

     SEC. 8123. OPTIONAL APPLICATION OF PRACTICE GUIDELINES.

       (a) Development and Certification of Guidelines.--Each 
     State may develop, for certification by the Secretary, a set 
     of specialty clinical practice guidelines, based on 
     recommended guidelines from national specialty societies, to 
     be updated annually. In the absence of recommended guidelines 
     from such societies, each State may develop such guidelines 
     based on such criteria as the State considers appropriate 
     (including based on recommended guidelines developed by the 
     Agency for Health Care Policy and Research).
       (b) Provision of Health Care Under Guidelines.--
     Notwithstanding any other provision of law, in any medical 
     malpractice liability action arising from the conduct of a 
     health care provider or health care professional, if such 
     conduct was in accordance with a guideline developed by the 
     State in which the conduct occurred and certified by the 
     Secretary under subsection (a), the guideline--
       (1) may be introduced by any party to the action (including 
     a health care provider, health care professional, or 
     patient); and
       (2) if introduced, shall establish a rebuttable presumption 
     that the conduct was in accordance with the appropriate 
     standard of medical care, which may only be overcome by the 
     presentation of clear and convincing evidence on behalf of 
     the party against whom the presumption operates.

     SEC. 8124. TREATMENT OF NONECONOMIC AND PUNITIVE DAMAGES.

       (a) Limitation on Noneconomic Damages.--The total amount of 
     noneconomic damages that may be awarded to a claimant and the 
     members of the claimant's family for losses resulting from 
     the injury which is the subject of a medical malpractice 
     liability action may not exceed $500,000, regardless of the 
     number of parties against whom the action is brought or the 
     number of actions brought with respect to the injury.
       (b) No Award of Punitive Damages Against Manufacturer of 
     Medical Product.--In the case of a medical malpractice 
     liability action in which the plaintiff alleges a claim 
     against the manufacturer of a medical product, no punitive or 
     exemplary damages may be awarded against such manufacturer.
       (c) Joint and Several Liability for Noneconomic Damages.--
     The liability of each defendant for noneconomic damages shall 
     be several only and shall not be joint, and each defendant 
     shall be liable only for the amount of noneconomic damages 
     allocated to the defendant in direct proportion to the 
     defendant's percentage of responsibility (as determined by 
     the trier of fact).
       (d) Use of Punitive Damage Awards for Operation of ADR 
     Systems in States.--
       (1) In general.--The total amount of any punitive damages 
     awarded in a medical malpractice liability action shall be 
     paid to the State in which the action is brought (or, in a 
     case brought in Federal court, in the State in which the 
     health care services that caused the injury that is the 
     subject of the action were provided), and shall be used by 
     the State solely to implement and operate the State 
     alternative dispute resolution system certified by the 
     Secretary under section 8132 (except as provided in paragraph 
     (2)).
       (2) Use of remaining amounts for provider licensing and 
     disciplinary activities.--If the amount of punitive damages 
     paid to a State under paragraph (1) for a year is greater 
     than the State's costs of implementing and operating the 
     State alternative dispute resolution system during the year, 
     the balance of such punitive damages paid to the State shall 
     be used solely to carry out activities to assure the safety 
     and quality of health care services provided in the State, 
     including (but not limited to)--
       (A) licensing or certifying health care professionals and 
     health care providers in the State; and
       (B) carrying out programs to reduce malpractice-related 
     costs for providers volunteering to provide services in 
     medically underserved areas.
       (3) Maintenance of effort.--A State shall use any amounts 
     paid pursuant to paragraph (1) to supplement and not to 
     replace amounts spent by the State for implementing and 
     operating the State alternative dispute resolution system or 
     carrying out the activities described in paragraph (2).
       (e) Drugs and Devices.--
       (1)(A) Punitive damages shall not be awarded against a 
     manufacturer or product seller of a drug (as defined in 
     section 201(g)(1) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 321(g)(1)) or medical device (as defined in 
     section 201(h) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 321(h)) which caused the claimant's harm where--
       (i) such drug or device was subject to premarket approval 
     by the Food and Drug Administration with respect to the 
     safety of the formulation or performance of the aspect of 
     such drug or device which caused the claimant's harm or the 
     adequacy of the packaging or labeling of such drug or device, 
     and such drug was approved by the Food and Drug 
     Administration; or
       (ii) the drug is generally recognized as safe and effective 
     pursuant to conditions established by the Food and Drug 
     Administration and applicable regulations, including 
     packaging and labeling regulations.
       (B) Subparagraph (A) shall not apply in any case in which 
     the defendant, before or after premarket approval of a drug 
     or device--
       (i) intentionally and wrongfully withheld from or 
     misrepresented to the Food and Drug Administration 
     information concerning such drug or device required to be 
     submitted under the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 301 et seq.) or section 351 of the Public Health 
     Service Act (42 U.S.C. 262) that is material and relevant to 
     the harm suffered by the claimant, or
       (ii) made an illegal payment to an official or employee of 
     the Food and Drug Administration for the purpose of securing 
     or maintaining approval of such drug or device.
       (2) Packaging.--In a product liability action for harm 
     which is alleged to relate to the adequacy of the packaging 
     (or labeling relating to such packaging) of a drug which is 
     required to have tamper-resistant packaging under regulations 
     of the Secretary of Health and Human Services (including 
     labeling regulations related to such packaging), the 
     manufacturer of the drug shall not be held liable for 
     punitive damages unless the drug is found by the court by 
     clear and convincing evidence to be substantially out of 
     compliance with such regulations.

     SEC. 8125. PERIODIC PAYMENTS FOR FUTURE LOSSES.

       (a) In General.--In any medical malpractice liability 
     action in which the damages awarded for future economic loss 
     exceeds $100,000, a defendant may not be required to pay such 
     damages in a single, lump-sum payment, but may be permitted 
     to make such payments on a periodic basis. The periods for 
     such payments shall be determined by the court, based upon 
     projections of when such expenses are likely to be incurred.
       (b) Waiver.--A court may waive the application of 
     subsection (a) with respect to a defendant if the court 
     determines that it is not in the best interests of the 
     plaintiff to receive payments for damages on such a periodic 
     basis.

     SEC. 8126. TREATMENT OF ATTORNEY'S FEES AND OTHER COSTS.

       (a) Requiring Party Contesting ADR Ruling To Pay Attorney's 
     Fees and Other Costs.--
       (1) In general.--The court in a medical malpractice 
     liability action shall require the party that (pursuant to 
     section 8122(c)(1)) contested the ruling of the alternative 
     dispute resolution system with respect to the medical 
     malpractice liability claim that is the subject of the action 
     to pay to the opposing party the costs incurred by the 
     opposing party under the action, including attorney's fees, 
     fees paid to expert witnesses, and other litigation expenses 
     (but not including court costs, filing fees, or other 
     expenses paid directly by the party to the court, or any fees 
     or costs associated with the resolution of the claim under 
     the alternative dispute resolution system), but only if--
       (A) in the case of an action in which the party that 
     contested the ruling is the claimant, the amount of damages 
     awarded to the party under the action is less than the amount 
     of damages awarded to the party under the ADR system; and
       (B) in the case of an action in which the party that 
     contested the ruling is the defendant, the amount of damages 
     assessed against the party under the action is greater than 
     the amount of damages assessed under the ADR system.

[[Page H11269]]

       (2) Exceptions.--Paragraph (1) shall not apply if--
       (A) the party contesting the ruling made under the previous 
     alternative dispute resolution system shows that--
       (i) the ruling was procured by corruption, fraud, or undue 
     means,
       (ii) there was partiality or corruption under the system,
       (iii) there was other misconduct under the system that 
     materially prejudiced the party's rights, or
       (iv) the ruling was based on an error of law;
       (B) the party contesting the ruling made under the 
     alternative dispute resolution system presents new evidence 
     before the trier of fact that was not available for 
     presentation under the ADR system;
       (C) the medical malpractice liability action raised a novel 
     issue of law; or
       (D) the court finds that the application of such paragraph 
     to a party would constitute an undue hardship, and issues an 
     order waiving or modifying the application of such paragraph 
     that specifies the grounds for the court's decision.
       (3) Limit on attorneys' fees paid.--Attorneys' fees that 
     are required to be paid under paragraph (1) by the contesting 
     party shall not exceed the amount of the attorneys' fees 
     incurred by the contesting party in the action. If the 
     attorneys' fees of the contesting party are based on a 
     contingency fee agreement, the amount of attorneys' fees for 
     purposes of the preceding sentence shall not exceed the 
     reasonable value of those services.
       (4) Records.--In order to receive attorneys' fees under 
     paragraph (1), counsel of record in the medical malpractice 
     liability action involved shall maintain accurate, complete 
     records of hours worked on the action, regardless of the fee 
     arrangement with the client involved.
       (b) Contingency Fee Defined.--As used in this section, the 
     term ``contingency fee'' means any fee for professional legal 
     services which is, in whole or in part, contingent upon the 
     recovery of any amount of damages, whether through judgment 
     or settlement.

     SEC. 8127. UNIFORM STATUTE OF LIMITATIONS.

       (a) In General.--Except as provided in subsection (b), no 
     medical malpractice claim may be initiated after the 
     expiration of the 2-year period that begins on the date on 
     which the alleged injury that is the subject of such claim 
     was discovered, but in no event may such a claim be initiated 
     after the expiration of the 4-year period that begins on the 
     date on which the alleged injury that is the subject of such 
     claim occurred.
       (b) Exception for Minors.--In the case of an alleged injury 
     suffered by a minor who has not attained 6 years of age, a 
     medical malpractice claim may not be initiated after the 
     expiration of the 2-year period that begins on the date on 
     which the alleged injury that is the subject of such claim 
     was discovered or should reasonably have been discovered, but 
     in no event may such a claim be initiated after the date on 
     which the minor attains 12 years of age.

     SEC. 8128. SPECIAL PROVISION FOR CERTAIN OBSTETRIC SERVICES.

       (a) In General.--In the case of a medical malpractice claim 
     relating to services provided during labor or the delivery of 
     a baby, if the health care professional or health care 
     provider against whom the claim is brought did not previously 
     treat the claimant for the pregnancy, the trier of fact may 
     not find that such professional or provider committed 
     malpractice and may not assess damages against such 
     professional or provider unless the malpractice is proven by 
     clear and convincing evidence.
       (b) Applicability to Group Practices or Agreements Among 
     Providers.--For purposes of subsection (a), a health care 
     professional shall be considered to have previously treated 
     an individual for a pregnancy if the professional is a member 
     of a group practice whose members previously treated the 
     individual for the pregnancy or is providing services to the 
     individual during labor or the delivery of a baby pursuant to 
     an agreement with another professional.

     SEC. 8129. JURISDICTION OF FEDERAL COURTS.

       Nothing in this subpart shall be construed to establish any 
     jurisdiction over any medical malpractice liability action in 
     the district courts of the United States on the basis of 
     sections 1331 or 1337 of title 28, United States Code.

     SEC. 8130. PREEMPTION.

       (a) In General.--The provisions of this subpart shall 
     preempt any State law to the extent such law is inconsistent 
     with such provisions, except that the provisions of this 
     subpart shall not preempt any State law that provides for 
     defenses or places limitations on a person's liability in 
     addition to those contained in this part, places greater 
     limitations on the amount of attorneys' fees that can be 
     collected, or otherwise imposes greater restrictions than 
     those provided in this part.
       (b) Effect on Sovereign Immunity and Choice of Law or 
     Venue.--Nothing in this subpart shall be construed to--
       (1) waive or affect any defense of sovereign immunity 
     asserted by any State under any provision of law;
       (2) waive or affect any defense of sovereign immunity 
     asserted by the United States;
       (3) affect the applicability of any provision of the 
     Foreign Sovereign Immunities Act of 1976;
       (4) preempt State choice-of-law rules with respect to 
     claims brought by a foreign nation or a citizen of a foreign 
     nation; or
       (5) affect the right of any court to transfer venue or to 
     apply the law of a foreign nation or to dismiss a claim of a 
     foreign nation or of a citizen of a foreign nation on the 
     ground in inconvenient forum.

   Subpart B--Requirements for State Alternative Dispute Resolution 
                             Systems (ADR)

     SEC. 8131. BASIC REQUIREMENTS.

       (a) In General.--A State's alternative dispute resolution 
     system meets the requirements of this section if the system--
       (1) applies to all medical malpractice liability claims 
     under the jurisdiction of the courts of that State;
       (2) requires that a written opinion resolving the dispute 
     be issued not later than 6 months after the date by which 
     each party against whom the claim is filed has received 
     notice of the claim (other than in exceptional cases for 
     which a longer period is required for the issuance of such an 
     opinion), and that the opinion contain--
       (A) findings of fact relating to the dispute, and
       (B) a description of the costs incurred in resolving the 
     dispute under the system (including any fees paid to the 
     individuals hearing and resolving the claim), together with 
     an appropriate assessment of the costs against any of the 
     parties;
       (3) requires individuals who hear and resolve claims under 
     the system to meet such qualifications as the State may 
     require (in accordance with regulations of the Secretary);
       (4) is approved by the State or by local governments in the 
     State;
       (5) with respect to a State system that consists of 
     multiple dispute resolution procedures--
       (A) permits the parties to a dispute to select the 
     procedure to be used for the resolution of the dispute under 
     the system, and
       (B) if the parties do not agree on the procedure to be used 
     for the resolution of the dispute, assigns a particular 
     procedure to the parties;
       (6) provides for the transmittal to the State agency 
     responsible for monitoring or disciplining health care 
     professionals and health care providers of any findings made 
     under the system that such a professional or provider 
     committed malpractice, unless, during the 90-day period 
     beginning on the date the system resolves the claim against 
     the professional or provider, the professional or provider 
     brings an action contesting the decision made under the 
     system; and
       (7) provides for the regular transmittal to the 
     Administrator for Health Care Policy and Research of 
     information on disputes resolved under the system, in a 
     manner that assures that the identity of the parties to a 
     dispute shall not be revealed.
       (b) Application of Malpractice Liability Standards to 
     Alternative Dispute Resolution.--The provisions of subpart A 
     (other than section 8122) shall apply with respect to claims 
     brought under a State alternative dispute resolution system 
     or the alternative Federal system in the same manner as such 
     provisions apply with respect to medical malpractice 
     liability actions brought in the State.

     SEC. 8132. CERTIFICATION OF STATE SYSTEMS; APPLICABILITY OF 
                   ALTERNATIVE FEDERAL SYSTEM.

       (a) Certification.--
       (1) In general.--Not later than October 1 of each year 
     (beginning with 1995), the Secretary, in consultation with 
     the Attorney General, shall determine whether a State's 
     alternative dispute resolution system meets the requirements 
     of this subpart for the following calendar year.
       (2) Basis for certification.--The Secretary shall certify a 
     State's alternative dispute resolution system under this 
     subsection for a calendar year if the Secretary determines 
     under paragraph (1) that the system meets the requirements of 
     section 8131, including the requirement described in section 
     8124 that punitive damages awarded under the system are paid 
     to the State for the uses described in such section.
       (b) Applicability of Alternative Federal System.--
       (1) Establishment and applicability.--Not later than 
     October 1, 1995, the Secretary, in consultation with the 
     Attorney General, shall establish by rule an alternative 
     Federal ADR system for the resolution of medical malpractice 
     liability claims during a calendar year in States that do not 
     have in effect an alternative dispute resolution system 
     certified under subsection (a) for the year.
       (2) Requirements for system.--Under the alternative Federal 
     ADR system established under paragraph (1)--
       (A) paragraphs (1), (2), (6), and (7) of section 8131(a) 
     shall apply to claims brought under the system;
       (B) if the system provides for the resolution of claims 
     through arbitration, the claims brought under the system 
     shall be heard and resolved by arbitrators appointed by the 
     Secretary in consultation with the Attorney General; and
       (C) with respect to a State in which the system is in 
     effect, the Secretary may (at the State's request) modify the 
     system to take into account the existence of dispute 
     resolution procedures in the State that affect the resolution 
     of medical malpractice liability claims.
       (3) Treatment of States with alternative system in 
     effect.--If the alternative Federal ADR system established 
     under this subsection is applied with respect to a State for 
     a calendar year, the State shall make a payment to the United 
     States (at such time 

[[Page H11270]]

     and in such manner as the Secretary may require) in an amount 
     equal to 110 percent of the costs incurred by the United 
     States during the year as a result of the application of the 
     system with respect to the State.

     SEC. 8133. REPORTS ON IMPLEMENTATION AND EFFECTIVENESS OF 
                   ALTERNATIVE DISPUTE RESOLUTION SYSTEMS.

       (a) In General.--Not later than 5 years after the date of 
     the enactment of this Act, the Secretary shall prepare and 
     submit to the Congress a report describing and evaluating 
     State alternative dispute resolution systems operated 
     pursuant to this subpart and the alternative Federal system 
     established under section 8132(b).
       (b) Contents of Report.--The Secretary shall include in the 
     report prepared and submitted under subsection (a)--
       (1) information on--
       (A) the effect of the alternative dispute resolution 
     systems on the cost of health care within each State,
       (B) the impact of such systems on the access of individuals 
     to health care within the State, and
       (C) the effect of such systems on the quality of health 
     care provided within the State; and
       (2) to the extent that such report does not provide 
     information on no-fault systems operated by States as 
     alternative dispute resolution systems pursuant to this part, 
     an analysis of the feasibility and desirability of 
     establishing a system under which medical malpractice 
     liability claims shall be resolved on a no-fault basis.

                         Subpart C--Definitions

     SEC. 8141. DEFINITIONS.

       As used in this part:
       (1) Alternative dispute resolution system.--The term 
     ``alternative dispute resolution system'' means a system that 
     is enacted or adopted by a State to resolve medical 
     malpractice claims other than through a medical malpractice 
     liability action.
       (2) Claimant.--The term ``claimant'' means any person who 
     brings a health care liability action and, in the case of an 
     individual who is deceased, incompetent, or a minor, the 
     person on whose behalf such an action is brought.
       (3) Clear and convincing evidence.--The term ``clear and 
     convincing evidence'' is that measure or degree of proof that 
     will produce in the mind of the trier of fact a firm belief 
     or conviction as to the truth of the allegations sought to be 
     established, except that such measure or degree of proof is 
     more than that required under preponderance of the evidence, 
     but less than that required for proof beyond a reasonable 
     doubt.
       (4) Economic damages.--The term ``economic damages'' means 
     damages paid to compensate an individual for losses for 
     hospital and other medical expenses, lost wages, lost 
     employment, and other pecuniary losses.
       (5) Health care professional.--The term ``health care 
     professional'' means any individual who provides health care 
     services in a State and who is required by State law or 
     regulation to be licensed or certified by the State to 
     provide such services in the State.
       (6) Health care provider.--The term ``health care 
     provider'' means any organization or institution that is 
     engaged in the delivery of health care services in a State 
     that is required by State law or regulation to be licensed or 
     certified by the State to engage in the delivery of such 
     services in the State.
       (7) Injury.--The term ``injury'' means any illness, 
     disease, or other harm that is the subject of a medical 
     malpractice claim.
       (8) Medical malpractice liability action.--The term 
     ``medical malpractice liability action'' means any civil 
     action brought pursuant to State law in which a plaintiff 
     alleges a medical malpractice claim against a health care 
     provider or health care professional, but does not include 
     any action in which the plaintiff's sole allegation is an 
     allegation of an intentional tort.
       (9) Medical malpractice claim.--The term ``medical 
     malpractice claim'' means any claim relating to the provision 
     of (or the failure to provide) health care services or the 
     use of a medical product, without regard to the theory of 
     liability asserted, and includes any third-party claim, 
     cross-claim, counterclaim, or contribution claim in a medical 
     malpractice liability action.
       (10) Medical product.--
       (A) In general.--The term ``medical product'' means, with 
     respect to the allegation of a claimant, a drug (as defined 
     in section 201(g)(1) of the Federal Food, Drug, and Cosmetic 
     Act (21 U.S.C. 321(g)(1)) or a medical device (as defined in 
     section 201(h) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 321(h)) if--
       (i) such drug or device was subject to premarket approval 
     under section 505, 507, or 515 of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 355, 357, or 360e) or section 351 of 
     the Public Health Service Act (42 U.S.C. 262) with respect to 
     the safety of the formulation or performance of the aspect of 
     such drug or device which is the subject of the claimant's 
     allegation or the adequacy of the packaging or labeling of 
     such drug or device, and such drug or device is approved by 
     the Food and Drug Administration; or
       (ii) the drug or device is generally recognized as safe and 
     effective under regulations issued by the Secretary of Health 
     and Human Services under section 201(p) of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 321(p)).
       (B) Exception in case of misrepresentation or fraud.--
     Notwithstanding subparagraph (A), the term ``medical 
     product'' shall not include any product described in such 
     subparagraph if the claimant shows that the product is 
     approved by the Food and Drug Administration for marketing as 
     a result of withheld information, misrepresentation, or an 
     illegal payment by manufacturer of the product.
       (11) Noneconomic damages.--The term ``noneconomic damages'' 
     means damages paid to compensate an individual for losses for 
     physical and emotional pain, suffering, inconvenience, 
     physical impairment, mental anguish, disfigurement, loss of 
     enjoyment of life, loss of consortium, and other nonpecuniary 
     losses, but does not include punitive damages.
       (12) Punitive damages.--The term ``punitive damages'' means 
     compensation, in addition to compensation for actual harm 
     suffered, that is awarded for the purpose of punishing a 
     person for conduct deemed to be malicious, wanton, willful, 
     or excessively reckless.

     PART 4--PAYMENT AREAS FOR PHYSICIANS' SERVICES UNDER MEDICARE

     SEC. 8151. MODIFICATION OF PAYMENT AREAS USED TO DETERMINE 
                   PAYMENTS FOR PHYSICIANS' SERVICES UNDER 
                   MEDICARE.

       (a) In General.--Section 1848(j)(2) (42 U.S.C. 
     1395w@4(j)(2)) is amended to read as follows:
       ``(2) Fee schedule area.--
       ``(A) General rule.--Except as provided in subparagraph 
     (B), the term `fee schedule area' means, with respect to 
     physicians' services furnished in a State, the State.
       ``(B) Exception for states with highest variation among 
     areas.--In the case of the 15 States with the greatest 
     variation in cost associated with physicians' services among 
     various geographic areas of the State (as determined by the 
     Secretary in accordance with such standards as the Secretary 
     considers appropriate), the fee schedule area applicable with 
     respect to physicians' services furnished in the State shall 
     be a locality used under section 1842(b) for purposes of 
     computing payment amounts for physicians' services, except 
     that the Secretary shall revise the localities used under 
     such section so that there are no more than 5 such localities 
     in any State.''.
       (b) Budget-Neutrality Requirement.--The Secretary of Health 
     and Human Services shall carry out the amendment made by 
     subsection (a) in a manner which ensures that the aggregate 
     amount of payment made for physicians' services under part B 
     of the medicare program in any year does not exceed the 
     aggregate amount of payment which would have been made for 
     such services under part B during the year if the amendment 
     were not in effect.
       (c) Effective Date.--The amendment made by subsection (a) 
     shall apply to physicians' services furnished on or after 
     January 1, 1997.
         Subtitle C--Medicare Payments to Health Care Providers

               PART 1--PROVISIONS AFFECTING ALL PROVIDERS

     SEC. 8201. ONE-YEAR FREEZE IN PAYMENTS TO PROVIDERS.

       (a) Freeze in Updates.--
       (1) In general.--Notwithstanding any other provision of 
     law, except as otherwise provided in paragraph (2), for 
     purposes of determining the amount to paid for an item or 
     service under title XVIII of the Social Security Act, the 
     percentage increase in any economic index by which a payment 
     amount under title XVIII of the Social Security Act is 
     required to be increased during fiscal year 1996 shall be 
     deemed to be zero.
       (2) Exceptions.--Paragraph (1) shall not apply to the 
     determination of hospital-specific FTE resident amounts under 
     section 1886(h) of such Act.
       (b) Economic Index.-- The term ``economic index'' 
     includes--
       (1) the hospital market basket index (described in section 
     1886(b)(3)(B)(iii) of the Social Security Act),
       (2) the medicare economic index (referred to in the fourth 
     sentence of section 1842(b)(3) of such Act),
       (3) the consumer price index for all urban consumers (U.S. 
     city average), and
       (4) any other index used to adjust payment amounts under 
     title XVIII of such Act.
       (c) Extension of Payment Freeze for SNFs and HHAs.--
       (1) Skilled nursing facilities.--
       (A) No change in cost limits.--Section 13503(a)(1) of OBRA-
     1993 is amended by striking ``1994 and 1995'' and inserting 
     ``1994, 1995, and 1996''.
       (B) Delay in updates; no catch up.--The last sentence of 
     section 1888(a) (42 U.S.C. 1395yy(a)) is amended--
       (i) by striking ``1995'' and inserting ``1996'', and
       (ii) by striking ``subsection.'' and inserting ``subsection 
     (except that such updates may not take into account any 
     changes in the routine service costs of skilled nursing 
     facilities during cost reporting periods which began during 
     fiscal year 1994, 1995, or 1996).''.
       (C) Prospective payments.--Section 13505(b) of OBRA-1993 is 
     amended by striking ``fiscal years 1994 and 1995'' and 
     inserting ``fiscal years 1994, 1995, and 1996''.
       (2) Home health agencies.--
       (A) No change in cost limits.--Section 13564(a)(1) of OBRA-
     1993 is amended by striking ``1996'' and inserting ``1997''.
       (B) Delay in updates; no catch up.--Section 
     1861(v)(1)(L)(iii) (42 U.S.C. 1395x(v)(1)(L)(iii)) is 
     amended--

[[Page H11271]]

       (i) by striking ``1996'' and inserting ``1997'', and
       (ii) by adding at the end the following: ``In establishing 
     limits under this subparagraph, the Secretary may not take 
     into account any changes in the routine service costs of the 
     provision of services furnished by home health agencies with 
     respect to cost reporting periods which began on or after 
     July 1, 1994, and before July 1, 1997.''.

                  PART 2--PROVISIONS AFFECTING DOCTORS

     SEC. 8211. PAYMENTS FOR PHYSICIANS' SERVICES.

       (a) Establishing Update to Conversion Factor to Match 
     Spending Under Sustainable Growth Rate.--
       (1) In general.--Section 1848(d)(2) (42 U.S.C. 
     1395ww(d)(2)) is amended to read as follows:
       ``(2) Recommendation of update.--
       ``(A) In general.--Not later than April 15 of each year 
     (beginning with 1996), the Secretary shall transmit to the 
     Congress a report that includes a recommendation on the 
     appropriate update in the conversion factor for all 
     physicians' services (as defined in subsection (f)(3)(A)) in 
     the following year. In making the recommendation, the 
     Secretary shall consider--
       ``(i) the percentage change in the medicare economic index 
     (described in the fourth sentence of section 1842(b)(3)) for 
     that year;
       ``(ii) such factors as enter into the calculation of the 
     update adjustment factor as described in paragraph (3)(B); 
     and
       ``(iii) access to services.
       ``(B) Additional considerations.--In making recommendations 
     under subparagraph (A), the Secretary may also consider--
       ``(i) unexpected changes by physicians in response to the 
     implementation of the fee schedule;
       ``(ii) unexpected changes in outlay projections;
       ``(iii) changes in the quality or appropriateness of care;
       ``(iv) any other relevant factors not measured in the 
     resource-based payment methodology; and
       ``(v) changes in volume or intensity of services.
       ``(C) Commission review.--The Medicare Payment Review 
     Commission shall review the report submitted under 
     subparagraph (A) in a year and shall submit to the Congress, 
     by not later than May 15 of the year, a report including its 
     recommendations respecting the update in the conversion 
     factor for the following year.''.
       (2) Update.--Section 1848(d)(3) (42 U.S.C. 1395w@4(d)(3)) 
     is amended to read as follows:
       ``(3) Update.--
       ``(A) In general.--Unless Congress otherwise provides, 
     subject to subparagraph (E), for purposes of this section the 
     update for a year (beginning with 1997) is equal to the 
     product of--
       ``(i) 1 plus the Secretary's estimate of the percentage 
     increase in the medicare economic index (described in the 
     fourth sentence of section 1842(b)(3)) for the year (divided 
     by 100), and
       ``(ii) 1 plus the Secretary's estimate of the update 
     adjustment factor for the year (divided by 100),

     minus 1 and multiplied by 100.
       ``(B) Update adjustment factor.--The `update adjustment 
     factor' for a year is equal to the quotient of--
       ``(i) the difference between (I) the sum of the allowed 
     expenditures for physicians' services furnished during each 
     of the years 1995 through the year involved and (II) the sum 
     of the amount of actual expenditures for physicians' services 
     furnished during each of the years 1995 through the previous 
     year; divided by
       ``(ii) the Secretary's estimate of allowed expenditures for 
     physicians' services furnished during the year.
       ``(C) Determination of allowed expenditures.--For purposes 
     of subparagraph (B), allowed expenditures for physicians' 
     services shall be determined as follows (as estimated by the 
     Secretary):
       ``(i) In the case of allowed expenditures for 1995, such 
     expenditures shall be equal to actual expenditures for 
     services furnished during the 12-month period ending with 
     June 30, 1995.
       ``(ii) In the case of allowed expenditures for 1996 and 
     each subsequent year, such expenditures shall be equal to 
     allowed expenditures for the previous year, increased by the 
     sustainable growth rate under subsection (f) for the fiscal 
     year which begins during the year.
       ``(D) Determination of actual expenditures.--For purposes 
     of subparagraph (B), the amount of actual expenditures for 
     physicians' services furnished during a year shall be equal 
     to the amount of expenditures for such services during the 
     12-month period ending with June of the previous year.
       ``(E) Restriction on variation from medicare economic 
     index.--Notwithstanding the amount of the update adjustment 
     factor determined under subparagraph (B) for a year, the 
     update in the conversion factor under this paragraph for the 
     year may not be--
       ``(i) greater than 103 percent of 1 plus the Secretary's 
     estimate of the percentage increase in the medicare economic 
     index (described in the fourth sentence of section 
     1842(b)(3)) for the year (divided by 100), minus 1 and 
     multiplied by 100; or
       ``(ii) less than 91.75 percent of 1 plus the Secretary's 
     estimate of the percentage increase in the medicare economic 
     index (described in the fourth sentence of section 
     1842(b)(3)) for the year (divided by 100), minus 1 and 
     multiplied by 100.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to physicians' services furnished on or after 
     January 1, 1997.
       (b) Replacement of Volume Performance Standard With 
     Sustainable Growth Rate.--Section 1848(f) (42 U.S.C. 
     1395w@4(f)) is amended to read as follows:
       ``(f) Sustainable Growth Rate.--
       ``(1) Process for establishing sustainable growth rate of 
     increase.--
       ``(A) Secretary's recommendation.--By not later than April 
     15 of each year (beginning with 1996), the Secretary shall 
     transmit to the Congress a recommendation on the sustainable 
     growth rate for the fiscal year beginning in such year. In 
     making the recommendation, the Secretary shall confer with 
     organizations representing physicians and shall consider--
       ``(i) inflation,
       ``(ii) changes in numbers of enrollees (other than private 
     plan enrollees) under this part,
       ``(iii) changes in the age composition of enrollees (other 
     than private plan enrollees) under this part,
       ``(iv) changes in technology,
       ``(v) evidence of inappropriate utilization of services,
       ``(vi) evidence of lack of access to necessary physicians' 
     services, and
       ``(vii) such other factors as the Secretary considers 
     appropriate.
       ``(B) Commission review.--The Medicare Payment Review 
     Commission shall review the recommendation transmitted during 
     a year under subparagraph (A) and shall make its 
     recommendation to Congress, by not later than May 15 of the 
     year, respecting the sustainable growth rate for the fiscal 
     year beginning in that year.
       ``(C) Publication of sustainable growth rate.--The 
     Secretary shall cause to have the sustainable growth rate 
     published in the Federal Register, in the last 15 days of 
     October of each calendar year (beginning with 1997), for the 
     fiscal year beginning in that year. The Secretary shall cause 
     to have published in the Federal Register, by not later than 
     January 1, 1997, the paragraph (2) for fiscal year 1997.
       ``(2) Specification of growth rate.--
       ``(A) Fiscal year 1996.--The sustainable growth rate for 
     all physicians' services for fiscal year 1996 shall be equal 
     to the product of--
       ``(i) 1 plus the Secretary's estimate of the percentage 
     change in the medicare economic index for 1996 (described in 
     the fourth sentence of section 1842(b)(3)) (divided by 100),
       ``(ii) 1 plus the Secretary's estimate of the percentage 
     change (divided by 100) in the average number of individuals 
     enrolled under this part (other than private plan enrollees) 
     from fiscal year 1995 to fiscal year 1996,
       ``(iii) 1 plus the Secretary's estimate of the projected 
     percentage growth in real gross domestic product per capita 
     (divided by 100) from fiscal year 1995 to fiscal year 1996, 
     and
       ``(iv) 1 plus the Secretary's estimate of the percentage 
     change (divided by 100) in expenditures for all physicians' 
     services in fiscal year 1996 (compared with fiscal year 1995) 
     which will result from changes in law (including the Common 
     Sense Balanced Budget Act of 1995), determined without taking 
     into account estimated changes in expenditures due to changes 
     in the volume and intensity of physicians' services or 
     changes in expenditures resulting from changes in the update 
     to the conversion factor under subsection (d),

     minus 1 and multiplied by 100.
       ``(B) Subsequent fiscal years.--The sustainable growth rate 
     for all physicians' services for fiscal year 1997 and each 
     subsequent fiscal year shall be equal to the product of--
       ``(i) 1 plus the Secretary's estimate of the percentage 
     change in the medicare economic index for the fiscal year 
     involved (described in the fourth sentence of section 
     1842(b)(3)) (divided by 100),
       ``(ii) 1 plus the Secretary's estimate of the percentage 
     change (divided by 100) in the average number of individuals 
     enrolled under this part (other than private plan enrollees) 
     from the previous fiscal year to the fiscal year involved,
       ``(iii) 1 plus the Secretary's estimate of the projected 
     percentage growth in real gross domestic product per capita 
     (divided by 100) from the previous fiscal year to the fiscal 
     year involved, and
       ``(iv) 1 plus the Secretary's estimate of the percentage 
     change (divided by 100) in expenditures for all physicians' 
     services in the fiscal year (compared with the previous 
     fiscal year) which will result from changes in law, 
     determined without taking into account estimated changes in 
     expenditures due to changes in the volume and intensity of 
     physicians' services or changes in expenditures resulting 
     from changes in the update to the conversion factor under 
     subsection (d)(3),

     minus 1 and multiplied by 100.
       ``(3) Definitions.--In this subsection:
       ``(A) Services included in physicians' services.--The term 
     `physicians' services' includes other items and services 
     (such as clinical diagnostic laboratory tests and radiology 
     services), specified by the Secretary, that are commonly 
     performed or furnished by a physician or in a physician's 
     office, but does not include services furnished to a private 
     plan enrollee.
       ``(B) Private plan enrollee.--The term `private plan 
     enrollee' means, with respect to a fiscal year, an individual 
     enrolled under 

[[Page H11272]]

     this part who has elected to receive benefits under this 
     title for the fiscal year through a Medicare Choice product 
     under part C or through enrollment with an eligible 
     organization with a risk-sharing contract under section 
     1876.''.
       (c) Establishment of Single Conversion Factor for 1996.--
       (1) In general.--Section 1848(d)(1) (42 U.S.C. 
     1395w@4(d)(1)) is amended--
       (A) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (B) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) Special rule for 1996.--For 1996, the conversion 
     factor under this subsection shall be $36.40 for all 
     physicians' services.''.
       (2) Conforming amendments.--Section 1848 (42 U.S.C. 
     1395w@4), as amended by paragraph (1), is amended--
       (A) by striking ``(or factors)'' each place it appears in 
     subsection (d)(1)(A) and (d)(1)(D)(ii);
       (B) in subsection (d)(1)(A), by striking ``or updates'';
       (C) in subsection (d)(1)(D)(ii), by striking ``(or 
     updates)''; and
       (D) in subsection (i)(1)(C), by striking ``conversion 
     factors'' and inserting ``the conversion factor''.

                 PART 3--PROVISIONS AFFECTING HOSPITALS

     SEC. 8221. REDUCTION IN UPDATE FOR INPATIENT HOSPITAL 
                   SERVICES.

       (a) PPS Hospitals.--Section 1886(b)(3)(B)(i) (42 U.S.C. 
     1395ww(b)(3)(B)(i)) is amended--
       (1) by amending subclause (XII) to read as follows:
       ``(XII) for each of the fiscal years 1997 through 2002, the 
     market basket percentage increase minus 0.5 percentage point 
     for hospitals in a rural area, and the market basket 
     percentage increase minus 1.5 percentage points for all other 
     hospitals, and''; and
       (2) in subclause (XIII), by striking ``1998'' and inserting 
     ``2003''.
       (b) PPS-Exempt Hospitals.--
       (1) In general.--Section 1886(b)(3)(B)(ii) (42 U.S.C. 
     1395ww(b)(3)(B)(ii)) is amended--
       (A) in subclause (V)--
       (i) by striking ``thorugh 1997'' and inserting ``through 
     1996'', and
       (ii) by striking ``and'' at the end;
       (B) by redesignating subclause (VI) as subclause (VII); and
       (C) by inserting after subclause (V) the following new 
     subclause:
       ``(VI) fiscal years 1997 through 2002, is the market basket 
     percentage increase minus 1.0 percentage point, and''.
       (2) Conforming amendment.--Section 1886(b)(3)(B) (42 U.S.C. 
     1395ww(b)(3)(B)) is amended by striking clause (v).

     SEC. 8222. ELIMINATION OF FORMULA-DRIVEN OVERPAYMENTS FOR 
                   CERTAIN OUTPATIENT HOSPITAL SERVICES.

       (a) Ambulatory Surgical Center Procedures.--Section 
     1833(i)(3)(B)(i)(II) (42 U.S.C. 1395l(i)(3)(B)(i)(II)) is 
     amended--
       (1) by striking ``of 80 percent''; and
       (2) by striking the period at the end and inserting the 
     following: ``, less the amount a provider may charge as 
     described in clause (ii) of section 1866(a)(2)(A).''.
       (b) Radiology Services and Diagnostic Procedures.--Section 
     1833(n)(1)(B)(i)(II) (42 U.S.C. 1395l(n)(1)(B)(i)(II)) is 
     amended--
       (1) by striking ``of 80 percent''; and
       (2) by striking the period at the end and inserting the 
     following: ``, less the amount a provider may charge as 
     described in clause (ii) of section 1866(a)(2)(A).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to services furnished during portions of cost 
     reporting periods occurring on or after January 1, 1996.

     SEC. 8223. ESTABLISHMENT OF PROSPECTIVE PAYMENT SYSTEM FOR 
                   OUTPATIENT SERVICES.

       (a) In General.--Section 1833(a)(2)(B) (42 U.S.C. 
     1395l(a)(2)(B)) is amended by striking ``section 1886)--'' 
     and all that follows and inserting the following: ``section 
     1886), an amount equal to a prospectively determined payment 
     rate established by the Secretary that provides for payments 
     for such items and services to be based upon a national rate 
     adjusted to take into account the relative costs of 
     furnishing such items and services in various geographic 
     areas, except that for items and services furnished during 
     cost reporting periods (or portions thereof) in years 
     beginning with 1996, such amount shall be equal to 95 percent 
     of the amount that would otherwise have been determined;''.
       (b) Establishment of Prospective Payment System.--Not later 
     than July 1, 1995, the Secretary of Health and Human Services 
     shall establish the prospective payment system for hospital 
     outpatient services necessary to carry out section 
     1833(a)(2)(B) of the Social Security Act (as amended by 
     subsection (a)).
       (c) Effective Date.--The amendment made by subsection (a) 
     shall apply to items and services furnished on or after 
     January 1, 1997.

     SEC. 8224. REDUCTION IN MEDICARE PAYMENTS TO HOSPITALS FOR 
                   INPATIENT CAPITAL-RELATED COSTS.

       (a) PPS Hospitals.--Section 1886(g)(1)(A) (42 U.S.C. 
     1395ww(g)(1)(A)) is amended by striking ``1995'' and 
     inserting ``2002''.
       (b) PPS-Exempt Hospitals.--Section 1861(v)(1) (42 U.S.C. 
     1395x(v)(1)) is amended by adding at the end the following:
       ``(T) Such regulations shall provide that, in determining 
     the amount of the payments that may be made under this title 
     with respect to the capital-related costs of inpatient 
     hospital services furnished by a hospital that is not a 
     subsection (d) hospital (as defined in section 1886(d)(1)(B)) 
     or a subsection (d) Puerto Rico hospital (as defined in 
     section 1886(d)(9)(A)), the Secretary shall reduce the 
     amounts of such payments otherwise established under this 
     title by 10 percent for payments attributable to portions of 
     cost reporting periods occurring during each of the fiscal 
     year 1996 through 2002.''.

     SEC. 8225. MORATORIUM ON PPS EXEMPTION FOR LONG-TERM CARE 
                   HOSPITALS.

       (a) In General.--Section 1886(d)(1)(B)(iv) (42 U.S.C. 
     1395ww(d)(1)(B)(iv)) is amended by striking ``Secretary)'' 
     and inserting ``Secretary on or before September 30, 1995)''.
       (b) Recommendations on Appropriate Standards for Long-Term 
     Care Hospitals.--Not later than 1 year after the date of the 
     enactment of this Act, the Secretary of Health and Human 
     Services shall submit to Congress recommendations for 
     modifications to the standards used by the Secretary to 
     determine whether a hospital (including a distinct part of 
     another hospital) is classified as a long-term care hospital 
     for purposes of determining the amount of payment to the 
     hospital under part A of the medicare program for the 
     operating costs of inpatient hospital services.

              PART 4--PROVISIONS AFFECTING OTHER PROVIDERS

     SEC. 8231. REVISION OF PAYMENT METHODOLOGY FOR HOME HEALTH 
                   SERVICES.

       (a) Additions to Cost Limits.--Section 1861(v)(1)(L) (42 
     U.S.C. 1395x(v)(1)(L)) is amended by adding at the end the 
     following new clauses:
       ``(iv) For services furnished by home health agencies for 
     cost reporting periods beginning on or after October 1, 1996, 
     the Secretary shall provide for an interim system of limits. 
     Payment shall be the lower of--

       ``(I) costs determined under the preceding provisions of 
     this subparagraph, or
       ``(II) an agency-specific per beneficiary annual limit 
     calculated from the agency's 12-month cost reporting period 
     ending on or after January 1, 1994 and on or before December 
     31, 1994 based on reasonable costs (including non-routine 
     medical supplies), updated by the home health market basket 
     index. The per beneficiary limitation shall be multiplied by 
     the agency's unduplicated census count of Medicare patients 
     for the year subject to the limitation. The limitation shall 
     represent total Medicare reasonable costs divided by the 
     unduplicated census count of Medicare patients.

       ``(v) For services furnished by home health agencies for 
     cost reporting periods beginning on or after October 1, 1996, 
     the following rules shall apply:

       ``(I) For new providers and those providers without a 12-
     month cost reporting period ending in calendar year 1994, the 
     per beneficiary limit shall be equal to the mean of these 
     limits (or the Secretary's best estimates thereof) applied to 
     home health agencies as determined by the Secretary. Home 
     health agencies that have altered their corporate structure 
     or name may not be considered new providers for payment 
     purposes.
       ``(II) For beneficiaries who use services furnished by more 
     than one home health agency, the per beneficiary limitation 
     shall be pro-rated among agencies.

       ``(vi) Home health agencies whose cost or utilization 
     experience is below 125 percent of the mean national or 
     census region aggregate per beneficiary cost or utilization 
     experience for 1994, or best estimates thereof, and whose 
     year-end reasonable costs are below the agency-specific per 
     beneficiary limit, shall receive payment equal to 50 percent 
     of the difference between the agency's reasonable costs and 
     its limit for fiscal years 1996, 1997, 1998, and 1999. Such 
     payments may not exceed 5 percent of an agency's aggregate 
     Medicare reasonable cost in a year.
       ``(vii) Effective January 1, 1997, or as soon as feasible, 
     the Secretary shall modify the agency specific per 
     beneficiary annual limit described in clause (iv) to provide 
     for regional or national variations in utilization. For 
     purposes of determining payment under clause (iv), the limit 
     shall be calculated through a blend of 75 percent of the 
     agency-specific cost or utilization experience in 1994 with 
     25 percent of the national or census region cost or 
     utilization experience in 1994, or the Secretary's best 
     estimates thereof.''.
       (b) Use of Interim Final Regulations.--The Secretary shall 
     implement the payment limits described in section 
     1861(v)(1)(L)(iv) of the Social Security Act by publishing in 
     the Federal Register a notice of interim final payment limits 
     by August 1, 1996 and allowing for a period of public 
     comments thereon. Payments subject to these limits will be 
     effective for cost reporting periods beginning on or after 
     October 1, 1996, without the necessity for consideration of 
     comments received, but the Secretary shall, by Federal 
     Register notice, affirm or modify the limits after 
     considering those comments.
       (c) Studies.--The Secretary shall expand research on a 
     prospective payment system for home health agencies that 
     shall tie prospective payments to an episode of care, 
     including an intensive effort to develop a reliable case mix 
     adjuster that explains a significant amount of the variances 
     in costs. The Secretary shall develop such a system for 
     implementation in fiscal year 2000.
       (d) Payments Determined on Prospective Basis.--Title XVIII 
     is amended by adding at the end the following new section:

[[Page H11273]]



             ``Prospective Payment for Home Health Services

       ``Sec. 1893. (a) Notwithstanding section 1861(v), the 
     Secretary shall, for cost reporting periods beginning on or 
     after fiscal year 2000, provide for payments for home health 
     services in accordance with a prospective payment system, 
     which pays home health agencies on a per episode basis, 
     established by the Secretary.
       ``(b) Such a system shall include the following:
       ``(1) Per episode rates under the system shall be 15 
     percent less than those that would otherwise occur under 
     fiscal year 2000 Medicare expenditures for home health 
     services.
       ``(2) All services covered and paid on a reasonable cost 
     basis under the Medicare home health benefit as of the date 
     of the enactment of the Medicare Enhancement Act of 1995, 
     including medical supplies, shall be subject to the per 
     episode amount. In defining an episode of care, the Secretary 
     shall consider an appropriate length of time for an episode 
     the use of services and the number of visits provided within 
     an episode, potential changes in the mix of services provided 
     within an episode and their cost, and a general system design 
     that will provide for continued access to quality services. 
     The per episode amount shall be based on the most current 
     audited cost report data available to the Secretary.
       ``(c) The Secretary shall employ an appropriate case mix 
     adjuster that explains a significant amount of the variation 
     in cost.
       ``(d) The episode payment amount shall be adjusted annually 
     by the home health market basket index. The labor portion of 
     the episode amount shall be adjusted for geographic 
     differences in labor-related costs based on the most current 
     hospital wage index.
       ``(e) The Secretary may designate a payment provision for 
     outliers, recognizing the need to adjust payments due to 
     unusual variations in the type or amount of medically 
     necessary care.
       ``(f) A home health agency shall be responsible for 
     coordinating all care for a beneficiary. If a beneficiary 
     elects to transfer to, or receive services from, another home 
     health agency within an episode period, the episode payment 
     shall be pro-rated between home health agencies.''.

     SEC. 8232. LIMITATION OF HOME HEALTH COVERAGE UNDER PART A.

       (a) In General.--Section 1812(a)(3) (42 U.S.C. 1395d(a)(3)) 
     is amended by striking the semicolon and inserting ``for up 
     to 150 days during any spell of illness;''.
       (b) Conforming Amendment.--Section 1812(b) (42 U.S.C. 
     1395d(b)) is amended--
       (1) by striking ``or'' at the end of paragraph (2),
       (2) by striking the period at the end of paragraph (3) and 
     inserting ``; or'', and
       (3) by adding at the end the following new paragraph:
       ``(4) home health services furnished to the individual 
     during such spell after such services have been furnished to 
     the individual for 150 days during such spell.''.
       (c) Exclusion of Additional Part B Costs From Determination 
     of Part B Monthly Premium.--Section 1839(a) (42 U.S.C. 
     1395r(a)) is amended--
       (1) in the second sentence of paragraph (1), by striking 
     ``enrollees.'' and inserting ``enrollees (except as provided 
     in paragraph (5)).''; and
       (2) by adding at the end the following new paragraph:
       ``(5) In estimating the benefits and administrative costs 
     which will be payable from the Federal Supplementary Medical 
     Insurance Trust Fund for a year (beginning with 1996), the 
     Secretary shall exclude an estimate of any benefits and costs 
     attributable to home health services for which payment would 
     have been made under part A during the year but for paragraph 
     (4) of section 1812(b).''.
       (d) Effective Date.--The amendments made by this subsection 
     shall apply to spells of illness beginning on or after 
     October 1, 1995.

     SEC. 8233. REDUCTION IN FEE SCHEDULE FOR DURABLE MEDICAL 
                   EQUIPMENT.

       (a) In General.--
       (1) Freeze in update for covered items.--Section 
     1834(a)(14) (42 U.S.C. 1395m(a)(14)) is amended--
       (A) by striking ``and'' at the end of subparagraph (A);
       (B) in subparagraph (B)--
       (i) by striking ``a subsequent year'' and inserting ``1993, 
     1994, and 1995'', and
       (ii) by striking the period at the end and inserting ``; 
     and''; and
       (C) by adding at the end the following:
       ``(C) for each of the years 1996 through 2002, 0 percent; 
     and
       ``(D) for a subsequent year, the percentage increase in the 
     consumer price index for all urban consumers (U.S. urban 
     average) for the 12-month period ending with June of the 
     previous year.''.
       (2) Update for orthotics and prosthetics.--Section 
     1834(h)(4)(A)(iii) (42 U.S.C. 1395m(h)(4)(A)(iii)) is amended 
     by striking ``1994 and 1995'' and inserting ``each of the 
     years 1994 through 2002''.
       (b) Oxygen and Oxygen Equipment.--Section 1834(a)(9)(C) (42 
     U.S.C. 1395m(a)(9)(C)) is amended--
       (1) by striking ``and'' at the end of clause (iii);
       (2) in clause (iv)--
       (A) by striking ``a subsequent year'' and inserting ``1993, 
     1994, and 1995'', and
       (B) by striking the period at the end and inserting ``; 
     and''; and
       (3) by adding at the end the following new clause:
       ``(v) in 1996 and each subsequent year, is 90 percent of 
     the national limited monthly payment rate computed under 
     subparagraph (B) for the item for the year.''.

     SEC. 8234. NURSING HOME BILLING.

       (a) Payments for Routine Service Costs.--
       (1) Clarification of definition of routine service costs.--
     Section 1888 (42 U.S.C. 1395yy) is amended by adding at the 
     end the following new subsection:
       ``(e) For purposes of this section, the `routine service 
     costs' of a skilled nursing facility are all costs which are 
     attributable to nursing services, room and board, 
     administrative costs, other overhead costs, and all other 
     ancillary services (including supplies and equipment), 
     excluding costs attributable to covered non-routine services 
     subject to payment limits under section 1888A.''.
       (2) Conforming amendment.--Section 1888 (42 U.S.C. 1395yy) 
     is amended in the heading by inserting ``and certain 
     ancillary'' after ``service''.
       (b) Incentives for Cost Effective Management of Covered 
     Nonroutine Services.--
       (1) In general.--Title XVIII is amended by inserting after 
     section 1888 the following new section:


   ``incentives for cost-effective management of covered non-routine 
                 services of skilled nursing facilities

       ``Sec. 1888A. (a) Definitions.--For purposes of this 
     section:
       ``(1) Covered non-routine services.--The term `covered non-
     routine services' means post-hospital extended care services 
     consisting of any of the following:
       ``(A) Physical or occupational therapy or speech-language 
     pathology services, or respiratory therapy.
       ``(B) Prescription drugs.
       ``(C) Complex medical equipment.
       ``(D) Intravenous therapy and solutions (including enteral 
     and parenteral nutrients, supplies, and equipment).
       ``(E) Radiation therapy.
       ``(F) Diagnostic services, including laboratory, radiology 
     (including computerized tomography services and imaging 
     services), and pulmonary services.
       ``(2) SNF market basket percentage increase.--The term `SNF 
     market basket percentage increase' for a fiscal year means a 
     percentage equal to the percentage increase in routine 
     service cost limits for the year under section 1888(a).
       ``(3) Stay.--The term `stay' means, with respect to an 
     individual who is a resident of a skilled nursing facility, a 
     period of continuous days during which the facility provides 
     extended care services for which payment may be made under 
     this title to the individual during the individual's spell of 
     illness.
       ``(b) New Payment Method for Covered Non-Routine 
     Services.--
       ``(1) In general.--Subject to subsection (c), a skilled 
     nursing facility shall receive interim payments under this 
     title for covered non-routine services furnished to an 
     individual during a cost reporting period beginning during a 
     fiscal year (after fiscal year 1996) in an amount equal to 
     the reasonable cost of providing such services in accordance 
     with section 1861(v). The Secretary may adjust such payments 
     if the Secretary determines (on the basis of such estimated 
     information as the Secretary considers appropriate) that 
     payments to the facility under this paragraph for a cost 
     reporting period would substantially exceed the cost 
     reporting period limit determined under subsection (c)(1)(B).
       ``(2) Responsibility of skilled nursing facility to manage 
     billings.--
       ``(A) Clarification relating to part a billing.--In the 
     case of a covered non-routine service furnished to an 
     individual who (at the time the service is furnished) is a 
     resident of a skilled nursing facility who is entitled to 
     coverage under section 1812(a)(2) for such service, the 
     skilled nursing facility shall submit a claim for payment 
     under this title for such service under part A (without 
     regard to whether or not the item or service was furnished by 
     the facility, by others under arrangement with them made by 
     the facility, under any other contracting or consulting 
     arrangement, or otherwise).
       ``(B) Part b billing.--In the case of a covered non-routine 
     service furnished to an individual who (at the time the 
     service is furnished) is a resident of a skilled nursing 
     facility who is not entitled to coverage under section 
     1812(a)(2) for such service but is entitled to coverage under 
     part B for such service, the skilled nursing facility shall 
     submit a claim for payment under this title for such service 
     under part B (without regard to whether or not the item or 
     service was furnished by the facility, by others under 
     arrangement with them made by the facility, under any other 
     contracting or consulting arrangement, or otherwise).
       ``(C) Maintaining records on services furnished to 
     residents.--Each skilled nursing facility receiving payments 
     for extended care services under this title shall document on 
     the facility's cost report all covered non-routine services 
     furnished to all residents of the facility to whom the 
     facility provided extended care services for which payment 
     was made under part A during a fiscal year (beginning with 
     fiscal year 1996) (without regard to whether or not the 
     services were furnished by the facility, by others under 
     arrangement with them made by the facility, under any 

[[Page H11274]]

     other contracting or consulting arrangement, or otherwise).
       ``(c) Reconciliation of Amounts.--
       ``(1) Limit based on per stay limit and number of stays.--
       ``(A) In general.--If a skilled nursing facility has 
     received aggregate payments under subsection (b) for covered 
     non-routine services during a cost reporting period beginning 
     during a fiscal year in excess of an amount equal to the cost 
     reporting period limit determined under subparagraph (B), the 
     Secretary shall reduce the payments made to the facility with 
     respect to such services for cost reporting periods beginning 
     during the following fiscal year in an amount equal to such 
     excess. The Secretary shall reduce payments under this 
     subparagraph at such times and in such manner during a fiscal 
     year as the Secretary finds necessary to meet the requirement 
     of this subparagraph.
       ``(B) Cost reporting period limit.--The cost reporting 
     period limit determined under this subparagraph is an amount 
     equal to the product of--
       ``(i) the per stay limit applicable to the facility under 
     subsection (d) for the period; and
       ``(ii) the number of stays beginning during the period for 
     which payment was made to the facility for such services.
       ``(C) Prospective reduction in payments.--In addition to 
     the process for reducing payments described in subparagraph 
     (A), the Secretary may reduce payments made to a facility 
     under this section during a cost reporting period if the 
     Secretary determines (on the basis of such estimated 
     information as the Secretary considers appropriate) that 
     payments to the facility under this section for the period 
     will substantially exceed the cost reporting period limit for 
     the period determined under this paragraph.
       ``(2) Incentive payments.--
       ``(A) In general.--If a skilled nursing facility has 
     received aggregate payments under subsection (b) for covered 
     non-routine services during a cost reporting period beginning 
     during a fiscal year in an amount that is less than the 
     amount determined under paragraph (1)(B), the Secretary shall 
     pay the skilled nursing facility in the following fiscal year 
     an incentive payment equal to 50 percent of the difference 
     between such amounts, except that the incentive payment may 
     not exceed 5 percent of the aggregate payments made to the 
     facility under subsection (b) for the previous fiscal year 
     (without regard to subparagraph (B)).
       ``(B) Installment incentive payments.--The Secretary may 
     make installment payments during a fiscal year to a skilled 
     nursing facility based on the estimated incentive payment 
     that the facility would be eligible to receive with respect 
     to such fiscal year.
       ``(d) Determination of Facility Per Stay Limit.--
       ``(1) Limit for fiscal year 1997.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the Secretary shall establish separate per stay limits for 
     hospital-based and freestanding skilled nursing facilities 
     for the 12-month cost reporting period beginning during 
     fiscal year 1997 that are equal to the sum of--
       ``(i) 50 percent of the facility-specific stay amount for 
     the facility (as determined under subsection (e)) for the 
     last 12-month cost reporting period ending on or before 
     September 30, 1994, increased (in a compounded manner) by the 
     SNF market basket percentage increase for fiscal years 1995 
     through 1997; and
       ``(ii) 50 percent of the average of all facility-specific 
     stay amounts for all hospital-based facilities or all 
     freestanding facilities (whichever is applicable) during the 
     cost reporting period described in clause (i), increased (in 
     a compounded manner) by the SNF market basket percentage 
     increase for fiscal years 1995 through 1997.
       ``(B) Facilities not having 1994 cost reporting period.--In 
     the case of a skilled nursing facility for which payments 
     were not made under this title for covered non-routine 
     services for the last 12-month cost reporting period ending 
     on or before September 30, 1994, the per stay limit for the 
     12-month cost reporting period beginning during fiscal year 
     1997 shall be twice the amount determined under subparagraph 
     (A)(ii).
       ``(2) Limit for subsequent fiscal years.--The per stay 
     limit for a skilled nursing facility for a 12-month cost 
     reporting period beginning during a fiscal year after fiscal 
     year 1997 is equal to the per stay limit established under 
     this subsection for the 12-month cost reporting period 
     beginning during the previous fiscal year, increased by the 
     SNF market basket percentage increase for such subsequent 
     fiscal year minus 2 percentage points.
       ``(3) Rebasing of amounts.--
       ``(A) In general.--The Secretary shall provide for an 
     update to the facility-specific amounts used to determine the 
     per stay limits under this subsection for cost reporting 
     periods beginning on or after October 1, 1999, and every 2 
     years thereafter.
       ``(B) Treatment of facilities not having rebased cost 
     reporting periods.--Paragraph (1)(B) shall apply with respect 
     to a skilled nursing facility for which payments were not 
     made under this title for covered non-routine services for 
     the 12-month cost reporting period used by the Secretary to 
     update facility-specific amounts under subparagraph (A) in 
     the same manner as such paragraph applies with respect to a 
     facility for which payments were not made under this title 
     for covered non-routine services for the last 12-month cost 
     reporting period ending on or before September 30, 1994.
       ``(e) Determination of Facility-Specific Stay Amounts.--The 
     `facility-specific stay amount' for a skilled nursing 
     facility for a cost reporting period is the sum of--
       ``(1) the average amount of payments made to the facility 
     under part A during the period which are attributable to 
     covered non-routine services furnished during a stay (as 
     determined on a per diem basis); and
       ``(2) the Secretary's best estimate of the average amount 
     of payments made under part B during the period for covered 
     non-routine services furnished to all residents of the 
     facility to whom the facility provided extended care services 
     for which payment was made under part A during the period 
     (without regard to whether or not the services were furnished 
     by the facility, by others under arrangement with them made 
     by the facility, under any other contracting or consulting 
     arrangement, or otherwise), as estimated by the Secretary.
       ``(f) Intensive Nursing or Therapy Needs.--
       ``(1) In general.--In applying subsection (b) to covered 
     non-routine services furnished during a stay beginning during 
     a cost reporting period beginning during a fiscal year 
     (beginning with fiscal years after fiscal year 1997) to a 
     resident of a skilled nursing facility who requires intensive 
     nursing or therapy services, the per stay limit for such 
     resident shall be the per stay limit developed under 
     paragraph (2) instead of the per stay limit determined under 
     subsection (d)(1)(A).
       ``(2) Per stay limit for intensive need residents.--Not 
     later than June 30, 1997, the Secretary, after consultation 
     with the Medicare Payment Review Commission and skilled 
     nursing facility experts, shall develop and publish a per 
     stay limit for residents of a skilled nursing facility who 
     require intensive nursing or therapy services.
       ``(3) Budget neutrality.--The Secretary shall adjust 
     payments under subsection (b) in a manner that ensures that 
     total payments for covered non-routine services under this 
     section are not greater or less than total payments for such 
     services would have been but for the application of paragraph 
     (1).
       ``(g) Special Treatment for Small Skilled Nursing 
     Facilities.--This section shall not apply with respect to a 
     skilled nursing facility for which payment is made for 
     routine service costs during a cost reporting period on the 
     basis of prospective payments under section 1888(d).
       ``(h) Exceptions and Adjustments to Limits.--
       ``(1) In general.--The Secretary may make exceptions and 
     adjustments to the cost reporting limits applicable to a 
     skilled nursing facility under subsection (c)(1)(B) for a 
     cost reporting period, except that the total amount of any 
     additional payments made under this section for covered non-
     routine services during the cost reporting period as a result 
     of such exceptions and adjustments may not exceed 5 percent 
     of the aggregate payments made to all skilled nursing 
     facilities for covered non-routine services during the cost 
     reporting period (determined without regard to this 
     paragraph).
       ``(2) Budget neutrality.--The Secretary shall adjust 
     payments under subsection (b) in a manner that ensures that 
     total payments for covered non-routine services under this 
     section are not greater or less than total payments for such 
     services would have been but for the application of paragraph 
     (1).
       ``(i) Special Rule for X-Ray Services.--Before furnishing a 
     covered non-routine service consisting of an X-ray service 
     for which payment may be made under part A or part B to a 
     resident, a skilled nursing facility shall consider whether 
     furnishing the service through a provider of portable X-ray 
     service services would be appropriate, taking into account 
     the cost effectiveness of the service and the convenience to 
     the resident.''.
       (2) Conforming amendment.--Section 1814(b) (42 U.S.C. 
     1395f(b)) is amended in the matter preceding paragraph (1) by 
     striking ``1813 and 1886'' and inserting ``1813, 1886, 1888, 
     and 1888A''.

     SEC. 8235. FREEZE IN PAYMENTS FOR CLINICAL DIAGNOSTIC 
                   LABORATORY TESTS.

       Section 1833(h)(2)(A)(ii)(IV) (42 U.S.C. 
     1395l(h)(2)(A)(ii)(IV)) is amended by striking ``1994 and 
     1995'' and inserting ``1994 through 2002''.

       PART 5--GRADUATE MEDICAL EDUCATION AND TEACHING HOSPITALS

     SEC. 8241. TEACHING HOSPITAL AND GRADUATE MEDICAL EDUCATION 
                   TRUST FUND.

       (a) Teaching Hospital and Graduate Medical Education Trust 
     Fund.--The Social Security Act (42 U.S.C. 300 et seq.) is 
     amended by adding at the end the following title:

  ``TITLE XXI--TEACHING HOSPITAL AND GRADUATE MEDICAL EDUCATION TRUST 
                                  FUND

                    ``Part A--Establishment of Fund

     ``SEC. 2101. ESTABLISHMENT OF FUND.

       ``(a) In General.--There is established in the Treasury of 
     the United States a fund to be known as the Teaching Hospital 
     and Graduate Medical Education Trust Fund (in this title 
     referred to as the `Fund'), consisting of amounts transferred 
     to the Fund under subsection (c), amounts appropriated to the 
     Fund pursuant to subsections (d) and (e)(3), and such gifts 
     and bequests as may be deposited in the Fund pursuant to 
     subsection (f). Amounts in the Fund are available until 
     expended.
       ``(b) Expenditures From Fund.--Amounts in the Fund are 
     available to the Secretary for making payments under section 
     2111.

[[Page H11275]]

       ``(c) Transfers to Fund.--
       ``(1) In general.--From the Federal Hospital Insurance 
     Trust Fund and the Federal Supplementary Medical Insurance 
     Trust Fund, the Secretary shall, for fiscal year 1996 and 
     each subsequent fiscal year, transfer to the Fund an amount 
     determined by the Secretary for the fiscal year involved in 
     accordance with paragraph (2).
       ``(2) Determination of amounts.--For purposes of paragraph 
     (1), the amount determined under this paragraph for a fiscal 
     year is an estimate by the Secretary of an amount equal to 75 
     percent of the difference between--
       ``(A) the nationwide total of the amounts that would have 
     been paid under sections 1855 and 1876 during the year but 
     for the operation of section 1855(b)(2)(B)(ii); and
       ``(B) the nationwide total of the amounts paid under such 
     sections during the year.
       ``(3) Allocation between medicare trust funds.--In 
     providing for a transfer under paragraph (1) for a fiscal 
     year, the Secretary shall provide for an allocation of the 
     amounts involved between part A and part B of title XVIII 
     (and the trust funds established under the respective parts) 
     as reasonably reflects the proportion of payments for the 
     indirect costs of medical education and direct graduate 
     medical education costs of hospitals associated with the 
     provision of services under each respective part.
       ``(d) Authorization of Appropriations.--There are 
     authorized to be appropriated to the Fund such sums as may be 
     necessary for each of the fiscal years 1996 through 2002.
       ``(e) Investment.--
       ``(1) In general.--The Secretary of the Treasury shall 
     invest such amounts of the Fund as such Secretary determines 
     are not required to meet current withdrawals from the Fund. 
     Such investments may be made only in interest-bearing 
     obligations of the United States. For such purpose, such 
     obligations may be acquired on original issue at the issue 
     price, or by purchase of outstanding obligations at the 
     market price.
       ``(2) Sale of obligations.--Any obligation acquired by the 
     Fund may be sold by the Secretary of the Treasury at the 
     market price.
       ``(3) Availability of income.--Any interest derived from 
     obligations acquired by the Fund, and proceeds from any sale 
     or redemption of such obligations, are hereby appropriated to 
     the Fund.
       ``(f) Acceptance of Gifts and Bequests.--The Fund may 
     accept on behalf of the United States money gifts and 
     bequests made unconditionally to the Fund for the benefit of 
     the Fund or any activity financed through the Fund.

                ``Part B--Payments to Teaching Hospitals

     ``SEC. 2111. FORMULA PAYMENTS TO TEACHING HOSPITALS.

       ``(a) In General.--In the case of each teaching hospital 
     that in accordance with subsection (b) submits to the 
     Secretary a payment document for fiscal year 1996 or any 
     subsequent fiscal year, the Secretary shall make payments for 
     the year to the teaching hospital for the direct and indirect 
     costs of operating approved medical residency training 
     programs. Such payments shall be made from the Fund, and 
     shall be made in accordance with a formula established by the 
     Secretary.
       ``(b) Payment Document.--For purposes of subsection (a), a 
     payment document is a document containing such information as 
     may be necessary for the Secretary to make payments under 
     such subsection to a teaching hospital for a fiscal year. The 
     document is submitted in accordance with this subsection if 
     the document is submitted not later than the date specified 
     by the Secretary, and the document is in such form and is 
     made in such manner as the Secretary may require. The 
     Secretary may require that information under this subsection 
     be submitted to the Secretary in periodic reports.''.
       (b) National Advisory Council on Postgraduate Medical 
     Education.--
       (1) In general.--There is established within the Department 
     of Health and Human Services an advisory council to be known 
     as the National Advisory Council on Postgraduate Medical 
     Education (in this title referred to as the ``Council'').
       (2) Duties.--The council shall provide advice to the 
     Secretary on appropriate policies for making payments for the 
     support of postgraduate medical education in order to assure 
     an adequate supply of physicians trained in various 
     specialities, consistent with the health care needs of the 
     United States.
       (3) Composition.--
       (A) In general.--The Secretary shall appoint to the Council 
     15 individuals who are not officers or employees of the 
     United States. Such individuals shall include not less than 1 
     individual from each of the following categories of 
     individuals or entities:
       (i) Organizations representing consumers of health care 
     services.
       (ii) Physicians who are faculty members of medical schools, 
     or who supervise approved physician training programs.
       (iii) Physicians in private practice who are not physicians 
     described in clause (ii).
       (iv) Practitioners in public health.
       (v) Advanced-practice nurses.
       (vi) Other health professionals who are not physicians.
       (vii) Medical schools.
       (viii) Teaching hospitals.
       (ix) The Accreditation Council on Graduate Medical 
     Education.
       (x) The American Board of Medical Specialities.
       (xi) The Council on Postdoctoral Training of the American 
     Osteopathic Association.
       (xii) The Council on Podiatric Medical Education of the 
     American Podiatric Medical Association.
       (B) Requirements regarding representative membership.--To 
     the greatest extent feasible, the membership of the Council 
     shall represent the various geographic regions of the United 
     States, shall reflect the racial, ethnic, and gender 
     composition of the population of the United States, and shall 
     be broadly representative of medical schools and teaching 
     hospitals in the United States.
       (C) Ex officio members; other federal officers or 
     employees.--The membership of the Council shall include 
     individuals designated by the Secretary to serve as members 
     of the Council from among Federal officers or employees who 
     are appointed by the President, or by the Secretary (or by 
     other Federal officers who are appointed by the President 
     with the advice and consent of the Senate). Individuals 
     designated under the preceding sentence shall include each of 
     the following officials (or a designee of the official):
       (i) The Secretary of Health and Human Services.
       (ii) The Secretary of Veterans Affairs.
       (iii) The Secretary of Defense.
       (4) Chair.--The Secretary shall, from among members of the 
     council appointed under paragraph (3)(A), designate an 
     individual to serve as the chair of the council.
       (5) Termination.--The Council terminates December 31, 1999.
       (c) Remove Medical Education and Disproportionate Share 
     Hospital Payments From Calculation of Adjusted Average Per 
     Capita Cost.--For provision removing medical education and 
     disproportionate share hospital payments from calculation of 
     payment amounts for organizations paid on a capitated basis, 
     see section 1855(b)(2)(B)(ii).
       (2) Payments to hospitals of amounts attributable to dsh.--
     Section 1886 (42 U.S.C. 1395ww) is amended by adding at the 
     end the following new subsection:
       ``(j)(1) In addition to amounts paid under subsection 
     (d)(5)(F), the Secretary is authorized to pay hospitals which 
     are eligible for such payments for a fiscal year supplemental 
     amounts that do not exceed the limit provided for in 
     paragraph (2).
       ``(2) The sum of the aggregate amounts paid pursuant to 
     paragraph (1) for a fiscal year shall not exceed the 
     Secretary's estimate of 75 percent of the amount of 
     reductions in payments under section 1855 that are 
     attributable to the operation of subsection (b)(2)(B)(ii) of 
     such section.''.

     SEC. 8242. REDUCTION IN PAYMENT ADJUSTMENTS FOR INDIRECT 
                   MEDICAL EDUCATION.

       (a) Modification Regarding 6.8 Percent.--Section 
     1886(d)(5)(B)(ii) (42 U.S.C. 1395ww(d)(5)(B)(ii)) is 
     amended--
       (1) by striking ``on or after October 1, 1988,'' and 
     inserting ``on or after October 1, 1999,''; and
       (2) by striking ``1.89'' and inserting ``1.68''.
       (b) Special Rule Regarding Fiscal Years 1996 Through 1998; 
     Modification Regarding 6 Percent.--Section 1886(d)(5)(B)(ii), 
     as amended by paragraph (1), is amended by adding at the end 
     the following: ``In the case of discharges occurring on or 
     after October 1, 1995, and before October 1, 1999, the 
     preceding sentence applies to the same extent and in the same 
     manner as the sentence applies to discharges occurring on or 
     after October 1, 1999, except that the term `1.68' is deemed 
     to be 1.48.''.
       Subtitle D--Provisions Relating to Medicare Beneficiaries

     SEC. 8301. PART B PREMIUM.

       (a) Freeze in Premium for 1996.--Section 1839(e)(1) (42 
     U.S.C. 1395r(e)(1)) is amended--
       (1) in subparagraph (A), by striking ``December 1995'' and 
     inserting ``December 1996''; and
       (2) in subparagraph (B)(v), by striking ``1995'' and 
     inserting ``1995 and 1996''.
       (b) Establishing Premium at 25 Percent of Program Costs 
     Through 2002.--Section 1839(e)(1)(A) (42 U.S.C. 
     1395r(e)(1)(A)) is amended by striking ``January 1999'' and 
     inserting ``January 2003''.

     SEC. 8302. FULL COST OF MEDICARE PART B COVERAGE PAYABLE BY 
                   HIGH-INCOME INDIVIDUALS.

       (a) In General.--Subchapter A of chapter 1 of the Internal 
     Revenue Code of 1986 is amended by adding at the end thereof 
     the following new part:

  ``PART VIII--SUPPLEMENTAL MEDICARE PART B PREMIUMS FOR HIGH-INCOME 
                              INDIVIDUALS

``Sec. 59B. Supplemental Medicare part B premium.

     ``SEC. 59B. SUPPLEMENTAL MEDICARE PART B PREMIUM.

       ``(a) Requirement To Pay Premium.--In the case of an 
     individual to whom this section applies for the taxable year, 
     there is hereby imposed (in addition to any other amount 
     imposed by this subtitle) an amount equal to the aggregate of 
     the supplemental Medicare part B premiums (if any) for months 
     during such year that such individual is covered under 
     Medicare part B.
       ``(b) Individuals to Whom Section Applies.--This section 
     shall apply to any individual for any taxable year if--
       ``(1) such individual is covered under Medicare part B for 
     any month during such year, and
       ``(2) the modified adjusted gross income of the taxpayer 
     for such taxable year exceeds the threshold amount.

[[Page H11276]]

       ``(c) Supplemental Medicare Part B Premium.--
       ``(1) In general.--For purposes of subsection (a), the 
     supplemental Medicare part B premium for any month is an 
     amount equal to the excess of--
       ``(A) subject to adjustment under paragraph (2), 200 
     percent of the monthly actuarial rate for enrollees age 65 
     and over determined under subsection 1839(a)(1) of the Social 
     Security Act for such month, over
       ``(B) the total monthly premium under section 1839 of the 
     Social Security Act (determined without regard to subsections 
     (b) and (f) of section 1839 of such Act).
       ``(2) Adjusting monthly actuarial rate by geographic 
     area.--
       ``(A) In general.--In determining the amount described in 
     paragraph (1)(A) for an individual residing in a premium 
     area, the Secretary shall adjust such amount for a year by a 
     geographic adjustment factor established by the Secretary 
     which reflects the relative benefits and administrative costs 
     payable from the Federal Supplementary Medical Insurance 
     Trust Fund for services performed and related administrative 
     costs incurred in the year with respect to enrollees residing 
     in such area compared to the national average of such 
     benefits and costs.
       ``(B) Premium area.--In this paragraph, a `premium area' 
     means a metropolitan statistical area or the portion of a 
     State outside of any metropolitan statistical area.
       ``(d) Phasein.--
       ``(1) In general.--If the modified adjusted gross income of 
     the taxpayer for any taxable year exceeds the threshold 
     amount by less than $50,000, the amount imposed by this 
     section for such taxable year shall be an amount which bears 
     the same ratio to the amount which would (but for this 
     subsection) be imposed by this section for such taxable year 
     as such excess bears to $50,000. The preceding sentence shall 
     not apply to any individual whose threshold amount is zero.
       ``(2) Phasein range for joint returns.--In the case of a 
     joint return, paragraph (1) shall be applied by substituting 
     `$75,000' for `$50,000'.
       ``(e) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Threshold amount.--The term `threshold amount' 
     means--
       ``(A) except as otherwise provided in this paragraph, 
     $50,000,
       ``(B) $75,000 in the case of a joint return, and
       ``(C) zero in the case of a taxpayer who--
       ``(i) is married at the close of the taxable year but does 
     not file a joint return for such year, and
       ``(ii) does not live apart from his spouse at all times 
     during the taxable year.
       ``(2) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means adjusted gross income--
       ``(A) determined without regard to sections 135, 911, 931, 
     and 933, and
       ``(B) increased by the amount of interest received or 
     accrued by the taxpayer during the taxable year which is 
     exempt from tax.
       ``(3) Joint returns.--In the case of a joint return--
       ``(A) the amount imposed by subsection (a) shall be the sum 
     of the amounts so imposed determined separately for each 
     spouse, and
       ``(B) subsections (a) and (d) shall be applied by taking 
     into account the combined modified adjusted gross income of 
     the spouses.
       ``(4) Medicare part b coverage.--An individual shall be 
     treated as covered under Medicare part B for any month if a 
     premium is paid under part B of title XVIII of the Social 
     Security Act for the coverage of the individual under such 
     part for the month.
       ``(5) Married individual.--The determination of whether an 
     individual is married shall be made in accordance with 
     section 7703.
       ``(f) Coordination With Other Provisions.--
       ``(1) Treatment as medical expense.--For purposes of 
     section 213, the supplemental Medicare part B premium imposed 
     by this section shall be treated as an amount paid for 
     insurance covering medical care (as defined in section 
     213(d)).
       ``(2) Treatment under subtitle f.--For purposes of subtitle 
     F (other than section 6654), the supplemental Medicare part B 
     premium imposed by this section shall be treated as if it 
     were a tax imposed by section 1.
       ``(3) Not treated as tax for certain purposes.--The 
     supplemental Medicare part B premium imposed by this section 
     shall not be treated as a tax imposed by this chapter for 
     purposes of determining--
       ``(A) the amount of any credit allowable under this 
     chapter, or
       ``(B) the amount of the minimum tax imposed by section 
     55.''
       (b) Transfers to Supplemental Medical Insurance Trust 
     Fund.--
       (1) In general.--There are hereby appropriated to the 
     Supplemental Medical Insurance Trust Fund amounts equivalent 
     to the aggregate increase in liabilities under chapter 1 of 
     the Internal Revenue Code of 1986 which is attributable to 
     the application of section 59B of such Code, as added by this 
     section.
       (2) Transfers.--The amounts appropriated by paragraph (1) 
     to the Supplemental Medical Insurance Trust Fund shall be 
     transferred from time to time (but not less frequently than 
     quarterly) from the general fund of the Treasury on the basis 
     of estimates made by the Secretary of the Treasury of the 
     amounts referred to in paragraph (1). Any quarterly payment 
     shall be made on the first day of such quarter and shall take 
     into account the portion of the supplemental Medicare part B 
     premium (as defined in such section 59B) which is 
     attributable to months during such quarter. Proper 
     adjustments shall be made in the amounts subsequently 
     transferred to the extent prior estimates were in excess of 
     or less than the amounts required to be transferred.
       (c) Reporting Requirements.--
       (1) Paragraph (1) of section 6050F(a) (relating to returns 
     relating to social security benefits) is amended by striking 
     ``and'' at the end of subparagraph (B) and by inserting after 
     subparagraph (C) the following new subparagraph:
       ``(D) the number of months during the calendar year for 
     which a premium was paid under part B of title XVIII of the 
     Social Security Act for the coverage of such individual under 
     such part, and''.
       (2) Paragraph (2) of section 6050F(b) is amended to read as 
     follows:
       ``(2) the information required to be shown on such return 
     with respect to such individual.''
       (3) Paragraph (1) of section 6050F(c) is amended by 
     striking ``and'' at the end of subparagraph (A), by striking 
     the period at the end of subparagraph (B) and inserting ``, 
     and'', and by adding at the end the following new 
     subparagraph:
       ``(C) the Secretary of Health and Human Services in the 
     case of the information specified in subsection (a)(1)(D).''
       (4) The heading for section 6050F is amended by inserting 
     ``AND MEDICARE PART B COVERAGE'' before the period.
       (5) The item relating to section 6050F in the table of 
     sections for subpart B of part III of subchapter A of chapter 
     61 is amended by inserting ``and Medicare part B coverage'' 
     before the period.
       (d) Clerical Amendment.--The table of parts for subchapter 
     A of chapter 1 is amended by adding at the end thereof the 
     following new item:

``Part VIII. Supplemental Medicare part B premiums for high-income 
              individuals.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to months after December 1995 in taxable years 
     ending after December 31, 1995.

     SEC. 8303. EXPANDED COVERAGE OF PREVENTIVE BENEFITS.

       (a) Providing Annual Screening Mammography for Women Over 
     Age 49.--Section 1834(c)(2)(A) (42 U.S.C. 1395m(c)(2)(A)) is 
     amended--
       (1) in clause (iv), by striking ``but under 65 years of 
     age,''; and
       (2) by striking clause (v).
       (b) Coverage of Screening Pap Smear and Pelvic Exams.--
       (1) Coverage of pelvic exam; increasing frequency of 
     coverage of pap smear.--Section 1861(nn) (42 U.S.C. 
     1395x(nn)) is amended--
       (A) in the heading, by striking ``Smear'' and inserting 
     ``Smear; Screening Pelvic Exam'';
       (B) by striking ``(nn)'' and inserting ``(nn)(1)'';
       (C) by striking ``3 years'' and all that follows and 
     inserting ``3 years, or during the preceding year in the case 
     of a woman described in paragraph (3).''; and
       (D) by adding at the end the following new paragraphs:
       ``(2) The term `screening pelvic exam' means an pelvic 
     examination provided to a woman if the woman involved has not 
     had such an examination during the preceding 3 years, or 
     during the preceding year in the case of a woman described in 
     paragraph (3), and includes a clinical breast examination.
       ``(3) A woman described in this paragraph is a woman who--
       ``(A) is of childbearing age and has not had a test 
     described in this subsection during each of the preceding 3 
     years that did not indicate the presence of cervical cancer; 
     or
       ``(B) is at high risk of developing cervical cancer (as 
     determined pursuant to factors identified by the 
     Secretary).''.
       (2) Waiver of deductible.--The first sentence of section 
     1833(b) (42 U.S.C. 1395l(b)), as amended by subsection 
     (a)(2), is amended--
       (A) by striking ``and (5)'' and inserting ``(5)''; and
       (B) by striking the period at the end and inserting the 
     following: ``, and (6) such deductible shall not apply with 
     respect to screening pap smear and screening pelvic exam (as 
     described in section 1861(nn)).''.
       (3) Conforming amendments.--(A) Section 1861(s)(14) (42 
     U.S.C. 1395x(s)(14)) is amended by inserting ``and screening 
     pelvic exam'' after ``screening pap smear''.
       (B) Section 1862(a)(1)(F) (42 U.S.C. 1395y(a)(1)(F)) is 
     amended by inserting ``and screening pelvic exam'' after 
     ``screening pap smear''.
       (c) Coverage of Colorectal Screening.--
       (1) In general.--Section 1834 (42 U.S.C. 1395m) is amended 
     by inserting after subsection (c) the following new 
     subsection:
       ``(d) Frequency and Payment Limits for Screening Fecal-
     Occult Blood Tests, Screening Flexible Sigmoidoscopies, and 
     Screening Colonoscopy.--
       ``(1) Frequency limits for screening fecal-occult blood 
     tests.--Subject to revision by the Secretary under paragraph 
     (4), no payment may be made under this part for a screening 
     fecal-occult blood test provided to an individual for the 
     purpose of early detection of colon cancer if the test is 
     performed--

[[Page H11277]]

       ``(A) in the case of an individual under 65 years of age, 
     more frequently than is provided in a periodicity schedule 
     established by the Secretary for purposes of this 
     subparagraph; or
       ``(B) in the case of any other individual, within the 11 
     months following the month in which a previous screening 
     fecal-occult blood test was performed.
       ``(2) Screening flexible sigmoid- oscopies.--
       ``(A) Payment amount.--The Secretary shall establish a 
     payment amount under section 1848 with respect to screening 
     flexible sigmoidoscopies provided for the purpose of early 
     detection of colon cancer that is consistent with payment 
     amounts under such section for similar or related services, 
     except that such payment amount shall be established without 
     regard to subsection (a)(2)(A) of such section.
       ``(B) Frequency limits.--Subject to revision by the 
     Secretary under paragraph (4), no payment may be made under 
     this part for a screening flexible sigmoidoscopy provided to 
     an individual for the purpose of early detection of colon 
     cancer if the procedure is performed--
       ``(i) in the case of an individual under 65 years of age, 
     more frequently than is provided in a periodicity schedule 
     established by the Secretary for purposes of this 
     subparagraph; or
       ``(ii) in the case of any other individual, within the 59 
     months following the month in which a previous screening 
     flexible sigmoidoscopy was performed.
       ``(3) Screening colonoscopy for individuals at high risk 
     for colorectal cancer.--
       ``(A) Payment amount.--The Secretary shall establish a 
     payment amount under section 1848 with respect to screening 
     colonoscopy for individuals at high risk for colorectal 
     cancer (as determined in accordance with criteria established 
     by the Secretary) provided for the purpose of early detection 
     of colon cancer that is consistent with payment amounts under 
     such section for similar or related services, except that 
     such payment amount shall be established without regard to 
     subsection (a)(2)(A) of such section.
       ``(B) Frequency limit.--Subject to revision by the 
     Secretary under paragraph (4), no payment may be made under 
     this part for a screening colonoscopy for individuals at high 
     risk for colorectal cancer provided to an individual for the 
     purpose of early detection of colon cancer if the procedure 
     is performed within the 47 months following the month in 
     which a previous screening colonoscopy was performed.
       ``(C) Factors considered in establishing criteria for 
     determining individuals at high risk.--In establishing 
     criteria for determining whether an individual is at high 
     risk for colorectal cancer for purposes of this paragraph, 
     the Secretary shall take into consideration family history, 
     prior experience of cancer, a history of chronic digestive 
     disease condition, and the presence of any appropriate 
     recognized gene markers for colorectal cancer.
       ``(4) Revision of frequency.--
       ``(A) Review.--The Secretary shall review periodically the 
     appropriate frequency for performing screening fecal-occult 
     blood tests, screening flexible sigmoidoscopies, and 
     screening colonoscopy based on age and such other factors as 
     the Secretary believes to be pertinent.
       ``(B) Revision of frequency.--The Secretary, taking into 
     consideration the review made under clause (i), may revise 
     from time to time the frequency with which such tests and 
     procedures may be paid for under this subsection.''.
       (2) Conforming amendments.--(A) Paragraphs (1)(D) and 
     (2)(D) of section 1833(a) (42 U.S.C. 1395l(a)) are each 
     amended by striking ``subsection (h)(1),'' and inserting 
     ``subsection (h)(1) or section 1834(d)(1),''.
       (B) Clauses (i) and (ii) of section 1848(a)(2)(A) (42 
     U.S.C. 1395w-4(a)(2)(A)) are each amended by striking ``a 
     service'' and inserting ``a service (other than a screening 
     flexible sigmoidoscopy provided to an individual for the 
     purpose of early detection of colon cancer or a screening 
     colonoscopy provided to an individual at high risk for 
     colorectal cancer for the purpose of early detection of colon 
     cancer)''.
       (C) Section 1862(a) (42 U.S.C. 1395y(a)) is amended--
       (i) in paragraph (1)--
       (I) in subparagraph (E), by striking ``and'' at the end;
       (II) in subparagraph (F), by striking the semicolon at the 
     end and inserting ``, and''; and
       (III) by adding at the end the following new subparagraph:
       ``(G) in the case of screening fecal-occult blood tests, 
     screening flexible sigmoidoscopies, and screening colonoscopy 
     provided for the purpose of early detection of colon cancer, 
     which are performed more frequently than is covered under 
     section 1834(d);''; and
       (ii) in paragraph (7), by striking ``paragraph (1)(B) or 
     under paragraph (1)(F)'' and inserting ``subparagraphs (B), 
     (F), or (G) of paragraph (1)''.
       (d) Prostate Cancer Screening Tests.--
       (1) In general.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) 
     is amended--
       (A) by striking ``and'' at the end of subparagraph (N) and 
     subparagraph (O); and
       (B) by inserting after subparagraph (O) the following new 
     subparagraph:
       ``(P) prostate cancer screening tests (as defined in 
     subsection (oo)); and''.
       (2) Tests described.--Section 1861 (42 U.S.C. 1395x) is 
     amended by adding at the end the following new subsection:

                   ``Prostate Cancer Screening Tests

       ``(oo) The term `prostate cancer screening test' means a 
     test that consists of a digital rectal examination or a 
     prostate-specific antigen blood test (or both) provided for 
     the purpose of early detection of prostate cancer to a man 
     over 40 years of age who has not had such a test during the 
     preceding year.''.
       (3) Payment for prostate-specific antigen blood test under 
     clinical diagnostic laboratory test fee schedules.--Section 
     1833(h)(1)(A) (42 U.S.C. 1395l(h)(1)(A)) is amended by 
     inserting after ``laboratory tests'' the following: 
     ``(including prostate cancer screening tests under section 
     1861(oo) consisting of prostate-specific antigen blood 
     tests)''.
       (4) Conforming amendment.--Section 1862(a) (42 U.S.C. 
     1395y(a)), as amended by subsection (c)(3)(C), is amended--
       (A) in paragraph (1)--
       (i) in subparagraph (F), by striking ``and'' at the end,
       (ii) in subparagraph (G), by striking the semicolon at the 
     end and inserting ``, and'', and
       (iii) by adding at the end the following new subparagraph:
       ``(H) in the case of prostate cancer screening test (as 
     defined in section 1861(oo)) provided for the purpose of 
     early detection of prostate cancer, which are performed more 
     frequently than is covered under such section;''; and
       (B) in paragraph (7), by striking ``or (G)'' and inserting 
     ``(G), or (H)''.
       (e) Diabetes Screening Benefits.--
       (1) Diabetes outpatient self-management training 
     services.--
       (A) In general.--Section 1861(s)(2) (42 U.S.C. 
     1395x(s)(2)), as amended by subsection (d)(1), is amended--
       (i) by striking ``and'' at the end of subparagraph (N);
       (ii) by striking ``and'' at the end of subparagraph (O); 
     and
       (iii) by inserting after subparagraph (O) the following new 
     subparagraph:
       ``(P) diabetes outpatient self-management training services 
     (as defined in subsection (pp)); and''.
       (B) Definition.--Section 1861 (42 U.S.C. 1395x), as amended 
     by subsection (d)(2), is amended by adding at the end the 
     following new subsection:


        ``diabetes outpatient self-management training services

       ``(pp)(1) The term `diabetes outpatient self-management 
     training services' means educational and training services 
     furnished to an individual with diabetes by or under 
     arrangements with a certified provider (as described in 
     paragraph (2)(A)) in an outpatient setting by an individual 
     or entity who meets the quality standards described in 
     paragraph (2)(B), but only if the physician who is managing 
     the individual's diabetic condition certifies that such 
     services are needed under a comprehensive plan of care 
     related to the individual's diabetic condition to provide the 
     individual with necessary skills and knowledge (including 
     skills related to the self-administration of injectable 
     drugs) to participate in the management of the individual's 
     condition.
       ``(2) In paragraph (1)--
       ``(A) a `certified provider' is an individual or entity 
     that, in addition to providing diabetes outpatient self-
     management training services, provides other items or 
     services for which payment may be made under this title; and
       ``(B) an individual or entity meets the quality standards 
     described in this paragraph if the individual or entity meets 
     quality standards established by the Secretary, except that 
     the individual or entity shall be deemed to have met such 
     standards if the individual or entity meets applicable 
     standards originally established by the National Diabetes 
     Advisory Board and subsequently revised by organizations who 
     participated in the establishment of standards by such Board, 
     or is recognized by the American Diabetes Association as 
     meeting standards for furnishing the services.''.
       (C) Consultation with organizations in establishing payment 
     amounts for services provided by physicians.--In establishing 
     payment amounts under section 1848(a) of the Social Security 
     Act for physicians' services consisting of diabetes 
     outpatient self-management training services, the Secretary 
     of Health and Human Services shall consult with appropriate 
     organizations, including the American Diabetes Association, 
     in determining the relative value for such services under 
     section 1848(c)(2) of such Act.
       (2) Blood-testing strips for individuals with diabetes.--
       (A) Including strips as durable medical equipment.--Section 
     1861(n) (42 U.S.C. 1395x(n)) is amended by striking the 
     semicolon in the first sentence and inserting the following: 
     ``, and includes blood-testing strips for individuals with 
     diabetes without regard to whether the individual has Type I 
     or Type II diabetes (as determined under standards 
     established by the Secretary in consultation with the 
     American Diabetes Association);''.
       (2) Payment for strips based on methodology for inexpensive 
     and routinely purchased equipment.--Section 1834(a)(2)(A) (42 
     U.S.C. 1395m(a)(2)(A)) is amended--
       (A) by striking ``or'' at the end of clause (ii);

[[Page H11278]]

       (B) by adding ``or'' at the end of clause (iii); and
       (C) by inserting after clause (iii) the following new 
     clause:
       ``(iv) which is a blood-testing strip for an individual 
     with diabetes,''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after 
     January 1, 2001.
                  Subtitle E--Medicare Fraud Reduction

     SEC. 8401. INCREASING BENEFICIARY AWARENESS OF FRAUD AND 
                   ABUSE.

       (a) Beneficiary Outreach Efforts.--The Secretary of Health 
     and Human Services (acting through the Administrator of the 
     Health Care Financing Administration and the Inspector 
     General of the Department of Health and Human Services) shall 
     make ongoing efforts (through public service announcements, 
     publications, and other appropriate methods) to alert 
     individuals entitled to benefits under the medicare program 
     of the existence of fraud and abuse committed against the 
     program and the costs to the program of such fraud and abuse, 
     and of the existence of the toll-free telephone line operated 
     by the Secretary to receive information on fraud and abuse 
     committed against the program.
       (b) Clarification of Requirement to Provide Explanation of 
     Medicare Benefits.--The Secretary shall provide an 
     explanation of benefits under the medicare program with 
     respect to each item or service for which payment may be made 
     under the program which is furnished to an individual, 
     without regard to whether or not a deductible or coinsurance 
     may be imposed against the individual with respect to the 
     item or service.
       (c) Provider Outreach Efforts; Publication of Fraud 
     Alerts.--
       (1) Special fraud alerts.--
       (A) In general.--
       (i) Request for special fraud alerts.--Any person may 
     present, at any time, a request to the Secretary to issue and 
     publish a special fraud alert.
       (ii) Special fraud alert defined.--In this section, a 
     ``special fraud alert'' is a notice which informs the public 
     of practices which the Secretary considers to be suspect or 
     of particular concern under the medicare program or a State 
     health care program (as defined in section 1128(h) of the 
     Social Security Act).
       (B) Issuance and publication of special fraud alerts.--
       (i) Investigation.--Upon receipt of a request for a special 
     fraud alert under subparagraph (A), the Secretary shall 
     investigate the subject matter of the request to determine 
     whether a special fraud alert should be issued. If 
     appropriate, the Secretary (in consultation with the Attorney 
     General) shall issue a special fraud alert in response to the 
     request. All special fraud alerts issued pursuant to this 
     subparagraph shall be published in the Federal Register.
       (ii) Criteria for issuance.--In determining whether to 
     issue a special fraud alert upon a request under subparagraph 
     (A), the Secretary may consider--

       (I) whether and to what extent the practices that would be 
     identified in the special fraud alert may result in any of 
     the consequences described in subparagraph (C); and
       (II) the extent and frequency of the conduct that would be 
     identified in the special fraud alert.

       (C) Consequences described.--The consequences described in 
     this subparagraph are as follows:
       (i) An increase or decrease in access to health care 
     services.
       (ii) An increase or decrease in the quality of health care 
     services.
       (iii) An increase or decrease in patient freedom of choice 
     among health care providers.
       (iv) An increase or decrease in competition among health 
     care providers.
       (v) An increase or decrease in the cost to health care 
     programs of the Federal Government.
       (vi) An increase or decrease in the potential 
     overutilization of health care services.
       (viii) Any other factors the Secretary deems appropriate in 
     the interest of preventing fraud and abuse in health care 
     programs of the Federal Government.
       (2) Publication of all hcfa fraud alerts in federal 
     register.--Each notice issued by the Health Care Financing 
     Administration which informs the public of practices which 
     the Secretary considers to be suspect or of particular 
     concern under the medicare program or a State health care 
     program (as defined in section 1128(h) of the Social Security 
     Act) shall be published in the Federal Register, without 
     regard to whether or not the notice is issued by a regional 
     office of the Health Care Financing Administration.

     SEC. 8402. BENEFICIARY INCENTIVES TO REPORT FRAUD AND ABUSE.

       (a) Program to Collect Information on Fraud and Abuse.--
       (1) Establishment of program.--Not later than 3 months 
     after the date of the enactment of this Act, the Secretary 
     shall establish a program under which the Secretary shall 
     encourage individuals to report to the Secretary information 
     on individuals and entities who are engaging or who have 
     engaged in acts or omissions which constitute grounds for the 
     imposition of a sanction under section 1128, section 1128A, 
     or section 1128B of the Social Security Act, or who have 
     otherwise engaged in fraud and abuse against the medicare 
     program.
       (2) Payment of portion of amounts collected.--If an 
     individual reports information to the Secretary under the 
     program established under paragraph (1) which serves as the 
     basis for the collection by the Secretary or the Attorney 
     General of any amount of at least $100 (other than any amount 
     paid as a penalty under section 1128B of the Social Security 
     Act), the Secretary may pay a portion of the amount collected 
     to the individual (under procedures similar to those 
     applicable under section 7623 of the Internal Revenue Code of 
     1986 to payments to individuals providing information on 
     violations of such Code).
       (b) Program to Collect Information on Program Efficiency.--
       (1) Establishment of program.--Not later than 3 months 
     after the date of the enactment of this Act, the Secretary 
     shall establish a program under which the Secretary shall 
     encourage individuals to submit to the Secretary suggestions 
     on methods to improve the efficiency of the medicare program.
       (2) Payment of portion of program savings.--If an 
     individual submits a suggestion to the Secretary under the 
     program established under paragraph (1) which is adopted by 
     the Secretary and which results in savings to the program, 
     the Secretary may make a payment to the individual of such 
     amount as the Secretary considers appropriate.

     SEC. 8403. ELIMINATION OF HOME HEALTH OVERPAYMENTS.

       (a) Requiring Billing and Payment to be Based on Site Where 
     Service Furnished.--Section 1891 (42 U.S.C. 1395bbb) is 
     amended by adding at the end the following new subsection:
       ``(g) A home health agency shall submit claims for payment 
     for home health services under this title only on the basis 
     of the geographic location at which the service is 
     furnished.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to services furnished during cost reporting 
     periods beginning on or after October 1, 1995.

     SEC. 8404. SKILLED NURSING FACILITIES.

       (a) Clarification of Treatment of Hospital Transfers.--
       (1) In general.--Section 1886(d)(5)(I) (42 U.S.C. 
     1395ww(d)(5)(I)) is amended by adding at the end the 
     following new clause:
       ``(iii) In making adjustments under clause (i) for transfer 
     cases, the Secretary shall treat as a transfer any transfer 
     to a hospital (without regard to whether or not the hospital 
     is a subsection (d) hospital), a unit thereof, or a skilled 
     nursing facility.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to discharges occurring on or after October 1, 
     1995.
       (b) Requiring Billing and Payment To Be Based on Site Where 
     Service Furnished.--Section 1819(b) (42 U.S.C. 1395i@3(b)) is 
     amended by adding at the end the following new paragraph:
       ``(8) Special rule for billing and payment.--A skilled 
     nursing facility shall submit claims for payment for services 
     under this title (whether such services are billed under part 
     A or part B) only on the basis of the geographic location at 
     which the service is furnished.''.

     SEC. 8405. DIRECT SPENDING FOR ANTI-FRAUD ACTIVITIES UNDER 
                   MEDICARE.

       (a) Establishment of Medicare Integrity Program.--Title 
     XVIII, as amended by section 8231(d), is further amended by 
     adding at the end the following new section:


                      ``medicare integrity program

       ``Sec. 1894. (a) Establishment of Program.--There is hereby 
     established the Medicare Integrity Program (hereafter in this 
     section referred to as the `Program') under which the 
     Secretary shall promote the integrity of the medicare program 
     by entering into contracts in accordance with this section 
     with eligible private entities to carry out the activities 
     described in subsection (b).
       ``(b) Activities Described.--The activities described in 
     this subsection are as follows:
       ``(1) Review of activities of providers of services or 
     other individuals and entities furnishing items and services 
     for which payment may be made under this title (including 
     skilled nursing facilities and home health agencies), 
     including medical and utilization review and fraud review 
     (employing similar standards, processes, and technologies 
     used by private health plans, including equipment and 
     software technologies which surpass the capability of the 
     equipment and technologies used in the review of claims under 
     this title as of the date of the enactment of this section).
       ``(2) Audit of cost reports.
       ``(3) Determinations as to whether payment should not be, 
     or should not have been, made under this title by reason of 
     section 1862(b), and recovery of payments that should not 
     have been made.
       ``(4) Education of providers of services, beneficiaries, 
     and other persons with respect to payment integrity and 
     benefit quality assurance issues.
       ``(c) Eligibility of Entities.--An entity is eligible to 
     enter into a contract under the Program to carry out any of 
     the activities described in subsection (b) if--
       ``(1) the entity has demonstrated capability to carry out 
     such activities;
       ``(2) in carrying out such activities, the entity agrees to 
     cooperate with the Inspector General of the Department of 
     Health and Human Services, the Attorney General of the United 
     States, and other law enforcement agencies, as appropriate, 
     in the investigation 

[[Page H11279]]

     and deterrence of fraud and abuse in relation to this title 
     and in other cases arising out of such activities;
       ``(3) the entity's financial holdings, interests, or 
     relationships will not interfere with its ability to perform 
     the functions to be required by the contract in an effective 
     and impartial manner; and
       ``(4) the entity meets such other requirements as the 
     Secretary may impose.
       ``(d) Process for Entering Into Contracts.--The Secretary 
     shall enter into contracts under the Program in accordance 
     with such procedures as the Secretary may by regulation 
     establish, except that such procedures shall include the 
     following:
       ``(1) The Secretary shall determine the appropriate number 
     of separate contracts which are necessary to carry out the 
     Program and the appropriate times at which the Secretary 
     shall enter into such contracts.
       ``(2) The provisions of section 1153(e)(1) shall apply to 
     contracts and contracting authority under this section, 
     except that competitive procedures must be used when entering 
     into new contracts under this section, or at any other time 
     considered appropriate by the Secretary.
       ``(3) A contract under this section may be renewed without 
     regard to any provision of law requiring competition if the 
     contractor has met or exceeded the performance requirements 
     established in the current contract.
       ``(e) Limitation on Contractor Liability.--The Secretary 
     shall by regulation provide for the limitation of a 
     contractor's liability for actions taken to carry out a 
     contract under the Program, and such regulation shall, to the 
     extent the Secretary finds appropriate, employ the same or 
     comparable standards and other substantive and procedural 
     provisions as are contained in section 1157.
       ``(f) Transfer of Amounts to Medicare Anti-Fraud and Abuse 
     Trust Fund.--For each fiscal year, the Secretary shall 
     transfer from the Federal Hospital Insurance Trust Fund and 
     the Federal Supplementary Medical Insurance Trust Fund to the 
     Medicare Anti-Fraud and Abuse Trust Fund under subsection (g) 
     such amounts as are necessary to carry out the activities 
     described in subsection (b). Such transfer shall be in an 
     allocation as reasonably reflects the proportion of such 
     expenditures associated with part A and part B.
       ``(g) Medicare Anti-Fraud and Abuse Trust Fund.--
       ``(1) Establishment.--
       ``(A) In general.--There is hereby established in the 
     Treasury of the United States the Anti-Fraud and Abuse Trust 
     Fund (hereafter in this subsection referred to as the `Trust 
     Fund'). The Trust Fund shall consist of such gifts and 
     bequests as may be made as provided in subparagraph (B) and 
     such amounts as may be deposited in the Trust Fund as 
     provided in subsection (f), paragraph (3), and title XI.
       ``(B) Authorization to accept gifts and bequests.--The 
     Trust Fund is authorized to accept on behalf of the United 
     States money gifts and bequests made unconditionally to the 
     Trust Fund, for the benefit of the Trust Fund or any activity 
     financed through the Trust Fund.
       ``(2) Investment.--
       ``(A) In general.--The Secretary of the Treasury shall 
     invest such amounts of the Fund as such Secretary determines 
     are not required to meet current withdrawals from the Fund in 
     government account serial securities.
       ``(B) Use of income.--Any interest derived from investments 
     under subparagraph (A) shall be credited to the Fund.
       ``(3) Amounts deposited into trust fund.--In addition to 
     amounts transferred under subsection (f), there shall be 
     deposited in the Trust Fund--
       ``(A) that portion of amounts recovered in relation to 
     section 1128A arising out of a claim under title XVIII as 
     remains after application of subsection (f)(2) (relating to 
     repayment of the Federal Hospital Insurance Trust Fund or the 
     Federal Supplementary Medical Insurance Trust Fund) of that 
     section, as may be applicable,
       ``(B) fines imposed under section 1128B arising out of a 
     claim under this title, and
       ``(C) penalties and damages imposed (other than funds 
     awarded to a relator or for restitution) under sections 3729 
     through 3732 of title 31, United States Code (pertaining to 
     false claims) in cases involving claims relating to programs 
     under title XVIII, XIX, or XXI.
       ``(4) Direct appropriation of funds to carry out program.--
       ``(A) In general.--There are appropriated from the Trust 
     Fund for each fiscal year such amounts as are necessary to 
     carry out the Medicare Integrity Program under this section, 
     subject to subparagraph (B).
       ``(B) Amounts specified.--The amount appropriated under 
     subparagraph (A) for a fiscal year is as follows:
       ``(i) For fiscal year 1996, such amount shall be not less 
     than $430,000,000 and not more than $440,000,000.
       ``(ii) For fiscal year 1997, such amount shall be not less 
     than $490,000,000 and not more than $500,000,000.
       ``(iii) For fiscal year 1998, such amount shall be not less 
     than $550,000,000 and not more than $560,000,000.
       ``(iv) For fiscal year 1999, such amount shall be not less 
     than $620,000,000 and not more than $630,000,000.
       ``(v) For fiscal year 2000, such amount shall be not less 
     than $670,000,000 and not more than $680,000,000.
       ``(vi) For fiscal year 2001, such amount shall be not less 
     than $690,000,000 and not more than $700,000,000.
       ``(vii) For fiscal year 2002, such amount shall be not less 
     than $710,000,000 and not more than $720,000,000.
       ``(5) Annual report.--The Secretary shall submit an annual 
     report to Congress on the amount of revenue which is 
     generated and disbursed by the Trust Fund in each fiscal 
     year.''.
       (b) Elimination of FI and Carrier Responsibility for 
     Carrying out Activities Subject to Program.--
       (1) Responsibilities of fiscal intermediaries under part 
     a.--Section 1816 (42 U.S.C. 1395h) is amended by adding at 
     the end the following new subsection:
       ``(l) No agency or organization may carry out (or receive 
     payment for carrying out) any activity pursuant to an 
     agreement under this section to the extent that the activity 
     is carried out pursuant to a contract under the Medicare 
     Integrity Program under section 1894.''.
       (2) Responsibilities of carriers under part b.--Section 
     1842(c) (42 U.S.C. 1395u(c)) is amended by adding at the end 
     the following new paragraph:
       ``(6) No carrier may carry out (or receive payment for 
     carrying out) any activity pursuant to a contract under this 
     subsection to the extent that the activity is carried out 
     pursuant to a contract under the Medicare Integrity Program 
     under section 1894.''.
       (c) Conforming Amendment.--Section 1128A(f)(3) (42 U.S.C. 
     1320a-7a(f)(3)) is amended by striking ``as miscellaneous 
     receipts of the Treasury of the United States'' and inserting 
     ``in the Anti-Fraud and Abuse Trust Fund established under 
     section 1895(g)''.
       (d) Direct Spending for Medicare-Related Activities of 
     Inspector General.--Section 1894, as added by subsection (a), 
     is amended by adding at the end the following new subsection:
       ``(h) Direct Spending for Medicare-Related Activities of 
     Inspector General.--
       ``(1) In general.--There are appropriated from the Federal 
     Hospital Insurance Trust Fund and the Federal Supplementary 
     Medical Insurance Trust Fund to the Inspector General of the 
     Department of Health and Human Services for each fiscal year 
     such amounts as are necessary to enable the Inspector General 
     to carry out activities relating to the medicare program (as 
     described in paragraph (2)), subject to paragraph (3).
       ``(2) Activities described.--The activities described in 
     this paragraph are as follows:
       ``(A) Prosecuting medicare-related matters through 
     criminal, civil, and administrative proceedings.
       ``(B) Conducting investigations relating to the medicare 
     program.
       ``(C) Performing financial and performance audits of 
     programs and operations relating to the medicare program.
       ``(D) Performing inspections and other evaluations relating 
     to the medicare program.
       ``(E) Conducting provider and consumer education activities 
     regarding the requirements of this title.
       ``(3) Amounts specified.--The amount appropriated under 
     paragraph (1) for a fiscal year is as follows:
       ``(A) For fiscal year 1996, such amount shall be 
     $130,000,000.
       ``(B) For fiscal year 1997, such amount shall be 
     $181,000,000.
       ``(C) For fiscal year 1998, such amount shall be 
     $204,000,000.
       ``(D) For each subsequent fiscal year, the amount 
     appropriated for the previous fiscal year, increased by the 
     percentage increase in aggregate expenditures under this 
     title for the fiscal year involved over the previous fiscal 
     year.
       ``(4) Allocation of payments among trust funds.--The 
     appropriations made under paragraph (1) shall be in an 
     allocation as reasonably reflects the proportion of such 
     expenditures associated with part A and part B.''.

