[Congressional Record Volume 151, Number 153 (Thursday, November 17, 2005)]
[House]
[Pages H10545-H10620]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     DEFICIT REDUCTION ACT OF 2005

  Mr. NUSSLE. Mr. Speaker, pursuant to House Resolution 560, I ask call 
up the bill (H.R. 4241) to provide for reconciliation pursuant to 
section 201(a) of the concurrent resolution on the budget for fiscal 
year 2006, and ask for its immediate consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 560, the bill 
is considered read and the amendment printed in House Report 109-303, 
as modified, is adopted.
  The text of the bill, as amended, is as follows:

                               H.R. 4241

       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 ``Deficit Reduction Act of 
     2005''.

     SEC. 2. TABLE OF TITLES.

       The table of titles is as follows:

                   TITLE I--COMMITTEE ON AGRICULTURE

           TITLE II--COMMITTEE ON EDUCATION AND THE WORKFORCE

              TITLE III--COMMITTEE ON ENERGY AND COMMERCE

               TITLE IV--COMMITTEE ON FINANCIAL SERVICES

                  TITLE V--COMMITTEE ON THE JUDICIARY

                    TITLE VI--COMMITTEE ON RESOURCES

       TITLE VII--COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                TITLE VIII--COMMITTEE ON WAYS AND MEANS

                   TITLE I--COMMITTEE ON AGRICULTURE

     SECTION 1001. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This title may be cited as the 
     ``Agricultural Reconciliation Act of 2005''.
       (b) Table of Contents.--The table of contents of this title 
     is as follows:

Sec. 1001. Short title; table of contents.

                     Subtitle A--Commodity Programs

Sec. 1101. Percentage reduction in amount of direct payments for 
              covered commodities and peanuts.
Sec. 1102. Reduction in percentage of direct payment amount authorized 
              to be paid in advance.
Sec. 1103. Cotton competitiveness provisions.

                        Subtitle B--Conservation

Sec. 1201. Limitations on use of Commodity Credit Corporation funds to 
              carry out watershed rehabilitation program.
Sec. 1202. Conservation security program.
Sec. 1203. Limitations on use of Commodity Credit Corporation funds to 
              carry out agricultural management assistance program.

                           Subtitle C--Energy

Sec. 1301. Termination of use of Commodity Credit Corporation funds to 
              carry out renewable energy systems and energy efficiency 
              improvements program.

                     Subtitle D--Rural Development

Sec. 1401. Enhanced access to broadband telecommunications services in 
              rural areas.
Sec. 1402. Value-added agricultural product market development grants.
Sec. 1403. Rural business investment program.
Sec. 1404. Rural business strategic investment grants.
Sec. 1405. Rural firefighters and emergency personnel grants.

                          Subtitle E--Research

Sec. 1501. Initiative for Future Food and Agriculture Systems.

                         Subtitle F--Nutrition

Sec. 1601. Eligible households.
Sec. 1602. Availability of commodities for the emergency food 
              assistance program.
Sec. 1603. Residency requirement.
Sec. 1604. Disaster food stamp program.

                     Subtitle A--Commodity Programs

     SEC. 1101. PERCENTAGE REDUCTION IN AMOUNT OF DIRECT PAYMENTS 
                   FOR COVERED COMMODITIES AND PEANUTS.

       (a) Covered Commodities.--Section 1103 of the Farm Security 
     and Rural Investment Act of 2002 (7 U.S.C. 7913) is amended--
       (1) in subsection (c), by striking ``The amount'' and 
     inserting ``Except as provided in subsection (e), the 
     amount''; and
       (2) by adding at the end the following new subsection:
       ``(e) Direct Payment Amount Reduction.--Notwithstanding 
     subsection (c), for the 2006 and 2007 crop years (and the 
     2008 and 2009 crop years if direct payments are provided 
     under this section for those crop years), the Secretary shall 
     reduce the total amount of the direct payment to be paid to 
     the producers on a farm for a covered commodity for the crop 
     year concerned by an amount equal to 1 percent of the direct 
     payment amount otherwise determined for that farm for that 
     covered commodity for that crop year. No reduction shall be 
     made under the authority of this subsection if direct 
     payments are made for the 2010 or any subsequent crop year of 
     a covered commodity.''.
       (b) Peanuts.--Section 1303 of such Act (7 U.S.C. 7953) is 
     amended--
       (1) in subsection (d), by striking ``The amount'' and 
     inserting ``Except as provided in subsection (f), the 
     amount''; and
       (2) by adding at the end the following new subsection:
       ``(f) Direct Payment Amount Reduction.--Notwithstanding 
     subsection (d), for the 2006 and 2007 crops of peanuts (and 
     the 2008 and 2009 crops of peanuts if direct payments are 
     provided under this section for those crops), the Secretary 
     shall reduce the total amount of the direct payment to be 
     paid to the producers on a farm for that crop of peanuts by 
     an amount equal to 1 percent of the direct payment amount 
     otherwise determined for that farm for that crop of peanuts. 
     No reduction shall be made under the authority of this 
     subsection if direct payments are made for the 2010 or any 
     subsequent crop of peanuts.''.

     SEC. 1102. REDUCTION IN PERCENTAGE OF DIRECT PAYMENT AMOUNT 
                   AUTHORIZED TO BE PAID IN ADVANCE.

       (a) Covered Commodities.--Section 1103(d)(2) of the Farm 
     Security and Rural Investment Act of 2002 (7 U.S.C. 
     7913(d)(2)) is amended in the first sentence by striking 
     ``2007 crop years'' and inserting ``2005 crop years and up to 
     40 percent of the direct payment for a covered commodity for 
     each of the 2006 and 2007 crop years''.
       (b) Peanuts.--Section 1303(e)(2) of such Act (7 U.S.C. 
     7953(e)(2)) is amended in the first sentence by striking 
     ``2007 crop years'' and inserting ``2005 crop years and up to 
     40 percent of the direct payment for each of the 2006 and 
     2007 crop years''.

     SEC. 1103. COTTON COMPETITIVENESS PROVISIONS.

       (a) Repeal of Authority to Issue Cotton User Marketing 
     Certificates.--Section 1207 of the Farm Security and Rural 
     Investment Act of 2002 (7 U.S.C. 7937) is amended--
       (1) by striking the section heading and inserting the 
     following: ``UPLAND COTTON IMPORT QUOTAS.'';
       (2) by striking subsection (a);
       (3) by redesignating subsections (b) and (c) as subsections 
     (a) and (b), respectively;
       (4) in subsection (a), as so redesignated--
       (A) in paragraph (1)--
       (i) in subparagraph (B), by striking ``, adjusted for the 
     value of any certificate issued under subsection (a),''; and
       (ii) in subparagraph (C), by striking ``, for the value of 
     any certificates issued under subsection (a)''; and
       (B) in paragraph (4), by striking ``subsection (c)'' and 
     inserting ``subsection (b)''; and
       (5) in subsection (b)(2), as so redesignated, by striking 
     ``subsection (b)'' and inserting ``subsection (a)''.
       (b) Conforming Amendment.--Section 136 of the Federal 
     Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 
     7236) is repealed.
       (c) Effective Date.--The amendments made by this section 
     take effect on August 1, 2006.

                        Subtitle B--Conservation

     SEC. 1201. LIMITATIONS ON USE OF COMMODITY CREDIT CORPORATION 
                   FUNDS TO CARRY OUT WATERSHED REHABILITATION 
                   PROGRAM.

       (a) Fiscal Year 2007 Funding.--Subparagraph (E) of section 
     14(h)(1) of the Watershed Protection and Flood Prevention Act 
     (16 U.S.C. 1012(h)(1)) is amended by striking ``$65,000,000'' 
     and inserting ``$50,000,000''.
       (b) Termination of Multi-Year Availability of Funds.--Such 
     section is further amended by striking ``, to remain 
     available until expended'' in the matter preceding 
     subparagraph (A).
       (c) Rescission of Unobligated Prior-Year Funds.--Funds 
     previously made available under such section for a fiscal 
     year and unobligated as of September 30, 2006, are hereby 
     rescinded effective on that date.

     SEC. 1202. CONSERVATION SECURITY PROGRAM.

       (a) Funding.--Section 1241(a) of the Food Security Act of 
     1985 (16 U.S.C. 3841(a)) is amended--
       (1) in the matter before paragraph (1), by striking ``For'' 
     and inserting ``Except as otherwise provided in this 
     subsection, for''; and
       (2) in paragraph (3), by striking ``not more than 
     $6,037,000,000'' and all that follows through ``2014.'' and 
     inserting the following:
      ``not more than--
       ``(A) $2,213,000,000 for the period of fiscal years 2006 
     through 2010; and
       ``(B) $5,729,000,000 for the period of fiscal years 2006 
     through 2015.''.
       (b) Duration.--Section 1238A(a) of such Act (16 U.S.C. 
     3838a(a)) is amended by striking ``2007'' and inserting 
     ``2011''.

     SEC. 1203. LIMITATIONS ON USE OF COMMODITY CREDIT CORPORATION 
                   FUNDS TO CARRY OUT AGRICULTURAL MANAGEMENT 
                   ASSISTANCE PROGRAM.

       Section 524(b)(4)(B) of the Federal Crop Insurance Act (7 
     U.S.C. 1524(b)(4)(B)) is amended--

[[Page H10546]]

       (1) in clause (i), by inserting before the period at the 
     end the following: ``, except fiscal years 2007 through 
     2010''; and
       (2) in clauses (ii) and (iii), by striking ``2007'' both 
     places it appears and inserting ``2006''.

                           Subtitle C--Energy

     SEC. 1301. TERMINATION OF USE OF COMMODITY CREDIT CORPORATION 
                   FUNDS TO CARRY OUT RENEWABLE ENERGY SYSTEMS AND 
                   ENERGY EFFICIENCY IMPROVEMENTS PROGRAM.

       Section 9006(f) of the Farm Security and Rural Investment 
     Act of 2002 (7 U.S.C. 8106(f)) is amended by striking 
     ``2007'' and inserting ``2006''.

                     Subtitle D--Rural Development

     SEC. 1401. ENHANCED ACCESS TO BROADBAND TELECOMMUNICATIONS 
                   SERVICES IN RURAL AREAS.

       (a) Termination of Fiscal Year 2007 Funding.--Subparagraph 
     (B) of section 601(j)(1) of the Rural Electrification Act of 
     1936 (7 U.S.C. 950bb(j)(1)) is amended by striking ``for each 
     of fiscal years 2006 and 2007'' and inserting ``for fiscal 
     year 2006''.
       (b) Termination of Multi-Year Availability of Funds.--Such 
     section is further amended by striking ``, to remain 
     available until expended'' both places it appears.
       (c) Rescission of Unobligated Prior-Year Funds.--Funds 
     previously made available under such section for a fiscal 
     year and unobligated as of September 30, 2006, are hereby 
     rescinded effective on that date.

     SEC. 1402. VALUE-ADDED AGRICULTURAL PRODUCT MARKET 
                   DEVELOPMENT GRANTS.

       (a) Termination of Fiscal Year 2007 Funding.--Section 
     231(b)(4) of the Agricultural Risk Protection Act of 2000 
     (Public Law 106-224; 7 U.S.C. 1621 note) is amended by 
     striking ``October 1, 2006'' and inserting ``October 1, 
     2005''.
       (b) Termination of Multi-Year Availability of Funds.--Such 
     section is further amended by striking ``, to remain 
     available until expended''.
       (c) Rescission of Unobligated Prior-Year Funds.--Funds 
     previously made available under such section for a fiscal 
     year and unobligated as of September 30, 2006, are hereby 
     rescinded effective on that date.

     SEC. 1403. RURAL BUSINESS INVESTMENT PROGRAM.

       (a) Termination of Fiscal Year 2007 and Subsequent 
     Funding.--Subsection (a)(1) of section 384S of the 
     Consolidated Farm and Rural Development Act (7 U.S.C. 2009cc-
     18) is amended by inserting after ``necessary'' the 
     following: ``through fiscal year 2006''.
       (b) Termination of Multi-Year Availability of Funds.--Such 
     section is further amended--
       (1) by striking ``(a) In General.--''; and
       (2) by striking subsection (b).
       (c) Rescission of Unobligated Prior-Year Funds.--Funds 
     previously made available under such section and unobligated 
     as of September 30, 2006, are hereby rescinded effective on 
     that date.

     SEC. 1404. RURAL BUSINESS STRATEGIC INVESTMENT GRANTS.

       (a) Termination of Multi-Year Availability of Funds.--
     Subsection (a) of section 385E of the Consolidated Farm and 
     Rural Development Act (7 U.S.C. 2009dd-4) is amended by 
     striking ``, to remain available until expended,''.
       (b) Rescission of Unobligated Prior-Year Funds.--Funds 
     previously made available under such section and unobligated 
     as of September 30, 2006, are hereby rescinded effective on 
     that date.

     SEC. 1405. RURAL FIREFIGHTERS AND EMERGENCY PERSONNEL GRANTS.

       (a) Termination of Fiscal Year 2007 Funding.--Section 
     6405(c) of the Farm Security and Rural Investment Act of 2002 
     (7 U.S.C. 2655(c)) is amended by striking ``2007'' and 
     inserting ``2006''.
       (b) Termination of Multi-Year Availability of Funds.--Such 
     section is further amended by striking ``, to remain 
     available until expended''.
       (c) Rescission of Unobligated Prior-Year Funds.--Funds 
     previously made available under such section for a fiscal 
     year and unobligated as of September 30, 2006, are hereby 
     rescinded effective on that date.

                          Subtitle E--Research

     SEC. 1501. INITIATIVE FOR FUTURE FOOD AND AGRICULTURE 
                   SYSTEMS.

       (a) Termination of Fiscal Year 2007, 2008, and 2009 
     Transfers.--Subsection (b)(3)(D) of section 401 of the 
     Agricultural Research, Extension, and Education Reform Act of 
     1998 (7 U.S.C. 7621) is amended by striking ``2006'' and 
     inserting ``2009''.
       (b) Termination of Multi-Year Availability of Fiscal Year 
     2006 Funds.--Paragraph (6) of subsection (f) of such section 
     is amended to read as follows:
       ``(6) Availability of funds.--
       ``(A) Two-year availability.--Except as provided in 
     subparagraph (B), funds for grants under this section shall 
     be available to the Secretary for obligation for a 2-year 
     period beginning on the date of the transfer of the funds 
     under subsection (b).
       ``(B) Exception for fiscal year 2006 transfer.--In the case 
     of the funds required to be transferred by subsection 
     (b)(3)(C), the funds shall be available to the Secretary for 
     obligation for the 1-year period beginning on October 1, 
     2005.''.

                         Subtitle F--Nutrition

     SEC. 1601. ELIGIBLE HOUSEHOLDS.

       ``(a) Eligible Households.--The Food Stamp Act of 1977 (7 
     U.S.C. 2011 et seq.) is amended--
       ``(1) in section 5----
       ``(A) in the 2d sentence of subsection (a); and
       ``(B) in subsection (j);
     by striking `receives benefits' each place it appears and 
     inserting `in fiscal years 2006 through 2010 receives cash 
     assistance, and in any other fiscal year receives benefits,';
       ``(2) in section 5(a) by adding at the end the following:

     `Notwithstanding any other provisions of this Act except 
     sections 6(b), 6(d)(2), and 6(g) and section 3(i)(4), 
     households in which each member receives substantial and 
     ongoing noncash benefits under a State program funded under 
     part A of title IV of the Social Security Act (42 U.S.C. 601 
     et seq.) provided for purposes of shelter, utilities, child 
     care, health care, transportation, or job training, and that 
     have a monthly income that does not exceed (before the 
     exclusions and deductions provided for in subsections (d) and 
     (e)) 150 percent of the poverty line, as defined in section 
     673(2) of the Community Services Block Grant Act (42 U.S.C. 
     9902(2)), for the forty-eight contiguous States and the 
     District of Columbia, Alaska, Hawaii, the Virgin Islands of 
     the United States, and Guam, respectively, shall be eligible 
     to participate in the food stamp program.'; and
       ``(3) in section 5(j) by adding at the end the following:

     `Notwithstanding subsections (a) through (i), a State agency 
     shall consider a member of a household in which each 
     household member receives substantial and ongoing noncash 
     benefits under a State program funded under part A of title 
     IV of the Social Security Act (42 U.S.C. 601 et seq.) 
     provided for purposes of shelter, utilities, child care, 
     health care, transportation, or job training, and which has a 
     monthly income that does not exceed (before the exclusions 
     and deductions provided for in subsections (d) and (e)) 150 
     percent of the poverty line, as defined in section 673(2) of 
     the Community Services Block Grant Act (42 U.S.C. 9902(2)), 
     for the forty-eight contiguous States and the District of 
     Columbia, Alaska, Hawaii, the Virgin Islands of the United 
     States, and Guam, respectively, to have satisfied the 
     resource limitations prescribed under subsection (g).'.''
       (b) Extensions.--The Food Stamp Act of 1977 (7 U.S.C. 2011 
     et seq.) is amended in--
       (1) section 11(t)(1);
       (2) section 16--
       (A) in subparagraphs (A)(vii) and (E)(i) of subsection 
     (h)(1); and
       (B) in subparagraphs (A) and(B)(ii) of subsection (k)(3);
       (3) section 17(b)(1)(B)(vi);
       (4) section 18(a); and
       (5) section 19(a)(2)(A)(ii);

     by striking ``2007'' each place it appears and inserting 
     ``2011''.

     SEC. 1602. AVAILABILITY OF COMMODITIES FOR THE EMERGENCY FOOD 
                   ASSISTANCE PROGRAM.

        Section 27(a) of the Food Stamp Act of 1977 (7 U.S.C. 
     2036(a)) is amended--
       (1) by striking ``2007,'' and inserting ``2005 and for each 
     of the fiscal years 2007 through 2011'';
       (2) by inserting ``, and for fiscal year 2006 the Secretary 
     shall purchase $152,000,000,'' before ``of a variety''; and
       (3) by adding at the end the following:
     ``Of the funds used to purchase commodities in accordance 
     with this subsection for fiscal year 2006, $12,000,000 shall 
     be used to purchase commodities for distribution to States 
     that received a Presidential designation of a major disaster 
     under the Robert T. Stafford Disaster Relief and Emergency 
     Assistance Act (42 U.S.C. 5121-5206) as a result of Hurricane 
     Katrina or Hurricane Rita and States contiguous to those 
     States.''.

     SEC. 1603. RESIDENCY REQUIREMENT.

       Section 402(a)(2)(L) of the Personal Responsibility and 
     Work Opportunity Reconciliation Act of 1996 (8 U.S.C. 
     1612(a)(2)(L)) is amended by striking ``5 years or more'' and 
     inserting ``7 years or more effective until September 30, 
     2010, and for a period of 5 years or more beginning'' and 
     inserting the following:
       ``for a period--
       ``(1) effective until September 30, 2010--
       ``(A) for an alien--
       ``(i)(I) who is 60 years of age or older;
       or
       ``(II) with respect to whom--
       ``(aa) an application for naturalization under Immigration 
     and Nationality Act is approved; or
       ``(bb) such application is pending under such Act and no 
     previous application for naturalization has been rejected 
     under such Act; and
       ``(ii) who is a member of a household that receives food 
     stamp benefits; as of the date of the enactment of the 
     Agricultural Reconciliation Act of 2005, of 5 years or more; 
     and
       ``(B) for an alien with respect to whom subparagraph (A) 
     does not apply, of 7 years or more; and
       ``(2) effective beginning on October 1, 2010, of 5 years or 
     more;
       beginning''.

       (c) Certification for School Lunch Program.--Section 9 of 
     the Richard B. Russell National School Lunch Act (42 U.S.C. 
     1758) is amended--
       (1) in subsection (b)(12)--
       (A) in subparagraph (A)--
       (i) in clause (v), by striking ``; or'' and inserting a 
     semicolon;
       (ii) in clause (vi), by striking the period and inserting 
     ``; or''; and
       (iii) by adding at the end the following new clause:

[[Page H10547]]

       ``(vii) a member of a household in which each member 
     receives or is eligible to receive non-cash or in-kind 
     benefits under a State program funded under part A of title 
     IV of the Social Security Act (42 U.S.C. 601 et seq.), and 
     requires participants to have a gross monthly income at or 
     below 200 percent of the Federal poverty level.''; and
       (B) in subparagraph (B), by striking ``or assistance'' and 
     inserting ``, benefits, or assistance''; and
       (2) in subsection (d)(2)--
       (A) in subparagraph (D), by striking ``; or'' and inserting 
     a semicolon;
       (B) in subparagraph (E), by striking the period and 
     inserting ``; or''; and
       (C) by adding at the end the following:
       ``(F) documentation has been provided to the local 
     educational agency showing that the household is one in which 
     each member receives or is eligible to receive non-cash or 
     in-kind benefits under a State program funded under part A of 
     title IV of the Social Security Act (42 U.S.C. 601 et seq.), 
     and requires participants to have a gross monthly income at 
     or below 200 percent of the Federal poverty level.''.

     SEC. 1604. DISASTER FOOD STAMP PROGRAM.

       Notwithstanding section 16(a) of the Food Stamp Act of 1977 
     (7 U.S.C. 2025(a)), the Secretary of Agriculture is 
     authorized, at the discretion of the Secretary, to pay to 
     State agencies 100 percent of the administrative costs 
     incurred in the certification of, and issuance of benefits 
     to, applicant households that become eligible to receive food 
     stamp benefits under the disaster food stamp program 
     eligibility standards in effect during the Presidentially 
     declared emergency in response to Hurricane Katrina or 
     Hurricane Rita.

           TITLE II--COMMITTEE ON EDUCATION AND THE WORKFORCE

     SECTION 2000. TABLE OF CONTENTS.

       The table of contents of this title is as follows:

           TITLE II--COMMITTEE ON EDUCATION AND THE WORKFORCE

Sec. 2000. Table of contents.

                       Subtitle A--Welfare Reform

                    Part 1--Short title; references

Sec. 2001. Short title.
Sec. 2002. References.

                              Part 2--TANF

Sec. 2011. Universal engagement and family self-sufficiency plan 
              requirements.
Sec. 2012. Work participation requirements.
Sec. 2013. Work-related performance improvement.
Sec. 2014. Report on coordination.
Sec. 2015. Fatherhood program.
Sec. 2016. State option to make TANF programs mandatory partners with 
              one-stop employment training centers.
Sec. 2017. Sense of the Congress.
Sec. 2018. Prohibition on offshoring.

                           Part 3--Child Care

Sec. 2021. Short title.
Sec. 2022. Goals.
Sec. 2023. Authorization of appropriations.
Sec. 2024. Application and plan.
Sec. 2025. Activities to improve the quality of child care.
Sec. 2026. Reports and audits.
Sec. 2027. Report by Secretary.
Sec. 2028. Definitions.
Sec. 2029. Waiver authority to expand the availability of services 
              under Child Care and Development Block Grant Act of 1990.

                  Part 4--State and Local Flexibility

Sec. 2041. Program coordination demonstration projects.

                         Part 5--Effective Date

Sec. 2051. Effective date.

                      Subtitle B--Higher Education

Sec. 2101. Short title.

         Part 1--Amendments to the Higher Education Act of 1965

Sec. 2111. References; effective date.
Sec. 2112. Modification of 50/50 Rule.
Sec. 2113. Reauthorization of Federal Family Education Loan Program.
Sec. 2114. Loan limits.
Sec. 2115. Interest rates and special allowances.
Sec. 2116. Additional loan terms and conditions.
Sec. 2117. Consolidation loan changes.
Sec. 2118. Deferment of student loans for military service.
Sec. 2119. Loan forgiveness for service in areas of national need.
Sec. 2120. Unsubsidized Stafford loans.
Sec. 2121. Elimination of termination dates from Taxpayer-Teacher 
              Protection Act of 2004.
Sec. 2122. Loan fees from lenders.
Sec. 2123. Additional administrative provisions.
Sec. 2124. Funds for administrative expenses.
Sec. 2125. Significantly simplifying the student aid application 
              process.
Sec. 2126. Additional need analysis amendments.
Sec. 2127. Definition of eligible program.
Sec. 2128. Distance education.
Sec. 2129. Student eligibility.
Sec. 2130. Institutional refunds.
Sec. 2131. College access initiative.
Sec. 2132. Cancellation of Student Loan Indebtedness For Survivors of 
              Victims of the September 11, 2001, Attacks.
Sec. 2133. Independent evaluation of distance education programs.
Sec. 2134. Disbursement of student loans.

                    Part 2--Higher education relief

Sec. 2141. References.
Sec. 2142. Waivers and modifications.
Sec. 2143. Cancellation of institutional repayment by colleges and 
              universities affected by a Gulf hurricane disaster.
Sec. 2144. Cancellation of student loans for cancelled enrollment 
              periods.
Sec. 2145. Temporary deferment of student loan repayment.
Sec. 2146. No affect on grant and loan limits.
Sec. 2147. Teacher loan relief.
Sec. 2148. Expanding information dissemination regarding eligibility 
              for Pell Grants.
Sec. 2149. Procedures.
Sec. 2150. Termination of authority.
Sec. 2151. Definitions.

                          Subtitle C--Pensions

Sec. 2201. Increases in PBGC premiums.

                       Subtitle A--Welfare Reform

                    PART 1--SHORT TITLE; REFERENCES

     SEC. 2001. SHORT TITLE.

       This subtitle may be cited as the ``Personal 
     Responsibility, Work, and Family Promotion Act of 2005''.

     SEC. 2002. REFERENCES.

       Except as otherwise expressly provided, wherever in this 
     subtitle an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a section or other provision, the 
     amendment or repeal shall be considered to be made to a 
     section or other provision of the Social Security Act.

                              PART 2--TANF

     SEC. 2011. UNIVERSAL ENGAGEMENT AND FAMILY SELF-SUFFICIENCY 
                   PLAN REQUIREMENTS.

       (a) Modification of State Plan Requirements.--Section 
     402(a)(1)(A) (42 U.S.C. 602(a)(1)(A)) is amended by striking 
     clauses (ii) and (iii) and inserting the following:
       ``(ii) Require a parent or caretaker receiving assistance 
     under the program to engage in work or alternative self-
     sufficiency activities (as defined by the State), consistent 
     with section 407(e)(2).
       ``(iii) Require families receiving assistance under the 
     program to engage in activities in accordance with family 
     self-sufficiency plans developed pursuant to section 
     408(b).''.
       (b) Establishment of Family Self-Sufficiency Plans.--
       (1) In general.--Section 408(b) (42 U.S.C. 608(b)) is 
     amended to read as follows:
       ``(b) Family Self-Sufficiency Plans.--
       ``(1) In general.--A State to which a grant is made under 
     section 403 shall--
       ``(A) assess, in the manner deemed appropriate by the 
     State, the skills, prior work experience, and employability 
     of each work-eligible individual (as defined in section 
     407(b)(2)(C)) receiving assistance under the State program 
     funded under this part;
       ``(B) establish for each family that includes such an 
     individual, in consultation as the State deems appropriate 
     with the individual, a self-sufficiency plan that specifies 
     appropriate activities described in the State plan submitted 
     pursuant to section 402, including direct work activities as 
     appropriate designed to assist the family in achieving their 
     maximum degree of self-sufficiency, and that provides for the 
     ongoing participation of the individual in the activities;
       ``(C) require, at a minimum, each such individual to 
     participate in activities in accordance with the self-
     sufficiency plan;
       ``(D) monitor the participation of each such individual in 
     the activities specified in the self-sufficiency plan, and 
     regularly review the progress of the family toward self-
     sufficiency;
       ``(E) upon such a review, revise the self-sufficiency plan 
     and activities as the State deems appropriate.
       ``(2) Timing.--The State shall comply with paragraph (1) 
     with respect to a family--
       ``(A) in the case of a family that, as of October 1, 2005, 
     is not receiving assistance from the State program funded 
     under this part, not later than 60 days after the family 
     first receives assistance on the basis of the most recent 
     application for the assistance; or
       ``(B) in the case of a family that, as of such date, is 
     receiving the assistance, not later than 12 months after the 
     date of enactment of this subsection.
       ``(3) State discretion.--A State shall have sole 
     discretion, consistent with section 407, to define and design 
     activities for families for purposes of this subsection, to 
     develop methods for monitoring and reviewing progress 
     pursuant to this subsection, and to make modifications to the 
     plan as the State deems appropriate to assist the individual 
     in increasing their degree of self-sufficiency.
       ``(4) Rule of interpretation.--Nothing in this part shall 
     preclude a State from--
       ``(A) requiring participation in work and any other 
     activities the State deems appropriate for helping families 
     achieve self-sufficiency and improving child well-being; or
       ``(B) using job search or other appropriate job readiness 
     or work activities to assess the employability of individuals 
     and to determine appropriate future engagement activities.''.
       (2) Penalty for failure to establish family self-
     sufficiency plan.--Section 409(a)(3) (42 U.S.C. 609(a)(3)) is 
     amended--
       (A) in the paragraph heading, by inserting ``or establish 
     family self-sufficiency plan'' after ``Rates''; and
       (B) in subparagraph (A), by inserting ``or 408(b)'' after 
     ``407(a)''.

[[Page H10548]]

     SEC. 2012. WORK PARTICIPATION REQUIREMENTS.

       (a) Elimination of Separate Participation Rate Requirements 
     for 2-Parent Families.--
       (1) Section 407 (42 U.S.C. 607) is amended in each of 
     subsections (a) and (b) by striking paragraph (2).
       (2) Section 407(b)(4) (42 U.S.C. 607(b)(4)) is amended by 
     striking ``paragraphs (1)(B) and (2)(B)'' and inserting 
     ``paragraph (1)(B)''.
       (3) Section 407(c)(1) (42 U.S.C. 607(c)(1)) is amended by 
     striking subparagraph (B).
       (4) Section 407(c)(2)(D) (42 U.S.C. 607(c)(2)(D)) is 
     amended by striking ``paragraphs (1)(B)(i) and (2)(B) of 
     subsection (b)'' and inserting ``subsection (b)(1)(B)(i)''.
       (b) Work Participation Requirements.--Section 407 (42 
     U.S.C. 607) is amended by striking all that precedes 
     subsection (b)(3) and inserting the following:

     ``SEC. 407. WORK PARTICIPATION REQUIREMENTS.

       ``(a) Participation Rate Requirements.--A State to which a 
     grant is made under section 403 for a fiscal year shall 
     achieve a minimum participation rate equal to not less than--
       ``(1) 50 percent for fiscal year 2006;
       ``(2) 55 percent for fiscal year 2007;
       ``(3) 60 percent for fiscal year 2008;
       ``(4) 65 percent for fiscal year 2009; and
       ``(5) 70 percent for fiscal year 2010 and each succeeding 
     fiscal year.
       ``(b) Calculation of Participation Rates.--
       ``(1) Average monthly rate.--For purposes of subsection 
     (a), the participation rate of a State for a fiscal year is 
     the average of the participation rates of the State for each 
     month in the fiscal year.
       ``(2) Monthly participation rates; incorporation of 40-hour 
     work week standard.--
       ``(A) In general.--For purposes of paragraph (1), the 
     participation rate of a State for a month is--
       ``(i) the total number of countable hours (as defined in 
     subsection (c)) with respect to the counted families for the 
     State for the month; divided by
       ``(ii) 160 multiplied by the number of counted families for 
     the State for the month.
       ``(B) Counted families defined.--
       ``(i) In general.--In subparagraph (A), the term `counted 
     family' means, with respect to a State and a month, a family 
     that includes a work-eligible individual and that receives 
     assistance in the month under the State program funded under 
     this part, subject to clause (ii).
       ``(ii) State option to exclude certain families.--At the 
     option of a State, the term `counted family' shall not 
     include--

       ``(I) a family in the first month for which the family 
     receives assistance from a State program funded under this 
     part on the basis of the most recent application for such 
     assistance;
       ``(II) on a case-by-case basis, a family in which the 
     youngest child has not attained 12 months of age; or
       ``(III) a family that is subject to a sanction under this 
     part or part D, but that has not been subject to such a 
     sanction for more than 3 months (whether or not consecutive) 
     in the preceding 12-month period.

       ``(iii) State option to include individuals receiving 
     assistance under a tribal family assistance plan or tribal 
     work program.--At the option of a State, the term `counted 
     family' may include families in the State that are receiving 
     assistance under a tribal family assistance plan approved 
     under section 412 or under a tribal work program to which 
     funds are provided under this part.
       ``(C) Work-eligible individual defined.--In this section, 
     the term `work-eligible individual' means an individual--
       ``(i) who is married or a single head of household; and
       ``(ii) whose needs are (or, but for sanctions under this 
     part or part D, would be) included in determining the amount 
     of cash assistance to be provided to the family under the 
     State program funded under this part.''.
       (c) Recalibration of Caseload Reduction Credit.--
       (1) In general.--Section 407(b)(3)(A)(ii) (42 U.S.C. 
     607(b)(3)(A)(ii)) is amended to read as follows:
       ``(ii) the average monthly number of families that received 
     assistance under the State program funded under this part 
     during the base year.''.
       (2) Conforming amendment.--Section 407(b)(3)(B) (42 U.S.C. 
     607(b)(3)(B)) is amended by striking ``and eligibility 
     criteria'' and all that follows through the close parenthesis 
     and inserting ``and the eligibility criteria in effect during 
     the then applicable base year''.
       (3) Base year defined.--Section 407(b)(3) (42 U.S.C. 
     607(b)(3)) is amended by adding at the end the following:
       ``(C) Base year defined.--In this paragraph, the term `base 
     year' means, with respect to a fiscal year--
       ``(i) if the fiscal year is fiscal year 2006, fiscal year 
     1996;
       ``(ii) if the fiscal year is fiscal year 2007, fiscal year 
     1998;
       ``(iii) if the fiscal year is fiscal year 2008, fiscal year 
     2001; or
       ``(iv) if the fiscal year is fiscal year 2009 or any 
     succeeding fiscal year, the then 4th preceding fiscal 
     year.''.
       (d) Superachiever Credit.--Section 407(b) (42 U.S.C. 
     607(b)) is amended by striking paragraphs (4) and (5) and 
     inserting the following:
       ``(4) Superachiever credit.--
       ``(A) In general.--The participation rate, determined under 
     paragraphs (1) and (2) of this subsection, of a superachiever 
     State for a fiscal year shall be increased by the lesser of--
       ``(i) the amount (if any) of the superachiever credit 
     applicable to the State; or
       ``(ii) the number of percentage points (if any) by which 
     the minimum participation rate required by subsection (a) for 
     the fiscal year exceeds 50 percent.
       ``(B) Superachiever state.--For purposes of subparagraph 
     (A), a State is a superachiever State if the State caseload 
     for fiscal year 2001 has declined by at least 60 percent from 
     the State caseload for fiscal year 1995.
       ``(C) Amount of credit.--The superachiever credit 
     applicable to a State is the number of percentage points (if 
     any) by which the decline referred to in subparagraph (B) 
     exceeds 60 percent.
       ``(D) Definitions.--In this paragraph:
       ``(i) State caseload for fiscal year 2001.--The term `State 
     caseload for fiscal year 2001' means the average monthly 
     number of families that received assistance during fiscal 
     year 2001 under the State program funded under this part.
       ``(ii) State caseload for fiscal year 1995.--The term 
     `State caseload for fiscal year 1995' means the average 
     monthly number of families that received aid under the State 
     plan approved under part A (as in effect on September 30, 
     1995) during fiscal year 1995.''.
       (e) Countable Hours.--Section 407 (42 U.S.C. 607) is 
     amended by striking subsections (c) and (d) and inserting the 
     following:
       ``(c) Countable Hours.--
       ``(1) Definition.--In subsection (b)(2), the term 
     `countable hours' means, with respect to a family for a 
     month, the total number of hours in the month in which any 
     member of the family who is a work-eligible individual is 
     engaged in a direct work activity or other activities 
     specified by the State (excluding an activity that does not 
     address a purpose specified in section 401(a)), subject to 
     the other provisions of this subsection.
       ``(2) Limitations.--Subject to such regulations as the 
     Secretary may prescribe:
       ``(A) Minimum weekly average of 24 hours of direct work 
     activities required.--If the work-eligible individuals in a 
     family are engaged in a direct work activity for an average 
     total of fewer than 24 hours per week in a month, then the 
     number of countable hours with respect to the family for the 
     month shall be zero.
       ``(B) Maximum weekly average of 16 hours of other 
     activities.--An average of not more than 16 hours per week of 
     activities specified by the State (subject to the exclusion 
     described in paragraph (1)) may be considered countable hours 
     in a month with respect to a family.
       ``(3) Special rules.--For purposes of paragraph (1):
       ``(A) Participation in qualified activities.--
       ``(i) In general.--If, with the approval of the State, the 
     work-eligible individuals in a family are engaged in 1 or 
     more qualified activities for an average total of at least 24 
     hours per week in a month, then all such engagement in the 
     month shall be considered engagement in a direct work 
     activity, subject to clause (iii).
       ``(ii) Qualified activity defined.--The term `qualified 
     activity' means an activity specified by the State (subject 
     to the exclusion described in paragraph (1)) that meets such 
     standards and criteria as the State may specify, including--

       ``(I) substance abuse counseling or treatment;
       ``(II) rehabilitation treatment and services;
       ``(III) work-related education or training directed at 
     enabling the family member to work;
       ``(IV) job search or job readiness assistance; and
       ``(V) any other activity that addresses a purpose specified 
     in section 401(a).

       ``(iii) Limitation.--

       ``(I) In general.--Except as provided in subclause (II), 
     clause (i) shall not apply to a family for more than 3 months 
     in any period of 24 consecutive months.
       ``(II) Special rule applicable to education and training.--
     A State may, on a case-by-case basis, apply clause (i) to a 
     work-eligible individual so that participation by the 
     individual in education or training, if needed to permit the 
     individual to complete a certificate program or other work-
     related education or training directed at enabling the 
     individual to fill a known job need in a local area, may be 
     considered countable hours with respect to the family of the 
     individual for not more than 4 months in any period of 24 
     consecutive months.

       ``(B) School attendance by teen head of household.--The 
     work-eligible members of a family shall be considered to be 
     engaged in a direct work activity for an average of 40 hours 
     per week in a month if the family includes an individual who 
     is married, or is a single head of household, who has not 
     attained 20 years of age, and the individual--
       ``(i) maintains satisfactory attendance at secondary school 
     or the equivalent in the month; or
       ``(ii) participates in education directly related to 
     employment for an average of at least 20 hours per week in 
     the month.
       ``(C) Parental participation in schools.--Each work-
     eligible individual in a family shall make verified visits at 
     least twice per school year to the school of each of the 
     individual's minor dependent children required to attend 
     school under the law of the State in which the minor children 
     reside, during

[[Page H10549]]

     the period in which the family receives assistance under the 
     program funded under this part. Hours spent in such activity 
     may be specified by the State as countable hours for purposes 
     of paragraph (2)(B).
       ``(d) Direct Work Activity.--In this section, the term 
     `direct work activity' means--
       ``(1) unsubsidized employment;
       ``(2) subsidized private sector employment;
       ``(3) subsidized public sector employment;
       ``(4) on-the-job training;
       ``(5) supervised work experience; or
       ``(6) supervised community service.''.
       (f) Penalties Against Individuals.--Section 407(e)(1) (42 
     U.S.C. 607(e)(1)) is amended to read as follows:
       ``(1) Reduction or termination of assistance.--
       ``(A) In general.--Except as provided in paragraph (2), if 
     an individual in a family receiving assistance under a State 
     program funded under this part fails to engage in activities 
     required in accordance with this section, or other activities 
     required by the State under the program, and the family does 
     not otherwise engage in activities in accordance with the 
     self-sufficiency plan established for the family pursuant to 
     section 408(b), the State shall--
       ``(i) if the failure is partial or persists for not more 
     than 1 month--

       ``(I) reduce the amount of assistance otherwise payable to 
     the family pro rata (or more, at the option of the State) 
     with respect to any period during a month in which the 
     failure occurs; or
       ``(II) terminate all assistance to the family, subject to 
     such good cause exceptions as the State may establish; or

       ``(ii) if the failure is total and persists for at least 2 
     consecutive months, terminate all cash payments to the family 
     including qualified State expenditures (as defined in section 
     409(a)(7)(B)(i)) for at least 1 month and thereafter until 
     the State determines that the individual has resumed full 
     participation in the activities, subject to such good cause 
     exceptions as the State may establish.
       ``(B) Special rule.--
       ``(i) In general.--In the event of a conflict between a 
     requirement of clause (i)(II) or (ii) of subparagraph (A) and 
     a requirement of a State constitution, or of a State statute 
     that, before 1966, obligated local government to provide 
     assistance to needy parents and children, the State 
     constitutional or statutory requirement shall control.
       ``(ii) Limitation.--Clause (i) of this subparagraph shall 
     not apply after the 1-year period that begins with the date 
     of the enactment of this subparagraph.''.
       (g) Conforming Amendments.--
       (1) Section 407(f) (42 U.S.C. 607(f)) is amended in each of 
     paragraphs (1) and (2) by striking ``work activity described 
     in subsection (d)'' and inserting ``direct work activity''.
       (2) The heading of section 409(a)(14) (42 U.S.C. 
     609(a)(14)) is amended by inserting ``or refusing to engage 
     in activities under a family self-sufficiency plan'' after 
     ``work''.

     SEC. 2013. WORK-RELATED PERFORMANCE IMPROVEMENT.

       (a) State Plans.--Section 402(a)(1) (42 U.S.C. 602(a)) is 
     amended--
       (1) in subparagraph (A), by adding at the end the 
     following:
       ``(vii) The document shall--

       ``(I) describe how the State will pursue ending dependence 
     of needy families on government benefits and reducing poverty 
     by promoting job preparation and work;
       ``(II) include specific, numerical, and measurable 
     performance objectives for accomplishing subclause (I); and
       ``(III) describe the methodology that the State will use to 
     measure State performance in relation to each such objective.

       ``(viii) Describe any strategies and programs the State may 
     be undertaking to address--

       ``(I) employment retention and advancement for recipients 
     of assistance under the program, including placement into 
     high-demand jobs, and whether the jobs are identified using 
     labor market information;
       ``(II) services for struggling and noncompliant families, 
     and for clients with special problems; and
       ``(III) program integration, including the extent to which 
     employment and training services under the program are 
     provided through the One-Stop delivery system created under 
     the Workforce Investment Act of 1998, and the extent to which 
     former recipients of such assistance have access to 
     additional core, intensive, or training services funded 
     through such Act.''; and

       (2) in subparagraph (B), by striking clause (iv).
       (b) Report on Annual Performance Improvement.--Section 411 
     (42 U.S.C. 611) is amended by adding at the end the 
     following:
       ``(c) Annual Report on Performance Improvement.--Beginning 
     with fiscal year 2007, not later than January 1 of each 
     fiscal year, each eligible State shall submit to the 
     Secretary a report on achievement and improvement during the 
     preceding fiscal year under the numerical performance goals 
     and measures under the State program funded under this part 
     with respect to the matter described in section 
     402(a)(1)(A)(vii).''.
       (c) Annual Ranking of States.--Section 413(d)(1) (42 U.S.C. 
     613(d)(1)) is amended by striking ``long-term private sector 
     jobs,'' and inserting ``private sector jobs, the success of 
     the recipients in retaining employment, the ability of the 
     recipients to increase their wages,''.
       (d) Performance Improvement.--Section 413 (42 U.S.C. 613) 
     is amended by adding at the end the following:
       ``(k) Performance Improvement.--The Secretary, in 
     consultation with States, shall develop uniform performance 
     measures designed to assess the degree of effectiveness, and 
     the degree of improvement, of State programs funded under 
     this part in accomplishing the work-related purposes of this 
     part.''.

     SEC. 2014. REPORT ON COORDINATION.

       Not later than 6 months after the date of the enactment of 
     this Act, the Secretary of Health and Human Services and the 
     Secretary of Labor shall jointly submit a report to the 
     Congress describing common or conflicting data elements, 
     definitions, performance measures, and reporting requirements 
     in the Workforce Investment Act of 1998 and part A of title 
     IV of the Social Security Act, and, to the degree each 
     Secretary deems appropriate, at the discretion of either 
     Secretary, any other program administered by the respective 
     Secretary, to allow greater coordination between the welfare 
     and workforce development systems.

     SEC. 2015. FATHERHOOD PROGRAM.

       (a) Short Title.--This section may be cited as the 
     ``Promotion and Support of Responsible Fatherhood and Healthy 
     Marriage Act of 2005''.
       (b) Fatherhood Program.--
       (1) In general.--Title I of the Personal Responsibility and 
     Work Opportunity Reconciliation Act of 1996 (Public Law 104-
     193) is amended by adding at the end the following:

     ``SEC. 117. FATHERHOOD PROGRAM.

       ``(a) In General.--Title IV (42 U.S.C. 601-679b) is amended 
     by inserting after part B the following:

                      `PART C--FATHERHOOD PROGRAM

     `SEC. 441. FINDINGS AND PURPOSES.

       `(a) Findings.--The Congress finds that there is 
     substantial evidence strongly indicating the urgent need to 
     promote and support involved, committed, and responsible 
     fatherhood, and to encourage and support healthy marriages 
     between parents raising children, including data 
     demonstrating the following:
       `(1) In approximately 84 percent of cases where a parent is 
     absent, that parent is the father.
       `(2) If current trends continue, half of all children born 
     today will live apart from one of their parents, usually 
     their father, at some point before they turn 18.
       `(3) Where families (whether intact or with a parent 
     absent) are living in poverty, a significant factor is the 
     father's lack of job skills.
       `(4) Committed and responsible fathering during infancy and 
     early childhood contributes to the development of emotional 
     security, curiosity, and math and verbal skills.
       `(5) An estimated 19,400,000 children (27 percent) live 
     apart from their biological father.
       `(6) Forty percent of children under age 18 not living with 
     their biological father had not seen their father even once 
     in the last 12 months, according to national survey data.
       `(b) Purposes.--The purposes of this part are:
       `(1) To provide for projects and activities by public 
     entities and by nonprofit community entities, including 
     religious organizations, designed to test promising 
     approaches to accomplishing the following objectives:
       `(A) Promoting responsible, caring, and effective parenting 
     through counseling, mentoring, and parenting education, 
     dissemination of educational materials and information on 
     parenting skills, encouragement of positive father 
     involvement, including the positive involvement of 
     nonresident fathers, and other methods.
       `(B) Enhancing the abilities and commitment of unemployed 
     or low-income fathers to provide material support for their 
     families and to avoid or leave welfare programs by assisting 
     them to take full advantage of education, job training, and 
     job search programs, to improve work habits and work skills, 
     to secure career advancement by activities such as outreach 
     and information dissemination, coordination, as appropriate, 
     with employment services and job training programs, including 
     the One-Stop delivery system established under title I of the 
     Workforce Investment Act of 1998, encouragement and support 
     of timely payment of current child support and regular 
     payment toward past due child support obligations in 
     appropriate cases, and other methods.
       `(C) Improving fathers' ability to effectively manage 
     family business affairs by means such as education, 
     counseling, and mentoring in matters including household 
     management, budgeting, banking, and handling of financial 
     transactions, time management, and home maintenance.
       `(D) Encouraging and supporting healthy marriages and 
     married fatherhood through such activities as premarital 
     education, including the use of premarital inventories, 
     marriage preparation programs, skills-based marriage 
     education programs, marital therapy, couples counseling, 
     divorce education and reduction programs, divorce mediation 
     and counseling, relationship skills enhancement programs, 
     including those designed to reduce child abuse and domestic 
     violence, and dissemination of information about the benefits 
     of marriage for both parents and children.
       `(2) Through the projects and activities described in 
     paragraph (1), to improve outcomes for children with respect 
     to measures such as increased family income and economic 
     security, improved school performance, better health, 
     improved emotional and behavioral stability and social 
     adjustment,

[[Page H10550]]

     and reduced risk of delinquency, crime, substance abuse, 
     child abuse and neglect, teen sexual activity, and teen 
     suicide.
       `(3) To evaluate the effectiveness of various approaches 
     and to disseminate findings concerning outcomes and other 
     information in order to encourage and facilitate the 
     replication of effective approaches to accomplishing these 
     objectives.

     `SEC. 442. DEFINITIONS.

       `In this part, the terms ``Indian tribe'' and ``tribal 
     organization'' have the meanings given them in subsections 
     (e) and (l), respectively, of section 4 of the Indian Self-
     Determination and Education Assistance Act.

     `SEC. 443. COMPETITIVE GRANTS FOR SERVICE PROJECTS.

       `(a) In General.--The Secretary may make grants for fiscal 
     years 2006 through 2010 to public and nonprofit community 
     entities, including religious organizations, and to Indian 
     tribes and tribal organizations, for demonstration service 
     projects and activities designed to test the effectiveness of 
     various approaches to accomplish the objectives specified in 
     section 441(b)(1).
       `(b) Eligibility Criteria for Full Service Grants.--In 
     order to be eligible for a grant under this section, except 
     as specified in subsection (c), an entity shall submit an 
     application to the Secretary containing the following:
       `(1) Project description.--A statement including--
       `(A) a description of the project and how it will be 
     carried out, including the geographical area to be covered 
     and the number and characteristics of clients to be served, 
     and how it will address each of the 4 objectives specified in 
     section 441(b)(1); and
       `(B) a description of the methods to be used by the entity 
     or its contractor to assess the extent to which the project 
     was successful in accomplishing its specific objectives and 
     the general objectives specified in section 441(b)(1).
       `(2) Experience and qualifications.--A demonstration of 
     ability to carry out the project, by means such as 
     demonstration of experience in successfully carrying out 
     projects of similar design and scope, and such other 
     information as the Secretary may find necessary to 
     demonstrate the entity's capacity to carry out the project, 
     including the entity's ability to provide the non-Federal 
     share of project resources.
       `(3) Addressing child abuse and neglect and domestic 
     violence.--A description of how the entity will assess for 
     the presence of, and intervene to resolve, domestic violence 
     and child abuse and neglect, including how the entity will 
     coordinate with State and local child protective service and 
     domestic violence programs.
       `(4) Addressing concerns relating to substance abuse and 
     sexual activity.--A commitment to make available to each 
     individual participating in the project education about 
     alcohol, tobacco, and other drugs, and about the health risks 
     associated with abusing such substances, and information 
     about diseases and conditions transmitted through substance 
     abuse and sexual contact, including HIV/AIDS, and to 
     coordinate with providers of services addressing such 
     problems, as appropriate.
       `(5) Coordination with specified programs.--An undertaking 
     to coordinate, as appropriate, with State and local entities 
     responsible for the programs under parts A, B, and D of this 
     title, including programs under title I of the Workforce 
     Investment Act of 1998 (including the One-Stop delivery 
     system), and such other programs as the Secretary may 
     require.
       `(6) Records, reports, and audits.--An agreement to 
     maintain such records, make such reports, and cooperate with 
     such reviews or audits as the Secretary may find necessary 
     for purposes of oversight of project activities and 
     expenditures.
       `(7) Self-initiated evaluation.--If the entity elects to 
     contract for independent evaluation of the project (part or 
     all of the cost of which may be paid for using grant funds), 
     a commitment to submit to the Secretary a copy of the 
     evaluation report within 30 days after completion of the 
     report and not more than 1 year after completion of the 
     project.
       `(8) Cooperation with secretary's oversight and 
     evaluation.--An agreement to cooperate with the Secretary's 
     evaluation of projects assisted under this section, by means 
     including random assignment of clients to service recipient 
     and control groups, if determined by the Secretary to be 
     appropriate, and affording the Secretary access to the 
     project and to project-related records and documents, staff, 
     and clients.
       `(c) Eligibility Criteria for Limited Purpose Grants.--In 
     order to be eligible for a grant under this section in an 
     amount under $25,000 per fiscal year, an entity shall submit 
     an application to the Secretary containing the following:
       `(1) Project description.--A description of the project and 
     how it will be carried out, including the number and 
     characteristics of clients to be served, the proposed 
     duration of the project, and how it will address at least 1 
     of the 4 objectives specified in section 441(b)(1).
       `(2) Qualifications.--Such information as the Secretary may 
     require as to the capacity of the entity to carry out the 
     project, including any previous experience with similar 
     activities.
       `(3) Coordination with related programs.--As required by 
     the Secretary in appropriate cases, an undertaking to 
     coordinate and cooperate with State and local entities 
     responsible for specific programs relating to the objectives 
     of the project including, as appropriate, jobs programs and 
     programs serving children and families.
       `(4) Records, reports, and audits.--An agreement to 
     maintain such records, make such reports, and cooperate with 
     such reviews or audits as the Secretary may find necessary 
     for purposes of oversight of project activities and 
     expenditures.
       `(5) Cooperation with secretary's oversight and 
     evaluation.--An agreement to cooperate with the Secretary's 
     evaluation of projects assisted under this section, by means 
     including affording the Secretary access to the project and 
     to project-related records and documents, staff, and clients.
       `(d) Considerations in Awarding Grants.--
       `(1) Diversity of projects.--In awarding grants under this 
     section, the Secretary shall seek to achieve a balance among 
     entities of differing sizes, entities in differing geographic 
     areas, entities in urban and in rural areas, and entities 
     employing differing methods of achieving the purposes of this 
     section, including working with the State agency responsible 
     for the administration of part D to help fathers satisfy 
     child support arrearage obligations.
       `(2) Preference for projects serving low-income fathers.--
     In awarding grants under this section, the Secretary may give 
     preference to applications for projects in which a majority 
     of the clients to be served are low-income fathers.
       `(e) Federal Share.--
       `(1) In general.--Grants for a project under this section 
     for a fiscal year shall be available for a share of the cost 
     of such project in such fiscal year equal to--
       `(A) up to 80 percent (or up to 90 percent, if the entity 
     demonstrates to the Secretary's satisfaction circumstances 
     limiting the entity's ability to secure non-Federal 
     resources) in the case of a project under subsection (b); and
       `(B) up to 100 percent, in the case of a project under 
     subsection (c).
       `(2) Non-federal share.--The non-Federal share may be in 
     cash or in kind. In determining the amount of the non-Federal 
     share, the Secretary may attribute fair market value to 
     goods, services, and facilities contributed from non-Federal 
     sources.

     `SEC. 444. MULTICITY, MULTISTATE DEMONSTRATION PROJECTS.

       `(a) In General.--The Secretary may make grants under this 
     section for fiscal years 2006 through 2010 to eligible 
     entities (as specified in subsection (b)) for 2 multicity, 
     multistate projects demonstrating approaches to achieving the 
     objectives specified in section 441(b)(1). One of the 
     projects shall test the use of married couples to deliver 
     program services.
       `(b) Eligible Entities.--An entity eligible for a grant 
     under this section must be a national nonprofit fatherhood 
     promotion organization that meets the following requirements:
       `(1) Experience with fatherhood programs.--The organization 
     must have substantial experience in designing and 
     successfully conducting programs that meet the purposes 
     described in section 441.
       `(2) Experience with multicity, multistate programs and 
     government coordination.--The organization must have 
     experience in simultaneously conducting such programs in more 
     than 1 major metropolitan area in more than 1 State and in 
     coordinating such programs, where appropriate, with State and 
     local government agencies and private, nonprofit agencies 
     (including community-based and religious organizations), 
     including State or local agencies responsible for child 
     support enforcement and workforce development.
       `(c) Application Requirements.--In order to be eligible for 
     a grant under this section, an entity must submit to the 
     Secretary an application that includes the following:
       `(1) Qualifications.--
       `(A) Eligible entity.--A demonstration that the entity 
     meets the requirements of subsection (b).
       `(B) Other.--Such other information as the Secretary may 
     find necessary to demonstrate the entity's capacity to carry 
     out the project, including the entity's ability to provide 
     the non-Federal share of project resources.
       `(2) Project description.--A description of and commitments 
     concerning the project design, including the following:
       `(A) In general.--A detailed description of the proposed 
     project design and how it will be carried out, which shall--
       `(i) provide for the project to be conducted in at least 3 
     major metropolitan areas;
       `(ii) state how it will address each of the 4 objectives 
     specified in section 441(b)(1);
       `(iii) demonstrate that there is a sufficient number of 
     potential clients to allow for the random selection of 
     individuals to participate in the project and for comparisons 
     with appropriate control groups composed of individuals who 
     have not participated in such projects; and
       `(iv) demonstrate that the project is designed to direct a 
     majority of project resources to activities serving low-
     income fathers (but the project need not make services 
     available on a means-tested basis).
       `(B) Oversight, evaluation, and adjustment component.--An 
     agreement that the entity--
       `(i) in consultation with the evaluator selected pursuant 
     to section 446, and as required by the Secretary, will modify 
     the project design, initially and (if necessary)

[[Page H10551]]

     subsequently throughout the duration of the project, in order 
     to facilitate ongoing and final oversight and evaluation of 
     project operation and outcomes (by means including, to the 
     maximum extent feasible, random assignment of clients to 
     service recipient and control groups), and to provide for 
     mid-course adjustments in project design indicated by interim 
     evaluations;
       `(ii) will submit to the Secretary revised descriptions of 
     the project design as modified in accordance with clause (i); 
     and
       `(iii) will cooperate fully with the Secretary's ongoing 
     oversight and ongoing and final evaluation of the project, by 
     means including affording the Secretary access to the project 
     and to project-related records and documents, staff, and 
     clients.
       `(3) Addressing child abuse and neglect and domestic 
     violence.--A description of how the entity will assess for 
     the presence of, and intervene to resolve, domestic violence 
     and child abuse and neglect, including how the entity will 
     coordinate with State and local child protective service and 
     domestic violence programs.
       `(4) Addressing concerns relating to substance abuse and 
     sexual activity.--A commitment to make available to each 
     individual participating in the project education about 
     alcohol, tobacco, and other drugs, and about the health risks 
     associated with abusing such substances, and information 
     about diseases and conditions transmitted through substance 
     abuse and sexual contact, including HIV/AIDS, and to 
     coordinate with providers of services addressing such 
     problems, as appropriate.
       `(5) Coordination with specified programs.--An undertaking 
     to coordinate, as appropriate, with State and local entities 
     responsible for the programs funded under parts A, B, and D 
     of this title, programs under title I of the Workforce 
     Investment Act of 1998 (including the One-Stop delivery 
     system), and such other programs as the Secretary may 
     require.
       `(6) Records, reports, and audits.--An agreement to 
     maintain such records, make such reports, and cooperate with 
     such reviews or audits (in addition to those required under 
     the preceding provisions of paragraph (2)) as the Secretary 
     may find necessary for purposes of oversight of project 
     activities and expenditures.
       `(d) Federal Share.--
       `(1) In general.--Grants for a project under this section 
     for a fiscal year shall be available for up to 80 percent of 
     the cost of such project in such fiscal year.
       `(2) Non-federal share.--The non-Federal share may be in 
     cash or in kind. In determining the amount of the non-Federal 
     share, the Secretary may attribute fair market value to 
     goods, services, and facilities contributed from non-Federal 
     sources.

     `SEC. 445. ECONOMIC INCENTIVE DEMONSTRATION PROJECTS.

       `(a) In General.--The Secretary may make grants under this 
     section for fiscal years 2006 through 2010 to eligible 
     entities (as specified in subsection (b)) for two to five 
     projects demonstrating approaches to achieving the objectives 
     specified in section 441(b)(1). Drawing on the success of 
     economic-incentive programs in demonstrating strong 
     employment effects for low-income mothers, projects shall 
     test the use of economic incentives combined with a 
     comprehensive approach to addressing employment barriers to 
     encourage non-custodial parents to enter the workforce and to 
     contribute financially and emotionally to their children. The 
     Secretary may make grants based on the level of innovation, 
     comprehensiveness, and likelihood to achieve the goal of 
     increased employment by the applicant.
       `(b) Eligible Entities.--An entity eligible for a grant 
     under this section must be a national nonprofit fatherhood 
     promotion organization that meets the following requirements:
       `(1) Experience with fatherhood programs.--The organization 
     must have substantial experience in designing and 
     successfully conducting programs that meet the purposes 
     described in section 441.
       `(2) Experience addressing multiple barriers to 
     employment.--The organization must have experience in 
     conducting such programs and in coordinating such programs, 
     where appropriate, with State and local government agencies 
     and private, nonprofit agencies (including community-based 
     and religious organizations), including State or local 
     agencies responsible for child support enforcement and 
     workforce development.
       `(3) Negotiated agreements with state and local agencies 
     for appropriate policy changes to address barriers to 
     employment.--The organization must have agreements in place 
     with State and local government agencies, including State or 
     local agencies responsible for child support enforcement and 
     workforce development, to incorporate appropriate policy 
     changes proposed to address barriers to employment.
       `(c) Application Requirements.--In order to be eligible for 
     a grant under this section, an entity must submit to the 
     Secretary an application that includes the following:
       `(1) Qualifications.--
       `(A) Eligible entity.--A demonstration that the entity 
     meets the requirements of subsection (b).
       `(B) Other.--Such other information as the Secretary may 
     find necessary to demonstrate the entity's capacity to carry 
     out the project, including the entity's ability to provide 
     the non-Federal share of project resources.
       `(2) Project description.--A description of and commitments 
     concerning the project design, including the following:
       `(A) In general.--A detailed description of the proposed 
     project design and how the project will be carried out, which 
     shall--
       `(i) state how the project will address each of the 4 
     objectives specified in section 441(b)(1);
       `(ii) state how the project will address employment 
     barriers across programs (such as child support, criminal 
     justice, and workforce development programs) using both 
     sanctions and compliance along with monetary incentives for 
     obtaining employment, with earning subsidies contingent upon 
     work and child support payment;
       `(iii) demonstrate that there is a sufficient number of 
     potential clients to allow for the random selection of 
     individuals to participate in the project and for comparisons 
     with appropriate control groups composed of individuals who 
     have not participated in such projects; and
       `(iv) demonstrate that the project is designed to direct a 
     majority of project resources to activities serving low-
     income fathers (but the project need not make services 
     available on a means-tested basis).
       `(B) Oversight, evaluation, and adjustment component.--An 
     agreement that the entity--
       `(i) in consultation with the evaluator selected pursuant 
     to section 446, and as required by the Secretary, will modify 
     the project design, initially and (if necessary) subsequently 
     throughout the duration of the project, in order to 
     facilitate ongoing and final oversight and evaluation of 
     project operation and outcomes (by means including, to the 
     maximum extent feasible, random assignment of clients to 
     service recipient and control groups), and to provide for 
     mid-course adjustments in project design indicated by interim 
     evaluations;
       `(ii) will submit to the Secretary revised descriptions of 
     the project design as modified in accordance with clause (i); 
     and
       `(iii) will cooperate fully with the Secretary's ongoing 
     oversight and ongoing and final evaluation of the project, by 
     means including affording the Secretary access to the project 
     and to project-related records and documents, staff, and 
     clients.
       `(3) Addressing child abuse and neglect and domestic 
     violence.--A description of how the entity will assess for 
     the presence of, and intervene to resolve, domestic violence 
     and child abuse and neglect, including how the entity will 
     coordinate with State and local child protective service and 
     domestic violence programs.
       `(4) Addressing concerns relating to substance abuse and 
     sexual activity.--A commitment to make available to each 
     individual participating in the project education about 
     alcohol, tobacco, and other drugs, and about the health risks 
     associated with abusing such substances, and information 
     about diseases and conditions transmitted through substance 
     abuse and sexual contact, including HIV/AIDS, and to 
     coordinate with providers of services addressing such 
     problems, as appropriate.
       `(5) Coordination with specified programs.--An undertaking 
     to coordinate, as appropriate, with State and local entities 
     responsible for the programs funded under parts A, B, and D 
     of this title, programs under title I of the Workforce 
     Investment Act of 1998 (including the One-Stop delivery 
     system), and such other programs as the Secretary may 
     require.
       `(6) Records, reports, and audits.--An agreement to 
     maintain such records, make such reports, and cooperate with 
     such reviews or audits (in addition to those required under 
     the preceding provisions of paragraph (2)) as the Secretary 
     may find necessary for purposes of oversight of project 
     activities and expenditures.
       `(d) Federal Share.--
       `(1) In general.--Grants for a project under this section 
     for a fiscal year shall be available for up to 80 percent of 
     the cost of such project in such fiscal year.
       `(2) Non-federal share.--The non-Federal share may be in 
     cash or in kind. In determining the amount of the non-Federal 
     share, the Secretary may attribute fair market value to 
     goods, services, and facilities contributed from non-Federal 
     sources.

     `SEC. 446. EVALUATION.

       `(a) In General.--The Secretary, directly or by contract or 
     cooperative agreement, shall evaluate the effectiveness of 
     service projects funded under sections 443 and 444 from the 
     standpoint of the purposes specified in section 441(b)(1).
       `(b) Evaluation Methodology.--Evaluations under this 
     section shall--
       `(1) include, to the maximum extent feasible, random 
     assignment of clients to service delivery and control groups 
     and other appropriate comparisons of groups of individuals 
     receiving and not receiving services;
       `(2) describe and measure the effectiveness of the projects 
     in achieving their specific project goals; and
       `(3) describe and assess, as appropriate, the impact of 
     such projects on marriage, parenting, domestic violence, 
     child abuse and neglect, money management, employment and 
     earnings, payment of child support, and child well-being, 
     health, and education.
       `(c) Evaluation Reports.--The Secretary shall publish the 
     following reports on the results of the evaluation:
       `(1) An implementation evaluation report covering the first 
     24 months of the activities

[[Page H10552]]

     under this part to be completed by 36 months after initiation 
     of such activities.
       `(2) A final report on the evaluation to be completed by 
     September 30, 2013.

     `SEC. 447. PROJECTS OF NATIONAL SIGNIFICANCE.

       `The Secretary is authorized, by grant, contract, or 
     cooperative agreement, to carry out projects and activities 
     of national significance relating to fatherhood promotion, 
     including--
       `(1) Collection and dissemination of information.--
     Assisting States, communities, and private entities, 
     including religious organizations, in efforts to promote and 
     support marriage and responsible fatherhood by collecting, 
     evaluating, developing, and making available (through the 
     Internet and by other means) to all interested parties 
     information regarding approaches to accomplishing the 
     objectives specified in section 441(b)(1).
       `(2) Media campaign.--Developing, promoting, and 
     distributing to interested States, local governments, public 
     agencies, and private nonprofit organizations, including 
     charitable and religious organizations, a media campaign that 
     promotes and encourages involved, committed, and responsible 
     fatherhood and married fatherhood.
       `(3) Technical assistance.--Providing technical assistance, 
     including consultation and training, to public and private 
     entities, including community organizations and faith-based 
     organizations, in the implementation of local fatherhood 
     promotion programs.
       `(4) Research.--Conducting research related to the purposes 
     of this part.

     `SEC. 448. NONDISCRIMINATION.

       `The projects and activities assisted under this part shall 
     be available on the same basis to all fathers and expectant 
     fathers able to benefit from such projects and activities, 
     including married and unmarried fathers and custodial and 
     noncustodial fathers, with particular attention to low-income 
     fathers, and to mothers and expectant mothers on the same 
     basis as to fathers.

     `SEC. 449. AUTHORIZATION OF APPROPRIATIONS; RESERVATION FOR 
                   CERTAIN PURPOSE.

       `(a) Authorization.--There are authorized to be 
     appropriated $20,000,000 for each of fiscal years 2006 
     through 2010 to carry out the provisions of this part.
       `(b) Reservation.--Of the amount appropriated under this 
     section for each fiscal year, not more than 35 percent shall 
     be available for the costs of the multicity, multicounty, 
     multistate demonstration projects under section 444, the 
     economic incentives demonstration projects under section 445, 
     evaluations under section 446, and projects of national 
     significance under section 447, with not less than $5,000,000 
     allocated to the economic incentives demonstration project 
     under section 445.'.
       ``(b) Inapplicability of Effective Date Provisions.--
     Section 116 shall not apply to the amendment made by 
     subsection (a) of this section.''.
       (2) Clerical amendment.--Section 2 of such Act is amended 
     in the table of contents by inserting after the item relating 
     to section 116 the following new item:

``Sec. 117. Fatherhood program.''.

     SEC. 2016. STATE OPTION TO MAKE TANF PROGRAMS MANDATORY 
                   PARTNERS WITH ONE-STOP EMPLOYMENT TRAINING 
                   CENTERS.

       Section 408 (42 U.S.C. 608) is amended by adding at the end 
     the following:
       ``(h) State Option to Make Tanf Programs Mandatory Partners 
     With One-Stop Employment Training Centers.--For purposes of 
     section 121(b) of the Workforce Investment Act of 1998, a 
     State program funded under part A of title IV of the Social 
     Security Act shall be considered a program referred to in 
     paragraph (1)(B) of such section, unless, after the date of 
     the enactment of this subsection, the Governor of the State 
     notifies the Secretaries of Health and Human Services and 
     Labor in writing of the decision of the Governor not to make 
     the State program a mandatory partner.''.

     SEC. 2017. SENSE OF THE CONGRESS.

       It is the sense of the Congress that a State welfare-to-
     work program should include a mentoring program.

     SEC. 2018. PROHIBITION ON OFFSHORING.

       Section 408(a) (42 U.S.C. 608(a)) is amended by adding at 
     the end the following:
       ``(12) Prohibition on offshoring.--A State to which a grant 
     is made under section 403 shall not use any part of the 
     grant--
       ``(A) to enter into a contract with an entity that, 
     directly or through a subcontractor, provides any service, 
     activity or function described under this part at a location 
     outside the United States; or
       ``(B) to reduce employment in the United States through use 
     of 1 or more employees outside the United States.''.

                           PART 3--CHILD CARE

     SEC. 2021. SHORT TITLE.

       This part may be cited as the ``Caring for Children Act of 
     2005''.

     SEC. 2022. GOALS.

       (a) Goals.--Section 658A(b) of the Child Care and 
     Development Block Grant Act of 1990 (42 U.S.C. 9801 note) is 
     amended--
       (1) in paragraph (3) by striking ``encourage'' and 
     inserting ``assist'',
       (2) by amending paragraph (4) to read as follows:
       ``(4) to assist States to provide child care to low-income 
     parents;'',
       (3) by redesignating paragraph (5) as paragraph (7), and
       (4) by inserting after paragraph (4) the following:
       ``(5) to encourage States to improve the quality of child 
     care available to families;
       ``(6) to promote school readiness by encouraging the 
     exposure of young children in child care to nurturing 
     environments and developmentally-appropriate activities, 
     including activities to foster early cognitive and literacy 
     development; and''.
       (b) Conforming Amendment.--Section 658E(c)(3)(B) of the 
     Child Care and Development Block Grant Act of 1990 (42 U.S.C. 
     9858c(c)(3)(B)) is amended by striking ``through (5)'' and 
     inserting ``through (7)''.

     SEC. 2023. AUTHORIZATION OF APPROPRIATIONS.

       Section 658B of the Child Care and Development Block Grant 
     Act of 1990 (42 U.S.C. 9858) is amended--
       (1) by striking ``is'' and inserting ``are'', and
       (2) by striking ``$1,000,000,000 for each of the fiscal 
     years 1996 through 2002'' and inserting ``$2,300,000,000 for 
     fiscal year 2006, $2,500,000,000 for fiscal year 2007, 
     $2,700,000,000 for fiscal year 2008, $2,900,000,000 for 
     fiscal year 2009, and $3,100,000,000 for fiscal year 2010''.

     SEC. 2024. APPLICATION AND PLAN.

       Section 658E(c)(2) of the Child Care and Development Block 
     Grant Act of 1990 (42 U.S.C. 9858C(c)(2)) is amended--
       (1) by amending subparagraph (D) to read as follows:
       ``(D) Consumer and child care provider education 
     information.--
       ``(i) Certification.--Certify that the State will collect 
     and disseminate, through resource and referral services and 
     other means as determined by the State, to parents of 
     eligible children, child care providers, and the general 
     public, information regarding--

       ``(I) the promotion of informed child care choices, 
     including information about the quality and availability of 
     child care services;
       ``(II) research and best practices on children's 
     development, including early cognitive development;
       ``(III) the availability of assistance to obtain child care 
     services; and
       ``(IV) other programs for which families that receive child 
     care services for which financial assistance is provided 
     under this subchapter may be eligible, including the food 
     stamp program, the WIC program under section 17 of the Child 
     Nutrition Act of 1966, the child and adult care food program 
     under section 17 of the Richard B. Russell National School 
     Lunch Act, Head Start programs, Early Head Start programs, 
     services and activities under section 619 and part C of the 
     Individuals with Disabilities Education Act, and the medicaid 
     and SCHIP programs under titles XIX and XXI of the Social 
     Security Act.