     SEC. 8406. FRAUD REDUCTION DEMONSTRATION PROJECT.

       (a) In General.--Not later than July 1, 1996, the Secretary 
     of Health and Human Services (in this section referred to as 
     the ``Secretary'') shall establish not less than three 
     demonstration projects under which organizations with a 
     contract under section 1816 or section 1842 of the Social 
     Security Act--
       (1) identify practitioners and providers whose patterns of 
     providing care to beneficiaries enrolled under title XVIII of 
     the Social Security Act are consistently outside the norm for 
     other practitioners or providers of the same category, class, 
     or type, and
       (2) experiment with ways of identifying fraudulent claims 
     submitted to the program established under such title before 
     they are paid.
       (b) Duration of Projects.--Each project established under 
     subsection (a) shall last for at least 18 months and shall 
     focus on those categories, classes, or types of providers and 
     practitioners that have been identified by the Inspector 
     General of the Department of Health and Human Services as 
     having a high incidence of fraud and abuse.
       (c) Report.--Not later than July 1, 1997, the Secretary 
     shall report to the Congress on the demonstration projects 
     established under subsection (a), and shall include in the 
     report an assessment of the effectiveness of, 

[[Page H11280]]

     and any recommended legislative changes based on, the 
     projects.

     SEC. 8407. REPORT ON COMPETITIVE PRICING.

       Not later than 1 year after the date of the enactment of 
     this Act, the Secretary of Health and Human Services (acting 
     through the Administrator of the Health Care Financing 
     Administration) shall submit to Congress a report 
     recommending legislative changes to the medicare program to 
     enable the prices paid for items and services under the 
     medicare program to be established on a more competitive 
     basis.
              Subtitle F--Improving Access to Health Care

                 PART 1--ASSISTANCE FOR RURAL PROVIDERS

                       Subpart A--Rural Hospitals

     SEC. 8501. SOLE COMMUNITY HOSPITALS.

       (a) Update.--Section 1886(b)(3)(B)(iv) (42 U.S.C. 
     1395ww(b)(3)(B)(iv)) is amended--
       (A) in subclause (III), by striking ``and'' at the end; and
       (B) by striking subclause (IV) and inserting the following:
       ``(IV) for each of the fiscal years 1996 through 2000, the 
     market basket percentage increase minus 1 percentage points, 
     and
       ``(V) for fiscal year 2001 and each subsequent fiscal year, 
     the applicable percentage increase under clause (i).''.
       (b) Study of Impact of Sole Community Hospital 
     Designations.--
       (1) Study.--The Medicare Payment Review Commission shall 
     conduct a study of the impact of the designation of hospitals 
     as sole community hospitals under the medicare program on the 
     delivery of health care services to individuals in rural 
     areas, and shall include in the study an analysis of the 
     characteristics of the hospitals designated as such sole 
     community hospitals under the program.
       (2) Report.--Not later than 12 months after the date a 
     majority of the members of the Commission are first 
     appointed, the Commission shall submit to Congress a report 
     on the study conducted under paragraph (1).

     SEC. 8502. CLARIFICATION OF TREATMENT OF EAC AND RPC 
                   HOSPITALS.

       Paragraphs (1)(A) and (2)(A) of section 1820(i) (42 U.S.C. 
     1395i@4(i)) are each amended by striking the semicolon at the 
     end and inserting the following: ``, or in a State which the 
     Secretary finds would receive a grant under such subsection 
     during a fiscal year if funds were appropriated for grants 
     under such subsection for the fiscal year;''.

     SEC. 8503. ESTABLISHMENT OF RURAL EMERGENCY ACCESS CARE 
                   HOSPITALS.

       (a) Establishment.--
       (1) In general.--Section 1861 (42 U.S.C. 1395x) is amended 
     by adding at the end the following new subsection:

  ``Rural Emergency Access Care Hospital; Rural Emergency Access Care 
                           Hospital Services

       ``(oo)(1) The term `rural emergency access care hospital' 
     means, for a fiscal year, a facility with respect to which 
     the Secretary finds the following:
       ``(A) The facility is located in a rural area (as defined 
     in section 1886(d)(2)(D)).
       ``(B) The facility was a hospital under this title at any 
     time during the 5-year period that ends on the date of the 
     enactment of this subsection.
       ``(C) The facility is in danger of closing due to low 
     inpatient utilization rates and operating losses, and the 
     closure of the facility would limit the access to emergency 
     services of individuals residing in the facility's service 
     area.
       ``(D) The facility has entered into (or plans to enter 
     into) an agreement with a hospital with a participation 
     agreement in effect under section 1866(a), and under such 
     agreement the hospital shall accept patients transferred to 
     the hospital from the facility and receive data from and 
     transmit data to the facility.
       ``(E) There is a practitioner who is qualified to provide 
     advanced cardiac life support services (as determined by the 
     State in which the facility is located) on-site at the 
     facility on a 24-hour basis.
       ``(F) A physician is available on-call to provide emergency 
     medical services on a 24-hour basis.
       ``(G) The facility meets such staffing requirements as 
     would apply under section 1861(e) to a hospital located in a 
     rural area, except that--
       ``(i) the facility need not meet hospital standards 
     relating to the number of hours during a day, or days during 
     a week, in which the facility must be open, except insofar as 
     the facility is required to provide emergency care on a 24-
     hour basis under subparagraphs (E) and (F); and
       ``(ii) the facility may provide any services otherwise 
     required to be provided by a full-time, on-site dietitian, 
     pharmacist, laboratory technician, medical technologist, or 
     radiological technologist on a part-time, off-site basis.
       ``(H) The facility meets the requirements applicable to 
     clinics and facilities under subparagraphs (C) through (J) of 
     paragraph (2) of section 1861(aa) and of clauses (ii) and 
     (iv) of the second sentence of such paragraph (or, in the 
     case of the requirements of subparagraph (E), (F), or (J) of 
     such paragraph, would meet the requirements if any reference 
     in such subparagraph to a `nurse practitioner' or to `nurse 
     practitioners' were deemed to be a reference to a `nurse 
     practitioner or nurse' or to `nurse practitioners or 
     nurses'); except that in determining whether a facility meets 
     the requirements of this subparagraph, subparagraphs (E) and 
     (F) of that paragraph shall be applied as if any reference to 
     a `physician' is a reference to a physician as defined in 
     section 1861(r)(1).
       ``(2) The term `rural emergency access care hospital 
     services' means the following services provided by a rural 
     emergency access care hospital and furnished to an individual 
     over a continuous period not to exceed 24 hours (except that 
     such services may be furnished over a longer period in the 
     case of an individual who is unable to leave the hospital 
     because of inclement weather):
       ``(A) An appropriate medical screening examination (as 
     described in section 1867(a)).
       ``(B) Necessary stabilizing examination and treatment 
     services for an emergency medical condition and labor (as 
     described in section 1867(b)).''.
       (2) Requiring rural emergency access care hospitals to meet 
     hospital anti-dumping requirements.--Section 1867(e)(5) (42 
     U.S.C. 1395dd(e)(5)) is amended by striking ``1861(mm)(1))'' 
     and inserting ``1861(mm)(1)) and a rural emergency access 
     care hospital (as defined in section 1861(oo)(1))''.
       (b) Coverage and Payment Under Part B.--
       (1) Coverage under part b.--Section 1832(a)(2) (42 U.S.C. 
     1395k(a)(2)) is amended--
       (A) by striking ``and'' at the end of subparagraph (I);
       (B) by striking the period at the end of subparagraph (J) 
     and inserting ``; and''; and
       (C) by adding at the end the following new subparagraph:
       ``(K) rural emergency access care hospital services (as 
     defined in section 1861(oo)(2)).''.
       (2) Payment based on payment for outpatient rural primary 
     care hospital services.--
       (A) In general.--Section 1833(a)(6) (42 U.S.C. 1395l(a)(6)) 
     is amended by striking ``services,'' and inserting ``services 
     and rural emergency access care hospital services,''.
       (B) Payment methodology described.--Section 1834(g) (42 
     U.S.C. 1395m(g)) is amended--
       (i) in the heading, by striking ``Services'' and inserting 
     ``Services and Rural Emergency Access Care Hospital 
     Services''; and
       (ii) by adding at the end the following new sentence: ``The 
     amount of payment for rural emergency access care hospital 
     services provided during a year shall be determined using the 
     applicable method provided under this subsection for 
     determining payment for outpatient rural primary care 
     hospital services during the year.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to fiscal years beginning on or after October 1, 
     1995.

     SEC. 8504. CLASSIFICATION OF RURAL REFERRAL CENTERS.

       (a) Prohibiting Denial of Request for Reclassification on 
     Basis of Comparability of Wages.--
       (1) In general.--Section 1886(d)(10)(D) (42 U.S.C. 
     1395ww(d)(10)(D)) is amended--
       (A) by redesignating clause (iii) as clause (iv); and
       (B) by inserting after clause (ii) the following new 
     clause:
       ``(iii) Under the guidelines published by the Secretary 
     under clause (i), in the case of a hospital which is 
     classified by the Secretary as a rural referral center under 
     paragraph (5)(C), the Board may not reject the application of 
     the hospital under this paragraph on the basis of any 
     comparison between the average hourly wage of the hospital 
     and the average hourly wage of hospitals in the area in which 
     it is located.''.
       (2) Effective date.--Notwithstanding section 
     1886(d)(10)(C)(ii) of the Social Security Act, a hospital may 
     submit an application to the Medicare Geographic 
     Classification Review Board during the 30-day period 
     beginning on the date of the enactment of this Act requesting 
     a change in its classification for purposes of determining 
     the area wage index applicable to the hospital under section 
     1886(d)(3)(D) of such Act for fiscal year 1997, if the 
     hospital would be eligible for such a change in its 
     classification under the standards described in section 
     1886(d)(10)(D) (as amended by paragraph (1)) but for its 
     failure to meet the deadline for applications under section 
     1886(d)(10)(C)(ii).
       (b) Continuing Treatment of Previously Designated 
     Centers.--Any hospital classified as a rural referral center 
     by the Secretary of Health and Human Services under section 
     1886(d)(5)(C) of the Social Security Act for fiscal year 1994 
     shall be classified as such a rural referral center for 
     fiscal year 1996 and each subsequent fiscal year.

     SEC. 8505. FLOOR ON AREA WAGE INDEX.

       (a) In General.--For purposes of section 1886(d)(3)(E) of 
     the Social Security Act for discharges occurring on or after 
     October 1, 1995, the area wage index applicable under such 
     section to any hospital which is not located in a rural area 
     (as defined in section 1886(d)(2)(D) of such Act) may not be 
     less than the average of the area wage indices applicable 
     under such section to hospitals located in rural areas in the 
     State in which the hospital is located.
       (b) Budget-Neutrality in Implementation.--The Secretary of 
     Health and Human Services shall make any adjustments required 
     under subsection (a) in a manner which assures that the 
     aggregate payments made under section 1886(d) of the Social 
     Security Act in a fiscal year for the operating costs of 
     inpatient hospital services are not greater or less than 
     those which would have been made in the year without such 
     adjustments.

[[Page H11281]]


     SEC. 8506. MEDICAL EDUCATION.

       (a) State and Consortium Demonstration Projects.--
       (1) In general.--
       (A) Participation of states and consortia.--The Secretary 
     shall establish and conduct a demonstration project to 
     increase the number and percentage of medical students 
     entering primary care practice relative to those entering 
     nonprimary care practice under which the Secretary shall make 
     payments in accordance with paragraph (4)--
       (i) to not more than 10 States for the purpose of testing 
     and evaluating mechanisms to meet the goals described in 
     subsection (b); and
       (ii) to not more than 10 health care training consortia for 
     the purpose of testing and evaluating mechanisms to meet such 
     goals.
       (B) Exclusion of consortia in participating states.--A 
     consortia may not receive payments under the demonstration 
     project under subparagraph (A)(ii) if any of its members is 
     located in a State receiving payments under the project under 
     subparagraph (A)(i).
       (2) Applications.--
       (A) In general.--Each State and consortium desiring to 
     conduct a demonstration project under this subsection shall 
     prepare and submit to the Secretary an application, at such 
     time, in such manner, and containing such information as the 
     Secretary may require to assure that the State or consortium 
     will meet the goals described in subsection (b). In the case 
     of an application of a State, the application shall include--
       (i) information demonstrating that the State has consulted 
     with interested parties with respect to the project, 
     including State medical associations, State hospital 
     associations, and medical schools located in the State;
       (ii) an assurance that no hospital conducting an approved 
     medical residency training program in the State will lose 
     more than 10 percent of such hospital's approved medical 
     residency positions in any year as a result of the project; 
     and
       (iii) an explanation of a plan for evaluating the impact of 
     the project in the State.
       (B) Approval of applications.--A State or consortium that 
     submits an application under subparagraph (A) may begin a 
     demonstration project under this subsection--
       (i) upon approval of such application by the Secretary; or
       (ii) at the end of the 60-day period beginning on the date 
     such application is submitted, unless the Secretary denies 
     the application during such period.
       (C) Notice and comment.--A State or consortium shall issue 
     a public notice on the date it submits an application under 
     subparagraph (A) which contains a general description of the 
     proposed demonstration project. Any interested party may 
     comment on the proposed demonstration project to the State or 
     consortium or the Secretary during the 30-day period 
     beginning on the date the public notice is issued.
       (3) Specific requirements for participants.--
       (A) Requirements for states.--Each State participating in 
     the demonstration project under this section shall use the 
     payments provided under paragraph (4) to test and evaluate 
     either of the following mechanisms to increase the number and 
     percentage of medical students entering primary care practice 
     relative to those entering nonprimary care practice:
       (i) Use of alternative weighting factors.--

       (I) In general.--The State may make payments to hospitals 
     in the State for direct graduate medical education costs in 
     amounts determined under the methodology provided under 
     section 1886(h) of the Social Security Act, except that the 
     State shall apply weighting factors that are different than 
     the weighting factors otherwise set forth in section 
     1886(h)(4)(C) of the Social Security Act.

       (II) Use of payments for primary care residents.--In 
     applying different weighting factors under subclause (I), the 
     State shall ensure that the amount of payment made to 
     hospitals for costs attributable to primary care residents 
     shall be greater than the amount that would have been paid to 
     hospitals for costs attributable to such residents if the 
     State had applied the weighting factors otherwise set forth 
     in section 1886(h)(4)(C) of the Social Security Act.

       (ii) Payments for medical education through consortium.--
     The State may make payments for graduate medical education 
     costs through payments to a health care training consortium 
     (or through any entity identified by such a consortium as 
     appropriate for receiving payments on behalf of the 
     consortium) that is established in the State but that is not 
     otherwise participating in the demonstration project.
       (B) Requirements for consortium.--
       (i) In general.--In the case of a consortium participating 
     in the demonstration project under this section, the 
     Secretary shall make payments for graduate medical education 
     costs through a health care training consortium whose members 
     provide medical residency training (or through any entity 
     identified by such a consortium as appropriate for receiving 
     payments on behalf of the consortium).
       (ii) Use of payments.--

       (I) In general.--Each consortium receiving payments under 
     clause (i) shall use such funds to conduct activities which 
     test and evaluate mechanisms to increase the number and 
     percentage of medical students entering primary care practice 
     relative to those entering nonprimary care practice, and may 
     use such funds for the operation of the consortium.

       (II) Payments to participating programs.--The consortium 
     shall ensure that the majority of the payments received under 
     clause (i) are directed to consortium members for primary 
     care residency programs, and shall designate for each 
     resident assigned to the consortium a hospital operating an 
     approved medical residency training program for purposes of 
     enabling the Secretary to calculate the consortium's payment 
     amount under the project. Such hospital shall be the hospital 
     where the resident receives the majority of the resident's 
     hospital-based, nonambulatory training experience.

       (4) Allocation of portion of medicare gme payments for 
     activities under project.--Notwithstanding any provision of 
     title XVIII of the Social Security Act, the following rules 
     apply with respect to each State and each health care 
     training consortium participating in the demonstration 
     project established under this subsection during a year:
       (A) In the case of a State--
       (i) the Secretary shall reduce the amount of each payment 
     made to hospitals in the State during the year for direct 
     graduate medical education costs under section 1886(h) of the 
     Social Security Act by 3 percent; and
       (ii) the Secretary shall pay the State an amount equal to 
     the Secretary's estimate of the sum of the reductions made 
     during the year under clause (i) (as adjusted by the 
     Secretary in subsequent years for over- or under-estimations 
     in the amount estimated under this subparagraph in previous 
     years).
       (B) In the case of a consortium--
       (i) the Secretary shall reduce the amount of each payment 
     made to hospitals who are members of the consortium during 
     the year for direct graduate medical education costs under 
     section 1886(h) of the Social Security Act by 3 percent; and
       (ii) the Secretary shall pay the consortium an amount equal 
     to the Secretary's estimate of the sum of the reductions made 
     during the year under clause (i) (as adjusted by the 
     Secretary in subsequent years for over- or under-estimations 
     in the amount estimated under this subparagraph in previous 
     years).
       (5) Duration.--A demonstration project under this 
     subsection shall be conducted for a period not to exceed 5 
     years. The Secretary may terminate a project if the Secretary 
     determines that the State or consortium conducting the 
     project is not in substantial compliance with the terms of 
     the application approved by the Secretary.
       (6) Evaluations and reports.--
       (A) Evaluations.--Each State or consortium participating in 
     the demonstration project shall submit to the Secretary a 
     final evaluation within 360 days of the termination of the 
     State or consortium's participation and such interim 
     evaluations as the Secretary may require.
       (B) Reports to congress.--Not later than 360 days after the 
     first demonstration project under this section begins, and 
     annually thereafter for each year in which such a project is 
     conducted, the Secretary shall submit a report to Congress 
     which evaluates the effectiveness of the State and consortium 
     activities conducted under such projects and includes any 
     legislative recommendations determined appropriate by the 
     Secretary.
       (7) Maintenance of effort.--Any funds available for the 
     activities covered by a demonstration project under this 
     section shall supplement, and shall not supplant, funds that 
     are expended for similar purposes under any State, regional, 
     or local program.
       (b) Goals for Projects.--The goals referred to in this 
     subsection for a State or consortium participating in the 
     demonstration project under this section are as follows:
       (1) The training of an equal number of physician and 
     nonphysician primary care providers.
       (2) The recruiting of residents for graduate medical 
     education training programs who received a portion of 
     undergraduate training in a rural area.
       (3) The allocation of not less than 50 percent of the 
     training spent in a graduate medical residency training 
     program at sites at which acute care inpatient hospital 
     services are not furnished.
       (4) The rotation of residents in approved medical residency 
     training programs among practices that serve residents of 
     rural areas.
       (5) The development of a plan under which, after a 5-year 
     transition period, not less than 50 percent of the residents 
     who begin an initial residency period in an approved medical 
     residency training program shall be primary care residents.
       (c) Definitions.--In this section:
       (1) Approved medical residency training program.--The term 
     ``approved medical residency training program'' has the 
     meaning given such term in section 1886(h)(5)(A) of the 
     Social Security Act.
       (2) Health care training consortium.--The term ``health 
     care training consortium'' means a State, regional, or local 
     entity consisting of at least one of each of the following:
       (A) A hospital operating an approved medical residency 
     training program at which residents receive training at 
     ambulatory training sites located in rural areas.
       (B) A school of medicine or osteopathic medicine.
       (C) A school of allied health or a program for the training 
     of physician assistants (as such terms are defined in section 
     799 of the Public Health Service Act).

[[Page H11282]]

       (D) A school of nursing (as defined in section 853 of the 
     Public Health Service Act).
       (3) Primary care.--The term ``primary care'' means family 
     practice, general internal medicine, general pediatrics, and 
     obstetrics and gynecology.
       (4) Resident.--The term ``resident'' has the meaning given 
     such term in section 1886(h)(5)(H) of the Social Security 
     Act.
       (5) Rural area.--The term ``rural area'' has the meaning 
     given such term in section 1886(d)(2)(D) of the Social 
     Security Act.

            Subpart B--Rural Physicians and Other Providers

     SEC. 8511. PROVIDER INCENTIVES.

       (a) Additional Payments Under Medicare for Physicians' 
     Services Furnished in Shortage Areas.--
       (1) Increase in amount of additional payment.--Section 
     1833(m) (42 U.S.C. 1395l(m)) is amended by striking ``10 
     percent'' and inserting ``20 percent''.
       (2) Restriction to primary care services.--Section 1833(m) 
     (42 U.S.C. 1395l(m)) is amended by inserting after 
     ``physicians' services'' the following: ``consisting of 
     primary care services (as defined in section 1842(i)(4))''.
       (3) Extension of payment for former shortage areas.--
       (A) In general.--Section 1833(m) (42 U.S.C. 1395l(m)) is 
     amended by striking ``area,'' and inserting ``area (or, in 
     the case of an area for which the designation as a health 
     professional shortage area under such section is 
     withdrawn, in the case of physicians' services furnished 
     to such an individual during the 3-year period beginning 
     on the effective date of the withdrawal of such 
     designation),''.
       (B) Effective date.--The amendment made by subparagraph (A) 
     shall apply to physicians' services furnished in an area for 
     which the designation as a health professional shortage area 
     under section 332(a)(1)(A) of the Public Health Service Act 
     is withdrawn on or after January 1, 1996.
       (4) Requiring carriers to report on services provided.--
     Section 1842(b)(3) (42 U.S.C. 1395u(b)(3)) is amended--
       (A) by striking ``and'' at the end of subparagraph (I); and
       (B) by inserting after subparagraph (I) the following new 
     subparagraph:
       ``(J) will provide information to the Secretary not later 
     than 30 days after the end of the contract year on the types 
     of providers to whom the carrier made additional payments 
     during the year for certain physicians' services pursuant to 
     section 1833(m), together with a description of the services 
     furnished by such providers during the year; and''.
       (5) Study.--
       (A) In general.--The Secretary of Health and Human Services 
     shall conduct a study analyzing the effectiveness of the 
     provision of additional payments under part B of the medicare 
     program for physicians' services provided in health 
     professional shortage areas in recruiting and retaining 
     physicians to provide services in such areas.
       (B) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Secretary shall submit to Congress 
     a report on the study conducted under subparagraph (A), and 
     shall include in the report such recommendations as the 
     Secretary considers appropriate.
       (6) Effective date.--The amendments made by paragraphs (1), 
     (2), and (4) shall apply to physicians' services furnished on 
     or after January 1, 1996.
       (b) Development of Model State Scope of Practice Law.--
       (1) In general.--The Secretary of Health and Human Services 
     shall develop and publish a model law that may be adopted by 
     States to increase the access of individuals residing in 
     underserved rural areas to health care services by expanding 
     the services which non-physician health care professionals 
     may provide in such areas.
       (2) Deadline.--The Secretary shall publish the model law 
     developed under paragraph (1) not later than 1 year after the 
     date of the enactment of this Act.

     SEC. 8512. NATIONAL HEALTH SERVICE CORPS LOAN REPAYMENTS 
                   EXCLUDED FROM GROSS INCOME.

       (a) In General.--Part III of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to items 
     specifically excluded from gross income) is amended by 
     redesignating section 137 as section 138 and by inserting 
     after section 136 the following new section:

     ``SEC. 137. NATIONAL HEALTH SERVICE CORPS LOAN REPAYMENTS.

       ``(a) General Rule.--Gross income shall not include any 
     qualified loan repayment.
       ``(b) Qualified Loan Repayment.--For purposes of this 
     section, the term `qualified loan repayment' means any 
     payment made on behalf of the taxpayer by the National Health 
     Service Corps Loan Repayment Program under section 338B(g) of 
     the Public Health Service Act.''.
       (b) Conforming Amendment.--Paragraph (3) of section 338B(g) 
     of the Public Health Service Act is amended by striking 
     ``Federal, State, or local'' and inserting ``State or 
     local''.
       (c) Clerical Amendment.--The table of sections for part III 
     of subchapter B of chapter 1 of the Internal Revenue Code of 
     1986 is amended by striking the item relating to section 137 
     and inserting the following:

``Sec. 137. National Health Service Corps loan repayments.
``Sec. 138. Cross references to other Acts.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to payments made under section 338B(g) of the 
     Public Health Service Act after the date of the enactment of 
     this Act.

     SEC. 8513. TELEMEDICINE PAYMENT METHODOLOGY.

       The Secretary of Health and Human Services shall establish 
     a methodology for making payments under part B of the 
     medicare program for telemedicine services furnished on an 
     emergency basis to individuals residing in an area designated 
     as a health professional shortage area (under section 332(a) 
     of the Public Health Service Act).

     SEC. 8514. DEMONSTRATION PROJECT TO INCREASE CHOICE IN RURAL 
                   AREAS.

       The Secretary of Health and Human Services (acting through 
     the Administrator of the Health Care Financing 
     Administration) shall conduct a demonstration project to 
     assess the advantages and disadvantages of requiring Medicare 
     Choice organizations under part C of title XVIII of the 
     Social Security Act (as added by section 8002(a)) to market 
     Medicare Choice products in certain underserved areas which 
     are near the standard service area for such products.

                      PART 2--MEDICARE SUBVENTION

     SEC. 8521. MEDICARE PROGRAM PAYMENTS FOR HEALTH CARE SERVICES 
                   PROVIDED IN THE MILITARY HEALTH SERVICES 
                   SYSTEM.

       (a) Payments Under Medicare Risk Contracts Program.--
       (1) Current program.--Section 1876 (42 U.S.C. 1395mm) is 
     amended by adding at the end the following new subsection:
       ``(k) Notwithstanding any other provision of this section, 
     a managed health care plan established by the Secretary of 
     Defense under chapter 55 of title 10, United States Code, 
     shall be considered an eligible organization under this 
     section, and the Secretary shall make payments to such a 
     managed health care plan during a year on behalf of any 
     individuals entitled to benefits under this title who are 
     enrolled in such a managed health care plan during the year. 
     Such payments shall be equal to 30 percent of the amount 
     otherwise paid to other eligible organizations under this 
     section, and shall be made under similar terms and conditions 
     under which the Secretary makes payments to other eligible 
     organizations with risk sharing contracts under this 
     section.''.
       (2) Medicare choice program.--Section 1855, as inserted by 
     section 8002(a), by adding at the end the following new 
     subsection:
       ``(h) Payments to Military Program.--Notwithstanding any 
     other provision of this section, a managed health care plan 
     established by the Secretary of Defense under chapter 55 of 
     title 10, United States Code, shall be considered a Medicare 
     Choice organization under this part, and the Secretary shall 
     make payments to such a managed health care plan during a 
     year on behalf of any individuals entitled to benefits under 
     this title who are enrolled in such a managed health care 
     plan during the year. Such payments shall be equal to 30 
     percent of the amount otherwise paid to other Medicare Choice 
     organizations under this section, and shall be made under 
     similar terms and conditions under which the Secretary 
     makes payments to other Medicare Choice organizations with 
     contracts in effect under this part.''.
       (b) Temporary Provision for Waiver of Part B Premium 
     Penalty.--Section 1839 (42 U.S.C. 1395r) is amended by adding 
     at the end the following new subsection:
       ``(h) The premium increase required by subsection (b) shall 
     not apply with respect to a person who is enrolled with a 
     managed care plan that is established by the Secretary of 
     Defense under chapter 55 of title 10, United States Code, and 
     is recognized as an eligible organization pursuant to section 
     1855(h) or section 1876(k), if such person first enrolled in 
     such plan prior to January 1, 1998.''.
       (c) Payments Under Part A of Medicare.--Section 1814(c) (42 
     U.S.C. 1395f(c)) is amended--
       (1) by redesignating the current matter as paragraph (1); 
     and
       (2) by adding at the end the following new paragraph:
       ``(2) Paragraph (1) shall not apply to services provided by 
     facilities of the uniformed services pursuant to chapter 55 
     of title 10, United States Code, and subject to the 
     provisions of section 1095 of such title. With respect to 
     such services, payments under this title shall be made 
     without regard to whether the beneficiary under this title 
     has paid the deductible and copayments amounts generally 
     required by this title.''.
       (d) Payments Under Part B of Medicare.--Section 1835(d) (42 
     U.S.C. 1395n(d)) is amended--
       (1) by redesignating the current matter as paragraph (1); 
     and
       (2) by adding at the end the following new paragraph:
       ``(2) Paragraph (1) shall not apply to services provided by 
     facilities of the uniformed services pursuant to chapter 55 
     of title 10, United States Code, and subject to the 
     provisions of section 1095 of such title. With respect to 
     such services, payments under this title shall be made 
     without regard to whether the beneficiary under this title 
     has paid the deductible and copayments amounts generally 
     required by this title.''.
       (e) Conforming Amendments to the Third Party Collection 
     Program for Military Medical Facilities.--(1) Section 1095(d) 
     of title 10, United States Code, is amended--

[[Page H11283]]

       (A) by striking ``XVIII or''; and
       (B) by striking ``1395'' and inserting ``1396''.
       (2) Section 1095(h)(2) of such title is amended by 
     inserting after ``includes'' the following: ``plans 
     administered under title XVIII of the Social Security Act (42 
     U.S.C. 1395 et seq.),''.
       (f) Effective Date.--The amendments made by this section 
     shall take effect at the end of the 30-day period beginning 
     on the date of the enactment of this Act.
                      Subtitle G--Other Provisions

     SEC. 8601. EXTENSION AND EXPANSION OF EXISTING SECONDARY 
                   PAYER REQUIREMENTS.

       (a) Data Match.--
       (1) Section 1862(b)(5)(C) (42 U.S.C. 1395y(b)(5)(C)) is 
     amended by striking clause (iii).
       (2) Section 6103(l)(12) of the Internal Revenue Code of 
     1986 is amended by striking subparagraph (F).
       (b) Application to Disabled Individuals in Large Group 
     Health Plans.--
       (1) In general.--Section 1862(b)(1)(B) (42 U.S.C. 
     1395y(b)(1)(B)) is amended--
       (A) in clause (i), by striking ``clause (iv)'' and 
     inserting ``clause (iii)'',
       (B) by striking clause (iii), and
       (C) by redesignating clause (iv) as clause (iii).
       (2) Conforming amendments.--Paragraphs (1) through (3) of 
     section 1837(i) (42 U.S.C. 1395p(i)) and the second sentence 
     of section 1839(b) (42 U.S.C. 1395r(b)) are each amended by 
     striking ``1862(b)(1)(B)(iv)'' each place it appears and 
     inserting ``1862(b)(1)(B)(iii)''.
       (c) Expansion of Period of Application to Individuals With 
     End Stage Renal Disease.--Section 1862(b)(1)(C) (42 U.S.C. 
     1395y(b)(1)(C)) is amended--
       (1) in the first sentence, by striking ``12-month'' each 
     place it appears and inserting ``24-month'', and
       (2) by striking the second sentence.

     SEC. 8602. REPEAL OF MEDICARE AND MEDICAID COVERAGE DATA 
                   BANK.

       (a) In General.--Section 1144 (42 U.S.C. 1320b-14) is 
     repealed.
       (b) Conforming Amendments.--
       (1) Medicare.--Section 1862(b)(5) (42 U.S.C. 1395y(b)(5)) 
     is amended--
       (A) in subparagraph (B), by striking ``under--'' and all 
     that follows through the end and inserting ``subparagraph (A) 
     for purposes of carrying out this subsection.'', and
       (B) in subparagraph (C)(i), by striking ``subparagraph 
     (B)(i)'' and inserting ``subparagraph (B)''.
       (2) Medicaid.--Section 1902(a)(25)(A)(i) (42 U.S.C. 
     1396a(a)(25)(A)(i)) is amended by striking ``including the 
     use of'' and all that follows through ``any additional 
     measures''.
       (3) ERISA.--Section 101(f) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1021(f)) is repealed.
       (4) Data matches.--Section 552a(a)(8)(B) of title 5, United 
     States Code, is amended--
       (A) by adding ``; or'' at the end of clause (v),
       (B) by striking ``or'' at the end of clause (vi), and
       (C) by striking clause (vii).

     SEC. 8603. CLARIFICATION OF MEDICARE COVERAGE OF ITEMS AND 
                   SERVICES ASSOCIATED WITH CERTAIN MEDICAL 
                   DEVICES APPROVED FOR INVESTIGATIONAL USE.

       (a) Coverage.--Nothing in title XVIII of the Social 
     Security Act may be construed to prohibit coverage under part 
     A or part B of the medicare program of items and services 
     associated with the use of a medical device in the furnishing 
     of inpatient hospital services (as defined for purposes of 
     part A of the medicare program) solely on the grounds that 
     the device is not an approved device, if--
       (1) the device is an investigational device; and
       (2) the device is used instead of an approved device.
       (b) Clarification of Payment Amount.--Notwithstanding any 
     other provision of title XVIII of the Social Security Act, 
     the amount of payment made under the medicare program for any 
     item or service associated with the use of an investigational 
     device in the furnishing of inpatient hospital services (as 
     defined for purposes of part A of the medicare program) may 
     not exceed the amount of the payment which would have been 
     made under the program for the item or service if the item or 
     service were associated with the use of an approved device.
       (c) Definitions.--In this section--
       (1) the term ``approved device'' means a medical device 
     which has been approved for marketing under pre-market 
     approval under the Federal Food, Drug, and Cosmetic Act or 
     cleared for marketing under a 510(k) notice under such Act; 
     and
       (2) the term ``investigational device'' means a medical 
     device (other than a device described in paragraph (1)) which 
     is approved for investigational use under section 520(g) of 
     the Federal Food, Drug, and Cosmetic Act.

     SEC. 8604. ADDITIONAL EXCLUSION FROM COVERAGE.

       (a) In General.--Section 1862(a) (42 U.S.C. 1395y(a)) is 
     amended--
       (1) by striking ``or'' at the end of paragraph (14),
       (2) by striking the period at the end of paragraph (15) and 
     inserting ``; or'', and
       (3) by inserting after paragraph (15) the following new 
     paragraph:
       ``(16) where such expenses are for items or services, or to 
     assist in the purchase, in whole or in part, of health 
     benefit coverage that includes items or services, for the 
     purpose of causing, or assisting in causing, the death, 
     suicide, euthanasia, or mercy killing of a person.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to payment for items and services furnished on or 
     after the date of the enactment of this Act.

     SEC. 8605. EXTENDING MEDICARE COVERAGE OF, AND APPLICATION OF 
                   HOSPITAL INSURANCE TAX TO, ALL STATE AND LOCAL 
                   GOVERNMENT EMPLOYEES.

       (a) In General.--
       (1) Application of hospital insurance tax.--Section 
     3121(u)(2) of the Internal Revenue Code of 1986 is amended by 
     striking subparagraphs (C) and (D).
       (2) Coverage under medicare.--Section 210(p) of the Social 
     Security Act (42 U.S.C. 410(p)) is amended by striking 
     paragraphs (3) and (4).
       (3) Effective date.--The amendments made by this subsection 
     shall apply to services performed after December 31, 1996.
       (b) Transition in Benefits for State and Local Government 
     Employees and Former Employees.--
       (1) In general.--
       (A) Employees newly subject to tax.--For purposes of 
     sections 226, 226A, and 1811 of the Social Security Act, in 
     the case of any individual who performs services during the 
     calendar quarter beginning January 1, 1997, the wages for 
     which are subject to the tax imposed by section 3101(b) of 
     the Internal Revenue Code of 1986 only because of the 
     amendment made by subsection (a), the individual's medicare 
     qualified State or local government employment (as defined in 
     subparagraph (B)) performed before January 1, 1997, shall be 
     considered to be ``employment'' (as defined for purposes of 
     title II of such Act), but only for purposes of providing the 
     individual (or another person) with entitlement to hospital 
     insurance benefits under part A of title XVIII of such Act 
     for months beginning with January 1997.
       (B) Medicare qualified state or local government employment 
     defined.--In this paragraph, the term ``medicare qualified 
     State or local government employment'' means medicare 
     qualified government employment described in section 
     210(p)(1)(B) of the Social Security Act (determined without 
     regard to section 210(p)(3) of such Act, as in effect before 
     its repeal under subsection (a)(2)).
       (2) Authorization of appropriations.--There are authorized 
     to be appropriated to the Federal Hospital Insurance Trust 
     Fund from time to time such sums as the Secretary of Health 
     and Human Services deems necessary for any fiscal year on 
     account of--
       (A) payments made or to be made during such fiscal year 
     from such Trust Fund with respect to individuals who are 
     entitled to benefits under title XVIII of the Social Security 
     Act solely by reason of paragraph (1),
       (B) the additional administrative expenses resulting or 
     expected to result therefrom, and
       (C) any loss in interest to such Trust Fund resulting from 
     the payment of those amounts, in order to place such Trust 
     Fund in the same position at the end of such fiscal year as 
     it would have been in if this subsection had not been 
     enacted.
       (3) Information to individuals who are prospective medicare 
     beneficiaries based on state and local government 
     employment.--Section 226(g) of the Social Security Act (42 
     U.S.C. 426(g)) is amended--
       (A) by redesignating paragraphs (1) through (3) as 
     subparagraphs (A) through (C), respectively,
       (B) by inserting ``(1)'' after ``(g)'', and
       (C) by adding at the end the following new paragraph:
       ``(2) The Secretary, in consultation with State and local 
     governments, shall provide procedures designed to assure that 
     individuals who perform medicare qualified government 
     employment by virtue of service described in section 
     210(a)(7) are fully informed with respect to (A) their 
     eligibility or potential eligibility for hospital insurance 
     benefits (based on such employment) under part A of title 
     XVIII, (B) the requirements for, and conditions of, such 
     eligibility, and (C) the necessity of timely application as a 
     condition of becoming entitled under subsection (b)(2)(C), 
     giving particular attention to individuals who apply for an 
     annuity or retirement benefit and whose eligibility for such 
     annuity or retirement benefit is based on a disability.''
       (c) Technical Amendments.--
       (1) Subparagraph (A) of section 3121(u)(2) of the Internal 
     Revenue Code of 1986 is amended by striking ``subparagraphs 
     (B) and (C),'' and inserting ``subparagraph (B),''.
       (2) Subparagraph (B) of section 210(p)(1) of the Social 
     Security Act (42 U.S.C. 410(p)(1)) is amended by striking 
     ``paragraphs (2) and (3).'' and inserting ``paragraph (2).''
       (3) Section 218 of the Social Security Act (42 U.S.C. 418) 
     is amended by striking subsection (n).
       (4) The amendments made by this subsection shall apply 
     after December 31, 1996.
      Subtitle H--Monitoring Achievement of Medicare Reform Goals

     SEC. 8701. ESTABLISHMENT OF BUDGETARY AND PROGRAM GOALS.

       (a) In General.--The Secretary shall establish program 
     budgetary and program goals for the medicare program 
     consistent with this section.
       (b) Budgetary Goals.--The budgetary goal is to restrict 
     total outlays under the medicare program as follows:
       (1) For fiscal year 1996, $173,500,000,000.
       (2) For fiscal year 1997, $187,300,000,000.
       (3) For fiscal year 1998, $200,800,000,000.

[[Page H11284]]

       (4) For fiscal year 1999, $215,200,000,000.
       (5) For fiscal year 2000, $220,500,000,000.
       (6) For fiscal year 2001, $248,000,000,000.
       (7) For fiscal year 2002, $267,100,000,000.
       (c) Program Goals.--The program goals shall be consistent 
     with the following:
       (1) There should be an equitable distribution of funds 
     between per beneficiary spending on payments to Medicare 
     Choice organizations under part C of the medicare program and 
     on payments to providers on a fee-for-service basis under 
     parts A and B of the program.
       (2) Payments to Medicare Choice organizations should be 
     established in a manner that promotes the availability of 
     Medicare Choice products in all regions of the country and 
     that permits such organizations to offer adequate coverage.

     SEC. 8702. MEDICARE REFORM COMMISSION.

       (a) Establishment.--There is established a commission to be 
     known as the Medicare Reform Commission (in this section 
     referred to as the ``Commission'').
       (b) Duties.--
       (1) In general.--The Commission shall examine how the 
     medicare program has met the budgetary and program goals 
     established under section 8701.
       (2) Periodic reports.--
       (A) In general.--The Commission shall issue a report on 
     April 1, 1998, and on March 1 of every third subsequent year, 
     on the status of the medicare program in relation to the 
     budgetary and program goals specified in section 8601.
       (B) Contents.--Each report shall include the following 
     information about the medicare program in the most recent 
     fiscal year and projects for the succeeding 3 fiscal years:
       (i) The actuarial value of the traditional medicare benefit 
     package.
       (ii) The projected rate of growth of outlays under the 
     traditional medicare program.
       (iii) The ability of Medicare Choice organizations to offer 
     an adequate benefit package under part C of the medicare 
     program.
       (iv) The extent of Medicare Choice products made available 
     to medicare beneficiaries in the different regions of the 
     country.
       (3) Recommendations.--
       (A) In general.--If a report under paragraph (2) finds that 
     any of the following problems exists, the Commission shall 
     include recommendations to respond to the problem:
       (i) The actuarial value of the traditional medicare benefit 
     package exceeds the payment rate under the Medicare Choice 
     program.
       (ii) The rate of growth of the traditional medicare program 
     under parts A and B is projected to result in medicare 
     outlays exceeding the outlay targets specified in section 
     8701.
       (iii) The payments under the Medicare Choice program are 
     not sufficient to allow contractors to provide an adequate 
     benefit package.
       (iv) The selection of Medicare Choice products are limited 
     or not available in parts of the country.
       (B) Types of recommendations.--The recommendations provided 
     under subparagraph (A) may include--
       (i) in response to the problem described in subparagraph 
     (A)(ii), reduction in payments to providers under parts A and 
     B or an increase in cost sharing by beneficiaries; and
       (ii) in response to the problems described in subparagraphs 
     (A)(iii) and (A)(iv), an adjustment to payment rates to 
     Medicare Choice organizations.
     Such recommendations may not include any change that is 
     inconsistent with attaining the outlay targets specified 
     under section 8701.
       (4) Presidential response.--If the Commission reports under 
     this subsection that the goals established in section 8701 
     are not met (or projects that such goals will not be met 
     during a 3-year period), the President shall submit to 
     Congress, within 90 days after the date of submission of the 
     report, specific legislative recommendations to correct the 
     problem. Such recommendations may include those described in 
     paragraph (3)(B) and may not include any change that is 
     inconsistent with attaining the outlay targets specified 
     under section 8701.
       (5) Congressional consideration.--
       (A) In general.--The President's recommendations submitted 
     under paragraph (4) shall not apply unless a joint resolution 
     (described in subparagraph (B)) approving such 
     recommendations is enacted, in accordance with the provisions 
     of subparagraph (C), before the end of the 60-day period 
     beginning on the date on which a report containing such 
     recommendations is submitted by the President under paragraph 
     (4). For purposes of applying the preceding sentence and 
     subparagraphs (B) and (C), the days on which either House of 
     Congress is not in session because of an adjournment of more 
     than three days to a day certain shall be excluded in the 
     computation of a period.
       (B) Joint resolution of approval.--A joint resolution 
     described in this subparagraph means only a joint resolution 
     which is introduced within the 10-day period beginning on the 
     date on which the report described in subparagraph (A) is 
     submitted and--
       (i) which does not have a preamble;
       (ii) the matter after the resolving clause of which is as 
     follows: ``That Congress approves the recommendations of the 
     President under section 8702(b)(4) of the Medicare 
     Preservation Act, as submitted by the President on 
     ______________.'', the blank space being filled in with the 
     appropriate date; and
       (iii) the title of which is as follows: ``Joint resolution 
     approving Presidential recommendations submitted under 
     section 8702(b)(4) of the Medicare Preservation Act, as 
     submitted by the President on ______________.'', the blank 
     space being filled in with the appropriate date.
       (C) Procedures for consideration of resolution of 
     approval.--Subject to subparagraph (D), the provisions of 
     section 2908 (other than subsection (a)) of the Defense Base 
     Closure and Realignment Act of 1990 shall apply to the 
     consideration of a joint resolution described in subparagraph 
     (B) in the same manner as such provisions apply to a joint 
     resolution described in section 2908(a) of such Act.
       (D) Special rules.--For purposes of applying subparagraph 
     (C) with respect to such provisions--
       (i) any reference to the Committee on Armed Services of the 
     House of Representatives shall be deemed a reference to the 
     Committee on Ways and Means and any reference to the 
     Committee on Armed Services of the Senate shall be deemed a 
     reference to the Committee on Finance of the Senate; and
       (ii) any reference to the date on which the President 
     transmits a report shall be deemed a reference to the date on 
     which the President submits the recommendations under 
     paragraph (4).
       (c) Membership.--
       (1) Appointment.--The Commission shall be composed of 5 
     members appointed by the President, of which 4 of whom are 
     appointed from a list (of at least 5 nominees) submitted by 
     each of the following:
       (A) The Speaker of the House of Representatives.
       (B) The Minority Leader of the House of Representatives.
       (C) The Majority Leader of the Senate.
       (D) The Minority Leader of the Senate.
       (2) Term of service.--Each member of the Commission shall 
     serve for a term of 3 years. Members may be reappointed for 
     additional terms.
       (3) Chairman and vice chairman.--The Commission shall elect 
     a Chairman and Vice Chairman from among its members.
       (4) Vacancies.--Any vacancy in the membership of the 
     Commission shall be filled in the manner in which the 
     original appointment was made and shall not affect the power 
     of the remaining members to execute the duties of the 
     Commission.
       (5) Quorum.--A quorum shall consist of 3 members of the 
     Commission, except that 2 members may conduct a hearing under 
     subsection (e).
       (6) Meetings.--The Commission shall meet at the call of its 
     Chairman or a majority of its members.
       (7) Compensation and reimbursement of expenses.--Members of 
     the Commission are not entitled to receive compensation for 
     service on the Commission. Members may be reimbursed for 
     travel, subsistence, and other necessary expenses incurred in 
     carrying out the duties of the Commission.
       (d) Staff and Consultants.--
       (1) Staff.--The Commission may appoint and determine the 
     compensation of such staff as may be necessary to carry out 
     the duties of the Commission. Such appointments and 
     compensation may be made without regard to the provisions of 
     title 5, United States Code, that govern appointments in the 
     competitive services, and the provisions of chapter 51 and 
     subchapter III of chapter 53 of such title that relate to 
     classifications and the General Schedule pay rates.
       (2) Consultants.--The Commission may procure such temporary 
     and intermittent services of consultants under section 
     3109(b) of title 5, United States Code, as the Commission 
     determines to be necessary to carry out the duties of the 
     Commission.
       (e) Powers.--
       (1) Hearings and other activities.--For the purpose of 
     carrying out its duties, the Commission may hold such 
     hearings and undertake such other activities as the 
     Commission determines to be necessary to carry out its 
     duties.
       (2) Studies by gao.--Upon the request of the Commission, 
     the Comptroller General shall conduct such studies or 
     investigations as the Commission determines to be necessary 
     to carry out its duties.
       (3) Cost estimates by congressional budget office.--
       (A) Upon the request of the Commission, the Director of the 
     Congressional Budget Office shall provide to the Commission 
     such cost estimates as the Commission determines to be 
     necessary to carry out its duties.
       (B) The Commission shall reimburse the Director of the 
     Congressional Budget Office for expenses relating to the 
     employment in the office of the Director of such additional 
     staff as may be necessary for the Director to comply with 
     requests by the Commission under subparagraph (A).
       (4) Detail of federal employees.--Upon the request of the 
     Commission, the head of any Federal agency is authorized to 
     detail, without reimbursement, any of the personnel of such 
     agency to the Commission to assist the Commission in carrying 
     out its duties. Any such detail shall not interrupt or 
     otherwise affect the civil service status or privileges of 
     the Federal employee.
       (5) Technical assistance.--Upon the request of the 
     Commission, the head of a Federal agency shall provide such 
     technical assistance to the Commission as the Commission 
     determines to be necessary to carry out its duties.

[[Page H11285]]

       (6) Use of mails.--The Commission may use the United States 
     mails in the same manner and under the same conditions as 
     Federal agencies and shall, for purposes of the frank, be 
     considered a commission of Congress as described in section 
     3215 of title 39, United States Code.
       (7) Obtaining information.--The Commission may secure 
     directly from any Federal agency information necessary to 
     enable it to carry out its duties, if the information may be 
     disclosed under section 552 of title 5, United States Code. 
     Upon request of the Chairman of the Commission, the head of 
     such agency shall furnish such information to the Commission. 
     In particular, the Administrator of the Health Care Financing 
     Administration and the Director of the Office of Management 
     and Budget shall provide the Commission with access to data 
     for the conduct of its work.
       (8) Administrative support services.--Upon the request of 
     the Commission, the Administrator of General Services shall 
     provide to the Commission on a reimbursable basis such 
     administrative support services as the Commission may 
     request.
       (9) Acceptance of donations.--The Commission may accept, 
     use, and dispose of gifts or donations of services or 
     property.
       (10) Printing.--For purposes of costs relating to printing 
     and binding, including the cost of personnel detailed from 
     the Government Printing Office, the Commission shall be 
     deemed to be a committee of the Congress.
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as may be necessary to carry out 
     this section. Amounts appropriated to carry out this section 
     shall remain available until expended.
Subtitle I--Lock-Box Provisions for Medicare Part B Savings from Growth 
                               Reductions

     SEC. 8801. ESTABLISHMENT OF MEDICARE GROWTH REDUCTION TRUST 
                   FUND FOR PART B SAVINGS.

       Part B of title XVIII is amended by inserting after section 
     1841 the following new section:


                 ``medicare growth reduction trust fund

       ``Sec. 1841A. (a)(1) There is hereby created on the books 
     of the Treasury of the United States a trust fund to be known 
     as the `Federal Medicare Growth Reduction Trust Fund' (in 
     this section referred to as the `Trust Fund'). The Trust Fund 
     shall consist of such gifts and bequests as may be made as 
     provided in section 201(i)(1) and amounts appropriated under 
     paragraph (2).
       ``(2) There are hereby appropriated to the Trust Fund 
     amounts equivalent to 100 percent of the Secretary's estimate 
     of the reductions in expenditures under this part that are 
     attributable to the Medicare Preservation Act of 1995. The 
     amounts appropriated by the preceding sentence shall be 
     transferred from time to time (not less frequently than 
     monthly) from the general fund in the Treasury to the Trust 
     Fund.
       ``(3)(A) Subject to subparagraph (B), with respect to 
     monies transferred to the Trust Fund, no transfers, 
     authorizations of appropriations, or appropriations are 
     permitted.
       ``(B) Beginning with fiscal year 2003, the Secretary may 
     expend funds in the Trust Fund to carry out this title, but 
     only to the extent provided by Congress in advance through a 
     specific amendment to this section.
       ``(b) The provisions of subsections (b) through (e) of 
     section 1841 shall apply to the Trust Fund in the same manner 
     as they apply to the Federal Supplementary Medical Insurance 
     Trust Fund, except that the Board of Trustees and Managing 
     Trustee of the Trust Fund shall be composed of the members of 
     the Board of Trustees and the Managing Trustee, respectively, 
     of the Federal Supplementary Medical Insurance Trust Fund.''.
                   Subtitle J--Clinical Laboratories

     SEC. 8901. EXEMPTION OF PHYSICIAN OFFICE LABORATORIES.

       Section 353(d) of the Public Health Service Act (42 U.S.C. 
     263a(d)) is amended--
       (1) by redesignating paragraphs (2), (3), and (4) as 
     paragraphs (3), (4), and (5) and by adding after paragraph 
     (1) the following:
       ``(2) Exemption of physician office laboratories.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     a clinical laboratory in a physician's office (including an 
     office of a group of physicians) which is directed by a 
     physician and in which examinations and procedures are either 
     performed by a physician or by individuals supervised by a 
     physician solely as an adjunct to other services provided by 
     the physician's office is exempt from this section.
       ``(B) Exception.--A clinical laboratory described in 
     subparagraph (A) is not exempt from this section when it 
     performs a pap smear (Papanicolaou Smear) analysis.
       ``(C) Definition.--For purposes of subparagraph (A), the 
     term `physician' has the same meaning as is prescribed for 
     such term by section 1861(r) of the Social Security Act (42 
     U.S.C. 1395x(r)).'';
       (2) in paragraph (3) (as so redesignated) by striking 
     ``(3)'' and inserting ``(4)''; and
       (3) in paragraphs (4) and (5) (as so redesignated) by 
     striking ``(2)'' and inserting ``(3)''.
                        TITLE IX--WELFARE REFORM

     SEC. 9000. AMENDMENT OF THE SOCIAL SECURITY ACT.

       Except as otherwise expressly provided, wherever in this 
     title an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a section or other provision, the 
     reference shall be considered to be made to a section or 
     other provision of the Social Security Act.
              Subtitle A--Temporary Employment Assistance

     SEC. 9101. STATE PLAN.

       (a) In General.--Title IV (42 U.S.C. 601 et seq.) is 
     amended by striking part A and inserting the following:

               ``PART A--TEMPORARY EMPLOYMENT ASSISTANCE

     ``SEC. 400. APPROPRIATION.

       ``For the purpose of providing assistance to families with 
     needy children and assisting parents of children in such 
     families to obtain and retain private sector work to the 
     extent possible, and public sector or volunteer work if 
     necessary, through the Work First Employment Block Grant 
     program (hereafter in this title referred to as the `Work 
     First program'), there is hereby authorized to be 
     appropriated, and is hereby appropriated, for each fiscal 
     year a sum sufficient to carry out the purposes of this part. 
     The sums made available under this section shall be used for 
     making payments to States which have approved State plans for 
     temporary employment assistance.

      ``Subpart 1--State Plans for Temporary Employment Assistance

     ``SEC. 401. ELEMENTS OF STATE PLANS.

       ``A State plan for temporary employment assistance shall 
     provide a description of the State program which carries out 
     the purpose described in section 400 and shall meet the 
     requirements of the following sections of this subpart.

     ``SEC. 402. FAMILY ELIGIBILITY FOR TEMPORARY EMPLOYMENT 
                   ASSISTANCE.

       ``(a) In General.--The State plan shall provide that any 
     family--
       ``(1) with 1 or more children (or any expectant family, at 
     the option of the State), defined as needy by the State; and
       ``(2) which fulfills the conditions set forth in subsection 
     (b),
     shall be eligible for cash assistance under the plan, except 
     as otherwise provided under this part.
       ``(b) Individual Responsibility Plan.--The State plan shall 
     provide that not later than 30 days after the approval of the 
     application for temporary employment assistance, a parent 
     qualifying for assistance shall execute an individual 
     responsibility plan as described in section 403. If a child 
     otherwise eligible for assistance under this part is residing 
     with a relative other than a parent, the State plan may 
     require the relative to execute such a plan as a condition of 
     the family receiving such assistance.
       ``(c) Limitations on Eligibility.--
       ``(1) Length of time.--
       ``(A) In general.--Except as provided in subparagraphs (B), 
     (C), (D), and (E), the State plan shall provide that the 
     family of an individual who, after attaining age 18 years (or 
     age 19 years, at the option of the State), has received 
     assistance under the plan for 60 months, shall no longer be 
     eligible for cash assistance under the plan.
       ``(B) Hardship exception.--With respect to any family, the 
     State plan shall not include in the determination of the 60-
     month period under subparagraph (A) any month in which--
       ``(i) at the option of the State, the family includes an 
     individual working 20 hours per week (or more, at the option 
     of the State);
       ``(ii) the family resides in an area with an unemployment 
     rate exceeding 8 percent; or
       ``(iii) the family is experiencing other special hardship 
     circumstances which make it appropriate for the State to 
     provide an exemption for such month, except that the total 
     number of exemptions under this clause for any month shall 
     not exceed 15 percent of the number of families to which the 
     State is providing assistance under the plan.
       ``(C) Exception for teen parents.--With respect to any 
     family, the State plan shall not include in the determination 
     of the 60-month period under subparagraph (A) any month in 
     which the parent--
       ``(i) is under age 18 (or age 19, at the option of the 
     State); and
       ``(ii) is making satisfactory progress while attending high 
     school or an alternative technical preparation school.
       ``(D) Exception for individuals exempt from work 
     requirements.--With respect to any family, the State plan 
     shall not include in the determination of the 60-month period 
     under subparagraph (A) any month in which 1 or each of the 
     parents--
       ``(i) is seriously ill, incapacitated, or of advanced age;
       ``(ii)(I) except for a child described in subclause (II), 
     is responsible for a child under age 1 year (or age 6 months, 
     at the option of the State), or
       ``(II) in the case of a 2nd or subsequent child born during 
     such period, is responsible for a child under age 3 months;
       ``(iii) is pregnant in the 3rd trimester; or
       ``(iv) is caring for a family member who is ill or 
     incapacitated.
       ``(E) Exception for child-only cases.--With respect to any 
     child who has not attained age 18 (or age 19, at the option 
     of the State) and who is eligible for assistance under this 
     part, but not as a member of a family otherwise eligible for 
     assistance under this part (determined without regard to this 
     paragraph), the State plan shall not include in the 
     determination of the 60-month period under subparagraph (A) 
     any month in which such child has not attained such age.

[[Page H11286]]

       ``(F) Other program eligibility.--The State plan shall 
     provide that if a family is no longer eligible for cash 
     assistance under the plan due to the imposition of the 60-
     month period under subparagraph (A) or due to the imposition 
     of a penalty under subparagraph (A)(ii) or (B)(ii) of section 
     403(e)(1)--
       ``(i) for purposes of determining eligibility for any other 
     Federal or federally assisted program based on need, such 
     family shall continue to be considered eligible for such cash 
     assistance;
       ``(ii) for purposes of determining the amount of assistance 
     under any other Federal or federally assisted program based 
     on need, such family shall continue to be considered 
     receiving such cash assistance; and
       ``(iii) the State may, at the option of the State, after 
     having assessed the needs of the child or children of the 
     family, provide for such needs with a voucher for such 
     family--

       ``(I) determined on the same basis as the State would 
     provide assistance under the State plan to such a family with 
     1 less individual,
       ``(II) designed appropriately to pay third parties for 
     shelter, goods, and services received by the child or 
     children, and
       ``(III) payable directly to such third parties.

       ``(2) Treatment of interstate migrants.--The State plan may 
     apply to a category of families the rules for such category 
     under a plan of another State approved under this part, if a 
     family in such category has moved to the State from the other 
     State and has resided in the State for less than 12 months.
       ``(3) Individuals on old-age assistance or ssi ineligible 
     for temporary employment assistance.--The State plan shall 
     provide that no assistance shall be furnished any individual 
     under the plan with respect to any period with respect to 
     which such individual is receiving old-age assistance under 
     the State plan approved under section 102 of title I or 
     supplemental security income under title XVI.
       ``(4) Children for whom federal, state, or local foster 
     care maintenance or adoption assistance payments are made.--A 
     child with respect to whom foster care maintenance payments 
     or adoption assistance payments are made under part E or 
     under State or local law shall not, for the period for which 
     such payments are made, be regarded as a needy child under 
     this part, and such child's income and resources shall be 
     disregarded in determining the eligibility of the family of 
     such child for temporary employment assistance.
       ``(5) Denial of assistance for 10 years to a person found 
     to have fraudulently misrepresented residence in order to 
     obtain assistance in 2 or more states.--The State plan shall 
     provide that no assistance will be furnished any individual 
     under the plan during the 10-year period that begins on the 
     date the individual is convicted in Federal or State court of 
     having made, a fraudulent statement or representation with 
     respect to the place of residence of the individual in order 
     to receive benefits or services simultaneously from 2 or more 
     States under programs that are funded under this part, title 
     XIX, or the Food Stamp Act of 1977, or benefits in 2 or more 
     States under the supplemental security income program under 
     title XVI.
       ``(6) Denial of assistance for fugitive felons and 
     probation and parole violators.--
       ``(A) In general.--The State plan shall provide that no 
     assistance will be furnished any individual under the plan 
     for any period if during such period the State agency has 
     knowledge that such individual is--
       ``(i) fleeing to avoid prosecution, or custody or 
     confinement after conviction, under the laws of the place 
     from which the individual flees, for a crime, or an attempt 
     to commit a crime, which is a felony under the laws of the 
     place from which the individual flees, or which, in the case 
     of the State of New Jersey, is a high misdemeanor under the 
     laws of such State; or
       ``(ii) violating a condition of probation or parole imposed 
     under Federal or State law.
       ``(B) Exchange of information with law enforcement 
     agencies.--Notwithstanding any other provision of law, the 
     State plan shall provide that the State shall furnish any 
     Federal, State, or local law enforcement officer, upon the 
     request of the officer, with the current address of any 
     recipient of assistance under the plan, if the officer 
     furnishes the agency with the name of the recipient and 
     notifies the agency that--
       ``(i) such recipient--

       ``(I) is described in clause (i) or (ii) of subparagraph 
     (A); or
       ``(II) has information that is necessary for the officer to 
     conduct the officer's official duties; and

       ``(ii) the location or apprehension of the recipient is 
     within such officer's official duties.
       ``(d) Determination of Eligibility.--
       ``(1) Determination of need.--The State plan shall provide 
     that the State agency take into consideration any income and 
     resources of any individual the State determines should be 
     considered in determining the need of the child or relative 
     claiming temporary employment assistance, subject to section 
     407.
       ``(2) Resource and income determination.--In determining 
     the total resources and income of the family of any needy 
     child, the State plan shall provide the following:
       ``(A) Resources.--The State's resource limit, including a 
     description of the policy determined by the State regarding 
     any exclusion allowed for vehicles owned by family members, 
     resources set aside for future needs of a child, individual 
     development accounts, or other policies established by the 
     State to encourage savings.
       ``(B) Family income.--The extent to which earned or 
     unearned income is disregarded in determining eligibility 
     for, and amount of, assistance.
       ``(C) Child support.--The State's policy, if any, for 
     determining the extent to which child support received in 
     excess of $50 per month on behalf of a member of the family 
     is disregarded in determining eligibility for, and the amount 
     of, assistance.
       ``(D) Child's earnings.--The treatment of earnings of a 
     child living in the home.
       ``(E) Earned income tax credit.--The State agency shall 
     disregard any refund of Federal income taxes made to a family 
     receiving temporary employment assistance by reason of 
     section 32 of the Internal Revenue Code of 1986 (relating to 
     earned income tax credit) and any payment made to such a 
     family by an employer under section 3507 of such Code 
     (relating to advance payment of earned income credit).
       ``(3) Verification System.--The State plan shall provide 
     that information is requested and exchanged for purposes of 
     income and eligibility verification in accordance with a 
     State system which meets the requirements of section 1137.

     ``SEC. 403. INDIVIDUAL RESPONSIBILITY PLAN.

       ``(a) Assessment.--The State agency responsible for 
     administering the State plan shall make an initial assessment 
     of the skills, prior work experience, and employability of 
     each applicant for, or recipient of, assistance under the 
     State plan who--
       ``(1) has attained 18 years of age; or
       ``(2) has not completed high school or obtained a 
     certificate of high school equivalency, and is not attending 
     secondary school.
       ``(b) Individual Responsibility Plans.--
       ``(1) In general.--On the basis of the assessment made 
     under subsection (a) with respect to an individual, the State 
     agency, in consultation with the individual, shall develop an 
     individual responsibility plan for the individual, which--
       ``(A) shall provide that participation by the individual in 
     job search activities shall be a condition of eligibility for 
     assistance under the State plan approved under part A, except 
     during any period for which the individual is employed full-
     time in an unsubsidized job in the private sector;
       ``(B) sets forth an employment goal for the individual and 
     a plan for moving the individual immediately into private 
     sector employment;
       ``(C) sets forth the obligations of the individual, which 
     may include a requirement that the individual attend school, 
     maintain certain grades and attendance, keep school age 
     children of the individual in school, immunize children, 
     attend parenting and money management classes, or do other 
     things that will help the individual become and remain 
     employed in the private sector;
       ``(D) may require that the individual enter the State 
     program established under part F, if the caseworker 
     determines that the individual will need education, training, 
     job placement assistance, wage enhancement, or other services 
     to become employed in the private sector;
       ``(E) shall provide that the individual must--
       ``(i) assign to the State any rights to support from any 
     other person the individual may have in such individual's own 
     behalf or in behalf of any other family member for whom the 
     individual is applying for or receiving assistance; and
       ``(ii) cooperate with the State--

       ``(I) in establishing the paternity of a child born out of 
     wedlock with respect to whom assistance is claimed, and
       ``(II) in obtaining support payments for the individual and 
     for a child with respect to whom such assistance is claimed, 
     or in obtaining any other payments or property due the 
     individual or the child,

     unless (in either case) the individual is found to have good 
     cause for refusing to cooperate as determined by the State 
     agency in accordance with standards prescribed by the 
     Secretary, which standards shall take into consideration the 
     best interests of the child on whose behalf assistance is 
     claimed.
       ``(F) to the greatest extent possible shall be designed to 
     move the individual into whatever private sector employment 
     the individual is capable of handling as quickly as possible, 
     and to increase the responsibility and amount of work the 
     individual is to handle over time;
       ``(G) shall describe what services the State will provide 
     the individual so that the individual will be able to obtain 
     and keep employment in the private sector, and describe the 
     job counseling and other services that will be provided by 
     the State; and
       ``(H) at the option of the State, may require the 
     individual to undergo appropriate substance abuse treatment.
       ``(2) Timing.--The State agency shall comply with paragraph 
     (1) with respect to an individual--
       ``(A) within 90 days (or, at the option of the State, 180 
     days) after the effective date of this part, in the case of 
     an individual who, as of such effective date, is a recipient 
     of assistance under the State plan approved under this part; 
     or

[[Page H11287]]

       ``(B) within 30 days (or, at the option of the State, 90 
     days) after the individual is determined to be eligible for 
     such assistance, in the case of any other individual.
       ``(c) Provision of Program and Employment Information.--The 
     State shall inform all applicants for and recipients of 
     assistance under the State plan approved under this part of 
     all available services under the State plan for which they 
     are eligible.
       ``(d) Requirement That Recipients Enter the Work First 
     Program.--
       ``(1) In general.--Beginning with fiscal year 2004, the 
     State shall place recipients of assistance under the State 
     plan approved under this part, who have not become employed 
     in the private sector within 1 year after signing an 
     individual responsibility plan, in the first available slot 
     in the State program established under part F, except as 
     provided in paragraph (2).
       ``(2) Exceptions.--A state may not be required to place a 
     recipient of such assistance in the State program established 
     under part F if the recipient--
       ``(A) is ill, incapacitated, or of advanced age;
       ``(B) has not attained 18 years of age;
       ``(C) is caring for a child or parent who is ill or 
     incapacitated; or
       ``(D) is enrolled in school or in educational or training 
     programs that will lead to private sector employment.
       ``(e) Penalties.--
       ``(1) State not operating a work first or workfare 
     program.--In the case of a State that is not operating a 
     program under part F or G:
       ``(A) Failure to comply with individual responsibility plan 
     or agreement of mutual responsibility.--
       ``(i) Progressive reductions in assistance for 1st and 2nd 
     failures.--The amount of assistance otherwise to be provided 
     under the State plan approved under this part to a family 
     that includes an individual who fails without good cause to 
     comply with an individual responsibility plan (or, if the 
     State has established a program under subpart 1 of part F and 
     the individual is required to participate in the program, an 
     agreement of mutual responsibility) signed by the individual 
     (other than by reason of conduct described in paragraph (2)) 
     shall be reduced by--

       ``(I) 33 percent for the 1st such act of noncompliance; or
       ``(II) 66 percent for the 2nd such act of noncompliance.

       ``(ii) Denial of assistance for 3rd failure.--In the case 
     of the 3rd such act of noncompliance, the family of which the 
     individual is a member shall not thereafter be eligible for 
     assistance under the State plan approved under this part.
       ``(iii) Acts of noncompliance.--For purposes of this 
     paragraph, a 1st act of noncompliance by an individual 
     continues for more than 1 calendar month shall be considered 
     a 2nd act of noncompliance, and a 2nd act of noncompliance 
     that continues for more than 3 calendar months shall be 
     considered a 3rd act of noncompliance.
       ``(B) Denial of assistance to adults refusing to work, look 
     for work, or accept a bona fide offer of employment.--
       ``(i) Refusal to work or look for work.--If an unemployed 
     individual who has attained 18 years of age refuses to work 
     or look for work--

       ``(I) in the case of the 1st such refusal, assistance under 
     the State plan approved under this part shall not be payable 
     with respect to the individual until the later of--

       ``(aa) a period of not less than 6 months after the date of 
     the first such refusal; or
       ``(bb) the first date the individual agrees to work or look 
     for work; or

       ``(II) in the case of the 2nd such refusal, the family of 
     which the individual is a member shall not thereafter be 
     eligible for assistance under the State plan approved under 
     this part.

       ``(ii) Refusal to accept a bona fide offer of employment.--
     If an unemployed individual who has attained 18 years of age 
     refuses to accept a bona fide offer of employment, the family 
     of which the individual is a member shall not thereafter be 
     eligible for assistance under the State plan approved under 
     this part.
       ``(2) Other states.--In the case of any other State, the 
     State shall reduce, by such amount as the State considers 
     appropriate, the amount of assistance otherwise payable under 
     the State plan approved under this part to a family that 
     includes an individual who fails without good cause to comply 
     with an individual responsibility plan signed by the 
     individual.

     ``SEC. 404. PAYMENT OF ASSISTANCE.

       ``(a) Standards of Assistance.--The State plan shall 
     specify standards of assistance, including--
       ``(1) the composition of the unit for which assistance will 
     be provided;
       ``(2) a standard, expressed in money amounts, to be used in 
     determining the need of applicants and recipients;
       ``(3) a standard, expressed in money amounts, to be used in 
     determining the amount of the assistance payment; and
       ``(4) the methodology to be used in determining the payment 
     amount received by assistance units.
       ``(b) Level of Assistance.--Except as otherwise provided in 
     this title, the State plan shall provide that--
       ``(1) the determination of need and the amount of 
     assistance for all applicants and recipients shall be made on 
     an objective and equitable basis; and
       ``(2) families of similar composition with similar needs 
     and circumstances shall be treated similarly.
       ``(c) Correction of Payments.--The State plan shall provide 
     that the State agency will promptly take all necessary steps 
     to correct any overpayment or underpayment of assistance 
     under such plan, including the request for Federal tax refund 
     intercepts as provided under section 416.
       ``(d) Optional Voluntary Diversion Program.--The State plan 
     shall, at the option of the State, and in such part or parts 
     of the State as the State may select, provide that--
       ``(1) upon the recommendation of the caseworker who is 
     handling the case of a family eligible for assistance under 
     the State plan, the State shall, in lieu of any other 
     assistance under the State plan to the family during a time 
     period of not more than 3 months, make a lump-sum payment to 
     the family for the time period in an amount not to exceed--
       ``(A) the value of the monthly benefits that would 
     otherwise be provided to the family under the State plan; 
     multiplied by
       ``(B) the number of months in the time period;
       ``(2) a lump-sum payment pursuant to subparagraph (A) shall 
     not be made more than once to any family; and
       ``(3) if, during a time period for which the State has made 
     a lump-sum payment to a family pursuant to subparagraph (A), 
     the family applies for and (but for the lump-sum payment) 
     would be eligible under the State plan for a monthly benefit 
     that is greater than the value of the monthly benefit which 
     would have been provided to the family under the State plan 
     at the time of the calculation of the lump sum payment, then, 
     notwithstanding subparagraph (A), the State shall, for that 
     part of the time period that remains after the family becomes 
     eligible for the greater monthly benefit, provide monthly 
     benefits to the family in an amount not to exceed--
       ``(A) the amount by which the value of the greater monthly 
     benefit exceeds the value of the former monthly benefit, 
     multiplied by the number of months in the time period; 
     divided by
       ``(B) the whole number of months remaining in the time 
     period.''.

     ``SEC. 405. OTHER PROGRAMS.

       ``(a) Work First Program; Workfare or Job Placement Voucher 
     Program.--The State plan shall provide that the State has in 
     effect and operation--
       ``(1) a work first program that meets the requirements of 
     part F; and
       ``(2) a workfare program that meets the requirements of 
     part G, or a job placement voucher program that meets the 
     requirements of part H, but not both.
       ``(b) Provision of Positions and Vouchers.--The State plan 
     shall provide that the State shall provide a position in the 
     workfare program established by the State under part G, or a 
     job placement voucher under the job placement voucher program 
     established by the State under part H to any individual who, 
     by reason of section 487(b), is prohibited from participating 
     in the work first program operated by the State, and shall 
     not provide such a position or such a voucher to any other 
     individual.
       ``(c) Provision of Case Management Services.--The State 
     plan shall provide that the State shall provide to 
     participants in such programs such case management services 
     as are necessary to ensure the integrated provision of 
     benefits and services under such programs.
       ``(d) State Child Support Agency.--The State plan shall--
       ``(1) provide that the State has in effect a plan approved 
     under part D and operates a child support program in 
     substantial compliance with such plan;
       ``(2) provide that the State agency administering the plan 
     approved under this part shall be responsible for assuring 
     that--
       ``(A) the benefits and services provided under plans 
     approved under this part and part D are furnished in an 
     integrated manner, including coordination of intake 
     procedures with the agency administering the plan approved 
     under part D;
       ``(B) all applicants for, and recipients of, temporary 
     employment assistance are encouraged, assisted, and required 
     (as provided under section 403(b)(1)(E)(ii)) to cooperate in 
     the establishment and enforcement of paternity and child 
     support obligations and are notified about the services 
     available under the State plan approved under part D; and
       ``(C) procedures require referral of paternity and child 
     support enforcement cases to the agency administering the 
     plan approved under part D not later than 10 days after the 
     application for temporary employment assistance; and
       ``(3) provide for prompt notice (including the transmittal 
     of all relevant information) to the State child support 
     collection agency established pursuant to part D of the 
     furnishing of temporary employment assistance with respect to 
     a child who has been deserted or abandoned by a parent 
     (including a child born out-of-wedlock without regard to 
     whether the paternity of such child has been established).
       ``(e) Child Welfare Services and Foster Care and Adoption 
     Assistance.--The State plan shall provide that the State has 
     in effect--
       ``(1) a State plan for child welfare services approved 
     under part B; and
       ``(2) a State plan for foster care and adoption assistance 
     approved under part E,

[[Page H11288]]

     and operates such plans in substantial compliance with the 
     requirements of such parts.
       ``(f) Report of Child Abuse, etc.--The State plan shall 
     provide that the State agency will--
       ``(1) report to an appropriate agency or official, known or 
     suspected instances of physical or mental injury, sexual 
     abuse or exploitation, or negligent treatment or maltreatment 
     of a child receiving assistance under the State plan under 
     circumstances which indicate that the child's health or 
     welfare is threatened thereby; and
       ``(2) provide such information with respect to a situation 
     described in paragraph (1) as the State agency may have.
       ``(g) Availability of Assistance in Rural Areas of State.--
     The State plan shall consider and address the needs of rural 
     areas in the State to ensure that families in such areas 
     receive assistance to become self-sufficient.
       ``(h) Family Preservation.--
       ``(1) In general.--The State plan shall describe the 
     efforts by the State to promote family preservation and 
     stability, including efforts--
       ``(A) to encourage fathers to stay home and be a part of 
     the family;
       ``(B) to keep families together to the extent possible; and
       ``(C) except to the extent provided in paragraph (2), to 
     treat 2-parent families and 1-parent families equally with 
     respect to eligibility for assistance.
       ``(2) Maintenance of treatment.--The State may impose 
     eligibility limitations relating specifically to 2-parent 
     families to the extent such limitations are no more 
     restrictive than such limitations in effect in the State plan 
     in fiscal year 1995.

     ``SEC. 406. ADMINISTRATIVE REQUIREMENTS FOR STATE PLAN.

       ``(a) Statewide Plan.--The State plan shall be in effect in 
     all political subdivisions of the State, and, if administered 
     by the subdivisions, be mandatory upon such subdivisions. If 
     such plan is not administered uniformly throughout the State, 
     the plan shall describe the administrative variations.
       ``(b) Single Administrating Agency.--The State plan shall 
     provide for the establishment or designation of a single 
     State agency to administer the plan or supervise the 
     administration of the plan.
       ``(c) Financial Participation.--The State plan shall 
     provide for financial participation by the State in the same 
     manner and amount as such State participates under title XIX, 
     except that with respect to the sums expended for the 
     administration of the State plan, the percentage shall be 50 
     percent.
       ``(d) Reasonable Promptness.--The State plan shall provide 
     that all individuals wishing to make application for 
     temporary employment assistance shall have opportunity to do 
     so, and that such assistance be furnished with reasonable 
     promptness to all eligible individuals.
       ``(e) Automated Data Processing System.--The State plan 
     shall, at the option of the State, provide for the 
     establishment and operation of an automated statewide 
     management information system designed effectively and 
     efficiently, to assist management in the administration of 
     the State plan approved under this part, so as--
       ``(1) to control and account for--
       ``(A) all the factors in the total eligibility 
     determination process under such plan for assistance, and
       ``(B) the costs, quality, and delivery of payments and 
     services furnished to applicants for and recipients of 
     assistance; and
       ``(2) to notify the appropriate officials for child 
     support, food stamp, and social service programs, and the 
     medical assistance program approved under title XIX, whenever 
     a recipient becomes ineligible for such assistance or the 
     amount of assistance provided to a recipient under the State 
     plan is changed.
       ``(f) Disclosure of Information.--The State plan shall 
     provide for safeguards which restrict the use or disclosure 
     of information concerning applicants or recipients.
       ``(g) Detection of Fraud.--The State plan shall provide, in 
     accordance with regulations issued by the Secretary, for 
     appropriate measures to detect fraudulent applications for 
     temporary employment assistance before the establishment of 
     eligibility for such assistance.

                 ``Subpart 2--Administrative Provisions

     ``SEC. 411. APPROVAL OF PLAN.

       ``(a) In General.--The Secretary shall approve a State plan 
     which fulfills the requirements under subpart 1 within 120 
     days of the submission of the plan by the State to the 
     Secretary.
       ``(b) Deemed Approval.--If a State plan has not been 
     rejected by the Secretary during the period specified in 
     subsection (a), the plan shall be deemed to have been 
     approved.

     ``SEC. 412. COMPLIANCE.

       In the case of any State plan for temporary employment 
     assistance which has been approved under section 411, if the 
     Secretary, after reasonable notice and opportunity for 
     hearing to the State agency administering or supervising the 
     administration of such plan, finds that in the administration 
     of the plan there is a failure to comply substantially with 
     any provision required by subpart 1 to be included in the 
     plan, the Secretary shall notify such State agency that 
     further payments will not be made to the State (or in the 
     Secretary's discretion, that payments will be limited to 
     categories under or parts of the State plan not affected by 
     such failure) until the Secretary is satisfied that such 
     prohibited requirement is no longer so imposed, and that 
     there is no longer any such failure to comply. Until the 
     Secretary is so satisfied the Secretary shall make no further 
     payments to such State (or shall limit payments to categories 
     under or parts of the State plan not affected by such 
     failure).

     ``SEC. 413. PAYMENTS TO STATES.

       ``(a) Computation of Amount.--Subject to section 412, from 
     the sums appropriated therefor, the Secretary of the Treasury 
     shall pay to each State which has an approved plan for 
     temporary employment assistance, for each quarter, beginning 
     with the quarter commencing October 1, 1996, an amount equal 
     to the Federal medical assistance percentage (as defined 
     in section 1905(b)) of the expenditures by the State under 
     such plan.
       ``(b) Method of Computation and Payment.--The method of 
     computing and paying such amounts shall be as follows:
       ``(1) The Secretary shall, prior to the beginning of each 
     quarter, estimate the amount to be paid to the State for such 
     quarter under the provisions of subsection (a), such estimate 
     to be based on--
       ``(A) a report filed by the State containing its estimate 
     of the total sum to be expended in such quarter in accordance 
     with the provisions of such subsection and stating the amount 
     appropriated or made available by the State and its political 
     subdivisions for such expenditures in such quarter, and if 
     such amount is less than the State's proportionate share of 
     the total sum of such estimated expenditures, the source or 
     sources from which the difference is expected to be derived;
       ``(B) records showing the number of needy children in the 
     State; and
       ``(C) such other information as the Secretary may find 
     necessary.
       ``(2) The Secretary of Health and Human Services shall then 
     certify to the Secretary of the Treasury the amount so 
     estimated by the Secretary of Health and Human Services--
       ``(A) reduced or increased, as the case may be, by any sum 
     by which the Secretary of Health and Human Services finds 
     that the estimate for any prior quarter was greater or less 
     than the amount which should have been paid to the State for 
     such quarter;
       ``(B) reduced by a sum equivalent to the pro rata share to 
     which the Federal Government is equitably entitled, as 
     determined by the Secretary of Health and Human Services, of 
     the net amount recovered during any prior quarter by the 
     State or any political subdivision thereof with respect to 
     temporary employment assistance furnished under the State 
     plan; and
       ``(C) reduced by such amount as is necessary to provide the 
     appropriate reimbursement to the Federal Government that the 
     State is required to make under section 457 out of that 
     portion of child support collections retained by the State 
     pursuant to such section,

     except that such increases or reductions shall not be made to 
     the extent that such sums have been applied to make the 
     amount certified for any prior quarter greater or less than 
     the amount estimated by the Secretary of Health and Human 
     Services for such prior quarter.
       ``(c) Method of Payment.--The Secretary of the Treasury 
     shall thereupon, through the Fiscal Service of the Department 
     of the Treasury and prior to audit or settlement by the 
     General Accounting Office, pay to the State, at the time or 
     times fixed by the Secretary of Health and Human Services, 
     the amount so certified.

     ``SEC. 414. QUALITY ASSURANCE, DATA COLLECTION, AND REPORTING 
                   SYSTEM.

       ``(a) Quality Assurance.--
       ``(1) In general.--Under the State plan, a quality 
     assurance system shall be developed based upon a 
     collaborative effort involving the Secretary, the State, the 
     political subdivisions of the State, and assistance 
     recipients, and shall include quantifiable program outcomes 
     related to self sufficiency in the categories of welfare-to-
     work, payment accuracy, and child support.
       ``(2) Modifications to system.--As deemed necessary, but 
     not more often than every 2 years, the Secretary, in 
     consultation with the State, the political subdivisions of 
     the State, and assistance recipients, shall make appropriate 
     changes in the design and administration of the quality 
     assurance system, including changes in benchmarks, measures, 
     and data collection or sampling procedures.
       ``(b) Data Collection and Reporting.--
       ``(1) In general.--The State plan shall provide for a 
     quarterly report to the Secretary regarding the data 
     described in paragraphs (2) and (3) and such additional data 
     needed for the quality assurance system. The data collection 
     and reporting system under this subsection shall promote 
     accountability, continuous improvement, and integrity in the 
     State plans for temporary employment assistance and Work 
     First.
       ``(2) Disaggregated data.--The State shall collect the 
     following data items on a monthly basis from disaggregated 
     case records of applicants for and recipients of temporary 
     employment assistance from the previous month:
       ``(A) The age of adults and children (including pregnant 
     women).
       ``(B) Marital or familial status of cases: married (2-
     parent family), widowed, divorced, separated, or never 
     married; or child living with other adult relative.
       ``(C) The gender, race, educational attainment, work 
     experience, disability status 

[[Page H11289]]

     (whether the individual is seriously ill, incapacitated, or 
     caring for a disabled or incapacitated child) of adults.
       ``(D) The amount of cash assistance and the amount and 
     reason for any reduction in such assistance. Any other data 
     necessary to determine the timeliness and accuracy of 
     benefits and welfare diversions.
       ``(E) Whether any member of the family receives benefits 
     under any of the following:
       ``(i) Any housing program.
       ``(ii) The food stamp program under the Food Stamp Act of 
     1977.
       ``(iii) The Head Start programs carried out under the Head 
     Start Act.
       ``(iv) Any job training program.
       ``(F) The number of months since the most recent 
     application for assistance under the plan.
       ``(G) The total number of months for which assistance has 
     been provided to the families under the plan.
       ``(H) The employment status, hours worked, and earnings of 
     individuals while receiving assistance, whether the case was 
     closed due to employment, and other data needed to meet the 
     work performance rate.
       ``(I) Status in Work First and workfare, including the 
     number of hours an individual participated and the component 
     in which the individual participated.
       ``(J) The number of persons in the assistance unit and 
     their relationship to the youngest child. Nonrecipients in 
     the household and their relationship to the youngest child.
       ``(K) Citizenship status.
       ``(L) Shelter arrangement.
       ``(M) Unearned income (not including temporary employment 
     assistance), such as child support, and assets.
       ``(N) The number of children who have a parent who is 
     deceased, incapacitated, or unemployed.
       ``(O) Geographic location.
       ``(3) Aggregated data.--The State shall collect the 
     following data items on a monthly basis from aggregated case 
     records of applicants for and recipients of temporary 
     employment assistance from the previous month:
       ``(A) The number of adults receiving assistance.
       ``(B) The number of children receiving assistance.
       ``(C) The number of families receiving assistance.
       ``(D) The number of assistance units who had their grants 
     reduced or terminated and the reason for the reduction or 
     termination, including sanction, employment, and meeting 
     the time limit for assistance).
       ``(E) The number of applications for assistance; the number 
     approved and the number denied and the reason for denial.
       ``(4) Longitudinal studies.--The State shall submit 
     selected data items for a cohort of individuals who are 
     tracked over time. This longitudinal sample shall be used for 
     selected data items described in paragraphs (2) and (3), as 
     determined appropriate by the Secretary.
       ``(c) Additional Data.--The report required by subsection 
     (b) for a fiscal year quarter shall also include the 
     following:
       ``(1) Report on use of federal funds to cover 
     administrative costs and overhead.--A statement of--
       ``(A) the percentage of the Federal funds paid to the State 
     under this part for the fiscal year quarter that are used to 
     cover administrative costs or overhead; and
       ``(B) the total amount of State funds that are used to 
     cover such costs or overhead.
       ``(2) Report on state expenditures on programs for needy 
     families.--A statement of the total amount expended by the 
     State during the fiscal year quarter on programs for needy 
     families, with the amount spent on the program under this 
     part, and the purposes for which such amount was spent, 
     separately stated.
       ``(3) Report on noncustodial parents participating in work 
     activities.--The number of noncustodial parents in the State 
     who participated in work activities during the fiscal year 
     quarter.
       ``(4) Report on child support collected.--The total amount 
     of child support collected by the State agency administering 
     the State plan under part D on behalf of a family receiving 
     assistance under this part.
       ``(5) Report on child care.--The total amount expended by 
     the State for child care under this part, along with a 
     description of the types of child care provided, such as 
     child care provided in the case of a family that has ceased 
     to receive assistance under this part because of increased 
     hours of, or increased income from, employment, or in the 
     case of a family that is not receiving assistance under this 
     part but would be at risk of becoming eligible for such 
     assistance if child care was not provided.
       ``(6) Report on transitional services.--The total amount 
     expended by the State for providing transitional services to 
     a family that has ceased to receive assistance under this 
     part because of increased hours of, or increased income from, 
     employment, along with a description of such services.
       ``(d) Collection Procedures.--The Secretary shall provide 
     case sampling plans and data collection procedures as deemed 
     necessary to make statistically valid estimates of plan 
     performance.
       ``(e) Verification.--The Secretary shall develop and 
     implement procedures for verifying the quality of the data 
     submitted by the State, and shall provide technical 
     assistance, funded by the compliance penalties imposed under 
     section 412, if such data quality falls below acceptable 
     standards.

     ``SEC. 415. COMPILATION AND REPORTING OF DATA.

       ``(a) Current Programs.--The Secretary shall, on the basis 
     of the Secretary's review of the reports received from the 
     States under section 414, compile such data as the Secretary 
     believes necessary, and from time to time, publish the 
     findings as to the effectiveness of the programs developed 
     and administered by the States under this part. The Secretary 
     shall annually report to the Congress on the programs 
     developed and administered by each State under this part.
       ``(b) Research, Demonstration and Evaluation.--Of the 
     amount specified under section 413(a), an amount equal to 
     0.25 percent is authorized to be expended by the Secretary to 
     support the following types of research, demonstrations, and 
     evaluations:
       ``(1) State-initiated research.--States may apply for 
     grants to cover 90 percent of the costs of self-evaluations 
     of programs under State plans approved under this part.
       ``(2) Demonstrations.--
       ``(A) In general.--The Secretary may implement and evaluate 
     demonstrations of innovative and promising strategies to--
       ``(i) improve child well-being through reductions in 
     illegitimacy, teen pregnancy, welfare dependency, 
     homelessness, and poverty;
       ``(ii) test promising strategies by nonprofit and for-
     profit institutions to increase employment, earning, child 
     support payments, and self-sufficiency with respect to 
     temporary employment assistance clients under State plans; 
     and
       ``(iii) foster the development of child care.
       ``(B) Additional parameters.--Demonstrations implemented 
     under this paragraph--
       ``(i) may provide one-time capital funds to establish, 
     expand, or replicate programs;
       ``(ii) may test performance-based grant to loan financing 
     in which programs meeting performance targets receive grants 
     while programs not meeting such targets repay funding on a 
     pro-rated basis; and
       ``(iii) should test stategies in multiple States and types 
     of communities.
       ``(3) Federal evaluations.--
       ``(A) In general.--The Secretary shall conduct research on 
     the effects, benefits, and costs of different approaches to 
     operating welfare programs, including an implementation study 
     based on a representative sample of States and localities, 
     documenting what policies were adopted, how such policies 
     were implemented, the types and mix of services provided, and 
     other such factors as the Secretary deems appropriate.
       ``(B) Research on related issues.--The Secretary shall also 
     conduct research on issues related to the purposes of this 
     part, such as strategies for moving welfare recipients into 
     the workforce quickly, reducing teen pregnancies and out-of-
     wedlock births, and providing adequate child care.
       ``(C) State reimbursement.--The Secretary may reimburse a 
     State for any research-related costs incurred pursuant to 
     research conducted under this paragraph.
       ``(D) Use of random assignment.--Evaluations authorized 
     under this paragraph should use random assignment to the 
     maximum extent feasible and appropriate.
       ``(4) Regional information centers.--
       ``(A) In general.--The Secretary shall establish not less 
     than 5, nor more than 7 regional information centers located 
     at major research universities or consortiums of universities 
     to ensure the effective implementation of welfare reform and 
     the efficient dissemination of information about innovations, 
     evaluation outcomes, and training initiatives.
       ``(B) Center responsibilities.--The Centers shall have the 
     following functions:
       ``(i) Disseminate information about effective income 
     support and related programs, along with suggestions for the 
     replication of such programs.
       ``(ii) Research the factors that cause and sustain welfare 
     dependency and poverty in the regions served by the 
     respective centers.
       ``(iii) Assist the States in the region formulate and 
     implement innovative programs and improvements in existing 
     programs that help clients move off welfare and become 
     productive citizens.
       ``(iv) Provide training as appropriate to staff of State 
     agencies to enhance the ability of the agencies to 
     successfully place Work First clients in productive 
     employment or self-employment.
       ``(C) Center eligibility to perform evaluations.--The 
     Centers may compete for demonstration and evaluation 
     contracts developed under this section.

     ``SEC. 416. COLLECTION OF OVERPAYMENTS FROM FEDERAL TAX 
                   REFUNDS.

       ``(a) In General.--Upon receiving notice from a State 
     agency administering a plan approved under this part that a 
     named individual has been overpaid under the State plan 
     approved under this part, the Secretary of the Treasury shall 
     determine whether any amounts as refunds of Federal taxes 
     paid are payable to such individual, regardless of whether 
     such individual filed a tax return as a married or unmarried 
     individual. If the Secretary of the Treasury finds that any 
     such amount is payable, the Secretary shall withhold from 
     such refunds an amount equal to the overpayment sought to be 
     collected by the State and pay such amount to the State 
     agency.
       ``(b) Regulations.--The Secretary of the Treasury shall 
     issue regulations, approved by the Secretary of Health and 
     Human Services, that provide--

[[Page H11290]]

       ``(1) that a State may only submit under subsection (a) 
     requests for collection of overpayments with respect to 
     individuals--
       ``(A) who are no longer receiving temporary employment 
     assistance under the State plan approved under this part,
       ``(B) with respect to whom the State has already taken 
     appropriate action under State law against the income or 
     resources of the individuals or families involved; and
       ``(C) to whom the State agency has given notice of its 
     intent to request withholding by the Secretary of the 
     Treasury from the income tax refunds of such individuals;
       ``(2) that the Secretary of the Treasury will give a timely 
     and appropriate notice to any other person filing a joint 
     return with the individual whose refund is subject to 
     withholding under subsection (a); and
       ``(3) the procedures that the State and the Secretary of 
     the Treasury will follow in carrying out this section which, 
     to the maximum extent feasible and consistent with the 
     specific provisions of this section, will be the same as 
     those issued pursuant to section 464(b) applicable to 
     collection of past-due child support.''.
       (b) Payments to Puerto Rico.--Section 1108(a)(1) (42 U.S.C. 
     1308(a)(1)) is amended--
       (1) in subparagraph (F), by striking ``or''; and
       (2) by striking subparagraph (G) and inserting the 
     following:
       ``(G) $82,000,000 with respect to each of fiscal years 1989 
     through 1995, or
       ``(H) $102,500,000 with respect to the fiscal year 1996 and 
     each fiscal year thereafter;''.
       (c) Conforming Amendments Relating To Collection of 
     Overpayments.--
       (1) Section 6402 of the Internal Revenue Code of 1986 
     (relating to authority to make credits or refunds) is 
     amended--
       (A) in subsection (a), by striking ``(c) and (d)'' and 
     inserting ``(c), (d), and (e)'';
       (B) by redesignating subsections (e) through (i) as 
     subsections (f) through (j), respectively; and
       (C) by inserting after subsection (d) the following:
       ``(g) Collection of Overpayments Under Title IV-A of the 
     Social Security Act.--The amount of any overpayment to be 
     refunded to the person making the overpayment shall be 
     reduced (after reductions pursuant to subsections (c) and 
     (d), but before a credit against future liability for an 
     internal revenue tax) in accordance with section 416 of the 
     Social Security Act (concerning recovery of overpayments to 
     individuals under State plans approved under part A of title 
     IV of such Act).''.
       (2) Section 552a(a)(8)(B)(iv)(III) of title 5, United 
     States Code, is amended by striking ``section 464 or 1137 of 
     the Social Security Act'' and inserting ``section 416, 464, 
     or 1137 of the Social Security Act''.
       (d) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall be effective with 
     respect to calendar quarters beginning on or after October 1, 
     1996.
       (2) Special rule.--In the case of a State that the 
     Secretary of Health and Human Services determines requires 
     State legislation (other than legislation appropriating 
     funds) in order to meet the requirements imposed by the 
     amendment made by subsection (a), the State shall not be 
     regarded as failing to comply with the requirements of such 
     amendment before the first day of the first calendar quarter 
     beginning after the close of the first regular session of the 
     State legislature that begins after the date of enactment of 
     this Act. For purposes of this paragraph, in the case of a 
     State that has a 2-year legislative session, each year of the 
     session shall be treated as a separate regular session of the 
     State legislature.
                       Subtitle B--Make Work Pay

     SEC. 9201. TRANSITIONAL MEDICAID BENEFITS.

       (a) State Option of Extension of Medicaid Enrollment for 
     Former AFDC Recipients for 1 Additional Year.--
       (1) In general.--Section 1925(b)(1) (42 U.S.C. 1396r-
     6(b)(1)) is amended by striking the period at the end and 
     inserting the following: ``, and that the State may, at its 
     option, offer to each such family the option of extending 
     coverage under this subsection for any of the first 2 
     succeeding 6-month periods, in the same manner and under the 
     same conditions as the option of extending coverage under 
     this subsection for the first succeeding 6-month period.''.
       (2) Conforming amendments.--Section 1925(b) (42 U.S.C. 
     1396r-6(b)) is amended--
       (A) in the heading, by striking ``Extension'' and inserting 
     ``Extensions'';
       (B) in the heading of paragraph (1), by striking 
     ``Requirement'' and inserting ``In general'';
       (C) in paragraph (2)(B)(ii)--
       (i) in the heading, by striking ``period'' and inserting 
     ``periods'', and
       (ii) by striking ``in the period'' and inserting ``in any 
     of the 6-month periods'';
       (D) in paragraph (3)(A), by striking ``the 6-month period'' 
     and inserting ``any 6-month period'';
       (E) in paragraph (4)(A), by striking ``the extension 
     period'' and inserting ``any extension period''; and
       (F) in paragraph (5)(D)(i), by striking ``is a 3-month 
     period'' and all that follows and inserting the following: 
     ``is, with respect to a particular 6-month additional 
     extension period provided under this subsection, a 3-month 
     period beginning with the 1st or 4th month of such extension 
     period.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to calendar quarters beginning on or after 
     October 1, 1997, without regard to whether or not final 
     regulations to carry out such amendments have been 
     promulgated by such date.

     SEC. 9202. NOTICE OF AVAILABILITY REQUIRED TO BE PROVIDED TO 
                   APPLICANTS AND FORMER RECIPIENTS OF TEMPORARY 
                   FAMILY ASSISTANCE, FOOD STAMPS, AND MEDICAID.

       (a) Temporary Family Assistance.--Section 406, as added by 
     the amendment made by section 9101(a) of this Act, is amended 
     by adding at the end the following:
       ``(h) Notice of Availability of EITC.--The State plan shall 
     provide that the State agency referred to in subsection (b) 
     must provide written notice of the existence and availability 
     of the earned income credit under section 32 of the Internal 
     Revenue Code of 1986 to--
       ``(1) any individual who applies for assistance under the 
     State plan, upon receipt of the application; and
       ``(2) any individual whose assistance under the State plan 
     (or under the State plan approved under part A of this title 
     (as in effect before the effective date of title IX of the 
     Omnibus Budget Reconciliation Act of 1995) is terminated, in 
     the notice of termination of benefits.''.
       (b) Food Stamps.--Section 11(e) of the Food Stamp Act of 
     1977 (7 U.S.C. 2020(e)) is amended--
       (1) in paragraph (24) by striking ``and'' at the end;
       (2) in paragraph (25) by striking the period at the end and 
     inserting ``; and''; and
       (3) by inserting after paragraph (25) the following:
       ``(26) that whenever a household applies for food stamp 
     benefits, and whenever such benefits are terminated with 
     respect to a household, the State agency shall provide to 
     each member of such household notice of--
       ``(A) the existence of the earned income tax credit under 
     section 32 of the Internal Revenue Code of 1986; and
       ``(B) the fact that such credit may be applicable to such 
     member.''.
       (c) Medicaid.--Section 1902(a) (42 U.S.C. 1396a(a)) is 
     amended--
       (1) by striking ``and'' at the end of paragraph (61);
       (2) by striking the period at the end of paragraph (62) and 
     inserting ``; and''; and
       (3) by inserting after paragraph (62) the following new 
     paragraph:
       ``(63) provide that the State shall provide notice of the 
     existence and availability of the earned income tax credit 
     under section 32 of the Internal Revenue Code of 1986 to each 
     individual applying for medical assistance under the State 
     plan and to each individual whose eligibility for medical 
     assistance under the State plan is terminated.''.

     SEC. 9203. NOTICE OF AVAILABILITY OF EARNED INCOME TAX CREDIT 
                   AND DEPENDENT CARE TAX CREDIT TO BE INCLUDED ON 
                   W-4 FORM.

       (a) In General.--Section 11114 of the Omnibus Budget 
     Reconciliation Act of 1990 (26 U.S.C. 21 note), relating to 
     program to increase public awareness, is amended by adding at 
     the end the following new sentence: ``Such means shall 
     include printing a notice of the availability of such credits 
     on the forms used by employees to determine the proper number 
     of withholding exemptions under chapter 24 of such Code.''

     SEC. 9204. ADVANCE PAYMENT OF EARNED INCOME TAX CREDIT 
                   THROUGH STATE DEMONSTRATION PROGRAMS.

       (a) In General.--Section 3507 of the Internal Revenue Code 
     of 1986 (relating to the advance payment of the earned income 
     tax credit) is amended by adding at the end the following:
       ``(g) State Demonstrations.--
       ``(1) In general.--In lieu of receiving earned income 
     advance amounts from an employer under subsection (a), a 
     participating resident shall receive advance earned income 
     payments from a responsible State agency pursuant to a State 
     Advance Payment Program that is designated pursuant to 
     paragraph (2).
       ``(2) Designations.--
       ``(A) In general.--From among the States submitting 
     proposals satisfying the requirements of paragraph (3), the 
     Secretary (in consultation with the Secretary of Health and 
     Human Services) may designate not more than 4 State Advance 
     Payment Demonstrations. States selected for the 
     demonstrations may have, in the aggregate, no more than 5 
     percent of the total number of households participating in 
     the program under the Food Stamp program in the immediately 
     preceding fiscal year. Administrative costs of a State in 
     conducting a demonstration under this section may be included 
     for matching under section 413(a) of the Social Security Act 
     and section 16(a) of the Food Stamp Act of 1977.
       ``(B) When designation may be made.--Any designation under 
     this paragraph shall be made no later than December 31, 1996.
       ``(C) Period for which designation is in effect.--
       ``(i) In general.--Designations made under this paragraph 
     shall be effective for advance earned income payments made 
     after December 31, 1996, and before January 1, 2000.
       ``(ii) Special rules.--
       ``(I) Revocation of designations.--The Secretary may revoke 
     any designation made under this paragraph if the Secretary 
     determines that the State is not complying substantially with 
     the proposal described in paragraph (3) submitted by the 
     State.

[[Page H11291]]

     ``(II) Automatic termination of designations.--Any failure by 
     a State to comply with the reporting requirements described 
     in paragraphs (3)(F) and (3)(G) shall have the effect of 
     immediately terminating the designation under this paragraph 
     and rendering paragraph (5)(A)(ii) inapplicable to subsequent 
     payments.
       ``(3) Proposals.--No State may be designated under 
     paragraph (2) unless the State's proposal for such 
     designation--
       ``(A) identifies the responsible State agency,
       ``(B) describes how and when the advance earned income 
     payments will be made by that agency, including a description 
     of any other State or Federal benefits with which such 
     payments will be coordinated,
       ``(C) describes how the State will obtain the information 
     on which the amount of advance earned income payments made to 
     each participating resident will be determined in accordance 
     with paragraph (4),
       ``(D) describes how State residents who will be eligible to 
     receive advance earned income payments will be selected, 
     notified of the opportunity to receive advance earned income 
     payments from the responsible State agency, and given the 
     opportunity to elect to participate in the program,
       ``(E) describes how the State will verify, in addition to 
     receiving the certifications and statement described in 
     paragraph (7)(D)(iv), the eligibility of participating 
     residents for the earned income tax credit,
       ``(F) commits the State to furnishing to each participating 
     resident by January 31 of each year a written statement 
     showing--
       ``(i) the name and taxpayer identification number of the 
     participating resident, and
       ``(ii) the total amount of advance earned income payments 
     made to the participating resident during the prior calendar 
     year,
       ``(G) commits the State to furnishing to the Secretary by 
     December 1 of each year a written statement showing the name 
     and taxpayer identification number of each participating 
     resident,
       ``(H) commits the State to treat any advance earned income 
     payments as described in paragraph (5) and any repayments of 
     excessive advance earned income payments as described in 
     paragraph (6),
       ``(I) commits the State to assess the development and 
     implementation of its State Advance Payment Program, 
     including an agreement to share its findings and lessons with 
     other interested States in a manner to be described by the 
     Secretary, and
       ``(J) is submitted to the Secretary on or before June 30, 
     1996.
       ``(4) Amount and timing of advance earned income 
     payments.--
       ``(A) Amount.--
       ``(i) In general.--The method for determining the amount of 
     advance earned income payments made to each participating 
     resident shall conform to the fullest extent possible with 
     the provisions of subsection (c).
       ``(ii) Special rule.--A State may, at its election, apply 
     the rules of subsection (c)(2)(B) by substituting `between 60 
     percent and 75 percent of the credit percentage in effect 
     under section 32(b)(1) for an individual with the 
     corresponding number of qualifying children' for `60 percent 
     of the credit percentage in effect under section 32(b)(1) for 
     such an eligible individual with 1 qualifying child' in 
     clause (i) and `the same percentage (as applied in clause 
     (i))' for `60 percent' in clause (ii).
       ``(B) Timing.--The frequency of advance earned income 
     payments may be determined on the basis of the payroll 
     periods of participating residents, on a single statewide 
     schedule, or on any other reasonable basis prescribed by the 
     State in its proposal; however, in no event may advance 
     earned income payments be made to any participating resident 
     less frequently than on a calendar-quarter basis.
       ``(5) Payments to be treated as payments of withholding and 
     fica taxes.--
       ``(A) In general.--For purposes of this title, advance 
     earned income payments during any calendar quarter--
       ``(i) shall neither be treated as a payment of compensation 
     nor be included in gross income, and
       ``(ii) shall be treated as made out of--

       ``(I) amounts required to be deducted by the State and 
     withheld for the calendar quarter by the State under section 
     3401 (relating to wage withholding),
       ``(II) amounts required to be deducted for the calendar 
     quarter under section 3102 (relating to FICA employee taxes), 
     and
       ``(III) amounts of the taxes imposed on the State for the 
     calendar quarter under section 3111 (relating to FICA 
     employer taxes),

     as if the State had paid to the Secretary, on the day on 
     which payments are made to participating residents, an amount 
     equal to such payments.
       ``(B) If advance payments exceed taxes due.--If for any 
     calendar quarter the aggregate amount of advance earned 
     income payments made by the responsible State agency under a 
     State Advance Payment Program exceeds the sum of the amounts 
     referred to in subparagraph (A)(ii) (without regard to 
     paragraph (6)(A)), each such advance earned income payment 
     shall be reduced by an amount which bears the same ratio to 
     such excess as such advance earned income payment bears to 
     the aggregate amount of all such advance earned income 
     payments.
       ``(6) State repayment of excessive advance earned income 
     payments.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, in the case of an excessive advance earned income 
     payment a State shall be treated as having deducted and 
     withheld under section 3401 (relating to wage withholding), 
     and as being required to pay to the United States, the 
     repayment amount during the repayment calendar quarter.
       ``(B) Excessive advance earned income payment.--For 
     purposes of this section, the term `excessive advance income 
     payment' means that portion of any advance earned income 
     payment that, when combined with other advance earned income 
     payments previously made to the same participating resident 
     during the same calendar year, exceeds the amount of earned 
     income tax credit to which that participating resident is 
     entitled under section 32 for that year.
       ``(C) Repayment amount.--For purposes of this subsection, 
     the term `repayment amount' means an amount equal to 50 
     percent of the excess of--
       ``(i) excessive advance earned income payments made by a 
     State during a particular calendar year, over
       ``(ii) the sum of--

       ``(I) 4 percent of all advance earned income payments made 
     by the State during that calendar year, and
       ``(II) the excessive advance earned income payments made by 
     the State during that calendar year that have been collected 
     from participating residents by the Secretary.

       ``(D) Repayment calendar quarter.--For purposes of this 
     subsection, the term `repayment calendar quarter' means the 
     second calendar quarter of the third calendar year beginning 
     after the calendar year in which an excessive earned income 
     payment is made.
       ``(7) Definitions.--For purposes of this subsection--
       ``(A) State advance payment program.--The term `State 
     Advance Payment Program' means the program described in a 
     proposal submitted for designation under paragraph (1) and 
     designated by the Secretary under paragraph (2).
       ``(B) Responsible state agency.--The term `responsible 
     State agency' means the single State agency that will be 
     making the advance earned income payments to residents of the 
     State who elect to participate in a State Advance Payment 
     Program.
       ``(C) Advance earned income payments.--The term `advance 
     earned income payments' means an amount paid by a responsible 
     State agency to residents of the State pursuant to a State 
     Advance Payment Program.
       ``(D) Participating resident.--The term `participating 
     resident' means an individual who--
       ``(i) is a resident of a State that has in effect a 
     designated State Advance Payment Program,
       ``(ii) makes the election described in paragraph (3)(D) 
     pursuant to guidelines prescribed by the State,
       ``(iii) certifies to the State the number of qualifying 
     children the individual has, and
       ``(iv) provides to the State the certifications and 
     statement described in subsections (b)(1), (b)(2), (b)(3), 
     and (b)(4) (except that for purposes of this clause, the term 
     `any employer' shall be substituted for `another employer' in 
     subsection (b)(3)), along with any other information required 
     by the State.''.
       (b) Technical Assistance.--The Secretaries of the Treasury 
     and Health and Human Services shall jointly ensure that 
     technical assistance is provided to State Advance Payment 
     Programs and that these programs are rigorously evaluated.
       (c) Annual Reports.--The Secretary shall issue annual 
     reports detailing the extent to which--
       (1) residents participate in the State Advance Payment 
     Programs,
       (2) participating residents file Federal and State tax 
     returns,
       (3) participating residents report accurately the amount of 
     the advance earned income payments made to them by the 
     responsible State agency during the year, and
       (4) recipients of excessive advance earned income payments 
     repay those amounts.
     The report shall also contain an estimate of the amount of 
     advance earned income payments made by each responsible State 
     agency but not reported on the tax returns of a participating 
     resident and the amount of excessive advance earned income 
     payments.
       (d) Authorization of Appropriations.--For purposes of 
     providing technical assistance described in subsection (b), 
     preparing the reports described in subsection (c), and 
     providing grants to States in support of designated State 
     Advance Payment Programs, there are authorized to be 
     appropriated in advance to the Secretary of the Treasury and 
     the Secretary of Health and Human Services a total of 
     $1,400,000 for fiscal years 1997 through 2000.

     SEC. 9205. FUNDING OF CHILD CARE SERVICES.

       (a) Repeal of Child Care Programs Under the Child Care and 
     Development Block Grant Act of1990.--The Child Care and 
     Development Block Grant Act of 1990 (42 U.S.C. 9858 et seq.) 
     is hereby repealed.
       (b) Funding of Child Care Services Through Social Services 
     Block Grant Program.--Title XX (42 U.S.C. 1397-1397f) is 
     amended by adding at the end the following:

     ``SEC. 2008. CHILD CARE.

       ``(a) Conditional Grant.--
       ``(1) In general.--In addition to any payment under section 
     2002 or 2007, the Secretary shall make a grant to each State 
     with a plan approved under this section for a fiscal year in 
     an amount equal to the special allotment of the State for the 
     fiscal year.

[[Page H11292]]

       ``(2) Limitations on authorization of appropriations.--For 
     grants under this section, there are authorized to be 
     appropriated to the Secretary not more than--
       ``(A) $1,400,000,000 for fiscal year 1997;
       ``(B) $1,450,000,000 for each of fiscal years 1998, 1999, 
     and 2000; and
       ``(C) $1,500,000,000 for each of fiscal years 2001 and 
     2002.
       ``(b) State Plans.--
       ``(1) Content.--A plan meets the requirements of this 
     paragraph if the plan--
       ``(A) identifies an appropriate State agency to be the lead 
     agency responsible for administering at the State level, and 
     coordinating with local governments, the activities of the 
     State pursuant to this section;
       ``(B) describes the activities the State will carry out 
     with funds provided under this section;
       ``(C) provides assurances that the funds provided under 
     this section will be used to supplement, not supplant, State 
     and local funds as well as Federal funds provided under any 
     Act and applied to child care activities in the State during 
     fiscal year 1989;
       ``(D) provides assurances that the State will not expend 
     more than 7 percent of the funds provided to the States under 
     this section for the fiscal year for administrative expenses;
       ``(E) provides assurances that, in providing child care 
     assistance, the State will give priority to families with low 
     income and families living in a low-income geographical area;
       ``(F) ensures that child care providers reimbursed under 
     this section meet applicable standards of State and local 
     law;
       ``(G) provides assurances that the lead agency will 
     coordinate the use of funds provided under this section with 
     the use of other Federal resources for child care provided 
     under this Act, and with other Federal, State, or local child 
     care and preschool programs operated in the State;
       ``(H) provides for the establishment of such fiscal and 
     accounting procedures as may be necessary to--
       ``(i) ensure a proper accounting of Federal funds received 
     by the State under this section; and
       ``(ii) ensure the proper verification of the reports 
     submitted by the State under subsection (f)(2);
       ``(I) provides assurances that the State will not impose 
     more stringent standards and licensing or regulatory 
     requirements on child care providers receiving funds provided 
     under this section than those imposed on other child care 
     providers in the State;
       ``(J) provides assurances that the State will not implement 
     any policy or practice which has the effect of significantly 
     restricting parental choice by--
       ``(i) expressly or effectively excluding any category of 
     care or type of provider within a category of care;
       ``(ii) limiting parental access to or choices from among 
     various categories of care or types of providers; or
       ``(iii) excluding a significant number of providers in any 
     category of care; and
       ``(K) provides assurances that parents will be informed 
     regarding their options under this section, including the 
     option of receiving a child care certificate or voucher.
       ``(2) Form.--A State may submit a plan that meets the 
     requirements of paragraph (1) in the form of amendments to 
     the State plan submitted pursuant to section 658E of the 
     Child Care and Development Block Grant Act of 1990, as in 
     effect before the effective date of section 9205 of the 
     Omnibus Budget Reconciliation Act of 1995.
       ``(3) Approval.--Not later than 90 days after the date the 
     State submits a plan to the Secretary under this subsection, 
     the Secretary shall either approve or disapprove the plan. If 
     the Secretary disapproves the plan, the Secretary shall 
     provide the State with an explanation and recommendations for 
     changes in the plan to gain approval.
       ``(c) Special Allotments.--The special allotment of a State 
     for a fiscal year equals the amount that bears the same ratio 
     to the amount appropriated pursuant to this section for the 
     fiscal year, as the number of children who have not attained 
     13 years of age and are residing with families in the State 
     bears to the total number of such children in all States with 
     plans approved under this section for the fiscal year, 
     determined on the basis of the most recent data available 
     from the Department of Commerce at the time the special 
     allotment is determined.
       ``(d) Payments to States.--
       ``(1) Payments.--
       ``(A) Computation of amount.--From the sums appropriated 
     therefor, the Secretary of the Treasury shall pay to each 
     State which has a plan approved under this section for a 
     fiscal year, for each quarter, beginning with the quarter 
     commencing October 1, 1996, an amount equal to \1/4\ of the 
     special allotment of the State for the fiscal year.
       ``(B) Method of computation and payment.--The method of 
     computing and paying such amounts shall be as follows:
       ``(i) Estimate.--The Secretary shall, before each quarter, 
     estimate the amount to be paid to the State for the quarter 
     under this section, based on a report filed by the State 
     containing the State's estimate of the total sum to be 
     expended by the State in such quarter in accordance with 
     subsection (e).
       ``(ii) Certification.--The Secretary of Health and Human 
     Services shall then certify to the Secretary of the Treasury 
     the amount so estimated by the Secretary of Health and Human 
     Services reduced or increased, as the case may be, by any sum 
     by which the Secretary of Health and Human Services finds 
     that the estimate for any prior quarter was greater or less 
     than the amount which should have been paid to the State for 
     such quarter, except that such increases or reductions shall 
     not be made to the extent that such sums have been applied to 
     make the amount certified for any prior quarter greater or 
     less than the amount estimated by the Secretary of Health and 
     Human Services for such prior quarter.
       ``(iii) Method of payment.--The Secretary of the Treasury 
     shall thereupon, through the Fiscal Service of the Department 
     of the Treasury and prior to audit or settlement by the 
     General Accounting Office, pay to the State, at the time or 
     times fixed by the Secretary of Health and Human Services, 
     the amount so certified.
       ``(2) Deadline for expenditure of funds by states.--Except 
     as provided in paragraph (3)(A), each State to which funds 
     are paid under this section for a fiscal year shall expend 
     such funds in the fiscal year or in the immediately 
     succeeding fiscal year.
       ``(3) Redistribution of unexpended special allotments.--
       ``(A) Remittance to the secretary.--Each State to which 
     funds are paid under this section for a fiscal year shall 
     remit to the Secretary that part of such funds which the 
     State intends not to, or does not, expend in the fiscal year 
     or in the immediately succeeding fiscal year.
       ``(B) Redistribution.--The Secretary shall increase the 
     special allotment of each State with a plan approved under 
     this part for a fiscal year that does not remit any amount to 
     the Secretary for the fiscal year by an amount equal to--
       ``(i) the aggregate of the amounts remitted pursuant to 
     subparagraph (A) for the fiscal year; multiplied by
       ``(ii) the adjusted State share for the fiscal year.
       ``(C) Adjusted state share.--As used in subparagraph 
     (B)(ii), the term `adjusted State share' means, with respect 
     to a fiscal year--
       ``(i) the special allotment of the State for the fiscal 
     year (before any increase under subparagraph (B)); divided by
       ``(ii)(I) the sum of the special allotments of all States 
     with plans approved under this part for the fiscal year; 
     minus
       ``(II) the aggregate of the amounts remitted to the 
     Secretary pursuant to subparagraph (A) for the fiscal year.
       ``(e) Use of Funds.--
       ``(1) In general.--Funds provided under this section shall 
     be used to expand parent choices in selecting child care, to 
     address deficiencies in the supply of child care, and to 
     expand and improve child care services, with an emphasis on 
     providing such services to low-income families and 
     geographical areas. Subject to the approval of the Secretary, 
     States to which funds are paid under this section shall use 
     such funds to carry out child care programs and activities 
     through cash grants, certificates, or contracts with 
     families, or public or private entities as the State 
     determines appropriate. States shall take parental preference 
     into account to the maximum extent possible in carrying out 
     child care programs.
       ``(2) Specific uses.--Each State to which funds are paid 
     under this section may expend such funds for--
       ``(A) child care services for infants, sick children, 
     children with special needs, and children of adolescent 
     parents;
       ``(B) after-school and before-school programs and programs 
     during nontraditional hours for the children of working 
     parents;
       ``(C) programs for the recruitment and training of day care 
     workers, including older Americans;
       ``(D) grant and loan programs to enable child care workers 
     and providers to meet State and local standards and 
     requirements;
       ``(E) child care programs developed by public and private 
     sector partnerships;
       ``(F) State efforts to provide technical assistance 
     designed to help providers improve the services offered to 
     parents and children; and
       ``(G) other child care-related programs consistent with the 
     purpose of this section and approved by the Secretary.
       ``(3) Limitations on use of funds.--A State to which funds 
     are paid under this section for a fiscal year shall use not 
     less than 80 percent of such funds to provide direct child 
     care assistance to low-income parents through child care 
     certificates or vouchers, contracts, or grants.
       ``(4) Methods of funding.--Funds for child care services 
     under this title shall be for the benefit of parents and 
     shall be provided through child care vouchers or certificates 
     provided directly to parents or through contracts or grants 
     with public or private providers.
       ``(5) Parental rights of choice.--Any parent who receives a 
     child care certificate under this title may use such 
     certificate with any child care provider, including those 
     providers which have religious activities, if such provider 
     is freely chosen by the parent from among the available 
     alternatives.
       ``(6) Child care certificates.--
       ``(A) In general.--For purposes of this title, a child care 
     certificate is a certificate issued by a State directly to a 
     parent or legal guardian for use only as payment for child 
     care services in any child care facility eligible to receive 
     funds under this Act.
       ``(B) Redemption.--If the demand for child care services of 
     families qualified to receive 

[[Page H11293]]

     such services from a State under this Act exceeds the 
     available supply of such services, the State shall ration 
     assistance to obtain such services using procedures that do 
     not disadvantage parents using child care certificates, 
     relative to other methods of financing, in either the waiting 
     period or the pecuniary value of such services.
       ``(C) Commencement of certificate program.--Beginning not 
     later than 1 year after the date of the enactment of this 
     section, each State that receives funds under this title 
     shall offer a child care certificate program in accordance 
     with this section.
       ``(D) Authority to use child care funds for certificate 
     program.--Each State to which funds are paid under this title 
     may use the funds provided to the State under this title 
     which are required to be used for child care activities to 
     plan and establish the State's child care certificate 
     program.
       ``(7) Option of receiving a child care certificate.--Each 
     parent or legal guardian who receives assistance pursuant to 
     this title shall be provided with the option of enrolling 
     their child with an eligible child care provider that 
     receives funds through grants, contracts, or child care 
     certificates provided under this title. Such parent shall 
     have the right to use such certificates to purchase child 
     care services from an eligible provider of their choice. The 
     State shall ensure that parental preference is considered to 
     the maximum extent possible in awarding grants or contracts.
       ``(8) Rights of religious child care providers.--
     Notwithstanding any other provision of law, a religious child 
     care provider who receives funds under this Act may require 
     adherence by employees to the religious tenets or teachings 
     of the provider.
       ``(9) Eligible child care providers.--Any child care 
     provider who meets applicable standards of State and local 
     law shall be eligible to receive funds under this section. As 
     used in this paragraph, the term `child care provider' 
     includes--
       ``(A) proprietary for-profit entities, relatives, informal 
     day care homes, religious child care providers, day care 
     centers, and any other entities that the State determines 
     appropriate subject to approval of the Secretary;
       ``(B) nonprofit organizations under subsections (c) and (d) 
     of section 501 of the Internal Revenue Code of 1986;
       ``(C) professional or employee associations;
       ``(D) consortia of small businesses; and
       ``(E) units of State and local governments, and elementary, 
     secondary, and post-secondary educational institutions.
       ``(10) Prohibited uses.--Any State to which funds are paid 
     under this section may not use such funds--
       ``(A) to satisfy any State matching requirement imposed 
     under any Federal grant;
       ``(B) for the purchase or improvement of land, or the 
     purchase, construction, or permanent improvement (other than 
     minor remodeling) of any building or other facility; or
       ``(C) to provide any service which the State makes 
     generally available to the residents of the State without 
     cost to such residents and without regard to the income of 
     such residents.
       ``(f) Reporting Requirements.--
       ``(1) Notice to secretary of unexpended funds.--Each State 
     which has not completely expended the funds paid to the State 
     under this section for a fiscal year in the fiscal year or 
     the immediately succeeding fiscal year shall notify the 
     Secretary of any amount not so expended.
       ``(2) State reports on use of funds.--Not later than 18 
     months after the date of the enactment of this section, and 
     each year thereafter, the State shall prepare and submit to 
     the Secretary, in such form as the Secretary shall prescribe, 
     a report describing the State's use of funds paid to the 
     State under this section, including--
       ``(A) the number, type, and distribution of services and 
     programs under this section;
       ``(B) the average cost of child care, by type of provider;
       ``(C) the number of children serviced under this section;
       ``(D) the average income and distribution of incomes of the 
     families being served;
       ``(E) efforts undertaken by the State pursuant to this 
     section to promote and ensure health and safety and improve 
     quality; and
       ``(F) such other information as the Secretary considers 
     appropriate.
       ``(3) Guidelines for state reports; coordination with 
     reports under section 2006.--Within 6 months after the date 
     of the enactment of this section, the Secretary shall 
     establish guidelines for State reports under paragraph (2). 
     To the extent feasible, the Secretary shall coordinate such 
     reporting requirement with the reports required under section 
     2006 and, as the Secretary deems appropriate, with other 
     reporting requirements placed on States as a condition of 
     receipt of other Federal funds which support child care.
       ``(4) Reports by the secretary.--
       ``(A) Reports to the congress of summary of state 
     reports.--The Secretary shall annually summarize the 
     information reported to the Secretary pursuant to paragraph 
     (2) and provide such summary to the Congress.
       ``(B) Reports to the states on effective practices.--The 
     Secretary shall annually provide the States with a report on 
     particularly effective practices and programs supported by 
     funds paid to the State under this section, which ensure the 
     health and safety of children in care, promote quality child 
     care, and provide training to all types of providers.
       ``(g) Administration and Enforcement.--
       ``(1) Administration.--The Secretary shall--
       ``(A) coordinate all activities of the Department of Health 
     and Human Services relating to child care, and, to the 
     maximum extent practicable, coordinate such activities with 
     similar activities of other Federal entities;
       ``(B) collect, publish, and make available to the public a 
     listing of State child care standards at least once every 3 
     years; and
       ``(C) provide technical assistance to assist States to 
     carry out this section, including assistance on a 
     reimbursable basis.
       ``(2) Enforcement.--
       ``(A) Review of compliance with state plan.--The Secretary 
     shall review and monitor State compliance with this section 
     and the plans approved under this section for the State, and 
     shall have the power to terminate payments to the State in 
     accordance with subparagraph (B).
       ``(B) Noncompliance.--
       ``(i) In general.--If the Secretary, after reasonable 
     notice to a State and opportunity for a hearing, finds that--

       ``(I) there has been a failure by the State to comply 
     substantially with any provision or requirement set forth in 
     the plan approved under this section for the State; or
       ``(II) in the operation of any program for which assistance 
     is provided under this section there is a failure by the 
     State to comply substantially with any provision of this 
     section;

     the Secretary shall notify the State of the findings and that 
     no further payments may be made to such State under this 
     section (or, in the case of noncompliance in the operation of 
     a program or activity, that no further payments to the 
     State will be made with respect to such program or 
     activity) until the Secretary is satisfied that there is 
     no longer any such failure to comply or that the 
     noncompliance will be promptly corrected.
       ``(ii) Additional sanctions.--In the case of a finding of 
     noncompliance made pursuant to clause (i), the Secretary may, 
     in addition to imposing the sanctions described in such 
     subparagraph, impose the other appropriate sanctions, 
     including recoupment of money improperly expended for 
     purposes prohibited or not authorized by this section, and 
     disqualification from the receipt of financial assistance 
     under this section.
       ``(iii) Notice.--The notice required under subparagraph (A) 
     shall include a specific identification of any additional 
     sanction being imposed under clause (ii).
       ``(C) Issuance of rules.--The Secretary shall establish by 
     rule procedures for--
       ``(i) receiving, processing, and determining the validity 
     of complaints concerning any failure of a State to comply 
     with the State plan or any requirement of this section; and
       ``(ii) imposing sanctions under this subsection.

     ``SEC. 2009. CHILD CARE DURING PARTICIPATION IN EMPLOYMENT, 
                   EDUCATION, AND TRAINING; EXTENDED ELIGIBILITY.

       ``(a) Child Care Guarantee.--
       ``(1) In general.--Each State agency referred to in section 
     2008(b)(1)(A) shall guarantee child care in accordance with 
     section 2008--
       ``(A) for any individual who is participating in an 
     education or training activity (including participation in a 
     program established under part G of title IV) if the State 
     agency approves the activity and determines that the 
     individual is participating satisfactorily in the activity;
       ``(B) for each family with a dependent child (as defined in 
     section 413(a)(2)(E)) requiring such care to the extent that 
     such care is determined by the State agency to be necessary 
     for an individual in the family to accept employment or 
     remain employed, including in a community service job under 
     part G of title IV; and
       ``(C) to the extent that the State agency determines that 
     such care is necessary for the employment of an individual, 
     if the family of which the individual is a member has ceased 
     to receive assistance under the State plan approved under 
     part A of title IV by reason of increased hours of, or income 
     from, such employment, subject to paragraph (2) of this 
     subsection.
       ``(2) Limitations on eligibility for transitional child 
     care.--A family shall not be eligible for child care under 
     paragraph (1)(C)--
       ``(A) for more than 12 months after the last month for 
     which the family received assistance described in such 
     paragraph;
       ``(B) if the family did not receive such assistance in at 
     least 3 of the most recent 6 months in which the family 
     received such assistance;
       ``(C) if the family does not include a child who is (or, if 
     needy, would be) a dependent child (within the meaning of 
     section 413(a)(2)(E));
       ``(D) for any month beginning after the caretaker relative 
     (within the meaning of such part) in the family has 
     terminated his or her employment without good cause; or
       ``(E) with respect to a child, for any month beginning 
     after the caretaker relative in the family has refused to 
     cooperate with the State in establishing or enforcing the 
     obligation of any parent of the child to provide support for 
     the child, without good cause as 

[[Page H11294]]

     determined by the State agency in accordance with standards 
     prescribed by the Secretary which shall take into 
     consideration the best interests of the child.
       ``(b) State Entitlement to Payments.--Each State with a 
     plan approved under section 2008 shall be entitled to receive 
     from the Secretary for any fiscal year an amount equal to--
       ``(1) the total amount expended by the State to carry out 
     subsection (a) during the fiscal year; multiplied by
       ``(2) the Federal medical assistance percentage (as defined 
     in the last sentence of section 1118).''.
       (c) Effective Date.--The amendments and repeals made by 
     this section shall take effect on October 1, 1996.

     SEC. 9206. CERTAIN FEDERAL ASSISTANCE INCLUDIBLE IN GROSS 
                   INCOME.

       (a) In General.--Part II of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to items 
     specifically included in gross income) is amended by adding 
     at the end the following new section:

     ``SEC. 91. CERTAIN FEDERAL ASSISTANCE.

       ``(a) In General.--Gross income shall include an amount 
     equal to the specified Federal assistance received by the 
     taxpayer during the taxable year.
       ``(b) Specified Federal Assistance.--For purposes of this 
     section--
       ``(1) In general.--The term `specified Federal assistance' 
     means--
       ``(A) assistance provided under a State plan approved under 
     part A of title IV of the Social Security Act (relating to 
     temporary employment assistance program),
       ``(B) assistance provided under any food stamp program, and
       ``(C) supplemental security income benefits under title XVI 
     of the Social Security Act (including supplemental security 
     income benefits of the type described in section 1616 of such 
     Act or section 212 of Public Law 93-66).
       ``(2) Special rule.--In the case of assistance provided 
     under a program described in subsection (d)(2), such term 
     shall include only the assistance required to be provided 
     under section 21 or 22 (as the case may be) of the Food Stamp 
     Act of 1977.
       ``(c) Individuals Subject to Tax.--For purposes of this 
     section--
       ``(1) Temporary employment assistance program.--Assistance 
     described in subsection (b)(1)(A) shall be treated as 
     received by the relative with whom the dependent child is 
     living (within the meaning of section 406(c) of the Social 
     Security Act).
       ``(2) Food stamps.--In the case of assistance described in 
     subsection (b)(1)(B)--
       ``(A) In general.--Except as provided in subparagraph (B), 
     such assistance shall be treated as received ratably by each 
     of the individuals taken into account in determining the 
     amount of such assistance for the benefit of such 
     individuals.
       ``(B) Assistance to children treated as received by 
     parents, etc.--The amount of assistance which would (but for 
     this subparagraph) be treated as received by a child shall be 
     treated as received as follows:
       ``(i) If there is an includible parent, such amount shall 
     be treated as received by the includible parent (or if there 
     is more than 1 includible parent, as received ratably by each 
     includible parent).
       ``(ii) If there is no includible parent and there is an 
     includible grandparent, such amount shall be treated as 
     received by the includible grandparent (or if there is more 
     than 1 includible grandparent, as received ratably by each 
     includible grandparent).
       ``(iii) If there is no includible parent or grandparent, 
     such amount shall be treated as received ratably by each 
     includible adult.
       ``(C) Definitions.--For purposes of subparagraph (B)--
       ``(i) Child.--The term `child' means any individual who has 
     not attained age 16 as of the close of the taxable year. Such 
     term shall not include any individual who is an includible 
     parent of a child (as defined in the preceding sentence).
       ``(ii) Adult.--The term `adult' means any individual who is 
     not a child.
       ``(iii) Includible.--The term `includible' means, with 
     respect to any individual, an individual who is included in 
     determining the amount of assistance paid to the household 
     which includes the child.
       ``(iv) Parent.--The term `parent' includes the stepfather 
     and stepmother of the child.
       ``(v) Grandparent.--The term `grandparent' means any parent 
     of a parent of the child.
       ``(d) Food Stamp Program.--For purposes of subsection (b), 
     the term `food stamp program' means--
       ``(1) the food stamp program (as defined in section 3(h) of 
     the Food Stamp Act of 1977), and
       ``(2) the portion of the program under sections 21 and 22 
     of such Act which provides food assistance.''
       (b) Reporting.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 of such Code is amended by adding at the end the 
     following new section:

     ``SEC. 6050Q. PAYMENTS OF CERTAIN FEDERAL ASSISTANCE.

       ``(a) Requirement of Reporting.--The appropriate official 
     shall make a return, according to the forms and regulations 
     prescribed by the Secretary, setting forth--
       ``(1) the aggregate amount of specified Federal assistance 
     paid to any individual during any calendar year, and
       ``(2) the name, address, and TIN of such individual.
       ``(b) Statements To Be Furnished to Persons With Respect to 
     Whom Information Is Required.--Every person required to make 
     a return under subsection (a) shall furnish to each 
     individual whose name is required to be set forth in such 
     return a written statement showing--
       ``(1) the aggregate amount of payments made to the 
     individual which are required to be shown on such return, and
       ``(2) the name of the agency making the payments.

     The written statement required under the preceding sentence 
     shall be furnished to the individual on or before January 31 
     of the year following the calendar year for which the return 
     under subsection (a) was required to be made.
       ``(c) Definitions and Special Rule.--For purposes of this 
     section--
       ``(1) Appropriate official.--The term `appropriate 
     official' means--
       ``(A) in the case of specified Federal assistance described 
     in section 91(b)(1)(A), the head of the State agency 
     administering the plan under which such assistance is 
     provided,
       ``(B) in the case of specified Federal assistance described 
     in section 91(b)(1)(B), the head of the State agency 
     administering the program under which such assistance is 
     provided, and
       ``(C) in the case of specified Federal assistance described 
     in section 91(b)(1)(C), the Secretary of Health and Human 
     Services.
       ``(2) Specified federal assistance.--The term `specified 
     Federal assistance' has the meaning given such term by 
     section 91(b).
       ``(3) Amounts treated as paid.--The rules of section 91(c) 
     shall apply for purposes of determining to whom specified 
     Federal assistance is paid.''
       (2) Penalties.--
       (A) Subparagraph (B) of section 6724(d)(1) of such Code is 
     amended by redesignating clauses (ix) through (xiv) as 
     clauses (x) through (xv), respectively, and by inserting 
     after clause (viii) the following new clause:
       ``(ix) section 6050Q (relating to payments of certain 
     Federal assistance),''.
       (B) Paragraph (2) of section 6724(d) of such Code is 
     amended by redesignating subparagraphs (Q) through (T) as 
     subparagraphs (R) through (U), respectively, and by inserting 
     after subparagraph (P) the following new subparagraph:
       ``(Q) section 6050Q(b) (relating to payments of certain 
     Federal assistance),''.
       (c) Temporary Employment Assistance Program, Supplemental 
     Security Income, and Food Stamp Benefits Not Taken into 
     Account for Purposes of the Earned Income Tax Credit.--
     Section 32 of the Internal Revenue Code of 1986 (relating to 
     the earned income tax credit), is amended by adding at the 
     end the following new subsection:
       ``(k) Adjusted Gross Income Determined Without Regard to 
     Certain Federal Assistance.--For purposes of this section, 
     adjusted gross income shall be determined without regard to 
     any amount which is includible in gross income solely by 
     reason of section 91.''
       (d) Clerical Amendments.--
       (1) The table of sections for part II of subchapter B of 
     chapter 1 of such Code is amended by adding at the end the 
     following new item:

``Sec. 91. Certain Federal assistance.''
       (2) The table of sections for subpart B of part III of 
     subchapter A of chapter 61 of such Code is amended by adding 
     at the end the following new item:

``Sec. 6050Q. Payments of certain Federal assistance.''
       (e) Effective Date.--The amendments made by this section 
     shall apply to benefits received after December 31, 1995, 
     except that the amendment made by subsection (c) shall apply 
     to taxable years beginning after such date.

     SEC. 9207. DEPENDENT CARE CREDIT TO BE REFUNDABLE; HIGH-
                   INCOME TAXPAYERS INELIGIBLE FOR CREDIT.

       (a) Credit To Be Refundable.--
       (1) In general.--Section 21 of the Internal Revenue Code of 
     1986 (relating to expenses for household and dependent care 
     services necessary for gainful employment) is hereby moved to 
     subpart C of part IV of subchapter A of chapter 1 of such 
     Code (relating to refundable credits) and inserted after 
     section 34.
       (2) Technical amendments.--
       (A) Section 35 of such Code is redesignated as section 36.
       (B) Section 21 of such Code is redesignated as section 35.
       (C) Paragraph (1) of section 35(a) of such Code (as 
     redesignated by subparagraph (B)) is amended by striking 
     ``this chapter'' and inserting ``this subtitle''.
       (D) Subparagraph (C) of section 129(a)(2) of such Code is 
     amended by striking ``section 21(e)'' and inserting ``section 
     35(e)''.
       (E) Paragraph (2) of section 129(b) of such Code is amended 
     by striking ``section 21(d)(2)'' and inserting ``section 
     35(d)(2)''.
       (F) Paragraph (1) of section 129(e) of such Code is amended 
     by striking ``section 21(b)(2)'' and inserting ``section 
     35(b)(2)''.
       (G) Subsection (e) of section 213 of such Code is amended 
     by striking ``section 21'' and inserting ``section 35''.
       (H) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``, or 
     from section 35 of such Code''.
       (I) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 of such 

[[Page H11295]]

     Code is amended by striking the item relating to section 35 
     and inserting the following:

``Sec. 35. Expenses for household and dependent care services necessary 
              for gainful employment.
``Sec. 36. Overpayments of tax.''.
       (J) The table of sections for subpart A of such part IV is 
     amended by striking the item relating to section 21.
       (b) Higher-Income Taxpayers Ineligible for Credit.--
     Subsection (a) of section 35 of such Code, as redesignated by 
     subsection (a), is amended by adding at the end the following 
     new paragraph:
       ``(3) Phaseout of credit for higher-income taxpayers.--The 
     amount of the credit which would (but for this paragraph) be 
     allowed by this section shall be reduced (but not below zero) 
     by an amount which bears the same ratio to such amount of 
     credit as the excess of the taxpayer's adjusted gross income 
     for the taxable year over $60,000 bears to $20,000. Any 
     reduction determined under the preceding sentence which is 
     not a multiple of $10 shall be rounded to the nearest 
     multiple of $10.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.
                         Subtitle C--Work First

     SEC. 9301. WORK FIRST PROGRAM.

       (a) Establishment and Operation of Program.--Title IV (42 
     U.S.C. 601 et seq.) is amended by striking part F and 
     inserting the following:

                      ``Part F--Work First Program

     ``SEC. 481. STATE ROLE.

       ``(a) Program Requirements.--Any State may establish and 
     operate a work first program that meets the following 
     requirements:
       ``(1) Objective.--The objective of the program is for each 
     program participant to find and hold a full-time unsubsidized 
     paid job, and for this goal to be achieved in a cost-
     effective fashion.
       ``(2) Method.--The method of the program is to connect 
     recipients of assistance under the State plan approved under 
     part A with the private sector labor market as soon as 
     possible and offer them the support and skills necessary to 
     remain in the labor market. Each component of the program 
     should be permeated with an emphasis on employment and with 
     an understanding that minimum wage jobs are a stepping stone 
     to more highly paid employment. The program shall provide 
     recipients with education, training, job search and 
     placement, wage supplementation, temporary subsidized jobs, 
     or such other services that the State deems necessary to 
     help a recipient obtain private sector employment.
       ``(3) Job creation.--The creation of jobs, with an emphasis 
     on private sector jobs, shall be a component of the program 
     and shall be a priority for each State office with 
     responsibilities under the program.
       ``(4) Forms of assistance.--The State shall provide 
     assistance to participants in the program in the form of 
     education, training, job placement services (including 
     vouchers for job placement services), work supplementation 
     programs, temporary subsidized job creation, job counseling, 
     assistance in establishing microenterprises, or other 
     services to provide individuals with the support and skills 
     necessary to obtain and keep employment in the private 
     sector.
       ``(5) 2-year limitation on participation.--The program 
     shall comply with section 487(b).
       ``(6) Agreements of mutual responsibility.--
       ``(A) In general.--The State agency shall develop an 
     agreement of mutual responsibility for each program 
     participant, which will be an individualized comprehensive 
     plan, developed by the team and the participant, to move the 
     participant into a full-time unsubsidized job. The agreement 
     should detail the education, training, or skills that the 
     individual will be receiving to obtain a full-time 
     unsubsidized job, and the obligations of the individual.
       ``(B) Hours of participation requirement.--The agreement 
     shall provide that the individual shall participate in 
     activities in accordance with the agreement for--
       ``(i) not fewer than 20 hours per week during fiscal years 
     1997 and 1998;
       ``(ii) not fewer than 25 hours per week during fiscal year 
     1999; and
       ``(iii) not fewer than 30 hours per week thereafter.
       ``(7) Caseload participation rates.--The program shall 
     comply with section 488.
       ``(8) Nondisplacement.--The program may not be operated in 
     a manner that results in--
       ``(A) the displacement of a currently employed worker or 
     position by a program participant;
       ``(B) the replacement of an employee who has been 
     terminated with a program participant; or
       ``(C) the replacement of an individual who is on layoff 
     from the same position given to a program participant or any 
     equivalent position.
       ``(b) Annual Reports.--
       ``(1) Compliance with performance measures.--Each State 
     that operates a program under this part shall submit to the 
     Secretary annual reports that compare the achievements of the 
     program with the performance-based measures established under 
     section 488(c).
       ``(2) Compliance with participation rates.--Each State that 
     operates a program under this part for a fiscal year shall 
     submit to the Secretary a report on the participation rate of 
     the State for the fiscal year.

     ``SEC. 482. REVAMPED JOBS PROGRAM.

       ``A State that establishes a program under this part may 
     operate a program similar to the program known as the `GAIN 
     Program' that has been operated by Riverside County, 
     California, under Federal law in effect immediately before 
     the date this part first applies to the State of California.

     ``SEC. 483. USE OF PLACEMENT COMPANIES.

       ``(a) In General.--A State that establishes a program under 
     this part may enter into contracts with private companies 
     (whether operated for profit or not for profit) for the 
     placement of participants in the program in positions of 
     full-time employment, preferably in the private sector, for 
     wages sufficient to eliminate the need of such participants 
     for cash assistance.
       ``(b) Required Contract Terms.--Each contract entered into 
     under this section with a company shall meet the following 
     requirements:
       ``(1) Provision of job readiness and support services.--The 
     contract shall require the company to provide, to any program 
     participant who presents to the company a voucher issued 
     under subsection (d) intensive personalized support and job 
     readiness services designed to prepare the individual for 
     employment and ensure the continued success of the individual 
     in employment.
       ``(2) Payments.--
       ``(A) In general.--The contract shall provide for payments 
     to be made to the company with respect to each program 
     participant who presents to the company a voucher issued 
     under subsection (d).
       ``(B) Structure.--The contract shall provide for the 
     majority of the amounts to be paid under the contract with 
     respect to a program participant, to be paid after the 
     company has placed the participant in a position of full-time 
     employment and the participant has been employed in the 
     position for such period of not less than 5 months as the 
     State deems appropriate.
       ``(c) Competitive Bidding Required.--Contracts under this 
     section shall be awarded only after competitive bidding.
       ``(d) Vouchers.--The State shall issue a voucher to each 
     program participant whose agreement of mutual responsibility 
     provides for the use of placement companies under this 
     section, indicating that the participant is eligible for the 
     services of such a company.

     ``SEC. 484. TEMPORARY SUBSIDIZED JOB CREATION.

       ``A State that establishes a program under this part may 
     establish a program similar to the program known as `JOBS 
     Plus' that has been operated by the State of Oregon under 
     Federal law in effect immediately before the date this part 
     first applies to the State of Oregon.

     ``SEC. 485. MICROENTERPRISE.

       ``(a) Grants and Loans to Nonprofit Organizations for the 
     Provision of Technical Assistance, Training, and Credit to 
     Low Income Entrepreneurs.--A State that establishes a program 
     under this part may make grants and loans to nonprofit 
     organizations to provide technical assistance, training, and 
     credit to low income entrepreneurs for the purpose of 
     establishing microenterprises.
       ``(b) Microenterprise Defined.--For purposes of this 
     subsection, the term `microenterprise' means a commercial 
     enterprise which has 5 or fewer employees, 1 or more of whom 
     owns the enterprise.

     ``SEC. 486. WORK SUPPLEMENTATION PROGRAM.

       ``(a) In General.--A State that establishes a program under 
     this part may institute a work supplementation program under 
     which the State, to the extent it considers appropriate, may 
     reserve the sums that would otherwise be payable under the 
     State plan approved under part A to participants in the 
     program and use the sums instead for the purpose of providing 
     and subsidizing jobs for the participants (as described in 
     subsection (c)(3)(A) and (B)), as an alternative to providing 
     such assistance to the participants.
       ``(b) State Flexibility.--
       ``(1) Nothing in this part, or in any State plan approved 
     under part A, shall be construed to prevent a State from 
     operating (on such terms and conditions and in such cases as 
     the State may find to be necessary or appropriate) a work 
     supplementation program in accordance with this section 
     and section 484 (as in effect immediately before the date 
     this part first applies to the State).
       ``(2) Notwithstanding any other provision of law, a State 
     may adjust the levels of the standards of need under the 
     State plan as the State determines to be necessary and 
     appropriate for carrying out a work supplementation program 
     under this section.
       ``(3) Notwithstanding any other provision of law, a State 
     operating a work supplementation program under this section 
     may provide that the need standards in effect in those areas 
     of the State in which the program is in operation may be 
     different from the need standards in effect in the areas in 
     which the program is not in operation, and the State may 
     provide that the need standards for categories of recipients 
     may vary among such categories to the extent the State 
     determines to be appropriate on the basis of ability to 
     participate in the work supplementation program.
       ``(4) Notwithstanding any other provision of law, a State 
     may make such further adjustments in the amounts of 
     assistance provided under the plan to different categories of 
     recipients (as determined under paragraph (3)) in order to 
     offset increases in benefits 

[[Page H11296]]

     from needs-related programs (other than the State plan 
     approved under part A) as the State determines to be 
     necessary and appropriate to further the purposes of the work 
     supplementation program.
       ``(5) In determining the amounts to be reserved and used 
     for providing and subsidizing jobs under this section as 
     described in subsection (a), the State may use a sampling 
     methodology.
       ``(6) Notwithstanding any other provision of law, a State 
     operating a work supplementation program under this section, 
     may reduce or eliminate the amount of earned income to be 
     disregarded under the State plan as the State determines to 
     be necessary and appropriate to further the purposes of the 
     work supplementation program.
       ``(c) Rules Relating to Supplemented Jobs.--
       ``(1) A work supplementation program operated by a State 
     under this section may provide that any individual who is an 
     eligible individual (as determined under paragraph (2)) shall 
     take a supplemented job (as defined in paragraph (3)) to the 
     extent that supplemented jobs are available under the 
     program. Payments by the State to individuals or to employers 
     under the work supplementation program shall be treated as 
     expenditures incurred by the State for temporary employment 
     assistance under part A except as limited by subsection (d).
       ``(2) For purposes of this section, an eligible individual 
     is an individual who is in a category which the State 
     determines should be eligible to participate in the work 
     supplementation program, and who would, at the time of 
     placement in the job involved, be eligible for assistance 
     under an approved State plan if the State did not have a work 
     supplementation program in effect.
       ``(3) For purposes of this subsection, a supplemented job 
     is--
       ``(A) a job provided to an eligible individual by the State 
     or local agency administering the State plan under part A; or
       ``(B) a job provided to an eligible individual by any other 
     employer for which all or part of the wages are paid by the 
     State or local agency.
     A State may provide or subsidize under the program any job 
     which the State determines to be appropriate.
       ``(d) Cost Limitation.--The amount of the Federal payment 
     to a State under section 413 for expenditures incurred in 
     making payments to individuals and employers under a work 
     supplementation program under this subsection shall not 
     exceed an amount equal to the amount which would otherwise be 
     payable under such section if the family of each individual 
     employed in the program established in the State under this 
     section had received the maximum amount of assistance 
     providable under the State plan to such a family with no 
     income (without regard to adjustments under subsection (b) of 
     this section) for the lesser of--
       ``(1) 9 months; or
       ``(2) the number of months in which the individual was 
     employed in the program.
       ``(e) Rules of Interpretation.--
       ``(1) This section shall not be construed as requiring the 
     State or local agency administering the State plan to provide 
     employee status to an eligible individual to whom the State 
     or local agency provides a job under the work supplementation 
     program (or with respect to whom the State or local agency 
     provides all or part of the wages paid to the individual by 
     another entity under the program), or as requiring any State 
     or local agency to provide that an eligible individual 
     filling a job position provided by another entity under the 
     program be provided employee status by the entity during the 
     first 13 weeks the individual fills the position.
       ``(2) Wages paid under a work supplementation program shall 
     be considered to be earned income for purposes of any 
     provision of law.
       ``(f) Preservation of Medicaid Eligibility.--Any State that 
     chooses to operate a work supplementation program under this 
     section shall provide that any individual who participates in 
     the program, and any child or relative of the individual (or 
     other individual living in the same household as the 
     individual) who would be eligible for assistance under the 
     State plan approved under part A if the State did not have a 
     work supplementation program, shall be considered individuals 
     receiving assistance under the State plan approved under part 
     A for purposes of eligibility for medical assistance under 
     the State plan approved under title XIX.

     ``SEC. 487. PARTICIPATION RULES.

       ``(a) In General.--Except as provided in subsection (b), a 
     State that establishes a program under this part may require 
     any individual receiving assistance under the State plan 
     approved under part A to participate in the program.
       ``(b) 2-Year Limitation on Participation.--
       ``(1) In general.--Except as provided in paragraph (2), an 
     individual may not participate in a State program established 
     under this part if the individual has participated in the 
     State program established under this part for 24 months after 
     the date the individual first signed an agreement of mutual 
     responsibility under this part, excluding any month during 
     which the individual worked for an average of at least 25 
     hours per week in a private sector job.
       ``(2) Authority to allow repeat participation.--
       ``(A) In general.--Subject to subparagraph (B) of this 
     paragraph, a State may allow an individual who, by reason of 
     paragraph (1), would be prohibited from participating in the 
     State program established under this part to participate in 
     the program for such additional period or periods as the 
     State determines appropriate.
       ``(B) Limitation on percentage of repeat participants.--
       ``(i) In general.--Except as provided in clause (ii) of 
     this subparagraph, the number of individuals allowed under 
     subparagraph (A) to participate during a program year in a 
     State program established under this part shall not exceed--

       ``(I) 10 percent of the total number of individuals who 
     participated in the State program established under this part 
     or the State program established under part H during the 
     immediately preceding program year; or

       ``(II) in the case of fiscal year 2004 or any succeeding 
     fiscal year, 15 percent of such total number of individuals.

       ``(ii) Authority to increase limitation.--

       ``(I) Petition.--A State may request the Secretary to 
     increase to not more than 15 percent the percentage 
     limitation imposed by clause (i)(I) for a fiscal year before 
     fiscal year 2004.
       ``(II) Authority to grant request.--The Secretary may 
     approve a request made pursuant to subclause (I) if the 
     Secretary deems it appropriate. The Secretary shall develop 
     recommendations on the criteria that should be applied in 
     evaluating requests under subclause (I).

     ``SEC. 488. CASELOAD PARTICIPATION RATES; PERFORMANCE 
                   MEASURES.

       ``(a) Participation Rates.--
       ``(1) Requirement.--A State that operates a program under 
     this part shall achieve a participation rate for the 
     following fiscal years of not less than the following 
     percentage:

``Fiscal year:                                              Percentage:
  1997..........................................................20 ....

  1998..........................................................24 ....

  1999..........................................................28 ....

  2000..........................................................32 ....

  2001..........................................................36 ....

  2002..........................................................40 ....

  2003 or later.................................................52.....

       ``(2) Participation rate defined.--
       ``(A) In general.--As used in this subsection, the term 
     `participation rate' means, with respect to a State and a 
     fiscal year, an amount equal to--
       ``(i) the average monthly number of individuals who, during 
     the fiscal year, participate in the State program established 
     under this part or (if applicable) part G or H; divided by
       ``(ii) the average monthly number of individuals who are 
     not described in section 402(c)(1)(D) and for whom an 
     individual responsibility plan is in effect under section 403 
     during the fiscal year.
       ``(B) Special rule.--For each of the 1st 12 months after an 
     individual ceases to receive assistance under a State plan 
     approved under part A by reason of having become employed for 
     more than 25 hours per week in an unsubsidized job in the 
     private sector, the individual shall be considered to be 
     participating in the State program established under this 
     part, and to be an adult recipient of such assistance, for 
     purposes of subparagraph (A).
       ``(3) State compliance reports.--Each State that operates a 
     program under this part for a fiscal year shall submit to the 
     Secretary a report on the participation rate of the State for 
     the fiscal year.
       ``(4) Effect of failure to meet participation rates.--
       ``(A) In general.--If a State reports that the State has 
     failed to achieve the participation rate required by 
     paragraph (1) for the fiscal year, the Secretary may make 
     recommendations for changes in the State program established 
     under this part and (if the State has established a program 
     under part G) the State program established under part G. The 
     State may elect to follow such recommendations, and shall 
     demonstrate to the Secretary how the State will achieve the 
     required participation rates.
       ``(B) Second consecutive failure.--Notwithstanding 
     subparagraph (A), if a State fails to achieve the 
     participation rate required by paragraph (1) for 2 
     consecutive fiscal years, the Secretary may--
       ``(i) require the State to make changes in the State 
     program established under this part and (if the State has 
     established a program under part G) the State program 
     established under part G; and
       ``(ii) reduce by 5 percent the amount otherwise payable to 
     the State under section 413.
       ``(b) Performance Standards.--The Secretary shall develop 
     standards to be used to measure the effectiveness of the 
     programs established under this part and part G in moving 
     recipients of assistance under the State plan approved under 
     part A into full-time unsubsidized employment.
       ``(c) Performance-Based Measures.--
       ``(1) Establishment.--The Secretary shall, by regulation, 
     establish measures of the effectiveness of the State programs 
     established under this part and under part G in moving 
     recipients of assistance under the State plan approved under 
     part A into full-time unsubsidized employment, based on the 
     performance of such programs.
       ``(2) Annual compliance reports.--Each State that operates 
     a program under this part shall submit to the Secretary 
     annual reports that compare the achievements of the program 
     with the performance-based measures established under 
     paragraph (1).

     ``SEC. 489. FEDERAL ROLE.

       ``(a) Approval of State Plans.--

[[Page H11297]]

       ``(1) In general.--Within 60 days after the date a State 
     submits to the Secretary a plan that provides for the 
     establishment and operation of a work first program that 
     meets the requirements of section 481, the Secretary shall 
     approve the plan.
       ``(2) Authority to extend approval deadline.--The 60-day 
     deadline established in paragraph (1) with respect to a State 
     may be extended in accordance with an agreement between the 
     Secretary and the State.
       ``(b) Performance-Based Measures.--The Secretary shall, by 
     regulation, establish measures of the effectiveness of the 
     State program established under this part and (if the State 
     has established a program under part G) the State program 
     established under part G in moving recipients of assistance 
     under the State plan approved under part A into full-time 
     unsubsidized employment, based on the performance of such 
     programs.
       ``(c) Effect of Failure To Meet Participation Rates.--
       ``(1) In general.--If a State reports that the State has 
     failed to achieve the participation rate required by section 
     488 for the fiscal year, the Secretary may make 
     recommendations for changes in the State program established 
     under this part and (if the State has established a program 
     under part G) the State program established under part G. The 
     State may elect to follow such recommendations, and shall 
     demonstrate to the Secretary how the State will achieve the 
     required participation rates.
       ``(2) Second consecutive failure.--Notwithstanding 
     paragraph (1), if the State has failed to achieve the 
     participation rates required by section 488 for 2 consecutive 
     fiscal years, the Secretary may require the State to make 
     changes in the State program established under this part and 
     (if the State has established a program under part G) the 
     State program established under part G.

                       ``Part G--Workfare Program

     ``SEC. 490. ESTABLISHMENT AND OPERATION OF PROGRAM.

       ``(a) In General.--A State that establishes a work first 
     program under part F may establish and carry out a 
     workfare program that meets the requirements of this part, 
     unless the State has established a job placement voucher 
     program under part H.
       ``(b) Objective.--The objective of the workfare program is 
     for each program participant to find and hold a full-time 
     unsubsidized paid job, and for this goal to be achieved in a 
     cost-effective fashion.
       ``(c) Case Management Teams.--The State shall assign to 
     each program participant a case management team that shall 
     meet with the participant and assist the participant to 
     choose the most suitable workfare job under subsection (e), 
     (f), or (g) and to eventually obtain a full-time unsubsidized 
     paid job.
       ``(d) Provision of Jobs.--The State shall provide each 
     participant in the program with a community service job that 
     meets the requirements of subsection (e) or a subsidized job 
     that meets the requirements of subsection (f) or (g).
       ``(e) Community Service Jobs.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), each participant shall work for not fewer than 30 hours 
     per week (or, at the option of the State, 20 hours per week 
     during fiscal years 1997 and 1998, not fewer than 25 hours 
     per week during fiscal year 1999, not fewer than 30 hours per 
     week during fiscal years 2000 and 2001, and not fewer than 35 
     hours per week thereafter) in a community service job, and be 
     paid at a rate which is not greater than 75 percent (or, at 
     the option of the State, 100 percent) of the maximum amount 
     of assistance that may be provided under the State plan 
     approved under part A to a family of the same size and 
     composition with no income.
       ``(2) Exception.--(A) If the participant has obtained 
     unsubsidized part-time employment in the private sector, the 
     State shall provide the participant with a part-time 
     community service job.
       ``(B) If the State provides a participant a part-time 
     community service job under subparagraph (A), the State shall 
     ensure that the participant works for not fewer than 30 hours 
     per week.
       ``(3) Wages not considered earned income.--Wages paid under 
     a workfare program shall not be considered to be earned 
     income for purposes of any provision of law.
       ``(4) Community service job defined.--For purposes of this 
     section, the term `community service job' means--
       ``(A) a job provided to a participant by the State 
     administering the State plan under part A; or
       ``(B) a job provided to a participant by any other employer 
     for which all or part of the wages are paid by the State.
     A State may provide or subsidize under the program any job 
     which the State determines to be appropriate.
       ``(f) Temporary Subsidized Job Creation.--A State that 
     establishes a workfare program under this part may establish 
     a program similar to the program operated by the State of 
     Oregon, which is known as `JOBS Plus'.
       ``(g) Work Supplementation Program.--
       ``(1) In general.--A State that establishes a workfare 
     program under this part may institute a work supplementation 
     program under which the State, to the extent it considers 
     appropriate, may reserve the sums that would otherwise be 
     payable to participants in the program as a community service 
     minimum wage and use the sums instead for the purpose of 
     providing and subsidizing private sector jobs for the 
     participants.
       ``(2) Employer agreement.--An employer who provides a 
     private sector job to a participant under paragraph (1) shall 
     agree to provide to the participant an amount in wages equal 
     to the poverty threshold for a family of three.
       ``(h) Job Search Requirement.--The State shall require each 
     participant to spend a minimum of 5 hours per week on 
     activities related to securing unsubsidized full-time 
     employment in the private sector.
       ``(i) Duration of Participation.--
       ``(1) In general.--Except as provided in paragraph (2), an 
     individual may not participate for more than 2 years in a 
     workfare program under this part.
       ``(2) Authority to allow repeated participation.--
       ``(A) In general.--Subject to subparagraph (B), a State may 
     allow an individual who, by reason of paragraph (1), would be 
     prohibited from participating in the State program 
     established under this part to participate in the program for 
     such additional period or periods as the State determines 
     appropriate.
       ``(B) Limitation on percentage of repeat participants.--
       ``(i) In general.--Except as provided in clause (ii), the 
     number of individuals allowed under subparagraph (A) to 
     participate during a program year in a State program 
     established under this part shall not exceed 10 percent of 
     the total number of individuals who participated in the 
     program during the immediately preceding program year.
       ``(ii) Authority to increase limitation.--

       ``(I) Petition.--A State may request the Secretary to 
     increase the percentage limitation imposed by clause (i) to 
     not more than 15 percent.
       ``(II) Authority to grant request.--The Secretary may 
     approve a request made pursuant to subclause (I) if the 
     Secretary deems it appropriate. The Secretary shall develop 
     recommendations on the criteria that should be applied in 
     evaluating requests under subclause (I).

       ``(j) Use of Placement Companies.--A State that establishes 
     a workfare program under this part may enter into contracts 
     with private companies (whether operated for profit or not 
     for profit) for the placement of participants in the program 
     in positions of full-time employment, preferably in the 
     private sector, for wages sufficient to eliminate the need of 
     such participants for cash assistance in accordance with 
     section 483.
       ``(k) Maximum of 3 Community Service Jobs.--A program 
     participant may not receive more than 3 community service 
     jobs under the program.

                ``Part H--Job Placement Voucher Program

     ``SEC. 490A. JOB PLACEMENT VOUCHER PROGRAM.

       ``A State that is not operating a workfare program under 
     part G may establish a job placement voucher program that 
     meets the following requirements:
       ``(1) The program shall offer each program participant a 
     voucher which the participant may use to obtain employment in 
     the private sector.
       ``(2) An employer who receives a voucher issued under the 
     program from an individual may redeem the voucher at any time 
     after the individual has been employed by the employer for 6 
     months, unless another employee of the employer was displaced 
     by the employment of the individual.
       ``(3) Upon presentation of a voucher by an employer to the 
     State agency responsible for the administration of the 
     program, the State agency shall pay to the employer an amount 
     equal to 50 percent of the total amount of assistance 
     provided under the State plan approved under part A to the 
     family of which the individual is a member for the most 
     recent 12 months for which the family was eligible for such 
     assistance.''.
       (c) Funding.--Section 413(a), as added by section 9101(a) 
     of this Act, is amended--
       (1) by striking ``Subject to'' and inserting the following:
       ``(1) In general.--Subject to''; and
       (2) by inserting after and below the end the following:
       ``(2) Work first and other programs.--(A) Each State that 
     is operating a program in accordance with a plan approved 
     under part F and a program in accordance with part G or H 
     shall be entitled to payments under paragraph (3) for any 
     fiscal year in an amount equal to the sum of the applicable 
     percentages (specified in such paragraph) of its expenditures 
     to carry out such programs (subject to limitations prescribed 
     by or pursuant to such parts or this part on expenditures 
     that may be included for purposes of determining payment 
     under paragraph (3)), but such payments for any fiscal year 
     in the case of any State may not exceed the limitation 
     determined under subparagraph (B) with respect to the State.
       ``(B) The limitation determined under this subparagraph 
     with respect to a State for any fiscal year is the amount 
     that bears the same ratio to the amount specified in 
     subparagraph (C) for such fiscal year as the average monthly 
     number of adult recipients (as defined in subparagraph (D)) 
     in the State in the preceding fiscal year bears to the 
     average monthly number of such recipients in all the States 
     for such preceding year.
       ``(C)(i) The amount specified in this subparagraph is--
       ``(I) $1,600,000,000 for fiscal year 1997;
       ``(II) $1,600,000,000 for fiscal year 1998;
       ``(III) $1,900,000,000 for fiscal year 1999;
       ``(IV) $2,500,000,000 for fiscal year 2000; and
       ``(V) $3,200,000,000 for fiscal year 2001; and
       ``(VI) $4,700,000,000 for fiscal year 2002; and

[[Page H11298]]

       ``(VII) the amount determined under clause (ii) for fiscal 
     year 2003 and each succeeding fiscal year.
       ``(ii) The amount determined under this clause for a fiscal 
     year is the product of the following:
       ``(I) The amount specified in this subparagraph for the 
     immediately preceding fiscal year.
       ``(II) 1.00 plus the percentage (if any) by which--
       ``(aa) the average of the Consumer Price Index (as defined 
     in section 1(f)(5) of the Internal Revenue Code of 1986) for 
     the most recent 12-month period for which such information is 
     available; exceeds
       ``(bb) the average of the Consumer Price Index (as so 
     defined) for the 12-month period ending on June 30 of the 2nd 
     preceding fiscal year.
       ``(III) The amount that bears the same ratio to the amount 
     specified in this subparagraph for the immediately preceding 
     fiscal year as the number of individuals whom the Secretary 
     estimates will participate in programs operated under part F, 
     G, or H during the fiscal year bears to the total number of 
     individuals who participated in such programs during such 
     preceding fiscal year.
       ``(D) For purposes of this paragraph, the term `adult 
     recipient' in the case of any State means an individual other 
     than a dependent child (unless such child is the custodial 
     parent of another dependent child) whose needs are met (in 
     whole or in part) with assistance provided under the State 
     plan approved under this part.
       ``(E) For purposes of subparagraph (D), the term `dependent 
     child' means a needy child (i) who has been deprived of 
     parental support or care by reason of the death, continued 
     absence from the home (other than absence occasioned solely 
     by reason of the performance of active duty in the uniformed 
     services of the United States), or physical or mental 
     incapacity of a parent, and who is living with his father, 
     mother, grandfather, grandmother, brother, sister, 
     stepfather, stepmother, stepbrother, stepsister, uncle, aunt, 
     first cousin, nephew, or niece, in a place of residence 
     maintained by one or more of such relatives as his or their 
     own home, and (ii) who is (I) under the age of eighteen, or 
     (II) at the option of the State, under the age of nineteen 
     and a full-time student in a secondary school (or in the 
     equivalent level of vocational or technical training), if, 
     before he attains age nineteen, he may reasonably be expected 
     to complete the program of such secondary school (or such 
     training).
       ``(F) For purposes of subparagraph (E), the term `relative 
     with whom any dependent child is living' means the individual 
     who is one of the relatives specified in subparagraph (E) and 
     with whom such child is living (within the meaning of such 
     subsection) in a place of residence maintained by such 
     individual (himself or together with any one or more of the 
     other relatives so specified) as his (or their) own home.
       ``(3)(A) In lieu of any payment under paragraph (1) 
     therefor, the Secretary shall pay to each State that is 
     operating a program in accordance with a plan approved under 
     part F and a program in accordance with part G or H, with 
     respect to expenditures by the State to carry out such 
     programs, an amount equal to--
       ``(i) with respect to so much of such expenditures in a 
     fiscal year as do not exceed the State's expenditures in the 
     fiscal year 1987 with respect to which payments were made to 
     such State from its allotment for such fiscal year pursuant 
     to part C of this title as then in effect, 90 percent; and
       ``(ii) with respect to so much of such expenditures in a 
     fiscal year as exceed the amount described in clause (i)--
       ``(I) 50 percent, in the case of expenditures for 
     administrative costs made by a State in operating such 
     programs for such fiscal year (other than the personnel costs 
     for staff employed full-time in the operation of such 
     program) and the costs of transportation and other work-
     related supportive services; and
       ``(II) 60 percent or the Federal medical assistance 
     percentage (as defined in the last sentence of section 1118), 
     whichever is the greater, in the case of expenditures made by 
     a State in operating such programs for such fiscal year 
     (other than for costs described in subclause (I)).
       ``(B) With respect to the amount for which payment is made 
     to a State under subparagraph (A)(i), the State's 
     expenditures for the costs of operating such programs may be 
     in cash or in kind, fairly evaluated.
       ``(C) Not more than 10 percent of the amount payable to a 
     State under this paragraph for a quarter may be for 
     expenditures made during the quarter with respect to program 
     participants who are not eligible for assistance under the 
     State plan approved under this part.''.
       (d) Secretary's Special Adjustment Fund.--Section 413(a), 
     as added by section 9101(a) of this Act, is amended by adding 
     at the end the following:
       ``(4) Secretary's Special Adjustment Fund.--(A) There shall 
     be available to the Secretary from the amount appropriated 
     for payments under paragraph (2) for States' programs under 
     parts F and G for fiscal year 1996, $300,000,000 for special 
     adjustments to States' limitations on Federal payments for 
     such programs.
       ``(B) A State may, not later than March 1 and September 1 
     of each fiscal year, submit to the Secretary a request to 
     adjust the limitation on payments under this section with 
     respect to its program under part F (and, in fiscal years 
     after 1997) its program under part G for the following fiscal 
     year. The Secretary shall only consider such a request from a 
     State which has, or which demonstrates convincingly on the 
     basis of estimates that it will, submit allowable claims for 
     Federal payment in the full amount available to it under 
     paragraph (2) in the current fiscal year and obligated 95 
     percent of its full amount in the prior fiscal year. The 
     Secretary shall by regulation prescribe criteria for the 
     equitable allocation among the States of Federal payments 
     pursuant to adjustments of the limitations referred to in 
     the preceding sentence in the case where the requests of 
     all States that the Secretary finds reasonable exceed the 
     amount available, and, within 30 days following the dates 
     specified in this paragraph, will notify each State 
     whether one or more of its limitations will be adjusted in 
     accordance with the State's request and the amount of the 
     adjustment (which may be some or all of the amount 
     requested).
       ``(C) The Secretary may adjust the limitation on Federal 
     payments to a State for a fiscal year under paragraph (2), 
     and upon a determination by the Secretary that (and the 
     amount by which) a State's limitation should be raised, the 
     amount specified in such paragraph shall be considered to be 
     so increased for the following fiscal year.
       ``(D) The amount made available under subparagraph (A) for 
     special adjustments shall remain available to the Secretary 
     until expended. That amount shall be reduced by the sum of 
     the adjustments approved by the Secretary in any fiscal year, 
     and the amount shall be increased in a fiscal year by the 
     amount by which all States' limitations under paragraph (2) 
     of this subsection and section 2008 for a fiscal year 
     exceeded the sum of the Federal payments under such provisons 
     of law for such fiscal year, but for fiscal years after 1997, 
     such amount at the end of such fiscal year shall not exceed 
     $400,000,000.''.
       (e) Conforming Amendments.--
       (1) Section 1115(b)(2)(A) (42 U.S.C. 1315(b)(2)(A)) is 
     amended by striking ``, and 402(a)(19) (relating to the work 
     incentive program)''.
       (2) Section 1108 (42 U.S.C. 1308) is amended--
       (A) in subsection (a), by striking ``or, in the case of 
     part A of title IV, section 403(k)''; and
       (B) in subsection (d), by striking ``(exclusive of any 
     amounts on account of services and items to which, in the 
     case of part A of such title, section 403(k) applies)''.
       (3) Section 1902(a)(10)(A)(i)(I) (42 U.S.C. 
     1396a(a)(19)(A)(i)(I)) is amended--
       (A) by striking ``402(a)(37), 406(h), or''; and
       (B) by striking ``482(e)(6)'' and inserting ``486(f)''.
       (4) Section 1928(a)(1) (42 U.S.C. 1396s(a)(1)) is amended 
     by striking ``482(e)(6)'' and inserting ``486(f)''.
       (f) Intent of the Congress.--The Congress intends for State 
     activities under section 484 of the Social Security Act (as 
     added by the amendment made by section 9301(a) of this Act) 
     to emphasize the use of the funds that would otherwise be 
     used to provide individuals with assistance under part A of 
     title IV of the Social Security Act and with food stamp 
     benefits under the Food Stamp Act of 1977, to subsidize the 
     wages of such individuals in temporary jobs.
       (g) Sense of the Congress.--It is the sense of the Congress 
     that States should target individuals who have not attained 
     25 years of age for participation in the program established 
     by the State under part F of title IV of the Social Security 
     Act (as added by the amendment made by section 9301(a) of 
     this section) in order to break the cycle of welfare 
     dependency.

     SEC. 9302. REGULATIONS.

       The Secretary of Health and Human Services shall prescribe 
     such regulations as may be necessary to implement the 
     amendments made by this subtitle.

     SEC. 9303. APPLICABILITY TO STATES.

       (a) State Option to Accelerate Applicability.--If a State 
     formally notifies the Secretary of Health and Human Services 
     that the State desires to accelerate the applicability to the 
     State of the amendments made by this subtitle, the amendments 
     shall apply to the State on and after such earlier date as 
     the State may select.
       (b) State Option to Delay Applicability Until Waivers 
     Expire.--The amendments made by this subtitle shall not apply 
     to a State with respect to which there is in effect a waiver 
     issued under section 1115 of the Social Security Act for the 
     State program established under part F of title IV of such 
     Act, until the waiver expires, if the State formally notifies 
     the Secretary of Health and Human Services that the State 
     desires to so delay such effective date.
       (c) Authority of the Secretary of Health and Human Services 
     to Delay Applicability to a State.--If a State formally 
     notifies the Secretary of Health and Human Services that the 
     State desires to delay the applicability to the State of the 
     amendments made by this title, the amendments shall apply to 
     the State on and after any later date agreed upon by the 
     Secretary and the State.

[[Page H11299]]

     Subtitle D--Family Responsibility And Improved Child Support 
                              Enforcement

CHAPTER 1--ELIGIBILITY AND OTHER MATTERS CONCERNING TITLE IV-D PROGRAM 
                                CLIENTS

     SEC. 9401. STATE OBLIGATION TO PROVIDE PATERNITY 
                   ESTABLISHMENT AND CHILD SUPPORT ENFORCEMENT 
                   SERVICES.

       (a) State Law Requirements.--Section 466(a) (42 U.S.C. 
     666(a)) is amended by inserting after paragraph (11) the 
     following:
       ``(12) Use of central case registry and centralized 
     collections unit.--Procedures under which--
       ``(A) every child support order established or modified in 
     the State on or after October 1, 1998, is recorded in the 
     central case registry established in accordance with section 
     454A(e); and
       ``(B) child support payments are collected through the 
     centralized collections unit established in accordance with 
     section 454B--
       ``(i) on and after October 1, 1998, under each order 
     subject to wage withholding under section 466(b); and
       ``(ii) on and after October 1, 1999, under each other order 
     required to be recorded in such central case registry under 
     this paragraph or section 454A(e), except as provided in 
     subparagraph (C); and
       ``(C)(i) parties subject to a child support order described 
     in subparagraph (B)(ii) may opt out of the procedure for 
     payment of support through the centralized collections unit 
     (but not the procedure for inclusion in the central case 
     registry) by filing with the State agency a written 
     agreement, signed by both parties, to an alternative payment 
     procedure; and
       ``(ii) an agreement described in clause (i) becomes void 
     whenever either party advises the State agency of an intent 
     to vacate the agreement.''.
       (b) State Plan Requirements.--Section 454 (42 U.S.C. 654) 
     is amended--
       (1) by striking paragraph (4) and inserting the following:
       ``(4) provide that such State will undertake--
       ``(A) to provide appropriate services under this part to--
       ``(i) each child with respect to whom an assignment is 
     effective under section 403(b)(1)(E)(i), 471(a)(17), or 1912 
     (except in cases where the State agency determines, in 
     accordance with paragraph (25), that it is against the best 
     interests of the child to do so); and
       ``(ii) each child not described in clause (i)--

       ``(I) with respect to whom an individual applies for such 
     services; and
       ``(II) (on and after October 1, 1998) each child with 
     respect to whom a support order is recorded in the central 
     State case registry established under section 454A, 
     regardless of whether application is made for services under 
     this part; and

       ``(B) to enforce the support obligation established with 
     respect to the custodial parent of a child described in 
     subparagraph (A) unless the parties to the order which 
     establishes the support obligation have opted, in accordance 
     with section 466(a)(12)(C), for an alternative payment 
     procedure.''; and
       (2) in paragraph (6)--
       (A) by striking subparagraph (A) and inserting the 
     following:
       ``(A) services under the State plan shall be made available 
     to nonresidents on the same terms as to residents;'';
       (B) in subparagraph (B)--
       (i) by inserting ``on individuals not receiving assistance 
     under part A'' after ``such services shall be imposed''; and
       (ii) by inserting ``but no fees or costs shall be imposed 
     on any absent or custodial parent or other individual for 
     inclusion in the central State registry maintained pursuant 
     to section 454A(e)''; and
       (C) in each of subparagraphs (B), (C), and (D)--
       (i) by indenting such subparagraph and aligning its left 
     margin with the left margin of subparagraph (A); and
       (ii) by striking the final comma and inserting a semicolon.
       (c) Conforming Amendments.--
       (1) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is 
     amended by striking ``454(6)'' each place it appears and 
     inserting ``454(4)(A)(ii)''.
       (2) Section 454(23) (42 U.S.C. 654(23)) is amended, 
     effective October 1, 1998, by striking ``information as to 
     any application fees for such services and''.
       (3) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) is 
     amended by striking ``in the case of overdue support which a 
     State has agreed to collect under section 454(6)'' and 
     inserting ``in any other case''.
       (4) Section 466(e) (42 U.S.C. 666(e)) is amended by 
     striking ``or (6)''.

     SEC. 9402. DISTRIBUTION OF PAYMENTS.

       (a) Distributions Through State Child Support Enforcement 
     Agency to Former Assistance Recipients.--Section 454(5) (42 
     U.S.C. 654(5)) is amended--
       (1) in subparagraph (A)--
       (A) by striking section 402(a)(26) is effective,'' and 
     inserting ``section 403(b)(1)(E)(i) is effective, except as 
     otherwise specifically provided in section 464 or 
     466(a)(3),''; and
       (B) by striking ``except that'' and all that follows 
     through the semicolon; and
       (2) in subparagraph (B), by striking ``, except'' and all 
     that follows through ``medical assistance''.
       (b) Distribution to a Family Currently Receiving Temporary 
     Employment Assistance.--Section 457 (42 U.S.C. 657) is 
     amended--
       (1) by striking subsection (a) and redesignating subsection 
     (b) as subsection (a);
       (2) in subsection (a) (as so redesignated)--
       (A) in the matter preceding paragraph (2), to read as 
     follows:
       ``(a) In the Case of a Family Receiving TEA.--Amounts 
     collected under this part during any month as support of a 
     child who is receiving assistance under part A (or a parent 
     or caretaker relative of such a child) shall (except in the 
     case of a State exercising the option under subsection (b)) 
     be distributed as follows:
       ``(1) an amount equal to the amount that will be 
     disregarded pursuant to section 402(d)(2)(C) shall be taken 
     from each of--
       ``(A) the amounts received in a month which represent 
     payments for that month; and
       ``(B) the amounts received in a month which represent 
     payments for a prior month which were made by the absent 
     parent in that prior month;
     and shall be paid to the family without affecting its 
     eligibility for assistance or decreasing any amount otherwise 
     payable as assistance to such family during such month;'';
       (B) in paragraph (4), by striking ``or (B)'' and all that 
     follows through the period and inserting ``; then (B) from 
     any remainder, amounts equal to arrearages of such support 
     obligations assigned, pursuant to part A, to any other State 
     or States shall be paid to such other State or States and 
     used to pay any such arrearages (with appropriate 
     reimbursement of the Federal Government to the extent of its 
     participation in the financing); and then (C) any remainder 
     shall be paid to the family.''; and
       (3) by inserting after subsection (a) (as so redesignated) 
     the following new subsection:
       ``(b) Alternative Distribution in Case of Family Receiving 
     TEA.--In the case of a State electing the option under this 
     subsection, amounts collected as described in subsection (a) 
     shall be distributed as follows:
       ``(1) an amount equal to the amount that will be 
     disregarded pursuant to section 402(d)(2)(C) shall be taken 
     from each of--
       ``(A) the amounts received in a month which represent 
     payments for that month; and
       ``(B) the amounts received in a month which represent 
     payments for a prior month which were made by the absent 
     parent in that prior month;
     and shall be paid to the family without affecting its 
     eligibility for assistance or decreasing any amount otherwise 
     payable as assistance to such family during such month;
       ``(2) second, from any remainder, amounts equal to the 
     balance of support owed for the current month shall be paid 
     to the family;
       ``(3) third, from any remainder, amounts equal to 
     arrearages of such support obligations assigned, pursuant to 
     part A, to the State making the collection shall be retained 
     and used by such State to pay any such arrearages (with 
     appropriate reimbursement of the Federal Government to the 
     extent of its participation in the financing);
       ``(4) fourth, from any remainder, amounts equal to 
     arrearages of such support obligations assigned, pursuant to 
     part A, to any other State or States shall be paid to such 
     other State or States and used to pay any such arrearages 
     (with appropriate reimbursement of the Federal Government to 
     the extent of its participation in the financing); and
       ``(5) fifth, any remainder shall be paid to the family.''.
       (c) Distribution to a Family Not Receiving TEA.--Section 
     457(c) (42 U.S.C. 657(c)) is amended to read as follows:
       ``(c) Distributions In Case of Family Not Receiving TEA.--
     Amounts collected by a State agency under this part during 
     any month as support of a child who is not receiving 
     assistance under part A (or of a parent or caretaker relative 
     of such a child) shall (subject to the remaining provisions 
     of this section) be distributed as follows:
       ``(1) first, amounts equal to the total of such support 
     owed for such month shall be paid to the family;
       ``(2) second, from any remainder, amounts equal to 
     arrearages of such support obligations for months during 
     which such child did not receive assistance under part A 
     shall be paid to the family;
       ``(3) third, from any remainder, amounts equal to 
     arrearages of such support obligations assigned to the State 
     making the collection pursuant to part A shall be retained 
     and used by such State to pay any such arrearages (with 
     appropriate reimbursement of the Federal Government to the 
     extent of its participation in the financing); and
       ``(4) fourth, from any remainder, amounts equal to 
     arrearages of such support obligations assigned to any other 
     State pursuant to part A shall be paid to such other State or 
     States, and used to pay such arrearages, in the order in 
     which such arrearages accrued (with appropriate reimbursement 
     of the Federal Government to the extent of its participation 
     in the financing).''.
       (d) Distribution to a Child Receiving Assistance Under 
     Title IV-E.--Section 457(d) (42 U.S.C. 657(d)) is amended, in 
     the matter preceding paragraph (1), by striking 
     ``Notwithstanding the preceding provisions of this section, 
     amounts'' and inserting the following:
       ``(d) Distributions In Case of a Child Receiving Assistance 
     Under Title IV-E.--Amounts''.

[[Page H11300]]

       (e) Regulations.--The Secretary of Health and Human 
     Services shall promulgate regulations under part A of title 
     IV of the Social Security Act, establishing standards 
     applicable to States electing the alternative formula under 
     section 457(b) of such Act for distribution of collections on 
     behalf of families receiving temporary employment assistance, 
     designed to minimize irregular monthly payments to such 
     families.
       (f) Clerical Amendments.--Section 454 (42 U.S.C. 654) is 
     amended--
       (1) in paragraph (11)--
       (A) by striking ``(11)'' and inserting ``(11)(A)''; and
       (B) by inserting after the semicolon ``and''; and
       (2) by redesignating paragraph (12) as subparagraph (B) of 
     paragraph (11).
       (g) Effective dates.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall become 
     effective on October 1, 1996.
       (2) Family not receiving tea.--The amendment made by 
     subsection (c) shall become effective on October 1, 1999.
       (3) Special rules.--
       (A) Applicability.--A State may elect to have the 
     amendments made by any subsection of this section become 
     effective only with respect to child support cases beginning 
     on or after the effective date of such subsection.
       (B) Delayed implementation.--A State may elect to have the 
     amendments made by this section (other than subsection (c)) 
     become effective on a date later than October 1, 1996, which 
     date shall coincide with the operation of the single 
     statewide automated data processing and information retrieval 
     system required by section 454A of the Social Security Act 
     (as added by section 9415(a)(2) of this Act) and the State 
     centralized collection unit required by section 454B of the 
     Social Security Act (as added by section 9422(b) of this 
     Act).

     SEC. 9403. DUE PROCESS RIGHTS.

       (a) In General.--Section 454 (42 U.S.C. 654), as amended by 
     section 9402(f) of this Act, is amended by inserting after 
     paragraph (11) the following new paragraph:
       ``(12) provide for procedures to ensure that--
       ``(A) individuals who are applying for or receiving 
     services under this part, or are parties to cases in which 
     services are being provided under this part--
       ``(i) receive notice of all proceedings in which support 
     obligations might be established or modified; and
       ``(ii) receive a copy of any order establishing or 
     modifying a child support obligation, or (in the case of a 
     petition for modification) a notice of determination that 
     there should be no change in the amount of the child support 
     award, within 14 days after issuance of such order or 
     determination;
       ``(B) individuals applying for or receiving services under 
     this part have access to a fair hearing that meets standards 
     established by the Secretary and ensures prompt consideration 
     and resolution of complaints (but the resort to such 
     procedure shall not stay the enforcement of any support 
     order); and
       ``(C) individuals adversely affected by the establishment 
     or modification of (or, in the case of a petition for 
     modification, the determination that there should be no 
     change in) a child support order shall be afforded not less 
     than 30 days after the receipt of the order or determination 
     to initiate proceedings to challenge such order or 
     determination;''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall become effective on October 1, 1997.

     SEC. 9404. PRIVACY SAFEGUARDS.

       (a) State Plan Requirement.--Section 454 (42 U.S.C. 454) is 
     amended--
       (1) by striking ``and'' at the end of paragraph (23);
       (2) by striking the period at the end of paragraph (24) and 
     inserting ``; and''; and
       (3) by adding after paragraph (24) the following:
       ``(25) will have in effect safeguards applicable to all 
     sensitive and confidential information handled by the State 
     agency designed to protect the privacy rights of the parties, 
     including--
       ``(A) safeguards against unauthorized use or disclosure of 
     information relating to proceedings or actions to establish 
     paternity, or to establish or enforce support;
       ``(B) prohibitions on the release of information on the 
     whereabouts of one party to another party against whom a 
     protective order with respect to the former party has been 
     entered; and
       ``(C) prohibitions on the release of information on the 
     whereabouts of one party to another party if the State has 
     reason to believe that the release of the information may 
     result in physical or emotional harm to the former party.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall become effective on October 1, 1997.

             CHAPTER 2--PROGRAM ADMINISTRATION AND FUNDING

     SEC. 9411. FEDERAL MATCHING PAYMENTS.

       (a) Increased Base Matching Rate.--Section 455(a)(2) (42 
     U.S.C. 655(a)(2)) is amended to read as follows:
       ``(2) The applicable percent for a quarter for purposes of 
     paragraph (1)(A) is--
       ``(A) for fiscal year 1997, 69 percent,
       ``(B) for fiscal year 1998, 72 percent, and
       ``(C) for fiscal year 1999 and succeeding fiscal years, 75 
     percent.''.
       (b) Maintenance of Effort.--Section 455 (42 U.S.C. 655) is 
     amended--
       (1) in subsection (a)(1), in the matter preceding 
     subparagraph (A), by striking ``From'' and inserting 
     ``Subject to subsection (c), from''; and
       (2) by inserting after subsection (b) the following new 
     subsection:
       ``(c) Maintenance of Effort.--Notwithstanding the 
     provisions of subsection (a), total expenditures for the 
     State program under this part for fiscal year 1997 and each 
     succeeding fiscal year, reduced by the percentage specified 
     for such fiscal year under subsection (a)(2)(A), (B), or 
     (C)(i), shall not be less than such total expenditures for 
     fiscal year 1996, reduced by 66 percent.''.

     SEC. 9412. PERFORMANCE-BASED INCENTIVES AND PENALTIES.

       (a) Incentive Adjustments to Federal Matching Rate.--
     Section 458 (42 U.S.C. 658) is amended to read as follows:


                ``incentive adjustments to matching rate

       ``Sec. 458. (a) Incentive Adjustment.--(1) In General.--In 
     order to encourage and reward State child support enforcement 
     programs which perform in an effective manner, the Federal 
     matching rate for payments to a State under section 
     455(a)(1)(A), for each fiscal year beginning on or after 
     October 1, 1998, shall be increased by a factor reflecting 
     the sum of the applicable incentive adjustments (if any) 
     determined in accordance with regulations under this section 
     with respect to Statewide paternity establishment and to 
     overall performance in child support enforcement.
       ``(2) Standards.--(A) In General.--The Secretary shall 
     specify in regulations--
       ``(i) the levels of accomplishment, and rates of 
     improvement as alternatives to such levels, which States must 
     attain to qualify for incentive adjustments under this 
     section; and
       ``(ii) the amounts of incentive adjustment that shall be 
     awarded to States achieving specified accomplishment or 
     improvement levels, which amounts shall be graduated, ranging 
     up to--
       ``(I) 5 percentage points, in connection with Statewide 
     paternity establishment; and
       ``(II) 10 percentage points, in connection with overall 
     performance in child support enforcement.
       ``(B) Limitation.--In setting performance standards 
     pursuant to subparagraph (A)(i) and adjustment amounts 
     pursuant to subparagraph (A)(ii), the Secretary shall ensure 
     that the aggregate number of percentage point increases as 
     incentive adjustments to all States do not exceed such 
     aggregate increases as assumed by the Secretary in estimates 
     of the cost of this section as of June 1995, unless the 
     aggregate performance of all States exceeds the projected 
     aggregate performance of all States in such cost estimates.
       ``(3) Determination of Incentive Adjustment.--The Secretary 
     shall determine the amount (if any) of incentive adjustment 
     due each State on the basis of the data submitted by the 
     State pursuant to section 454(15)(B) concerning the levels of 
     accomplishment (and rates of improvement) with respect to 
     performance indicators specified by the Secretary pursuant to 
     this section.
       ``(4) Fiscal Year Subject to Incentive Adjustment.--The 
     total percentage point increase determined pursuant to this 
     section with respect to a State program in a fiscal year 
     shall apply as an adjustment to the applicable percent under 
     section 455(a)(2) for payments to such State for the 
     succeeding fiscal year.
       ``(5) Recycling of Incentive Adjustment.--A State shall 
     expend in the State program under this part all funds paid to 
     the State by the Federal Government as a result of an 
     incentive adjustment under this section.
       ``(b) Meaning of Terms.--For purposes of this section--
       ``(1) the term `Statewide paternity establishment 
     percentage' means, with respect to a fiscal year, the ratio 
     (expressed as a percentage) of--
       ``(A) the total number of out-of-wedlock children in the 
     State under one year of age for whom paternity is established 
     or acknowledged during the fiscal year, to
       ``(B) the total number of children born out of wedlock in 
     the State during such fiscal year; and
       ``(2) the term `overall performance in child support 
     enforcement' means a measure or measures of the effectiveness 
     of the State agency in a fiscal year which takes into account 
     factors including--
       ``(A) the percentage of cases requiring a child support 
     order in which such an order was established;
       ``(B) the percentage of cases in which child support is 
     being paid;
       ``(C) the ratio of child support collected to child support 
     due; and
       ``(D) the cost-effectiveness of the State program, as 
     determined in accordance with standards established by the 
     Secretary in regulations.''.
       (b) Adjustment of Payments Under Part D of Title IV.--
     Section 455(a)(2) (42 U.S.C. 655(a)(2)), as amended by 
     section 9411(a) of this Act, is amended--
       (1) by striking the period at the end of subparagraph 
     (C)(ii) and inserting a comma; and
       (2) by adding after and below subparagraph (C), flush with 
     the left margin of the subsection, the following:

[[Page H11301]]

     ``increased by the incentive adjustment factor (if any) 
     determined by the Secretary pursuant to section 458.''.
       (c) Conforming Amendments.--Section 454(22) (42 U.S.C. 
     654(22)) is amended--
       (1) by striking ``incentive payments'' the first place it 
     appears and inserting ``incentive adjustments''; and
       (2) by striking ``any such incentive payments made to the 
     State for such period'' and inserting ``any increases in 
     Federal payments to the State resulting from such incentive 
     adjustments''.
       (d) Calculation of IV-D Paternity Establishment 
     Percentage.--(1) Section 452(g)(1) (42 U.S.C. 652(g)(1)) is 
     amended in the matter preceding subparagraph (A) by inserting 
     ``its overall performance in child support enforcement is 
     satisfactory (as defined in section 458(b) and regulations of 
     the Secretary), and'' after ``1994,''.
       (2) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is amended--
       (A) in subparagraph (A), in the matter preceding clause 
     (i)--
       (i) by striking ``paternity establishment percentage'' and 
     inserting ``IV-D paternity establishment percentage''; and
       (ii) by striking ``(or all States, as the case may be)'';
       (B) in subparagraph (A)(i), by striking ``during the fiscal 
     year'';
       (C) in subparagraph (A)(ii)(I), by striking ``as of the end 
     of the fiscal year'' and inserting ``in the fiscal year or, 
     at the option of the State, as of the end of such year'';
       (D) in subparagraph (A)(ii)(II), by striking ``or (E) as of 
     the end of the fiscal year'' and inserting ``in the fiscal 
     year or, at the option of the State, as of the end of such 
     year'';
       (E) in subparagraph (A)(iii)--
       (i) by striking ``during the fiscal year''; and
       (ii) by striking ``and'' at the end; and
       (F) in the matter following subparagraph (A)--
       (i) by striking ``who were born out of wedlock during the 
     immediately preceding fiscal year'' and inserting ``born out 
     of wedlock'';
       (ii) by striking ``such preceding fiscal year'' both places 
     it appears and inserting ``the preceding fiscal year''; and
       (iii) by striking ``or (E)'' the second place it appears.
       (3) Section 452(g)(3) (42 U.S.C. 652(g)(3)) is amended--
       (A) by striking subparagraph (A) and redesignating 
     subparagraphs (B) and (C) as subparagraphs (A) and (B), 
     respectively;
       (B) in subparagraph (A), as redesignated, by striking ``the 
     percentage of children born out-of-wedlock in the State'' and 
     inserting ``the percentage of children in the State who are 
     born out of wedlock or for whom support has not been 
     established''; and
       (C) in subparagraph (B), as redesignated--
       (i) by inserting ``and overall performance in child support 
     enforcement'' after ``paternity establishment percentages''; 
     and
       (ii) by inserting ``and securing support'' before the 
     period.
       (e) Reduction of Payments Under Part D of Title IV.--
       (1) New requirements.--Section 455 (42 U.S.C. 655) is 
     amended by inserting after subsection (b) the following:
       ``(c)(1) If the Secretary finds, with respect to a State 
     program under this part in a fiscal year beginning on or 
     after October 1, 1997--
       ``(A)(i) on the basis of data submitted by a State pursuant 
     to section 454(15)(B), that the State program in such fiscal 
     year failed to achieve the IV-D paternity establishment 
     percentage (as defined in section 452(g)(2)(A)) or the 
     appropriate level of overall performance in child support 
     enforcement (as defined in section 458(b)(2)), or to meet 
     other performance measures that may be established by the 
     Secretary, or
       ``(ii) on the basis of an audit or audits of such State 
     data conducted pursuant to section 452(a)(4)(C), that the 
     State data submitted pursuant to section 454(15)(B) is 
     incomplete or unreliable; and
       ``(B) that, with respect to the succeeding fiscal year--
       ``(i) the State failed to take sufficient corrective action 
     to achieve the appropriate performance levels as described in 
     subparagraph (A)(i) of this paragraph, or
       ``(ii) the data submitted by the State pursuant to section 
     454(15)(B) is incomplete or unreliable,
     the amounts otherwise payable to the State under this part 
     for quarters following the end of such succeeding fiscal 
     year, prior to quarters following the end of the first 
     quarter throughout which the State program is in compliance 
     with such performance requirement, shall be reduced by the 
     percentage specified in paragraph (2).
       ``(2) The reductions required under paragraph (1) shall 
     be--
       ``(A) not less than 6 nor more than 8 percent, or
       ``(B) not less than 8 nor more than 12 percent, if the 
     finding is the second consecutive finding made pursuant to 
     paragraph (1), or
       ``(C) not less than 12 nor more than 15 percent, if the 
     finding is the third or a subsequent consecutive such 
     finding.
       ``(3) For purposes of this subsection, section 405(d), and 
     section 452(a)(4), a State which is determined as a result of 
     an audit to have submitted incomplete or unreliable data 
     pursuant to section 454(15)(B), shall be determined to have 
     submitted adequate data if the Secretary determines that the 
     extent of the incompleteness or unreliability of the data is 
     of a technical nature which does not adversely affect the 
     determination of the level of the State's performance.''.
       (2) Conforming amendments.--
       (A) Section 452(a)(4) (42 U.S.C. 652(a)(4)) is amended by 
     striking ``403(h)'' each place such term appears and 
     inserting ``455(c)''.
       (B) Subsections (d)(3)(A), (g)(1), and (g)(3)(A) of section 
     452 (42 U.S.C. 652) are each amended by striking ``403(h)'' 
     and inserting ``455(c)''.
       (f) Effective Dates.--
       (1) Incentive adjustments.--(A) The amendments made by 
     subsections (a), (b), and (c) shall become effective October 
     1, 1997, except to the extent provided in subparagraph (B).
       (B) Section 458 of the Social Security Act, as in effect 
     prior to the enactment of this section, shall be effective 
     for purposes of incentive payments to States for fiscal years 
     prior to fiscal year 1999.
       (2) Penalty reductions.--(A) The amendments made by 
     subsection (d) shall become effective with respect to 
     calendar quarters beginning on and after the date of 
     enactment of this Act.
       (B) The amendments made by subsection (e) shall become 
     effective with respect to calendar quarters beginning on and 
     after the date one year after the date of enactment of this 
     Act.

     SEC. 9413. FEDERAL AND STATE REVIEWS AND AUDITS.

       (a) State Agency Activities.--Section 454 (42 U.S.C. 654) 
     is amended--
       (1) in paragraph (14), by striking ``(14)'' and inserting 
     ``(14)(A)'';
       (2) by redesignating paragraph (15) as subparagraph (B) of 
     paragraph (14); and
       (3) by inserting after paragraph (14) the following new 
     paragraph:
       ``(15) provide for--
       ``(A) a process for annual reviews of and reports to the 
     Secretary on the State program under this part, which shall 
     include such information as may be necessary to measure State 
     compliance with Federal requirements for expedited procedures 
     and timely case processing, using such standards and 
     procedures as are required by the Secretary, under which the 
     State agency will determine the extent to which such program 
     is in conformity with applicable requirements with respect to 
     the operation of State programs under this part (including 
     the status of complaints filed under the procedure required 
     under paragraph (12)(B)); and
       ``(B) a process of extracting from the State automated data 
     processing system and transmitting to the Secretary data and 
     calculations concerning the levels of accomplishment (and 
     rates of improvement) with respect to applicable performance 
     indicators (including IV-D paternity establishment 
     percentages and overall performance in child support 
     enforcement) to the extent necessary for purposes of sections 
     452(g) and 458.''.
       (b) Federal Activities.--Section 452(a)(4) (42 U.S.C. 
     652(a)(4)) is amended to read as follows:
       ``(4)(A) review data and calculations transmitted by State 
     agencies pursuant to section 454(15)(B) on State program 
     accomplishments with respect to performance indicators for 
     purposes of section 452(g) and 458, and determine the amount 
     (if any) of penalty reductions pursuant to section 455(c) to 
     be applied to the State;
       ``(B) review annual reports by State agencies pursuant to 
     section 454(15)(A) on State program conformity with Federal 
     requirements; evaluate any elements of a State program in 
     which significant deficiencies are indicated by such report 
     on the status of complaints under the State procedure under 
     section 454(12)(B); and, as appropriate, provide to the State 
     agency comments, recommendations for additional or 
     alternative corrective actions, and technical assistance; and
       ``(C) conduct audits, in accordance with the government 
     auditing standards of the United States Comptroller General--
       ``(i) at least once every 3 years (or more frequently, in 
     the case of a State which fails to meet requirements of this 
     part, or of regulations implementing such 
     requirements, concerning performance standards and 
     reliability of program data) to assess the completeness, 
     reliability, and security of the data, and the accuracy of 
     the reporting systems, used for the calculations of 
     performance indicators specified in subsection (g) and 
     section 458;
       ``(ii) of the adequacy of financial management of the State 
     program, including assessments of--
       ``(I) whether Federal and other funds made available to 
     carry out the State program under this part are being 
     appropriately expended, and are properly and fully accounted 
     for; and
       ``(II) whether collections and disbursements of support 
     payments and program income are carried out correctly and are 
     properly and fully accounted for; and
       ``(iii) for such other purposes as the Secretary may find 
     necessary;''.
       (c) Effective Date.--The amendments made by this section 
     shall be effective with respect to calendar quarters 
     beginning on or after the date one year after enactment of 
     this section.

     SEC. 9414. REQUIRED REPORTING PROCEDURES.

       (a) Establishment.--Section 452(a)(5) (42 U.S.C. 652(a)(5)) 
     is amended by inserting ``, and establish procedures to be 
     followed by States for collecting and reporting information 
     required to be provided under this part, and establish 
     uniform definitions (including those necessary to enable the 
     measurement of State compliance with the requirements 

[[Page H11302]]

     of this part relating to expedited processes and timely case 
     processing) to be applied in following such procedures'' 
     before the semicolon.
       (b) State Plan Requirement.--Section 454 (42 U.S.C. 654), 
     as amended by section 9404(a) of this Act, is amended--
       (1) by striking ``and'' at the end of paragraph (24);
       (2) by striking the period at the end of paragraph (25) and 
     inserting ``; and''; and
       (3) by adding after paragraph (25) the following:
       ``(26) provide that the State shall use the definitions 
     established under section 452(a)(5) in collecting and 
     reporting information as required under this part.''.

     SEC. 9415. AUTOMATED DATA PROCESSING REQUIREMENTS.

       (a) Revised Requirements.--(1) Section 454(16) (42 U.S.C. 
     654(16)) is amended--
       (A) by striking ``, at the option of the State,'';
       (B) by inserting ``and operation by the State agency'' 
     after ``for the establishment'';
       (C) by inserting ``meeting the requirements of section 
     454A'' after ``information retrieval system'';
       (D) by striking ``in the State and localities thereof, so 
     as (A)'' and inserting ``so as'';
       (E) by striking ``(i)''; and
       (F) by striking ``(including'' and all that follows and 
     inserting a semicolon.
       (2) Part D of title IV (42 U.S.C. 651-669) is amended by 
     inserting after section 454 the following new section:


                      ``automated data processing

       ``Sec. 454A. (a) In General.--In order to meet the 
     requirements of this section, for purposes of the requirement 
     of section 454(16), a State agency shall have in operation a 
     single statewide automated data processing and information 
     retrieval system which has the capability to perform the 
     tasks specified in this section, and performs such tasks with 
     the frequency and in the manner specified in this part or in 
     regulations or guidelines of the Secretary.
       ``(b) Program Management.--The automated system required 
     under this section shall perform such functions as the 
     Secretary may specify relating to management of the program 
     under this part, including--
       ``(1) controlling and accounting for use of Federal, State, 
     and local funds to carry out such program; and
       ``(2) maintaining the data necessary to meet Federal 
     reporting requirements on a timely basis.
       ``(c) Calculation of Performance Indicators.--In order to 
     enable the Secretary to determine the incentive and penalty 
     adjustments required by sections 452(g) and 458, the State 
     agency shall--
       ``(1) use the automated system--
       ``(A) to maintain the requisite data on State performance 
     with respect to paternity establishment and child support 
     enforcement in the State; and
       ``(B) to calculate the IV-D paternity establishment 
     percentage and overall performance in child support 
     enforcement for the State for each fiscal year; and
       ``(2) have in place systems controls to ensure the 
     completeness, and reliability of, and ready access to, the 
     data described in paragraph (1)(A), and the accuracy of the 
     calculations described in paragraph (1)(B).
       ``(d) Information Integrity and Security.--The State agency 
     shall have in effect safeguards on the integrity, accuracy, 
     and completeness of, access to, and use of data in the 
     automated system required under this section, which shall 
     include the following (in addition to such other safeguards 
     as the Secretary specifies in regulations):
       ``(1) Policies restricting access.--Written policies 
     concerning access to data by State agency personnel, and 
     sharing of data with other persons, which--
       ``(A) permit access to and use of data only to the extent 
     necessary to carry out program responsibilities;
       ``(B) specify the data which may be used for particular 
     program purposes, and the personnel permitted access to such 
     data; and
       ``(C) ensure that data obtained or disclosed for a limited 
     program purpose is not used or redisclosed for another, 
     impermissible purpose.
       ``(2) Systems controls.--Systems controls (such as 
     passwords or blocking of fields) to ensure strict adherence 
     to the policies specified under paragraph (1).
       ``(3) Monitoring of access.--Routine monitoring of access 
     to and use of the automated system, through methods such as 
     audit trails and feedback mechanisms, to guard against and 
     promptly identify unauthorized access or use.
       ``(4) Training and information.--The State agency shall 
     have in effect procedures to ensure that all personnel 
     (including State and local agency staff and contractors) who 
     may have access to or be required to use sensitive or 
     confidential program data are fully informed of applicable 
     requirements and penalties, and are adequately trained in 
     security procedures.
       ``(5) Penalties.--The State agency shall have in effect 
     administrative penalties (up to and including dismissal from 
     employment) for unauthorized access to, or disclosure or use 
     of, confidential data.''.
       (3) Regulations.--Section 452 (42 U.S.C. 652) is amended by 
     adding at the end the following:
       ``(j) The Secretary shall prescribe final regulations for 
     implementation of the requirements of section 454A not later 
     than 2 years after the date of the enactment of this 
     subsection.''.
       (4) Implementation Timetable.--Section 454(24) (42 U.S.C. 
     654(24)), as amended by sections 9404(a)(2) and 9414(b)(1) of 
     this Act, is amended to read as follows:
       ``(24) provide that the State will have in effect an 
     automated data processing and information retrieval system--
       ``(A) by October 1, 1995, meeting all requirements of this 
     part which were enacted on or before the date of enactment of 
     the Family Support Act of 1988; and
       ``(B) by October 1, 1999, meeting all requirements of this 
     part enacted on or before the date of enactment of the 
     Omnibus Budget Reconciliation Act of 1995 (but this provision 
     shall not be construed to alter earlier deadlines specified 
     for elements of such system), except that such deadline shall 
     be extended by 1 day for each day (if any) by which the 
     Secretary fails to meet the deadline imposed by section 
     452(j) of this Act;''.
       (b) Special Federal Matching Rate for Development Costs of 
     Automated Systems.--Section 455(a) (42 U.S.C. 655(a)) is 
     amended--
       (1) in paragraph (1)(B)--
       (A) by striking ``90 percent'' and inserting ``the percent 
     specified in paragraph (3)'';
       (B) by striking ``so much of''; and
       (C) by striking ``which the Secretary'' and all that 
     follows and inserting ``, and''; and
       (2) by adding at the end the following new paragraph:
       ``(3)(A) The Secretary shall pay to each State, for each 
     quarter in fiscal year 1996, 90 percent of so much of State 
     expenditures described in subparagraph (1)(B) as the 
     Secretary finds are for a system meeting the requirements 
     specified in section 454(16), or meeting such requirements 
     without regard to clause (D) thereof.
       ``(B)(i) The Secretary shall pay to each State, for each 
     quarter in fiscal years 1997 through 2001, the percentage 
     specified in clause (ii) of so much of State expenditures 
     described in subparagraph (1)(B) as the Secretary finds are 
     for a system meeting the requirements specified in section 
     454(16) and 454A, subject to clause (iii).
       ``(ii) The percentage specified in this clause, for 
     purposes of clause (i), is the higher of--
       ``(I) 80 percent, or
       ``(II) the percentage otherwise applicable to Federal 
     payments to the State under subparagraph (A) (as adjusted 
     pursuant to section 458).''.
       (c) Conforming Amendment.--Section 123(c) of the Family 
     Support Act of 1988 (102 Stat. 2352; Public Law 100-485) is 
     repealed.
       (d) Additional Provisions.--For additional provisions of 
     section 454A, as added by subsection (a) of this section, see 
     the amendments made by sections 9421, 9422(c), and 9433(d) of 
     this Act.

     SEC. 9416. DIRECTOR OF CSE PROGRAM; STAFFING STUDY.

       (a) Reporting to Secretary.--Section 452(a) (42 U.S.C. 
     652(a)) is amended in the matter preceding paragraph (1) by 
     striking ``directly''.
       (b) Staffing Studies.--
       (1) Scope.--The Secretary of Health and Human Services 
     shall, directly or by contract, conduct studies of the 
     staffing of each State child support enforcement program 
     under part D of title IV of the Social Security Act. Such 
     studies shall include a review of the staffing needs created 
     by requirements for automated data processing, maintenance of 
     a central case registry and centralized collections of child 
     support, and of changes in these needs resulting from changes 
     in such requirements. Such studies shall examine and report 
     on effective staffing practices used by the States and on 
     recommended staffing procedures.
       (2) Frequency of studies.--The Secretary shall complete the 
     first staffing study required under paragraph (1) by October 
     1, 1997, and may conduct additional studies subsequently at 
     appropriate intervals.
       (3) Report to the congress.--The Secretary shall submit a 
     report to the Congress stating the findings and conclusions 
     of each study conducted under this subsection.

     SEC. 9417. FUNDING FOR SECRETARIAL ASSISTANCE TO STATE 
                   PROGRAMS.

       Section 452 (42 U.S.C. 652), as amended by section 
     9415(a)(3) of this Act, is amended by adding at the end the 
     following new subsection:
       ``(k) Funding for Federal Activities Assisting State 
     Programs.--(1) There shall be available to the Secretary, 
     from amounts appropriated for fiscal year 1996 and each 
     succeeding fiscal year for payments to States under this 
     part, the amount specified in paragraph (2) for the costs to 
     the Secretary for--
       ``(A) information dissemination and technical assistance to 
     States, training of State and Federal staff, staffing 
     studies, and related activities needed to improve programs 
     (including technical assistance concerning State automated 
     systems);
       ``(B) research, demonstration, and special projects of 
     regional or national significance relating to the operation 
     of State programs under this part; and
       ``(C) operation of the Federal Parent Locator Service under 
     section 453, to the extent such costs are not recovered 
     through user fees.
       ``(2) The amount specified in this paragraph for a fiscal 
     year is the amount equal to a percentage of the reduction in 
     Federal payments to States under part A on account of child 
     support (including arrearages) collected in the preceding 
     fiscal year on behalf of children receiving assistance under 
     State 

[[Page H11303]]

     plans approved under part A in such preceding fiscal year (as 
     determined on the basis of the most recent reliable data 
     available to the Secretary as of the end of the third 
     calendar quarter following the end of such preceding fiscal 
     year), equal to--
       ``(A) 1 percent, for the activities specified in 
     subparagraphs (A) and (B) of paragraph (1); and
       ``(B) 2 percent, for the activities specified in 
     subparagraph (C) of paragraph (1).''.

     SEC. 9418. REPORTS AND DATA COLLECTION BY THE SECRETARY.

       (a) Annual Report to Congress.--(1) Section 452(a)(10)(A) 
     (42 U.S.C. 652(a)(10)(A)) is amended--
       (A) by striking ``this part;'' and inserting ``this part, 
     including--''; and
       (B) by adding at the end the following indented clauses:
       ``(i) the total amount of child support payments collected 
     as a result of services furnished during such fiscal year to 
     individuals receiving services under this part;
       ``(ii) the cost to the States and to the Federal Government 
     of furnishing such services to those individuals; and
       ``(iii) the number of cases involving families--

       ``(I) who became ineligible for assistance under a State 
     plan approved under part A during a month in such fiscal 
     year; and
       ``(II) with respect to whom a child support payment was 
     received in the same month;''.

       (2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C)) is 
     amended--
       (A) in the matter preceding clause (i)--
       (i) by striking ``with the data required under each clause 
     being separately stated for cases'' and inserting 
     ``separately stated for (1) cases'';
       (ii) by striking ``cases where the child was formerly 
     receiving'' and inserting ``or formerly received'';
       (iii) by inserting ``or 1912'' after ``471(a)(17)''; and
       (iv) by inserting ``(2)'' before ``all other'';
       (B) in each of clauses (i) and (ii), by striking ``, and 
     the total amount of such obligations'';
       (C) in clause (iii), by striking ``described in'' and all 
     that follows and inserting ``in which support was collected 
     during the fiscal year;'';
       (D) by striking clause (iv); and
       (E) by redesignating clause (v) as clause (vii), and 
     inserting after clause (iii) the following new clauses:
       ``(iv) the total amount of support collected during such 
     fiscal year and distributed as current support;
       ``(v) the total amount of support collected during such 
     fiscal year and distributed as arrearages;
       ``(vi) the total amount of support due and unpaid for all 
     fiscal years; and''.
       (3) Section 452(a)(10)(G) (42 U.S.C. 652(a)(10)(G)) is 
     amended by striking ``on the use of Federal courts and''.
       (4) Section 452(a)(10) (42 U.S.C. 652(a)(10)) is amended by 
     striking all that follows subparagraph (I).
       (b) Data Collection and Reporting.--Section 469 (42 U.S.C. 
     669) is amended--
       (1) by striking subsections (a) and (b) and inserting the 
     following:
       ``(a) The Secretary shall collect and maintain, on a fiscal 
     year basis, up-to-date statistics, by State, with respect to 
     services to establish paternity and services to establish 
     child support obligations, the data specified in subsection 
     (b), separately stated, in the case of each such service, 
     with respect to--
       ``(1) families (or dependent children) receiving assistance 
     under State plans approved under part A (or E); and
       ``(2) families not receiving such assistance.
       ``(b) The data referred to in subsection (a) are--
       ``(1) the number of cases in the caseload of the State 
     agency administering the plan under this part in which such 
     service is needed; and
       ``(2) the number of such cases in which the service has 
     been provided.''; and
       (2) in subsection (c), by striking ``(a)(2)'' and inserting 
     ``(b)(2)''.
       (c) Effective Date.--The amendments made by this section 
     shall be effective with respect to fiscal year 1996 and 
     succeeding fiscal years.

                  CHAPTER 3--LOCATE AND CASE TRACKING

     SEC. 9421. CENTRAL STATE AND CASE REGISTRY.

       Section 454A, as added by section 9415(a)(2) of this Act, 
     is amended by adding at the end the following:
       ``(e) Central Case Registry.--(1) In General.--The 
     automated system required under this section shall perform 
     the functions, in accordance with the provisions of this 
     subsection, of a single central registry containing records 
     with respect to each case in which services are being 
     provided by the State agency (including, on and after October 
     1, 1998, each order specified in section 466(a)(12)), using 
     such standardized data elements (such as names, social 
     security numbers or other uniform identification numbers, 
     dates of birth, and case identification numbers), and 
     containing such other information (such as information on 
     case status) as the Secretary may require.
       ``(2) Payment Records.--Each case record in the central 
     registry shall include a record of--
       ``(A) the amount of monthly (or other periodic) support 
     owed under the support order, and other amounts due or 
     overdue (including arrears, interest or late payment 
     penalties, and fees);
       ``(B) the date on which or circumstances under which the 
     support obligation will terminate under such order;
       ``(C) all child support and related amounts collected 
     (including such amounts as fees, late payment penalties, and 
     interest on arrearages);
       ``(D) the distribution of such amounts collected; and
       ``(E) the birth date of the child for whom the child 
     support order is entered.
       ``(3) Updating and Monitoring.--The State agency shall 
     promptly establish and maintain, and regularly monitor, case 
     records in the registry required by this subsection, on the 
     basis of--
       ``(A) information on administrative actions and 
     administrative and judicial proceedings and orders relating 
     to paternity and support;
       ``(B) information obtained from matches with Federal, 
     State, or local data sources;
       ``(C) information on support collections and distributions; 
     and
       ``(D) any other relevant information.
       ``(f) Data Matches and Other Disclosures of Information.--
     The automated system required under this section shall have 
     the capacity, and be used by the State agency, to extract 
     data at such times, and in such standardized format or 
     formats, as may be required by the Secretary, and to share 
     and match data with, and receive data from, other data bases 
     and data matching services, in order to obtain (or provide) 
     information necessary to enable the State agency (or 
     Secretary or other State or Federal agencies) to carry out 
     responsibilities under this part. Data matching activities of 
     the State agency shall include at least the following:
       ``(1) Data bank of child support orders.--Furnish to the 
     Data Bank of Child Support Orders established under section 
     453(h) (and update as necessary, with information including 
     notice of expiration of orders) minimal information (to be 
     specified by the Secretary) on each child support case in the 
     central case registry.
       ``(2) Federal parent locator service.--Exchange data with 
     the Federal Parent Locator Service for the purposes specified 
     in section 453.
       ``(3) Temporary employment assistance program and medicaid 
     agencies.--Exchange data with State agencies (of the State 
     and of other States) administering the programs under part A 
     and title XIX, as necessary for the performance of State 
     agency responsibilities under this part and under such 
     programs.
       ``(4) Intra- and interstate data matches.--Exchange data 
     with other agencies of the State, agencies of other States, 
     and interstate information networks, as necessary and 
     appropriate to carry out (or assist other States to carry 
     out) the purposes of this part.''.

     SEC. 9422. CENTRALIZED COLLECTION AND DISBURSEMENT OF SUPPORT 
                   PAYMENTS.