       ``(ii) Information.--Information provided to parents shall 
     be in plain language and, to the extent practicable, be in a 
     language that such parents can understand.'', and
       (2) by inserting after subparagraph (H) the following:
       ``(I) Coordination with other early child care services and 
     early childhood education programs.--Demonstrate how the 
     State is coordinating child care services provided under this 
     subchapter with Head Start programs, Early Head Start 
     programs, Early Reading First, Even Start, Ready-To-Learn 
     Television, services and activities under section 619 and 
     part C of the Individuals with Disabilities Education Act, 
     State pre-kindergarten programs, and other early childhood 
     education programs to expand accessibility to and continuity 
     of care and early education consistent with the goals of this 
     Act, without displacing services provided by the current 
     early care and education delivery system.
       ``(J) Public-private partnerships.--Demonstrate how the 
     State encourages partnerships with private and other public 
     entities to leverage existing service delivery systems of 
     early childhood education and increase the supply and quality 
     of child care services.
       ``(K) Child care service quality.--
       ``(i) Certification.--For each fiscal year after fiscal 
     year 2006, certify that during the then preceding fiscal year 
     the State was in compliance with section 658G and describe 
     how funds were used to comply with such section during such 
     preceding fiscal year.
       ``(ii) Strategy.--For each fiscal year after fiscal year 
     2006, contain an outline of the strategy the State will 
     implement during such fiscal year for which the State plan is 
     submitted, to address the quality of child care services in 
     the State available from eligible child care providers, and 
     include in such strategy--

       ``(I) a statement specifying how the State will address the 
     activities described in paragraphs (1), (2), and (3) of 
     section 658G;
       ``(II) a description of measures for evaluating the quality 
     improvements generated by the activities listed in each of 
     such paragraphs that the State will use to evaluate its 
     progress in improving the quality of such child care 
     services;
       ``(III) a list of State-developed child care service 
     quality targets for such fiscal year quantified on the basis 
     of such measures; and
       ``(IV) for each fiscal year after fiscal year 2006, a 
     report on the progress made to achieve such targets during 
     the then preceding fiscal year.

[[Page H10553]]

       ``(iii) Rule of construction.--Nothing in this subparagraph 
     shall be construed to require that the State apply measures 
     for evaluating quality to specific types of child care 
     providers.
       ``(L) Access to care for certain populations.--Demonstrate 
     how the State is addressing the child care needs of parents 
     eligible for child care services for which financial 
     assistance is provided under this subchapter who have 
     children with special needs, are limited English proficient, 
     work nontraditional hours, or require child care services for 
     infants or toddlers.''.

     SEC. 2025. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE.

       Section 658G of the Child Care and Development Block Grant 
     Act of 1990 (42 U.S.C. 9858e) is amended to read as follows:

     ``SEC. 658G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE 
                   SERVICES.

       ``A State that receives funds to carry out this subchapter 
     for a fiscal year, shall use not less than 6 percent of the 
     amount of such funds for activities provided through resource 
     and referral services and other means, that are designed to 
     improve the quality of child care services in the State 
     available from eligible child care providers. Such activities 
     include--
       ``(1) programs that provide training, education, and other 
     professional development activities to enhance the skills of 
     the child care workforce, including training opportunities 
     for caregivers in informal care settings;
       ``(2) activities within child care settings to enhance 
     early learning for young children, to promote early literacy, 
     and to foster school readiness;
       ``(3) initiatives to increase the retention and 
     compensation of child care providers, including tiered 
     reimbursement rates for providers that meet quality standards 
     as defined by the State; or
       ``(4) other activities deemed by the State to improve the 
     quality of child care services provided in such State.''.

     SEC. 2026. REPORTS AND AUDITS.

       Section 658K(a)(1)(B)(iii) of the Child Care and 
     Development Block Grant Act of 1990 (42 U.S.C. 
     9858i(a)(1)(B)(iii)) is amended by inserting ``ethnicity, 
     primary language,'' after ``race,''.

     SEC. 2027. REPORT BY SECRETARY.

       Section 658L of the Child Care and Development Block Grant 
     Act of 1990 (42 U.S.C. 9858j) is amended to read as follows:

     ``SEC. 658L. REPORT BY SECRETARY.

       ``(a) Report Required.--Not later than October 1, 2007, and 
     biennially thereafter, the Secretary shall prepare and submit 
     to the Committee on Education and the Workforce of the House 
     of Representatives and the Committee on Health, Education, 
     Labor and Pensions of the Senate a report that contains the 
     following:
       ``(1) A summary and analysis of the data and information 
     provided to the Secretary in the State reports submitted 
     under section 658K.
       ``(2) Aggregated statistics on the supply of, demand for, 
     and quality of child care, early education, and non-school-
     hours programs.
       ``(3) An assessment, and where appropriate, recommendations 
     for the Congress concerning efforts that should be undertaken 
     to improve the access of the public to quality and affordable 
     child care in the United States.
       ``(b) Collection of Information.--The Secretary may utilize 
     the national child care data system available through 
     resource and referral organizations at the local, State, and 
     national level to collect the information required by 
     subsection (a)(2).''.

     SEC. 2028. DEFINITIONS.

       (a) Eligible Children.--Section 658P(4)(B) of the Child 
     Care and Development Block Grant Act of 1990 (42 U.S.C. 
     9858N(4)(B)) is amended by striking ``85 percent of the State 
     median income'' and inserting ``income levels as established 
     by the State, prioritized by need,''.
       (b) Limited English Proficient.--Section 658P of the Child 
     Care and Development Block Grant Act of 1990 (42 U.S.C. 
     9858n) is amended--
       (1) by redesignating paragraph (9) as paragraph (10); and
       (2) by inserting after paragraph (8) the following:
       ``(9) Limited english proficient.--The term `limited 
     English proficient' means with respect to an individual, that 
     such individual--
       ``(A)(i) was not born in the United States or has a native 
     language that is not English;
       ``(ii)(I) is a Native American, an Alaska Native, or a 
     native resident of a territory or possession of the United 
     States; and
       ``(II) comes from an environment in which a language that 
     is not English has had a significant impact on such 
     individual's level of English language proficiency; or
       ``(iii) is migratory, has a native language that is not 
     English, and comes from an environment in which a language 
     that is not English is dominant; and
       ``(B) has difficultly in speaking or understanding the 
     English language to an extent that may be sufficient to deny 
     such individual--
       ``(i) the ability to successfully achieve in classrooms in 
     which the language of instruction is English; or
       ``(ii) the opportunity to fully participate in society.''.

     SEC. 2029. WAIVER AUTHORITY TO EXPAND THE AVAILABILITY OF 
                   SERVICES UNDER CHILD CARE AND DEVELOPMENT BLOCK 
                   GRANT ACT OF 1990.

       (a) Waiver Authority.--For such period up to June 30, 2006, 
     and to such extent as the Secretary considers to be 
     appropriate, the Secretary of Health and Human Service may 
     waive or modify, for any affected State, and any State 
     serving significant numbers of individuals adversely affected 
     by a Gulf hurricane disaster, provisions of the Child Care 
     and Development Block Grant Act of 1990 (42 U.S.C. 9858 et 
     seq.)--
       (1) relating to Federal income limitations on eligibility 
     to receive child care services for which assistance is 
     provided under such Act,
       (2) relating to work requirements applicable to eligibility 
     to receive child care services for which assistance is 
     provided under such Act,
       (3) relating to limitations on the use of funds under 
     section 658G of the Child Care and Development Block Grant 
     Act of 1990, and
       (4) preventing children designated as evacuees from 
     receiving priority for child care services provided under 
     such Act, except that children residing in a State and 
     currently receiving services should not lose such services in 
     order to accommodate evacuee children,
     for purposes of easing State fiscal burdens and providing 
     child care services to children orphaned, or of families 
     displaced, as a result of a Gulf hurricane disaster.
       (b) Definitions.--For purposes of this section:
       (1) Affected state.--The term ``affected State'' means the 
     State of Alabama, Florida, Louisiana, Mississippi, or Texas.
       (2) Gulf hurricane disaster.--The term ``Gulf hurricane 
     disaster'' means a major disaster that the President declared 
     to exist, in accordance with section 401 of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act, and 
     that was caused by Hurricane Katrina or Hurricane Rita.
       (3) Individual adversely affected by a gulf hurricane 
     disaster.--The term ``individual adversely affected by a Gulf 
     hurricane disaster'' means an individual who, on August 29, 
     2005, was living, working, or attending school in an area in 
     which the President has declared to exist a Gulf hurricane 
     disaster.

                  PART 4--STATE AND LOCAL FLEXIBILITY

     SEC. 2041. PROGRAM COORDINATION DEMONSTRATION PROJECTS.

       (a) Purpose.--The purpose of this section is to establish a 
     program of demonstration projects in a State or portion of a 
     State to coordinate multiple public assistance, workforce 
     development, and other programs, for the purpose of 
     supporting working individuals and families, helping families 
     escape welfare dependency, promoting child well-being, or 
     helping build stronger families, using innovative approaches 
     to strengthen service systems and provide more coordinated 
     and effective service delivery.
       (b) Definitions.--In this section:
       (1) Administering secretary.--The term ``administering 
     Secretary'' means, with respect to a qualified program, the 
     head of the Federal agency responsible for administering the 
     program.
       (2) Qualified program.--The term ``qualified program'' 
     means--
       (A) activities funded under title I of the Workforce 
     Investment Act of 1998, except subtitle C of such title;
       (B) a demonstration project authorized under section 505 of 
     the Family Support Act of 1988;
       (C) activities funded under the Wagner-Peyser Act;
       (D) activities funded under the Adult Education and Family 
     Literacy Act; or
       (E) activities funded under the Child Care and Development 
     Block Grant Act of 1990;
       (c) Application Requirements.--The head of a State entity 
     or of a sub-State entity administering 2 or more qualified 
     programs proposed to be included in a demonstration project 
     under this section shall (or, if the project is proposed to 
     include qualified programs administered by 2 or more such 
     entities, the heads of the administering entities (each of 
     whom shall be considered an applicant for purposes of this 
     section) shall jointly) submit to the administering Secretary 
     of each such program an application that contains the 
     following:
       (1) Programs included.--A statement identifying each 
     qualified program to be included in the project, and 
     describing how the purposes of each such program will be 
     achieved by the project.
       (2) Population served.--A statement identifying the 
     population to be served by the project and specifying the 
     eligibility criteria to be used.
       (3) Description and justification.--A detailed description 
     of the project, including--
       (A) a description of how the project is expected to improve 
     or enhance achievement of the purposes of the programs to be 
     included in the project, from the standpoint of quality, of 
     cost-effectiveness, or of both; and
       (B) a description of the performance objectives for the 
     project, including any proposed modifications to the 
     performance measures and reporting requirements used in the 
     programs.
       (4) Waivers requested.--A description of the statutory and 
     regulatory requirements with respect to which a waiver is 
     requested in order to carry out the project, and a 
     justification of the need for each such waiver.
       (5) Cost neutrality.--Such information and assurances as 
     necessary to establish to

[[Page H10554]]

     the satisfaction of the administering Secretary, in 
     consultation with the Director of the Office of Management 
     and Budget, that the proposed project is reasonably expected 
     to meet the applicable cost neutrality requirements of 
     subsection (d)(4).
       (6) Evaluation and reports.--An assurance that the 
     applicant will conduct ongoing and final evaluations of the 
     project, and make interim and final reports to the 
     administering Secretary, at such times and in such manner as 
     the administering Secretary may require.
       (7) Other information and assurances.--Such other 
     information and assurances as the administering Secretary may 
     require.
       (d) Approval of Applications.--
       (1) In general.--The administering Secretary with respect 
     to a qualified program that is identified in an application 
     submitted pursuant to subsection (c) may approve the 
     application and, except as provided in paragraph (2), waive 
     any requirement applicable to the program, to the extent 
     consistent with this section and necessary and appropriate 
     for the conduct of the demonstration project proposed in the 
     application, if the administering Secretary determines that 
     the project--
       (A) has a reasonable likelihood of achieving the objectives 
     of the programs to be included in the project;
       (B) may reasonably be expected to meet the applicable cost 
     neutrality requirements of paragraph (4), as determined by 
     the Director of the Office of Management and Budget; and
       (C) includes the coordination of 2 or more qualified 
     programs.
       (2) Provisions excluded from waiver authority.--A waiver 
     shall not be granted under paragraph (1)--
       (A) with respect to any provision of law relating to--
       (i) civil rights or prohibition of discrimination;
       (ii) purposes or goals of any program;
       (iii) maintenance of effort requirements;
       (iv) health or safety;
       (v) labor standards under the Fair Labor Standards Act of 
     1938; or
       (vi) environmental protection;
       (B) with respect to section 241(a) of the Adult Education 
     and Family Literacy Act;
       (C) in the case of a program under the Workforce Investment 
     Act, with respect to any requirement the waiver of which 
     would violate section 189(i)(4)(A)(i) of such Act;
       (D) with respect to any requirement that a State pass 
     through to a sub-State entity part or all of an amount paid 
     to the State;
       (E) if the waiver would waive any funding restriction or 
     limitation provided in an appropriations Act, or would have 
     the effect of transferring appropriated funds from 1 
     appropriations account to another; or
       (F) except as otherwise provided by statute, if the waiver 
     would waive any funding restriction applicable to a program 
     authorized under an Act which is not an appropriations Act 
     (but not including program requirements such as application 
     procedures, performance standards, reporting requirements, or 
     eligibility standards), or would have the effect of 
     transferring funds from a program for which there is direct 
     spending (as defined in section 250(c)(8) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985) to another 
     program.
       (3) Agreement of each administering secretary required.--
       (A) In general.--An applicant may not conduct a 
     demonstration project under this section unless each 
     administering Secretary with respect to any program proposed 
     to be included in the project has approved the application to 
     conduct the project.
       (B) Agreement with respect to funding and implementation.--
     Before approving an application to conduct a demonstration 
     project under this section, an administering Secretary shall 
     have in place an agreement with the applicant with respect to 
     the payment of funds and responsibilities required of the 
     administering Secretary with respect to the project.
       (4) Cost-neutrality requirement.--
       (A) General rule.--Notwithstanding any other provision of 
     law (except subparagraph (B)), the total of the amounts that 
     may be paid by the Federal Government for a fiscal year with 
     respect to the programs in the State in which an entity 
     conducting a demonstration project under this section is 
     located that are affected by the project shall not exceed the 
     estimated total amount that the Federal Government would have 
     paid for the fiscal year with respect to the programs if the 
     project had not been conducted, as determined by the Director 
     of the Office of Management and Budget.
       (B) Special rule.--If an applicant submits to the Director 
     of the Office of Management and Budget a request to apply the 
     rules of this subparagraph to the programs in the State in 
     which the applicant is located that are affected by a 
     demonstration project proposed in an application submitted by 
     the applicant pursuant to this section, during such period of 
     not more than 5 consecutive fiscal years in which the project 
     is in effect, and the Director determines, on the basis of 
     supporting information provided by the applicant, to grant 
     the request, then, notwithstanding any other provision of 
     law, the total of the amounts that may be paid by the Federal 
     Government for the period with respect to the programs shall 
     not exceed the estimated total amount that the Federal 
     Government would have paid for the period with respect to the 
     programs if the project had not been conducted.
       (5) 90-day approval deadline.--
       (A) In general.--If an administering Secretary receives an 
     application to conduct a demonstration project under this 
     section and does not disapprove the application within 90 
     days after the receipt, then--
       (i) the administering Secretary is deemed to have approved 
     the application for such period as is requested in the 
     application, except to the extent inconsistent with 
     subsection (e); and
       (ii) any waiver requested in the application which applies 
     to a qualified program that is identified in the application 
     and is administered by the administering Secretary is deemed 
     to be granted, except to the extent inconsistent with 
     paragraph (2) or (4) of this subsection.
       (B) Deadline extended if additional information is 
     sought.--The 90-day period referred to in subparagraph (A) 
     shall not include any period that begins with the date the 
     Secretary requests the applicant to provide additional 
     information with respect to the application and ends with the 
     date the additional information is provided.
       (e) Duration of Projects.--A demonstration project under 
     this section may be approved for a term of not more than 5 
     years.
       (f) Reports to Congress.--
       (1) Report on disposition of applications.--Within 90 days 
     after an administering Secretary receives an application 
     submitted pursuant to this section, the administering 
     Secretary shall submit to each Committee of the Congress 
     which has jurisdiction over a qualified program identified in 
     the application notice of the receipt, a description of the 
     decision of the administering Secretary with respect to the 
     application, and the reasons for approving or disapproving 
     the application.
       (2) Reports on projects.--Each administering Secretary 
     shall provide annually to the Congress a report concerning 
     demonstration projects approved under this section, 
     including--
       (A) the projects approved for each applicant;
       (B) the number of waivers granted under this section, and 
     the specific statutory provisions waived;
       (C) how well each project for which a waiver is granted is 
     improving or enhancing program achievement from the 
     standpoint of quality, cost-effectiveness, or both;
       (D) how well each project for which a waiver is granted is 
     meeting the performance objectives specified in subsection 
     (c)(3)(B);
       (E) how each project for which a waiver is granted is 
     conforming with the cost-neutrality requirements of 
     subsection (d)(4); and
       (F) to the extent the administering Secretary deems 
     appropriate, recommendations for modification of programs 
     based on outcomes of the projects.

                         PART 5--EFFECTIVE DATE

     SEC. 2051. EFFECTIVE DATE.

       (a) In General.--Except as otherwise provided in this 
     subtitle, this subtitle and the amendments made by this 
     subtitle shall take effect on the date of the enactment of 
     this Act.
       (b) Exception.--In the case of a State plan under part A of 
     title IV of the Social Security Act which the Secretary 
     determines requires State legislation in order for the plan 
     to meet the additional requirements imposed by the amendments 
     made by this subtitle, the effective date of the amendments 
     imposing the additional requirements shall be 3 months after 
     the first day of the first calendar quarter beginning after 
     the close of the first regular session of the State 
     legislature that begins after the date of the enactment of 
     this Act. For purposes of the preceding sentence, in the case 
     of a State that has a 2-year legislative session, each year 
     of the session shall be considered to be a separate regular 
     session of the State legislature.

                      Subtitle B--Higher Education

     SEC. 2101. SHORT TITLE.

       This subtitle may be cited as the ``Higher Education Budget 
     Reconciliation Act of 2005''.

         PART 1--AMENDMENTS TO THE HIGHER EDUCATION ACT OF 1965

     SEC. 2111. REFERENCES; EFFECTIVE DATE.

       (a) References.--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 Higher Education Act of 
     1965 (20 U.S.C. 1001 et seq.).
       (b) Effective Date.--Except as otherwise provided in this 
     part, the amendments made by this part shall be effective on 
     the date of enactment of this Act.

     SEC. 2112. MODIFICATION OF 50/50 RULE.

       Section 102(a)(3) (20 U.S.C. 1002(a)(3)) is amended--
       (1) in subparagraph (A), by inserting ``(excluding courses 
     offered by telecommunications as defined in section 
     484(l)(4))'' after ``courses by correspondence''; and
       (2) in subparagraph (B), by inserting ``(excluding courses 
     offered by telecommunications as defined in section 
     484(l)(4))'' after ``correspondence courses''.

     SEC. 2113. REAUTHORIZATION OF FEDERAL FAMILY EDUCATION LOAN 
                   PROGRAM.

       (a) Authorization of Appropriations.--Section 421(b)(5) (20 
     U.S.C. 1071(b)(5)) is amended by striking ``an administrative 
     cost allowance'' and inserting ``a loan processing and 
     issuance fee''.

[[Page H10555]]

       (b) Extension of Authority.--
       (1) Federal insurance limitations.--Section 424(a) (20 
     U.S.C. 1074(a)) is amended--
       (A) by striking ``2004'' and inserting ``2012''; and
       (B) by striking ``2008'' and inserting ``2016''.
       (2) Guaranteed loans.--Section 428(a)(5) (20 U.S.C. 
     1078(a)(5)) is amended--
       (A) by striking ``2004'' and inserting ``2012''; and
       (B) by striking ``2008'' and inserting ``2016''.
       (3) Consolidation loans.--Section 428C(e) (20 U.S.C. 1078-
     3(e)) is amended by striking ``2004'' and inserting ``2012''.

     SEC. 2114. LOAN LIMITS.

       (a) Federal Insurance Limits.--Section 425(a)(1)(A) (20 
     U.S.C. 1075(a)(1)(A)) is amended--
       (1) in clause (i)(I), by striking ``$2,625'' and inserting 
     ``$3,500''; and
       (2) in clause (ii)(I), by striking ``$3,500'' and inserting 
     ``$4,500''.
       (b) Guarantee Limits.--Section 428(b)(1)(A) (20 U.S.C. 
     1078(b)(1)(A)) is amended--
       (1) in clause (i)(I), by striking ``$2,625'' and inserting 
     ``$3,500''; and
       (2) in clause (ii)(I), by striking ``$3,500'' and inserting 
     ``$4,500''.
       (c) Counting of Consolidation Loans Against Limits.--
     Section 428C(a)(3)(B) (20 U.S.C. 1078-3(a)(3)(B)) is amended 
     by adding at the end the following new clause:
       ``(ii) Loans made under this section shall, to the extent 
     used to pay off the outstanding principal balance on loans 
     made under this title, excluding capitalized interest, be 
     counted against the applicable limitations on aggregate 
     indebtedness contained in sections 425(a)(2), 428(b)(1)(B), 
     428H(d), 455, and 464(a)(2)(B).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to any loan made, insured, or 
     guaranteed under part B or part D of title IV of the Higher 
     Education Act of 1965 for which the first disbursement of 
     principal is made on or after July 1, 2007.

     SEC. 2115. INTEREST RATES AND SPECIAL ALLOWANCES.

       (a) FFEL Interest Rates.--Section 427A (20 U.S.C. 1077a(k)) 
     is amended--
       (1) in subsection (k)--
       (A) by striking ``, and Before July 1, 2006'' in the 
     heading of such subsection; and
       (B) by striking ``, and before July 1, 2006,'' each place 
     it appears in paragraphs (1), (2), and (3);
       (2) by striking subsection (l); and
       (3) by redesignating subsections (m) and (n) as subsections 
     (l) and (m), respectively.
       (b) Direct Loan Interest Rates.--Section 455(b) (20 U.S.C. 
     1087e(b)) is amended--
       (1) in paragraph (6)--
       (A) by striking ``, and before july 1, 2006'' in the 
     heading of such paragraph; and
       (B) by striking ``, and before July 1, 2006,'' each place 
     it appears in subparagraphs (A), (B), and (C);
       (2) by striking paragraph (7); and
       (3) by redesignating paragraphs (8) and (9) as paragraphs 
     (7) and (8), respectively.
       (c) Consolidation Loan Interest Rates.--
       (1) FFEL loans.--Section 427A(k) (20 U.S.C. 1077a(k)) is 
     further amended--
       (A) in the heading of paragraph (4), by inserting ``before 
     july 1, 2006'' after ``loans'';
       (B) by redesignating paragraph (5) as paragraph (6); and
       (C) by inserting after paragraph (4) the following:
       ``(5) Consolidation loans on or after july 1, 2006.--
       ``(A) Borrower election.--With respect to any consolidation 
     loan under section 428C for which the application is received 
     by an eligible lender on or after July 1, 2006, the 
     applicable rate of interest shall, at the election of the 
     borrower at the time of application for the loan, be either 
     at the rate determined under subparagraph (B) or the rate 
     determined under subparagraph (C).
       ``(B) Variable rate.--Except as provided in subparagraph 
     (D), the rate determined under this subparagraph shall, 
     during any 12-month period beginning on July 1 and ending on 
     June 30, be determined on the preceding June 1 and, for such 
     12-month period, not be more than--
       ``(i) the bond equivalent rate of 91-day Treasury bills 
     auctioned at the final auction held prior to such June 1; 
     plus
       ``(ii) 2.3 percent,

     except that such rate shall not exceed 8.25 percent.
       ``(C) Fixed rate.--Except as provided in subparagraph (D), 
     the rate determined under this subparagraph shall be 
     determined for the duration of the term of the loan on the 
     July 1 that is or precedes the date on which the application 
     is received by an eligible lender, and shall be, for such 
     duration, not more than--
       ``(i) the bond equivalent rate of 91-day Treasury bills 
     auctioned at the final auction held prior to the June 1 
     immediately preceding such July 1; plus
       ``(ii) 3.3 percent,
     except that such rate shall not exceed 8.25 percent.
       ``(D) Consolidation of plus loans.--In the case of any such 
     consolidation loan that is used to repay loans each of which 
     was made under section 428B or was a Federal Direct PLUS Loan 
     (or both), the rates determined under clauses (B) and (C) 
     shall be determined--
       ``(i) by substituting `3.1 percent' for `2.3 percent';
       ``(ii) by substituting `4.1 percent' for `3.3 percent'; and
       ``(iii) by substituting `9.0 percent' for `8.25 
     percent'.''.
       (2) Direct loans.--Section 455(b)(6) (20 U.S.C. 
     1087e(b)(6)) is further amended--
       (A) in the heading of subparagraph (D), by inserting 
     ``before july 1, 2006'' after ``loans''
       (B) by redesignating subparagraph (E) as subparagraph (F); 
     and
       (C) by inserting after subparagraph (D) the following:
       ``(E) Consolidation loans on or after july 1, 2006.--
       ``(i) Borrower election.--Notwithstanding the preceding 
     paragraphs of this subsection, with respect to any Federal 
     Direct Consolidation Loan for which the application is 
     received by the Secretary on or after July 1, 2006, the 
     applicable rate of interest shall, at the election of the 
     borrower at the time of application for the loan, be either 
     at the rate determined under clause (ii) or the rate 
     determined under clause (iii).
       ``(ii) Variable rate.--Except as provided in clause (iv), 
     the rate determined under this clause shall, during any 12-
     month period beginning on July 1 and ending on June 30, be 
     determined on the preceding June 1 and, for such 12-month 
     period, be equal to--

       ``(I) the bond equivalent rate of 91-day Treasury bills 
     auctioned at the final auction held prior to such June 1; 
     plus
       ``(II) 2.3 percent,

     except that such rate shall not exceed 8.25 percent.
       ``(iii) Fixed rate.--Except as provided in clause (iv), the 
     rate determined under this clause shall be determined for the 
     duration of the term of the loan on the July 1 that is or 
     precedes the date on which the application is received by the 
     Secretary, and shall be, for such duration, equal to--

       ``(I) the bond equivalent rate of 91-day Treasury bills 
     auctioned at the final auction held prior to the June 1 
     immediately preceding such July 1; plus
       ``(II) 3.3 percent,

     except that such rate shall not exceed 8.25 percent.
       ``(iv) Consolidation of plus loans.--In the case of any 
     such Federal Direct Consolidation Loan that is used to repay 
     loans each of which was made under section 428B or was a 
     Federal Direct PLUS Loan (or both), the rates determined 
     under clauses (ii) and (iii) shall be determined--

       ``(I) by substituting `3.1 percent' for `2.3 percent';
       ``(II) by substituting `4.1 percent' for `3.3 percent'; and
       ``(III) by substituting `9.0 percent' for `8.25 
     percent'.''.

       (d) Consolidation Loan Conforming Amendment.--Section 
     428C(c)(1)(A)(ii) (20 U.S.C. 1078-3(c)(1)(A)(ii)) is amended 
     by striking ``section 427A(l)(3)'' and inserting ``section 
     427A(k)(5)''.
       (e) Conforming Amendments for Special Allowances.--
       (1) Amendment.--Subparagraph (I) of section 438(b)(2) (20 
     U.S.C. 1087-1(b)(2)) is amended--
       (A) by striking clause (ii) and inserting the following:
       ``(ii) In school and grace period.--In the case of any loan 
     for which the first disbursement is made on or after January 
     1, 2000, and for which the applicable interest rate is 
     described in section 427A(k)(2), clause (i)(III) of this 
     subparagraph shall be applied by substituting `1.74 percent' 
     for `2.34 percent'.'';
       (B) in clause (iii),
       (i) by striking ``or (l)(2)''; and
       (ii) by striking ``, subject to clause (v) of this 
     subparagraph'';
       (C) in clause (iv)--
       (i) by striking ``or (l)(3)'' and inserting ``or (k)(5)''; 
     and
       (ii) by striking ``, subject to clause (vi) of this 
     subparagraph''; and
       (D) by striking clauses (v), (vi), and (vii) and inserting 
     the following:
       ``(v) Recapture of excess interest.--

       ``(I) Excess credited.--With respect to a loan on which the 
     applicable interest rate is determined under section 427A(k) 
     and for which the first disbursement of principal is made on 
     or after July 1, 2006, if the applicable interest rate for 
     any 3-month period exceeds the special allowance support 
     level applicable to such loan under this subparagraph for 
     such period, then an adjustment shall be made by calculating 
     the excess interest in the amount computed under subclause 
     (II) of this clause, and by crediting the excess interest to 
     the Government not less often than annually.
       ``(II) Calculation of excess.--The amount of any adjustment 
     of interest on a loan to be made under this subsection for 
     any quarter shall be equal to--

       ``(aa) the applicable interest rate minus the special 
     allowance support level determined under this subparagraph; 
     multiplied by
       ``(bb) the average daily principal balance of the loan (not 
     including unearned interest added to principal) during such 
     calendar quarter; divided by
       ``(cc) four.

       ``(III) Special allowance support level.--For purposes of 
     this clause, the term `special allowance support level' 
     means, for any loan, a number expressed as a percentage equal 
     to the sum of the rates determined under subclauses (I) and 
     (III) of clause (i), and applying any substitution rules 
     applicable to such loan under clauses (ii), (iii), and (iv) 
     in determining such sum.''.

       (2) Effective date.--The amendments made by this subsection 
     shall not apply with respect to any special allowance payment

[[Page H10556]]

     made under section 438 of the Higher Education Act of 1965 
     (20 U.S.C 1087-1) before July 1, 2006.

     SEC. 2116. ADDITIONAL LOAN TERMS AND CONDITIONS.

       (a) Federal Default Fees.--
       (1) In general.--Subparagraph (H) of section 428(b)(1) (20 
     U.S.C. 1078(b)(1)(H)) is amended to read as follows:
       ``(H) provides--
       ``(i) for loans for which the first disbursement of 
     principal is made before July, 1, 2006, for the collection of 
     a single insurance premium equal to not more than 1.0 percent 
     of the principal amount of the loan, by deduction 
     proportionately from each installment payment of the proceeds 
     of the loan to the borrower, and ensures that the proceeds of 
     the premium will not be used for incentive payments to 
     lenders; or
       ``(ii) for loans for which the first disbursement of 
     principal is made on or after July 1, 2006, for the 
     collection and deposit into the Federal Student Loan Reserve 
     Fund under section 422A of a Federal default fee of 1.0 
     percent of the principal amount of such loan, which shall be 
     deducted proportionately from each installment payment of the 
     proceeds of the loan to the borrower prior to payment to the 
     borrower, and ensures that the proceeds of the Federal 
     default fee will not be used for incentive payments to 
     lenders;''.
       (2) Unsubsidized loans.--Section 428H(h) (20 U.S.C. 1078-
     8(h)) is amended by adding at the end the following new 
     sentence: ``Effective for loans for which the first 
     disbursement of principal is made on or after July 1, 2006, 
     in lieu of the insurance premium authorized under the 
     preceding sentence, each State or nonprofit private 
     institution or organization having an agreement with the 
     Secretary under section 428(b)(1) shall collect and deposit 
     into the Federal Student Loan Reserve Fund under section 422A 
     a Federal default fee of 1.0 percent of the principal amount 
     of the loan, obtained by deduction proportionately from each 
     installment payment of the proceeds of the loan to the 
     borrower. The Federal default fee shall not be used for 
     incentive payments to lenders.''.
       (3) Voluntary flexible agreements.--Section 428A(a)(1) (20 
     U.S.C. 1078-1(a)(1)) is amended--
       (A) by striking ``or'' at the end of subparagraph (A);
       (B) by striking the period at the end of subparagraph (B) 
     and inserting ``; or''; and
       (C) by adding at the end the following new subparagraph:
       ``(C) the Federal default fee required by section 
     428(b)(1)(H) and the second sentence of section 428H(h).''.
       (b) Disbursement.--Section 428(b)(1)(N) (20 U.S.C. 
     1078(b)(1)(N)) is amended--
       (1) in clause (i), by inserting ``(including an eligible 
     foreign institution, except as provided in clause (ii))'' 
     after ``institution''; and
       (2) in clause (ii), by striking ``or at an eligible foreign 
     institution''.
       (c) Repayment Plans.--
       (1) FFEL loans.--Section 428(b)(9)(A) (20 U.S.C. 
     1078(b)(9)(A)) is amended--
       (A) by inserting before the semicolon at the end of clause 
     (ii) the following: ``, and the Secretary may not restrict 
     the proportions or ratios by which such payments may be 
     graduated with the informed agreement of the borrower'';
       (B) by striking ``and'' at the end of clause (iii);
       (C) by redesignating clause (iv) as clause (v); and
       (D) by inserting after clause (iii) the following new 
     clause:
       ``(iv) a delayed repayment plan under which the borrower 
     makes scheduled payments for not more than 2 years that are 
     annually not less than the amount of interest due or $600, 
     whichever is greater, and then makes payments in accordance 
     with clause (i), (ii), or (iii); and''.
       (2) Direct loans.--Section 455(d)(1) (20 U.S.C. 
     1087e(d)(1)) is amended--
       (A) by redesignating subparagraph (D) as subparagraph (E); 
     and
       (B) by striking subparagraphs (A), (B), and (C) and 
     inserting the following:
       ``(A) a standard repayment plan, consistent with subsection 
     (a)(1) of this section and with section 428(b)(9)(A)(i);
       ``(B) a graduated repayment plan, consistent with section 
     428(b)(9)(A)(ii);
       ``(C) an extended repayment plan, consistent with section 
     428(b)(9)(A)(v), except that the borrower shall annually 
     repay a minimum amount determined by the Secretary in 
     accordance with section 428(b)(1)(L);
       ``(D) a delayed repayment plan under which the borrower 
     makes scheduled payments for not more than 2 years that are 
     annually not less than the amount of interest due or $600, 
     whichever is greater, and then makes payments in accordance 
     with subparagraph (A), (B), or (C); and''.
       (d) Origination Fees.--
       (1) FFEL program.--Paragraph (2) of section 438(c) (20 
     U.S.C. 1087-1(c)) is amended--
       (A) by striking the designation and heading of such 
     paragraph and inserting the following:
       ``(2) Amount of origination fees.--
       ``(A) In general.--''; and
       (B) by adding at the end the following new subparagraph:
       ``(B) Subsequent reductions.--Subparagraph (A) shall be 
     applied to loans made under this part (other than loans made 
     under sections 428C and 439(o))--
       ``(i) by substituting `2.0 percent' for `3.0 percent' with 
     respect to loans for which the first disbursement of 
     principal is made on or after July 1, 2006, and before July 
     1, 2007;
       ``(ii) by substituting `1.5 percent' for `3.0 percent' with 
     respect to loans for which the first disbursement of 
     principal is made on or after July 1, 2007, and before July 
     1, 2008;
       ``(iii) by substituting `1.0 percent' for `3.0 percent' 
     with respect to loans for which the first disbursement of 
     principal is made on or after July 1, 2008, and before July 
     1, 2009;
       ``(iv) by substituting `0.5 percent' for `3.0 percent' with 
     respect to loans for which the first disbursement of 
     principal is made on or after July 1, 2009, and before July 
     1, 2010; and
       ``(v) by substituting `0.0 percent' for `3.0 percent' with 
     respect to loans for which the first disbursement of 
     principal is made on or after July 1, 2010.''.
       (2) Direct loan program.--Subsection (c) of section 455 (20 
     U.S.C. 1087e(c)) is amended to read as follows:
       ``(c) Loan Fee.--
       ``(1) In general.--The Secretary shall charge the borrower 
     of a loan made under this part an origination fee of 4.0 
     percent of the principal amount of loan.
       ``(2) Subsequent reduction.--Paragraph (1) shall be applied 
     to loans made under this part, other than Federal Direct 
     Consolidation loans and Federal Direct PLUS loans--
       ``(A) by substituting `not more or less than 3.0 percent' 
     for `4.0 percent' with respect to loans for which the first 
     disbursement of principal is made on or after July 1, 2006, 
     and before July 1, 2007;
       ``(B) by substituting `not more or less than 2.5 percent' 
     for `4.0 percent' with respect to loans for which the first 
     disbursement of principal is made on or after July 1, 2007, 
     and before July 1, 2008;
       ``(C) by substituting `not more or less than 2.0 percent' 
     for `4.0 percent' with respect to loans for which the first 
     disbursement of principal is made on or after July 1, 2008, 
     and before July 1, 2009;
       ``(D) by substituting `not more or less than 1.5 percent' 
     for `4.0 percent' with respect to loans for which the first 
     disbursement of principal is made on or after July 1, 2009, 
     and before July 1, 2010; and
       ``(E) by substituting `not more or less than 1.0 percent' 
     for `4.0 percent' with respect to loans for which the first 
     disbursement of principal is made on or after July 1, 2010.
       ``(3) Waivers and repayment incentives prohibited.--
     Beginning with loans made on or after July 1, 2006, the 
     Secretary is prohibited--
       ``(A) from waiving any amount of the loan fee prescribed 
     under this section as part of a repayment incentive in 
     section 455(b)(7); and
       ``(B) from providing any repayment incentive before the 
     borrower enters repayment.''.
       (e) Consolidation Loan Offset Charge.--
       (1) FFEL consolidation loans.--Section 438(c) (20 U.S.C. 
     1087-1(c)) is further amended--
       (A) in paragraph (1)(A), by inserting after ``paragraph (2) 
     of this subsection'' the following: ``and the amount the 
     lender is authorized to collect as a consolidation loan 
     offset charge in accordance with paragraph (9) of this 
     subsection'';
       (B) in paragraph (1)(B)--
       (i) by inserting ``and the consolidation loan offset 
     charge'' after ``origination fee''; and
       (ii) by inserting ``and consolidation loan offset charges'' 
     after ``origination fees'';
       (C) in paragraphs (3) and (4), by inserting ``and 
     consolidation loan offset charge'' after ``origination fee'' 
     each place it appears;
       (D) in paragraph (5)--
       (i) by inserting ``or consolidation loan offset charge'' 
     after ``origination fee''; and
       (ii) by inserting ``or consolidation loan offset charges'' 
     after ``origination fees'';
       (E) in paragraph (7)--
       (i) by inserting ``and consolidation loan offset charges'' 
     after ``origination fees''; and
       (ii) by striking ``428A or''; and
       (F) by adding at the end the following new paragraph:
       ``(9) Consolidation loan offset charge.--For any loan under 
     section 428C, the lender is authorized to collect a 
     consolidation loan offset charge in an amount not to exceed 
     1.0 percent of the principal amount of the loan. Such amount 
     may be added to the principal amount of the loan for 
     repayment by the borrower.''.
       (2) Direct loans.--Section 455(c) (20 U.S.C. 1087e(c)), as 
     amended by subsection (d)(2) of this section, is further 
     amended by adding at the end the following new paragraph:
       ``(4) Consolidation loan offset charges.--For any Federal 
     Direct Consolidation Loan, the Secretary shall collect a 
     consolidation loan offset charge in an amount not more or 
     less than 1.0 percent of the principal amount of the loan. 
     Such amount may be added to the principal amount of the loan 
     for repayment by the borrower. Such amount is not subject to 
     the requirements of paragraph (3) of this subsection.''.

     SEC. 2117. CONSOLIDATION LOAN CHANGES.

       (a) Cross-Consolidation Between Programs.--Section 428C (20 
     U.S.C. 1078-3) is amended--
       (1) in subsection (a)(3)(B)(i)--
       (A) by inserting ``or under section 455(g)'' after ``under 
     this section'' both places it appears;
       (B) by inserting ``under both sections'' after 
     ``terminates''
       (C) by striking ``and'' at the end of subclause (III);
       (D) by striking the period at the end of subclause (IV) and 
     inserting ``; and''; and
       (E) by adding at the end the following new subclause:

[[Page H10557]]

       ``(V) an individual may obtain a subsequent consolidation 
     loan under section 455(g) only for the purposes of obtaining 
     an income contingent repayment plan, and only if the loan has 
     been submitted to the guaranty agency for default 
     aversion.''; and
       (2) in subsection (b)(5), by striking the first sentence 
     and inserting the following: ``In the event that a lender 
     with an agreement under subsection (a)(1) of this section 
     denies a consolidation loan application submitted to it by an 
     eligible borrower under this section, or denies an 
     application submitted to it by such a borrower for a 
     consolidation loan with income-sensitive repayment terms, the 
     Secretary shall offer any such borrower who applies for it, a 
     Federal Direct Consolidation loan. The Secretary shall offer 
     such a loan to a borrower who has defaulted, for the purpose 
     of resolving the default.''.
       (b) Repeal of in-School Consolidation.--
       (1) Definition of repayment period.--Section 428(b)(7)(A) 
     (20 U.S.C. 1078(b)(7)(A)) is amended by striking ``shall 
     begin--'' and all that follows through ``earlier date.'' and 
     inserting the following: ``shall begin the day after 6 months 
     after the date the student ceases to carry at least one-half 
     the normal full-time academic workload (as determined by the 
     institution).''.
       (2) Conforming change to eligible borrower definition.--
     Section 428C(a)(3)(A)(ii)(I) (20 U.S.C. 1078-
     3(a)(3)(A)(ii)(I)) is amended by inserting ``as determined 
     under section 428(b)(7)(A)'' after ``repayment status''.
       (c) Interest Payment Rebate Fee.--Section 428C(f)(2) (20 
     U.S.C. 1078-2(f)(2)) is amended--
       (1) by striking ``Special rule.--'' and inserting ``Special 
     rules.--(A)''; and
       (2) by adding at the end the following new subparagraph:
       ``(B) For consolidation loans based on applications 
     received on or after July 1, 2006, if 90 percent or more of 
     the total principal and accrued unpaid interest outstanding 
     on the loans held, directly or indirectly, by any holder is 
     comprised of principal and accrued unpaid interest owed on 
     consolidation loans, the rebate described in paragraph (1) 
     for such holder shall be equal to 1.30 percent of the 
     principal plus accrued unpaid interest on such loans.''.
       (d) Additional Amendments.--Section 428C (20 U.S.C. 1078-3) 
     is amended--
       (1) in subsection (a)(3), by striking subparagraph (C); and
       (2) in subsection (b)(1)--
       (A) by striking everything after ``under this section'' the 
     first place it appears in subparagraph (A) and inserting the 
     following: ``and that, if all the borrower's loans under this 
     part are held by a single holder, the borrower has notified 
     such holder that the borrower is seeking to obtain a 
     consolidation loan under this section;'';
       (B) by striking ``(i) which'' and all that follows through 
     ``and (ii)'' in subparagraph (C);
       (C) by striking ``and'' at the end of subparagraph (E);
       (D) by redesignating subparagraph (F) as subparagraph (G); 
     and
       (E) by inserting after subparagraph (E) the following new 
     subparagraph:
       ``(F) that the lender of the consolidation loan shall, upon 
     application for such loan, provide the borrower with a clear 
     and conspicuous notice of at least the following information:
       ``(i) the effects of consolidation on total interest to be 
     paid, fees to be paid, and length of repayment;
       ``(ii) the effects of consolidation on a borrower's 
     underlying loan benefits, including loan forgiveness, 
     cancellation, deferment, and reduced interest rates on those 
     underlying loans;
       ``(iii) the ability of the borrower to prepay the loan, pay 
     on a shorter schedule, and to change repayment plans;
       ``(iv) that borrower benefit programs may vary among 
     different loan holders, and a description of how the borrower 
     benefits may vary among different loan holders;
       ``(v) the tax benefits for which borrowers may be eligible;
       ``(vi) the consequences of default; and
       ``(vii) that by making the application the applicant is not 
     obligated to agree to take the consolidation loan; and''.
       (e) Effective Date for Single Holder Amendment.--The 
     amendment made by subsection (d)(2)(A) shall apply with 
     respect to any loan made under section 428C of the Higher 
     Education Act of 1965 (20 U.S.C. 1078-3) for which the 
     application is received by an eligible lender on or after 
     July 1, 2006.
       (f) Conforming Amendments to Direct Loan Program.--Section 
     455 (20 U.S.C. 1087e) is amended
       (1) in subsection (a)(1) by inserting ``428C,'' after 
     ``428B,'';
       (2) in subsection (a)(2)--
       (A) by striking ``and'' at the end of subparagraph (B);
       (B) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (C) by inserting after subparagraph (B) the following:
       ``(C) section 428C shall be known as `Federal Direct 
     Consolidation Loans'; and ''; and
       (3) in subsection (g)--
       (A) by striking the second sentence; and
       (B) by adding at the end the following new sentences: ``To 
     be eligible for a consolidation loan under this part, a 
     borrower must meet the eligibility criteria set forth in 
     section 428C(a)(3). The Secretary, upon application for such 
     a loan, shall comply with the requirements applicable to a 
     lender under section 428C(b)(1)(F).''.

     SEC. 2118. DEFERMENT OF STUDENT LOANS FOR MILITARY SERVICE.

       (a) Federal Family Education Loans.--Section 428(b)(1)(M) 
     (20 U.S.C. 1078(b)(1)(M)) is amended--
       (1) by striking ``or'' at the end of clause (ii);
       (2) by redesignating clause (iii) as clause (iv); and
       (3) by inserting after clause (ii) the following new 
     clause:
       ``(iii) not in excess of 3 years during which the 
     borrower--

       ``(I) is serving on active duty during a war or other 
     military operation or national emergency; or
       ``(II) is performing qualifying National Guard duty during 
     a war or other military operation or national emergency; 
     or''.

       (b) Direct Loans.--Section 455(f)(2) (20 U.S.C. 
     1087e(f)(2)) is amended--
       (1) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (2) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) not in excess of 3 years during which the borrower--
       ``(i) is serving on active duty during a war or other 
     military operation or national emergency; or
       ``(ii) is performing qualifying National Guard duty during 
     a war or other military operation or national emergency; 
     or''.
       (c) Perkins Loans.--Section 464(c)(2)(A) (20 U.S.C. 
     1087dd(c)(2)(A)) is amended--
       (1) by redesignating clauses (iii) and (iv) as clauses (iv) 
     and (v), respectively; and
       (2) by inserting after clause (ii) the following new 
     clause:
       ``(iii) not in excess of 3 years during which the 
     borrower--
       ``(I) is serving on active duty during a war or other 
     military operation or national emergency; or
       ``(II) is performing qualifying National Guard duty during 
     a war or other military operation or national emergency;''.
       (d) Definitions.--Section 481 (20 U.S.C. 1088) is amended 
     by adding at the end the following new subsection:
       ``(d) Definitions for Military Deferments.--For purposes of 
     parts B, D, and E of this title:
       ``(1) Active duty.--The term `active duty' has the meaning 
     given such term in section 101(d)(1) of title 10, United 
     States Code, except that such term does not include active 
     duty for training or attendance at a service school.
       ``(2) Military operation.--The term `military operation' 
     means a contingency operation as such term is defined in 
     section 101(a)(13) of title 10, United States Code.
       ``(3) National emergency.--The term `national emergency' 
     means the national emergency by reason of certain terrorist 
     attacks declared by the President on September 14, 2001, or 
     subsequent national emergencies declared by the President by 
     reason of terrorist attacks.
       ``(4) Serving on active duty.--The term `serving on active 
     duty during a war or other military operation or national 
     emergency' means service by an individual who is--
       ``(A) a Reserve of an Armed Force ordered to active duty 
     under section 12301(a), 12301(g), 12302, 12304, or 12306 of 
     title 10, United States Code, or any retired member of an 
     Armed Force ordered to active duty under section 688 of such 
     title, for service in connection with a war or other military 
     operation or national emergency, regardless of the location 
     at which such active duty service is performed; and
       ``(B) any other member of an Armed Force on active duty in 
     connection with such emergency or subsequent actions or 
     conditions who has been assigned to a duty station at a 
     location other than the location at which such member is 
     normally assigned.
       ``(5) Qualifying national guard duty.--The term `qualifying 
     National Guard duty during a war or other military operation 
     or national emergency' means service as a member of the 
     National Guard on full-time National Guard duty (as defined 
     in section 101(d)(5) of title 10, United States Code) under a 
     call to active service authorized by the President or the 
     Secretary of Defense for a period of more than 30 consecutive 
     days under section 502(f) of title 32, United States Code, in 
     connection with a war, other military operation, or a 
     national emergency declared by the President and supported by 
     Federal funds.''.
       (e) Rule of Construction.--Nothing in the amendments made 
     by this section shall be construed to authorize any refunding 
     of any repayment of a loan.
       (f) Effective Date.--The amendments made by this section 
     shall apply with respect to loans for which the first 
     disbursement is made on or after July 1, 1993, to an 
     individual who is a new borrower (within the meaning of 
     section 103 of the Higher Education Act of 1965 (20 U.S.C. 
     1003)) on or after such date.

     SEC. 2119. LOAN FORGIVENESS FOR SERVICE IN AREAS OF NATIONAL 
                   NEED.

       Section 428K (20 U.S.C. 1078-11) is amended to read as 
     follows:

     ``SEC. 428K. LOAN FORGIVENESS FOR SERVICE IN AREAS OF 
                   NATIONAL NEED.

       ``(a) Purposes.--The purposes of this section are--
       ``(1) to encourage highly trained individuals to enter and 
     continue in service in areas of national need; and
       ``(2) to reduce the burden of student debt for Americans 
     who dedicate their careers to service in areas of national 
     need.

[[Page H10558]]

       ``(b) Program Authorized.--
       ``(1) In general.--The Secretary is authorized to carry out 
     a program of assuming the obligation to repay, pursuant to 
     subsections (c)(2) and (d), a qualified loan amount for a 
     loan made, insured, or guaranteed under this part or part D 
     (other than loans made under section 428B and 428C and 
     comparable loans made under part D), for any new borrower 
     after the date of enactment of the Higher Education Budget 
     Reconciliation Act of 2005, who--
       ``(A) has been employed full-time for at least 5 
     consecutive complete school, academic, or calendar years, as 
     appropriate, in an area of national need described in 
     subsection (c); and
       ``(B) is not in default on a loan for which the borrower 
     seeks forgiveness.
       ``(2) Award basis.--Loan repayment under this section shall 
     be on a first-come, first-served basis pursuant to the 
     designation under subsection (c) and subject to the 
     availability of appropriations.
       ``(3) Regulations.--The Secretary is authorized to issue 
     such regulations as may be necessary to carry out the 
     provisions of this section.
       ``(c) Areas of National Need.--
       ``(1) Statutory categories.--For purposes of this section, 
     an individual shall be treated as employed in an area of 
     national need if the individual is employed full-time and is 
     any of the following:
       ``(A) Early childhood educators.--An individual who is 
     employed as an early childhood educator in an eligible 
     preschool program or child care facility in a low-income 
     community, and who is involved directly in the care, 
     development and education of infants, toddlers, or young 
     children through age five.
       ``(B) Nurses.--An individual who is employed--
       ``(i) as a nurse in a clinical setting; or
       ``(ii) as a member of the nursing faculty at an accredited 
     school of nursing (as those terms are defined in section 801 
     of the Public Health Service Act (42 U.S.C. 296)).
       ``(C) Foreign language specialists.--An individual who has 
     obtained a baccalaureate degree in a critical foreign 
     language and is employed--
       ``(i) in an elementary or secondary school as a teacher of 
     a critical foreign language; or
       ``(ii) in an agency of the United States Government in a 
     position that regularly requires the use of such critical 
     foreign language.
       ``(D) Librarians.--An individual who is employed as a 
     librarian in--
       ``(i) a public library that serves a geographic area within 
     which the public schools have a combined average of 30 
     percent or more of their total student enrollments composed 
     of children counted under section 1113(a)(5) of the 
     Elementary and Secondary Education Act of 1965; or
       ``(ii) an elementary or secondary school which is in the 
     school district of a local educational agency which is 
     eligible in such year for assistance pursuant to title I of 
     the Elementary and Secondary Education Act of 1965, and which 
     for the purpose of this paragraph and for that year has been 
     determined by the Secretary (pursuant to regulations and 
     after consultation with the State educational agency of the 
     State in which the school is located) to be a school in which 
     the enrollment of children counted under section 1113(a)(5) 
     of the Elementary and Secondary Education Act of 1965 exceeds 
     30 percent of the total enrollment of that school.
       ``(E) Highly qualified teachers: bilingual education and 
     low-income communities.--An individual who--
       ``(i) is highly qualified as such term is defined in 
     section 9101 of the Elementary and Secondary Education Act of 
     1965; and
       ``(ii)(I) is employed as a teacher of bilingual education; 
     or
       ``(II) is employed as a teacher for service in a public or 
     nonprofit private elementary or secondary school which is in 
     the school district of a local educational agency which is 
     eligible in such year for assistance pursuant to title I of 
     the Elementary and Secondary Education Act of 1965, and which 
     for the purpose of this paragraph and for that year has been 
     determined by the Secretary (pursuant to regulations and 
     after consultation with the State educational agency of the 
     State in which the school is located) to be a school in which 
     the enrollment of children counted under section 1113(a)(5) 
     of the Elementary and Secondary Education Act of 1965 exceeds 
     40 percent of the total enrollment of that school.
       ``(F) First responders in low-income communities.--An 
     individual who--
       ``(i) is employed as a firefighter, police officer, or 
     emergency medical technician; and
       ``(ii) serves as such in a low-income community.
       ``(G) Child welfare workers.--An individual who--
       ``(i) has obtained a degree in social work or a related 
     field with a focus on serving children and families; and
       ``(ii) is employed in public or private child welfare 
     services.
       ``(H) Speech-language pathologists.--An individual who is a 
     speech-language pathologist, who is employed in an eligible 
     preschool program or an elementary or secondary school, and 
     who has, at a minimum, a graduate degree in speech-language 
     pathology, or communication sciences and disorders.
       ``(I) Additional areas of national need.--An individual who 
     is employed in an area designated by the Secretary under 
     paragraph (2) and has completed a baccalaureate or advanced 
     degree related to such area.
       ``(2) Designation of additional areas of national need.--
     After consultation with appropriate Federal, State, and 
     community-based agencies and organizations, the Secretary 
     shall designate additional areas of national need in which an 
     individual may be employed full-time to be eligible for loan 
     repayment under this section. In making such designations, 
     the Secretary shall take into account the extent to which--
       ``(A) the national interest in the area is compelling;
       ``(B) the area suffers from a critical lack of qualified 
     personnel; and
       ``(C) other Federal programs support the area concerned.
       ``(d) Qualified Loan Amount.--Subject to the availability 
     of appropriations, the Secretary shall repay not more than 
     $5,000 in the aggregate of the loan obligation on a loan made 
     under section 428 or 428H that is outstanding after the 
     completion of the fifth consecutive school, academic, or 
     calendar year, as appropriate, described in subsection 
     (b)(1).
       ``(e) Construction.--Nothing in this section shall be 
     construed to authorize the refunding of any repayment of a 
     loan made under section 428 or 428H.
       ``(f) Ineligibility of National Service Award Recipients.--
     No student borrower may, for the same service, receive a 
     benefit under both this section and subtitle D of title I of 
     the National and Community Service Act of 1990 (42 U.S.C. 
     12601 et seq.).
       ``(g) Ineligibility for Double Benefits.--No borrower may 
     receive a reduction of loan obligations under both this 
     section and section 428J or 460.
       ``(h) Definitions.--In this section
       ``(1) Child care facility.--The term `child care facility' 
     means a facility, including a home, that--
       ``(A) provides for the education and care of children from 
     birth through age 5; and
       ``(B) meets any applicable State or local government 
     licensing, certification, approval, or registration 
     requirements.
       ``(2) Critical foreign language.--The term `critical 
     foreign language' includes the languages of Arabic, Korean, 
     Japanese, Chinese, Pashto, Persian-Farsi, Serbian-Croatian, 
     Russian, Portuguese, and any other language identified by the 
     Secretary of Education, in consultation with the Defense 
     Language Institute, the Foreign Service Institute, and the 
     National Security Education Program, as a critical foreign 
     language need.
       ``(3) Early childhood educator.--The term `early childhood 
     educator' means an early childhood educator employed in an 
     eligible preschool program who has completed a baccalaureate 
     or advanced degree in early childhood development, early 
     childhood education, or in a field related to early childhood 
     education.
       ``(4) Eligible preschool program.--The term `eligible 
     preschool program' means a program that provides for the 
     care, development, and education of infants, toddlers, or 
     young children through age 5, meets any applicable State or 
     local government licensing, certification, approval, and 
     registration requirements, and is operated by--
       ``(A) a public or private school that may be supported, 
     sponsored, supervised, or administered by a local educational 
     agency;
       ``(B) a Head Start agency serving as a grantee designated 
     under the Head Start Act (42 U.S.C. 9831 et seq.);
       ``(C) a nonprofit or community based organization; or
       ``(D) a child care program, including a home.
       ``(5) Low-income community.--In this subsection, the term 
     `low-income community' means a community in which 70 percent 
     of households earn less than 85 percent of the State median 
     household income.
       ``(6) Nurse.--The term `nurse' means a nurse who meets all 
     of the following:
       ``(A) The nurse graduated from--
       ``(i) an accredited school of nursing (as those terms are 
     defined in section 801 of the Public Health Service Act (42 
     U.S.C. 296));
       ``(ii) a nursing center; or
       ``(iii) an academic health center that provides nurse 
     training.
       ``(B) The nurse holds a valid and unrestricted license to 
     practice nursing in the State in which the nurse practices in 
     a clinical setting.
       ``(C) The nurse holds one or more of the following:
       ``(i) A graduate degree in nursing, or an equivalent 
     degree.
       ``(ii) A nursing degree from a collegiate school of nursing 
     (as defined in section 801 of the Public Health Service Act 
     (42 U.S.C. 296)).
       ``(iii) A nursing degree from an associate degree school of 
     nursing (as defined in section 801 of the Public Health 
     Service Act (42 U.S.C. 296)).
       ``(iv) A nursing degree from a diploma school of nursing 
     (as defined in section 801 of the Public Health Service Act 
     (42 U.S.C. 296)).
       ``(7) Speech-language pathologist.--The term `speech-
     language pathologist' means a speech-language pathologist who 
     meets all of the following:
       ``(A) the speech-language pathologist has received, at a 
     minimum, a graduate degree in speech-language pathology or 
     communication sciences and disorders from an institution of 
     higher education accredited by an

[[Page H10559]]

     agency or association recognized by the Secretary pursuant to 
     section 496(a) of this Act; and
       ``(B) the speech-language pathologist meets or exceeds the 
     qualifications described in section 1861(ll)(3) of the Social 
     Security Act (42 U.S.C. 1395x(3)).
       ``(i) Authorization of Appropriations.--There are 
     authorized to be appropriated to carry out this section such 
     sums as may be necessary for fiscal year 2006 and such sums 
     as may be necessary for each of the 5 succeeding fiscal 
     years.''.

     SEC. 2120. UNSUBSIDIZED STAFFORD LOANS.

       (a) Amendment.--Section 428H(d)(2)(C) (20 U.S.C. 1078-
     8(d)(2)(C)) is amended by striking ``$10,000'' and inserting 
     ``$12,000''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to loans for which the first disbursement of 
     principal is made on or after July 1, 2007.

     SEC. 2121. ELIMINATION OF TERMINATION DATES FROM TAXPAYER-
                   TEACHER PROTECTION ACT OF 2004.

       (a) Extension of Limitations on Special Allowance for Loans 
     From the Proceeds of Tax Exempt Issues.--Section 438(b)(2)(B) 
     (20 U.S.C. 1087-1(b)(2)(B)) is amended--
       (1) in clause (iv), by striking ``and before January 1, 
     2006,''; and
       (2) in clause (v)(II)--
       (A) by striking ``and before January 1, 2006,'' each place 
     it appears in divisions (aa) and (bb); and
       (B) by striking ``, and before January 1, 2006'' in 
     division (cc).
       (b) Additional Limitation on Special Allowance for Loans 
     From the Proceeds of Tax Exempt Issues.--Section 438(b)(2)(B) 
     (20 U.S.C 1087-1(b)(2)(B)) is further amended by adding at 
     the end thereof the following new clause:
       ``(vi) Notwithstanding clauses (i), (ii), and (v), the 
     quarterly rate of the special allowance shall be the rate 
     determined under subparagraph (A), (E), (F), (G), (H), or (I) 
     of this paragraph, as the case may be, for a holder of 
     loans--
       ``(I) that were made or purchased on or after October 1, 
     2005; or
       ``(II) that were not earning a quarterly rate of special 
     allowance determined under clauses (i) or (ii) of 
     subparagraph (B) of this paragraph (20 U.S.C. 1087-
     1(b)(2)(b)) as of October 1, 2005.''.
       (c) Elimination of Effective Date Limitation on Higher 
     Teacher Loan Forgiveness Benefits.--Paragraph (3) of section 
     3(b) of the Taxpayer-Teacher Protection Act of 2004 (20 
     U.S.C. 1078-10 note) is amended by striking ``, and before 
     October 1, 2005''.
       (d) Additional Changes to Teacher Loan Forgiveness 
     Provisions.--
       (1) FFEL provisions.--Section 428J (20 U.S.C. 1078-10) is 
     amended--
       (A) in subsection (b)(1)(B), by inserting after ``1965'' 
     the following: ``, or meets the requirements of subsection 
     (g)(3)'';
       (B) in subsection (c)(3)--
       (i) by striking ``and'' at the end of subparagraph (A);
       (ii) by striking the period at the end of subparagraph (B) 
     and inserting ``; and''; and
       (iii) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) an elementary or secondary school teacher who 
     primarily teaches reading--
       ``(i) who meets the requirements of subsection (b);
       ``(ii) who has obtained a separate reading instruction 
     credential from the State in which the teacher is employed; 
     and
       ``(iii) who is certified by the chief administrative 
     officer of the public or nonprofit private elementary or 
     secondary school in which the borrower is employed to teach 
     reading--

       ``(I) as being proficient in teaching the essential 
     components of reading instruction as defined in section 1208 
     of the Elementary and Secondary Education Act of 1965; and
       ``(II) as having such credential.''; and

       (C) in subsection (g), by adding at the end the following 
     new paragraph:
       ``(3) Private school teachers.--An individual who is 
     employed as a teacher in a private school and is exempt from 
     State certification requirements (unless otherwise applicable 
     under State law), may, in lieu of the requirement of 
     subsection (a)(1)(B), have such employment treated as 
     qualifying employment under this section if such individual 
     is permitted to and does satisfy rigorous subject knowledge 
     and skills tests by taking competency tests in the applicable 
     grade levels and subject areas. For such purposes, the 
     competency tests taken by such a private school teacher must 
     be recognized by 5 or more States for the purpose of 
     fulfilling the highly qualified teacher requirements under 
     section 9101 of the Elementary and Secondary Education Act of 
     1965, and the score achieved by such teacher on each test 
     must equal or exceed the average passing score of those 5 
     States.''.
       (2) Direct loan provisions.--Section 460 (20 U.S.C. 1087j) 
     is amended--
       (A) in subsection (b)(1)(A)(ii), by inserting after 
     ``1965'' the following: ``, or meets the requirements of 
     subsection (g)(3)'';
       (B) in subsection (c)(3)--
       (i) by striking ``and'' at the end of subparagraph (A);
       (ii) by striking the period at the end of subparagraph (B) 
     and inserting ``; and''; and
       (iii) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) an elementary or secondary school teacher who 
     primarily teaches reading--
       ``(i) who meets the requirements of subsection (b);
       ``(ii) who has obtained a separate reading instruction 
     credential from the State in which the teacher is employed; 
     and
       ``(iii) who is certified by the chief administrative 
     officer of the public or nonprofit private elementary or 
     secondary school in which the borrower is employed to teach 
     reading--

       ``(I) as being proficient in teaching the essential 
     components of reading instruction as defined in section 1208 
     of the Elementary and Secondary Education Act of 1965; and
       ``(II) as having such credential.''; and

       (C) in subsection (g), by adding at the end the following 
     new paragraph:
       ``(3) Private school teachers.--An individual who is 
     employed as a teacher in a private school and is exempt from 
     State certification requirements (unless otherwise applicable 
     under State law), may, in lieu of the requirement of 
     subsection (a)(1)(A)(ii), have such employment treated as 
     qualifying employment under this section if such individual 
     is permitted to and does satisfy rigorous subject knowledge 
     and skills tests by taking competency tests in the applicable 
     grade levels and subject areas. For such purposes, the 
     competency tests taken by such a private school teacher must 
     be recognized by 5 or more States for the purpose of 
     fulfilling the highly qualified teacher requirements under 
     section 9101 of the Elementary and Secondary Education Act of 
     1965, and the score achieved by such teacher on each test 
     must equal or exceed the average passing score of those 5 
     States.''.

     SEC. 2122. LOAN FEES FROM LENDERS.

       Section 438(d)(2) (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 equal 
     to--
       ``(A) 0.50 percent of the principal amount of the loan with 
     respect to any loan under this part for which the first 
     disbursement was made on or after October 1, 1993, and before 
     July 1, 2006; and
       ``(B) 1.0 percent of the principal amount of the loan with 
     respect to any loan under this part for which the first 
     disbursement was made on or after July 1, 2006.''.

     SEC. 2123. ADDITIONAL ADMINISTRATIVE PROVISIONS.

       (a) Treatment of Exempt Claims.--
       (1) Insurance coverage.--Section 428(b)(1)(G) (20 U.S.C. 
     1078(b)(1)(G)) is amended by inserting before the semicolon 
     at the end the following: ``and 100 percent of the unpaid 
     principal amount of exempt claims as defined in subsection 
     (c)(1)(G)''.
       (2) Treatment.--Section 428(c)(1) (20 U.S.C. 1078(c)(1)) is 
     amended--
       (A) by redesignating subparagraph (G) as subparagraph (H), 
     and moving such subparagraph 2 em spaces to the left; and
       (B) by inserting after subparagraph (F) the following new 
     subparagraph:
       ``(G)(i) Notwithstanding any other provisions of this 
     section, in the case of exempt claims, the Secretary shall 
     apply the provisions of--
       ``(I) the fourth sentence of subparagraph (A) by 
     substituting `100 percent' for `95 percent';
       ``(II) subparagraph (B)(i) by substituting `100 percent' 
     for `85 percent'; and
       ``(III) subparagraph (B)(ii) by substituting `100 percent' 
     for `75 percent'.
       ``(ii) For purposes of clause (i) of this subparagraph, the 
     term `exempt claims' means claims with respect to loans for 
     which it is determined that the borrower (or the student on 
     whose behalf a parent has borrowed), without the lender's or 
     the institution's knowledge at the time the loan was made, 
     provided false or erroneous information or took actions that 
     caused the borrower or the student to be ineligible for all 
     or a portion of the loan or for interest benefits thereon.''.
       (b) Reduction of Insurance Percentage.--
       (1) Insurance percentage reduction.--Section 428(b)(1)(G) 
     as amended by subsection (a)(1) is further amended by 
     inserting after the matter inserted by such subsection the 
     following: ``, except, for any loan for which the first 
     disbursement of principal is made on or after July 1, 2006, 
     the preceding provisions of this subparagraph shall be 
     applied by substituting `96 percent' for `98 percent' ''.
       (2) Increase insurance for exceptional performance.--
     Section 428I (20 U.S.C. 1078-9) is amended to read as 
     follows:

     ``SEC. 428I. SPECIAL INSURANCE AND REINSURANCE RULES FOR 
                   EXCEPTIONAL PERFORMANCE.