       (a) State Plan Requirement.--Section 454 (42 U.S.C. 654), 
     as amended by sections 9404(a) and 9414(b) of this Act, is 
     amended--
       (1) by striking ``and'' at the end of paragraph (25);
       (2) by striking the period at the end of paragraph (26) and 
     inserting ``; and''; and
       (3) by adding after paragraph (26) the following new 
     paragraph:
       ``(27) provide that the State agency, on and after October 
     1, 1998--
       ``(A) will operate a centralized, automated unit for the 
     collection and disbursement of child support under orders 
     being enforced under this part, in accordance with section 
     454B; and
       ``(B) will have sufficient State staff (consisting of State 
     employees), and (at State option) contractors reporting 
     directly to the State agency to monitor and enforce support 
     collections through such centralized unit, including carrying 
     out the automated data processing responsibilities specified 
     in section 454A(g) and to impose, as appropriate in 
     particular cases, the administrative enforcement remedies 
     specified in section 466(c)(1).''.
       (b) Establishment of Centralized Collection Unit.--Part D 
     of title IV (42 U.S.C. 651-669) is amended by adding after 
     section 454A the following new section:


     ``centralized collection and disbursement of support payments

       ``Sec. 454B. (a) In General.--In order to meet the 
     requirement of section 454(27), the State agency must operate 
     a single centralized, automated unit for the collection and 
     disbursement of support payments, coordinated with the 
     automated data system required under section 454A, in 
     accordance with the provisions of this section, which shall 
     be--
       ``(1) operated directly by the State agency (or by two or 
     more State agencies under a regional cooperative agreement), 
     or by a single contractor responsible directly to the State 
     agency; and
       ``(2) used for the collection and disbursement (including 
     interstate collection and disbursement) of payments under 
     support orders in all cases being enforced by the State 
     pursuant to section 454(4).
       ``(b) Required Procedures.--The centralized collections 
     unit shall use automated procedures, electronic processes, 
     and computer-driven technology to the maximum extent 
     feasible, efficient, and economical, for the collection and 
     disbursement of support payments, including procedures--
       ``(1) for receipt of payments from parents, employers, and 
     other States, and for disbursements to custodial parents and 
     other 

[[Page H11304]]

     obligees, the State agency, and the State agencies of other 
     States;
       ``(2) for accurate identification of payments;
       ``(3) to ensure prompt disbursement of the custodial 
     parent's share of any payment; and
       ``(4) to furnish to either parent, upon request, timely 
     information on the current status of support payments.''.
       (c) Use of Automated System.--Section 454A, as added by 
     section 9415(a)(2) of this Act and as amended by section 9421 
     of this Act, is amended by adding at the end the following 
     new subsection:
       ``(g) Centralized Collection and Distribution of Support 
     Payments.--The automated system required under this section 
     shall be used, to the maximum extent feasible, to assist and 
     facilitate collections and disbursement of support payments 
     through the centralized collections unit operated pursuant to 
     section 454B, through the performance of functions including 
     at a minimum--
       ``(1) generation of orders and notices to employers (and 
     other debtors) for the withholding of wages (and other 
     income)--
       ``(A) within two working days after receipt (from the 
     directory of New Hires established under section 453(i) or 
     any other source) of notice of and the income source subject 
     to such withholding; and
       ``(B) using uniform formats directed by the Secretary;
       ``(2) ongoing monitoring to promptly identify failures to 
     make timely payment; and
       ``(3) automatic use of enforcement mechanisms (including 
     mechanisms authorized pursuant to section 466(c)) where 
     payments are not timely made.''.
       (d) Effective Date.--The amendments made by this section 
     shall become effective on October 1, 1998.

     SEC. 9423. AMENDMENTS CONCERNING INCOME WITHHOLDING.

       (a) Mandatory Income Withholding.--(1) Section 466(a)(1) 
     (42 U.S.C. 666(a)(1)) is amended to read as follows:
       ``(1) Income withholding.--(A) Under orders enforced under 
     the state plan.--Procedures described in subsection (b) for 
     the withholding from income of amounts payable as support in 
     cases subject to enforcement under the State plan.
       ``(B) Under certain orders predating change in 
     requirement.--Procedures under which all child support orders 
     issued (or modified) before October 1, 1996, and which are 
     not otherwise subject to withholding under subsection (b), 
     shall become subject to withholding from wages as provided in 
     subsection (b) if arrearages occur, without the need for a 
     judicial or administrative hearing.''.
       (2) Section 466(a)(8) (42 U.S.C. 666(a)(8)) is repealed.
       (3) Section 466(b) (42 U.S.C. 666(b)) is amended--
       (A) in the matter preceding paragraph (1), by striking 
     ``subsection (a)(1)'' and inserting ``subsection (a)(1)(A)'';
       (B) in paragraph (5), by striking all that follows 
     ``administered by'' and inserting ``the State through the 
     centralized collections unit established pursuant to section 
     454B, in accordance with the requirements of such section 
     454B.'';
       (C) in paragraph (6)(A)(i)--
       (i) by inserting ``, in accordance with timetables 
     established by the Secretary,'' after ``must be required''; 
     and
       (ii) by striking ``to the appropriate agency'' and all that 
     follows and inserting ``to the State centralized collections 
     unit within 5 working days after the date such amount would 
     (but for this subsection) have been paid or credited to the 
     employee, for distribution in accordance with this part.'';
       (D) in paragraph (6)(A)(ii), by inserting ``be in a 
     standard format prescribed by the Secretary, and'' after 
     ``shall''; and
       (E) in paragraph (6)(D)--
       (i) by striking ``employer who discharges'' and inserting 
     ``employer who--(A) discharges'';
       (ii) by relocating subparagraph (A), as designated, as an 
     indented subparagraph after and below the introductory 
     matter;
       (iii) by striking the period at the end; and
       (iv) by adding after and below subparagraph (A) the 
     following new subparagraph:
       ``(B) fails to withhold support from wages, or to pay such 
     amounts to the State centralized collections unit in 
     accordance with this subsection.''.
       (b) Conforming Amendment.--Section 466(c) (42 U.S.C. 
     666(c)) is repealed.
       (c) Definition of Terms.--The Secretary shall promulgate 
     regulations providing definitions, for purposes of part D of 
     title IV of the Social Security Act, for the term ``income'' 
     and for such other terms relating to income withholding under 
     section 466(b) of such Act as the Secretary may find it 
     necessary or advisable to define.

     SEC. 9424. LOCATOR INFORMATION FROM INTERSTATE NETWORKS.

       Section 466(a) (42 U.S.C. 666(a)), as amended by section 
     9423(a)(2) of this Act, is amended by inserting after 
     paragraph (7) the following:
       ``(8) Locator information from interstate networks.--
     Procedures ensuring that the State will neither provide 
     funding for, nor use for any purpose (including any purpose 
     unrelated to the purposes of this part), any automated 
     interstate network or system used to locate individuals--
       ``(A) for purposes relating to the use of motor vehicles; 
     or
       ``(B) providing information for law enforcement purposes 
     (where child support enforcement agencies are otherwise 
     allowed access by State and Federal law),
     unless all Federal and State agencies administering programs 
     under this part (including the entities established under 
     section 453) have access to information in such system or 
     network to the same extent as any other user of such system 
     or network.''.

     SEC. 9425. EXPANDED FEDERAL PARENT LOCATOR SERVICE.

       (a) Expanded Authority to Locate Individuals and Assets.--
     Section 453 (42 U.S.C. 653) is amended--
       (1) in subsection (a), by striking all that follows 
     ``subsection (c))'' and inserting the following:
     ``, for the purpose of establishing parentage, establishing, 
     setting the amount of, modifying, or enforcing child support 
     obligations--
       ``(1) information on, or facilitating the discovery of, the 
     location of any individual--
       ``(A) who is under an obligation to pay child support;
       ``(B) against whom such an obligation is sought; or
       ``(C) to whom such an obligation is owed, including such 
     individual's social security number (or numbers), most recent 
     residential address, and the name, address, and employer 
     identification number of such individual's employer; and
       ``(2) information on the individual's wages (or other 
     income) from, and benefits of, employment (including rights 
     to or enrollment in group health care coverage); and
       ``(3) information on the type, status, location, and amount 
     of any assets of, or debts owed by or to, any such 
     individual.''; and
       (2) in subsection (b)--
       (A) in the matter preceding paragraph (1), by striking 
     ``social security'' and all that follows through ``absent 
     parent'' and inserting ``information specified in subsection 
     (a)''; and
       (B) in paragraph (2), by inserting before the period ``, or 
     from any consumer reporting agency (as defined in section 
     603(f) of the Fair Credit Reporting Act (15 U.S.C. 
     1681a(f))'';
       (3) in subsection (e)(1), by inserting before the period 
     ``, or by consumer reporting agencies''.
       (b) Reimbursement for Data From Federal Agencies.--Section 
     453(e)(2) (42 U.S.C. 653(e)(2)) is amended in the fourth 
     sentence by inserting before the period ``in an amount which 
     the Secretary determines to be reasonable payment for the 
     data exchange (which amount shall not include payment for the 
     costs of obtaining, compiling, or maintaining the data)''.
       (c) Access to Consumer Reports Under Fair Credit Reporting 
     Act.--(1) Section 608 of the Fair Credit Reporting Act (15 
     U.S.C. 1681f) is amended--
       (A) by striking ``, limited to'' and inserting ``to a 
     governmental agency (including the entire consumer report, in 
     the case of a Federal, State, or local agency administering a 
     program under part D of title IV of the Social Security Act, 
     and limited to''; and
       (B) by striking ``employment, to a governmental agency'' 
     and inserting ``employment, in the case of any other 
     governmental agency)''.
       (2) Reimbursement for Reports by State Agencies and Credit 
     Bureaus.--Section 453 (42 U.S.C. 653) is amended by adding at 
     the end the following new subsection:
       ``(g) The Secretary is authorized to reimburse costs to 
     State agencies and consumer credit reporting agencies the 
     costs incurred by such entities in furnishing information 
     requested by the Secretary pursuant to this section in an 
     amount which the Secretary determines to be reasonable 
     payment for the data exchange (which amount shall not include 
     payment for the costs of obtaining, compiling, or maintaining 
     the data).''.
       (d) Disclosure of Tax Return Information.--(1) Section 
     6103(1)(6)(A)(ii) of the Internal Revenue Code of 1986 is 
     amended by striking ``, but only if'' and all that follows 
     and inserting a period.
       (2) Section 6103(1)(8)(A) of the Internal Revenue Code of 
     1986 is amended by inserting ``Federal,'' before ``State or 
     local''.
       (e) Technical Amendments.--
       (1) Sections 452(a)(9), 453(a), 453(b), 463(a), and 463(e) 
     (42 U.S.C. 652(a)(9), 653(a), 653(b), 663(a), and 663(e)) are 
     each amended by inserting ``Federal'' before ``Parent'' each 
     place it appears.
       (2) Section 453 (42 U.S.C. 653) is amended in the heading 
     by adding ``federal'' before ``parent''.
       (f) New Components.--Section 453 (42 U.S.C. 653), as 
     amended by subsection (c)(2) of this section, is amended by 
     adding at the end the following:
       ``(h) Data Bank of Child Support Orders.--
       ``(1) In general.--Not later than October 1, 1998, In order 
     to assist States in administering their State plans under 
     this part and parts A, F, and G, and for the other purposes 
     specified in this section, the Secretary shall establish and 
     maintain in the Federal Parent Locator Service an automated 
     registry to be known as the Data Bank of Child Support 
     Orders, which shall contain abstracts of child support orders 
     and other information described in paragraph (2) on each case 
     in each State central case registry maintained pursuant to 
     section 454A(e), as furnished (and regularly updated), 
     pursuant to section 454A(f), by State agencies administering 
     programs under this part.
       ``(2) Case information.--The information referred to in 
     paragraph (1), as specified by the Secretary, shall include 
     sufficient information (including names, social security 

[[Page H11305]]

     numbers or other uniform identification numbers, and State 
     case identification numbers) to identify the individuals who 
     owe or are owed support (or with respect to or on behalf of 
     whom support obligations are sought to be established), and 
     the State or States which have established or modified, or 
     are enforcing or seeking to establish, such an order.
       ``(i) Directory of New Hires.--
       ``(1) In general.--Not later than October 1, 1998, In order 
     to assist States in administering their State plans under 
     this part and parts A, F, and G, and for the other purposes 
     specified in this section, the Secretary shall establish and 
     maintain in the Federal Parent Locator Service an automated 
     directory to be known as the directory of New Hires, 
     containing--
       ``(A) information supplied by employers on each newly hired 
     individual, in accordance with paragraph (2); and
       ``(B) information supplied by State agencies administering 
     State unemployment compensation laws, in accordance with 
     paragraph (3).
       ``(2) Employer information.--
       ``(A) Information required.--Subject to subparagraph (D), 
     each employer shall furnish to the Secretary, for inclusion 
     in the directory established under this subsection, not later 
     than 10 days after the date (on or after October 1, 1998) on 
     which the employer hires a new employee (as defined in 
     subparagraph (C)), a report containing the name, date of 
     birth, and social security number of such employee, and the 
     employer identification number of the employer.
       ``(B) Reporting method and format.--The Secretary shall 
     provide for transmission of the reports required under 
     subparagraph (A) using formats and methods which minimize the 
     burden on employers, which shall include--
       ``(i) automated or electronic transmission of such reports;
       ``(ii) transmission by regular mail; and
       ``(iii) transmission of a copy of the form required for 
     purposes of compliance with section 3402 of the Internal 
     Revenue Code of 1986.
       ``(C) Employee defined.--For purposes of this paragraph, 
     the term `employee' means any individual subject to the 
     requirement of section 3402(f)(2) of the Internal Revenue 
     Code of 1986.
       ``(D) Paperwork reduction requirement.--As required by the 
     information resources management policies published by the 
     Director of the Office of Management and Budget pursuant to 
     section 3504(b)(1) of title 44, United States Code, the 
     Secretary, in order to minimize the cost and reporting burden 
     on employers, shall not require reporting pursuant to this 
     paragraph if an alternative reporting mechanism can be 
     developed that either relies on existing Federal or State 
     reporting or enables the Secretary to collect the needed 
     information in a more cost-effective and equally expeditious 
     manner, taking into account the reporting costs on employers.
       ``(E) Civil money penalty on noncomplying employers.--(i) 
     Any employer that fails to make a timely report in accordance 
     with this paragraph with respect to an individual shall be 
     subject to a civil money penalty, for each calendar year in 
     which the failure occurs, of the lesser of $500 or 1 percent 
     of the wages or other compensation paid by such employer to 
     such individual during such calendar year.
       ``(ii) Subject to clause (iii), the provisions of section 
     1128A (other than subsections (a) and (b) thereof) shall 
     apply to a civil money penalty under clause (i) in the same 
     manner as they apply to a civil money penalty or proceeding 
     under section 1128A(a).
       ``(iii) Any employer with respect to whom a penalty under 
     this subparagraph is upheld after an administrative hearing 
     shall be liable to pay all costs of the Secretary with 
     respect to such hearing.
       ``(3) Employment security information.--
       ``(A) Reporting requirement.--Each State agency 
     administering a State unemployment compensation law approved 
     by the Secretary of Labor under the Federal Unemployment Tax 
     Act shall furnish to the Secretary of Health and Human 
     Services extracts of the reports to the Secretary of Labor 
     concerning the wages and unemployment compensation paid to 
     individuals required under section 303(a)(6), in accordance 
     with subparagraph (B).
       ``(B) Manner of compliance.--The extracts required under 
     subparagraph (A) shall be furnished to the Secretary of 
     Health and Human Services on a quarterly basis, with respect 
     to calendar quarters beginning on and after October 1, 1996, 
     by such dates, in such format, and containing such 
     information as required by that Secretary in regulations.
       ``(j) Data Matches and Other Disclosures.--
       ``(1) Verification by social security administration.--(A) 
     The Secretary shall transmit data on individuals and 
     employers maintained under this section to the Social 
     Security Administration to the extent necessary for 
     verification in accordance with subparagraph (B).
       ``(B) The Social Security Administration shall verify the 
     accuracy of, correct or supply to the extent necessary and 
     feasible, and report to the Secretary, the following 
     information in data supplied by the Secretary pursuant to 
     subparagraph (A):
       ``(i) the name, social security number, and birth date of 
     each individual; and
       ``(ii) the employer identification number of each employer.
       ``(2) Child support locator matches.--For the purpose of 
     locating individuals for purposes of paternity establishment 
     and establishment and enforcement of child support, the 
     Secretary shall--
       ``(A) match data in the directory of New Hires against the 
     child support order abstracts in the Data Bank of Child 
     Support Orders not less often than every 2 working days; and
       ``(B) report information obtained from such a match to 
     concerned State agencies operating programs under this part 
     not later than 2 working days after such match.
       ``(3) Data matches and disclosures of data in all 
     registries for title iv program purposes.--The Secretary 
     shall--
       ``(A) perform matches of data in each component of the 
     Federal Parent Locator Service maintained under this section 
     against data in each other such component (other than the 
     matches required pursuant to paragraph (1)), and report 
     information resulting from such matches to State agencies 
     operating programs under this part and parts A, F, and G; and
       ``(B) disclose data in such registries to such State 
     agencies,
     to the extent, and with the frequency, that the Secretary 
     determines to be effective in assisting such States to carry 
     out their responsibilities under such programs.
       ``(k) Fees.--
       ``(1) For ssa verification.--The Secretary shall reimburse 
     the Commissioner of Social Security, at a rate negotiated 
     between the Secretary and the Commissioner, the costs 
     incurred by the Commissioner in performing the verification 
     services specified in subsection (j).
       ``(2) For information from sesas.--The Secretary shall 
     reimburse costs incurred by State employment security 
     agencies in furnishing data as required by subsection (j)(3), 
     at rates which the Secretary determines to be reasonable 
     (which rates shall not include payment for the costs of 
     obtaining, compiling, or maintaining such data).
       ``(3) For information furnished to state and federal 
     agencies.--State and Federal agencies receiving data or 
     information from the Secretary pursuant to this section shall 
     reimburse the costs incurred by the Secretary in furnishing 
     such data or information, at rates which the Secretary 
     determines to be reasonable (which rates shall include 
     payment for the costs of obtaining, verifying, maintaining, 
     and matching such data or information).
       ``(l) Restriction on Disclosure and Use.--Data in the 
     Federal Parent Locator Service, and information resulting 
     from matches using such data, shall not be used or disclosed 
     except as specifically provided in this section.
       ``(m) Retention of Data.--Data in the Federal Parent 
     Locator Service, and data resulting from matches performed 
     pursuant to this section, shall be retained for such period 
     (determined by the Secretary) as appropriate for the data 
     uses specified in this section.
       ``(n) Information Integrity and Security.--The Secretary 
     shall establish and implement safeguards with respect to the 
     entities established under this section designed to--
       ``(1) ensure the accuracy and completeness of information 
     in the Federal Parent Locator Service; and
       ``(2) restrict access to confidential information in the 
     Federal Parent Locator Service to authorized persons, and 
     restrict use of such information to authorized purposes.
       ``(o) Limit on Liability.--The Secretary shall not be 
     liable to either a State or an individual for inaccurate 
     information provided to a component of the Federal Parent 
     Locator Service section and disclosed by the Secretary in 
     accordance with this section.''.
       (g) Conforming Amendments.--
       (1) To part d of title iv of the social security act.--
     Section 454(8)(B) (42 U.S.C. 654(8)(B)) is amended to read as 
     follows:
       ``(B) the Federal Parent Locator Service established under 
     section 453;''.
       (2) To federal unemployment tax act.--Section 3304(16) of 
     the Internal Revenue Code of 1986 is amended--
       (A) by striking ``Secretary of Health, Education, and 
     Welfare'' each place such term appears and inserting 
     ``Secretary of Health and Human Services'';
       (B) in subparagraph (B), by striking ``such information'' 
     and all that follows and inserting ``information furnished 
     under subparagraph (A) or (B) is used only for the purposes 
     authorized under such subparagraph;'';
       (C) by striking ``and'' at the end of subparagraph (A);
       (D) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (E) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) wage and unemployment compensation information 
     contained in the records of such agency shall be furnished to 
     the Secretary of Health and Human Services (in accordance 
     with regulations promulgated by such Secretary) as necessary 
     for the purposes of the directory of New Hires established 
     under section 453(i) of the Social Security Act, and''.
       (3) To state grant program under title iii of the social 
     security act.--Section 303(a) (42 U.S.C. 503(a)) is amended--
       (A) by striking ``and'' at the end of paragraph (8);
       (B) by striking the period at the end of paragraph (9) and 
     inserting ``; and''; and
       (C) by adding after paragraph (9) the following new 
     paragraph:

[[Page H11306]]

       ``(10) The making of quarterly electronic reports, at such 
     dates, in such format, and containing such information, as 
     required by the Secretary of Health and Human Services under 
     section 453(i)(3), and compliance with such provisions as 
     such Secretary may find necessary to ensure the correctness 
     and verification of such reports.''.

     SEC. 9426. USE OF SOCIAL SECURITY NUMBERS.

       (a) State Law Requirement.--Section 466(a) (42 U.S.C. 
     666(a)), as amended by section 9401(a) of this Act, is 
     amended by inserting after paragraph (12) the following:
       ``(13) Social security numbers required.--Procedures 
     requiring the recording of social security numbers--
       ``(A) of both parties on marriage licenses and divorce 
     decrees; and
       ``(B) of both parents, on birth records and child support 
     and paternity orders.''.
       (b) Clarification of Federal Policy.--Section 
     205(c)(2)(C)(ii) (42 U.S.C. 405(c)(2)(C)(ii)) is amended by 
     striking the third sentence and inserting ``This clause shall 
     not be considered to authorize disclosure of such numbers 
     except as provided in the preceding sentence.''.

          CHAPTER 4--STREAMLINING AND UNIFORMITY OF PROCEDURES

     SEC. 9431. ADOPTION OF UNIFORM STATE LAWS.

       Section 466(a) (42 U.S.C. 666(a)), as amended by sections 
     9401(a) and 9426(a) of this Act, is amended inserting after 
     paragraph (13) the following:
       ``(14) Interstate enforcement.--(A) Adoption of uifsa.--
     Procedures under which the State adopts in its entirety (with 
     the modifications and additions specified in this paragraph) 
     not later than January 1, 1997, and uses on and after such 
     date, the Uniform Interstate Family Support Act, as approved 
     by the National Conference of Commissioners on Uniform State 
     Laws in August, 1992.
       ``(B) Expanded application of uifsa.--The State law adopted 
     pursuant to subparagraph (A) shall be applied to any case--
       ``(i) involving an order established or modified in one 
     State and for which a subsequent modification is sought in 
     another State; or
       ``(ii) in which interstate activity is required to enforce 
     an order.
       ``(C) Jurisdiction to modify orders.--The State law adopted 
     pursuant to subparagraph (A) of this paragraph shall contain 
     the following provision in lieu of section 611(a)(1) of the 
     Uniform Interstate Family Support Act described in such 
     subparagraph (A):
       ```(1) the following requirements are met:
       ```(i) the child, the individual obligee, and the obligor--
       ```(I) do not reside in the issuing State; and
       ```(II) either reside in this State or are subject to the 
     jurisdiction of this State pursuant to section 201; and
       ```(ii) (in any case where another State is exercising or 
     seeks to exercise jurisdiction to modify the order) the 
     conditions of section 204 are met to the same extent as 
     required for proceedings to establish orders; or'.
       ``(D) Service of process.--The State law adopted pursuant 
     to subparagraph (A) shall recognize as valid, for purposes of 
     any proceeding subject to such State law, service of process 
     upon persons in the State (and proof of such service) by any 
     means acceptable in another State which is the initiating or 
     responding State in such proceeding.
       ``(E) Cooperation by employers.--The State law adopted 
     pursuant to subparagraph (A) shall provide for the use of 
     procedures (including sanctions for noncompliance) under 
     which all entities in the State (including for-profit, 
     nonprofit, and governmental employers) are required to 
     provide promptly, in response to a request by the State 
     agency of that or any other State administering a program 
     under this part, information on the employment, compensation, 
     and benefits of any individual employed by such entity as an 
     employee or contractor.''.

     SEC. 9432. IMPROVEMENTS TO FULL FAITH AND CREDIT FOR CHILD 
                   SUPPORT ORDERS.

       Section 1738B of title 28, United States Code, is amended--
       (1) in subsection (a)(2), by striking ``subsection (e)'' 
     and inserting ``subsections (e), (f), and (i)'';
       (2) in subsection (b), by inserting after the 2nd 
     undesignated paragraph the following:
       ```child's home State' means the State in which a child 
     lived with a parent or a person acting as parent for at least 
     six consecutive months immediately preceding the time of 
     filing of a petition or comparable pleading for support and, 
     if a child is less than six months old, the State in which 
     the child lived from birth with any of them. A period of 
     temporary absence of any of them is counted as part of the 
     six-month period.'';
       (3) in subsection (c), by inserting ``by a court of a 
     State'' before ``is made'';
       (4) in subsection (c)(1), by inserting ``and subsections 
     (e), (f), and (g)'' after ``located'';
       (5) in subsection (d)--
       (A) by inserting ``individual'' before ``contestant''; and
       (B) by striking ``subsection (e)'' and inserting 
     ``subsections (e) and (f)'';
       (6) in subsection (e), by striking ``make a modification of 
     a child support order with respect to a child that is made'' 
     and inserting ``modify a child support order issued'';
       (7) in subsection (e)(1), by inserting ``pursuant to 
     subsection (i)'' before the semicolon;
       (8) in subsection (e)(2)--
       (A) by inserting ``individual'' before ``contestant'' each 
     place such term appears; and
       (B) by striking ``to that court's making the modification 
     and assuming'' and inserting ``with the State of continuing, 
     exclusive jurisdiction for a court of another State to modify 
     the order and assume'';
       (9) by redesignating subsections (f) and (g) as subsections 
     (g) and (h), respectively;
       (10) by inserting after subsection (e) the following:
       ``(f) Recognition of Child Support Orders.--If one or more 
     child support orders have been issued in this or another 
     State with regard to an obligor and a child, a court shall 
     apply the following rules in determining which order to 
     recognize for purposes of continuing, exclusive jurisdiction 
     and enforcement:
       ``(1) If only one court has issued a child support order, 
     the order of that court must be recognized.
       ``(2) If two or more courts have issued child support 
     orders for the same obligor and child, and only one of the 
     courts would have continuing, exclusive jurisdiction under 
     this section, the order of that court must be recognized.
       ``(3) If two or more courts have issued child support 
     orders for the same obligor and child, and only one of the 
     courts would have continuing, exclusive jurisdiction under 
     this section, an order issued by a court in the current home 
     State of the child must be recognized, but if an order has 
     not been issued in the current home State of the child, the 
     order most recently issued must be recognized.
       ``(4) If two or more courts have issued child support 
     orders for the same obligor and child, and none of the courts 
     would have continuing, exclusive jurisdiction under this 
     section, a court may issue a child support order, which must 
     be recognized.
       ``(5) The court that has issued an order recognized under 
     this subsection is the court having continuing, exclusive 
     jurisdiction.'';
       (11) in subsection (g) (as so redesignated)--
       (A) by striking ``Prior'' and inserting ``Modified''; and
       (B) by striking ``subsection (e)'' and inserting 
     ``subsections (e) and (f)'';
       (12) in subsection (h) (as so redesignated)--
       (A) in paragraph (2), by inserting ``including the duration 
     of current payments and other obligations of support'' before 
     the comma; and
       (B) in paragraph (3), by inserting ``arrears under'' after 
     ``enforce''; and
       (13) by adding at the end the following:
       ``(i) Registration for Modification.--If there is no 
     individual contestant or child residing in the issuing State, 
     the party or support enforcement agency seeking to modify, or 
     to modify and enforce, a child support order issued in 
     another State shall register that order in a State with 
     jurisdiction over the nonmovant for the purpose of 
     modification.''.

     SEC. 9433. STATE LAWS PROVIDING EXPEDITED PROCEDURES.

       (a) State Law Requirements.--Section 466 (42 U.S.C. 666) is 
     amended--
       (1) in subsection (a)(2), in the first sentence, to read as 
     follows: ``Expedited administrative and judicial procedures 
     (including the procedures specified in subsection (c)) for 
     establishing paternity and for establishing, modifying, and 
     enforcing support obligations.''; and
       (2) by adding after subsection (b) the following new 
     subsection:
       ``(c) Expedited Procedures.--The procedures specified in 
     this subsection are the following:
       ``(1) Administrative action by state agency.--Procedures 
     which give the State agency the authority (and recognize and 
     enforce the authority of State agencies of other States), 
     without the necessity of obtaining an order from any other 
     judicial or administrative tribunal (but subject to due 
     process safeguards, including (as appropriate) requirements 
     for notice, opportunity to contest the action, and 
     opportunity for an appeal on the record to an independent 
     administrative or judicial tribunal), to take the following 
     actions relating to establishment or enforcement of orders:
       ``(A) Genetic testing.--To order genetic testing for the 
     purpose of paternity establishment as provided in section 
     466(a)(5).
       ``(B) Default orders.--To enter a default order, upon a 
     showing of service of process and any additional showing 
     required by State law--
       ``(i) establishing paternity, in the case of any putative 
     father who refuses to submit to genetic testing; and
       ``(ii) establishing or modifying a support obligation, in 
     the case of a parent (or other obligor or obligee) who fails 
     to respond to notice to appear at a proceeding for such 
     purpose.
       ``(C) Subpoenas.--To subpoena any financial or other 
     information needed to establish, modify, or enforce an order, 
     and to sanction failure to respond to any such subpoena.
       ``(D) Access to personal and financial information.--To 
     obtain access, subject to safeguards on privacy and 
     information security, to the following records (including 
     automated access, in the case of records maintained in 
     automated data bases):
       ``(i) records of other State and local government agencies, 
     including--

       ``(I) vital statistics (including records of marriage, 
     birth, and divorce);
       ``(II) State and local tax and revenue records (including 
     information on residence address, employer, income and 
     assets);
       ``(III) records concerning real and titled personal 
     property;

[[Page H11307]]

       ``(IV) records of occupational and professional licenses, 
     and records concerning the ownership and control of 
     corporations, partnerships, and other business entities;
       ``(V) employment security records;
       ``(VI) records of agencies administering public assistance 
     programs;
       ``(VII) records of the motor vehicle department; and
       ``(VIII) corrections records; and

       ``(ii) certain records held by private entities, 
     including--

       ``(I) customer records of public utilities and cable 
     television companies; and
       ``(II) information (including information on assets and 
     liabilities) on individuals who owe or are owed support (or 
     against or with respect to whom a support obligation is 
     sought) held by financial institutions (subject to 
     limitations on liability of such entities arising from 
     affording such access).

       ``(E) Income withholding.--To order income withholding in 
     accordance with subsection (a)(1) and (b) of section 466.
       ``(F) Change in payee.--(In cases where support is subject 
     to an assignment under section 403(b)(1)(E)(i), 471(a)(17), 
     or 1912, or to a requirement to pay through the centralized 
     collections unit under section 454B) upon providing notice to 
     obligor and obligee, to direct the obligor or other payor to 
     change the payee to the appropriate government entity.
       ``(G) Secure assets to satisfy arrearages.--For the purpose 
     of securing overdue support--
       ``(i) to intercept and seize any periodic or lump-sum 
     payment to the obligor by or through a State or local 
     government agency, including--

       ``(I) unemployment compensation, workers' compensation, and 
     other benefits;
       ``(II) judgments and settlements in cases under the 
     jurisdiction of the State or local government; and
       ``(III) lottery winnings;

       ``(ii) to attach and seize assets of the obligor held by 
     financial institutions;
       ``(iii) to attach public and private retirement funds in 
     appropriate cases, as determined by the Secretary; and
       ``(iv) to impose liens in accordance with paragraph (a)(4) 
     and, in appropriate cases, to force sale of property and 
     distribution of proceeds.
       ``(H) Increase monthly payments.--For the purpose of 
     securing overdue support, to increase the amount of monthly 
     support payments to include amounts for arrearages (subject 
     to such conditions or restrictions as the State may provide).
       ``(I) Suspension of drivers' licenses.--To suspend drivers' 
     licenses of individuals owing past-due support, in accordance 
     with subsection (a)(16).
       ``(2) Substantive and procedural rules.--The expedited 
     procedures required under subsection (a)(2) shall include the 
     following rules and authority, applicable with respect to all 
     proceedings to establish paternity or to establish, modify, 
     or enforce support orders:
       ``(A) Locator information; presumptions concerning 
     notice.--Procedures under which--
       ``(i) the parties to any paternity or child support 
     proceedings are required (subject to privacy safeguards) to 
     file with the tribunal before entry of an order, and to 
     update as appropriate, information on location and identity 
     (including Social Security number, residential and mailing 
     addresses, telephone number, driver's license number, and 
     name, address, and telephone number of employer); and
       ``(ii) in any subsequent child support enforcement action 
     between the same parties, the tribunal shall be authorized, 
     upon sufficient showing that diligent effort has been made to 
     ascertain such party's current location, to deem due process 
     requirements for notice and service of process to be met, 
     with respect to such party, by delivery to the most recent 
     residential or employer address so filed pursuant to clause 
     (i).
       ``(B) Statewide jurisdiction.--Procedures under which--
       ``(i) the State agency and any administrative or judicial 
     tribunal with authority to hear child support and paternity 
     cases exerts statewide jurisdiction over the parties, and 
     orders issued in such cases have statewide effect; and
       ``(ii) (in the case of a State in which orders in such 
     cases are issued by local jurisdictions) a case may be 
     transferred between jurisdictions in the State without need 
     for any additional filing by the petitioner, or service of 
     process upon the respondent, to retain jurisdiction over the 
     parties.''.
       (c) Exceptions from State Law Requirements.--Section 466(d) 
     (42 U.S.C. 666(d)) is amended--
       (1) by striking ``(d) If'' and inserting the following:
       ``(d) Exemptions From Requirements.--
       ``(1) In general.--Subject to paragraph (2), if''; and
       (2) by adding at the end the following new paragraph:
       ``(2) Nonexempt requirements.--The Secretary shall not 
     grant an exemption from the requirements of--
       ``(A) subsection (a)(5) (concerning procedures for 
     paternity establishment);
       ``(B) subsection (a)(10) (concerning modification of 
     orders);
       ``(C) subsection (a)(12) (concerning recording of orders in 
     the central State case registry);
       ``(D) subsection (a)(13) (concerning recording of Social 
     Security numbers);
       ``(E) subsection (a)(14) (concerning interstate 
     enforcement); or
       ``(F) subsection (c) (concerning expedited procedures), 
     other than paragraph (1)(A) thereof (concerning establishment 
     or modification of support amount).''.
       (d) Automation of State Agency Functions.--Section 454A, as 
     added by section 9415(a)(2) of this Act and as amended by 
     sections 9421 and 9422(c) of this Act, is amended by adding 
     at the end the following new subsection:
       ``(h) Expedited Administrative Procedures.--The automated 
     system required under this section shall be used, to the 
     maximum extent feasible, to implement any expedited 
     administrative procedures required under section 466(c).''.

                   CHAPTER 5--PATERNITY ESTABLISHMENT

     SEC. 9441. SENSE OF THE CONGRESS.

       It is the sense of the Congress that social services should 
     be provided in hospitals to women who have become pregnant as 
     a result of rape or incest.

     SEC. 9442. AVAILABILITY OF PARENTING SOCIAL SERVICES FOR NEW 
                   FATHERS.

       Section 466(a) (42 U.S.C. 666(a)), as amended by sections 
     9401(a), 9426(a), and 9431 of this Act, is amended by 
     inserting after paragraph (14) the following:
       ``(15) Procedures for providing new fathers with positive 
     parenting counseling that stresses the importance of paying 
     child support in a timely manner, in accordance with 
     regulations prescribed by the Secretary.''.

     SEC. 9443. COOPERATION REQUIREMENT AND GOOD CAUSE EXCEPTION.

       (a) In General.--Section 454 (42 U.S.C. 654) is amended--
       (1) by striking ``and'' at the end of paragraph (23);
       (2) by striking the period at the end of paragraph (24) and 
     inserting ``; and''; and
       (3) by inserting after paragraph (24) the following:
       ``(25) provide that the State agency administering the plan 
     under this part--
       ``(A) will make the determination specified under paragraph 
     (4), as to whether an individual is cooperating with efforts 
     to establish paternity and secure support (or has good cause 
     not to cooperate with such efforts) for purposes of the 
     requirements of sections 403(b)(1)(E)(i) and 1912;
       ``(B) will advise individuals, both orally and in writing, 
     of the grounds for good cause exceptions to the requirement 
     to cooperate with such efforts;
       ``(C) will take the best interests of the child into 
     consideration in making the determination whether such 
     individual has good cause not to cooperate with such efforts;
       ``(D)(i) will make the initial determination as to whether 
     an individual is cooperating (or has good cause not to 
     cooperate) with efforts to establish paternity within 10 days 
     after such individual is referred to such State agency by the 
     State agency administering the program under part A of title 
     XIX;
       ``(ii) will make redeterminations as to cooperation or good 
     cause at appropriate intervals; and
       ``(iii) will promptly notify the individual, and the State 
     agencies administering such programs, of each such 
     determination and redetermination;
       ``(E) with respect to any child born on or after the date 
     10 months after enactment of this provision, will not 
     determine (or redetermine) the mother (or other custodial 
     relative) of such child to be cooperating with efforts to 
     establish paternity unless such individual furnishes--
       ``(i) the name of the putative father (or fathers); and
       ``(ii) sufficient additional information to enable the 
     State agency, if reasonable efforts were made, to verify the 
     identity of the person named as the putative father 
     (including such information as the putative father's present 
     address, telephone number, date of birth, past or present 
     place of employment, school previously or currently attended, 
     and names and addresses of parents, friends, or relatives 
     able to provide location information, or other information 
     that could enable service of process on such person), and
       ``(F)(i) (where a custodial parent who was initially 
     determined not to be cooperating (or to have good cause not 
     to cooperate) is later determined to be cooperating or to 
     have good cause not to cooperate) will immediately notify the 
     State agencies administering the programs under part A of 
     title XIX that this eligibility condition has been met; and
       ``(ii) (where a custodial parent was initially determined 
     to be cooperating (or to have good cause not to cooperate)) 
     will not later determine such individual not to be 
     cooperating (or not to have good cause not to cooperate) 
     until such individual has been afforded an opportunity for a 
     hearing.''.
       (b) Medicaid Amendments.--Section 1912(a) (42 U.S.C. 
     1396k(a)) is amended--
       (1) in paragraph (1)(B), by inserting ``(except as provided 
     in paragraph (2))'' after ``to cooperate with the State'';
       (2) in subparagraphs (B) and (C) of paragraph (1) by 
     striking ``, unless'' and all that follows and inserting a 
     semicolon; and
       (3) by redesignating paragraph (2) as paragraph (5), and 
     inserting after paragraph (1) the following new paragraphs:
       ``(2) provide that the State agency will immediately refer 
     each applicant or recipient requiring paternity establishment 
     services to the State agency administering the program under 
     part D of title IV;

[[Page H11308]]

       ``(3) provide that an individual will not be required to 
     cooperate with the State, as provided under paragraph (1), if 
     the individual is found to have good cause for refusing to 
     cooperate, as determined in accordance with standards 
     prescribed by the Secretary, which standards shall take into 
     consideration the best interests of the individuals 
     involved--
       ``(A) to the satisfaction of the State agency administering 
     the program under part D, as determined in accordance with 
     section 454(25), with respect to the requirements to 
     cooperate with efforts to establish paternity and to obtain 
     support (including medical support) from a parent; and
       ``(B) to the satisfaction of the State agency administering 
     the program under this title, with respect to other 
     requirements to cooperate under paragraph (1);
       ``(4) provide that (except as provided in paragraph (5)) an 
     applicant requiring paternity establishment services (other 
     than an individual presumptively eligible pursuant to section 
     1920) shall not be eligible for medical assistance under this 
     title until such applicant--
       ``(i) has furnished to the agency administering the State 
     plan under part D of title IV the information specified in 
     section 454(25)(E); or
       ``(ii) has been determined by such agency to have good 
     cause not to cooperate; and
       ``(5) provide that the provisions of paragraph (4) shall 
     not apply with respect to an applicant--
       ``(i) if such agency has not, within 10 days after such 
     individual was referred to such agency, provided the 
     notification required by section 454(25)(D)(iii), until such 
     notification is received); and
       ``(ii) if such individual appeals a determination that the 
     individual lacks good cause for noncooperation, until after 
     such determination is affirmed after notice and opportunity 
     for a hearing.''.
       (c) Effective Date.--The amendments made by this section 
     shall be effective with respect to applications filed in or 
     after the first calendar quarter beginning 10 months or more 
     after the date of the enactment of this Act (or such earlier 
     quarter as the State may select) for assistance under a State 
     plan approved under part A of title IV of the Social Security 
     Act or for medical assistance under a State plan approved 
     under title XIX of such Act.

     SEC. 9444. FEDERAL MATCHING PAYMENTS.

       (a) Increased Base Matching Rate.--Section 455(a)(2) (42 
     U.S.C. 655(a)(2)) is amended to read as follows:
       ``(2) The applicable percent for a quarter for purposes of 
     paragraph (1)(A) is--
       ``(A) for fiscal year 1996, 69 percent;
       ``(B) for fiscal year 1997, 72 percent; and
       ``(C) for fiscal year 1998 and succeeding fiscal years, 75 
     percent.''.
       (b) Maintenance of Effort.--Section 455 (42 U.S.C. 655) is 
     amended--
       (1) in subsection (a)(1), in the matter preceding 
     subparagraph (A), by striking ``From'' and inserting 
     ``Subject to subsection (c), from''; and
       (2) by inserting after subsection (b) the following:
       ``(c) Maintenance of Effort.--Notwithstanding subsection 
     (a), total expenditures for the State program under this part 
     for fiscal year 1996 and each succeeding fiscal year, reduced 
     by the percentage specified for such fiscal year under 
     subparagraph (A), (B), or (C)(i) of paragraph (2), shall not 
     be less than such total expenditures for fiscal year 1995, 
     reduced by 66 percent.''.

     SEC. 9445. STATE LAWS CONCERNING PATERNITY ESTABLISHMENT.

       (a) State Laws Required.--Section 466(a)(5) (42 U.S.C. 
     666(a)(5)) is amended--
       (1) by striking ``(5)'' and inserting the following:
       ``(5) Procedures concerning paternity establishment.--'';
       (2) in subparagraph (A)--
       (A) by striking ``(A)(i)'' and inserting the following:
       ``(A) Establishment process available from birth until age 
     eighteen.--(i)''; and
       (B) by indenting clauses (i) and (ii) so that the left 
     margin of such clauses is 2 ems to the right of the left 
     margin of paragraph (4);
       (3) in subparagraph (B)--
       (A) by striking ``(B)'' and inserting the following:
       ``(B) Procedures concerning genetic testing.--(i)'';
       (B) in clause (i), as redesignated, by inserting before the 
     period ``, where such request is supported by a sworn 
     statement (I) by such party alleging paternity setting forth 
     facts establishing a reasonable possibility of the requisite 
     sexual contact of the parties, or (II) by such party denying 
     paternity setting forth facts establishing a reasonable 
     possibility of the nonexistence of sexual contact of the 
     parties;'';
       (C) by inserting after and below clause (i) (as 
     redesignated) the following new clause:
       ``(ii) Procedures which require the State agency, in any 
     case in which such agency orders genetic testing--
       ``(I) to pay costs of such tests, subject to recoupment 
     (where the State so elects) from the putative father if 
     paternity is established; and
       ``(II) to obtain additional testing in any case where an 
     original test result is disputed, upon request and advance 
     payment by the disputing party.'';
       (4) by striking subparagraphs (C) and (D) and inserting the 
     following:
       ``(C) Paternity acknowledgment.--(i) Procedures for a 
     simple civil process for voluntarily acknowledging paternity 
     under which the State must provide that, before a mother and 
     a putative father can sign an acknowledgment of paternity, 
     the putative father and the mother must be given notice, 
     orally, in writing, and in a language that each can 
     understand, of the alternatives to, the legal consequences 
     of, and the rights (including, if 1 parent is a minor, any 
     rights afforded due to minority status) and responsibilities 
     that arise from, signing the acknowledgment.
       ``(ii) Such procedures must include a hospital-based 
     program for the voluntary acknowledgment of paternity 
     focusing on the period immediately before or after the birth 
     of a child.
       ``(iii) Such procedures must require the State agency 
     responsible for maintaining birth records to offer voluntary 
     paternity establishment services.
       ``(iv) The Secretary shall prescribe regulations governing 
     voluntary paternity establishment services offered by 
     hospitals and birth record agencies. The Secretary shall 
     prescribe regulations specifying the types of other entities 
     that may offer voluntary paternity establishment services, 
     and governing the provision of such services, which shall 
     include a requirement that such an entity must use the same 
     notice provisions used by, the same materials used by, 
     provide the personnel providing such services with the same 
     training provided by, and evaluate the provision of such 
     services in the same manner as, voluntary paternity 
     establishment programs of hospitals and birth record 
     agencies.
       ``(v) Such procedures must require the State and those 
     required to establish paternity to use only the affidavit 
     developed under section 452(a)(7) for the voluntary 
     acknowledgment of paternity, and to give full faith and 
     credit to such an affidavit signed in any other State.
       ``(D) Status of signed paternity acknowledgment.--(i) 
     Procedures under which a signed acknowledgment of paternity 
     is considered a legal finding of paternity, subject to the 
     right of any signatory to rescind the acknowledgment within 
     60 days.
       ``(ii)(I) Procedures under which, after the 60-day period 
     referred to in clause (i), a signed acknowledgment of 
     paternity may be challenged in court only on the basis of 
     fraud, duress, or material mistake of fact, with the burden 
     of proof upon the challenger, and under which the legal 
     responsibilities (including child support obligations) of any 
     signatory arising from the acknowledgment may not be 
     suspended during the challenge, except for good cause shown.
       ``(II) Procedures under which, after the 60-day period 
     referred to in clause (i), a minor who signs an 
     acknowledgment of paternity other than in the presence of a 
     parent or court-appointed guardian ad litem may rescind the 
     acknowledgment in a judicial or administrative proceeding, 
     until the earlier of--
       ``(aa) attaining the age of majority; or
       ``(bb) the date of the first judicial or administrative 
     proceeding brought (after the signing) to establish a child 
     support obligation, visitation rights, or custody rights with 
     respect to the child whose paternity is the subject of the 
     acknowledgment, and at which the minor is represented by a 
     parent, guardian ad litem, or attorney.'';
       (5) by striking subparagraph (E) and inserting the 
     following:
       ``(E) Bar on acknowledgment ratification proceedings.--
     Procedures under which no judicial or administrative 
     proceedings are required or permitted to ratify an 
     unchallenged acknowledgment of paternity.'';
       (6) by striking subparagraph (F) and inserting the 
     following:
       ``(F) Admissibility of genetic testing results.--
     Procedures--
       ``(i) requiring that the State admit into evidence, for 
     purposes of establishing paternity, results of any genetic 
     test that is--

       ``(I) of a type generally acknowledged, by accreditation 
     bodies designated by the Secretary, as reliable evidence of 
     paternity; and
       ``(II) performed by a laboratory approved by such an 
     accreditation body;

       ``(ii) that any objection to genetic testing results must 
     be made in writing not later than a specified number of days 
     before any hearing at which such results may be introduced 
     into evidence (or, at State option, not later than a 
     specified number of days after receipt of such results); and
       ``(iii) that, if no objection is made, the test results are 
     admissible as evidence of paternity without the need for 
     foundation testimony or other proof of authenticity or 
     accuracy.''; and
       (7) by adding after subparagraph (H) the following new 
     subparagraphs:
       ``(I) No right to jury trial.--Procedures providing that 
     the parties to an action to establish paternity are not 
     entitled to jury trial.
       ``(J) Temporary support order based on probable paternity 
     in contested cases.--Procedures which require that a 
     temporary order be issued, upon motion by a party, requiring 
     the provision of child support pending an administrative or 
     judicial determination of parentage, where there is clear and 
     convincing evidence of paternity (on the basis of genetic 
     tests or other evidence).
       ``(K) Proof of certain support and paternity establishment 
     costs.--Procedures under which bills for pregnancy, 
     childbirth, and genetic testing are admissible as evidence 
     without requiring third-party foundation testimony, and 
     shall constitute prima facie evidence of amounts incurred 
     for such services and testing on behalf of the child.

[[Page H11309]]

       ``(L) Waiver of state debts for cooperation.--At the option 
     of the State, procedures under which the tribunal 
     establishing paternity and support has discretion to waive 
     rights to all or part of amounts owed to the State (but not 
     to the mother) for costs related to pregnancy, childbirth, 
     and genetic testing and for public assistance paid to the 
     family where the father cooperates or acknowledges paternity 
     before or after genetic testing.
       ``(M) Standing of putative fathers.--Procedures ensuring 
     that the putative father has a reasonable opportunity to 
     initiate a paternity action.''.
       (b) National Paternity Acknowledgment Affidavit.--Section 
     452(a)(7) (42 U.S.C. 652(a)(7)) is amended by inserting ``, 
     and develop an affidavit to be used for the voluntary 
     acknowledgment of paternity which shall include the social 
     security account number of each parent'' before the 
     semicolon.
       (c) Technical Amendment.--Section 468 (42 U.S.C. 668) is 
     amended by striking ``a simple civil process for voluntarily 
     acknowledging paternity and''.

     SEC. 9446. OUTREACH FOR VOLUNTARY PATERNITY ESTABLISHMENT.

       (a) State Plan Requirement.--Section 454(23) (42 U.S.C. 
     654(23)) is amended by adding at the end the following new 
     subparagraph:
       ``(C) publicize the availability and encourage the use of 
     procedures for voluntary establishment of paternity and child 
     support through a variety of means, which--
       ``(i) include distribution of written materials at health 
     care facilities (including hospitals and clinics), and other 
     locations such as schools;
       ``(ii) may include pre-natal programs to educate expectant 
     couples on individual and joint rights and responsibilities 
     with respect to paternity (and may require all expectant 
     recipients of assistance under part A to participate in such 
     pre-natal programs, as an element of cooperation with efforts 
     to establish paternity and child support);
       ``(iii) include, with respect to each child discharged from 
     a hospital after birth for whom paternity or child support 
     has not been established, reasonable follow-up efforts 
     (including at least one contact of each parent whose 
     whereabouts are known, except where there is reason to 
     believe such follow-up efforts would put mother or child at 
     risk), providing--

       ``(I) in the case of a child for whom paternity has not 
     been established, information on the benefits of and 
     procedures for establishing paternity; and
       ``(II) in the case of a child for whom paternity has been 
     established but child support has not been established, 
     information on the benefits of and procedures for 
     establishing a child support order, and an application for 
     child support services;''.

       (b) Enhanced Federal Matching.--Section 455(a)(1)(C) (42 
     U.S.C. 655(a)(1)(C)) is amended--
       (1) by inserting ``(i)'' before ``laboratory costs'', and
       (2) by inserting before the semicolon ``, and (ii) costs of 
     outreach programs designed to encourage voluntary 
     acknowledgment of paternity''.
       (c) Effective Dates.--(1) The amendments made by subsection 
     (a) shall become effective October 1, 1997.
       (2) The amendments made by subsection (b) shall be 
     effective with respect to calendar quarters beginning on and 
     after October 1, 1996.

      CHAPTER 6--ESTABLISHMENT AND MODIFICATION OF SUPPORT ORDERS

     SEC. 9451. NATIONAL CHILD SUPPORT GUIDELINES COMMISSION.

       (a) Establishment.--There is hereby established a 
     commission to be known as the ``National Child Support 
     Guidelines Commission'' (in this section referred to as the 
     ``Commission'').
       (b) General Duties.--The Commission shall develop a 
     national child support guideline for consideration by the 
     Congress that is based on a study of various guideline 
     models, the benefits and deficiencies of such models, and any 
     needed improvements.
       (c) Membership.--
       (1) Number; appointment.--
       (A) In general.--The Commission shall be composed of 12 
     individuals appointed jointly by the Secretary of Health and 
     Human Services and the Congress, not later than January 15, 
     1997, of which--
       (i) 2 shall be appointed by the Chairman of the Committee 
     on Finance of the Senate, and 1 shall be appointed by the 
     ranking minority member of the Committee;
       (ii) 2 shall be appointed by the Chairman of the Committee 
     on Ways and Means of the House of Representatives, and 1 
     shall be appointed by the ranking minority member of the 
     Committee; and
       (iii) 6 shall be appointed by the Secretary of Health and 
     Human Services.
       (B) Qualifications of members.--Members of the Commission 
     shall have expertise and experience in the evaluation and 
     development of child support guidelines. At least 1 member 
     shall represent advocacy groups for custodial parents, at 
     least 1 member shall represent advocacy groups for 
     noncustodial parents, and at least 1 member shall be the 
     director of a State program under part D of title IV of the 
     Social Security Act.
       (2) Terms of office.--Each member shall be appointed for a 
     term of 2 years. A vacancy in the Commission shall be filled 
     in the manner in which the original appointment was made.
       (d) Commission Powers, Compensation, Access to Information, 
     and Supervision.--The first sentence of subparagraph (C), the 
     first and third sentences of subparagraph (D), subparagraph 
     (F) (except with respect to the conduct of medical studies), 
     clauses (ii) and (iii) of subparagraph (G), and subparagraph 
     (H) of section 1886(e)(6) of the Social Security Act shall 
     apply to the Commission in the same manner in which such 
     provisions apply to the Prospective Payment Assessment 
     Commission.
       (e) Report.--Not later than 2 years after the appointment 
     of members, the Commission shall submit to the President, the 
     Committee on Ways and Means of the House of Representatives, 
     and the Committee on Finance of the Senate, a recommended 
     national child support guideline and a final assessment of 
     issues relating to such a proposed national child support 
     guideline.
       (f) Termination.--The Commission shall terminate 6 months 
     after the submission of the report described in subsection 
     (e).

     SEC. 9452. SIMPLIFIED PROCESS FOR REVIEW AND ADJUSTMENT OF 
                   CHILD SUPPORT ORDERS.

       (a) In General.--Section 466(a)(10) (42 U.S.C. 666(a)(10)) 
     is amended to read as follows:
       ``(10) Procedures for modification of support orders.--
       ``(A)(i) Procedures under which--
       ``(I) every 3 years, at the request of either parent 
     subject to a child support order, the State shall review and, 
     as appropriate, adjust the order in accordance with the 
     guidelines established under section 467(a) if the amount of 
     the child support award under the order differs from the 
     amount that would be awarded in accordance with such 
     guidelines, without a requirement for any other change in 
     circumstances; and
       ``(II) upon request at any time of either parent subject to 
     a child support order, the State shall review and, as 
     appropriate, adjust the order in accordance with the 
     guidelines established under section 467(a) based on a 
     substantial change in the circumstances of either such 
     parent.
       ``(ii) Such procedures shall require both parents subject 
     to a child support order to be notified of their rights and 
     responsibilities provided for under clause (i) at the time 
     the order is issued and in the annual information exchange 
     form provided under subparagraph (B).
       ``(B) Procedures under which each child support order 
     issued or modified in the State after the effective date of 
     this subparagraph shall require the parents subject to the 
     order to provide each other with a complete statement of 
     their respective financial condition annually on a form which 
     shall be established by the Secretary and provided by the 
     State. The Secretary shall establish regulations for the 
     enforcement of such exchange of information.''.

                CHAPTER 7--ENFORCEMENT OF SUPPORT ORDERS

     SEC. 9461. FEDERAL INCOME TAX REFUND OFFSET.

       (a) Changed Order of Refund Distribution Under Internal 
     Revenue Code.--Section 6402(c) of the Internal Revenue Code 
     of 1986 is amended by striking the 3rd sentence.
       (b) Elimination of Disparities in Treatment of Assigned and 
     Non-Assigned Arrearages.--(1) Section 464(a) (42 U.S.C. 
     664(a)) is amended--
       (A) by striking ``(a)'' and inserting ``(a) Offset 
     Authorized.--'';
       (B) in paragraph (1)--
       (i) in the first sentence, by striking ``which has been 
     assigned to such State pursuant to section 402(a)(26) or 
     section 471(a)(17)''; and
       (ii) in the second sentence, by striking ``in accordance 
     with section 457 (b)(4) or (d)(3)'' and inserting ``as 
     provided in paragraph (2)'';
       (C) in paragraph (2), to read as follows:
       ``(2) The State agency shall distribute amounts paid by the 
     Secretary of the Treasury pursuant to paragraph (1)--
       ``(A) in accordance with section 457(a)(4) or (d)(3), in 
     the case of past-due support assigned to a State pursuant to 
     section 403(b)(1)(E)(i) or 471(a)(17); and
       ``(B) to or on behalf of the child to whom the support was 
     owed, in the case of past-due support not so assigned.'';
       (D) in paragraph (3)--
       (i) by striking ``or (2)'' each place it appears; and
       (ii) in subparagraph (B), by striking ``under paragraph 
     (2)'' and inserting ``on account of past-due support 
     described in paragraph (2)(B)''.
       (2) Section 464(b) (42 U.S.C. 664(b)) is amended--
       (A) by striking ``(b)(1)'' and inserting ``(b) 
     Regulations.--''; and
       (B) by striking paragraph (2).
       (3) Section 464(c) (42 U.S.C. 664(c)) is amended--
       (A) by striking ``(c)(1) Except as provided in paragraph 
     (2), as'' and inserting ``(c) Definition.--As''; and
       (B) by striking paragraphs (2) and (3).
       (c) Effective Date.--The amendments made by this section 
     shall become effective October 1, 1999.

     SEC. 9462. INTERNAL REVENUE SERVICE COLLECTION OF ARREARS.

       (a) Amendment to Internal Revenue Code.--Section 6305(a) of 
     the Internal Revenue Code of 1986 is amended--

[[Page H11310]]

       (1) in paragraph (1), by inserting ``except as provided in 
     paragraph (5)'' after ``collected'';
       (2) by striking ``and'' at the end of paragraph (3);
       (3) by striking the period at the end of paragraph (4) and 
     inserting a comma;
       (4) by adding after paragraph (4) the following new 
     paragraph:
       ``(5) no additional fee may be assessed for adjustments to 
     an amount previously certified pursuant to such section 
     452(b) with respect to the same obligor.''; and
       (5) by striking ``Secretary of Health, Education, and 
     Welfare'' each place it appears and inserting ``Secretary of 
     Health and Human Services''.
       (b) Effective Date.--The amendments made by this section 
     shall become effective October 1, 1997.

     SEC. 9463. AUTHORITY TO COLLECT SUPPORT FROM FEDERAL 
                   EMPLOYEES.

       (a) Consolidation and Streamlining of Authorities.--
       (1) Section 459 (42 U.S.C. 659) is amended in the caption 
     by inserting ``income withholding,'' before ``garnishment''.
       (2) Section 459(a) (42 U.S.C. 659(a)) is amended--
       (A) by striking ``(a)'' and inserting ``(a) Consent To 
     Support Enforcement.--
       (B) by striking ``section 207'' and inserting ``section 207 
     of this Act and 38 U.S.C. 5301''; and
       (C) by striking all that follows ``a private person,'' and 
     inserting ``to withholding in accordance with State law 
     pursuant to subsections (a)(1) and (b) of section 466 and 
     regulations of the Secretary thereunder, and to any other 
     legal process brought, by a State agency administering a 
     program under this part or by an individual obligee, to 
     enforce the legal obligation of such individual to provide 
     child support or alimony.''.
       (3) Section 459(b) (42 U.S.C. 659(b)) is amended to read as 
     follows:
       ``(b) Consent to Requirements Applicable to Private 
     Person.-- Except as otherwise provided herein, each entity 
     specified in subsection (a) shall be subject, with respect to 
     notice to withhold income pursuant to subsection (a)(1) or 
     (b) of section 466, or to any other order or process to 
     enforce support obligations against an individual (if such 
     order or process contains or is accompanied by sufficient 
     data to permit prompt identification of the individual and 
     the moneys involved), to the same requirements as would apply 
     if such entity were a private person.''.
       (4) Section 459(c) (42 U.S.C. 659(c)) is redesignated and 
     relocated as paragraph (2) of subsection (f), and is 
     amended--
       (A) by striking ``responding to interrogatories pursuant to 
     requirements imposed by section 461(b)(3)'' and inserting 
     ``taking actions necessary to comply with the requirements of 
     subsection (A) with regard to any individual''; and
       (B) by striking ``any of his duties'' and all that follows 
     and inserting ``such duties.''.
       (5) Section 461 (42 U.S.C. 661) is amended by striking 
     subsection (b), and section 459 (42 U.S.C. 659) is amended by 
     inserting after subsection (b) (as added by paragraph (3) of 
     this subsection) the following:
       ``(c) Designation of Agent; Response to Notice or 
     Process.--(1) The head of each agency subject to the 
     requirements of this section shall--
       ``(A) designate an agent or agents to receive orders and 
     accept service of process; and
       ``(B) publish (i) in the appendix of such regulations, (ii) 
     in each subsequent republication of such regulations, and 
     (iii) annually in the Federal Register, the designation of 
     such agent or agents, identified by title of position, 
     mailing address, and telephone number.''.
       (6) Section 459 (42 U.S.C. 659) is amended by striking 
     subsection (d) and by inserting after subsection (c)(1) (as 
     added by paragraph (5) of this subsection) the following:
       ``(2) Whenever an agent designated pursuant to paragraph 
     (1) receives notice pursuant to subsection (a)(1) or (b) of 
     section 466, or is effectively served with any order, 
     process, or interrogatories, with respect to an individual's 
     child support or alimony payment obligations, such agent 
     shall--
       ``(A) as soon as possible (but not later than fifteen days) 
     thereafter, send written notice of such notice or service 
     (together with a copy thereof) to such individual at his duty 
     station or last-known home address;
       ``(B) within 30 days (or such longer period as may be 
     prescribed by applicable State law) after receipt of a notice 
     pursuant to subsection (a)(1) or (b) of section 466, comply 
     with all applicable provisions of such section 466; and
       ``(C) within 30 days (or such longer period as may be 
     prescribed by applicable State law) after effective service 
     of any other such order, process, or interrogatories, respond 
     thereto.''.
       (7) Section 461 (42 U.S.C. 661) is amended by striking 
     subsection (c), and section 459 (42 U.S.C. 659) is amended by 
     inserting after subsection (c) (as added by paragraph (5) and 
     amended by paragraph (6) of this subsection) the following:
       ``(d) Priority of Claims.--In the event that a governmental 
     entity receives notice or is served with process, as provided 
     in this section, concerning amounts owed by an individual to 
     more than one person--
       ``(1) support collection under section 466(b) must be given 
     priority over any other process, as provided in section 
     466(b)(7);
       ``(2) allocation of moneys due or payable to an individual 
     among claimants under section 466(b) shall be governed by the 
     provisions of such section 466(b) and regulations thereunder; 
     and
       ``(3) such moneys as remain after compliance with 
     subparagraphs (A) and (B) shall be available to satisfy any 
     other such processes on a first-come, first-served basis, 
     with any such process being satisfied out of such moneys as 
     remain after the satisfaction of all such processes which 
     have been previously served.''.
       (8) Section 459(e) (42 U.S.C. 659(e)) is amended by 
     striking ``(e)'' and inserting the following:
       ``(e) No Requirement To Vary Pay Cycles.--''.
       (9) Section 459(f) (42 U.S.C. 659(f)) is amended by 
     striking ``(f)'' and inserting the following:
       ``(f) Relief From Liability.--(1)''.
       (10) Section 461(a) (42 U.S.C. 661(a)) is redesignated and 
     relocated as section 459(g), and is amended--
       (A) by striking ``(g)'' and inserting the following:
       ``(g) Regulations.--''; and
       (B) by striking ``section 459'' and inserting ``this 
     section''.
       (11) Section 462 (42 U.S.C. 662) is amended by striking 
     subsection (f), and section 459 (42 U.S.C. 659) is amended by 
     inserting the following after subsection (g) (as added by 
     paragraph (10) of this subsection):
       ``(h) Moneys Subject to Process.--(1) Subject to subsection 
     (i), moneys paid or payable to an individual which are 
     considered to be based upon remuneration for employment, for 
     purposes of this section--
       ``(A) consist of--
       ``(i) compensation paid or payable for personal services of 
     such individual, whether such compensation is denominated as 
     wages, salary, commission, bonus, pay, allowances, or 
     otherwise (including severance pay, sick pay, and incentive 
     pay);
       ``(ii) periodic benefits (including a periodic benefit as 
     defined in section 228(h)(3)) or other payments--
       ``(I) under the insurance system established by title II;
       ``(II) under any other system or fund established by the 
     United States which provides for the payment of pensions, 
     retirement or retired pay, annuities, dependents' or 
     survivors' benefits, or similar amounts payable on account of 
     personal services performed by the individual or any other 
     individual;
       ``(III) as compensation for death under any Federal 
     program;
       ``(IV) under any Federal program established to provide 
     `black lung' benefits; or
       ``(V) by the Secretary of Veterans Affairs as pension, or 
     as compensation for a service-connected disability or death 
     (except any compensation paid by such Secretary to a former 
     member of the Armed Forces who is in receipt of retired or 
     retainer pay if such former member has waived a portion of 
     his retired pay in order to receive such compensation); and
       ``(iii) worker's compensation benefits paid under Federal 
     or State law; but
       ``(B) do not include any payment--
       ``(i) by way of reimbursement or otherwise, to defray 
     expenses incurred by such individual in carrying out duties 
     associated with his employment; or
       ``(ii) as allowances for members of the uniformed services 
     payable pursuant to chapter 7 of title 37, United States 
     Code, as prescribed by the Secretaries concerned (defined by 
     section 101(5) of such title) as necessary for the efficient 
     performance of duty.''.
       (12) Section 462(g) (42 U.S.C. 662(g)) is redesignated and 
     relocated as section 459(i) (42 U.S.C. 659(i)).
       (13)(A) Section 462 (42 U.S.C. 662) is amended--
       (i) in subsection (e)(1), by redesignating subparagraphs 
     (A), (B), and (C) as clauses (i), (ii), and (iii); and
       (ii) in subsection (e), by redesignating paragraphs (1) and 
     (2) as subparagraphs (A) and (B).
       (B) Section 459 (42 U.S.C. 659) is amended by adding at the 
     end the following:
       ``(j) Definitions.--For purposes of this sec- tion--''.
       (C) Subsections (a) through (e) of section 462 (42 U.S.C. 
     662), as amended by subparagraph (A) of this paragraph, are 
     relocated and redesignated as paragraphs (1) through (4), 
     respectively of section 459(j) (as added by subparagraph (B) 
     of this paragraph, (42 U.S.C. 659(j)), and the left margin of 
     each of such paragraphs (1) through (4) is indented 2 ems to 
     the right of the left margin of subsection (i) (as added by 
     paragraph (12) of this subsection).
       (b) Conforming Amendments.--
       (1) To part d of title iv.--Sections 461 and 462 (42 U.S.C. 
     661), as amended by subsection (a) of this section, are 
     repealed.
       (2) To title 5, united states code.--Section 5520a of title 
     5, United States Code, is amended, in subsections (h)(2) and 
     (i), by striking ``sections 459, 461, and 462 of the 
     Social Security Act (42 U.S.C. 659, 661, and 662)'' and 
     inserting ``section 459 of the Social Security Act (42 
     U.S.C. 659)''.
       (c) Military Retired and Retainer Pay.--(1) Definition of 
     Court.--Section 1408(a)(1) of title 10, United States Code, 
     is amended--
       (A) by striking ``and'' at the end of subparagraph (B);
       (B) by striking the period at the end of subparagraph (C) 
     and inserting ``; and''; and
       (C) by adding after subparagraph (C) the following new 
     paragraph:
       ``(D) any administrative or judicial tribunal of a State 
     competent to enter orders for support or maintenance 
     (including a State agency administering a State program under 


[[Page H11311]]

     part D of title IV of the Social Security Act).'';
       (2) Definition of Court Order.--Section 1408(a)(2) of such 
     title is amended by inserting ``or a court order for the 
     payment of child support not included in or accompanied by 
     such a decree or settlement,'' before ``which--''.
       (3) Public Payee.--Section 1408(d) of such title is 
     amended--
       (A) in the heading, by striking ``to spouse'' and inserting 
     ``to (or for benefit of)''; and
       (B) in paragraph (1), in the first sentence, by inserting 
     ``(or for the benefit of such spouse or former spouse to a 
     State central collections unit or other public payee 
     designated by a State, in accordance with part D of title IV 
     of the Social Security Act, as directed by court order, or as 
     otherwise directed in accordance with such part D)'' before 
     ``in an amount sufficient''.
       (4) Relationship to Part D of Title IV.--Section 1408 of 
     such title is amended by adding at the end the following new 
     subsection:
       ``(j) Relationship to Other Laws.--In any case involving a 
     child support order against a member who has never been 
     married to the other parent of the child, the provisions of 
     this section shall not apply, and the case shall be subject 
     to the provisions of section 459 of the Social Security 
     Act.''.
       (d) Effective Date.--The amendments made by this section 
     shall become effective 6 months after the date of the 
     enactment of this Act.

     SEC. 9464. ENFORCEMENT OF CHILD SUPPORT OBLIGATIONS OF 
                   MEMBERS OF THE ARMED FORCES.

       (a) Availability of Locator Information.--
       (1) Maintenance of address information.--The Secretary of 
     Defense shall establish a centralized personnel locator 
     service that includes the address of each member of the Armed 
     Forces under the jurisdiction of the Secretary. Upon request 
     of the Secretary of Transportation, addresses for members of 
     the Coast Guard shall be included in the centralized 
     personnel locator service.
       (2) Type of address.--
       (A) Residential address.--Except as provided in 
     subparagraph (B), the address for a member of the Armed 
     Forces shown in the locator service shall be the residential 
     address of that member.
       (B) Duty address.--The address for a member of the Armed 
     Forces shown in the locator service shall be the duty address 
     of that member in the case of a member--
       (i) who is permanently assigned overseas, to a vessel, or 
     to a routinely deployable unit; or
       (ii) with respect to whom the Secretary concerned makes a 
     determination that the member's residential address should 
     not be disclosed due to national security or safety concerns.
       (3) Updating of locator information.--Within 30 days after 
     a member listed in the locator service establishes a new 
     residential address (or a new duty address, in the case of a 
     member covered by paragraph (2)(B)), the Secretary concerned 
     shall update the locator service to indicate the new address 
     of the member.
       (4) Availability of information.--The Secretary of Defense 
     shall make information regarding the address of a member of 
     the Armed Forces listed in the locator service available, on 
     request, to the Federal Parent Locator Service.
       (b) Facilitating Granting of Leave for Attendance at 
     Hearings.--
       (1) Regulations.--The Secretary of each military 
     department, and the Secretary of Transportation with respect 
     to the Coast Guard when it is not operating as a service in 
     the Navy, shall prescribe regulations to facilitate the 
     granting of leave to a member of the Armed Forces under the 
     jurisdiction of that Secretary in a case in which--
       (A) the leave is needed for the member to attend a hearing 
     described in paragraph (2);
       (B) the member is not serving in or with a unit deployed in 
     a contingency operation (as defined in section 101 of title 
     10, United States Code); and
       (C) the exigencies of military service (as determined by 
     the Secretary concerned) do not otherwise require that such 
     leave not be granted.
       (2) Covered hearings.--Paragraph (1) applies to a hearing 
     that is conducted by a court or pursuant to an administrative 
     process established under State law, in connection with a 
     civil action--
       (A) to determine whether a member of the Armed Forces is a 
     natural parent of a child; or
       (B) to determine an obligation of a member of the Armed 
     Forces to provide child support.
       (3) Definitions.--For purposes of this subsection:
       (A) The term ``court'' has the meaning given that term in 
     section 1408(a) of title 10, United States Code.
       (B) The term ``child support'' has the meaning given such 
     term in section 462 of the Social Security Act (42 U.S.C. 
     662).
       (c) Payment of Military Retired Pay in Compliance With 
     Child Support Orders.--
       (1) Date of certification of court order.--Section 1408 of 
     title 10, United States Code, is amended--
       (A) by redesignating subsection (i) as subsection (j); and
       (B) by inserting after subsection (h) the following new 
     subsection (i):
       ``(i) Certification Date.--It is not necessary that the 
     date of a certification of the authenticity or completeness 
     of a copy of a court order or an order of an administrative 
     process established under State law for child support 
     received by the Secretary concerned for the purposes of this 
     section be recent in relation to the date of receipt by the 
     Secretary.''.
       (2) Payments consistent with assignments of rights to 
     states.--Section 1408(d)(1) of such title is amended by 
     inserting after the first sentence the following: ``In the 
     case of a spouse or former spouse who, pursuant to section 
     403(b)(1)(E)(i) of the Social Security Act, assigns to a 
     State the rights of the spouse or former spouse to receive 
     support, the Secretary concerned may make the child support 
     payments referred to in the preceding sentence to that State 
     in amounts consistent with that assignment of rights.''.
       (3) Arrearages owed by members of the uniformed services.--
     Section 1408(d) of such title is amended by adding at the end 
     the following new paragraph:
       ``(6) In the case of a court order or an order of an 
     administrative process established under State law for which 
     effective service is made on the Secretary concerned on or 
     after the date of the enactment of this paragraph and which 
     provides for payments from the disposable retired pay of a 
     member to satisy the amount of child support set forth in 
     the order, the authority provided in paragraph (1) to make 
     payments from the disposable retired pay of a member to 
     satisy the amount of child support set forth in a court 
     order or an order of an administrative process established 
     under State law shall apply to payment of any amount of 
     child support arrearages set forth in that order as well 
     as to amounts of child support that currently become 
     due.''.

     SEC. 9465. MOTOR VEHICLE LIENS.

       Section 466(a)(4) (42 U.S.C. 666(a)(4)) is amended--
       (1) by striking ``(4) Procedures'' and inserting the 
     following:
       ``(4) Liens.--
       ``(A) In general.--Procedures''; and
       (2) by adding at the end the following new subparagraph:
       ``(B) Motor vehicle liens.--Procedures for placing liens 
     for arrears of child support on motor vehicle titles of 
     individuals owing such arrears equal to or exceeding two 
     months of support, under which--
       ``(i) any person owed such arrears may place such a lien;
       ``(ii) the State agency administering the program under 
     this part shall systematically place such liens;
       ``(iii) expedited methods are provided for--

       ``(I) ascertaining the amount of arrears;
       ``(II) affording the person owing the arrears or other 
     titleholder to contest the amount of arrears or to obtain a 
     release upon fulfilling the support obligation;

       ``(iv) such a lien has precedence over all other 
     encumbrances on a vehicle title other than a purchase money 
     security interest; and
       ``(v) the individual or State agency owed the arrears may 
     execute on, seize, and sell the property in accordance with 
     State law.''.

     SEC. 9466. VOIDING OF FRAUDULENT TRANSFERS.

       Section 466(a) (42 U.S.C. 666(a)), as amended by sections 
     9401(a), 9426(a), 9431, and 9442 of this Act, is amended by 
     inserting after paragraph (15) the following:
       ``(16) Fraudulent transfers.--Procedures under which--
       ``(A) the State has in effect--
       ``(i) the Uniform Fraudulent Conveyance Act of 1981,
       ``(ii) the Uniform Fraudulent Transfer Act of 1984, or
       ``(iii) another law, specifying indicia of fraud which 
     create a prima facie case that a debtor transferred income or 
     property to avoid payment to a child support creditor, which 
     the Secretary finds affords comparable rights to child 
     support creditors; and
       ``(B) in any case in which the State knows of a transfer by 
     a child support debtor with respect to which such a prima 
     facie case is established, the State must--
       ``(i) seek to void such transfer; or
       ``(ii) obtain a settlement in the best interests of the 
     child support creditor.''.

     SEC. 9467. STATE LAW AUTHORIZING SUSPENSION OF LICENSES.

       Section 466(a) (42 U.S.C. 666(a)), as amended by sections 
     9401(a), 9426(a), 9431, 9442, and 9466 of this Act, is 
     amended by inserting after paragraph (16) the following:
       ``(17) Authority to withhold or suspend licenses.--
     Procedures under which the State has (and uses in appropriate 
     cases) authority (subject to appropriate due process 
     safeguards) to withhold or suspend, or to restrict the use of 
     driver's licenses, and professional and occupational licenses 
     of individuals owing overdue child support or failing, after 
     receiving appropriate notice, to comply with subpoenas or 
     warrants relating to paternity or child support 
     proceedings.''.

     SEC. 9468. REPORTING ARREARAGES TO CREDIT BUREAUS.

       Section 466(a)(7) (42 U.S.C. 666(a)(7)) is amended to read 
     as follows:
       ``(7) Reporting arrearages to credit bureaus.--(A) 
     Procedures (subject to safeguards pursuant to subparagraph 
     (B)) requiring the State to report periodically to consumer 
     reporting agencies (as defined in section 603(f) of the Fair 
     Credit Reporting Act (15 U.S.C. 1681a(f)) the name of any 
     absent parent who is delinquent by 90 days or more in the 
     payment of support, and the amount of overdue support owed by 
     such parent.

[[Page H11312]]

       ``(B) Procedures ensuring that, in carrying out 
     subparagraph (A), information with respect to an absent 
     parent is reported--
       ``(i) only after such parent has been afforded all due 
     process required under State law, including notice and a 
     reasonable opportunity to contest the accuracy of such 
     information; and
       ``(ii) only to an entity that has furnished evidence 
     satisfactory to the State that the entity is a consumer 
     reporting agency.''.

     SEC. 9469. EXTENDED STATUTE OF LIMITATION FOR COLLECTION OF 
                   ARREARAGES.

       (a) Amendments.--Section 466(a)(9) (42 U.S.C. 666(a)(9)) is 
     amended--
       (1) by striking ``(9) Procedures'' and inserting the 
     following:
       ``(9) Legal treatment of arrears.--
       ``(A) Finality.--Procedures'';
       (2) by redesignating subparagraphs (A), (B), and (C) as 
     clauses (i), (ii), and (iii), respectively, and by indenting 
     each of such clauses 2 additional ems to the right; and
       (3) by adding after and below subparagraph (A), as 
     redesignated, the following new subparagraph:
       ``(B) Statute of limitations.--Procedures under which the 
     statute of limitations on any arrearages of child support 
     extends at least until the child owed such support is 30 
     years of age.''.
       (b) Application of Requirement.--The amendment made by this 
     section shall not be read to require any State law to revive 
     any payment obligation which had lapsed prior to the 
     effective date of such State law.

     SEC. 9470. CHARGES FOR ARREARAGES.

       (a) State Law Requirement.--Section 466(a) (42 U.S.C. 
     666(a)), as amended by sections 9401(a), 9426(a), 9431, 9442, 
     9466, and 9467 of this Act, is amended by inserting after 
     paragraph (17) the following:
       ``(18) Charges for arrearages.--Procedures providing for 
     the calculation and collection of interest or penalties for 
     arrearages of child support, and for distribution of such 
     interest or penalties collected for the benefit of the child 
     (except where the right to support has been assigned to the 
     State).''.
       (b) Regulations.--The Secretary of Health and Human 
     Services shall establish by regulation a rule to resolve 
     choice of law conflicts arising in the implementation of the 
     amendment made by subsection (a).
       (c) Conforming Amendment.--Section 454(21) (42 U.S.C. 
     654(21)) is repealed.
       (d) Effective Date.--The amendments made by this section 
     shall be effective with respect to arrearages accruing on or 
     after October 1, 1998.

     SEC. 9471. DENIAL OF PASSPORTS FOR NONPAYMENT OF CHILD 
                   SUPPORT.

       (a) HHS Certification Procedure.--
       (1) Secretarial responsibility.--Section 452 (42 U.S.C. 
     652), as amended by sections 9415(a)(3) and 9417 of this Act, 
     is amended by adding at the end the following new subsection:
       ``(l) Certifications for Purposes of Passport 
     Restrictions.--
       ``(1) In general.--Where the Secretary receives a 
     certification by a State agency in accordance with the 
     requirements of section 454(28) that an individual owes 
     arrearages of child support in an amount exceeding $5,000 or 
     in an amount exceeding 24 months' worth of child support, the 
     Secretary shall transmit such certification to the Secretary 
     of State for action (with respect to denial, revocation, or 
     limitation of passports) pursuant to section 9471(b) of the 
     Omnibus Budget Reconciliation Act of 1995.
       ``(2) Limit on liability.--The Secretary shall not be 
     liable to an individual for any action with respect to a 
     certification by a State agency under this section.''.
       (2) State cse agency responsibility.--Section 454 (42 
     U.S.C. 654), as amended by sections 9404(a), 9414(b), and 
     9422(a) of this Act, is amended--
       (A) by striking ``and'' at the end of paragraph (26);
       (B) by striking the period at the end of paragraph (27) and 
     inserting ``; and''; and
       (C) by adding after paragraph (27) the following new 
     paragraph:
       ``(28) provide that the State agency will have in effect a 
     procedure (which may be combined with the procedure for tax 
     refund offset under section 464) for certifying to the 
     Secretary, for purposes of the procedure under section 452(l) 
     (concerning denial of passports) determinations that 
     individuals owe arrearages of child support in an amount 
     exceeding $5,000 or in an amount exceeding 24 months' worth 
     of child support, under which procedure--
       ``(A) each individual concerned is afforded notice of such 
     determination and the consequences thereof, and an 
     opportunity to contest the determination; and
       ``(B) the certification by the State agency is furnished to 
     the Secretary in such format, and accompanied by such 
     supporting documentation, as the Secretary may require.''.
       (b) State Department Procedure for Denial of Passports.--
       (1) In general.--The Secretary of State, upon certification 
     by the Secretary of Health and Human Services, in accordance 
     with section 452(l) of the Social Security Act, that an 
     individual owes arrearages of child support in excess of 
     $5,000, shall refuse to issue a passport to such individual, 
     and may revoke, restrict, or limit a passport issued 
     previously to such individual.
       (2) Limit on liability.--The Secretary of State shall not 
     be liable to an individual for any action with respect to a 
     certification by a State agency under this section.
       (c) Effective Date.--This section and the amendments made 
     by this section shall become effective October 1, 1996.

     SEC. 9472. INTERNATIONAL CHILD SUPPORT ENFORCEMENT.

       (a) Sense of the Congress That the United States Should 
     Ratify the United Nations Convention of 1956.--It is the 
     sense of the Congress that the United States should ratify 
     the United Nations Convention of 1956.
       (b) Treatment of International Child Support Cases as 
     Interstate Cases.--Section 454 (42 U.S.C. 654), as amended by 
     sections 9404(a), 9414(b), 9422(a), and 9471(a)(2) of this 
     Act, is amended--
       (1) by striking ``and'' at the end of paragraph (27);
       (2) by striking the period at the end of paragraph (28) and 
     inserting ``; and''; and
       (3) by inserting after paragraph (28) the following:
       ``(29) provide that the State must treat international 
     child support cases in the same manner as the State treats 
     interstate child support cases.''.

     SEC. 9473. SEIZURE OF LOTTERY WINNINGS, SETTLEMENTS, PAYOUTS, 
                   AWARDS, AND BEQUESTS, AND SALE OF FORFEITED 
                   PROPERTY, TO PAY CHILD SUPPORT ARREARAGES.

       Section 466(a) (42 U.S.C. 666(a)), as amended by sections 
     9401(a), 9426(a), 9431, 9442, 9466, 9467, and 9470(a) of this 
     Act, is amended by inserting after paragraph (18) the 
     following:
       ``(19) Procedures, in addition to other income withholding 
     procedures, under which a lien is imposed against property 
     with the following effect:
       ``(A) The person required to make a payment under a policy 
     of insurance or a settlement of a claim made with respect to 
     the policy shall--
       ``(i) suspend the payment until an inquiry is made to and a 
     response received from the agency as to whether the person 
     otherwise entitled to the payment owes a child support 
     arrearage; and
       ``(ii) if there is such an arrearage, withhold from the 
     payment the lesser of the amount of the payment or the amount 
     of the arrearage, and pay the amount withheld to the agency 
     for distribution.
       ``(B) The payor of any amount pursuant to an award, 
     judgment, or settlement in any action brought in Federal or 
     State court shall--
       ``(i) suspend the payment of the amount until an inquiry is 
     made to and a response is received from the agency as to 
     whether the person otherwise entitled to the payment owes a 
     child support arrearage; and
       ``(ii) if there is such an arrearage, withhold from the 
     payment the lesser of the amount of the payment or the amount 
     of the arrearage, and pay the amount withheld to the agency 
     for distribution.
       ``(C) If the State seizes property forfeited to the State 
     by an individual by reason of a criminal conviction, the 
     State shall--
       ``(i) hold the property until an inquiry is made to and a 
     response is received from the agency as to whether the 
     individual owes a child support arrearage; and
       ``(ii) if there is such an arrearage, sell the property 
     and, after satisfying the claims of all other private or 
     public claimants to the property and deducting from the 
     proceeds of the sale the attendant costs (such as for towing, 
     storage, and the sale), pay the lesser of the remaining 
     proceeds or the amount of the arrearage directly to the 
     agency for distribution.
       ``(D) Any person required to make a payment in respect of a 
     decedent shall--
       ``(i) suspend the payment until an inquiry is made to and a 
     response received from the agency as to whether the person 
     otherwise entitled to the payment owes a child support 
     arrearage; and
       ``(ii) if there is such an arrearage, withhold from the 
     payment the lesser of the amount of the payment or the amount 
     of the arrearage, and pay the amount withheld to the agency 
     for distribution.''.

     SEC. 9474. LIABILITY OF GRANDPARENTS FOR FINANCIAL SUPPORT OF 
                   CHILDREN OF THEIR MINOR CHILDREN.

       Section 466(a) (42 U.S.C. 666(a)), as amended by sections 
     9401(a), 9426(a), 9431, 9442, 9466, 9467, 9470(a), and 9473 
     of this Act, is amended by inserting after paragraph (19) the 
     following:
       ``(20) Procedures under which each parent of an individual 
     who has not attained 18 years of age is liable for the 
     financial support of any child of the individual to the 
     extent that the individual is unable to provide such support. 
     The preceding sentence shall not apply to the State if the 
     State plan explicitly provides for such 
     inapplicability.''.

     SEC. 9475. SENSE OF THE CONGRESS REGARDING PROGRAMS FOR 
                   NONCUSTODIAL PARENTS UNABLE TO MEET CHILD 
                   SUPPORT OBLIGATIONS.

       It is the sense of the Congress that the States should 
     develop programs, such as the program of the State of 
     Wisconsin known as the ``Children's First Program'', that are 
     designed to work with noncustodial parents who are unable to 
     meet their child support obligations.

                       CHAPTER 8--MEDICAL SUPPORT

     SEC. 9481. TECHNICAL CORRECTION TO ERISA DEFINITION OF 
                   MEDICAL CHILD SUPPORT ORDER.

       (a) In General.--Section 609(a)(2)(B) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 
     1169(a)(2)(B)) is amended--
       (1) by striking ``issued by a court of competent 
     jurisdiction'';
       (2) by striking the period at the end of clause (ii) and 
     inserting a comma; and
       (3) by adding, after and below clause (ii), the following:

[[Page H11313]]

     ``if such judgment, decree, or order (I) is issued by a court 
     of competent jurisdiction or (II) is issued by an 
     administrative adjudicator and has the force and effect of 
     law under applicable State law.''.
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     take effect on the date of the enactment of this Act.
       (2) Plan amendments not required until january 1, 1996.--
     Any amendment to a plan required to be made by an amendment 
     made by this section shall not be required to be made before 
     the first plan year beginning on or after January 1, 1996, 
     if--
       (A) during the period after the date before the date of the 
     enactment of this Act and before such first plan year, the 
     plan is operated in accordance with the requirements of the 
     amendments made by this section, and
       (B) such plan amendment applies retroactively to the period 
     after the date before the date of the enactment of this Act 
     and before such first plan year.

     A plan shall not be treated as failing to be operated in 
     accordance with the provisions of the plan merely because it 
     operates in accordance with this paragraph.

               CHAPTER 9--FOOD STAMP PROGRAM REQUIREMENTS

     SEC. 9491. COOPERATION WITH CHILD SUPPORT AGENCIES.

       Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015) is 
     amended adding at the end the following:
       ``(i) Custodial Parent's Cooperation With Child Support 
     Agencies.--
       ``(1) In general.--At the option of a State agency, subject 
     to paragraphs (2) and (3), no natural or adoptive parent or 
     other individual (collectively referred to in this subsection 
     as `the individual') who is living with and exercising 
     parental control over a child under the age of 18 who has an 
     absent parent shall be eligible to participate in the food 
     stamp program unless the individual cooperates with the State 
     agency administering the program established under part D of 
     title IV of the Social Security Act (42 U.S.C. 651 et seq.)--
       ``(A) in establishing the paternity of the child (if the 
     child is born out of wedlock); and
       ``(B) in obtaining support for--
       ``(i) the child; or
       ``(ii) the individual and the child.
       ``(2) Good cause for noncooperation.--Paragraph (1) shall 
     not apply to the individual if good cause is found for 
     refusing to cooperate, as determined by the State agency in 
     accordance with standards prescribed by the Secretary in 
     consultation with the Secretary of Health and Human Services. 
     The standards shall take into consideration circumstances 
     under which cooperation may be against the best interests of 
     the child.
       ``(3) Fees.--Paragraph (1) shall not require the payment of 
     a fee or other cost for services provided under part D of 
     title IV of the Social Security Act (42 U.S.C. 651 et seq.).
       ``(j) Non-Custodial Parent's Cooperation With Child Support 
     Agencies.--
       ``(1) In general.--At the option of a State agency, subject 
     to paragraphs (2) and (3), a putative or identified non-
     custodial parent of a child under the age of 18 (referred to 
     in this subsection as `the individual') shall not be eligible 
     to participate in the food stamp program if the individual 
     refuses to cooperate with the State agency administering the 
     program established under part D of title IV of the Social 
     Security Act (42 U.S.C. 651 et seq.)--
       ``(A) in establishing the paternity of the child (if the 
     child is born out of wedlock); and
       ``(B) in providing support for the child.
       ``(2) Refusal to cooperate.--
       ``(A) Guidelines.--The Secretary, in consultation with the 
     Secretary of Health and Human Services, shall develop 
     guidelines on what constitutes a refusal to cooperate under 
     paragraph (1).
       ``(B) Procedures.--The State agency shall develop 
     procedures, using guidelines developed under subparagraph 
     (A), for determining whether an individual is refusing to 
     cooperate under paragraph (1).
       ``(3) Fees.--Paragraph (1) shall not require the payment of 
     a fee or other cost for services provided under part D of 
     title IV of the Social Security Act (42 U.S.C. 651 et seq.).
       ``(4) Privacy.--The State agency shall provide safeguards 
     to restrict the use of information collected by a State 
     agency administering the program established under part D of 
     title IV of the Social Security Act (42 U.S.C. 651 et seq.) 
     to purposes for which the information is collected.''.

     SEC. 9492. DISQUALIFICATION FOR CHILD SUPPORT ARREARS.

       Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as 
     amended by section 9491 of this Act, is amended by adding at 
     the end the following:
       ``(k) Disqualification for Child Support Arrears.--
       ``(1) In general.--At the option of a State agency, except 
     as provided in paragraph (2), no individual shall be eligible 
     to participate in the food stamp program as a member of any 
     household during any month that the individual is delinquent 
     in any payment due under a court order for the support of a 
     child of the individual.
       ``(2) Exceptions.--Paragraph (1) shall not apply if--
       ``(A) a court is allowing the individual to delay payment; 
     or
       ``(B) the individual is complying with a payment plan 
     approved by a court or the State agency designated under part 
     D of title IV of the Social Security Act (42 U.S.C. 651 et 
     seq.) to provide support for the child of the individual.''.

                    CHAPTER 10--EFFECT OF ENACTMENT

     SEC. 9498. EFFECTIVE DATES.

       (a) In General.--Except as otherwise specifically provided 
     (but subject to subsections (b) and (c))--
       (1) provisions of this title requiring enactment or 
     amendment of State laws under section 466 of the Social 
     Security Act, or revision of State plans under section 454 of 
     such Act, shall be effective with respect to periods 
     beginning on and after October 1, 1996; and
       (2) all other provisions of this title shall become 
     effective upon enactment.
       (b) Grace Period for State Law Changes.--The provisions of 
     this title shall become effective with respect to a State on 
     the later of--
       (1) the date specified in this title, or
       (2) the effective date of laws enacted by the legislature 
     of such State implementing such provisions,

     but in no event later than the first day of the first 
     calendar quarter beginning after the close of the first 
     regular session of the State legislature that begins after 
     the date of enactment of this Act. For purposes of the 
     previous sentence, in the case of a State that has a 2-year 
     legislative session, each year of such session shall be 
     deemed to be a separate regular session of the State 
     legislature.
       (c) Grace Period for State Constitutional Amendment.--A 
     State shall not be found out of compliance with any 
     requirement enacted by this title if it is unable to comply 
     without amending the State constitution until the earlier 
     of--
       (1) the date one year after the effective date of the 
     necessary State constitutional amendment, or
       (2) the date five years after enactment of this title.

     SEC. 9499. SEVERABILITY.

       If any provision of this title or the application thereof 
     to any person or circumstance is held invalid, the invalidity 
     shall not affect other provisions or applications of this 
     title which can be given effect without regard to the invalid 
     provision or application, and to this end the provisions of 
     this title shall be severable.
            Subtitle E--Teen Pregnancy And Family Stability

     SEC. 9501. STATE OPTION TO DENY TEMPORARY EMPLOYMENT 
                   ASSISTANCE FOR ADDITIONAL CHILDREN.

       (a) In General.--Section 402(d)(1), as added by section 
     9101(a) of this Act, is amended--
       (1) by striking ``(1) Determination of need.--'' and 
     inserting the following:
       ``(1) Determination of need.--
       ``(A) In general.--''; and
       (2) by adding at the end the following:
       ``(B) Optional denial of assistance to families having 
     additional children while receiving assistance.--At the 
     option of the State, the State plan may provide that--
       ``(i)(I) a child shall not be considered a needy child if 
     the child is born (other than as a result of rape or incest) 
     to a member of a family--

       ``(aa) while the family was a recipient of assistance under 
     the State plan; or
       ``(bb) during the 6-month period ending with the date the 
     family applied for such assistance; and

       ``(II) if the value of assistance to a family under the 
     State plan approved under this part is reduced by reason of 
     subclause (I), each member of the family shall be considered 
     to be receiving such assistance for purposes of eligibility 
     for medical assistance under the State plan approved under 
     title XIX for so long as assistance to the family under the 
     State plan approved under this part would otherwise not be so 
     reduced; and
       ``(ii) if the State exercises the option, the State may 
     provide the family with vouchers, in amounts not exceeding 
     the amount of any such reduction in assistance, that may be 
     used only to pay for particular goods and services specified 
     by the State as suitable for the care of the child of the 
     parent (such as diapers, clothing, or school supplies).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     of this section shall take effect in the same manner as the 
     amendment made by section 9101(a) takes effect.

     SEC. 9502. SUPERVISED LIVING ARRANGEMENTS FOR MINORS.

       (a) In General.--Section 402(c), as added by section 
     9101(a) of this Act, is amended by adding at the end the 
     following:
       ``(8) Supervised living arrangements for minors.--The State 
     plan shall provide that--
       ``(A) except as provided in subparagraph (B), in the case 
     of any individual who is under age 18 and has never married, 
     and who has a needy child in his or her care (or is pregnant 
     and is eligible for temporary employment assistance under the 
     State plan)--
       ``(i) such individual may receive such assistance for the 
     individual and such child (or for herself in the case of a 
     pregnant woman) only if such individual and child (or such 
     pregnant woman) reside in a place of residence maintained by 
     a parent, legal guardian, or other adult relative of such 
     individual as such parent's, guardian's, or adult relative's 
     own home; and
       ``(ii) such assistance (where possible) shall be provided 
     to the parent, legal guardian, or other adult relative on 
     behalf of such individual and child; and
       ``(B)(i) in the case of an individual described in clause 
     (ii)--

[[Page H11314]]

       ``(I) the State agency shall assist such individual in 
     locating an appropriate adult-supervised supportive living 
     arrangement taking into consideration the needs and concerns 
     of the individual, unless the State agency determines that 
     the individual's current living arrangement is appropriate, 
     and thereafter shall require that the individual (and child, 
     if any) reside in such living arrangement as a condition of 
     the continued receipt of assistance under the plan (or in an 
     alternative appropriate arrangement, should circumstances 
     change and the current arrangement cease to be appropriate), 
     or
       ``(II) if the State agency is unable, after making diligent 
     efforts, to locate any such appropriate living arrangement, 
     the State agency shall provide for comprehensive case 
     management, monitoring, and other social services consistent 
     with the best interests of the individual (and child) while 
     living independently (as determined by the State agency); and
       ``(ii) for purposes of clause (i), an individual is 
     described in this clause if--
       ``(I) such individual has no parent or legal guardian of 
     his or her own who is living and whose whereabouts are known;
       ``(II) no living parent or legal guardian of such 
     individual allows the individual to live in the home of such 
     parent or guardian;
       ``(III) the State agency determines that the physical or 
     emotional health of such individual or any needy child of the 
     individual would be jeopardized if such individual and such 
     needy child lived in the same residence with such 
     individual's own parent or legal guardian; or
       ``(IV) the State agency otherwise determines (in accordance 
     with regulations issued by the Secretary) that it is in the 
     best interest of the needy child to waive the requirement of 
     subparagraph (A) with respect to such individual.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     of this section shall take effect in the same manner as the 
     amendment made by section 9101(a) takes effect.

     SEC. 9503. NATIONAL CLEARINGHOUSE ON ADOLESCENT PREGNANCY.

       (a) In General.--Title XX (42 U.S.C. 1397-1397f), as 
     amended by section 9205(b) of this Act, is amended by adding 
     at the end the following:

     ``SEC. 2010. NATIONAL CLEARINGHOUSE ON ADOLESCENT PREGNANCY.

       ``(a) National Clearinghouse on Adolescent Pregnancy.--
       ``(1) Establishment.--The responsible Federal officials 
     shall establish, through grant or contract, a national center 
     for the collection and provision of programmatic information 
     and technical assistance that relates to adolescent pregnancy 
     prevention programs, to be known as the `National 
     Clearinghouse on Adolescent Pregnancy Prevention Programs'.
       ``(2) Functions.--The national center established under 
     paragraph (1) shall serve as a national information and data 
     clearinghouse, and as a training, technical assistance, and 
     material development source for adolescent pregnancy 
     prevention programs. Such center shall--
       ``(A) develop and maintain a system for disseminating 
     information on all types of adolescent pregnancy prevention 
     programs and on the state of adolescent pregnancy prevention 
     program development, including information concerning the 
     most effective model programs;
       ``(B) develop and sponsor a variety of training institutes 
     and curricula for adolescent pregnancy prevention program 
     staff;
       ``(C) identify model programs representing the various 
     types of adolescent pregnancy prevention programs;
       ``(D) develop technical assistance materials and activities 
     to assist other entities in establishing and improving 
     adolescent pregnancy prevention programs;
       ``(E) develop networks of adolescent pregnancy prevention 
     programs for the purpose of sharing and disseminating 
     information; and
       ``(F) conduct such other activities as the responsible 
     Federal officials find will assist in developing and carrying 
     out programs or activities to reduce adolescent pregnancy.
       ``(b) Funding.--The responsible Federal officials shall 
     make grants to eligible entities for the establishment and 
     operation of a National Clearinghouse on Adolescent Pregnancy 
     Prevention Programs under subsection (a) so that in the 
     aggregate the expenditures for such grants do not exceed 
     $2,000,000 for fiscal year 1996, $4,000,000 for fiscal year 
     1997, $8,000,000 for fiscal year 1998, and $10,000,000 for 
     fiscal year 1999 and each subsequent fiscal year.
       ``(c) Definitions.--As used in this section:
       ``(1) Adolescents.--The term `adolescents' means youth who 
     are ages 10 through 19.
       ``(2) Eligible entity.--The term `eligible entity' means a 
     partnership that includes--
       ``(A) a local education agency, acting on behalf of one or 
     more schools, together with
       ``(B) one or more community-based organizations, 
     institutions of higher education, or public or private 
     agencies or organizations.
       ``(3) Eligible area.--The term `eligible area' means a 
     school attendance area in which--
       ``(A) at least 75 percent of the children are from low-
     income families as that term is used in part A of title I of 
     the Elementary and Secondary Education Act of 1965; or
       ``(B) the number of children receiving assistance under a 
     State plan approved under part A of title IV of this Act is 
     substantial as determined by the responsible Federal 
     officials; or
       ``(C) the unmarried adolescent birth rate is high, as 
     determined by the responsible Federal officials.
       ``(4) School.--The term `school' means a public elementary, 
     middle, or secondary school.
       ``(5) Responsible federal officials.--The term `responsible 
     Federal officials' means the Secretary of Education, the 
     Secretary of Health and Human Services, and the Chief 
     Executive Officer of the Corporation for National and 
     Community Service.''.
       (b) Effective Date.--The amendment made by this section 
     shall become effective January 1, 1996.

     SEC. 9504. REQUIRED COMPLETION OF HIGH SCHOOL OR OTHER 
                   TRAINING FOR TEENAGE PARENTS.

       (a) In General.--Section 403(b)(1)(D), as added by section 
     9101(a) of this Act, is amended--
       (1) by inserting ``(i)'' after ``(D)''; and
       (2) by adding at the end the following:
       ``(ii) in the case of a client who is a custodial parent 
     who is under age 18 (or age 19, at the option of the State), 
     has not successfully completed a high-school education (or 
     its equivalent), and is required to participate in the Work 
     First program (including an individual who would otherwise be 
     exempt from participation in the program), shall provide 
     that--
       ``(I) such parent participate in--

       ``(aa) educational activities directed toward the 
     attainment of a high school diploma or its equivalent on a 
     full-time (as defined by the educational provider) basis; or
       ``(bb) an alternative educational or training program on a 
     full-time (as defined by the provider) basis; and

       ``(II) child care be provided in accordance with section 
     2009 with respect to the family.''.
       (b) State Option To Provide Additional Incentives and 
     Penalties to Encourage Teen Parents to Complete High School 
     and Participate in Parenting Activities.--
       (1) State plan.--Section 403(b)(1)(D), as amended by 
     subsection (a) of this section, is amended by adding at the 
     end the following:
       ``(iii) at the option of the State, may provide that the 
     client who is a custodial parent or pregnant woman who is 
     under age 19 (or age 21, at the option of the State) 
     participate in a program of monetary incentives and penalties 
     which--
       ``(I) may, at the option of the State, require full-time 
     participation by such custodial parent or pregnant woman in 
     secondary school or equivalent educational activities, or 
     participation in a course or program leading to a skills 
     certificate found appropriate by the State agency or 
     parenting education activities (or any combination of such 
     activities and secondary education);
       ``(II) shall require that the needs of such custodial 
     parent or pregnant woman be reviewed and the program assure 
     that, either in the initial development or revision of such 
     individual's individual responsibility plan, there will be 
     included a description of the services that will be provided 
     to the client and the way in which the program and service 
     providers will coordinate with the educational or skills 
     training activities in which the client is participating;
       ``(III) shall provide monetary incentives (to be treated as 
     assistance under the State plan) for more than minimally 
     acceptable performance of required educational activities;
       ``(IV) shall provide penalties (which may be those required 
     by subsection (e) or, with the approval of the Secretary, 
     other monetary penalties that the State finds will better 
     achieve the objectives of the program) for less than 
     minimally acceptable performance of required activities;
       ``(V) shall provide that when a monetary incentive is 
     payable because of the more than minimally acceptable 
     performance of required educational activities by a custodial 
     parent, the incentive be paid directly to such parent, 
     regardless of whether the State agency makes payment of 
     assistance under the State plan directly to such parent; and
       ``(VI) for purposes of any other Federal or federally-
     assisted program based on need, shall not consider any 
     monetary incentive paid under the State plan as income in 
     determining a family's eligibility for or amount of benefits 
     under such program, and if assistance is reduced by reason of 
     a penalty under this clause, such other program shall treat 
     the family involved as if no such penalty has been 
     applied.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect in the same manner as the amendment made by 
     section 9101(a) takes effect.

     SEC. 9505. DENIAL OF FEDERAL HOUSING BENEFITS TO MINORS WHO 
                   BEAR CHILDREN OUT-OF-WEDLOCK.

       (a) Prohibition of Assistance.--Notwithstanding any other 
     provision of law, a household whose head of household is an 
     individual who has borne a child out-of-wedlock before 
     attaining 18 years of age may not be provided Federal housing 
     assistance for a dwelling unit until attaining such age, 
     unless--
       (1) after the birth of the child--
       (A) the individual marries an individual who has been 
     determined by the relevant State to be the biological father 
     of the child; or
       (B) the biological parent of the child has legal custody of 
     the child and marries an individual who legally adopts the 
     child;

[[Page H11315]]

       (2) the individual is a biological and custodial parent of 
     another child who was not born out-of-wedlock; or
       (3) eligibility for such Federal housing assistance is 
     based in whole or in part on any disability or handicap of a 
     member of the household.
       (b) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       (1) Covered program.--The term ``covered program'' means--
       (A) the program of rental assistance on behalf of low-
     income families provided under section 8 of the United States 
     Housing Act of 1937 (42 U.S.C. 1437f);
       (B) the public housing program under title I of the United 
     States Housing Act of 1937 (42 U.S.C. 1437 et seq.);
       (C) the program of rent supplement payments on behalf of 
     qualified tenants pursuant to contracts entered into under 
     section 101 of the Housing and Urban Development Act of 1965 
     (12 U.S.C. 1701s);
       (D) the program of interest reduction payments pursuant to 
     contracts entered into by the Secretary of Housing and Urban 
     Development under section 236 of the National Housing Act (12 
     U.S.C. 1715z-1);
       (E) the program for mortgage insurance provided pursuant to 
     sections 221(d) (3) or (4) of the National Housing Act (12 
     U.S.C. 1715l(d)) for multifamily housing for low- and 
     moderate-income families;
       (F) the rural housing loan program under section 502 of the 
     Housing Act of 1949 (42 U.S.C. 1472);
       (G) the rural housing loan guarantee program under section 
     502(h) of the Housing Act of 1949 (42 U.S.C. 1472(h));
       (H) the loan and grant programs under section 504 of the 
     Housing Act of 1949 (42 U.S.C. 1474) for repairs and 
     improvements to rural dwellings;
       (I) the program of loans for rental and cooperative rural 
     housing under section 515 of the Housing Act of 1949 (42 
     U.S.C. 1485);
       (J) the program of rental assistance payments pursuant to 
     contracts entered into under section 521(a)(2)(A) of the 
     Housing Act of 1949 (42 U.S.C. 1490a(a)(2)(A));
       (K) the loan and assistance programs under sections 514 and 
     516 of the Housing Act of 1949 (42 U.S.C. 1484, 1486) for 
     housing for farm labor;
       (L) the program of grants and loans for mutual and self-
     help housing and technical assistance under section 523 of 
     the Housing Act of 1949 (42 U.S.C. 1490c);
       (M) the program of grants for preservation and 
     rehabilitation of housing under section 533 of the Housing 
     Act of 1949 (42 U.S.C. 1490m); and
       (N) the program of site loans under section 524 of the 
     Housing Act of 1949 (42 U.S.C. 1490d).
       (2) Covered project.--The term ``covered project'' means 
     any housing for which Federal housing assistance is provided 
     that is attached to the project or specific dwelling units in 
     the project.
       (3) Federal housing assistance.--The term ``Federal housing 
     assistance'' means--
       (A) assistance provided under a covered program in the form 
     of any contract, grant, loan, subsidy, cooperative agreement, 
     loan or mortgage guarantee or insurance, or other financial 
     assistance; or
       (B) occupancy in a dwelling unit that is--
       (i) provided assistance under a covered program; or
       (ii) located in a covered project and subject to occupancy 
     limitations under a covered program that are based on income.
       (4) State.--The term ``State'' means the States of the 
     United States, the District of Columbia, the Commonwealth of 
     Puerto Rico, the Commonwealth of the Northern Mariana 
     Islands, Guam, the Virgin Islands, American Samoa, and any 
     other territory or possession of the United States.
       (c) Limitations on Applicability.--Subsection (a) shall not 
     apply to Federal housing assistance provided for a household 
     pursuant to an application or request for such assistance 
     made by such household before the effective date of this Act 
     if the household was receiving such assistance on the 
     effective date of this Act.

     SEC. 9506. STATE OPTION TO DENY TEMPORARY EMPLOYMENT 
                   ASSISTANCE TO MINOR PARENTS.

       (a) In General.--Section 402(d)(1), as added by section 
     9101(a) of this Act and as amended by section 9501(a) of this 
     Act, is amended by adding at the end the following:
       ``(C) Optional denial of assistance to minor parents.--At 
     the option of the State, the State plan may provide that--
       ``(i)(I) in determining the need of a family, the State may 
     disregard the needs of any family member who is a parent and 
     has not attained 18 years of age or such lesser age as the 
     State may prescribe; and
       ``(II) if the value of the assistance provided to a family 
     under the State plan approved under this part is reduced by 
     reason of subclause (I), each member of the family shall be 
     considered to be receiving such assistance for purposes of 
     eligibility for medical assistance under the State plan 
     approved under title XIX for so long as such assistance under 
     the State plan approved under this part would otherwise not 
     be so reduced; and
       ``(ii) if the State exercises the option, the State may 
     provide the family with vouchers, in amounts not exceeding 
     the value of any such reduction in assistance, that may be 
     used only to pay for--
       ``(I) particular goods and services specified by the State 
     as suitable for the care of the child of the parent (such as 
     diapers, clothing, or cribs); and
       ``(II) the costs associated with a maternity home, foster 
     home, or other adult-supervised supportive living arrangement 
     in which the parent and the child live.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect in the same manner in which the amendment 
     made by section 9101(a) takes effect.
                         Subtitle F--SSI Reform

     SEC. 9601. DEFINITION AND ELIGIBILITY RULES.

       (a) Definition of Childhood Disability.--Section 1614(a)(3) 
     (42 U.S.C. 1382c(a)(3)) is amended--
       (1) in subparagraph (A), by striking ``An individual'' and 
     inserting ``Except as provided in subparagraph (C), an 
     individual'';
       (2) in subparagraph (A), by striking ``(or, in the case of 
     an individual under the age of 18, if he suffers from any 
     medically determinable physical or mental impairment of 
     comparable severity)'';
       (3) by redesignating subparagraphs (C) through (H) as 
     subparagraphs (D) through (I), respectively;
       (4) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) An individual under the age of 18 shall be considered 
     disabled for the purposes of this title if that individual 
     has a medically determinable physical or mental impairment, 
     which results in marked and severe functional limitations, 
     and which can be expected to result in death or which has 
     lasted or can be expected to last for a continuous period of 
     not less than 12 months.''; and
       (5) in subparagraph (F), as so redesignated by paragraph 
     (3) of this subsection, by striking ``(D)'' and inserting 
     ``(E)''.
       (b) Changes to Childhood SSI Regulations.--
       (1) Modification to medical criteria for evaluation of 
     mental and emotional disorders.--The Commissioner of Social 
     Security shall modify sections 112.00C.2. and 112.02B.2.c.(2) 
     of appendix 1 to subpart P of part 404 of title 20, Code of 
     Federal Regulations, to eliminate references to maladaptive 
     behavior in the domain of personal/behavorial function.
       (2) Discontinuance of individualized functional 
     assessment.--The Commissioner of Social Security shall 
     discontinue the individualized functional assessment for 
     children set forth in sections 416.924d and 416.924e of title 
     20, Code of Federal Regulations.
       (c) Effective Date; Regulations; Application to Current 
     Recipients.--
       (1) In general.--The amendments made by subsections (a) and 
     (b) shall apply to applicants for benefits for months 
     beginning on or after the date of the enactment of this Act, 
     without regard to whether regulations have been issued to 
     implement such amendments.
       (2) Regulations.--The Commissioner of Social Security shall 
     issue such regulations as the Commissioner determines to be 
     necessary to implement the amendments made by subsections (a) 
     and (b) not later than 60 days after the date of the 
     enactment of this Act.
       (3) Application to current recipients.--
       (A) Eligibility determinations.--Not later than 1 year 
     after the date of the enactment of this Act, the Commissioner 
     of Social Security shall redetermine the eligibility of any 
     individual under age 18 who is receiving supplemental 
     security income benefits based on a disability under title 
     XVI of the Social Security Act as of the date of the 
     enactment of this Act and whose eligibility for such benefits 
     may terminate by reason of the amendments made by subsection 
     (a) or (b). With respect to any redetermination under this 
     subparagraph--
       (i) section 1614(a)(4) of the Social Security Act (42 
     U.S.C. 1382c(a)(4)) shall not apply;
       (ii) the Commissioner of Social Security shall apply the 
     eligibility criteria for new applicants for benefits under 
     title XVI of such Act;
       (iii) the Commissioner shall give such redetermination 
     priority over all continuing eligibility reviews and other 
     reviews under such title; and
       (iv) such redetermination shall be counted as a review or 
     redetermination otherwise required to be made under section 
     208 of the Social Security Independence and Program 
     Improvements Act of 1994 or any other provision of title XVI 
     of the Social Security Act.
       (B) Grandfather provision.--The amendments made by 
     subsections (a) and (b), and the redetermination under 
     subparagraph (A), shall only apply with respect to the 
     benefits of an individual described in subparagraph (A) for 
     months beginning on or after January 1, 1997.
       (C) Notice.--Not later than 90 days after the date of the 
     enactment of this Act, the Commissioner of Social Security 
     shall notify an individual described in subparagraph (A) of 
     the provisions of this paragraph.

     SEC. 9602. ELIGIBILITY REDETERMINATIONS AND CONTINUING 
                   DISABILITY REVIEWS.

       (a) Continuing Disability Reviews Relating to Certain 
     Children.--Section 1614(a)(3)(H) (42 U.S.C. 1382c(a)(3)(H)), 
     as so redesignated by section 9601(a)(3) of this Act, is 
     amended--
       (1) by inserting ``(i)'' after ``(H)''; and
       (2) by adding at the end the following new clause:
       ``(ii)(I) Not less frequently than once every 3 years, the 
     Commissioner shall review in accordance with paragraph (4) 
     the continued eligibility for benefits under this title of 
     each individual who has not attained 18 years of age and is 
     eligible for such benefits by reason of an impairment (or 
     combination of impairments) which may improve (or, 

[[Page H11316]]

     which is unlikely to improve, at the option of the 
     Commissioner).
       ``(II) A parent or guardian of a recipient whose case is 
     reviewed under this clause shall present, at the time of 
     review, evidence demonstrating that the recipient is, and has 
     been, receiving treatment, to the extent considered medically 
     necessary and available, of the condition which was the basis 
     for providing benefits under this title.''.
       (b) Disability Eligibility Redeterminations Required for 
     SSI Recipients Who Attain 18 Years of Age.--
       (1) In general.--Section 1614(a)(3)(H) (42 U.S.C. 
     1382c(a)(3)(H)), as so redesignated by section 9601(a)(3) of 
     this Act and as amended by subsection (a) of this section, is 
     amended by adding at the end the following new clause:
       ``(iii) If an individual is eligible for benefits under 
     this title by reason of disability for the month preceding 
     the month in which the individual attains the age of 18 
     years, the Commissioner shall redetermine such eligibility--
       ``(I) during the 1-year period beginning on the 
     individual's 18th birthday; and
       ``(II) by applying the criteria used in determining the 
     initial eligibility for applicants who have attained the age 
     of 18 years.

     With respect to a redetermination under this clause, 
     paragraph (4) shall not apply and such redetermination shall 
     be considered a substitute for a review or redetermination 
     otherwise required under any other provision of this 
     subparagraph during that 1-year period.''.
       (2) Conforming repeal.--Section 207 of the Social Security 
     Independence and Program Improvements Act of 1994 (42 U.S.C. 
     1382 note; 108 Stat. 1516) is hereby repealed.
       (c) Continuing Disability Review Required for Low Birth 
     Weight Babies.--Section 1614(a)(3)(H) (42 U.S.C. 
     1382c(a)(3)(H)), as so redesignated by section 9601(a)(3) of 
     this Act and as amended by subsections (a) and (b) of this 
     section, is amended by adding at the end the following new 
     clause:
       ``(iv)(I) Not later than 12 months after the birth of an 
     individual, the Commissioner shall review in accordance with 
     paragraph (4) the continuing eligibility for benefits under 
     this title by reason of disability of such individual whose 
     low birth weight is a contributing factor material to the 
     Commissioner's determination that the individual is disabled.
       ``(II) A review under subclause (I) shall be considered a 
     substitute for a review otherwise required under any other 
     provision of this subparagraph during that 12-month period.
       ``(III) A parent or guardian of a recipient whose case is 
     reviewed under this clause shall present, at the time of 
     review, evidence demonstrating that the recipient is, and has 
     been, receiving treatment, to the extent considered medically 
     necessary and available, of the condition which was the basis 
     for providing benefits under this title.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to benefits for months beginning on or after the 
     date of the enactment of this Act, without regard to whether 
     regulations have been issued to implement such amendments.

     SEC. 9603. ADDITIONAL ACCOUNTABILITY REQUIREMENTS.

       (a) Tightening of Representative Payee Requirements.--
       (1) Clarification of role.--Section 1631(a)(2)(B)(ii) (42 
     U.S.C. 1383(a)(2)(B)(ii)) is amended by striking ``and'' at 
     the end of subclause (II), by striking the period at the end 
     of subclause (IV) and inserting ``; and'', and by adding 
     after subclause (IV) the following new subclause:
       ``(V) advise such person through the notice of award of 
     benefits, and at such other times as the Commissioner of 
     Social Security deems appropriate, of specific examples of 
     appropriate expenditures of benefits under this title and the 
     proper role of a representative payee.''.
       (2) Documentation of expenditures required.--
       (A) In general.--Subparagraph (C)(i) of section 1631(a)(2) 
     (42 U.S.C. 1383(a)(2)) is amended to read as follows:
       ``(C)(i) In any case where payment is made to a 
     representative payee of an individual or spouse, the 
     Commissioner of Social Security shall--
       ``(I) require such representative payee to document 
     expenditures and keep contemporaneous records of transactions 
     made using such payment; and
       ``(II) implement statistically valid procedures for 
     reviewing a sample of such contemporaneous records in order 
     to identify instances in which such representative payee is 
     not properly using such payment.''.
       (B) Conforming amendment with respect to parent payees.--
     Clause (ii) of section 1631(a)(2)(C) (42 U.S.C. 
     1383(a)(2)(C)) is amended by striking ``Clause (i)'' and 
     inserting ``Subclauses (II) and (III) of clause (i)''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to benefits paid after the date of the enactment 
     of this Act.
       (b) Dedicated Savings Accounts.--
       (1) In general.--Section 1631(a)(2)(B) (42 U.S.C. 
     1383(a)(2)(B)) is amended by adding at the end the following:
       ``(xiv) Notwithstanding clause (x), the Commissioner of 
     Social Security may, at the request of the representative 
     payee, pay any lump sum payment for the benefit of a child 
     into a dedicated savings account that could only be used to 
     purchase for such child--
       ``(I) education and job skills training;
       ``(II) special equipment or housing modifications or both 
     specifically related to, and required by the nature of, the 
     child's disability; and
       ``(III) appropriate therapy and rehabilitation.''.
       (2) Disregard of trust funds.--Section 1613(a) (42 U.S.C. 
     1382b(a)) is amended--
       (A) by striking ``and'' at the end of paragraph (10),
       (B) by striking the period at the end of paragraph (11) and 
     inserting ``; and'', and
       (C) by inserting after paragraph (11) the following:
       ``(12) all amounts deposited in, or interest credited to, a 
     dedicated savings account described in section 
     1631(a)(2)(B)(xiv).''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to payments made after the date of the enactment 
     of this Act.

     SEC. 9604. DENIAL OF SSI BENEFITS BY REASON OF DISABILITY TO 
                   DRUG ADDICTS AND ALCOHOLICS.

       (a) In General.--Section 1614(a)(3) (42 U.S.C. 
     1382c(a)(3)), as amended by section 9601(a)(3) of this Act, 
     is amended by adding at the end the following:
       ``(J) Notwithstanding subparagraph (A), an individual shall 
     not be considered to be disabled for purposes of this title 
     if alcoholism or drug addiction would (but for this 
     subparagraph) be a contributing factor material to the 
     Commissioner's determination that the individual is 
     disabled.''.
       (b) Conforming Amendments.--
       (1) Section 1611(e) (42 U.S.C. 1382(e)) is amended by 
     striking paragraph (3).
       (2) Section 1613(a)(12) (42 U.S.C. 1382b(a)(12)) is amended 
     by striking ``1631(a)(2)(B)(xiv)'' and inserting 
     ``1631(a)(2)(B)(xiii)''.
       (3) Section 1631(a)(2)(A)(ii) (42 U.S.C. 1383(a)(2)(A)(ii)) 
     is amended--
       (A) by striking ``(I)''; and
       (B) by striking subclause (II).
       (4) Section 1631(a)(2)(B) (42 U.S.C. 1383(a)(2)(B)) is 
     amended--
       (A) by striking clause (vii);
       (B) in clause (viii), by striking ``(ix)'' and inserting 
     ``(viii)'';
       (C) in clause (ix)--
       (i) by striking ``(viii)'' and inserting ``(vii)''; and
       (ii) in subclause (II), by striking all that follows ``15 
     years'' and inserting a period;
       (D) in clause (xiii)--
       (i) by striking ``(xii)'' and inserting ``(xi)''; and
       (ii) by striking ``(xi)'' and inserting ``(x)'';
       (E) in clause (xiv) (as added by section 9603(b)(1) of this 
     Act), by striking ``(x)'' and inserting ``(ix)''; and
       (F) by redesignating clauses (viii) through (xiv) as 
     clauses (vii) through (xiii), respectively.
       (5) Section 1631(a)(2)(D)(i)(II) (42 U.S.C. 
     1383(a)(2)(D)(i)(II)) is amended by striking all that follows 
     ``$25.00 per month'' and inserting a period.
       (6) Section 1634 (42 U.S.C. 1383c) is amended by striking 
     subsection (e).
       (7) Section 201(c)(1) of the Social Security Independence 
     and Program Improvements Act of 1994 (42 U.S.C. 425 note) is 
     amended--
       (A) by striking ``--'' and all that follows through ``(A)'' 
     the 1st place such term appears;
       (B) by striking ``and'' the 3rd place such term appears;
       (C) by striking subparagraph (B);
       (D) by striking ``either subparagraph (A) or subparagraph 
     (B)'' and inserting ``the preceding sentence''; and
       (E) by striking ``subparagraph (A) or (B)'' and inserting 
     ``the preceding sentence''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on October 1, 1995, and shall apply with 
     respect to months beginning on or after such date.
       (d) Funding of Certain Programs for Drug Addicts and 
     Alcoholics.--Out of any money in the Treasury of the United 
     States not otherwise appropriated, the Secretary of the 
     Treasury shall pay to the Director of the National Institute 
     on Drug Abuse--
       (1) $95,000,000, for each of fiscal years 1997, 1998, 1999, 
     and 2000, for expenditure through the Federal Capacity 
     Expansion Program to expand the availability of drug 
     treatment; and
       (2) $5,000,000 for each of fiscal years 1997, 1998, 1999, 
     and 2000 to be expended solely on the medication development 
     project to improve drug abuse and drug treatment research.

     SEC. 9605. DENIAL OF SSI BENEFITS FOR 10 YEARS TO INDIVIDUALS 
                   FOUND TO HAVE FRAUDULENTLY MISREPRESENTED 
                   RESIDENCE IN ORDER TO OBTAIN BENEFITS 
                   SIMULTANEOUSLY IN 2 OR MORE STATES.

       Section 1614(a) (42 U.S.C. 1382c(a)) is amended by adding 
     at the end the following:
       ``(5) An individual shall not be considered an eligible 
     individual for purposes of this title during the 10-year 
     period beginning on the date the individual is found by a 
     State to have made, or is convicted in Federal or State court 
     of having made, a fraudulent statement or representation with 
     respect to the place of residence of the individual in order 
     to receive benefits simultaneously from 2 or more States 
     under programs that are funded under part A of title IV, or 
     title XIX of this Act, the consolidated program of food 
     assistance under chapter 2 of subtitle E of title XIV of the 
     Omnibus Budget Reconciliation Act of 1995, or the Food Stamp 
     Act of 1977 (as in effect before the effective 

[[Page H11317]]

     date of such chapter), or benefits in 2 or more States under 
     the supplemental security income program under title XVI of 
     this Act.''.

     SEC. 9606. DENIAL OF SSI BENEFITS FOR FUGITIVE FELONS AND 
                   PROBATION AND PAROLE VIOLATORS.

       (a) In General.--Section 1611(e) (42 U.S.C. 1382(e)), as 
     amended by section 9604(b)(1) of this Act, is amended by 
     inserting after paragraph (2) the following:
       ``(3) A person shall not be an eligible individual or 
     eligible spouse for purposes of this title with respect to 
     any month if, throughout the month, the person is--
       ``(A) fleeing to avoid prosecution, or custody or 
     confinement after conviction, under the laws of the place 
     from which the person flees, for a crime, or an attempt to 
     commit a crime, which is a felony under the laws of the place 
     from which the person flees, or which, in the case of the 
     State of New Jersey, is a high misdemeanor under the laws of 
     such State; or
       ``(B) violating a condition of probation or parole imposed 
     under Federal or State law.''.
       (b) Exchange of Information With Law Enforcement 
     Agencies.--Section 1631(e) of such Act (42 U.S.C. 1383(e)) is 
     amended by inserting after paragraph (3) the following:
       ``(4) Notwithstanding any other provision of law, the 
     Commissioner shall furnish any Federal, State, or local law 
     enforcement officer, upon the request of the officer, with 
     the current address of any recipient of benefits under this 
     title, if the officer furnishes the agency with the name of 
     the recipient and notifies the agency that--
       ``(A) the recipient--
       ``(i) is fleeing to avoid prosecution, or custody or 
     confinement after conviction, under the laws of the place 
     from which the person flees, for a crime, or an attempt to 
     commit a crime, which is a felony under the laws of the place 
     from which the person flees, or which, in the case of the 
     State of New Jersey, is a high misdemeanor under the laws of 
     such State;
       ``(ii) is violating a condition of probation or parole 
     imposed under Federal or State law; or
       ``(iii) has information that is necessary for the officer 
     to conduct the officer's official duties;
       ``(B) the location or apprehension of the recipient is 
     within the official duties of the officer; and
       ``(C) the request is made in the proper exercise of such 
     duties.''.

     SEC. 9607. REAPPLICATION REQUIREMENTS FOR ADULTS RECEIVING 
                   SSI BENEFITS BY REASON OF DISABILITY.

       (a) In General.--Section 1614(a)(3)(H) (42 U.S.C. 
     1382c(a)(3)(H)), as so redesignated by section 9601(a)(3) of 
     this Act and as amended by section 9602 of this Act, is 
     amended by adding at the end the following:
       ``(v) In the case of an individual who has attained 18 
     years of age and for whom a determination has been made of 
     eligibility for a benefit under this title by reason of 
     disability, the following applies:
       ``(I) Subject to the provisions of this clause, the 
     determination of eligibility is effective for the 3-year 
     period beginning on the date of the determination, and the 
     eligibility of the individual lapses unless a determination 
     of continuing eligibility is made before the end of such 
     period, and before the end of each subsequent 3-year period. 
     This subclause ceases to apply to the individual upon the 
     individual attaining 65 years of age. This subclause does not 
     apply to the individual if the individual has an impairment 
     that is not expected to improve (or a combination of 
     impairments that are not expected to improve).
       ``(II) With respect to a determination under subclause (I) 
     of whether the individual continues to be eligible for the 
     benefit (in this clause referred to as a `redetermination'), 
     the Commissioner may not make the redetermination unless the 
     individual submits to the Commissioner an application 
     requesting the redetermination. If such an application is 
     submitted, the Commissioner shall make the redetermination. 
     This subclause is subject to subclause (V).
       ``(III) If as of the date on which this clause takes effect 
     the individual has been receiving the benefit for three years 
     or less, the first period under subclause (I) for the 
     individual is deemed to end on the expiration of the period 
     beginning on the date on which this clause takes effect and 
     continuing through a number of months equal to 12 plus a 
     number equal to 36 minus the number of months the 
     individual has been receiving the benefit.
       ``(IV) If as of the date on which this clause takes effect 
     the individual has been receiving the benefit for five years 
     or less, but for more than three years, the first period 
     under subclause (I) for the individual is deemed to end on 
     the expiration of the 1-year period beginning on the date on 
     which this clause takes effect.
       ``(V) If as of the date on which this clause takes effect 
     the individual has been receiving the benefit for more than 
     five years, the Commissioner shall make redeterminations 
     under subclause (I) and may not require the individual to 
     submit applications for the redeterminations. The first 3-
     year period under subclause (I) for the individual is deemed 
     to begin upon the expiration of the period beginning on the 
     date on which this clause takes effect and ending upon the 
     termination of a number of years equal to the lowest number 
     (greater than zero) that can be obtained by subtracting the 
     number of years that the individual has been receiving the 
     benefit from a number that is a multiple of three.
       ``(VI) If the individual first attains 18 years of age on 
     or after the date on which this clause takes effect, the 
     first 3-year period under subclause (I) for the individual is 
     deemed to end on the date on which the individual attains 
     such age.
       ``(VII) Not later than one year prior to the date on which 
     a determination under subclause (I) expires, the Commissioner 
     shall (except in the case of an individual to whom subclause 
     (V) applies) provide to the individual a written notice 
     explaining the applicability of this clause to the 
     individual, including an explanation of the effect of failing 
     to submit the application. If the individual submits the 
     application not later than 180 days prior to such date and 
     the Commissioner does not make the redetermination before 
     such date, the Commissioner shall continue to provide the 
     benefit pending the redetermination and shall publish in the 
     Federal Register a notice that the Commissioner was unable to 
     make the redetermination by such date.
       ``(VIII) If the individual fails to submit the application 
     under subclause (II) by the end of the applicable period 
     under subclause (I), the individual may apply for a 
     redetermination. The Commissioner shall make the 
     redetermination for the individual only after making 
     redeterminations for individuals for whom eligibility has not 
     lapsed pursuant to subclause (I).''.
       (b) Limitations on Authorization of Appropriations.--For 
     redeterminations of eligibility pursuant to section 
     1614(a)(3)(H)(v) of the Social Security Act, there are 
     authorized to be appropriated to the Commissioner of Social 
     Security not more than $100,000,000 for fiscal years 1996 
     through 2000.
       (c) Effective Date.--The amendment made by subsection (a) 
     takes effect upon the expiration of the 9-month period 
     beginning on the date of the enactment of this Act.

     SEC. 9608. REDUCTION IN UNEARNED INCOME EXCLUSION.

       (a) In General.--Section 1612(b)(3)(A) (42 U.S.C. 
     1382a(b)(3)(A)) is amended by striking ``$20'' and inserting 
     ``$15''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to benefits for months beginning after December 
     31, 1995.
                      Subtitle G--Food Assistance

                     CHAPTER 1--FOOD STAMP PROGRAM

     SEC. 9701. APPLICATION OF AMENDMENTS.

       The amendments made by this chapter shall not apply with 
     respect to certification periods beginning before the 
     effective date of this chapter.

     SEC. 9702. AMENDMENTS TO THE FOOD STAMP ACT OF 1977.

       (a) Certification Period.--(1) Section 3(c) of the Food 
     Stamp Act of 1977 (7 U.S.C. 2012(c)) is amended to read as 
     follows:
       ``(c) `Certification period' means the period specified by 
     the State agency for which households shall be eligible to 
     receive authorization cards, except that such period shall 
     be--
       ``(1) 24 months for households in which all adult members 
     are elderly or disabled; and
       ``(2) not more than 12 months for all other households.''.
       (2) Section 6(c)(1)(C) of the Food Stamp Act of 1977 (7 
     U.S.C. 2015(c)(1)(C)) is amended--
       (A) in clause (ii) by adding ``and'' at the end;
       (B) in clause (iii) by striking ``; and'' at the end and 
     inserting a period; and
       (C) by striking clause (iv).
       (b) Energy Assistance Counted as Income.--
       (1) Limiting exclusion.--Section 5(d)(11) of the Food Stamp 
     Act of 1977 (7 U.S.C. 2014(d)(11)) is amended--
       (A) by striking ``(A) under any Federal law, or (B)''; and
       (B) by inserting before the comma at the end the following: 
     ``, except that no benefits provided under the State program 
     under part A of title IV of the Social Security Act (42 
     U.S.C. 601 et seq.) shall be excluded under this clause''.
       (2) Conforming amendments.--
       (A) Section 5(e) of the Food Stamp Act of 1977 (7 U.S.C. 
     2014(e)) is amended by striking the ninth through the twelfth 
     sentences.
       (B) Section 5(k)(2) of the Food Stamp Act of 1977 (7 U.S.C. 
     2014(k)(2)) is amended by striking subparagraph (C) and 
     redesignating subparagraphs (D) through (H) as subparagraphs 
     (C) through (G), respectively.
       (C) Section 5(k) of the Food Stamp Act of 1977 (7 U.S.C. 
     2014(k)) is amended by adding at the end the following:
       ``(4) For purposes of subsection (d)(1), any payments or 
     allowances made under any Federal or State law for the 
     purposes of energy assistance shall be treated as money 
     payable directly to the household.''.
       (D) Section 2605(f) of the Low-Income Home Energy 
     Assistance Act of 1981 (42 U.S.C. 8634(f)) is amended--
       (i) in paragraph (1), by striking ``food stamps'';
       (ii) by striking ``(f)(1) Notwithstanding'' and inserting 
     ``(f) Notwithstanding''; and
       (iii) by striking paragraph (2).
       (c) Exclusion of Certain JTPA Income.--Section 5 of the 
     Food Stamp Act of 1977 (7 U.S.C. 2014) is amended--
       (1) in subsection (d)--
       (A) by striking ``and (16)'' and inserting ``(16)''; and

[[Page H11318]]

       (B) by inserting before the period at the end the 
     following: ``, and (17) income received under the Job 
     Training Partnership Act (29 U.S.C. 1501 et seq.) by a 
     household member who is less than 19 years of age''; and
       (2) in subsection (l), by striking ``under section 
     204(b)(1)(C)'' and all that follows and inserting ``shall be 
     considered earned income for purposes of the food stamp 
     program.''.
       (d) Exclusion of Life Insurance Policies.--Section 5(g) of 
     the Food Stamp Act of 1977 (7 U.S.C. 2014(g)) is amended by 
     adding at the end the following:
       ``(6) The Secretary shall exclude from financial resources 
     the cash value of any life insurance policy owned by a member 
     of a household.''.
       (e) In-Tandem Exclusions From Income.--Section 5 of the 
     Food Stamp Act of 1977 (7 U.S.C. 2014) is amended by adding 
     at the end the following:
       ``(n) Whenever a Federal statute enacted after the date of 
     the enactment of this Act excludes funds from income for 
     purposes of determining eligibility, benefit levels, or both 
     under State plans approved under part A of title IV of the 
     Social Security Act, then such funds shall be excluded from 
     income for purposes of determining eligibility, benefit 
     levels, or both, respectively, under the food stamp program 
     of households all of whose members receive benefits under a 
     State plan approved under part A of title IV of the Social 
     Security Act.''.

     SEC. 9703. AUTHORITY TO ESTABLISH AUTHORIZATION PERIODS.

       Section 9(a)(1) of the Food Stamp Act of 1977 (7 U.S.C. 
     2018(a)(1)) is amended by adding at the end the following: 
     ``The Secretary is authorized to issue regulations 
     establishing specific time periods during which authorization 
     to accept and redeem coupons under the food stamp program 
     shall be valid.''.

     SEC. 9704. SPECIFIC PERIOD FOR PROHIBITING PARTICIPATION OF 
                   STORES BASED ON LACK OF BUSINESS INTEGRITY.

       Section 9(a)(1) of the Food Stamp Act of 1977 (7 U.S.C. 
     2018(a)(1)), as amended by section 9703, is amended by adding 
     at the end the following: ``The Secretary is authorized to 
     issue regulations establishing specific time periods during 
     which a retail food store or wholesale food concern that has 
     an application for approval to accept and redeem coupons 
     denied or that has such an approval withdrawn on the basis of 
     business integrity and reputation cannot submit a new 
     application for approval. Such periods shall reflect the 
     severity of business integrity infractions that are the basis 
     of such denials or withdrawals.''.

     SEC. 9705. INFORMATION FOR VERIFYING ELIGIBILITY FOR 
                   AUTHORIZATION.

       Section 9(c) of the Food Stamp Act of 1977 (7 U.S.C. 
     2018(c)) is amended--
       (1) in the first sentence by inserting ``, which may 
     include relevant income and sales tax filing documents,'' 
     after ``submit information'' ; and
       (2) by inserting after the first sentence the following: 
     ``The regulations may require retail food stores and 
     wholesale food concerns to provide written authorization for 
     the Secretary to verify all relevant tax filings with 
     appropriate agencies and to obtain corroborating 
     documentation from other sources in order that the accuracy 
     of information provided by such stores and concerns may be 
     verified.''.

     SEC. 9706. WAITING PERIOD FOR STORES THAT INITIALLY FAIL TO 
                   MEET AUTHORIZATION CRITERIA.

       Section 9(d) of the Food Stamp Act of 1977 (7 U.S.C. 
     2018(d)) is amended by adding at the end the following: 
     ``Regulations issued pursuant to this Act shall prohibit a 
     retail food store or wholesale food concern that has an 
     application for approval to accept and redeem coupons denied 
     because it does not meet criteria for approval established by 
     the Secretary in regulations from submitting a new 
     application for six months from the date of such denial.''.

     SEC. 9707. BASES FOR SUSPENSIONS AND DISQUALIFICATIONS.

       Section 12(a) of the Food Stamp Act of 1977 (7 U.S.C. 
     2021(a)) is amended by adding at the end the following: 
     ``Regulations issued pursuant to this Act shall provide 
     criteria for the finding of violations and the suspension or 
     disqualification of a retail food store or wholesale food 
     concern on the basis of evidence which may include, but is 
     not limited to, facts established through on-site 
     investigations, inconsistent redemption data, or evidence 
     obtained through transaction reports under electronic benefit 
     transfer systems.''.

     SEC. 9708. AUTHORITY TO SUSPEND STORES VIOLATING PROGRAM 
                   REQUIREMENTS PENDING ADMINISTRATIVE AND 
                   JUDICIAL REVIEW.

       (a) Section 12(a) of the Food Stamp Act of 1977 (7 U.S.C. 
     2021(a)), as amended by section 9707, is amended by adding at 
     the end the following: ``Such regulations may establish 
     criteria under which the authorization of a retail food store 
     or wholesale food concern to accept and redeem coupons may be 
     suspended at the time such store or concern is initially 
     found to have committed violations of program requirements. 
     Such suspension may coincide with the period of a review as 
     provided in section 14. The Secretary shall not be liable for 
     the value of any sales lost during any suspension or 
     disqualification period.''.
       (b) Section 14(a) of the Food Stamp Act of 1977 (7 U.S.C. 
     2023(a)) is amended--
       (1) in the first sentence by inserting ``suspended,'' 
     before ``disqualified or subjected'';
       (2) in the fifth sentence by inserting before the period at 
     the end the following: ``, except that in the case of the 
     suspension of a retail food store or wholesale food concern 
     pursuant to section 12(a), such suspension shall remain in 
     effect pending any administrative or judicial review of the 
     proposed disqualification action, and the period of 
     suspension shall be deemed a part of any period of 
     disqualification which is imposed.''; and
       (3) by striking the last sentence.

     SEC. 9709. DISQUALIFICATION OF RETAILERS WHO ARE DISQUALIFIED 
                   FROM THE WIC PROGRAM.

       Section 12 of the Food Stamp Act of 1977 (7 U.S.C. 2021) is 
     amended by adding at the end the following:
       ``(g) The Secretary shall issue regulations providing 
     criteria for the disqualification of approved retail food 
     stores and wholesale food concerns that are otherwise 
     disqualified from accepting benefits under the Special 
     Supplemental Nutrition Program for Women, Infants and 
     Children (WIC) authorized under section 17 of the Child 
     Nutrition Act of 1966. Such disqualification--
       ``(1) shall be for the same period as the disqualification 
     from the WIC Program;
       ``(2) may begin at a later date; and
       ``(3) notwithstanding section 14 of this Act, shall not be 
     subject to administrative or judicial review.''.

     SEC. 9710. PERMANENT DEBARMENT OF RETAILERS WHO INTENTIONALLY 
                   SUBMIT FALSIFIED APPLICATIONS.

       Section 12 of the Food Stamp Act of 1977 (7 U.S.C. 2021), 
     as amended by section 9709, is amended by adding at the end 
     the following:
       ``(h) The Secretary shall issue regulations providing for 
     the permanent disqualification of a retail food store or 
     wholesale food concern that is determined to have knowingly 
     submitted an application for approval to accept and redeem 
     coupons which contains false information about one or more 
     substantive matters which were the basis for providing 
     approval. Any disqualification imposed under this subsection 
     shall be subject to administrative and judicial review 
     pursuant to section 14, but such disqualification shall 
     remain in effect pending such review.''.

     SEC. 9711. EXPANDED CIVIL AND CRIMINAL FORFEITURE FOR 
                   VIOLATIONS OF THE FOOD STAMP ACT.

       (a) Forfeiture of Items Exchanged in Food Stamp 
     Trafficking.--Section 15(g) of the Food Stamp Act of 1977 (7 
     U.S.C. 2024(g)) is amended by striking ``or intended to be 
     furnished''.
       (b) Civil and Criminal Forfeiture.--Section 15 of the Food 
     Stamp Act of 1977 (7 U.S.C. 2024)) is amended by adding at 
     the end the following:
       ``(h)(1) Civil Forfeiture for Food Stamp Benefit 
     Violations.--
       ``(A) Any food stamp benefits and any property, real or 
     personal--
       ``(i) constituting, derived from, or traceable to any 
     proceeds obtained directly or indirectly from, or
       ``(ii) used, or intended to be used, to commit, or to 
     facilitate,
     the commission of a violation of subsection (b) or subsection 
     (c) involving food stamp benefits having an aggregate value 
     of not less than $5,000, shall be subject to forfeiture to 
     the United States.
       ``(B) The provisions of chapter 46 of title 18, United 
     States Code, relating to civil forfeitures shall extend to a 
     seizure or forfeiture under this subsection, insofar as 
     applicable and not inconsistent with the provisions of this 
     subsection.
       ``(2) Criminal Forfeiture for Food Stamp Benefit 
     Violations.--
       ``(A)(i) Any person convicted of violating subsection (b) 
     or subsection (c) involving food stamp benefits having an 
     aggregate value of not less than $5,000, shall forfeit to the 
     United States, irrespective of any State law--
       ``(I) any food stamp benefits and any property 
     constituting, or derived from, or traceable to any proceeds 
     such person obtained directly or indirectly as a result of 
     such violation; and
       ``(II) any food stamp benefits and any of such person's 
     property used, or intended to be used, in any manner or part, 
     to commit, or to facilitate the commission of such violation.
       ``(ii) In imposing sentence on such person, the court shall 
     order that the person forfeit to the United States all 
     property described in this subsection.
       ``(B) All food stamp benefits and any property subject to 
     forfeiture under this subsection, any seizure and disposition 
     thereof, and any administrative or judicial proceeding 
     relating thereto, shall be governed by subsections (b), (c), 
     (e), and (g) through (p) of section 413 of the Comprehensive 
     Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. 
     853), insofar as applicable and not inconsistent with the 
     provisions of this subsection.
       ``(3) Applicability.--This subsection shall not apply to 
     property specified in subsection (g) of this section.
       ``(4) Rules.--The Secretary may prescribe such rules and 
     regulations as may be necessary to carry out this 
     subsection.''.

     SEC. 9712. EXPANDED AUTHORITY FOR SHARING INFORMATION 
                   PROVIDED BY RETAILERS.

       (a) Section 205(c)(2)(C)(iii) of the Social Security Act 
     (42 U.S.C. 405(c)(2)(C)(iii)) (as amended by section 316(a) 
     of the Social Security Administrative Reform Act of 1994 
     (Public Law 103-296; 108 Stat. 1464) is amended--
       (1) by inserting in the first sentence of subclause (II) 
     after ``instrumentality of the 

[[Page H11319]]

     United States'' the following: ``, or State government 
     officers and employees with law enforcement or investigative 
     responsibilities, or State agencies that have the 
     responsibility for administering the Special Supplemental 
     Nutrition Program for Women, Infants and Children (WIC)'';
       (2) by inserting in the last sentence of subclause (II) 
     immediately after ``other Federal'' the words ``or State''; 
     and
       (3) by inserting ``or a State'' in subclause (III) 
     immediately after ``United States''.
       (b) Section 6109(f)(2) of the Internal Revenue Code of 1986 
     (26 U.S.C. 6109(f)(2)) (as added by section 316(b) of the 
     Social Security Administrative Reform Act of 1994 (Public Law 
     103-296; 108 Stat. 1464)) is amended--
       (1) by inserting in subparagraph (A) after 
     ``instrumentality of the United States'' the following: ``, 
     or State government officers and employees with law 
     enforcement or investigative responsibilities, or State 
     agencies that have the responsibility for administering the 
     Special Supplemental Nutrition Program for Women, Infants and 
     Children (WIC)'';
       (2) in the last sentence of subparagraph (A) by inserting 
     ``or State'' after ``other Federal''; and
       (3) in subparagraph (B) by inserting ``or a State'' after 
     ``United States''.

     SEC. 9713. EXPANDED DEFINITION OF ``COUPON''.

       Section 3(d) of the Food Stamp Act of 1977 (7 U.S.C. 
     2012(d)) is amended by striking ``or type of certificate'' 
     and inserting ``type of certificate, authorization cards, 
     cash or checks issued of coupons or access devices, 
     including, but not limited to, electronic benefit transfer 
     cards and personal identification numbers''.

     SEC. 9714. DOUBLED PENALTIES FOR VIOLATING FOOD STAMP PROGRAM 
                   REQUIREMENTS.

       Section 6(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 
     2015(b)(1)) is amended--
       (1) in clause (i)--
       (A) by striking ``six months'' and inserting ``1 year''; 
     and
       (B) by adding ``and'' at the end; and
       (2) striking clauses (ii) and (iii) and inserting the 
     following:
       ``(ii) permanently upon--
       ``(I) the second occasion of any such determination; or
       ``(II) the first occasion of a finding by a Federal, State, 
     or local court of the trading of a controlled substance (as 
     defined in section 102 of the Controlled Substances Act (21 
     U.S.C. 802)), firearms, ammunition, or explosives for 
     coupons.''.

     SEC. 9715. MANDATORY CLAIMS COLLECTION METHODS.

       (a) Section 11(e)(8) of the Food Stamp Act of 1977 (7 
     U.S.C. 2020(e)(8)) is amended by inserting ``or refunds of 
     Federal taxes as authorized pursuant to 31 U.S.C. 3720A'' 
     before the semicolon at the end.
       (b) Section 13(d) of the Food Stamp Act of 1977 (7 U.S.C. 
     2022(d)) is amended--
       (1) by striking ``may'' and inserting ``shall''; and
       (2) by inserting ``or refunds of Federal taxes as 
     authorized pursuant to 31 U.S.C. 3720A'' before the period at 
     the end.
       (c) Section 6103(1) of the Internal Revenue Code (26 U.S.C. 
     6103(1)) is amended--
       (1) by striking ``officers and employees'' in paragraph 
     (10)(A) and inserting ``officers, employees or agents, 
     including State agencies''; and
       (2) by striking ``officers and employees'' in paragraph 
     (10)(B) and inserting ``officers, employees or agents, 
     including State agencies''.

     SEC. 9716. PROMOTING EXPANSION OF ELECTRONIC BENEFITS 
                   TRANSFER.

       Section 7(i) of the Food Stamp Act of 1977 (7 U.S.C. 
     2016(i)(1)) is amended--
       (1) by amending paragraph (1) to read:
       ``(1)(A) State agencies are encouraged to implement an on-
     line electronic benefit transfer system in which household 
     benefits determined under section 8(a) are issued from and 
     stored in a central data bank and electronically accessed by 
     household members at the point-of-sale.
       ``(B) Subject to paragraph (2), a State agency is 
     authorized to procure and implement an electronic benefit 
     transfer system under the terms, conditions, and design that 
     the State agency deems appropriate.
       ``(C) The Secretary shall, upon request of a State agency, 
     waive any provision of this subsection prohibiting the 
     effective implementation of an electronic benefit transfer 
     system consistent with the purposes of this Act. The 
     Secretary shall act upon any request for such a waiver within 
     90 days of receipt of a complete application.'';
       (2) in paragraph (2), by striking ``for the approval''; and
       (3) in paragraph (3), by striking ``the Secretary shall not 
     approve such a system unless'' and inserting ``the State 
     agency shall ensure that''.

     SEC. 9717. REDUCTION OF BASIC BENEFIT LEVEL.

       Section 3(o) of the Food Stamp Act of 1977 (7 U.S.C. 
     2012(o)) is amended--
       (1) by striking ``and (11)'' and inserting ``(11)'';
       (2) in clause (11) by inserting ``through October 1, 1994'' 
     after ``each October 1 thereafter''; and
       (3) by inserting before the period at the end the 
     following:

     ``, and (12) on October 1, 1995, and on each October 1 
     thereafter, adjust the cost of such diet to reflect 100 
     percent of the cost, in the preceding June (without regard to 
     any previous adjustment made under this clause or clauses (4) 
     through (11) of this subsection) and round the result to the 
     nearest lower dollar increment for each household size''.

     SEC. 9718. 2-YEAR FREEZE OF STANDARD DEDUCTION.

       The second sentence of section 5(e)(4) (7 U.S.C. 
     2014(e)(4)) is amended by inserting ``, except October 1, 
     1995, and October 1, 1996'' after ``thereafter''.

     SEC. 9719. PRO-RATING BENEFITS AFTER INTERRUPTIONS IN 
                   PARTICIPATION.

       Section 8(c)(2)(B) of the Food Stamp Act of 1977 (7 U.S.C. 
     2017(c)(2)(B)) is amended by striking ``of more than one 
     month''.

     SEC. 9720. DISQUALIFICATION FOR PARTICIPATING IN 2 OR MORE 
                   STATES.

       Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as 
     amended by sections 9491 and 9492, is amended by adding at 
     the end the following:
       ``(l) Disqualification for Participating in 2 or More 
     States.--An individual shall be ineligible to participate in 
     the food stamp program as a member of any household during a 
     10-year period beginning on the date the individual is found 
     by a State to have made, or is convicted in Federal or State 
     court of having made, a fraudulent statement or 
     representation with respect to the place of residence of the 
     individual to receive benefits simultaneously from 2 or more 
     States under--
       ``(1) the food stamp program;
       ``(2) a State program funded under part A of title IV of 
     the Social Security Act (42 U.S.C. 601 et seq.) or under 
     title XIX of the Act (42 U.S.C. 1396 et seq.); or
       ``(3) the supplemental security income program under title 
     XVI of the Act (42 U.S.C. 1381 et seq.).''.

     SEC. 9721. DISQUALIFICATION RELATING TO CHILD SUPPORT 
                   ARREARS.

       Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as 
     amended by sections 9491, 9492, and 9720, is amended by 
     adding at the end the following:
       ``(m) Disqualification for Child Support Arrears.--
       ``(1) In general.--At the option of a State agency, except 
     as provided in paragraph (2), no individual shall be eligible 
     to participate in the food stamp program as a member of any 
     household during any month that the individual is delinquent 
     in any payment due under a court order for the support of a 
     child of the individual.
       ``(2) Exceptions.--Paragraph (1) shall not apply if--
       ``(A) a court is allowing the individual to delay payment; 
     or
       ``(B) the individual is complying with a payment plan 
     approved by a court or the State agency designated under part 
     D of title IV of the Social Security Act (42 U.S.C. 651 et 
     seq.) to provide support for the child of the individual.''.

     SEC. 9722. STATE AUTHORIZATION TO ASSIST LAW ENFORCEMENT 
                   OFFICERS IN LOCATING FUGITIVE FELONS.

       Section 11(e)(8)(B) of the Food Stamp Act of 1977 (7 U.S.C. 
     2020(e)(8)(B)) is amended by striking ``Act, and'' and 
     inserting ``Act or of locating a fugitive felon (as defined 
     by a State), and''.

     SEC. 9723. WORK REQUIREMENT FOR ABLE-BODIED RECIPIENTS.

       (a) In General.--Section 6 of the Food Stamp Act of 1977 (7 
     U.S.C. 2015), as amended by sections 9491, 9492, 9720, and 
     9721, is amended by adding at the end the following:
       ``(n) Work Requirement.--
       ``(1) Definition of work program.--In this subsection, the 
     term `work program' means--
       ``(A) a program under the Job Training Partnership Act (29 
     U.S.C. 1501 et seq.);
       ``(B) a program under section 236 of the Trade Act of 1974 
     (19 U.S.C. 2296); or
       ``(C) a program of employment or training operated or 
     supervised by a State or local government, as determined 
     appropriate by the Secretary.
       ``(2) Work requirement.--No individual shall be eligible to 
     participate in the food stamp program as a member of any 
     household if, during the preceding 12 months, the individual 
     received food stamp benefits for not less than 6 months 
     during which the individual did not--
       ``(A) work 20 hours or more per week, averaged monthly;
       ``(B) participate in a workfare program under section 20 or 
     a comparable State or local workfare program;
       ``(C) participate in and comply with the requirements of an 
     approved employment and training program under subsection 
     (d)(4); or
       ``(D) participate in and comply with the requirements of a 
     work program for 20 hours or more per week.
       ``(3) Exception.--Paragraph (2) shall not apply to an 
     individual if the individual is--
       ``(A) under 18 or over 50 years of age;
       ``(B) medically certified as physically or mentally unfit 
     for employment;
       ``(C) a parent or other member of a household with a 
     dependent child under 18 years of age; or
       ``(D) otherwise exempt under subsection (d)(2).
       ``(4) Waiver.--
       ``(A) In general.--The Secretary may waive the 
     applicability of paragraph (2) to any group of individuals in 
     the State if the Secretary makes a determination that the 
     area in which the individuals reside--
       ``(i) has an unemployment rate of over 8 percent; or
       ``(ii) does not have a sufficient number of jobs to provide 
     employment for the individuals.
       ``(B) Report.--The Secretary shall report the basis for a 
     waiver under subparagraph (A) to the Committee on Agriculture 
     of the 

[[Page H11320]]

     House of Representatives and the Committee on Agriculture, 
     Nutrition, and Forestry of the Senate.''.
       (b) Work and Training Programs.--Section 6(d)(4) of the 
     Food Stamp Act of 1977 (7 U.S.C. 2015(d)(4)) is amended by 
     adding at the end the following:
       ``(O) Required participation in work and training 
     programs.--A State agency shall provide an opportunity to 
     participate in the employment and training program under this 
     paragraph to any individual who would otherwise become 
     subject to disqualification under subsection (i).
       ``(P) Coordinating work requirements.--
       ``(i) In general.--Notwithstanding any other provision of 
     this paragraph, a State agency that meets the participation 
     requirements of clause (ii) may operate the employment and 
     training program of the State for individuals who are members 
     of households receiving allotments under this Act as part of 
     a program operated by the State under part F of title IV of 
     the Social Security Act (42 U.S.C. 681 et seq.), subject to 
     the requirements of the Act.
       ``(ii) Participation requirements.--A State agency may 
     exercise the option under clause (i) if the State agency 
     provides an opportunity to participate in an approved 
     employment and training program to an individual who is--

       ``(I) subject to subsection (i);
       ``(II) not employed at least an average of 20 hours per 
     week;
       ``(III) not participating in a workfare program under 
     section 20 (or a comparable State or local program); and
       ``(IV) not subject to a waiver under subsection (i)(4).''.

       (c) Enhanced Employment and Training Program.--Section 
     16(h)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2025(h)(1)) 
     is amended--
       (1) in subparagraph (A), by striking ``$75,000,000 for each 
     of the fiscal years 1991 through 1995'' and inserting 
     ``$150,000,000 for each of fiscal years 1996 through 2000'';
       (2) by striking subparagraphs (B), (C), (E), and (F);
       (3) by redesignating subparagraph (D) as subparagraph (B); 
     and
       (4) in subparagraph (B) (as redesignated by paragraph (3)), 
     by striking ``for each'' and all that follows through ``of 
     $60,000,000'' and inserting ``, the Secretary shall allocate 
     funding''.

     SEC. 9724. COORDINATION OF EMPLOYMENT AND TRAINING PROGRAMS.

       Section 8(d) of the Food Stamp Act of 1977 (7 U.S.C. 
     2019(d)) is amended--
       (1) by striking ``(d) A household'' and inserting the 
     following:
       ``(d) Noncompliance With Other Welfare or Work Programs.--
       ``(1) In general.--A household''; and
       (2) by inserting ``or a work requirement under a welfare or 
     public assistance program'' after ``assistance program''; and
       (3) by adding at the end the following:
       ``(2) Work requirement.--If a household fails to comply 
     with a work requirement under a State program funded under 
     part A of title IV of the Social Security Act (42 U.S.C. 601 
     et seq.), for the duration of the reduction--
       ``(A) the household may not receive an increased allotment 
     as the result of a decrease in the income of the household to 
     the extent that the decrease is the result of a penalty 
     imposed for the failure to comply; and
       ``(B) the State agency may reduce the allotment of the 
     household by not more than 25 percent.''.

     SEC. 9725. EXTENDING CURRENT CLAIMS RETENTION RATES.

       Section 16(a) of the Food Stamp Act of 1977 (7 U.S.C. 
     2025(a)) is amended by striking ``September 30, 1995'' each 
     place it appears and inserting ``September 30, 2002''.

     SEC. 9726. NUTRITION ASSISTANCE FOR PUERTO RICO.

       Section 19(a)(1)(A) of the Food Stamp Act of 1977 (7 U.S.C. 
     2028(a)(1)(A)) is amended--
       (1) by striking ``1994, and'' and inserting ``1994,''; and
       (2) by inserting ``and $1,143,000,000 for fiscal year 
     1996,'' before ``to finance''.

     SEC. 9727. TREATMENT OF CHILDREN LIVING AT HOME.

       The second sentence of section 3(i) of the Food Stamp Act 
     of 1977 (7 U.S.C. 2012(i)) is amended by striking ``(who are 
     not themselves parents living with their children or married 
     and living with their spouses)''.

                   CHAPTER 2--COMMODITY DISTRIBUTION

     SEC. 9751. SHORT TITLE.

       This chapter may be cited as the ``Commodity Distribution 
     Act of 1995''.

     SEC. 9752. AVAILABILITY OF COMMODITIES.

       (a) Notwithstanding any other provision of law, the 
     Secretary of Agriculture (hereinafter in this chapter 
     referred to as the ``Secretary'') is authorized during fiscal 
     years 1996 through 2000 to purchase a variety of nutritious 
     and useful commodities and distribute such commodities to the 
     States for distribution in accordance with this chapter.
       (b) In addition to the commodities described in subsection 
     (a), the Secretary may expend funds made available to carry 
     out the section 32 of the Act of August 24, 1935 (7 U.S.C. 
     612c), which are not expended or needed to carry out such 
     section, to purchase, process, and distribute commodities of 
     the types customarily purchased under such section to the 
     States for distribution in accordance to this chapter.
       (c) In addition to the commodities described in subsections 
     (a) and (b), agricultural commodities and the products 
     thereof made available under clause (2) of the second 
     sentence of section 32 of the Act of August 24, 1935 (7 
     U.S.C. 612c), may be made available by the Secretary to the 
     States for distribution in accordance with this chapter.
       (d) In addition to the commodities described in subsections 
     (a), (b), and (c), commodities acquired by the Commodity 
     Credit Corporation that the Secretary determines, in the 
     discretion of the Secretary, are in excess of quantities 
     needed to--
       (1) carry out other domestic donation programs;
       (2) meet other domestic obligations;
       (3) meet international market development and food aid 
     commitments, and
       (4) carry out the farm price and income stabilization 
     purposes of the Agricultural Adjustment Act of 1938, the 
     Agricultural Act of 1949, and the Commodity Credit 
     Corporation Charter Act; shall be made available by the 
     Secretary, without charge or credit for such commodities, to 
     the States for distribution in accordance with this chapter.
       (e) During each fiscal year, the types, varieties, and 
     amounts of commodities to be purchased under this chapter 
     shall be determined by the Secretary. In purchasing such 
     commodities, except those commodities purchased pursuant to 
     section 9760, the Secretary shall, to the extent practicable 
     and appropriate, make purchases based on--
       (1) agricultural market conditions;
       (2) the preferences and needs of States and distributing 
     agencies; and
       (3) the preferences of the recipients.

     SEC. 9753. STATE, LOCAL AND PRIVATE SUPPLEMENTATION OF 
                   COMMODITIES.

       (a) The Secretary shall establish procedures under which 
     State and local agencies, recipient agencies, or any other 
     entity or person may supplement the commodities distributed 
     under this chapter for use by recipient agencies with 
     nutritious and wholesome commodities that such entities or 
     persons donate for distribution, in all or part of the 
     State, in addition to the commodities otherwise made 
     available under this chapter.
       (b) States and eligible recipient agencies may use--
       (1) the funds appropriated for administrative cost under 
     section 9759(b);
       (2) equipment, structures, vehicles, and all other 
     facilities involved in the storage, handling, or distribution 
     of commodities made available under this chapter; and
       (3) the personnel, both paid or volunteer, involved in such 
     storage, handling, or distribution; to store, handle or 
     distribute commodities donated for use under subsection (a).
       (c) States and recipient agencies shall continue, to the 
     maximum extent practical, to use volunteer workers, and 
     commodities and other foodstuffs donated by charitable and 
     other organizations, in the distribution of commodities under 
     this chapter.

     SEC. 9754. STATE PLAN.

       (a) A State seeking to receive commodities under this 
     chapter shall submit a plan of operation and administration 
     every four years to the Secretary for approval. The plan may 
     be amended at any time, with the approval of the Secretary.
       (b) The State plan, at a minimum, shall--
       (1) designate the State agency responsible for distributing 
     the commodities received under this chapter;
       (2) set forth a plan of operation and administration to 
     expeditiously distribute commodities under this chapter in 
     quantities requested to eligible recipient agencies in 
     accordance with sections 9756 and 9760;
       (3) set forth the standards of eligibility for recipient 
     agencies; and
       (4) set forth the standards of eligibility for individual 
     or household recipients of commodities, which at minimum 
     shall require--
       (A) individuals or households to be comprised of needy 
     persons; and
       (B) individual or household members to be residing in the 
     geographic location served by the distributing agency at the 
     time of application for assistance.
       (c) The Secretary shall encourage each State receiving 
     commodities under this chapter to establish a State advisory 
     board consisting of representatives of all interested 
     entities, both public and private, in the distribution of 
     commodities received under this chapter in the State.
       (d) A State agency receiving commodities under this chapter 
     may--
       (1)(A) enter into cooperative agreements with State 
     agencies of other States to jointly provide commodities 
     received under this chapter to eligible recipient agencies 
     that serve needy persons in a single geographical area which 
     includes such States; or
       (B) transfer commodities received under this chapter to any 
     such eligible recipient agency in the other State under such 
     agreement; and
       (2) advise the Secretary of an agreement entered into under 
     this subsection and the transfer of commodities made pursuant 
     to such agreement.

     SEC. 9755. ALLOCATION OF COMMODITIES TO STATES.

       (a) In each fiscal year, except for those commodities 
     purchased under section 9760, the Secretary shall allocate 
     the commodities distributed under this chapter as follows:
       (1) 60 percent of such total value of commodities shall be 
     allocated in a manner such that the value of commodities 
     allocated to each State bears the same ratio to 60 percent of 
     such total value as the number of persons in households 
     within the State having incomes below the poverty line bears 
     to the 

[[Page H11321]]

     total number of persons in households within all States 
     having incomes below such poverty line. Each State shall 
     receive the value of commodities allocated under this 
     paragraph.
       (2) 40 percent of such total value of commodities shall be 
     allocated in a manner such that the value of commodities 
     allocated to each State bears the same ratio to 40 percent of 
     such total value as the average monthly number of unemployed 
     persons within the State bears to the average monthly number 
     of unemployed persons within all States during the same 
     fiscal year. Each State shall receive the value of 
     commodities allocated to the State under this paragraph.
       (b)(1) The Secretary shall notify each State of the amount 
     of commodities that such State is allotted to receive under 
     subsection (a) or this subsection, if applicable. Each State 
     shall promptly notify the Secretary if such State determines 
     that it will not accept any or all of the commodities made 
     available under such allocation. On such a notification by a 
     State, the Secretary shall reallocate and distribute such 
     commodities in a manner the Secretary deems appropriate and 
     equitable. The Secretary shall further establish procedures 
     to permit States to decline to receive portions of such 
     allocation during each fiscal year in a manner the State 
     determines is appropriate and the Secretary shall reallocate 
     and distribute such allocation as the Secretary deems 
     appropriate and equitable.
       (2) In the event of any drought, flood, hurricane, or other 
     natural disaster affecting substantial numbers of persons in 
     a State, county, or parish, the Secretary may request that 
     States unaffected by such a disaster consider assisting 
     affected States by allowing the Secretary to reallocate 
     commodities from such unaffected State to States containing 
     areas adversely affected by the disaster.
       (c) Purchases of commodities under this chapter shall be 
     made by the Secretary at such times and under such conditions 
     as the Secretary determines appropriate within each fiscal 
     year. All commodities so purchased for each such fiscal year 
     shall be delivered at reasonable intervals to States based on 
     the allocations and reallocations made under subsections (a) 
     and (b), and or carry out section 9760, not later than 
     December 31 of the following fiscal year.

     SEC. 9756. PRIORITY SYSTEM FOR STATE DISTRIBUTION OF 
                   COMMODITIES.

       (a) In distributing the commodities allocated under 
     subsections (a) and (b) of section 9755, the State agency, 
     under procedures determined by the State agency, shall offer, 
     or otherwise make available, its full allocation of 
     commodities for distribution to emergency feeding 
     organizations.
       (b) If the State agency determines that the State will not 
     exhaust the commodities allocated under subsections (a) and 
     (b) of section 9755 through distribution to organizations 
     referred to in subsection (a), its remaining allocation of 
     commodities shall be distributed to charitable institutions 
     described in section 9763(3) not receiving commodities under 
     subsection (a).
       (c) If the State agency determines that the State will not 
     exhaust the commodities allocated under subsections (a) and 
     (b) of section 9755 through distribution to organizations 
     referred to in subsections (a) and (b), its remaining 
     allocation of commodities shall be distributed to any 
     eligible recipient agency not receiving commodities under 
     subsections (a) and (b).

     SEC. 9757. INITIAL PROCESSING COSTS.

       The Secretary may use funds of the Commodity Credit 
     Corporation to pay the costs of initial processing and 
     packaging of commodities to be distributed under this chapter 
     into forms and in quantities suitable, as determined by the 
     Secretary, for use by the individual households or eligible 
     recipient agencies, as applicable. The Secretary may pay such 
     costs in the form of Corporation-owned commodities equal in 
     value to such costs. The Secretary shall ensure that any such 
     payments in kind will not displace commercial sales of such 
     commodities.

     SEC. 9758. ASSURANCES; ANTICIPATED USE.

       (a) The Secretary shall take such precautions as the 
     Secretary deems necessary to ensure that commodities made 
     available under this chapter will not displace commercial 
     sales of such commodities or the products thereof. The 
     Secretary shall submit to the Committee on Agriculture of the 
     House of Representatives and the Committee on Agriculture, 
     Nutrition, and Forestry of the Senate by December 31, 1997, 
     and not less than every two years thereafter, a report as to 
     whether and to what extent such displacements or 
     substitutions are occurring.
       (b) The Secretary shall determine that commodities provided 
     under this chapter shall be purchased and distributed only in 
     quantities that can be consumed without waste. No eligible 
     recipient agency may receive commodities under this chapter 
     in excess of anticipated use, based on inventory records and 
     controls, or in excess of its ability to accept and store 
     such commodities.

     SEC. 9759. AUTHORIZATION OF APPROPRIATIONS.

       (a) Purchase of Commodities.--To carry out this chapter, 
     there are authorized to be appropriated $260,000,000 for each 
     of the fiscal years 1996 through 2000 to purchase, process, 
     and distribute commodities to the States in accordance with 
     this chapter.
       (b) Administrative Funds.--
       (1) There are authorized to be appropriated $40,000,000 for 
     each of the fiscal years 1996 through 2000 for the Secretary 
     to make available to the States for State and local payments 
     for costs associated with the distribution of commodities by 
     eligible recipient agencies under this chapter, excluding 
     costs associated with the distribution of those commodities 
     distributed under section 9760. Funds appropriated under this 
     paragraph for any fiscal year shall be allocated to the 
     States on an advance basis dividing such funds among the 
     States in the same proportions as the commodities distributed 
     under this chapter for such fiscal year are allocated among 
     the States. If a State agency is unable to use all of the 
     funds so allocated to it, the Secretary shall reallocate such 
     unused funds among the other States in a manner the Secretary 
     deems appropriate and equitable.
       (2)(A) A State shall make available in each fiscal year to 
     eligible recipient agencies in the State not less than 40 
     percent of the funds received by the State under paragraph 
     (1) for such fiscal year, as necessary to pay for, or provide 
     advance payments to cover, the allowable expenses of eligible 
     recipient agencies for distributing commodities to needy 
     persons, but only to the extent such expenses are actually so 
     incurred by such recipient agencies.
       (B) As used in this paragraph, the term ``allowable 
     expenses'' includes--
       (i) costs of transporting, storing, handling, repackaging, 
     processing, and distributing commodities incurred after such 
     commodities are received by eligible recipient agencies;
       (ii) costs associated with determinations of eligibility, 
     verification, and documentation;
       (iii) costs of providing information to persons receiving 
     commodities under this chapter concerning the appropriate 
     storage and preparation of such commodities; and
       (iv) costs of recordkeeping, auditing, and other 
     administrative procedures required for participation in the 
     program under this chapter.
       (C) If a State makes a payment, using State funds, to cover 
     allowable expenses of eligible recipient agencies, the amount 
     of such payment shall be counted toward the amount a State 
     must make available for allowable expenses of recipient 
     agencies under this paragraph.
       (3) States to which funds are allocated for a fiscal year 
     under this subsection shall submit financial reports to the 
     Secretary, on a regular basis, as to the use of such funds. 
     No such funds may be used by States or eligible recipient 
     agencies for costs other than those involved in covering the 
     expenses related to the distribution of commodities by 
     eligible recipient agencies.
       (4)(A) Except as provided in subparagraph (B), to be 
     eligible to receive funds under this subsection, a State 
     shall provide in cash or in kind (according to procedures 
     approved by the Secretary for certifying these in-kind 
     contributions) from non-Federal sources a contribution equal 
     to the difference between--
       (i) the amount of such funds so received; and
       (ii) any part of the amount allocated to the State and paid 
     by the State--
       (I) to eligible recipient agencies; or
       (II) for the allowable expenses of such recipient agencies; 
     for use in carrying out this chapter.
       (B) Funds allocated to a State under this section may, upon 
     State request, be allocated before States satisfy the 
     matching requirement specified in subparagraph (A), based on 
     the estimated contribution required. The Secretary shall 
     periodically reconcile estimated and actual contributions and 
     adjust allocations to the State to correct for overpayments 
     and underpayments.
       (C) Any funds distributed for administrative costs under 
     section 9760(b) shall not be covered by this paragraph.
       (5) States may not charge for commodities made available to 
     eligible recipient agencies, and may not pass on to such 
     recipient agencies the cost of any matching requirements, 
     under this chapter.
       (c) Value of Commodities.--The value of the commodities 
     made available under subsections (c) and (d) of section 9752, 
     and the funds of the Corporation used to pay the costs of 
     initial processing, packaging (including forms suitable for 
     home use), and delivering commodities to the States shall not 
     be charged against appropriations authorized by this section.

     SEC. 9760. COMMODITY SUPPLEMENTAL FOOD PROGRAM.

       (a) From the funds appropriated under section 9759(a), 
     $94,500,000 shall be used for each fiscal year to purchase 
     and distribute commodities to supplemental feeding programs 
     serving woman, infants, and children or elderly individuals 
     (hereinafter in this section referred to as the ``commodity 
     supplemental food program''), or serving both groups wherever 
     located.
       (b) Not more than 20 percent of the funds made available 
     under subsection (a) shall be made available to the States 
     for State and local payments of administrative costs 
     associated with the distribution of commodities by eligible 
     recipient agencies under this section. Administrative costs 
     for the purposes of the commodity supplemental food program 
     shall include, but not be limited to, expenses for 
     information and referral, operation, monitoring, nutrition 
     education, start-up costs, and general administration, 
     including staff, warehouse and transportation personnel, 
     insurance, and administration of the State or local office.

[[Page H11322]]

       (c)(1) During each fiscal year the commodity supplemental 
     food program is in operation, the types, varieties, and 
     amounts of commodities to be purchased under this section 
     shall be determined by the Secretary, but, if the Secretary 
     proposes to make any significant changes in the types, 
     varieties, or amounts from those that were available or were 
     planned at the beginning of the fiscal year the Secretary 
     shall report such changes before implementation to the 
     Committee on Agriculture of the House of Representatives and 
     the Committee on Agriculture, Nutrition, and Forestry of the 
     Senate.
       (2) Notwithstanding any other provision of law, the 
     Commodity Credit Corporation shall, to the extent that the 
     Commodity Credit Corporation inventory levels permit, provide 
     not less than 9,000,000 pounds of cheese and not less than 
     4,000,000 pounds of nonfat dry milk in each of the fiscal 
     years 1996 through 2000 to the Secretary. The Secretary 
     shall use such amounts of cheese and nonfat dry milk to 
     carry out the commodity supplemental food program before 
     the end of each fiscal year.
       (d) The Secretary shall, in each fiscal year, approve 
     applications of additional sites for the program, including 
     sites that serve only elderly persons, in areas in which the 
     program currently does not operate, to the full extent that 
     applications can be approved within the appropriations 
     available for the program for the fiscal year and without 
     reducing actual participation levels (including participation 
     of elderly persons under subsection (e)) in areas in which 
     the program is in effect.
       (e) If a local agency that administers the commodity 
     supplemental food program determines that the amount of funds 
     made available to the agency to carry out this section 
     exceeds the amount of funds necessary to provide assistance 
     under such program to women, infants, and children, the 
     agency, with the approval of the Secretary, may permit low-
     income elderly persons (as defined by the Secretary) to 
     participate in and be served by such program.
       (f)(1) If it is necessary for the Secretary to pay a 
     significantly higher than expected price for one or more 
     types of commodities purchased under this section, the 
     Secretary shall promptly determine whether the price is 
     likely to cause the number of persons that can be served in 
     the program in a fiscal year to decline.
       (2) If the Secretary determines that such a decline would 
     occur, the Secretary shall promptly notify the State agencies 
     charged with operating the program of the decline and shall 
     ensure that a State agency notify all local agencies 
     operating the program in the State of the decline.
       (g) Commodities distributed to States pursuant to this 
     section shall not be considered in determining the commodity 
     allocation to each State under section 9755 or priority of 
     distribution under section 9756.

     SEC. 9761. COMMODITIES NOT INCOME.

       Notwithstanding any other provision of law, commodities 
     distributed under this chapter shall not be considered income 
     or resources for purposes of determining recipient 
     eligibility under any Federal, State, or local means-tested 
     program.

     SEC. 9762. PROHIBITION AGAINST CERTAIN STATE CHARGES.

       Whenever a commodity is made available without charge or 
     credit under this chapter by the Secretary for distribution 
     within the States to eligible recipient agencies, the State 
     may not charge recipient agencies any amount that is in 
     excess of the State's direct costs of storing, and 
     transporting to recipient agencies the commodities minus any 
     amount the Secretary provides the State for the costs of 
     storing and transporting such commodities.

     SEC. 9763. DEFINITIONS.

       As used in this chapter:
       (1) The term ``average monthly number of unemployed 
     persons'' means the average monthly number of unemployed 
     persons within a State in the most recent fiscal year for 
     which such information is available as determined by the 
     Bureau of Labor Statistics of the Department of Labor.
       (2) The term ``elderly persons'' means individuals 60 years 
     of age or older.
       (3) The term ``eligible recipient agency'' means a public 
     or nonprofit organization that administers--
       (A) an institution providing commodities to supplemental 
     feeding programs serving women, infants, and children or 
     serving elderly persons, or serving both groups;
       (B) an emergency feeding organization;
       (C) a charitable institution (including hospitals and 
     retirement homes and excluding penal institutions) to the 
     extent that such institution serves needy persons;
       (D) a summer camp for children, or a child nutrition 
     program providing food service;
       (E) a nutrition project operating under the Older Americans 
     Act of 1965, including such projects that operate a 
     congregate nutrition site and a project that provides home-
     delivered meals; or
       (F) a disaster relief program; and that has been designated 
     by the appropriate State agency, or by the Secretary, and 
     approved by the Secretary for participation in the program 
     established under this chapter.
       (4) The term ``emergency feeding organization'' means a 
     public or nonprofit organization that administers activities 
     and projects (including the activities and projects of a 
     charitable institution, a food bank, a food pantry, a hunger 
     relief center, a soup kitchen, or a similar public or private 
     nonprofit eligible recipient agency) providing nutrition 
     assistance to relieve situations of emergency and distress 
     through the provision of food to needy persons, including 
     low-income and unemployed persons.
       (5) The term ``food bank'' means a public and charitable 
     institution that maintains an established operation involving 
     the provision of food or edible commodities, or the products 
     thereof, to food pantries, soup kitchens, hunger relief 
     centers, or other food or feeding centers that, as an 
     integral part of their normal activities, provide meals or 
     food to feed needy persons on a regular basis.
       (6) The term ``food pantry'' means a public or private 
     nonprofit organization that distributes food to low-income 
     and unemployed households, including food from sources other 
     than the Department of Agriculture, to relieve situations of 
     emergency and distress.
       (7) The term ``needy persons'' means--
       (A) individuals who have low incomes or who are unemployed, 
     as determined by the State (in no event shall the income of 
     such individual or household exceed 185 percent of the 
     poverty line);
       (B) households certified as eligible to participate in the 
     food stamp program under the Food Stamp Act of 1977 (7 U.S.C. 
     2011 et seq.); or
       (C) individuals or households participating in any other 
     Federal, or federally assisted, means-tested program.
       (8) The term ``poverty line'' has the same meaning given 
     such term in section 673(2) of the Community Services Block 
     Grant Act (42 U.S.C. 9902(2)).
       (9) The term ``soup kitchen'' means a public and charitable 
     institution that, as integral part of its normal activities, 
     maintains an established feeding operation to provide food to 
     needy homeless persons on a regular basis.

     SEC. 9764. REGULATIONS.

       (a) The Secretary shall issue regulations within 120 days 
     to implement this chapter.
       (b) In administering this chapter, the Secretary shall 
     minimize, to the maximum extent practicable, the regulatory, 
     recordkeeping, and paperwork requirements imposed on eligible 
     recipient agencies.
       (c) The Secretary shall as early as feasible but not later 
     than the beginning of each fiscal year, publish in the 
     Federal Register a nonbinding estimate of the types and 
     quantities of commodities that the Secretary anticipates are 
     likely to be made available under the commodity distribution 
     program under this chapter during the fiscal year.
       (d) The regulations issued by the Secretary under this 
     section shall include provisions that set standards with 
     respect to liability for commodity losses for the commodities 
     distributed under this chapter in situations in which there 
     is no evidence of negligence or fraud, and conditions for 
     payment to cover such losses. Such provisions shall take into 
     consideration the special needs and circumstances of 
     eligible recipient agencies.

     SEC. 9765. FINALITY OF DETERMINATIONS.

       Determinations made by the Secretary under this chapter and 
     the facts constituting the basis for any donation of 
     commodities under this chapter, or the amount thereof, when 
     officially determined in conformity with the applicable 
     regulations prescribed by the Secretary, shall be final and 
     conclusive and shall not be reviewable by any other officer 
     or agency of the Government.

     SEC. 9766. RELATIONSHIP TO OTHER PROGRAMS.

       (a) Section 4(b) of the Food Stamp Act of 1977 (7 U.S.C. 
     2013(b)) shall not apply with respect to the distribution of 
     commodities under this chapter.
       (b) Except as otherwise provided in section 9757, none of 
     the commodities distributed under this chapter shall be sold 
     or otherwise disposed of in commercial channels in any form.

     SEC. 9767. SETTLEMENT AND ADJUSTMENT OF CLAIMS.

       (a) The Secretary may--
       (1) determine the amount of, settle, and adjust any claim 
     arising under this chapter; and
       (2) waive such a claim if the Secretary determines that to 
     do so will serve the purposes of this chapter.
       (b) Nothing contained in this section shall be construed to 
     diminish the authority of the Attorney General of the United 
     States under section 516 of title 28, United States Code, to 
     conduct litigation on behalf of the United States.

     SEC. 9768. REPEALERS; AMENDMENTS.

       (a) Repealer.--The Emergency Food Assistance Act of 1983 (7 
     U.S.C. 612c note) is repealed.
       (b) Amendments.--
       (1) The Hunger Prevention Act of 1988 (7 U.S.C. 612c note) 
     is amended--
       (A) by striking section 110; and
       (B) by striking section 502.
       (2) The Commodity Distribution Reform Act and WIC 
     Amendments of 1987 (7 U.S.C. 612c note) is amended by 
     striking section 4.
       (3) The Charitable Assistance and Food Bank Act of 1987 (7 
     U.S.C. 612c note) is amended by striking section 3.
       (4) The Food Security Act of 1985 (7 U.S.C. 612c note) is 
     amended--
       (A) by striking section 1562(a) and section 1571; and
       (B) in section 1562(d), by striking ``section 4 of the 
     Agricultural and Consumer Protection Act of 1973'' and 
     inserting ``section 9752 of the Commodity Distribution Act of 
     1995''.
       (5) The Agricultural and Consumer Protection Act of 1973 (7 
     U.S.C. 612c note) is amended--

[[Page H11323]]

       (A) in section 4(a), by striking ``institutions (including 
     hospitals and facilities caring for needy infants and 
     children), supplemental feeding programs serving women, 
     infants and children or elderly persons, or both, wherever 
     located, disaster areas, summer camps for children,'';
       (B) in subsection 4(c), by striking ``the Emergency Food 
     Assistance Act of 1983'' and inserting ``the Commodity 
     Distribution Act of 1995''; and
       (C) by striking section 5.
       (6) The Food, Agriculture, Conservation, and Trade Act of 
     1990 (7 U.S.C. 612c note) is amended by striking section 
     1773(f).

                       CHAPTER 3--OTHER PROGRAMS

     SEC. 9781. CHILD AND ADULT CARE FOOD PROGRAM.

       (a) Payments to Sponsor Employees.--Paragraph (2) of the 
     last sentence of section 17(a) of the National School Lunch 
     Act (42 U.S.C. 1766(a)) is amended--
       (1) by striking ``and'' at the end of subparagraph (B);
       (2) by striking the period at the end of subparagraph (C) 
     and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(D) in the case of a family or group day care home 
     sponsoring organization that employs more than 1 employee, 
     the organization does not base payments to an employee of the 
     organization on the number of family or group day care homes 
     recruited, managed, or monitored.''.
       (b) Improved Targeting of Day Care Home Reimbursements.--
       (1) Restructured day care home reimbursements.--Section 
     17(f)(3) of the National School Lunch Act is amended by 
     striking ``(3)(A) Institutions'' and all that follows through 
     the end of subparagraph (A) and inserting the following:
       ``(3) Reimbursement of family or group day care home 
     sponsoring organizations.--
       ``(A) Reimbursement factor.--
       ``(i) In general.--An institution that participates in the 
     program under this section as a family or group day care home 
     sponsoring organization shall be provided, for payment to a 
     home of the organization, reimbursement factors in accordance 
     with this subparagraph for the cost of obtaining and 
     preparing food and prescribed labor costs involved in 
     providing meals under this section.
       ``(ii) Tier i family or group day care homes.--

       ``(I) Definition.--In this paragraph, the term `tier I 
     family or group day care home' means--

       ``(aa) a family or group day care home that is located in a 
     geographic area, as defined by the Secretary based on census 
     data, in which at least 50 percent of the children residing 
     in the area are members of households whose incomes meet the 
     eligibility standards for free or reduced price meals under 
     section 9;
       ``(bb) a family or group day care home that is located in 
     an area served by a school enrolling elementary students in 
     which at least 50 percent of the total number of children 
     enrolled are certified eligible to receive free or reduced 
     price school meals under this Act or the Child Nutrition Act 
     of 1966 (42 U.S.C. 1771 et seq.); or
       ``(cc) a family or group day care home that is operated by 
     a provider whose household meets the eligibility standards 
     for free or reduced price meals under section 9 and whose 
     income is verified by a sponsoring organization under 
     regulations established by the Secretary.

       ``(II) Reimbursement.--Except as provided in subclause 
     (III), a tier I family or group day care home shall be 
     provided reimbursement factors under this clause without a 
     requirement for documentation of the costs described in 
     clause (i), except that reimbursement shall not be provided 
     under this subclause for meals or supplements served to the 
     children of a person acting as a family or group day care 
     home provider unless the children meet the eligibility 
     standards for free or reduced price meals under section 9.

       ``(III) Factors.--Except as provided in subclause (IV), the 
     reimbursement factors applied to a home referred to in 
     subclause (II) shall be the factors in effect on the date of 
     enactment of this subclause.
       ``(IV) Adjustments.--The reimbursement factors under this 
     subparagraph shall be adjusted on August 1, 1996, July 1, 
     1997, and each July 1 thereafter, to reflect changes in the 
     Consumer Price Index for food at home for the most recent 12-
     month period for which the data are available. The 
     reimbursement factors under this subparagraph shall be 
     rounded to the nearest lower cent increment and based on the 
     unrounded adjustment for the preceding 12-month period.

       ``(iii) Tier ii family or group day care homes.--

       ``(I) In general.--

       ``(aa) Factors.--Except as provided in subclause (II), with 
     respect to meals or supplements served under this clause by a 
     family or group day care home that does not meet the criteria 
     set forth in clause (ii)(I), the reimbursement factors shall 
     be $1 for lunches and suppers, 40 cents for breakfasts, and 
     20 cents for supplements.
       ``(bb) Adjustments.--The factors shall be adjusted on July 
     1, 1997, and each July 1 thereafter, to reflect changes in 
     the Consumer Price Index for food at home for the most recent 
     12-month period for which the data are available. The 
     reimbursement factors under this item shall be rounded down 
     to the nearest lower cent increment and based on the 
     unrounded adjustment for the preceding 12-month period.
       ``(cc) Reimbursement.--A family or group day care home 
     shall be provided reimbursement factors under this subclause 
     without a requirement for documentation of the costs 
     described in clause (i), except that reimbursement shall not 
     be provided under this subclause for meals or supplements 
     served to the children of a person acting as a family or 
     group day care home provider unless the children meet the 
     eligibility standards for free or reduced price meals under 
     section 9.

       ``(II) Other factors.--A family or group day care home that 
     does not meet the criteria set forth in clause (ii)(I) may 
     elect to be provided reimbursement factors determined in 
     accordance with the following requirements:

       ``(aa) Children eligible for free or reduced price meals.--
     In the case of meals or supplements served under this 
     subsection to children who are members of households whose 
     incomes meet the eligibility standards for free or reduced 
     price meals under section 9, the family or group day care 
     home shall be provided reimbursement factors set by the 
     Secretary in accordance with clause (ii)(III).
       ``(bb) Ineligible children.--In the case of meals or 
     supplements served under this subsection to children who are 
     members of households whose incomes do not meet the 
     eligibility standards, the family or group day care home 
     shall be provided reimbursement factors in accordance with 
     subclause (I).

       ``(III) Information and determinations.--

       ``(aa) In general.--If a family or group day care home 
     elects to claim the factors described in subclause (II), the 
     family or group day care home sponsoring organization serving 
     the home shall collect the necessary income information, as 
     determined by the Secretary, from any parent or other 
     caretaker to make the determinations specified in subclause 
     (II) and shall make the determinations in accordance with 
     rules prescribed by the Secretary.
       ``(bb) Categorical eligibility.--In making a determination 
     under item (aa), a family or group day care home sponsoring 
     organization may consider a child participating in or 
     subsidized under, or a child with a parent participating in 
     or subsidized under, a federally or State supported child 
     care or other benefit program with an income eligibility 
     limit that does not exceed the eligibility standard for free 
     or reduced price meals under section 9 to be a child who is a 
     member of a household whose income meets the eligibility 
     standards under section 9.
       ``(cc) Factors for children only.--A family or group day 
     care home may elect to receive the reimbursement factors 
     prescribed under clause (ii)(III) solely for the children 
     participating in a program referred to in item (bb) if the 
     home elects not to have income statements collected from 
     parents or other caretakers.

       ``(IV) Simplified meal counting and reporting procedures.--
     The Secretary shall prescribe simplified meal counting and 
     reporting procedures for use by a family or group day care 
     home that elects to claim the factors under subclause (II) 
     and by a family or group day care home sponsoring 
     organization that serves the home. The procedures the 
     Secretary prescribes may include 1 or more of the following:

       ``(aa) Setting an annual percentage for each home of the 
     number of meals served that are to be reimbursed in 
     accordance with the reimbursement factors prescribed under 
     clause (ii)(III) and an annual percentage of the number of 
     meals served that are to be reimbursed in accordance with the 
     reimbursement factors prescribed under subclause (I), based 
     on the family income of children enrolled in the home in a 
     specified month or other period.
       ``(bb) Placing a home into 1 of 2 or more reimbursement 
     categories annually based on the percentage of children in 
     the home whose households have incomes that meet the 
     eligibility standards under section 9, with each such 
     reimbursement category carrying a set of reimbursement 
     factors such as the factors prescribed under clause (ii)(III) 
     or subclause (I) or factors established within the range of 
     factors prescribed under clause (ii)(III) and subclause (I).
       ``(cc) Such other simplified procedures as the Secretary 
     may prescribe.

       ``(V) Minimum verification requirements.--The Secretary may 
     establish any necessary minimum verification requirements.''.

       (2) Sponsor payments.--Section 17(f)(3)(B) of the National 
     School Lunch Act is amended--
       (A) by striking the period at the end of the second 
     sentence and all that follows through the end of the 
     subparagraph and inserting the following: ``, except that the 
     adjustment that otherwise would occur on July 1, 1996, shall 
     be made on August 1, 1996. The maximum allowable levels for 
     administrative expense payments shall be rounded to the 
     nearest lower dollar increment and based on the unrounded 
     adjustment for the preceding 12-month period.'';
       (B) by striking ``(B)'' and inserting ``(B)(i)''; and
       (C) by adding at the end the following new clause:
       ``(ii) The maximum allowable level of administrative 
     expense payments shall be adjusted by the Secretary--
       ``(I) to increase by 7.5 percent the monthly payment to 
     family or group day care home sponsoring organizations both 
     for tier I family or group day care homes and for those tier 
     II family or group day care homes for which the sponsoring 
     organization administers a means test as provided under 
     subparagraph (A)(iii); and

[[Page H11324]]

       ``(II) to decrease by 7.5 percent the monthly payment to 
     family or group day care home sponsoring organizations for 
     family or group day care homes that do not meet the criteria 
     for tier I homes and for which a means test is not 
     administered.''.
       (3) Grants to states to provide assistance to family or 
     group day care homes.--Section 17(f)(3) of the Act is amended 
     by adding at the end the following:
       ``(D) Grants to states to provide assistance to family or 
     group day care homes.--
       ``(i) In general.--

       ``(I) Reservation.--From amounts made available to carry 
     out this section, the Secretary shall reserve $5,000,000 of 
     the amount made available for fiscal year 1996.
       ``(II) Purpose.--The Secretary shall use the funds made 
     available under subclause (I) to provide grants to States for 
     the purpose of providing--

       ``(aa) assistance, including grants, to family and day care 
     home sponsoring organizations and other appropriate 
     organizations, in securing and providing training, materials, 
     automated data processing assistance, and other assistance 
     for the staff of the sponsoring organizations; and
       ``(bb) training and other assistance to family and group 
     day care homes in the implementation of the amendments to 
     subparagraph (A) made by section 574(b)(1) of the Family 
     Self-Sufficiency Act of 1995.
       ``(ii) Allocation.--The Secretary shall allocate from the 
     funds reserved under clause (i)(II)--

       ``(I) $30,000 in base funding to each State; and
       ``(II) any remaining amount among the States, based on the 
     number of family day care homes participating in the program 
     in a State in 1994 as a percentage of the number of all 
     family day care homes participating in the program in 
     1994.
       ``(iii) Retention of funds.--Of the amount of funds made 
     available to a State for a fiscal year under clause (i), the 
     State may retain not to exceed 30 percent of the amount to 
     carry out this subparagraph.
       ``(iv) Additional payments.--Any payments received under 
     this subparagraph shall be in addition to payments that a 
     State receives under subparagraph (A) (as amended by section 
     134(b)(1) of the Family Self-Sufficiency Act of 1995).''.
       (4) Provision of data.--Section 17(f)(3) of the National 
     School Lunch Act (as amended by paragraph (3)) is further 
     amended by adding at the end the following:
       ``(E) Provision of data to family or group day care home 
     sponsoring organizations.--
       ``(i) Census data.--The Secretary shall provide to each 
     State agency administering a child and adult care food 
     program under this section data from the most recent 
     decennial census survey or other appropriate census survey 
     for which the data are available showing which areas in the 
     State meet the requirements of subparagraph (A)(ii)(I)(aa). 
     The State agency shall provide the data to family or group 
     day care home sponsoring organizations located in the State.
       ``(ii) School data.--

       ``(I) In general.--A State agency administering the program 
     under this section shall annually provide to a family or 
     group day care home sponsoring organizations that request the 
     data, a list of schools serving elementary school children in 
     the State in which at least 50 percent of the children 
     enrolled are certified to receive free or reduced price 
     meals. State agencies administering the school lunch program 
     under this Act or the school breakfast program under the 
     Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.) shall 
     collect such data annually and provide such data on a timely 
     basis to the State agency administering the program under 
     this section.
       ``(II) Use of data from preceding school year.--In 
     determining for a fiscal year or other annual period whether 
     a home qualifies as a tier I family or group day care home 
     under subparagraph (A)(ii)(I), the State agency administering 
     the program under this section, and a family or group day 
     care home sponsoring organization, shall use the most current 
     available data at the time of the determination.

       ``(iii) Duration of determination.--For purposes of this 
     section, a determination that a family or group day care home 
     is located in an area that qualifies the home as a tier I 
     family or group day care home (as the term is defined in 
     subparagraph (A)(ii)(I)), shall be in effect for 3 years 
     (unless the determination is made on the basis of census 
     data, in which case the determination shall remain in effect 
     until more recent census data are available) unless the State 
     agency determines that the area in which the home is located 
     no longer qualifies the home as a tier I family or group day 
     care home.''.
       (5) Conforming amendments.--Section 17(c) of the National 
     School Lunch Act is amended by inserting ``except as provided 
     in subsection (f)(3),'' after ``For purposes of this 
     section,'' each place it appears in paragraphs (1), (2), and 
     (3).
       (c) Disallowing Meal Claims.--The fourth sentence of 
     section 17(f)(4) of the National School Lunch Act is amended 
     by inserting ``(including institutions that are not family or 
     group day care home sponsoring organizations)'' after 
     ``institutions''.
       (d) Elimination of State Paperwork and Outreach Burden.--
     Section 17 of the National School Lunch Act is amended by 
     striking subsection (k) and inserting the following:
       ``(k) Training and Technical Assistance.--A State 
     participating in the program established under this section 
     shall provide sufficient training, technical assistance, and 
     monitoring to facilitate effective operation of the program. 
     The Secretary shall assist the State in developing plans to 
     fulfill the requirements of this subsection.''.
       (e) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall become effective on the 
     date of enactment of this Act.
       (2) Improved targeting of day care home reimbursements.--
     The amendments made by paragraphs (1), (3), and (4) of 
     subsection (b) shall become effective on August 1, 1996.
       (3) Implementation.--The Secretary of Agriculture shall 
     issue regulations to implement the amendments made by 
     paragraphs (1), (2), (3), and (4) of subsection (b) and the 
     provisions of section 17(f)(3)(C) of the National School 
     Lunch Act (42 U.S.C. 1766(f)(3)(C)) not later than February 
     1, 1996. If such regulations are issued in interim form, 
     final regulations shall be issued not later than August 1, 
     1996.

     SEC. 9782. RESUMPTION OF DISCRETIONARY FUNDING FOR NUTRITION 
                   EDUCATION AND TRAINING PROGRAM.

       Section 19(i)(2)(A) of the Child Nutrition Act of 1966 (42 
     U.S.C. 1788(i)(2)(A)) is amended--
       (1) by striking ``Out of'' and all that follows through 
     ``and $10,000,000'' and inserting ``To carry out the 
     provisions of this section, there is hereby authorized to be 
     appropriated not to exceed $10,000,000''; and
       (2) by striking the last sentence.
                    Subtitle H--Treatment of Aliens

     SEC. 9801. EXTENSION OF DEEMING OF INCOME AND RESOURCES UNDER 
                   TEA, SSI, AND FOOD STAMP PROGRAMS.

       (a) In General.--Except as provided in subsections (b) and 
     (c), in applying sections 407 and 1621 of the Social Security 
     Act and section 5(i) of the Food Stamp Act of 1977, the 
     period in which each respective section otherwise applies 
     with respect to an alien shall be extended through the date 
     (if any) on which the alien becomes a citizen of the United 
     States (under chapter 2 of title III of the Immigration and 
     Nationality Act).
       (b) Exception.--Subsection (a) shall not apply to an alien 
     if--
       (1) the alien has been lawfully admitted to the United 
     States for permanent residence, has attained 75 years of age, 
     and has resided in the United States for at least 5 years;
       (2) the alien--
       (A) is a veteran (as defined in section 101 of title 38, 
     United States Code) with a discharge characterized as an 
     honorable discharge,
       (B) is on active duty (other than active duty for training) 
     in the Armed Forces of the United States, or
       (C) is the spouse or unmarried dependent child of an 
     individual described in subparagraph (A) or (B);
       (3) the alien is the subject of domestic violence by the 
     alien's spouse and a divorce between the alien and the 
     alien's spouse has been initiated through the filing of an 
     appropriate action in an appropriate court; or
       (4) there has been paid with respect to the self-employment 
     income or employment of the alien, or of a parent or spouse 
     of the alien, taxes under chapter 2 or chapter 21 of the 
     Internal Revenue Code of 1986 in each of 20 different 
     calendar quarters.
       (c) Hold Harmless for Medicaid Eligibility.--Subsection (a) 
     shall not apply with respect to determinations of eligibility 
     for benefits under a State plan approved under part A of 
     title IV of the Social Security Act or under the supplemental 
     income security program under title XVI of such Act but only 
     insofar as such determinations provide for eligibility for 
     medical assistance under title XIX of such Act.
       (d) Rules Regarding Income and Resource Deeming Under TEA 
     Program.--Subpart 1 of part A of title IV of the Social 
     Security Act, as added by section 9101(a) of this Act, is 
     amended by adding at the end the following:

     ``SEC. 407. ATTRIBUTION OF SPONSOR'S INCOME AND RESOURCES TO 
                   ALIEN.

       ``(a) For purposes of determining eligibility for and the 
     amount of assistance under a State plan approved under this 
     part for an individual who is an alien lawfully admitted for 
     permanent residence or otherwise permanently residing in the 
     United States under color of law (including any alien who is 
     lawfully present in the United States as a result of the 
     application of the provisions of section 207(c) of the 
     Immigration and Nationality Act (or of section 203(a)(7) of 
     such Act prior to April 1, 1980), or as a result of the 
     application of the provisions of section 208 or 212(d)(5) of 
     such Act), the income and resources of any person who (as a 
     sponsor of such individual's entry into the United States) 
     executed an affidavit of support or similar agreement with 
     respect to such individual, and the income and resources of 
     the sponsor's spouse, shall be deemed to be the unearned 
     income and resources of such individual (in accordance with 
     subsections (b) and (c)) for a period of three years after 
     the individual's entry into the United States, except that 
     this section is not applicable if such individual is a 
     dependent child and such sponsor (or such sponsor's spouse) 
     is the parent of such child.

[[Page H11325]]

       ``(b)(1) The amount of income of a sponsor (and his spouse) 
     which shall be deemed to be the unearned income of an alien 
     for any month shall be determined as follows:
       ``(A) the total amount of earned and unearned income of 
     such sponsor and such sponsor's spouse (if such spouse is 
     living with the sponsor) shall be determined for such month;
       ``(B) the amount determined under subparagraph (A) shall be 
     reduced by an amount equal to the sum of--
       ``(i) the lesser of (I) 20 percent of the total of any 
     amounts received by the sponsor and his spouse in such month 
     as wages or salary or as net earnings from self-employment, 
     plus the full amount of any costs incurred by them in 
     producing self-employment income in such month, or (II) $175;
       ``(ii) the cash needs standard established by the State 
     under its plan for a family of the same size and composition 
     as the sponsor and those other individuals living in the same 
     household as the sponsor who are claimed by him as dependents 
     for purposes of determining his Federal personal income tax 
     liability but whose needs are not taken into account in 
     making a determination under section 402(d);
       ``(iii) any amounts paid by the sponsor (or his spouse) to 
     individuals not living in such household who are claimed by 
     him as dependents for purposes of determining his Federal 
     personal income tax liability; and
       ``(iv) any payments of alimony or child support with 
     respect to individuals not living in such household.
       ``(2) The amount of resources of a sponsor (and his spouse) 
     which shall be deemed to be the resources of an alien for any 
     month shall be determined as follows:
       ``(A) the total amount of the resources (determined as if 
     the sponsor were applying for assistance under the State plan 
     approved under this part) of such sponsor and such sponsor's 
     spouse (if such spouse is living with the sponsor) shall be 
     determined; and
       ``(B) the amount determined under subparagraph (A) shall be 
     reduced by $1,500.
       ``(c)(1) Any individual who is an alien and whose sponsor 
     was a public or private agency shall be ineligible for 
     assistance under a State plan approved under this part during 
     the period of three years after his or her entry into the 
     United States, unless the State agency administering such 
     plan determines that such sponsor either no longer exists or 
     has become unable to meet such individual's needs; and such 
     determination shall be made by the State agency based upon 
     such criteria as it may specify in the State plan, and upon 
     such documentary evidence as it may therein require. Any such 
     individual, and any other individual who is an alien (as a 
     condition of his or her eligibility for assistance under a 
     State plan approved under this part during the period of 
     three years after his or her entry into the United States), 
     shall be required to provide to the State agency 
     administering such plan such information and documentation 
     with respect to his sponsor as may be necessary in order for 
     the State agency to make any determination required under 
     this section, and to obtain any cooperation from such sponsor 
     necessary for any such determination. Such alien shall also 
     be required to provide to the State agency such information 
     and documentation as it may request and which such alien or 
     his sponsor provided in support of such alien's immigration 
     application.
       ``(2) The Secretary shall enter into agreements with the 
     Secretary of State and the Attorney General whereby any 
     information available to them and required in order to make 
     any determination under this section will be provided by them 
     to the Secretary (who may, in turn, make such information 
     available, upon request, to a concerned State agency), and 
     whereby the Secretary of State and Attorney General will 
     inform any sponsor of an alien, at the time such sponsor 
     executes an affidavit of support or similar agreement, of the 
     requirements imposed by this section.
       ``(d) Any sponsor of an alien, and such alien, shall be 
     jointly and severally liable for an amount equal to any 
     overpayment of assistance under the State plan made to such 
     alien during the period of three years after such alien's 
     entry into the United States, on account of such sponsor's 
     failure to provide correct information under the provisions 
     of this section, except where such sponsor was without fault, 
     or where good cause of such failure existed. Any such 
     overpayment which is not repaid to the State or recovered in 
     accordance with the procedures generally applicable under the 
     State plan to the recoupment of overpayments shall be 
     withheld from any subsequent payment to which such alien or 
     such sponsor is entitled under any provision of this Act.
       ``(e)(1) In any case where a person is the sponsor of two 
     or more alien individuals who are living in the same home, 
     the income and resources of such sponsor (and his spouse), to 
     the extent they would be deemed the income and resources of 
     any one of such individuals under the preceding provisions of 
     this section, shall be divided into two or more equal shares 
     (the number of shares being the same as the number of such 
     alien individuals) and the income and resources of each such 
     individual shall be deemed to include one such share.
       ``(2) Income and resources of a sponsor (and his spouse) 
     which are deemed under this section to be the income and 
     resources of any alien individual in a family shall not be 
     considered in determining the need of other family members 
     except to the extent such income or resources are actually 
     available to such other members.
       ``(f) The provisions of this section shall not apply with 
     respect to any alien who is--
       ``(1) admitted to the United States as a result of the 
     application, prior to April 1, 1980, of the provisions of 
     section 203(a)(7) of the Immigration and Nationality Act;
       ``(2) admitted to the United States as a result of the 
     application, after March 31, 1980, of the provisions of 
     section 207(c) of such Act;
       ``(3) paroled into the United States as a refugee under 
     section 212(d)(5) of such Act;
       ``(4) granted political asylum by the Attorney General 
     under section 208 of such Act; or
       ``(5) a Cuban and Haitian entrant, as defined in section 
     501(e) of the Refugee Education Assistance Act of 1980 
     (Public Law 96-422).'.

     SEC. 9802. REQUIREMENTS FOR SPONSOR'S AFFIDAVITS OF SUPPORT.

       (a) In General.--Title II of the Immigration and 
     Nationality Act is amended by inserting after section 213 the 
     following new section:


           ``requirements for sponsor's affidavit of support

       ``Sec. 213A. (a) Enforceability.--
       ``(1) In general.--No affidavit of support may be accepted 
     by the Attorney General or by any consular officer to 
     establish that an alien is not excludable under section 
     212(a)(4) unless such affidavit is executed as a contract--
       ``(A) which is legally enforceable against the sponsor by 
     the Federal Government, by a State, or by any political 
     subdivision of a State, providing cash benefits under a 
     public cash assistance program (as defined in subsection 
     (f)(2)), but not later than 5 years after the date the alien 
     last receives any such cash benefit; and
       ``(B) in which the sponsor agrees to submit to the 
     jurisdiction of any Federal or State court for the purpose of 
     actions brought under subsection (e)(2).
       ``(2) Expiration of liability.--Such contract shall only 
     apply with respect to cash benefits described in paragraph 
     (1)(A) provided to an alien before the earliest of the 
     following:
       ``(A) Citizenship.--The date the alien becomes a citizen of 
     the United States under chapter 2 of title III.
       ``(B) Veteran.--The first date the alien is described in 
     section 9801(b)(2)(A) of the Omnibus Budget Reconciliation 
     Act of 1995.
       ``(C) Payment of social security taxes.--The first date as 
     of which the condition described in section 9801(b)(4) of the 
     Omnibus Budget Reconciliation Act of 1995 is met with respect 
     to the alien.
       ``(3) Nonapplication during certain periods.--Such contract 
     also shall not apply with respect to cash benefits described 
     in paragraph (1)(A) provided during any period in which the 
     alien is described in section 9801(b)(2)(B) or 9801(b)(2)(C) 
     of the Omnibus Budget Reconciliation Act of 1995.
       ``(b) Forms.--Not later than 90 days after the date of 
     enactment of this section, the Attorney General, in 
     consultation with the Secretary of State and the Secretary of 
     Health and Human Services, shall formulate an affidavit of 
     support consistent with the provisions of this section.
       ``(c) Notification of Change of Address.--
       ``(1) Requirement.--The sponsor shall notify the Federal 
     Government and the State in which the sponsored alien is 
     currently resident within 30 days of any change of address of 
     the sponsor during the period specified in subsection 
     (a)(1)(A).
       ``(2) Enforcement.--Any person subject to the requirement 
     of paragraph (1) who fails to satisfy such requirement shall 
     be subject to a civil penalty of--
       ``(A) not less than $250 or more than $2,000, or
       ``(B) if such failure occurs with knowledge that the 
     sponsored alien has received any benefit under any means-
     tested public benefits program, not less than $2,000 or more 
     than $5,000.
       ``(d) Reimbursement of Government Expenses.--
       ``(1) Request for reimbursement.--
       ``(A) In general.--Upon notification that a sponsored alien 
     has received any cash benefits described in subsection 
     (a)(1)(A), the appropriate Federal, State, or local official 
     shall request reimbursement by the sponsor in the amount of 
     such cash benefits.
       ``(B) Regulations.--The Attorney General, in consultation 
     with the Secretary of Health and Human Services, shall 
     prescribe such regulations as may be necessary to carry out 
     subparagraph (A).
       ``(2) Initiation of action.--If within 45 days after 
     requesting reimbursement, the appropriate Federal, State, or 
     local agency has not received a response from the sponsor 
     indicating a willingness to commence payments, an action may 
     be brought against the sponsor pursuant to the affidavit of 
     support.
       ``(3) Failure to abide by repayment terms.--If the sponsor 
     fails to abide by the repayment terms established by such 
     agency, the agency may, within 60 days of such failure, bring 
     an action against the sponsor pursuant to the affidavit of 
     support.
       ``(4) Limitation on actions.--No cause of action may be 
     brought under this subsection later than 5 years after the 
     date the alien last received any cash benefit described in 
     subsection (a)(1)(A).
       ``(f) Definitions.--For the purposes of this section:

[[Page H11326]]

       ``(1) Sponsor.--The term `sponsor' means an individual 
     who--
       ``(A) is a citizen or national of the United States or an 
     alien who is lawfully admitted to the United States for 
     permanent residence;
       ``(B) is 18 years of age or over; and
       ``(C) is domiciled in any State.
       ``(2) Public cash assistance program.--The term `public 
     cash assistance program' means a program of the Federal 
     Government or of a State or political subdivision of a State 
     that provides direct cash assistance for the purpose of 
     income maintenance and in which the eligibility of an 
     individual, household, or family eligibility unit for cash 
     benefits under the program, or the amount of such cash 
     benefits, or both are determined on the basis of income, 
     resources, or financial need of the individual, household, or 
     unit. Such term does not include any program insofar as it 
     provides medical, housing, education, job training, food, or 
     in-kind assistance or social services.''.
       (b) Clerical Amendment.--The table of contents of such Act 
     is amended by inserting after the item relating to section 
     213 the following:

``Sec. 213A. Requirements for sponsor's affidavit of support.''.

       (c) Effective Date.--Subsection (a) of section 213A of the 
     Immigration and Nationality Act, as inserted by subsection 
     (a) of this section, shall apply to affidavits of support 
     executed on or after a date specified by the Attorney 
     General, which date shall be not earlier than 60 days (and 
     not later than 90 days) after the date the Attorney General 
     formulates the form for such affidavits under subsection (b) 
     of such section 213A.

     SEC. 9803. EXTENDING REQUIREMENT FOR AFFIDAVITS OF SUPPORT TO 
                   FAMILY-RELATED AND DIVERSITY IMMIGRANTS.

       (a) In General.--Section 212(a)(4) of the Immigration and 
     Nationality Act (8 U.S.C. 1182(a)(4)) is amended to read as 
     follows:
       ``(4) Public charge and affidavits of support.--
       ``(A) Public charge.--Any alien who, in the opinion of the 
     consular officer at the time of application for a visa, or in 
     the opinion of the Attorney General at the time of 
     application for admission or adjustment of status, is likely 
     at any time to become a public charge is excludable.
       ``(B) Affidavits of support.--Any immigrant who seeks 
     admission or adjustment of status as any of the following is 
     excludable unless there has been executed with respect to the 
     immigrant an affidavit of support pursuant to section 213A:
       ``(i) As an immediate relative (under section 201(b)(2)).
       ``(ii) As a family-sponsored immigrant under section 203(a) 
     (or as the spouse or child under section 203(d) of such an 
     immigrant).
       ``(iii) As the spouse or child (under section 203(d)) of an 
     employment-based immigrant under section 203(b).
       ``(iv) As a diversity immigrant under section 203(c) (or as 
     the spouse or child under section 203(d) of such an 
     immigrant).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to aliens with respect to whom an immigrant visa 
     is issued (or adjustment of status is granted) after the date 
     specified by the Attorney General under section 9802(c)
                  Subtitle I--Earned Income Tax Credit

     SEC. 9901. EARNED INCOME TAX CREDIT DENIED TO INDIVIDUALS NOT 
                   AUTHORIZED TO BE EMPLOYED IN THE UNITED STATES.

       (a) In General.--Section 32(c)(1) of the Internal Revenue 
     Code of 1986 (relating to individuals eligible to claim the 
     earned income tax credit) is amended by adding at the end the 
     following new subparagraph:
       ``(F) Identification number requirement.--The term 
     `eligible individual' does not include any individual who 
     does not include on the return of tax for the taxable year--
       ``(i) such individual's taxpayer identification number, and
       ``(ii) if the individual is married (within the meaning of 
     section 7703), the taxpayer identification number of such 
     individual's spouse.''
       (b) Special Identification Number.--Section 32 of such Code 
     is amended by adding at the end the following new subsection:
       ``(l) Identification Numbers.--Solely for purposes of 
     subsections (c)(1)(F) and (c)(3)(D), a taxpayer 
     identification number means a social security number issued 
     to an individual by the Social Security Administration (other 
     than a social security number issued pursuant to clause (II) 
     (or that portion of clause (III) that relates to clause (II)) 
     of section 205(c)(2)(B)(i) of the Social Security Act).''
       (c) Extension of Procedures Applicable to Mathematical or 
     Clerical Errors.--Section 6213(g)(2) of such Code (relating 
     to the definition of mathematical or clerical errors) is 
     amended by striking ``and' at the end of subparagraph (D), by 
     striking the period at the end of subparagraph (E) and 
     inserting a comma, and by inserting after subparagraph (E) 
     the following new subparagraphs:
       ``(F) an omission of a correct taxpayer identification 
     number required under section 32 (relating to the earned 
     income tax credit) to be included on a return, and
       ``(G) an entry on a return claiming the credit under 
     section 32 with respect to net earnings from self-employment 
     described in section 32(c)(2)(A) to the extent the tax 
     imposed by section 1401 (relating to self-employment tax) on 
     such net earnings has not been paid.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
    TITLE X--REDUCTIONS IN CORPORATE TAX SUBSIDIES AND OTHER REFORMS

     SEC. 10001. SHORT TITLE.

       This title may be cited as the ``Revenue Reconciliation Act 
     of 1995''.
               Subtitle A--Tax Treatment of Expatriation

     SEC. 10101. REVISION OF TAX RULES ON EXPATRIATION.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     inserting after section 877 the following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Mark to market.--Except as provided in subsection 
     (f)(2), all property held by an expatriate immediately before 
     the expatriation date shall be treated as sold at such time 
     for its fair market value.
       ``(2) Recognition of gain or loss.--In the case of any sale 
     under paragraph (1)--
       ``(A) notwithstanding any other provision of this title, 
     any gain arising from such sale shall be taken into account 
     for the taxable year of the sale unless such gain is excluded 
     from gross income under part III of subchapter B, and
       ``(B) any loss arising from such sale shall be taken into 
     account for the taxable year of the sale to the extent 
     otherwise provided by this title, except that section 1091 
     shall not apply (and section 1092 shall apply) to any such 
     loss.
       ``(3) Election to continue to be taxed as united states 
     citizen.--
       ``(A) In general.--If an expatriate elects the application 
     of this paragraph with respect to any property--
       ``(i) this section (other than this paragraph) shall not 
     apply to such property, but
       ``(ii) such property shall be subject to tax under this 
     title in the same manner as if the individual were a United 
     States citizen.
       ``(B) Limitation on amount of estate, gift, and generation-
     skipping transfer taxes.--The aggregate amount of taxes 
     imposed under subtitle B with respect to any transfer of 
     property by reason of an election under subparagraph (A) 
     shall not exceed the amount of income tax which would be due 
     if the property were sold for its fair market value 
     immediately before the time of the transfer or death (taking 
     into account the rules of subsection (a)(2)).
       ``(C) Requirements.--Subparagraph (A) shall not apply to an 
     individual unless the individual--
       ``(i) provides security for payment of tax in such form and 
     manner, and in such amount, as the Secretary may require,
       ``(ii) consents to the waiver of any right of the 
     individual under any treaty of the United States which would 
     preclude assessment or collection of any tax which may be 
     imposed by reason of this paragraph, and
       ``(iii) complies with such other requirements as the 
     Secretary may prescribe.
       ``(D) Election.--An election under subparagraph (A) shall 
     apply only to the property described in the election and, 
     once made, shall be irrevocable.
       ``(b) Exclusion for Certain Gain.--The amount which would 
     (but for this subsection) be includible in the gross income 
     of any individual by reason of subsection (a) shall be 
     reduced (but not below zero) by $600,000.
       ``(c) Property Treated as Held.--For purposes of this 
     section, except as otherwise provided by the Secretary, an 
     individual shall be treated as holding--
       ``(1) all property which would be includible in his gross 
     estate under chapter 11 if such individual were a citizen or 
     resident of the United States (within the meaning of chapter 
     11) who died at the time the property is treated as sold,
       ``(2) any other interest in a trust which the individual is 
     treated as holding under the rules of subsection (f)(1), and
       ``(3) any other interest in property specified by the 
     Secretary as necessary or appropriate to carry out the 
     purposes of this section.
       ``(d) Exceptions.--The following property shall not be 
     treated as sold for purposes of this section:
       ``(1) United states real property interests.--Any United 
     States real property interest (as defined in section 
     897(c)(1)), other than stock of a United States real property 
     holding corporation which does not, on the expatriation date, 
     meet the requirements of section 897(c)(2).
       ``(2) Interest in certain retirement plans.--
       ``(A) In general.--Any interest in a qualified retirement 
     plan (as defined in section 4974(c)), other than any interest 
     attributable to contributions which are in excess of any 
     limitation or which violate any condition for tax- favored 
     treatment.
       ``(B) Foreign pension plans.--
       ``(i) In general.--Under regulations prescribed by the 
     Secretary, interests in foreign pension plans or similar 
     retirement arrangements or programs.
       ``(ii) Limitation.--The value of property which is treated 
     as not sold by reason of this subparagraph shall not exceed 
     $500,000.
       ``(e) Definitions.--For purposes of this section--

[[Page H11327]]

       ``(1) Expatriate.--The term `expatriate' means--
       ``(A) any United States citizen who relinquishes his 
     citizenship, or
       ``(B) any long-term resident of the United States who--
       ``(i) ceases to be a lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)), or
       ``(ii) commences to be treated as a resident of a foreign 
     country under the provisions of a tax treaty between the 
     United States and the foreign country and who does not waive 
     the benefits of such treaty applicable to residents of the 
     foreign country.