       ``(a) Designation of Lenders and Servicers.--
       ``(1) In general.--Whenever the Secretary determines that 
     an eligible lender or servicer meets the performance measures 
     required by paragraph (2), the Secretary shall designate that 
     eligible lender or servicer, as the case may be, for 
     exceptional performance. The Secretary shall notify each 
     appropriate guaranty agency of the eligible lenders and 
     servicers designated under this section.
       ``(2) Performance measures.--
       ``(A) In determining whether to award a lender or servicer 
     the exceptional performance designation, the Secretary shall 
     require that the lender or servicer be performing at or above 
     the 95 percentile of the industry, and demonstrate improved 
     performance against the lender's or servicer's average of the 
     last 3 years on the factors described in subparagraph (B).
       ``(B) The factors on which the Secretary shall require 
     improvement shall include--
       ``(i) delinquency rates;

[[Page H10560]]

       ``(ii) the rate at which delinquent accounts are restored 
     to good standing;
       ``(iii) default rates;
       ``(iv) the rate of rejected claims; and
       ``(v) any other such measures as determined by the 
     Secretary.
       ``(C) In addition, the Secretary shall not make any award 
     of such a designation unless the consequence of the 
     designation is cost-neutral to the Federal Government.
       ``(3) Additional information on lenders and servicers.--
     Each appropriate guaranty agency shall provide the Secretary 
     with such other information in its possession regarding an 
     eligible lender or servicer desiring designation as may 
     relate to the Secretary's determination under paragraph (1), 
     including but not limited to any information suggesting that 
     the application of a lender or servicer for designation 
     should not be approved.
       ``(4) Determinations by the secretary.--
       ``(A) The Secretary shall designate an eligible lender or 
     servicer for exceptional performance if the eligible lender 
     or servicer meets the performance measures required by 
     paragraph (2).
       ``(B) The Secretary shall make the determination under 
     paragraph (1) based upon the documentation submitted by the 
     eligible lender or servicer as specified in regulation, such 
     other information as provided by any guaranty agency under 
     paragraph (3), and any information in the possession of the 
     Secretary or submitted by any other agency or office of the 
     Federal Government.
       ``(C) The Secretary shall inform the eligible lender or 
     servicer and the appropriate guaranty agency that its 
     application for designation as an exceptional performance 
     lender or servicer has been approved or disapproved.
       ``(5) Transition.--
       ``(A) Any eligible lender or servicer designated for 
     exceptional performance as of the day before the date of 
     enactment of the Higher Education Budget Reconciliation Act 
     of 2005 shall continue to be so designated, and subject to 
     the requirements of this section as in effect on that day 
     (including revocation), until the performance standards 
     described in paragraph (2) are established.
       ``(B) The Secretary shall not designate any additional 
     eligible lenders or servicers for exceptional performance 
     until those performance standards are established.
       ``(b) Payment to Lenders and Servicers.--A guaranty agency 
     shall pay, to each eligible lender or servicer (as agent for 
     an eligible lender) designated under subsection (a), 98 
     percent of the unpaid principal and interest of all loans for 
     which claims are submitted for payment by that eligible 
     lender or servicer for the one-year period following the 
     receipt by the guaranty agency of the notification of 
     designation under this section, or until the guaranty agency 
     receives notice from the Secretary that the designation of 
     the lender or servicer under subsection (a)(2) has been 
     revoked.
       ``(c) Revocation Authority.--
       ``(1) The Secretary shall revoke the designation of a 
     lender or a servicer under subsection (a) if the Secretary 
     determines that the lender or servicer has failed to meet the 
     performance standards required by subsection (a)(2).
       ``(2) Notwithstanding any other provision of this section, 
     a designation under subsection (a) may be revoked at any time 
     by the Secretary, in the Secretary's discretion, if the 
     Secretary determines that the eligible lender or servicer has 
     failed to meet the criteria and performance standards 
     established by the Secretary in regulation, or if the 
     Secretary believes the lender or servicer may have engaged in 
     fraud in securing designation under subsection (a), or is 
     failing to service loans in accordance with program 
     regulations.
       ``(d) Documentation.--Nothing in this section shall 
     restrict or limit the authority of guaranty agencies to 
     require the submission of claims documentation evidencing 
     servicing performed on loans, except that the guaranty agency 
     may not require greater documentation than that required for 
     lenders and servicers not designated under subsection (a).
       ``(e) Special Rule.--Reimbursements made by the Secretary 
     on loans submitted for claim by an eligible lender or loan 
     servicer designated for exceptional performance under this 
     section shall not be subject to additional review by the 
     Secretary or repurchase by the guaranty agency for any reason 
     other than a determination by the Secretary that the eligible 
     lender or loan servicer engaged in fraud or other purposeful 
     misconduct in obtaining designation for exceptional 
     performance.
       ``(f) Limitation.--Nothing in this section shall be 
     construed to affect the processing of claims on student loans 
     of eligible lenders not subject to this section.
       ``(g) Claims.--A lender or servicer designated under 
     subsection (a) failing to service loans or otherwise comply 
     with applicable program regulations shall be considered in 
     violation of section 3729 of title 31, United States Code.
       ``(h) Termination.--The Secretary may terminate the 
     designation of lenders and servicers under this section if he 
     determines that termination would be in the fiscal interest 
     of the United States.
       ``(i) Definitions.--As used in this section--
       ``(1) the term `eligible loan' means a loan made, insured, 
     or guaranteed under this part; and
       ``(2) the term `servicer' means an entity servicing and 
     collecting student loans that--
       ``(A) has substantial experience in servicing and 
     collecting consumer loans or student loans;
       ``(B) has an independent financial audit annually which is 
     furnished to the Secretary and any other parties designated 
     by the Secretary;
       ``(C) has business systems which are capable of meeting the 
     requirements of this part;
       ``(D) has adequate personnel who are knowledgeable about 
     the student loan programs authorized by this part; and
       ``(E) does not have any owner, majority shareholder, 
     director, or officer of the entity who has been convicted of 
     a felony.''.
       (3) Effective date of amendments.--The amendments made by 
     this subsection shall apply with respect to loans for which 
     the first disbursement of principal is made on or after July 
     1, 2006.
       (c) Documentation of Forbearance Agreements.--Section 
     428(c) (20 U.S.C. 1078(c)) is further amended--
       (1) in paragraph (3)(A)(i)--
       (A) by striking ``in writing''; and
       (B) by inserting ``and documented in accordance with 
     paragraph (10)'' after ``approval of the insurer''; and
       (2) by adding at the end the following new paragraph:
       ``(10) Documentation of forbearance agreements.--For the 
     purposes of paragraph (3), the terms of forbearance agreed to 
     by the parties shall be documented by confirming the 
     agreement of the borrower by notice to the borrower from the 
     lender, and by recording the terms in the borrower's file.''.
       (d) Consolidation of Defaulted Loans.--Section 428(c) (20 
     U.S.C. 1078(c)) is further amended--
       (1) in paragraph (2)(A)--
       (A) by inserting ``(i)'' after ``including''; and
       (B) by inserting before the semicolon at the end the 
     following: ``and (ii) requirements establishing procedures to 
     preclude consolidation lending from being an excessive 
     proportion of guaranty agency recoveries on defaulted loans 
     under this part'';
       (2) in paragraph (2)(D), by striking ``paragraph (6)'' and 
     inserting ``paragraph (6)(A)''; and
       (3) in paragraph (6)--
       (A) by inserting ``(A)'' before ``For the purpose of 
     paragraph (2)(D),'';
       (B) by redesignating subparagraphs (A) and (B) as clauses 
     (i) and (ii), respectively; and
       (C) by adding at the end the following new subparagraphs:
       ``(B) A guaranty agency shall--
       ``(i) on or after October 1, 2006--
       ``(I) not charge the borrower collection costs in an amount 
     in excess of 18.5 percent of the outstanding principal and 
     interest of a defaulted loan that is paid off through 
     consolidation by the borrower under this title; and
       ``(II) remit to the Secretary a portion of the collection 
     charge under subclause (I) equal to 8.5 percent of the 
     outstanding principal and interest of such defaulted loan; 
     and
       ``(ii) on and after October 1, 2009, remit to the Secretary 
     the entire amount charged under clause (i)(I) with respect to 
     each defaulted loan that is paid off with excess 
     consolidation proceeds.
       ``(C) For purposes of subparagraph (B), the term `excess 
     consolidation proceeds' means, with respect to any guaranty 
     agency for any Federal fiscal year beginning on or after 
     October 1, 2009, the proceeds of consolidation of defaulted 
     loans under this title that exceed 45 percent of the agency's 
     total collections on defaulted loans in such Federal fiscal 
     year.''.
       (e) Collection Retention Percentages.--Clause (ii) of 
     section 428(c)(6)(B) (20 U.S.C. 1078(c)(6)(B)), as 
     redesignated by subsection (d)(3) of this section, is amended 
     to read as follows:
       ``(ii) an amount equal to 24 percent of such payments for 
     use in accordance with section 422B, except that--
       ``(I) beginning on October 1, 2003, and ending on October 
     1, 2006, this clause shall be applied by substituting `23 
     percent' for `24 percent'; and
       ``(II) beginning on October 1, 2006, this clause shall be 
     applied by substituting `20 percent' for `24 percent'.''.
       (f) Voluntary Flexible Agreements.--Section 428A (20 U.S.C. 
     1078-1) is amended--
       (1) in subsection (a)(1)(B), by striking ``unless the 
     Secretary'' and all that follows through ``designated 
     guarantor'';
       (2) by striking paragraph (2) of subsection (a);
       (3) in paragraph (4)(B) of subsection (a), by striking 
     ``and any waivers provided to other guaranty agencies under 
     paragraph (2)'';
       (4) by redesignating paragraphs (3) and (4) of subsection 
     (a) as paragraphs (2) and (3), respectively; and
       (5) by striking paragraph (3) of subsection (c) and 
     inserting the following:
       ``(3) Notice to interested parties.--Once the Secretary 
     reaches a tentative agreement in principle under this 
     section, the Secretary shall publish in the Federal Register 
     a notice that invites interested parties to comment on the 
     proposed agreement. The notice shall state how to obtain a 
     copy of the tentative agreement in principle and shall give 
     interested parties no less than 30 days to provide comments. 
     The Secretary may consider such comments prior to providing 
     the notices pursuant to paragraph (2).''.
       (g) Fraud: Repayment Required.--Section 428B(a)(1) (20 
     U.S.C. 1078-2(a)(1)) is amended--
       (1) by striking ``and'' at the end of subparagraph (A);
       (2) by redesignating subparagraph (B) as subparagraph (C); 
     and

[[Page H10561]]

       (3) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) in the case of a parent who has been convicted of, or 
     has pled nolo contendere or guilty to, a crime involving 
     fraud in obtaining funds under this title, such parent has 
     completed the repayment of such funds to the Secretary, or to 
     the holder in the case of a loan under this title obtained by 
     fraud; and''.
       (h) Default Reduction Program.--Section 428F(a)(1) (20 
     U.S.C. 1078-6(a)(1)) is amended--
       (1) in subparagraph (A), by striking ``consecutive payments 
     for 12 months'' and inserting ``9 payments made within 20 
     days of the due date during 10 consecutive months'';
       (2) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (3) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) A guaranty agency may charge the borrower and retain 
     collection costs in an amount not to exceed 18.5 percent of 
     the outstanding principal and interest at the time of sale of 
     a loan rehabilitated under subparagraph (A).''.
       (i) Financial and Economic Literacy.--
       (1) Default reduction program.--Section 428F is further 
     amended by adding at the end the following:
       ``(c) Financial and Economic Literacy.--Where appropriate, 
     each program described under subsection (b) shall include 
     making financial and economic education materials available 
     to the borrower.''.
       (2) Program assistance for borrowers.--Section 432(k)(1) 
     (20 U.S.C. 1082(k)(1)) is amended by striking ``and 
     offering'' and all that follows through the period and 
     inserting ``, offering loan repayment matching provisions as 
     part of employee benefit packages, and providing employees 
     with financial and economic education and counseling.''.
       (j) Credit Bureau Organization Agreements.--Section 430A(a) 
     (20 U.S.C. 1080a(a)) is amended by striking ``agreements with 
     credit bureau organizations'' and inserting ``an agreement 
     with each national credit bureau organization (as described 
     in section 603(p) of the Fair Credit Reporting Act)''.
       (k) Uniform Administrative and Claims Procedure.--Section 
     432(l)(1)(H) (20 U.S.C. 1082(l)(1)(H)) is amended by 
     inserting ``and anticipated graduation date'' after ``status 
     change''.
       (l) Default Reduction Management.--Section 432 is further 
     amended--
       (1) by striking subsection (n); and
       (2) by redesignating subsections (o) and (p) as subsections 
     (n) and (o), respectively.
       (m) Schools as Lenders.--Paragraph (2) of section 435(d) 
     (20 U.S.C. 1085(d)(2)) is amended to read as follows:
       ``(2) Requirements for eligible institutions.--
       ``(A) In general.--To be an eligible lender under this 
     part, an eligible institution--
       ``(i) shall employ at least one person whose full-time 
     responsibilities are limited to the administration of 
     programs of financial aid for students attending such 
     institution;
       ``(ii) shall not be a home study school;
       ``(iii) shall not--

       ``(I) make a loan to any undergraduate student;
       ``(II) make a loan other than a loan under section 428 or 
     428H to a graduate or professional student; or
       ``(III) make a loan to a borrower who is not enrolled at 
     that institution;

       ``(iv) shall award any contract for financing, servicing, 
     or administration of loans under this title on a competitive 
     basis;
       ``(v) shall offer loans that carry an origination fee or an 
     interest rate, or both, that are less than such fee or rate 
     authorized under the provisions of this title;
       ``(vi) shall not have a cohort default rate (as defined in 
     section 435(m)) greater than 10 percent;
       ``(vii) shall, for any year for which the institution 
     engages in activities as an eligible lender, provide for a 
     compliance audit conducted in accordance with section 
     428(b)(1)(U)(iii)(I), and the regulations thereunder, and 
     submit the results of such audit to the Secretary; and
       ``(viii) shall use any proceeds from special allowance 
     payments and interest payments from borrowers, interest 
     subsidies received from the Department of Education, and any 
     proceeds from the sale or other disposition of loans, for 
     need-based grant programs.
       ``(B) Administrative expenses.--An eligible lender under 
     subparagraph (A) shall be permitted to use a portion of the 
     proceeds described in subparagraph (A)(viii) for reasonable 
     and direct administrative expenses.
       ``(C) Supplement, not supplant.--An eligible lender under 
     subparagraph (A) shall ensure that the proceeds described in 
     subparagraph (A)(viii) are used to supplement, and not to 
     supplant, non-Federal funds that would otherwise be used for 
     need-based grant programs.''.
       (n) Disability Determinations.--Section 437(a) (20 U.S.C. 
     1087(a)) is amended by adding at the end the following new 
     sentence: ``In making such determination of permanent and 
     total disability, the Secretary shall not require a borrower 
     who has been certified as permanently and totally disabled by 
     the Department of Veterans Affairs or the Social Security 
     Administration to present further documentation of disability 
     for purposes of this title.''.
       (o) Treatment of Falsely Certified Borrowers.--Section 
     437(c)(1) (20 U.S.C. 1087(c)(1)) is amended by inserting ``or 
     parent's eligibility'' after ``such student's eligibility''.
       (p) Perfection of Security Interests.--Section 439(d) (20 
     U.S.C. 1087-2(d)) is amended--
       (1) by striking paragraph (3); and
       (2) by redesignating paragraphs (4) and (5) as paragraphs 
     (3) and (4), respectively.
       (q) Additional Technical Amendments.--
       (1) Section 428(a)(2)(A) (20 U.S.C. 1078(a)(2)(A)) is 
     amended--
       (A) by striking ``and'' at the end of subclause (II) of 
     clause (i); and
       (B) by moving the margin of clause (iii) two ems to the 
     left.
       (2) Section 428(a)(3)(A)(v) (20 U.S.C. 1078(a)(3)(A)(v)) is 
     amended--
       (A) by striking ``or'' at the end of subclause (I);
       (B) by striking the period at the end of subclause (II) and 
     inserting ``; or''; and
       (C) by adding after subclause (II) the following new 
     subclause:
       ``(III) in the case of a loan disbursed through an escrow 
     agent, 3 days before the first disbursement of the loan.''.
       (3) Section 428(c)(1)(A) (20 U.S.C. 1078(c)(1)(A)) is 
     amended by striking ``45 days'' in the last sentence and 
     inserting ``30 days''.
       (4) Section 428(i)(1) (20 U.S.C. 1078(i)(1)) is amended by 
     striking ``21 days'' in the third sentence and inserting ``10 
     days''.
       (5) Section 428G(e) (20 U.S.C. 1078-7(e)) is amended by 
     striking ``, made to a student to cover the cost of 
     attendance at an eligible institution outside the United 
     States,''.
       (6) Section 428H(e) (20 U.S.C. 1078-8(e)) is amended by 
     striking paragraph (6) and inserting the following:
       ``(6) Time limits on billing interest.--A lender may not 
     receive interest on a loan under this section from a borrower 
     for any period that precedes the dates described in section 
     428(a)(3)(A)(v).''.
       (7) Section 432(m)(1)(B) (20 U.S.C. 1082(m)(1)(B)) is 
     amended--
       (A) in clause (i), by inserting ``and'' after the semicolon 
     at the end; and
       (B) in clause (ii), by striking ``; and'' and inserting a 
     period.
       (8) Section 438(b)(4)(B) (20 U.S.C. 1087-1(b)(4)(B)) is 
     amended by striking ``shall be computed'' and all that 
     follows through ``to the loan'' and inserting ``described in 
     subparagraph (A) shall be computed using the interest rate 
     described in section 3902(a) of title 31, United States 
     Code,''.

     SEC. 2124. FUNDS FOR ADMINISTRATIVE EXPENSES.

       Section 458 is amended to read as follows:

     ``SEC. 458. FUNDS FOR ADMINISTRATIVE EXPENSES.

       ``(a) Administrative Expenses.--
       ``(1) Mandatory funds for fiscal year 2006.--For fiscal 
     year 2006, there shall be available to the Secretary, from 
     funds not otherwise appropriated, funds to be obligated for--
       ``(A) administrative costs under this part and part B, 
     including the costs of the direct student loan programs under 
     this part; and
       ``(B) account maintenance fees payable to guaranty agencies 
     under part B and calculated in accordance with subsections 
     (b) and (c),

     not to exceed (from such funds not otherwise appropriated) 
     $820,000,000 in fiscal year 2006.
       ``(2) Authorization for administrative costs beginning in 
     fiscal year 2007.--For each of the fiscal years 2007 through 
     2011, there are authorized to be appropriated such sums as 
     may be necessary for administrative costs under this part and 
     part B, including the costs of the direct student loan 
     programs under this part.
       ``(3) Continuing mandatory funds for account maintenance 
     fees.--For each of the fiscal years 2007 through 2011, there 
     shall be available to the Secretary, from funds not otherwise 
     appropriated, funds to be obligated for account maintenance 
     fees payable to guaranty agencies under part B and calculated 
     in accordance with subsection (b).
       ``(4) Account mainenance fees.--Account maintenance fees 
     under paragraph (3) shall be paid quarterly and deposited in 
     the Agency Operating Fund established under section 422B.
       ``(5) Carryover.--The Secretary may carry over funds made 
     available under this section to a subsequent fiscal year.
       ``(b) Calculation Basis.--Account maintenance fees payable 
     to guaranty agencies under subsection (a)(3) shall not exceed 
     the basis of 0.10 percent of the original principal amount of 
     outstanding loans on which insurance was issued under part B.
       ``(c) Budget Justification.--No funds may be expended under 
     this section unless the Secretary includes in the Department 
     of Education's annual budget justification to Congress a 
     detailed description of the specific activities for which the 
     funds made available by this section have been used in the 
     prior and current years (if applicable), the activities and 
     costs planned for the budget year, and the projection of 
     activities and costs for each remaining year for which 
     administrative expenses under this section are made 
     available.''.

     SEC. 2125. SIGNIFICANTLY SIMPLIFYING THE STUDENT AID 
                   APPLICATION PROCESS.

       (a) Expanding the Auto-Zero and Further Simplifying the 
     Simplified Needs Test.--
       (1) Simplified needs test.--Section 479 (20 U.S.C. 1087ss) 
     is amended--
       (A) in subsection (b)--
       (i) in paragraph (1)--

       (I) by striking clause (i) of subparagraph (A) and 
     inserting the following:

[[Page H10562]]

       ``(i) the student's parents file, or are eligible to file, 
     a form described in paragraph (3) or certify that they are 
     not required to file an income tax return, and the student 
     files, or is eligible to file, such a form or certifies that 
     the student is not required to file an income tax return, or 
     the student's parents, or the student, received benefits at 
     some time during the previous 12-month period under a means-
     tested Federal benefit program as defined under subsection 
     (d); and''; and

       (II) by striking clause (i) of subparagraph (B) and 
     inserting the following:

       ``(i) the student (and the student's spouse, if any) files, 
     or is eligible to file, a form described in paragraph (3) or 
     certifies that the student (and the student's spouse, if any) 
     is not required to file an income tax return, or the student 
     (and the student's spouse, if any) received benefits at some 
     time during the previous 12-month period under a means-tested 
     Federal benefit program as defined under subsection (d); 
     and''; and
       (ii) in paragraph (3), by striking ``A student or family 
     files a form described in this subsection, or subsection (c), 
     as the case may be, if the student or family, respectively, 
     files'' and inserting ``In the case of an independent 
     student, the student, or in the case of a dependent student, 
     the parent, files a form described in this subsection, or 
     subsection (c), as the case may be, if the student or parent, 
     as appropriate, files'';
       (B) in subsection (c)--
       (i) in paragraph (1), by striking subparagraph (A) and 
     inserting the following:
       ``(A) the student's parents file, or are eligible to file, 
     a form described in subsection (b)(3) or certify that they 
     are not required to file an income tax return, and the 
     student files, or is eligible to file, such a form or 
     certifies that the student is not required to file an income 
     tax return, or the student's parents, or the student, 
     received benefits at some time during the previous 12-month 
     period under a means-tested Federal benefit program as 
     defined in subsection (d); and''; and
       (ii) in paragraph (2), by striking subparagraph (A) and 
     inserting the following:
       ``(A) the student (and the student's spouse, if any) files, 
     or is eligible to file, a form described in subsection (b)(3) 
     or certifies that the student (and the student's spouse, if 
     any) is not required to file an income tax return, or the 
     student (and the student's spouse, if any) received benefits 
     at some time during the previous 12-month period under a 
     means-tested Federal benefit program as defined in subsection 
     (d); and''; and
       (C) by adding at the end the following new subsections:
       ``(d) Definition of Means-Tested Federal Benefit Program.--
     For the purposes of this section, the term `means-tested 
     Federal benefit program' means a mandatory spending program 
     of the Federal Government, other than a program under this 
     title, in which eligibility for the program's benefits, or 
     the amount of such benefits, or both, are determined on the 
     basis of income or resources of the individual or family 
     seeking the benefit, and may include such programs as the 
     supplemental security income program under title XVI of the 
     Social Security Act, the food stamp program under the Food 
     Stamp Act of 1977, the free and reduced price school lunch 
     program established under the Richard B. Russell National 
     School Lunch Act, the temporary assistance to needy families 
     program established under part A of title IV of the Social 
     Security Act, and the women, infants and children program 
     established under Section 17 of the Child Nutrition Act of 
     1966, and other programs identified by the Secretary.
       ``(e) Reporting Requirements.--The Secretary shall 
     regularly evaluate the impact of the eligibility guidelines 
     in subsections (b)(1)(A)(i), (b)(1)(B)(i), (c)(1)(A) and 
     (c)(2)(A) of this section. In particular, the Secretary shall 
     evaluate whether using receipt of benefits under a means-
     tested Federal benefit program (as defined in subsection (d)) 
     for eligibility continues to target the Simplified Needs 
     Test, to the greatest extent possible, for use by low- and 
     moderate-income students and their families.''.
       (b) Improvements to Paper and Electronic Forms.--
       (1) Common financial aid form development and processing.--
     Section 483(a) (20 U.S.C. 1090(a)) is amended--
       (A) by striking paragraphs (1), (2), and (5);
       (B) by redesignating paragraphs (3), (4), (6), and (7), as 
     paragraphs (9), (10), (11), and (12), respectively;
       (C) by inserting before paragraph (9), as redesignated by 
     subparagraph (B), the following:
       ``(1) In general.--The Secretary, in cooperation with 
     representatives of agencies and organizations involved in 
     student financial assistance, shall produce, distribute, and 
     process free of charge common financial reporting forms as 
     described in this subsection to be used for application and 
     reapplication to determine the need and eligibility of a 
     student for financial assistance under parts A through E 
     (other than subpart 4 of part A). These forms shall be made 
     available to applicants in both paper and electronic formats 
     and shall be referred to as the `Free Application for Federal 
     Student Aid' or the `FAFSA'.
       ``(2) Early estimates.--
       ``(A) In general.--The Secretary shall permit applicants to 
     complete such forms as described in this subsection in the 4 
     years prior to enrollment in order to obtain a non-binding 
     estimate of the family contribution, as defined in section 
     473. The estimate shall clearly and conspicuously indicate 
     that it is only an estimate of family contribution, and may 
     not reflect the actual family contribution of the applicant 
     that shall be used to determine the grant, loan, or work 
     assistance that the applicant may receive under this title 
     when enrolled in a program of postsecondary education. Such 
     applicants shall be permitted to update information submitted 
     on forms described in this subsection using the process 
     required under paragraph (5)(A).
       ``(B) Evaluation.--Two years after the early estimates are 
     implemented under this paragraph and from data gathered from 
     the early estimates, the Secretary shall evaluate the 
     differences between initial, non-binding early estimates and 
     the final financial aid award made available under this 
     title.
       ``(C) Report.--The Secretary shall provide a report to the 
     authorizing committees on the results of the evaluation.
       ``(3) Paper format.--
       ``(A) In general.--The Secretary shall produce, distribute, 
     and process common forms in paper format to meet the 
     requirements of paragraph (1). The Secretary shall develop a 
     common paper form for applicants who do not meet the 
     requirements of subparagraph (B).
       ``(B) EZ fafsa.--
       ``(i) In general.--The Secretary shall develop and use a 
     simplified paper application form, to be known as the `EZ 
     FAFSA', to be used for applicants meeting the requirements of 
     section 479(c).
       ``(ii) Reduced data requirements.--The form under this 
     subparagraph shall permit an applicant to submit, for 
     financial assistance purposes, only the data elements 
     required to make a determination of whether the applicant 
     meets the requirements under section 479(c).
       ``(iii) State data.--The Secretary shall include on the 
     form under this subparagraph such data items as may be 
     necessary to award State financial assistance, as provided 
     under paragraph (6), except that the Secretary shall not 
     include a State's data if that State does not permit its 
     applicants for State assistance to use the form under this 
     subparagraph.
       ``(iv) Free availability and processing.--The provisions of 
     paragraph (7) shall apply to the form under this 
     subparagraph, and the data collected by means of the form 
     under this subparagraph shall be available to institutions of 
     higher education, guaranty agencies, and States in accordance 
     with paragraph (9).
       ``(v) Testing.--The Secretary shall conduct appropriate 
     field testing on the form under this subparagraph.
       ``(C) Promoting the use of electronic fafsa.--
       ``(i) In general.--The Secretary shall--

       ``(I) develop a form that uses skip logic to simplify the 
     application process for applicants; and
       ``(II) make all efforts to encourage applicants to utilize 
     the electronic forms described in paragraph (4).

       ``(ii) Maintenance of the fafsa in a printable electronic 
     file.--The Secretary shall maintain a version of the paper 
     forms described in subparagraphs (A) and (B) in a printable 
     electronic file that is easily portable. The printable 
     electronic file will be made easily accessible and 
     downloadable to students on the same website used to provide 
     students with the electronic application forms described in 
     paragraph (4) of this subsection. The Secretary shall enable 
     students to submit a form created under this subparagraph 
     that is downloaded and printed from an electronic file format 
     in order to meet the filing requirements of this section and 
     in order to receive aid from programs under this title.
       ``(iii) Reporting requirement.--The Secretary shall report 
     annually to Congress on the impact of the digital divide on 
     students completing applications for title IV aid described 
     under this paragraph and paragraph (4). The Secretary will 
     also report on the steps taken to eliminate the digital 
     divide and phase out the paper form described in subparagraph 
     (A) of this paragraph. The Secretary's report will 
     specifically address the impact of the digital divide on the 
     following student populations: dependent students, 
     independent students without dependents, and independent 
     students with dependents other than a spouse.
       ``(4) Electronic format.--
       ``(A) In general.--The Secretary shall produce, distribute, 
     and process common forms in electronic format to meet the 
     requirements of paragraph (1). The Secretary shall develop 
     common electronic forms for applicants who do not meet the 
     requirements of subparagraph (C) of this paragraph.
       ``(B) State data.--The Secretary shall include on the 
     common electronic forms space for information that needs to 
     be submitted from the applicant to be eligible for State 
     financial assistance, as provided under paragraph (6), except 
     the Secretary shall not require applicants to complete data 
     required by any State other than the applicant's State of 
     residence.
       ``(C) Simplified applications: fafsa on the web.--
       ``(i) In general.--The Secretary shall develop and use a 
     simplified electronic application form to be used by 
     applicants meeting the requirements under subsection (c) of 
     section 479 and an additional, separate simplified electronic 
     application form to be used by applicants meeting the 
     requirements under subsection (b) of section 479.
       ``(ii) Reduced data requirements.--The simplified 
     electronic application forms shall permit an applicant to 
     submit for financial

[[Page H10563]]

     assistance purposes only the data elements required to make a 
     determination of whether the applicant meets the requirements 
     under subsection (b) or (c) of section 479.
       ``(iii) State data.--The Secretary shall include on the 
     simplified electronic application forms such data items as 
     may be necessary to award state financial assistance, as 
     provided under paragraph (6), except that the Secretary shall 
     not require applicants to complete data required by any State 
     other than the applicant's State of residence.
       ``(iv) Availability and processing.--The data collected by 
     means of the simplified electronic application forms shall be 
     available to institutions of higher education, guaranty 
     agencies, and States in accordance with paragraph (9).
       ``(v) Testing.--The Secretary shall conduct appropriate 
     field testing on the forms developed under this subparagraph.
       ``(D) Use of forms.--Nothing in this subsection shall be 
     construed to prohibit the use of the forms developed by the 
     Secretary pursuant to this paragraph by an eligible 
     institution, eligible lender, guaranty agency, State grant 
     agency, private computer software provider, a consortium 
     thereof, or such other entities as the Secretary may 
     designate.
       ``(E) Privacy.--The Secretary shall ensure that data 
     collection under this paragraph complies with section 552a of 
     title 5, United States Code, and that any entity using the 
     electronic version of the forms developed by the Secretary 
     pursuant to this paragraph shall maintain reasonable and 
     appropriate administrative, technical, and physical 
     safeguards to ensure the integrity and confidentiality of the 
     information, and to protect against security threats, or 
     unauthorized uses or disclosures of the information provided 
     on the electronic version of the forms. Data collected by 
     such electronic version of the forms shall be used only for 
     the application, award, and administration of aid awarded 
     under this title, State aid, or aid awarded by eligible 
     institutions or such entities as the Secretary may designate. 
     No data collected by such electronic version of the forms 
     shall be used for making final aid awards under this title 
     until such data have been processed by the Secretary or a 
     contractor or designee of the Secretary, and an expected 
     family contribution has been calculated by the Secretary, 
     except as may be permitted under this title.
       ``(F) Signature.--Notwithstanding any other provision of 
     this Act, the Secretary may permit an electronic form under 
     this paragraph to be submitted with an electronic signature.
       ``(5) Streamlining.--
       ``(A) Streamlined reapplication process.--
       ``(i) In general.--The Secretary shall develop streamlined 
     reapplication forms and processes, including both paper and 
     electronic reapplication processes, consistent with the 
     requirements of this subsection, for an applicant who applies 
     for financial assistance under this title--

       ``(I) in the academic year succeeding the year in which 
     such applicant first applied for financial assistance under 
     this title; or
       ``(II) in any succeeding academic years.

       ``(ii) Mechanisms for reapplication.--The Secretary shall 
     develop appropriate mechanisms to support reapplication.
       ``(iii) Identification of updated data.--The Secretary 
     shall determine, in cooperation with States, institutions of 
     higher education, agencies, and organizations involved in 
     student financial assistance, the data elements that can be 
     updated from the previous academic year's application.
       ``(iv) Reduced data authorized.--Nothing in this title 
     shall be construed as limiting the authority of the Secretary 
     to reduce the number of data elements required of 
     reapplicants.
       ``(v) Zero family contribution.--Applicants determined to 
     have a zero family contribution pursuant to section 479(c) 
     shall not be required to provide any financial data in a 
     reapplication form, except that which is necessary to 
     determine eligibility under such section.
       ``(B) Reduction of data elements.--
       ``(i) Reduction encouraged.--Of the number of data elements 
     on the FAFSA on the date of enactment of the Higher Education 
     Budget Reconciliation Act of 2005 (including questions on the 
     FAFSA for the purposes described in paragraph (6)), the 
     Secretary, in cooperation with representatives of agencies 
     and organizations involved in student financial assistance, 
     shall continue to reduce the number of such data elements 
     following the date of enactment. Reductions of data elements 
     under paragraph (3)(B), (4)(C), or (5)(A)(iv) shall not be 
     counted towards the reduction referred to in this paragraph 
     unless those data elements are reduced for all applicants.
       ``(ii) Report.--The Secretary shall annually report to the 
     House of Representatives and the Senate on the progress made 
     of reducing data elements.
       ``(6) State requirements.--
       ``(A) In general.--The Secretary shall include on the forms 
     developed under this subsection, such State-specific data 
     items as the Secretary determines are necessary to meet State 
     requirements for State need-based financial aid under section 
     415C, except as provided in paragraphs (3)(B)(iii) and 
     (4)(C)(iii) of this subsection. Such items shall be selected 
     in consultation with State agencies in order to assist in the 
     awarding of State financial assistance in accordance with the 
     terms of this subsection, except as provided in paragraphs 
     (3)(B)(iii) and (4)(C)(iii) of this subsection. The number of 
     such data items shall not be less than the number included on 
     the form on October 7, 1998, unless a State notifies the 
     Secretary that the State no longer requires those data items 
     for the distribution of State need-based financial aid.
       ``(B) Annual review.--The Secretary shall conduct an annual 
     review process to determine which forms and data items the 
     States require to award State need-based financial aid and 
     other application requirements that the States may impose.
       ``(C) State use of simplified forms.--The Secretary shall 
     encourage States to take such steps as necessary to encourage 
     the use of simplified application forms, including those 
     described in paragraphs (3)(B) and (4)(C), to meet the 
     requirements under subsection (b) or (c) of section 479.
       ``(D) Federal register notice.--The Secretary shall publish 
     on an annual basis a notice in the Federal Register requiring 
     State agencies to inform the Secretary--
       ``(i) if the State agency is unable to permit applicants to 
     utilize the simplified application forms described in 
     paragraphs (3)(B) and (4)(C); and
       ``(ii) of the State-specific data that the State agency 
     requires for delivery of State need-based financial aid.
       ``(E) State notification to the secretary.--
       ``(i) In general.--Each State agency shall notify the 
     Secretary--

       ``(I) whether the State permits an applicant to file a form 
     described in paragraph (3)(B) or paragraph (4)(C) of this 
     subsection for purposes of determining eligibility for State 
     need-based financial aid; and
       ``(II) the State-specific data that the State agency 
     requires for delivery of State need-based financial aid.

       ``(ii) Acceptance of forms.--In the event that a State does 
     not permit an applicant to file a form described in paragraph 
     (3)(B) or paragraph (4)(C) of this subsection for purposes of 
     determining eligibility for State need-based financial aid--

       ``(I) the State shall notify the Secretary if the State is 
     not permitted to do so because of either State law or because 
     of agency policy; and
       ``(II) the notification under subclause (I) shall include 
     an estimate of the program cost to permit applicants to 
     complete simplified application forms under paragraphs (3)(B) 
     and paragraph (4)(C) of this subsection.

       ``(iii) Lack of notification by the state.--If a State does 
     not notify the Secretary pursuant to clause (i), the 
     Secretary shall--

       ``(I) permit residents of that State to complete simplified 
     application forms under paragraphs (3)(B) and paragraph 
     (4)(C) of this subsection; and
       ``(II) not require any resident of that State to complete 
     any data previously required by that State under this 
     section.

       ``(7) Charges to students and parents for use of forms 
     prohibited.--
       ``(A) Fees prohibited.--The FAFSA, in whatever form 
     (including the EZ-FAFSA, paper, electronic, simplified, or 
     reapplication), shall be produced, distributed, and processed 
     by the Secretary and no parent or student shall be charged a 
     fee by any entity for the collection, processing, or delivery 
     of financial aid through the use of the FAFSA. The need and 
     eligibility of a student for financial assistance under parts 
     A through E of this title (other than under subpart 4 of part 
     A) may only be determined by using the FAFSA developed by the 
     Secretary pursuant to this subsection. No student may receive 
     assistance under parts A through E of this title (other than 
     under subpart 4 of part A), except by use of the FAFSA 
     developed by the Secretary pursuant to this subsection. No 
     data collected on a form, worksheet, or other document for 
     which a fee is charged shall be used to complete the FAFSA.
       ``(B) Notice.--Any entity that provides to students or 
     parents, or charges students or parents for, any value-added 
     services with respect to or in connection with the FAFSA, 
     such as completion of the FAFSA, submission of the FAFSA, or 
     tracking of the FAFSA for a student, shall provide to 
     students and parents clear and conspicuous notice that--
       ``(i) the FAFSA is a free Federal student aid application;
       ``(ii) the FAFSA can be completed without professional 
     assistance; and
       ``(iii) includes the current Internet address for the FAFSA 
     on the Department's web site.
       ``(8) Application processing cycle.--The Secretary shall 
     enable students to submit a form created under this 
     subsection in order to meet the filing requirements of this 
     section and in order to receive aid from programs under this 
     title and shall initiate the processing of applications under 
     this subsection as early as practicable prior to January 1 of 
     the student's planned year of enrollment.''.
       (2) Master calendar.--Section 482(a)(1)(B) (20 U.S.C. 1089) 
     is amended to read as follows:
       ``(B) by March 1: proposed modifications, updates, and 
     notices pursuant to sections 478, 479(c)(2)(C), and 483(a)(6) 
     published in the Federal Register;''.
       (c) Increasing Access to Technology.--Section 483 (20 
     U.S.C. 1090) is further amended by adding at the end the 
     following:
       ``(f) Addressing the Digital Divide.--The Secretary shall 
     utilize savings accrued by moving more applicants to the 
     electronic

[[Page H10564]]

     forms described in subsection (a)(4) to improve access to the 
     electronic forms described in subsection (a)(4) for 
     applicants meeting the requirements of section 479(c).''.
       (d) Expanding the Definition of an Independent Student.--
     Section 480(d) (20 U.S.C.1087vv(d)) is amended by striking 
     paragraph (2) and inserting the following:
       ``(2) is an orphan, in foster care, or a ward of the court, 
     or was in foster care or a ward of the court until the 
     individual reached the age of 18;''.

     SEC. 2126. ADDITIONAL NEED ANALYSIS AMENDMENTS.

       (a) Income Protection Allowance for Dependent Students.----
       (1) Amendment.--Section 475(g)(2)(D) (20 U.S.C. 
     1087oo(g)(2)(D)) is amended by striking ``$2,200'' and 
     inserting ``$3,000''.
       (2) Conforming amendment.--Section 478(b) (20 U.S.C. 
     1087rr(b)) is amended by adding at the end the following new 
     paragraph:
       ``(3) Revised amounts after increase.--Notwithstanding 
     paragraph (2), for each academic year after academic year 
     2006-2007, the Secretary shall publish in the Federal 
     Register a revised income protection allowance for the 
     purpose of section 475(g)(2)(D). Such revised allowance shall 
     be developed by increasing the dollar amount contained in 
     such section by a percentage equal to the estimated 
     percentage increase in the Consumer Price Index (as 
     determined by the Secretary) between December 2005 and the 
     December next preceding the beginning of such academic year, 
     and rounding the result to the nearest $10.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply with respect to determinations of need for 
     periods of enrollment beginning on or after July 1, 2006.
       (b) Employment Expense Allowance.--Section 478(h) (20 
     U.S.C. 1087rr(h)) is amended--
       (1) by striking ``476(b)(4)(B),''; and
       (2) by striking ``meals away from home, apparel and upkeep, 
     transportation, and housekeeping services'' and inserting 
     ``food away from home, apparel, transportation, and household 
     furnishings and operations''.
       (c) Discretion of Student Financial Aid Administrators.--
     Section 479A(a) (20 U.S.C. 1087tt(a)) is amended--
       (1) by striking ``(a) In general.--'' and inserting the 
     following:
       ``(a) Authority to Make Adjustments.--
       ``(1) Adjustments for special circumstances.--'';
       (2) by inserting before ``Special circumstances may'' the 
     following:
       ``(2) Special circumstances defined.--'';
       (3) by inserting ``a student's status as a ward of the 
     court at any time prior to attaining 18 years of age, a 
     student's status as an individual who was adopted at or after 
     age 13, a student's status as a homeless or unaccompanied 
     youth (as defined in section 725 of the McKinney-Vento 
     Homeless Assistance Act),'' after ``487,'';
       (4) by inserting before ``Adequate documentation'' the 
     following:
       ``(3) Documentation and use of supplementary information.--
     ''; and
       (5) by inserting before ``No student'' the following:
       ``(4) Fees for supplementary information prohibited.--''.
       (d) Treating Active Duty Members of the Armed Forces as 
     Independent Students.--Section 480(d)(3) (20 U.S.C. 
     1087vv(d)(3)) is amended by inserting before the semicolon at 
     the end the following: ``or is currently serving on active 
     duty in the Armed Forces for other than training purposes''.
       (e) Excludable Income.--Section 480(e) (20 U.S.C. 
     1087vv(e)) is amended--
       (1) by striking ``and'' at the end of paragraph (3);
       (2) by striking the period at the end of paragraph (4) and 
     inserting ``; and''; and
       (3) by adding at the end the following new paragraph:
       ``(5) any part of any distribution from a qualified tuition 
     program established under section 529 of the Internal Revenue 
     Code of 1986 that is not includable in gross income under 
     such section 529.''.
       (f) Treatment of Savings Plans.--
       (1) Amendment.--Section 480(f) (20 U.S.C. 1087vv(f)) is 
     amended--
       (A) in paragraph (1), by inserting ``qualified tuition 
     programs established under section 529 of the Internal 
     Revenue Code of 1986 (26 U.S.C. 529), except as provided in 
     paragraph (2),'' after ``tax shelters,'';
       (B) by redesignating paragraph (2) as paragraph (3); and
       (C) by inserting after paragraph (1) the following new 
     paragraph:
       ``(2) A qualified tuition program shall not be considered 
     an asset of a dependent student under section 475 of this 
     part. The value of a qualified tuition program for purposes 
     of determining the assets of parents or independent students 
     shall be--
       ``(A) the refund value of any tuition credits or 
     certificates purchased under section 529 of the Internal 
     Revenue Code of 1986 (26 U.S.C. 529) on behalf of a 
     beneficiary; or
       ``(B) the current balance of any account which is 
     established under such section for the purpose of meeting the 
     qualified higher education expenses of the designated 
     beneficiary of the account.''.
       (2) Conforming amendment.--Section 480(j) (20 U.S.C. 
     1087vv(j)) is amended--
       (A) by striking ``; Tuition Prepayment Plans'' in the 
     heading of such subsection;
       (B) by striking paragraph (2);
       (C) in paragraph (3), by inserting ``, or a distribution 
     that is not includable in gross income under section 529 of 
     such Code,'' after ``1986''; and
       (D) by redesignating paragraph (3) as paragraph (2).
       (g) Treatment of Family Ownership of Small Businesses.--
     Section 480(f)(3) of the Higher Education Act of 1965 (20 
     U.S.C. 1087vv(f)(3)), as redesignated by subsection (f) of 
     this section, is amended--
       (1) in subparagraph (A), by striking ``or'';
       (2) in subparagraph (B), by striking the period at the end 
     and inserting ``; or''; and
       (3) by adding at the end the following new subparagraph:
       ``(C) a small business with not more than 100 full-time or 
     full-time equivalent employees (or any part of such a small 
     business) that is owned and controlled by the family.''.
       (h) Designated Assistance.--Section 480(j) (20 U.S.C. 
     1087vv(j)) is amended by adding after paragraph (2) (as 
     redesignated by subsection (f)(2)(D) of this section) the 
     following new paragraph:
       ``(3) Notwithstanding paragraph (1) and section 472, 
     assistance not received under this title may be excluded from 
     both estimated financial assistance and cost of attendance, 
     if that assistance is provided by a State and is designated 
     by such State to offset a specific component of the cost of 
     attendance. If that assistance is excluded from either 
     estimated financial assistance or cost of attendance, it 
     shall be excluded from both.''.

     SEC. 2127. DEFINITION OF ELIGIBLE PROGRAM.

       Section 481(b) (20 U.S.C. 1088(b)) is amended by adding at 
     the end the following new paragraph:
       ``(3) For purposes of this title, an eligible program 
     includes an instructional program that utilizes direct 
     assessment of student learning, or recognizes the direct 
     assessment of student learning, in lieu of credit hours or 
     clock hours as the measure of student learning. In the case 
     of a program being determined eligible for the first time 
     under this paragraph, such determination shall be made by the 
     Secretary before such program is considered to be eligible. 
     The Secretary shall provide an annual report to Congress 
     identifying the programs made eligible under this 
     paragraph.''.

     SEC. 2128. DISTANCE EDUCATION.

       (a) Distance Education: Eligible Program.--Section 481(b) 
     (20 U.S.C. 1088(b)) is amended by adding after paragraph (3) 
     (as added by section 2127 of this Act) the following new 
     paragraph:
       ``(4) An otherwise eligible program that is offered in 
     whole or in part through telecommunications is eligible for 
     the purposes of this title if the program is offered by an 
     institution, other than a foreign institution, that has been 
     evaluated and determined (before or after the date of 
     enactment of this paragraph) to have the capability to 
     effectively deliver distance education programs by an 
     accrediting agency or association that--
       ``(A) is recognized by the Secretary under subpart 2 of 
     Part H; and
       ``(B) has evaluation of distance education programs within 
     the scope of its recognition, as described in section 
     496(n)(3).''.
       (b) Correspondence Courses.--Section 484(l)(1) (20 U.S.C. 
     1091(l)(1)) is amended--
       (1) in subparagraph (A)--
       (A) by striking ``for a program of study of 1 year or 
     longer''; and
       (B) by striking ``unless the total'' and all that follows 
     through ``courses at the institution''; and
       (2) by amending subparagraph (B) to read as follows:
       ``(B) Exception.--Subparagraph (A) does not apply to an 
     institution or school described in section 3(3)(C) of the 
     Carl D. Perkins Vocational and Technical Education Act of 
     1998.''.

     SEC. 2129. STUDENT ELIGIBILITY.

       (a) Fraud: Repayment Required.--Section 484(a) (20 U.S.C. 
     1091(a)) is amended--
       (1) by striking the period at the end of paragraph (5) and 
     inserting ``; and''; and
       (2) by adding at the end the following new paragraph:
       ``(6) if the student has been convicted of, or has pled 
     nolo contendere or guilty to, a crime involving fraud in 
     obtaining funds under this title, have completed the 
     repayment of such funds to the Secretary, or to the holder in 
     the case of a loan under this title obtained by fraud.''.
       (b) Technical Amendment.--Section 484(b)(5) (20 U.S.C. 
     1091(b)(5)) is amended by inserting ``or parent (on behalf of 
     a student)'' after ``student''.
       (c) Loan Ineligibility Based on Involuntary Civil 
     Commitment for Sexual Offenses.--Section 484(b)(5) (20 U.S.C. 
     1091(b)(5)) is further amended by inserting before the period 
     the following: ``, and no student who is subject to an 
     involuntary civil commitment upon completion of a period of 
     incarceration for a sexual offense (as determined under 
     regulations of the Secretary) is eligible to receive a loan 
     under this title''.
       (d) Freely Associated States.--Section 484(j) (20 U.S.C. 
     1091(j)) is amended by inserting ``and shall be eligible only 
     for assistance under subpart 1 of part A thereafter,'' after 
     ``part C,''.
       (e) Verification of Income Date.--Paragraph (1) of section 
     484(q) (20 U.S.C. 1091(q)) is amended to read as follows:
       ``(1) Confirmation with irs.--The Secretary of Education, 
     in cooperation with the Secretary of the Treasury, is 
     authorized to confirm with the Internal Revenue Service the 
     information specified in section

[[Page H10565]]

     6103(l)(13) of the Internal Revenue Code of 1986 reported by 
     applicants (including parents) under this title on their 
     Federal income tax returns for the purpose of verifying the 
     information reported by applicants on student financial aid 
     applications.''.
       (f) Suspension of Eligibility for Drug Offenses.--Section 
     484(r)(1) (20 U.S.C. 1091(r)(1)) is amended by striking 
     everything preceding the table and inserting the following:
       ``(1) In general.--A student who is convicted of any 
     offense under any Federal or State law involving the 
     possession or sale of a controlled substance for conduct that 
     occurred during a period of enrollment for which the student 
     was receiving any grant, loan, or work assistance under this 
     title shall not be eligible to receive any grant, loan, or 
     work assistance under this title from the date of that 
     conviction for the period of time specified in the following 
     table:''.

     SEC. 2130. INSTITUTIONAL REFUNDS.

       Section 484B (20 U.S.C. 1091b) is amended--
       (1) in subsection (a)(1), by inserting ``subpart 4 of part 
     A or'' after ``received under'';
       (2) in subsection (a)(2), by striking ``takes a leave'' and 
     by inserting ``takes one or more leaves'';
       (3) in subsection (a)(3)(B)(ii), by inserting ``(as 
     determined in accordance with subsection (d))'' after 
     ``student has completed'';
       (4) in subsection (a)(4), by amending subparagraph (A) to 
     read as follows:
       ``(A) In general.--After determining the eligibility of the 
     student for a late disbursement or post-withdrawal 
     disbursement (as required in regulations prescribed by the 
     Secretary), the institution of higher education shall contact 
     the borrower and obtain confirmation that the loan funds are 
     still required by the borrower. In making such contact, the 
     institution shall explain to the borrower the borrower's 
     obligation to repay the funds following any such 
     disbursement. The institution shall document in the 
     borrower's file the result of such contact and the final 
     determination made concerning such disbursement.'';
       (5) in subsection (b)(1), by inserting ``no later than 45 
     days from the determination of withdrawal'' after ``return'';
       (6) in subsection (b)(2), by amending subparagraph (C) to 
     read as follows:
       ``(C) Grant overpayment requirements.--
       ``(i) In general.--Notwithstanding subparagraphs (A) and 
     (B), a student shall only be required to return grant 
     assistance in the amount (if any) by which--

       ``(I) the amount to be returned by the student (as 
     determined under subparagraphs (A) and (B)), exceeds
       ``(II) 50 percent of the total grant assistance received by 
     the student under this title for the payment period or period 
     of enrollment.

       ``(ii) Minimum.--A student shall not be required to return 
     amounts of $50 or less.''; and
       (7) in subsection (d), by striking ``(a)(3)(B)(i)'' and 
     inserting ``(a)(3)(B)''.

     SEC. 2131. COLLEGE ACCESS INITIATIVE.

       Part G is further amended by inserting after section 485C 
     (20 U.S.C. 1092c) the following new section:

     ``SEC. 485D. COLLEGE ACCESS INITIATIVE.

       ``(a) State-by-State Information.--The Secretary shall 
     direct each guaranty agency with which the Secretary has an 
     agreement under section 428(c) to provide to the Secretary 
     the information necessary for the development of web links 
     and access for students and families to a comprehensive 
     listing of the postsecondary education opportunities, 
     programs, publications, Internet Web sites, and other 
     services available in the States for which such agency serves 
     as the designated guarantor.
       ``(b) Guaranty Agency Activities.--
       ``(1) Plan and activity required.--Each guaranty agency 
     with which the Secretary has an agreement under section 
     428(c) shall develop a plan and undertake the activity 
     necessary to gather the information required under subsection 
     (a) and to make such information available to the public and 
     to the Secretary in a form and manner as prescribed by the 
     Secretary.
       ``(2) Activities.--Each guaranty agency shall undertake 
     such activities as are necessary to promote access to 
     postsecondary education for students through providing 
     information on college planning, career preparation, and 
     paying for college. The guaranty agency shall publicize such 
     information and coordinate such activities with other 
     entities that either provide or distribute such information 
     in the States for which such guaranty agency serves as the 
     designated guarantor.
       ``(3) Funding.--The activities required by this section may 
     be funded from the guaranty agency's operating account 
     established pursuant to section 422B and, to the extent funds 
     remain, from earnings on the restricted account established 
     pursuant to section 422(h)(4).
       ``(c) Access to Information.--
       ``(1) Secretary's responsibility.--The Secretary shall 
     ensure the availability of the information provided by the 
     guaranty agencies in accordance with this section to 
     students, parents, and other interested individuals, through 
     web links or other methods prescribed by the Secretary.
       ``(2) Guaranty agency responsibility.--The guaranty 
     agencies shall ensure that the information required by this 
     section is available without charge in printed format for 
     students and parents requesting such information.
       ``(3) Publicity.--Within 270 days after the date of 
     enactment of the Higher Education Budget Reconciliation Act 
     of 2005, the Secretary and guaranty agencies shall publicize 
     the availability of the information required by this section, 
     with special emphasis on ensuring that populations that are 
     traditionally underrepresented in postsecondary education are 
     made aware of the availability of such information.''.

     SEC. 2132. CANCELLATION OF STUDENT LOAN INDEBTEDNESS FOR 
                   SURVIVORS OF VICTIMS OF THE SEPTEMBER 11, 2001, 
                   ATTACKS.

       (a) Definitions.--For purposes of this section:
       (1) Eligible public servant.--The term ``eligible public 
     servant'' means an individual who, as determined in 
     accordance with regulations of the Secretary--
       (A) served as a police officer, firefighter, other safety 
     or rescue personnel, or as a member of the Armed Forces; and
       (B) died (or dies) or became (or becomes) permanently and 
     totally disabled due to injuries suffered in the terrorist 
     attacks on September 11, 2001.
       (2) Eligible victim.--The term ``eligible victim'' means an 
     individual who, as determined in accordance with regulations 
     of the Secretary, died (or dies) or became (or becomes) 
     permanently and totally disabled due to injuries suffered in 
     the terrorist attacks on September 11, 2001.
       (3) Eligible parent.--The term ``eligible parent'' means 
     the parent of an eligible victim if--
       (A) the parent owes a Federal student loan that is a 
     consolidation loan that was used to repay a PLUS loan 
     incurred on behalf of such eligible victim; or
       (B) the parent owes a Federal student loan that is a PLUS 
     loan incurred on behalf of an eligible victim.
       (4) Secretary.--The term ``Secretary'' means the Secretary 
     of Education.
       (5) Federal student loan.--The term ``Federal student 
     loan'' means any loan made, insured, or guaranteed under part 
     B, D, or E of title IV of the Higher Education Act of 1965.
       (b) Relief From Indebtedness.--
       (1) In general.--The Secretary shall provide for the 
     discharge or cancellation of--
       (A) the Federal student loan indebtedness of the spouse of 
     an eligible public servant, as determined in accordance with 
     regulations of the Secretary, including any consolidation 
     loan that was used jointly by the eligible public servant and 
     his or her spouse to repay the Federal student loans of the 
     spouse and the eligible public servant;
       (B) the portion incurred on behalf of the eligible victim 
     (other than an eligible public servant), of a Federal student 
     loan that is a consolidation loan that was used jointly by 
     the eligible victim and his or her spouse, as determined in 
     accordance with regulations of the Secretary, to repay the 
     Federal student loans of the eligible victim and his or her 
     spouse;
       (C) the portion of the consolidation loan indebtedness of 
     an eligible parent that was incurred on behalf of an eligible 
     victim; and
       (D) the PLUS loan indebtedness of an eligible parent that 
     was incurred on behalf of an eligible victim.
       (2) Method of discharge or cancellation.--A loan required 
     to be discharged or canceled under paragraph (1) shall be 
     discharged or canceled by the method used under section 
     437(a), 455(a)(1), or 464(c)(1)(F) of the Higher Education 
     Act of 1965 (20 U.S.C. 1087(a), 1087e(a)(1), 
     1087dd(c)(1)(F)), whichever is applicable to such loan.
       (c) Facilitation of Claims.--The Secretary shall--
       (1) establish procedures for the filing of applications for 
     discharge or cancellation under this section by regulations 
     that shall be prescribed and published within 90 days after 
     the date of enactment of this Act and without regard to the 
     requirements of section 553 of title 5, United States Code; 
     and
       (2) take such actions as may be necessary to publicize the 
     availability of discharge or cancellation of Federal student 
     loan indebtedness under this section.
       (d) Availability of Funds for Payments.--Funds available 
     for the purposes of making payments to lenders in accordance 
     with section 437(a) for the discharge of indebtedness of 
     deceased or disabled individuals shall be available for 
     making payments under section 437(a) to lenders of loans as 
     required by this section.
       (e) Applicable to Outstanding Debt.--The provisions of this 
     section shall be applied to discharge or cancel only Federal 
     student loans (including consolidation loans) on which 
     amounts were owed on September 11, 2001. Nothing in this 
     section shall be construed to authorize any refunding of any 
     repayment of a loan.

     SEC. 2133. INDEPENDENT EVALUATION OF DISTANCE EDUCATION 
                   PROGRAMS.

       (a) Independent Evaluation.--The Secretary of Education 
     shall enter into an agreement with the National Academy of 
     Sciences to conduct a scientifically correct and 
     statistically valid evaluation of the quality of distance 
     education programs, as compared to campus-based education 
     programs, at institutions of higher education. Such 
     evaluation shall include--
       (1) identification of the elements by which the quality of 
     distance education, as compared to campus-based education, 
     can be assessed, including elements such as subject matter, 
     interactivity, and student outcomes;
       (2) identification of distance and campus-based education 
     program success, with respect to student achievement, in 
     relation to

[[Page H10566]]

     the mission of the institution of higher education; and
       (3) identification of the types of students (including 
     classification of types of students based on student age) who 
     most benefit from distance education programs, the types of 
     students who most benefit from campus-based education 
     programs, and the types of students who do not benefit from 
     distance education programs, by assessing elements including 
     access to higher education, job placement rates, 
     undergraduate graduation rates, and graduate and professional 
     degree attainment rates.
       (b) Scope.--The National Academy of Sciences shall select 
     for participation in the evaluation under subsection (a) a 
     diverse group of institutions of higher education with 
     respect to size, mission, and geographic distribution.
       (c) Interim and Final Reports.--The agreement under 
     subsection (a) shall require that the National Academy of 
     Sciences submit to the Secretary of Education, the Committee 
     on Health, Education, Labor and Pensions of the Senate, and 
     the Committee on Education and the Workforce of the House of 
     Representatives--
       (1) an interim report regarding the evaluation under 
     subsection (a) not later than December 31, 2007; and
       (2) a final report regarding such evaluation not later than 
     December 31, 2009.

     SEC. 2134. DISBURSEMENT OF STUDENT LOANS.

       Section 422(d) of the Higher Education Amendments of 1998 
     (Public Law 105-244; 112 Stat. 1696) is amended by adding at 
     the end the following new sentence: ``Such amendments shall 
     also be effective on and after July 1, 2006.''.

                    PART 2--HIGHER EDUCATION RELIEF

     SEC. 2141. REFERENCES.

       References in this part to ``the Act'' are references to 
     the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).

     SEC. 2142. WAIVERS AND MODIFICATIONS.

       Notwithstanding any other provision of law, unless enacted 
     with specific reference to this section, the Secretary of 
     Education is authorized to waive or modify any statutory or 
     regulatory provision applicable to the student financial 
     assistance programs under title IV of the Act, or any student 
     or institutional eligibility provisions in the Act, as the 
     Secretary of Education deems necessary in connection with a 
     Gulf hurricane disaster to ensure that--
       (1) the calculation of expected family contribution under 
     section 474 of the Act used in the determination of need for 
     student financial assistance under title IV of the Act for 
     any affected student (and the determination of such need for 
     his or her family, if applicable), is modified to reflect any 
     changes in the financial condition of such affected student 
     and his or her family resulting from a Gulf hurricane 
     disaster; and
       (2) institutions of higher education, systems of 
     institutions, or consortia of institutions that are located 
     in an area affected by a Gulf hurricane disaster, or that are 
     serving affected students, are eligible, notwithstanding 
     section 486(d) of the Act, to apply for participation in the 
     distance education demonstration program under section 486 of 
     the Act, except that the Secretary of Education shall include 
     in reports under section 486(f) of the Act an identification 
     of those institutions, systems, and consortia that were 
     granted participation in the demonstration program due to a 
     Gulf hurricane disaster.

     SEC. 2143. CANCELLATION OF INSTITUTIONAL REPAYMENT BY 
                   COLLEGES AND UNIVERSITIES AFFECTED BY A GULF 
                   HURRICANE DISASTER.

       Notwithstanding any provision of title IV of the Act or any 
     regulation issued thereunder, the Secretary of Education 
     shall cancel any obligation of an affected institution to 
     return or repay any funds the institution received before the 
     date of enactment of this Act for, or on behalf of, its 
     students under subpart 1 or 3 of part A or parts B, C, D, or 
     E of title IV of the Act for any cancelled enrollment period.

     SEC. 2144. CANCELLATION OF STUDENT LOANS FOR CANCELLED 
                   ENROLLMENT PERIODS.

       (a) Loan Forgiveness Authorized.--Notwithstanding any 
     provision of title IV of the Act, the Secretary shall 
     discharge all loan amounts under parts B and D of title IV of 
     the Act, and cancel any loan made under part E of such title, 
     disbursed to, or on behalf of, an affected student for a 
     cancelled enrollment period.
       (b) Reimbursement.--The Secretary of Education shall--
       (1) reimburse each affected institution for any amounts 
     discharged under subsection (a) with respect to a loan under 
     part E of title IV of the Act in the same manner as is 
     required by section 465(b) of the Act with respect to a loan 
     cancelled under section 465(a) of the Act; and
       (2) reimburse lenders for the purpose of discharging any 
     loan amounts disbursed to, or on behalf of, an affected 
     student under part B of title IV of the Act for a cancelled 
     enrollment period.
       (c) Limitation on Consolidation Loans.--A loan amount for a 
     loan made under section 428C of the Act or a Federal Direct 
     Consolidation Loan may be eligible for discharge under this 
     section only to the extent that such loan amount was used to 
     repay a loan to an affected student for a cancelled 
     enrollment period.
       (d) Construction.--Nothing in this section shall be 
     construed to authorize any refunding of any repayment of a 
     loan.

     SEC. 2145. TEMPORARY DEFERMENT OF STUDENT LOAN REPAYMENT.

       An affected individual who is a borrower of a qualified 
     student loan or a qualified parent loan shall be granted a 
     deferment, not in excess of 6 months, during which periodic 
     installments of principal need not be paid, and interest--
       (1) shall accrue and be paid by the Secretary, in the case 
     of a loan made under section 428, 428B, 428C, or 428H of the 
     Act;
       (2) shall accrue and be paid by the Secretary to the 
     Perkins loan fund held by the institution of higher education 
     that made the loan, in the case of a loan made under part E 
     of title IV of the Act; and
       (3) shall not accrue, in the case of a Federal Direct Loan 
     made under part D of such title.

     SEC. 2146. NO AFFECT ON GRANT AND LOAN LIMITS.

       Notwithstanding any provision of title IV of the Act or any 
     regulation issued thereunder, no grant or loan funds received 
     by an affected student under title IV of the Act for a 
     cancelled enrollment period shall be counted against such 
     affected student's annual or aggregate grant or loan limits 
     for the receipt of grants or loans under that title.

     SEC. 2147. TEACHER LOAN RELIEF.

       The Secretary of Education may waive the requirement of 
     sections 428J(b)(1) and 460(b)(1)(A) of the Higher Education 
     Act of 1965 that the 5 years of qualifying service be 
     consecutive academic years for any teacher whose employment 
     was interrupted if--
       (1) the teacher was employed in qualifying service, at the 
     time of a Gulf hurricane disaster, in a school located in an 
     area affected by a Gulf hurricane disaster; and
       (2) the teacher resumes qualifying service not later than 
     the beginning of academic year 2006-2007 in that school or 
     any other school in which employment is qualifying service 
     under such section.

     SEC. 2148. EXPANDING INFORMATION DISSEMINATION REGARDING 
                   ELIGIBILITY FOR PELL GRANTS.

       (a) In General.--The Secretary of Education shall make 
     special efforts, in conjunction with State efforts, to notify 
     affected students and if applicable, their parents, who 
     qualify for means-tested Federal benefit programs, of their 
     potential eligibility for a maximum Pell Grant, and shall 
     disseminate such informational materials as the Secretary of 
     Education deems appropriate.
       (b) Means-Tested Federal Benefit Program.--For the purpose 
     of this section, the term ``means-tested Federal benefit 
     program'' means a mandatory spending program of the Federal 
     Government, other than a program under the Act, in which 
     eligibility for the program's benefits, or the amount of such 
     benefits, or both, are determined on the basis of income or 
     resources of the individual or family seeking the benefit, 
     and may include such programs as the supplemental security 
     income program under title XVI of the Social Security Act, 
     the food stamp program under the Food Stamp Act of 1977, the 
     free and reduced price school lunch program established under 
     the Richard B. Russell National School Lunch Act, the 
     temporary assistance to needy families program established 
     under part A of title IV of the Social Security Act, and the 
     women, infants, and children program established under 
     section 17 of the Child Nutrition Act of 1966, and other 
     programs identified by the Secretary of Education.

     SEC. 2149. PROCEDURES.

       (a) Deadlines and Procedures.--Sections 482(c) and 492 of 
     the Act (20 U.S.C. 1089(c), 1098a) shall not apply to any 
     waivers, modifications, or actions initiated by the Secretary 
     of Education under this part.
       (b) Case-by-Case Basis.--The Secretary of Education is not 
     required to exercise any waiver or modification authority 
     under this part on a case-by-case basis.

     SEC. 2150. TERMINATION OF AUTHORITY.

       The authority of the Secretary of Education to issue 
     waivers or modifications under this part shall expire at the 
     conclusion of the 2005-2006 academic year, but the expiration 
     of such authority shall not affect the continuing validity of 
     any such waivers or modifications after such academic year.

     SEC. 2151. DEFINITIONS.

       For the purposes of this part, the following terms have the 
     following meanings:
       (1) Affected individual.--The term ``affected individual'' 
     means an individual who has applied for or received student 
     financial assistance under title IV of the Higher Education 
     Act of 1965, and--
       (A) who is an affected student; or
       (B) whose primary place of employment or residency was, as 
     of August 29, 2005, in an area affected by a Gulf hurricane 
     disaster.
       (2) Affected institution.--The term ``affected 
     institution'' means an institution of higher education that--
       (A) is located in an area affected by a Gulf hurricane 
     disaster; and
       (B) has temporarily ceased operations as a consequence of a 
     Gulf hurricane disaster, as determined by the Secretary of 
     Education.
       (3) Affected state.--The term ``affected State'' means the 
     State of Alabama, Florida, Louisiana, Mississippi, or Texas.
       (4) Affected student.--The term ``affected student'' means 
     an individual who has applied for or received student 
     financial assistance under title IV of the Higher Education 
     Act of 1965, and who--
       (A) was enrolled or accepted for enrollment, as of August 
     29, 2005, at an institution of higher education in an area 
     affected by a Gulf hurricane disaster;

[[Page H10567]]

       (B) was a dependent student enrolled or accepted for 
     enrollment at an institution of higher education that is not 
     in an area affected by a Gulf hurricane disaster, but whose 
     parents resided or were employed, as of August 29, 2005, in 
     an area affected by a Gulf hurricane disaster; or
       (C) was enrolled or accepted for enrollment at an 
     institution of higher education, as of August 29, 2005, and 
     whose attendance was interrupted because of a Gulf hurricane 
     disaster.
       (5) Area affected by a gulf hurricane disaster.--The term 
     ``area affected by a Gulf hurricane disaster'' means a county 
     or parish, in an affected State, that has been designated by 
     the Federal Emergency Management Agency for disaster 
     assistance for individuals and households as a result of 
     Hurricane Katrina or Hurricane Rita.
       (6) Cancelled enrollment period.--The term ``cancelled 
     enrollment period'' means any period of enrollment at an 
     affected institution during the academic year 2005.
       (7) Gulf hurricane disaster.--The term ``Gulf hurricane 
     disaster'' means a major disaster that the President declared 
     to exist, in accordance with section 401 of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act, and 
     that was caused by Hurricane Katrina or Hurricane Rita.
       (8) Institution of higher education.--The term 
     ``institution of higher education'' has the meaning given 
     such term in section 102 of the Higher Education Act of 1965, 
     except that the term does not include institutions under 
     subsection (a)(1)(C) of that section.
       (9) Qualified student loan.--The term ``qualified student 
     loan'' means any loan made, insured, or guaranteed under part 
     B, D, or E of title IV of the Higher Education Act of 1965, 
     other than a loan under section 428B of such title or a 
     Federal Direct Plus loan.
       (10) Qualified parent loan.--The term ``qualified parent 
     loan'' means a loan made under section 428B of title IV of 
     the Higher Education Act of 1965 or a Federal Direct Plus 
     loan.

                          Subtitle C--Pensions

     SEC. 2201. INCREASES IN PBGC PREMIUMS.

       (a) Flat-Rate Premiums.--Clause (i) of section 
     4006(a)(3)(A) of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1306(a)(3)(A)) is amended by striking 
     ``$19'' and inserting ``$30''.
       (b) Adjustment for Inflation.--Paragraph (3) of section 
     4006(a) of such Act (29 U.S.C. 1306(a)) is amended by adding 
     at the end the following new subparagraph:
       ``(F) For each plan year beginning after 2006, there shall 
     be substituted for the $30 dollar amount in subparagraph 
     (A)(i) the amount equal to the product derived by multiplying 
     the premium rate, as in effect under this paragraph 
     immediately prior to such plan year for basic benefits 
     guaranteed by the corporation under section 4022 for single-
     employer plans, by the ratio of--
       ``(i) the national average wage index (as defined in 
     section 209(k)(1) of the Social Security Act) for the first 
     of the 2 calendar years preceding the calendar year in which 
     such plan year begins, to
       ``(ii) the national average wage index (as so defined) for 
     the first of the 3 calendar years preceding the calendar year 
     in which the plan year begins,

     with such product, if not a multiple of $1, being rounded to 
     the next higher multiple of $1 where such product is a 
     multiple of $0.50 but not of $1, and to the nearest multiple 
     of $1 in any other case.''.
       (c) Additional Discretionary Increase.--Paragraph (3) of 
     section 4006(a) of such Act (as amended by subsection (b) of 
     this section) is further amended by adding at the end the 
     following new subparagraph:
       ``(G)(i) The corporation may increase under this 
     subparagraph, effective for plan years commencing with or 
     during any calendar year after 2006, the premium rate 
     otherwise in effect under this section for basic benefits 
     guaranteed by it under section 4022 for single-employer plans 
     if the corporation determines that such increase is necessary 
     to achieve actuarial soundness in the plan termination 
     insurance program under this title.
       ``(ii) The amount of any premium rate described in clause 
     (i), as increased under this subparagraph for plan years 
     commencing with or during any calendar year, may not exceed 
     by more than 20 percent the amount of the premium rate, in 
     effect under this paragraph for plan years commencing with or 
     during such calendar year for basic benefits guaranteed by 
     the corporation under section 4022 for single-employer plans, 
     as determined for plan years commencing with or during such 
     calendar year without regard to this subparagraph.
       ``(iii) The preceding provisions of this subparagraph shall 
     apply in connection with plan years commencing with or during 
     any calendar year only if--
       ``(I) the corporation transmits to each House of the 
     Congress and to the Comptroller General its proposal for the 
     increase in the premium rate for plan years commencing with 
     or during such calendar year, subject to Congressional review 
     under chapter 8 of title 5 of the United States Code 
     (relating to Congressional review of agency rulemaking) not 
     later than 120 calendar days after the beginning of the 
     preceding calendar year, and
       ``(II) a joint resolution disapproving such increase has 
     not been enacted as provided in section 802 of such title, 
     within the 60-day period described in section 802(a) of such 
     title.

     The proposal transmitted by the corporation shall include a 
     description of the methodologies and assumptions used in 
     formulating its proposal. At the time of the transmittal of 
     any such proposal to each House of the Congress pursuant to 
     subclause (I), the corporation shall transmit a copy of such 
     proposal to the Committee on Education and the Workforce and 
     the Committee on Ways and Means of the House of 
     Representatives and the Committee on Health, Education, 
     Labor, and Pensions and the Committee on Finance of the 
     Senate. Any such proposal shall, for purposes of chapter 8 of 
     such title 5, be treated as a rule which is a major rule.''.
       (d) Premium Rate for Certain Terminated Single-Employer 
     Plans.--Subsection (a) of section 4006 of such Act (29 U.S.C. 
     1306) is amended by adding at the end the following:
       ``(7) Premium Rate for Certain Terminated Single-Employer 
     Plans.--
       ``(A) In general.--If there is a termination of a single-
     employer plan under clause (ii) or (iii) of section 
     4041(c)(2)(B) or section 4042, there shall be payable to the 
     corporation, with respect to each applicable 12-month period, 
     a premium at a rate equal to $1,250 multiplied by the number 
     of individuals who were participants in the plan immediately 
     before the termination date. Such premium shall be in 
     addition to any other premium under this section.
       ``(B) Special rule for plans terminated in bankruptcy 
     reorganization.--If the plan is terminated under 
     4041(c)(2)(B)(ii) or under section 4042 and, as of the 
     termination date, a person who is (as of such date) a 
     contributing sponsor of the plan or a member of such 
     sponsor's controlled group has filed or has had filed against 
     such person a petition seeking reorganization in a case under 
     title 11 of the United States Code, or under any similar law 
     of a State or a political subdivision of a State (or a case 
     described in section 4041(c)(2)(B)(i) filed by or against 
     such person has been converted, as of such date, to such a 
     case in which reorganization is sought), subparagraph (A) 
     shall not apply to such plan until the date of the discharge 
     of such person in such case.
       ``(C) Applicable 12-month period.--For purposes of 
     subparagraph (A)--
       ``(i) In general.--The term `applicable 12-month period' 
     means--
       ``(I) the 12-month period beginning with the first month 
     following the month in which the termination date occurs, and
       ``(II) each of the first two 12-month periods immediately 
     following the period described in subclause (I).
       ``(ii) Plans terminated in bankruptcy reorganization.--In 
     any case in which the requirements of subparagraph (B) are 
     met in connection with the termination of the plan with 
     respect to 1 or more persons described in such subparagraph, 
     the 12-month period described in clause (i)(I) shall be the 
     12-month period beginning with the first month following the 
     month which includes the earliest date as of which each such 
     person is discharged in the case described in such clause in 
     connection with such person.
       ``(D) Coordination with section 4007.--
       ``(i) Notwithstanding section 4007--
       ``(I) premiums under this paragraph shall be due within 30 
     days after the beginning of any applicable 12-month period, 
     and
       ``(II) the designated payor shall be the person who is the 
     contributing sponsor as of immediately before the termination 
     date.
       ``(ii) The fifth sentence of section 4007(a) shall not 
     apply in connection with premiums determined under this 
     paragraph.''.
       (e) Conforming Amendments.--
       (1) Section 4006(a)(2) of such Act (29 U.S.C. 1306(a)(2)) 
     is amended, in the matter following subparagraph (E), by 
     inserting ``paragraph (3)(G) of this subsection or'' after 
     ``Except as provided in''.
       (2) Section 4006(b)(1) of such Act (29 U.S.C. 1306(b)(1)) 
     is amended by inserting ``or a proposal for a premium rate 
     increase under subsection (a)(3)(G)'' after ``or (E)''.
       (f) Effective Dates.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to plan years beginning after December 31, 2005.
       (2) Premium rate for certain terminated single-employer 
     plans.--
       (A) In general.--Except as provided in subparagraph (B), 
     the amendment made by subsection (d) shall apply with respect 
     to terminations for which the termination date occurs on or 
     after the date of the enactment of this Act.
       (B) Treatment of cases in bankruptcy.--In any case in which 
     the requirements of subparagraph (B) of section 4007(a)(7) of 
     the Employee Retirement Income Security Act of 1974 (as added 
     by subsection (d)) are met in connection with the termination 
     of the plan with respect to 1 or more persons described in 
     such subparagraph, the amendment made by subsection (d) shall 
     apply with respect to any such termination described in such 
     subparagraph (B), notwithstanding subparagraph (A) of this 
     paragraph, if the case under title 11, United States Code, or 
     under any similar law of a State or political subdivision of 
     a State (referred to in such subparagraph (B)) commenced 
     after October 26, 2005.
       (3) Special rule if subsequent savings enacted.--The 
     amendments made by this section shall not take effect if, 
     after the date of enactment of this Act and before January 1, 
     2006, a Federal law is enacted which--
       (A) provides for decreases in Federal outlays which in the 
     aggregate are less than the decreases in Federal outlays by 
     reason of the amendments made by this section; and

[[Page H10568]]

       (B) specifically provides that such decreases are to be in 
     lieu of the decreases in Federal outlays by reason of the 
     amendments made by this section.