     An individual shall not be treated as an expatriate for 
     purposes of this section by reason of the individual 
     relinquishing United States citizenship before attaining the 
     age of 18\1/2\ if the individual has been a resident of 
     the United States (as defined in section 
     7701(b)(1)(A)(ii)) for less than 5 taxable years before 
     the date of relinquishment.
       ``(2) Expatriation date.--The term `expatriation date' 
     means--
       ``(A) the date an individual relinquishes United States 
     citizenship, or
       ``(B) in the case of a long-term resident of the United 
     States, the date of the event described in clause (i) or (ii) 
     of paragraph (1)(B).
       ``(3) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing his United States citizenship on the 
     earliest of--
       ``(A) the date the individual renounces his United States 
     nationality before a diplomatic or consular officer of the 
     United States pursuant to paragraph (5) of section 349(a) of 
     the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
       ``(B) the date the individual furnishes to the United 
     States Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a) (1)-(4)),
       ``(C) the date the United States Department of State issues 
     to the individual a certificate of loss of nationality, or
       ``(D) the date a court of the United States cancels a 
     naturalized citizen's certificate of naturalization.

     Subparagraph (A) or (B) shall not apply to any individual 
     unless the renunciation or voluntary relinquishment is 
     subsequently approved by the issuance to the individual of a 
     certificate of loss of nationality by the United States 
     Department of State.
       ``(4) Long-term resident.--
       ``(A) In general.--The term `long-term resident' means any 
     individual (other than a citizen of the United States) who is 
     a lawful permanent resident of the United States in at least 
     8 taxable years during the period of 15 taxable years ending 
     with the taxable year during which the sale under subsection 
     (a)(1) is treated as occurring. For purposes of the preceding 
     sentence, an individual shall not be treated as a lawful 
     permanent resident for any taxable year if such individual is 
     treated as a resident of a foreign country for the taxable 
     year under the provisions of a tax treaty between the United 
     States and the foreign country and does not waive the 
     benefits of such treaty applicable to residents of the 
     foreign country.
       ``(B) Special rule.--For purposes of subparagraph (A), 
     there shall not be taken into account--
       ``(i) any taxable year during which any prior sale is 
     treated under subsection (a)(1) as occurring, or
       ``(ii) any taxable year prior to the taxable year referred 
     to in clause (i).
       ``(f) Special Rules Applicable to Beneficiaries' Interests 
     in Trust.--
       ``(1) Determination of beneficiaries' interest in trust.--
     For purposes of this section--
       ``(A) General rule.--A beneficiary's interest in a trust 
     shall be based upon all relevant facts and circumstances, 
     including the terms of the trust instrument and any letter of 
     wishes or similar document, historical patterns of trust 
     distributions, and the existence of and functions performed 
     by a trust protector or any similar advisor.
       ``(B) Special rule.--The remaining interests in the trust 
     not determined under subparagraph (A) to be held by any 
     beneficiary shall be allocated first to the grantor, if a 
     beneficiary, and then to other beneficiaries under rules 
     prescribed by the Secretary similar to the rules of intestate 
     succession.
       ``(C) Constructive ownership.--If a beneficiary of a trust 
     is a corporation, partnership, trust, or estate, the 
     shareholders, partners, or beneficiaries shall be deemed to 
     be the trust beneficiaries for purposes of this section.
       ``(D) Taxpayer return position.--A taxpayer shall clearly 
     indicate on its income tax return--
       ``(i) the methodology used to determine that taxpayer's 
     trust interest under this section, and
       ``(ii) if the taxpayer knows (or has reason to know) that 
     any other beneficiary of such trust is using a different 
     methodology to determine such beneficiary's trust interest 
     under this section.
       ``(2) Deemed sale in case of trust interest.--If an 
     individual who is an expatriate is treated under paragraph 
     (1) as holding an interest in a trust for purposes of this 
     section--
       ``(A) the individual shall not be treated as having sold 
     such interest,
       ``(B) such interest shall be treated as a separate share in 
     the trust, and
       ``(C)(i) such separate share shall be treated as a separate 
     trust consisting of the assets allocable to such share,
       ``(ii) the separate trust shall be treated as having sold 
     its assets immediately before the expatriation date for their 
     fair market value and as having distributed all of its assets 
     to the individual as of such time, and
       ``(iii) the individual shall be treated as having 
     recontributed the assets to the separate trust.

     Subsection (a)(2) shall apply to any income, gain, or loss of 
     the individual arising from a distribution described in 
     subparagraph (C)(ii).
       ``(g) Termination of Deferrals, Etc.--On the date any 
     property held by an individual is treated as sold under 
     subsection (a), notwithstanding any other provision of this 
     title--
       ``(1) any period during which recognition of income or gain 
     is deferred shall terminate, and
       ``(2) any extension of time for payment of tax shall cease 
     to apply and the unpaid portion of such tax shall be due and 
     payable at the time and in the manner prescribed by the 
     Secretary.
       ``(h) Rules Relating to Payment of Tax.--
       ``(1) Imposition of tentative tax.--
       ``(A) In general.--If an individual is required to include 
     any amount in gross income under subsection (a) for any 
     taxable year, there is hereby imposed, immediately before the 
     expatriation date, a tax in an amount equal to the amount of 
     tax which would be imposed if the taxable year were a short 
     taxable year ending on the expatriation date.
       ``(B) Due date.--The due date for any tax imposed by 
     subparagraph (A) shall be the 90th day after the expatriation 
     date.
       ``(C) Treatment of tax.--Any tax paid under subparagraph 
     (A) shall be treated as a payment of the tax imposed by this 
     chapter for the taxable year to which subsection (a) applies.
       ``(2) Deferral of tax.--The payment of any tax attributable 
     to amounts included in gross income under subsection (a) may 
     be deferred to the same extent, and in the same manner, as 
     any tax imposed by chapter 11, except that the Secretary may 
     extend the period for extension of time for paying tax under 
     section 6161 to such number of years as the Secretary 
     determines appropriate.
       ``(3) Rules relating to security interests.--
       ``(A) Adequacy of security interests.--In determining the 
     adequacy of any security to be provided under this section, 
     the Secretary may take into account the principles of section 
     2056A.
       ``(B) Special rule for trust.--If a taxpayer is required by 
     this section to provide security in connection with any tax 
     imposed by reason of this section with respect to the holding 
     of an interest in a trust and any trustee of such trust is an 
     individual citizen of the United States or a domestic 
     corporation, such trustee shall be required to provide such 
     security upon notification by the taxpayer of such 
     requirement.
       ``(i) Coordination With Estate and Gift Taxes.--If 
     subsection (a) applies to property held by an individual for 
     any taxable year and--
       ``(1) such property is includible in the gross estate of 
     such individual solely by reason of section 2107, or
       ``(2) section 2501 applies to a transfer of such property 
     by such individual solely by reason of section 2501(a)(3),

     then there shall be allowed as a credit against the 
     additional tax imposed by section 2101 or 2501, whichever is 
     applicable, solely by reason of section 2107 or 2501(a)(3) an 
     amount equal to the increase in the tax imposed by this 
     chapter for such taxable year by reason of this section.
       ``(j) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section, including regulations to 
     prevent double taxation by ensuring that--
       ``(1) appropriate adjustments are made to basis to reflect 
     gain recognized by reason of subsection (a) and the exclusion 
     provided by subsection (b),
       ``(2) no interest in property is treated as held for 
     purposes of this section by more than one taxpayer, and
       ``(3) any gain by reason of a deemed sale under subsection 
     (a) of an interest in a corporation, partnership, trust, or 
     estate is reduced to reflect that portion of such gain which 
     is attributable to an interest in a trust which a 
     shareholder, partner, or beneficiary is treated as holding 
     directly under subsection (f)(1)(C).
       ``(k) Cross Reference.--

  ``For income tax treatment of individuals who terminate United States 
citizenship, see section 7701(a)(47).''

       (b) Definition of Termination of United States 
     Citizenship.--Section 7701(a) of the Internal Revenue Code of 
     1986 is amended by adding at the end the following new 
     paragraph:
       ``(47) Termination of united states citizenship.--An 
     individual shall not cease to be treated as a United States 
     citizen before the date on which the individual's citizenship 
     is treated as relinquished under section 877A(e)(3).''

[[Page H11328]]

       (c) Conforming Amendments.--
       (1) Section 877 of the Internal Revenue Code of 1986 is 
     amended by adding at the end the following new subsection:
       ``(f) Application.--This section shall not apply to any 
     individual who relinquishes (within the meaning of section 
     877A(e)(3)) United States citizenship on or after February 6, 
     1995.''
       (2) Section 2107(c) of such Code is amended by adding at 
     the end the following new paragraph:
       ``(3) Cross reference.--For credit against the tax imposed 
     by subsection (a) for expatriation tax, see section 
     877A(i).''
       (3) Section 2501(a)(3) of such Code is amended by adding at 
     the end the following new flush sentence:

     ``For credit against the tax imposed under this section by 
     reason of this paragraph, see section 877A(i).''
       (4) Section 6851 of such Code is amended by striking 
     subsection (d) and by redesignating subsection (e) as 
     subsection (d).
       (5) Paragraph (10) of section 7701(b) of such Code is 
     amended by adding at the end the following new sentence: 
     ``This paragraph shall not apply to any long-term resident of 
     the United States who is an expatriate (as defined in section 
     877A(e)(1)).''
       (d) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 of the Internal 
     Revenue Code of 1986 is amended by inserting after the item 
     relating to section 877 the following new item:

``Sec. 877A. Tax responsibilities of expatriation.''

       (e) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to expatriates (within the meaning of section 877A(e) 
     of the Internal Revenue Code of 1986, as added by this 
     section) whose expatriation date (as so defined) occurs on or 
     after February 6, 1995.
       (2) Due date for tentative tax.--The due date under section 
     877A(h)(1)(B) of such Code shall in no event occur before the 
     90th day after the date of the enactment of this Act.

     SEC. 10102. BASIS OF ASSETS OF NONRESIDENT ALIEN INDIVIDUALS 
                   BECOMING CITIZENS OR RESIDENTS.

       (a) In General.--Part IV of subchapter O of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to special rules 
     for gain or loss on disposition of property) is amended by 
     redesignating section 1061 as section 1062 and by inserting 
     after section 1060 the following new section:

     ``SEC. 1061. BASIS OF ASSETS OF NONRESIDENT ALIEN INDIVIDUALS 
                   BECOMING CITIZENS OR RESIDENTS.

       ``(a) General Rule.--If a nonresident alien individual 
     becomes a citizen or resident of the United States, gain or 
     loss on the disposition of any property held on the date the 
     individual becomes such a citizen or resident shall be 
     determined by substituting, as of the applicable date, the 
     fair market value of such property (on the applicable date) 
     for its cost basis.
       ``(b) Exception for Depreciation.--Any deduction under this 
     chapter for depreciation, depletion, or amortization shall be 
     determined without regard to the application of this section.
       ``(c) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Applicable date.--The term `applicable date' means, 
     with respect to any property to which subsection (a) applies, 
     the earlier of--
       ``(A) the date the individual becomes a citizen or resident 
     of the United States, or
       ``(B) the date the property first becomes subject to tax 
     under this subtitle by reason of being used in a United 
     States trade or business or by reason of becoming a United 
     States real property interest (within the meaning of section 
     897(c)(1)).
       ``(2) Resident.--The term `resident' does not include an 
     individual who is treated as a resident of a foreign country 
     under the provisions of a tax treaty between the United 
     States and a foreign country and who does not waive the 
     benefits of such treaty applicable to residents of the 
     foreign country.
       ``(3) Trusts.--A trust shall not be treated as an 
     individual.
       ``(4) Election not to have section apply.--An individual 
     may elect not to have this section apply solely for purposes 
     of determining gain with respect to any property. Such 
     election shall apply only to property specified in the 
     election and, once made, shall be irrevocable.
       ``(5) Section only to apply once.--This section shall apply 
     only with respect to the first time the individual becomes 
     either a citizen or resident of the United States.
       ``(d) Regulations.--The Secretary shall prescribe 
     regulations for purposes of this section, including 
     regulations--
       ``(1) for application of this section in the case of 
     property which consists of a direct or indirect interest in a 
     trust, and
       ``(2) providing look-thru rules in the case of any indirect 
     interest in any United States real property interest (within 
     the meaning of section 897(c)(1)) or property used in a 
     United States trade or business.''
       (b) Conforming Amendment.--The table of sections for part 
     IV of subchapter O of chapter 1 of the Internal Revenue Code 
     of 1986 is amended by striking the item relating to section 
     1061 and inserting the following new items:

``Sec. 1061. Basis of assets of nonresident alien individuals becoming 
              citizens or residents.
``Sec. 1062. Cross references.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to dispositions after the date of the enactment 
     of this Act, and to any disposition occurring on or before 
     such date to which section 877A of the Internal Revenue Code 
     of 1986 (as added by section 611) applies.
            Subtitle B--Modification to Earned Income Credit

     SEC. 10201. EARNED INCOME TAX CREDIT DENIED TO INDIVIDUALS 
                   WITH SUBSTANTIAL CAPITAL GAIN NET INCOME.

       (a) In General.--Paragraph (2) of section 32(i) of the 
     Internal Revenue Code of 1986 (relating to denial of credit 
     for individuals having excessive investment income) is 
     amended--
       (1) by striking ``and'' at the end of subparagraph (B),
       (2) by striking the period at the end of subparagraph (C) 
     and inserting ``, and'', and
       (3) by adding at the end the following new subparagraph:
       ``(D) capital gain net income for the taxable year.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
Subtitle C--Alternative Minimum Tax on Corporations Importing Products 
         into the United States at Artificially Inflated Prices

     SEC. 10301. ALTERNATIVE MINIMUM TAX ON CORPORATIONS IMPORTING 
                   PRODUCTS INTO THE UNITED STATES AT ARTIFICIALLY 
                   INFLATED PRICES.

       (a) In General.--Subchapter A of chapter 1 of the Internal 
     Revenue Code of 1986 (relating to determination of tax 
     liability) is amended by adding at the end the following new 
     part:

``PART VIII--ALTERNATIVE MINIMUM TAX ON CORPORATIONS IMPORTING PRODUCTS 
         INTO THE UNITED STATES AT ARTIFICIALLY INFLATED PRICES

``Sec. 59B. Alternative minimum tax on corporations importing products 
              into the United States at artificially inflated prices.

     ``SEC. 59B. ALTERNATIVE MINIMUM TAX ON CORPORATIONS IMPORTING 
                   PRODUCTS INTO THE UNITED STATES AT ARTIFICIALLY 
                   INFLATED PRICES.

       ``(a) Imposition of Tax.--In the case of a corporation to 
     which this section applies, there is hereby imposed an 
     alternative minimum tax equal to 4 percent of net business 
     receipts of the corporation for the taxable year.
       ``(b) Taxpayers to Which Section Applies.--This section 
     shall apply to any corporation, foreign or domestic, if--
       ``(1) gross sales in the United States during the tax year 
     of parts or products manufactured by the corporation, or any 
     subsidiary or affiliate controlled by the corporation, 
     exceeded $10,000,000,
       ``(2) during that same tax year parts or products 
     manufactured by the corporation, or any subsidiary or 
     affiliate controlled by the corporation, with a customs value 
     in excess of $10,000,000 were imported into the United 
     States, and
       ``(3) its tax obligation under this section exceeds its 
     total tax obligation under all other sections of the Internal 
     Revenue Code of 1986.
       ``(c) Credit For Taxes Paid.--There shall be a 
     nonrefundable credit against the taxes owed under this 
     section equal to the total of all other taxes paid by the 
     corporation under the Internal Revenue Code of 1986.
       ``(d) Definitions.--For purposes of this section:
       ``(1) Net business receipts.--The term `net business 
     receipts' means the value of all parts or products sold in 
     the United States, excluding--
       ``(A) the value of parts or products sold for export,
       ``(B) expenses paid for parts or products produced in the 
     United States,
       ``(C) expenses paid for services performed in the United 
     States, and
       ``(D) amounts paid for income, sales or use taxes imposed 
     by any State, or political subdivision thereof, or by the 
     District of Columbia, Puerto Rico, Guam or the Virgin 
     Islands.
       ``(2) Subsidiary or affiliate controlled by the 
     corporation.--An entity shall be considered to be a 
     `subsidiary or affiliate controlled by the corporation' if 
     the corporation owns 5 percent or more of any class of stock 
     of the entity or if the corporation exercises control over a 
     majority of the board of directors of the entity.''
       (b) Clerical Amendment.--The table of parts for such 
     subchapter A is amended by adding at the end thereof the 
     following new item:

``Part VIII. Alternative minimum tax on corporations importing products 
              into the United States at artificially inflated prices.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
      Subtitle D--Tax Treatment of Certain Extraordinary Dividends

     SEC. 10401. TAX TREATMENT OF CERTAIN EXTRAORDINARY DIVIDENDS.

       (a) Treatment of Extraordinary Dividends in Excess of 
     Basis.--Paragraph (2) of section 1059(a) of the Internal 
     Revenue Code of 1986 (relating to corporate shareholder's 
     basis in stock reduced by nontaxed portion 

[[Page H11329]]

     of extraordinary dividends) is amended to read as follows:
       ``(2) Amounts in excess of basis.--If the nontaxed portion 
     of such dividends exceeds such basis, such excess shall be 
     treated as gain from the sale or exchange of such stock for 
     the taxable year in which the extraordinary dividend is 
     received.''
       (b) Treatment of Redemptions Where Options Involved.--
     Paragraph (1) of section 1059(e) of such Code (relating to 
     treatment of partial liquidations and non-pro rata 
     redemptions) is amended to read as follows:
       ``(1) Treatment of partial liquidations and certain 
     redemptions.--Except as otherwise provided in regulations--
       ``(A) Redemptions.--In the case of any redemption of 
     stock--
       ``(i) which is part of a partial liquidation (within the 
     meaning of section 302(e)) of the redeeming corporation,
       ``(ii) which is not pro rata as to all shareholders, or
       ``(iii) which would not have been treated (in whole or in 
     part) as a dividend if any options had not been taken into 
     account under section 318(a)(4),

     any amount treated as a dividend with respect to such 
     redemption shall be treated as an extraordinary dividend to 
     which paragraphs (1) and (2) of subsection (a) apply without 
     regard to the period the taxpayer held such stock. In the 
     case of a redemption described in clause (iii), only the 
     basis in the stock redeemed shall be taken into account under 
     subsection (a).
       ``(B) Reorganizations, etc.--An exchange described in 
     section 356(a)(1) which is treated as a dividend under 
     section 356(a)(2) shall be treated as a redemption of stock 
     for purposes of applying subparagraph (A).''
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to distributions after May 3, 1995.
       (2) Transition rule.--The amendments made by this section 
     shall not apply to any distribution made pursuant to the 
     terms of--
       (A) a written binding contract in effect on May 3, 1995, 
     and at all times thereafter before such distribution, or
       (B) a tender offer outstanding on May 3, 1995.
       (3) Certain dividends not pursuant to certain 
     redemptions.--In determining whether the amendment made by 
     subsection (a) applies to any extraordinary dividend other 
     than a dividend treated as an extraordinary dividend under 
     section 1059(e)(1) of the Internal Revenue Code of 1986 (as 
     amended by this Act), paragraphs (1) and (2) shall be applied 
     by substituting ``September 13, 1995'' for ``May 3, 1995''.
                Subtitle E--Foreign Trust Tax Compliance

     SEC. 10501. IMPROVED INFORMATION REPORTING ON FOREIGN TRUSTS.

       (a) In General.--Section 6048 of the Internal Revenue Code 
     of 1986 (relating to returns as to certain foreign trusts) is 
     amended to read as follows:

     ``SEC. 6048. INFORMATION WITH RESPECT TO CERTAIN FOREIGN 
                   TRUSTS.

       ``(a) Notice of Certain Events.--
       ``(1) General rule.--On or before the 90th day (or such 
     later day as the Secretary may prescribe) after any 
     reportable event, the responsible party shall provide written 
     notice of such event to the Secretary in accordance with 
     paragraph (2).
       ``(2) Contents of notice.--The notice required by paragraph 
     (1) shall contain such information as the Secretary may 
     prescribe, including--
       ``(A) the amount of money or other property (if any) 
     transferred to the trust in connection with the reportable 
     event, and
       ``(B) the identity of the trust and of each trustee and 
     beneficiary (or class of beneficiaries) of the trust.
       ``(3) Reportable event.--For purposes of this subsection--
       ``(A) In general.--The term `reportable event' means--
       ``(i) the creation of any foreign trust by a United States 
     person,
       ``(ii) the transfer of any money or property (directly or 
     indirectly) to a foreign trust by a United States person, 
     including a transfer by reason of death, and
       ``(iii) the death of a citizen or resident of the United 
     States if--

       ``(I) the decedent was treated as the owner of any portion 
     of a foreign trust under the rules of subpart E of part I of 
     subchapter J of chapter 1, or
       ``(II) any portion of a foreign trust was included in the 
     gross estate of the decedent.

       ``(B) Exceptions.--
       ``(i) Fair market value sales.--Subparagraph (A)(ii) shall 
     not apply to any transfer of property to a trust in exchange 
     for consideration of at least the fair market value of the 
     transferred property. For purposes of the preceding sentence, 
     consideration other than cash shall be taken into account at 
     its fair market value and the rules of section 679(a)(3) 
     shall apply.
       ``(ii) Pension and charitable trusts.--Subparagraph (A) 
     shall not apply with respect to a trust which is--

       ``(I) described in section 404(a)(4) or 404A, or
       ``(II) determined by the Secretary to be described in 
     section 501(c)(3).

       ``(4) Responsible party.--For purposes of this subsection, 
     the term `responsible party' means--
       ``(A) the grantor in the case of the creation of an inter 
     vivos trust,
       ``(B) the transferor in the case of a reportable event 
     described in paragraph (3)(A)(ii) other than a transfer by 
     reason of death, and
       ``(C) the executor of the decedent's estate in any other 
     case.
       ``(b) United States Grantor of Foreign Trust.--
       ``(1) In general.--If, at any time during any taxable year 
     of a United States person, such person is treated as the 
     owner of any portion of a foreign trust under the rules of 
     subpart E of part I of subchapter J of chapter 1, such person 
     shall be responsible to ensure that--
       ``(A) such trust makes a return for such year which sets 
     forth a full and complete accounting of all trust activities 
     and operations for the year, the name of the United States 
     agent for such trust, and such other information as the 
     Secretary may prescribe, and
       ``(B) such trust furnishes such information as the 
     Secretary may prescribe to each United States person (i) who 
     is treated as the owner of any portion of such trust or (ii) 
     who receives (directly or indirectly) any distribution from 
     the trust.
       ``(2) Trusts not having united states agent.--
       ``(A) In general.--If the rules of this subsection apply to 
     any foreign trust, the determination of amounts required to 
     be taken into account with respect to such trust by a United 
     States person under the rules of subpart E of part I of 
     subchapter J of chapter 1 shall be determined by the 
     Secretary in the Secretary's sole discretion from 
     the Secretary's own knowledge or from such information as 
     the Secretary may obtain through testimony or otherwise.
       ``(B) United states agent required.--The rules of this 
     subsection shall apply to any foreign trust to which 
     paragraph (1) applies unless such trust agrees (in such 
     manner, subject to such conditions, and at such time as the 
     Secretary shall prescribe) to authorize a United States 
     person to act as such trust's limited agent solely for 
     purposes of applying sections 7602, 7603, and 7604 with 
     respect to--
       ``(i) any request by the Secretary to examine records or 
     produce testimony related to the proper treatment of amounts 
     required to be taken into account under the rules referred to 
     in subparagraph (A), or
       ``(ii) any summons by the Secretary for such records or 
     testimony.

     The appearance of persons or production of records by reason 
     of a United States person being such an agent shall not 
     subject such persons or records to legal process for any 
     purpose other than determining the correct treatment under 
     this title of the amounts required to be taken into account 
     under the rules referred to in subparagraph (A). A foreign 
     trust which appoints an agent described in this subparagraph 
     shall not be considered to have an office or a permanent 
     establishment in the United States, or to be engaged in a 
     trade or business in the United States, solely because of the 
     activities of such agent pursuant to this subsection.
       ``(C) Other rules to apply.--Rules similar to the rules of 
     paragraphs (2) and (4) of section 6038A(e) shall apply for 
     purposes of this paragraph.
       ``(c) Reporting by United States Beneficiaries of Foreign 
     Trusts.--
       ``(1) In general.--If any United States person receives 
     (directly or indirectly) during any taxable year of such 
     person any distribution from a foreign trust, such person 
     shall make a return with respect to such trust for such year 
     which includes--
       ``(A) the name of such trust,
       ``(B) the aggregate amount of the distributions so received 
     from such trust during such taxable year, and
       ``(C) such other information as the Secretary may 
     prescribe.
       ``(2) Inclusion in income if records not provided.--If 
     adequate records are not provided to the Secretary to 
     determine the proper treatment of any distribution from a 
     foreign trust, such distribution shall be treated as an 
     accumulation distribution includible in the gross income of 
     the distributee under chapter 1. To the extent provided in 
     regulations, the preceding sentence shall not apply if the 
     foreign trust elects to be subject to rules similar to the 
     rules of subsection (b)(2)(B).
       ``(d) Special Rules.--
       ``(1) Determination of whether united states person 
     receives distribution.--For purposes of this section, in 
     determining whether a United States person receives a 
     distribution from a foreign trust, the fact that a portion of 
     such trust is treated as owned by another person under the 
     rules of subpart E of part I of subchapter J of chapter 1 
     shall be disregarded.
       ``(2) Domestic trusts with foreign activities.--To the 
     extent provided in regulations, a trust which is a United 
     States person shall be treated as a foreign trust for 
     purposes of this section and section 6677 if such trust has 
     substantial activities, or holds substantial property, 
     outside the United States.
       ``(3) Time and manner of filing information.--Any notice or 
     return required under this section shall be made at such time 
     and in such manner as the Secretary shall prescribe.
       ``(4) Modification of return requirements.--The Secretary 
     is authorized to suspend or modify any requirement of this 
     section if the Secretary determines that the United States 
     has no significant tax interest in obtaining the required 
     information.''
       (b) Increased Penalties.--Section 6677 of such Code 
     (relating to failure to file information returns with respect 
     to certain foreign trusts) is amended to read as follows:

[[Page H11330]]


     ``SEC. 6677. FAILURE TO FILE INFORMATION WITH RESPECT TO 
                   CERTAIN FOREIGN TRUSTS.

       ``(a) Civil Penalty.--In addition to any criminal penalty 
     provided by law, if any notice or return required to be filed 
     by section 6048--
       ``(1) is not filed on or before the time provided in such 
     section, or
       ``(2) does not include all the information required 
     pursuant to such section or includes incorrect information,

     the person required to file such notice or return shall pay a 
     penalty equal to 35 percent of the gross reportable amount. 
     If any failure described in the preceding sentence continues 
     for more than 90 days after the day on which the Secretary 
     mails notice of such failure to the person required to pay 
     such penalty, such person shall pay a penalty (in addition to 
     the amount determined under the preceding sentence) of 
     $10,000 for each 30-day period (or fraction thereof) during 
     which such failure continues after the expiration of such 90-
     day period.
       ``(b) Special Rules for Returns Under Section 6048(b).--In 
     the case of a return required under section 6048(b)--
       ``(1) the United States person referred to in such section 
     shall be liable for the penalty imposed by subsection (a), 
     and
       ``(2) subsection (a) shall be applied by substituting `5 
     percent' for `35 percent'.
       ``(c) Gross Reportable Amount.--For purposes of subsection 
     (a), the term `gross reportable amount' means--
       ``(1) the gross value of the property involved in the event 
     (determined as of the date of the event) in the case of a 
     failure relating to section 6048(a),
       ``(2) the gross value of the portion of the trust's assets 
     at the close of the year treated as owned by the United 
     States person in the case of a failure relating to section 
     6048(b)(1), and
       ``(3) the gross amount of the distributions in the case of 
     a failure relating to section 6048(c).
       ``(d) Reasonable Cause Exception.--No penalty shall be 
     imposed by this section on any failure which is shown to be 
     due to reasonable cause and not due to willful neglect. The 
     fact that a foreign jurisdiction would impose a civil or 
     criminal penalty on the taxpayer (or any other person) for 
     disclosing the required information is not reasonable cause.
       ``(e) Deficiency Procedures Not To Apply.--Subchapter B of 
     chapter 63 (relating to deficiency procedures for income, 
     estate, gift, and certain excise taxes) shall not apply in 
     respect of the assessment or collection of any penalty 
     imposed by subsection (a).''
       (c) Conforming Amendments.--
       (1) Paragraph (2) of section 6724(d) of such Code is 
     amended by striking ``or'' at the end of subparagraph (S), by 
     striking the period at the end of subparagraph (T) and 
     inserting ``, or'', and by inserting after subparagraph (T) 
     the following new subparagraph:
       ``(U) section 6048(b)(1)(B) (relating to foreign trust 
     reporting requirements).''
       (2) The table of sections for subpart B of part III of 
     subchapter A of chapter 61 of such Code is amended by 
     striking the item relating to section 6048 and inserting the 
     following new item:

``Sec. 6048. Information with respect to certain foreign trusts.''
       (3) The table of sections for part I of subchapter B of 
     chapter 68 of such Code is amended by striking the item 
     relating to section 6677 and inserting the following new 
     item:

``Sec. 6677. Failure to file information with respect to certain 
              foreign trusts.''

       (d) Effective Dates.--
       (1) Reportable events.--To the extent related to subsection 
     (a) of section 6048 of the Internal Revenue Code of 1986, as 
     amended by this section, the amendments made by this section 
     shall apply to reportable events (as defined in such section 
     6048) occurring after the date of the enactment of this Act.
       (2) Grantor trust reporting.--To the extent related to 
     subsection (b) of such section 6048, the amendments made by 
     this section shall apply to taxable years of United States 
     persons beginning after the date of the enactment of this 
     Act.
       (3) Reporting by united states beneficiaries.--To the 
     extent related to subsection (c) of such section 6048, the 
     amendments made by this section shall apply to distributions 
     received after the date of the enactment of this Act.

     SEC. 10502. MODIFICATIONS OF RULES RELATING TO FOREIGN TRUSTS 
                   HAVING ONE OR MORE UNITED STATES BENEFICIARIES.

       (a) Treatment of Trust Obligations, Etc.--
       (1) Paragraph (2) of section 679(a) of the Internal Revenue 
     Code of 1986 is amended by striking subparagraph (B) and 
     inserting the following:
       ``(B) Transfers at fair market value.--To any transfer of 
     property to a trust in exchange for consideration of at least 
     the fair market value of the transferred property. For 
     purposes of the preceding sentence, consideration other than 
     cash shall be taken into account at its fair market value.''
       (2) Subsection (a) of section 679 of such Code (relating to 
     foreign trusts having one or more United States 
     beneficiaries) is amended by adding at the end the following 
     new paragraph:
       ``(3) Certain obligations not taken into account under fair 
     market value exception.--
       ``(A) In general.--In determining whether paragraph (2)(B) 
     applies to any transfer by a person described in clause (ii) 
     or (iii) of subparagraph (C), there shall not be taken into 
     account--
       ``(i) any obligation of a person described in subparagraph 
     (C), and
       ``(ii) to the extent provided in regulations, any 
     obligation which is guaranteed by a person described in 
     subparagraph (C).
       ``(B) Treatment of principal payments on obligation.--
     Principal payments by the trust on any obligation referred to 
     in subparagraph (A) shall be taken into account on and after 
     the date of the payment in determining the portion of the 
     trust attributable to the property transferred.
       ``(C) Persons described.--The persons described in this 
     subparagraph are--
       ``(i) the trust,
       ``(ii) any grantor or beneficiary of the trust, and
       ``(iii) any person who is related (within the meaning of 
     section 643(i)(3)) to any grantor or beneficiary of the 
     trust.''
       (b) Exemption of Transfers to Charitable Trusts.--
     Subsection (a) of section 679 of such Code is amended by 
     striking ``section 404(a)(4) or 404A'' and inserting 
     ``section 6048(a)(3)(B)(ii)''.
       (c) Other Modifications.--Subsection (a) of section 679 of 
     such Code is amended by adding at the end the following new 
     paragraphs:
       ``(4) Special rules applicable to foreign grantor who later 
     becomes a united states person.--
       ``(A) In general.--If a nonresident alien individual has a 
     residency starting date within 5 years after directly or 
     indirectly transferring property to a foreign trust, this 
     section and section 6048 shall be applied as if such 
     individual transferred to such trust on the residency 
     starting date an amount equal to the portion of such trust 
     attributable to the property transferred by such individual 
     to such trust in such transfer.
       ``(B) Treatment of undistributed income.--For purposes of 
     this section, undistributed net income for periods before 
     such individual's residency starting date shall be taken into 
     account in determining the portion of the trust which is 
     attributable to property transferred by such individual to 
     such trust but shall not otherwise be taken into account.
       ``(C) Residency starting date.--For purposes of this 
     paragraph, an individual's residency starting date is the 
     residency starting date determined under section 
     7701(b)(2)(A).
       ``(5) Outbound trust migrations.--If--
       ``(A) an individual who is a citizen or resident of the 
     United States transferred property to a trust which was not a 
     foreign trust, and
       ``(B) such trust becomes a foreign trust while such 
     individual is alive,
     then this section and section 6048 shall be applied as if 
     such individual transferred to such trust on the date such 
     trust becomes a foreign trust an amount equal to the portion 
     of such trust attributable to the property previously 
     transferred by such individual to such trust. A rule similar 
     to the rule of paragraph (4)(B) shall apply for purposes of 
     this paragraph.''
       (d) Modifications Relating to Whether Trust Has United 
     States Beneficiaries.--Subsection (c) of section 679 of such 
     Code is amended by adding at the end the following new 
     paragraphs:
       ``(3) Certain united states beneficiaries disregarded.--A 
     beneficiary shall not be treated as a United States person in 
     applying this section with respect to any transfer of 
     property to foreign trust if such beneficiary first became a 
     United States person more than 5 years after the date of such 
     transfer.
       ``(4) Treatment of former united states persons.--To the 
     extent provided by the Secretary, for purposes of this 
     subsection, the term `United States person' includes any 
     person who was a United States person at any time during the 
     existence of the trust.''
       (e) Technical Amendment.--Subparagraph (A) of section 
     679(c)(2) of such Code is amended to read as follows:
       ``(A) in the case of a foreign corporation, such 
     corporation is a controlled foreign corporation (as defined 
     in section 957(a)),''.
       (f) Regulations.--Section 679 of such Code is amended by 
     adding at the end the following new subsection:
       ``(d) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''
       (g) Effective Date.--The amendments made by this section 
     shall apply to transfers of property after February 6, 1995.

     SEC. 10503. FOREIGN PERSONS NOT TO BE TREATED AS OWNERS UNDER 
                   GRANTOR TRUST RULES.

       (a) General Rule.--
       (1) Subsection (f) of section 672 of the Internal Revenue 
     Code of 1986 (relating to special rule where grantor is 
     foreign person) is amended to read as follows:
       ``(f) Subpart Not To Result in Foreign Ownership.--
       ``(1) In general.--Notwithstanding any other provision of 
     this subpart, this subpart shall apply only to the extent 
     such application results in an amount being currently taken 
     into account (directly or through 1 or more entities) under 
     this chapter in computing the income of a citizen or resident 
     of the United States or a domestic corporation.
       ``(2) Exceptions.--
       ``(A) Certain revocable and irrevocable trusts.--

[[Page H11331]]

       ``(i) In general.--Except as provided in clause (ii), 
     paragraph (1) shall not apply to any trust if--

       ``(I) the power to revest absolutely in the grantor title 
     to the trust property is exercisable solely by the grantor 
     without the approval or consent of any other person or with 
     the consent of a related or subordinate party who is 
     subservient to the grantor, or
       ``(II) the only amounts distributable from such trust 
     (whether income or corpus) during the lifetime of the grantor 
     are amounts distributable to the grantor or the spouse of the 
     grantor.

       ``(ii) Exception.--Clause (i) shall not apply to any trust 
     which has a beneficiary who is a United States person to the 
     extent such beneficiary has made transfers of property by 
     gift (directly or indirectly) to a foreign person who is the 
     grantor of such trust. For purposes of the preceding 
     sentence, any gift shall not be taken into account to the 
     extent such gift is excluded from taxable gifts under section 
     2503(b).
       ``(B) Compensatory trusts.--Except as provided in 
     regulations, paragraph (1) shall not apply to any portion of 
     a trust distributions from which are taxable as compensation 
     for services rendered.
       ``(3) Special rules.--Except as otherwise provided in 
     regulations prescribed by the Secretary--
       ``(A) a controlled foreign corporation (as defined in 
     section 957) shall be treated as a domestic corporation for 
     purposes of paragraph (1), and
       ``(B) paragraph (1) shall not apply for purposes of 
     applying part III of subchapter G (relating to foreign 
     personal holding companies) and part VI of subchapter P 
     (relating to treatment of certain passive foreign investment 
     companies).
       ``(4) Recharacterization of purported gifts.--In the case 
     of any transfer directly or indirectly from a partnership or 
     foreign corporation which the transferee treats as a gift or 
     bequest, the Secretary may recharacterize such transfer in 
     such circumstances as the Secretary determines to be 
     appropriate to prevent the avoidance of the purposes of this 
     subsection.
       ``(5) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this subsection, including regulations 
     providing that paragraph (1) shall not apply in appropriate 
     cases.''
       (2) The last sentence of subsection (c) of section 672 of 
     such Code is amended by inserting ``subsection (f) and'' 
     before ``sections 674''.
       (b) Credit for Certain Taxes.--Paragraph (2) of section 
     665(d) of such Code is amended by adding at the end the 
     following new sentence: ``Under rules or regulations 
     prescribed by the Secretary, in the case of any foreign trust 
     of which the settlor or another person would be treated as 
     owner of any portion of the trust under subpart E but for 
     section 672(f), the term `taxes imposed on the trust' 
     includes the allocable amount of any income, war profits, and 
     excess profits taxes imposed by any foreign country or 
     possession of the United States on the settlor or such other 
     person in respect of trust gross income.''
       (c) Distributions by Certain Foreign Trusts Through 
     Nominees.--
       (1) Section 643 of such Code is amended by adding at the 
     end the following new subsection:
       ``(h) Distributions by Certain Foreign Trusts Through 
     Nominees.--For purposes of this part, any amount paid to a 
     United States person which is derived directly or indirectly 
     from a foreign trust of which the payor is not the grantor 
     shall be deemed in the year of payment to have been directly 
     paid by the foreign trust to such United States person.''
       (2) Section 665 of such Code is amended by striking 
     subsection (c).
       (d) Effective Date.--
       (1) In general.--Except as provided by paragraph (2), the 
     amendments made by this section shall take effect on the date 
     of the enactment of this Act.
       (2) Exception for certain trusts.--The amendments made by 
     this section shall not apply to any trust--
       (A) which is treated as owned by the grantor or another 
     person under section 676 or 677 (other than subsection (a)(3) 
     thereof) of the Internal Revenue Code of 1986, and
       (B) which is in existence on September 19, 1995.

     The preceding sentence shall not apply to the portion of any 
     such trust attributable to any transfer to such trust after 
     September 19, 1995.
       (e) Transitional Rule.--If--
       (1) by reason of the amendments made by this section, any 
     person other than a United States person ceases to be treated 
     as the owner of a portion of a domestic trust, and
       (2) before January 1, 1997, such trust becomes a foreign 
     trust, or the assets of such trust are transferred to a 
     foreign trust,

     no tax shall be imposed by section 1491 of the Internal 
     Revenue Code of 1986 by reason of such trust becoming a 
     foreign trust or the assets of such trust being transferred 
     to a foreign trust.

     SEC. 10504. INFORMATION REPORTING REGARDING FOREIGN GIFTS.

       (a) In General.--Subpart A of part III of subchapter A of 
     chapter 61 of the Internal Revenue Code of 1986 is amended by 
     inserting after section 6039E the following new section:

     ``SEC. 6039F. NOTICE OF GIFTS RECEIVED FROM FOREIGN PERSONS.

       ``(a) In General.--If the value of the aggregate foreign 
     gifts received by a United States person (other than an 
     organization described in section 501(c) and exempt from tax 
     under section 501(a)) during any taxable year exceeds 
     $10,000, such United States person shall furnish (at such 
     time and in such manner as the Secretary shall prescribe) 
     such information as the Secretary may prescribe regarding 
     each foreign gift received during such year.
       ``(b) Foreign Gift.--For purposes of this section, the term 
     `foreign gift' means any amount received from a person other 
     than a United States person which the recipient treats as a 
     gift or bequest. Such term shall not include any qualified 
     transfer (within the meaning of section 2503(e)(2)).
       ``(c) Penalty for Failure To File Information.--
       ``(1) In general.--If a United States person fails to 
     furnish the information required by subsection (a) with 
     respect to any foreign gift within the time prescribed 
     therefor (including extensions)--
       ``(A) the tax consequences of the receipt of such gift 
     shall be determined by the Secretary in the Secretary's sole 
     discretion from the Secretary's own knowledge or from such 
     information as the Secretary may obtain through testimony 
     or otherwise, and
       ``(B) such United States person shall pay (upon notice and 
     demand by the Secretary and in the same manner as tax) an 
     amount equal to 5 percent of the amount of such foreign gift 
     for each month for which the failure continues (not to exceed 
     25 percent of such amount in the aggregate).
       ``(2) Reasonable cause exception.--Paragraph (1) shall not 
     apply to any failure to report a foreign gift if the United 
     States person shows that the failure is due to reasonable 
     cause and not due to willful neglect.
       ``(d) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''
       (b) Clerical Amendment.--The table of sections for such 
     subpart is amended by inserting after the item relating to 
     section 6039E the following new item:

``Sec. 6039F. Notice of large gifts received from foreign persons.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts received after the date of the 
     enactment of this Act in taxable years ending after such 
     date.

     SEC. 10505. MODIFICATION OF RULES RELATING TO FOREIGN TRUSTS 
                   WHICH ARE NOT GRANTOR TRUSTS.

       (a) Modification of Interest Charge on Accumulation 
     Distributions.--Subsection (a) of section 668 of the Internal 
     Revenue Code of 1986 (relating to interest charge on 
     accumulation distributions from foreign trusts) is amended to 
     read as follows:
       ``(a) General Rule.--For purposes of the tax determined 
     under section 667(a)--
       ``(1) Interest determined using underpayment rates.--The 
     interest charge determined under this section with respect to 
     any distribution is the amount of interest which would be 
     determined on the partial tax computed under section 667(b) 
     for the period described in paragraph (2) using the rates and 
     the method under section 6621 applicable to underpayments of 
     tax.
       ``(2) Period.--For purposes of paragraph (1), the period 
     described in this paragraph is the period which begins on the 
     date which is the applicable number of years before the date 
     of the distribution and which ends on the date of the 
     distribution.
       ``(3) Applicable number of years.--For purposes of 
     paragraph (2)--
       ``(A) In general.--The applicable number of years with 
     respect to a distribution is the number determined by 
     dividing--
       ``(i) the sum of the products described in subparagraph (B) 
     with respect to each undistributed income year, by
       ``(ii) the aggregate undistributed net income.q02
     The quotient determined under the preceding sentence shall be 
     rounded under procedures prescribed by the Secretary.
       ``(B) Product described.--For purposes of subparagraph (A), 
     the product described in this subparagraph with respect to 
     any undistributed income year is the product of--
       ``(i) the undistributed net income for such year, and
       ``(ii) the sum of the number of taxable years between such 
     year and the taxable year of the distribution (counting in 
     each case the undistributed income year but not counting the 
     taxable year of the distribution).
       ``(4) Undistributed income year.--For purposes of this 
     subsection, the term `undistributed income year' means any 
     prior taxable year of the trust for which there is 
     undistributed net income, other than a taxable year during 
     all of which the beneficiary receiving the distribution was 
     not a citizen or resident of the United States.
       ``(5) Determination of undistributed net income.--
     Notwithstanding section 666, for purposes of this subsection, 
     an accumulation distribution from the trust shall be treated 
     as reducing proportionately the undistributed net income for 
     prior taxable years.
       ``(6) Periods before 1996.--Interest for the portion of the 
     period described in paragraph (2) which occurs before January 
     1, 1996, shall be determined--
       ``(A) by using an interest rate of 6 percent, and
       ``(B) without compounding until January 1, 1996.''

[[Page H11332]]

       (b) Abusive Transactions.--Section 643(a) of such Code is 
     amended by inserting after paragraph (6) the following new 
     paragraph:
       ``(7) Abusive transactions.--The Secretary shall prescribe 
     such regulations as may be necessary or appropriate to carry 
     out the purposes of this part, including regulations to 
     prevent avoidance of such purposes.''
       (c) Treatment of Use of Trust Property.--
       (1) In general.--Section 643 of such Code (relating to 
     definitions applicable to subparts A, B, C, and D) is amended 
     by adding at the end the following new subsection:
       ``(i) Use of Foreign Trust Property.--For purposes of 
     subparts B, C, and D--
       ``(1) General rule.--If a foreign trust makes a loan of 
     cash or marketable securities directly or indirectly to--
       ``(A) any grantor or beneficiary of such trust who is a 
     United States person, or
       ``(B) any United States person not described in 
     subparagraph (A) who is related to such grantor or 
     beneficiary,
     the amount of such loan shall be treated as a distribution by 
     such trust to such grantor or beneficiary (as the case may 
     be).
       ``(2) Use of other property.--Except as provided in 
     regulations prescribed by the Secretary, any direct or 
     indirect use of trust property (other than cash or marketable 
     securities) by a person referred to in subparagraph (A) or 
     (B) of paragraph (1) shall be treated as a distribution to 
     the grantor or beneficiary (as the case may be) equal to the 
     fair market value of the use of such property. The Secretary 
     may prescribe regulations treating a loan guarantee by the 
     trust as a use of trust property equal to the value of the 
     guarantee.
       ``(3) Definitions and special rules.--For purposes of this 
     subsection--
       ``(A) Cash.--The term `cash' includes foreign currencies 
     and cash equivalents.
       ``(B) Related person.--
       ``(i) In general.--A person is related to another person if 
     the relationship between such persons would result in a 
     disallowance of losses under section 267 or 707(b). In 
     applying section 267 for purposes of the preceding sentence, 
     section 267(c)(4) shall be applied as if the family of an 
     individual includes the spouses of the members of the family.
       ``(ii) Allocation of use.--If any person described in 
     paragraph (1)(B) is related to more than one person, the 
     grantor or beneficiary to whom the treatment under this 
     subsection applies shall be determined under regulations 
     prescribed by the Secretary.
       ``(C) Exclusion of tax-exempts.--The term `United States 
     person' does not include any entity exempt from tax under 
     this chapter.
       ``(D) Trust not treated as simple trust.--Any trust which 
     is treated under this subsection as making a distribution 
     shall be treated as not described in section 651.
       ``(4) Subsequent transactions regarding loan principal.--If 
     any loan is taken into account under paragraph (1), any 
     subsequent transaction between the trust and the original 
     borrower regarding the principal of the loan (by way of 
     complete or partial repayment, satisfaction, cancellation, 
     discharge, or otherwise) shall be disregarded for purposes of 
     this title.''
       (2) Technical amendment.--Paragraph (8) of section 7872(f) 
     of such Code is amended by inserting ``, 643(i),'' before 
     ``or 1274'' each place it appears.
       (d) Effective Dates.--
       (1) Interest charge.--The amendment made by subsection (a) 
     shall apply to distributions after the date of the enactment 
     of this Act.
       (2) Abusive transactions.--The amendment made by subsection 
     (b) shall take effect on the date of the enactment of this 
     Act.
       (3) Use of trust property.--The amendment made by 
     subsection (c) shall apply to--
       (A) loans of cash or marketable securities after September 
     19, 1995, and
       (B) uses of other trust property after December 31, 1995.

     SEC. 10506. RESIDENCE OF ESTATES AND TRUSTS, ETC.

       (a) Treatment as United States Person.--
       (1) In general.--Paragraph (30) of section 7701(a) of the 
     Internal Revenue Code of 1986 is amended by striking 
     subparagraph (D) and by inserting after subparagraph (C) the 
     following:
       ``(D) any estate or trust if--
       ``(i) a court within the United States is able to exercise 
     primary supervision over the administration of the estate or 
     trust, and
       ``(ii) in the case of a trust, one or more United States 
     fiduciaries have the authority to control all substantial 
     decisions of the trust.''
       (2) Conforming amendment.--Paragraph (31) of section 
     7701(a) of such Code is amended to read as follows:
       ``(31) Foreign estate or trust.--The term `foreign estate' 
     or `foreign trust' means any estate or trust other than an 
     estate or trust described in section 7701(a)(30)(D).''
       (3) Effective date.--The amendments made by this subsection 
     shall apply--
       (A) to taxable years beginning after December 31, 1996, or
       (B) at the election of the trustee of a trust, to taxable 
     years ending after the date of the enactment of this Act.
     Such an election, once made, shall be irrevocable.
       (b) Domestic Trusts Which Become Foreign Trusts.--
       (1) In general.--Section 1491 of such Code (relating to 
     imposition of tax on transfers to avoid income tax) is 
     amended by adding at the end the following new flush 
     sentence:

     ``If a trust which is not a foreign trust becomes a foreign 
     trust, such trust shall be treated for purposes of this 
     section as having transferred, immediately before becoming a 
     foreign trust, all of its assets to a foreign trust.''
       (2) Penalty.--Section 1494 of such Code is amended by 
     adding at the end the following new subsection:
       ``(c) Penalty.--In the case of any failure to file a return 
     required by the Secretary with respect to any transfer 
     described in section 1491, the person required to file such 
     return shall be liable for the penalties provided in section 
     6677 in the same manner as if such failure were a failure to 
     file a return under section 6048(a).''
       (3) Effective date.--The amendments made by this subsection 
     shall take effect on the date of the enactment of this Act.
              Subtitle F--Limitation on Section 936 Credit

     SEC. 10601. LIMITATION ON SECTION 936 CREDIT.

       (a) General Rule.--Paragraph (4) of section 936(a) of the 
     Internal Revenue Code of 1986 (relating to Puerto Rico and 
     possession tax credit) is amended by redesignating 
     subparagraphs (B) and (C) as subparagraphs (C) and (D), 
     respectively, and by striking subparagraph (A) and inserting 
     the following new subsections:
       ``(A) Credit for active business income.--The amount of the 
     credit determined under paragraph (1)(A) for any taxable year 
     shall not exceed 60 percent of the aggregate amount of the 
     possession corporation's qualified possession wages for such 
     taxable year.
       ``(B) Credit for investment income.--
       ``(i) In general.--If--

       ``(I) the QPSII assets of the possession corporation for 
     any taxable year, exceed
       ``(II) 80 percent of such possession corporation's 
     qualified tangible business investment for such taxable year,

     the credit determined under paragraph (1)(B) for such taxable 
     year shall be reduced by the amount determined under clause 
     (ii).
       ``(ii) Amount of reduction.--The reduction determined under 
     this clause for any taxable year is an amount which bears the 
     same ratio to the credit determined under paragraph (1)(B) 
     for such taxable year (determined without regard to this 
     subparagraph) as--

       ``(I) the excess determined under clause (i), bears to
       ``(II) the QPSII assets of the possession corporation for 
     such taxable year.''

       (b) Phasedown of Credit.--The table contained in clause 
     (ii) of section 936(a)(4)(C) of such Code, as redesignated by 
     subsection (a), is amended to read as follows:

``In the case of taxable                                        The    
  years beginning in:                                    percentage is:
    1994..........................................................60   
    1995..........................................................55   
    1996..........................................................40   
    1997..........................................................20   
    1998 and thereafter..........................................0.''  

       (c) Definitions and Special Rules.--Subsection (i) of 
     section 936 of such Code is amended to read as follows:
       ``(i) Definitions and Special Rules Relating to Limitations 
     of Subsection (a)(4).--
       ``(1) Qualified possession wages.--For purposes of this 
     section--
       ``(A) In general.--The term `qualified possession wages' 
     means wages paid or incurred by the possession corporation 
     during the taxable year to any employee for services 
     performed in a possession of the United States, but only if 
     such services are performed while the principal place of 
     employment of such employee is within such possession.
       ``(B) Limitation on amount of wages taken into account.--
       ``(i) In general.--The amount of wages which may be taken 
     into account under subparagraph (A) with respect to any 
     employee for any taxable year shall not exceed the 
     contribution and benefit base determined under section 230 
     of the Social Security Act for the calendar year in which 
     such taxable year begins.
       ``(ii) Treatment of part-time employees, etc.--If--

       ``(I) any employee is not employed by the possession 
     corporation on a substantially full-time basis at all times 
     during the taxable year, or
       ``(II) the principal place of employment of any employee 
     with the possession corporation is not within a possession at 
     all times during the taxable year,

     the limitation applicable under clause (i) with respect to 
     such employee shall be the appropriate portion (as determined 
     by the Secretary) of the limitation which would otherwise be 
     in effect under clause (i).
       ``(C) Treatment of certain employees.--The term `qualified 
     possession wages' shall not include any wages paid to 
     employees who are assigned by the employer to perform 
     services for another person, unless the principal trade or 
     business of the employer is to make employees available for 
     temporary periods to other persons in return for 
     compensation. All possession corporations treated as 1 
     corporation under paragraph (4) shall be treated as 1 
     employer for purposes of the preceding sentence.
       ``(D) Wages.--
       ``(i) In general.--Except as provided in clause (ii), the 
     term `wages' has the meaning 

[[Page H11333]]

     given to such term by subsection (b) of section 3306 
     (determined without regard to any dollar limitation contained 
     in such section). For purposes of the preceding sentence, 
     such subsection (b) shall be applied as if the term `United 
     States' included all possessions of the United States.
       ``(ii) Special rule for agricultural labor and railway 
     labor.--In any case to which subparagraph (A) or (B) of 
     paragraph (1) of section 51(h) applies, the term `wages' has 
     the meaning given to such term by section 51(h)(2).
       ``(2) QPSII assets.--For purposes of this section--
       ``(A) In general.--The QPSII assets of a possession 
     corporation for any taxable year is the average of the 
     amounts of the possession corporation's qualified investment 
     assets as of the close of each quarter of such taxable year.
       ``(B) Qualified investment assets.--The term `qualified 
     investment assets' means the aggregate adjusted bases of the 
     assets which are held by the possession corporation and the 
     income from which qualifies as qualified possession source 
     investment income. For purposes of the preceding sentence, 
     the adjusted basis of any asset shall be its adjusted basis 
     as determined for purposes of computing earnings and profits.
       ``(3) Qualified tangible business investment.--For purposes 
     of this section--
       ``(A) In general.--The qualified tangible business 
     investment of any possession corporation for any taxable year 
     is the average of the amounts of the possession corporation's 
     qualified possession investments as of the close of each 
     quarter of such taxable year.
       ``(B) Qualified possession investments.--The term 
     `qualified possession investments' means the aggregate 
     adjusted bases of tangible property used by the possession 
     corporation in a possession of the United States in the 
     active conduct of a trade or business within such possession. 
     For purposes of the preceding sentence, the adjusted basis of 
     any property shall be its adjusted basis as determined for 
     purposes of computing earnings and profits.
       ``(4) Relocated businesses.--
       ``(A) In general.--In determining--
       ``(i) the possession corporation's qualified possession 
     wages for any taxable year, and
       ``(ii) the possession corporation's qualified tangible 
     business investment for such taxable year,

     there shall be excluded all wages and all qualified 
     possession investments which are allocable to a disqualified 
     relocated business.
       ``(B) Disqualified relocated business.--For purposes of 
     subparagraph (A), the term `disqualified relocated business' 
     means any trade or business commenced by the possession 
     corporation after October 12, 1995, or any addition after 
     such date to an existing trade or business of such possession 
     corporation unless--
       ``(i) the possession corporation certifies that the 
     commencement of such trade or business or such addition will 
     not result in a decrease in employment at an existing 
     business operation located in the United States, and
       ``(ii) there is no reason to believe that such commencement 
     or addition was done with the intention of closing down 
     operations of an existing business located in the United 
     States.
       ``(5) Election to compute credit on consolidated basis.--
       ``(A) In general.--Any affiliated group may elect to treat 
     all possession corporations which would be members of such 
     group but for section 1504(b)(4) as 1 corporation for 
     purposes of this section. The credit determined under this 
     section with respect to such 1 corporation shall be allocated 
     among such possession corporations in such manner as the 
     Secretary may prescribe.
       ``(B) Election.--An election under subparagraph (A) shall 
     apply to the taxable year for which made and all succeeding 
     taxable years unless revoked with the consent of the 
     Secretary.
       ``(6) Treatment of certain taxes.--Notwithstanding 
     subsection (c), if--
       ``(A) the credit determined under subsection (a)(1) for any 
     taxable year is limited under subsection (a)(4), and
       ``(B) the possession corporation has paid or accrued any 
     taxes of a possession of the United States for such taxable 
     year which are treated as not being income, war profits, or 
     excess profits taxes paid or accrued to a possession of the 
     United States by reason of subsection (c), such possession 
     corporation shall be allowed a deduction for such taxable 
     year equal to the portion of such taxes which are allocable 
     (on a pro rata basis) to taxable income of the possession 
     corporation the tax on which is not offset by reason of the 
     limitations of subsection (a)(4). In determining the credit 
     under subsection (a) and in applying the preceding sentence, 
     taxable income shall be determined without regard to the 
     preceding sentence.
       ``(7) Possession corporation.--The term `possession 
     corporation' means a domestic corporation for which the 
     election provided in subsection (a) is in effect.''
       (d) Minimum Tax Treatment.--Clause (iii) of section 
     56(g)(4)(C) of such Code is amended by adding at the end 
     thereof the following subclauses:

       ``(III) Separate application of foreign tax credit 
     limitations.--In determining the alternative minimum foreign 
     tax credit, section 904(d) shall be applied as if dividends 
     from a corporation eligible for the credit provided by 
     section 936 were a separate category of income referred to in 
     a subparagraph of section 904(d)(1).
       ``(IV) Coordination with limitation on 936 credit.--Any 
     reference in this clause to a dividend received from a 
     corporation eligible for the credit provided by section 936 
     shall be treated as a reference to the portion of any such 
     dividend for which the dividends received deduction is 
     disallowed under clause (i) after the application of clause 
     (ii)(I).''

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
                TITLE XI--COMMITTEE ON VETERANS' AFFAIRS

     SEC. 11001. SHORT TITLE.

       This title may be cited as the ``Veterans Reconciliation 
     Act of 1995''.
        Subtitle A--Permanent Extension of Temporary Authorities

     SEC. 11011. AUTHORITY TO REQUIRE THAT CERTAIN VETERANS AGREE 
                   TO MAKE COPAYMENTS IN EXCHANGE FOR RECEIVING 
                   HEALTH-CARE BENEFITS.

       Section 8013 of the Omnibus Budget Reconciliation Act of 
     1990 (38 U.S.C. 1710 note) is amended by striking out 
     subsection (e).

     SEC. 11012. MEDICAL CARE COST RECOVERY AUTHORITY.

       Section 1729(a)(2)(E) of title 38, United States Code, is 
     amended by striking out ``before October 1, 1998,''.

     SEC. 11013. INCOME VERIFICATION AUTHORITY.

       Section 5317 of title 38, United States Code, is amended by 
     striking out subsection (g).

     SEC. 11014. LIMITATION ON PENSION FOR CERTAIN RECIPIENTS OF 
                   MEDICAID-COVERED NURSING HOME CARE.

       Section 5503(f) of title 38, United States Code, is amended 
     by striking out paragraph (7).

     SEC. 11015. HOME LOAN FEES.

       Section 3729(a) of title 38, United States Code, is 
     amended--
       (1) in paragraph (4), by striking out ``and before October 
     1, 1998''; and
       (2) in paragraph (5)(C), by striking out ``, and before 
     October 1, 1998''.

     SEC. 11016. PROCEDURES APPLICABLE TO LIQUIDATION SALES ON 
                   DEFAULTED HOME LOANS GUARANTEED BY THE 
                   DEPARTMENT OF VETERANS AFFAIRS.

       Section 3732(c)(11) of title 38, United States Code, is 
     amended by striking out paragraph (11).
                       Subtitle B--Other Matters

     SEC. 11021. REVISED STANDARD FOR LIABILITY FOR INJURIES 
                   RESULTING FROM DEPARTMENT OF VETERANS AFFAIRS 
                   TREATMENT.

       (a) Revised Standard.--Section 1151 of title 38, United 
     States Code, is amended--
       (1) by designating the second sentence as subsection (c);
       (2) by striking out the first sentence and inserting in 
     lieu thereof the following:
       ``(a) Compensation under this chapter and dependency and 
     indemnity compensation under chapter 13 of this title shall 
     be awarded for a qualifying additional disability of a 
     veteran or the qualifying death of a veteran in the same 
     manner as if such disability or death were service-connected.
       ``(b)(1) For purposes of this section, a disability or 
     death is a qualifying additional disability or a qualifying 
     death only if the disability or death--
       ``(A) was caused by Department health care and was a 
     proximate result of--
       ``(i) negligence on the part of the Department in 
     furnishing the Department health care; or
       ``(ii) an event not reasonably foreseeable; or
       ``(B) was incurred as a proximate result of the provision 
     of training and rehabilitation services by the Secretary 
     (including by a service-provider used by the Secretary for 
     such purpose under section 3115 of this title) as part of an 
     approved rehabilitation program under chapter 31 of this 
     title.
       ``(2) For purposes of this section, the term `Department 
     health care' means hospital care, medical or surgical 
     treatment, or an examination that is furnished under any law 
     administered by the Secretary to a veteran by a Department 
     employee or in a Department facility (as defined in section 
     1701(3)(A) of this title).
       ``(3) A disability or death of a veteran which is the 
     result of the veteran's willful misconduct is not a 
     qualifying disability or death for purposes of this 
     section.''; and
       (3) by adding at the end the following:
       ``(d) Effective with respect to injuries, aggravations of 
     injuries, and deaths occurring after September 30, 2002, a 
     disability or death is a qualifying additional disability or 
     a qualifying death for purposes of this section 
     (notwithstanding the provisions of subsection (b)(1)) if the 
     disability or death--
       ``(1) was the result of Department health care; or
       ``(2) was the result of the pursuit of a course of 
     vocational rehabilitation under chapter 31 of this title.''.
       (b) Conforming Amendments.--Subsection (c) of such section, 
     as designated by subsection (a)(1), is amended--
       (1) by striking out ``, aggravation,'' both places it 
     appears; and
       (2) by striking out ``sentence'' and inserting in lieu 
     thereof ``subsection''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any administrative or judicial determination 
     of eligibility for benefits under section 1151 of title 38, 
     United States Code, based on a claim 

[[Page H11334]]

     that is received by the Secretary on or after October 1, 
     1995, including any such determination based on an original 
     application or an application seeking to reopen, revise, 
     reconsider, or otherwise readjudicate any claim for benefits 
     under section 1151 of that title or any predecessor provision 
     of law.

     SEC. 11022. ENHANCED LOAN ASSET SALE AUTHORITY.

       Section 3720(h)(2) of title 38, United States Code, is 
     amended by striking out ``December 31, 1995'' and inserting 
     in lieu thereof ``September 30, 1996''.

     SEC. 11023. WITHHOLDING OF PAYMENTS AND BENEFITS.

       (a) Notice Required in Lieu of Consent or Court Order.--
     Section 3726 of title 38, United States Code, is amended by 
     striking out ``unless'' and all that follows and inserting in 
     lieu thereof the following: ``unless the Secretary provides 
     such veteran or surviving spouse with notice by certified 
     mail with return receipt requested of the authority of the 
     Secretary to waive the payment of indebtedness under section 
     5302(b) of this title. If the Secretary does not waive the 
     entire amount of the liability, the Secretary shall then 
     determine whether the veteran or surviving spouse should be 
     released from liability under section 3713(b) of this title. 
     If the Secretary determines that the veteran or surviving 
     spouse should not be released from liability, the Secretary 
     shall notify the veteran or surviving spouse of that 
     determination and provide a notice of the procedure for 
     appealing that determination, unless the Secretary has 
     previously made such determination and notified the veteran 
     or surviving spouse of the procedure for appealing the 
     determination.''.
       (b) Conforming Amendment.--Section 5302(b) of such title is 
     amended by inserting ``with return receipt requested'' after 
     ``certified mail''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to any indebtedness to the United 
     States arising pursuant to chapter 37 of title 38, United 
     States Code, before, on, or after the date of the enactment 
     of this Act.
               Subtitle C--Health Care Eligibility Reform

     SEC. 11031. HOSPITAL CARE AND MEDICAL SERVICES.

       (a) Eligibility for Care.--Section 1710(a) of title 38, 
     United States Code, is amended by striking out paragraphs (1) 
     and (2) and inserting the following:
       ``(a)(1) The Secretary shall, to the extent and in the 
     amount provided in advance in appropriations Acts for these 
     purposes, provide hospital care and medical services, and may 
     provide nursing home care, which the Secretary determines is 
     needed to any veteran--
       ``(A) with a compensable service-connected disability;
       ``(B) whose discharge or release from active military, 
     naval, or air service was for a compensable disability that 
     was incurred or aggravated in the line of duty;
       ``(C) who is in receipt of, or who, but for a suspension 
     pursuant to section 1151 of this title (or both a suspension 
     and the receipt of retired pay), would be entitled to 
     disability compensation, but only to the extent that such 
     veteran's continuing eligibility for such care is provided 
     for in the judgment or settlement provided for in such 
     section;
       ``(D) who is a former prisoner of war;
       ``(E) of the Mexican border period or of World War I;
       ``(F) who was exposed to a toxic substance, radiation, or 
     environmental hazard, as provided in subsection (e); and
       ``(G) who is unable to defray the expenses of necessary 
     care as determined under section 1722(a) of this title.
       ``(2) In the case of a veteran who is not described in 
     paragraph (1), the Secretary may, to the extent resources and 
     facilities are available and subject to the provisions of 
     subsection (f), furnish hospital care, medical services, and 
     nursing home care which the Secretary determines is 
     needed.''.
       (b) Conforming Amendments.--(1) Section 1710(e) of such 
     title is amended--
       (A) in paragraph (1), by striking out ``hospital care and 
     nursing home care'' in subparagraphs (A), (B), and (C) and 
     inserting in lieu thereof ``hospital care, medical services, 
     and nursing home care'';
       (B) in paragraph (2), by inserting ``and medical services'' 
     after ``Hospital and nursing home care''; and
       (C) by striking out ``subsection (a)(1)(G) of this 
     section'' each place it appears and inserting in lieu thereof 
     ``subsection (a)(1)(F)''.
       (2) Chapter 17 of such title is amended--
       (A) by redesignating subsection (g) of section 1710 as 
     subsection (h); and
       (B) by transferring subsection (f) of section 1712 of such 
     title to section 1710 so as to appear after subsection (f), 
     redesignating such subsection as subsection (g), and amending 
     such subsection by striking out ``section 1710(a)(2) of this 
     title'' in paragraph (1) and inserting in lieu thereof 
     ``subsection (a)(2) of this section''.
       (3) Section 1712 of such title is amended--
       (A) by striking out subsections (a) and (i); and
       (B) by redesignating subsections (b), (c), (d), (h) and 
     (j), as subsections (a), (b), (c), (d), and (e), 
     respectively.

     SEC. 11032. EXTENSION OF AUTHORITY TO PRIORITY HEALTH CARE 
                   FOR PERSIAN GULF VETERANS.

       Section 1710(e)(3) of title 38, United States Code, is 
     amended by striking out ``December 31, 1995'' and inserting 
     in lieu thereof ``December 31, 1998''.

     SEC. 11033. PROSTHETICS.

       (a) Eligibility for Prosthetics.--Section 1701(6)(A)(i) of 
     title 38, United States Code, is amended--
       (1) by striking out ``(in the case of a person otherwise 
     receiving care or services under this chapter)'' and 
     ``(except under the conditions described in section 
     1712(a)(5)(A) of this title),'';
       (2) by inserting ``(in the case of a person otherwise 
     receiving care or services under this chapter)'' before 
     ``wheelchairs,''; and
       (3) by inserting ``except that the Secretary may not 
     furnish sensori-neural aids other than in accordance with 
     guidelines which the Secretary shall prescribe,'' after 
     ``reasonable and necessary,''.
       (b) Regulations.--Not later than 30 days after the date of 
     the enactment of this Act, the Secretary of Veterans Affairs 
     shall prescribe the guidelines required by the amendments 
     made by subsection (a) and shall furnish a copy of those 
     guidelines to the Committees on Veterans' Affairs of the 
     Senate and House of Representatives.

     SEC. 11034. MANAGEMENT OF HEALTH CARE.

       (a) In General.--(1) Chapter 17 of title 38, United States 
     Code, is amended by inserting after section 1704 the 
     following new sections:

     ``Sec. 1705. Management of health care: patient enrollment 
       system

       ``(a) In managing the provision of hospital care and 
     medical services under section 1710(a)(1) of this title, the 
     Secretary, in accordance with regulations the Secretary shall 
     prescribe, shall establish and operate a system of annual 
     patient enrollment. The Secretary shall manage the enrollment 
     of veterans in accordance with the following priorities, in 
     the order listed:
       ``(1) Veterans with service-connected disabilities rated 30 
     percent or greater.
       ``(2) Veterans who are former prisoners of war and veterans 
     with service connected disabilities rated 10 percent or 20 
     percent.
       ``(3) Veterans who are in receipt of increased pension 
     based on a need of regular aid and attendance or by reason of 
     being permanently housebound and other veterans who are 
     catastrophically disabled.
       ``(4) Veterans not covered by paragraphs (1) through (3) 
     who are unable to defray the expenses of necessary care as 
     determined under section 1722(a) of this title.
       ``(5) All other veterans eligible for hospital care, 
     medical services, and nursing home care under section 
     1710(a)(1) of this title.
       ``(b) In the design of an enrollment system under 
     subsection (a), the Secretary--
       ``(1) shall ensure that the system will be managed in a 
     manner to ensure that the provision of care to enrollees is 
     timely and acceptable in quality;
       ``(2) may establish additional priorities within each 
     priority group specified in subsection (a), as the Secretary 
     determines necessary; and
       ``(3) may provide for exceptions to the specified 
     priorities where dictated by compelling medical reasons.

     ``Sec. 1706. Management of health care: other requirements

       ``(a) In managing the provision of hospital care and 
     medical services under section 1710(a) of this title, the 
     Secretary shall, to the extent feasible, design, establish 
     and manage health care programs in such a manner as to 
     promote cost-effective delivery of health care services in 
     the most clinically appropriate setting.
       ``(b) In managing the provision of hospital care and 
     medical services under section 1710(a) of this title, the 
     Secretary--
       ``(1) may contract for hospital care and medical services 
     when Department facilities are not capable of furnishing such 
     care and services economically, and
       ``(2) shall make such rules and regulations regarding 
     acquisition procedures or policies as the Secretary considers 
     appropriate to provide such needed care and services.
       ``(c) In managing the provision of hospital care and 
     medical services under section 1710(a) of this title, the 
     Secretary shall ensure that the Department maintains its 
     capacity to provide for the specialized treatment and 
     rehabilitative needs of disabled veterans described in 
     section 1710(a) of this title (including veterans with spinal 
     cord dysfunction, blindness, amputations, and mental illness) 
     within distinct programs or facilities of the Department that 
     are dedicated to the specialized needs of those veterans in a 
     manner that (1) affords those veterans reasonable access to 
     care and services for those specialized needs, and (2) 
     ensures that overall capacity of the Department to provide 
     such services is not reduced below the capacity of the 
     Department, nationwide, to provide those services, as of the 
     date of the enactment of this section.
       ``(d) In managing the provision of hospital care and 
     medical services under section 1710(a) of this title, the 
     Secretary shall ensure that any veteran with a service-
     connected disability is provided all benefits under this 
     chapter for which that veteran was eligible before the date 
     of the enactment of this section.''.
       (2) The table of sections at the beginning of chapter 17 of 
     such title is amended by inserting after the item relating to 
     section 1704 the following new items:

``1705. Management of health care: patient enrollment system.
``1706. Management of health care: other requirements.''.
       (b) Conforming Amendments to Section 1703.--(1) Section 
     1703 of such title is amended--
       (A) by striking out subsections (a) and (b); and

[[Page H11335]]

       (B) in subsection (c) by--
       (i) striking out ``(c)'', and
       (ii) striking out ``this section, sections'' and inserting 
     in lieu thereof ``sections 1710,''.
       (2)(A) The heading of such section is amended to read as 
     follows:

     ``Sec. 1703. Annual report on furnishing of care and services 
       by contract''.

       (B) The item relating to such section in the table of 
     sections at the beginning of chapter 17 of such title is 
     amended to read as follows:

``1703. Annual report on furnishing of care and services by 
              contract.''.

     SEC. 11035. IMPROVED EFFICIENCY IN HEALTH CARE RESOURCE 
                   MANAGEMENT.

       (a) Repeal of Sunset Provision.--Section 204 of the 
     Veterans Health Care Act of 1992 (Public Law 102-585; 106 
     Stat. 4950) is repealed.
       (b) Cost Recovery.--Title II of such Act is further amended 
     by adding at the end the following new section:

     ``SEC. 207. AUTHORITY TO BILL HEALTH-PLAN CONTRACTS.

       ``(a) Right To Recover.--In the case of a primary 
     beneficiary (as described in section 201(2)(B)) who has 
     coverage under a health-plan contract, as defined in section 
     1729(i)(1)(A) of title 38, United States Code, and who is 
     furnished care or services by a Department medical 
     facility pursuant to this title, the United States shall 
     have the right to recover or collect charges for such care 
     or services from such health-plan contract to the extent 
     that the beneficiary (or the provider of the care or 
     services) would be eligible to receive payment for such 
     care or services from such health-plan contract if the 
     care or services had not been furnished by a department or 
     agency of the United States. Any funds received from such 
     health-plan contract shall be credited to funds that have 
     been allotted to the facility that furnished the care or 
     services.
       ``(b) Enforcement.--The right of the United States to 
     recover under such a beneficiary's health-plan contract shall 
     be enforceable in the same manner as that provided by 
     subsections (a)(3), (b), (c)(1), (d), (f), (h), and (i) of 
     section 1729 of title 38, United States Code.''.

     SEC. 11036. SHARING AGREEMENTS FOR SPECIALIZED MEDICAL 
                   RESOURCES.

       (a) Repeal of Section 8151.--(1) Subchapter IV of chapter 
     81 of title 38, United States Code, is amended--
       (A) by striking out section 8151; and
       (B) by redesignating sections 8152, 8153, 8154, 8155, 8156, 
     8157, and 8158 as sections 8151, 8152, 8153, 8154, 8155, 
     8156, and 8157, respectively.
       (2) The table of sections at the beginning of chapter 81 is 
     amended--
       (A) by striking out the item relating to section 8151; and
       (B) by revising the items relating to sections 8152, 8153, 
     8154, 8155, 8156, 8157, and 8158 to reflect the 
     redesignations by paragraph (1)(B).
       (b) Revised Authority for Sharing Agreements.--Section 8152 
     of such title, as redesignated by subsection (a)(1)(B), is 
     amended--
       (1) in subsection (a)(1)(A)--
       (A) by striking out ``specialized medical resources'' and 
     inserting in lieu thereof ``health-care resources''; and
       (B) by striking out ``other'' and all that follows through 
     ``medical schools'' and inserting in lieu thereof ``any 
     medical school, health-care provider, health-care plan, 
     insurer, or other entity or individual'';
       (2) in subsection (a)(2) by striking out ``only'' and all 
     that follows through ``are not'' and inserting in lieu 
     thereof ``if such resources are not, or would not be,'';
       (3) in subsection (b), by striking out ``reciprocal 
     reimbursement'' in the first sentence and all that follows 
     through the period at the end of that sentence and inserting 
     in lieu thereof ``payment to the Department in accordance 
     with procedures that provide appropriate flexibility to 
     negotiate payment which is in the best interest of the 
     Government.'';
       (4) in subsection (d), by striking out ``preclude such 
     payment, in accordance with--'' and all that follows through 
     ``to such facility therefor'' and inserting in lieu thereof 
     ``preclude such payment to such facility for such care or 
     services'';
       (5) by redesignating subsection (e) as subsection (f); and
       (6) by inserting after subsection (d) the following new 
     subsection (e):
       ``(e) The Secretary may make an arrangement that authorizes 
     the furnishing of services by the Secretary under this 
     section to individuals who are not veterans only if the 
     Secretary determines--
       ``(1) that such an arrangement will not result in the 
     denial of, or a delay in providing access to, care to any 
     veteran at that facility; and
       ``(2) that such an arrangement--
       ``(A) is necessary to maintain an acceptable level and 
     quality of service to veterans at that facility; or
       ``(B) will result in the improvement of services to 
     eligible veterans at that facility.''.
       (c) Cross-Reference Amendments.--(1) Section 8110(c)(3)(A) 
     of such title is amended by striking out ``8153'' and 
     inserting in lieu thereof ``8152''.
       (2) Subsection (b) of section 8154 of such title (as 
     redesignated by subsection (a)(1)(B)) is amended by striking 
     out ``section 8154'' and inserting in lieu thereof ``section 
     8153''.
       (3) Section 8156 of such title (as redesignated by 
     subsection (a)(1)(B)) is amended--
       (A) in subsection (a), by striking out ``section 8153(a)'' 
     and inserting in lieu thereof ``section 8152(a)''; and
       (B) in subsection (b)(3), by striking out ``section 8153'' 
     and inserting in lieu thereof ``section 8152''.
       (4) Subsection (a) of section 8157 of such title (as 
     redesignated by subsection (a)(1)(B)) is amended--
       (A) in the matter preceding paragraph (1), by striking out 
     ``section 8157'' and ``section 8153(a)'' and inserting in 
     lieu thereof ``section 8156'' and ``section 8152(a)'', 
     respectively; and
       (B) in paragraph (1), by striking out ``section 
     8157(b)(4)'' and inserting in lieu thereof ``section 
     8156(b)(4)''.

     SEC. 11037. PERSONNEL FURNISHING SHARED RESOURCES.

       Section 712(b)(2) of title 38, United States Code, is 
     amended--
       (1) by striking out ``the sum of--'' and inserting in lieu 
     thereof ``the sum of the following:'';
       (2) by capitalizing the first letter of the first word of 
     each of subparagraphs (A) and (B);
       (3) by striking out ``; and'' at the end of subparagraph 
     (A) and inserting in lieu thereof a period; and
       (4) by adding at the end the following:
       ``(C) The number of such positions in the Department during 
     that fiscal year held by persons involved in providing 
     health-care resources under section 8111 or 8152 of this 
     title.''.
                     TITLE XII--LEGISLATIVE BRANCH

     SEC. 12101. REQUIREMENT THAT EXCESS FUNDS PROVIDED FOR 
                   OFFICIAL ALLOWANCES OF MEMBERS OF THE HOUSE OF 
                   REPRESENTATIVES BE DEDICATED TO DEFICIT 
                   REDUCTION.

       Of the funds made available in any appropriation Act for 
     fiscal year 1996 or any succeeding fiscal year for the 
     official expenses allowance, the clerk hire allowance, or the 
     official mail allowance of a Member of the House of 
     Representatives, any amount that remains unobligated at the 
     end of such fiscal year shall be transferred to the Deficit 
     Reduction Fund established by Executive Order 12858 (58 Fed. 
     Reg. 42185). Any amount so transferred shall be in addition 
     to the amounts specified in section 2(b) of such order, but 
     shall be subject to the requirements and limitations set 
     forth in sections 2(c) and 3 of such order.
                  TITLE XIII--MISCELLANEOUS PROVISIONS

     SEC. 13101. ELIMINATION OF DISPARITY BETWEEN EFFECTIVE DATES 
                   FOR MILITARY AND CIVILIAN RETIREE COST-OF-
                   LIVING ADJUSTMENTS FOR FISCAL YEARS 1996, 1997, 
                   AND 1998.

       (a) Conformance With Schedule for Civil Service COLAs.--
     Subparagraph (B) of section 1401a(b)(2) of title 10, United 
     States Code, is amended--
       (1) by striking out ``through 1998'' the first place it 
     appears and all that follows through ``In the case of'' the 
     second place it appears and inserting in lieu thereof 
     ``through 1996.--In the case of'';
       (2) by striking ``of 1994, 1995, 1996, or 1997'' and 
     inserting in lieu thereof ``of 1993, 1994, or 1995''; and
       (3) by striking out ``September'' and inserting in lieu 
     thereof ``March''.
       (b) Repeal of Prior Conditional Enactment.--Section 
     8114A(b) of Public Law 103-335 (108 Stat. 2648) is repealed.

     SEC. 13102. DISPOSAL OF CERTAIN MATERIALS IN NATIONAL DEFENSE 
                   STOCKPILE FOR DEFICIT REDUCTION.

       (a) Disposals Required.--(1) During fiscal year 1996, the 
     President shall dispose of all cobalt contained in the 
     National Defense Stockpile that, as the date of the enactment 
     of this Act, is authorized for disposal under any law (other 
     than this Act).
       (2) In addition to the disposal of cobalt under paragraph 
     (1), the President shall dispose of additional quantities of 
     cobalt and quantities of aluminum, ferro columbium, 
     germanium, palladium, platinum, and rubber contained in the 
     National Defense Stockpile so as to result in receipts to the 
     United States in amounts equal to--
       (A) $21,000,000 during the fiscal year ending September 30, 
     1996;
       (B) $338,000,000 during the five-fiscal year period ending 
     on September 30, 2000; and
       (C) $649,000,000 during the seven-fiscal year period ending 
     on September 30, 2002.
       (3) The President is not required to include the disposal 
     of the materials identified in paragraph (2) in an annual 
     materials plan for the National Defense Stockpile. Disposals 
     made under this section may be made without consideration of 
     the requirements of an annual materials plan.
       (b) Limitation on Disposal Quantity.--The total quantities 
     of materials authorized for disposal by the President under 
     subsection (a)(2) may not exceed the amounts set forth in the 
     following table:


                    95Authorized Stockpile Disposals                    
------------------------------------------------------------------------
   Material for disposal                              Quantity          
------------------------------------------------------------------------
Aluminum..................................  62,881 short tons           
Cobalt....................................  42,482,323 pounds contained 
Ferro Columbium...........................  930,911 pounds contained    
Germanium.................................  68,207 kilograms            
Palladium.................................  1,264,601 troy ounces       
Platinum..................................  452,641 troy ounces         
Rubber....................................  125,138 long tons           
------------------------------------------------------------------------



[[Page H11336]]

       (c) Deposit of Receipts.--Notwithstanding section 9 of the 
     Strategic and Critical Materials Stock Piling Act (50 U.S.C. 
     98h), funds received as a result of the disposal of materials 
     under subsection (a)(2) shall be deposited into the general 
     fund of the Treasury for the purpose of deficit reduction.
       (d) Relationship to Other Disposal Authority.--The disposal 
     authority provided in subsection (a)(2) is new disposal 
     authority and is in addition to, and shall not affect, any 
     other disposal authority provided by law regarding the 
     materials specified in such subsection.
       (e) Termination of Disposal Authority.--The President may 
     not use the disposal authority provided in subsection (a)(2) 
     after the date on which the total amount of receipts 
     specified in subparagraph (C) of such subsection is achieved.
       (f) Definition.--The term ``National Defense Stockpile'' 
     means the National Defense Stockpile provided for in section 
     4 of the Strategic and Critical Materials Stock Piling Act 
     (50 U.S.C. 98c).

     SEC. 13103. REQUIREMENT THAT CERTAIN AGENCIES PREFUND 
                   GOVERNMENT HEALTH BENEFITS CONTRIBUTIONS FOR 
                   THEIR ANNUITANTS.

       (a) Definitions.--For the purpose of this section--
       (1) the term ``agency'' means any agency or other 
     instrumentality within the executive branch of the 
     Government, the receipts and disbursements of which are not 
     generally included in the totals of the budget of the United 
     States Government submitted by the President;
       (2) the term ``health benefits plan'' means, with respect 
     to an agency, a health benefits plan, established by or under 
     Federal law, in which employees or annuitants of such agency 
     may participate;
       (3) the term ``health-benefits coverage'' means coverage 
     under a health benefits plan;
       (4) an individual shall be considered to be an ``annuitant 
     of an agency'' if such individual is entitled to an annuity, 
     under a retirement system established by or under Federal 
     law, by virtue of--
       (A) such individual's service with, and separation from, 
     such agency; or
       (B) being the survivor of an annuitant under subparagraph 
     (A) or of an individual who died while employed by such 
     agency; and
       (5) the term ``Office'' means the Office of Personnel 
     Management.
       (b) Prefunding Requirement.--
       (1) In general.--Effective as of October 1, 1996, each 
     agency shall be required to prepay the Government 
     contributions which are or will be required in connection 
     with providing health-benefits coverage for annuitants of 
     such agency.
       (2) Regulations.--The Office shall prescribe such 
     regulations as may be necessary to carry out this section. 
     The regulations shall be designed to ensure at least the 
     following:
       (A) Amounts paid by each agency shall be sufficient to 
     cover the amounts which would otherwise be payable by such 
     agency (on a ``pay-as-you-go'' basis), on or after the 
     applicable effective date under paragraph (1), on behalf of--
       (i) individuals who are annuitants of the agency as of such 
     effective date; and
       (ii) individuals who are employed by the agency as of such 
     effective date, or who become employed by the agency after 
     such effective date, after such individuals have become 
     annuitants of the agency (including their survivors).
       (B)(i) For purposes of determining any amounts payable by 
     an agency--
       (I) this section shall be treated as if it had taken effect 
     at the beginning of the 20-year period which ends on the 
     effective date applicable under paragraph (1) with respect to 
     such agency; and
       (II) in addition to any amounts payable under subparagraph 
     (A), each agency shall also be responsible for paying any 
     amounts for which it would have been responsible, with 
     respect to the 20-year period described in subclause (I), in 
     connection with any individuals who are annuitants or 
     employees of the agency as of the applicable effective date 
     under paragraph (1).
       (ii) Any amounts payable under this subparagraph for 
     periods preceding the applicable effective date under 
     paragraph (1) shall be payable in equal installments over the 
     20-year period beginning on such effective date.
       (c) FASB Standards.--Regulations under subsection (b) shall 
     be in conformance with the provisions of standard 106 of the 
     Financial Accounting Standards Board, issued in December 
     1990.
       (d) Clarification.--Nothing in this section shall be 
     considered to permit or require duplicative payments on 
     behalf of any individuals.
       (e) Draft Legislation.--The Office shall prepare and submit 
     to Congress any draft legislation which may be necessary in 
     order to carry out this section.

     SEC. 13104. APPLICATION OF OMB CIRCULAR A-129.

       The provisions of Office of Management and Budget Circular 
     No. A-129, relating to policies for Federal credit programs 
     and non-tax receivables, as in effect on the date of 
     enactment of this Act, shall apply as provided in that 
     circular.

     SEC. 13105. 7-YEAR EXTENSION OF HAZARDOUS SUBSTANCE SUPERFUND 
                   EXCISE TAXES.

       (a) Extension of Hazardous Substance Superfund Financing 
     Rate.--Subsection (e) of section 4611 of the Internal Revenue 
     Code of 1986 is amended to read as follows:
       ``(e) Application of hazardous substance superfund 
     financing rate.--The Hazardous Substance Superfund financing 
     rate under this section shall apply after December 31, 1986, 
     and before January 1, 2003.''
       (b) Extension of Repayment Deadline for Superfund 
     Borrowing.--Subparagraph (B) of section 9507(d)(3) of such 
     Code is amended by striking ``December 31, 1995'' and 
     inserting ``December 31, 2002''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 1996.
                  TITLE XIV--BUDGET PROCESS PROVISIONS

                    CHAPTER 1--SHORT TITLE; PURPOSE

     SEC. 14001. SHORT TITLE.

       This title may be cited as the ``Balanced Budget 
     Enforcement Act of 1995''.

     SEC. 14002. PURPOSE.

       The purpose of this title is to enforce a path toward a 
     balanced budget by fiscal year 2002 and to make Federal 
     budget process more honest and open.

                      CHAPTER 2--BUDGET ESTIMATES

     SEC. 14051. BOARD OF ESTIMATES.

       (a) Establishment.--There is established a Board of 
     Estimates.
       (b) Duties of the Board.--(1) On the dates specified in 
     section 254, the Board shall issue a report to the President 
     and the Congress which states whether it has chosen (with no 
     modification)--
       (A) the sequestration preview report for the budget year 
     submitted by OMB under section 254(d) of the Balanced Budget 
     and Emergency Deficit Control Act of 1985 or the report for 
     that year submitted by CBO under that section; and
       (B) the final sequestration report for the budget year 
     submitted by OMB under section 254(g) of the Balanced Budget 
     and Emergency Deficit Control Act of 1985 or the report for 
     that year submitted by CBO under that section;
     that shall be used for purposes of the Balanced Budget and 
     Emergency Deficit Control Act of 1985, chapter 11 of title 
     31, United States Code, and section 403 of the Congressional 
     Budget Act of 1974. In making its choice, the Board shall 
     choose the report that, in its opinion, is the more accurate.
       (2) At any time the Board may change the list of major 
     estimating assumptions to be used by OMB and CBO in preparing 
     their sequestration preview reports.
       (c) Membership.--
       (1) Number and appointment.--The Board shall be composed of 
     5 members, the chairman of the Board of Governors of the 
     Federal Reserve System and 4 other members to be appointed by 
     the President as follows:
       (A) One from a list of at least 5 individuals nominated for 
     such appointment by the Speaker of the House of 
     Representatives.
       (B) One from a list of at least 5 individuals nominated for 
     such appointment by the majority leader of the Senate.
       (C) One from a list of at least 5 individuals nominated for 
     such appointment by the minority leader of the House of 
     Representatives.
       (D) One from a list of at least 5 individuals nominated for 
     such appointment by the minority leader of the Senate.
     No member appointed by the President may be an officer or 
     employee of any government. A vacancy in the Board shall be 
     filled in the manner in which the original appointment was 
     made.
       (2) Continuation of membership.--If any member of the Board 
     appointed by the President becomes an officer or employee of 
     a government, he may continue as a member of the Board for 
     not longer than the 30-day period beginning on the date he 
     becomes such an officer or employee.
       (3) Terms.--(A) Members shall be appointed for terms of 4 
     years.
       (B) Any member appointed to fill a vacancy occurring before 
     the expiration of the term for which his predecessor was 
     appointed shall be appointed only for the remainder of such 
     term. A member may serve after the expiration of his term 
     until his successor has taken office.
       (4) Basic pay.--Members of the Board shall serve without 
     pay.
       (5) Quorum.--Three members of the Board shall constitute a 
     quorum but a lesser number may hold hearings.
       (6) Chairman.--The Chairman of the Board shall be chosen 
     annually by its members.
       (7) Meetings.--The Board shall meet at the call of the 
     Chairman or a majority of its members.
       (d) Director and Staff.--
       (1) Appointment.--The Board shall have a Director who shall 
     be appointed by the members of the Board. Subject to such 
     rules as may be prescribed by the Board, the Director may 
     appoint and fix the pay of such personnel as the Director 
     considers appropriate.
       (2) Applicability of certain civil service laws.--The 
     Director and staff of the Board may be appointed without 
     regard to the provisions of title 5, United States Code, 
     governing appointments in the competitive service, 

[[Page H11337]]

     and may be paid without regard to the provisions of chapter 
     51 and subchapter III of chapter 53 of such title relating to 
     classification and General Schedule pay rates, except that no 
     individual so appointed may receive pay in excess of the 
     annual rate of basic pay payable for GS-18 of the General 
     Schedule.
       (3) Staff of federal agencies.--Upon request of the Board, 
     the head of any Federal agency is authorized to detail, on a 
     reimbursable basis, any of the personnel of such agency to 
     the Board to assist the Board in carrying out its duties, 
     notwithstanding section 202(a) of the Legislative 
     Reorganization Act of 1946 (2 U.S.C. 72a(a)).
       (e) Powers.--
       (1) Hearings and sessions.--The Board may, for the purpose 
     of carrying out its duties, hold such hearings, sit and act 
     at such times and places, take such testimony, and receive 
     such evidence, as it considers appropriate.
       (2) Obtaining official data.--The Board may secure directly 
     from any department or agency of the United States 
     information necessary to enable it to carry out its duties. 
     Upon request of the Chairman of the Board, the head of such 
     department or agency shall furnish such information to the 
     Board.
       (3) Administrative support services.--The Administrator of 
     General Services shall provide to the Board on a reimbursable 
     basis such administrative support services as the Board may 
     request.
       (f) Definitions.--As used in this section:
       (1) The term ``Board'' refers to the Board of Estimates 
     established by subsection (a).
       (2) The term ``CBO'' refers to the Director of the 
     Congressional Budget Office.
       (3) The term ``OMB'' refers to the Director of the Office 
     of Management and Budget.
               Subtitle B--Discretionary Spending Limits

     SEC. 14101. DISCRETIONARY SPENDING LIMITS.

       (a) Limits.--Section 601(a)(2) of the Congressional Budget 
     Act of 1974 is amended by striking subparagraphs (A), (B), 
     (C), (D), and (F), by redesignating subparagraph (E) as 
     subparagraph (A) and by striking ``and'' at the end of that 
     subparagraph, and by inserting after subparagraph (A) the 
     following new subparagraphs:
       ``(B) with respect to fiscal year 1996, $498,113,000,000 in 
     new budget authority and $536,600,000,000 in outlays;
       ``(C) with respect to fiscal year 1997, $497,200,000,000 in 
     new budget authority and $530,200,000,000 in outlays;
       ``(D) with respect to fiscal year 1998, $496,700,000,000 in 
     new budget authority and $526,100,000,000 in outlays;
       ``(E) with respect to fiscal year 1999, $495,700,000,000 in 
     new budget authority and $524,200,000,000 in outlays;
       ``(F) with respect to fiscal year 2000, $497,700,000,000 in 
     new budget authority and $523,300,000,000 in outlays;
       ``(G) with respect to fiscal year 2001, $506,700,000,000 in 
     new budget authority and $529,500,000,000 in outlays; and
       ``(H) with respect to fiscal year 2002, $509,700,000,000 in 
     new budget authority and $529,500,000,000 in outlays.''.
       (b) Committee Allocations and Enforcement.--Section 602 of 
     the Congressional Budget Act of 1974 is amended--
       (1) in subsection (c), by striking ``1995'' and inserting 
     ``2002'' and by striking its last sentence; and
       (2) in subsection (d), by striking ``1992 to 1995'' in the 
     side heading and inserting ``1995 to 2002'' and by striking 
     ``1992 through 1995'' and inserting ``1995 through 2002''.
       (c) Five-Year Budget Resolutions.--Section 606 of the 
     Congressional Budget Act of 1974 is amended--
       (1) in subsection (a), by striking ``for fiscal year 1992, 
     1993, 1994, or 1995''; and
       (2) in subsection (d)(1), by striking ``for fiscal years 
     1992, 1993, 1994, and 1995'' and by striking ``(i) and 
     (ii)''.
       (d) Effective Date Repealer.--(1) Section 607 of the 
     Congressional Budget Act of 1974 is repealed.
       (2) The item relating to section 607 in the table of 
     contents set forth in section 1(b) of the Congressional 
     Budget and Impoundment Control Act of 1974 is repealed.
       (e) Sequestration Regarding Crime Trust Fund.--(1) Section 
     251A(b)(1) of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended by striking subparagraphs (B), 
     (C), and (D) and its last sentence and inserting the 
     following:
       ``(B) For fiscal year 1996, $2,227,000,000.
       ``(C) For fiscal year 1997, $3,846,000,000.
       ``(D) For fiscal year 1998, $4,901,000,000.
       ``(E) For fiscal year 1999, $5,639,000,000.
       ``(F) For fiscal year 2000, $6,225,000,000.
     ``The appropriate levels of new budget authority are as 
     follows: for fiscal year 1996, $4,087,000,000; for fiscal 
     year 1997, $5,000,000,000; for fiscal year 1998, 
     $5,500,000,000; for fiscal year 1999, $6,500,000,000; for 
     fiscal year 2000, $6,500,000,000.''.
       (2) The last two sentences of section 310002 of the Violent 
     Crime Control and Law Enforcement Act of 1994 (42 U.S.C. 
     14212) are repealed.

     SEC. 14102. TECHNICAL AND CONFORMING CHANGES.

       (a) General Statement.--Section 250(b) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 is amended 
     by striking the first sentence and inserting the following: 
     ``This part provides for the enforcement of deficit reduction 
     through discretionary spending limits and pay-as-you-go 
     requirements for fiscal years 1995 through 2002.''.
       (b) Definitions.--Section 250(c) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended--
       (1) by striking paragraph (6) and inserting the following:
       ``(6) The term `budgetary resources' means new budget 
     authority, unobligated balances, direct spending authority, 
     and obligation limitations.'';
       (2) in paragraph (9), by striking ``1992'' and inserting 
     ``1996''; and
       (3) in paragraph (14), by striking ``1995'' and inserting 
     ``2002''.

     SEC. 14103. ELIMINATION OF CERTAIN ADJUSTMENTS TO 
                   DISCRETIONARY SPENDING LIMITS.

       Section 251 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended--
       (1) in the side heading of subsection (a), by striking 
     ``1991-1998'' and inserting ``1995-2002'';
       (2) in the first sentence of subsection (b)(1), by striking 
     ``1992, 1993, 1994, 1995, 1996, 1997 or 1998'' and inserting 
     ``1995, 1996, 1997, 1998, 1999, 2000, 2001, or 2002'' and by 
     striking ``through 1998'' and inserting ``through 2002'';
       (3) in subsection (b)(1), by striking subparagraphs (B) and 
     (C) and by striking ``the following:'' and all that follows 
     through ``The adjustments'' and inserting ``the following: 
     the adjustments'';
       (4) in subsection (b)(2), by striking ``1991, 1992, 1993, 
     1994, 1995, 1996, 1997, or 1998'' and inserting ``1995, 1996, 
     1997, 1998, 1999, 2000, 2001, or 2002'' and by striking 
     ``through 1998'' and inserting ``through 2002''; and
       (5) by repealing subsection (b)(2).
                  Subtitle C--Pay-As-You-Go Procedures

     SEC. 14201. PERMANENT EXTENSION OF PAY-AS-YOU-GO PROCEDURES; 
                   TEN-YEAR SCOREKEEPING.

       (a) Ten-year Scorekeeping.--Section 252 of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 is amended--
       (1) in the side heading of subsection (a), by striking 
     ``Fiscal Years 1992-1998''; and
       (2) in subsection (d), by striking ``each fiscal year 
     through fiscal year 1998'' each place it appears and 
     inserting ``each of the 10 succeeding fiscal years following 
     enactment of any direct spending or receipts legislation''.
       (b) Repeal of Emergencies.--Section 252(e) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 is repealed.
       (c) Pay-As-You-Go Scorecard.--Upon enactment of this Act, 
     the Director of the Office of Management and Budget shall 
     reduce the balances of direct spending and receipts 
     legislation applicable to each fiscal year under section 252 
     of the Balanced Budget and Emergency Deficit Control Act of 
     1985 by an amount equal to the net deficit reduction achieved 
     through the enactment of this Act of direct spending and 
     receipts legislation for that year.
       (d) Pay-As-You-Go Point of Order.--Section 311 of the 
     Congressional Budget Act of 1974 is amended by redesignating 
     subsection (c) as subsection (d) and by inserting after 
     subsection (b) the following new subsection:
       ``(d) Pay-As-You-Go Point of Order.--It shall not be in 
     order in the House of Representatives or the Senate to 
     consider any bill, joint resolution, amendment, motion, or 
     conference report that would increase the deficit above the 
     maximum deficit amount set forth in section 253 for the 
     budget year or any of the 9 succeeding fiscal years after the 
     budget year, as measured by the sum of all applicable 
     estimates of direct spending and receipts legislation 
     applicable to that fiscal year.''.

     SEC. 14202. ELIMINATION OF EMERGENCY EXCEPTION.

       (a) Sequestration.--Section 252(b)(1) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 is amended 
     by striking subparagraph (B), by striking the dash after 
     ``from'', and by striking ``(A)''.
       (b) Technical Change.--Section 252(c) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 is amended 
     by inserting ``in the manner described in section 256.'' 
     after ``accounts'' the first place it appears and by striking 
     the remainder of the subsection.
                       Subtitle D--Miscellaneous

     SEC. 14301. TECHNICAL CORRECTION.

       Section 258 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985, entitled ``Modification of Presidential 
     Order'', is repealed.

     SEC. 14302. REPEAL OF EXPIRATION DATE.

       (a) Expiration.--Section 275 of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended by repealing 
     subsection (b) and by redesignating subsection (c) as 
     subsection (b).
       (b) Expiration.--Section 14002(c)(3) of the Omnibus Budget 
     Reconciliation Act of 1993 (2 U.S.C. 900 note; 2 U.S.C. 665 
     note) is repealed.
                      Subtitle E--Deficit Control

     SEC. 14401. DEFICIT CONTROL.

       (a) Deficit Control.--Part D of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended to read as 
     follows:
                       ``Part D--Deficit Control

     ``SEC. 261. ESTABLISHMENT OF DEFICIT TARGETS.

       ``The deficit targets are as follows:

------------------------------------------------------------------------
            ``Fiscal year              Deficit (in billions of dollars) 
------------------------------------------------------------------------
  1996..............................                 179.2              
  1997..............................                 160.4              
  1998..............................                 132.5              
  1999..............................                 111.0              
  2000..............................                 85.3               
  2001..............................                 41.0               
  2002..............................                   0                
------------------------------------------------------------------------

     The deficit target for each fiscal year after 2002 shall be 
     zero.

[[Page H11338]]


     ``SEC. 262. SPECIAL DEFICIT MESSAGE BY PRESIDENT.

       ``(a) Special Message.--If the OMB sequestration preview 
     report submitted under section 254(d) indicates that deficit 
     for the budget year or any outyear will exceed the applicable 
     deficit target, or that the actual deficit target in the most 
     recently completed fiscal year exceeded the applicable 
     deficit target, the budget submitted under section 1105(a) of 
     title 31, United States Code, shall include a special deficit 
     message that includes proposed legislative changes to offset 
     the net deficit impact of the excess identified by that OMB 
     sequestration preview report for each such year through any 
     combination of:
       ``(1) Reductions in outlays.
       ``(2) Increases in revenues.
       ``(3) Increases in the deficit targets, if the President 
     submits a written determination that, because of economic or 
     programmatic reasons, only some or none of the excess should 
     be offset.
       ``(b) Introduction of President's Package.--Within 10 days 
     after the President submitted a special deficit message, the 
     text referred to in subsection (a) shall be introduced as a 
     joint resolution in the House of Representatives by the 
     chairman of its Committee on the Budget and in the Senate by 
     the chairman of its Committee on the Budget. If the chairman 
     fails to do so, after the 10th day the resolution may be 
     introduced by any Member of the House of Representatives or 
     the Senate, as the case may be. A joint resolution introduced 
     under this subsection shall be referred to the Committee on 
     the Budget of the House of Representatives or the Senate, as 
     the case may be.

     ``SEC. 263. CONGRESSIONAL ACTION REQUIRED.

       ``(a) In General.--The requirements of this section shall 
     be in effect for any year in which the OMB sequestration 
     preview report submitted under section 254(d) indicates that 
     the deficit for the budget year or any outyear will exceed 
     the applicable deficit target.
       ``(b) Requirements for Special Budget Resolution in the 
     House.--The Committee on the Budget in the House shall report 
     not later than March 15 a joint resolution, either as a 
     separate section of the joint resolution on the budget 
     reported pursuant to section 301 of the Congressional Budget 
     Act of 1974 or as a separate resolution, that includes 
     reconciliation instructions instructing the appropriate 
     committees of the House and Senate to report changes in laws 
     within their jurisdiction to offset any excess in the deficit 
     identified in the OMB sequestration preview report submitted 
     under section 254(d) as follows:
       ``(1) Reductions in outlays.
       ``(2) Increases in revenues.
       ``(3) Increases in the deficit targets, except that any 
     increase in those targets may not be greater than the 
     increase included in the special reconciliation message 
     submitted by the President.
       ``(c) Procedure if House Budget Committee Fails To Report 
     Required Resolution.--
       ``(1) Automatic discharge of house budget committee.--In 
     the event that the House Committee on the Budget fails to 
     report a resolution meeting the requirements of subsection 
     (b), the committee shall be automatically discharged from 
     further consideration of the joint resolution reflecting the 
     President's recommendations introduced pursuant to section 
     5(b), and the joint resolution shall be placed on the 
     appropriate calendar.
       ``(2) Consideration by house of discharged resolution.--Ten 
     days after the House Committee on the Budget has been 
     discharged under paragraph (1), any member may move that the 
     House proceed to consider the resolution. Such motion shall 
     be highly privileged and not debatable. It shall not be in 
     order to consider any amendment to the resolution except 
     amendments which are germane and which do not change the net 
     deficit impact of the resolution. Consideration of such 
     resolution shall be pursuant to the procedures set forth 
     in section 305 of the Congressional Budget Act of 1974 and 
     subsection (d).
       ``(d) Consideration by the House of Representatives.--(1) 
     It shall not be in order in the House of Representatives to 
     consider a joint resolution on the budget unless that joint 
     resolution fully addresses the entirety of any excess of the 
     deficit targets as identified in the OMB sequestration 
     preview report submitted under section 254(d) through 
     reconciliation instructions requiring spending reductions, or 
     changes in the deficit targets.
       ``(2) If the joint resolution on the budget proposes to 
     eliminate or offset less than the entire excess for budget 
     year and any subsequent fiscal years, then the Committee on 
     the Budget shall report a separate resolution increasing the 
     deficit targets for each applicable year by the full amount 
     of the excess not offset or eliminated. It shall not be in 
     order to consider any joint resolution on the budget that 
     does not offset the full amount of the excess until the House 
     of Representatives has agreed to the resolution directing the 
     increase in the deficit targets.
       ``(e) Transmittal to Senate.--If a joint resolution passes 
     the House pursuant to subsection (d), the Clerk of the House 
     of Representatives shall cause the resolution to be 
     engrossed, certified, and transmitted to the Senate within 
     one calendar day of the day on which the resolution is 
     passed. The resolution shall be referred to the Senate 
     Committee on the Budget.
       ``(f) Requirements for Special Budget Resolution in the 
     Senate.--The Committee on the Budget in the Senate shall 
     report not later than April 1 a joint resolution, either as a 
     separate section of a budget resolution reported pursuant to 
     section 301 of the Congressional Budget Act of 1974 or as a 
     separate resolution, that shall include reconciliation 
     instructions instructing the appropriate committees of the 
     House and Senate to report changes in laws within their 
     jurisdiction to offset any excess through any combination of:
       ``(1) Reductions in outlays.
       ``(2) Increases in revenues.
       ``(3) Increases in the deficit targets, except that any 
     increase in those targets may not be greater than the 
     increase included in the special reconciliation message 
     submitted by the President.
       ``(g) Procedure if Senate Budget Committee Fails to Report 
     Required Resolution.--
       ``(1) Automatic discharge of senate budget committee.--In 
     the event that the Senate Committee on the Budget fails to 
     report a resolution meeting the requirements of subsection 
     (f), the committee shall be automatically discharged from 
     further consideration of the joint resolution reflecting the 
     President's recommendations introduced pursuant to section 
     5(b), and the joint resolution shall be placed on the 
     appropriate calendar.
       ``(2) Consideration by senate of discharged resolution.--
     Ten days after the Senate Committee on the Budget has been 
     discharged under paragraph (1), any member may move that the 
     Senate proceed to consider the resolution. Such motion shall 
     be privileged and not debatable. Consideration of such 
     resolution shall be pursuant to the procedures set forth in 
     section 305 of the Congressional Budget Act of 1974 and 
     subsection (h).
       ``(h) Consideration by Senate.--(1) It shall not be in 
     order in the Senate to consider a joint resolution on the 
     budget unless that joint resolution fully addresses the 
     entirety of any excess of the deficit targets as identified 
     in the OMB sequestration report submitted under section 
     254(d) through reconciliation instructions requiring deficit 
     reductions, or changes in the deficit targets.
       ``(2) If the joint resolution on the budget proposes to 
     eliminate or offset less than the entire overage of a budget 
     year, then the Committee on the Budget shall report a 
     resolution increasing the deficit target by the full amount 
     of the overage not eliminated. It shall not be in order to 
     consider any joint resolution on the budget that does not 
     offset the entire amount of the overage until the Senate has 
     agreed to the resolution directing the increase in the 
     deficit targets.
       ``(i) Conference Reports Must Fully Address Deficit 
     Excess.--It shall not be in order in the House of 
     Representatives or the Senate to consider a conference report 
     on a joint resolution on the budget unless that conference 
     report fully addresses the entirety of any excess identified 
     by the OMB sequestration preview report submitted pursuant to 
     section 254(d) through reconciliation instructions requiring 
     deficit reductions, or changes in the deficit targets.

     ``SEC. 264. COMPREHENSIVE SEQUESTRATION.

       ``(a) Sequestration Based on Budget-Year Shortfall.--The 
     amount to be sequestered for the budget year is the amount 
     (if any) by which deficit exceeds the cap for that year under 
     section 261 or the amount that the actual deficit in the 
     preceding fiscal year exceeded the applicable deficit target.
       ``(b) Sequestration.--Within 15 days after Congress 
     adjourns to end a session and on May 15, there shall be a 
     sequestration to reduce the amount of deficit in the current 
     policy baseline and to repay any deficit excess in the most 
     recently completed fiscal year by the amounts specified in 
     subsection (b). The amount required to be sequestered shall 
     be achieved by reducing each spending account (or activity 
     within an account) by the uniform percentage necessary to 
     achieve that amount.''.
       (c) Conforming Changes.--(1) The table of sections set 
     forth in section 200 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 is amended by striking the items 
     relating to part D and inserting the following:

``Sec. 261. Establishment of deficit targets.
``Sec. 262. Special deficit message by President.
``Sec. 263. Congressional action required.
``Sec. 264. Comprehensive sequestration.''.
       (2) Section 250(c) of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 is amended by inserting ``or in 
     part D'' after ``As used in this part''.

     SEC. 14402. SEQUESTRATION PROCESS.

       (a) Estimating Assumptions, Reports, and Orders.--Sections 
     254, 255, and 256 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 are amended to read as follows:

     ``SEC. 254. ESTIMATING ASSUMPTIONS, REPORTS, AND ORDERS.

       ``(a) Timetable.--The timetable with respect to this part 
     for any budget year is as follows:

Action to be completed:
OMB and CBO sequestration preview reports submitted to Board...........
Board selects sequestration preview report.............................
OMB publishes sequestration preview report.............................
OMB and CBO sequestration reports submitted to Board...................
Board selected midsession sequestration report.........................

[[Page H11339]]

President issues sequestration order...................................
President's midsession review; notification regarding military ........
  personnel.
OMB and CBO final budget year sequestration reports submitted to Board.
Board selects final sequestration report; President issues ............
  sequestration order.

       ``(b) Submission and Availability of Reports.--Each report 
     required by this section shall be submitted, in the case of 
     CBO, to the House of Representatives, the Senate, OMB, and 
     the Board and, in the case of OMB, to the House of 
     Representatives, the Senate, the President, and the Board on 
     the day it is issued. On the following day a notice of the 
     report shall be printed in the Federal Register.
       ``(c) Exchange of Preliminary Current Policy Baselines.--On 
     December 15 or 3 weeks after Congress adjourns to end a 
     session, whichever is later, OMB and CBO shall exchange their 
     preliminary current policy baselines for the budget-year 
     session starting in January.
       ``(d) Sequestration Preview Reports.--
       ``(1) Reporting requirement.--On December 31 or 2 weeks 
     after exchanging preliminary current policy baselines, 
     whichever is later, OMB and CBO shall each submit a 
     sequestration preview report.
       ``(2) Contents.--Each preview report shall set forth the 
     following:
       ``(A) Major estimating assumptions.--The major estimating 
     assumptions for the current year, the budget year, and the 
     outyears, and an explanation of them.
       ``(B) Current policy baseline.--A detailed display of the 
     current policy baseline for the current year, the budget 
     year, and the outyears, with an explanation of changes in the 
     baseline since it was last issued that includes the effect of 
     policy decisions made during the intervening period and an 
     explanation of the differences between OMB and CBO for each 
     item set forth in the report.
       ``(C) Deficits.--Estimates for the most recently completed 
     fiscal year, the budget year, and each subsequent year 
     through fiscal year 2002 of the deficits or surpluses in the 
     current policy baseline.
       ``(D) Discretionary spending limits.--Estimates for the 
     current year and each subsequent year through 2002 of the 
     applicable discretionary spending limits for each category 
     and an explanation of any adjustments in such limits under 
     section 251.
       ``(E) Sequestration of discretionary accounts.--Estimates 
     of the uniform percentage and the amount of budgetary 
     resources to be sequestered from discretionary programs given 
     the baseline level of appropriations, and if the President 
     chooses to exempt some or all military personnel from 
     sequestration, the effect of that decision on the percentage 
     and amounts.
       ``(F) Pay-as-you-go sequestration reports.--The preview 
     reports shall set forth, for the current year and the budget 
     year, estimates for each of the following:
       ``(i) The amount of net deficit increase or decrease, if 
     any, calculated under section 252(b).
       ``(ii) A list identifying each law enacted and 
     sequestration implemented after the date of enactment of this 
     section included in the calculation of the amount of deficit 
     increase or decrease and specifying the budgetary effect of 
     each such law.
       ``(iii) The sequestration percentage or (if the required 
     sequestration percentage is greater than the maximum 
     allowable percentage for medicare) percentages necessary to 
     eliminate a deficit increase under section 252(c).
       ``(G) Requirements for the deficit.--An estimate of the 
     amount of deficit reduction, if any, to be achieved for the 
     budget year and the current year necessary to comply with the 
     deficit targets or to repay any deficit excess in the 
     preceding fiscal year.
       ``(H) deficit sequestration.--Estimates of the uniform 
     percentage and the amount of comprehensive sequestration of 
     spending programs that will be necessary under section 264.
       ``(I) Amount of change in deficit projections.--Amounts 
     that deficit projections for the current year and the budget 
     year have changed as a result of changes in economic and 
     technical assumptions occurring after the enactment of the 
     Omnibus Budget Reconciliation Act of 1995.
       ``(e) Selection of Official Sequestration Preview Report.--
     On January 15 or 2 weeks after receiving the OMB and CBO 
     sequestration preview reports, whichever is later, the Board 
     shall choose either the OMB or CBO sequestration preview 
     report as the official report for purposes of this Act. The 
     Board shall add to the chosen report an analysis of which 
     reports submitted in previous years have proven to be more 
     accurate and recommendations about methods of improving the 
     accuracy of future reports. That report shall be set forth, 
     without change, in the budget submitted by the President 
     under section 1105(a) of title 31, United States Code, for 
     the budget year.
       ``(f) Agreeing on Earlier Dates.--The Chairman of the Board 
     may set earlier dates for subsections (c), (d), and (e) if 
     OMB and CBO concur.
       ``(g) Notification Regarding Military Personnel.--On or 
     before August 29, the President shall notify the Congress of 
     the manner in which he intends to exercise flexibility with 
     respect to military personnel accounts under section 
     251(a)(3).
       ``(h) Final Sequestration Reports.--
       ``(1) Reporting requirement.--Not later than 10 days 
     following the end of a budget-year session, OMB and CBO shall 
     each submit a final sequestration report. On May 1 of each 
     year, OMB and CBO shall each submit a midyear sequestration 
     report for the current year.
       ``(2) Contents.--Each such report shall be based upon laws 
     enacted through the date of the report and shall set forth 
     all the information and estimates required of a sequestration 
     preview report required by subsections (d)(2)(D) through (H). 
     In addition, that report shall include--
       ``(A) for each account to be sequestered, the baseline 
     level of sequestrable budgetary resources and the resulting 
     reductions in new budget authority and outlays; and
       ``(B) the effects of sequestration on the level of outlays 
     for each fiscal year through 2002.
       ``(i) Selection of Official Final Sequestration Report.--
     Not later than 5 days after receiving the final OMB and CBO 
     sequestration reports, the Board shall choose either the OMB 
     or CBO final sequestration report as the official report for 
     purposes of this Act, and shall issue a report stating that 
     decision and making any comments that the Board chooses.
       ``(j) Presidential Order.--(1) On the day that the Board 
     chooses a final sequestration report, the President shall 
     issue an order fully implementing without change all 
     sequestrations required by--
       ``(A) the final sequestration report that requires the 
     lesser amount of discretionary sequestration under section 
     250; and
       ``(B) the final sequestration report that requires the 
     lesser total amount of deficit sequestration under section 
     264.
     The order shall be effective on issuance and shall be issued 
     only if sequestration is required.
       ``(2)(A) If both the CBO and OMB final sequestration 
     reports require a sequestration of discretionary programs, 
     and the Board chooses the report requiring the greater 
     sequestration, then a positive amount equal to the difference 
     between the CBO and OMB estimates of discretionary new budget 
     authority for the budget year shall be subtracted from the 
     budget-year column and added to the column for the first 
     outyear of the discretionary scorecard under section 107 as 
     though that amount had been enacted in the next session of 
     Congress.
       ``(B) If one final sequestration report requires a 
     sequestration of discretionary programs and the Board chooses 
     that report, then an amount equal to the difference between 
     that report's estimate of discretionary new budget authority 
     for the budget year and the discretionary funding limit for 
     that year shall be subtracted from the budget-year column and 
     added to column for the first outyear of the discretionary 
     scorecard under section 107 as though that amount had been 
     enacted in the next session of Congress.
       ``(k) Use of Major Estimating Assumptions and Scorekeeping 
     Conventions.--In the estimates, projections, and reports 
     under subsections (c) and (d), CBO and OMB shall use the best 
     and most recent estimating assumptions available. In all 
     other reports required by this section and in all estimates 
     or calculations required by this Act, CBO and OMB shall use--
       ``(1) current-year and budget-year discretionary funding 
     limits chosen by the Board and the estimates chosen by the 
     Board of the deficit reduction necessary to comply with the 
     deficit targets in the budget year;
       ``(2) in estimating the effects of bills and discretionary 
     regulations, the major estimating assumptions most recently 
     chosen by the Board, except to the extent that they must be 
     altered to reflect actual results occurring or measured after 
     the Board's choice; and
       ``(3) scorekeeping conventions determined after 
     consultation among the House and Senate Committees on the 
     Budget, CBO, and OMB.
     In applying the two previous sentences, the major estimating 
     assumptions and other calculations required by this Act that 
     are included in the statement of managers accompanying the 
     conference report on this Act shall be considered, for all 
     purposes of this Act, to be the report of the Board chosen 
     under subsection (e) for fiscal year 1993.
       ``(l) Bill Cost Estimates.--Within 10 days after the 
     enactment of any discretionary appropriations, direct 
     spending, or receipts legislation, CBO and OMB shall transmit 
     to each other, the Board, and to the Congress an estimate of 
     the budgetary effects of that law, following the estimating 
     requirements of this section. Those estimates may not change 
     after the 10-day period except--
       ``(1) to the extent those estimates are subsumed within 
     (and implicitly changed by) the estimates made in preparation 
     of a new baseline under subsections (c), (d), and (h);
       ``(2) to reflect a choice of the Board regarding an 
     official set of estimates under subsections (l) and (n); and
       ``(3) to correct clerical errors or errors in the 
     application of this Act.

     ``SEC. 255. EXEMPT PROGRAMS AND ACTIVITIES.

       ``The following budget accounts, activities within 
     accounts, or income shall be exempt from sequestration--
       ``(1) net interest;

[[Page H11340]]

       ``(2) deposit insurance and pension benefit guarantees;
       ``(3) all payments to trust funds from excise taxes or 
     other receipts or collections properly creditable to those 
     trust funds;
       ``(4) offsetting receipts and collections;
       ``(5) all payments from one Federal direct spending budget 
     account to another Federal budget account; all 
     intragovernmental funds including those from which funding is 
     derived primarily from other Government accounts;
       ``(6) expenses to the extent they result from private 
     donations, bequests, or voluntary contributions to the 
     Government;
       ``(7) nonbudgetary activities, including but not limited 
     to--
       ``(A) credit liquidating and financing accounts;
       ``(B) the Pension Benefit Guarantee Corporation Trust 
     Funds;
       ``(C) the Thrift Savings Fund;
       ``(D) the Federal Reserve System; and
       ``(E) appropriations for the District of Columbia to the 
     extent they are appropriations of locally raised funds;
       ``(8) payments resulting from Government insurance, 
     Government guarantees, or any other form of contingent 
     liability, to the extent those payments result from 
     contractual or other legally binding commitments of the 
     Government at the time of any sequestration;
       ``(9) the following accounts, which largely fulfill 
     requirements of the Constitution or otherwise make payments 
     to which the Government is committed--
       Administration of Territories, Northern Mariana Islands 
     Covenant grants (14-0412-0-1-806);
       Bureau of Indian Affairs, miscellaneous payments to Indians 
     (14-2303-0-1-452);
       Bureau of Indian Affairs, miscellaneous trust funds, tribal 
     trust funds (14-9973-0-7-999);
       Claims, defense;
       Claims, judgments, and relief act (20-1895-0-1-806);
       Compact of Free Association, economic assistance pursuant 
     to Public Law 99-658 (14-0415-0-1-806);
       Compensation of the President (11-0001-0-1-802);
       Customs Service, miscellaneous permanent appropriations 
     (20-9992-0-2-852);
       Eastern Indian land claims settlement fund (14-2202-0-1-
     806)
       Farm Credit System Financial Assistance Corporation, 
     interest payments (20-1850-0-1-351);
       Internal Revenue collections of Puerto Rico (20-5737-0-2-
     852);
       Panama Canal Commission, operating expenses and capital 
     outlay (95-5190-0-2-403);
       Payments of Vietnam and USS Pueblo prisoner-of-war claims 
     (15-0104-0-1-153);
       Payments to copyright owners (03-5175-0-2-376);
       Payments to the United States territories, fiscal 
     assistance (14-0418-0-1-801);
       Salaries of Article III judges;
       Soldier's and Airmen's Home, payment of claims (84-8930-0-
     7-705);
       Washington Metropolitan Area Transit Authority, interest 
     payments (46-0300-0-1-401).
       ``(10) the following noncredit special, revolving, or 
     trust-revolving funds--
       Coinage profit fund (20-5811-0-2-803);
       Exchange Stabilization Fund (20-4444-0-3-155);
       Foreign Military Sales trust fund (11-82232-0-7-155);
       ``(11)(A) any amount paid as regular unemployment 
     compensation by a State from its account in the Unemployment 
     Trust Fund (established by section 904(a) of the Social 
     Security Act);
       ``(B) any advance made to a State from the Federal 
     unemployment account (established by section 904(g) of such 
     Act) under title XII of such Act and any advance appropriated 
     to the Federal unemployment account pursuant to section 1203 
     of such Act;
       ``(C) any payment made from the Federal Employees 
     Compensation Account (as established under section 909 of 
     such Act) for the purpose of carrying out chapter 85 of title 
     5, United States Code, and funds appropriated or transferred 
     to or otherwise deposited in such Account;
       ``(12) the earned income tax credit (payments to 
     individuals pursuant to section 32 of the Internal Revenue 
     Code of 1986);
       ``(13) the uranium enrichment program; and
       ``(14) benefits payable under the old-age, survivors, and 
     disability insurance program established under title II of 
     the Social Security Act.

     ``SEC. 256. GENERAL AND SPECIAL SEQUESTRATION RULES.

       ``(a) Permanent Sequestration of deficit.--
       ``(1) The purpose of any sequestration under this Act is to 
     ensure deficit reduction in the budget year and all 
     subsequent fiscal years, so that the budget-year cap in 
     section 262 is not exceeded.
       ``(2) Obligations in sequestered spending accounts shall be 
     reduced in the fiscal year in which a sequestration occurs 
     and in all succeeding fiscal years. Notwithstanding any other 
     provision of this section, after the first deficit 
     sequestration, any later sequestration shall reduce spending 
     outlays by an amount in addition to, rather than in lieu of, 
     the reduction in spending outlays in place under the existing 
     sequestration or sequestrations.
       ``(b) Uniform Percentages.--
       ``(1) In calculating the uniform percentage applicable to 
     the sequestration of all spending programs or activities 
     under section 266 the sequestrable base for spending programs 
     and activities is the total budget-year level of outlays for 
     those programs or activities in the current policy baseline 
     minus--
       ``(A) those budget-year outlays resulting from obligations 
     incurred in the current or prior fiscal years, and
       (B) those budget-year outlays resulting from exemptions 
     under section 253.
       ``(2) For any direct spending program in which--
       ``(A) outlays pay for entitlement benefits,
       (B) a budget-year sequestration takes effect after the 1st 
     day of the budget year, and
       ``(C) that delay reduces the amount of entitlement 
     authority that is subject to sequestration in the budget 
     year,
     the uniform percentage otherwise applicable to the 
     sequestration of that program in the budget year shall be 
     increased as necessary to achieve the same budget-year outlay 
     reduction in that program as would have been achieved had 
     there been no delay.
       ``(3) If the uniform percentage otherwise applicable to the 
     budget-year sequestration of a program or activity is 
     increased under paragraph (2), then it shall revert to the 
     uniform percentage calculated under paragraph (1) when the 
     budget year is completed.
       ``(c) General Rules for Sequestration.--
       ``(1) Indefinite authority.--Except as otherwise provided, 
     sequestration in accounts for which obligations are 
     indefinite shall be taken in a manner to ensure that 
     obligations in the fiscal year of a sequestration and 
     succeeding fiscal years are reduced, from the level that 
     would actually have occurred, by the applicable sequestration 
     percentage or percentages.
       ``(2) Cancellation of budgetary resources.--Budgetary 
     resources sequestered from any account other than an 
     entitlement trust, special, or revolving fund account shall 
     revert to the Treasury and be permanently canceled or 
     repealed.
       ``(3) Indexed benefit payments.--If, under any entitlement 
     program--
       ``(A) benefit payments are made to persons or governments 
     more frequently than once a year, and
       ``(B) the amount of entitlement authority is periodically 
     adjusted under existing law to reflect changes in a price 
     index,
     then for the first fiscal year to which a sequestration order 
     applies, the benefit reductions in that program accomplished 
     by the order shall take effect starting with the payment made 
     at the beginning of January or 7 weeks after the order is 
     issued, whichever is later. For the purposes of this 
     subsection, Veterans Compensation shall be considered a 
     program that meets the conditions of the preceding sentence.
       ``(4) Programs, projects, or activities.--Except as 
     otherwise provided, the same percentage sequestration shall 
     apply to all programs, projects, and activities within a 
     budget account (with programs, projects, and activities as 
     delineated in the appropriation Act or accompanying report 
     for the relevant fiscal year covering that account, or for 
     accounts not included in appropriation Acts, as delineated in 
     the most recently submitted President's budget).
       ``(5) Implementing regulations.--Administrative regulations 
     or similar actions implementing the sequestration of a 
     program or activity shall be made within 120 days of the 
     effective date of the sequestration of that program or 
     activity.
       ``(6) Distribution formulas.--To the extent that 
     distribution or allocation formulas differ at different 
     levels of budgetary resources within an account, program, 
     project, or activity, a sequestration shall be interpreted as 
     producing a lower total appropriation, with that lower 
     appropriation being obligated as though it had been the pre-
     sequestration appropriation and no sequestration had 
     occurred.
       ``(7) Contingent fees.--In any account for which fees 
     charged to the public are legally determined by the level of 
     appropriations, fees shall be charged on the basis of the 
     presequestration level of appropriations.
       ``(d) Non-JOBS Portion of AFDC.--Any sequestration order 
     shall accomplish the full amount of any required reduction in 
     payments for the non-jobs portion of the aid to families with 
     dependant children program under the Social Security Act by 
     reducing the Federal reimbursement percentage (for the fiscal 
     year involved) by multiplying that reimbursement percentage, 
     on a State-by-State basis, by the uniform percentage 
     applicable to the sequestration of nonexempt direct spending 
     programs or activities.
       ``(e) JOBS Portion of AFDC.--
       ``(1) Full amount of sequestration required.--Any 
     sequestration order shall accomplish the full amount of any 
     required reduction of the job opportunities and basic skills 
     training program under section 402(a)(19), and part F of 
     title VI, of the Social Security Act, in the manner specified 
     in this subsection. Such an order may not reduce any Federal 
     matching rate pursuant to section 403(l) of the Social 
     Security Act.
       ``(2) New allotment formula.--
       ``(A) General rule.--Notwithstanding section 403(k) of the 
     Social Security Act, each State's percentage share of the 
     amount available after sequestration for direct spending 
     pursuant to section 403(l) of such Act shall be equal to that 
     percentage of the total amount paid to the States pursuant to 
     such section 403(l) for the prior fiscal year that is 
     represented by the amount paid to such State pursuant to such 
     section 403(l) for the prior fiscal year, except that a State 
     may not be allotted an amount under this 

[[Page H11341]]

     subparagraph that exceeds the amount that would have been 
     allotted to such State pursuant to such section 403(k) had 
     the sequestration not been in effect.
       ``(B) Reallotment of amounts remaining unallotted after 
     application of general rule.--Any amount made available after 
     sequestration for direct spending pursuant to section 403(l) 
     of the Social Security Act that remains unallotted as a 
     result of subparagraph (A) of this paragraph shall be 
     allotted among the States in proportion to the absolute 
     difference between the amount allotted, respectively, to each 
     State as a result of such subparagraph and the amount that 
     would have been allotted to such State pursuant to section 
     403(k) of such Act had the sequestration not been in effect, 
     except that a State may not be allotted an amount under this 
     subparagraph that results in a total allotment to the State 
     under this paragraph of more than the amount that would 
     have been allotted to such State pursuant to such section 
     403(k) had the sequestration not been in effect.
       ``(f) Child Support Enforcement Program.--Any sequestration 
     order shall accomplish the full amount of any required 
     reduction in payments under sections 455 and 458 of the 
     Social Security Act by reducing the Federal matching rate for 
     State administrative costs under the program, as specified 
     (for the fiscal year involved) in section 455(a) of such Act, 
     to the extent necessary to reduce such expenditures by that 
     amount.
       ``(g) Commodity Credit Corporation.--
       ``(1) Effective date.--For the Commodity Credit 
     Corporation, the date on which a sequestration order takes 
     effect in a fiscal year shall vary for each crop of a 
     commodity. In general, the sequestration order shall take 
     effect when issued, but for each crop of a commodity for 
     which 1-year contracts are issued as an entitlement, the 
     sequestration order shall take effect with the start of the 
     sign-up period for that crop that begins after the 
     sequestration order is issued. Payments for each contract in 
     such a crop shall be reduced under the same terms and 
     conditions.
       ``(2) Dairy program.--(A) As the sole means of achieving 
     any reduction in outlays under the milk price-support 
     program, the Secretary of Agriculture shall provide for a 
     reduction to be made in the price received by producers for 
     all milk produced in the United States and marketed by 
     producers for commercial use. That price reduction (measured 
     in cents per hundredweight of milk marketed) shall occur 
     under subparagraph (A) of section 201(d)(2) of the 
     Agricultural Act of 1949 (7 U.S.C. 1446(d)(2)(A)), shall 
     begin on the day any sequestration order is issued, and shall 
     not exceed the aggregate amount of the reduction in outlays 
     under the milk price-support program, that otherwise would 
     have been achieved by reducing payments made for the purchase 
     of milk or the products of milk under this subsection during 
     that fiscal year.
       ``(3) Effect of delay.--For purposes of subsection (b)(1), 
     the sequestrable base for the Commodity Credit Corporation is 
     the budget-year level of gross outlays resulting from new 
     budget authority that is subject to reduction under 
     paragraphs (1) and (2), and subsection (b)(2) shall not 
     apply.
       ``(4) Certain authority not to be limited.--Nothing in this 
     Act shall restrict the Corporation in the discharge of its 
     authority and responsibility as a corporation to buy and sell 
     commodities in world trade, or limit or reduce in any way any 
     appropriation that provides the Corporation with funds to 
     cover its net realized losses.
       ``(h) Extended Unemployment Compensation.--(1) A State may 
     reduce each weekly benefit payment made under the Federal-
     State Extended Unemployment Compensation Act of 1970 for any 
     week of unemployment occurring during any period with respect 
     to which payments are reduced under any sequestration order 
     by a percentage not to exceed the percentage by which the 
     Federal payment to the State under section 204 of such Act is 
     to be reduced for such week as a result of such order.
       ``(2) A reduction by a State in accordance with 
     subparagraph (A) shall not be considered as a failure to 
     fulfill the requirements of section 3304(a)(11) of the 
     Internal Revenue Code of 1986.
       ``(i) Federal Employees Health Benefits Fund.--For the 
     Federal Employees Health Benefits Fund, a sequestration order 
     shall take effect with the next open season. The 
     sequestration shall be accomplished by annual payments from 
     that Fund to the General Fund of the Treasury. Those annual 
     payments shall be financed solely by charging higher 
     premiums. For purposes of subsection (b)(1), the sequestrable 
     base for the Fund is the budget-year level of gross outlays 
     resulting from claims paid after the sequestration order 
     takes effect, and subsection (b)(2) shall not apply.
       ``(j) Federal Housing Finance Board.--Any sequestration of 
     the Federal Housing Finance Board shall be accomplished by 
     annual payments (by the end of each fiscal year) from that 
     Board to the general fund of the Treasury, in amounts equal 
     to the uniform sequestration percentage for that year times 
     the gross obligations of the Board in that year.
       ``(k) Federal Pay.--
       ``(1) In general.--Except as provided in section 10(b)(3), 
     new budget authority to pay Federal personnel from direct 
     spending accounts shall be reduced by the uniform percentage 
     calculated under section 264, as applicable, but no 
     sequestration order may reduce or have the effect of reducing 
     the rate of pay to which any individual is entitled under any 
     statutory pay system (as increased by any amount payable 
     under section 5304 of title 5, United States Code, or section 
     302 of the Federal Employees Pay Comparability Act of 1990) 
     or the rate of any element of military pay to which any 
     individual is entitled under title 37, United States Code, or 
     any increase in rates of pay which is scheduled to take 
     effect under section 5303 of title 5, United States Code, 
     section 1009 of title 37, United States Code, or any other 
     provision of law.
       ``(2) Definitions.--For purposes of this subsection:
       ``(A) The term `statutory pay system' shall have the 
     meaning given that term in section 5302(1) of title 5, United 
     States Code.
       ``(B) The term `elements of military pay' means--
       ``(i) the elements of compensation of members of the 
     uniformed services specified in section 1009 of title 37, 
     United States Code,
       ``(ii) allowances provided members of the uniformed 
     services under sections 403a and 405 of such title, and
       ``(iii) cadet pay and midshipman pay under section 203(c) 
     of such title.
       ``(C) The term `uniformed services' shall have the meaning 
     given that term in section 101(3) of title 37, United States 
     Code.
       ``(l) Guaranteed Student Loans.--(A) For all student loans 
     under part B of title IV of the Higher Education Act of 1965 
     made on or after the date of a sequestration, the origination 
     fees shall be increased by a uniform percentage sufficient to 
     produce the dollar savings in student loan programs for the 
     fiscal year of the sequestration required by section 264, and 
     all subsequent origination fees shall be increased by the 
     same percentage, notwithstanding any other provision of law.
       ``(B) The origination fees to which paragraph (A) applies 
     are those specified in sections 428H(f)(1) and 438(c) of that 
     Act.
       ``(m) Insurance Programs.--Any sequestration in a Federal 
     program that sells insurance contracts to the public 
     (including the Federal Crop Insurance Fund, the National 
     Insurance Development Fund, the National Flood Insurance 
     Fund, insurance activities of the Overseas Private Insurance 
     Corporation, and Veterans' life insurance programs) shall be 
     accomplished by annual payments from the insurance fund or 
     account to the general fund of the Treasury. The amount of 
     each annual payment by each such fund or account shall be the 
     amount received by the fund or account by increasing premiums 
     on contracts entered into after the date a sequestration 
     order takes effect by the uniform sequestration percentage, 
     and premiums shall be increased accordingly.
       ``(n) Medicaid.--The November 15th estimate of medicaid 
     spending by States shall be the base estimate from which the 
     uniform percentage reduction under any sequestration, applied 
     across-the-board by State, shall be made. Succeeding Federal 
     payments to States shall reflect that reduction. The Health 
     Care Financing Administration shall reconcile actual medicaid 
     spending for each fiscal year with the base estimate as 
     reduced by the uniform percentage, and adjust each State's 
     grants as soon as practicable, but no later than 100 days 
     after the end of the fiscal year to which the base 
     estimate applied, to comply with the sequestration order.
       ``(o) Medicare.--
       ``(1) Timing of application of reductions.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     if a reduction is made in payment amounts pursuant to a 
     sequestration order, the reduction shall be applied to 
     payment for services furnished after the effective date of 
     the order. For purposes of the previous sentence, in the case 
     of inpatient services furnished for an individual, the 
     services shall be considered to be furnished on the date of 
     the individual's discharge from the inpatient facility.
       ``(B) Payment on the basis of cost reporting periods.--In 
     the case in which payment for services of a provider of 
     services is made under title XVIII of the Social Security Act 
     on a basis relating to the reasonable cost incurred for the 
     services during a cost reporting period of the provider, if a 
     reduction is made in payment amounts pursuant to a 
     sequestration order, the reduction shall be applied to 
     payment for costs for such services incurred at any time 
     during each cost reporting period of the provider any part of 
     which occurs after the effective date of the order, but only 
     (for each such cost reporting period) in the same proportion 
     as the fraction of the cost reporting period that occurs 
     after the effective date of the order.
       ``(2) No increase in beneficiary charges in assignment-
     related cases.--If a reduction in payment amounts is made 
     pursuant to a sequestration order for services for which 
     payment under part B of title XVIII of the Social Security 
     Act is made on the basis of an assignment described in 
     section 1842(b)(3)(B)(ii), in accordance with section 
     1842(b)(6)(B), or under the procedure described in section 
     1870(f)(1) of such Act, the person furnishing the services 
     shall be considered to have accepted payment of the 
     reasonable charge for the services, less any reduction in 
     payment amount made pursuant to a sequestration order, as 
     payment in full.
       ``(p) Postal Service Fund.--Any sequestration of the Postal 
     Service Fund shall be accomplished by annual payments from 
     that Fund to the General Fund of the Treasury, and the 
     Postmaster General of the United States shall have the duty 
     to make those 

[[Page H11342]]

     payments during the fiscal year to which the sequestration 
     order applies and each succeeding fiscal year. The amount of 
     each annual payment shall be--
       ``(1) the uniform sequestration percentage, times
       ``(2) the estimated gross obligations of the Postal Service 
     Fund in that year other than those obligations financed with 
     an appropriation for revenue foregone for that year.
     Any such payment for a fiscal year shall be made as soon as 
     possible during the fiscal year, except that it may be made 
     in installments within that year if the payment schedule is 
     approved by the Secretary of the Treasury. Within 30 days 
     after the sequestration order is issued, the Postmaster 
     General shall submit to the Postal Rate Commission a plan for 
     financing the annual payment for that fiscal year and publish 
     that plan in the Federal Register. The plan may assume 
     efficiencies in the operation of the Postal Service, 
     reductions in capital expenditures, increases in the prices 
     of services, or any combination, but may not assume a lower 
     Fund surplus or higher Fund deficit and must follow the 
     requirements of existing law governing the Postal Service in 
     all other respects. Within 30 days of the receipt of that 
     plan, the Postal Rate Commission shall approve the plan or 
     modify it in the manner that modifications are allowed under 
     current law. If the Postal Rate Commission does not respond 
     to the plan within 30 days, the plan submitted by the 
     Postmaster General shall go into effect. Any plan may be 
     later revised by the submission of a new plan to the Postal 
     Rate Commission, which may approve or modify it.
       ``(q) Power Marketing Administrations and T.V.A.--Any 
     sequestration of the Department of Energy power marketing 
     administration funds or the Tennessee Valley Authority fund 
     shall be accomplished by annual payments from those funds to 
     the General Fund of the Treasury, and the administrators of 
     those funds shall have the duty to make those payments during 
     the fiscal year to which the sequestration order applies and 
     each succeeding fiscal year. The amount of each annual 
     payment by a fund shall be--
       ``(1) the uniform sequestration percentage, times
       ``(2) the estimated gross obligations of the fund in that 
     year.
     Any such payment for a fiscal year shall be made as soon as 
     possible during the fiscal year, except that it may be made 
     in installments within that year if the payment schedule is 
     approved by the Secretary of the Treasury. Annual payments by 
     a fund may be financed by reductions in costs required to 
     produce the presequester amount of power (but those 
     reductions shall not include reductions in the amount of 
     power supplied by the fund), by reductions in capital 
     expenditures, by increases in rates, or by any combination, 
     but may not be financed by a lower fund surplus or a higher 
     fund deficit and must follow the requirements of existing law 
     governing the fund in all other respects. The administrator 
     of a fund or the TVA Board is authorized to take the actions 
     specified above in order to make the annual payments to the 
     Treasury.
       ``(r) Veterans' Housing Loans.--(1) For all housing loans 
     guaranteed, insured, or made under chapter 37 of title 38, 
     United States Code, on or after the date of a sequestration, 
     the origination fees shall be increased by a uniform 
     percentage sufficient to produce the dollar savings in 
     veterans' housing programs for the fiscal year of the 
     sequestration required by section 264, and all subsequent 
     origination fees shall be increased by the same percentage, 
     notwithstanding any other provision of law.
       ``(2) The origination fees to which paragraph (1) applies 
     are those referred to in section 3729 of title 38, United 
     States Code.''.
       (b) Conforming Changes.--(1) The item relating to section 
     254 in the table of sections set forth in section 200 of the 
     Balanced Budget and Emergency Deficit Control Act of 1985 is 
     amended to read as follows:

``Sec. 254. Estimating assumptions, reports, and orders.''.
       (2) The item relating to section 256 in the table of 
     sections set forth in section 200 of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended to read as 
     follows:

``Sec. 256. General and special sequestration rules.''.

       (c) Within 30 days after the date of enactment of this Act, 
     the Director of the Office of Management and Budget and the 
     Director of the Congressional Budget Office shall each issue 
     a report that includes projections of Federal spending, 
     revenues, and deficits as a result of enactment of this Act 
     and setting forth the economic and technical assumptions used 
     to make those projections.
                       Subtitle F--Line Item Veto

     SEC. 14501. LINE ITEM VETO AUTHORITY.

       (a) In General.--Notwithstanding the provisions of part B 
     of title X of the Congressional Budget and Impoundment 
     Control Act of 1974, and subject to the provisions of this 
     section, the President may rescind all or part of the dollar 
     amount of any discretionary budget authority specified in an 
     appropriation Act for fiscal year 1996 or conference report 
     or joint explanatory statement accompanying a conference 
     report on the Act, or veto any targeted tax benefit 
     provision in this reconciliation Act, if the President--
       (1) determines that--
       (A) such rescission or veto would help reduce the Federal 
     budget deficit;
       (B) such rescission or veto will not impair any essential 
     Government functions; and
       (C) such rescission or veto will not harm the national 
     interest; and
       (2) notifies the Congress of such rescission or veto by a 
     special message not later than 10 calendar days (not 
     including Sundays) after the date of the enactment of an 
     appropriation Act providing such budget authority, or of this 
     reconciliation Act in the case of a targeted tax benefit.
       (b) Deficit Reduction.--In each special message, the 
     President may also propose to reduce the appropriate 
     discretionary spending limit set forth in section 601(a)(2) 
     of the Congressional Budget Act of 1974 by an amount that 
     does not exceed the total amount of discretionary budget 
     authority rescinded by that message.
       (c) Separate Messages.--The President shall submit a 
     separate special message under this section for each 
     appropriation Act and for this reconciliation Act.
       (d) Limitation.--No special message submitted by the 
     President under this section may change any prohibition or 
     limitation of discretionary budget authority set forth in any 
     appropriation Act.
       (e) Special Rule for Previously Enacted Appropriation 
     Acts.--Notwithstanding subsection (a)(2), in the case of any 
     unobligated discretionary budget authority provided by any 
     appropriation Act for fiscal year 1996 that is enacted before 
     the date of the enactment of this Act, the President may 
     rescind all or part of that discretionary budget authority 
     under the terms of this subtitle if the President notifies 
     the Congress of such rescission by a special message not 
     later than 10 calendar days (not including Sundays) after the 
     date of the enactment of this Act.

     SEC. 14502. LINE ITEM VETO EFFECTIVE UNLESS DISAPPROVED.

       (a) In General.--
       (1) Any amount of budget authority rescinded under this 
     subtitle as set forth in a special message by the President 
     shall be deemed canceled unless, during the period described 
     in subsection (b), a rescission/receipts disapproval bill 
     making available all of the amount rescinded is enacted into 
     law.
       (2) Any provision of law vetoed under this subtitle as set 
     forth in a special message by the President shall be deemed 
     repealed unless, during the period described in subsection 
     (b), a rescission/receipts disapproval bill restoring that 
     provision is enacted into law.
       (b) Congressional Review Period.--The period referred to in 
     subsection (a) is--
       (1) a congressional review period of 20 calendar days of 
     session, beginning on the first calendar day of session after 
     the date of submission of the special message, during which 
     Congress must complete action on the rescission/receipts 
     disapproval bill and present such bill to the President for 
     approval or disapproval;
       (2) after the period provided in paragraph (1), an 
     additional 10 days (not including Sundays) during which the 
     President may exercise his authority to sign or veto the 
     rescission/receipts disapproval bill; and
       (3) if the President vetoes the rescission/receipts 
     disapproval bill during the period provided in paragraph (2), 
     an additional 5 calendar days of session after the date of 
     the veto.
       (c) Special Rule.--If a special message is transmitted by 
     the President under this subtitle and the last session of the 
     Congress adjourns sine die before the expiration of the 
     period described in subsection (b), the rescission or veto, 
     as the case may be, shall not take effect. The message shall 
     be deemed to have been retransmitted on the first Monday in 
     February of the succeeding Congress and the review period 
     referred to in subsection (b) (with respect to such message) 
     shall run beginning after such first day.

     SEC. 14503. DEFINITIONS.

       As used in this subtitle:
       (1) The term ``rescission/receipts disapproval bill'' means 
     a bill which only disapproves, in whole, rescissions of 
     discretionary budget authority or only disapproves vetoes of 
     targeted tax benefits in a special message transmitted by the 
     President under this subtitle and--
       (A)(i) in the case of a special message regarding 
     rescissions, the matter after the enacting clause of which is 
     as follows: ``That Congress disapproves each rescission of 
     discretionary budget authority of the President as submitted 
     by the President in a special message on ________.'', the 
     blank space being filled in with the appropriate date and the 
     public law to which the message relates; and
       (ii) in the case of a special message regarding vetoes of 
     targeted tax benefits, the matter after the enacting clause 
     of which is as follows: ``That Congress disapproves each veto 
     of targeted tax benefits of the President as submitted by the 
     President in a special message on ________.'', the blank 
     space being filled in with the appropriate date and the 
     public law to which the message relates; and
       (B) the title of which is as follows: ``A bill to 
     disapprove the recommendations submitted by the President on 
     ________.'', the blank space being filled in with the date of 
     submission of the relevant special message and the public law 
     to which the message relates.
       (2) The term ``calendar days of session'' shall mean only 
     those days on which both Houses of Congress are in session.

[[Page H11343]]

       (3) The term ``targeted tax benefit'' means any provision 
     of this reconciliation Act determined by the President to 
     provide a Federal tax deduction, credit, exclusion, 
     preference, or other concession to 100 or fewer 
     beneficiaries. Any partnership, limited partnership, trust, 
     or S corporation, and any subsidiary or affiliate of the same 
     parent corporation, shall be deemed and counted as a single 
     beneficiary regardless of the number of partners, limited 
     partners, beneficiaries, shareholders, or affiliated 
     corporate entities.
       (4) The term ``appropriation Act'' means any general or 
     special appropriation Act for fiscal year 1996, and any Act 
     or joint resolution making supplemental, deficiency, or 
     continuing appropriations for fiscal year 1996.

     SEC. 14504. CONGRESSIONAL CONSIDERATION OF LINE ITEM VETOES.

       (a) Presidential Special Message.--Whenever the President 
     rescinds any budget authority as provided in this subtitle or 
     vetoes any provision of law as provided in this subtitle, the 
     President shall transmit to both Houses of Congress a special 
     message specifying--
       (1) the amount of budget authority rescinded or the 
     provision vetoed;
       (2) any account, department, or establishment of the 
     Government to which such budget authority is available for 
     obligation, and the specific project or governmental 
     functions involved;
       (3) the reasons and justifications for the determination to 
     rescind budget authority or veto any provision pursuant to 
     this subtitle;
       (4) to the maximum extent practicable, the estimated 
     fiscal, economic, and budgetary effect of the rescission or 
     veto; and
       (5) all actions, circumstances, and considerations relating 
     to or bearing upon the rescission or veto and the decision to 
     effect the rescission or veto, and to the maximum extent 
     practicable, the estimated effect of the rescission upon the 
     objects, purposes, and programs for which the budget 
     authority is provided.
       (b) Transmission of Messages to House and Senate.--
       (1) Each special message transmitted under this subtitle 
     shall be transmitted to the House of Representatives and the 
     Senate on the same day, and shall be delivered to the Clerk 
     of the House of Representatives if the House is not in 
     session, and to the Secretary of the Senate if the Senate is 
     not in session. Each special message so transmitted shall be 
     referred to the appropriate committees of the House of 
     Representatives and the Senate. Each such message shall be 
     printed as a document of each House.
       (2) Any special message transmitted under this subtitle 
     shall be printed in the first issue of the Federal Register 
     published after such transmittal.
       (c) Introduction of Rescission/Receipts Disapproval 
     Bills.--The procedures set forth in subsection (d) shall 
     apply to any rescission/receipts disapproval bill introduced 
     in the House of Representatives not later than the third 
     calendar day of session beginning on the day after the date 
     of submission of a special message by the President under 
     this subtitle.
       (d) Consideration in the House of Representatives.--
       (1) The committee of the House of Representatives to which 
     a rescission/receipts disapproval bill is referred shall 
     report it without amendment, and with or without 
     recommendation, not later than the eighth calendar day of 
     session after the date of its introduction. If the committee 
     fails to report the bill within that period, it is in order 
     to move that the House discharge the committee from further 
     consideration of the bill. A motion to discharge may be made 
     only by an individual favoring the bill (but only after the 
     legislative day on which a Member announces to the House the 
     Member's intention to do so). The motion is highly 
     privileged. Debate thereon shall be limited to not more than 
     one hour, the time to be divided in the House equally between 
     a proponent and an opponent. The previous question shall be 
     considered as ordered on the motion to its adoption without 
     intervening motion. A motion to reconsider the vote by which 
     the motion is agreed to or disagreed to shall not be in 
     order.
       (2) After a rescission/receipts disapproval bill is 
     reported or the committee has been discharged from further 
     consideration, it is in order to move that the House resolve 
     into the Committee of the Whole House on the State of the 
     Union for consideration of the bill. All points of order 
     against the bill and against consideration of the bill are 
     waived. The motion is highly privileged. The previous 
     question shall be considered as ordered on that motion to its 
     adoption without intervening motion. A motion to reconsider 
     the vote by which the motion is agreed to or disagreed to 
     shall not be in order. During consideration of the bill in 
     the Committee of the Whole, the first reading of the bill 
     shall be dispensed with. General debate shall proceed without 
     intervening motion, shall be confined to the bill, and shall 
     not exceed two hours equally divided and controlled by a 
     proponent and an opponent of the bill. No amendment to the 
     bill is in order, except any Member may move to strike the 
     disapproval of any rescission or rescissions of budget 
     authority or any proposed repeal of a targeted tax benefit, 
     as applicable, if supported by 49 other Members. At the 
     conclusion of the consideration of the bill for amendment, 
     the Committee shall rise and report the bill to the House. 
     The previous question shall be considered as ordered on the 
     bill and amendments thereto to final passage without 
     intervening motion. A motion to reconsider the vote on 
     passage of the bill shall not be in order.
       (3) Appeals from the decisions of the Chair relating to the 
     application of the rules of the House of Representatives to 
     the procedure relating to a bill described in subsection (a) 
     shall be decided without debate.
       (4) It shall not be in order to consider more than one bill 
     described in subsection (c) or more than one motion to 
     discharge described in paragraph (1) with respect to a 
     particular special message.
       (5) Consideration of any rescission/receipts disapproval 
     bill under this subsection is governed by the rules of the 
     House of Representatives except to the extent specifically 
     provided by the provisions of this subtitle.
       (e) Consideration in the Senate.--
       (1) Any rescission/receipts disapproval bill received in 
     the Senate from the House shall be considered in the Senate 
     pursuant to the provisions of this subtitle.
       (2) Debate in the Senate on any rescission/receipts 
     disapproval bill and debatable motions and appeals in 
     connection therewith, shall be limited to not more than ten 
     hours. The time shall be equally divided between, and 
     controlled by, the majority leader and the minority leader or 
     their designees.
       (3) Debate in the Senate on any debatable motions or appeal 
     in connection with such bill shall be limited to one hour, to 
     be equally divided between, and controlled by the mover and 
     the manager of the bill, except that in the event the manager 
     of the bill is in favor of any such motion or appeal, the 
     time in opposition thereto shall be controlled by the 
     minority leader or his designee. Such leaders, or either of 
     them, may, from the time under their control on the passage 
     of the bill, allot additional time to any Senator during the 
     consideration of any debatable motion or appeal.
       (4) A motion to further limit debate is not debatable. A 
     motion to recommit (except a motion to recommit with 
     instructions to report back within a specified number of days 
     not to exceed one, not counting any day on which the Senate 
     is not in session) is not in order.
       (f) Points of Order.--
       (1) It shall not be in order in the Senate to consider any 
     rescission/receipts disapproval bill that relates to any 
     matter other than the rescission of budget authority or veto 
     of the provision of law transmitted by the President under 
     this subtitle.
       (2) It shall not be in order in the Senate to consider any 
     amendment to a rescission/receipts disapproval bill.
       (3) Paragraphs (1) and (2) may be waived or suspended in 
     the Senate only by a vote of three-fifths of the members duly 
     chosen and sworn.

     SEC. 14505. REPORT OF THE GENERAL ACCOUNTING OFFICE.

       On January 6, 1997, the Comptroller General shall submit a 
     report to each House of Congress which provides the following 
     information:
       (1) A list of each proposed Presidential rescission of 
     discretionary budget authority and veto of a targeted tax 
     benefit submitted through special messages for fiscal year 
     1996, together with their dollar value, and an indication of 
     whether each rescission of discretionary budget authority or 
     veto of a targeted tax benefit was accepted or rejected by 
     Congress.
       (2) The total number of proposed Presidential rescissions 
     of discretionary budget authority and vetoes of a targeted 
     tax benefit submitted through special messages for fiscal 
     year 1996, together with their total dollar value.
       (3) The total number of Presidential rescissions of 
     discretionary budget authority or vetoes of a targeted tax 
     benefit submitted through special messages for fiscal year 
     1996 and approved by Congress, together with their total 
     dollar value.
       (4) A list of rescissions of discretionary budget authority 
     initiated by Congress for fiscal year 1996, together with 
     their dollar value, and an indication of whether each such 
     rescission was accepted or rejected by Congress.
       (5) The total number of rescissions of discretionary budget 
     authority initiated and accepted by Congress for fiscal year 
     1996, together with their total dollar value.

     SEC. 14506. JUDICIAL REVIEW.

       (a) Expedited Review.--
       (1) Any Member of Congress may bring an action, in the 
     United States District Court for the District of Columbia, 
     for declaratory judgment and injunctive relief on the ground 
     that any provision of this subtitle violates the 
     Constitution.
       (2) A copy of any complaint in an action brought under 
     paragraph (1) shall be promptly delivered to the Secretary of 
     the Senate and the Clerk of the House of Representatives, and 
     each House of Congress shall have the right to intervene in 
     such action.
       (3) Any action brought under paragraph (1) shall be heard 
     and determined by a three-judge court in accordance with 
     section 2284 of title 28, United States Code.
       (4) Nothing in this section or in any other law shall 
     infringe upon the right of the House of Representatives to 
     intervene in an action brought under paragraph (1) without 
     the necessity of adopting a resolution to authorize such 
     intervention.
       (b) Appeal to Supreme Court.--Notwithstanding any other 
     provision of law, any order of the United States District 
     Court for 

[[Page H11344]]

     the District of Columbia which is issued pursuant to an 
     action brought under paragraph (1) of subsection (a) shall be 
     reviewable by appeal directly to the Supreme Court of the 
     United States. Any such appeal shall be taken by a notice of 
     appeal filed within 10 days after such order is entered; and 
     the jurisdictional statement shall be filed within 30 days 
     after such order is entered. No stay of an order issued 
     pursuant to an action brought under paragraph (1) of 
     subsection (a) shall be issued by a single Justice of the 
     Supreme Court.
       (c) Expedited Consideration.--It shall be the duty of the 
     District Court for the District of Columbia and the Supreme 
     Court of the United States to advance on the docket and to 
     expedite to the greatest possible extent the disposition of 
     any matter brought under subsection (a).
                 Subtitle G--Enforcing Points of Order

     SEC. 14601. POINTS OF ORDER IN THE SENATE.

       (a) Waiver.--The second sentence of section 904(c) of the 
     Congressional Budget Act of 1974 is amended by inserting 
     ``303(a),'' after ``302(f),'', by inserting ``311(c),'' after 
     ``311(a),'', by inserting ``606(b),'' after ``601(b),'', and 
     by inserting ``253(d), 253(h), 253(i),'' before 
     ``258(a)(4)(C)''.
       (b) Appeals.--The third sentence of section 904(c) of the 
     Congressional Budget Act of 1974 is amended by inserting 
     ``303(a),'' after ``302(f),'', by inserting ``311(c),'' after 
     ``311(a),'', by inserting ``606(b),'' after ``601(b),'', and 
     by inserting ``253(d), 253(h), 253(i),'' before 
     ``258(a)(4)(C)''.

     SEC. 14602. POINTS OF ORDER IN THE HOUSE OF REPRESENTATIVES.

       Section 904 of the Congressional Budget Act of 1974 is 
     amended by redesignating subsection (d) as subsection (e) and 
     by inserting after subsection (c) the following new 
     subsection:
       ``(d) In the House of Representatives, a separate vote 
     shall be required on that part of any resolution or order 
     that makes in order the waiver of any points of order 
     referred to in subsection (c).''.
                 Subtitle H--Deficit Reduction Lock-box

     SEC. 14701. DEFICIT REDUCTION LOCK-BOX PROVISIONS OF 
                   APPROPRIATION MEASURES.

       (a) Deficit Reduction Lock-box Provisions.--Title III of 
     the Congressional Budget Act of 1974 is amended by adding at 
     the end the following new section:


     ``deficit reduction lock-box provisions of appropriation bills

       ``Sec. 314. (a) Any appropriation bill that is being marked 
     up by the Committee on Appropriations (or a subcommittee 
     thereof) of either House shall contain a line item entitled 
     `Deficit Reduction Lock-box'.
       ``(b) Whenever the Committee on Appropriations of either 
     House reports an appropriation bill, that bill shall contain 
     a line item entitled `Deficit Reduction Account' comprised of 
     the following:
       ``(1) Only in the case of any general appropriation bill 
     containing the appropriations for Treasury and Postal Service 
     (or resolution making continuing appropriations (if 
     applicable)), an amount equal to the amounts by which the 
     discretionary spending limit for new budget authority and 
     outlays set forth in the most recent OMB sequestration 
     preview report pursuant to section 601(a)(2) exceed the 
     section 602(a) allocation for the fiscal year covered by that 
     bill.
       ``(2) Only in the case of any general appropriation bill 
     (or resolution making continuing appropriations (if 
     applicable)), an amount not to exceed the amount by which the 
     appropriate section 602(b) allocation of new budget authority 
     exceeds the amount of new budget authority provided by that 
     bill (as reported by that committee), but not less than the 
     sum of reductions in budget authority resulting from adoption 
     of amendments in the committee which were designated for 
     deficit reduction.
       ``(3) Only in the case of any bill making supplemental 
     appropriations following enactment of all general 
     appropriation bills for the same fiscal year, an amount not 
     to exceed the amount by which the section 602(a) allocation 
     of new budget authority exceeds the sum of all new budget 
     authority provided by appropriation bills enacted for that 
     fiscal year plus that supplemental appropriation bill (as 
     reported by that committee).
       ``(c) It shall not be in order for the Committee on Rules 
     of the House of Representatives to report a resolution that 
     restricts the offering of amendments to any appropriation 
     bill adjusting the level of budget authority contained in a 
     Deficit Reduction Account.
       ``(d) Whenever a Member of either House of Congress offers 
     an amendment (whether in subcommittee, committee, or on the 
     floor) to an appropriation bill to reduce spending, that 
     reduction shall be placed in the deficit reduction lock-box 
     unless that Member indicates that it is to be utilized for 
     another program, project, or activity covered by that bill. 
     If the amendment is agreed to and the reduction was placed in 
     the deficit reduction lock-box, then the line item entitled 
     `Deficit Reduction Lock-box' shall be increased by the amount 
     of that reduction. Any amendment pursuant to this subsection 
     shall be in order even if amendment portions of the bill are 
     not read for amendment with respect to the Deficit Reduction 
     Lock-box.
       ``(e) It shall not be in order in the House of 
     Representatives or the Senate to consider a conference report 
     or amendment of the Senate that modifies any Deficit 
     Reduction Lock-box provision that is beyond the scope of that 
     provision as so committed to the conference committee.
       ``(f) It shall not be in order to offer an amendment 
     increasing the Deficit Reduction Lock-box Account unless the 
     amendment increases rescissions or reduces appropriations by 
     an equivalent or larger amount, except that it shall be in 
     order to offer an amendment increasing the amount in the 
     Deficit Reduction Lock-box by the amount that the 
     appropriate 602(b) allocation of new budget authority 
     exceeds the amount of new budget authority provided by 
     that bill.
       ``(g) It shall not be in order for the Committee on Rules 
     of the House of Representatives to report a resolution which 
     waives subsection (c).''.
       (b) Conforming Amendment.--The table of contents set forth 
     in section 1(b) of the Congressional Budget and Impoundment 
     Control Act of 1974 is amended by inserting after the item 
     relating to section 313 the following new item:

``Sec. 314. Deficit reduction lock-box provisions of appropriation 
              measures.''.

     SEC. 14702. DOWNWARD ADJUSTMENTS.

       (a) Downward Adjustments.--The discretionary spending limit 
     for new budget authority for any fiscal year set forth in 
     section 601(a)(2) of the Congressional Budget Act of 1974, as 
     adjusted in strict conformance with section 251 of the 
     Balanced Budget and Emergency Deficit Control Act of 1985, 
     shall be reduced by the amount of budget authority 
     transferred to the Deficit Reduction Lockbox for that fiscal 
     year under section 314 of the Budget Control and Impoundment 
     Act of 1974. The adjusted discretionary spending limit for 
     outlays for that fiscal year and each outyear as set forth in 
     such section 601(a)(2) shall be reduced as a result of the 
     reduction of such budget authority, as calculated by the 
     Director of the Office of Management and Budget based upon 
     such programmatic and other assumptions set forth in the 
     joint explanatory statement of managers accompanying the 
     conference report on that bill. All such reductions shall 
     occur within ten days of enactment of any appropriations 
     bill.
       (b) Definition.--As used in this section, the term 
     ``appropriation bill'' means any general or special 
     appropriation bill, and any bill or joint resolution making 
     supplemental, deficiency, or continuing appropriations.
       (c) Rescission.--Funds in the Deficit Reduction Lockbox 
     shall be rescinded upon reductions in discretionary limits 
     pursuant to subsection (a).

     SEC. 14703. CBO TRACKING.

       Section 202 of the Congressional Budget Act of 1974 is 
     amended by adding at the end the following new subsection:
       ``(i) Scorekeeping.--To facilitate compliance by the 
     Committee on Appropriations with section 314, the Office 
     shall score all general appropriation measures (including 
     conference reports) as passed by the House of 
     Representatives, as passed the Senate and as enacted into 
     law. The scorecard shall include amounts contained in the 
     Deficit Reduction Lock-Box. The chairman of the Committee on 
     Appropriations of the House of Representatives or the Senate, 
     as the case may be, shall have such scorecard published in 
     the Congressional Record.''.
Subtitle I--Emergency Spending; Baseline Reform; Continuing Resolutions 
                                 Reform

                     CHAPTER 1--EMERGENCY SPENDING

     SEC. 14801. ESTABLISHMENT OF BUDGET RESERVE ACCOUNT.

       (a) Establishment.--A budget reserve account (hereinafter 
     in this section referred to as the ``account'') shall be 
     established for the purpose of setting aside adequate funding 
     for natural disasters and national security emergencies.
       (b) Prior Appropriation Required.--The account shall 
     consist of such sums as may be provided in advance in 
     appropriation Acts for a particular fiscal year.
       (c) Restriction on Use of Funds.--(1) Notwithstanding any 
     other provision of law, the amounts in the account shall not 
     be available for other than emergency funding requirements 
     for particular natural disasters or national security 
     emergencies so designated by Acts of Congress.
       (2) Funds in the account that are not obligated during the 
     fiscal year for which they are appropriated may only be used 
     for deficit reduction purposes.
       (d) New Point of Order.--(1) Title IV of the Congressional 
     Budget Act of 1974 is amended by adding at the end the 
     following new section:


                 ``point of order regarding emergencies

       ``Sec. 408. It shall not be in order in the House of 
     Representatives or the Senate to consider any bill or joint 
     resolution, or amendment thereto or conference report 
     thereon, containing an emergency designation for purposes of 
     section 251(b)(2)(D) or 252(e) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 if it also provides an 
     appropriation or direct spending for any other item or 
     contains any other matter, but that bill or joint resolution, 
     amendment, or conference report may contain rescissions of 
     budget authority or reductions of direct spending, or that 
     amendment may reduce amounts for that emergency.''.
       (2) The table of contents set forth in section 1(b) of the 
     Congressional Budget and Impoundment Control Act of 1974 is 
     amended by inserting after the item relating to section 407 
     the following new item:

``Sec. 408. Point of order regarding emergencies.''.

[[Page H11345]]


     SEC. 14802. CONGRESSIONAL BUDGET PROCESS CHANGES.

       (a) Contents of joint Resolutions on the Budget.--Section 
     301(a) of the Congressional Budget Act of 1974 is amended by 
     redesignating paragraphs (6) and (7) as paragraphs (7) and 
     (8), respectively, and by inserting after paragraph (5) the 
     following new paragraph:
       ``(6) total new budget authority and total budget outlays 
     for emergency funding requirements for natural disasters and 
     national security emergencies to be included in a budget 
     reserve account;''.
       (b) Section 602 Allocations.--(1) Section 602 of the 
     Congressional Budget Act of 1974 is amended by adding at the 
     end the following new subsection:
       ``(f) Committee Spending Allocations and Suballocations for 
     Budget Reserve Account.--
       ``(1) Allocations.--The joint explanatory statement 
     accompanying a conference report on a budget resolution shall 
     include allocations, consistent with the resolution 
     recommended in the conference report, of the appropriate 
     levels (for each fiscal year covered by that resolution) of 
     total new budget authority and outlays to the Committee on 
     Appropriations of each House for emergency funding 
     requirements for natural disasters and national security 
     emergencies to be included in a budget reserve account.
       ``(2) Suballocations.--As soon as practicable after a 
     budget resolution is agreed to, the Committee on 
     Appropriations of each House (after consulting with the 
     Committee on Appropriations of the other House) shall 
     suballocate each amount allocated to it for the budget year 
     under paragraph (1) among its subcommittees. Each Committee 
     on Appropriations shall promptly report to its House 
     suballocations made or revised under this paragraph.''.
       (2) Section 602(c) of the Congressional Budget Act of 1974 
     is amended by inserting ``or subsection (f)(1)'' after 
     ``subsection (a)'' and by inserting ``or subsection (f)(2)'' 
     after ``subsection (b)''.

     SEC. 14803. REPORTING.

       Not later than November 30, 1996, and at annual intervals 
     thereafter, the Director of the Office of Management and 
     Budget shall submit a report to each House of Congress 
     listing the amounts of money expended from the budget reserve 
     account established under section 1 for the fiscal year 
     ending during that calendar year for each natural disaster 
     and national security emergency.

                       CHAPTER 2--BASELINE REFORM

     SEC. 14851. THE BASELINE.

       (a) The second sentence of section 257(c) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 is amended--
       (1) by inserting ``but only for the purpose of adjusting 
     the discretionary spending limits set forth in section 
     601(a)(2) of the Congressional Budget Act of 1974'' after 
     ``for inflation as specified in paragraph (5)''; and
       (2) by inserting ``but only for the purpose of adjusting 
     the discretionary spending limits set forth in section 
     601(a)(2) of the Congressional Budget Act of 1974'' after 
     ``to offset pay absorption and for pay annualization as 
     specified in paragraph (4)''.
       (b) Section 1109(a) of title 31, United States Code, is 
     amended by adding after the first sentence the following new 
     sentence: ``These estimates shall not include an adjustment 
     for inflation for programs and activities subject to 
     discretionary appropriations.''.

     SEC. 14852. THE PRESIDENT'S BUDGET.

       (a) Paragraph (5) of section 1105(a) of title 31, United 
     States Code, is amended to read as follows:
       ``(5) except as provided in subsection (b) of this section, 
     estimated expenditures and appropriations for the current 
     year and estimated expenditures and proposed appropriations 
     the President decides are necessary to support the Government 
     in the fiscal year for which the budget is submitted and the 
     4 fiscal years following that year;''.
       (b) Section 1105(a)(6) of title 31, United States Code, is 
     amended by inserting ``current fiscal year and the'' before 
     ``fiscal year''.
       (c) Section 1105(a)(12) of title 31, United States Code, is 
     amended by striking ``and'' at the end of subparagraph (A), 
     by striking the period and inserting ``; and'' at the end of 
     subparagraph (B), and by adding at the end the following new 
     subparagraph:
       ``(C) the estimated amount for the same activity (if any) 
     in the current fiscal year.''.
       (d) Section 1105(a)(18) of title 31, United States Code, is 
     amended by inserting ``new budget authority and'' before 
     ``budget outlays''.
       (e) Section 1105(a) of title 31, United States Code, is 
     amended by adding at the end the following new paragraph:
       ``(30) a comparison of levels of estimated expenditures and 
     proposed appropriations for each function and subfunction in 
     the current fiscal year and the fiscal year for which the 
     budget is submitted, along with the proposed increase or 
     decrease of spending in percentage terms for each function 
     and subfunction.''.

     SEC. 14853. THE CONGRESSIONAL BUDGET.

       Section 301(e) of the Congressional Budget Act of 1974 is 
     amended by--
       (1) inserting after the second sentence the following: 
     ``The starting point for any deliberations in the Committee 
     on the Budget of each House on the joint resolution on the 
     budget for the next fiscal year shall be the estimated level 
     of outlays for the current year in each function and 
     subfunction. Any increases or decreases in the congressional 
     budget for the next fiscal year shall be from such estimated 
     levels.''; and
       (2) striking paragraph (8) and redesignating paragraphs (9) 
     and (10) as paragraphs (10) and (11), respectively, and by 
     inserting after paragraph (7) the following new paragraphs:
       ``(8) a comparison of levels for the current fiscal year 
     with proposed spending and revenue levels for the subsequent 
     fiscal years along with the proposed increase or decrease of 
     spending in percentage terms for each function and 
     subfunction; and
       ``(9) information, data, and comparisons indicating the 
     manner in which and the basis on which, the committee 
     determined each of the matters set forth in the joint 
     resolution;''.

     SEC. 14854. CONGRESSIONAL BUDGET OFFICE REPORTS TO 
                   COMMITTEES.

       (a) The first sentence of section 202(f)(1) of the 
     Congressional Budget Act of 1974 is amended to read as 
     follows: ``On or before February 15 of each year, the 
     Director shall submit to the Committees on the Budget of the 
     House of Representatives and the Senate a report for the 
     fiscal year commencing on October 1 of that year with respect 
     to fiscal policy, including (A) alternative levels of total 
     revenues, total new budget authority, and total outlays 
     (including related surpluses and deficits) compared to 
     comparable levels for the current year and (B) the levels of 
     tax expenditures under existing law, taking into account 
     projected economic factors and any changes in such levels 
     based on proposals in the budget submitted by the President 
     for such fiscal year.''.
       (b) Section 202(f)(1) of the Congressional Budget Act of 
     1974 is amended by inserting after the first sentence the 
     following new sentence: ``That report shall also include a 
     table on sources of spending growth in total mandatory 
     spending for the budget year and the ensuing 4 fiscal years, 
     which shall include changes in outlays attributable to the 
     following: cost-of-living adjustments; changes in the number 
     of program recipients; increases in medical care prices, 
     utilization and intensity of medical care; and residual 
     factors.''.
       (c) Section 308(a)(1) of the Congressional Budget Act of 
     1974 is amended--
       (1) in subparagraph (C), by inserting ``, and shall include 
     a comparison of those levels to comparable levels for the 
     current fiscal year'' before ``if timely submitted''; and
       (2) by striking ``and'' at the end of subparagraph (C), by 
     striking the period and inserting ``; and'' at the end of 
     subparagraph (D), and by adding at the end the following new 
     subparagraph:
       ``(E) comparing the levels in existing programs in such 
     measure to the estimated levels for the current fiscal 
     year.''
       (d) Title IV of the Congressional Budget Act of 1974 is 
     amended by adding at the end the following new section:


                   ``gao reports to budget committees

       (a) ``Sec. 408. On or before January 15 of each year, the 
     Comptroller General, after consultation with appropriate 
     committees of the House of Representatives and Senate, shall 
     submit to the Congress a report listing all programs, 
     projects, and activities that fall within the definition of 
     direct spending under section 250(c)(8) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985.''.
       (b) Conforming Amendment.--The table of contents set forth 
     in section 1(b) of the Congressional Budget and Impoundment 
     Control Act of 1974 is amended by inserting after the item 
     relating to section 407 the following new item:

``Sec. 408. GAO reports to budget committees.''.

          CHAPTER 3--RESTRICTED USES OF CONTINUING RESOLUTIONS

     SEC. 14871. RESTRICTIONS RESPECTING CONTINUING RESOLUTIONS.

       (a) Rule XXI of the Rules of the House of Representatives 
     is amended by adding at the end thereof the following new 
     clause:
       ``9. (a) Any item of appropriation set forth in any joint 
     resolution continuing appropriations, or amendment thereto, 
     shall not exceed the rate it would have been at assuming the 
     continuation of current law.
       ``(b) It shall not be in order in the House to consider any 
     joint resolution continuing appropriations, or amendment 
     thereto, which changes existing law.''.
       (b) The amendment made by subsection (a) shall only apply 
     to joint resolutions continuing appropriations for fiscal 
     year 1996 or any subsequent fiscal year.
            Subtitle J--Technical and Conforming Amendments

     SEC. 14901. AMENDMENTS TO THE CONGRESSIONAL BUDGET AND 
                   IMPOUNDMENT CONTROL ACT OF 1974.

       (a) Definition of Budget Authority.--Paragraph (2) of 
     section 3 of the Congressional Budget and Impoundment Control 
     Act of 1974, the second time it appears, is amended by 
     inserting ``in any form'' after ``promissory notes'', by 
     inserting at the end of subparagraph (A) the following new 
     sentence: ``Such term excludes transactions classified as 
     means of financing.'', and by striking ``With respect to'' 
     and all that follows through ``retirement account, any'' and 
     inserting ``Any'', by inserting after subparagraph (B) the 
     following:
       ``(C) Relationship to entitlement authority.--For purposes 
     of titles III and IV, all references to budget authority 
     shall be considered to include the amount of budget authority 
     estimated to be needed to fund entitlement provisions under 
     existing or proposed law, and all legislation increasing (or 

[[Page H11346]]

     decreasing) the level of entitlement authority under existing 
     law shall be considered to provide (or decrease) new budget 
     authority in that amount.'',
     and by redesignating the next subparagraph accordingly.
       (b) Definition of Entitlement Authority.--Paragraph (9) of 
     section 3 of the Congressional Budget and Impoundment Control 
     Act of 1974 is amended by striking ``spending authority 
     described by section 401(c)(2)(C)'' and inserting the 
     following: ``, and the term `entitlement program' refers to, 
     any provision of law that has the effect of requiring the 
     Government to make net payments (including intragovernmental 
     payments) regardless of the amount of budget authority that 
     may be available to make those payments. Those terms shall 
     include amounts estimated to be required under provisions of 
     law that depend on the fulfillment of non-legislative 
     conditions or are indefinite as to amount or timing. Except 
     as provided in the next sentence, if a provision of law that 
     otherwise requires the Government to make net payments is 
     directly or indirectly limited by any other provision of law 
     to an amount of available budget authority, then entitlement 
     authority does not exist. Subchapter II of chapter 13 of 
     title 31, United States Code, and the sequestration 
     provisions of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 shall not be considered provisions of law 
     that limit entitlement authority to the amount of available 
     budget authority.''
       (c) Definition of Means of Financing.--Section 3 of the 
     Congressional Budget and Impoundment Control Act of 1974 is 
     amended by adding at the end the following new paragraph:
       ``(11) The term `means of financing' means the financial 
     transactions of the Government that consist of exchanges of 
     money or monetary proxies of equal value and therefore are 
     not counted as obligations, outlays, or revenues, such as net 
     Federal borrowing from the public in any form, debt 
     redemption, seignorage on coins and profits from the sale of 
     gold, and changes in outstanding check or other monetary 
     credits, including write-offs.''.
       (d) CBO Studies.--Section 202(h) of the Congressional 
     Budget Act of 1974 is amended by striking ``outlays, credit 
     authority,'' and inserting ``outlays''.
       (e) Required Contents of Budget Resolution.--Section 301(a) 
     of the Congressional Budget Act of 1974 is amended by 
     striking ``planning levels'', by striking ``two'' and 
     inserting ``four'', by striking ``, budget outlays, direct 
     loan obligations, and primary loan guarantee commitments'' 
     both places it appears and inserting ``and outlays'', by 
     striking paragraphs (5), (6) and (7), by striking the 
     semicolon at the end of paragraph (4) and inserting a period, 
     by inserting ``and'' after the semicolon at the end of 
     paragraph (3), and by striking the last sentence.
       (f) Technical Correction to Section 301(e).--Section 301(e) 
     of the Congressional Budget Act of 1974 is amended by 
     inserting ``new'' before ``budget authority'' in the second 
     sentence.
       (g) Committee Allocations and Suballocations.--Section 
     602(a)(1)(B) of the Congressional Budget Act of 1974 is 
     amended by striking ``committee.'' and inserting ``committee, 
     except that new budget authority and outlays for entitlement 
     programs funded through annual appropriations shall be 
     allocated and scored both to the Committee on Appropriations 
     and to the committee that authorized such programs.''.
       (h) Committee Allocations.--Section 302 of the 
     Congressional Budget Act of 1974 is amended to read as 
     follows:


                        ``committee allocations

       ``Sec. 302. (a) Reports by Committees.--As soon as 
     practicable after a joint resolution on the budget is 
     enacted--
       ``(1) the Committee on Appropriations of each House shall, 
     after consulting with the Committee on Appropriations of the 
     other House--
       ``(A) subdivide among its subcommittees the allocation of 
     budget outlays, new budget authority, and new credit 
     authority allocated to it in the joint budget resolution;
       ``(B) further subdivide the amount with respect to each 
     such subcommittee between controllable amounts and all other 
     amounts; and
       ``(2) every other committee of the House and Senate to 
     which an allocation was made in such joint budget resolution 
     shall, after consulting with the committee or committees of 
     the other House to which all or part of its allocation was 
     made--
       ``(A) subdivide such allocation among its subcommittees or 
     among programs over which it has jurisdiction; and
       ``(B) further subdivide the amount with respect to each 
     subcommittee or program between controllable amounts and all 
     other amounts.
     Each such committee shall promptly report to its House the 
     subdivisions made by it pursuant to this subsection.
       ``(b) Point of Order.--It shall not be in order in the 
     House of Representatives or the Senate to consider any bill 
     or resolution, or amendment thereto, providing--
       ``(1) new budget authority for a fiscal year;
       ``(2) new spending authority as described in section 
     401(c)(2) for a fiscal year; or
       ``(3) new credit authority for a fiscal year;
     within the jurisdiction of any committee which has received 
     an appropriate allocation of such authority pursuant to 
     section 301(a)(6) for such fiscal year, unless and until such 
     committee makes the allocation of subdivisions required by 
     subsection (a), in connection with the most recently enacted 
     joint resolution on the budget for such fiscal year.
       ``(c) Subsequent Joint Resolutions.--In the case of a joint 
     resolution on the budget referred to in section 304, the 
     subdivisions under subsection (a) shall be required only to 
     the extent necessary to take into account revisions made in 
     the most recently enacted joint resolution on the budget.
       ``(d) Alteration of Allocations.--At any time after a 
     committee reports the subdivision required to be made under 
     subsection (a), such committee may report to its House an 
     alteration of such subdivision. Any alteration of such 
     subdivision must be consistent with any actions already 
     taken by its House on legislation within the committee's 
     jurisdiction.
       ``(e) Legislation Subject to Point of Order.--After 
     enactment of a joint resolution on the budget for a fiscal 
     year, it shall not be in order in the House of 
     Representatives or the Senate to consider any bill, 
     resolution, or amendment providing new budget authority for 
     such fiscal year, new entitlement authority effective during 
     such fiscal year, or new credit authority for such fiscal 
     year, or any conference report on any such bill or 
     resolution, if--
       ``(1) the enactment of such bill or resolution as reported;
       ``(2) the adoption and enactment of such amendment; or
       ``(3) the enactment of such bill or resolution in the form 
     recommended in such conference report;
     would cause the appropriate allocation made pursuant to 
     section 301(a)(6) or subdivision made under subsection (a) of 
     this section for such fiscal year of new discretionary budget 
     authority, new entitlement authority, or new credit 
     authority, to be exceeded.
       ``(f) Determinations by Budget Committees.--For purposes of 
     this section, the levels of new budget authority, spending 
     authority as described in section 401(c)(2), outlays and new 
     credit authority for a fiscal year, shall be determined on 
     the basis of estimates made by the Committee on the Budget of 
     the House of Representatives or the Senate, as the case may 
     be.''.
       (i) Cost Estimates and Scorekeeping Reports.--Section 308 
     of the Congressional Budget Act of 1974 is amended--
       (1) in its title, by striking ``, new spending authority, 
     or new credit authority,'';
       (2) by striking ``, new spending authority described in 
     section 401(c)(2), or new credit authority,'' the 3 times it 
     appears;
       (3) in subsection (a), by striking ``in the reports 
     submitted'', by inserting ``302(a) or'' before ``302(b)'', in 
     paragraph (1)(B) by striking ``spending authority'' and 
     everything that follows through ``401(c)(2) which is'' and 
     inserting ``budget authority'' and by striking ``annual 
     appropriations'' and inserting ``annual discretionary 
     appropriations'', and in paragraph (1)(C) by striking ``such 
     budget authority'' and all that follows through ``loan 
     guarantee commitments'' and inserting ``new budget authority, 
     outlays, or revenues''; and
       (4) in subsection (c), by adding ``and'' at the end of 
     paragraph (1), by striking ``period;'' and inserting 
     ``period.'' at the end of paragraph (2), and by striking 
     paragraphs (3), (4), and (5).
       (j) Technical Correction to Section 312.--Section 312 of 
     the Congressional Budget Act of 1974 is amended by inserting 
     ``(a)'' after ``312.''.
       (k) Consideration of Legislation That Has Not Been 
     Reported.--Section 312 of the Congressional Budget Act of 
     1974 is amended by inserting at the end the following:
       ``(c) Consideration of Legislation That Has Not Been 
     Reported.--In the House of Representatives, any point of 
     order under title III or IV that would lie against 
     consideration of a bill or joint resolution as reported by a 
     committee shall also lie against a motion to consider 
     legislation respecting which no report has been filed.''
       (l) Conforming Amendments to Section 313.--Section 313 of 
     the Congressional Budget Act of 1974 is amended by striking 
     ``or section 258C'' and everything that follows through 
     ``Deficit Control Act of 1985'', by striking ``; and (F)'' 
     and everything that follows through ``310(g)'', by 
     redesignating the second subsection (c) and subsection (d) as 
     subsections (d) and (e), respectively, and by striking ``or 
     (b)(1)(F),''.
       (m) Borrowing and Contract Authority.--Section 401 of the 
     Congressional Budget Act of 1974 is amended
       (1) in subsection (a), by striking ``new spending authority 
     described in subsection (c)(2)(A) or (B)'' both times it 
     appears and inserting ``borrowing authority or contract 
     authority'';
       (2) by repealing subsections (b) and (c) and by 
     redesignating subsection (d) as subsection (b); and
       (3) in subsection (b) (as redesignated), by striking 
     ``Subsections (a) and (b)'' and inserting ``Subsection (a)'', 
     by inserting ``non-interest'' before ``receipts'' in 
     paragraph (1)(B), by repealing paragraph (2), and by 
     redesignating paragraph (3) as paragraph (2).
       (n) Credit Authority.--Section 402(a) of the Congressional 
     Budget Act of 1974 is amended by inserting before the period 
     the following: ``, except that this provision shall not apply 
     with respect to programs that, as of August 15, 1992, provide 
     credit authority as an entitlement''.

[[Page H11347]]


     SEC. 14902. TECHNICAL AND CONFORMING AMENDMENTS TO THE RULES 
                   OF THE HOUSE OF REPRESENTATIVES.

       (a) Miscellaneous Conforming Amendment.--Clause 4(h) of 
     rule X of the Rules of the House of Representatives is 
     amended by striking ``or section 602 (in the case of fiscal 
     years 1991 through 1995)''.
       (b) Repealer.--Rule XLIX of the Rules of the House of 
     Representatives is repealed.

     SEC. 14903. PRESIDENT'S BUDGET.

       (a) Definitions.--Section 1101 of title 31, United States 
     Code, is amended by adding at the end the following:
       ``(3) `Expenditures' has the same meaning as the term 
     `outlays' in the Balanced Budget and Emergency Deficit 
     Control Act of 1985.
       ``(4) All other terms used herein or in the documents 
     prepared hereunder shall have the meanings set forth in the 
     Balanced Budget and Emergency Deficit Control Act of 1985.''.
       (b) Byrd Amendment.--Section 1103 of title 31, United 
     States Code, is amended by striking ``commitment that 
     budget'' and inserting ``commitment that, starting with 
     fiscal year 2002,''.
       (c) President's Budget Submission.--Section 1105(a) of 
     title 31, United States Code, is amended--
       (1) in the first sentence by striking ``On or after the 
     first Monday in January but not later than the first Monday 
     in February of each year'' and inserting ``On or before the 
     first Monday in February or the 21st calendar day beginning 
     after the date the Board of Estimates issues a report to the 
     President under section 254 of the Balanced Budget and 
     Emergency Deficit Control Act of 1985'';
       (2) in paragraph (15) by striking ``section 301(a)(1)-(5)'' 
     and inserting ``section 301(a)(1)-(4);
       (3) in paragraph (16) by striking ``section 3(a)(3)'' and 
     inserting ``section 3(3)''; and
       (4) by adding at the end the following new paragraph:
       ``(32) an analysis of the financial condition of 
     Government-sponsored enterprises and the financial exposure 
     of the Government, if any, posed by them.''.
       (d) Use of Official Estimates.--Section 1105(f) of title 
     31, United States Code, is amended by inserting at the end 
     the following new sentence: ``That budget shall be consistent 
     with the discretionary funding limit and the direct spending 
     and receipts deficit reduction requirement for that year 
     chosen by the Board of Estimates and shall be based upon the 
     major estimating assumptions chosen by that Board.''.
                    Subtitle K--Truth in Legislating

     SEC. 14951. IDENTITY, SPONSOR, AND COST OF CERTAIN PROVISIONS 
                   REQUIRED TO BE REPORTED.

       (a) Identity, Sponsor, and Cost.--Clause 4 of rule X of the 
     Rules of the House of Representatives is amended by adding at 
     the end thereof the following:
       ``(j)(1) Except as provided by subparagraph (2), the report 
     or joint explanatory statement accompanying each bill or 
     joint resolution of a public character reported by a 
     committee or committee of conference shall contain, in plain 
     and understandable language--
       ``(A) an identification of each provision (if any) of the 
     bill or joint resolution which benefits only 10 or fewer 
     beneficiaries in any one of the following categories: 
     persons, corporations, partnerships, institutions, 
     organizations, transactions, events, items of property, 
     projects, civil subdivisions within one or more States, or 
     issuances of bonds;
       ``(B) the name of each beneficiary of such provision;
       ``(C) the name of any Member or Members who sponsored the 
     inclusion of each such provision and an indication of each 
     such provision requested by any agency, instrumentality, or 
     officer of the United States; and
       ``(D) an estimate by the Congressional Budget Office or the 
     Joint Committee on Taxation, whichever is appropriate, of the 
     costs which would be incurred in carrying out such provision 
     or any loss in revenues resulting from such provision for the 
     fiscal year for which costs or loss in revenues, as the case 
     may be, first occurs and each of the next 5 fiscal years.
       ``(2)(A) Subparagraph (1) shall not apply with respect to 
     any provision of a bill or joint resolution or of a 
     conference report on a bill or joint resolution if the 
     beneficiary of such provision is the United States or any 
     agency or instrumentality thereof.
       ``(B) Subparagraph (1)(D) shall not apply with respect to 
     any provision of a bill or joint resolution or of a 
     conference report on a bill or joint resolution if the costs 
     which would be incurred in carrying out such provision or any 
     loss in revenues resulting from such provision are identified 
     clearly in the report or joint explanatory statement 
     accompanying such bill or joint resolution.
       ``(3) It shall not be in order to consider any such bill or 
     joint resolution in the House if the report or joint 
     explanatory statement of the committee or committee of 
     conference which reported that bill or joint resolution does 
     not comply with subparagraph (1). The requirements of 
     subparagraph (1) may be waived only upon a separate vote 
     directed solely to that subject.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to bills and joint resolutions reported by a 
     committee of the House of Representatives after the date of 
     enactment of this Act.
  The CHAIRMAN. Pursuant to the rule, the gentleman from Utah [Mr. 
Orton] and a Member opposed will be recognized for 30 minutes each.
  Mr. KASICH. Mr. Chairman, I rise in aggressive opposition to the 
gentleman's proposal.
  The CHAIRMAN. The gentleman from Ohio [Mr. Kasich] will be recognized 
for 30 minutes.
  The Chair recognizes the gentleman from Utah [Mr. Orton].
  Mr. ORTON. Mr. Chairman, I yield 1 minute to the gentleman from 
California [Mr. Condit], the chairman of our coalition.
  Mr. CONDIT. Mr. Chairman, first of all, I would like to thank the 
coalition members and the staff for all the hard work they have done in 
putting this budget together. We have worked over the last several 
months with limited number of staff, and we believe we put a good 
budget together. The budget obviously is a product of hard work. It is 
a sound and credible and reasonable alternative. There are some 
technical and major public policy differences.
  But we come to the floor today not armed with any charts. We come 
today armed with the facts. And we would like to take the opportunity 
today to have a thoughtful and respectful discussion about our budget 
and about how it differs from the Republican budget.
  We have a great deal of respect for the chairman of the Committee on 
the Budget on the Republican side and we do not question his motives on 
his budget. But we do think there is a difference, and we would like 
very much to have the opportunity to explain that and have a kind and 
reasonable discussion.
  We want to make a commitment. At the end of this process, the 
coalition members are committed to get this country's financial house 
in order. We will work with anyone in this House at the end of this 
process to see that that gets done.
  Mr. KASICH. Mr. Chairman, I yield 4 minutes to my friend, the 
gentleman from New York [Mr. Paxon].
  Mr. PAXON. Mr. Chairman, I rise in opposition to the substitute and 
appreciate the opportunity to address the House.
  Before I do, I just want to commend my dear friend and colleague from 
the State of Ohio, who I think is a gentleman, a true revolutionary 
making history today for the American people. To my friend, the 
gentleman from Ohio [Mr. Kasich] I tip my hat again.
  Mr. Chairman, today is an extraordinary day for the American people. 
As Speaker Gingrich said the other day, the changes we are making for 
the American people in today's reconciliation bill approach the level 
of sweeping change advanced by President Roosevelt's New Deal. Without 
question, our dramatic reshaping of the Federal Government certainly 
surpasses the magnitude of change advanced by Lyndon Johnson's big 
government Great Society programs.
  Without doubt, history will judge our efforts today as the start of a 
new era in American life and in American politics.
  Unfortunately, not all Members of this body are willing to stake a 
dramatic new course for America and its people. The liberal Democrat 
leadership in this body still clings to the failed policies of the 
past. They still believe that America can continue deficit spending 
with impunity. They still believe in the Great Society notion that the 
Federal Government is the leading institution in American life.
  A few Members of the Democrat Party in this House have rejected the 
notion of their liberal leaders and at least made an attempt to present 
an alternative reconciliation plan that balances the budget in 7 years.
  Unfortunately, Mr. Chairman, this Democrat alternative is serious 
flawed.
  As we set out to dramatically reshape the Federal Government, a 
government that was built with the hard work and sweat of American 
taxpayers, it is only fair that we provide the American people with a 
dividend in the form of tax relief for working families.
  The Democrat alternative ignores the very people whose hard earned 
dollars built the bloated Government we are now downsizing by refusing 
to provide them with tax relief.
  Mr. Chairman, in my own region of western New York and the Finger 
Lakes, nearly 430,000 children will be eligible for the $500 tax 
credit, worth nearly $220 million to their families--not to government.
  Nearly 15,000 senior citizen households will see the 1993 assault on 
their Social Security earnings reversed.

[[Page H11348]]

  For the 200 or so couples in my region who were married last week, 
they will see a slow reversal of the unfair marriage penalty contained 
in the Tax Code.
  And for the 120 or so senior citizens in my community who this week 
became eligible for Medicare, our reconciliation plan protects their 
access to health care until the year 2010.
  Mr. Chairman, the Democrat alternative accomplishes none of these 
goals.
  Our reconciliation plan is the right answer to get America on a new 
course. Our reconciliation plan says to the taxpayers back home; we 
work for you. You are our bosses. You are paying to keep us here and 
you deserve a dividend as your Government is restructured.
  Mr. Chairman, I urge my colleagues to support the Republican plan and 
reject the Democrat alternative.

                              {time}  1615

  Mr. ORTON. Mr. Chairman, I yield myself 5 minutes to explain our 
bill.
  Mr. Chairman, my colleagues, the coalition budget also reaches 
balance in the year 2002, but does so by reducing the deficit by more 
than $30 billion more than the leadership plan before us.
  Let me just divert for a minute and tell my colleagues a little 
story. Most of my colleagues have seen me on the floor with my son, 
Will. I have learned something from my son over the last several 
months. That is, when I feed him his vanilla custard first, he does not 
want to eat the green beans. History proves that our country is the 
same way. We want desert first.
  Mr. Chairman, in the 1980 changes that we went through we made the 
tax cuts, but we never got around to making the difficult spending 
cuts. The coalition budget puts spending cuts ahead of tax cuts, in 
contrast to the leadership plan which borrows money to pay for tax cuts 
and cuts deeply into critical priority spending areas like education 
and health care.
  The coalition budget proves that it is possible to balance the budget 
and also restore solvency to the Medicare trust fund to avoid 
devastating cuts to Medicare, to avoid raising premiums for low- and 
middle-income seniors. In fact, our plan would have seniors, the 
average senior, paying $1,000 less per person over the next 7 years 
than the plan before us. Mr. Chairman, it also avoids cuts which 
threaten the solvency of rural and inner-city hospitals.
  The coalition budget proves that it is possible to balance the budget 
at the same time avoiding huge Medicaid cuts contained in the 
leadership plan that will threaten nursing home care for seniors. Ours 
retains the nursing home standards in current law, threatened health 
care for millions of poor Americans, and provide a huge unfunded 
mandate to the States or, in the alternative, raise premiums on 
poverty-level seniors by up to $5,000 apiece over the next 7 years. It 
also retains the spousal exemption so that seniors do not have to 
become impoverished when one spouse goes into the hospital.
  The coalition budget also proves that it is possible to balance the 
budget and at the same time reform welfare in a way that provides tough 
work requirements, provides for child care, child enforcement, health 
care, and training skills to allow people to move off of welfare, 
provides protection for children, avoids new individual mandates on the 
States which merely implement a new social agenda. It avoids crippling 
cuts in discretionary spending to protect critical areas like 
education, health research, job training, economic development, and 
infrastructure. It avoids severe cuts to agriculture programs which 
could threaten the existence of family farms and rural communities.
  It avoids a tax increase, as Mr. Kemp put it, on working people, 14 
million working Americans of low and moderate income, as contained in 
the leadership plan on the earned income tax credit changes. It avoids 
unnecessary levels of cuts to student loans, single and multifamily 
housing programs, Federal worker benefits, and environmental areas. It 
does not politicize the debt limit and risk financial solvency of the 
Treasury.
  Ultimately, Mr. Chairman, the coalition plan proves that it is 
possible to balance the budget over 7 years using honest numbers, 
shared sacrifices, sound priorities, and common sense, without blue 
smoke and mirrors as Senator Domenici called the $36 billion plug 
figure in the leadership Medicare plan. Our budget reflects where the 
majority of Americans would like to see our ideological debate 
resolved.

  Our budget has received endorsements from various and interesting 
groups from all sides of the political spectrum including the Concord 
Coalition, the Washington Post, the New York Times, the Philadelphia 
Inquirer, and the Minneapolis Star Bulletin.
  The coalition plan places deficit reduction over ideology, puts 
spending cuts before tax cuts, and presents a complete and credible 
package without blue smoke and mirrors. Our budget reflects Democratic 
priorities, but, more important, it reflects America's priorities.
  Mr. Chairman, I urge adoption of the coalition budget and am happy to 
announce that in the other body Senators Simon, Robb, Kerrey, and 
Conrad are going to be introducing the same bill as an amendment on the 
floor of the Senate.
  Mr. Chairman, I reserve the balance of my time.
  Mr. KASICH. Mr. Chairman, I yield 2 minutes to the very distinguished 
gentleman from North Carolina [Mr. Burr].
  (Mr. BURR asked and was given permission to revise and extend his 
remarks.)
  Mr. BURR. Mr. Chairman, I also come, as the gentleman who stood up 
earlier on the Democrat side of the aisle, with no charts, with no 
maps, even with no buttons, even though I have worn one today, because 
in fact today the strategy has been clear. The strategy by the minority 
in this House is that, if we say things that are untrue enough, people 
will believe them. If we say to seniors that trying to fix Medicare 
will hurt them, they might believe that. If, in fact, we say to 
children do not worry about the debt, we are going to solve it at some 
point, that they might believe it. If in fact we say to the poor enough 
do not worry about federally driven programs, the States cannot do it, 
that they might believe it.
  As my colleagues know, the fact is that I have had a button on all 
day that said if not now, when? Well, if not now, when will we stand up 
for seniors and secure the future of Medicare for them and for future 
generations? If not now, when will we stand up for children in this 
country and for once say we are going to begin to do away with the debt 
problem that we have put on their shoulders? If not now, when? If not 
now, when will we say to those poor individuals in this country who 
need Federal assistance we are going to ask their neighbors to design 
programs because they know better than bureaucrats what they need? If 
not now, when are we going to do what the American people want us to 
do, and turn down this substitute, and vote for the reconciliation 
package that will truly balance our budget in 7 years and save the 
programs of this Government?
  Mr. Chairman, I hope and expect this legislation will foster the 
development of provider networks, including specialty provider networks 
because of my interest in assuring seniors that they will have choices 
relating to behavioral health care, rehabilitation care and other 
specialty services.
  The private sector has engaged in direct contracting with specialty 
networks in order to lower costs and improve access to quality 
treatment as well as expand choice for consumers. The Medicare Program 
should also explore the utilization of these specialty networks for the 
same reasons.
  I believe the Health Care Finance Administration has adequate 
demonstration authority under current law to test the feasibility and 
desirability of permitting specialty provider sponsored networks to 
serve the new Medicare market. A demonstration project would serve to 
determine whether seniors have access to the most cost-effective 
quality treatments for specialized services.
  Mr. ORTON. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from 
Minnesota [Mr. Peterson], who is the chairman for policy of the 
coalition.
  Mr. PETERSON of Minnesota. Mr. Chairman, first of all I want to 
commend all the chairmen of the task forces of the coalition and 
Members that served on those task forces for their hard work. It has 
been a lot of effort put in this budget, and this coalition budget is a 
honest plan to balance the budget, as the gentleman from 

[[Page H11349]]

Utah said, in 7 years through real reforms in Government programs. We 
make tough choices to balance the budget first instead of borrowing 
money to pay for tax cuts is being done in the other plan. Because we 
do not have tax cuts up front, we add $30 billion less to the national 
debt over the next 7 years than the Republican plan and put the deficit 
on a much more reasonable guidepath toward a balanced budget. The 
deficit actually increases in the second year under the Kasich 
substitute because of that tax increase. The coalition plan does not 
include this deficit bump in the second year, and in fact reduces the 
deficit by $61 billion in the second year. The coalition plan does not 
include any of the unspecified Medicare savings or budget gimmicks such 
as pension reversion, merger of the bank insurance fund, back-loaded 
IRA's, and other tax changes that make the deficit appear smaller in 
the first year but actually cost the taxpayers money over the long 
term. If we remove these gimmicks from the plan, the deficit will be 
$25 billion higher than in the first 2 years under the Republican plan. 
The coalition budget backs up the deficit reduction in this bill with 
tough enforcement mechanisms that make sure we meet the deficit 
targets. The coalition budget includes budget process reforms such as 
line-item veto and the lockbox to allow Congress and the President to 
cut spending further.
  In addition, Mr. Chairman, we make a change in here that most anybody 
looking at this thinks we need to make. The coalition budget includes a 
0.5-percent reduction in the CPI. In the Republican plan they pick up 
the real Bureau of Labor Statistics 0.2 change in 1999. We do what a 
lot of people say we should do. Five prominent economists chaired by 
Michael Boskin said that the CPI is overstated by between 0.7 and 2 
percent. Alan Greenspan has said that it has been overstated by maybe 1 
percent. The CBO says it is anywhere from 0.2 to 0.8 percent. So we 
picked something that we think makes some sense, and, if we are going 
to get at this budget problem, we have got to get something out of 
every area. This CPI is a fair way to spread the burden of balancing 
the budget evenly by treating all programs equally including tax 
indexing. There is lots of Republicans, including the Republican 
majority leader, that support this, and we also have a flat-rate COLA 
which we think makes a lot of sense for lower-income Americans.
  We urge our colleagues' support.
  Mr. KASICH. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from Florida [Mr. Mica].
  Mr. MICA. Mr. Chairman, last week President Clinton said, ``I 
increased taxes too much and cut spending too little.'' We all saw it 
here, and, as my colleagues know, that is really what this debate is 
all about. Will we continue 40 years of blindly throwing taxpayer money 
at our problems, or will for one time reverse that failed policy? Today 
we must really ask ourselves what has the tax-and-spend policy of these 
past 30 or 40 years brought us?
  We discourage and we penalize people for working. We have destroyed 
family structures. Our Federal programs are like sieves. They are 
fraught with waste, fraud, and abuse. In my district nearly 50 percent 
of our community college entrants need remedial education. Our children 
must look forward to bleak futures, part-time jobs, low-paying jobs, or 
service jobs. We penalize our seniors for working. We export our jobs. 
We discourage savings. We penalize investment, and, to top it all off, 
the wonderful mess we have created for our people makes them afraid to 
go out and walk on our streets at night.
  Today we have with the budget before us possibly the last opportunity 
to change all that. I urge the adoption of the Republican budget and 
urge the defeat of this fig-leaf substitute.
  Mr. ORTON. Mr. Chairman, I yield 2 minutes to the gentleman from 
Virginia [Mr. Payne].

                              {time}  1630

  Mr. PAYNE of Virginia. Mr. Chairman, I thank the gentleman for 
yielding time to me, and I thank all my colleagues in the coalition for 
their hard work on this substitute.
  Mr. Chairman, there are many good reasons why this substitute is 
better than the Republican bill. But let me just tell you why it's 
better for all Americans who are, or who will be, served by Medicare.
  First, the coalition budget saves Medicare by restoring its hospital 
trust fund. But unlike the Republican budget, our plan doesn't ask our 
least vulnerable seniors to shoulder an undue burden. We maintain basic 
part B premiums for seniors at 25 percent while we ask seniors who earn 
more than $50,000 to pay more. Overall, our budget provides $100 
billion more for Medicare over 7 years than the Republican plan.
  Second, the coalition's reforms in Medicare won't destroy health care 
in rural and other medically underserved areas. Our plan avoids deep, 
harmful cuts in payments to these vulnerable hospitals. And we 
incorporate vital reforms recommended by the bipartisan Rural Health 
Care Coalition.
  Third, the coalition's Medicare reforms expand coverage for 
preventive medicine.
  Fourth, the coalition's budget fights Medicare fraud and abuse 
better.
  And fifth, our Medicare reforms aren't based on gimmicks such as the 
look-back provision. The reforms made by the coalition are clear and 
there for the American people to see and understand.
  Mr. Chairman, the Republicans have been telling us for months now 
that we must cut $270 billion from Medicare to save the program from 
bankruptcy and to balance the budget.
  Our coalition budget proves them wrong on both counts. Our plan 
ensures the solvency of Medicare, balances the budget, and protects our 
most vulnerable seniors, while spending $100 billion more than the 
Republican plan on Medicare for the next 7 years.
  The New York Times says the coalition's plan shows ``the budget can 
be balanced by 2002 without pummeling the poor or Medicare.''
  The Washington Post says our budget is ``easily the best horse in the 
race.''
  These and many other newspapers across the country, as well as the 
Concord Coalition, are endorsing the coalition's budget.
  I urge my colleagues to vote for this substitute.
  Mr. KASICH. Mr. Chairman, I yield 1\1/2\ minutes to the distinguished 
gentleman from California [Mr. Kim].
  (Mr. KIM asked and was given permission to revise and extend his 
remarks.)
  Mr. KIM. Mr. Chairman, I thank the gentleman for yielding time to me.
  Mr. Chairman, we all agree that we cannot continue spending and 
spending more than we take in. We all know we have to balance the 
budget. We all agree with that. In private, if you spend more than you 
earn, you have to file a bankruptcy. My kid can understand this.
  The debate is not whether we should or should not. I think the debate 
is how to do it. Obviously, we have two kinds of solutions. One is a 
real solution, the Republican solution, which guarantees that the 
budget will be balanced at the end of 7 years. The other plan is 
gentler, a band-aid plan, a feel-good plan.
  Let me talk about this. Right now our national deficit is sky high. 
The interest payment alone last year was about the same as our national 
defense budget. This is a tough time. We need a tough solution, not a 
band-aid feel-good solution. As a matter of fact, the feel-good 
solution was rejected yesterday by the other body by 96 to 3. Only two 
Democrats supported this feel-good plan yesterday in the other body. 
Forty-four Democrats rejected this band-aid, feel-good plan.
  Obviously, the plan we adopt must be the Republican plan. I do not 
see any other plan except this. This is a tough solution, a realistic 
solution. We guarantee we will balance the budget at the end of 7 
years, which our budget does.
  Mr. ORTON. Mr. Chairman, I yield myself 10 seconds to correct the 
gentleman.
  The gentleman reflected that this alternative had been voted on in 
the Senate yesterday and lost 96 to 3. That is incorrect. This 
alternative has not been voted on in the Senate. Several Senators 
indicated their intention to raise it today. That is an incorrect 
statement.
  Mr. Chairman, I yield 1 minute to the gentleman from Texas [Mr. 
Hall].
  (Mr. HALL of Texas asked and was given permission to revise and 
extend his remarks.)
  Mr. HALL of Texas. Mr. Chairman, I rise in strong support of the 
coalition's 

[[Page H11350]]

budget reconciliation plan. It is a fair and responsible proposal that 
achieves a balanced budget and yet is not unkind in doing so. These are 
two important points, Mr. Chairman. It is important for our Nation's 
future that we ensure economic security through a balanced budget, and 
it is equally important that we protect all of our citizens in the 
process. It is also vital that we protect the most vulnerable in our 
Nation--our children, our seniors, our sick, our poor.
  As chairman of the Coalition's Health Care Task Force, I would like 
to address the coalition's plan to reform Medicare and Medicaid. We 
recognize that reforms are needed to protect the future of these 
programs. We recognize that we need to slow the rate of growth. We 
believe that our plan achieves these goals less painfully than the 
majority's proposal.

  The coalition budget achieves a balanced budget while protecting 
Medicare. It does this by slowing the rate of growth and by giving 
seniors more choices of health care plans--but it does not force them 
to change. The reforms contained in our budget have far less impact on 
Medicare than those in the leadership's budget--by about $100 billion 
less. Our Medicare plan increases coverage for preventive care and 
maintains full home health care coverage. It reduces providers' 
Medicare reimbursements far less than the leadership budget does. Our 
plan includes fraud and abuse provisions, medical malpractice reform, 
and anti-trust relief. It establishes a commission to report every 3 
years on the effectiveness of our plan. Most importantly, Mr. Chairman, 
it maintains part B premiums at 25 percent for low and middle-income 
seniors and avoids cuts to rural and inner city hospitals. The 
coalition's Medicare provisions are less painful than those in the 
leadership's plan--and yet will keep us on target to balance the 
budget.
  Those who need our help the most--those covered under Medicaid--also 
are protected under the coalition's plan. Our budget maintains Medicaid 
payment of part B premimus, deductibles, and co-payments for low-income 
seniors. It continues nursing home standards and protects spouses from 
exhausting their resources to pay for nursing home costs. These are 
safety nets that are critical to the health and economic well-being of 
our citizens, Mr. Chairman, and they must be preserved.
  Mr. Chairman, we must honor our contract with the 37 million seniors 
being served by Medicare. We have an obligation to protect their 
current quality of care. At the same time, part of our contract with 
them is to ensure the future solvency of the program. The coalition 
budget accomplishes both of these. Although I don't agree with all 
aspects of either the leadership bill or the coalition budget, I 
believe the coalition budget is the most responsible proposal before 
the House today. I, for example, favor some tax relief, such as the 
$500 child tax credit and capital gains relief, that will spawn income 
and not cause outgo, but the argument is strong that we should not cut 
taxes until we balance the budget. I believe there will be some tax 
cuts in the final bill.
  I believe that we are within a stone's throw of where the 
Republicans, Democrats, and the President will finally come to. We have 
an extraordinary opportunity to achieve a balanced budget. This is a 
goal that I have supported throughout my years in Congress and one that 
is long overdue. But we must be sure that we are stepping in the right 
direction, that we are resolute but kind in our efforts to protect 
Medicare and also balance our budget. Mr. Chairman, I believe the 
coalition budget is a right step, and I urge my colleagues' support.
  Mr. KASICH. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Nebraska [Mr. Christensen].
  Mr. CHRISTENSEN. Mr. Chairman, in November the American people 
elected a new Congress to come to Washington. They elected us on a 
number of principles, but the one that I campaigned on was cutting 
taxes, cutting bureaucracy, and cutting spending. The Democrat 
alternative falls short on cutting taxes. One in particular is the 
capital gains tax cut.
  A capital gains tax cut is good for the small business person, it is 
good for the little guy, but we have heard a lot about the fact that it 
only helps the rich. That is not quite true. If we look at this chart, 
we will see that in last year's returns, capital gains was filed by 
people making less than $50,000, 58 percent of the time. As a matter of 
fact, 86 percent of all the returns filing a capital gain were from 
people making less than $100,000.
  Capital gains will spur the economy. We know it. It is proven. It has 
happened before. It is going to help our seniors, it is going to help 
our children. It is good for the working men and women of this country. 
I believe that the Democrat alternative falls short in not returning 
people's money back to its rightful owner. That is why I support the 
Kasich substitute, the Republican plan, and why I think we should vote 
no on the Democrat alternative and vote yes on the Republican plan to 
balance this budget for the future of this country.
  Mr. ORTON. Mr. Chairman, I yield 1\1/2\ minutes to the gentlewoman 
from Arkansas [Mrs. Lincoln].
  (Mrs. LINCOLN asked and was given permission to revise and extend her 
remarks.)
  Mrs. LINCOLN. Mr. Chairman, both of these plans balance the budget. I 
think that is a lot of what the American people are asking us to do. 
The way they ask us to do it is in a fair and reasonable way.
  I think in a recent article in the Philadelphia Enquirer our group of 
23 conservative Democrats, the coalition, are called a group of 
renegades. We are basically called that because we are the few people 
here in Washington that are willing to do exactly what the American 
people want, and that is to put people above politics, especially the 
partisan politics that are played here in Washington.
  As I said, both of these plans balance the budget. Many of us from 
the coalition agree with the former speaker, that there is a need for 
tax reform and tax relief. However, what the American people want us to 
do is to cut spending first, and that is what we do. In specific areas 
of Medicaid, we are much more reasonable and fair than the Republican 
alternative. We plan to treat Medicaid more fairly than the Republican 
budget. The Coalition cuts $100 billion less than the Republican plan, 
while still balancing the budget by 2002.
  The coalition keeps nursing home quality care standards that are 
currently in the Federal law. We do not impose liens on family farms or 
homes, and spouses or children of nursing home residents do not have to 
spend all of their assets to pay for care. The coalition imposes a per 
capita limit on Federal spending, instead of limiting growth per State. 
The coalition will allow Medicaid to continue to guarantee to pay for 
low-income Medicare beneficiaries.

  In my State of Arkansas, roughly 70 to 80 percent of the Medicare 
recipients of our State have their premiums paid by Medicaid, but most 
importantly, the coalition will continue to guarantee health care 
coverage for the three categories of Medicaid beneficiaries: Low-income 
mothers and children, elderly people needing long-term care, and the 
disabled population.
  I urge my colleagues to take the reasonable approach to balancing the 
budget.
  Mr. KASICH. Mr. Chairman, I yield 2 minutes to the distinguished 
gentlewoman from North Carolina [Mrs. Myrick], a former mayor.
  Mrs. MYRICK. Mr. Chairman, our colleague, the gentleman from 
Oklahoma, Mr. Tom Coburn, became the proud grandfather of a little baby 
girl, Sarah. Today's vote on this balanced Budget Reconciliation Act is 
going to be an historic vote that is going to make a big difference in 
Sarah's life. It restores fiscal sanity to our Government. As a mother 
of five and a grandmother of six, I have a moral obligation to balance 
this budget. I want my kids to have the same opportunity to succeed 
that I have enjoyed in this generation. We are looking today at a 
national debt of $4.8 trillion.
  What this vote on the balanced budget means is very simply that Sarah 
and my new grandchild, No. 7, who is going to be born in December, will 
not have to pay $187,000 just to cover the interest on the debt alone 
through their lifetimes. We cannot go on literally mortgaging our 
children and our 

[[Page H11351]]

grandchildren's future, and saddling them with this huge mountain of 
debt.
  When we pass this bill today, it is going to be the first step in 
balancing a budget that has not been balanced in 26 years. That is 
historic. We owe it to our children and we owe it to our grandchildren, 
and their children, to pass a balanced budget. This bill is the first 
step in the right direction.

  Mr. ORTON. Mr. Chairman, I yield 1 minute to the gentlewoman from 
California [Ms. Harman].
  (Ms. HARMAN asked and was given permission to revise and extend her 
remarks.)
  Ms. HARMAN. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  Mr. Chairman, my family and I would personally benefit from the tax 
cuts contained in H.R. 2491, but they are wrong. I strongly support the 
coalition substitute, which cuts spending first and defers tax relief 
until the budget is balanced. As the mother of the bipartisan lockbox, 
deficit lockbox amendment, let me point out that the coalition 
substitute is the only, repeat, the only vote we can take today to 
include a formal deficit lockbox mechanism as part of our 7-year 
balanced budget program. Only the coalition substitute makes a cut a 
cut, this year and in the out years.
  Deficit hawks, listen up. This is the defining vote for those serious 
about process reform, reform that will genuinely help to reduce the 
deficit. Deficit hawks, Republican freshmen, this is the vote you need 
to make. Support the coalition substitute and its bipartisan deficit 
reduction lockbox.
  Mr. KASICH. Mr. Chairman, I yield 1 minute to the very distinguished 
gentleman from Wisconsin [Mr. Gunderson], the reformer of agriculture 
in the House.
  Mr. GUNDERSON. Mr. Chairman, last June, I joined with my colleagues 
in the House in voting to balance the Federal budget over 7 years. This 
is an historic step and, if successful, would represent the first 
balanced budget in 33 years.
  I voted in favor of a balanced budget because it is time that 
Congress finally take the necessary action to slow Federal spending. 
Failure to correct the course now will land us in dire straits over 
time. In fact, if we decide to continue spending at the same levels we 
had in fiscal year 1995, the annual deficit--the amount by which 
spending exceed receipts each year--would increase from $210 billion in 
fiscal year 1996 to $349 billion in fiscal year 2002. That increase 
represents a $1.165 trillion addition to the national debt. Without any 
additional changes, the interest on the national debt will increase 
from $235 billion in fiscal year 1996 to $334 billion in 2002.
  This again becomes clear if you just look at how much more we spend 
on interest on the national debt than we spend on our education and 
training programs. In fiscal year 1995, we spent 66 times more on 
interest on the national debt than we do on the Head Start Program. We 
spent 32 times more on interest on the national debt than we do on the 
Title I Program which benefits disadvantaged grade-school kids. We 
spent 149 times more on interest on the national debt than we did on 
all elementary and secondary school improvement programs. We spent 158 
times more on interest on the national debt than we did on Federal aid 
to vocational education, 180 times more than on the JOBS program to get 
people off welfare, and 212 times more than on Job Corps. Clearly this 
is a distorted sense of priorities because interest on the debt is only 
going to grow if we do not take action now.
  Today, entitlement spending makes up 64 percent of the entire Federal 
budget, and spending on discretionary programs, such as defense, 
education and job training, makes up 36 percent. Without significant 
shifts in priorities, by 2012 entitlement spending will consume the 
entire budget. That means unless we institute a significant increase in 
the income tax, zero Federal dollars spent for our national defense, 
for any education programs, other than student loans, and countless 
other Federal programs.
  It is vital that we take steps to slow the growth in Federal spending 
because of the dramatic growth in entitlement programs. Although I 
continue to support the existence of many of our entitlement programs--
especially Social Security, Medicare and student loans--we risk them 
consuming the entire budget.


             the omnibus budget reconciliation act of 1995

  The budget that we passed in June was only a blueprint for action on 
congressional spending. Today, through the Omnibus Budget 
Reconciliation Act of 1995, we are making tough choices to slow the 
rate of Federal spending on entitlement programs.
  Slowing the rate of growth in Federal entitlement programs is not a 
cut. Instead, we are slowing the rate of increase in spending. If you 
look at the big picture this becomes clear. Over the last 7 years, 
between 1989 and 1995 as a nation we spent $9.5 trillion. By taking the 
requisite steps to balance the budget over 7 years, we will still spend 
$11.2 trillion. That's $2.2 trillion more than in the previous 7 years. 
Clearly, this package makes tough choices, but spending still 
increases.
  Let us take a look at three of the components of the budget 
reconciliation package that are most important to the third district. 
The changes in the Student Loan Program, the deregulation of the dairy 
industry and pro-growth tax cuts. Earlier, I expressed my support for 
another major component, the Medicare Preservation Act.