              TITLE III--COMMITTEE ON ENERGY AND COMMERCE

                          Subtitle A--Medicaid

Sec. 3100. Short title of subtitle; rule of construction with regard to 
              Katrina evacuees.

               Chapter 1--Payment for Prescription Drugs

Sec. 3101. Federal upper limit (FUL).
Sec. 3102. Collection and submission of utilization data for certain 
              physician administered drugs.
Sec. 3103. Improved regulation of drugs sold under a new drug 
              application approved under section 505(c) of the Federal 
              Food, Drug, and Cosmetic Act.
Sec. 3104. Children's hospital participation in section 340B drug 
              discount program.
Sec. 3105. Improving patient outcomes through greater reliance on 
              science and best practices.

               Chapter 2--Reform of Asset Transfer Rules

Sec. 3111. Lengthening look-back period; change in beginning date for 
              period of ineligibility.
Sec. 3112. Disclosure and treatment of annuities and of large 
              transactions.
Sec. 3113. Application of ``income-first'' rule in applying community 
              spouse's income before assets in providing support of 
              community spouse.
Sec. 3114. Disqualification for long-term care assistance for 
              individuals with substantial home equity.
Sec. 3115. Enforceability of continuing care retirement communities 
              (CCRC) and life care community admission contracts.

          Chapter 3--Flexibility in Cost Sharing and Benefits

Sec. 3121. State option for alternative medicaid premiums and cost 
              sharing.
Sec. 3122. Special rules for cost sharing for prescription drugs.
Sec. 3123. Emergency room copayments for non-emergency care.
Sec. 3124. Use of benchmark benefit packages.
Sec. 3125. State option to establish non-emergency medical 
              transportation program.
Sec. 3126. Exempting women covered under breast or cervical cancer 
              program.

             Chapter 4--Expanded Access to Certain Benefits

Sec. 3131. Expanded access to home and community-based services for the 
              elderly and disabled.
Sec. 3132. Optional choice of self-directed personal assistance 
              services (cash and counseling).
Sec. 3133. Expansion of State long-term care partnership program.
Sec. 3134. Health opportunity accounts.

                      Chapter 5--Other Provisions

Sec. 3141. Increase in medicaid payments to insular areas.
Sec. 3142. Managed care organization provider tax reform.
Sec. 3143. Medicaid transformation grants.
Sec. 3144. Enhancing third party identification and payment.
Sec. 3145. Improved enforcement of documentation requirements.
Sec. 3146. Reforms of targeted case management.
Sec. 3147. Emergency services furnished by non-contract providers for 
              medicaid managed care enrollees.
Sec. 3148. Adjustment in computation of medicaid FMAP to disregard an 
              extraordinary employer pension contribution.

                 Subtitle B--Katrina Health Care Relief

Sec. 3201. Targeted medicaid relief for States affected by Hurricane 
              Katrina.
Sec. 3202. State high risk health insurance pool funding.
Sec. 3203. Recomputation of HPSA, MUA, and MUP designations within 
              Hurricane Katrina affected areas.
Sec. 3204. Waiver of certain requirements applicable to the provision 
              of health care in areas impacted by Hurricane Katrina.
Sec. 3205. FMAP hold harmless for Katrina impact.

               Subtitle C--Katrina and Rita Energy Relief

Sec. 3301. Hurricanes Katrina and Rita energy relief.

               Subtitle D--Digital Television Transition

Sec. 3401. Short title.
Sec. 3402. Findings.
Sec. 3403. Analog spectrum recovery: hard deadline.
Sec. 3404. Auction of recovered spectrum.
Sec. 3405. Digital Television Conversion Fund.
Sec. 3406. Public Safety Interoperable Communications Fund.
Sec. 3407. NYC 9/11 Digital Transition Fund.
Sec. 3408. Low-power television transition provisions.
Sec. 3409. Consumer education regarding analog televisions.
Sec. 3410. Additional provisions.
Sec. 3411. Deployment of broadband wireless technologies.
Sec. 3412. Sense of Congress.
Sec. 3413. Band plan revision required.

                          Subtitle A--Medicaid

     SEC. 3100. SHORT TITLE OF SUBTITLE; RULE OF CONSTRUCTION WITH 
                   REGARD TO KATRINA EVACUEES.

       (a) Short Title.--This subtitle may be cited as the 
     ``Medicaid Reconciliation Act of 2005''.
       (b) Rule of Construction With Regard to Katrina Evacuees.--
     None of the provisions of the following chapters of this 
     subtitle shall apply during the 11-month period beginning 
     September 1, 2005, to individuals entitled to medical 
     assistance under title XIX of the Social Security Act by 
     reason of their residence in a parish in the State of 
     Louisiana, or a county in the State of Mississippi or 
     Alabama, for which a major disaster has been declared in 
     accordance with section 401 of the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170) 
     as a result of Hurricane Katrina and which the President has 
     determined, before September 14, 2005, warrants individual 
     and public assistance from the Federal Government under such 
     Act.

               CHAPTER 1--PAYMENT FOR PRESCRIPTION DRUGS

     SEC. 3101. FEDERAL UPPER LIMIT (FUL).

       (a) In General.--Subsection (e) of section 1927 of the 
     Social Security Act (42 U.S.C. 1396r-8) is amended to read as 
     follows:
       ``(e) Pharmacy Reimbursement Limits.--
       ``(1) Federal upper limit for ingredient cost of covered 
     outpatient drugs.--
       ``(A) In general.--Subject to subparagraph (B), no Federal 
     financial participation shall be available for payment for 
     the ingredient cost of a covered outpatient drug in excess of 
     the Federal upper limit for that drug established under 
     paragraph (2).
       ``(B) Optional carve out.--A State may elect not to apply 
     subparagraph (A) to payment for either or both of the 
     following:
       ``(i) Drugs dispensed by specialty pharmacies (such as 
     those dispensing only immunosuppressive drugs), as defined by 
     the Secretary.
       ``(ii) Drugs administered by a physician in a physician's 
     office.
       ``(2) Federal upper limit.--
       ``(A) In general.--Except as provided in subparagraph (D) 
     and subject to paragraph (5), the Federal upper limit 
     established under this paragraph for the ingredient cost of 
     a--
       ``(i) single source drug, is 106 percent of the RAMP (as 
     defined in subparagraph (B)(i)) for that drug; and
       ``(ii) multiple source drug, is 120 percent of the volume 
     weighted average RAMP (as determined under subparagraph (C)) 
     for that drug.

     A drug product that is a single source drug and that becomes 
     a multiple source drug shall continue to be treated under 
     this subsection as a single source drug until the Secretary 
     determines that there are sufficient data to compile the 
     volume weighted average RAMP for that drug.
       ``(B) RAMP and related provisions.--For purposes of this 
     subsection:
       ``(i) RAMP defined.--The term `RAMP' means, with respect to 
     a covered outpatient drug by a manufacturer for a calendar 
     quarter and subject to clauses (ii) and (iii), the average 
     price paid to a manufacturer for the drug in the United 
     States in the quarter by wholesalers for drugs distributed to 
     retail pharmacies, excluding service fees that are paid by 
     the manufacturer to an entity and that represent fair market 
     value for a bona-fide service provided by the entity.
       ``(ii) Sales exempted from computation.--The RAMP under 
     clause (i) shall exclude any of the following:

       ``(I) Sales exempt from inclusion in the determination of 
     best price under subsection (c)(1)(C)(i).
       ``(II) Such other sales as the Secretary identifies as 
     sales to an entity that are merely nominal in amount under 
     subsection (c)(1)(C)(ii)(III).

       ``(iii) Sale price net of discounts.--In calculating the 
     RAMP under clause (i), such RAMP shall include any of the 
     following:

       ``(I) Cash discounts and volume discounts.
       ``(II) Free goods that are contingent upon any purchase 
     requirement.
       ``(III) Sales at a nominal price that are contingent upon 
     any purchase requirement or agreement.
       ``(IV) Chargebacks, rebates (not including rebates provided 
     under an agreement under this section), or any other direct 
     or indirect discounts.
       ``(V) Any other price concessions, which may be based on 
     recommendations of the Inspector General of the Department of 
     Health and Human Services, that would result in a reduction 
     of the cost to the purchaser.

       ``(iv) Retail pharmacy.--For purposes of this subsection, 
     the term `retail pharmacy' does not include mail-order only 
     pharmacies or any pharmacy at a nursing facility or home.
       ``(C) Volume weighted average ramp defined.--For purposes 
     of this subsection, for all drug products included within the 
     same multiple source drug billing and payment code (or such 
     other methodology as may be specified by the Secretary), the 
     volume weighted average RAMP is the volume weighted average 
     of the RAMPs reported under subsection (b)(3)(A)(iv) 
     determined by--

[[Page H10569]]

       ``(i) computing the sum of the products (for each National 
     Drug Code assigned to such drug products) of--

       ``(I) the manufacturer's RAMP (as defined in subparagraph 
     (B)); and
       ``(II) the total number of units specified under section 
     1847A(b)(2) sold; and

       ``(ii) dividing the sum determined under clause (i) by the 
     sum of the total number of units under clause (i)(II) for all 
     National Drug Codes assigned to such drug products.
       ``(D) Exception for initial sales periods.--
       ``(i) In general.--In the case of a single source drug 
     during an initial sales period (not to exceed 2 calendar 
     quarters) in which data on sales for the drug are not 
     sufficiently available from the manufacturer to compute the 
     RAMP or the volume weighted average RAMP under subparagraph 
     (C), the Federal upper limit for the ingredient cost of such 
     drug during such period shall be the wholesale acquisition 
     cost (as defined in clause (ii)) for the drug.
       ``(ii) Wholesale acquisition cost.--For purposes of clause 
     (i), the term `wholesale acquisition cost' means, with 
     respect to a single source drug, the manufacturer's list 
     price for the drug to wholesalers or direct purchasers in the 
     United States, not including prompt pay or other discounts, 
     rebates or reductions in price, for the most recent month for 
     which the information is available, as reported in wholesale 
     price guides or other publications of drug or biological 
     pricing data.
       ``(E) Updates; data collection.--
       ``(i) Frequency of determination.--The Secretary shall 
     update the Federal upper limits applicable under this 
     paragraph on at least a quarterly basis, taking into account 
     the most recent data collected for purposes of determining 
     such limits and the Food and Drug Administration's most 
     recent publication of `Approved Drug Products with 
     Therapeutic Equivalence Evaluations'.
       ``(ii) Collection of data.--Data on RAMP is collected under 
     subsection (b)(3)(A)(iv).
       ``(F) Authority to enter contracts.--The Secretary may 
     enter into contracts with appropriate entities to determine 
     RAMPs and other data necessary to calculate the Federal upper 
     limit for a covered outpatient drug established under this 
     subsection and to calculate that payment limit.
       ``(3) Dispensing fees.--
       ``(A) In general.--A State which provides medical 
     assistance for covered outpatient drugs shall pay a 
     dispensing fee for each covered outpatient drug in accordance 
     with this paragraph. A State may vary the amount of such 
     dispensing fees, including taking into account the special 
     circumstances of pharmacies that are serving rural or 
     underserved areas or that are sole community pharmacies, so 
     long as such variation is consistent with subparagraph (B).
       ``(B) Dispensing fee payment for multiple source drugs.--A 
     State shall establish a dispensing fee under this title for a 
     covered outpatient drug that is treated as a multiple source 
     drug under paragraph (2)(A) (whether or not it may be an 
     innovator multiple source drug) in an amount that is not less 
     than $8 per prescription unit. The Secretary shall define 
     what constitutes a prescription unit for purposes of the 
     previous sentence.
       ``(4) Effect on state maximum allowable cost limitations.--
     This section shall not supersede or affect provisions in 
     effect prior to January 1, 1991, or after December 31, 1994, 
     relating to any maximum allowable cost limitation established 
     by a State for payment by the State for covered outpatient 
     drugs, and rebates shall be made under this section without 
     regard to whether or not payment by the State for such drugs 
     is subject to such a limitation or the amount of such a 
     limitation.
       ``(5) Evaluation of use of retail survey price 
     methodology.--
       ``(A) In general.--The Secretary may develop a methodology 
     to set the Federal upper limit based on the reported retail 
     survey price, as most recently reported under subparagraph 
     (C), instead of a percentage of RAMP or volume weighted 
     average RAMP as described in paragraph (2).
       ``(B) Initial application.--For 2007, the Secretary may use 
     this methodology for a limited number of covered outpatient 
     drugs, including both single source and multiple source 
     drugs, selected by the Secretary in a manner so as to be 
     representative of the classes of drugs dispensed under this 
     title.
       ``(C) Determination of retail survey price for covered 
     outpatient drugs.--
       ``(i) Use of vendor.--The Secretary may contract services 
     for the determination of retail survey prices for covered 
     outpatient drugs that represent a nationwide average of 
     pharmacy sales costs for such drugs, net of all discounts and 
     rebates. Such a contract shall be awarded for a term of 2 
     years.
       ``(ii) Use of competitive bidding.--In contracting for such 
     services, the Secretary shall competitively bid for an 
     outside vendor that has a demonstrated history in--

       ``(I) surveying and determining, on a representative 
     nationwide basis, retail prices for ingredient costs of 
     prescription drugs;
       ``(II) working with retail pharmacies, commercial payers, 
     and States in obtaining and disseminating such price 
     information; and
       ``(III) collecting and reporting such price information on 
     at least a monthly basis.

       ``(iii) Additional provisions.--A contract with a vendor 
     under this subparagraph shall include such terms and 
     conditions as the Secretary shall specify, including the 
     following:

       ``(I) The vendor must monitor the marketplace and report to 
     the Secretary each time there is a new covered outpatient 
     drug available nationwide.
       ``(II) The vendor must update the Secretary no less often 
     than monthly on the retail survey prices for multiple source 
     drugs.
       ``(III) The vendor must apply methods for independently 
     confirming retail survey prices.

       ``(iv) Availability of information to states.--Information 
     on retail survey prices obtained under this subparagraph, 
     including applicable information on single source drugs, 
     shall be provided to States on an ongoing, timely basis.
       ``(D) State use of retail survey price data.--
       ``(i) Distribution of price data.--The Secretary shall 
     devise and implement a means for electronic distribution to 
     each State agency designated under section 1902(a)(5) with 
     responsibility for the administration or supervision of the 
     administration of the State plan under this title of the 
     retail survey price determined under this paragraph.
       ``(ii) Authority to establish payment rates based on 
     data.--A State may use the price data received in accordance 
     with clause (i) in establishing payment rates for the 
     ingredient costs and dispensing fees for covered outpatient 
     drugs dispensed to individuals eligible for medical 
     assistance under this title.
       ``(6) Limitation on judicial review.--There shall be no 
     administrative or judicial review of--
       ``(A) the Secretary's determinations of Federal upper 
     limits, RAMPs, and volume weighted average RAMPs under this 
     subsection, including the assignment of National Drug Codes 
     to billing and payment classes;
       ``(B) the Secretary's disclosure to States of the average 
     manufacturer prices, RAMPs, volume weighted average RAMPs, 
     and retail survey prices;
       ``(C) determinations under this subsection by the Secretary 
     of covered outpatient drugs which are dispensed by a 
     specialty pharmacy or administered by a physician in a 
     physician's office;
       ``(D) the contracting and calculations process under this 
     subsection; and
       ``(E) the method to allocate rebates, chargebacks, and 
     other price concessions to a quarter if specified by the 
     Secretary.''.
       (b) Conforming Amendments.--
       (1) Reporting ramp-related information.--Subsection 
     (b)(3)(A) of such section is amended--
       (A) by striking ``and'' at the end of clause (ii);
       (B) by striking the period at the end of clause (iii) and 
     inserting ``; and''; and
       (C) by inserting after clause (iii) the following new 
     clause:
       ``(iv) for calendar quarters beginning on or after July 1, 
     2006, in conjunction with reporting required under clause (i) 
     and by National Drug Code (including package size)--
       ``(I) the manufacturer's RAMP (as defined in subsection 
     (e)(2)(B)(i)) and the total number of units required to 
     compute the volume weighted average RAMP under subsection 
     (e)(2)(C);
       ``(II) if required to make payment under subsection 
     (e)(2)(D), the manufacturer's wholesale acquisition cost, as 
     defined in clause (ii) of such subsection; and
       ``(III) information on those sales that were made at a 
     nominal price or otherwise described in subsection 
     (e)(2)(B)(ii)(II);
     for all covered outpatient drugs.''.
       (2) Disclosure to states.--Subsection (b)(3)(D) of such 
     section is amended--
       (A) by striking ``and'' at the end of clause (ii);
       (B) by striking the period at the end of clause (iii) and 
     inserting ``, and''; and
       (C) by inserting after clause (iii) the following new 
     clause:
       ``(iv) to States to carry out this title.''.
       (3) Limitations on federal financial participation.--
     Section 1903(i) of such Act (42 U.S.C. 1396b(i)) is amended--
       (A) in paragraph (10)(A), by striking ``and'' at the end;
       (B) in paragraph (10)(B), by striking ``or'' at the end and 
     inserting ``and'';
       (C) by adding at the end of paragraph (10) the following:
       ``(C) with respect to any amount expended for the 
     ingredient cost of a covered outpatient drug that exceeds the 
     Federal upper limit for that drug established and applied 
     under section 1927(e); or''; and
       (D) in paragraph (21), as inserted by section 104(b) of 
     Public Law 109-91, by inserting before the period at the end 
     the following: ``or described in subparagraph (B) or (C) of 
     section 1927(d)(2)''.
       (c) Effective Date.--Except as otherwise provided, the 
     amendments made by this section take effect with respect to a 
     State on the later of--
       (1) January 1, 2007; or
       (2) the date that is 6 months after the close of the first 
     regular session of the State legislature that begins after 
     the date of the enactment of this Act.
       (d) GAO Study on Dispensing Fees ``, Estimated Payment 
     Amounts, and Pharmacy Acquisition Costs''.--The Comptroller 
     General of the United States shall conduct a study on the 
     appropriateness in payment levels to pharmacies for 
     dispensing fees under the medicaid program, including payment 
     to specialty pharmacies ``, and on whether the estimated 
     average payment amounts to pharmacies for covered outpatient 
     drugs

[[Page H10570]]

     under the medicaid program after implementation of the 
     amendments made by this section are below the average prices 
     paid by pharmacies for acquiring such drugs.'' Not later than 
     9 months after the date of the enactment of this Act, the 
     Comptroller General shall submit to Congress a report on such 
     study.
       (e) Secretarial Authority to Delay Implementation.--The 
     Secretary of Health and Human Services may delay the 
     implementation of the amendments made by subsections (a) and 
     (b)(3)(C) for a period of not more than 1 year, if the 
     Comptroller General finds, in the study conducted under 
     subsection (d), that the estimated average payment amounts to 
     pharmacies for covered outpatient drugs under the medicaid 
     program after implementation of such amendments are below the 
     average prices paid by pharmacies for acquiring such drugs. 
     If the Secretary delays the implementation of such amendments 
     under this subsection, the Secretary shall transmit to 
     Congress, prior to the termination of the period of delay, a 
     report containing specific recommendations for legislation to 
     establish a more equitable payment system.
       (f) IG Report on Use of RAMP and Retail Survey Prices.--Not 
     later than 2 years after the date of the enactment of this 
     Act, the Inspector General of the Department of Health and 
     Human Services shall submit to Congress a report on the 
     appropriateness of using RAMPs and retail survey prices, 
     rather than the average manufacturer prices or other price 
     measures, as the basis for establishing a Federal upper limit 
     for reimbursement for covered outpatient drugs under the 
     medicaid program.

     SEC. 3102. COLLECTION AND SUBMISSION OF UTILIZATION DATA FOR 
                   CERTAIN PHYSICIAN ADMINISTERED DRUGS.

       (a) In General.--Section 1927(a) of the Social Security Act 
     (42 U.S.C. 1396r-8(a)) is amended by adding at the end the 
     following new paragraph:
       ``(7) Requirement for submission of utilization data for 
     certain physician administered drugs.--
       ``(A) Single source drugs.--In order for payment to be 
     available under section 1903(a) for a covered outpatient drug 
     that is a single source drug that is physician administered 
     (as determined by the Secretary), and that is administered on 
     or after January 1, 2006, the State shall provide for the 
     submission of such utilization data and coding (such as J-
     codes and National Drug Code numbers) for each such drug as 
     the Secretary may specify as necessary to identify the 
     manufacturer of the drug in order to secure rebates under 
     this section for drugs administered for which payment is made 
     under this title.
       ``(B) Multiple source drugs.--
       ``(i) In general.--Not later than January 1, 2007, the 
     information shall be submitted under subparagraph (A) using 
     National Drug Code codes unless the Secretary specifies that 
     an alternative coding system should be used.
       ``(ii) Identification of most frequently physician 
     administered multiple source drugs.--Not later than January 
     1, 2007, the Secretary shall publish a list of the 20 
     physician administered multiple source drugs that the 
     Secretary determines have the highest dollar volume of 
     physician administered drugs dispensed under this title. The 
     Secretary may modify such list from year to year to reflect 
     changes in such volume.
       ``(iii) Requirement.--In order for payment to be available 
     under section 1903(a) for a covered outpatient drug that is a 
     multiple source drug that is physician administered (as 
     determined by the Secretary), that is on the list published 
     under clause (ii), and that is administered on or after 
     January 1, 2008, the State shall provide for the submission 
     of such utilization data and coding (such as J-codes and 
     National Drug Code numbers) for each such drug as the 
     Secretary may specify as necessary to identify the 
     manufacturer of the drug in order to secure rebates under 
     this section.
       ``(C) Hardship waiver.--The Secretary may delay the 
     application of subparagraph (A) or (B), or both, in the case 
     of a State to prevent hardship to States which require 
     additional time to implement the reporting system required 
     under the respective subparagraph.''.
       (b) Limitation on Payment.--Section 1903(i)(10) of such Act 
     (42 U.S.C. 1396b(i)(10)), as amended by section 3101(b)(3), 
     is amended--
       (1) by striking ``and'' at the end of subparagraph (B);
       (2) by striking ``or'' at the end of subparagraph (C) and 
     inserting ``and''; and
       (3) by adding at the end the following new subparagraph:
       ``(D) with respect to covered outpatient drugs described in 
     section 1927(a)(7), unless information respecting utilization 
     data and coding on such drugs that is required to be 
     submitted under such section is submitted in accordance with 
     such section; or''.

     SEC. 3103. IMPROVED REGULATION OF DRUGS SOLD UNDER A NEW DRUG 
                   APPLICATION APPROVED UNDER SECTION 505(C) OF 
                   THE FEDERAL FOOD, DRUG, AND COSMETIC ACT.

       (a) Inclusion With Other Reported Average Manufacturer and 
     Best Prices.--Section 1927(b)(3)(A) of the Social Security 
     Act (42 U.S.C. 1396r-8(b)(3)(A)) is amended--
       (1) by striking clause (i) and inserting the following:
       ``(i) not later than 30 days after the last day of each 
     rebate period under the agreement--

       ``(I) on the average manufacturer price (as defined in 
     subsection (k)(1)) for covered outpatient drugs for the 
     rebate period under the agreement (including for all such 
     drugs that are sold under a new drug application approved 
     under section 505(c) of the Federal Food, Drug, and Cosmetic 
     Act); and
       ``(II) for single source drugs and innovator multiple 
     source drugs (including all such drugs that are sold under a 
     new drug application approved under section 505(c) of the 
     Federal Food, Drug, and Cosmetic Act), on the manufacturer's 
     best price (as defined in subsection (c)(1)(C)) for such 
     drugs for the rebate period under the agreement;''; and

       (2) in clause (ii), by inserting ``(including for such 
     drugs that are sold under a new drug application approved 
     under section 505(c) of the Federal Food, Drug, and Cosmetic 
     Act)'' after ``drugs''.
       (b) Conforming Amendments.--Section 1927 of such Act (42 
     U.S.C. 1396r-8) is amended--
       (1) in subsection (c)(1)(C)--
       (A) in clause (i), in the matter preceding subclause (I), 
     by inserting after ``or innovator multiple source drug of a 
     manufacturer'' the following: ``(including any other such 
     drug of a manufacturer that is sold under a new drug 
     application approved under section 505(c) of the Federal 
     Food, Drug, and Cosmetic Act)''; and
       (B) in clause (ii)--
       (i) in subclause (II), by striking ``and'' at the end;
       (ii) in subclause (III), by striking the period at the end 
     and inserting ``; and''; and
       (iii) by adding at the end the following:

       ``(IV) in the case of a manufacturer that approves, allows, 
     or otherwise permits any other drug of the manufacturer to be 
     sold under a new drug application approved under section 
     505(c) of the Federal Food, Drug, and Cosmetic Act, shall be 
     inclusive of the lowest price for such authorized drug 
     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 those prices described in 
     subclauses (I) through (IV) of clause (i).''; and

       (2) in subsection (k)--
       (A) in paragraph (1)--
       (i) by striking ``The term'' and inserting the following:
       ``(A) In general.--The term''; and
       (ii) by adding at the end the following:
       ``(B) Inclusion of section 505(c) drugs.--In the case of a 
     manufacturer that approves, allows, or otherwise permits any 
     drug of the manufacturer to be sold under a new drug 
     application approved under section 505(c) of the Federal 
     Food, Drug, and Cosmetic Act, such term shall be inclusive of 
     the average price paid for such authorized drug by 
     wholesalers for drugs distributed to the retail pharmacy 
     class of trade, after deducting customary prompt pay 
     discounts.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 3104. CHILDREN'S HOSPITAL PARTICIPATION IN SECTION 340B 
                   DRUG DISCOUNT PROGRAM.

       (a) In General.--Section 1927(a)(5)(B) of the Social 
     Security Act (42 U.S.C. 1396r-8(a)(5)(B)) is amended by 
     inserting before the period at the end the following: ``and a 
     children's hospital described in section 1886(d)(1)(B)(iii) 
     which meets the requirements of clauses (i) and (iii) of 
     section 340B(b)(4)(L) of the Public Health Service Act and 
     which would meet the requirements of clause (ii) of such 
     section if that clause were applied by taking into account 
     the percentage of care provided by the hospital to patients 
     eligible for medical assistance under a State plan under this 
     title''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to drugs purchased on or after the date of the 
     enactment of this Act.

     SEC. 3105. IMPROVING PATIENT OUTCOMES THROUGH GREATER 
                   RELIANCE ON SCIENCE AND BEST PRACTICES.

       (a) In General.--Section 1927 of Social Security Act (42 
     U.S.C. 1396r-8) is amended--
       (1) in subsection (d)(5)--
       (A) in the matter before subparagraph (A), by striking 
     ``providing for such approval--'' and inserting ``providing 
     for such approval meets the following requirements:'';
       (B) in subparagraph (A)--
       (i) by inserting ``The system'' before ``provides''; and
       (ii) by striking ``; and'' and inserting a period;
       (C) in subparagraph (B)--
       (i) by striking ``except'' and inserting ``Except''; and
       (ii) by inserting ``the system'' before ``provides''; and
       (D) by adding at the end the following new subparagraphs:
       ``(C) The system provides that an atypical antipsychotic or 
     antidepressant single source drug may be placed on a list of 
     drugs subject to prior authorization only where a drug use 
     review board has determined, based on the strength of the 
     scientific evidence and standards of practice, including 
     assessing peer-reviewed medical literature, pharmacoeconomic 
     studies, outcomes research data and such other information as 
     the board determines to be appropriate, that placing the drug 
     on prior approval or otherwise imposing restrictions on its 
     use is not likely to harm patients or increase overall 
     medical costs.
       ``(D) The system provides that where a response is not 
     received to a request for authorization of an atypical 
     antipsychotic or

[[Page H10571]]

     antidepressant drug prescribed within 24 hours after the 
     prescription is transmitted, payment is made for a 30 day 
     supply of a medication that the prescriber certifies is 
     medically necessary.''; and
       (2) in subsection (g)(3)(C), by inserting after clause 
     (iii) the following new clause:
       ``(iv) The development and oversight of prior authorization 
     programs described in subsection (d)(5).''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect on January 1, 2007.

               CHAPTER 2--REFORM OF ASSET TRANSFER RULES

     SEC. 3111. LENGTHENING LOOK-BACK PERIOD; CHANGE IN BEGINNING 
                   DATE FOR PERIOD OF INELIGIBILITY.

       (a) Lengthening Look-Back Period for All Disposals to 5 
     Years.--Section 1917(c)(1)(B)(i) of the Social Security Act 
     (42 U.S.C. 1396p(c)(1)(B)(i)) is amended by inserting ``or in 
     the case of any other disposal of assets made on or after the 
     date of the enactment of the Medicaid Reconciliation Act of 
     2005'' before ``, 60 months''.
       (b) Change in Beginning Date for Period of Ineligibility.--
     Section 1917(c)(1)(D) of such Act (42 U.S.C. 1396p(c)(1)(D)) 
     is amended--
       (1) by striking ``(D) The date'' and inserting ``(D)(i) In 
     the case of a transfer of asset made before the date of the 
     enactment of the Medicaid Reconciliation Act of 2005, the 
     date''; and
       (2) by adding at the end the following new clause:
       ``(ii) In the case of a transfer of asset made on or after 
     the date of the enactment of the Medicaid Reconciliation Act 
     of 2005, the date specified in this subparagraph is the first 
     day of a month during or after which assets have been 
     transferred for less than fair market value, or the date on 
     which the individual is eligible for medical assistance under 
     the State plan and is receiving services described in 
     subparagraph (C) but for the application of the penalty 
     period, whichever is later, and which does not occur during 
     any other period of ineligibility under this subsection.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to transfers made on or after the date of the 
     enactment of this Act.
       (d) Availability of Hardship Waivers.--Each State shall 
     provide for a hardship waiver process in accordance with 
     section 1917(c)(2)(D) of the Social Security Act (42 U.S.C. 
     1396p(c)(2)(D))--
       (1) under which an undue hardship exists when application 
     of the transfer of assets provision would deprive the 
     individual--
       (A) of medical care such that the individual's health or 
     life would be endangered; or
       (B) of food, clothing, shelter, or other necessities of 
     life; and
       (2) which provides for--
       (A) notice to recipients that an undue hardship exception 
     exists;
       (B) a timely process for determining whether an undue 
     hardship waiver will be granted; and
       (C) a process under which an adverse determination can be 
     appealed.
       (e) Additional Provisions on Hardship Waivers.--
       (1) Application by facility.--Section 1917(c)(2) of the 
     Social Security Act (42 U.S.C. 1396p(c)(2)) is amended--
       (A) by striking the semicolon at the end of subparagraph 
     (D) and inserting a period; and
       (B) by adding after and below such subparagraph the 
     following:
     ``The procedures established under subparagraph (D) shall 
     permit the facility in which the institutionalized individual 
     is residing to file an undue hardship waiver application on 
     behalf of the individual with the consent of the individual 
     or the legal guardian of the individual.''.
       (2) Authority to Make Bed Hold Payments for Hardship 
     Applicants.--Such section is further amended by adding at the 
     end the following: ``While an application for an undue 
     hardship waiver is pending under subparagraph (D) in the case 
     of an individual who is a resident of a nursing facility, if 
     the application meets such criteria as the Secretary 
     specifies, the State may provide for payments for nursing 
     facility services in order to hold the bed for the individual 
     at the facility, but not in excess of payments for 30 
     days.''.

     SEC. 3112. DISCLOSURE AND TREATMENT OF ANNUITIES AND OF LARGE 
                   TRANSACTIONS.

       (a) In General.--Section 1917 of the Social Security Act 
     (42 U.S.C. 1396p) is amended by redesignating subsection (e) 
     as subsection (f) and by inserting after subsection (d) the 
     following new subsection:
       ``(e)(1) In order to meet the requirements of this section 
     for purposes of section 1902(a)(18), a State shall require, 
     as a condition for the provision of medical assistance for 
     services described in subsection (c)(1)(C)(i) (relating to 
     long-term care services) for an individual, the application 
     of the individual for such assistance (including any 
     recertification of eligibility for such assistance) shall 
     disclose the following:
       ``(A) A description of any interest the individual or 
     community spouse has in an annuity (or similar financial 
     instrument which provides for the conversion of a countable 
     asset to a noncountable asset, as may be specified by the 
     Secretary), regardless of whether the annuity is irrevocable 
     or is treated as an asset.
       ``(B) Full information (as specified by the Secretary) 
     concerning any transaction involving the transfer or disposal 
     of assets during the previous period of 60 months, if the 
     transaction exceeded $100,000, without regard to whether the 
     transfer or disposal was for fair market value. For purposes 
     of applying the previous sentence under this subsection, all 
     transactions of $5,000 or more occurring within a 12-month 
     period shall be treated as a single transaction. The dollar 
     amounts specified in the first and second sentences of this 
     subparagraph shall be increased, beginning with 2007, from 
     year to year based on the percentage increase in the consumer 
     price index for all urban consumers (all items; United States 
     city average), rounded to the nearest $1,000 in the case of 
     the first sentence and $100 in the case of the second 
     sentence.
     Such application or recertification form shall include a 
     statement that under paragraph (2) the State becomes a 
     remainder beneficiary under such an annuity or similar 
     financial instrument by virtue of the provision of such 
     medical assistance.
       ``(2)(A) In the case of any annuity in which an 
     institutionalized individual or community spouse has an 
     interest, if medical assistance is furnished to the 
     individual for services described in subsection (c)(1)(C)(i), 
     by virtue of the provision of such assistance the State 
     becomes the remainder beneficiary in the first position for 
     the total amount of such medical assistance paid on behalf of 
     the individual under this title (or, where there is a 
     community spouse or minor or disabled child in such first 
     position, in the position immediately succeeding the position 
     of such spouse or child or both).
       ``(B) In the case of disclosure concerning an annuity under 
     paragraph (1)(A), the State shall notify the issuer of the 
     annuity of the right of the State under subparagraph (A) as a 
     preferred remainder beneficiary in the annuity for medical 
     assistance furnished to the individual. Nothing in this 
     paragraph shall be construed as preventing such an issuer 
     from notifying persons with any other remainder interest of 
     the State's remainder interest under subparagraph (A).
       ``(C) In the case of such an issuer receiving notice under 
     subparagraph (B), the State may require the issuer to notify 
     the State when there is a change in the amount of income or 
     principal being withdrawn from the amount that was being 
     withdrawn at the time of the most recent disclosure described 
     in paragraph (1)(A). A State shall take such information into 
     account in determining the amount of the State's obligations 
     for medical assistance or in the individual's eligibility for 
     such assistance.
       ``(3)(A) For purposes of subsection (c)(1), a transaction 
     described in paragraph (1)(B) shall be deemed as the transfer 
     of an asset for less than fair market value unless the 
     individual demonstrates to the satisfaction of the State that 
     the transfer of the asset was for fair market value.
       ``(B) The Secretary may provide guidance to States on 
     categories of arms length transactions (such as the purchase 
     of a commercial annuity) that could be generally treated as a 
     transfer of asset for fair market value.
       ``(4) Nothing in this subsection shall be construed as 
     preventing a State from denying eligibility for medical 
     assistance for an individual based on the income or resources 
     derived from an annuity described in paragraph (1)(A).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to transactions (including the purchase of an 
     annuity) occurring on or after the date of the enactment of 
     this Act.

     SEC. 3113. APPLICATION OF ``INCOME-FIRST'' RULE IN APPLYING 
                   COMMUNITY SPOUSE'S INCOME BEFORE ASSETS IN 
                   PROVIDING SUPPORT OF COMMUNITY SPOUSE.

       (a) In General.--Section 1924(d) of the Social Security Act 
     (42 U.S.C. 1396r-5(d)) is amended by adding at the end the 
     following new paragraph:
       ``(6) Application of `income first' rule for funding 
     community spouse monthly income allowance.--For purposes of 
     this subsection and subsection (e), any transfer or 
     allocation made from an institutionalized spouse to meet the 
     need of a community spouse for a community spouse monthly 
     income allowance under paragraph (1)(B) shall be first made 
     from income of the institutionalized spouse and then only 
     when the income is not available from the resources of such 
     institutionalized spouse.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to transfers and allocations made on or after the 
     date of the enactment of this Act by individuals who become 
     institutionalized spouses on or after such date.

     SEC. 3114. DISQUALIFICATION FOR LONG-TERM CARE ASSISTANCE FOR 
                   INDIVIDUALS WITH SUBSTANTIAL HOME EQUITY.

       (a) In General.--Section 1917 of the Social Security Act, 
     as amended by section 3112, is further amended by 
     redesignating subsection (f) as subsection (g) and by 
     inserting after subsection (e) the following new subsection:
       ``(f)(1) Notwithstanding any other provision of this title, 
     subject to paragraph (2), in determining eligibility of an 
     individual for medical assistance with respect to nursing 
     facility services or other long-term care services, the 
     individual shall not be eligible for such assistance if the 
     individual's equity interest in the individual's home exceeds 
     $750,000. The dollar amount specified in the preceding 
     sentence shall be increased, beginning with 2011, from year 
     to year based on the percentage increase in the consumer

[[Page H10572]]

     price index for all urban consumers (all items; United States 
     city average), rounded to the nearest $1,000.
       ``(2) Paragraph (1) shall not apply with respect to an 
     individual if--
       ``(A) the spouse of such individual, or
       ``(B) such individual's child who is under age 21, or (with 
     respect to States eligible to participate in the State 
     program established under title XVI) is blind or permanently 
     and totally disabled, or (with respect to States which are 
     not eligible to participate in such program) is blind or 
     disabled as defined in section 1614,
     is lawfully residing in the individual's home.
       ``(3) Nothing in this subsection shall be construed as 
     preventing an individual from using a reverse mortgage or 
     home equity loan to reduce the individual's total equity 
     interest in the home.
       ``(4) The Secretary shall establish a process whereby 
     paragraph (1) is waived in the case of a demonstrated 
     hardship.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to individuals who are determined eligible for 
     medical assistance with respect to nursing facility services 
     or other long-term care services based on an application 
     filed on or after January 1, 2006.

     SEC. 3115. ENFORCEABILITY OF CONTINUING CARE RETIREMENT 
                   COMMUNITIES (CCRC) AND LIFE CARE COMMUNITY 
                   ADMISSION CONTRACTS.

       (a) Admission Policies of Nursing Facilities.--Section 
     1919(c)(5) of the Social Security Act (42 U.S.C. 1396r(c)(5)) 
     is amended--
       (1) in subparagraph (A)(i)(II), by inserting ``subject to 
     clause (v),'' after ``(II)''; and
       (2) by adding at the end of subparagraph (B) the following 
     new clause:
       ``(v) Treatment of continuing care retirement communities 
     admission contracts.--Notwithstanding subclause (II) of 
     subparagraph (A)(i), subject to subsections (c) and (d) of 
     section 1924, contracts for admission to a State licensed, 
     registered, certified, or equivalent continuing care 
     retirement community or life care community, including 
     services in a nursing facility that is part of such 
     community, may require residents to spend on their care 
     resources declared for the purposes of admission before 
     applying for medical assistance.''.
       (b) Treatment of Entrance Fees.--Section 1917 of such Act 
     (42 U.S.C. 1396p), as amended by sections 3112(a) and 
     3114(a), is amended by redesignating subsection (g) as 
     subsection (h) and by inserting after subsection (f) the 
     following new subsection:
       ``(g) Treatment of Entrance Fees of Individuals Residing in 
     Continuing Care Retirement Communities.--
       ``(1) In general.--For purposes of determining an 
     individual's eligibility for, or amount of, benefits under a 
     State plan under this title, the rules specified in paragraph 
     (2) shall apply to individuals residing in continuing care 
     retirement communities or life care communities that collect 
     an entrance fee on admission from such individuals.
       ``(2) Treatment of entrance fee.--For purposes of this 
     subsection, an individual's entrance fee in a continuing care 
     retirement community or life care community shall be 
     considered a resource available to the individual to the 
     extent that--
       ``(A) the individual has the ability to use the entrance 
     fee, or the contract provides that the entrance fee may be 
     used, to pay for care should other resources or income of the 
     individual be insufficient to pay for such care;
       ``(B) the individual is eligible for a refund of any 
     remaining entrance fee when the individual dies or terminates 
     the continuing care retirement community or life care 
     community contract and leaves the community; and
       ``(C) the entrance fee does not confer an ownership 
     interest in the continuing care retirement community or life 
     care community.
       ``(3) Treatment in relation to spousal share.--To the 
     extent that an entrance fee is determined to be an available 
     resource to an individual applying for medical assistance and 
     the individual has a community spouse as defined in section 
     1924(h), the entrance fee shall be considered in the 
     computation of spousal share pursuant to section 1924(c).''.

          CHAPTER 3--FLEXIBILITY IN COST SHARING AND BENEFITS

     SEC. 3121. STATE OPTION FOR ALTERNATIVE MEDICAID PREMIUMS AND 
                   COST SHARING.

       (a) In General.--Title XIX of the Social Security Act is 
     amended by inserting after section 1916 the following new 
     section:


        ``State option for alternative premiums and cost sharing

       ``Sec. 1916A. (a) State Flexibility.--
       ``(1) In general.--Notwithstanding sections 1916 and 
     1902(a)(10)(B), a State, at its option and through a State 
     plan amendment, may impose premiums and cost sharing for any 
     group of individuals (as specified by the State) and for any 
     type of services (and may vary such premiums and cost sharing 
     among such groups or types, including through the use of 
     tiered cost sharing for prescription drugs) consistent with 
     the limitations established under this section. Nothing in 
     this section shall be construed as superseding (or preventing 
     the application of) section 1916(g).
       ``(2) Definitions.--In this section:
       ``(A) Premium.--The term `premium' includes any enrollment 
     fee or similar charge.
       ``(B) Cost sharing.--The term `cost sharing' includes any 
     deduction, deductible, copayment, or similar charge.
       ``(b) Limitations on Exercise of Authority.--
       ``(1) Individuals with family income below 100 percent of 
     poverty level.--In the case of an individual whose family 
     income does not exceed 100 percent of the Federal poverty 
     level applicable to a family of the size involved, subject to 
     subsections (c)(2) and (e)(2)(A), the limitations otherwise 
     provided under subsections (a) and (b) of section 1916 shall 
     continue to apply and no premium will be imposed under the 
     plan, except that the total annual aggregate amount of cost 
     sharing imposed (including any increased cost sharing imposed 
     under subsection (c) or (e)) for all individuals in the 
     family may not exceed 5 percent of the family income of the 
     family involved for the year involved.
       ``(2) Individuals with family income above 100 percent of 
     poverty level.--In the case of an individual whose family 
     income exceeds 100 percent of the Federal poverty level 
     applicable to a family of the size involved, the total annual 
     aggregate amount of premiums and cost sharing imposed 
     (including any increase and cost sharing imposed under 
     subsection (c) or (e)) for all individuals in the family may 
     not exceed 5 percent of the family income of the family 
     involved for the year involved.
       ``(3) Additional limitations.--
       ``(A) Premiums.--No premiums shall be imposed under this 
     section with respect to the following:
       ``(i) Individuals under 18 years of age that are required 
     to be provided medical assistance under section 
     1902(a)(10)(A)(i), and including individuals with respect to 
     whom adoption or foster care assistance is made available 
     under part E of title IV without regard to age.
       ``(ii) Pregnant women.
       ``(iii) Any terminally ill individual who is receiving 
     hospice care (as defined in section 1905(o)).
       ``(iv) Any individual who is an inpatient in a hospital, 
     nursing facility, intermediate care facility for the mentally 
     retarded, or other medical institution, if such individual is 
     required, as a condition of receiving services in such 
     institution under the State plan, to spend for costs of 
     medical care all but a minimal amount of the individual's 
     income required for personal needs.
       ``(B) Cost sharing.--Subject to the succeeding provisions 
     of this section, no cost sharing shall be imposed under this 
     section with respect to the following:
       ``(i) Services furnished to individuals under 18 years of 
     age that are required to be provided medical assistance under 
     section 1902(a)(10)(A)(i), and including services furnished 
     to individuals with respect to whom adoption or foster care 
     assistance is made available under part E of title IV without 
     regard to age.
       ``(ii) Preventive services (such as well baby and well 
     child care and immunizations) provided to children under 18 
     years of age regardless of family income.
       ``(iii) Services furnished to pregnant women, if such 
     services relate to the pregnancy or to any other medical 
     condition which may complicate the pregnancy.
       ``(iv) Services furnished to a terminally ill individual 
     who is receiving hospice care (as defined in section 
     1905(o)).
       ``(v) Services furnished to any individual who is an 
     inpatient in a hospital, nursing facility, intermediate care 
     facility for the mentally retarded, or other medical 
     institution, if such individual is required, as a condition 
     of receiving services in such institution under the State 
     plan, to spend for costs of medical care all but a minimal 
     amount of the individual's income required for personal 
     needs.
       ``(vi) Emergency services (as defined by the Secretary for 
     purposes of section 1916(a)(2)(D)).
       ``(vii) Family planning services and supplies described in 
     section 1905(a)(4)(C).
       ``(C) Construction.--Nothing in this paragraph shall be 
     construed as preventing a State from exempting additional 
     classes of individuals from premiums under this section or 
     from exempting additional individuals or services from cost 
     sharing under this section.
       ``(4) Indexing nominal amounts.--In applying section 1916 
     under paragraph (1) with respect to cost sharing that is 
     `nominal' in amount, the Secretary shall increase such 
     `nominal' amounts for each year (beginning with 2006) by the 
     annual percentage increase in the medical care component of 
     the consumer price index for all urban consumers (U.S. city 
     average) as rounded up in an appropriate manner.''.
       ``(5) Determinations of family income.--In applying this 
     subsection, family income shall be determined in a manner 
     specified by the State for purposes of this subsection, 
     including the use of such disregards as the State may 
     provide. Family income shall be determined for such period 
     and at such periodicity as the State may provide under this 
     title.
       ``(6) Poverty line defined.--For purposes of this section, 
     the term `poverty line' has the meaning given such term in 
     section 673(2) of the Community Services Block Grant Act (42 
     U.S.C. 9902(2)), including any revision required by such 
     section.
       ``(7) Construction.--Nothing in this section shall be 
     construed--
       ``(A) as preventing a State from further limiting the 
     premiums and cost sharing imposed under this section beyond 
     the limitations provided under this subsection;
       ``(B) as affecting the authority of the Secretary through 
     waiver to modify limitations

[[Page H10573]]

     on premiums and cost sharing under this subsection; or
       ``(C) as affecting any such waiver of requirements in 
     effect under this title before the date of the enactment of 
     this section with regard to the imposition of premiums and 
     cost sharing.
       ``(d) Enforceability of Premiums and Other Cost Sharing.--
       ``(1) Premiums.--Notwithstanding section 1916(c)(3) and 
     section 1902(a)(10)(B), a State may, at its option, condition 
     the provision of medical assistance for an individual upon 
     prepayment of a premium authorized to be imposed under this 
     section, or may terminate eligibility for such medical 
     assistance on the basis of failure to pay such a premium but 
     shall not terminate eligibility of an individual for medical 
     assistance under this title on the basis of failure to pay 
     any such premium until such failure continues for a period of 
     not less than 60 days. A State may apply the previous 
     sentence for some or all groups of beneficiaries as specified 
     by the State and may waive payment of any such premium in any 
     case where the State determines that requiring such payment 
     would create an undue hardship.
       ``(2) Cost sharing.--Notwithstanding section 1916(e) or any 
     other provision of law, a State may permit a provider 
     participating under the State plan to require, as a condition 
     for the provision of care, items, or services to an 
     individual entitled to medical assistance under this title 
     for such care, items, or services, the payment of any cost 
     sharing authorized to be imposed under this section with 
     respect to such care, items, or services. Nothing in this 
     paragraph shall be construed as preventing a provider from 
     reducing or waiving the application of such cost sharing.''.
       (b) Conforming Amendment.--Section 1916(f) of such Act (42 
     U.S.C. 1396o(f)) is amended by inserting ``and section 
     1916A'' after ``(b)(3)''.
       (c) GAO Study of Impact of Premiums and Cost Sharing.--The 
     Comptroller General of the United States shall conduct a 
     study on the impact of premiums and cost sharing under the 
     medicaid program on access to, and utilization of, services. 
     Not later than January 1, 2008, the Comptroller General shall 
     submit to Congress a report on such study.
       (d) Effective Date.--The amendments made by this section 
     shall apply to cost sharing imposed for items and services 
     furnished on or after January 1, 2006.

     SEC. 3122. SPECIAL RULES FOR COST SHARING FOR PRESCRIPTION 
                   DRUGS.

       (a) In General.--Section 1916A of the Social Security Act, 
     as inserted by section 3121, is amended by inserting after 
     subsection (b) the following new subsection:
       ``(c) Special Rules for Cost Sharing for Prescription 
     Drugs.--
       ``(1) In general.--In order to encourage beneficiaries to 
     use drugs (in this subsection referred to as `preferred 
     drugs') identified by the State as the least (or less) costly 
     effective prescription drugs within a class of drugs (as 
     defined by the State), with respect to one or more groups of 
     beneficiaries specified by the State, subject to paragraphs 
     (2) and (5), the State may--
       ``(A) provide an increase in cost sharing (above the 
     nominal level otherwise permitted under section 1916 or 
     subsection (b), but subject to paragraphs (2) and (3)) with 
     respect to drugs that are not preferred drugs within a class; 
     and
       ``(B) waive or reduce the cost sharing otherwise applicable 
     for preferred drugs within such class and shall not apply any 
     such cost sharing for such preferred drugs for individuals 
     for whom cost sharing may not otherwise be imposed under 
     subsection (b)(3)(B).
       ``(2) Limitations.--
       ``(A) By income group as a multiple of nominal amounts.--In 
     no case may the increase in cost sharing under paragraph 
     (1)(A) with respect to a non-preferred drug exceed, in the 
     case of an individual whose family income is--
       ``(i) below 100 percent of the poverty line applicable to a 
     family of the size involved, the amount of nominal cost 
     sharing (as otherwise determined under subsection (b));
       ``(ii) at least 100 percent, but below 150 percent, of the 
     poverty line applicable to a family of the size involved, two 
     times the amount of nominal cost sharing (as otherwise 
     determined under subsection (b)); or
       ``(iii) at least 150 percent of the poverty line applicable 
     to a family of the size involved, three times the amount of 
     nominal cost sharing (as otherwise determined under 
     subsection (b)).
       ``(B) Limitation to nominal for exempt populations.--In the 
     case of an individual who is otherwise not subject to cost 
     sharing due to the application of subsection (b)(3), any 
     increase in cost sharing under paragraph (1)(A) with respect 
     to a non-preferred drug may not exceed a nominal amount (as 
     otherwise determined under subsection (b)).
       ``(C) Continued application of aggregate cap.--In addition 
     to the limitations imposed under subparagraphs (A) and (B), 
     any increase in cost sharing under paragraph (1)(A) continues 
     to be subject to the aggregate cap on cost sharing applied 
     under paragraph (1) or (2) of subsection (b), as the case may 
     be.
       ``(D) TRICARE pharmacy benefit program limitations.--In no 
     case may a State--
       ``(i) treat as a non-preferred drug under this subsection a 
     drug that is treated as a preferred drug under the TRICARE 
     pharmacy benefit program established under section 1074g of 
     title 10, United States Code, as such program is in effect on 
     the date of the enactment of this section; or
       ``(ii) impose cost sharing under this subsection that 
     exceeds the cost sharing imposed under the standards under 
     such pharmacy benefit program, as such program is in effect 
     as of the date of the enactment of this section.
       ``(3) Waiver.--In carrying out paragraph (1), a State shall 
     provide for the application of cost sharing levels applicable 
     to a preferred drug in the case of a drug that is not a 
     preferred drug if the prescribing physician determines that 
     the preferred drug for treatment of the same condition either 
     would not be as effective for the individual or would have 
     adverse effects for the individual or both.
       ``(4) Exclusion authority.--Nothing in this subsection 
     shall be construed as preventing a State from excluding from 
     paragraph (1) specified drugs or classes of drugs.
       ``(5) Prior authorization and appeals process.--A State may 
     not provide for increased cost sharing under this subsection 
     unless the State has implemented for outpatient prescription 
     drugs a system for prior authorization and an appeals process 
     for determinations relating to prior authorization.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to cost sharing imposed for items and services 
     furnished on or after October 1, 2006.

     SEC. 3123. EMERGENCY ROOM COPAYMENTS FOR NON-EMERGENCY CARE.

       (a) In General.--Section 1916A of the Social Security Act, 
     as inserted by section 3121 and as amended by section 3122, 
     is further amended by adding at the end the following new 
     subsection:
       ``(e) State Option for Imposing Cost Sharing for Non-
     Emergency Care Furnished in an Hospital Emergency Room.--
       ``(1) In general.--Notwithstanding section 1916 or the 
     previous provisions of this section, but subject to the 
     limitations of paragraph (2), a State may, by amendment to 
     its State plan under this title, impose cost sharing for non-
     emergency services furnished to an individual (within one or 
     more groups of individuals specified by the State) in a 
     hospital emergency department under this subsection if the 
     following conditions are met:
       ``(A) Access to non-emergency room provider.--The 
     individual has actually available and accessible (as such 
     terms are applied by the Secretary under section 1916(b)(3)) 
     an alternate non-emergency services provider with respect to 
     such services.
       ``(B) Notice.--The physician or hospital must inform the 
     beneficiary after the appropriate screening assessment, but 
     before providing the non-emergency services, of the 
     following:
       ``(i) The hospital may require the payment of the State 
     specified cost sharing before the service can be provided.
       ``(ii) The name and location of an alternate non-emergency 
     services provider (described in subparagraph (A)) that is 
     actually available and accessible (as described in such 
     subparagraph).
       ``(iii) The fact that such alternate provider can provide 
     the services without the imposition of the increase in cost 
     sharing described in clause (i).
       ``(iv) The hospital provides a referral to coordinate 
     scheduling of this treatment.
     Nothing in this subsection shall be construed as preventing a 
     State from applying (or waiving) cost sharing otherwise 
     permissible under this section to services described in 
     clause (iii).
       ``(2) Limitations.--
       ``(A) For poorest beneficiaries.--In the case of an 
     individual described in subsection (b)(1), the cost sharing 
     imposed under this subsection may not exceed twice the amount 
     determined to be nominal under this section, subject to the 
     percent of income limitation otherwise applicable under 
     subsection (b)(1).
       ``(B) Application to exempt populations.--In the case of an 
     individual who is otherwise not subject to cost sharing under 
     subsection (b)(3), a State may impose cost sharing under 
     paragraph (1) for care in an amount that does not exceed a 
     nominal amount (as otherwise determined under subsection (b)) 
     so long as no cost sharing is imposed to receive such care 
     through an outpatient department or other alternative health 
     care provider in the geographic area of the hospital 
     emergency department involved.
       ``(C) Continued application of aggregate cap.--In addition 
     to the limitations imposed under subparagraphs (A) and (B), 
     any increase in cost sharing under paragraph (1) continues to 
     be subject to the aggregate cap on cost sharing applied under 
     paragraph (1) or (2) of subsection (b), as the case may be.
       ``(3) Construction.--Nothing in this section shall be 
     construed--
       ``(A) to limit a hospital's obligations with respect to 
     screening and stabilizing treatment of an emergency medical 
     condition under section 1867; or
       ``(B) to modify any obligations under either State or 
     Federal standards relating to the application of a prudent-
     layperson standard with respect to payment or coverage of 
     emergency services by any managed care organization.
       ``(4) Determination standard.--No hospital or physician 
     that makes a determination with respect to the imposition of 
     cost sharing under this subsection shall be liable in any 
     civil action or proceeding for such determination absent a 
     finding by clear and convincing evidence of gross negligence 
     by

[[Page H10574]]

     the hospital or physician. The previous sentence shall not 
     affect any liability under section 1867 or otherwise 
     applicable under State law based upon the provision (or 
     failure to provide) care.
       ``(5) Definitions.--For purposes of this subsection:
       ``(A) Non-emergency services.--The term `non-emergency 
     services' means any care or services furnished in a emergency 
     department of a hospital that the physician determines do not 
     constitute an appropriate medical screening examination or 
     stabilizing examination and treatment screening required to 
     be provided by the hospital under section 1867.
       ``(B) Alternate non-emergency services provider.--The term 
     `alternative non-emergency services provider' means, with 
     respect to non-emergency services for the diagnosis or 
     treatment of a condition, a health care provider, such as a 
     physician's office, health care clinic, community health 
     center, hospital outpatient department, or similar health 
     care provider, that provides clinically appropriate services 
     for such diagnosis or treatment of the condition within a 
     clinically appropriate time of the provision of such non-
     emergency services and that is participating in the program 
     under this title.''.
       (b) Grant Funds for Establishment of Alternate Non-
     Emergency Services Providers.--Section 1903 of the Social 
     Security Act (42 U.S.C. 1396b) is amended by adding at the 
     end the following new subsection:
       ``(x) Payments for Establishment of Alternate Non-Emergency 
     Services Providers.--
       ``(1) Payments.--In addition to the payments otherwise 
     provided under subsection (a), subject to paragraph (2), the 
     Secretary shall provide for payments to States under such 
     subsection for the establishment of alternate non-emergency 
     service providers (as defined in section 1916A(f)(5)(B)), or 
     networks of such providers.
       ``(2) Limitation.--The total amount of payments under this 
     subsection shall be equal to, and shall not exceed, 
     $100,000,000 during the four-year period beginning with 2006. 
     This subsection constitutes budget authority in advance of 
     appropriations Acts and represents the obligation of the 
     Secretary to provide for the payment of amounts provided 
     under this subsection.
       ``(3) Preference.--In providing for payments to States 
     under this subsection, the Secretary shall provide preference 
     to States that establish, or provide for, alternate non-
     emergency services providers or networks of such providers 
     that--
       ``(A) serve rural or underserved areas where beneficiaries 
     under this title may not have regular access to providers of 
     primary care services; or
       ``(B) are in partnership with local community hospitals.
       ``(4) Form and manner of payment.--Payment to a State under 
     this subsection shall be made only upon the filing of such 
     application in such form and in such manner as the Secretary 
     shall specify. Payment to a State under this subsection shall 
     be made in the same manner as other payments under section 
     1903(a).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to non-emergency services furnished on or after 
     the date of the enactment of this Act.

     SEC. 3124. USE OF BENCHMARK BENEFIT PACKAGES.

       Title XIX of the Social Security Act is amended by 
     redesignating section 1936 as section 1937 and by inserting 
     after section 1935 the following new section:


                ``State flexibility in benefit packages

       ``Sec. 1936. (a) State Option of Providing Benchmark 
     Benefits.--
       ``(1) Authority.--
       ``(A) In general.--Notwithstanding any other provision of 
     this title, a State, at its option as a State plan amendment, 
     may provide for medical assistance under this title to 
     individuals within one or more groups of individuals 
     specified by the State through enrollment in coverage that 
     provides--
       ``(i) benchmark coverage described in subsection (b)(1) 
     and, for a qualifying child, benchmark dental coverage as 
     defined in subparagraph (F); or
       ``(ii) benchmark equivalent coverage described in 
     subsection (b)(2)and, for a qualifying child, benchmark 
     dental coverage as defined in subparagraph (F).
       ``(B) Limitation.--The State may only exercise the option 
     under subparagraph (A) for eligibility categories that had 
     been established before the date of the enactment of this 
     section.
       ``(C) Option of wrap-around benefits.--In the case of 
     coverage described in subparagraph (A), a State, at its 
     option, may provide such wrap-around or additional benefits 
     as the State may specify.
       ``(D) Treatment as medical assistance.--Payment of premiums 
     for such coverage under this subsection shall be treated as 
     payment of other insurance premiums described in the third 
     sentence of section 1905(a).
       ``(E) Qualifying child defined.--For purposes of 
     subparagraph (A), the term `qualifying child' means a child 
     under 18 years of age with a family income below 133 percent 
     of the poverty line applicable to a family of the size 
     involved.
       ``(F) Benchmark dental coverage.--For purposes of 
     subparagraph (A), the term `benchmark dental coverage' means, 
     with respect to a State, dental benefits coverage that is 
     equivalent to or better than the dental coverage offered 
     under the dental benefit plan that covers the greatest number 
     of individuals in the State who are not entitled to medical 
     assistance under this title.
       ``(2) Application.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     a State may require that a full-benefit eligible individual 
     (as defined in subparagraph (C)) within a group obtain 
     benefits under this title through enrollment in coverage 
     described in paragraph (1)(A). A State may apply the previous 
     sentence to individuals within one or more groups of such 
     individuals.
       ``(B) Limitation on application.--A State may not require 
     under subparagraph (A) an individual to obtain benefits 
     through enrollment described in paragraph (1)(A) if the 
     individual is within one of the following categories of 
     individuals:
       ``(i) Mandatory pregnant women and children.--The 
     individual is a pregnant woman or child under 18 years of age 
     who is required to be covered under the State plan under 
     section 1902(a)(10)(A)(i).
       ``(ii) Dual eligibles.--The individual is entitled to 
     benefits under any part of title XVIII.
       ``(iii) Terminally ill hospice patients.--The individual is 
     terminally ill and is receiving benefits for hospice care 
     under this title.
       ``(iv) Eligible on basis of institutionalization.--The 
     individual is an inpatient in a hospital, nursing facility, 
     intermediate care facility for the mentally retarded, or 
     other medical institution, and is required, as a condition of 
     receiving services in such institution under the State plan, 
     to spend for costs of medical care all but a minimal amount 
     of the individual's income required for personal needs.
       ``(v) Medically frail and special medical needs 
     individuals.--The individual is medically frail or otherwise 
     an individual with special medical needs (as identified in 
     accordance with regulations of the Secretary).
       ``(vi) Beneficiaries qualifying for long-term care 
     services.--The individual qualifies based on medical 
     condition for medical assistance for long-term care services 
     described in section 1917(c)(1)(C).
       ``(C) Full-benefit eligible individuals.--
       ``(i) In general.--For purposes of this paragraph, subject 
     to clause (ii), the term `full-benefit eligible individual' 
     means for a State for a month an individual who is determined 
     eligible by the State for medical assistance for all services 
     defined in section 1905(a) which are covered under the State 
     plan under this title for such month under section 
     1902(a)(10)(A) or under any other category of eligibility for 
     medical assistance for all such services under this title, as 
     determined by the Secretary.
       ``(ii) Exclusion of medically needy and spend-down 
     populations.--Such term shall not include an individual 
     determined to be eligible by the State for medical assistance 
     under section 1902(a)(10)(C) or by reason of section 1902(f) 
     or otherwise eligible based on a reduction of income based on 
     costs incurred for medical or other remedial care.
       ``(b) Benchmark Benefit Packages.--
       ``(1) In general.--For purposes of subsection (a)(1), each 
     of the following coverage shall be considered to be benchmark 
     coverage:
       ``(A) FEHBP-equivalent health insurance coverage.--The 
     standard Blue Cross/Blue Shield preferred provider option 
     service benefit plan, described in and offered under section 
     8903(1) of title 5, United States Code.
       ``(B) State employee coverage.--A health benefits coverage 
     plan that is offered and generally available to State 
     employees in the State involved.
       ``(C) Coverage offered through hmo.--The health insurance 
     coverage plan that--
       ``(i) is offered by a health maintenance organization (as 
     defined in section 2791(b)(3) of the Public Health Service 
     Act), and
       ``(ii) has the largest insured commercial, non-medicaid 
     enrollment of covered lives of such coverage plans offered by 
     such a health maintenance organization in the State involved.
       ``(2) Benchmark-equivalent coverage.--For purposes of 
     subsection (a)(1), coverage that meets the following 
     requirement shall be considered to be benchmark-equivalent 
     coverage:
       ``(A) Inclusion of basic services.--The coverage includes 
     benefits for items and services within each of the following 
     categories of basic services:
       ``(i) Inpatient and outpatient hospital services.
       ``(ii) Physicians' surgical and medical services.
       ``(iii) Laboratory and x-ray services.
       ``(iv) Well-baby and well-child care, including age-
     appropriate immunizations.
       ``(v) Other appropriate preventive services, as designated 
     by the Secretary.
       ``(B) Aggregate actuarial value equivalent to benchmark 
     package.--The coverage has an aggregate actuarial value that 
     is at least actuarially equivalent to one of the benchmark 
     benefit packages described in paragraph (1).
       ``(C) Substantial actuarial value for additional services 
     included in benchmark package.--With respect to each of the 
     following categories of additional services for which 
     coverage is provided under the benchmark benefit package used 
     under subparagraph (B), the coverage has an actuarial value 
     that is equal to at least 75 percent of the actuarial value 
     of the coverage of that category of services in such package:
       ``(i) Coverage of prescription drugs.
       ``(ii) Mental health services.
       ``(iii) Vision services.
       ``(iv) Hearing services.

[[Page H10575]]

       ``(3) Determination of actuarial value.--The actuarial 
     value of coverage of benchmark benefit packages shall be set 
     forth in an actuarial opinion in an actuarial report that has 
     been prepared--
       ``(A) by an individual who is a member of the American 
     Academy of Actuaries;
       ``(B) using generally accepted actuarial principles and 
     methodologies;
       ``(C) using a standardized set of utilization and price 
     factors;
       ``(D) using a standardized population that is 
     representative of the population involved;
       ``(E) applying the same principles and factors in comparing 
     the value of different coverage (or categories of services);
       ``(F) without taking into account any differences in 
     coverage based on the method of delivery or means of cost 
     control or utilization used; and
       ``(G) taking into account the ability of a State to reduce 
     benefits by taking into account the increase in actuarial 
     value of benefits coverage offered under this title that 
     results from the limitations on cost sharing under such 
     coverage.
     The actuary preparing the opinion shall select and specify in 
     the memorandum the standardized set and population to be used 
     under subparagraphs (C) and (D).
       ``(4) Coverage of rural health clinic and fqhc services.--
     Notwithstanding the previous provisions of this section, a 
     State may not provide for medical assistance through 
     enrollment of an individual with benchmark coverage or 
     benchmark equivalent coverage under this section unless--
       ``(A) the individual has access, through such coverage or 
     otherwise, to services described in subparagraphs (B) and (C) 
     of section 1905(a)(2); and
       ``(B) payment for such services is made in accordance with 
     the requirements of section 1902(bb).''.

     SEC. 3125. STATE OPTION TO ESTABLISH NON-EMERGENCY MEDICAL 
                   TRANSPORTATION PROGRAM.

       (a) In General.--Section 1902(a) of the Social Security Act 
     (42 U.S.C. 1396a(a)) is amended--
       (1) in paragraph (66), by striking ``and'' at the end;
       (2) in paragraph (67) by striking the period at the end and 
     inserting ``; and''; and
       (3) by inserting after paragraph (67) the following:
       ``(68) at the option of the State and notwithstanding 
     paragraph (10)(B) or (23), provide for the establishment of a 
     non-emergency medical transportation brokerage program in 
     order to more cost-effectively provide transportation for 
     individuals eligible for medical assistance under the State 
     plan who need access to medical care or services and have no 
     other means of transportation which--
       ``(A) may include a wheelchair van, taxi, stretcher car, 
     bus passes and tickets, secured transportation, and such 
     other transportation as the Secretary determines appropriate; 
     and
       ``(B) may be conducted under contract with a broker who--
       ``(i) is selected through a competitive bidding process 
     based on the State's evaluation of the broker's experience, 
     performance, references, resources, qualifications, and 
     costs;
       ``(ii) has oversight procedures to monitor beneficiary 
     access and complaints and ensure that transport personnel are 
     licensed, qualified, competent, and courteous;
       ``(iii) is subject to regular auditing and oversight by the 
     State in order to ensure the quality of the transportation 
     services provided and the adequacy of beneficiary access to 
     medical care and services; and
       ``(iv) complies with such requirements related to 
     prohibitions on referrals and conflict of interest as the 
     Secretary shall establish (based on the prohibitions on 
     physician referrals under section 1877 and such other 
     prohibitions and requirements as the Secretary determines to 
     be appropriate).''.
       (b) Effective Date.--The amendments made by subsection (a) 
     take effect on the date of the enactment of this Act.
       (c) IG Report on Utilization.--Not later than January 1, 
     2007, the Inspector General of the Department of Health and 
     Human Services shall submit to Congress a report that 
     examines the non-emergency medical transportation brokerage 
     programs implemented under section 1902(a)(68) of the Social 
     Security Act, as inserted by subsection (a). The report shall 
     include findings regarding conflicts of interest and improper 
     utilization of transportation services under such programs, 
     as well as recommendations for improvements in such programs.

     SEC. 3126. EXEMPTING WOMEN COVERED UNDER BREAST OR CERVICAL 
                   CANCER PROGRAM.

       Notwithstanding any other provision of law, none of 
     provisions of the previous sections of this chapter, or 
     amendments made by such sections, shall apply to women who 
     are receiving medical assistance by virtue of the application 
     of sections 1902(a)(10)(A)(ii)(XVIII) and 1902(aa) of the 
     Social Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)(XVIII), 
     1396a(aa)).

             CHAPTER 4--EXPANDED ACCESS TO CERTAIN BENEFITS

     SEC. 3131. EXPANDED ACCESS TO HOME AND COMMUNITY-BASED 
                   SERVICES FOR THE ELDERLY AND DISABLED.

       (a) In General.--Section 1905(a) of the Social Security Act 
     (42 U.S.C. 1396d(a)) is amended--
       (1) in paragraph (27), by striking ``and'' at the end;
       (2) by redesignating paragraph (28) as paragraph (29); and
       (3) by inserting after paragraph (27) the following new 
     paragraph:
       ``(28) subject to section 1902(cc), home and community-
     based services (within the scope of services described in 
     paragraph (4)(B) of section 1915(c) for which the Secretary 
     has the authority to approve a waiver and not including room 
     and board) provided pursuant to a written plan of care for 
     individuals--
       ``(A) who are 65 years of age or older, who are disabled 
     (as defined under the State plan), who are persons with 
     developmental disabilities or mental retardation or persons 
     with related conditions, or who are within a subgroup thereof 
     under the State plan;
       ``(B) with respect to whom there has been a determination, 
     in the manner described in paragraph (1) of such section, 
     that but for the provision of such services the individuals 
     would require the level of care provided in a hospital, a 
     nursing facility, or an intermediate care facility for the 
     mentally retarded the cost of which could be reimbursed under 
     the State plan; and
       ``(C) who qualify for medical assistance under the 
     eligibility standards in effect in the State (which may 
     include standards in effect under an approved waiver) as of 
     the date of the enactment of this paragraph; and''.
       (b) Conditions.--Section 1902 of such Act (42 U.S.C. 1396a) 
     is amended by adding at the end the following new subsection:
       ``(cc) Provision of Home and Community-Based Services Under 
     State Plan.--
       ``(1) Conditions.--A State may provide home and community-
     based services under section 1905(a)(28), other than through 
     a waiver or demonstration project under section 1915 or 1115, 
     only if the following conditions are met:
       ``(A) Expiration of previous waiver.--Any State waiver or 
     demonstration project under either such section with respect 
     to services for individuals described in such section has 
     expired.
       ``(B) Information.--The State must monitor and report to 
     the Secretary, in a form and manner specified by the 
     Secretary and on a quarterly basis, enrollment and 
     expenditures for provision of such services under such 
     section.
       ``(2) Options.--Notwithstanding any other provision of this 
     title, in a State's provision of services under section 
     1905(a)(28)--
       ``(A) a State is not required to comply with the 
     requirements of section 1902(a)(1) (relating to 
     statewideness), section 1902(a)(10)(B) (relating to 
     comparability), and section 1902(a)(10)(C)(i)(III) (relating 
     to income and resource rules applicable in the community);
       ``(B) a State may limit the number of individuals who are 
     eligible for such services and may establish waiting lists 
     for the receipt of such services; and
       ``(C) a State may limit the amount, duration, and scope of 
     such services.
     Nothing in this section shall be construed as applying the 
     previous sentence to any items or services other than home 
     and community-based services provided under section 
     1905(a)(28).
       ``(3) Use of electronic data.--The State shall permit 
     health care providers to comply with documentation and data 
     requirements imposed with respect to home and community-based 
     services through the maintenance of data in electronic form 
     rather than in paper form.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to home and community-based services furnished on 
     or after October 1, 2006.