                          student loan reform

  One of the tougher jobs during the budget process was the task given 
to the Economic and Educational Opportunities Committee of which I am a 
member. To find $10.1 billion in savings over 7 years in the Student 
Loan Program. That is a lot of money. But if you look at the fact that 
we will spend 242 times more this year on interest on the national debt 
than on higher education programs, you will realize that this is 
absolutely necessary. In the end, the committee was successful in 
crafting a student-friendly package while getting our fiscal house in 
order.
  The package crafted by the committee would eliminate the President's 
Direct Loan Program. If allowed to expand, the Direct Loan Program 
would transform the Education Department into a bank and would 
disregard the long-term impact on the Federal budget. This year, the 
Congressional Budget Office and the Congressional Research Service have 
estimated that the Student Loan Program would cost $1.5 billion over 7 
years. The program would require that the Education Department either 
hire or contract with hundreds of loan processors--duplicating what the 
private sector has already perfected.
  The student loan reform package passed by the committee would 
preserve student aid for all students, despite eliminating the direct 
loan program. Any student who wants financial aid will be able to 
receive it. Students will continue to have access to Stafford and PLUS 
loan dollars. The annual student loan volume is projected to increase 
47 percent over the next 7 years, from $24.5 billion in 1995 to $36 
billion in 2002. The annual student loan amount would increase from 
$2,340 to $4,300 over the 7 years.
  We have also succeeded in minimizing costs to students, by requiring 
the financial industry to shoulder its fair share--$4.8 billion. 
Students will not accrue or be asked to pay interest while they are 
still in school. In addition, they will maintain the 6-month-
grace period before they are required to start repaying their loans. 
The only difference is that interest will begin accruing the month 
after graduation. This will cost graduates on average between $6 and $9 
per month during the repayment period.


   dairy policy for world market--the dairy title of freedom to farm

  The 1995 farm bill marks a key change in farm commodity pricing, 
and--especially important to western Wisconsin--a deregulation of the 
dairy industry. The ``Freedom to Farm Act'' put forth by House 
Agriculture Committee Chairman Pat Roberts, would save $13.4 billion 
over the next 7 years.
  The dairy title of the Freedom to Farm Act, which I crafted as 
chairman of the Dairy and Livestock Subcommittee of the House 
Agriculture Committee, would deregulate the market in dairy products, 
leveling the playing field and freeing western Wisconsin farmers from 
the outdated and market-suppressing milk marketing order system. The 
change will enable U.S. dairy producers to become and remain players in 
the world market.
  The act would continue market transition payments over the next 7 
years, and would fully fund the Dairy Export Incentive Program. In 
addition, the act would authorize the Secretary of Agriculture to help 
the industry from export trading companies and continue existing 
producer and processor promotion programs.


           tax changes: pro-growth, private-sector incentives

  Reducing the amount of Federal Government growth also requires that 
we return control of money which we have traditionally sent to 
Washington back to the taxpayers. Although I believe that we must be 
very careful when enacting tax cuts at the same time we are balancing 
the budget, I have consistently supported pro-growth tax policies. The 
reconciliation bill before us today will help grow the economy through 
market incentives.
  The reconciliation bill would cut individual capital gains taxes by 
50 percent and corporate capital gains rates by 25 percent. These cuts 
will spur investment to enable the United States to maintain its 
competitive edge in the world economy. In addition, the bill would 
create new, expanded savings accounts, like individual retirement 
accounts, that would allow individuals to withdraw savings tax-free for 
major investments, such as for the 

[[Page H11352]]

purchase of a new house or for a child's college or vocational 
education. But the bill also closes $27 billion in corporate tax 
loopholes.
  In sum, it is time for us to act to protect our future, to ensure 
that we have the option of investing in important programs in which 
there should be a Federal role, such as education and training. The 
choices that we have made are not easy, and this bill is not perfect by 
any means. But it represents an important start toward real fiscal 
responsibility. I whole-heartedly agree with that goal. By eliminating 
the deficit, and gradually reducing the debt, we will increase the 
economy's capacity for growth and ensure that our children have a 
chance at a prosperous future.
  Mr. Chairman, I appreciate those comments, but I would like to engage 
the chairman of the Subcommittee on Health and the Environment of the 
Committee on Commerce in a brief colloquy.
  If I understand the current law, Medicaid eligibility for a person 
who is disabled is based on whether the Social Security Administration 
has recognized them to be disabled. Social Security has improved the 
eligibility determination process to help ensure that disabled people 
get recognized as disabled and therefore qualify for Medicaid as soon 
as possible. This is especially important for people who have 
disabilities that are life-threatening and are at risk of dying before 
the Government finds them to be disabled.
  My question to the chairman of the committee is, Is it the 
committee's expectation that a State, in establishing its Medigrant, 
will expedite determinations of eligibility for people with life-
threatening conditions?
  Mr. BILIRAKIS. Mr. Chairman, will the gentleman yield?
  Mr. GUNDERSON. I yield to the gentleman from Florida.
  Mr. BILIRAKIS. Very clearly, Mr. Chairman, we would expect the States 
to take such steps to ensure that such people receive expedited 
determinations of eligibility, and would be very disappointed if they 
did not take these steps.
  Mr. GUNDERSON. Mr. Chairman, I appreciate the reassurance of the 
gentleman, and look forward to making sure there is no doubt about this 
after it comes out of conference.
  Mr. ORTON. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Maryland [Mr. Cardin].
  Mr. CARDIN. Mr. Chairman, I rise in strong support of the coalition 
budget. It is clearly the best plan before us. It balances the budget 
within 7 years, and it provides for less borrowing and less debt than 
the Republican plan. It is not perfect. I disagree with some of the 
provisions in there. I would like to see a little more time in 
understanding the COLA changes. I would have had less Medicare cuts. 
However, the key difference between the substitute and the Republican 
bill is the tax provisions. There are no tax cuts in this proposal, 
because this proposal is serious about deficit reduction.
  The Republican budget runs the risk of us repeating the same mistakes 
that we made in 1981. In 1981 we thought we could cut taxes. We 
promised to control future spending. We saw the deficit soar. We could 
very well end up with the Republican budget devastating programs for 
our seniors, for our children, and our environment, and still have 
large deficits. That is the risk we run with the Republican budget.
  The coalition budget puts the spending cuts towards deficit 
reduction, where it should. It does less cuts in order to preserve 
Medicare, in order to preserve our opportunities for higher education, 
in order to preserve our programs for the environment. The Members have 
a clear choice. In supporting the coalition budget, they are supporting 
cuts for deficit reduction. In the Republican plan, we are talking 
about cuts in order to provide for tax breaks for the wealthy. I think 
it is a clear choice, and I am proud to support the coalition budget.
  I rise in support of the coalition budget plan. It is the best plan 
that has yet been proposed for balancing the budget.
  Two years ago, we took a major first step toward eliminating Federal 
budget deficits. The 1993 budget plan has succeeded in bringing 
deficits down for 3 consecutive years, and the deficit in the year just 
ended was about half what it would have been.
  This year, we have to take the next step, and move toward a balanced 
budget. The coalition budget will balance the budget in 7 years, 
through spending cuts that are real, but not harsh. The plan balances 
the budget more quickly, with less borrowing than the Republican 
leadership budget.
  The coalition budget is not perfect. The cost of living adjustment in 
this plan raises many serious issues that have not been adequately 
considered. The level of Medicare cuts would not devastate the program, 
as the Republican plan does, but they exceed the amount I believe is 
necessary. I would have preferred alternative spending cuts.
  Nonetheless, the authors of the coalition plan have learned the 
lessons of recent budget history. In 1981, in the Reagan revolution, 
Congress enacted the Reagan plan of tax cuts and promised spending 
cuts. What resulted was an explosion of Federal deficit spending.
  Today, in 1995, the Gingrich revolution is hell-bent on repeating the 
fiscal mistakes of 1981. By cutting taxes by $245 billion, mostly to 
benefit the most well-off Americans, this plan again puts the cart 
before the horse. We should not be borrowing hundreds of billions of 
dollars for tax breaks, while we are still piling up hundreds of 
billions of debt. With the Republican budget, we could very easily end 
up slashing programs that are needed for our seniors, students, and the 
environment, and still have large budget deficits.
  The coalition budget is driven by the need to balance the budget, 
preserve Medicare, and maintain our commitment to higher education. The 
Republican leadership budget is about cutting taxes and taking the 
first step toward eliminating Medicare. Do not take my word for it. 
Speaker Gingrich, the architect of this plan, yesterday said that he 
would have gotten rid of Medicare but it would not be ``politically 
smart.''
  The difference could not be clearer. The coalition budget cuts 
spending to balance the budget. The Republican budget cuts taxes to 
benefit the wealthy, and cuts Medicare as a first step toward 
eliminating this most successful American program. I urge my colleagues 
to support the coalition budget, and reject the committee budget.
  Mr. KASICH. Mr. Chairman, I yield 2 minutes to my friend, the 
distinguished gentleman from Pennsylvania, [Mr. Walker], the czar of 
science, and the vice-chairman of the Committee on the Budget.
  Mr. WALKER. Mr. Chairman, I would like to begin by thanking the 
coalition for bringing forward a balanced budget to the floor, and 
allowing us to debate a couple of different balanced budgets out here 
on the floor. I think that is a useful thing to have done. I happen to 
think that it is preferable to give the American people an opportunity 
to get some tax cuts out of all of this to what the coalition has done, 
but I think it is useful to have a debate about this.
  I happen to believe that some of the spending reductions that we are 
making are in fact responsible spending reductions, because they go 
toward trying to reform the system a good deal more than what the 
Coalition does. But again, it is a useful exercise.
  The reason why the tax cuts are important is for the reason of what 
happens in my district. Sixty-five million dollars in tax cuts come 
primarily to families with children in my district; over 100,000 
children in my district are eligible for tax cuts. Their families are 
eligible for tax breaks under our budget. That is something that gets 
denied under the Democrats' proposal on the floor. I just think that it 
is a better plan to give people back a little bit of what they owe.
  Mr. Chairman, I am a little disappointed, I must say, in the debate 
that we had a little earlier today that suggested, for instance, that 
the Speaker had spoken out against Medicare.
  The fact is, some of the charts I saw on the floor and some of the 
phoney language I heard from the other side is very disappointing 
because I think some of the people may have known about it. The fact 
is, the Speaker's quote is quite clear in what we said. He was talking 
about HCFA. He was talking about a centralized bureaucratic monstrosity 
that is in the government called HCFA. He said that perhaps at some 
point we ought to get rid of some of the bureaucracies that surround 
all of this process.
  It seems to me that that is what the American people have told us. 
They have told us that government is too big and spends too much and 
that we ought to get rid of a lot of the centralized bureaucracy. I 
think the American people would agree with that. Nothing was said by 
the Speaker that indicated that he was talking about Medicare in any 
way, shape or form.
  So I think for some of the disingenuous language that we have heard 
on the floor today about some of the issues we have seen discussing is 
disturbing. That being said, Mr. Chairman, it 

[[Page H11353]]

is a good thing to be debating balanced budgets.
  Mr. ORTON. Mr. Chairman, I yield 10 seconds to the gentleman from 
Mississippi [Mr. Taylor].
  Mr. TAYLOR of Mississippi. Mr. Chairman, I would like to remind my 
friend from Pennsylvania that the chairman of the Committee on the 
Budget has informed this body that the $500 per child tax cut is not in 
his bill.
  Mr. ORTON. Mr. Chairman, I yield 2 minutes to the gentleman from 
Tennessee [Mr. Tanner].
  Mr. TANNER. Mr. Chairman, I want to thank the gentleman from Utah 
[Mr. Orton] for yielding me the time.
  Mr. Chairman, I want to reiterate something that has reverberated 
through this chamber and that is the Coalition budget gets to balance 
in 7 years every bit as much as the Republican budget gets to balance. 
However, ours is more responsible, it is wiser and fairer.
  Mr. Chairman, I would tell the Members that I do not know of any 
group of people who have more credibility on the wisdom of a balanced 
budget in this Nation than the Concord Coalition. Those of you who are 
listening, the Concord Coalition is a bipartisan group who came 
together because of their concern, all of our concern, about our 
national deficit and debt. The Concord Coalition has endorsed the 
Coalition budget today as being the better way to go for our country.
  In welfare reform, for example, we put people to work in a better way 
and faster than does the Republican plan. We do not rob the people who 
are trying to stay off of welfare of their earned income tax credit, 
the working poor, the people who are getting up every day and going to 
work, trying to stay off of the welfare rolls, that is simply the wrong 
way to go. They need a helping hand, a hand-up and not a handout. We do 
that in the Coalition budget.
  But more importantly, let me say that we were sent here for an 
American solution, not a Democratic or a Republican solution, but an 
American solution, representing people in our districts consistent with 
the national interests. Democrats, Republicans and Independents. The 
Coalition budget is an American solution to the disgrace that our 
national deficit has become.
  So when you hear all of this rhetoric about the Republicans have all 
of the answers, it is simply not true. Neither do the Democrats. This 
23 maverick Democrats in the middle, as the Philadelphia Enquirer 
called us, have the American solution.
  Mr. FRANKS of New Jersey. Mr. Chairman, I yield 1 minute to the 
gentleman from Pennsylvania [Mr. Fox].
  Mr. FOX of Pennsylvania. Mr. Chairman, I rise today in support of the 
Republican plan which will balance the budget and give the opportunity 
for all Americans to have reductions in their mortgage so that they can 
better take care of their families and have the American dream 
realized. It will lower by at least 2 percent their auto loans, which 
again will put more money back in their pocket. It will also reduce for 
them the cost of student loans for college, at least by 2 percent or 
more. Over the life of a loan, we are talking about a lot of money.
  It will also help senior citizens by making sure we have the rollback 
of the 1993 Social Security tax. It will also give senior citizens the 
ability to make about the $11,280 we have been talking about, which the 
ceiling is falsely there now, stifling opportunity; and under our 
legislative, the total package, we will now have, for the first time, 
the ability to make up to $30,000 a year for seniors under 70 without 
impinging on their Social Security.
  So for seniors, for working people, for children, for all Americans, 
by balancing the budget for the first time since 1969, we will actually 
help America move forward fiscally for every family.
  Mr. ORTON. Mr. Chairman, I yield such time as he may consume to the 
gentleman from South Carolina [Mr. Spratt].
  (Mr. SPRATT asked and was given permission to revise and extend his 
remarks.)
  Mr. SPRATT. Mr. Chairman, I rise in support of the Coalition 
substitute. This substitute shows that we can wipe out the deficit 
without wiping out programs.
  We can take on this task today of balancing the budget in 7 years 
only because 3 years ago, we began the quest for a balanced budget on 
our side of the aisle.
  Let put that in context. On January 13, 1993, one week before he left 
office, President Bush handed in his ``Economic Report of the 
President.'' Turn to page 69 of this Report, and you will see that 
President Bush projected a deficit for 1993 of $332 billion. In March 
1993, this House passed a budget, solely with Democratic votes, which 
put the deficit on a path downward and steered us away from that 
projection.
  Yesterday, the President announced the results. The deficit for 
fiscal year 1995 was $164 billion--half the deficit President Bush 
projected for his last year in office. But for what we have achieved 
over the last three years, we would still be looking at deficits as far 
as the eye can see. We could not even hope to balance the budget in 
seven years.
  Even so, balancing the budget in this time-frame is a tall order. My 
first problem with the Republican budget resolution was that it took a 
tough problem and made tougher by stipulating $350 billion in tax 
breaks, mostly for upper-income Americans. Those tax cuts have been 
compromised down to $245 billion; but guess who bears the brunt of that 
compromise? Working families, whose Earned Income Tax Credit will be 
reduced by $23 billion so that the Alternative Minimum Tax can be taken 
off the books, and some of the largest corporations in America can be 
taken off the hook when it comes to paying a fair share of taxes.

  What are the consequences of such tax breaks? It's very simple: 
spending has to be cut by $245 billion more than otherwise needed to 
balance the budget over 7 years. And where do these extra spending cuts 
fall? On the old and very young, who depend on Medicaid, which the 
Republicans would slash by $182 billion. And they hit the elderly 
again, in the form of higher premiums for Medicare, and benefit 
payments so low they are sure to shut down small hospitals and rural as 
well as inner city hospitals.
  Not everyone in this House seems concerned by such a scenario. 
Yesterday, the Speaker, with some pride, told a gathering from Blue 
Cross-Blue Shield that under his proposal, Medicare as we know it will 
``wither on the vine.''
  I cannot vote for a budget that will cause Medicare ``to wither on 
the vine.'' I am not willing to wreck programs on which peoples' lives 
depend under the guise of balancing the budget, especially when it is 
not necessary to commit such carnage.
  We have before us a substitute that offers a better way to a balanced 
budget. It reduces the cost of Medicare by more than I would like, but 
by enough to ensure that its solvency. It lowers the cost of Medicaid, 
but saves its integrity. And it puts us on a straighter course to a 
balanced budget because it avoids any diversion into tax cuts until the 
task is accomplished.
  I urge my colleagues to vote against a budget that will cause 
Medicare to ``wither on the vine,'' and wreck Medicaid, and run up the 
cost of student loans. We can wipe out the deficit without wiping out 
programs that millions of Americans depend on. We should all vote 
instead for the Sabo-Stenholm-Orton substitute.
  Mr. ORTON. Mr. Chairman, I yield 2 minutes to the gentleman from 
Maryland [Mr. Hoyer].
  Mr. HOYER. Mr. Chairman, I rise in strong support of the Orton 
alternative.
  It is a real and positive alternative that would solidify America's 
economic future.
  Our deficit threatens our health as a nation and our ability to be 
competitive in our global economy. This Orton package balances the 
budget and meets our responsibilities to the future.
  As a strong supporter of the balanced budget amendment, I recognize 
that we must make tough choices. We do that. Without attacking the 
middle class. Without taking Medicaid benefits from children and 
seniors. Without gutting Medicare.
  This bill cuts $100 billion less from Medicare than the bill rammed 
through the House by the Republican leadership last Thursday.
  The coalition alternative restores solvency to the Medicare Trust 
Fund without stealing money from seniors for tax breaks for the 
wealthy.
  Over 7 years, the Medicare provisions in the Republican bill would 
cut $2,700 more per senior than this alternative.

[[Page H11354]]

  This alternative provides a total of $80 billion more in 
discretionary spending for priorities such as job training, housing, 
economic development, and education.
  It does not cut student loans--a Republican provision that has 
students at the University of Maryland justifiably worried about 
whether or not they can finish their education.
  The amendment rejects the most damaging farm program cuts included in 
the Republican bill.
  This sensible alternative also rejects cuts in Federal employee 
benefits.
  The welfare reform provisions in the alternative, which 204 Members 
of this body supported, represented true reform, that plus parents to 
work and protects the well-being of children.
  Mr. Chairman, this is responsible government. It makes tough choices 
and gets us to a balanced budget in 2002. As the sponsors have stated 
it uses ``honest numbers, shared sacrifice, sound priorities, and 
common sense'' to get our budget balanced.
  Instead, the alternative imposes real discipline on spending. Unlike 
the Kasich bill it does so while continuing our commitment to invest in 
Americans to ensure a strong, healthy, educated nation.
  Passage of this alternative would be good news for the citizens I 
represent and for all Americans. I urge a vote for the Orton-Stenholm-
Peterson-Sabo alternative.
  Mr. KASICH. Mr. Chairman, I yield myself 1 minute to say, with regard 
to the gentleman from Maryland [Mr. Hoyer], if you take the best 
collection of the Beatles, which in essence is what the Blue Dogs did, 
they took the best pieces of our plan and recorded an album, any way 
you shake it or cut it, it still is the fundamentals of the Beatles, 
and their plan is still the fundamentals of ours.
  They are to be complimented for having real numbers and for trying to 
balance the budget. But let us not dwell too much on the difference 
between the two proposals. It is the best of what we have to offer, and 
I compliment them for that.
  Mr. HOYER. Mr. Chairman, will the gentleman yield?
  Mr. KASICH. I yield to the gentleman from Maryland.
  Mr. HOYER. Mr. Chairman, I thank the gentleman for yielding.
  Mr. Chairman, if we have taken the best of the Kasich program, would 
it not be best to support it?
  Mr. KASICH. Mr. Chairman, the answer is, no. The problem with that, I 
say to the gentleman, is that you take off the icing and you can take 
the easiest things to do without completing the job and without also 
giving people some of their money back. But the point is that the Blue 
Dog budget is a positive document and it bears an amazing resemblance 
to the document that we will vote on later this afternoon. That is, 
frankly, why I want to compliment the folks for their program, but they 
could have done better.
  Mr. SMITH of Michigan. Mr. Chairman, I thank the gentleman for 
yielding.
  Mr. Chairman, let us talk about this maybe in a little more simple 
terms. The fact is is that the Democrat alternative has more taxes, has 
higher taxes than the Republican proposal and has higher spending than 
the Republican proposal.
  If the gentleman is suggesting that we should take those taxes and 
cut some of that tax decrease out and use it to balance the budget 
faster, I think that would be one question; but to go back to the same 
old story of higher taxes and higher spending is not the way we need to 
go.
  There was a comment that used the word draconian. Mr. Chairman, what 
we are doing is we are cutting 10 percent out of our budget. A lot of 
families in the United States cut 10 percent out of their budget in 1 
year. We are taking 7 years to cut 10 percent out of our budget. It is 
ridiculous.
  The spending of this Congress is out of shape, it is out of style, 
and let us get back to the real world and let people keep their money 
in their pockets.
  Mr. ORTON. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Pennsylvania [Mr. McHALE].
  (Mr. McHALE asked and was given permission to revise and extend his 
remarks.)
  Mr. McHALE. Mr. Chairman, I rise in strong support of the Coalition 
budget. The Philadelphia Enquirer called it a hint of sanity.
  Today, I rise in opposition to the Republican reconciliation bill, 
H.R. 2491, which will devastate essential Medicine and Medicaid 
programs, institute tax cuts which will disproportionately benefit the 
wealthiest in our country, and debilitate entitlement and discretionary 
programs which are essential to securing the economic and environmental 
health of this country. I will support the Orton substitute to balance 
the budget by the year 2002.
  Through the $452 billion in Medicare and Medicaid cuts, the 
Republicans are asking far too much of our most vulnerable citizens. In 
my State of Pennsylvania, Medicare currently serves one of six 
citizens, or more than 2 million people. Medicaid covers one in every 
seven residents. The impact of these cuts on our seniors will be 
profound: Forty-five percent of Medicaid dollars spent in Pennsylvania 
are for long-term nursing care for the elderly, and Medicaid dollars 
account for more than half of total nursing home care in the United 
States. These two programs have proven to be remarkably successful. In 
1959, only 46% of seniors had health coverage. By 1995, this number had 
increased to 99%. I do not support cuts in these programs which go far 
beyond ensuring the solvency of these programs, and will endanger the 
viability of these programs for future generations.
  The Republican bill contains irresponsible tax cut provisions which 
will benefit the wealthiest, and unfair cuts in the EITC program which 
will increase taxes on the poorest working families. Two thirds of the 
Republican's proposed tax cut would go to families in the top fifth 
distribution of income. Further, in my district, the 15th District of 
Pennsylvania, $16,644 hard working families will have their taxes 
increased by almost $2.3 million through the Republican EITC cuts, 
according to the Treasury Department.
  Republican cuts in student loan and education programs will increase 
the cost of student loans and significantly raise the interest rates on 
parent loans--making college much less affordable for the middle class. 
The Republican budget reconciliation also opens the Arctic National 
Wildlife Refuge the Nation's second largest national wildlife refuge, 
to oil and natural gas exploration and drilling--paving way for the 
destruction of one of our most precious and unpolluted natural 
resources.
  The Orton substitute is an effective, financially responsible 
document which will balance the budget by the year 2002 without 
drastically cutting Medicare, Medicaid, and other crucial programs and 
without implementing irresponsible tax cuts before a balanced budget is 
achieved. The Republican reconciliation bill represents a betrayal of 
basic principles, while the substitute is a fiscally sound, budget-
balancing document which embodies necessary and prudent budget 
decisions.
  Therefore, I urge the defeat of HR 2491 in its current form and the 
adoption of the Orton substitute.
  Mr. ORTON. Mr. Chairman, I yield 1 minute to the gentleman from 
Illinois [Mr. Poshard].
  (Mr. POSHARD asked and was given permission to revise and extend his 
remarks.)
  Mr. POSHARD. Mr. Chairman, earlier this year, the Entitlement Reform 
Commission told us that all tax dollars would be spent on entitlements 
and interest on the debt by the year 2012 and if we continue our 
present course we will bankrupt the nation.
  Therefore, we must stop this borrowing and spending and we must 
balance the budget.
  The Medicare trust fund board told us we must act to restore the 
trust fund balance to its normal 10-12 years instead of the 6-year 
balance to which it has presently sunk.
  Both of these reconciliation bills will balance the budget in 7 years 
and restore solvency to Medicare.
  Only one, however, does it without massive downsizing of Medicare, 
Medicaid, Education, Agriculture, and Pension funds. That is the 
coalition budget and it is the one we should support because it puts 
spending cuts toward deficit reduction, not toward tax breaks for 
people who are not asking for them.
  Mr. Chairman, in 1992 we faced the impending collapse of the Coal 
Miner's Retiree Health Fund. Several hundred companies who had 
thousands of retired miners basically said what this bill allows.
  They said, ``Even though these retirees were our employees all these 
years, and even though we have signed signatory agreements guaranteeing 
their health care, through our contributions to the Retiree Health Care 
plan, now, because we no longer want to be a part of the Bituminous 
Coal Operators of America, we no longer have any obligation for the 
health care of these retirees.''

[[Page H11355]]

  Well, a bipartisan agreement in this Congress is 1992, negotiated by 
a Republican Secretary of Labor and signed by a Republican President 
said to those companies, ``You do have an obligation. You can't just 
transfer your responsibility to the remaining BCOA companies and force 
them to pay your bills.''
  Mr. Chairman, if the bill stands, the remaining companies will assume 
an additional $58 billion a year for these orphaned retirees.
  We're struggling now for the survival of our coal economy and we're 
going to put this additional burden on the companies who are still 
mining!
  Increase their costs, the ones that are being responsible? The coal 
companies who are mining the coal and the unions agreed on this. This 
isn't a one-sided agreement.
  Please don't allow this agreement to be rescinded as a part of the 
reconciliation bill.
  The Coal Act which I helped pass in 1992 helped keep the health fund 
from collapsing and helped preserve both health care and peace of mind 
for nearly 100,000 mining families in this nation. The shift of costs 
and responsibility back to only those companies who are still in 
business will upset the competitive balance in the coal industry, which 
is already struggling to comply with the onerous provisions of the 
Clean Air Act.
  While this provision is certainly important to me and thousands of 
mining families in my district, I am also very concerned about how this 
bill will negatively impact my district in many other ways.
  That is why I am cosponsoring the Coalition Budget, which I have 
worked to develop along with a host of colleagues who are moderate and 
conservative Democrats. The people behind this alternative are seasoned 
veterans in the war against deficit spending.
  Our budget is demonstrably better than the leadership proposal in a 
number of ways. Our budget controls Medicare spending by $170 billion 
over five years--enough to restore solvency to the trust fund and to 
control government spending to help us reach a balanced budget. We 
don't take an extra $100 billion out of Medicare to finance unwise and 
unnecessary tax cuts, as the Republican plan proposes. Likewise, our 
Medicaid proposal maintains nursing home standards and continues to 
guarantee health care for the poor and elderly.
  On the discretionary spending side, our budget has $80 billion less 
in budget cuts for areas such as education, job training, job creation 
and housing.
  And in the area of agriculture, which is the economic foundation of 
the 19th District of Illinois, we reject the lopsided cuts contained in 
the Republican budget.
  On balance, the coalition budget which I support is clearly better 
for my district, the State of Illinois and the country as a whole. We 
reach balance in 7 years. We reform programs such as Medicare, Medicaid 
and welfare, taking the necessary steps to control rising costs but 
ensuring there is a way to help people maintain a decent standard of 
living. There are budget cuts across the spectrum of federal spending, 
but we have prioritized and balanced our spending plan to help middle-
income families afford a home and send their kids to college.
  I know that our proposal is not likely to be accepted today. The 
Republican plan will pass, the Senate will pass its version, and the 
conference agreement will go to the President and he will veto it. At 
that point in time, we will have to come back and work as a legislative 
body to reach consensus and do the job the people sent us to do. The 
final agreement is also likely to contain some provisions with which I 
very much disagree, but I will continue to keep an open mind and work 
in a productive way to do what's right for this country--to balance the 
budget.
  My strong belief is that the budget which I cosponsor and have worked 
for looks a lot like where the final agreement will be, because I think 
it is the most fair and balanced approach.

                              {time}  1700

  Mr. KASICH. Mr. Chairman, I yield 2 minutes to the gentleman from 
Connecticut [Mr. Shays], a distinguished member of the Committee on the 
Budget.
  Mr. SHAYS. Mr. Chairman, I first want to thank the Coalition. The 
Democratic alternative is a very fine plan. I think there is some if 
not a good deal that we should be talking about when we ultimately come 
to a conference agreement between the House and the Senate.
  When I look at this budget, I see that their budget balances the 
budget in 7 years, and that is what we are asking the President of the 
United States to do. If he does that, we go a long way to having a 
point of agreement. So I am encouraged that my colleagues on that side 
of the aisle who will vote for it will be sending a message to the 
President.
  I am also encouraged that it looks at the growth of Medicare and 
Medicaid and particularly Medicare and attempts to cut the growth by 
$170 billion. We are attempting to cut the growth by $270 billion. So 
there is a difference of $100 billion. In my judgment, that $100 
billion change in the growth needs to happen. So we have a disagreement 
there.
  But, on balance, there is a lot that can be complimented about this. 
I like the plan that we have done, and I believe in the tax cuts. I 
believe that if we are going to take 7 years to balance the budget, 
that we can, in fact, afford a tax cut; and I believe that the group 
that needs it the most are those that have children that are under 17 
years of age and can get that $500 tax credit.
  I also believe in the capital gains, because I think it generates 
economic activity rather than causing a loss in revenue. But, on 
balance, I congratulate my colleagues. They, I think, have gone a long 
way in helping the White House and both Chambers realize that, 
ultimately, we can come to an agreement.
  Mr. ORTON. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Texas [Mr. Dde la Garza].
  (Mr. de la GARZA asked and was given permission to revise and extend 
his remarks.)
  Mr. de la GARZA. Mr. Chairman, I rise in strong support of the 
Democratic substitute and I want to commend my colleagues for their 
work in its development. I especially wish to recognize my friend from 
Texas, Mr. Stenholm. We worked together with other Agriculture 
Committee Democrats to develop the agriculture provisions now contained 
in the substitute--the alternative receiving the fewest no votes in the 
Agriculture Committee.
  Mr. Chairman, the substitute amendment does what the American people 
want. It results in a balanced budget for fiscal year 2002. It is 
particularly attractive to me and to those who know agriculture because 
it achieves that goal without endangering the strength of our food and 
fiber production system and without decimating the nutrition programs 
that are vital to so many American families.
  Mr. Chairman, we pointed out earlier that the cuts in agriculture 
made by the Gingrich bill are just too severe. Agriculture is the very 
foundation of our Nation's economy. Our basic farm programs have played 
a significant role in the farmer/government partnership that has been 
so successful in assuring that our Nation has a safe, reliable, and 
affordable food supply. The Gingrich plan to reduce Federal spending on 
farm programs by $13.4 billion will threaten the economic viability of 
American agriculture and thereby endanger our food security.
  To take such an enormous risk with our food production system in 
order to provide a tax cut is a reckless approach to fiscal policy.
  Mr. Chairman, the substitute includes savings from agricultural 
programs. It would reduce farm spending by $4.4 billion over 7 years. 
Agriculture always contributes its share to deficit reduction--from 
1981 through 1993 we cut $50 billion out of farm spending. But this 
substitute cuts these programs in a responsible manner and in a way 
that preserves the farmer/government partnership that has so 
successfully served to satisfy our nation's food.


                               Food Stamp

  This substitute also achieves over $17 billion in food stamp savings 
over the next 7 years. These are painful cuts in a vital program that 
keeps millions of people from going hungry every day; but Democrats are 
supporting the welfare reform provisions of the substitute because we 
cannot vote for a bill that incorporates the harsh welfare reform 
legislation passed by the House last spring. The Democrats are strongly 
in favor of welfare reform and want the public record to properly 
reflect our commitment to welfare reform.
  Although this substitute will reduce the amount of food stamp 
benefits people will get in the future, it assures that those benefits 
will never go below 100 percent of the thrifty food plan. People will 
continue to get enough benefits so that they can purchase a 
nutritionally adequate diet.
  Unlike H.R. 4 as it passed the House, the food stamp provisions of 
the substitute bill do not cap the funding for food stamps. The 
substitute retains the flexibility in funding necessary to accommodate 
downswings in the economy and the subsequent increases in program 
participation. If the economy of a locality falters for a time, people 
thrown out of 

[[Page H11356]]

work will be able to feed their families under our proposal; adequate 
funding will be available.
  Our proposal contains strong incentives to get people out of the food 
stamp program and into jobs, but it doesn't kick them out of the 
program if they are wanting and willing to work and there are no jobs 
available.
  The substitute contains all of the fraud and abuse provisions 
proposed by USDA. The Gingrich bill contains only about half of those 
proposals. We must do everything possible to maintain the integrity of 
the food stamp program, to assure that these vital benefits go to those 
who need them most.
  The substitute bill puts us on the road to true and effective welfare 
reform without putting huge holes in the food safety net. It cuts farm 
spending without endangering the foundation of our food production 
system. I urge my colleagues to approve this substitute.
  Mr. Chairman, there are several misperceptions about the different 
agriculture bills that need to be clarified.
  First, we need to talk about reductions. Neither the Democrats nor 
Republicans are saying that Agriculture should be exempted from the 
Reconciliation process. Agriculture has always given its fair share. We 
have cut agriculture over $50 billion since the 1980's. It is the only 
major entitlement program that has steadily declined and continues to 
decline. So we are in agreement.
  What we don't agree with is having to cut Agriculture an additional 
$9 billion in order to pay for a $245 billion tax cut. It isn't that we 
don't like tax cuts. It isn't that we don't support the many tax cuts 
that are proposed. It is the simple fact that this is an inappropriate 
time to cut taxes (although I will note that on the working poor we are 
raising taxes)--when we are trying to balance the budget.
  In addition, Chairman Roberts said that American farmers would pay 
$15 billion less in interest expenses because of a balanced budget. Mr. 
Speaker, the Substitute will reduce the interest expenses for American 
farmers the same $15 billion because the Substitute also balances the 
budget.
  Second, we need to talk about trade. The Gingrich plan will cut our 
trade programs by $1.2 billion. We are now implementing the GATT 
Agreement that many of us supported. This is a crucial time in 
Agriculture as we implement this agreement. I fear that many of my 
colleagues have the perception that, because of the GATT Agreement, we 
are now on a level playing field with our competitors. Nothing could be 
further from the truth. Yes, this Agreement will reduce spending in 
agriculture. However to some extent it locked in the inequities that 
existed. The EV still currently subsidizes its agriculture 6 times more 
than the U.S. The Substitute recognizes this crucial fact and fully 
funds our export programs so that American Agriculture can compete 
abroad and maintain its markets.
  Third, we need to talk about flexibility. It is being represented 
that one bill allows flexibility and the other doesn't. This is simply 
incorrect. Democrats and Republicans both agree that farmers want more 
flexibility in commodity programs. Both the Substitute and ``Freedom to 
Farm'' allow producers more flexibility. ``Freedom to Farm'' allows 
producers to plant program and other specified crops on their base 
acres. The Substitute is similar in that it provides this flexibility 
with the total acreage base concept and with additional safeguards for 
certain commodities if supplies are in excess.
  And fourth, one of the most basic differences between the two 
provisions goes to the core of what our farms programs are designed to 
do. My farmers have never said that they want a handout. My farmers 
have never talked to me about preserving the baseline. They have talked 
to me about getting a decent price for their crops and about various 
ways to minimize risk. Farmers don't need a guaranteed payment when 
prices are high. Many people will say that some times when prices are 
high farmers don't have a crop to sell. That is why we have tried to 
make crop insurance a workable program. It still has many problems, but 
it is a concept that we need to continue to improve. Our commodity 
programs in the Substitute are designed to provide farmers with risk 
management when prices are low. ``Freedom to Farm'' just does not 
provide the safety net that producers need to survive in the face of 
certain weather, prices, and world conditions.
  Mr. Chairman, Chairman Roberts said that Freedom to Farm will lock up 
the baseline for farmers so that when we have to pass more cuts in 
coming years--and he said not to fool ourselves, we will have more 
deficit reduction bills just like this one--that farm spending will be 
protected.
  Mr. Chairman, I don't know why there will be more cuts and 
reconciliation bills in coming years. Perhaps the tax cuts are too high 
or the spending cuts are not real in the Gingrich package, but if you 
vote for the Substitute, there will be no need for future 
reconciliation bills because it will balance the budget.
  Mr. ORTON. Mr. Chairman, I yield 1 minute to the gentleman from 
Mississippi [Mr. TAYLOR].
  Mr. TAYLOR of Mississippi. As usual, my friend, the gentleman from 
Ohio [Mr. KASICH], is right. We do take the best parts of their plan, 
and we make it better.
  As far as our Nation's veterans, the coalition budget makes $1.5 
billion less in spending cuts for veterans' programs. The leadership 
plan would extend the prescription drug co-payment and raise it by $1. 
The Coalition plan does not.
  But, most importantly, the coalition plan enacts the text of H.R. 
580, a bill that has over 220 cosponsors, and provides much-needed 
military subvention, allows our military retirees to take their 
Medicare payments to a military hospital. This is a plan that has been 
endorsed by the Coalition of Military and Veterans Associations, the 
Retired Officers Association, the Fleet Reserve Association, the Air 
Force Association, the Army Association, the Marine Corps League, the 
Marine Corps Officers Association, the Military Order of the Purple 
Heart, the National Association of Uniformed Services and 30 other 
veterans' groups want to see this plan become law.
  We have a chance to do that by passing the coalition budget.
  Mr. ORTON. Mr. Chairman, I yield 1 minute to the gentleman from 
Kentucky [Mr. Baesleb].
  Mr. BAESLER. Mr. Chairman, the second place I think the coalition 
budget is superior to the budget presented by the Republicans is in the 
area of education. The coalition believes that education is an 
investment in our Nation's future. The $10 billion question is whether 
or not we want to make it harder for young people to invest in our own 
future. the coalition believes the answer is no.
  The Republican plan would eliminate the 6-month, interest-free grace 
period, thus costing graduate students $2,500. The coalition plan 
thinks that is unnecessary and unfair.
  The leadership plan would increase the rates that parents have to pay 
on the plus program. This could cost parents an additional $5,000 when 
repaying these loans. The coalition plan does not ask the parents to 
take on this additional burden.
  The leadership plan eliminates direct lending as an option for 
schools and students. The coalition plant does not eliminate direct 
lending. The coalition plan believes that education cuts do not heal.
  I hope my colleagues will join me in encouraging this investment by 
supporting the coalition reconciliation plan.
  Mr. ORTON. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Texas, Mr. Pete Geren.
  (Mr. PETE GEREN of Texas asked and was given permission to revise and 
extend his remarks.)
  Mr. PETER GEREN of Texas. Mr. Chairman, I thank the gentleman for 
yielding me the time.
  Mr. Chairman, I rise in strong support of the Medicare subvention 
provisions in the coalition budget and endorse the coalition budget.
  Mr. Chairman, I rise to give you yet another reason why the coalition 
alternative deserves your vote. We have included a provision in our 
alternative on Medicare subvention that has widespread and bipartisan 
support. It is similar to H.R. 580 which has 222 cosponsors. Not only 
does this proposal make dollars and cents, it corrects an inequity in 
the way we provide health care to our military retirees.
  This proposal would allow our military retirees to use military 
treatment facilities with the cost of care reimbursed by Medicare. 
Under current law, the DOD receives no reimbursement when it treats 
Medicare-eligible retirees, and they are frequently the first group of 
beneficiaries to be denied care when budget cuts force cutbacks. Yet 
the military facility is the more cost-effective provider of care. The 
current arrangement makes no sense.
  Mr. Chairman, there are 1.2 million military retirees age 65 and 
older in America. These men and women dedicated their lives to 
protecting our freedom. Right now, these retirees pay into the Medicare 
program as do all Americans, but Medicare will not cover their care 
because they receive their health care at military facilities. In 1994 
alone, the DOD provided more than $1 billion in care to 230,000 
Medicare-eligible retirees. Medicare should reimburse the DOD for these 
costs. This is good for the retiree, after all it's his or her first 
choice, and it is good for the taxpayer because it saves money.
  Why is this so? Because health care costs at military facilities are 
10 percent to 24 percent less than in the private sector, which is 

[[Page H11357]]

the price that Medicare has to pay. This proposal will save Medicare 
and the taxpayers billions of dollars as we struggle with balancing our 
budget.
  But more important than that, I stated that this proposal corrects a 
basic inequity for our military retirees. Because of shrinking budgets, 
our military retirees are seeing their access to care diminish, care 
that they earned by their service to America. This proposal will ensure 
that these retirees will receive the access to care they deserve, from 
the doctors they choose.
  Mr. Chairman, this reform is long overdue. Many military retirees 
choose military facilities over private providers, and we should expand 
that option by having Medicare cover those costs. Our military retirees 
deserve this and it saves money. Mr. Chairman, this is a no-brainer. It 
is a win/win situation.
  I urge my colleagues to support our military retirees and vote yes on 
the coalition substitute.
  Mr. KASICH. Mr. Chairman, I yield 5 minutes to the gentleman from 
Texas [Mr. DeLay], our distinguished Republican whip.
  Mr. DeLay. Mr. Chairman, I thank the chairman of the Committee on the 
Budget for yielding me the time, and I just want to commend him. It is 
been a long road for the gentleman from Ohio, but he is here today, and 
we are all very, very proud of the work that he has done and very proud 
of him.
  Mr. Chairman, I want to rise in support of this historic 
reconciliation legislation and obviously in opposition of the 
Democrats' alternative.
  Many people have trouble understanding what the reconciliation 
process really is. I believe it is where we reconcile our campaign 
promises with our legislative agenda. In other words, we are putting 
our money where our mouth has been. Pundits have called the Democrat 
alternative humble. Well as Churchill would have put it, it has much to 
be humble about. It does not give tax relief for American families, it 
does not save Medicare, and most of the Democrat leadership will not 
even support it.
  Let me focus on the biggest difference between the Republicans and 
the Democrats in this debate: taxes. Republicans believe that there is 
a moral imperative to cutting taxes. If we fail in this endeavor, we 
will break faith with the families and the voters of this great Nation.
  The Democrats in the Congress have a different view. They are 
squeamish about cutting taxes. It cuts against their philosophy, and it 
is shown in this substitute. The reason they are against cutting taxes 
is they want to spend more money. They have branded our efforts to be 
tax cuts for the rich. Never has so much been said by so few that has 
been so wrong. When Bill Clinton knows it is wrong, he admitted it 
himself.
  Beyond the rhetoric, here are the facts: Under our bill, a family 
with two kids earning up to $24,000 a year will not have to pay any 
taxes at all. Our plan actually removes 3 million low-income families 
from the income tax rolls, and a family of 4 that earns $24,000 a year 
or more will pay $1,000 less in taxes than they paid last year under 
our plan.
  Do we really cut taxes only for the rich? Is a $500 tax credit for 
children a tax break for the rich? Since when is it politically 
incorrect to help families take care of their children? Is our adoption 
tax credit a giveaway to the rich?
  Let me tell you something. Those children who desperately need to 
find homes that are safe and secure do not think they are rich.

  Is our repeal of the President's Social Security tax increase a 
giveaway to the rich? Frankly, I do not even think the President 
believes that anymore.
  How about the infamous capital gains tax cut? We all know that, 
without the capital gains tax cut, the economy will continue to chug 
along at its current 2 percent per year growth rate. I thought I would 
never see a President of the United States brag about a 2 percent 
growth rate.
  The real victims of this meager growth rate are those who cannot find 
jobs, those who cannot afford to start their own businesses, those who 
have never heard opportunity knock. Are they really the rich? They do 
not think so.
  Republicans will not be intimidated by the Democrats' rhetoric on tax 
cuts. If we cut taxes, we will be doing what the American people sent 
us here for. We will be keeping our promises with our constituents. 
There are only positive political consequences when you keep your 
promises.
  I hope the American people remember just one thing: These tax cuts 
are only 40 percent of the $600 billion that were raised in tax 
increases in 1990 and in 1993. These tax cuts are simply a down payment 
on the principle of smaller, more efficient and more effective 
government.
  Bill Clinton has expressed taxer's remorse over his efforts to raise 
taxes in 1993. Maybe now he will get the message that we can cut taxes 
for families and balance the budget in 7 years.
  Mr. Chairman, I just urge my colleagues to support historic change, 
vote down the Democrat alternative and vote to provide relief for the 
American family.
  Mr. ORTON. Mr. Chairman, I yield such time as she may consume to the 
gentlewoman from Oregon [Ms. Furse].
  (Ms. FURSE asked and was given permission to revise and extend her 
remarks.)
  Ms. FURSE. Mr. Chairman, I support the Coalition plan because it is 
fiscally conservative but socially responsible.
  Mr. ORTON. Mr. Chairman, I yield 2 minutes to the gentleman from 
Alabama [Mr. Browder).
  Mr. BROWDER. Mr. Chairman, I appreciate the gentleman yielding me the 
time.
  Mr. Chairman, the coalition reconciliation plan balances the budget 
by 2002 just like the Republican plan but we do it in a way that is 
fair and responsible. I am not going to speak about the fairness, but I 
do want to touch on responsibility.
  Earlier this year the Budget Committee traveled around the country 
for public hearings. Attendance at these hearings probably ran into the 
thousands. At every hearing, I asked if they thought we should cut 
taxes before balancing the budget. Overwhelmingly, the public rejected 
up front tax cuts. By not listening the wisdom of the American public 
the Republican reconciliation is unnecessarily polarizing the Nation 
and may cause us to fail to reach any agreement on balancing the budget 
this year. This is not responsible.
  Make no mistake, I and many of my coalition colleagues support 
cutting taxes. For me, I would like to see something done on capital 
gains. I want a better deal for family owned businesses on estate 
taxes. I think a family tax credit--done smartly so it reaches families 
in need--is a good thing. But not in this bill.
  At this stage the tax cut debate has touched off partisan bickering 
and class and generational warfare. When it comes to the bottom line, 
why divide the Nation when we are in agreement on what really needs to 
be done--balance the budget? Even more to the point, who go through 
this divisive debate when we are all in agreement that Congress soon 
will take up major tax reforms--many of the proposed reforms will make 
all our actions on tax cuts today moot.
  We are in agreement that the budget should be balanced. The issue 
today, then, is whether we want to miss this chance just to make a 
political statement. The coalition sets the stage for bipartisan 
agreement in the best interests of the country. The Republican bill 
sets up a veto fight and 12 months of political rhetoric while the 
country suffers more deficits, more debt.
  The coalition says balance first. Then nobody can charge that this is 
being done to cut taxes for one class while raising costs for another. 
Passing the coalition reconciliation would let us take up a pure tax 
bill--real tax reform--outside the scope of this divisive debate, so 
that the American people can clearly examine the spending cuts that 
offset the tax reductions. Then we can debate the issues of tax 
fairness and appropriate levels of taxation clearly and partisanship 
and class warfare--that is tearing this county apart--will be 
diminished.
  Mr. ORTON. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Alabama [Mr. Cramer].
  (Mr. CRAMER asked and was given permission to revise and extend his 
remarks.)
  Mr. CRAMER. Mr. Chairman, I rise in strong support of coalition plan 
to balance the budget in 7 years without egregious cuts, without 
putting tax cuts ahead of spending cuts, and without huge Medicaid and 
Medicare cuts.

[[Page H11358]]

  It is often said on this floor, in reference to a particular bill, 
that that bill is not a perfect bill.
  This may be said of the coalition plan as well.
  However, the coalition proposal is the best proposal being considered 
today and every Republican and Democrat should vote for it.
  The coalition plan is based on fairness and fiscal responsibility. 
The coalition plan is both tough and compassionate.
  It is tough because it reaches balance in 7 years with a steady 
glidepath of deficit reduction and includes tough deficit reduction 
enforcement provisions.
  It is tough because it puts spending cuts ahead of popular tax cuts.
  It is tough because it reforms welfare in a way that provides tough 
work requirements and provides protection for children.
  It is compassionate because it restores solvency to the Medicare 
trust fund and avoids premium hikes for low- and middle-income seniors, 
and avoids devastating cuts to rural and inner-city hospitals.
  It is compassionate because it maintains nursing home standards and 
Medicare premium assistance for low-income seniors.
  It is compassionate because it rejects a tax increase on the working 
poor.
  If Members of Congress are looking for a proactive moderate proposal 
that reflects true mainstream American values--have I got a deal for 
you--the coalition reconciliation proposal.
  The coalition plan proves that it is possible to balance the budget 
over 7 years, using honest numbers, shared sacrifice, sound priorities, 
and common sense.
  Both The Washington Post and The New York Times, considered two of 
the most conservative newspapers in the country, have endorsed the 
coalition plan by opining that ``it [Coalition plan] is a far better 
solution to the deficit problem than any other in sight now,'' and 
``the plan suggests the budget can be balanced by 2002 without 
pummeling the poor or Medicare,'' respectively.
  I urge my colleagues to support the coalition plan--a plan that 
reflects where the majority of Americans would like to see our 
ideological budget debates resolved.
  The CHAIRMAN. The Members should know that the gentleman from Utah 
has 5\1/2\ minutes remaining and the gentleman from Ohio [Mr. Kasich] 
has 5\1/2\ minutes remaining, and the gentleman from Ohio has the right 
to close.
  Mr Orton. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from 
Minnesota [Mr. Sabo], the ranking member of the Committee on the Budget 
and the former chairman of the Committee on the Budget.
  (Mr. Sabo asked and was given permission to revise and extend his 
remarks.)
  Mr. Sabo. Mr. Chairman, I rise in support of the Orton coalition 
budget alternative that is before us today. It accomplishes the goal of 
balancing the budget by the year 2002 in a fashion that is reasonable, 
fair, and tough but not mean.
  Let me speak to some components. Clearly the area of big cuts in the 
Republican plan is health care. The Orton alternative makes reasonable 
change and reform in Medicare. it deals not only with part A of 
Medicare, it also deals with part B which comes from general revenue 
and impacts the balance of our budget.
  In my judgment, there are 3 numbers that are very clear.

                              {time}  1715

  If one wants to simply deal with the solvency of the part A fund for 
the next decade, you can do $90 billion of change. If you want to deal 
with part A, part B, deal with higher premiums for high-income people, 
balance the budget, you can do it with $170 billion. If your want to 
deal with solvency, balance the budget, and then have a tax cut, that 
requires $270 billion, changes that I think are totally unacceptable in 
Medicare, and puts in question the long-term sustainability of those 
kind of cuts.
  The Orton proposal restores $100 billion to Medicaid to deal with 
health care for the most vulnerable of children, of seniors, and of 
disabled in our country. Because one says let us get our fiscal house 
in order first, it means that we have discretionary funds so we can 
deal with the problems of education and housing and economic 
development in our country. The proposal deals with welfare reform in a 
tough way, in a method to put people to work but have training and 
child care there available for them. It does not have the meanness that 
some proposals have. It gets the job done. It would help people, not 
hurt them.
  So, Mr. Chairman, I congratulate the gentleman from Utah and all the 
people who worked with him in putting this alternative before us. It is 
a good alternative. The country would be well served if it became law
  Mr. Orton. Mr. Chairman, I thank my former chairman for his very 
knowledgeable statement.
  Mr. Chairman, I yield 3 minutes to the gentleman from Texas [Mr. 
Stenholm].
  (Mr. Stenholm asked and was given permission to revise and extend his 
remarks.)
  Mr. STENHOLM. Mr. Chairman, I first want to associate myself with 
Chairman Kasich's remarks earlier today when he commented on the 
remarkable shift in philosophy toward a balanced budget which has 
occurred in our country. John, you have done as much as any single 
individual to bring about that shift and I am grateful for the role you 
have played.
  I also associate myself with many of the comments of my ranking 
member. My Swedish ancestors may turn in their graves but Martin Sabo 
is one Norwegian who has earned my deepest, highest respect.
  Finally, I have been proud to spend hours locked up in rooms with 
coalition members and our staffs as we fought our way through this 
massive reconciliation substitute. I am proud of our product, making 
tough choices, always with an eye toward fairness and reasonableness.
  All Members know that launching into the intricacies of the Federal 
budget can bring about an eye-glazing, bring-numbing boredom. But 
budgets are about much more than numbers; they are about people and our 
values.
  When the coalition budget reaches balance in 7 years it is not just 
numbers. It is an assertion of the value that our children and 
grandchildren should be given as much economic opportunity as we were, 
not have to pay for our irresponsibility.
  By putting spending cuts ahead of tax cuts we reinforce the value 
that rewards should come after hard work, not before. We are not 
opposed to tax cuts. We simply learned from the 1980's that when 
dessert comes first, you never get to the spinach.
  The coalition budget makes reforms in Medicare to keep the program 
solvent well into the next decade. Value: keep the promises you have 
made, to today's and tomorrow's seniors.
  Similarly, the coalition budget finds a numeric middle ground in 
Medicaid. Value: A society will be judged by the way it treats its most 
vulnerable citizens, particularly young children needing basic health 
care, senior citizens needing guaranteed, quality nursing home care, 
and the disabled.
  The coalition budget would fundamentally reform America's welfare 
system, moving people from welfare to the work force, but also it 
includes sufficient funding for child care, job training, and other 
building blocks necessary to make a welfare reform policy more than a 
pot full of empty political promises. Value: balance compassion with a 
sense of personal responsibility.
  The Coalition budget maintains support for student loans and 
agriculture. Value: treasure, nurture, and develop your national 
resources if you want to remain strong and healthy. Unilaterally 
disarming the American farmer as he seeks to compete in the 
international market place food makes about as much sense as 
unilaterally disarming our country militarily. Disarming our American 
students by depriving them of the education they will need to compete 
globally is equal folly.
  Finally, the coalition budget includes the only meaningful budget 
enforcement to be found in this debate. Value: if you expect people to 
believe what you say, you ought to police yourself in ways that show 
you mean it.
  Our budget includes hundreds of numbers but all of those numbers draw 
a picture of values Americans are desperately seeking in their elected 
officials and in public policy: responsibility, honesty, fairness, 
compassion. Vote for a commonsense reconciliation budget full of the 
common values held by most Americans. Vote for the coalition 
substitute.
  Mr. ORTON. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Ohio [Mr. Sawyer].

[[Page H11359]]

  (Mr. SAWYER asked and was given permission to revise and extend his 
remarks.)
  Mr. SAWYER. Mr. Chairman, I rise in support of the Coalition 
substitute.
  Mr. Chairman, today, Congress is debating the Republican budget 
reconciliation proposal.
  This bill is just bad policy.
  The Republican bill will cut $270 billion from Medicare, $10 billion 
from student loans, and $180 billion from Medicaid. I agree that we 
need to find ways to reduce the budget deficit. However, I am concerned 
that we have decided to do so by transferring the burden to poor and 
low-income Americans who are already struggling to get by.
  The combination of a large national debt and the aging of the post-
war generation will place an even greater burden on younger 
generations. Our national policies must reflect this changing reality. 
As we seek ways to balance the budget, we must also continue investing 
in our Nation's future--including expanding access to higher education. 
These investments will be essential to preserving living standards and 
ensuring higher wages for the challenges we face in the future.
  Twice before in our history, our Nation was able to grow out of a 
large national debt by investing in human capital. In the last century, 
the establishment of the Land Grant College system made higher 
education something to benefit all Americans. The G.I. Bill further 
increased access to higher education, strengthening a new American 
workforce able to face the changing needs of the country and the times. 
As we once again face a mounting national debt, history can be a model 
for our policy decisions.
  The higher education cuts in the Republican budget proposal will 
increasingly restrict access to higher education in this country. These 
cuts will increase the cost of postsecondary education and may put 
college out of the financial reach of many families. Access to higher 
education has never been more important. Today, the incomes of 
Americans with college degrees are over 75 percent more than those with 
a high school education.
  It is no exaggeration to suggest that higher education has helped 
create the American century. Our system is the envy of the world. We 
would be shortsighted and foolish not to take the full measure of 
benefit from this singular, uniquely American, comparative advantage.
  I support responsible measures to reduce or eliminate the budget 
deficit. That is why I support the coalition alternative. This 
alternative balances the budget while investing in our Nation's future. 
It dedicates $50 billion more to education programs and maintains our 
commitment to student financial aid. The coalition budget 
reconciliation package does not give tax breaks that will only serve to 
cut current discretionary spending.
  History has shown that we can balance the budget while making the 
investments in our Nation's future that can help to diminish our debt. 
Given that record, I believe we are doing ourselves a great disservice 
by limiting access to higher education by making these cuts. We cannot 
afford to waste any of the talent that is America's most powerful 
national resource.
  I urge my colleagues to vote for the coalition alternative.
  I urge my colleagues to vote against the Republican bill.
  Mr. KASICH. I yield the balance of our time, 5\1/2\ minutes, to the 
gentleman from Texas [Mr. Armey], the majority leader.
  Mr. ARMEY. Mr. Chairman, I thank the gentleman from Ohio [Mr. 
Kasich], my good friend, for yielding me this time.
  My colleagues, historians will have already no choice but to 
recognize this first session of the 104th Congress as among the 
hardest-working sessions ever of any Congress at any time. I am sure 
all of my colleagues will agree with that proposition.
  If I could take a moment, Mr. Chairman, I would like to give my 
regards, my personal recognition of appreciation to all the Members of 
this Congress on both sides of the aisle, both those with whom I found 
myself in disagreement most of the time, and those with whom I found 
myself in agreement. The fact is we worked hard. Now we are at a point 
in our legislative agenda where it is time to collect our work together 
and to validate that work and move it forward. This work that we have 
before us today, this budget reconciliation bill, represents big 
change.
  America has asked of Congress that we make a big change. We pledged 
to make a big change, and today is the day we can stand and deliver and 
keep our promise. Big change is unnerving. Those of us who are 
committed to making it are haunted by a fear that maybe the American 
people will not understand, and, quite frankly, I must say those who 
resist our efforts are haunted by the fear that maybe America will 
understand. But we must put aside our fears regarding the understanding 
of the American people and recognize that they do understand.
  We are not here today asking America to be with us, to be on our 
side. We are here today prepared to make a vote that says to America, 
we are on your side. We are ready to give you the change you demand.
  For 60 years the Ship of State, this great land, has been sailed 
consistently in the wrong direction, to the left, in the direction of 
big government, big taxation, big regulation and a lack of regard and 
respect for the American people's ability and integrity. With this vote 
today, we will crank this ship around. We will turn this ship around to 
the right, and we will sail it in the direction of freedom, integrity, 
recognition, in the direction of a government that has the ability to 
know the goodness of the American people and the decency to respect it. 
That is what this change is all about.
  We must look at the direction in which we have sailed and recognize 
that we have left in our wake a sea of despair, a sea of frustration, 
and a sea of dependence, in fact a nation that is not fulfilling its 
great promises and its great dreams.
  So now is the time to make the vote. Now is the time to step up to 
the challenge of those who elected us and those we represent, the 
people back home, the good people back home, people who work hard, 
people who care hard, people who share hard, and, yes, unhappily 
because of the failures of big government, people back home who despair 
hard for its failures, and in that, today we are putting together a 
package, and we will pass a package that promises, first, tax relief to 
those who work hard, that says to these American people, ``We believe 
you should keep more of the money you earn and make the decisions 
regarding your family at home instead of ship that money away to 
Washington where people who do not know you will make mistakes on your 
behalf.''
  We have also here the first year's mark to that all-important 
balanced budget in 7 years. We do that for people who care hard, care 
hard for the future of their children, and there to say enough, we 
cannot saddle them with more debt. Then, as we save Medicare for 
another generation, we again act on behalf of those who share hard and 
who care hard and do so out of respect for and concern for the medical 
future of their parents.
  This is a serious business.
  Finally, on behalf of those who today must only despair hard, we have 
welfare reform. We dare to change a system that has failed, not because 
we believe people have abused that system but because we know that 
system has abused people and made them victims.
  This is the vote we must take. In doing that, we must put aside our 
concerns, our fears, our parochial interests. We must think about 
America, and we must first reject the politics of fear and the politics 
of class warfare, and we must vote for the two great promises of 
America. America is a nation that promises each individual an equality 
of opportunity, and it is pledged to the all-important, critical 
guarantee that we will always work to secure the blessings of liberty 
for ourselves and our posterity, and our posterity is our children.
  So I call on my colleagues, step up today, stand and deliver. Vote 
for this budget reconciliation package brought forward by the gentleman 
from Ohio [Mr. Kasich] and the Committee on the Budget and all of our 
hard work, reject this substitute, reject a motion to recommit. Vote 
for the future of our children so that they shall know our heritage and 
live it in their own lives.
  Mr. DICKS. Mr. Chairman, today Congress faces a decision of great 
significance, where our actions will affect so thoroughly the lives of 
our fellow Americans. I urge my colleagues to indicate their most 
serious consideration of the plight of seniors, children, workers, and 
the less privileged, by lending their support to the Democratic 
substitute and rejecting the GOP package.
  Both sides of the aisle have been able to agree on a number of 
important policy issues, and I commend the leadership of both sides for 
their willingness to address these important points. We have agreed 
that the Federal deficit must be eliminated. Both sides agree that 

[[Page H11360]]

there should be a 7-year time period through which to accomplish this. 
Members agree that the short and long term problems with Medicare and 
Medicaid must be resolved by this legislation. The House has also been 
able to agree that the welfare system must be improved to encourage 
recipients to re-enter the workforce and become positive, contributing 
members of society.
  Unfortunately, the agreement ends here. The Republican budget 
reconciliation proposal severely cuts many critical Federal programs 
unnecessarily--for the single purpose of providing a tax cut worth over 
$245 billion during the next 7 years, much of which will go directly to 
individuals who make over $100,000 a year. At the same time, the 
Republican plan will cut the Earned Income Tax Credit, which provides 
critical tax relief to the poorest American workers. Frankly, I am 
unable to find the logic of a proposal which cuts taxes for the wealthy 
while raising taxes on the working people of the United States. I do 
not believe that this is the message the House should be sending to the 
American people.
  This $245 billion tax cut for wealthy Americans also will force 
draconian cuts to be made across the board to programs which provide 
critical services and assistance upon which many Americans rely. The 
Republican plan brutally attacks seniors by cutting Medicare and 
Medicaid by a combined $482 billion. The measure requires seniors and 
low income individuals to pay greater premiums. It also will reduce 
payments to hospitals which will force many of these facilities to 
reduce services or, in some cases, shut down entirely. The Republican 
proposal will make further cuts to veterans' health programs, 
increasing their co-payments by 50 percent and increasing the fees 
veterans must pay to stay in a VA hospital or nursing home. Federal 
retirees will also be hit by delays in their COLA payments and  other 
changes adding up to a cut of $9.9 billion. Is it right to demand that 
seniors, veterans, and Federal employees pay more while the most 
wealthy pay less?

  This proposal also calls for major reductions to Federal programs 
supporting our children. Student loans, the most important vehicle 
through which middle and lower class children are able to attend 
college, will be cut by over $10 billion. The Federal direct loan 
program, which has been highly successful at my alma mater, the 
University of Washington, is eliminated by the Republican bill. 
Students receiving loans also will be charged an additional $3.8 
billion over the next 7 years by eliminating the interest-free grace 
period, increasing the cost of student loans by as much as $2,500 per 
student. Is it truly in our Nation's best interest to provide $255 
billion to the richest Americans by raising taxes on students?
  The Republican bill also contains a number of policy decisions which 
are, simply put, bad ideas. This measure would eliminate established 
Federal standards nursing homes must meet to receive Medicaid funds. 
These requirements ensure that our parents and grandparents receive 
adequate care, are served by competent staff, and retain the rights 
that they deserve. This measure also permits corporations to raid their 
workers' pension funds for any purpose--including hostile takeovers--
thus putting the retirement funds of working Americans at significant 
risk.
  Mr. Chairman, if all of these changes were truly necessary to balance 
the budget by 2002, perhaps more of us on the Democratic side of the 
aisle would be willing to support the Republican proposal. However, the 
Coalition has developed a plan which accomplishes all of the important 
goals without this terrible assault on the middle and lower class. How 
can the coalition's plan do this? Simply, by eliminating the huge tax 
cut which our Nation cannot afford.
  The Democratic plan will accomplish deficit reduction while 
maintaining crucial investments in education and human resources. Our 
plan will restore the solvency of the Medicare trust fund while cutting 
health care services by $195 billion less than the GOP plan. It also 
provides for other important services such as annual mammograms which 
the GOP proposal chooses not to include. This plan rejects the 
Republican tax increase on the working poor, encouraging people to 
choose work over welfare. Our substitute also confirms Congress's 
dedication to providing our children with a quality education and 
maintaining their access to institutions of higher learning by 
providing $50 billion more for education than the Republican plan and 
fully funding Federal student loan programs. Retired Federal employees 
will not be required to accept again delayed COLA payments under the 
Democratic substitute. Neither will nursing home residents be asked to 
compromise their personal safety nor must worker risk the security of 
their retirement funds.
  I ask my friends on both sides of the aisle to consider carefully the 
decision they are about to make. Ask yourselves, should the effort to 
balance the Federal budget be a divisive affair--where the rich win and 
the poor lose; where corporations profit while workers and retirees are 
asked to pay more? Or should this action require all Americans to bear 
the burden of deficit reduction equally, with fairness and the common 
need being our guide? I urge my colleagues to reject the further 
splitting of the wealthy and middle class in this country and to 
support the balanced approach inherent in the Democratic substitute.
  Mr. SKAGGS. Mr. Chairman, We have two choices today.
  The Democratic alternative--the Orton substitute--would balance the 
budget in 7 years, without tax cuts we can't now afford, without undue 
cuts in Medicare and Medicaid, without raising taxes on lower-income 
workers, and while making possible investments we need to keep our 
country strong in the future. I support it.
  This is in sharp contrast to the Republican bill, which I oppose. 
That bill would also balance the budget in 7 years, but there the 
similarity ends. It includes a tax cut we cannot afford, most of which 
goes to the wealthy who least need it. To pay for that tax cut, the 
committee bill cuts Medicare and Medicaid more than necessary, with 
over half of the total spending cuts coming from those important 
programs. It also actually raises taxes on lower-income workers.
  Compared to the Republican bill, the Orton substitute cuts $100 
billion less in Medicare, $100 billion less in Medicaid, $50 billion 
less in direct assistance to individuals, $10 billion less in 
education, $10 billion less in agriculture, and $80 billion less in 
other discretionary spending.
  How is that possible? It is made possible by refusing to dig the hole 
of Federal debt deeper--that is, by refusing to cut taxes before we can 
afford to. And by ending $28 billion worth of particularly ill-advised 
subsidies to corporations.
  The Democratic alternative reduces the deficit more, and quicker, 
than the majority's bill. It cuts a total of $853 billion from the 
budget over the next 7 years, compared to $811 billion in the 
Republican bill.
  While making these deep cuts, our alternative reflects better 
priorities and wiser policies than majority's bill.
  It maintains the earned-income tax credit, which used to enjoy strong 
bipartisan support as an effective, non-bureaucratic way to enable 
lower-income people to work their way into the middle class.
  It closes tax loopholes that let multinational corporations 
manipulate their books to avoid paying their fair share of U.S. taxes 
and that allow billionaires to avoid paying their taxes by renouncing 
their citizenship.
  It protects Medicare and Medicaid, because it is not driven to cut 
them deeper than necessary because it does not have to pay for a 
misguided tax cut.

  It would provide more resources for nutrition, education, 
transportation, research, and crime control.
  It includes real welfare reforms, with flexibility for States, a 
crack-down on fraud, and enough funding for day-care, training, and the 
other needs of people moving off welfare and into jobs.
  It maintains funding for student loans, which the Republican bill 
would cut.
  It protects the benefits of Federal retirees and preserves veterans' 
compensation.
  It keeps our public lands in public ownership--unlike the Republican 
plan, which offers to turn national forest ski mountains over to the 
owners of ski resorts. The Republican leadership refused to let me 
offer an amendment to strip that provision from their bill.
  The Democratic alternative would not sacrifice the wilderness and 
wildlife of America's last untouched stretch of Arctic coastline, the 
coastal plain of the Arctic National Wildlife Refuge, which the 
majority's bill would open to oil and gas development.
  Our alternative would not perpetuate bargain-basement sales of the 
gold, silver, and other hardrock mineral resources of our public lands.
  And it does not include the myriad provisions tucked into the 
majority leadership's plan, including ones that have little or nothing 
to do with balancing the budget and everything to do with political 
posturing and campaigns. Like a requirement to waste even more money on 
TV Marti, which no one in Cuba sees anyway, by switching to a signal 
that even fewer Cuban televisions can receive--and which will be even 
easier for Castro to jam!
  And like provisions to eliminate the arms control and disarmament 
agency.
  It's clear to me which of these two choices is better for the 
country. The Republican plan may be called a reconciliation bill, but I 
can't 

[[Page H11361]]

be reconciled into thinking that it's anything but bad for the country. 
We have a chance to do better--in fact, we have a duty to do better. 
The Democratic alternative is that better choice.
  Mr. RICHARDSON. Mr. Chairman, I rise in support of the Stenholm 
reconciliation bill that balances the budget in 7 years without the 
draconian cuts found in the Republican plan.
  The Stenholm alternative balances the budget without cuts in 
education, without extreme cuts to Medicare and Medicaid, and without 
increasing taxes on the middle class and the working poor.
  The Stenholm alternative places deficit reduction first and does not 
borrow money to pay for tax cuts.
  The Stenholm alternative spreads the sacrifice necessary to balance 
the budget among various areas of the budget. The Republican plan 
places a heavy burden on middle-class, hard-working Americans while 
giving a tax cut for the rich.
  The Stenholm alternative reforms the welfare program by rewarding 
work that pays more than welfare.
  Mr. Speaker, the Stenholm alternative has been praised by the 
Washington Post as a ``respectable, disciplined alternative'' that is 
``easily the best horse in the race.''
  The bottom line is the Stenholm alternative balances the budget 
without punishing the middle class and the poor. This is the bill that 
the American people have been asking for.
  The President deserves credit for his 1993 budget which has brought 
the fiscal year 1995 deficit to $164 billion, almost half of what it 
was when he took office.
  Despite forecasts of doom in 1993, our economy continues to grow at a 
strong, steady pace.
  The Stenholm alternative will signal to the markets that we are 
serious about implementing sound fiscal policy in Washington. The lower 
interest rates that will result from this budget will allow businesses 
to expand at a lower cost, it will allow millions of Americans to 
refinance their loans on homes, cars, and credit cards, it will hasten 
the retirement of past debts that depress the savings rate of this 
country.
  The Republican budget threatens to shock the economy with enormous 
tax cuts that could jeopardize the effects of the difficult spending 
cuts that we have already made.
  The Stenholm alternative is prudent and makes difficult choices that 
we are sent here to make.
  I urge my colleagues to balance the budget the smart way, and to 
support the Stenholm alternative.
  Mr. HAYES. Mr. Chairman, when we vote today on this reconciliation 
bill, we are passing judgement on hundreds of pages of text containing 
thousands of specific numbers and provisions. As important as those 
details are--and they are very important--perhaps more crucial are the 
underlying values embodied in the proposals before us. In the final 
analysis, people sent me here to recognize, protect, and advance the 
basic values America holds dear. A group of conservative Democrats 
called the coalition have a reconciliation bill that best accomplishes 
that objective.
  The values implicit in the Democratic leadership's refusal to submit 
a balanced budget are unacceptable. At the same time, I believe that 
the Republican leadership bill goes too far in too many areas and does 
not adequately enough protect some of our most vulnerable citizens.
  The coalition's budget strikes the right balance. It reflects the 
common sense and common values held by most Americans. All of us should 
strongly support it.
  The coalition budget reaches balance in 7 years with a steady 
glidepath of deficit reduction. Value interpretation: Our children and 
grandchildren should be given as much economic opportunity as we were, 
not forced to pay for our irresponsibility.
  The coalition budget requires tough spending cuts before tax rewards. 
Value interpretation: Rewards should come after hard work, not before.
  The coalition budget makes reforms in Medicare to achieve $170 
billion in savings--compared to the Republicans $270 billion and the 
Democratic leadership's $90 billion--to keep the program solvent well 
into the next decade. Value interpretation: Keep promises you've made, 
to both today's and tomorrow's seniors.
  The coalition budget finds a numeric middle ground in Medicaid, 
saving $85 billion from the program for lower-income citizens. Value 
interpretation: Runaway costs must be reigned in, but not at the 
expense of the most vulnerable.
  The coalition budget includes a proposal to significantly reform our 
welfare system. Value interpretation: Balance the compassion imperative 
just mentioned with a sense of personal responsibility, moving people 
from welfare to the work force while including adequate funds for child 
care, job training, and other building blocks necessary to make a 
welfare reform policy more than a pot full of empty promises.
  The coalition budgets maintains support for student loans and 
agriculture. Value interpretation: Treasure, nurture, and develop your 
national resources if you want to remain strong and healthy.
  Finally, the coalition budget includes the only meaningful budget 
enforcement to be found in this debate. Value interpretation: If you 
expect people to believe what you say, you ought to police yourself in 
ways that show you mean it.
  During the debate on the balanced budget amendment, I stood in this 
very well and stressed that our obligation as public servants and to 
the Framers of the Constitution is to ensure that the Federal 
Government live within its means. Prudence and fairness dictate that we 
get down to the business of cutting the deficit as soon as possible and 
not postpone the major portion of the burden until the out years. The 
coalition substitute would leave our children with $159 billion less 
debt than H.R. 2491, my Republican colleagues' bill. That is what this 
debate is about--ensuring a sound financial future for our children and 
grandchildren--not rhetorical comments about partisan politics or 
Presidential elections.
  I remind my colleagues that my voting record speaks volumes about my 
philosophy on tax cuts. I supported the Contract With America tax cut 
package and voted against the President's 1993 tax increases. 
Increasing the amount of income that my constituents retain has always 
been one of my, and should be one of our, top priorities. Taxes should, 
however, only be cut when the hard work of balancing the budget is 
completed. I believe that the final budget agreement will likely 
contain a reduced tax cut. The groundwork to do is also in place as 
indicated by comments of the Speaker and the President.
  The coalition proposal represents the views of the majority of 
Americans and our best opportunity for compromise. Americans want their 
Federal Government to manage its fiscal affairs with the same 
responsibility that they are forced to in private life. Americans want 
the Federal Government to respect their privacy and personal freedoms. 
Americans want the Federal Government to trust their abilities to make 
decisions.
  But, Americans also expect the Federal Government to carry out its 
responsibility to protect the general welfare. The coalition substitute 
does so by being fairer to rural communities, senior citizens, farmers, 
children, and the American family. Our proposal also balances the 
budget in seven years. I believe that such a combination achieves a 
commonsense balance that is essential to guarantee that our long-term 
and short-term economic future is not jeopardized, and I urge its 
adoption.
  The CHAIRMAN. The question is on the amendment in the nature of a 
substitute offered by the gentleman from Utah [Mr. Orton].
  The question was taken; and the Chairman announced that the noes to 
have it.


                             Recorded Vote

  Mr. ORTON. Mr. Chairman, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 72, 
noes 356, answered ``present'' 1, not voting 3, as follows:

                             [Roll No. 741]

                                AYES--72

     Andrews
     Baesler
     Baldacci
     Barcia
     Barrett (WI)
     Beilenson
     Bentsen
     Bishop
     Blute
     Brewster
     Browder
     Brown (CA)
     Cardin
     Chapman
     Clayton
     Condit
     Cramer
     de la Garza
     Dicks
     Dingell
     Dooley
     Duncan
     Eshoo
     Fazio
     Flake
     Furse
     Geren
     Hall (OH)
     Hall (TX)
     Hamilton
     Harman
     Hayes
     Hoyer
     Klug
     Lincoln
     Luther
     Martinez
     Matsui
     McCarthy
     McHale
     Meehan
     Minge
     Montgomery
     Moran
     Morella
     Murtha
     Ortiz
     Orton
     Payne (VA)
     Peterson (FL)
     Peterson (MN)
     Pomeroy
     Poshard
     Richardson
     Roemer
     Sabo
     Sawyer
     Schroeder
     Scott
     Skaggs
     Skelton
     Spratt
     Stenholm
     Tanner
     Taylor (MS)
     Thornton
     Torres
     Vento
     Visclosky
     Volkmer
     Ward
     Wilson

                               NOES--356

     Abercrombie
     Ackerman
     Allard
     Archer
     Armey
     Bachus
     Baker (CA)
     Baker (LA)
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Becerra
     Bereuter
     Berman
     Bevill
     Bilbray
     Bilirakis
     Bliley
     Boehlert
     Boehner
     Bonilla
     Bonior
     Bono
     Borski
     Boucher
     Brown (FL)
     Brown (OH)
     Brownback
     Bryant (TN)
     Bryant (TX)
     Bunn
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Chrysler
     Clay
     Clement
     Clinger
     Clyburn
     Coble
     Coburn
     Coleman
     Collins (GA)

[[Page H11362]]

     Collins (IL)
     Collins (MI)
     Combest
     Conyers
     Cooley
     Costello
     Cox
     Coyne
     Crane
     Crapo
     Cremeans
     Cubin
     Cunningham
     Danner
     Davis
     Deal
     DeFazio
     DeLauro
     DeLay
     Dellums
     Deutsch
     Diaz-Balart
     Dickey
     Dixon
     Doggett
     Doolittle
     Dornan
     Doyle
     Dreier
     Dunn
     Durbin
     Edwards
     Ehlers
     Ehrlich
     Emerson
     Engel
     English
     Ensign
     Evans
     Everett
     Ewing
     Farr
     Fattah
     Fawell
     Fields (LA)
     Fields (TX)
     Filner
     Flanagan
     Foglietta
     Foley
     Forbes
     Ford
     Fowler
     Fox
     Frank (MA)
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Frost
     Funderburk
     Gallegly
     Ganske
     Gejdenson
     Gekas
     Gephardt
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gonzalez
     Goodlatte
     Goodling
     Gordon
     Goss
     Graham
     Green
     Greenwood
     Gunderson
     Gutierrez
     Gutknecht
     Hancock
     Hansen
     Hastert
     Hastings (FL)
     Hastings (WA)
     Hayworth
     Hefley
     Hefner
     Heineman
     Herger
     Hilleary
     Hilliard
     Hinchey
     Hobson
     Hoekstra
     Hoke
     Holden
     Horn
     Hostettler
     Houghton
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Jackson-Lee
     Jacobs
     Jefferson
     Johnson (CT)
     Johnson (SD)
     Johnson, E. B.
     Johnson, Sam
     Johnston
     Jones
     Kanjorski
     Kasich
     Kelly
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kim
     King
     Kingston
     Kleczka
     Klink
     Knollenberg
     Kolbe
     LaFalce
     LaHood
     Lantos
     Largent
     Latham
     LaTourette
     Laughlin
     Lazio
     Leach
     Levin
     Lewis (CA)
     Lewis (GA)
     Lewis (KY)
     Lightfoot
     Linder
     Lipinski
     Livingston
     LoBiondo
     Lofgren
     Longley
     Lowey
     Lucas
     Maloney
     Manton
     Manzullo
     Markey
     Martini
     Mascara
     McCollum
     McCrery
     McDade
     McDermott
     McHugh
     McInnis
     McIntosh
     McKeon
     McKinney
     McNulty
     Meek
     Menendez
     Metcalf
     Meyers
     Mfume
     Mica
     Miller (CA)
     Miller (FL)
     Mink
     Moakley
     Molinari
     Mollohan
     Moorhead
     Myers
     Myrick
     Nadler
     Neal
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Oberstar
     Obey
     Olver
     Owens
     Oxley
     Packard
     Pallone
     Parker
     Pastor
     Paxon
     Payne (NJ)
     Pelosi
     Petri
     Pickett
     Pombo
     Porter
     Portman
     Pryce
     Quillen
     Quinn
     Radanovich
     Rahall
     Ramstad
     Rangel
     Reed
     Regula
     Riggs
     Rivers
     Roberts
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Rose
     Roth
     Roukema
     Roybal-Allard
     Royce
     Rush
     Salmon
     Sanders
     Sanford
     Saxton
     Scarborough
     Schaefer
     Schiff
     Schumer
     Seastrand
     Sensenbrenner
     Serrano
     Shadegg
     Shaw
     Shays
     Shuster
     Skeen
     Slaughter
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Stark
     Stearns
     Stockman
     Stokes
     Studds
     Stump
     Stupak
     Talent
     Tate
     Tauzin
     Taylor (NC)
     Tejeda
     Thomas
     Thompson
     Thornberry
     Thurman
     Tiahrt
     Torkildsen
     Torricelli
     Towns
     Traficant
     Upton
     Velazquez
     Vucanovich
     Waldholtz
     Walker
     Walsh
     Wamp
     Waters
     Watt (NC)
     Watts (OK)
     Waxman
     Weldon (FL)
     Weller
     White
     Whitfield
     Wicker
     Williams
     Wise
     Wolf
     Woolsey
     Wyden
     Wynn
     Yates
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                        ANSWERED ``PRESENT''--1

       
     Kaptur
       

                             NOT VOTING--3

     Sisisky
       Tucker
     Weldon (PA)
  Mrs. CUBIN and Messrs. ALLARD, BACHUS, HEFLEY, McINTOSH, and OBERSTAR 
has changed their vote from ``aye'' to ``no''.
  So the amendment in the nature of a substitute was rejected.
  The result of the vote was announced as above recorded.
  The CHAIRMAN. Under the rule, the Committee rises.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Dreier) having assumed the Chair, Mr. Boehner, Chairman of the 
Committee of the Whole House on the State of the Union, reported that 
that Committee, having had under consideration the bill (H.R. 2491) to 
provide for reconciliation pursuant to section 105 of the concurrent 
resolution on the budget for fiscal year 1996, pursuant to House 
Resolution 245, he reported the bill, as amended pursuant to that rule, 
back to the House.
  The SPEAKER pro tempore (Mr. Dreier). Under the rule, the previous 
question is ordered and the amendment is adopted.
  The question is on the engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


               motion to recommit offered by mr. gephardt

  Mr. GEPHARDT. Mr. Speaker, I offer a motion to recommit.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. GEPHARDT. I am, Mr. Speaker.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Mr. Gephardt moves to recommit the bill H.R. 2491 to the 
     Committee on Budget with instructions to report the same back 
     to the House with modifications to preserve and protect the 
     health and income security of our seniors and our children 
     and to achieve fairness by denying revenue reductions 
     favoring the rich and excluding revenue increases on working 
     class families and to retain Section 5003 relating to federal 
     retirement provisions for Members of Congress and 
     Congressional employees.

  The SPEAKER pro tempore. The gentleman from Missouri [Mr. Gephardt] 
is recognized for 5 minutes.
  Mr. GEPHARDT. Mr. Speaker, let me say, a few moments ago the majority 
leader, my friend, the gentleman from Texas [Mr. Armey] said that for 
60 years we have been steering to the left and that now we should vote 
for a big change and begin to steer to the right. With all respect to 
my friend, I believe we should not be trying to steer left or right but 
we ought to steer together forward, to move this great country forward 
to meet the central challenges of our time.
  What is that? The fact is that America in the last 20 years has 
fallen to sixth in the world in standard of living. The fact is that 
real wages for the middle class in this country have been declining for 
over 20 years, the steepest decline since 1820. The fact is that 
American families are working longer, taking second jobs and part-time 
jobs, having spouses in the work force who did not have to work 20 
years ago. And at the end of all that work, at the end of the month and 
at the end of the year, they have less money to spend than they had 20 
years ago.
  The fact is that in the boom years of the 1980's, two-thirds of all 
the new wealth went to the top 1 percent, while most Americans, the 
bottom 80 percent, saw their income decline in real terms. So that the 
disparity between the people at the top and the rest of America has 
grown larger and wider than it has been in decades.
  Mr. Speaker, we have two problems. We have two challenges. How do we 
get the pie to grow again in this country so we can talk about 
everybody having a larger share of a larger pie; and how, along with 
that, we can decrease the disparity in income so that there is less 
room between the middle class and the people trying to get in the 
middle class and the people at the top. Mr. Speaker, I suggest to my 
colleagues that the budget we are talking about today does not move us 
in the right direction on either of those challenges.
  Let me talk about disparity of income for a moment. This budget we 
are about to vote on decreases the earned income credit for families 
struggling to get in the middle class. In other words, it increases 
taxes on people that are struggling to get in the middle class, people 
earning $25,000 and $30,000 a year. And in the same budget we have a 
tax cut, a massive tax cut for people at the top. It takes my breath 
away. I cannot believe that someone seriously, in 1995, at the same 
time could make those two suggestions simultaneously. It is wrong. It 
is morally wrong. It is economically wrong. It is the wrong thing for 
our country.

  Second, the budget does not address how we make the pie grow again. 
One of our former colleagues from this side of the aisle, Jack Kemp, is 
an eloquent voice for saying that we will never get rid of the deficit 
simply by cutting. We have to also grow our way to balance in the 
budget. I do not agree with a lot of the things that Jack Kemp, our 
former colleague, prescribed, but I think he was right, we have to grow 
our way.
  Are we going to grow our way out of this deficit if we are cutting 
student loans, which is the one way people in the middle class have a 
chance to do better and to advance their young people? Do we make the 
pie grow if we are cutting Medicare and Medicaid, which, in the case of 
Medicaid, is the one way that youngsters, two of five youngsters in the 
country today are on Medicaid. Are they going to have a healthy life, 

[[Page H11363]]

will they be able to produce and be productive citizens in our society 
if we are cutting the very way that they can do that?
  Agriculture. we have had a partnership in agriculture in this country 
for as long as any body can remember, programs to help farming families 
be able to succeed and provide the food and fiber that this society 
needs, which has been part of the secret of having a large and growing 
middle class. Most countries spend more for food and fiber than we do, 
yet this bill takes away those agricultural programs.
  Finally, Mr. Speaker, let me say that I think this budget, more than 
anything that we have dealt with, presents a very clear and different 
vision between these two parties. This budget really presents a 
different vision for America.
  A very prominent Member in the other body said yesterday, ``I was 
there fighting the fight voting against Medicare because we knew it 
would not work in 1965.'' My party, the Democratic party, fought for 
and enacted Medicare in 1965.

                              {time}  1600

  We believe that Medicare has helped the American people probably more 
than anything we as a people have ever done.
  Mr. Speaker, I believe the rhetoric we heard yesterday is really the 
real debate that we ought to be having. If extremes in the Republican 
party really do want to get rid of Medicare and to change it so 
dramatically that it is emasculated, then let us have that debate. Let 
us be proud to bring that difference to the American people.
  If the extremes in the Republican party really believe that the right 
thing to do is to raise taxes on the middle-class and lower taxes 
dramatically on the wealthiest people in this country, then let us have 
that debate between now and 1996.
  Mr. Speaker, I say to the ladies and gentlemen of the House in 
conclusion, this budget and these next 14 or 15 months are about real 
differences and a difference in vision of where this country should go. 
Let the American people decide and I believe they will decide for 
Medicare and for the middle-class of this country, not the wealthiest 
of this country.
  Mr. KASICH. Mr. Chairman, I rise in opposition to the motion to 
recommit.
  Mr. Speaker, this is a great Republican, and frankly we are going to 
have some Democrats, team effort today to try to meet the challenge. It 
is a team effort.
  But, Mr. Speaker, if I could just for a second lodge a personal note, 
I started offering budgets in 1989 with my good friend, the gentleman 
from Connecticut [Mr. Shays] and the support of the gentleman from 
Texas [Mr. Stenholm]. When we did it, we took on the Republican 
President of the United States and the Republican chairman of the 
Committee on the Budget.
  Mr. Speaker, the reason we did it is because we were committed to a 
basic principle that regardless of who was in power, regardless of who 
was in charge, we just had to like tell it like it was.
  We started arguing back in 1989 that we needed to make some hard 
decisions and, frankly, we discovered this: If we would just slow the 
growth in Federal spending, if we would just put the Federal budget on 
a slight diet, we could save the next generation.
  It was not partisan. All over this town, if my colleagues read all 
the scholarly writings and listen to all the analysts and listen to 
politicians of both parties and listen to the presidential candidates 
for the last 20, 30 years, frankly they will hear the same thing: We 
cannot let this continue to go on; we have got to make some hard 
choices, because if we do not, our inability to make choices and put 
the country first will destroy us.

  This is not a matter of conservative or liberal or Democrat or 
Republican. This is a matter of using good common sense, like every 
American family does. We need to establish priorities. We need to 
shrink the size and the scope of the influence of the Federal 
Government. And if, in fact, we put America first, we can get it done.
  This is what all the political commentators have been saying. Do my 
colleagues want to know something? It has been tough to take on the 
sacred cows. The folks that have criticized our program should come 
over here and listen. It is not easy.
  In order to take on the sacred cows, in order to deal with the 
entitlement programs in this country, we have had to walk across some 
very hot coals, have we not colleagues on both sides of the aisle? We 
have had to.
  But we have had the courage to do it, and we promised that this day 
would come. We said that we would finally, once and for all, end the 
smoke and mirrors, end the gimmicks, stop delaying and balance the 
Federal budget.
  Mr. Speaker, they said it could not be done. Here we have before us 
today the Seven Year Balanced Budget Resolution certified by the 
Congressional Budget Office that we, in fact, have met our goal and the 
people of this country should understand that in seven years we will, 
in fact, balance the Federal budget and save this country and save the 
next generation. Why did we do it? Why did we do it? Why did we do it 
and how did it happen?
  Mr. Speaker, I just ask my colleagues to just think about this a 
little bit. First of all, it took courage. Some of my colleagues know 
what it is like to go home and have to take the heat when people do not 
understand all the programs and what we are doing.
  Mr. Speaker, I am proud of these people. I am proud to serve with 
them. Why? It is courage. It is the courage to be willing to put an 
election on the line; do the right thing.
  But the other thing we are missing is why it is being done. We hear 
about polls. I am going to tell my colleagues about the poll I take. I 
started taking it in 1989, and I really took it in 1993, and I really 
took it this year, because I have to listen, I know I talk a lot, but I 
have to listen to my colleagues. Mr. Speaker, when they come back from 
home, know that they are listening to? The people.
  Tip O'Neill talked about the beauty of the House being the House the 
people run. It is true. We get their message later rather than sooner, 
but in the final analysis, the people rule in this House. And when 
Members come back when they came back from the August recess and when 
they came back from the last holiday, what were they were hearing at 
home?'' ``Don't stop. No smoke and mirrors. No gimmicks. Put the 
country first. We want you to do it. Save our children.'' That is what 
they heard and that is why the program is advancing.
  Mr. Speaker, a little about the program. Every time I put these 
charts up we get a thousand calls to the office asking for charts. Mr. 
Speaker, let me tell my colleagues about the program. It 
is unbelievable what we are doing. We are going from $9.5 trillion in 
spending over the last 7 years to $12.1 trillion.

  Some in this House want to grow to $13.3 trillion. I respect them for 
that, but we are not talking about going down; we are talking about 
going up. The debate is not about a $3 trillion increase in spending; 
it is whether we can restrain ourselves for that last trillion dollars; 
whether we can meet the challenge on that last trillion dollars to slow 
the growth of this government so that we, in fact, can balance our 
budget.
  Medicaid. Medicaid is going from 443 to 785. All over America, that 
is an increase. We are going to give the States flexibility. Know what? 
We added a little back to Medicaid today. Why? Because we will be big 
enough to say, if it is too thin, we are going to come in and we are 
going to help. We will be big enough to say it. I asked my colleagues 
on the other side the last time to work with us. We will keep working 
with them.
  Medicare, $926 billion to $1.6 trillion increase over the next 7 
years. How about the per beneficiary? The per beneficiary is going to 
go from 4,800 bucks to 6,700 bucks. The average person in the private 
sector who is not a senior citizen is getting 1,900. We are doing a 
good job by our senior citizens. We are giving them a heck of a lot 
more and they need it and they are going to get it. We are going to 
save the program from bankruptcy.
  One other thing, Mr. Speaker, we are going to stop generational 
transfer that begins to rob the next generation that is about to go to 
work.
  Welfare, 492 to 838. Any way we want to count it, if the Cleveland 
Indians could have a 492 to 838, we would be winning the World Series 
tonight. That 

[[Page H11364]]

is an increase. That is more. If Cleveland had 838 and Atlanta had 492, 
we would be bringing out the champagne in Cleveland tonight. The fact 
is, we are doing better by this program. Bottom line though, again, 
$9.5 trillion to $12.2 trillion.
  Tax cuts. Two schools of thought on tax cuts. Mr. Speaker, to growth 
advocates I would say, want to know something? Your President, our 
President, my President is going to sign a reduction in the capital 
gains tax. I will tell my colleagues why. Because intellectuals, and 
people who simply get up and go to work every day, know we have got to 
provide an incentive for risk-taking, because that creates jobs. We 
will have a lower capital gains tax at the end of this process, because 
it is for creating jobs.
  Number 2, the social advocates, and they are not mutually exclusive, 
number 2, people who are concerned about the American family, they want 
to give the family some back. So, we close the Commerce Department down 
and save $8 billion. We are going to give some of the money back to the 
people who supported that bureaucracy all these years. It makes sense.
  Mr. Speaker, the results at the end of the day? Do not listen to 
these think tanks. Let us not even listen to us. Let us listen to the 
Chairman of the Federal Reserve. Do my colleagues know what he said? In 
simple terms: If we can balance the budget, we will do two things. We 
will destroy the fear in the hearts and minds of mothers and fathers 
that their children will not have a better America than what they had, 
we will eliminate that if we can balance the budget; and, secondly, we 
will unleash a prosperity that we cannot even chart in America.
  It is about growth; it is about the future; it is about the family; 
it is about the next generation; about doing the commonsense things 
that we all believe in and our constituents believe in.

  Finally, Mr. Speaker, we have a process called reconciliation.
  The SPEAKER pro tempore (Mr. Dreier). The Chair wishes to observe 
that the gentleman from Missouri [Mr. Gephardt] was recognized for the 
time that he consumed, which was beyond the 5 minutes. We are extending 
the same courtesy to the gentleman from Ohio [Mr. Kasich], chairman of 
the Committee on the Budget.
  Mr. KASICH. Mr. Speaker, let me finish by saying the word 
``reconciliation'' never made any sense to me. I thought about it this 
morning. If there is anything this country needs, it is reconciliation. 
If there is anything this House needs over the longhaul, it is 
reconciliation.
  Mr. Speaker, I was in the gym with the gentleman from California [Mr. 
Miller] the other night and I said, ``George, you were doing a lot of 
things when you were in power that I thought were not so hot, but I 
liked you anyway, George.'' I said, ``Now we are in power and we are 
doing some things that you do not like. The challenge for you is can 
you still like us?'' Do my colleagues know what the gentleman from 
California said? ``Yes, we can.''
  Mr. Speaker, at the end of the day, and the gentleman from Minnesota 
[Mr. Sabo] reminds me of this every day, at the end of the day, in the 
fourth quarter, we have to have reconciliation with ourselves, with the 
other body, with the administration.
  Mr. Speaker, I will promise my colleagues that one of the leaders on 
this side or this side will ever ask Members to sell out their 
principles. They cannot do it. What I can tell Members is if we can 
talk, if we can communicate, if we can listen, if we can understand one 
another, nothing but good can come from it. Frankly, if we can have 
reconciliation in this House as part of the leadership of this country, 
that will spread to the kind of reconciliation we need in this Nation.
  Republicans and Democrats, let us lay this plan down. Let us pass it. 
Let us save the next generation, and let us begin saving America.
  (By unanimous consent, Mr. Walker was allowed to speak out of order 
for 1 minute.)


  welcome to mr. weldon of pennsylvania upon his return to the house 
                                 floor

  Mr. WALKER. Mr. Speaker, I make this announcement simply to ask the 
House to welcome back our colleague, the gentleman from Pennsylvania 
[Mr. Weldon], who has had open heart surgery just last week and, in 
fact, is here for this historic vote.
  The SPEAKER pro tempore. (Mr. Drier). Without objection, the previous 
question is ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. GEPHARDT. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The vote was taken by electronic device, and there were--yeas 180, 
nays 250, as follows:

                             [Roll No. 742]

                               YEAS--180

     Abercrombie
     Ackerman
     Andrews
     Baldacci
     Barcia
     Barrett (WI)
     Becerra
     Beilenson
     Bentsen
     Berman
     Bevill
     Bishop
     Bonior
     Borski
     Boucher
     Browder
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Bryant (TX)
     Cardin
     Chapman
     Clay
     Clayton
     Clement
     Clyburn
     Coleman
     Collins (IL)
     Collins (MI)
     Conyers
     Costello
     Coyne
     Danner
     de la Garza
     DeFazio
     DeLauro
     Dellums
     Deutsch
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Durbin
     Edwards
     Engel
     Eshoo
     Evans
     Farr
     Fattah
     Fazio
     Fields (LA)
     Filner
     Flake
     Foglietta
     Ford
     Frank (MA)
     Frost
     Furse
     Gejdenson
     Gephardt
     Gibbons
     Gonzalez
     Gordon
     Green
     Gutierrez
     Hall (OH)
     Hamilton
     Harman
     Hastings (FL)
     Hefner
     Hilliard
     Hinchey
     Holden
     Hoyer
     Jackson-Lee
     Jacobs
     Jefferson
     Johnson (SD)
     Johnson, E. B.
     Johnston
     Kanjorski
     Kaptur
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kleczka
     Klink
     LaFalce
     Lantos
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Luther
     Maloney
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy
     McDermott
     McHale
     McKinney
     McNulty
     Meehan
     Meek
     Menendez
     Mfume
     Miller (CA)
     Minge
     Mink
     Moakley
     Mollohan
     Moran
     Murtha
     Nadler
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pastor
     Payne (NJ)
     Pelosi
     Peterson (FL)
     Pomeroy
     Poshard
     Rahall
     Rangel
     Reed
     Richardson
     Rivers
     Roemer
     Rose
     Roybal-Allard
     Rush
     Sabo
     Sanders
     Sawyer
     Schroeder
     Schumer
     Scott
     Serrano
     Skaggs
     Slaughter
     Spratt
     Stark
     Stokes
     Studds
     Stupak
     Tejeda
     Thompson
     Thornton
     Thurman
     Torres
     Torricelli
     Towns
     Traficant
     Velazquez
     Vento
     Visclosky
     Volkmer
     Ward
     Waters
     Watt (NC)
     Waxman
     Williams
     Wilson
     Wise
     Woolsey
     Wyden
     Wynn
     Yates

                               NAYS--250

     Allard
     Archer
     Armey
     Bachus
     Baesler
     Baker (CA)
     Baker (LA)
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Bilbray
     Bilirakis
     Bliley
     Blute
     Boehlert
     Boehner
     Bonilla
     Bono
     Brewster
     Brownback
     Bryant (TN)
     Bunn
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Chrysler
     Clinger
     Coble
     Coburn
     Collins (GA)
     Combest
     Condit
     Cooley
     Cox
     Cramer
     Crane
     Crapo
     Cremeans
     Cubin
     Cunningham
     Davis
     Deal
     DeLay
     Diaz-Balart
     Dickey
     Doolittle
     Dornan
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Ensign
     Everett
     Ewing
     Fawell
     Fields (TX)
     Flanagan
     Foley
     Forbes
     Fowler
     Fox
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Funderburk
     Gallegly
     Ganske
     Gekas
     Geren
     Gilchrest
     Gillmor
     Gilman
     Goodlatte
     Goodling
     Goss
     Graham
     Greenwood
     Gunderson
     Gutknecht
     Hall (TX)
     Hancock
     Hansen
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Heineman
     Herger
     Hilleary
     Hobson
     Hoekstra
     Hoke
     Horn
     Hostettler
     Houghton
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Johnson (CT)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kim
     King
     Kingston
     Klug
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Laughlin
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Lightfoot
     Lincoln
     Linder
     Livingston
     LoBiondo
     Longley
     Lucas
     Manzullo
     Martini
     McCollum
     McCrery
     McDade
     McHugh
     McInnis
     McIntosh
     McKeon
     Metcalf
     Meyers
     Mica
     Miller (FL)
     Molinari
     Montgomery
     Moorhead
     Morella
     Myers
     Myrick
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Orton
     Oxley
     Packard
     Parker
     Paxon
     Payne (VA)
     Peterson (MN)
     Petri
     Pickett

[[Page H11365]]

     Pombo
     Porter
     Portman
     Pryce
     Quillen
     Quinn
     Radanovich
     Ramstad
     Regula
     Riggs
     Roberts
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roth
     Roukema
     Royce
     Salmon
     Sanford
     Saxton
     Scarborough
     Schaefer
     Schiff
     Seastrand
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Shuster
     Skeen
     Skelton
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Stearns
     Stenholm
     Stockman
     Stump
     Talent
     Tanner
     Tate
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Thomas
     Thornberry
     Tiahrt
     Torkildsen
     Upton
     Vucanovich
     Waldholtz
     Walker
     Walsh
     Wamp
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Wolf
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                             NOT VOTING--2

     Sisisky
     Tucker
       

                              {time}  1832

  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore (Mr. Dreier). The question is on the passage 
of the bill.
  Pursuant to House Resolution 245, the yeas and nays are ordered.
  The vote was taken by electronic device, and there were--yeas--227, 
nay 203, not voting 3, as follows:

                             [Roll No 743]

                               YEAS--227

     Allard
     Archer
     Armey
     Bachus
     Baker (CA)
     Baker (LA)
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Bilbray
     Bilirakis
     Bliley
     Blute
     Boehner
     Bonilla
     Bono
     Brownback
     Bryant (TN)
     Bunn
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Chrysler
     Clinger
     Coble
     Coburn
     Collins (GA)
     Combest
     Cooley
     Cox
     Crane
     Crapo
     Cremeans
     Cubin
     Cunningham
     Davis
     Deal
     DeLay
     Diaz-Balart
     Dickey
     Doolittle
     Dornan
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Ensign
     Everett
     Ewing
     Fawell
     Fields (TX)
     Flanagan
     Foley
     Forbes
     Fowler
     Fox
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Funderburk
     Gallegly
     Ganske
     Gekas
     Geren
     Gilchrest
     Gillmor
     Gilman
     Gingrich
     Goodlatte
     Goodling
     Goss
     Graham
     Greenwood
     Gunderson
     Gutknecht
     Hall (TX)
     Hancock
     Hansen
     Hastert
     Hastings (WA)
     Hayworth
     Hefley
     Heineman
     Herger
     Hilleary
     Hobson
     Hoekstra
     Hoke
     Horn
     Hostettler
     Houghton
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Johnson (CT)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kim
     King
     Kingston
     Klug
     Knollenberg
     Kolbe
     Largent
     Latham
     Laughlin
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Lightfoot
     Linder
     Livingston
     Longley
     Lucas
     Manzullo
     Martini
     McCollum
     McCrery
     McDade
     McInnis
     McIntosh
     McKeon
     Metcalf
     Meyers
     Mica
     Miller (FL)
     Molinari
     Montgomery
     Moorhead
     Myers
     Myrick
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Oxley
     Packard
     Parker
     Paxon
     Petri
     Pombo
     Porter
     Portman
     Pryce
     Quillen
     Quinn
     Radanovich
     Ramstad
     Regula
     Riggs
     Roberts
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roth
     Roukema
     Royce
     Salmon
     Sanford
     Schaefer
     Schiff
     Seastrand
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Shuster
     Skeen
     Smith (MI)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Stearns
     Stockman
     Stump
     Talent
     Tate
     Tauzin
     Taylor (NC)
     Thomas
     Thornberry
     Tiahrt
     Torkildsen
     Upton
     Vucanovich
     Waldholtz
     Walker
     Walsh
     Wamp
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Wolf
     Young (AK)
     Young (FL)
     Zeliff

                               NAYS--203

     Abercrombie
     Ackerman
     Andrews
     Baesler
     Baldacci
     Barcia
     Barrett (WI)
     Becerra
     Beilenson
     Bentsen
     Berman
     Bevill
     Bishop
     Boehlert
     Bonior
     Borski
     Boucher
     Brewster
     Browder
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Bryant (TX)
     Cardin
     Chapman
     Clay
     Clayton
     Clement
     Clyburn
     Coleman
     Collins (IL)
     Collins (MI)
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Danner
     de la Garza
     DeFazio
     DeLauro
     Dellums
     Deutsch
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Durbin
     Edwards
     Engel
     Eshoo
     Evans
     Farr
     Fattah
     Fazio
     Fields (LA)
     Filner
     Flake
     Foglietta
     Ford
     Frank (MA)
     Frost
     Furse
     Gejdenson
     Gephardt
     Gibbons
     Gonzalez
     Gordon
     Green
     Gutierrez
     Hall (OH)
     Hamilton
     Harman
     Hastings (FL)
     Hayes
     Hefner
     Hinchey
     Holden
     Hoyer
     Jackson-Lee
     Jacobs
     Jefferson
     Johnson (SD)
     Johnson, E. B.
     Johnston
     Kanjorski
     Kaptur
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kleczka
     Klink
     LaFalce
     LaHood
     Lantos
     LaTourette
     Levin
     Lewis (GA)
     Lincoln
     Lipinski
     LoBiondo
     Lofgren
     Lowey
     Luther
     Maloney
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy
     McDermott
     McHale
     McHugh
     McKinney
     McNulty
     Meehan
     Meek
     Menendez
     Mfume
     Miller (CA)
     Minge
     Mink
     Moakley
     Mollohan
     Moran
     Morella
     Murtha
     Nadler
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Orton
     Owens
     Pallone
     Pastor
     Payne (NJ)
     Payne (VA)
     Pelosi
     Peterson (FL)
     Peterson (MN)
     Pickett
     Pomeroy
     Poshard
     Rahall
     Rangel
     Reed
     Richardson
     Rivers
     Roemer
     Rose
     Roybal-Allard
     Rush
     Sabo
     Sanders
     Sawyer
     Saxton
     Scarborough
     Schroeder
     Schumer
     Scott
     Serrano
     Skaggs
     Skelton
     Slaughter
     Smith (NJ)
     Spratt
     Stark
     Stenholm
     Stokes
     Studds
     Stupak
     Tanner
     Taylor (MS)
     Tejeda
     Thompson
     Thornton
     Thurman
     Torres
     Torricelli
     Towns
     Traficant
     Velazquez
     Vento
     Visclosky
     Volkmer
     Ward
     Waters
     Watt (NC)
     Waxman
     Williams
     Wilson
     Wise
     Woolsey
     Wyden
     Wynn
     Yates
     Zimmer

                             NOT VOTING--3

     Hilliard
     Sisisky
     Tucker

                              {time}  1849

  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

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