     SEC. 3132. OPTIONAL CHOICE OF SELF-DIRECTED PERSONAL 
                   ASSISTANCE SERVICES (CASH AND COUNSELING).

       (a) Exemption From Certain Requirements.--Section 1915 of 
     the Social Security Act (42 U.S.C. 1396n) is amended by 
     adding at the end the following new subsection:
       ``(i)(1) A State may provide, as `medical assistance', 
     payment for part or all of the cost of self-directed personal 
     assistance services (other than room and board) under the 
     plan which are provided pursuant to a written plan of care to 
     individuals with respect to whom there has been a 
     determination that, but for the provision of such services, 
     the individuals would require and receive personal care 
     services under the plan, or home and community-based services 
     provided pursuant to a waiver under subsection (c). Self-
     directed personal assistance services may not be provided 
     under this subsection to individuals who reside in a home or 
     property that is owned, operated, or controlled by a provider 
     of services, not related by blood or marriage.
       ``(2) The Secretary shall not grant approval for a State 
     self-directed personal assistance services program under this 
     section unless the State provides assurances satisfactory to 
     the Secretary of the following:
       ``(A) Necessary safeguards have been taken to protect the 
     health and welfare of individuals provided services under the 
     program, and to assure financial accountability for funds 
     expended with respect to such services.
       ``(B) The State will provide, with respect to individuals 
     who--
       ``(i) are entitled to medical assistance for personal care 
     services under the plan, or receive home and community-based 
     services under a waiver granted under subsection (c);
       ``(ii) may require self-directed personal assistance 
     services; and
       ``(iii) may be eligible for self-directed personal 
     assistance services,

     an evaluation of the need for personal care under the plan, 
     or personal services under a waiver granted under subsection 
     (c).

[[Page H10576]]

       ``(C) Such individuals who are determined to be likely to 
     require personal care under the plan, or home and community-
     based services under a waiver granted under subsection (c) 
     are informed of the feasible alternatives, if available under 
     the State's self-directed personal assistance services 
     program, at the choice of such individuals, to the provision 
     of personal care services under the plan, or personal 
     assistance services under a waiver granted under subsection 
     (c).
       ``(D) The State will provide for a support system that 
     ensures participants in the self-directed personal assistance 
     services program are appropriately assessed and counseled 
     prior to enrollment and are able to manage their budgets. 
     Additional counseling and management support may be provided 
     at the request of the participant.
       ``(E) The State will provide to the Secretary an annual 
     report on the number of individuals served and total 
     expenditures on their behalf in the aggregate. The State 
     shall also provide an evaluation of overall impact on the 
     health and welfare of participating individuals compared to 
     non-participants every three years.
       ``(3) A State may provide self-directed personal assistance 
     services under the State plan without regard to the 
     requirements of section 1902(a)(1) and may limit the 
     population eligible to receive these services and limit the 
     number of persons served without regard to section 
     1902(a)(10)(B).
       ``(4)(A) For purposes of this subsection, the term `self-
     directed personal assistance services' means personal care 
     and related services, or home and community-based services 
     otherwise available under the plan under this title or 
     subsection (c), that are provided to an eligible participant 
     under a self-directed personal assistance services program 
     under this section, under which individuals, within an 
     approved self-directed services plan and budget, purchase 
     personal assistance and related services, and permits 
     participants to hire, fire, supervise, and manage the 
     individuals providing such services.
       ``(B) At the election of the State--
       ``(i) a participant may choose to use any individual 
     capable of providing the assigned tasks including legally 
     liable relatives as paid providers of the services; and
       ``(ii) the individual may use the individual's budget to 
     acquire items that increase independence or substitute (such 
     as a microwave oven or an accessibility ramp) for human 
     assistance, to the extent that expenditures would otherwise 
     be made for the human assistance.
       ``(5) For purpose of this section, the term `approved self-
     directed services plan and budget' means, with respect to a 
     participant, the establishment of a plan and budget for the 
     provision of self-directed personal assistance services, 
     consistent with the following requirements:
       ``(A) Self-direction.--The participant (or in the case of a 
     participant who is a minor child, the participant's parent or 
     guardian, or in the case of an incapacitated adult, another 
     individual recognized by State law to act on behalf of the 
     participant) exercises choice and control over the budget, 
     planning, and purchase of self-directed personal assistance 
     services, including the amount, duration, scope, provider, 
     and location of service provision.
       ``(B) Assessment of needs.--There is an assessment of the 
     needs, strengths, and preferences of the participants for 
     such services.
       ``(C) Service plan.--A plan for such services (and supports 
     for such services) for the participant has been developed and 
     approved by the State based on such assessment through a 
     person-centered process that--
       ``(i) builds upon the participant's capacity to engage in 
     activities that promote community life and that respects the 
     participant's preferences, choices, and abilities; and
       ``(ii) involves families, friends, and professionals in the 
     planning or delivery of services or supports as desired or 
     required by the participant.
       ``(D) Service budget.--A budget for such services and 
     supports for the participant has been developed and approved 
     by the State based on such assessment and plan and on a 
     methodology that uses valid, reliable cost data, is open to 
     public inspection, and includes a calculation of the expected 
     cost of such services if those services were not self-
     directed. The budget may not restrict access to other 
     medically necessary care and services furnished under the 
     plan and approved by the State but not included in the 
     budget.
       ``(E) Application of quality assurance and risk 
     management.--There are appropriate quality assurance and risk 
     management techniques used in establishing and implementing 
     such plan and budget that recognize the roles and 
     responsibilities in obtaining services in a self-directed 
     manner and assure the appropriateness of such plan and budget 
     based upon the participant's resources and capabilities.
       ``(6) A State may employ a financial management entity to 
     make payments to providers, track costs, and make reports 
     under the program. Payment for the activities of the 
     financial management entity shall be at the administrative 
     rate established in section 1903(a).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to services furnished on or after January 1, 
     2006.

     SEC. 3133. EXPANSION OF STATE LONG-TERM CARE PARTNERSHIP 
                   PROGRAM.

       (a) In General.--Section 1917(b)(1)(C) of the Social 
     Security Act (42 U.S.C. 1396p(b)(1)(C)) is amended--
       (1) in clause (ii), by inserting ``or which has a State 
     plan amendment that provides for a qualified State long-term 
     care insurance partnership (as defined in clause (iii))'' 
     after ``1993,''; and
       (2) by adding at the end the following new clauses:
       ``(iii) For purposes of this paragraph, the term `qualified 
     State long-term care insurance partnership' means an approved 
     State plan amendment under this title that provides for the 
     disregard of any assets or resources in an amount equal to 
     the insurance benefit payments that are made to or on behalf 
     of an individual who is a beneficiary under a long-term care 
     insurance policy (including a certificate issued under a 
     group insurance contract), if the following requirements are 
     met:
       ``(I) The policy covers an insured who was a resident of 
     such State when coverage first became effective under the 
     policy.
       ``(II) The policy is a qualified long-term care insurance 
     policy (as defined in section 7702B(b) of the Internal 
     Revenue Code of 1986) issued on or after the first day of the 
     first calendar quarter in which the plan amendment was 
     submitted to the Secretary.
       ``(III) If the policy does not provide some level of 
     inflation protection, the insured was offered, before the 
     policy was sold, a long-term care insurance policy that 
     provides some level of inflation protection.
       ``(IV) The State Medicaid agency under section 1902(a)(5) 
     provides information and technical assistance to the State 
     insurance department on the insurance department's role of 
     assuring that any individual who sells a long-term care 
     insurance policy under the partnership receives training or 
     demonstrates evidence of an understanding of such policies 
     and how they relate to other public and private coverage of 
     long-term care.
       ``(V) The issuer of the policy provides regular reports to 
     the Secretary that include, in accordance with regulations of 
     the Secretary (promulgated after consultation with the 
     States), notification regarding when all benefits provided 
     under the policy have been paid and the amount of such 
     benefits paid, when the policy otherwise terminates, and such 
     other information as the Secretary determines may be 
     appropriate to the administration of such partnerships.
       ``(VI) The State does not impose any requirement affecting 
     the terms or benefits of such a policy unless the State 
     imposes such requirement on long-term care insurance policies 
     without regard to whether the policy is covered under the 
     partnership or is offered in connection with such a 
     partnership.

     In the case of a long-term care insurance policy which is 
     exchanged for another such policy, subclause (I) shall be 
     applied based on the coverage of the first such policy that 
     was exchanged.
       ``(iv) The Secretary--
       ``(I) as appropriate, shall provide copies of the reports 
     described in clause (iii)(V) to the State involved; and
       ``(II) shall promote the education of consumers regarding 
     qualified State long-term care insurance partnerships.
       ``(v) The Secretary, in consultation with other appropriate 
     Federal agencies, issuers of long-term care insurance, the 
     National Association of Insurance Commissioners, and State 
     insurance commissioners, shall develop recommendations for 
     Congress to authorize and fund a uniform minimum data set to 
     be reported electronically by all issuers of long-term care 
     insurance policies under qualified State long-term care 
     insurance partnerships to a secure, centralized electronic 
     query and report-generating mechanism that the State, the 
     Secretary, and other Federal agencies can access.''.
       (b) Construction.--Nothing in the amendments made by 
     subsection (a) shall be construed as affecting the treatment 
     of long-term care insurance policies that will be, are, or 
     were provided under a State plan amendment described in 
     section 1917(b)(1)(C)(ii) of the Social Security Act that was 
     approved as of May 14, 1993.
       (c) Effective Date.--A State plan amendment that provides 
     for a qualified State long-term care insurance partnership 
     under the amendments made by subsection (a) may provide that 
     such amendment is effective for long-term care insurance 
     policies issued on or after a date, specified in the 
     amendment, that is not earlier than the first day of the 
     first calendar quarter in which the plan amendment was 
     submitted to the Secretary of Health and Human Services.
       (d) Standards for Reciprocal Recognition Among Partnership 
     States.--In order to permit portability in long-term care 
     insurance policies purchased under State long-term care 
     insurance partnerships, the Secretary of Health and Human 
     Services may develop, in consultation with the States and the 
     National Association of Insurance Commissioners, uniform 
     standards for reciprocal recognition of such policies among 
     States with qualified State long-term care insurance 
     partnerships.

     SEC. 3134. HEALTH OPPORTUNITY ACCOUNTS.

       Title XIX of the Social Security Act, as amended by section 
     3124, is amended--
       (1) by redesignating section 1937 as section 1938; and
       (2) by inserting after section 1936 the following new 
     section:


                     ``Health opportunity accounts

       ``Sec. 1937. (a) Authority.--
       ``(1) In general.--Notwithstanding any other provision of 
     this title, the Secretary shall establish a demonstration 
     program

[[Page H10577]]

     under which States may provide under their State plans under 
     this title (including such a plan operating under a statewide 
     waiver under section 1115) in accordance with this section 
     for the provision of alternative benefits consistent with 
     subsection (c) for eligible population groups in one or more 
     geographic areas of the State specified by the State. An 
     amendment under the previous sentence is referred to in this 
     section as a `State demonstration program'.
       ``(2) Initial demonstration.--The demonstration program 
     under this section shall begin on January 1, 2006. During the 
     first 5 years of such program, the Secretary shall not 
     approve more than 10 State demonstration programs, with each 
     State demonstration program covering one or more geographic 
     areas specified by the State. After such 5-year period--
       ``(A) unless the Secretary finds, taking into account cost-
     effectiveness, quality of care, and other criteria that the 
     Secretary specifies, that a State demonstration program 
     previously implemented has been unsuccessful, such a 
     demonstration program may be extended or made permanent in 
     the State; and
       ``(B) unless the Secretary finds, taking into account cost-
     effectiveness, quality of care, and other criteria that the 
     Secretary specifies, that all State demonstration programs 
     previously implemented were unsuccessful, other States may 
     implement State demonstration programs.
       ``(3) Approval.--The Secretary shall not approve a State 
     demonstration program under paragraph (1) unless the program 
     includes the following:
       ``(A) Creating patient awareness of the high cost of 
     medical care.
       ``(B) Providing incentives to patients to seek preventive 
     care services.
       ``(C) Reducing inappropriate use of health care services.
       ``(D) Enabling patients to take responsibility for health 
     outcomes.
       ``(E) Providing enrollment counselors and ongoing education 
     activities.
       ``(F) Providing transactions involving health opportunity 
     accounts to be conducted electronically and without cash.
       ``(G) Providing access to negotiated provider payment rates 
     consistent with this section.

     Nothing in this section shall be construed as preventing a 
     State demonstration program from providing incentives for 
     patients obtaining appropriate preventive care (as defined 
     for purposes of section 223(c)(2)(C) of the Internal Revenue 
     Code of 1986), such as additional account contributions for 
     an individual demonstrating healthy prevention practices.
       ``(4) No requirement for statewideness.--Nothing in this 
     section or any other provision of law shall be construed to 
     require that a State must provide for the implementation of a 
     State demonstration program on a Statewide basis.
       ``(5) Reports.--The Secretary shall periodically submit to 
     Congress reports regarding the success of State demonstration 
     programs.
       ``(b) Eligible Population Groups.--
       ``(1) In general.--A State demonstration program under this 
     section shall specify the eligible population groups 
     consistent with paragraphs (2) and (3).
       ``(2) Eligibility limitations during initial demonstration 
     period.--During the initial 5 years of the demonstration 
     program under this section, a State demonstration program 
     shall not apply to any of the following individuals:
       ``(A) Individuals who are 65 years of age or older.
       ``(B) Individuals who are disabled, regardless of whether 
     or not their eligibility for medical assistance under this 
     title is based on such disability.
       ``(C) Individuals who are eligible for medical assistance 
     under this title only because they are (or were within the 
     previous 60 days) pregnant.
       ``(D) Individuals who have been eligible for medical 
     assistance for a continuous period of less than 3 months.
       ``(3) Additional limitations.--A State demonstration 
     program shall not apply to any individual within a category 
     of individuals described in section 1936(a)(2)(B).
       ``(4) Limitations.--
       ``(A) State option.--This subsection shall not be construed 
     as preventing a State from further limiting eligibility.
       ``(B) On enrollees in medicaid managed care 
     organizations.--Insofar as the State provides for eligibility 
     of individuals who are enrolled in medicaid managed care 
     organizations, such individuals may participate in the State 
     demonstration program only if the State provides assurances 
     satisfactory to the Secretary that the following conditions 
     are met with respect to any such organization:
       ``(i) In no case may the number of such individuals 
     enrolled in the organization who participate in the program 
     exceed 5 percent of the total number of individuals enrolled 
     in such organization.
       ``(ii) The proportion of enrollees in the organization who 
     so participate is not significantly disproportionate to the 
     proportion of such enrollees in other such organizations who 
     participate.
       ``(iii) The State has provided for an appropriate 
     adjustment in the per capita payments to the organization to 
     account for such participation, taking into account 
     differences in the likely use of health services between 
     enrollees who so participate and enrollees who do not so 
     participate.
       ``(5) Voluntary participation.--An eligible individual 
     shall be enrolled in a State demonstration program only if 
     the individual voluntarily enrolls. Except in such hardship 
     cases as the Secretary shall specify, such an enrollment 
     shall be effective for a period of 12 months, but may be 
     extended for additional periods of 12 months each with the 
     consent of the individual.
       ``(c) Alternative Benefits.--
       ``(1) In general.--The alternative benefits provided under 
     this section shall consist, consistent with this subsection, 
     of at least--
       ``(A) coverage for medical expenses in a year for items and 
     services for which benefits are otherwise provided under this 
     title after an annual deductible described in paragraph (2) 
     has been met; and
       ``(B) contribution into a health opportunity account.

     Nothing in subparagraph (A) shall be construed as preventing 
     a State from providing for coverage of preventive care 
     (referred to in subsection (a)(3)) within the alternative 
     benefits without regard to the annual deductible.
       ``(2) Annual deductible.--The amount of the annual 
     deductible described in paragraph (1)(A) shall be at least 
     100 percent, but no more than 110 percent, of the annualized 
     amount of contributions to the health opportunity account 
     under subsection (d)(2)(A)(i), determined without regard to 
     any limitation described in subsection (d)(2)(C)(i)(II).
       ``(3) Access to negotiated provider payment rates.--
       ``(A) Fee-for-service enrollees.--In the case of an 
     individual who is participating in a State demonstration 
     program and who is not enrolled with a medicaid managed care 
     organization, the State shall provide that the individual may 
     obtain demonstration program medicaid services from--
       ``(i) any participating provider under this title at the 
     same payment rates that would be applicable to such services 
     if the deductible described in paragraph (1)(A) was not 
     applicable; or
       ``(ii) any provider at payment rates that do not exceed 125 
     percent of the payment rate that would be applicable to such 
     services furnished by a participating provider under this 
     title if the deductible described in paragraph (1)(A) was not 
     applicable.
       ``(B) Treatment under medicaid managed care plans.--In the 
     case of an individual who is participating in a State 
     demonstration program and is enrolled with a medicaid managed 
     care organization, the State shall enter into an arrangement 
     with the organization under which the individual may obtain 
     demonstration program medicaid services from any provider 
     under such organization at payment rates that do not exceed 
     the payment rate that would be applicable to such services if 
     the deductible described in paragraph (1)(A) was not 
     applicable.
       ``(C) Computation.--The payment rates described in 
     subparagraphs (A) and (B) shall be computed without regard to 
     any cost sharing that would be otherwise applicable under 
     sections 1916 and 1916A.
       ``(D) Definitions.--For purposes of this paragraph:
       ``(i) The term `demonstration program medicaid services' 
     means, with respect to an individual participating in a State 
     demonstration program, services for which the individual 
     would be provided medical assistance under this title but for 
     the application of the deductible described in paragraph 
     (1)(A).
       ``(ii) The term `participating provider' means--

       ``(I) with respect to an individual described in 
     subparagraph (A), a health care provider that has entered 
     into a participation agreement with the State for the 
     provision of services to individuals entitled to benefits 
     under the State plan; or
       ``(II) with respect to an individual described in 
     subparagraph (B) who is enrolled in a medicaid managed care 
     organization, a health care provider that has entered into an 
     arrangement for the provision of services to enrollees of the 
     organization under this title.

       ``(4) No effect on subsequent benefits.--Except as provided 
     under paragraphs (1) and (2), alternative benefits for an 
     eligible individual shall consist of the benefits otherwise 
     provided to the individual, including cost sharing relating 
     to such benefits.
       ``(5) Overriding cost sharing and comparability 
     requirements for alternative benefits.--The provisions of 
     this title relating to cost sharing for benefits (including 
     sections 1916 and 1916A) shall not apply with respect to 
     benefits to which the annual deductible under paragraph 
     (1)(A) applies. The provisions of section 1902(a)(10)(B) 
     (relating to comparability) shall not apply with respect to 
     the provision of alternative benefits (as described in this 
     subsection).
       ``(6) Treatment as medical assistance.--Subject to 
     subparagraphs (D) and (E) of subsection (d)(2), payments for 
     alternative benefits under this section (including 
     contributions into a health opportunity account) shall be 
     treated as medical assistance for purposes of section 
     1903(a).
       ``(7) Use of tiered deductible and cost sharing.--
       ``(A) In general.--A State--
       ``(i) may vary the amount of the annual deductible applied 
     under paragraph (1)(A) based on the income of the family 
     involved so long as it does not favor families with higher 
     income over those with lower income; and
       ``(ii) may vary the amount of the maximum out-of-pocket 
     cost sharing (as defined in subparagraph (B)) based on the 
     income of

[[Page H10578]]

     the family involved so long as it does not favor families 
     with higher income over those with lower income.
       ``(B) Maximum out-of-pocket cost sharing.--For purposes of 
     subparagraph (A)(ii), the term `maximum out-of-pocket cost 
     sharing' means, for an individual or family, the amount by 
     which the annual deductible level applied under paragraph 
     (1)(A) to the individual or family exceeds the balance in the 
     health opportunity account for the individual or family.
       ``(8) Contributions by employers.--Nothing in this section 
     shall be construed as preventing an employer from providing 
     health benefits coverage consisting of the coverage described 
     in paragraph (1)(A) to individuals who are provided 
     alternative benefits under this section.
       ``(d) Health Opportunity Account.--
       ``(1) In general.--For purposes of this section, the term 
     `health opportunity account' means an account that meets the 
     requirements of this subsection.
       ``(2) Contributions.--
       ``(A) In general.--No contribution may be made into a 
     health opportunity account except--
       ``(i) contributions by the State under this title; and
       ``(ii) contributions by other persons and entities, such as 
     charitable organizations.
       ``(B) State contribution.--A State shall specify the 
     contribution amount that shall be deposited under 
     subparagraph (A)(i) into a health opportunity account.
       ``(C) Limitation on annual state contribution provided and 
     permitting imposition of maximum account balance.--
       ``(i) In general.--A State--

       ``(I) may impose limitations on the maximum contributions 
     that may be deposited under subparagraph (A)(i) into a health 
     opportunity account in a year;
       ``(II) may limit contributions into such an account once 
     the balance in the account reaches a level specified by the 
     State; and
       ``(III) subject to clauses (ii) and (iii) and subparagraph 
     (D)(i), may not provide contributions described in 
     subparagraph (A)(i) to a health opportunity account on behalf 
     of an individual or family to the extent the amount of such 
     contributions (including both State and Federal shares) 
     exceeds, on an annual basis, $2,500 for each individual (or 
     family member) who is an adult and $1,000 for each individual 
     (or family member) who is a child.

       ``(ii) Indexing of dollar limitations.--For each year after 
     2006, the dollar amounts specified in clause (i)(III) shall 
     be annually increased by the Secretary by a percentage that 
     reflects the annual percentage increase in the medical care 
     component of the consumer price index for all urban 
     consumers.
       ``(iii) Budget neutral adjustment.--A State may provide for 
     dollar limitations in excess of those specified in clause 
     (i)(III) (as increased under clause (ii)) for specified 
     individuals if the State provides assurances satisfactory to 
     the Secretary that contributions otherwise made to other 
     individuals will be reduced in a manner so as to provide for 
     aggregate contributions that do not exceed the aggregate 
     contributions that would otherwise be permitted under this 
     subparagraph.
       ``(D) Limitations on federal matching.--
       ``(i) State contribution.--A State may contribute under 
     subparagraph (A)(i) amounts to a health opportunity account 
     in excess of the limitations provided under subparagraph 
     (C)(i)(III), but no Federal financial participation shall be 
     provided under section 1903(a) with respect to contributions 
     in excess of such limitations.
       ``(ii) No ffp for private contributions.--No Federal 
     financial participation shall be provided under section 
     1903(a) with respect to any contributions described in 
     subparagraph (A)(ii) to a health opportunity account.
       ``(E) Application of different matching rates.--The 
     Secretary shall provide a method under which, for 
     expenditures made from a health opportunity account for 
     medical care for which the Federal matching rate under 
     section 1903(a) exceeds the Federal medical assistance 
     percentage, a State may obtain payment under such section at 
     such higher matching rate for such expenditures.
       ``(3) Use.--
       ``(A) General uses.--
       ``(i) In general.--Subject to the succeeding provisions of 
     this paragraph, amounts in a health opportunity account may 
     be used for payment of such health care expenditures as the 
     State specifies.
       ``(ii) General limitation.--In no case shall such account 
     be used for payment for health care expenditures that are not 
     payment of medical care (as defined by section 213(d) of the 
     Internal Revenue Code of 1986).
       ``(iii) State restrictions.--In applying clause (i), a 
     State may restrict payment for--

       ``(I) providers of items and services to providers that are 
     licensed or otherwise authorized under State law to provide 
     the item or service and may deny payment for such a provider 
     on the basis that the provider has been found, whether with 
     respect to this title or any other health benefit program, to 
     have failed to meet quality standards or to have committed 
     one or more acts of fraud or abuse; and
       ``(II) items and services insofar as the State finds they 
     are not medically appropriate or necessary.

       ``(iv) Electronic withdrawals.--The State demonstration 
     program shall provide for a method whereby withdrawals may be 
     made from the account for such purposes using an electronic 
     system and shall not permit withdrawals from the account in 
     cash.
       ``(B) Maintenance of health opportunity account after 
     becoming ineligible for public benefit.--
       ``(i) In general.--Notwithstanding any other provision of 
     law, if an account holder of a health opportunity account 
     becomes ineligible for benefits under this title because of 
     an increase in income or assets--

       ``(I) no additional contribution shall be made into the 
     account under paragraph (2)(A)(i);
       ``(II) subject to clause (iii), the balance in the account 
     shall be reduced by 25 percent; and
       ``(III) subject to the succeeding provisions of this 
     subparagraph, the account shall remain available to the 
     account holder for withdrawals under the same terms and 
     conditions as if the account holder remained eligible for 
     such benefits.

       ``(ii) Special rules.--Withdrawals under this subparagraph 
     from an account--

       ``(I) shall be available for the purchase of health 
     insurance coverage; and
       ``(II) may, subject to clause (iv), be made available (at 
     the option of the State) for such additional expenditures 
     (such as job training and tuition expenses) specified by the 
     State (and approved by the Secretary) as the State may 
     specify.

       ``(iii) Exception from 25 percent savings to government for 
     private contributions.--Clause (i)(II) shall not apply to the 
     portion of the account that is attributable to contributions 
     described in paragraph (2)(A)(ii). For purposes of accounting 
     for such contributions, withdrawals from a health opportunity 
     account shall first be attributed to contributions described 
     in paragraph (2)(A)(i).
       ``(iv) Condition for non-health withdrawals.--No withdrawal 
     may be made from an account under clause (ii)(II) unless the 
     accountholder has participated in the program under this 
     section for at least 1 year.
       ``(v) No requirement for continuation of coverage.--An 
     account holder of a health opportunity account, after 
     becoming ineligible for medical assistance under this title, 
     is not required to purchase high-deductible or other 
     insurance as a condition of maintaining or using the account.
       ``(4) Administration.--A State may coordinate 
     administration of health opportunity accounts through the use 
     of a third party administrator and reasonable expenditures 
     for the use of such administrator shall be reimbursable to 
     the State in the same manner as other administrative 
     expenditures under section 1903(a)(7).
       ``(5) Treatment.--Amounts in, or contributed to, a health 
     opportunity account shall not be counted as income or assets 
     for purposes of determining eligibility for benefits under 
     this title.
       ``(6) Unauthorized withdrawals.--A State may establish 
     procedures--
       ``(A) to penalize or remove an individual from the health 
     opportunity account based on nonqualified withdrawals by the 
     individual from such an account; and
       ``(B) to recoup costs that derive from such nonqualified 
     withdrawals.''.

                      CHAPTER 5--OTHER PROVISIONS

     SEC. 3141. INCREASE IN MEDICAID PAYMENTS TO INSULAR AREAS.

       Section 1108(g) of the Social Security Act (42 U.S.C. 
     1308(g)) is amended--
       (1) in paragraph (2), by inserting ``and subject to 
     paragraph (3)'' after ``subsection (f)''; and
       (2) by adding at the end the following new paragraph:
       ``(3) Fiscal years 2006 and 2007 for certain insular 
     areas.--The amounts otherwise determined under this 
     subsection for Puerto Rico, the Virgin Islands, Guam, the 
     Northern Mariana Islands, and American Samoa for fiscal year 
     2006 and fiscal year 2007 shall be increased by the following 
     amounts:
       ``(A) For Puerto Rico, $12,000,000 for fiscal year 2006 and 
     $12,000,000 for fiscal year 2007.
       ``(B) For the Virgin Islands, $2,500,000 for fiscal year 
     2006 and $5,000,000 for fiscal year 2007.
       ``(C) For Guam, $2,500,000 for fiscal year 2006 and 
     $5,000,000 for fiscal year 2007.
       ``(D) For the Northern Mariana Islands, $1,000,000 for 
     fiscal year 2006 and $2,000,000 for fiscal year 2007.
       ``(E) For American Samoa, $2,000,000 for fiscal year 2006 
     and $4,000,000 for fiscal year 2007.

     Such amounts shall not be taken into account in applying 
     paragraph (2) for fiscal year 2007 but shall be taken into 
     account in applying such paragraph for fiscal year 2008 and 
     subsequent fiscal years.''.

     SEC. 3142. MANAGED CARE ORGANIZATION PROVIDER TAX REFORM.

       (a) In General.--Section 1903(w)(7)(A)(viii) of the Social 
     Security Act (42 U.S.C. 1396b(w)(7)(A)(viii)) is amended to 
     read as follows:
       ``(viii) Services of managed care organizations (including 
     health maintenance organizations, preferred provider 
     organizations, and such other similar organizations as the 
     Secretary may specify by regulation).''.
       (b) Effective Date.--
       (1) In general.--Subject to paragraph (2), the amendment 
     made by subsection (a) shall be effective as of the date of 
     the enactment of this Act.
       (2) Grandfather.--
       (A) In general.--Subject to subparagraph (B), in the case 
     of a State that has had approved as of the date of the 
     enactment of this Act a provider tax on services described

[[Page H10579]]

     in section 1903(w)(7)(A)(viii) of the Social Security Act, as 
     amended by subsection (a), such amendment shall be effective 
     as of October 1, 2008.
       (B) Transition rule for fiscal year 2009.--In the case of a 
     State described in subparagraph (A), the amount of any 
     reduction in payment under subsection (a)(1) of section 1903 
     of the Social Security Act (42 U.S.C. 1396b) that would 
     otherwise be required under subsection (w) of such section 
     for calendar quarters in fiscal year 2009 because of the 
     amendment made by section (a) shall be reduced by one-half.

     SEC. 3143. MEDICAID TRANSFORMATION GRANTS.

       (a) In General.--Section 1903 of the Social Security Act 
     (42 U.S.C. 1396b), as amended by section 3123, is amended by 
     adding at the end the following new subsection:
       ``(y) Medicaid Transformation Payments.--
       ``(1) In general.--In addition to the payments provided 
     under subsection (a), subject to paragraph (4), the Secretary 
     shall provide for payments to States for the adoption of 
     innovative methods to improve the effectiveness and 
     efficiency in providing medical assistance under this title.
       ``(2) Permissible uses of funds.--The following are 
     examples of innovative methods for which funds provided under 
     this subsection may be used:
       ``(A) Methods for reducing patient error rates through the 
     implementation and use of electronic health records, 
     electronic clinical decision support tools, or e-prescribing 
     programs.
       ``(B) Methods for improving rates of collection from 
     estates of amounts owed under this title.
       ``(C) Methods for reducing waste, fraud, and abuse under 
     the program under this title, such as reducing improper 
     payment rates as measured by annual payment error rate 
     measurement (PERM) project rates.
       ``(D) Implementation of a medication risk management 
     program as part of a drug use review program under section 
     1927(g).
       ``(E) Methods in reducing, in clinically appropriate ways, 
     expenditures under this title for covered outpatient drugs, 
     particularly in the categories of greatest drug utilization, 
     by increasing the utilization of generic drugs through the 
     use of education programs and other incentives to promote 
     greater use of generic drugs.''.
       ``(3) Application; terms and conditions.--
       ``(A) In general.--No payments shall be made to a State 
     under this subsection unless the State applies to the 
     Secretary for such payments in a form, manner, and time 
     specified by the Secretary.
       ``(B) Terms and conditions.--Such payments are made under 
     such terms and conditions consistent with this subsection as 
     the Secretary prescribes.
       ``(C) Annual report.--Payment to a State under this 
     subsection is conditioned on the State submitting to the 
     Secretary an annual report on the programs supported by such 
     payment. Such report shall include information on--
       ``(A) the specific uses of such payment;
       ``(B) an assessment of quality improvements and clinical 
     outcomes under such programs; and
       ``(C) estimates of cost savings resulting from such 
     programs.
       ``(4) Funding.--
       ``(A) Limitation on funds.--The total amount of payments 
     under this subsection shall be equal to, and shall not 
     exceed--
       ``(i) $50,000,000 for fiscal year 2007; and
       ``(ii) $50,000,000 for fiscal year 2008.

     This subsection constitutes budget authority in advance of 
     appropriations Acts and represents the obligation of the 
     Secretary to provide for the payment of amounts provided 
     under this subsection.
       ``(B) Allocation of funds.--The Secretary shall specify a 
     method for allocating the funds made available under this 
     subsection among States. Such method shall provide preference 
     for States that design programs that target health providers 
     that treat significant numbers of medicaid beneficiaries. 
     Such method shall provide that not less than 25 percent of 
     such funds shall be allocated among States the population of 
     which (as determined according to data collected by the 
     United States Census Bureau) as of July 1, 2004, was more 
     than 105 percent of the population of the respective State 
     (as so determined) as of April 1, 2000.
       ``(C) Form and manner of payment.--Payment to a State under 
     this subsection shall be made in the same manner as other 
     payments under section 1903(a). There is no requirement for 
     State matching funds to receive payments under this 
     subsection.
       ``(5) Medication risk management program.--
       ``(A) In general.--For purposes of this subsection, the 
     term `medication risk management program' means a program for 
     targeted beneficiaries that ensures that covered outpatient 
     drugs are appropriately used to optimize therapeutic outcomes 
     through improved medication use and to reduce the risk of 
     adverse events.
       ``(B) Elements.--Such program may include the following 
     elements:
       ``(i) The use of established principles and standards for 
     drug utilization review and best practices to analyze 
     prescription drug claims of targeted beneficiaries and 
     identify outlier physicians.
       ``(ii) On an ongoing basis provide outlier physicians--

       ``(I) a comprehensive pharmacy claims history for each 
     targeted beneficiary under their care;
       ``(II) information regarding the frequency and cost of 
     relapses and hospitalizations of targeted beneficiaries under 
     the physician's care; and
       ``(III) applicable best practice guidelines and empirical 
     references.

       ``(iii) Monitor outlier physician's prescribing, such as 
     failure to refill, dosage strengths, and provide incentives 
     and information to encourage the adoption of best clinical 
     practices.
       ``(C) Targeted beneficiaries.--For purposes of this 
     paragraph, the term `targeted beneficiaries' means medicaid 
     eligible beneficiaries who are identified as having high 
     prescription drug costs and medical costs, such as 
     individuals with behavioral disorders or multiple chronic 
     diseases who are taking multiple medications.''.

     SEC. 3144. ENHANCING THIRD PARTY IDENTIFICATION AND PAYMENT.

       (a) Clarification of Third Parties Legally Responsible for 
     Payment of a Claim for a Health Care Item or Service.--
     Section 1902(a)(25) of the Social Security Act (42 U.S.C. 
     1396a(a)(25)) is amended--
       (1) in subparagraph (A), in the matter preceding clause 
     (i)--
       (A) by inserting ``, including self-insured plans'' after 
     ``health insurers''; and
       (B) by striking ``and health maintenance organizations'' 
     and inserting ``health maintenance organizations, pharmacy 
     benefit managers, or other parties that are, by statute, 
     contract, or agreement, legally responsible for payment of a 
     claim for a health care item or service''; and
       (2) in subparagraph (G)--
       (A) by inserting ``a self-insured plan,'' after ``1974,''; 
     and
       (B) by striking ``and a health maintenance organization'' 
     and inserting ``a health maintenance organization, a pharmacy 
     benefit manager, or other party that is, by statute, 
     contract, or agreement, legally responsible for payment of a 
     claim for a health care item or service''.
       (b) Requirement for Third Parties to Provide the State With 
     Coverage Eligibility and Claims Data.--Section 1902(a)(25) of 
     such Act (42 U.S.C. 1396a(a)(25)) is amended--
       (1) in subparagraph (G), by striking ``and'' at the end;
       (2) in subparagraph (H), by adding ``and'' after the 
     semicolon at the end; and
       (3) by inserting after subparagraph (H), the following:
       ``(I) that the State shall provide assurances satisfactory 
     to the Secretary that the State has in effect laws requiring 
     health insurers, including self-insured plans, group health 
     plans (as defined in section 607(1) of the Employee 
     Retirement Income Security Act of 1974), service benefit 
     plans, health maintenance organizations, pharmacy benefit 
     managers, or other parties that are, by statute, contract, or 
     agreement, legally responsible for payment of a claim for a 
     health care item or service, as a condition of doing business 
     in the State, to--
       ``(i) provide eligibility and claims payment data with 
     respect to an individual who is eligible for, or is provided, 
     medical assistance under the State plan, upon the request of 
     the State;
       ``(ii) accept the subrogation of the State to any right of 
     an individual or other entity to payment from the party for 
     an item or service for which payment has been made under the 
     State plan;
       ``(iii) respond to any inquiry by the State regarding a 
     claim for payment for any health care item or service 
     submitted not later than 3 years after the date of the 
     provision of such health care item or service; and
       ``(iv) agree not to deny a claim submitted by the State 
     solely on the basis of the date of submission of the 
     claim;''.
       (c) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section take effect on January 1, 
     2006.
       (2) Delayed effective date.--In the case of a State plan 
     under title XIX of the Social Security Act which the 
     Secretary determines requires State legislation in order for 
     the plan to meet the additional requirements imposed by the 
     amendments made by this section, the State plan shall not be 
     regarded as failing to comply with the requirements of such 
     Act solely on the basis of its failure to meet these 
     additional requirements before the first day of the first 
     calendar quarter beginning after the close of the first 
     regular session of the State legislature that begins after 
     the date of 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 the session shall be 
     considered to be a separate regular session of the State 
     legislature.

     SEC. 3145. IMPROVED ENFORCEMENT OF DOCUMENTATION 
                   REQUIREMENTS.

       (a) In General.--Section 1903 of the Social Security Act 
     (42 U.S.C. 1396b) is amended--
       (1) in subsection (i), as amended by section 104 of Public 
     Law 109-91--
       (A) by striking the period at the end of paragraph (21) and 
     inserting ``; or''; and
       (B) by inserting after paragraph (21) the following new 
     paragraph:
       ``(22) with respect to amounts expended for medical 
     assistance for an individual who declares under section 
     1137(d)(1)(A) to be a citizen or national of the United 
     States for purposes of establishing eligibility for benefits 
     under this title, unless the requirement of subsection (z) is 
     met.''; and

[[Page H10580]]

       (2) by adding at the end, as amended by sections 3123 and 
     3143, the following new subsection:
       ``(z)(1) For purposes of subsection (i)(22), the 
     requirement of this subsection is, with respect to an 
     individual declaring to be a citizen or national of the 
     United States, that, subject to paragraph (2), there is 
     presented satisfactory documentary evidence of citizenship or 
     nationality (as defined in paragraph (3)) of the individual.
       ``(2) The requirement of paragraph (1) shall not apply to 
     an alien who is eligible for medical assistance under this 
     title--
       ``(A) and is entitled to or enrolled for benefits under any 
     part of title XVIII;
       ``(B) on the basis of receiving supplemental security 
     income benefits under title XVI; or
       ``(C) on such other basis as the Secretary may specify 
     under which satisfactory documentary evidence of citizenship 
     or nationality had been previously presented.
       ``(3)(A) For purposes of this subsection, the term 
     `satisfactory documentary evidence of citizenship or 
     nationality' means--
       ``(i) any document described in subparagraph (B); or
       ``(ii) a document described in subparagraph (C) and a 
     document described in subparagraph (D).
       ``(B) The following are documents described in this 
     subparagraph:
       ``(i) A United State passport.
       ``(ii) Form N-550 or N-570 (Certificate of Naturalization).
       ``(iii) Form N-560 or N-561 (Certificate of United States 
     Citizenship).
       ``(iv) Such other document as the Secretary may specify, by 
     regulation, that provides proof of United States citizenship 
     or nationality and that provides a reliable means of 
     documentation of personal identity.
       ``(C) The following are documents described in this 
     subparagraph:
       ``(i) A certificate of birth in the United States.
       ``(ii) Form FS-545 or Form DS-1350 (Certification of Birth 
     Abroad).
       ``(iii) Form I-97 (United States Citizen Identification 
     Card).
       ``(iv) Form FS-240 (Report of Birth Abroad of a Citizen of 
     the United States).
       ``(v) Such other document (not described in subparagraph 
     (B)(iv)) as the Secretary may specify that provides proof of 
     United States citizenship or nationality.
       ``(D) The following are documents described in this 
     subparagraph:
       ``(i) Any identity document described in section 
     274A(b)(1)(D) of the Immigration and Nationality Act.
       ``(ii) Any other documentation of personal identity of such 
     other type as the Secretary finds, by regulation, provides a 
     reliable means of identification.
       ``(E) A reference in this paragraph to a form includes a 
     reference to any successor form.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to determinations of initial eligibility for 
     medical assistance made on or after July 1, 2006, and to 
     redeterminations of eligibility made on or after such date in 
     the case of individuals for whom the requirement of section 
     1903(z) of the Social Security Act, as added by such 
     amendments, was not previously met.

     SEC. 3146. REFORMS OF TARGETED CASE MANAGEMENT.

       (a) In General.--Section 1915(g) of the Social Security Act 
     (42 U.S.C. 1396n(g)) is amended by striking paragraph (2) and 
     inserting the following:
       ``(2) For purposes of this subsection:
       ``(A)(i) The term `case management services' means services 
     which will assist individuals eligible under the plan in 
     gaining access to needed medical, social, educational, and 
     other services.
       ``(ii) Such term includes the following:
       ``(I) Assessment of an eligible individual to determine 
     service needs, including activities that focus on needs 
     identification, to determine the need for any medical, 
     educational, social, or other services. Such assessment 
     activities include the following:
       ``(aa) Taking client history.
       ``(bb) Identifying the needs of the individual, and 
     completing related documentation.
       ``(cc) Gathering information from other sources such as 
     family members, medical providers, social workers, and 
     educators, if necessary, to form a complete assessment of the 
     eligible individual.
       ``(II) Development of a specific care plan based on the 
     information collected through an assessment, that specifies 
     the goals and actions to address the medical, social, 
     educational, and other services needed by the eligible 
     individual, including activities such as ensuring the active 
     participation of the eligible individual and working with the 
     individual (or the individual's authorized health care 
     decision maker) and others to develop such goals and identify 
     a course of action to respond to the assessed needs of the 
     eligible individual.
       ``(III) Referral and related activities to help an 
     individual obtain needed services, including activities that 
     help link eligible individuals with medical, social, 
     educational providers or other programs and services that are 
     capable of providing needed services, such as making 
     referrals to providers for needed services and scheduling 
     appointments for the individual.
       ``(IV) Monitoring and follow-up activities, including 
     activities and contacts that are necessary to ensure the care 
     plan is effectively implemented and adequately addressing the 
     needs of the eligible individual, and which may be with the 
     individual, family members, providers, or other entities and 
     conducted as frequently as necessary to help determine such 
     matters as--
       ``(aa) whether services are being furnished in accordance 
     with an individual's care plan;
       ``(bb) whether the services in the care plan are adequate; 
     and
       ``(cc) whether there are changes in the needs or status of 
     the eligible individual, and if so, making necessary 
     adjustments in the care plan and service arrangements with 
     providers.
       ``(iii) Such term does not include the direct delivery of 
     an underlying medical, educational, social, or other service 
     to which an eligible individual has been referred, including, 
     with respect to the direct delivery of foster care services, 
     services such as (but not limited to) the following:
       ``(I) Research gathering and completion of documentation 
     required by the foster care program.
       ``(II) Assessing adoption placements.
       ``(III) Recruiting or interviewing potential foster care 
     parents.
       ``(IV) Serving legal papers.
       ``(V) Home investigations.
       ``(VI) Providing transportation.
       ``(VII) Administering foster care subsidies.
       ``(VIII) Making placement arrangements.
       ``(B) The term `targeted case management services' means 
     case management services that are furnished without regard to 
     the requirements of section 1902(a)(1) and section 
     1902(a)(10)(B) to specific classes of individuals or to 
     individuals who reside in specified areas.
       ``(3) With respect to contacts with individuals who are not 
     eligible for medical assistance under the State plan or, in 
     the case of targeted case management services, individuals 
     who are eligible for such assistance but are not part of the 
     target population specified in the State plan, such 
     contacts--
       ``(A) are considered an allowable case management activity, 
     when the purpose of the contact is directly related to the 
     management of the eligible individual's care; and
       ``(B) are not considered an allowable case management 
     activity if such contacts relate directly to the 
     identification and management of the noneligible or 
     nontargeted individual's needs and care.
       ``(4)(A) In accordance with section 1902(a)(25), Federal 
     financial participation only is available under this title 
     for case management services or targeted case management 
     services if there are no other third parties liable to pay 
     for such services, including as reimbursement under a 
     medical, social, educational, or other program.
       ``(B) A State shall allocate the costs of any part of such 
     services which are reimbursable under another federally 
     funded program in accordance with OMB Circular A-87 (or any 
     related or successor guidance or regulations regarding 
     allocation of costs among federally funded programs) under an 
     approved cost allocation program.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on January 1, 2006.

     SEC. 3147. EMERGENCY SERVICES FURNISHED BY NON-CONTRACT 
                   PROVIDERS FOR MEDICAID MANAGED CARE ENROLLEES.

       (a) In General.--Section 1932(b)(2) of the Social Security 
     Act (42 U.S.C. 1396u-2(b)(2)) is amended by adding at the end 
     the following new subparagraph:
       ``(D) Emergency services furnished by non-contract 
     providers.--Any provider of emergency services that does not 
     have in effect a contract with a medicaid managed care entity 
     that establishes payment amounts for services furnished to a 
     beneficiary enrolled in the entity's medicaid managed care 
     plan must accept as payment in full the amounts (less any 
     payments for indirect costs of medical education and direct 
     costs of graduate medical education) that it could collect if 
     the beneficiary received medical assistance under this title 
     other than through enrollment in such an entity.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on January 1, 2007.

     SEC. 3148. ADJUSTMENT IN COMPUTATION OF MEDICAID FMAP TO 
                   DISREGARD AN EXTRAORDINARY EMPLOYER PENSION 
                   CONTRIBUTION.

       (a) In General.--Only for purposes of computing the Federal 
     medical assistance percentage under section 1905(b) of the 
     Social Security Act (42 U.S.C. 1396d(b)) for a State for a 
     fiscal year (beginning with fiscal year 2006), any 
     significantly disproportionate employer pension contribution 
     described in subsection (b) shall be disregarded in computing 
     the per capita income of such State, but shall not be 
     disregarded in computing the per capita income for the 
     continental United States (and Alaska) and Hawaii.
       (b) Significantly Disproportionate Employer Pension 
     Contribution.--For purposes of subsection (a), a 
     significantly disproportionate employer pension contribution 
     described in this subsection with respect to a State for a 
     fiscal year is an employer contribution towards pensions that 
     is allocated to such State for a period if the aggregate 
     amount so allocated exceeds 50 percent of the total increase 
     in personal income in that State for the period involved.

[[Page H10581]]

                 Subtitle B--Katrina Health Care Relief

     SEC. 3201. TARGETED MEDICAID RELIEF FOR STATES AFFECTED BY 
                   HURRICANE KATRINA.

       (a) 100 Percent Federal Matching Payments for Medical 
     Assistance Provided in Katrina Impacted Areas.--
       (1) In general.--Notwithstanding section 1905(b) of the 
     Social Security Act (42 U.S.C. 1396d(b)), for items and 
     services furnished during the period that begins on August 
     28, 2005, and ends on May 15, 2006, the Federal matching rate 
     for providing medical assistance for such items and services 
     under a State Medicaid plan to any individual residing in a 
     Katrina impacted parish or county (as defined in subsection 
     (c)(1)) or to a Katrina Survivor (as defined in subsection 
     (b)), and for costs directly attributable to all 
     administrative activities that relate to the provision of 
     such medical assistance, shall be 100 percent.
       (2) Application to child health assistance.--
     Notwithstanding section 2105(b) of the Social Security Act 
     (42 U.S.C. 1397ee(b)), for items and services furnished 
     during the period described in paragraph (1), the Federal 
     matching rate for providing child health assistance for such 
     items and services under a State child health plan under 
     title XXI of such Act in a Katrina impacted parish or county 
     or to a Katrina Survivor, and for costs directly attributable 
     to all administrative activities that relate to the provision 
     of such child health assistance, shall be 100 percent.
       (b) Katrina Survivor.--For purposes of subsection (a), the 
     term ``Katrina Survivor'' means an individual who, on any day 
     during the week preceding August 28, 2005, had a primary 
     residence in a major disaster parish or county (as defined in 
     subsection (c)).
       (c) Definitions.--For purposes of this section:
       (1) Katrina impacted parish or county.--The term ``Katrina 
     impacted parish or county'' means any parish in the State of 
     Louisiana, any county in the State of Mississippi, and any 
     major disaster parish or county in the State of Alabama.
       (2) Major disaster parish or county.--A major disaster 
     parish or county is a parish of the State of Louisiana or a 
     county of the State of Mississippi or Alabama for which a 
     major disaster has been declared in accordance with section 
     401 of the Robert T. Stafford Disaster Relief and Emergency 
     Assistance Act (42 U.S.C. 5170) as a result of Hurricane 
     Katrina and which the President has determined, as of 
     September 14, 2005, warrants individual assistance from the 
     Federal Government under such Act.

     SEC. 3202. STATE HIGH RISK HEALTH INSURANCE POOL FUNDING.

       There are hereby authorized and appropriated $90,000,000 
     for fiscal year 2006 for grants under subsection (b)(1) of 
     section 2745 of the Public Health Service Act (42 U.S.C. 
     300gg-45). The amount so appropriated shall be treated as if 
     it had been appropriated under subsection (c)(2) of such 
     section.

     SEC. 3203. RECOMPUTATION OF HPSA, MUA, AND MUP DESIGNATIONS 
                   WITHIN HURRICANE KATRINA AFFECTED AREAS.

       (a) In General.--For purposes of the Public Health Service 
     Act (42 U.S.C. 201 et seq.), the Secretary of Health and 
     Human Services shall conduct a review of all Hurricane 
     Katrina disaster areas and, as appropriate taking into 
     account the lack of availability of health care providers and 
     services due to Hurricane Katrina--
       (1) shall designate such areas as health professional 
     shortage areas or medically underserved areas; and
       (2) shall designate one of more populations of each such 
     area as a medically underserved population.
       (b) Hurricane Katrina Disaster Area Defined.--For purposes 
     of this section, the term ``Hurricane Katrina disaster area'' 
     means an area for which a major disaster has been declared in 
     accordance with section 401 of the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170) 
     as a result of Hurricane Katrina and which the President has 
     determined, before September 14, 2005, warrants individual 
     and public assistance from the Federal Government under such 
     Act.

     SEC. 3204. WAIVER OF CERTAIN REQUIREMENTS APPLICABLE TO THE 
                   PROVISION OF HEALTH CARE IN AREAS IMPACTED BY 
                   HURRICANE KATRINA.

       (a) Eligible Area.--
       (1) Definition.--In this section, the term ``eligible 
     area'' means an area identified by the Secretary of Health 
     and Human Services pursuant to paragraph (2).
       (2) Identification.--Not later than 30 days after the date 
     of the enactment of this Act, the Secretary of Health and 
     Human Services shall identify areas that--
       (A) have been directly impacted by Hurricane Katrina; or
       (B) are located in a State which has absorbed a significant 
     number of Hurricane Katrina evacuees.
       (b) Health Centers.--For the purpose of determining whether 
     an entity located in an eligible area qualifies as a health 
     center under section 330 of the Public Health Service Act (42 
     U.S.C. 254b):
       (1) Board composition.--
       (A) Waiver.--The Secretary of Health and Human Services 
     shall waive any requirement that a majority of the governing 
     board of the entity be consumers of the entity's health care 
     services.
       (B) Rule of construction.--This paragraph shall not be 
     construed as requiring the Secretary of Health and Human 
     Services to waive a requirement that the governing board of 
     the entity include representation of the consumers of the 
     entity's health care services.
       (2) Medically underserved population.--
       (A) Determination.--At the request of the entity, the 
     Secretary of Health and Human Services shall determine 
     whether, taking into consideration any change in population 
     associated with Hurricane Katrina, the entity serves a 
     medically underserved population (as that term is defined in 
     section 330(b)(3) of the Public Health Service Act (42 U.S.C. 
     254b(b)(3))).
       (B) Deadline.--The Secretary of Health and Human Services 
     shall make a determination under subparagraph (A) not later 
     than 60 days after the date on which the Secretary receives 
     the request for the determination.
       (C) Restriction.--The Secretary of Health and Human 
     Services shall not make any determination under this 
     paragraph on whether a population has ceased to qualify as a 
     medically underserved population under section 330 of the 
     Public Health Service Act (42 U.S.C. 254b).
       (3) Required primary health services.--The Secretary of 
     Health and Human Services shall waive any requirement for the 
     entity to provide primary health services described in clause 
     (iii), (iv), or (v) of section 330(b)(1) of the Public Health 
     Service Act (42 U.S.C. 254b(b)(1)).
       (c) National Health Service Corps.--Notwithstanding the 
     provisions of subpart II of part D of title III of the Public 
     Health Service Act (42 U.S.C. 254d et seq.) requiring that 
     members of the National Health Service Corps be assigned to 
     health professional shortage areas, the Secretary of Health 
     and Human Services may assign members of the National Health 
     Service Corps to any eligible area.
       (d) Termination of Authority.--The authority vested by this 
     section in the Secretary of Health and Human Services and the 
     Secretary of Homeland Security shall terminate on the date 
     that is 2 years after enactment of this Act. The Secretary of 
     Health and Human Services may not grant any waiver under 
     subsection (b)(1) or (b)(3) and may not make any assignment 
     of personnel under subsection (c), and the Secretary of 
     Homeland Security may not allow any agreement under 
     subsection (d), for a period extending beyond such date.

     SEC. 3205. FMAP HOLD HARMLESS FOR KATRINA IMPACT.

       Notwithstanding any other provision of law, for purposes of 
     titles XIX and XXI of the Social Security Act, the Secretary 
     of Health and Human Services in computing the Federal medical 
     assistance percentage under section 1905(b) of such (42 
     U.S.C. 1396d(b)) for any year after 2006 for a State that the 
     Secretary determines has a significant number of evacuees who 
     were evacuated to, and live in, the State as a result of 
     Hurricane Katrina as of October 1, 2005, the Secretary shall 
     disregard such evacuees (and income attributable to such 
     evacuees).

               Subtitle C--Katrina and Rita Energy Relief

     SEC. 3301. HURRICANES KATRINA AND RITA ENERGY RELIEF.

       (a) Findings.--The Congress finds the following:
       (1) Hurricanes Katrina and Rita severely disrupted crude 
     oil and natural gas production in the Gulf of Mexico. The 
     Energy Information Administration estimates that as a result 
     of these two hurricanes, the amount of shut in crude oil 
     production nearly doubled to almost 1,600,000 barrels per 
     day, and the amount of natural gas production shut in also 
     doubled to about 8,000,000,000 cubic feet per day. The 
     hurricanes also initially shut down most of the crude oil 
     refinery capacity in the Gulf of Mexico region. These 
     disruptions led to significantly higher prices for crude oil, 
     refined oil products, and natural gas.
       (2) These production and supply disruptions are expected to 
     lead to significantly higher heating costs for consumers this 
     winter. The Energy Information Administration projects an 
     increase in residential natural gas heating expenditures of 
     32 percent to 61 percent over last winter, with the Midwest 
     seeing the largest increase. Winter heating oil expenditures 
     are projected to increase by 30 percent to 41 percent over 
     last winter, again with the Midwest seeing the largest 
     increase. Propane expenditures for home heating are projected 
     to increase 20 percent to 36 percent over last winter, with 
     the Midwest seeing the largest projected increase. 
     Expenditures for home heating using electricity are expected 
     to increase by 2 percent to 9 percent over last winter, with 
     the South seeing the largest increase. Overall, average home 
     heating expenditures this winter are projected to increase 
     about 33 percent, assuming a normal winter. These significant 
     increases in home heating costs this winter will particularly 
     harm low-income consumers. The Low-Income Home Energy 
     Assistance Program is designed to assist these low income 
     consumers in this situation. Accordingly, Congress seeks a 
     one-time only supplement to the Low-Income Home Energy 
     Assistance Program fund to assist low income consumers with 
     the additional home heating expenditures that they will face 
     this winter as a result of Hurricanes Katrina and Rita.
       (b) Relief.--In addition to amounts otherwise made 
     available, there shall be directly available to the Secretary 
     of Health and Human Services for a 1-time only obligation and 
     expenditure $1,000,000,000 for fiscal year

[[Page H10582]]

     2006 for allocation under section 2604(a) through (d) of the 
     Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 
     8623(a) through (d)), for the sole purpose of providing 
     assistance to offset the anticipated higher energy costs 
     caused by Hurricane Katrina and Hurricane Rita.
       (c) Sunset.--The provisions of this section shall 
     terminate, be null and void, and have no force and effect 
     whatsoever after September 30, 2006. No monies provided for 
     under this section shall be available after such date.

               Subtitle D--Digital Television Transition

     SEC. 3401. SHORT TITLE.

       This subtitle may be cited as the ``Digital Television 
     Transition Act of 2005''.

     SEC. 3402. FINDINGS.

       The Congress finds the following:
       (1) A loophole in current law is stalling the digital 
     television (DTV) transition and preventing the return of 
     spectrum for critical public safety and wireless broadband 
     uses.
       (A) In 1996, to facilitate the DTV transition, Congress 
     gave each full-power television broadcaster an extra channel 
     of spectrum to broadcast in digital format while continuing 
     to broadcast in analog format on its original channel. Each 
     broadcaster was supposed to eventually return either the 
     original or additional channel and broadcast exclusively in 
     digital format on the remaining channel.
       (B) In 1997, Congress earmarked for public safety use some 
     of the spectrum the broadcasters are supposed to return. 
     Congress designated the rest of the spectrum to be auctioned 
     for advanced commercial applications, such as wireless 
     broadband services. Congress set December 31, 2006, as the 
     deadline for broadcasters to return the spectrum for public 
     safety and wireless use.
       (C) A loophole, however, allows broadcasters in a market to 
     delay the return of the spectrum until more than 85 percent 
     of television households in that market have at least one 
     television with access to digital broadcast channels using a 
     digital television receiver, a digital-to-analog converter 
     box, or cable or satellite service. Experts forecast it will 
     take many more years to meet the 85-percent test nationwide.
       (2) Eliminating the 85-percent test and setting a ``hard 
     deadline'' will close the loophole, making possible the 
     nationwide clearing necessary to complete the DTV transition 
     and free the spectrum for public safety use.
       (A) Some police officers, firefighters, and rescue 
     personnel already have equipment to communicate over the 
     spectrum the broadcasters are supposed to return, and are 
     just awaiting the turnover. Many more public safety officials 
     cannot purchase equipment or begin planning without a date 
     certain for the availability of the spectrum.
       (B) Five years to the day before September 11, 2001, an 
     advisory committee report to the Federal Communications 
     Commission (FCC) noted that public safety officials 
     desperately needed more spectrum to better communicate with 
     each other in times of emergency. The 9/11 Commission has 
     specifically recognized the importance of clearing for public 
     safety use the spectrum at issue here, especially following 
     the terrorist attacks on the Pentagon and the World Trade 
     Center. The spectrum is also important for communications 
     during natural disasters.
       (3) The certainty of a nationwide hard deadline will enable 
     consumers, industry, and government to take the necessary 
     steps to make the transition as smooth as possible.
       (A) Under existing law, once a market meets the 85-percent 
     penetration test, the remaining 15 percent of households in 
     the market would lose access to broadcast programming unless 
     they obtain a digital television receiver, a digital-to-
     analog converter box, or cable or satellite service.
       (B) Determining when the 85-percent test in current law has 
     been met in a particular market would be extremely difficult 
     for the FCC to accomplish. Moreover, because no one can 
     predict precisely when any market will meet the 85-percent 
     test, and because different markets will meet the test at 
     different times, consumers, industry, and government cannot 
     adequately plan on a either a local or nationwide basis.
       (C) With a hard deadline, government, industry, and 
     consumer groups can develop concrete plans for consumer 
     education. Manufacturers can build large quantities of low-
     cost digital-to-analog converter boxes for consumers who wish 
     to continue using their analog televisions. Clearing the 
     spectrum on a unified, nationwide basis will also enable the 
     government to maximize the revenue from the auction. Some of 
     that revenue can be used to help make the converter boxes 
     available.
       (D) The deadline will have little impact on most television 
     households. The vast majority of households already subscribe 
     to cable or satellite services. Allowing cable and satellite 
     operators to convert digital broadcasts into an analog-
     viewable format will enable their subscribers that wish to 
     continue using analog televisions to do so.
       (4) Setting a hard deadline will bring consumers and the 
     economy the benefits of the DTV transition faster.
       (A) DTV offers sharper and wider pictures, and CD-quality 
     sound. Even consumers with analog televisions connected to a 
     converter box or cable or satellite service will receive 
     better service than they did before the transition.
       (B) Once the transition is complete, broadcasters can 
     redirect the resources they currently expend running both 
     analog and digital stations and focus on programming that 
     capitalizes on the advanced features of digital 
     transmissions. Manufacturers can also increase the production 
     of televisions and other consumer electronics equipment that 
     takes advantage of these features, which will also drive down 
     prices.
       (C) The cleared spectrum can be used to bring cutting-edge 
     wireless services to public safety officials and consumers. 
     This spectrum travels greater distances at lower costs, and 
     more easily penetrates buildings and foliage. Consequently, 
     it is ideal to bring mobile broadband services not only to 
     urban areas, but to rural areas as well, which currently have 
     very few cost-effective broadband options.
       (D) The increase in DTV programming, services, and 
     equipment, and the provision of products and services that 
     use the cleared spectrum, will improve America's global 
     competitiveness and result in significant investment and 
     innovation, boosting our economy and fostering new jobs.

     SEC. 3403. ANALOG SPECTRUM RECOVERY: HARD DEADLINE.

       (a) Amendments.--Section 309(j)(14) of the Communications 
     Act of 1934 (47 U.S.C. 309(j)(14)) is amended--
       (1) in subparagraph (A), by striking ``December 31, 2006'' 
     and inserting ``December 31, 2008'';
       (2) by striking subparagraph (B);
       (3) in subparagraph (C)(i)(I), by striking ``or (B)'';
       (4) in subparagraph (D), by striking ``subparagraph 
     (C)(i)'' and inserting ``subparagraph (B)(i)''; and
       (5) by redesignating subparagraphs (C) and (D) as 
     subparagraphs (B) and (C), respectively.
       (b) Implementation.--
       (1) DTV allotment table of in-core channels for full-power 
     stations.--The Federal Communications Commission shall--
       (A) release by December 31, 2006, a report and order in MB 
     Docket No. 03-15 assigning all full-power broadcast 
     television stations authorized in the digital television 
     service a channel between channels 2 and 36, inclusive, or 38 
     and 51, inclusive (between frequencies 54 and 698 megahertz, 
     inclusive);
       (B) release by July 31, 2007, any reconsideration of such 
     report and order; and
       (C) not adopt any further changes between July 31, 2007, 
     and January 1, 2009, to the channels assigned to full-power 
     broadcast television stations for the provision of digital 
     television service unless doing so is necessary for reasons 
     of public safety or necessary to prevent a delay in the end 
     of broadcasting by full-power stations in the analog 
     television service.
       (2) Status reports.--Beginning with a report on January 31, 
     2006, and ending with a report on July 31, 2007, the 
     Commission shall submit reports to the Committee on Energy 
     and Commerce of the House of Representatives and the 
     Committee on Commerce, Science, and Transportation of the 
     Senate every six months on the status of international 
     coordination with Canada and Mexico of the digital television 
     service table of allotments.
       (3) Terminations of analog licenses and broadcasting.--The 
     Federal Communications Commission shall take such actions as 
     are necessary to terminate all licenses for full-power 
     television stations in the analog television service and to 
     require the cessation of broadcasting by full-power stations 
     in the analog television service by January 1, 2009.
       (4) Additional unlicensed spectrum for wireless 
     broadband.--The Commission shall, within one year after the 
     date of enactment of this Act, issue a final order in the 
     matter of Unlicensed Operation in the TV Broadcast Bands (ET 
     Docket No. 04-186).
       (c) Technical Amendment.--Paragraph (15) of section 309(j) 
     of the Communications Act of 1934 (47 U.S.C. 309(j)), as 
     added by section 203(b) of the Commercial Spectrum 
     Enhancement Act (P.L. 108-494; 118 Stat. 3993), is 
     redesignated as paragraph (16) of such section.

     SEC. 3404. AUCTION OF RECOVERED SPECTRUM.

       (a) Deadline for Auction.--Section 309(j)(15)(C) of the 
     Communications Act of 1934 (47 U.S.C. 309(j)(15)(C)) is 
     amended by adding at the end the following new clauses:
       ``(v) Additional deadlines for recovered analog spectrum.--
     Notwithstanding subparagraph (B), the Commission shall 
     conduct the auction of the licenses for recovered analog 
     spectrum by commencing the bidding not later than January 7, 
     2008, and shall deposit the proceeds of such auction in 
     accordance with paragraph (8)(E)(i) not later than June 30, 
     2008.
       ``(vi) Recovered analog spectrum.--For purposes of clause 
     (v), the term `recovered analog spectrum' means the spectrum 
     between channels 52 and 69, inclusive (between frequencies 
     698 and 806 megahertz, inclusive) reclaimed from analog 
     television service broadcasting under paragraph (14), other 
     than--

       ``(I) the spectrum required by section 337 to be made 
     available for public safety services; and
       ``(II) the spectrum auctioned prior to the date of 
     enactment of the Digital Television Transition Act of 
     2005.''.

       (b) Extension of Auction Authority.--Paragraph (11) of 
     section 309(j) of such Act is repealed.
       (c) Study of Auction Authority.--
       (1) Inquiry and study required.--Within 120 days after the 
     date of enactment of this

[[Page H10583]]

     Act, the Federal Communications Commission shall initiate an 
     ongoing inquiry and study--
       (A) to evaluate the participation of women, minorities, and 
     small businesses in the auction process, including the 
     percentage of winning bidders that are women, minorities, and 
     small businesses; and
       (B) to assess the efforts made by the Commission to ensure 
     that women, minorities, and small businesses are able to 
     successfully participate in the auction process.
       (2) Report.--The Commission shall submit a report to the 
     Congress on the results of the inquiry and study required by 
     paragraph (1) at least biennially beginning not later than 
     one year after the date of enactment of this Act.

     SEC. 3405. DIGITAL TELEVISION CONVERSION FUND.

       (a) Reservation of Auction Proceeds to Assist Conversion.--
     Section 309(j)(8) of the Communications Act of 1934 (47 
     U.S.C. 309(j)(8)) is amended--
       (1) in subparagraph (A), by striking ``subparagraph (B) or 
     subparagraph (D)'' and inserting ``subparagraphs (B), (D), 
     and (E)'';
       (2) in subparagraph (C)(i), by inserting before the 
     semicolon at the end the following: ``, except as otherwise 
     provided in subparagraph (E)(i)''; and
       (3) by adding at the end the following new subparagraph:
       ``(E) Transfer of revenues for digital television 
     conversion.--
       ``(i) Proceeds for dtv conversion fund.--Notwithstanding 
     subparagraph (A), of the proceeds (including deposits and 
     upfront payments from successful bidders) from the use of a 
     competitive bidding system under this subsection with respect 
     to recovered analog spectrum--

       ``(I) $990,000,000 shall be deposited in a separate fund in 
     the Treasury to be known as the `Digital Television 
     Conversion Fund', and be available exclusively to carry out 
     section 159 of the National Telecommunications and 
     Information Administration Organization Act;
       ``(II) $500,000,000 shall be deposited in a separate fund 
     in the Treasury to be known as the `Public Safety 
     Interoperable Communications Fund', and be available 
     exclusively to carry out section 160 of such Act;
       ``(III) $30,000,000 shall be deposited in a separate fund 
     in the Treasury to be known as the `NYC 9/11 Digital 
     Transition Fund', and be available exclusively to carry out 
     section 161 of such Act;
       ``(IV) $3,000,000 shall be deposited in a separate fund in 
     the Treasury to be known as the `Low-Power Digital-to-Analog 
     Conversion Fund', and be available exclusively to carry out 
     section 162 of such Act; and
       ``(V) the remainder of such proceeds shall be deposited in 
     the Treasury in accordance with chapter 33 of title 31, 
     United States Code.

       ``(ii) Recovered analog spectrum.--For purposes of clause 
     (i), the term `recovered analog spectrum' has the meaning 
     provided in paragraph (15)(C)(vi).''.
       (b) Converter Box Program.--Part C of the National 
     Telecommunications and Information Administration 
     Organization Act is amended by adding at the end the 
     following new section:

     ``SEC. 159. DIGITAL-TO-ANALOG CONVERTER BOX PROGRAM.

       ``(a) Creation of Program.--The Assistant Secretary--
       ``(1) shall use the funds available under subsection (d) of 
     this section to implement and administer a program through 
     which households in the United States may obtain, upon 
     request, up to two coupons that can be applied toward the 
     purchase of digital-to-analog converter boxes, subject to the 
     restrictions in this section and the regulations created 
     thereunder; and
       ``(2) may award one or more contracts (including a contract 
     with another Federal agency) for the administration of some 
     or all of the program.
       ``(b) Program Specifications.--
       ``(1) Form of coupon request.--The regulations under this 
     section shall prescribe the contents of the coupon request 
     form and the information any household seeking a coupon shall 
     provide on the form. The coupon request form shall be 
     required to include instructions for its use and also 
     describe, at a minimum, the requirements and limitations of 
     the program, the ways in which the form and the information 
     the household provides will be used, and to whom the form and 
     the information will be disclosed.
       ``(2) Distribution of coupon request forms.--
       ``(A) Paper and electronic forms.--The Assistant Secretary 
     shall provide for the distribution of paper coupon request 
     forms at Government buildings, including post offices. The 
     Assistant Secretary shall provide for the availability to 
     households of electronic coupon request forms, and may permit 
     such forms to be submitted electronically.
       ``(B) Additional distribution.--If the Assistant Secretary 
     determines that doing so would make the program more 
     successful and easier for consumers to participate in, paper 
     and electronic coupon request forms shall also be distributed 
     by such private entities as the Assistant Secretary shall 
     specify (such as retailers, manufacturers, broadcasters, 
     religious organizations, and consumer groups) and shall be 
     distributed in the manner specified by the Assistant 
     Secretary.
       ``(3) Limitations.--
       ``(A) Two-per-household maximum.--A household may obtain 
     coupons only by making a request as required by the 
     regulations under this section. Any request must be made 
     between January 1, 2008, and January 31, 2009, inclusive. The 
     Assistant Secretary shall ensure that each requesting 
     household receives no more than two coupons.
       ``(B) No combinations of coupons.--Two coupons may not be 
     used in combination toward the purchase of a single digital-
     to-analog converter box.
       ``(C) Duration.--All coupons shall expire 3 months after 
     issuance.
       ``(4) Distribution of coupons.--
       ``(A) Coupons shall be distributed to requesting households 
     by mail and each coupon shall be issued in the name of a 
     member of the requesting household, and shall include a 
     unique identification number as well as any other measures 
     the Assistant Secretary deems necessary to minimize fraud, 
     counterfeiting, duplication, and other unauthorized use.
       ``(B) Included on or provided with each coupon shall be, at 
     a minimum, instructions for the coupon's use and a 
     description of the coupon's limitations.
       ``(C) The Assistant Secretary shall expend not more than 
     $160,000,000 on administrative expenses and shall ensure that 
     the sum of all administrative expenses for the program and 
     the total maximum value of all the coupons redeemed, and 
     issued but not expired, does not exceed $990,000,000.
       ``(D) The Assistant Secretary may expend up to $5,000,000 
     of the administrative expenses on the public outreach program 
     required by section 330(d)(4) of the Communications Act of 
     1934 (47 U.S.C. 330(d)(4)). Such funds may be used for grants 
     to the Association of Public Television Stations, in 
     partnership with noncommercial educational television 
     broadcast stations (as defined section 397(6) of the 
     Communications Act of 1934 (47 U.S.C. 397(6))) to carry out 
     such public outreach.
       ``(5) Qualifying purchases.--
       ``(A) Qualifying box.--The regulations shall specify 
     methods for determining and identifying the converter boxes 
     that meet the definition in subsection (g).
       ``(B) Coupon value.--The value of each coupon shall be $40.
       ``(6) Redemption of coupons.--No coupon shall be redeemed 
     except upon submission of reasonable proof that the 
     individual redeeming the coupon is the individual named on 
     the coupon, and such additional information as is required by 
     the regulations under this section. In the case of retail 
     distribution of digital-to-analog converter boxes over the 
     Internet or by telephone, submission of a valid credit card 
     number issued in the name of the household member, the unique 
     identification number on the coupon, the address of the 
     household, and such other information as is required by the 
     regulations under this section shall be reasonable proof of 
     identity, except that the redemption of coupons over the 
     Internet or by telephone shall be prohibited if the Assistant 
     Secretary determines that such redemption would be 
     unreasonably susceptible to fraud or other abuse.
       ``(7) Retailer certification.--
       ``(A) Any retailer desiring to qualify for coupon 
     reimbursement under this section shall, in accordance with 
     the regulations under this section, be required to undergo a 
     certification process to qualify for participation in the 
     program.
       ``(B) As part of the certification process, retailers shall 
     be informed of the program's details and their rights and 
     obligations, including their obligations to honor all valid 
     coupons that are tendered in the authorized manner, and to 
     keep a reasonable number of eligible converter boxes in 
     stock.
       ``(8) Coupon reimbursement and retailer auditing.--
       ``(A) Reimbursement.--The regulations under this section 
     shall establish the process by which retailers may seek and 
     obtain reimbursement for the coupons, and shall include the 
     option for retailers to seek and obtain reimbursement 
     electronically.
       ``(B) Audits.--Such regulations shall establish procedures 
     for the auditing of retailer reimbursements.
       ``(9) Appeals.--The regulations under this section shall 
     establish an appeals process for the review and resolution of 
     complaints--
       ``(A) by a household alleging that--
       ``(i) the household was improperly denied a coupon;
       ``(ii) a valid coupon properly tendered was not honored; or
       ``(iii) the household was otherwise harmed by another 
     violation of this section or such regulations; or
       ``(B) by a retailer of digital-to-analog converter boxes 
     alleging that the retailer was improperly denied 
     reimbursement for a valid coupon properly tendered and 
     accepted under this section or such regulations.
     All such complaints shall be resolved within 30 days after 
     receipt of the complaint.
       ``(10) Enforcement.--The regulations under this section 
     shall provide for the termination of eligibility to 
     participate in the program for retailers or households that 
     engage in fraud, misrepresentation, or other misconduct in 
     connection with the program, or that otherwise violate this 
     section or such regulations.
       ``(11) Progress report.--Beginning with a report on March 
     31, 2008, and ending with a report on June 30, 2009, the 
     Assistant Secretary shall submit reports to the Committee on 
     Energy and Commerce of the House of Representatives and the 
     Committee on Commerce, Science, and Transportation of the 
     Senate, every three months summarizing the progress of coupon 
     distribution

[[Page H10584]]

     and redemption, including how many coupons are being 
     distributed and redeemed, and how quickly.
       ``(c) Privacy.--The program under this section shall ensure 
     that personally identifiable information collected in 
     connection with the program under this section is not used or 
     shared for any other purpose than as described in this 
     section, except as otherwise required or authorized by law. 
     For purposes of this subsection, the term `personally 
     identifiable information' shall have the same meaning as 
     provided in section 338(i)(2).
       ``(d) Availability of Funds.--
       ``(1) In general.--From the Digital Television Conversion 
     Fund established by section 309(j)(8)(E)(i)(I) of the 
     Communications Act of 1934, there shall be available to carry 
     out this section such sums as may be necessary for fiscal 
     years 2008 and 2009. Any sums that remain unexpended in the 
     Fund at the end of fiscal year 2009 shall revert to and be 
     deposited in the general fund of the Treasury.
       ``(2) Credit.--The Assistant Secretary may borrow from the 
     Treasury such sums as may be necessary not to exceed 
     $990,000,000 to implement and administer the program in 
     accordance with this section. The Assistant Secretary shall 
     reimburse the Treasury, without interest, as funds are 
     deposited into the Digital Television Conversion Fund under 
     section 309(j)(8)(E) of such Act.
       ``(e) Energy Standards Required.--
       ``(1) Standard.--The maximum energy consumption for the 
     passive standby mode of a digital-to-analog converter box 
     shall be no more than 9 watts.
       ``(2) Enforcement.--The Secretary of Energy shall enforce 
     the requirements of paragraph (1). Any converter box that the 
     Secretary of Energy determines is not in compliance with the 
     requirements of paragraph (1) shall not be eligible for 
     purchase with assistance made available under this section.
       ``(3) Preemption.--No State or any political subdivision 
     thereof may establish or enforce any law, rule, regulation, 
     or other provision having the force of law that regulates the 
     energy output, usage, or consumption standards for a digital-
     to-analog converter box.
       ``(f) Implementation.--The Secretary of Commerce shall 
     promulgate, within 9 months after the date of enactment of 
     the Digital Television Transition Act of 2005, such 
     regulations as are necessary to carry out this section.
       ``(g) Definition.--For purposes of this section:
       ``(1) Digital-to-analog converter box.--The term `digital-
     to-analog converter box' means a stand-alone device that does 
     not contain features or functions except those necessary to 
     enable a consumer to convert any channel broadcast in the 
     digital television service into a format that the consumer 
     can display on television receivers designed to receive and 
     display signals only in the analog television service.
       ``(2) Household.--The term `household' means the residents 
     at a residential street or rural route address, and shall not 
     include a post office box.
       ``(3) Standby passive mode.--The term `standby passive 
     mode' means a low power state the digital-to-analog converter 
     device enters while connected to a power source which 
     fulfills not the main function but can be switched into 
     another mode by means of an internal or external signal.''.

     SEC. 3406. PUBLIC SAFETY INTEROPERABLE COMMUNICATIONS FUND.

       Part C of the National Telecommunications and Information 
     Administration Organization Act is amended by adding after 
     section 159 (as added by section 3405(b) of this Act) the 
     following new section:

     ``SEC. 160. PUBLIC SAFETY INTEROPERABLE COMMUNICATIONS FUND.

       ``(a) Program Authorized.--From the funds available under 
     subsection (f), the Assistant Secretary shall carry out a 
     grant program to assist public safety agencies in the 
     acquisition of, deployment of, or training for the use of 
     interoperable communications systems that utilize, or enable 
     interoperability with communications systems that can 
     utilize, reallocated public safety spectrum for radio 
     communications.
       ``(b) Terms and Conditions of Grants.--In order to obtain a 
     grant under this section, a public safety agency shall--
       ``(1) submit an application to the Assistant Secretary at 
     such time, in such form, and containing or accompanied by 
     such information and assurances as the Assistant Secretary 
     shall require;
       ``(2) agree that, if awarded a grant, the public safety 
     agency will submit annual reports to the Assistant Secretary 
     for the duration of the grant award period with respect to--
       ``(A) the expenditure of grant funds; and
       ``(B) progress toward acquiring and deploying interoperable 
     communications systems funded by the grant;
       ``(3) agree to provide, from non-Federal sources, not less 
     than 20 percent of the costs of acquiring and deploying the 
     interoperable communications systems acquired and deployed 
     with funds provided under this section; and
       ``(4) agree to remit to the Assistant Secretary any grant 
     funds that remain unexpended at the end of the 3-year period 
     of the grant.
       ``(c) Duration of Grant; Recovery of Unused Funds.--Grants 
     under this section shall be awarded in the form of a single 
     grant for a period of not more that 3 years. At the end of 3 
     years, any grant funds that remain unexpended shall be 
     remitted by the grantee to the Assistant Secretary, and, 
     subject to subsection (f)(2), may be awarded to other 
     eligible grant recipients. At the end of fiscal year 2010, 
     any such reawarded grant funds that remain unexpended shall 
     be remitted by the grantee to the Assistant Secretary and may 
     not be reawarded to other grantees.
       ``(d) Oversight of Expenditures.--The Assistant Secretary 
     shall submit to the Committee on Commerce, Science, and 
     Transportation of the Senate and the Committee on Energy and 
     Commerce, not later than 6 months after the first award of a 
     grant under this section and every 6 months thereafter until 
     October 1, 2010, a report--
       ``(1) identifying, on a State-by-State basis, using the 
     information submitted under subsection (b)(2), the results of 
     the program, including an identification, on a State-by-State 
     basis, of--
       ``(A) the public safety agencies awarded a grant;
       ``(B) the amount of the grant;
       ``(C) the specified use for the grant; and
       ``(D) how each such grant was spent; and
       ``(2) stating the cumulative total of the amount of grants 
     awarded, and the balance, if any, remaining in the Public 
     Safety Interoperable Communications Fund; and
       ``(3) in the final such report, stating the amount in the 
     Fund that reverted to the general fund of the Treasury.
       ``(e) Regulations.--The Secretary is authorized to 
     prescribe such regulations as are necessary to carry out this 
     section.
       ``(f) Availability of Funds.--
       ``(1) Availability.--From the Public Safety Interoperable 
     Communications Fund established by section 
     309(j)(8)(E)(i)(II) of the Communications Act of 1934, there 
     shall be available to carry out this section such sums as may 
     be necessary for fiscal years 2008, 2009, and 2010.
       ``(2) Reversion.--Any sums that remain unexpended in the 
     Fund at the end of fiscal year 2010 shall revert to and be 
     deposited in the general fund of the Treasury.
       ``(g) Definitions.--For purposes of this section:
       ``(1) Public safety agency.--The term `public safety 
     agency' means any State or local government entity, or 
     nongovernmental organization authorized by such entity, whose 
     sole or principal purpose is to protect the safety of life, 
     health, or property.
       ``(2) Interoperable communications systems.--The term 
     `interoperable communications systems' means communications 
     systems which enable public safety agencies to share 
     information amongst local, State, and Federal public safety 
     agencies in the same area via voice or data signals.
       ``(3) Reallocated public safety spectrum.--The term 
     `reallocated public safety spectrum' means the bands of 
     spectrum located at 764-776 megahertz and 794-806 megahertz, 
     inclusive.''.

     SEC. 3407. NYC 9/11 DIGITAL TRANSITION FUND.

       Part C of the National Telecommunications and Information 
     Administration Organization Act is amended by adding after 
     section 160 (as added by section 3406 of this Act) the 
     following new section:

     ``SEC. 161. NYC 9/11 DIGITAL TRANSITION FUND.

       ``(a) Funds Available.--From the NYC 9/11 Digital 
     Transition Fund established by section 309(j)(8)(E)(i)(III) 
     of the Communications Act of 1934, there shall be available 
     to carry out this section such sums as may be necessary for 
     fiscal years 2006 through 2008. Any sums that remain 
     unexpended in the Fund at the end of fiscal year 2008 shall 
     revert to and be deposited in the general fund of the 
     Treasury. The Assistant Secretary may borrow from the 
     Treasury such sums as may be necessary not to exceed 
     $30,000,000 to implement and administer the program in 
     accordance with this section. The Assistant Secretary shall 
     reimburse the Treasury, without interest, as funds are 
     deposited into the NYC 9/11 Digital Transition Fund under 
     section 309(j)(8)(E) of such Act.
       ``(b) Use of Funds.--The sums available under subsection 
     (a) shall be made available by the Assistant Secretary by 
     grant to be used to reimburse the Metropolitan Television 
     Alliance for costs incurred in the design and deployment of a 
     temporary digital television broadcast system to ensure that, 
     until a permanent facility atop the Freedom Tower is 
     constructed, the members of the Metropolitan Television 
     Alliance can provide the New York City area with an adequate 
     digital television signal as determined by the Federal 
     Communications Commission.
       ``(c) Rule of Construction.--Nothing in this section shall 
     be construed to alter or otherwise affect the Federal 
     Communications Commission's authority with respect to 
     licensing and interference regulation.
       ``(d) Definitions.--For purposes of this section:
       ``(1) The term `Metropolitan Television Alliance' means the 
     organization formed by New York City television broadcast 
     station licensees to locate new shared facilities as a result 
     of the attacks on September 11, 2001 and the loss of use of 
     shared facilities that housed broadcast equipment.
       ``(2) The term `New York City area' means the five counties 
     comprising New York City and counties of northern New Jersey 
     in immediate proximity to New York City (Bergen, Essex, Union 
     and Hudson Counties) .''.

     SEC. 3408. LOW-POWER TELEVISION TRANSITION PROVISIONS.

       (a) Removal and Relocation.--Section 337(e) of the 
     Communications Act of 1934 (47 U.S.C. 337(e)) is amended--
       (1) in paragraph (1), by striking ``person who'' and 
     inserting ``full-power television station licensee that'';

[[Page H10585]]

       (2) in paragraph (2), by striking ``746 megahertz'' and 
     inserting ``698 megahertz''; and
       (3) by adding at the end the following new paragraph:
       ``(3) Continuation of low-power broadcasting.--Subject to 
     section 336(f) of the Communications Act (47 U.S.C. 336(f)), 
     a low-power television station, television translator 
     station, or television booster station (as defined by 
     Commission regulations) may operate above 698 megahertz on a 
     secondary basis in accordance with Commission rules, 
     including rules governing completion of the digital 
     television service transition for low-power broadcasters.''.
       (b) Exemption From Deadline.--Section 309(j)(14)(A) of such 
     Act (47 U.S.C. 309(j)(14)(A)) is amended by by inserting 
     ``full-power'' before ``television broadcast license''.
       (c) Advanced Television Services.--Section 336(f)(4) of 
     such Act (47 U.S.C. 336(f)(4)) is amended by inserting ``or 
     other low-power station'' after ``television translator 
     station'' in the first sentence.
       (d) Low-Power Television Digital-to-Analog Conversion.--
     Part C of the National Telecommunications and Information 
     Administration Organization Act is amended by adding after 
     section 161 (as added by section 3407 of this Act) the 
     following new section:

     ``SEC. 162. LOW-POWER TELEVISION DIGITAL-TO-ANALOG 
                   CONVERSION.

       ``(a) Creation of Program.--The Assistant Secretary shall 
     use the funds available under subsection (d) from the Low-
     Power Digital-to-Analog Conversion Fund to implement and 
     administer a program through which each eligible low-power 
     television station may receive compensation toward the cost 
     of the purchase of a digital-to-analog conversion device that 
     enables it to convert the incoming digital signal of its 
     corresponding full-power television station to analog format 
     for transmission on the low-power television station's analog 
     channel. An eligible low-power television station may receive 
     such compensation only if it submits a request for such 
     compensation on or before December 31, 2008.
       ``(b) Eligible Stations.--For purposes of this section, an 
     eligible low-power television station shall be a low-power 
     television broadcast station, Class A television station, 
     television translator station, or television booster 
     station--
       ``(1) that is itself broadcasting exclusively in analog 
     format; and
       ``(2) that has not purchased a digital-to-analog conversion 
     device prior to enactment of this section.
       ``(c) Qualifying Devices and Amounts.--The Assistant 
     Secretary--
       ``(1) may determine the types of digital-to-analog 
     conversion devices for which an eligible low-power broadcast 
     television station may receive compensation under this 
     section; and
       ``(2) shall determine the maximum amount of compensation 
     such a low-power television broadcast station may receive 
     based on the average cost of such digital-to-analog 
     conversion devices during the time period such low-power 
     broadcast television station purchased the digital-to-analog 
     conversion device, but in no case shall such compensation 
     exceed $400.
       ``(d) Funds Available.--From the Low-Power Digital-to-
     Analog Conversion Fund established by section 
     309(j)(8)(E)(i)(IV) of the Communications Act of 1934, there 
     shall be available to carry out this section such sums as may 
     be necessary for fiscal years 2008 and 2009. Any sums that 
     remain unexpended in such Fund at the end of fiscal year 2009 
     shall revert to and be deposited in the general fund of the 
     Treasury.''.
       (e) Report and Order Required.--The Federal Communications 
     Commission shall, not later than December 31, 2008, issue a 
     report and order specifying the methods and schedule by which 
     the Commission will complete the digital television service 
     transition for low-power broadcasters.

     SEC. 3409. CONSUMER EDUCATION REGARDING ANALOG TELEVISIONS.

       (a) Commission Authority.--Section 303 of the 
     Communications Act of 1934 (47 U.S.C. 303) is amended by 
     adding at the end the following new subsection:
       ``(z) Require the consumer education measures specified in 
     section 330(d) in the case of apparatus designed to receive 
     television signals that--
       ``(1) are shipped in interstate commerce or manufactured in 
     the United States;
       ``(2) have an integrated display screen or are sold in a 
     bundle with a display screen; and
       ``(3) are not capable of receiving broadcast signals in the 
     digital television service.''.
       (b) Consumer Education Requirements.--Section 330 of the 
     Communications Act of 1934 (47 U.S.C. 330) is amended--
       (1) in subsection (d), by striking ``sections 303(s), 
     303(u), and 303(x)'' and inserting ``subsections (s), (u), 
     (x), and (z) of section 303'';
       (2) by redesignating subsection (d) as subsection (e); and
       (3) by inserting after subsection (c) the following new 
     subsection:
       ``(d) Consumer Education Regarding Analog Television 
     Receivers.--
       ``(1) Requirements for manufacturers.--Any manufacturer of 
     any apparatus described in section 303(z) shall--
       ``(A) place in a conspicuous place on any such apparatus 
     that such manufacturer ships in interstate commerce or 
     manufactures in the United States after 180 days after the 
     date of enactment of the Digital Television Transition Act of 
     2005, a label containing, in clear and conspicuous print, the 
     warning language required by paragraph (3); and
       ``(B) also include after 180 days after the date of 
     enactment of the Digital Television Transition Act of 2005, 
     such warning language on the outside of the retail packaging 
     of such apparatus, in a conspicuous place and in clear and 
     conspicuous print, in a manner that cannot be removed.
       ``(2) Requirements for retail distributors.--Any retail 
     distributor shall place conspicuously in the vicinity of each 
     apparatus described in section 303(z) that such distributor 
     displays for sale or rent after 45 days after the date of 
     enactment of the Digital Television Transition Act of 2005, a 
     sign containing, in clear and conspicuous print, the warning 
     language required by paragraph (3). In the case of a retail 
     distributor vending such apparatus via direct mail, catalog, 
     or electronic means, such as displays on the Internet, the 
     warning language required by such paragraph shall be 
     prominently displayed, in clear and conspicuous print, in the 
     vicinity of any language describing the product.
       ``(3) Warning language.--The warning language required by 
     this paragraph shall read as follows: `This television has 
     only an analog broadcast tuner. After December 31, 2008, 
     television broadcasters will broadcast only in digital 
     format. You will then need to connect this television to a 
     digital-to-analog converter box or cable or satellite service 
     if you wish to receive broadcast programming. The device, if 
     any, that a cable or satellite subscriber will need to 
     connect to an analog television will depend on the cable or 
     satellite service provider. The television should continue to 
     work as before, however, with devices such as VCRs, digital 
     video recorders, DVD players, and video game systems. For 
     more information, call the Federal Communications Commission 
     at 1-888-225-5322 (TTY: 1-888-835-5322) or visit the 
     Commission's website at: www.fcc.gov.'.
       ``(4) Commission and ntia outreach.--Beginning within one 
     month after the date of enactment of the Digital Television 
     Transition Act of 2005, the Commission and the National 
     Telecommunications and Information Administration shall 
     engage, either jointly or separately, in a public outreach 
     program, including the distribution of materials on their web 
     sites and in Government buildings, such as post offices, to 
     educate consumers regarding the digital television 
     transition. The Commission and the National 
     Telecommunications and Information Administration may seek 
     public comment in crafting their public outreach program, and 
     may seek the assistance of private entities, such as 
     broadcasters, manufacturers, retailers, cable and satellite 
     operators, and consumer groups in administering the public 
     outreach program. The program shall educate consumers about--
       ``(A) the deadline for termination of analog television 
     broadcasting;
       ``(B) the options consumers have after such termination to 
     continue to receive broadcast programming; and
       ``(C) the converter box program under section 159 of the 
     National Telecommunications and Information Administration 
     Organization Act.
       ``(5) Additional disclosures.--
       ``(A) Announcements and notices required.--From January 1, 
     2008, through December 31, 2008--
       ``(i) each television broadcaster shall air, at a minimum, 
     two 60-second public service announcements per day, one 
     during the 8 to 9 a.m. hour and one during the 8 to 9 p.m. 
     hour; and
       ``(ii) each multichannel video program distributor (as such 
     term is defined in section 602 of this Act) shall include a 
     notice in any periodic bill.
       ``(B) Contents of announcements and notices.--The 
     announcements and notices required by subparagraphs (A)(i) 
     and (A)(ii), respectively, shall state, at a minimum, that: 
     `After December 31, 2008, television broadcasters will 
     broadcast only in digital format. You will then no longer be 
     able to receive broadcast programming on analog-only 
     televisions unless those televisions are connected to a 
     digital-to-analog converter box or a cable or satellite 
     service. The device, if any, that a cable or satellite 
     subscriber will need to connect to an analog television will 
     depend on the cable or satellite service provider. Analog-
     only televisions should continue to work as before, however, 
     with devices such as VCRs, digital video recorders, DVD 
     players, and video game systems. You may be eligible for up 
     to two coupons toward the purchase of up to two converter-
     boxes. For more information, call the Federal Communications 
     Commission at 1-888-225-5322 (TTY: 1-888-835-5322) or visit 
     the Commission's website at: www.fcc.gov.'.
       ``(6) Report required.--Beginning January 31, 2006, and 
     ending July 31, 2008, the Commission and the National 
     Telecommunications and Information Administration, either 
     jointly or separately, shall submit reports every six months 
     to the Committee on Energy and Commerce of the House of 
     Representatives and the Committee on Commerce, Science, and 
     Transportation of the Senate, on the Commission's and such 
     Administration's consumer education efforts, as well as the 
     consumer education efforts of broadcasters, cable and 
     satellite operators, consumer electronics manufacturers, 
     retailers, and consumer groups. The Commission and such 
     Administration may solicit public comment in preparing their 
     reports.''.

[[Page H10586]]

       (c) Preserving and Expediting Tuner Mandates.--The Federal 
     Communications Commission--
       (1) shall, within 30 days after the date of enactment of 
     this Act revise the digital television reception capability 
     implementation schedule under section 15.117(i) of its 
     regulations (47 CFR 15.117(i)) to require, in the case of 
     television reception devices that have, or are sold in a 
     bundle with, display screens sized 13 to 24 inches, 
     inclusive, that 100 percent of all such units must include 
     digital television tuners effective March 1, 2007; and
       (2) shall not make any other changes that extend or 
     otherwise delay the digital television reception capability 
     implementation schedule for television reception devices that 
     have, or are sold in a bundle with, display screens.

     SEC. 3410. ADDITIONAL PROVISIONS.

       (a) Digital-to-Analog Conversion.--Section 614(b) of the 
     Communications Act of 1934 (47 U.S.C. 534(b)) is amended by 
     adding at the end the following new paragraphs:
       ``(11) Carriage of digital formats.--
       ``(A) Primary video stream.--With respect to any television 
     station that is transmitting broadcast programming 
     exclusively in the digital television service in a local 
     market, a cable operator of a cable system in that market 
     shall carry the station's primary video stream and program-
     related material in the digital format transmitted by that 
     station, without material degradation, if the licensee for 
     that station--
       ``(i) relies on this section or section 615 to obtain 
     carriage of the primary video stream and program-related 
     material on that cable system in that market; and
       ``(ii) permits the cable system to carry without 
     compensation any other programming broadcast by that station 
     that is carried on that system.
       ``(B) Multiple formats permitted.--A cable operator of a 
     cable system may offer the primary video stream and program-
     related material of a local television station described in 
     subparagraph (A) in any analog or digital format or formats, 
     whether or not doing so requires conversion from the format 
     transmitted by the local television station, so long as--
       ``(i) the cable operator offers the primary video stream 
     and program-related material in the converted analog or 
     digital format or formats without material degradation; and
       ``(ii) also offers the primary video stream and program-
     related material in the manner or manners required by this 
     paragraph.
       ``(C) Transitional conversions.--Notwithstanding the 
     requirement in subparagraph (A) to carry the primary video 
     stream and program-related material in the digital format 
     transmitted by the local television station, but subject to 
     the prohibition on material degradation, until January 1, 
     2014--
       ``(i) a cable operator--

       ``(I) shall offer the primary video stream and program-
     related material in the format or formats necessary for such 
     stream and material to be viewable on analog and digital 
     televisions; and
       ``(II) may convert the primary video stream and program-
     related material to standard-definition digital format in 
     lieu of offering it in the digital format transmitted by the 
     local television station;

       ``(ii) notwithstanding clause (i), a cable operator of a 
     cable system with an activated capacity of 550 megahertz or 
     less--

       ``(I) shall offer the primary video stream and program-
     related material of the local television station described in 
     subparagraph (A), converted to an analog format; and
       ``(II) may, but shall not be required to, offer the primary 
     video stream and program-related material in any digital 
     format or formats.

       ``(D) Location and method of conversion.--
       ``(i) A cable operator of a cable system may perform any 
     conversion permitted or required by this paragraph at any 
     location, from the cable head-end to the customer premises, 
     inclusive.
       ``(ii) Notwithstanding any other provision of this Act 
     other than the prohibition on material degradation, a cable 
     operator may use switched digital video technology to 
     accomplish any conversion or transmission permitted or 
     required by this paragraph.
       ``(E) Conversions not treated as degradation.--Any 
     conversion permitted or required by this paragraph shall not, 
     by itself, be treated as a material degradation.
       ``(F) Carriage of program-related material.--The obligation 
     to carry program-related material under this paragraph is 
     effective only to the extent technically feasible.
       ``(G) Definition of standard-definition format.--For 
     purposes of this paragraph, a stream shall be in standard 
     definition digital format if such stream meets the criteria 
     for such format as specified in the standard recognized by 
     the Commission in section 73.682 of its rules (47 CFR 73.682) 
     or a successor regulation.''.
       (b) Tiering.--Clause (iii) of section 623(b)(7)(A) of such 
     Act (47 U.S.C. 543(b)(7)(A)(iii)) is amended to read as 
     follows:
       ``(iii) Both of the following signals:

       ``(I) the primary video stream and program-related material 
     of any television broadcast station that is provided by the 
     cable operator to any subscriber in an analog format, and
       ``(II) the primary video stream and program-related 
     material--

       ``(aa) of any television broadcast station that is 
     transmitting exclusively in digital format, and
       ``(bb) that is provided by the cable operator to any 
     subscriber in a digital format,

     but excluding a signal that is secondarily transmitted by a 
     satellite carrier beyond the local service area of such 
     station.''.
       (c) Comparable Treatment of Satellite Carriers.--Section 
     338 of the Communications Act of 1934 (47 U.S.C. 338) is 
     amended--
       (1) by adding at the end the following new subsection:
       ``(l) Specific Carriage Obligations After Digital 
     Transition.--
       ``(1) Carriage of digital formats.--With respect to any 
     television station that requests carriage under this section 
     and that is transmitting broadcast programming exclusively in 
     the digital television service in a local market in the 
     contiguous United States (hereafter in this paragraph 
     referred to as an eligible requesting station), a satellite 
     carrier carrying the digital signal of any other local 
     television station in that local market shall carry the 
     eligible requesting station's primary video stream and 
     program-related material, without material degradation, if 
     the licensee for that eligible requesting station--
       ``(A) relies on this section to obtain carriage of the 
     primary video stream and program-related material by that 
     satellite carrier in that market; and
       ``(B) permits the satellite carrier to carry without 
     compensation any other programming broadcast by that local 
     station that is carried on that system.
       ``(2) Formatting of primary video stream.--A satellite 
     carrier must offer the primary video stream and program-
     related material of an eligible requesting station in the 
     digital format transmitted by the station if the satellite 
     carrier carries the primary video stream of any other local 
     television station in that local market in the same digital 
     format.
       ``(3) Multiple formats permitted.--A satellite carrier may 
     offer the primary video stream and program-related material 
     of an eligible requesting station in any analog or digital 
     format or formats, whether or not doing so requires 
     conversion from the format transmitted by that eligible 
     requesting station, so long as--
       ``(A) the satellite carrier offers the primary video stream 
     and program-related material in the converted analog or 
     digital format or formats without material degradation; and
       ``(B) also offers the primary video stream and program-
     related material in the manner or manners required by this 
     subsection.
       ``(4) Transitional conversions.--Notwithstanding any 
     requirement in paragraphs (1) and (2) to carry the primary 
     video stream and program-related material in the digital 
     format transmitted by the local television station, but 
     subject to the prohibition on material degradation, until 
     January 1, 2014, a satellite carrier--
       ``(A) shall offer the primary video stream and program-
     related material of any local television broadcast station 
     required to be carried under paragraph (1) in the format 
     necessary for such stream to be viewable on analog and 
     digital televisions; and
       ``(B) may convert the primary video stream and program-
     related material to standard-definition format in lieu of 
     offering it in the digital format transmitted by the local 
     television station.
       ``(5) Location and method of conversion.--A satellite 
     carrier may perform any conversion permitted or required by 
     this subsection at any location, from the local receive 
     facility to the customer premises, inclusive.
       ``(6) Conversions not treated as degradation.--Any 
     conversion permitted or required by this subsection shall 
     not, by itself, be treated as a material degradation.
       ``(7) Carriage of program-related material.--The obligation 
     to carry program-related material under this subsection is 
     effective only to the extent technically feasible.
       ``(8) Definition of standard-definition format.--For 
     purposes of this subsection, a stream shall be in standard 
     definition digital format if such stream meets the criteria 
     for such format as specified in the standard recognized by 
     the Commission in section 73.682 of its rules (47 CFR 73.682) 
     or a successor regulation.'';
       (2) in subsection (b)(1), by striking ``subsection (a)'' 
     and inserting ``subsection (a) or (l)'';
       (3) in subsection (c)(1), by striking ``subsection (a)(1)'' 
     and inserting ``subsections (a)(1) and (l)''; and
       (4) in subsection (c)(2), by striking ``subsection (a)'' 
     and inserting ``subsections (a) and (l)''.
       (d) Deadline.--The Federal Communications Commission shall 
     revise its regulations to implement the amendments made by 
     this section within one year after the date of enactment of 
     this Act.

     SEC. 3411. DEPLOYMENT OF BROADBAND WIRELESS TECHNOLOGIES.

        Not later than 45 days after the effective date of this 
     Act, the Commission shall initiate a rulemaking to assess the 
     necessity of rechannelizing the spectrum located between 767-
     773 megahertz and 797-803 megahertz to accommodate broadband 
     applications. Such rulemaking shall be completed within 180 
     days.

     SEC. 3412. SENSE OF CONGRESS.

       (a) Findings.--The Congress finds the following:
       (1) The wireless communications industry in the United 
     States is becoming increasingly concentrated: there are 
     currently no

[[Page H10587]]

     ownership limitations on wireless companies, and the five 
     largest wireless carriers in the United States control nearly 
     90 percent of United States wireless subscribership.
       (2) Over 90 percent of households receive their broadband 
     services through either cable or digital subscriber line 
     (DSL) service, and most cable and DSL providers are heavily 
     concentrated within their geographic markets.
       (3) Under the Omnibus Budget and Reconciliation Act of 
     1993, Congress tasked the Federal Communications Commission 
     to promote economic opportunity by disseminating wireless 
     communications licenses among a wide variety of applicants, 
     including small businesses and rural telephone companies.
       (4) Upcoming auctions for the returned analog broadcast 
     spectrum in the 700 megahertz band that will be cleared 
     following the transition from analog to digital broadcast 
     television and Advanced Wireless Services (AWS) in the 1710-
     1755 megahertz and 2110-2155 megahertz bands will likely be 
     the last reallocation opportunities for commercial wireless 
     communications services and wireless broadband services in 
     the foreseeable future.
       (5) In the near term, wireless broadband presents the most 
     promising opportunity to provide a third option (other than 
     cable modem or DSL service) for broadband Internet access for 
     most consumers, and the spectrum in the 700 megahertz band is 
     considered ``beachfront'' property by telecommunications 
     carriers because wireless signals at this frequency range 
     pass easily through buildings, trees, and other interference.
       (6) The 700 megahertz band offers a historic opportunity to 
     provide the equivalent of a ``third wire'' into the home - an 
     alternative to telephone or cable broadband access that will 
     create new competition and incentives for new entrants, 
     innovation, and broader service offerings.
       (b) Sense of the Congress.--It is the sense of the Congress 
     that the Federal Communications Commission should disseminate 
     wireless communications licenses consistent with the findings 
     in subsection (a) and do so utilizing its existing authority 
     under section 309(j) of the Communications Act of 1934, which 
     requires the Commission to promote the following objectives:
       (1) the development and rapid deployment of new 
     technologies, products, and services for the benefit of the 
     public, including those residing in rural areas, without 
     administrative or judicial delays;
       (2) promoting economic opportunity and competition and 
     ensuring that new and innovative technologies are readily 
     accessible to the American people by avoiding excessive 
     concentration of licenses and by disseminating licenses among 
     a wide variety of applicants, including small businesses and 
     rural telephone companies;
       (3) recovery for the public of a portion of the value of 
     the public spectrum resource made available for commercial 
     use and avoidance of unjust enrichment through the methods 
     employed to award uses of that resource; and
       (4) efficient and intensive use of the electromagnetic 
     spectrum.

     SEC. 3413. BAND PLAN REVISION REQUIRED.

       (a) Proceeding Required.--The Federal Communications 
     Commission shall commence a proceeding no later than June 1, 
     2006, to reevaluate the band plan for the auction of the 
     unauctioned portions of the lower 700 megahertz band 
     (currently designated as Blocks A, B, and E).
       (b) Reconfiguration Required.--The Federal Communications 
     Commission shall reconfigure the band plan to license 
     spectrum for Block B of such portion according to Cellular 
     Market Areas (i.e., Metropolitan Statistical Areas (``MSAs'') 
     and Rural Service Areas (``RSAs'')) to facilitate the 
     offering of competitive wireless services by regional and 
     smaller wireless carriers.

               TITLE IV--COMMITTEE ON FINANCIAL SERVICES

     SECTION 4000. TABLE OF CONTENTS.

       The table of contents for this title is as follows:

Sec. 4000. Table of contents.

                  Subtitle A--Deposit Insurance Reform

Sec. 4001. Short title.
Sec. 4002. Merging the BIF and SAIF.
Sec. 4003. Increase in deposit insurance coverage.
Sec. 4004. Setting assessments and repeal of special rules relating to 
              minimum assessments and free deposit insurance.
Sec. 4005. Replacement of fixed designated reserve ratio with reserve 
              range.
Sec. 4006. Requirements applicable to the risk-based assessment system.
Sec. 4007. Refunds, dividends, and credits from Deposit Insurance Fund.
Sec. 4008. Deposit Insurance Fund restoration plans.
Sec. 4009. Regulations required.
Sec. 4010. Studies of FDIC structure and expenses and certain 
              activities and further possible changes to deposit 
              insurance system.
Sec. 4011. Bi-annual FDIC survey and report on increasing the deposit 
              base by encouraging use of depository institutions by the 
              unbanked.
Sec. 4012. Technical and conforming amendments to the Federal Deposit 
              Insurance Act relating to the merger of the BIF and SAIF.
Sec. 4013. Other technical and conforming amendments relating to the 
              merger of the BIF and SAIF.

                   Subtitle B--FHA Asset Disposition

Sec. 4101. Short title.
Sec. 4102. Definitions.
Sec. 4103. Appropriated funds requirement for below market sales.
Sec. 4104. Up-front grants.

                  Subtitle A--Deposit Insurance Reform

     SEC. 4001. SHORT TITLE.

       This subtitle may be cited as the ``Federal Deposit 
     Insurance Reform Act of 2005''.

     SEC. 4002. MERGING THE BIF AND SAIF.

       (a) In General.--
       (1) Merger.--The Bank Insurance Fund and the Savings 
     Association Insurance Fund shall be merged into the Deposit 
     Insurance Fund.
       (2) Disposition of assets and liabilities.--All assets and 
     liabilities of the Bank Insurance Fund and the Savings 
     Association Insurance Fund shall be transferred to the 
     Deposit Insurance Fund.
       (3) No separate existence.--The separate existence of the 
     Bank Insurance Fund and the Savings Association Insurance 
     Fund shall cease on the effective date of the merger thereof 
     under this section.
       (b) Repeal of Outdated Merger Provision.--Section 2704 of 
     the Deposit Insurance Funds Act of 1996 (12 U.S.C. 1821 note) 
     is repealed.
       (c) Effective Date.--This section shall take effect on the 
     first day of the first calendar quarter that begins after the 
     end of the 90-day period beginning on the date of the 
     enactment of this Act.

     SEC. 4003. INCREASE IN DEPOSIT INSURANCE COVERAGE.

       (a) In General.--Section 11(a)(1) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(a)(1)) is amended--
       (1) by striking subparagraph (B) and inserting the 
     following new subparagraph:
       ``(B) Net amount of insured deposit.--The net amount due to 
     any depositor at an insured depository institution shall not 
     exceed the standard maximum deposit insurance amount as 
     determined in accordance with subparagraphs (C), (D), (E) and 
     (F) and paragraph (3).''; and
       (2) by adding at the end the following new subparagraphs:
       ``(E) Standard maximum deposit insurance amount defined.--
     For purposes of this Act, the term `standard maximum deposit 
     insurance amount' means--
       ``(i) until the effective date of final regulations 
     prescribed pursuant to section 4009(a)(2) of the Federal 
     Deposit Insurance Reform Act of 2005, $100,000; and
       ``(ii) on and after such effective date, $130,000, adjusted 
     as provided under subparagraph (F).
       ``(F) Inflation adjustment.--
       ``(i) In general.--By April 1 of 2007, and the 1st day of 
     each subsequent 5-year period, the Board of Directors and the 
     National Credit Union Administration Board shall jointly 
     prescribe the amount by which the standard maximum deposit 
     insurance amount and the standard maximum share insurance 
     amount (as defined in section 207(k) of the Federal Credit 
     Union Act) applicable to any depositor at an insured 
     depository institution shall be increased by calculating the 
     product of--

       ``(I) $130,000; and
       ``(II) the ratio of the value of the Personal Consumption 
     Expenditures Chain-Type Index (or any successor index 
     thereto), published by the Department of Commerce, as of 
     December 31 of the year preceding the year in which the 
     adjustment is calculated under this clause, to the value of 
     such index as of the date this subparagraph takes effect.

       ``(ii) Rounding.--If the amount determined under clause 
     (ii) for any period is not a multiple of $10,000, the amount 
     so determined shall be rounded to the nearest $10,000.
       ``(iii) Publication and report to the congress.--Not later 
     than April 5 of any calendar year in which an adjustment is 
     required to be calculated under clause (i) to the standard 
     maximum deposit insurance amount and the standard maximum 
     share insurance amount under such clause, the Board of 
     Directors and the National Credit Union Administration Board 
     shall--

       ``(I) publish in the Federal Register the standard maximum 
     deposit insurance amount, the standard maximum share 
     insurance amount, and the amount of coverage under paragraph 
     (3)(A) and section 207(k)(3) of the Federal Credit Union Act, 
     as so calculated; and
       ``(II) jointly submit a report to the Congress containing 
     the amounts described in subclause (I).

       ``(iv) 6-month implementation period.--Unless an Act of 
     Congress enacted before July 1 of the calendar year in which 
     an adjustment is required to be calculated under clause (i) 
     provides otherwise, the increase in the standard maximum 
     deposit insurance amount and the standard maximum share 
     insurance amount shall take effect on January 1 of the year 
     immediately succeeding such calendar year.''.
       (b) Coverage for Certain Employee Benefit Plan Deposits.--
     Section 11(a)(1)(D) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(a)(1)(D)) is amended to read as follows:
       ``(D) Coverage for certain employee benefit plan 
     deposits.--
       ``(i) Pass-through insurance.--The Corporation shall 
     provide pass-through deposit insurance for the deposits of 
     any employee benefit plan.

[[Page H10588]]

       ``(ii) Prohibition on acceptance of benefit plan 
     deposits.--An insured depository institution that is not well 
     capitalized or adequately capitalized may not accept employee 
     benefit plan deposits.
       ``(iii) Definitions.--For purposes of this subparagraph, 
     the following definitions shall apply:

       ``(I) Capital standards.--The terms `well capitalized' and 
     `adequately capitalized' have the same meanings as in section 
     38.
       ``(II) Employee benefit plan.--The term `employee benefit 
     plan' has the same meaning as in paragraph (8)(B)(ii), and 
     includes any eligible deferred compensation plan described in 
     section 457 of the Internal Revenue Code of 1986.
       ``(III) Pass-through deposit insurance.--The term `pass-
     through deposit insurance' means, with respect to an employee 
     benefit plan, deposit insurance coverage provided on a pro 
     rata basis to the participants in the plan, in accordance 
     with the interest of each participant.''.

       (c) Doubling of Deposit Insurance for Certain Retirement 
     Accounts.--Section 11(a)(3)(A) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(a)(3)(A)) is amended by 
     striking ``$100,000'' and inserting ``2 times the standard 
     maximum deposit insurance amount (as determined under 
     paragraph (1))''.
       (d) Increased Insurance Coverage for Municipal Deposits.--
     Section 11(a)(2) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(a)(2)) is amended--
       (1) in subparagraph (A)--
       (A) by moving the margins of clauses (i) through (v) 4 ems 
     to the right;
       (B) by striking, in the matter following clause (v), ``such 
     depositor shall'' and all that follows through the period; 
     and
       (C) by striking the semicolon at the end of clause (v) and 
     inserting a period;
       (2) by striking ``(2)(A) Notwithstanding'' and all that 
     follows through ``a depositor who is--'' and inserting the 
     following:
       ``(2) Municipal depositors.--
       ``(A) In general.--Notwithstanding any limitation in this 
     Act or in any other provision of law relating to the amount 
     of deposit insurance available to any 1 depositor--
       ``(i) a municipal depositor shall, for the purpose of 
     determining the amount of insured deposits under this 
     subsection, be deemed to be a depositor separate and distinct 
     from any other officer, employee, or agent of the United 
     States or any public unit referred to in subparagraph (E); 
     and
       ``(ii) except as provided in subparagraph (B), the deposits 
     of a municipal depositor shall be insured in an amount equal 
     to the standard maximum deposit insurance amount (as 
     determined under paragraph (1)).
       ``(B) In-state municipal depositors.--In the case of the 
     deposits of an in-State municipal depositor described in 
     clause (ii), (iii), (iv), or (v) of subparagraph (E) at an 
     insured depository institution, such deposits shall be 
     insured in an amount not to exceed the lesser of--
       ``(i) $2,000,000; or
       ``(ii) the sum of the standard maximum deposit insurance 
     amount and 80 percent of the amount of any deposits in excess 
     of the standard maximum deposit insurance amount.
       ``(C) Municipal deposit parity.--No State may deny to 
     insured depository institutions within its jurisdiction the 
     authority to accept deposits insured under this paragraph, or 
     prohibit the making of such deposits in such institutions by 
     any in-State municipal depositor.
       ``(D) In-state municipal depositor defined.--For purposes 
     of this paragraph, the term `in-State municipal depositor' 
     means a municipal depositor that is located in the same State 
     as the office or branch of the insured depository institution 
     at which the deposits of that depositor are held.
       ``(E) Municipal depositor.--In this paragraph, the term 
     `municipal depositor' means a depositor that is--'';
       (3) by striking ``(B) The'' and inserting the following:
       ``(F) Authority to limit deposits.--The''; and
       (4) by striking ``depositor referred to in subparagraph (A) 
     of this paragraph'' each place such term appears and 
     inserting ``municipal depositor''.
       (e) Technical and Conforming Amendment Relating to 
     Insurance of Trust Funds.--Paragraphs (1) and (3) of section 
     7(i) of the Federal Deposit Insurance Act (12 U.S.C. 1817(i)) 
     are each amended by striking ``$100,000'' and inserting ``the 
     standard maximum deposit insurance amount (as determined 
     under section 11(a)(1))''.
       (f) Other Technical and Conforming Amendments.--
       (1) Section 11(m)(6) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1821(m)(6)) is amended by striking ``$100,000'' 
     and inserting ``an amount equal to the standard maximum 
     deposit insurance amount''.
       (2) Subsection (a) of section 18 of the Federal Deposit 
     Insurance Act (12 U.S.C. 1828(a)) is amended to read as 
     follows:
       ``(a) Insurance Logo.--
       ``(1) Insured depository institutions.--
       ``(A) In general.--Each insured depository institution 
     shall display at each place of business maintained by that 
     institution a sign or signs relating to the insurance of the 
     deposits of the institution, in accordance with regulations 
     to be prescribed by the Corporation.
       ``(B) Statement to be included.--Each sign required under 
     subparagraph (A) shall include a statement that insured 
     deposits are backed by the full faith and credit of the 
     United States Government.
       ``(2) Regulations.--The Corporation shall prescribe 
     regulations to carry out this subsection, including 
     regulations governing the substance of signs required by 
     paragraph (1) and the manner of display or use of such signs.
       ``(3) Penalties.--For each day that an insured depository 
     institution continues to violate this subsection or any 
     regulation issued under this subsection, it shall be subject 
     to a penalty of not more than $100, which the Corporation may 
     recover for its use.''.
       (3) Section 43(d) of the Federal Deposit Insurance Act (12 
     U.S.C. 1831t(d)) is amended by striking ``$100,000'' and 
     inserting ``an amount equal to the standard maximum deposit 
     insurance amount''.
       (4) Section 6 of the International Banking Act of 1978 (12 
     U.S.C. 3104) is amended--
       (A) by striking ``$100,000'' each place such term appears 
     and inserting ``an amount equal to the standard maximum 
     deposit insurance amount''; and
       (B) by adding at the end the following new subsection:
       ``(e) Standard Maximum Deposit Insurance Amount Defined.--
     For purposes of this section, the term `standard maximum 
     deposit insurance amount' means the amount of the maximum 
     amount of deposit insurance as determined under section 
     11(a)(1) of the Federal Deposit Insurance Act.''.
       (g) Conforming Change to Credit Union Share Insurance 
     Fund.--
       (1) In general.--Section 207(k) of the Federal Credit Union 
     Act (12 U.S.C. 1787(k)) is amended--
       (A) by striking ``(k)(1)'' and all that follows through the 
     end of paragraph (1) and inserting the following:
       ``(k) Insured Amounts Payable.--
       ``(1) Net insured amount.--
       ``(A) In general.--Subject to the provisions of paragraph 
     (2), the net amount of share insurance payable to any member 
     at an insured credit union shall not exceed the total amount 
     of the shares or deposits in the name of the member (after 
     deducting offsets), less any part thereof which is in excess 
     of the standard maximum share insurance amount, as determined 
     in accordance with this paragraph and paragraphs (5) and (6), 
     and consistently with actions taken by the Federal Deposit 
     Insurance Corporation under section 11(a) of the Federal 
     Deposit Insurance Act.
       ``(B) Aggregation.--Determination of the net amount of 
     share insurance under subparagraph (A), shall be in 
     accordance with such regulations as the Board may prescribe, 
     and, in determining the amount payable to any member, there 
     shall be added together all accounts in the credit union 
     maintained by that member for that member's own benefit, 
     either in the member's own name or in the names of others.
       ``(C) Authority to define the extent of coverage.--The 
     Board may define, with such classifications and exceptions as 
     it may prescribe, the extent of the share insurance coverage 
     provided for member accounts, including member accounts in 
     the name of a minor, in trust, or in joint tenancy.'';
       (B) in paragraph (2)--
       (i) in subparagraph (A)--

       (I) in clauses (i) through (v), by moving the margins 4 ems 
     to the right;
       (II) in the matter following clause (v), by striking ``his 
     account'' and all that follows through the period; and
       (III) by striking the semicolon at the end of clause (v) 
     and inserting a period;

       (ii) by striking ``(2)(A) Notwithstanding'' and all that 
     follows through ``a depositor or member who is--'' and 
     inserting the following:
       ``(2) Municipal depositors or members.--
       ``(A) In general.--Notwithstanding any limitation in this 
     Act or in any other provision of law relating to the amount 
     of insurance available to any 1 depositor or member, deposits 
     or shares of a municipal depositor or member shall be insured 
     in an amount equal to the standard maximum share insurance 
     amount (as determined under paragraph (5)), except as 
     provided in subparagraph (B).
       ``(B) In-state municipal depositors.--In the case of the 
     deposits of an in-State municipal depositor described in 
     clause (ii), (iii), (iv), or (v) of subparagraph (E) at an 
     insured credit union, such deposits shall be insured in an 
     amount equal to the lesser of--
       ``(i) $2,000,000; or
       ``(ii) the sum of the standard maximum deposit insurance 
     amount and 80 percent of the amount of any deposits in excess 
     of the standard maximum deposit insurance amount.
       ``(C) Rule of construction.--No provision of this paragraph 
     shall be construed as authorizing an insured credit union to 
     accept the deposits of a municipal depositor in an amount 
     greater than such credit union is authorized to accept under 
     any other provision of Federal or State law.
       ``(D) In-state municipal depositor defined.--For purposes 
     of this paragraph, the term `in-State municipal depositor' 
     means a municipal depositor that is located in the same State 
     as the office or branch of the insured credit union at which 
     the deposits of that depositor are held.
       ``(E) Municipal depositor.--In this paragraph, the term 
     `municipal depositor' means a depositor that is--'';
       (iii) by striking ``(B) The'' and inserting the following:
       ``(F) Authority to limit deposits.--The''; and

[[Page H10589]]

       (iv) by striking ``depositor or member referred to in 
     subparagraph (A)'' and inserting ``municipal depositor or 
     member''; and
       (C) by adding at the end the following new paragraphs:
       ``(4) Coverage for certain employee benefit plan 
     deposits.--
       ``(A) Pass-through insurance.--The Administration shall 
     provide pass-through share insurance for the deposits or 
     shares of any employee benefit plan.
       ``(B) Prohibition on acceptance of deposits.--An insured 
     credit union that is not well capitalized or adequately 
     capitalized may not accept employee benefit plan deposits.
       ``(C) Definitions.--For purposes of this paragraph, the 
     following definitions shall apply:
       ``(i) Capital standards.--The terms `well capitalized' and 
     `adequately capitalized' have the same meanings as in section 
     216(c).
       ``(ii) Employee benefit plan.--The term `employee benefit 
     plan'--

       ``(I) has the meaning given to such term in section 3(3) of 
     the Employee Retirement Income Security Act of 1974;
       ``(II) includes any plan described in section 401(d) of the 
     Internal Revenue Code of 1986; and
       ``(III) includes any eligible deferred compensation plan 
     described in section 457 of the Internal Revenue Code of 
     1986.

       ``(iii) Pass-through share insurance.--The term `pass-
     through share insurance' means, with respect to an employee 
     benefit plan, insurance coverage provided on a pro rata basis 
     to the participants in the plan, in accordance with the 
     interest of each participant.
       ``(D) Rule of construction.--No provision of this paragraph 
     shall be construed as authorizing an insured credit union to 
     accept the deposits of an employee benefit plan in an amount 
     greater than such credit union is authorized to accept under 
     any other provision of Federal or State law.
       ``(5) Standard maximum share insurance amount defined.--For 
     purposes of this Act, the term `standard maximum share 
     insurance amount' means--
       ``(A) until the effective date of final regulations 
     prescribed pursuant to section 4009(a)(2) of the Federal 
     Deposit Insurance Reform Act of 2005, $100,000; and
       ``(B) on and after such effective date, $130,000, adjusted 
     as provided under section 11(a)(1)(F) of the Federal Deposit 
     Insurance Act.''.
       (2) Doubling of share insurance for certain retirement 
     accounts.--Section 207(k)(3) of the Federal Credit Union Act 
     (12 U.S.C. 1787(k)(3)) is amended by striking ``$100,000'' 
     and inserting ``2 times the standard maximum share insurance 
     amount (as determined under paragraph (1))''.
       (h) Effective Date.--This section and the amendments made 
     by this section shall take effect on the date the final 
     regulations required under section 4009(a)(2) take effect.

     SEC. 4004. SETTING ASSESSMENTS AND REPEAL OF SPECIAL RULES 
                   RELATING TO MINIMUM ASSESSMENTS AND FREE 
                   DEPOSIT INSURANCE.

       (a) Setting Assessments.--Section 7(b)(2) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1817(b)(2)) is amended--
       (1) by striking subparagraphs (A) and (B) and inserting the 
     following new subparagraphs:
       ``(A) In general.--The Board of Directors shall set 
     assessments for insured depository institutions in such 
     amounts as the Board of Directors may determine to be 
     necessary or appropriate, subject to subparagraph (D).
       ``(B) Factors to be considered.--In setting assessments 
     under subparagraph (A), the Board of Directors shall consider 
     the following factors:
       ``(i) The estimated operating expenses of the Deposit 
     Insurance Fund.
       ``(ii) The estimated case resolution expenses and income of 
     the Deposit Insurance Fund.
       ``(iii) The projected effects of the payment of assessments 
     on the capital and earnings of insured depository 
     institutions.
       ``(iv) the risk factors and other factors taken into 
     account pursuant to paragraph (1) under the risk-based 
     assessment system, including the requirement under such 
     paragraph to maintain a risk-based system.
       ``(v) Any other factors the Board of Directors may 
     determine to be appropriate.''; and
       (2) by inserting after subparagraph (C) the following new 
     subparagraph:
       ``(D) Base rate for assessments.--
       ``(i) In general.--In setting assessment rates pursuant to 
     subparagraph (A), the Board of Directors shall establish a 
     base rate of not more than 1 basis point (exclusive of any 
     credit or dividend) for those insured depository institutions 
     in the lowest-risk category under the risk-based assessment 
     system established pursuant to paragraph (1). No insured 
     depository institution shall be barred from the lowest-risk 
     category solely because of size.
       ``(ii) Suspension.--Clause (i) shall not apply during any 
     period in which the reserve ratio of the Deposit Insurance 
     Fund is less than the amount which is equal to 1.15 percent 
     of the aggregate estimated insured deposits.''.
       (b) Assessment Recordkeeping Period Shortened.--Paragraph 
     (5) of section 7(b) of the Federal Deposit Insurance Act (12 
     U.S.C. 1817(b)) is amended to read as follows:
       ``(5) Depository institution required to maintain 
     assessment-related records.--Each insured depository 
     institution shall maintain all records that the Corporation 
     may require for verifying the correctness of any assessment 
     on the insured depository institution under this subsection 
     until the later of--
       ``(A) the end of the 3-year period beginning on the due 
     date of the assessment; or
       ``(B) in the case of a dispute between the insured 
     depository institution and the Corporation with respect to 
     such assessment, the date of a final determination of any 
     such dispute.''.
       (c) Increase in Fees for Late Assessment Payments.--
     Subsection (h) of section 18 of the Federal Deposit Insurance 
     Act (12 U.S.C. 1828(h)) is amended to read as follows:
       ``(h) Penalty for Failure to Timely Pay Assessments.--
       ``(1) In general.--Subject to paragraph (3), any insured 
     depository institution which fails or refuses to pay any 
     assessment shall be subject to a penalty in an amount not 
     more than 1 percent of the amount of the assessment due for 
     each day that such violation continues.
       ``(2) Exception in case of dispute.--Paragraph (1) shall 
     not apply if--
       ``(A) the failure to pay an assessment is due to a dispute 
     between the insured depository institution and the 
     Corporation over the amount of such assessment; and
       ``(B) the insured depository institution deposits security 
     satisfactory to the Corporation for payment upon final 
     determination of the issue.
       ``(3) Special rule for small assessment amounts.--If the 
     amount of the assessment which an insured depository 
     institution fails or refuses to pay is less than $10,000 at 
     the time of such failure or refusal, the amount of any 
     penalty to which such institution is subject under paragraph 
     (1) shall not exceed $100 for each day that such violation 
     continues.
       ``(4) Authority to modify or remit penalty.--The 
     Corporation, in the sole discretion of the Corporation, may 
     compromise, modify or remit any penalty which the Corporation 
     may assess or has already assessed under paragraph (1) upon a 
     finding that good cause prevented the timely payment of an 
     assessment.''.
       (d) Assessments for Lifeline Accounts.--
       (1) In general.--Section 232 of the Federal Deposit 
     Insurance Corporation Improvement Act of 1991 (12 U.S.C. 
     1834) is amended by striking subsection (c).
       (2) Clarification of rate applicable to deposits 
     attributable to lifeline accounts.--Section 7(b)(2)(H) of the 
     Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)(H)) is 
     amended by striking ``at a rate determined in accordance with 
     such Act'' and inserting ``at \1/2\ the assessment rate 
     otherwise applicable for such insured depository 
     institution''.
       (3) Regulations.--Section 232(a)(1) of the Federal Deposit 
     Insurance Corporation Improvement Act of 1991 (12 U.S.C. 
     1834(a)(1)) is amended by striking ``Board of Governors of 
     the Federal Reserve System, and the''.
       (e) Technical and Conforming Amendments.--
       (1) Paragraph (3) of section 7(a) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1817(a)(3)) is amended by striking 
     the 3d sentence and inserting the following: ``Such reports 
     of condition shall be the basis for the certified statements 
     to be filed pursuant to subsection (c).''.
       (2) Subparagraphs (B)(ii) and (C) of section 7(b)(1) of the 
     Federal Deposit Insurance Act (12 U.S.C. 1817(b)(1)) are each 
     amended by striking ``semiannual'' where such term appears in 
     each such subparagraph.
       (3) Section 7(b)(2) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1817(b)(2)) is amended--
       (A) by striking subparagraphs (E), (F), and (G);
       (B) in subparagraph (C), by striking ``semiannual''; and
       (C) by redesignating subparagraph (H) (as amended by 
     subsection (e)(2) of this section) as subparagraph (E).
       (4) Section 7(b) of the Federal Deposit Insurance Act (12 
     U.S.C. 1817(b)) is amended by striking paragraph (4) and 
     redesignating paragraphs (5) (as amended by subsection (b) of 
     this section), (6), and (7) as paragraphs (4), (5), and (6) 
     respectively.
       (5) Section 7(c) of the Federal Deposit Insurance Act (12 
     U.S.C. 1817(c)) is amended--
       (A) in paragraph (1)(A), by striking ``semiannual'';
       (B) in paragraph (2)(A), by striking ``semiannual''; and
       (C) in paragraph (3), by striking ``semiannual period'' and 
     inserting ``initial assessment period''.
       (6) Section 8(p) of the Federal Deposit Insurance Act (12 
     U.S.C. 1818(p)) is amended by striking ``semiannual''.
       (7) Section 8(q) of the Federal Deposit Insurance Act (12 
     U.S.C. 1818(q)) is amended by striking ``semiannual period'' 
     and inserting ``assessment period''.
       (8) Section 13(c)(4)(G)(ii)(II) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1823(c)(4)(G)(ii)(II)) is amended by 
     striking ``semiannual period'' and inserting ``assessment 
     period''.
       (9) Section 232(a) of the Federal Deposit Insurance 
     Corporation Improvement Act of 1991 (12 U.S.C. 1834(a)) is 
     amended--
       (A) in the matter preceding subparagraph (A) of paragraph 
     (2), by striking ``the Board and'';
       (B) in subparagraph (J) of paragraph (2), by striking ``the 
     Board'' and inserting ``the Corporation'';
       (C) by striking subparagraph (A) of paragraph (3) and 
     inserting the following new subparagraph:

[[Page H10590]]

       ``(A) Corporation.--The term `Corporation' means the 
     Federal Deposit Insurance Corporation.''; and
       (D) in subparagraph (C) of paragraph (3), by striking 
     ``Board'' and inserting ``Corporation''.
       (f) Effective Date.--This section and the amendments made 
     by this section shall take effect on the date that the final 
     regulations required under section 4009(a)(5) take effect.

     SEC. 4005. REPLACEMENT OF FIXED DESIGNATED RESERVE RATIO WITH 
                   RESERVE RANGE.

       (a) In General.--Section 7(b)(3) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1817(b)(3)) is amended to read as 
     follows:
       ``(3) Designated reserve ratio.--
       ``(A) Establishment.--
       ``(i) In general.--The Board of Directors shall designate, 
     by regulation after notice and opportunity for comment, the 
     reserve ratio applicable with respect to the Deposit 
     Insurance Fund.
       ``(ii) Not less than annual redetermination.--A 
     determination under clause (i) shall be made by the Board of 
     Directors at least before the beginning of each calendar 
     year, for such calendar year, and at such other times as the 
     Board of Directors may determine to be appropriate.
       ``(B) Range.--The reserve ratio designated by the Board of 
     Directors for any year--
       ``(i) may not exceed 1.4 percent of estimated insured 
     deposits; and
       ``(ii) may not be less than 1.15 percent of estimated 
     insured deposits.
       ``(C) Factors.--In designating a reserve ratio for any 
     year, the Board of Directors shall--
       ``(i) take into account the risk of losses to the Deposit 
     Insurance Fund in such year and future years, including 
     historic experience and potential and estimated losses from 
     insured depository institutions;
       ``(ii) take into account economic conditions generally 
     affecting insured depository institutions so as to allow the 
     designated reserve ratio to increase during more favorable 
     economic conditions and to decrease during less favorable 
     economic conditions, notwithstanding the increased risks of 
     loss that may exist during such less favorable conditions, as 
     determined to be appropriate by the Board of Directors;
       ``(iii) seek to prevent sharp swings in the assessment 
     rates for insured depository institutions; and
       ``(iv) take into account such other factors as the Board of 
     Directors may determine to be appropriate, consistent with 
     the requirements of this subparagraph.
       ``(D) Publication of proposed change in ratio.--In 
     soliciting comment on any proposed change in the designated 
     reserve ratio in accordance with subparagraph (A), the Board 
     of Directors shall include in the published proposal a 
     thorough analysis of the data and projections on which the 
     proposal is based.''.
       (b) Technical and Conforming Amendment.--Section 3(y) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813(y)) is 
     amended--
       (1) by striking ``(y) The term'' and inserting(y) 
     Definitions Relating to Deposit Insurance Fund.--
       ``(1) Deposit insurance fund.--The term''; and
       (2) by inserting after paragraph (1) (as so designated by 
     paragraph (1) of this subsection) the following new 
     paragraph:
       ``(2) Designated reserve ratio.--The term `designated 
     reserve ratio' means the reserve ratio designated by the 
     Board of Directors in accordance with section 7(b)(3).''.
       (c) Effective Date.--This section and the amendments made 
     by this section shall take effect on the date that the final 
     regulations required under section 4009(a)(1) take effect.

     SEC. 4006. REQUIREMENTS APPLICABLE TO THE RISK-BASED 
                   ASSESSMENT SYSTEM.

       Section 7(b)(1) of the Federal Deposit Insurance Act (12 
     U.S.C. 1817(b)(1)) is amended by adding at the end the 
     following new subparagraphs:
       ``(E) Information concerning risk of loss and economic 
     conditions.--
       ``(i) Sources of information.--For purposes of determining 
     risk of losses at insured depository institutions and 
     economic conditions generally affecting depository 
     institutions, the Corporation shall collect information, as 
     appropriate, from all sources the Board of Directors 
     considers appropriate, such as reports of condition, 
     inspection reports, and other information from all Federal 
     banking agencies, any information available from State bank 
     supervisors, State insurance and securities regulators, the 
     Securities and Exchange Commission (including information 
     described in section 35), the Secretary of the Treasury, the 
     Commodity Futures Trading Commission, the Farm Credit 
     Administration, the Federal Trade Commission, any Federal 
     reserve bank or Federal home loan bank, and other regulators 
     of financial institutions, and any information available from 
     credit rating entities, and other private economic or 
     business analysts.
       ``(ii) Consultation with federal banking agencies.--

       ``(I) In general.--Except as provided in subclause (II), in 
     assessing the risk of loss to the Deposit Insurance Fund with 
     respect to any insured depository institution, the 
     Corporation shall consult with the appropriate Federal 
     banking agency of such institution.
       ``(II) Treatment on aggregate basis.--In the case of 
     insured depository institutions that are well capitalized (as 
     defined in section 38) and, in the most recent examination, 
     were found to be well managed, the consultation under 
     subclause (I) concerning the assessment of the risk of loss 
     posed by such institutions may be made on an aggregate basis.

       ``(iii) Rule of construction.--No provision of this 
     paragraph shall be construed as providing any new authority 
     for the Corporation to require submission of information by 
     insured depository institutions to the Corporation.
       ``(F) Modifications to the risk-based assessment system 
     allowed only after notice and comment.--In revising or 
     modifying the risk-based assessment system at any time after 
     the date of the enactment of the Federal Deposit Insurance 
     Reform Act of 2005, the Board of Directors may implement such 
     revisions or modification in final form only after notice and 
     opportunity for comment.''.

     SEC. 4007. REFUNDS, DIVIDENDS, AND CREDITS FROM DEPOSIT 
                   INSURANCE FUND.

       (a) In General.--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, Dividends, and Credits.--
       ``(1) Refunds of 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 assessments until such credit is exhausted.
       ``(2) Dividends from excess amounts in deposit insurance 
     fund.--
       ``(A) Reserve ratio in excess of 1.4 percent of estimated 
     insured deposits.--Whenever the reserve ratio of the Deposit 
     Insurance Fund exceeds 1.4 percent of estimated insured 
     deposits, the Corporation shall declare the amount in the 
     Fund in excess of the amount required to maintain the reserve 
     ratio at 1.4 percent of estimated insured deposits, as 
     dividends to be paid to insured depository institutions.
       ``(B) Reserve ratio equal to or in excess of 1.35 percent 
     of estimated insured deposits and not more than 1.4 
     percent.--Whenever the reserve ratio of the Deposit Insurance 
     Fund equals or exceeds 1.35 percent of estimated insured 
     deposits and is not more than 1.4 percent of such deposits, 
     the Corporation shall declare the amount in the Fund that is 
     equal to 50 percent of the amount in excess of the amount 
     required to maintain the reserve ratio at 1.35 percent of the 
     estimated insured deposits as dividends to be paid to insured 
     depository institutions.
       ``(C) Basis for distribution of dividends.--
       ``(i) In general.--Solely for the purposes of dividend 
     distribution under this paragraph and credit distribution 
     under paragraph (3)(B), the Corporation shall determine each 
     insured depository institution's relative contribution to the 
     Deposit Insurance Fund (or any predecessor deposit insurance 
     fund) for calculating such institution's share of any 
     dividend or credit declared under this paragraph or paragraph 
     (3)(B), taking into account the factors described in clause 
     (ii).
       ``(ii) Factors for distribution.--In implementing this 
     paragraph and paragraph (3)(B) in accordance with 
     regulations, the Corporation shall take into account the 
     following factors:

       ``(I) The ratio of the assessment base of an insured 
     depository institution (including any predecessor) on 
     December 31, 1996, to the assessment base of all eligible 
     insured depository institutions on that date.
       ``(II) The total amount of assessments paid on or after 
     January 1, 1997, by an insured depository institution 
     (including any predecessor) to the Deposit Insurance Fund 
     (and any predecessor deposit insurance fund).
       ``(III) That portion of assessments paid by an insured 
     depository institution (including any predecessor) that 
     reflects higher levels of risk assumed by such institution.
       ``(IV) Such other factors as the Corporation may determine 
     to be appropriate.

       ``(D) Notice and opportunity for comment.--The Corporation 
     shall prescribe by regulation, after notice and opportunity 
     for comment, the method for the calculation, declaration, and 
     payment of dividends under this paragraph.
       ``(3) Credit pool.--
       ``(A) One-time credit based on total assessment base at 
     year-end 1996.--
       ``(i) In general.--Before the end of the 270-day period 
     beginning on the date of the enactment of the Federal Deposit 
     Insurance Reform Act of 2005, the Board of Directors shall, 
     by regulation, provide for a credit to each eligible insured 
     depository institution, based on the assessment base of the 
     institution (including any predecessor institution) on 
     December 31, 1996, as compared to the combined aggregate 
     assessment base of all eligible insured depository 
     institutions, taking into account such factors as the Board 
     of Directors may determine to be appropriate.
       ``(ii) Credit limit.--The aggregate amount of credits 
     available under clause (i) to all eligible insured depository 
     institutions shall equal the amount that the Corporation 
     could collect if the Corporation imposed an assessment of 12 
     basis points on the combined assessment base of the Bank 
     Insurance Fund and the Savings Association Insurance Fund as 
     of December 31, 2001.

[[Page H10591]]

       ``(iii) Eligible insured depository institution defined.--
     For purposes of this paragraph, the term `eligible insured 
     depository institution' means any insured depository 
     institution that--

       ``(I) was in existence on December 31, 1996, and paid a 
     deposit insurance assessment prior to that date; or
       ``(II) is a successor to any insured depository institution 
     described in subclause (I).

       ``(iv) Application of credits.--

       ``(I) In general.--The amount of a credit to any eligible 
     insured depository institution under this paragraph shall be 
     applied by the Corporation, subject to subsection (b)(3)(E), 
     to the assessments imposed on such institution under 
     subsection (b) that become due for assessment periods 
     beginning after the effective date of regulations prescribed 
     under clause (i).
       ``(II) Regulations.--The regulations prescribed under 
     clause (i) shall establish the qualifications and procedures 
     governing the application of assessment credits pursuant to 
     subclause (I).

       ``(v) Limitation on amount of credit for certain depository 
     institutions.--In the case of an insured depository 
     institution that exhibits financial, operational, or 
     compliance weaknesses ranging from moderately severe to 
     unsatisfactory, or is not adequately capitalized (as defined 
     in section 38) at the beginning of an assessment period, the 
     amount of any credit allowed under this paragraph against the 
     assessment on that depository institution for such period may 
     not exceed the amount calculated by applying to that 
     depository institution the average assessment rate on all 
     insured depository institutions for such assessment period.
       ``(vi) Predecessor defined.--For purposes of this 
     paragraph, the term `predecessor', when used with respect to 
     any insured depository institution, includes any other 
     insured depository institution acquired by or merged with 
     such insured depository institution.
       ``(B) On-going credit pool.--
       ``(i) In general.--In addition to the credit provided 
     pursuant to subparagraph (A) and subject to the limitation 
     contained in clause (v) of such subparagraph, the Corporation 
     shall, by regulation, establish an on-going system of credits 
     to be applied against future assessments under subsection 
     (b)(1) on the same basis as the dividends provided under 
     paragraph (2)(C).
       ``(ii) Limitation on credits under certain circumstances.--
     No credits may be awarded by the Corporation under this 
     subparagraph during any period in which--

       ``(I) the reserve ratio of the Deposit Insurance Fund is 
     less than the designated reserve ratio of such Fund; or
       ``(II) the reserve ratio of the Fund is less than 1.25 
     percent of the amount of estimated insured deposits.

       ``(iii) Criteria for determination.--In determining the 
     amounts of any assessment credits under this subparagraph, 
     the Board of Directors shall take into account the factors 
     for designating the reserve ratio under subsection (b)(3) and 
     the factors for setting assessments under subsection 
     (b)(2)(B).
       ``(4) Administrative review.--
       ``(A) In general.--The regulations prescribed under 
     paragraph (2)(D) and subparagraphs (A) and (B) of paragraph 
     (3) shall include provisions allowing an insured depository 
     institution a reasonable opportunity to challenge 
     administratively the amount of the credit or dividend 
     determined under paragraph (2) or (3) for such institution.
       ``(B) Administrative review.--Any review under subparagraph 
     (A) of any determination of the Corporation under paragraph 
     (2) or (3) shall be final and not subject to judicial 
     review.''.
       (b) Definition of Reserve Ratio.--Section 3(y) of the 
     Federal Deposit Insurance Act (12 U.S.C. 1813(y)) (as amended 
     by section 4005(b) of this subtitle) is amended by adding at 
     the end the following new paragraph:
       ``(3) Reserve ratio.--The term `reserve ratio', when used 
     with regard to the Deposit Insurance Fund other than in 
     connection with a reference to the designated reserve ratio, 
     means the ratio of the net worth of the Deposit Insurance 
     Fund to the value of the aggregate estimated insured 
     deposits.''.

     SEC. 4008. DEPOSIT INSURANCE FUND RESTORATION PLANS.

       Section 7(b)(3) of the Federal Deposit Insurance Act (12 
     U.S.C. 1817(b)(3)) (as amended by section 4005(a) of this 
     subtitle) is amended by adding at the end the following new 
     subparagraph:
       ``(E) Dif restoration plans.--
       ``(i) In general.--Whenever--

       ``(I) the Corporation projects that the reserve ratio of 
     the Deposit Insurance Fund will, within 6 months of such 
     determination, fall below the minimum amount specified in 
     subparagraph (B)(ii) for the designated reserve ratio; or
       ``(II) the reserve ratio of the Deposit Insurance Fund 
     actually falls below the minimum amount specified in 
     subparagraph (B)(ii) for the designated reserve ratio without 
     any determination under subclause (I) having been made,

     the Corporation shall establish and implement a Deposit 
     Insurance Fund restoration plan within 90 days that meets the 
     requirements of clause (ii) and such other conditions as the 
     Corporation determines to be appropriate.
       ``(ii) Requirements of restoration plan.--A Deposit 
     Insurance Fund restoration plan meets the requirements of 
     this clause if the plan provides that the reserve ratio of 
     the Fund will meet or exceed the minimum amount specified in 
     subparagraph (B)(ii) for the designated reserve ratio before 
     the end of the 10-year period beginning upon the 
     implementation of the plan.
       ``(iii) Restriction on assessment credits.--As part of any 
     restoration plan under this subparagraph, the Corporation may 
     elect to restrict the application of assessment credits 
     provided under subsection (e)(3) for any period that the plan 
     is in effect.
       ``(iv) Limitation on restriction.--Notwithstanding clause 
     (iii), while any restoration plan under this subparagraph is 
     in effect, the Corporation shall apply credits provided to an 
     insured depository institution under subsection (e)(3) 
     against any assessment imposed on the institution for any 
     assessment period in an amount equal to the lesser of--

       ``(I) the amount of the assessment; or
       ``(II) the amount equal to 3 basis points of the 
     institution's assessment base.

       ``(v) Transparency.--Not more than 30 days after the 
     Corporation establishes and implements a restoration plan 
     under clause (i), the Corporation shall publish in the 
     Federal Register a detailed analysis of the factors 
     considered and the basis for the actions taken with regard to 
     the plan.''.

     SEC. 4009. REGULATIONS REQUIRED.

       (a) In General.--Not later than 270 days after the date of 
     the enactment of this Act, the Board of Directors of the 
     Federal Deposit Insurance Corporation shall prescribe final 
     regulations, after notice and opportunity for comment--
       (1) designating the reserve ratio for the Deposit Insurance 
     Fund in accordance with section 7(b)(3) of the Federal 
     Deposit Insurance Act (as amended by section 4005 of this 
     subtitle);
       (2) implementing increases in deposit insurance coverage in 
     accordance with the amendments made by section 4003 of this 
     subtitle;
       (3) implementing the dividend requirement under section 
     7(e)(2) of the Federal Deposit Insurance Act (as amended by 
     section 4007 of this subtitle);
       (4) implementing the 1-time assessment credit to certain 
     insured depository institutions in accordance with section 
     7(e)(3) of the Federal Deposit Insurance Act, as amended by 
     section 4007 of this subtitle, including the qualifications 
     and procedures under which the Corporation would apply 
     assessment credits; and
       (5) providing for assessments under section 7(b) of the 
     Federal Deposit Insurance Act, as amended by this subtitle.
       (b) Rule of Construction.--No provision of this subtitle or 
     any amendment made by this subtitle shall be construed as 
     affecting the authority of the Corporation to set or collect 
     deposit insurance assessments before the effective date of 
     the final regulations prescribed under subsection (a).

     SEC. 4010. STUDIES OF FDIC STRUCTURE AND EXPENSES AND CERTAIN 
                   ACTIVITIES AND FURTHER POSSIBLE CHANGES TO 
                   DEPOSIT INSURANCE SYSTEM.

       (a) Study by Comptroller General.--
       (1) Study required.--The Comptroller General shall conduct 
     a study of the following issues:
       (A) The efficiency and effectiveness of the administration 
     of the prompt corrective action program under section 38 of 
     the Federal Deposit Insurance Act by the Federal banking 
     agencies (as defined in section 3 of such Act), including the 
     degree of effectiveness of such agencies in identifying 
     troubled depository institutions and taking effective action 
     with respect to such institutions, and the degree of accuracy 
     of the risk assessments made by the Corporation.
       (B) The appropriateness of the organizational structure of 
     the Federal Deposit Insurance Corporation for the mission of 
     the Corporation taking into account--
       (i) the current size and complexity of the business of 
     insured depository institutions (as such term is defined in 
     section 3 of the Federal Deposit Insurance Act);
       (ii) the extent to which the organizational structure 
     contributes to or reduces operational inefficiencies that 
     increase operational costs; and
       (iii) the effectiveness of internal controls.
       (2) Report to the congress.--The Comptroller General shall 
     submit a report to the Congress before the end of the 1-year 
     period beginning on the date of the enactment of this Act 
     containing the findings and conclusions of the Comptroller 
     General with respect to the study required under paragraph 
     (1) together with such recommendations for legislative or 
     administrative action as the Comptroller General may 
     determine to be appropriate.
       (b) Study of Further Possible Changes to Deposit Insurance 
     System.--
       (1) Study required.--The Board of Directors of the Federal 
     Deposit Insurance Corporation and the National Credit Union 
     Administration Board shall each conduct a study of the 
     following:
       (A) The feasibility of establishing a voluntary deposit 
     insurance system for deposits in excess of the maximum amount 
     of deposit insurance for any depositor and the potential 
     benefits and the potential adverse consequences that may 
     result from the establishment of any such system.
       (B) The feasibility of privatizing all deposit insurance at 
     insured depository institutions and insured credit unions.
       (2) Report.--Before the end of the 1-year period beginning 
     on the date of the enactment of this Act, the Board of 
     Directors of the Federal Deposit Insurance Corporation

[[Page H10592]]

     and the National Credit Union Administration Board shall each 
     submit a report to the Congress on the study required under 
     paragraph (1) containing the findings and conclusions of the 
     reporting agency together with such recommendations for 
     legislative or administrative changes as the agency may 
     determine to be appropriate.
       (c) Study Regarding Appropriate Deposit Base in Designating 
     Reserve Ratio.--
       (1) Study required.--The Federal Deposit Insurance 
     Corporation shall conduct a study of the feasibility of using 
     actual domestic deposits rather than estimated insured 
     deposits in calculating the reserve ratio of the Deposit 
     Insurance Fund and designating a reserve ratio for such Fund.
       (2) Report.--The Federal Deposit Insurance Corporation 
     shall submit a report to the Congress before the end of the 
     1-year period beginning on the date of the enactment of this 
     Act containing the findings and conclusions of the 
     Corporation with respect to the study required under 
     paragraph (1) together with such recommendations for 
     legislative or administrative action as the Board of 
     Directors of the Corporation may determine to be appropriate.
       (d) Study of Reserve Methodology and Accounting for Loss.--
       (1) Study required.--The Federal Deposit Insurance 
     Corporation shall conduct a study of the reserve methodology 
     and loss accounting used by the Corporation during the period 
     beginning on January 1, 1992, and ending December 31, 2004, 
     with respect to insured depository institutions in a troubled 
     condition (as defined in the regulations prescribed pursuant 
     to section 32(f) of the Federal Deposit Insurance Act). The 
     Corporation shall obtain comments on the design of the study 
     from the Comptroller General.
       (2) Factors to be included.--In conducting the study 
     pursuant to paragraph (1), the Federal Deposit Insurance 
     Corporation shall--
       (A) consider the overall effectiveness and accuracy of the 
     methodology used by the Corporation for establishing and 
     maintaining reserves and estimating and accounting for losses 
     at insured depository institutions, during the period 
     described in such paragraph;
       (B) consider the appropriateness and reliability of 
     information and criteria used by the Corporation in 
     determining--
       (i) whether an insured depository institution was in a 
     troubled condition; and
       (ii) the amount of any loss anticipated at such 
     institution;
       (C) analyze the actual historical loss experience over the 
     period described in paragraph (1) and the causes of the 
     exceptionally high rate of losses experienced by the 
     Corporation in the final 3 years of that period; and
       (D) rate the efforts of the Corporation to reduce losses in 
     such 3-year period to minimally acceptable levels and to 
     historical levels.
       (3) Report required.--The Board of Directors of the Federal 
     Deposit Insurance Corporation shall submit a report to the 
     Congress before the end of the 6-month period beginning on 
     the date of the enactment of this Act, containing the 
     findings and conclusions of the Corporation with respect to 
     the study required under paragraph (1), together with such 
     recommendations for legislative or administrative action as 
     the Board of Directors may determine to be appropriate. 
     Before submitting the report to Congress, the Board of 
     Directors shall provide a draft of the report to the 
     Comptroller General for comment.

     SEC. 4011. BI-ANNUAL FDIC SURVEY AND REPORT ON INCREASING THE 
                   DEPOSIT BASE BY ENCOURAGING USE OF DEPOSITORY 
                   INSTITUTIONS BY THE UNBANKED.

       The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) 
     is amended by adding at the end the following new section:

     ``SEC. 49. BI-ANNUAL FDIC SURVEY AND REPORT ON ENCOURAGING 
                   USE OF DEPOSITORY INSTITUTIONS BY THE UNBANKED.

       ``(a) Survey Required.--
       ``(1) In general.--The Corporation shall conduct a bi-
     annual survey on efforts by insured depository institutions 
     to bring those individuals and families who have rarely, if 
     ever, held a checking account, a savings account or other 
     type of transaction or check cashing account at an insured 
     depository institution (hereafter in this section referred to 
     as the `unbanked') into the conventional finance system.
       ``(2) Factors and questions to consider.--In conducting the 
     survey, the Corporation shall take the following factors and 
     questions into account:
       ``(A) To what extent do insured depository institutions 
     promote financial education and financial literacy outreach?
       ``(B) Which financial education efforts appear to be the 
     most effective in bringing `unbanked' individuals and 
     families into the conventional finance system?
       ``(C) What efforts are insured institutions making at 
     converting `unbanked' money order, wire transfer, and 
     international remittance customers into conventional account 
     holders?
       ``(D) What cultural, language and identification issues as 
     well as transaction costs appear to most prevent `unbanked' 
     individuals from establishing conventional accounts?
       ``(E) What is a fair estimate of the size and worth of the 
     `unbanked' market in the United States?
       ``(b) Reports.--The Chairperson of the Board of Directors 
     shall submit a bi-annual report to the Committee on Financial 
     Services of the House of Representatives and the Committee on 
     Banking, Housing, and Urban Affairs of the Senate containing 
     the Corporation's findings and conclusions with respect to 
     the survey conducted pursuant to subsection (a), together 
     with such recommendations for legislative or administrative 
     action as the Chairperson may determine to be appropriate.''.

     SEC. 4012. TECHNICAL AND CONFORMING AMENDMENTS TO THE FEDERAL 
                   DEPOSIT INSURANCE ACT RELATING TO THE MERGER OF 
                   THE BIF AND SAIF.

       (a) In General.--The Federal Deposit Insurance Act (12 
     U.S.C. 1811 et seq.) is amended--
       (1) in section 3 (12 U.S.C. 1813)--
       (A) by striking subparagraph (B) of subsection (a)(1) and 
     inserting the following new subparagraph:
       ``(B) includes any former savings association.''; and
       (B) by striking paragraph (1) of subsection (y) (as so 
     designated by section 4005(b) of this subtitle) and inserting 
     the following new paragraph:
       ``(1) Deposit insurance fund.--The term `Deposit Insurance 
     Fund' means the Deposit Insurance Fund established under 
     section 11(a)(4).'';
       (2) in section 5(b)(5) (12 U.S.C. 1815(b)(5)), by striking 
     ``the Bank Insurance Fund or the Savings Association 
     Insurance Fund,'' and inserting ``the Deposit Insurance 
     Fund,'';
       (3) in section 5(c)(4), by striking ``deposit insurance 
     fund'' and inserting ``Deposit Insurance Fund'';
       (4) in section 5(d) (12 U.S.C. 1815(d)), by striking 
     paragraphs (2) and (3) (and any funds resulting from the 
     application of such paragraph (2) prior to its repeal shall 
     be deposited into the general fund of the Deposit Insurance 
     Fund);
       (5) in section 5(d)(1) (12 U.S.C. 1815(d)(1))--
       (A) in subparagraph (A), by striking ``reserve ratios in 
     the Bank Insurance Fund and the Savings Association Insurance 
     Fund as required by section 7'' and inserting ``the reserve 
     ratio of the Deposit Insurance Fund'';
       (B) by striking subparagraph (B) and inserting the 
     following:
       ``(2) Fee credited to the deposit insurance fund.--The fee 
     paid by the depository institution under paragraph (1) shall 
     be credited to the Deposit Insurance Fund.'';
       (C) by striking ``(1) UNINSURED INSTITUTIONS.--''; and
       (D) by redesignating subparagraphs (A) and (C) as 
     paragraphs (1) and (3), respectively, and moving the left 
     margins 2 ems to the left;
       (6) in section 5(e) (12 U.S.C. 1815(e))--
       (A) in paragraph (5)(A), by striking ``Bank Insurance Fund 
     or the Savings Association Insurance Fund'' and inserting 
     ``Deposit Insurance Fund'';
       (B) by striking paragraph (6); and
       (C) by redesignating paragraphs (7), (8), and (9) as 
     paragraphs (6), (7), and (8), respectively;
       (7) in section 6(5) (12 U.S.C. 1816(5)), by striking ``Bank 
     Insurance Fund or the Savings Association Insurance Fund'' 
     and inserting ``Deposit Insurance Fund'';
       (8) in section 7(b) (12 U.S.C. 1817(b))--
       (A) in paragraph (1)(C), by striking ``deposit insurance 
     fund'' each place that term appears and inserting ``Deposit 
     Insurance Fund'';
       (B) in paragraph (1)(D), by striking ``each deposit 
     insurance fund'' and inserting ``the Deposit Insurance 
     Fund''; and
       (C) in paragraph (5) (as so redesignated by section 
     4004(e)(4) of this subtitle)--
       (i) by striking ``any such assessment'' and inserting ``any 
     such assessment is necessary'';
       (ii) by striking subparagraph (B);
       (iii) in subparagraph (A)--

       (I) by striking ``(A) is necessary--'';
       (II) by striking ``Bank Insurance Fund members'' and 
     inserting ``insured depository institutions''; and
       (III) by redesignating clauses (i), (ii), and (iii) as 
     subparagraphs (A), (B), and (C), respectively, and moving the 
     margins 2 ems to the left; and

       (iv) in subparagraph (C) (as so redesignated)--

       (I) by inserting ``that'' before ``the Corporation''; and
       (II) by striking ``; and'' and inserting a period;

       (9) in section 7(j)(7)(F) (12 U.S.C. 1817(j)(7)(F)), by 
     striking ``Bank Insurance Fund or the Savings Association 
     Insurance Fund'' and inserting ``Deposit Insurance Fund'';
       (10) in section 8(t)(2)(C) (12 U.S.C. 1818(t)(2)(C)), by 
     striking ``deposit insurance fund'' and inserting ``Deposit 
     Insurance Fund'';
       (11) in section 11 (12 U.S.C. 1821)--
       (A) by striking ``deposit insurance fund'' each place that 
     term appears and inserting ``Deposit Insurance Fund'';
       (B) by striking paragraph (4) of subsection (a) and 
     inserting the following new paragraph:
       ``(4) Deposit insurance fund.--
       ``(A) Establishment.--There is established the Deposit 
     Insurance Fund, which the Corporation shall--
       ``(i) maintain and administer;

[[Page H10593]]

       ``(ii) use to carry out its insurance purposes, in the 
     manner provided by this subsection; and
       ``(iii) invest in accordance with section 13(a).
       ``(B) Uses.--The Deposit Insurance Fund shall be available 
     to the Corporation for use with respect to insured depository 
     institutions the deposits of which are insured by the Deposit 
     Insurance Fund.
       ``(C) Limitation on use.--Notwithstanding any provision of 
     law other than section 13(c)(4)(G), the Deposit Insurance 
     Fund shall not be used in any manner to benefit any 
     shareholder or affiliate (other than an insured depository 
     institution that receives assistance in accordance with the 
     provisions of this Act) of--
       ``(i) any insured depository institution for which the 
     Corporation has been appointed conservator or receiver, in 
     connection with any type of resolution by the Corporation;
       ``(ii) any other insured depository institution in default 
     or in danger of default, in connection with any type of 
     resolution by the Corporation; or
       ``(iii) any insured depository institution, in connection 
     with the provision of assistance under this section or 
     section 13 with respect to such institution, except that this 
     clause shall not prohibit any assistance to any insured 
     depository institution that is not in default, or that is not 
     in danger of default, that is acquiring (as defined in 
     section 13(f)(8)(B)) another insured depository institution.
       ``(D) Deposits.--All amounts assessed against insured 
     depository institutions by the Corporation shall be deposited 
     into the Deposit Insurance Fund.'';
       (C) by striking paragraphs (5), (6), and (7) of subsection 
     (a); and
       (D) by redesignating paragraph (8) of subsection (a) as 
     paragraph (5);
       (12) in section 11(f)(1) (12 U.S.C. 1821(f)(1)), by 
     striking ``, except that--'' and all that follows through the 
     end of the paragraph and inserting a period;
       (13) in section 11(i)(3) (12 U.S.C. 1821(i)(3))--
       (A) by striking subparagraph (B);
       (B) by redesignating subparagraph (C) as subparagraph (B); 
     and
       (C) in subparagraph (B) (as so redesignated), by striking 
     ``subparagraphs (A) and (B)'' and inserting ``subparagraph 
     (A)'';
       (14) in section 11(p)(2)(B) (12 U.S.C. 1821(p)(2)(B)), by 
     striking ``institution, any'' and inserting ``institution, 
     the'';
       (15) in section 11A(a) (12 U.S.C. 1821a(a))--
       (A) in paragraph (2), by striking ``liabilities.--'' and 
     all that follows through ``Except'' and inserting 
     ``liabilities.--Except'';
       (B) by striking paragraph (2)(B); and
       (C) in paragraph (3), by striking ``the Bank Insurance 
     Fund, the Savings Association Insurance Fund,'' and inserting 
     ``the Deposit Insurance Fund'';
       (16) in section 11A(b) (12 U.S.C. 1821a(b)), by striking 
     paragraph (4);
       (17) in section 11A(f) (12 U.S.C. 1821a(f)), by striking 
     ``Savings Association Insurance Fund'' and inserting 
     ``Deposit Insurance Fund'';
       (18) in section 12(f)(4)(E)(iv) (12 U.S.C. 
     1822(f)(4)(E)(iv)), by striking ``Federal deposit insurance 
     funds'' and inserting ``the Deposit Insurance Fund (or any 
     predecessor deposit insurance fund)'';
       (19) in section 13 (12 U.S.C. 1823)--
       (A) by striking ``deposit insurance fund'' each place that 
     term appears and inserting ``Deposit Insurance Fund'';
       (B) in subsection (a)(1), by striking ``Bank Insurance 
     Fund, the Savings Association Insurance Fund,'' and inserting 
     ``Deposit Insurance Fund'';
       (C) in subsection (c)(4)(E)--
       (i) in the subparagraph heading, by striking ``funds'' and 
     inserting ``fund''; and
       (ii) in clause (i), by striking ``any insurance fund'' and 
     inserting ``the Deposit Insurance Fund'';
       (D) in subsection (c)(4)(G)(ii)--
       (i) by striking ``appropriate insurance fund'' and 
     inserting ``Deposit Insurance Fund'';
       (ii) by striking ``the members of the insurance fund (of 
     which such institution is a member)'' and inserting ``insured 
     depository institutions'';
       (iii) by striking ``each member's'' and inserting ``each 
     insured depository institution's''; and
       (iv) by striking ``the member's'' each place that term 
     appears and inserting ``the institution's'';
       (E) in subsection (c), by striking paragraph (11);
       (F) in subsection (h), by striking ``Bank Insurance Fund'' 
     and inserting ``Deposit Insurance Fund'';
       (G) in subsection (k)(4)(B)(i), by striking ``Savings 
     Association Insurance Fund member'' and inserting ``savings 
     association''; and
       (H) in subsection (k)(5)(A), by striking ``Savings 
     Association Insurance Fund members'' and inserting ``savings 
     associations'';
       (20) in section 14(a) (12 U.S.C. 1824(a)), in the 5th 
     sentence--
       (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 
     Deposit Insurance Fund'';
       (21) in section 14(b) (12 U.S.C. 1824(b)), by striking 
     ``Bank Insurance Fund or Savings Association Insurance Fund'' 
     and inserting ``Deposit Insurance Fund'';
       (22) in section 14(c) (12 U.S.C. 1824(c)), by striking 
     paragraph (3);
       (23) in section 14(d) (12 U.S.C. 1824(d))--
       (A) by striking ``Bank Insurance Fund member'' each place 
     that term appears and inserting ``insured depository 
     institution'';
       (B) by striking ``Bank Insurance Fund members'' each place 
     that term appears and inserting ``insured depository 
     institutions'';
       (C) by striking ``Bank Insurance Fund'' each place that 
     term appears (other than in connection with a reference to a 
     term amended by subparagraph (A) or (B) of this paragraph) 
     and inserting ``Deposit Insurance Fund'';
       (D) by striking the subsection heading and inserting the 
     following:
       ``(d) Borrowing for the Deposit Insurance Fund From Insured 
     Depository Institutions.--'';
       (E) in paragraph (3), in the paragraph heading, by striking 
     ``bif'' and inserting ``the deposit insurance fund''; and
       (F) in paragraph (5), in the paragraph heading, by striking 
     ``bif members'' and inserting ``insured depository 
     institutions'';
       (24) in section 14 (12 U.S.C. 1824), by adding at the end 
     the following new subsection:
       ``(e) Borrowing for the Deposit Insurance Fund From Federal 
     Home Loan Banks.--
       ``(1) In general.--The Corporation may borrow from the 
     Federal home loan banks, with the concurrence of the Federal 
     Housing Finance Board, such funds as the Corporation 
     considers necessary for the use of the Deposit Insurance 
     Fund.
       ``(2) Terms and conditions.--Any loan from any Federal home 
     loan bank under paragraph (1) to the Deposit Insurance Fund 
     shall--
       ``(A) bear a rate of interest of not less than the current 
     marginal cost of funds to that bank, taking into account the 
     maturities involved;
       ``(B) be adequately secured, as determined by the Federal 
     Housing Finance Board;
       ``(C) be a direct liability of the Deposit Insurance Fund; 
     and
       ``(D) be subject to the limitations of section 15(c).'';
       (25) in section 15(c)(5) (12 U.S.C. 1825(c)(5))--
       (A) by striking ``the Bank Insurance Fund or Savings 
     Association Insurance Fund, respectively'' each place that 
     term appears and inserting ``the Deposit Insurance Fund''; 
     and
       (B) in subparagraph (B), by striking ``the Bank Insurance 
     Fund or the Savings Association Insurance Fund, 
     respectively'' and inserting ``the Deposit Insurance Fund'';
       (26) in section 17(a) (12 U.S.C. 1827(a))--
       (A) in the subsection heading, by striking ``BIF, SAIF,'' 
     and inserting ``the Deposit Insurance Fund''; and
       (B) in paragraph (1)--
       (i) by striking ``the Bank Insurance Fund, the Savings 
     Association Insurance Fund,'' each place that term appears 
     and inserting ``the Deposit Insurance Fund''; and
       (ii) in subparagraph (D), by striking ``each insurance 
     fund'' and inserting ``the Deposit Insurance Fund'';
       (27) in section 17(d) (12 U.S.C. 1827(d)), by striking ``, 
     the Bank Insurance Fund, the Savings Association Insurance 
     Fund,'' each place that term appears and inserting ``the 
     Deposit Insurance Fund'';
       (28) in section 18(m)(3) (12 U.S.C. 1828(m)(3))--
       (A) by striking ``Savings Association Insurance Fund'' in 
     the 1st sentence of subparagraph (A) and inserting ``Deposit 
     Insurance Fund'';
       (B) by striking ``Savings Association Insurance Fund 
     member'' in the last sentence of subparagraph (A) and 
     inserting ``savings association''; and
       (C) by striking ``Savings Association Insurance Fund or the 
     Bank Insurance Fund'' in subparagraph (C) and inserting 
     ``Deposit Insurance Fund'';
       (29) in section 18(o) (12 U.S.C. 1828(o)), by striking 
     ``deposit insurance funds'' and ``deposit insurance fund'' 
     each place those terms appear and inserting ``Deposit 
     Insurance Fund'';
       (30) in section 18(p) (12 U.S.C. 1828(p)), by striking 
     ``deposit insurance funds'' and inserting ``Deposit Insurance 
     Fund'';
       (31) in section 24 (12 U.S.C. 1831a)--
       (A) in subsections (a)(1) and (d)(1)(A), by striking 
     ``appropriate deposit insurance fund'' each place that term 
     appears and inserting ``Deposit Insurance Fund'';
       (B) in subsection (e)(2)(A), by striking ``risk to'' and 
     all that follows through the period and inserting ``risk to 
     the Deposit Insurance Fund.''; and
       (C) in subsections (e)(2)(B)(ii) and (f)(6)(B), by striking 
     ``the insurance fund of which such bank is a member'' each 
     place that term appears and inserting ``the Deposit Insurance 
     Fund'';
       (32) in section 28 (12 U.S.C. 1831e), by striking 
     ``affected deposit insurance fund'' each place that term 
     appears and inserting ``Deposit Insurance Fund'';
       (33) by striking section 31 (12 U.S.C. 1831h);
       (34) in section 36(i)(3) (12 U.S.C. 1831m(i)(3)), by 
     striking ``affected deposit insurance fund'' and inserting 
     ``Deposit Insurance Fund'';
       (35) in section 37(a)(1)(C) (12 U.S.C. 1831n(a)(1)(C)), by 
     striking ``insurance funds'' and inserting ``Deposit 
     Insurance Fund'';
       (36) in section 38 (12 U.S.C. 1831o), by striking ``the 
     deposit insurance fund'' each place that term appears and 
     inserting ``the Deposit Insurance Fund'';
       (37) in section 38(a) (12 U.S.C. 1831o(a)), in the 
     subsection heading, by striking ``Funds'' and inserting 
     ``Fund'';
       (38) in section 38(k) (12 U.S.C. 1831o(k))--

[[Page H10594]]

       (A) in paragraph (1), by striking ``a deposit insurance 
     fund'' and inserting ``the Deposit Insurance Fund'';
       (B) in paragraph (2), by striking ``A deposit insurance 
     fund'' and inserting ``The Deposit Insurance Fund''; and
       (C) in paragraphs (2)(A) and (3)(B), by striking ``the 
     deposit insurance fund's outlays'' each place that term 
     appears and inserting ``the outlays of the Deposit Insurance 
     Fund''; and
       (39) in section 38(o) (12 U.S.C. 1831o(o))--
       (A) by striking ``associations.--'' and all that follows 
     through ``Subsections (e)(2)'' and inserting 
     ``associations.--Subsections (e)(2)'';
       (B) by redesignating subparagraphs (A), (B), and (C) as 
     paragraphs (1), (2), and (3), respectively, and moving the 
     margins 2 ems to the left; and
       (C) in paragraph (1) (as so redesignated), by redesignating 
     clauses (i) and (ii) as subparagraphs (A) and (B), 
     respectively, and moving the margins 2 ems to the left.
       (b) Effective Date.--This section and the amendments made 
     by this section shall take effect on the first day of the 
     first calendar quarter that begins after the end of the 90-
     day period beginning on the date of the enactment of this 
     Act.

     SEC. 4013. OTHER TECHNICAL AND CONFORMING AMENDMENTS RELATING 
                   TO THE MERGER OF THE BIF AND SAIF.

       (a) Section 5136 of the Revised Statutes.--The paragraph 
     designated the ``Eleventh'' of section 5136 of the Revised 
     Statutes of the United States (12 U.S.C. 24) is amended in 
     the 5th sentence, by striking ``affected deposit insurance 
     fund'' and inserting ``Deposit Insurance Fund''.
       (b) Investments Promoting Public Welfare; Limitations on 
     Aggregate Investments.--The 23d undesignated paragraph of 
     section 9 of the Federal Reserve Act (12 U.S.C. 338a) is 
     amended in the 4th sentence, by striking ``affected deposit 
     insurance fund'' and inserting ``Deposit Insurance Fund''.
       (c) Advances to Critically Undercapitalized Depository 
     Institutions.--Section 10B(b)(3)(A)(ii) of the Federal 
     Reserve Act (12 U.S.C. 347b(b)(3)(A)(ii)) is amended by 
     striking ``any deposit insurance fund in'' and inserting 
     ``the Deposit Insurance Fund of''.
       (d) Amendments to the Balanced Budget and Emergency Deficit 
     Control Act of 1985.--Section 255(g)(1)(A) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 
     905(g)(1)(A)) is amended--
       (1) by striking ``Bank Insurance Fund'' and inserting 
     ``Deposit Insurance Fund''; and
       (2) by striking ``Federal Deposit Insurance Corporation, 
     Savings Association Insurance Fund (51-4066-0-3-373);''.
       (e) Amendments to the Federal Home Loan Bank Act.--The 
     Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) is 
     amended--
       (1) in section 11(k) (12 U.S.C. 1431(k))--
       (A) in the subsection heading, by striking ``SAIF'' and 
     inserting ``the Deposit Insurance Fund''; and
       (B) by striking ``Savings Association Insurance Fund'' each 
     place such term appears and inserting ``Deposit Insurance 
     Fund'';
       (2) in section 21 (12 U.S.C. 1441)--
       (A) in subsection (f)(2), by striking ``, except that'' and 
     all that follows through the end of the paragraph and 
     inserting a period; and
       (B) in subsection (k), by striking paragraph (4);
       (3) in section 21A(b)(4)(B) (12 U.S.C. 1441a(b)(4)(B)), by 
     striking ``affected deposit insurance fund'' and inserting 
     ``Deposit Insurance Fund'';
       (4) in section 21A(b)(6)(B) (12 U.S.C. 1441a(b)(6)(B))--
       (A) in the subparagraph heading, by striking ``Saif-insured 
     banks'' and inserting ``Charter conversions''; and
       (B) by striking ``Savings Association Insurance Fund 
     member'' and inserting ``savings association'';
       (5) in section 21A(b)(10)(A)(iv)(II) (12 U.S.C. 
     1441a(b)(10)(A)(iv)(II)), by striking ``Savings Association 
     Insurance Fund'' and inserting ``Deposit Insurance Fund'';
       (6) in section 21A(n)(6)(E)(iv) (12 U.S.C. 
     1441(n)(6)(E)(iv)), by striking ``Federal deposit insurance 
     funds'' and inserting ``the Deposit Insurance Fund'';
       (7) in section 21B(e) (12 U.S.C. 1441b(e))--
       (A) in paragraph (5), by inserting ``as of the date of 
     funding'' after ``Savings Association Insurance Fund 
     members'' each place that term appears; and
       (B) by striking paragraphs (7) and (8); and
       (8) in section 21B(k) (12 U.S.C. 1441b(k))--
       (A) by inserting before the colon ``, the following 
     definitions shall apply'';
       (B) by striking paragraph (8); and
       (C) by redesignating paragraphs (9) and (10) as paragraphs 
     (8) and (9), respectively.
       (f) Amendments to the Home Owners' Loan Act.--The Home 
     Owners' Loan Act (12 U.S.C. 1461 et seq.) is amended--
       (1) in section 5 (12 U.S.C. 1464)--
       (A) in subsection (c)(5)(A), by striking ``that is a member 
     of the Bank Insurance Fund'';
       (B) in subsection (c)(6), by striking ``As used in this 
     subsection--'' and inserting ``For purposes of this 
     subsection, the following definitions shall apply:'';
       (C) in subsection (o)(1), by striking ``that is a Bank 
     Insurance Fund member'';
       (D) in subsection (o)(2)(A), by striking ``a Bank Insurance 
     Fund member until such time as it changes its status to a 
     Savings Association Insurance Fund member'' and inserting 
     ``insured by the Deposit Insurance Fund'';
       (E) in subsection (t)(5)(D)(iii)(II), by striking 
     ``affected deposit insurance fund'' and inserting ``Deposit 
     Insurance Fund'';
       (F) in subsection (t)(7)(C)(i)(I), by striking ``affected 
     deposit insurance fund'' and inserting ``Deposit Insurance 
     Fund''; and
       (G) in subsection (v)(2)(A)(i), by striking ``the Savings 
     Association Insurance Fund'' and inserting ``or the Deposit 
     Insurance Fund''; and
       (2) in section 10 (12 U.S.C. 1467a)--
       (A) in subsection (c)(6)(D), by striking ``this title'' and 
     inserting ``this Act'';
       (B) in subsection (e)(1)(B), by striking ``Savings 
     Association Insurance Fund or Bank Insurance Fund'' and 
     inserting ``Deposit Insurance Fund'';
       (C) in subsection (e)(2), by striking ``Savings Association 
     Insurance Fund or the Bank Insurance Fund'' and inserting 
     ``Deposit Insurance Fund'';
       (D) in subsection (e)(4)(B), by striking ``subsection (1)'' 
     and inserting ``subsection (l)'';
       (E) in subsection (g)(3)(A), by striking ``(5) of this 
     section'' and inserting ``(5) of this subsection'';
       (F) in subsection (i), by redesignating paragraph (5) as 
     paragraph (4);
       (G) in subsection (m)(3), by striking subparagraph (E) and 
     by redesignating subparagraphs (F), (G), and (H) as 
     subparagraphs (E), (F), and (G), respectively;
       (H) in subsection (m)(7)(A), by striking ``during period'' 
     and inserting ``during the period''; and
       (I) in subsection (o)(3)(D), by striking ``sections 5(s) 
     and (t) of this Act'' and inserting ``subsections (s) and (t) 
     of section 5''.
       (g) Amendments to the National Housing Act.--The National 
     Housing Act (12 U.S.C. 1701 et seq.) is amended--
       (1) in section 317(b)(1)(B) (12 U.S.C. 1723i(b)(1)(B)), by 
     striking ``Bank Insurance Fund for banks or through the 
     Savings Association Insurance Fund for savings associations'' 
     and inserting ``Deposit Insurance Fund''; and
       (2) in section 536(b)(1)(B)(ii) (12 U.S.C. 1735f-
     14(b)(1)(B)(ii)), by striking ``Bank Insurance Fund for banks 
     and through the Savings Association Insurance Fund for 
     savings associations'' and inserting ``Deposit Insurance 
     Fund''.
       (h) Amendments to the Financial Institutions Reform, 
     Recovery, and Enforcement Act of 1989.--The Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989 
     (12 U.S.C. 1811 note) is amended--
       (1) in section 951(b)(3)(B) (12 U.S.C. 1833a(b)(3)(B)), by 
     inserting ``and after the merger of such funds, the Deposit 
     Insurance Fund,'' after ``the Savings Association Insurance 
     Fund,''; and
       (2) in section 1112(c)(1)(B) (12 U.S.C. 3341(c)(1)(B)), by 
     striking ``Bank Insurance Fund, the Savings Association 
     Insurance Fund,'' and inserting ``Deposit Insurance Fund''.
       (i) Amendment to the Bank Holding Company Act of 1956.--The 
     Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is 
     amended--
       (1) in section 2(j)(2) (12 U.S.C. 1841(j)(2)), by striking 
     ``Savings Association Insurance Fund'' and inserting 
     ``Deposit Insurance Fund''; and
       (2) in section 3(d)(1)(D)(iii) (12 U.S.C. 
     1842(d)(1)(D)(iii)), by striking ``appropriate deposit 
     insurance fund'' and inserting ``Deposit Insurance Fund''.
       (j) Amendments to the Gramm-Leach-Bliley Act.--Section 114 
     of the Gramm-Leach-Bliley Act (12 U.S.C. 1828a) is amended by 
     striking ``any Federal deposit insurance fund'' in subsection 
     (a)(1)(B), paragraphs (2)(B) and (4)(B) of subsection (b), 
     and subsection (c)(1)(B), each place that term appears and 
     inserting ``the Deposit Insurance Fund''.
       (k) Effective Date.--This section and the amendments made 
     by this section shall take effect on the first day of the 
     first calendar quarter that begins after the end of the 90-
     day period beginning on the date of the enactment of this 
     Act.

                   Subtitle B--FHA Asset Disposition

     SEC. 4101. SHORT TITLE.

       This subtitle may be cited as the ``FHA Asset Disposition 
     Act of 2005''.

     SEC. 4102. DEFINITIONS.

       For purposes of this subtitle, the following definitions 
     shall apply:
       (1) The term ``affordability requirements'' means any 
     requirements or restrictions imposed by the Secretary, at the 
     time of sale, on a multifamily real property or a multifamily 
     loan, such as use restrictions, rent restrictions, and 
     rehabilitation requirements.
       (2) The term ``discount sale'' means the sale of a 
     multifamily real property in a transaction, such as a 
     negotiated sale, in which the sale price is lower than the 
     property market value and is set outside of a competitive 
     bidding process that has no affordability requirements.
       (3) The term ``discount loan sale'' means the sale of a 
     multifamily loan in a transaction, such as a negotiated sale, 
     in which the sale price is lower than the loan market value 
     and is set outside of a competitive bidding process that has 
     no affordability requirements.
       (4) The term ``loan market value'' means the value of a 
     multifamily loan, without taking into account any 
     affordability requirements.
       (5) The term ``multifamily real property'' means any rental 
     or cooperative housing

[[Page H10595]]

     project of 5 or more units owned by the Secretary that prior 
     to acquisition by the Secretary was security for a loan or 
     loans insured under title II of the National Housing Act.
       (6) The term ``multifamily loan'' means a loan held by the 
     Secretary and secured by a multifamily rental or cooperative 
     housing project of 5 or more units that was formerly insured 
     under title II of the National Housing Act.
       (7) The term ``property market value'' means the value of a 
     multifamily real property for its current use, without taking 
     into account any affordability requirements.
       (8) The term ``Secretary'' means the Secretary of Housing 
     and Urban Development.

     SEC. 4103. APPROPRIATED FUNDS REQUIREMENT FOR BELOW MARKET 
                   SALES.

       (a) Discount Sales.--Notwithstanding any other provision of 
     law, except for affordability requirements for the elderly 
     and disabled required by statute, disposition by the 
     Secretary of a multifamily real property during fiscal years 
     2006 through 2010 through a discount sale under sections 
     207(l) or 246 of the National Housing Act (12 U.S.C. 1713(l), 
     1715z-11), section 203 of the Housing and Community 
     Development Amendments of 1978 (12 U.S.C. 1701z-11), or 
     section 204 of the Departments of Veterans Affairs and 
     Housing and Urban Development, and Independent Agencies 
     Appropriations Act, 1997 (12 U.S.C. 1715z-11a), shall be 
     subject to the availability of appropriations to the extent 
     that the property value exceeds the sale proceeds. If the 
     multifamily real property is sold, during such fiscal years, 
     for an amount equal to or greater than the property market 
     value then the transaction is not subject to the availability 
     of appropriations.
       (b) Discount Loan Sales.--Notwithstanding any other 
     provision of law and in accordance with the Federal Credit 
     Reform Act of 1990 (2 U.S.C. 661 et seq.), a discount loan 
     sale during fiscal years 2006 through 2010 under section 
     207(k) of the National Housing Act (12 U.S.C. 1713(k)), 
     section 203(k) of the Housing and Community Development 
     Amendments of 1978 (12 U.S.C. 1701z-11(k)), or section 204(a) 
     of the Departments of Veterans Affairs and Housing and Urban 
     Development, and Independent Agencies Appropriations Act, 
     1997 (12 U.S.C. 1715z-11a(a)), shall be subject to the 
     availability of appropriations to the extent that the loan 
     value exceeds the sale proceeds. If the multifamily loan is 
     sold, during such fiscal years, for an amount equal to or 
     greater than the loan market value then the transaction is 
     not subject to the availability of appropriations.
       (c) Applicability.--This section shall not apply to any 
     transaction that formally commences within one year prior to 
     the enactment of this section.

     SEC. 4104. UP-FRONT GRANTS.

       (a) 1997 Act.--Section 204(a) of the Departments of 
     Veterans Affairs and Housing And Urban Development, and 
     Independent Agencies Appropriations Act, 1997 (12 U.S.C. 
     1715z-11a(a))) is amended by adding at the end the following 
     new sentence: ``A grant provided under this subsection during 
     fiscal years 2006 through 2010 shall be available only to the 
     extent that appropriations are made in advance for such 
     purposes and shall not be derived from the General Insurance 
     Fund.''.
       (b) 1978 Act.--Section 203(f)(4) of the Housing and 
     Community Development Amendments of 1978 (12 USC 1701z-
     11(f)(4)) is amended by adding at the end the following new 
     sentence: ``This paragraph shall be effective during fiscal 
     years 2006 through 2010 only to the extent that such budget 
     authority is made available for use under this paragraph in 
     advance in appropriation Acts.''.
       (c) Applicability.--The amendments made by this section 
     shall not apply to any transaction that formally commences 
     within one year prior to the enactment of this section.

                    TITLE V--COMMITTEE ON JUDICIARY

     SEC. 5001. TABLE OF CONTENTS.

                    TITLE V--COMMITTEE ON JUDICIARY

Sec. 5001. Table of contents.

                         Subtitle A--Visa Fees

Sec. 5101. Fees with respect to immigration services for intracompany 
              transferees.

              Subtitle B--Circuit and District Judgeships

Sec. 5201. Short title.
Sec. 5202. Circuit judges for the circuit courts of appeals.
Sec. 5203. District judges for the district courts.
Sec. 5204. Establishment of Article III court in the Virgin Islands.
Sec. 5205. Effective date.

                   Subtitle C--Bankruptcy Judgeships

Sec. 5301. Short title.
Sec. 5302. Authorization for additional bankruptcy judgeships.
Sec. 5303. Temporary bankruptcy judgeships.
Sec. 5304. Conversion of existing temporary bankruptcy judgeships.
Sec. 5305. General provisions.
Sec. 5306. Effective date.

                Subtitle D--Ninth Circuit Reorganization

Sec. 5401. Short title.
Sec. 5402. Definitions.
Sec. 5403. Number and composition of circuits.
Sec. 5404. Number of circuit judges.
Sec. 5405. Places of circuit court.
Sec. 5406. Assignment of circuit judges.
Sec. 5407. Election of assignment by senior judges.
Sec. 5408. Seniority of judges.
Sec. 5409. Application to cases.
Sec. 5410. Temporary assignment of circuit judges among circuits.
Sec. 5411. Temporary assignment of district judges among circuits.
Sec. 5412. Administration.
Sec. 5413. Effective date.

              Subtitle E--Authorization of Appropriations

Sec. 5501. Authorization of appropriations.

                         Subtitle A--Visa Fees

     SEC. 5101. FEES WITH RESPECT TO IMMIGRATION SERVICES FOR 
                   INTRACOMPANY TRANSFEREES.

       Section 214(c) of the Immigration and Nationality Act (8 
     U.S.C. 1184(c)) is amended by adding at the end the 
     following:
       ``(15)(A) The Secretary of State shall impose a fee on an 
     employer when an alien files an application abroad for a visa 
     authorizing initial admission to the United States as a 
     nonimmigrant described in section 101(a)(15)(L) in order to 
     be employed by the employer, if the alien is covered under a 
     blanket petition described in paragraph (2)(A).
       ``(B) The Secretary of Homeland Security shall impose a fee 
     on an employer filing a petition under paragraph (1) 
     initially to grant an alien nonimmigrant status described in 
     section 101(a)(15)(L) or to extend for the first time the 
     stay of an alien having such status.
       ``(C) The amount of the fee imposed under subparagraph (A) 
     or (B) shall be $1,500.
       ``(D) The fees imposed under subparagraphs (A) and (B) 
     shall only apply to principal aliens and not to spouses or 
     children who are accompanying or following to join such 
     principal aliens.
       ``(E) Fees collected under this paragraph shall be 
     deposited as offsetting receipts in the Treasury, and shall 
     not be available for expenditure until appropriated.
       ``(F)(i) An employer may not require an alien who is the 
     beneficiary of the visa or petition for which a fee is 
     imposed under this paragraph to reimburse, or otherwise 
     compensate, the employer for part or all of the cost of such 
     fee.
       ``(ii) Section 274A(g)(2) shall apply to a violation of 
     clause (i) in the same manner as it applies to a violation of 
     section 274A(g)(1).''.

              Subtitle B--Circuit and District Judgeships

     SEC. 5201. SHORT TITLE.

       This subtitle may be cited as the ``Federal Judgeship Act 
     of 2005''.

     SEC. 5202. CIRCUIT JUDGES FOR THE CIRCUIT COURTS OF APPEALS.

       (a) In General.--The President shall appoint, by and with 
     the advice and consent of the Senate--
       (1) 1 additional circuit judge for the first circuit court 
     of appeals;
       (2) 2 additional circuit judges for the second circuit 
     court of appeals;
       (3) 1 additional circuit judge for the sixth circuit court 
     of appeals; and
       (4) 5 additional circuit judges for the ninth circuit court 
     of appeals, whose official duty station shall be in 
     California.
       (b) Temporary Judgeships.--
       (1) In general.--The President shall appoint, by and with 
     the advice and consent of the Senate--
       (A) 1 additional circuit judge for the eighth circuit court 
     of appeals; and
       (B) 2 additional circuit judges for the ninth circuit court 
     of appeals, whose official duty station shall be in 
     California.
       (2) Vacancies.--
       (A) Eighth circuit.--The first vacancy in the office of 
     circuit judge in the eighth circuit court of appeals, 
     occurring 10 years or more after the confirmation date of the 
     judge named to fill the circuit judgeship created in that 
     circuit by paragraph (1)(A) shall not be filled.
       (B) Ninth circuit.--The first 2 vacancies in the office of 
     circuit judge in the ninth circuit court of appeals, 
     occurring 10 years or more after judges are first confirmed 
     to fill both temporary circuit judgeships created by 
     paragraph (1)(B) shall not be filled.
       (c) Table of judgeships.--In order that the table contained 
     in section 44 of title 28, United States Code, will, with 
     respect to each judicial circuit, reflect the changes in the 
     total number of permanent circuit judgeships authorized under 
     subsection (a) of this section, such table is amended to read 
     as follows:

                                                              Number of
``Circuits                                                       Judges
  District of Columbia............................................12   
  First............................................................7   
  Second..........................................................15   
  Third...........................................................14   
  Fourth..........................................................15   
  Fifth...........................................................17   
  Sixth...........................................................17   
  Seventh.........................................................11   
  Eighth..........................................................11   
  Ninth...........................................................33   
  Tenth...........................................................12   
  Eleventh........................................................12   
  Federal......................................................12.''.  

     SEC. 5203. DISTRICT JUDGES FOR THE DISTRICT COURTS.

       (a) In General.--The President shall appoint, by and with 
     the advice and consent of the Senate--
       (1) 1 additional district judge for the northern district 
     of Alabama;
       (2) 4 additional district judges for the district of 
     Arizona;
       (3) 3 additional district judges for the northern district 
     of California;
       (4) 4 additional district judges for the eastern district 
     of California;
       (5) 4 additional district judges for the central district 
     of California;
       (6) 1 additional district judge for the southern district 
     of California;

[[Page H10596]]

       (7) 1 additional district judge for the district of 
     Colorado;
       (8) 4 additional district judges for the middle district of 
     Florida;
       (9) 3 additional district judges for the southern district 
     of Florida;
       (10) 1 additional district judge for the district of Idaho;
       (11) 1 additional district judge for the northern district 
     of Illinois;
       (12) 1 additional district judge for the southern district 
     of Indiana;
       (13) 1 additional district judge for the western district 
     of Missouri;
       (14) 1 additional district judge for the district of 
     Nebraska;
       (15) 1 additional district judge for the district of 
     Nevada;
       (16) 1 additional district judge for the district of New 
     Mexico;
       (17) 3 additional district judges for the eastern district 
     of New York;
       (18) 1 additional district judge for the western district 
     of New York;
       (19) 1 additional district judge for the district of 
     Oregon;
       (20) 1 additional district judge for the district of South 
     Carolina;
       (21) 3 additional district judges for the southern district 
     of Texas;
       (22) 2 additional district judges for the eastern district 
     of Virginia; and
       (23) 1 additional district judge for the western district 
     of Washington.
       (b) Temporary Judgeships.--
       (1) In general.--The President shall appoint, by and with 
     the advice and consent of the Senate--
       (A) 1 additional district judge for the middle district of 
     Alabama;
       (B) 1 additional district judge for the district of 
     Arizona;
       (C) 1 additional district judge for the northern district 
     of California;
       (D) 1 additional district judge for the district of 
     Colorado;
       (E) 1 additional district judge for the middle district of 
     Florida;
       (F) 1 additional district judge for the northern district 
     of Iowa;
       (G) 1 additional district judge for the district of 
     Minnesota;
       (H) 1 additional district judge for the district of New 
     Jersey;
       (I) 1 additional district judge for the district of New 
     Mexico;
       (J) 1 additional district judge for the southern district 
     of Ohio;
       (K) 1 additional district judge for the district of Oregon; 
     and
       (L) 1 additional district judge for the district of Utah.
       (2) Vacancies not filled.--The first vacancy in the office 
     of district judge in each of the judicial districts named in 
     paragraph (1) occurring 10 years or more after the 
     confirmation date of the judge named to fill the district 
     judgeship created in that district by paragraph (1) shall not 
     be filled.
       (c) Existing Judgeships.--
       (1) Permanent judgeships.--The existing judgeships for the 
     district of Hawaii, the district of Kansas, and the eastern 
     district of Missouri authorized by section 203(c) of the 
     Judicial Improvements Act of 1990 (Public Law 101-650; 28 
     U.S.C. 133 note) shall, as of the effective date of this Act, 
     be authorized under section 133 of title 28, United States 
     Code, and the incumbents in those offices shall hold the 
     office under section 133 of title 28, United States Code, as 
     amended by this Act.
       (2) Extension of temporary judgeship.--Section 203(c) of 
     the Judicial Improvements Act of 1990 (Public Law 101-650; 28 
     U.S.C. 133 note) is amended in the fifth sentence (relating 
     to the northern district of Ohio) by striking ``15 years'' 
     and inserting ``20 years''.
       (d) Table of Judgeships.--In order that the table contained 
     in section 133(a) of title 28, United States Code, will, with 
     respect to each judicial district, reflect the changes in the 
     total number of permanent district judgeships authorized 
     under subsections (a) and (c) of this section, such table is 
     amended to read as follows:

``Districts                                                    Judges  
``Alabama:
  ``Northern.......................................................8   
  ``Middle.........................................................3   
  ``Southern.......................................................3   
``Alaska...........................................................3   
``Arizona.........................................................16   
``Arkansas:
  ``Eastern........................................................5   
  ``Western........................................................3   
``California:
  ``Northern......................................................17   
  ``Eastern.......................................................10   
  ``Central.......................................................31   
  ``Southern......................................................14   
``Colorado.........................................................8   
``Connecticut......................................................8   
``Delaware.........................................................4   
``District of Columbia............................................15   
``Florida:
  ``Northern.......................................................4   
  ``Middle........................................................19   
  ``Southern......................................................20   
``Georgia:
  ``Northern......................................................11   
  ``Middle.........................................................4   
  ``Southern.......................................................3   
``Hawaii...........................................................4   
``Idaho............................................................3   
``Illinois:
  ``Northern......................................................23   
  ``Central........................................................4   
  ``Southern.......................................................4   
``Indiana:
  ``Northern.......................................................5   
  ``Southern.......................................................6   
``Iowa:
  ``Northern.......................................................2   
  ``Southern.......................................................3   
``Kansas...........................................................6   
``Kentucky:
  ``Eastern........................................................5   
  ``Western........................................................4   
  ``Eastern and Western............................................1   
``Louisiana:
  ``Eastern.......................................................12   
  ``Middle.........................................................3   
  ``Western........................................................7   
``Maine............................................................3   
``Maryland........................................................10   
``Massachusetts...................................................13   
``Michigan:
  ``Eastern.......................................................15   
  ``Western........................................................4   
``Minnesota........................................................7   
``Mississippi:
  ``Northern.......................................................3   
  ``Southern.......................................................6   
``Missouri:
  ``Eastern........................................................7   
  ``Western........................................................6   
  ``Eastern and Western............................................2   
``Montana..........................................................3   
``Nebraska.........................................................4   
``Nevada...........................................................8   
``New Hampshire....................................................3   
``New Jersey......................................................17   
``New Mexico.......................................................7   
``New York:
  ``Northern.......................................................5   
  ``Southern......................................................28   
  ``Eastern.......................................................18   
  ``Western........................................................5   
``North Carolina:
  ``Eastern........................................................4   
  ``Middle.........................................................4   
  ``Western........................................................4   
``North Dakota.....................................................2   
``Ohio:
  ``Northern......................................................11   
  ``Southern.......................................................8   
``Oklahoma:
  ``Northern.......................................................3   
  ``Eastern........................................................1   
  ``Western........................................................6   
  ``Northern, Eastern, and Western.................................1   
``Oregon...........................................................7   
``Pennsylvania:
  ``Eastern.......................................................22   
  ``Middle.........................................................6   
  ``Western.......................................................10   
``Puerto Rico......................................................7   
``Rhode Island.....................................................3   
``South Carolina..................................................11   
``South Dakota.....................................................3   
``Tennessee:
  ``Eastern........................................................5   
  ``Middle.........................................................4   
  ``Western........................................................5   
``Texas:
  ``Northern......................................................12   
  ``Southern......................................................22   
  ``Eastern........................................................7   
  ``Western.......................................................13   
``Utah.............................................................5   
``Vermont..........................................................2   
``Virginia:
  ``Eastern.......................................................13   
  ``Western........................................................4   
``Washington:
  ``Eastern........................................................4   
  ``Western........................................................8   
``West Virginia:
  ``Northern.......................................................3   
  ``Southern.......................................................5   
``Wisconsin:
  ``Eastern........................................................5   
  ``Western........................................................2   
``Wyoming.......................................................3.''.  

     SEC. 5204. ESTABLISHMENT OF ARTICLE III COURT IN THE VIRGIN 
                   ISLANDS.

       (a) Establishment of Judicial District.--
       (1) Virgin islands.--Chapter 5 of title 28, United States 
     Code, is amended by inserting after section 126 the following 
     new section:

     ``Sec. 126A. Virgin Islands

       ``The Virgin Islands constitutes 1 judicial district 
     comprising 2 divisions.
       ``(1) The Saint Croix Division comprises the Island of 
     Saint Croix and adjacent islands and cays.
       ``Court for the Saint Croix Division shall be held at 
     Christiansted.
       ``(2) The Saint Thomas and Saint John Division comprises 
     the Islands of Saint Thomas and Saint John and adjacent 
     islands and cays.
       ``Court for the Saint Thomas and Saint John Division shall 
     be held at Charlotte-Amalie.''.
       (2) Technical and conforming amendment.--The table of 
     contents for chapter 5 of title 28, United States Code, is 
     amended by inserting after the item relating to section 126 
     the following:

``126A. Virgin Islands.''.

       (b) Number of Judges.--The table contained in section 
     133(a) of title 28, United States Code, is amended by 
     inserting after the item relating to Vermont the following:

``Virgin Islands...............................................2''.....

       (c) Bankruptcy Judges.--The table contained in section 
     152(a)(2) of title 28, United States Code, is amended by 
     inserting after the item relating to Vermont the following:

``Virgin Islands...............................................0''.....

       (d) Judicial Conferences of Circuits.--Section 333 of title 
     28, United States Code, is amended in the third sentence of 
     the first undesignated paragraph--
       (1) by striking ``, the District Court of the Virgin 
     Islands,''; and
       (2) by striking ``to the conferences of their respective 
     circuits'' and inserting ``to the conference of the ninth 
     circuit''.

[[Page H10597]]

       (e) Judges in Territories and Possessions.--Section 373 of 
     title 28, United States Code, is amended--
       (1) in subsection (a), by striking ``, the District Court 
     of the Northern Mariana Islands, or the District Court of the 
     Virgin Islands'' and inserting ``or the District Court of the 
     Northern Mariana Islands''; and
       (2) in subsection (e), by striking ``, the District Court 
     of the Northern Mariana Islands, or the District Court of the 
     Virgin Islands'' and inserting ``or the District Court of the 
     Northern Mariana Islands''.
       (f) Annuities for Survivors of Certain Judicial Officials 
     of the United States.--Section 376(a) of title 28, United 
     States Code, is amended--
       (1) in paragraph (1)(B), by striking ``, the District Court 
     of the Northern Mariana Islands, or the District Court of the 
     Virgin Islands'' and inserting ``or the District Court of the 
     Northern Mariana Islands''; and
       (2) in paragraph (2)(B), by striking ``, the District Court 
     of the Northern Mariana Islands, or the District Court of the 
     Virgin Islands'' and inserting ``or the District Court of the 
     Northern Mariana Islands''.
       (g) Authority of Attorney General.--Section 526(a)(2) of 
     title 28, United States Code, is amended by striking ``and of 
     the district court of the Virgin Islands''.
       (h) Courts Defined.--Section 610 of title 28, United States 
     Code, is amended--
       (1) by striking ``the United States District Court for the 
     District of the Canal Zone,''; and
       (2) by striking ``the District Court of the Virgin 
     Islands,''.
       (i) United States Magistrate Judges.--Section 631(a) of 
     title 28, United States Code, is amended--
       (1) in the first sentence, by striking ``the Virgin 
     Islands, Guam,'' and inserting ``Guam''; and
       (2) in the second sentence, by striking ``the Virgin 
     Islands, Guam,'' and inserting ``Guam''.
       (j) Court Reporters.--Section 753(a) of title 28, United 
     States Code, is amended by striking ``, the United States 
     District Court for the District of the Canal Zone, the 
     District Court of Guam, and the District Court of the Virgin 
     Islands'' and inserting ``and the District Court of Guam''.
       (k) Final Decisions of District Courts.--Section 1291 of 
     title 28, United States Code, is amended by striking ``, the 
     United States District Court for the District of the Canal 
     Zone, the District Court of Guam, and the District Court of 
     the Virgin Islands,'' and inserting ``and the District Court 
     of Guam,''.
       (l) Interlocutory Decisions.--Section 1292 of title 28, 
     United States Code, is amended--
       (1) in subsection (a), by striking ``, the United States 
     District Court for the District of the Canal Zone, the 
     District Court of Guam, and the District Court of the Virgin 
     Islands,'' and inserting ``and the District Court of Guam,''; 
     and
       (2) in subsection (d)(4)(A), by striking ``the District 
     Court of the Virgin Islands,''.
       (m) Jurisdiction of the United States Court of Appeals for 
     the Federal Circuit.--Section 1295(a) of title 28, United 
     States Code, is amended in paragraphs (1) and (2)--
       (1) by striking ``the United States District Court for the 
     District of the Canal Zone,''; and
       (2) by striking ``the District Court of the Virgin 
     Islands,''.
       (n) United States as Defendant.--Section 1346(b)(1) of 
     title 28, United States Code, is amended by striking ``, 
     together with the United States District Court for the 
     District of the Canal Zone and the District Court of the 
     Virgin Islands,''.
       (o) Adequate Representation of Defendants.--Section 
     3006A(j) of title 18, United States Code, is amended by 
     striking ``the District Court of the Virgin Islands,''.
       (p) Savings Provisions.--
       (1) Tenure of incumbent judges.--A judge of the District 
     Court of the Virgin Islands in office on the effective date 
     of this section shall continue in office until the expiration 
     of the term for which the judge was appointed, or until the 
     judge dies, resigns, or is removed from office, whichever 
     occurs first. When a vacancy occurs on the court on or after 
     the effective date of this section, the President, in 
     accordance with section 133(a) of title 28, United States 
     Code, shall appoint, by and with the advice and consent of 
     the Senate, a district judge for the District of the Virgin 
     Islands.
       (2) Retirement rights and benefits.--The amendments made by 
     this section shall not affect the rights under sections 373 
     and 376 of title 28, United States Code, of any judge of the 
     District Court of the Virgin Islands who retires on or before 
     the effective date of this section or who continues in office 
     after that date under paragraph (1) of this subsection. 
     Service as a judge of the District Court of the Virgin 
     Islands appointed under section 24 of the Revised Organic Act 
     of the Virgin Islands (48 U.S.C. 1614) shall be included in 
     calculating service under sections 371 and 372 of title 28, 
     United States Code, and shall not be counted for purposes of 
     section 373 of that title, if the judge is reappointed, after 
     the effective date of this section, under section 133(a) of 
     title 28, United States Code, as district judge for the 
     District of the Virgin Islands.
       (q) Amendments to Revised Organic Act of the Virgin 
     Islands.--
       (1) Repeals.--Sections 24, 25, 26, and 27 of the Revised 
     Organic Act of the Virgin Islands (48 U.S.C. 1614, 1615, 1616 
     and 1617) are repealed.
       (2) Rights and prohibitions.--Section 3 of the Revised 
     Organic Act of the Virgin Islands (48 U.S.C. 1561) is amended 
     in the 23d undesignated paragraph--
       (A) by inserting ``article III;'' after ``section 9, 
     clauses 2 and 3;'' and
       (B) by striking ``That all offenses against the laws of the 
     United States'' and all that follows through ``section 22(b) 
     of this Act or'' and inserting ``That all offenses against 
     the laws of the Virgin Islands which are prosecuted''.
       (3) Jurisdiction.--Section 21 of the Revised Organic Act of 
     the Virgin Islands (48 U.S.C. 1611) is amended to read as 
     follows:

     ``SEC. 21. JURISDICTION OF THE COURTS OF THE VIRGIN ISLANDS.

       ``(a) Jurisdiction of the Courts of the Virgin Islands.--
     The judicial power of the Virgin Islands shall be vested in 
     such trial and appellate courts as may have been or may 
     hereafter be established by local law. The local courts of 
     the Virgin Islands shall have jurisdiction over all causes of 
     action in the Virgin Islands over which any court established 
     by the Constitution and laws of the United States does not 
     have exclusive jurisdiction.
       ``(b) Practice and Procedure.--The rules governing the 
     practice and procedure of the courts established by local law 
     and those prescribing the qualifications and duties of the 
     judges and officers thereof, oaths and bonds, and the times 
     and places of holding court shall be governed by local law or 
     the rules promulgated by those courts.''.
       (4) Income tax matters.--Section 22 of the Revised Organic 
     Act of the Virgin Islands (48 U.S.C. 1612) is amended to read 
     as follows:

     ``SEC. 22. JURISDICTION OVER INCOME TAX MATTERS.

       ``The United States District Court for the District of the 
     Virgin Islands shall have exclusive jurisdiction over all 
     criminal and civil proceedings in the Virgin Islands with 
     respect to the income tax laws applicable to the Virgin 
     Islands, except the ancillary laws relating to the income tax 
     enacted by the legislature of the Virgin Islands. Any act or 
     failure to act with respect to the income tax laws applicable 
     to the Virgin Islands which would constitute a criminal 
     offense described in chapter 75 of subtitle F of the Internal 
     Revenue Code of 1986 shall constitute an offense against the 
     Government of the Virgin Islands and may be prosecuted in the 
     name of the Government of the Virgin Islands by the 
     appropriate officers thereof in the United States District 
     Court for the District of the Virgin Islands without the 
     request or consent of the United States attorney for the 
     Virgin Islands.''.
       (5) Appellate jurisdiction.--Section 23A of the Revised 
     Organic Act of the Virgin Islands (48 U.S.C. 1613a) is 
     amended--
       (A) by striking ``District Court of the Virgin Islands'' 
     each place it appears and inserting ``United States District 
     Court for the District of the Virgin Islands''; and
       (B) in subsection (b), by striking ``pursuant to section 
     24(a) of this Act: Provided, That no more than one of them 
     may be a judge of a court established by local law.'' and 
     inserting ``pursuant to chapter 13 of title 28, United States 
     Code, or a recalled senior judge of the former District Court 
     of the Virgin Islands. The chief judge of the United States 
     Court of Appeals for the Third Circuit may assign to the 
     appellate division a judge of a court of record of the Virgin 
     Islands, except that no more than 1 of the judges sitting in 
     the appellate division at any session may be a judge of a 
     court established by local law.''.
       (r) Additional References.--Any reference in any provision 
     of law to the ``District Court of the Virgin Islands'' shall, 
     on and after the effective date of this section, be deemed to 
     be a reference to the United States District Court for the 
     District of the Virgin Islands.
       (s) Effective Date.--This section and the amendments made 
     by this section shall take effect at the end of the 90-day 
     period beginning on the date of the enactment of this Act. 
     Any complaint or proceeding pending in the District Court of 
     the Virgin Islands on the effective date of this section may 
     be pursued to final determination in the United States 
     District Court for the District of the Virgin Islands, the 
     United States Court of Appeals for the Third Circuit, the 
     United States Court of Appeals for the Federal Circuit, and 
     the Supreme Court of the United States.

     SEC. 5205. EFFECTIVE DATE.

       Except as provided in section 5204(s), this subtitle and 
     the amendments made by this subtitle shall take effect on the 
     date of the enactment of this Act.

                   Subtitle C--Bankruptcy Judgeships

     SEC. 5301. SHORT TITLE.

       This subtitle may be cited as the ``Enhanced Bankruptcy 
     Judgeship Act of 2005''.

     SEC. 5302. AUTHORIZATION FOR ADDITIONAL BANKRUPTCY 
                   JUDGESHIPS.

       The following judgeships shall be filled in the manner 
     prescribed in section 152(a)(1) of title 28, United States 
     Code, for the appointment of bankruptcy judges provided for 
     in section 152(a)(2) of such title:
       (1) 1 additional bankruptcy judgeship for the eastern and 
     western districts of Arkansas.
       (2) 1 additional bankruptcy judgeship for the eastern 
     district of California.
       (3) 2 additional bankruptcy judgeships for the middle 
     district of Florida.
       (4) 2 additional bankruptcy judgeships for the northern 
     district of Georgia.
       (5) 1 additional bankruptcy judgeship for the southern 
     district of Georgia.

[[Page H10598]]

       (6) 1 additional bankruptcy judgeship for the eastern 
     district of Kentucky.
       (7) 1 additional bankruptcy judgeship for the district of 
     Maryland.
       (8) 3 additional bankruptcy judgeships for the eastern 
     district of Michigan.
       (9) 1 additional bankruptcy judgeship for the southern 
     district of New York.
       (10) 1 additional bankruptcy judgeship for the western 
     district of Pennsylvania.
       (11) 1 additional bankruptcy judgeship for the western 
     district of Tennessee.
       (12) 1 additional bankruptcy judgeship for the eastern 
     district of Texas.
       (13) 1 additional bankruptcy judgeship for the district of 
     Utah.

     SEC. 5303. TEMPORARY BANKRUPTCY JUDGESHIPS.

       (a) Authorization for Additional Temporary Bankruptcy 
     Judgeships.--The following judgeships shall be filled in the 
     manner prescribed in section 152(a)(1) of title 28, United 
     States Code, for the appointment of bankruptcy judges 
     provided for in section 152(a)(2) of such title:
       (1) 1 additional bankruptcy judgeship for the northern 
     district of Florida.
       (2) 2 additional bankruptcy judgeships for the middle 
     district of Florida.
       (3) 1 additional bankruptcy judgeship for the northern 
     district of Indiana.
       (4) 1 additional bankruptcy judgeship for the northern 
     district of Mississippi.
       (5) 1 additional bankruptcy judgeship for the district of 
     Nevada.
       (6) 1 additional bankruptcy judgeship for the western 
     district of North Carolina.
       (7) 1 additional bankruptcy judgeship for the southern 
     district of Ohio.
       (b) Vacancies.--
       (1) Districts with single appointments.--Except as provided 
     in paragraph (2), the first vacancy occurring in the office 
     of bankruptcy judge in each of the judicial districts set 
     forth in subsection (a)--
       (A) occurring 5 years or more after the appointment date of 
     the bankruptcy judge appointed under subsection (a) to such 
     office, and
       (B) resulting from the death, retirement, resignation, or 
     removal of a bankruptcy judge,
     shall not be filled.
       (2) Middle district of florida.--The 1st and 2d vacancies 
     in the office of bankruptcy judge in the middle district of 
     Florida--
       (A) occurring 5 years or more after the respective 1st and 
     2d appointment dates of the bankruptcy judges appointed under 
     subsection (a)(2), and
       (B) resulting from the death, retirement, resignation, or 
     removal of a bankruptcy judge,
     shall not be filled.
       (c) Eligibility for Subsequent Appointments.--A judge 
     holding office in any of the districts enumerated in 
     subsection (a) shall, at the expiration of the term of the 
     judge (other than by reason of paragraph (1)(B) or (2)(B) of 
     subsection (b)), be eligible for reappointment as a 
     bankruptcy judge in that district.

     SEC. 5304. CONVERSION OF EXISTING TEMPORARY BANKRUPTCY 
                   JUDGESHIPS.

       (a) Judgeships Authorized by Public Law 102-361.--The 
     following temporary bankruptcy judgeships authorized by the 
     following paragraphs of section 3(a) of Public Law 102-361, 
     as amended by section 307 of Public Law 104-317 (28 U.S.C. 
     152 note), are converted to permanent bankruptcy judgeships 
     under section 152(a)(2) of title 28, United States Code:
       (1) The temporary bankruptcy judgeship for the district of 
     Delaware authorized by paragraph (3).
       (2) The temporary bankruptcy judgeship for the southern 
     district of Illinois authorized by paragraph (4).
       (3) The temporary bankruptcy judgeship for the district of 
     Puerto Rico authorized by paragraph (7).
       (b) Judgeships Authorized by Public Law 109-8.--The 
     following temporary bankruptcy judgeships authorized by the 
     following subparagraphs of section 1223(b)(1) of the 
     Bankruptcy Abuse Prevention and Consumer Protection Act of 
     2005 (Public Law 109-8), are converted to permanent 
     bankruptcy judgeships under section 152(a)(2) of title 28, 
     United States Code:
       (1) The 4 temporary bankruptcy judgeships for the district 
     of Delaware authorized by subparagraph (C).
       (2) The temporary bankruptcy judgeship for the southern 
     district of Georgia authorized by subparagraph (E).
       (3) One of the 3 temporary bankruptcy judgeships for the 
     district of Maryland authorized by subparagraph (F).
       (4) The temporary bankruptcy judgeship for the eastern 
     district of Michigan authorized by subparagraph (G).
       (5) The temporary bankruptcy judgeship for the district of 
     New Jersey authorized by subparagraph (I).
       (6) The temporary bankruptcy judgeship for the northern 
     district of New York authorized by subparagraph (K).
       (7) The temporary bankruptcy judgeship for the southern 
     district of New York authorized by subparagraph (L).
       (8) The temporary bankruptcy judgeship for the eastern 
     district of North Carolina authorized by subparagraph (M).
       (9) The temporary bankruptcy judgeship for the eastern 
     district of Pennsylvania authorized by subparagraph (N).
       (10) The temporary bankruptcy judgeship for the district of 
     South Carolina authorized by subparagraph (S).
       (11) The temporary bankruptcy judgeship for the western 
     district of Tennessee authorized by subparagraph (Q).

     SEC. 5305. GENERAL PROVISIONS.

       (a) Table of judgeships.--In order that the table contained 
     in section 152(a)(2) of title 28, United States Code, will, 
     with respect to each judicial district, reflect the changes 
     in the total number of bankruptcy judgeships authorized under 
     sections 5302 and 5304, such table is amended to read as 
     follows:

``Districts                                                    Judges  
``Alabama:
  ``Northern.......................................................5   
  ``Middle.........................................................2   
  ``Southern.......................................................2   
``Alaska...........................................................2   
``Arizona..........................................................7   
``Arkansas:
  ``Eastern and Western............................................4   
``California:
  ``Northern.......................................................9   
  ``Eastern........................................................7   
  ``Central.......................................................21   
  ``Southern.......................................................4   
``Colorado.........................................................5   
``Connecticut......................................................3   
``Delaware.........................................................6   
``District of Columbia.............................................1   
``Florida:
  ``Northern.......................................................1   
  ``Middle........................................................10   
  ``Southern.......................................................5   
``Georgia:
  ``Northern......................................................10   
  ``Middle.........................................................3   
  ``Southern.......................................................4   
``Hawaii...........................................................1   
``Idaho............................................................2   
``Illinois:
  ``Northern......................................................10   
  ``Central........................................................3   
  ``Southern.......................................................2   
``Indiana:
  ``Northern.......................................................3   
  ``Southern.......................................................4   
``Iowa:
  ``Northern.......................................................2   
  ``Southern.......................................................2   
``Kansas...........................................................4   
``Kentucky:
  ``Eastern........................................................3   
  ``Western........................................................3   
``Louisiana:
  ``Eastern........................................................2   
  ``Middle.........................................................1   
  ``Western........................................................3   
``Maine............................................................2   
``Maryland.........................................................6   
``Massachusetts....................................................5   
``Michigan:
  ``Eastern........................................................8   
  ``Western........................................................3   
``Minnesota........................................................4   
``Mississippi:
  ``Northern.......................................................1   
  ``Southern.......................................................2   
``Missouri:
  ``Eastern........................................................3   
  ``Western........................................................3   
``Montana..........................................................1   
``Nebraska.........................................................2   
``Nevada...........................................................3   
``New Hampshire....................................................1   
``New Jersey.......................................................9   
``New Mexico.......................................................2   
``New York:
  ``Northern.......................................................3   
  ``Southern......................................................11   
  ``Eastern........................................................6   
  ``Western........................................................3   
``North Carolina:
  ``Eastern........................................................3   
  ``Middle.........................................................2   
  ``Western........................................................2   
``North Dakota.....................................................1   
``Ohio:
  ``Northern.......................................................8   
  ``Southern.......................................................7   
``Oklahoma:
  ``Northern.......................................................2   
  ``Eastern........................................................1   
  ``Western........................................................3   
``Oregon...........................................................5   
``Pennsylvania:
  ``Eastern........................................................6   
  ``Middle.........................................................2   
  ``Western........................................................5   
``Puerto Rico......................................................3   
``Rhode Island.....................................................1   
``South Carolina...................................................3   
``South Dakota.....................................................2   
``Tennessee:
  ``Eastern........................................................3   
  ``Middle.........................................................3   
  ``Western........................................................6   
``Texas:
  ``Northern.......................................................6   
  ``Eastern........................................................3   
  ``Southern.......................................................6   
  ``Western........................................................4   
``Utah.............................................................4   
``Vermont..........................................................1   
``Virgin Islands...................................................0   
``Virginia:
  ``Eastern........................................................5   
  ``Western........................................................3   
``Washington:
  ``Eastern........................................................2   
  ``Western........................................................5   
``West Virginia:
  ``Northern.......................................................1   

[[Page H10599]]

  ``Southern.......................................................1   
``Wisconsin:
  ``Eastern........................................................4   
  ``Western........................................................2   
``Wyoming.......................................................1.''.  
       (b) Sense of Congress.--It is the sense of the Congress 
     that bankruptcy judges in the eastern district of California 
     should conduct bankruptcy proceedings on a daily basis in 
     Bakersfield, California.

     SEC. 5306. EFFECTIVE DATE.

       This subtitle and the amendments made by this subtitle 
     shall take effect on the date of the enactment of this Act.

                Subtitle D--Ninth Circuit Reorganization

     SEC. 5401. SHORT TITLE.

       This subtitle may be cited as the ``Judicial Administration 
     and Improvements Act of 2005''.

     SEC. 5402. DEFINITIONS.

       In this subtitle:
       (1) Former ninth circuit.--The term ``former ninth 
     circuit'' means the ninth judicial circuit of the United 
     States as in existence on the day before the effective date 
     of this subtitle.
       (2) New ninth circuit.--The term ``new ninth circuit'' 
     means the ninth judicial circuit of the United States 
     established by the amendment made by section 5403(2)(A).
       (3) Twelfth circuit.--The term ``twelfth circuit'' means 
     the twelfth judicial circuit of the United States established 
     by the amendment made by section 5403(2)(B).

     SEC. 5403. NUMBER AND COMPOSITION OF CIRCUITS.

       Section 41 of title 28, United States Code, is amended--
       (1) in the matter preceding the table, by striking 
     ``thirteen'' and inserting ``fourteen''; and
       (2) in the table--
       (A) by striking the item relating to the ninth circuit and 
     inserting the following:

California, Guam, Hawaii, Northern Mariana Islands.'';.................

       and
       (B) by inserting after the item relating to the eleventh 
     circuit the following:

Alaska, Arizona, Idaho, Montana, Nevada, Oregon, Washington.''.........

     SEC. 5404. NUMBER OF CIRCUIT JUDGES.

       The table contained in section 44(a) of title 28, United 
     States Code, as amended by section 5202(c) of this Act, is 
     further amended--
       (1) by striking the item relating to the ninth circuit and 
     inserting the following:

``Ninth.......................................................19'';....

       and
       (2) by inserting after the item relating to the eleventh 
     circuit the following:

``Twelfth.....................................................14''.....

     SEC. 5405. PLACES OF CIRCUIT COURT.

       The table contained in section 48(a) of title 28, United 
     States Code, is amended--
       (1) by striking the item relating to the ninth circuit and 
     inserting the following:

Honolulu, Pasadena, San Francisco.'';..................................

       and
       (2) by inserting after the item relating to the eleventh 
     circuit the following:

Las Vegas, Missoula, Phoenix, Portland, Seattle.''.....................

     SEC. 5406. ASSIGNMENT OF CIRCUIT JUDGES.

       Each circuit judge of the former ninth circuit who is in 
     regular active service and whose official duty station on the 
     day before the effective date of this subtitle--
       (1) is in California, Guam, Hawaii, or the Northern Mariana 
     Islands shall be a circuit judge of the new ninth circuit as 
     of such effective date; and
       (2) is in Alaska, Arizona, Idaho, Montana, Nevada, Oregon, 
     or Washington shall be a circuit judge of the twelfth circuit 
     as of such effective date.

     SEC. 5407. ELECTION OF ASSIGNMENT BY SENIOR JUDGES.

       Each judge who is a senior circuit judge of the former 
     ninth circuit on the day before the effective date of this 
     subtitle may elect to be assigned to the new ninth circuit or 
     the twelfth circuit as of such effective date and shall 
     notify the Director of the Administrative Office of the 
     United States Courts of such election.

     SEC. 5408. SENIORITY OF JUDGES.

       The seniority of each judge--
       (1) who is assigned under section 5406, or
       (2) who elects to be assigned under section 5407,
     shall run from the date of commission of such judge as a 
     judge of the former ninth circuit.

     SEC. 5409. APPLICATION TO CASES.

       The following apply to any case in which, on the day before 
     the effective date of this subtitle, an appeal or other 
     proceeding has been filed with the former ninth circuit:
       (1) Except as provided in paragraph (3), if the matter has 
     been submitted for decision, further proceedings with respect 
     to the matter shall be had in the same manner and with the 
     same effect as if this subtitle had not been enacted.
       (2) If the matter has not been submitted for decision, the 
     appeal or proceeding, together with the original papers, 
     printed records, and record entries duly certified, shall, by 
     appropriate orders, be transferred to the court to which the 
     matter would have been submitted had this subtitle been in 
     full force and effect at the time such appeal was taken or 
     other proceeding commenced, and further proceedings with 
     respect to the case shall be had in the same manner and with 
     the same effect as if the appeal or other proceeding had been 
     filed in such court.
       (3) If a petition for rehearing en banc is pending on or 
     after the effective date of this subtitle, the petition shall 
     be considered by the court of appeals to which it would have 
     been submitted had this subtitle been in full force and 
     effect at the time that the appeal or other proceeding was 
     filed with the court of appeals.

     SEC. 5410. TEMPORARY ASSIGNMENT OF CIRCUIT JUDGES AMONG 
                   CIRCUITS.

       Section 291 of title 28, United States Code, is amended by 
     adding at the end the following:
       ``(c) The chief judge of the Ninth Circuit may, in the 
     public interest and upon request by the chief judge of the 
     Twelfth Circuit, designate and assign temporarily any circuit 
     judge of the Ninth Circuit to act as circuit judge in the 
     Twelfth Circuit.
       ``(d) The chief judge of the Twelfth Circuit may, in the 
     public interest and upon request by the chief judge of the 
     Ninth Circuit, designate and assign temporarily any circuit 
     judge of the Twelfth Circuit to act as circuit judge in the 
     Ninth Circuit.''.

     SEC. 5411. TEMPORARY ASSIGNMENT OF DISTRICT JUDGES AMONG 
                   CIRCUITS.

       Section 292 of title 28, United States Code, is amended by 
     adding at the end the following:
       ``(f) The chief judge of the United States Court of Appeals 
     for the Ninth Circuit may, in the public interest--
       ``(1) upon request by the chief judge of the Twelfth 
     Circuit, designate and assign 1 or more district judges 
     within the Ninth Circuit to sit upon the Court of Appeals of 
     the Twelfth Circuit, or a division thereof, whenever the 
     business of that court so requires; and
       ``(2) designate and assign temporarily any district judge 
     within the Ninth Circuit to hold a district court in any 
     district within the Twelfth Circuit.
       ``(g) The chief judge of the United States Court of Appeals 
     for the Twelfth Circuit may in the public interest--
       ``(1) upon request by the chief judge of the Ninth Circuit, 
     designate and assign 1 or more district judges within the 
     Twelfth Circuit to sit upon the Court of Appeals of the Ninth 
     Circuit, or a division thereof, whenever the business of that 
     court so requires; and
       ``(2) designate and assign temporarily any district judge 
     within the Twelfth Circuit to hold a district court in any 
     district within the Ninth Circuit.
       ``(h) Any designations or assignments under subsection (f) 
     or (g) shall be in conformity with the rules or orders of the 
     court of appeals of, or the district within, as applicable, 
     the circuit to which the judge is designated or assigned.''.

     SEC. 5412. ADMINISTRATION.

       The court of appeals for the ninth circuit as constituted 
     on the day before the effective date of this subtitle may 
     take such administrative action as may be required to carry 
     out this subtitle and the amendments made by this subtitle. 
     Such court shall cease to exist for administrative purposes 2 
     years after the date of the enactment of this Act.

     SEC. 5413. EFFECTIVE DATE.

       This subtitle and the amendments made by this subtitle 
     shall take effect no later than December 31, 2006.

              Subtitle E--Authorization of Appropriations

     SEC. 5501. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated for each of fiscal 
     years 2006 through 2009 such sums as are necessary to carry 
     out subtitles B, C, and D of this title, including such sums 
     as may be necessary to provide appropriate space and 
     facilities for the judicial positions created by this title. 
     Funds appropriated pursuant to this section in any fiscal 
     year shall remain available until expended.

                    TITLE VI--COMMITTEE ON RESOURCES

        Subtitle A--Miscellaneous Amendments Relating to Mining

Sec. 6101. Fees for recordation and location of mining claims.
Sec. 6102. Patents for mining or mill site claims.
Sec. 6103. Mineral examinations for mining on certain lands.
Sec. 6104. Mineral development lands available for purchase.
Sec. 6105. National mining and minerals policy to encourage and promote 
              the productive second use of lands.
Sec. 6106. Regulations.
Sec. 6107. Protection of national parks and wilderness areas.

                  Subtitle B--Disposal of Public Lands

         Chapter 1--Disposal of Certain Public Lands in Nevada

Sec. 6201. Short title.
Sec. 6202. Definitions.
Sec. 6203. Land conveyance.
Sec. 6204. Disposition of proceeds.

          Chapter 2--Disposal of Certain Public Lands in Idaho

Sec. 6211. Short title.
Sec. 6212. Definitions.
Sec. 6213. Land conveyance.
Sec. 6214. Disposition of proceeds.

                         Subtitle C--Oil shale

Sec. 6301. Oil shale and tar sands amendments.

            Subtitle D--Sale and Conveyance of Federal Land

Sec. 6401. Collection of receipts from the sale of Federal lands.

[[Page H10600]]

        Subtitle A--Miscellaneous Amendments Relating to Mining

     SEC. 6101. FEES FOR RECORDATION AND LOCATION OF MINING 
                   CLAIMS.

       (a) Dimensions of Mining Claims.--Section 2320 of the 
     Revised Statutes (30 U.S.C. 23) is amended by striking the 
     second and third sentences and inserting the following: ``A 
     mining claim located after May 10, 1872, whether located by 
     one or more persons, and including a claim located before 
     exposure of the vein or lode, may equal, but shall not 
     exceed, 1,500 feet in length along the vein or lode, and 
     shall extend no more than 300 feet on each side of the middle 
     of the vein at the surface, nor shall any claim be limited by 
     any mining regulation to less than 25 feet on each side of 
     the middle of the vein at the surface, except where adverse 
     rights existing on May 10, 1872, render such limitation 
     necessary.''.
       (b) Rights Secured by Claim Maintenance Fees.--Section 2322 
     of the Revised Statutes (30 U.S.C. 26) is amended by 
     inserting ``(a) Rights of Locators, Generally.--'' before the 
     first sentence, and by adding at the end the following:
       ``(b) Rights Secured by Maintenance Fees.--Prior to 
     issuance of a patent, timely payment of the claim maintenance 
     fee secures the rights of the holder of a mining claim, mill 
     site, or tunnel site, both prior to and after discovery of 
     valuable mineral deposits, to use and occupy public lands 
     under the provisions of the general mining law of the United 
     States (as that term is defined in section 2324 of the 
     Revised Statutes) for mineral prospecting, exploration, 
     development, mining, milling, and processing of minerals, 
     reclamation of the claimed lands, and uses reasonably 
     incident thereto. Except for the location fee and the 
     maintenance fees in section 2324 of the Revised Statutes (30 
     U.S.C. 28), and the patent prices in sections 2325, 2326, 
     2333, and 2337 of the Revised Statutes (30 U.S.C. 29, 30, 37, 
     and 42), no other fees or fair market value assessments shall 
     be applied to prospecting, exploration, development, mining, 
     processing, or reclamation, and uses reasonably incident 
     thereto.''.
       (c) Patent Requirements.--Section 2325 of the Revised 
     Statutes (30 U.S.C. 29) is amended--
       (1) in the second sentence by striking ``, or at any time'' 
     and inserting ``shall include a processing fee of $2,500 for 
     the first claim or site, and $50 for each additional claim 
     contained therein, and at any time''; and
       (2) in the fourth sentence by inserting ``and if the 
     applicant has complied with the law of discovery'' after 
     ``publication''.
       (d) Mining District Regulations by Miners.--Section 2324 of 
     the Revised Statutes (30 U.S.C. 28) is amended to read as 
     follows:
       ``Sec. 2324. (a) Authority to Make Regulations.--The miners 
     of each mining district may make regulations not in conflict 
     with the laws of the United States, or with the laws of the 
     State or Territory in which the district is situated, 
     governing the location, manner of recording, amount of work 
     necessary to hold possession of a mining claim, subject to 
     the following requirements:
       ``(1) The location must be distinctly marked on the ground 
     so that its boundaries can be readily traced.
       ``(2) All records of mining claims made after May 10, 1872, 
     shall contain the name or names of the locators, the date of 
     the location, and such a description of the claim or claims 
     located by reference to some natural object or permanent 
     monument as will identify the claim.
       ``(b) Recordation of Mining Claims and Abandonment.--The 
     locator of an unpatented lode or placer mining claim, mill 
     site, or tunnel site located after October 21, 1976, pursuant 
     to the general mining law of the United States shall, within 
     90 days after the date of location of such claim, file in the 
     office designated by the Secretary of the Interior a copy of 
     the official record of the notice of location or certificate 
     of location, including a description of the location of the 
     mining claim or mill or tunnel site sufficient to locate the 
     claimed lands on the ground. The failure to file such 
     instruments as required by this subsection is deemed 
     conclusively to constitute an abandonment of the mining 
     claim, mill site, or tunnel site by the owner. Such 
     recordation by itself shall not render valid any claim that 
     would not be otherwise valid under applicable law.
       ``(c) Location Fee.--Notwithstanding any other provision of 
     law, for every mining claim, mill site, or tunnel site 
     located after the date of the enactment of this subsection 
     pursuant to the general mining law of the United States, the 
     locator shall, at the time the location notice is recorded 
     pursuant to subsection (b), pay a location fee of $100 per 
     claim. This fee shall be in addition to the first year's 
     claim maintenance fee required by subsection (d). Payment of 
     the location fee required by this subsection and the 
     maintenance fee required by subsection (d) secures to the 
     locator the right to use and occupy the public lands for 
     purposes of the general mining law of the United States.
       ``(d) Schedule of Claim Maintenance Fees.--(1) The holder 
     of each unpatented mining claim, mill site, or tunnel site 
     located pursuant to the general mining law of the United 
     States on or after the date of the enactment of this 
     subsection shall pay to the Secretary of the Interior, on or 
     before September 1 of each year, a claim maintenance fee per 
     claim. Except as provided in paragraph (2), such claim 
     maintenance fee shall be paid in the following amounts:
       ``(A) $35 per claim for each of the first through fifth 
     maintenance years, beginning with the year the claim was 
     recorded.
       ``(B) $70 per claim for each of the sixth through tenth 
     maintenance years.
       ``(C) $125 per claim for each of the eleventh through 
     fifteenth maintenance years.
       ``(D) $150 per claim for the sixteenth maintenance year and 
     each year thereafter.
       ``(2) Notwithstanding any other provision of law, for each 
     unpatented mining claim located after the date of enactment 
     of this subsection pursuant to the general mining law of the 
     United States from which minerals are produced, and in lieu 
     of the fee otherwise required by paragraph (1), the holder 
     shall pay to the Secretary of the Interior an annual 
     maintenance fee of $200 per claim.
       ``(3) The holder of each unpatented mining claim, mill 
     site, or tunnel site located pursuant to the general mining 
     law of the United States before the date of enactment of this 
     subsection shall pay to the Secretary of the Interior for 
     such claim--
       ``(A) except as provided in subparagraph (B), the claim 
     maintenance fee that applied before such date of enactment; 
     or
       ``(B) the claim maintenance fee that applies under 
     paragraph (1) or (2), based on the number of years since the 
     original location of the claim, if before the date the 
     payment is due the claim holder--
       ``(i) notifies the Secretary; and
       ``(ii) pays to the Secretary a transfer fee of $100.
       ``(e) Adjustment of Claim Maintenance Fees.--Claim 
     maintenance fees under subsection (d) shall not be subject to 
     adjustment.
       ``(f) Work Requirement.--(1) The holder of each unpatented 
     mining claim, mill site, or tunnel site located pursuant to 
     the general mining law of the United States after the date of 
     enactment of this subsection, and any holder of a claim that 
     has transferred such claim to the claim maintenance fee 
     schedule under subsection (d), shall conduct physical 
     evaluation and development of the claim or of any contiguous 
     block of claims of which the claim is a part. Exploration and 
     mining activities conducted pursuant to a notice, approved 
     plan of operations, or, in the case of split estate lands, a 
     comparable State or county notice or approval, demonstrates 
     compliance with this section.
       ``(2) If physical evaluation of the claim is not carried 
     out in accordance with paragraph (1) before the end of the 
     fifth, tenth, or fifteenth maintenance year (beginning with 
     the maintenance year in which the claim is filed), 
     respectively, the claim holder shall be required to pay in 
     the next maintenance year the location fee described in 
     subsection (c), in addition to the annual claim maintenance 
     fee required to be paid for the next maintenance year.
       ``(g) Waiver of Claim Maintenance Fee Adjustments and Work 
     Requirement.--If a delay in meeting the work requirements 
     under subsection (f) is the result of pending administrative 
     proceedings, rights-of-way disputes, or litigation concerning 
     issuance or validity of any permit or authorization required 
     under Federal, State, or local law for physical evaluation 
     and development of the claim--
       ``(1) any increase in the claim maintenance fee that would 
     otherwise apply under subsection (d) and the work 
     requirements under subsection (f) shall be suspended for the 
     claim; and
       ``(2) claim maintenance fees required to be paid each year 
     for the claim shall be the same as the fee that applied for 
     the year in which the delay first occurred, and no additional 
     location fee will be owed.
       ``(h) Time of Payment.--The claim maintenance fee required 
     under subsection (d) for any maintenance year shall be paid 
     before the commencement of the maintenance year, except that, 
     for the maintenance year in which the location is made the 
     locator shall pay the claim maintenance fee and the location 
     fee imposed under subsection (c) at the time the location 
     notice is recorded with the Bureau of Land Management. The 
     Director of the Bureau of Land Management, after consultation 
     with the Governor of Alaska and by not later than 1 year 
     after the date of enactment of this subsection, may establish 
     a claim maintenance fee filing date for Alaska claim holders 
     that is not later than 60 days after September 1.
       ``(i) Small Miner Claim Maintenance Fee.--(1) In the case 
     of a claim for which the holder certifies in writing to the 
     Secretary that, on the date the payment of any claim 
     maintenance fee under this section was due, the claim holder 
     and all related parties held not more than 10 mining claims, 
     mill sites, or tunnel sites, or any combination thereof, on 
     public lands--
       ``(A) the claim maintenance fee shall be $25 per claim per 
     year for the life of the claim or site held by the claim 
     holder; and
       ``(B) subsection (f) shall not apply.
       ``(2) In this subsection:
       ``(A) With respect to any claim holder, the term `related 
     party' means--
       ``(i) the spouse and dependent children (as defined in 
     section 152 of the Internal Revenue Code of 1986 (26 U.S.C. 
     152), as in effect on the date of the enactment of this 
     paragraph of the claim holder; and
       ``(ii) a person who controls, is controlled by, or is under 
     common control with the claim holder.
       ``(B) The terms `control', `controls', and `controlled' 
     include actual control, legal control, and the power to 
     exercise control, through or by common directors, officers, 
     stockholders, a voting trust, or a holding company or 
     investment company, or any other means.

[[Page H10601]]

       ``(j) Failure to Pay.--(1) Failure to pay a claim 
     maintenance fee or a location fee for an unpatented mining 
     claim as required by this section shall subject an unpatented 
     mining claim, mill site, or tunnel site to forfeiture by the 
     claim holder as provided in this subsection.
       ``(2) The Secretary of the Interior shall provide the claim 
     holder with notice of the failure and the opportunity to cure 
     within 45 calendar days after the claim holder's receipt of 
     the notice.
       ``(3) The claim holder must, within such 45-day period, pay 
     twice the amount of maintenance fee that would otherwise have 
     been required to be timely paid. The Secretary of the 
     Interior shall specify the amount that must be paid in the 
     notice under paragraph (2).
       ``(4) Failure by the claim holder to make a timely and 
     proper payment in the amount specified in the notice by the 
     Secretary of the Interior, within 45 days after the claim 
     holder's receipt of the notice, shall constitute a forfeiture 
     of the mining claim, mill site, or tunnel site by the claim 
     holder by operation of law.
       ``(k) Failure of Co-Owner to Contribute.--Upon the failure 
     of any one of several co-owners of a claim to contribute the 
     co-owner's proportion of any claim maintenance fee required 
     by this section, the co-owners who have paid the claim 
     maintenance fee, at the expiration of the year in which any 
     unpaid amount was due, may give such delinquent co-owner 
     personal notice in writing or notice by publication in the 
     newspaper of record for the county in which the land that is 
     subject to the claim or mill site is located, at least once a 
     week for 90 days. If at the expiration of such 90-day period 
     such delinquent co-owner fails or refuses to contribute the 
     co-owner's proportion of the claim maintenance fee required 
     by this section, the co-owner's interest in the claim shall 
     become the property of the other co-owners who have paid the 
     claim maintenance fee. The co-owners who have assumed the 
     interest in the claims shall notify the Secretary of the 
     Interior within 30 days of the assumption.
       ``(l) Oil Shale Claims Subject to Claim Maintenance Fees 
     Under Energy Policy Act of 1992.-- This section shall not 
     apply to any oil shale claim for which a fee is required to 
     be paid under section 2511(e)(2) of the Energy Policy Act of 
     1992 (30 U.S.C. 242).
       ``(m) General Mining Law of the United States Defined; Rule 
     of Construction.--(1) In this section the term `general 
     mining law of the United States' means the provisions of law 
     codified in chapters 2, 12, 12A, 15, and 16 of title 30, 
     United States Code, and in sections 161 and 162 of such 
     title.
       ``(2) Subsections (b) and (c) shall be construed in 
     accordance with judicial decisions under section 314 of the 
     Federal Land Policy and Management Act of 1976, as in effect 
     before the enactment of those subsections.''.
       (e) Conforming Amendments.--
       (1) The Federal Land Policy and Management Act of 1976 is 
     amended--
       (A) by striking section 314 (43 U.S.C. 1744);
       (B) in the table of contents preceding title I by striking 
     the item relating to section 314; and
       (C) in section 302(a) by striking ``section 314, section 
     603,'' and inserting ``section 603''.
       (2) Section 22 of the Alaska Native Claims Settlement Act 
     is amended by striking ``and section 314 of the Federal Land 
     Policy and Management Act of 1976 (43 U.S.C. 1744)''.
       (3) Section 31(f) of the Mineral Leasing Act (30 U.S.C. 
     188(f)) is amended by striking ``section 314 of the Federal 
     Land Policy and Management Act of 1976 (43 U.S.C. 1744)'' and 
     inserting ``subsections (b) and (c) of section 2320 of the 
     Revised Statutes (30 U.S.C. 23)''.
       (4) Section 2511(e) of the Energy Policy Act of 1992 (30 
     U.S.C. 242(e)) is amended by striking the last sentence.

     SEC. 6102. PATENTS FOR MINING OR MILL SITE CLAIMS.

       (a) Repeal of Limitation on Use of Funds for Applications 
     for Patent.--Section 408(a) of the Department of the 
     Interior, Environment, and Related Agencies Appropriations 
     Act, 2006 (Public Law 109-54) is repealed.
       (b) Payment Amounts.--The Revised Statutes are amended--
       (1) in section 2325 (30 U.S.C. 29) by striking ``five 
     dollars per acre'' and inserting ``$1,000 per acre or fair 
     market value, whichever is greater'';
       (2) in section 2326 (30 U.S.C. 30) by striking ``five 
     dollars per acre'' and inserting ``$1,000 per acre or fair 
     market value, whichever is greater;'';
       (3) in section 2333 (30 U.S.C. 37)--
       (A) by striking ``five dollars per acre'' and inserting 
     ``$1,000 per acre or fair market value, whichever is 
     greater;''; and
       (B) by striking ``two dollars and fifty cents per acre'' 
     and inserting ``$1,000 per acre or fair market value, 
     whichever is greater'';
       (4) in section 2337 (30 U.S.C. 42)--
       (A) in subsection (a) by striking ``made at the same rate'' 
     and all that follows through the end of that sentence and 
     inserting ``at the rate of $1,000 per acre or fair market 
     value, whichever is greater.''; and
       (B) in subsection (b) by striking ``made at the rate'' and 
     all that follows through the end of that sentence and 
     inserting ``at the rate of $1,000 per acre or fair market 
     value, whichever is greater.''; and
       (5) in section 2325 (30 U.S.C. 29) by adding at the end the 
     following: ``For purposes of this section and sections 2326, 
     2333, and 2337 of the Revised Statutes, fair market value for 
     the patenting of mining claims or mill sites shall be 
     determined by appraisals prepared by an appraiser certified 
     or qualified under applicable professional criteria or State 
     law, in accordance with the Uniform Appraisal Standards for 
     Federal Land Acquisitions and the Uniform Standards of 
     Professional Appraisal Practice, submitted by the applicant 
     for a patent to the Secretary of the Interior upon 
     application for patent, that is completed within 120 days 
     prior to submission of the application for patent.''.
       (c) Mineral Development Work Requirements.--Section 2325 of 
     the Revised Statutes (30 U.S.C. 29) is amended--
       (1) by striking ``five hundred dollars' '' and inserting 
     ``$7,500''; and
       (2) by striking ``labor has been expended'' and inserting 
     ``mineral development work has been performed''.
       (d) Patent Applicants in Limbo.--If the holder of an 
     unpatented mining claim or mill site submitted an application 
     for a mineral patent and paid the patent service charges 
     required by regulation at the time the application was 
     submitted, and the Secretary of the Interior did not complete 
     all actions to process the application before April 26, 1996, 
     the holder of such claim may, at the holder's election, have 
     such application processed under rules that applied before 
     the date of the enactment of this Act.
       (e) Alternative Valuable Mineral Deposit Criteria.--Section 
     2325 of the Revised Statutes is further amended by inserting 
     ``(a) Manner for Obtaining Patent, Generally.--'' before the 
     first sentence, and by adding at the end the following:
       ``(b) Alternative Valuable Mineral Deposit Criteria.--
       ``(1) Claims subject to ongoing activities.--The holder of 
     an unpatented mining claim or mill site who is conducting 
     mining activities that meet the definition of a mine under 
     section 3(h) of the Federal Mine Safety and Health Act of 
     1972 (30 U.S.C. 802(h)) and whose activities with respect to 
     that claim or site are described in section 4 of such Act (30 
     U.S.C. 803) may receive a patent for any unpatented mining 
     claims on which mining activities are occurring or any mill 
     sites, within the boundaries of an approved plan of 
     operations or a comparable State or county approval. Upon 
     confirmation by the Secretary that minerals being mined are 
     locatable in accordance with Federal law and that actual 
     sales of minerals have taken place, all Federal lands within 
     those boundaries are eligible for patent upon compliance with 
     this section and sections 2327 and 2329 of the Revised 
     Statutes (30 U.S.C. 34, 35).
       ``(2) Disclosed claims and mill sites.--The holder of an 
     unpatented mining claim or mill site whose proven and 
     probable reserves are publicly disclosed in compliance with 
     the Securities Act of 1933 (15 U.S.C. 77a) or the Securities 
     Exchange Act of 1934 (15 U.S.C. 78a) may receive a patent for 
     any such unpatented mining claim containing such reserves or 
     for any mill site within the boundaries of a plan of 
     operations or a comparable State or county approval for such 
     reserves. All Federal lands within those boundaries are 
     eligible for patent upon compliance with this section and 
     sections 2327 and 2329 of the Revised Statutes (30 U.S.C. 34, 
     35).
       ``(c) Mineral Examinations.--
       ``(1) In general.--In order to process patent applications 
     in a timely and responsible manner, upon the request of a 
     patent applicant, the Secretary of the Interior shall allow 
     the applicant to fund a qualified third-party examiner from a 
     list maintained by the Bureau of Land Management to conduct a 
     mineral examination of the mining claims or mill sites 
     contained in a patent application as set forth in this 
     section and sections 2333 and 2337 of the Revised Statutes 
     (30 U.S.C. 37, 42). The Bureau of Land Management shall have 
     the sole responsibility to maintain the list of qualified 
     third-party examiners.
       ``(2) Training.--The Director of the Bureau of Land 
     Management shall provide training in the conduct of mineral 
     examinations to qualified individuals. The Director may 
     charge fees to cover the costs of the training.
       ``(3) Qualified third-party examiner defined.--In this 
     subsection the term `qualified third-party examiner' means a 
     person who is a registered geologist or registered 
     professional mining engineer licensed to practice within the 
     State in which the claims are located.
       ``(d) Disposition of Proceeds.--The gross proceeds of 
     conveyances of land under this section and sections 2319, 
     2330, 2332, 2333, and 2337 of the Revised Statutes (30 U.S.C. 
     22, 36, 37, 38, 42) shall be used as follows:
       ``(1) 10 percent shall be deposited into the Federal Energy 
     and Mineral Resource Professional Development Fund.
       ``(2) 20 percent shall be available to the Secretary of the 
     Army for use, through the Corps of Engineers, for the 
     Restoration of Abandoned Mine Sites Program and section 560 
     of the Water Resources Development Act of 1999.
       ``(3) 70 percent shall be deposited into the General Fund 
     of the Treasury.
       ``(e) Issuing Patents.--If no adverse claim has been filed 
     with the register and the receiver of the proper land office 
     at the expiration of the 60-day period beginning on the date 
     of publication of the notice that an application for mineral 
     patent has been filed under section 2325, 2333 and 2337 of 
     the Revised Statutes (30 U.S.C. 29, 37, 42), the Secretary 
     shall issue the patent not later than 24 months after the 
     date on which the application for patent was filed.

[[Page H10602]]

       ``(f) Small Miner Patent Adjudication and Mineral 
     Development Work Requirements.--The holder of 10 claims or 
     less who applies for a mineral patent under this section or a 
     direct purchase under section 2319 of the Revised Statutes 
     (30 U.S.C. 22) shall pay one-fifth of the processing fees and 
     perform one-fifth of the mineral development work required 
     under this section and section 2319 (30 U.S.C. 22).''.

     SEC. 6103. MINERAL EXAMINATIONS FOR MINING ON CERTAIN LANDS.

       Section 302 of the Federal Land Policy and Management Act 
     of 1976 (43 U.S.C. 1732) is amended by adding at the end the 
     following:
       ``(e) The Secretary shall not require a mineral examination 
     report, otherwise required to be prepared under regulations 
     promulgated pursuant to this Act, to approve a plan of 
     operations under such regulations for mining claims and mill 
     sites located on withdrawn lands if such mining claims, mill 
     sites, and blocks of such mining claims and mill sites are 
     contiguous to patented or unpatented mining claims or mill 
     sites where mineral development activities, including mining, 
     have been conducted as authorized by law or regulation.''.

     SEC. 6104. MINERAL DEVELOPMENT LANDS AVAILABLE FOR PURCHASE.

       Section 2319 of the Revised Statutes (30 U.S.C. 22) is 
     amended--
       (1) by inserting ``(a) Lands Open to Purchase by 
     Citizens.--'' before the first sentence; and
       (2) by adding at the end the following:
       ``(b) Availability for Purchase.--Notwithstanding any other 
     provision of law and in compliance with subsection (c), the 
     Secretary of the Interior shall make mineral deposits and the 
     lands that contain them, including lands in which the 
     valuable mineral deposit has been depleted, available for 
     purchase to facilitate sustainable economic development. This 
     subsection shall not apply with respect to any unit of the 
     National Park System, National Wildlife Refuge System, 
     National Wild and Scenic Rivers System, or National Trails 
     System, or to any National Conservation Area, any National 
     Recreation Area, any National Monument, or any unit of the 
     National Wilderness Preservation System.
       ``(c) Application.--The holder of mining claims, mill 
     sites, and blocks of such mining claims and mill sites 
     contiguous to patented or unpatented mining claims or mill 
     sites where mineral development activities, including mining, 
     have been conducted as authorized by law or regulation and on 
     which mineral development work has been performed may apply 
     to purchase Federal lands that are subject to the claims. The 
     filing of the proper application shall include such 
     processing fees as are required by section 2325 of the 
     Revised Statutes (30 U.S.C. 29). The applicant or applicants, 
     or their predecessors must present evidence of mineral 
     development work performed on the Federal lands identified 
     and submitted for purchase. Mineral development work upon 
     aggregation must average not less than $7,500 per mining 
     claim or mill site within the Federal lands identified and 
     applied for.
       ``(d) Land Surveys.--For the purpose of this section, and 
     notwithstanding section 2334 of the Revised Statutes (30 
     U.S.C. 39), land surveys of the Federal lands applied for 
     shall be paid for by the applicant and shall be completed 
     either by a land surveyor registered in the State where the 
     land is situated, or by such a surveyor also designated by 
     the Bureau of Land Management as a mineral surveyor, if such 
     mineral surveyors are available, willing, and able to 
     complete such surveys without delay at a cost comparable to 
     the charges of ordinary registered land surveyors.
       ``(e) Deadline for Conveyance; Price.--Notwithstanding any 
     other provision of law, and not later than one year after the 
     date of the approval of any survey required under subsection 
     (d), the Secretary of the Interior shall convey to the 
     applicant, in return for a payment of $1,000 per acre or fair 
     market value, whichever is greater, all right, title, and 
     interest in and to the Federal land, subject to valid 
     existing rights and the terms and conditions of the Act of 
     August 30, 1890 (26 Stat. 391). For purposes of this 
     subsection, fair market value for mineral development lands 
     available for purchase shall be determined by appraisals 
     prepared by an appraiser certified or qualified under 
     applicable professional criteria or State law, in accordance 
     with the Uniform Appraisal Standards for Federal Land 
     Acquisitions and the Uniform Standards of Professional 
     Appraisal Practice, submitted by the applicant to the 
     Secretary of the Interior upon application for purchase, that 
     is completed within 120 days prior to submission of the 
     application. Fair market value for the interest in the land 
     owned by the United States shall be exclusive of, and without 
     regard to, the mineral deposits in the land or the use of 
     such land for mineral activities.
       ``(f) Environmental Liability.--Notwithstanding any other 
     Federal, State or local law, the United States shall not be 
     responsible for--
       ``(1) investigating or disclosing the condition of any 
     property to be conveyed under this section; and
       ``(2) environmental remediation, waste management, or 
     environmental compliance activities arising from its 
     ownership, occupancy, or management of land and interests 
     therein conveyed under this section with respect to 
     conditions existing at or on the land at the time of the 
     conveyance.
       ``(g) Mineral Development Work Defined.--In this section 
     the term `mineral development work' means geologic, 
     geochemical or geophysical surveys; road building; 
     exploration drilling, trenching, and exploratory sampling by 
     any other means; construction of underground workings for the 
     purpose of conducting exploration; mine development work; 
     mineral production from underground or surface mines; 
     environmental baseline studies; construction of environmental 
     protection and monitoring systems; environmental reclamation; 
     construction of power and water distribution facilities; 
     engineering, metallurgical, geotechnical, and economic 
     feasibility studies; land surveys; and any other work 
     reasonably incident to mineral development.''.

     SEC. 6105. NATIONAL MINING AND MINERALS POLICY TO ENCOURAGE 
                   AND PROMOTE THE PRODUCTIVE SECOND USE OF LANDS.

       Section 101 of the Mining and Minerals Policy Act of 1970 
     (30 U.S.C. 21a) is amended--
       (1) in the first sentence--
       (A) in clause (2) by inserting ``including through remining 
     where appropriate'' after ``needs,'';
       (B) in clause (3) by striking ``and'' after the comma at 
     the end; and
       (C) by striking the period at the end and inserting the 
     following: ``, and (5) facilitate the productive second use 
     of lands used for mining and energy production.'';
       (2) in the second sentence by striking ``oil shale and 
     uranium'' and inserting ``oil shale, and uranium, whether 
     located onshore or offshore''; and
       (3) in the third sentence--
       (A) by striking ``the Secretary of the Interior'' and 
     inserting ``the head of each Federal department and of each 
     independent agency''; and
       (B) by striking ``his''.

     SEC. 6106. REGULATIONS.

       The Secretary of the Interior shall issue final regulations 
     implementing this subtitle by not later than 180 days after 
     the date of the enactment of this Act.

     SEC. 6107. PROTECTION OF NATIONAL PARKS AND WILDERNESS AREAS.

       Subject to valid existing rights, nothing in sections 6202, 
     6203, 6204, 6205, and 6206 of this subtitle shall be 
     construed as affecting any lands within the boundary of any 
     unit of the National Park System, National Wildlife Refuge 
     System, National Wild and Scenic Rivers System, or National 
     Trails System, or any National Conservation Area, any 
     National Recreation Area, any National Monument, or any unit 
     of the National Wilderness Preservation System as of the date 
     of the enactment of this Act.

                  Subtitle B--Disposal of Public Lands

         CHAPTER 1--DISPOSAL OF CERTAIN PUBLIC LANDS IN NEVADA

     SEC. 6201. SHORT TITLE.

       This chapter may be cited as the ``Northern Nevada 
     Sustainable Development in Mining Act''.

     SEC. 6202. DEFINITIONS.

       In this chapter:
       (1) Claimant.--The term ``Claimant'' means Coeur Rochester, 
     Inc.
       (2) County.--The term ``County'' means Pershing County, 
     Nevada.
       (3) General mining law.--The term ``general mining law'' 
     means the provisions of law codified in chapters 2, 12, 12A, 
     15, and 16 of title 30, United States Code, and in sections 
     161 and 162 of such title.
       (4) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.

     SEC. 6203. LAND CONVEYANCE.

       (a) Conveyance of Land.--Notwithstanding any other 
     provision of law, and not later than 90 days after the date 
     of the enactment of this Act, the Secretary shall convey to 
     the Claimant, in return for a payment of $500 per acre, all 
     right, title, and interest, subject to the terms and 
     conditions of subsection (c), in the approximately 7,000 
     acres of Federal lands subject to Claimant's mining claims 
     maintained under the general mining law and depicted on the 
     Rochester Sustainable Development Project map on file with 
     the Committee on Resources of the House of Representatives.
       (b) Exemption From Review, Etc.--Any conveyance of land 
     under this chapter is not subject to review, consultation, or 
     approval under any other Federal law.
       (c) Terms and Conditions of Conveyance.--
       (1) No impact on legal obligations.--Conveyance of the 
     lands pursuant to subsection (a) shall not affect Claimant's 
     legal obligations to comply with applicable Federal mine 
     closure or mine land reclamation laws, or with any other 
     applicable Federal or State requirement relating to closure 
     of the Rochester Mine and use of the land comprising such 
     mine, including any requirement to prepare any environmental 
     impact statement under the National Environmental Policy Act 
     of 1969. Federal reclamation and closure obligations shall 
     not be construed to require removal of infrastructure 
     identified by Claimant as being usable by a post-mining land 
     use.
       (2) Title to materials and minerals.--Notwithstanding any 
     other provision of law, Claimant shall own and have title to 
     all spent ore, waste rock and tailings, and other materials 
     located on lands conveyed pursuant to subsection (a).
       (3) Valid existing rights.--All lands conveyed pursuant to 
     subsection (a) shall be subject to valid existing rights 
     existing as of the date of transfer of title, and Claimant

[[Page H10603]]

     shall succeed to the rights and obligations of the United 
     States with respect to any mining claim, mill site claim, 
     lease, right-of-way, permit, or other valid existing right to 
     which the property is subject.
       (4) Environmental liability.--Notwithstanding any other 
     Federal, State or local law, the United States shall not be 
     responsible for--
       (A) investigating or disclosing the condition of any 
     property to be conveyed under this chapter; and
       (B) environmental remediation, waste management, or 
     environmental compliance activities arising from its 
     ownership, occupancy, or management of land and interests 
     therein conveyed under this chapter with respect to 
     conditions existing at or on the land at the time of the 
     conveyance.

     SEC. 6204. DISPOSITION OF PROCEEDS.

       The gross proceeds of conveyances of land under this 
     chapter shall be used as follows:
       (1) Such sums as are necessary shall be used to cover 100 
     percent of the administrative costs, not to exceed $20,000, 
     incurred by the Nevada State Office and the Winnemucca Field 
     Office of the Bureau of Land Management in conducting the 
     conveyance under this chapter.
       (2) $500,000 shall be paid directly to the State of Nevada 
     for use in the State's abandoned mined land program.
       (3) $100,000 shall be paid directly to Pershing County, 
     Nevada.
       (4) Proceeds remaining after the payments pursuant to 
     paragraphs (1) through (3) shall be deposited in the general 
     fund of the Treasury.

          CHAPTER 2--DISPOSAL OF CERTAIN PUBLIC LANDS IN IDAHO

     SEC. 6211. SHORT TITLE.

       This chapter may be cited as the ``Central Idaho 
     Sustainable Development in Mining Act''.

     SEC. 6212. DEFINITIONS.

       In this chapter:
       (1) Claimant.--The term ``Claimant'' means TDS LLC, an 
     affiliated company of L&W Stone Corporation.
       (2) County.--The term ``County'' means Custer County, 
     Idaho.
       (3) General mining law.--The term ``general mining law'' 
     means the provisions of law codified in chapters 2, 12A, 15, 
     and 16 of title 30, United States Code, and in sections 161 
     and 162 of such title.
       (4) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.

     SEC. 6213. LAND CONVEYANCE.

       (a) Conveyance of Land.--Notwithstanding any other 
     provision of law, and not later than 90 days after the date 
     of the enactment of this Act, the Secretary shall convey to 
     the Claimant, in return for a payment of $1,000 per acre, all 
     right, title, and interest, subject to the terms and 
     conditions of subsection (c), in the approximately 519.7 
     acres of Federal lands subject to Claimant's mining claims 
     maintained under the general mining law and depicted as 
     ``proposed land exchange alignment'' on the Central Idaho 
     Sustainable Development Project map on file with the 
     Committee on Resources of the House of Representatives.
       (b) Exemption From Review, Etc.--Any conveyance of land 
     under this chapter is not subject to review, consultation, or 
     approval under any other Federal law.
       (c) Terms and Conditions of Conveyance.--
       (1) Transfer of fee title in federal lands.--
     Notwithstanding any other provision of law, full fee title in 
     approximately 519.7 acres of Federal lands described in 
     subsection (a) shall be transferred to Claimant as depicted 
     as ``proposed land exchange alignment'' on the Central Idaho 
     Sustainable Development Project map.
       (2) Valid existing rights.--All lands conveyed pursuant to 
     subsection (a) shall be subject to valid existing rights 
     existing as of the date of transfer of title, and Claimant 
     shall succeed to the rights and obligations of the United 
     States with respect to any mining claim, mill site claim, 
     lease, right-of-way, permit, or other valid existing right to 
     which the property is subject.
       (3) Environmental liability.--Notwithstanding any other 
     Federal, State, or local law, the United States shall not be 
     responsible for--
       (A) investigating or disclosing the condition of any 
     property to be conveyed under this chapter; and
       (B) environmental remediation, waste management, or 
     environmental compliance activities arising from its 
     ownership, occupancy, or management of land and interests 
     therein conveyed under this chapter with respect to 
     conditions existing at or on the land at the time of the 
     conveyance.

     SEC. 6214. DISPOSITION OF PROCEEDS.

       Within one year of the completion of the conveyance under 
     this chapter, the gross proceeds of the conveyance shall be 
     used as follows:
       (1) Such sums as are necessary shall be used to cover 100 
     percent of the administrative costs, not to exceed $15,000, 
     incurred by the Idaho State Office and the Challis Field 
     Office of the Bureau of Land Management in conducting 
     conveyances under this chapter.
       (2) $200,000 shall be paid directly to the State of Idaho 
     for use in the State Parks program.
       (3) $200,000 shall be paid directly to Custer County, 
     Idaho.
       (4) Proceeds remaining after the payments pursuant to 
     paragraphs (1) through (3) shall be deposited in the general 
     fund of the Treasury.

                         Subtitle C--Oil Shale

     SEC. 6301. OIL SHALE AND TAR SANDS AMENDMENTS.

       (a) Commercial Leasing of Oil Shale and Tar Sands.--Section 
     369(e) of the Energy Policy Act of 2005 (Public Law 109-58) 
     is amended to read as follows:
       ``(e) Commencement of Commercial Leasing of Oil Shale and 
     Tar Sand.--Not later than 365 days after publication of the 
     final regulation required by subsection (d), the Secretary 
     shall hold the first oil shale and tar sands lease sales 
     under the regulation, offering for lease a minimum of 35 
     percent of the Federal lands that are geologically 
     prospective for oil shale and tar sands within Colorado, 
     Utah, and Wyoming. The environmental impact statement 
     developed in support of the commercial leasing program for 
     oil shale and tar sands as required by subsection (c) is 
     deemed to provide adequate environmental analysis for all oil 
     shale and tar sands lease sales conducted within the first 10 
     years after promulgation of the regulation, and such sales 
     shall not be subject to further environmental analysis.''.
       (b) Repeal of Requirement to Establish Payments.--Section 
     369(o) of the Energy Policy Act of 2005 (Public Law 109-58; 
     119 Stat. 728; 42 U.S.C. 15927) is repealed.
       (c) Treatment of Revenues.--Section 21 of the Mineral 
     Leasing Act (30 U.S.C. 241) is amended by adding at the end 
     the following:
       ``(e) Revenues.--
       ``(1) In general.--Notwithstanding the provisions of 
     section 35, all revenues received from and under an oil shale 
     or tar sands lease shall be disposed of as provided in this 
     subsection.
       ``(2) Royalty rates for commercial leases.--
       ``(A) Initial production.--For the first 10 years after 
     initial production under each oil shale or tar sands lease 
     issued under the commercial leasing program established under 
     subsection (d), the Secretary shall set the royalty rate at 
     not less than 1 percent nor more than 3 percent of the gross 
     value of production. However, the initial production period 
     royalty rate set by the Secretary shall not apply to 
     production occurring more than 15 years after the date of 
     issuance of the lease.
       ``(B) Subsequent periods.--After the periods of time 
     specified in subparagraph (A), the Secretary shall set the 
     royalty rate on each oil shale or tar sands lease issued 
     under the commercial leasing program established under 
     subsection (d) at not less than 6 percent nor more than 9 
     percent of the gross value of production.
       ``(C) Reduction.--The Secretary shall reduce any royalty 
     otherwise required to be paid under subparagraphs (A) and (B) 
     under any oil shale or tar sands lease on a sliding scale 
     based upon market price, with a 10 percent reduction if the 
     monthly average price of NYMEX West Texas Intermediate crude 
     oil at Cushing, Oklahoma, (WTI) drops below $50 (in 2005 
     dollars) for the month in which the production is sold, and 
     an 80 percent reduction if the monthly average price of WTI 
     drops below $30 (in 2005 dollars) for the month in which the 
     production is sold.
       ``(3) Disposition of revenues.--
       ``(A) Deposit.--The Secretary shall deposit into a separate 
     account in the Treasury all revenues derived from any oil 
     shale or tar sands lease.
       ``(B) Allocations to states and local political 
     subdivisions.--The Secretary shall allocate 50 percent of the 
     revenues deposited into the account established under 
     subparagraph (A) to the State within the boundaries of which 
     the leased lands are located, with a portion of that to be 
     paid directly by the Secretary to the State's local political 
     subdivisions as provided in this paragraph.
       ``(C) Transmission of allocations.--
       ``(i) In general.--Not later than the last business day of 
     the month after the month in which the revenues were 
     received, the Secretary shall transmit--

       ``(I) to each State two-thirds of such State's allocations 
     under subparagraph (B), and in accordance with clauses (ii) 
     and (iii) to certain county-equivalent and municipal 
     political subdivisions of such State a total of one-third of 
     such State's allocations under subparagraph (B), together 
     with all accrued interest thereon; and
       ``(II) the remaining balance of such revenues deposited 
     into the account that are not allocated under subparagraph 
     (B), together with interest thereon, shall be transmitted to 
     the miscellaneous receipts account of the Treasury, except 
     that until a lease has been in production for 10 years 80 
     percent of such remaining balance derived from a lease shall 
     be paid in accordance with subclause (I).

       ``(ii) Allocations to certain county-equivalent political 
     subdivisions.--The Secretary shall under clause (i)(I) make 
     equitable allocations of the revenues to county-equivalent 
     political subdivisions that the Secretary determines are 
     closely associated with the leasing and production of oil 
     shale and tar sands, under a formula that the Secretary shall 
     determine by regulation.
       ``(iii) Allocations to municipal political subdivisions.--
     The initial allocation to each county-equivalent political 
     subdivision under clause (ii) shall be further allocated to 
     the county-equivalent political subdivision and any municipal 
     political subdivisions located partially or wholly within the 
     boundaries of the county-equivalent political subdivision on 
     an equitable basis under a formula that the Secretary shall 
     determine by regulation.

[[Page H10604]]

       ``(D) Investment of deposits.--The deposits in the Treasury 
     account established under this section shall be invested by 
     the Secretary of the Treasury in securities backed by the 
     full faith and credit of the United States having maturities 
     suitable to the needs of the account and yielding the highest 
     reasonably available interest rates as determined by the 
     Secretary of the Treasury.
       ``(E) Use of funds.--A recipient of funds under this 
     subsection may use the funds for any lawful purpose as 
     determined by State law. Funds allocated under this 
     subsection to States and local political subdivisions may be 
     used as matching funds for other Federal programs without 
     limitation. Funds allocated to local political subdivisions 
     under this subsection may not be used in calculation of 
     payments to such local political subdivisions under programs 
     for payments in lieu of taxes or other similar programs.
       ``(F) No accounting required.--No recipient of funds under 
     this subsection shall be required to account to the Federal 
     Government for the expenditure of such funds, except as 
     otherwise may be required by law.
       ``(4) Definitions.--In this subsection:
       ``(A) County-equivalent political subdivision.--The term 
     `county-equivalent political subdivision' means a political 
     jurisdiction immediately below the level of State government, 
     including a county, parish, borough in Alaska, independent 
     municipality not part of a county, parish, or borough in 
     Alaska, or other equivalent subdivision of a State.
       ``(B) Municipal political subdivision.--The term `municipal 
     political subdivision' means a municipality located within 
     and part of a county, parish, borough in Alaska, or other 
     equivalent subdivision of a State.''.

            Subtitle D--Sale and Conveyance of Federal Land

     SEC. 6401. COLLECTION OF RECEIPTS FROM THE SALE OF FEDERAL 
                   LANDS.

       (a) In General.--Notwithstanding any other law, the 
     Secretary shall make the lands described in subsection (b) 
     available for immediate sale through a competitive sale 
     process at fair market value. Requirements under the National 
     Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) 
     shall not apply to the sale of lands under this section.
       (b) Lands Described.--The lands referred to in subsection 
     (a) are the following:
       (1) Poplar Point (Transfer and Conveyance of Properties in 
     the District of Columbia, Map Number 869/80460, Dated July 
     2005, p. 28 of 28).
       (2) U.S. Reservations 44, 45, 46, 47, 48 and 49 (Map Number 
     869/80460, Dated July 2005, p. 13 of 28).
       (3) U.S. Reservation 251 (Map Number 869/80460, Dated July 
     2005, p. 14 of 28).
       (4) U.S. Reservation 8 (Map Number 869/80460, Dated July 
     2005, p. 15 of 28).
       (5) U.S. Reservation 17A (Map Number 869/80460, Dated July 
     2005, p. 20 of 28).
       (6) U.S. Reservation 484 (Map Number 869/80460, Dated July 
     2005, p. 21 of 28).
       (7) U.S. Reservation 721, 722 and 723 (Map Number 869/
     80460, Dated July 2005, p. 25 of 28).
       (8) Certain land adjacent to Robert F. Kennedy Stadium 
     Parking Lot (Transfer and Conveyance of Properties in the 
     District of Columbia, Map Number 869/80460, Dated July 2005, 
     p. 26 of 28).
       (9) United States Reservation 243, 244, 245, and 247 
     (Transfer and Conveyance of Properties in the District of 
     Columbia, Map Number 869/80460, Dated July 2005, p. 22 of 
     28).
     The Secretary may retain from sale proceeds and spend without 
     further appropriation up to $1,000,000 each year to implement 
     land sales under this subsection, including hiring 
     contractors and appraisers
       (c) Poplar Point.--
       (1) Retention of funds.--The Secretary may retain 
     $10,000,000 from funds received from the sale of land under 
     subsection (b)(1) and spend such funds without further 
     appropriations for the purposes of complying with 
     subparagraph (2).
       (2) Continuity of operation.--Before the sale and 
     development of land referred to in subparagraph (b)(1), the 
     Secretary shall ensure that the existing facilities and 
     related properties (including necessary easements and 
     utilities related thereto) occupied or otherwise used by the 
     National Park Service are either withheld from any sale and 
     remain in operation at its current location or will be 
     relocated to suitable replacement facilities along the 
     Anacostia River in the District of Columbia using funds made 
     available by subparagraph (c)(1).
       (d) Conveyance of Lands to the District of Columbia.--
       (1) In general.--Notwithstanding any other law, the 
     Secretary shall immediately convey all right, title, and 
     interest of the United States in the lands described in this 
     subsection to the District of Columbia upon enactment of this 
     section. Requirements under the National Environmental Policy 
     Act (42 U.S.C. 4321 et seq.) shall not apply to the 
     conveyance of lands under this subsection.
       (2) Lands described.--The lands referred to in this 
     subsection are as follows:
       (A) United States Reservation 128, 129, 130, 298 and 299 
     (Transfer and Conveyance of Properties in the District of 
     Columbia, Map Number 869/80460, Dated July 2005, p. 23 of 
     28).
       (B) United States Reservation 174 (Map Number 869/80460, 
     Dated July 2005, p. 27 of 28).
       (C) United States Reservation 277A and 277C (Map Number 
     869/80460, Dated July 2005, p. 16 of 28).
       (D) United States Reservation 343D and 343E (Map Number 
     869/80460, Dated July 2005, p. 24 or 28).
       (E) United States Reservation 404 (Map Number 869/80460, 
     Dated July 2005, p. 12 of 28).
       (F) United States Reservation 451 (Map Number 869/80460, 
     Dated July 2005, p. 11 of 28).
       (G) United States Reservation 470 (Transfer and Conveyance 
     of Properties in the District of Columbia, Map Number 869/
     80460, Dated July 2005, p. 17 of 28).
       (e) Transfer of Administrative Jurisdiction Over Certain 
     Properties.--
       (1) In general.--Upon the date of the enactment of this 
     subsection, administrative jurisdiction over each of the 
     following properties (owned by the United States and as 
     depicted on listed maps) is hereby transferred from the 
     District of Columbia to the United States for administration 
     by the Secretary of the Interior through the Director of the 
     National Park Service:
       (A) An unimproved portion of Audubon Terrace Northwest, 
     located east of Linnean Avenue Northwest, that is within U.S. 
     Reservation 402 (Audubon Terrace, NW, Transfer and Conveyance 
     of Properties in the District of Columbia, Map Number 869/
     80460, Dated July 2005, p. 2 of 28) .
       (B) An unimproved portion of Barnaby Street Northwest, 
     north of Aberfoyle Place Northwest, that abuts U.S. 
     Reservation 545 (Barnaby Avenue, NW, Map Number 869/80460, 
     Dated July 2005, p. 3 of 28).
       (C) A portion of Canal Street Southwest, and a portion of V 
     Street Southwest, each which abuts U.S. Reservation (Canal 
     and V Streets, SW, Map Number 869/80460, Dated July 2005, p. 
     3 of 28).
       (D) Unimproved streets and alleys at Fort Circle Park 
     located within the boundaries of U.S. Reservation 497 (Fort 
     Circle Park, Map Number 869/80460, Dated July 2005, p. 5 of 
     28)''.
       (E) An unimproved portion of Western Avenue Northwest, 
     north of Oregon Avenue Northwest, that abuts U.S. Reservation 
     339 (Western Avenue, NW, Map Number 869/80460, Dated July 
     2005, p. 6 of 28).
       (F) An unimproved portion of 17th Street Northwest, south 
     of Shepard Street Northwest, that abuts U.S. Reservation 339 
     (17th Street, NW, Map Number 869/80460, Dated July 2005, p. 7 
     of 28).
       (G) An unimproved portion of 30th Street Northwest, north 
     of Broad Branch Road, Northwest, that is within the 
     boundaries of U.S. Reservation 515 (30th Street, NW, Map 
     Number 869/80460, Dated July 2005, p. 8 of 28).
       (H) Land over I-395 at Washington Avenue, Southwest (Lands 
     over I-395 at Washington Avenue, SW, Map Number 869/80460, 
     Dated July 2005, p. 9 of 28).
       (I) A portion of U.S. Reservation 357 at Whitehaven Parkway 
     Northwest, previously transferred to the District of Columbia 
     in conjunction with the former proposal for a residence for 
     the Mayor of the District of Columbia (Portion of U.S. 
     Reservation 357, Transfer and Conveyance of Properties in the 
     District of Columbia, Map Number 869/80460, Dated July 2005, 
     p. 10 of 28).
       (2) Use of certain property for memorial.--In the case of 
     the property for which administrative jurisdiction is 
     transferred under paragraph (1)(H), the property shall be 
     used as the site for the establishment of a memorial to honor 
     disabled veterans of the United States Armed Forces 
     authorized to be established by the Disabled Veterans' LIFE 
     Memorial Foundation by Public Law 106-348 (114 Stat. 1358; 40 
     U.S.C. 8903 note), except that the District of Columbia shall 
     retain administrative jurisdiction over the subsurface area 
     beneath the site for tunnels, walls, footings, and related 
     facilities.

       TITLE VII--COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

     SEC. 7001. EXTENSION OF VESSEL TONNAGE DUTIES.

       (a) Extension of Duties.--Section 36 of the Act entitled 
     ``An Act to provide revenue, equalize duties and encourage 
     the industries of the United States, and for other 
     purposes'', approved August 5, 1909 (36 Stat. 111; 46 U.S.C. 
     App. 121), is amended--
       (1) by striking ``9 cents per ton'' and all that follows 
     through ``2002,'' the first place it appears and inserting 
     ``4.5 cents per ton, not to exceed in the aggregate 22.5 
     cents per ton in any one year, for fiscal years 2006 through 
     2010,''; and
       (2) by striking ``27 cents per ton'' and all that follows 
     through ``2002,'' and inserting ``13.5 cents per ton, not to 
     exceed 67.5 cents per ton per annum, for fiscal years 2006 
     through 2010,''.
       (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 U.S.C. 
     App. 132), is amended by striking ``9 cents per ton'' and all 
     that follows through ``and 2 cents'' and inserting ``4.5 
     cents per ton, not to exceed in the aggregate 22.5 cents per 
     ton in any one year, for fiscal years 2006 through 2010, and 
     2 cents''.
       (c) Offsetting Receipts.--Increased tonnage charges 
     collected as a result of the amendments made by subsection 
     (a) shall be deposited in the general fund of the Treasury as 
     offsetting receipts of the department in which the Coast 
     Guard is operating and ascribed to Coast Guard activities 
     related to marine safety, search and rescue, and aids to 
     navigation.

                TITLE VIII--COMMITTEE ON WAYS AND MEANS

     SEC. 8001. SHORT TITLE.

       This title may be cited as the ``Work, Marriage, and Family 
     Promotion Reconciliation Act of 2005''.

[[Page H10605]]

     SEC. 8002. TABLE OF CONTENTS.

       The table of contents of this title is as follows:

Sec. 8001. Short title.
Sec. 8002. Table of contents.
Sec. 8003. References.
Sec. 8004. Findings.

                            Subtitle A--TANF

Sec. 8101. Purposes.
Sec. 8102. Family assistance grants.
Sec. 8103. Promotion of family formation and healthy marriage.
Sec. 8104. Supplemental grant for population increases in certain 
              States.
Sec. 8105. Elimination of high performance bonus.
Sec. 8106. Contingency fund.
Sec. 8107. Use of funds.
Sec. 8108. Repeal of Federal loan for State welfare programs.
Sec. 8109. Universal engagement and family self-sufficiency plan 
              requirements.
Sec. 8110. Work participation requirements.
Sec. 8111. Maintenance of effort.
Sec. 8112. Performance improvement.
Sec. 8113. Data collection and reporting.
Sec. 8114. Direct funding and administration by Indian tribes.
Sec. 8115. Research, evaluations, and national studies.
Sec. 8116. Study by the Census Bureau.
Sec. 8117. Definition of assistance.
Sec. 8118. Technical corrections.
Sec. 8119. Fatherhood program.
Sec. 8120. State option to make TANF programs mandatory partners with 
              one-stop employment training centers.
Sec. 8121. Sense of the Congress.
Sec. 8122. Drug testing of applicants for and recipients of assistance.

                         Subtitle B--Child care

Sec. 8201. Entitlement funding.

                       Subtitle C--Child support

Sec. 8301. Federal matching funds for limited pass through of child 
              support payments to families receiving TANF.
Sec. 8302. State option to pass through all child support payments to 
              families that formerly received TANF.
Sec. 8303. Mandatory review and adjustment of child support orders for 
              families receiving TANF.
Sec. 8304. Mandatory fee for successful child support collection for 
              family that has never received TANF.
Sec. 8305. Report on undistributed child support payments.
Sec. 8306. Decrease in amount of child support arrearage triggering 
              passport denial.
Sec. 8307. Use of tax refund intercept program to collect past-due 
              child support on behalf of children who are not minors.
Sec. 8308. Garnishment of compensation paid to veterans for service-
              connected disabilities in order to enforce child support 
              obligations.
Sec. 8309. Maintenance of technical assistance funding.
Sec. 8310. Maintenance of Federal Parent Locator Service funding.
Sec. 8311. Information comparisons with insurance data.
Sec. 8312. Tribal access to the Federal Parent Locator Service.
Sec. 8313. Reimbursement of Secretary's costs of information 
              comparisons and disclosure for enforcement of obligations 
              on Higher Education Act loans and grants.
Sec. 8314. Technical amendment relating to cooperative agreements 
              between States and Indian tribes.
Sec. 8315. State option to use statewide automated data processing and 
              information retrieval system for interstate cases.
Sec. 8316. Modification of rule requiring assignment of support rights 
              as a condition of receiving TANF.
Sec. 8317. State option to discontinue certain support assignments.
Sec. 8318. Technical correction.
Sec. 8319. Reduction in rate of reimbursement of child support 
              administrative expenses.
Sec. 8320. Incentive payments.

                       Subtitle D--Child welfare

Sec. 8401. Extension of authority to approve demonstration projects.
Sec. 8402. Elimination of limitation on number of waivers.
Sec. 8403. Elimination of limitation on number of States that may be 
              granted waivers to conduct demonstration projects on same 
              topic.
Sec. 8404. Elimination of limitation on number of waivers that may be 
              granted to a single State for demonstration projects.
Sec. 8405. Streamlined process for consideration of amendments to and 
              extensions of demonstration projects requiring waivers.
Sec. 8406. Availability of reports.
Sec. 8407. Clarification of eligibility for foster care maintenance 
              payments and adoption assistance.
Sec. 8408. Clarification regarding Federal matching of certain 
              administrative costs under the foster care maintenance 
              payments program.
Sec. 8409. Technical correction.
Sec. 8410. Technical correction.

                Subtitle E--Supplemental security income

Sec. 8501. Review of State agency blindness and disability 
              determinations.
Sec. 8502. Payment of certain lump sum benefits in installments under 
              the Supplemental Security Income program.

                Subtitle F--State and local flexibility

Sec. 8601. Program coordination demonstration projects.

       Subtitle G--Repeal of continued dumping and subsidy offset

Sec. 8701. Repeal of continued dumping and subsidy offset.

                       Subtitle H--Effective date

Sec. 8801. Effective date.

     SEC. 8003. REFERENCES.

       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 
     amendment or repeal shall be considered to be made to a 
     section or other provision of the Social Security Act.

     SEC. 8004. FINDINGS.

       The Congress makes the following findings:
       (1) The Temporary Assistance for Needy Families (TANF) 
     Program established by the Personal Responsibility and Work 
     Opportunity Reconciliation Act of 1996 (Public Law 104-193) 
     has succeeded in moving families from welfare to work and 
     reducing child poverty.
       (A) There has been a dramatic increase in the employment of 
     current and former welfare recipients. The percentage of 
     working recipients reached an all-time high in fiscal year 
     1999 and continued steady in fiscal years 2000 and 2001. In 
     fiscal year 2003, 31.3 percent of adult recipients were 
     counted as meeting the work participation requirements. All 
     States but one met the overall participation rate standard in 
     fiscal year 2003, as did the District of Columbia and Puerto 
     Rico.
       (B) Earnings for welfare recipients remaining on the rolls 
     have also increased significantly, as have earnings for 
     female-headed households. The increases have been 
     particularly large for the bottom 2 income quintiles, that 
     is, those women who are most likely to be former or present 
     welfare recipients.
       (C) Welfare dependency has plummeted. As of June 2004, 
     1,969,909 families and 4,727,291 individuals were receiving 
     assistance. Accordingly, the number of families in the 
     welfare caseload and the number of individuals receiving cash 
     assistance declined 55 percent and 61 percent, respectively, 
     since the enactment of TANF.
       (D) The child poverty rate continued to decline between 
     1996 and 2003, falling 14 percent from 20.5 to 17.6 percent. 
     Child poverty rates for African-American and Hispanic 
     children have also fallen dramatically during the past 7 
     years.
       (2) As a Nation, we have made substantial progress in 
     reducing teen pregnancies and births, slowing increases in 
     nonmarital childbearing, and improving child support 
     collections and paternity establishment.
       (A) The birth rate to teenagers declined 30 percent from 
     its high in 1991 to 2002. The 2002 teenage birth rate of 43.0 
     per 1,000 women aged 15-19 is the lowest recorded birth rate 
     for teenagers.
       (B) During the period from 1991 through 2001, teenage birth 
     rates fell in all States and the District of Columbia, Puerto 
     Rico, Guam, and the Virgin Islands. Declines also have 
     spanned age, racial, and ethnic groups. There has been 
     success in lowering the birth rate for both younger and older 
     teens. The birth rate for those 15-17 years of age has 
     declined 40 percent since 1991, and the rate for those 18 and 
     19 has declined 23 percent. The rate for African American 
     teens--until recently the highest--has declined the most--42 
     percent from 1991 through 2002.
       (C) Since the enactment of the Personal Responsibility and 
     Work Opportunity Reconciliation Act of 1996, child support 
     collections within the child support enforcement system have 
     grown every year, increasing from $12,000,000,000 in fiscal 
     year 1996 to over $21,000,000,000 in fiscal year 2003. The 
     number of paternities established or acknowledged in fiscal 
     year 2003 (over 1,500,000) includes a more than 100 percent 
     increase through in-hospital acknowledgement programs--
     862,043 in 2003 compared to 324,652 in 1996. Child support 
     collections were made in nearly 8,000,000 cases in fiscal 
     year 2003, significantly more than the almost 4,000,000 cases 
     having a collection in 1996.
       (3) The Personal Responsibility and Work Opportunity 
     Reconciliation Act of 1996 gave States great flexibility in 
     the use of Federal funds to develop innovative programs to 
     help families leave welfare and begin employment and to 
     encourage the formation of 2-parent families.
       (A) Total Federal and State TANF expenditures in fiscal 
     year 2003 were $26,300,000,000, up from $25,400,000,000 in 
     fiscal year 2002 and $22,600,000,000 in fiscal year 1999. 
     This increased spending is attributable to significant new 
     investments in supportive services in the TANF program, such 
     as child care and activities to support work.
       (B) Since the welfare reform effort began there has been a 
     dramatic increase in work participation (including 
     employment, community service, and work experience) among 
     welfare recipients, as well as an unprecedented reduction in 
     the caseload because recipients have left welfare for work.

[[Page H10606]]

       (C) States are making policy choices and investment 
     decisions best suited to the needs of their citizens.
       (i) To expand aid to working families, almost all States 
     disregard a portion of a family's earned income when 
     determining benefit levels.
       (ii) Most States increased the limits on countable assets 
     above the former Aid to Families with Dependent Children 
     (AFDC) program. Every State has increased the vehicle asset 
     level above the prior AFDC limit for a family's primary 
     automobile.
       (iii) States are experimenting with programs to promote 
     marriage and paternal involvement. Over half of the States 
     have eliminated restrictions on 2-parent families. Many 
     States use TANF, child support, or State funds to support 
     community-based activities to help fathers become more 
     involved in their children's lives or strengthen 
     relationships between mothers and fathers.
       (4) However, despite this success, there is still progress 
     to be made. Policies that support and promote more work, 
     strengthen families, and enhance State flexibility are 
     necessary to continue to build on the success of welfare 
     reform.
       (A) Significant numbers of welfare recipients still are not 
     engaged in employment-related activities. While all States 
     have met the overall work participation rates required by 
     law, in an average month, only 41 percent of all families 
     with an adult participated in work activities that were 
     countable toward the State's participation rate. In fiscal 
     year 2003, four jurisdictions failed to meet the more 
     rigorous 2-parent work requirements, and 25 jurisdictions 
     (States and territories) are not subject to the 2-parent 
     requirements, most because they moved their 2-parent cases to 
     separate State programs where they are not subject to a 
     penalty for failing the 2-parent rates.
       (B) In 2002, 34 percent of all births in the U.S. were to 
     unmarried women. And, with fewer teens entering marriage, the 
     proportion of births to unmarried teens has increased 
     dramatically (80 percent in 2002 versus 30 percent in 1970). 
     The negative consequences of out-of-wedlock birth on the 
     mother, the child, the family, and society are well 
     documented. These include increased likelihood of welfare 
     dependency, increased risks of low birth weight, poor 
     cognitive development, child abuse and neglect, and teen 
     parenthood, and decreased likelihood of having an intact 
     marriage during adulthood.
       (C) There has been a dramatic rise in cohabitation as 
     marriages have declined. It is estimated that 40 percent of 
     children are expected to live in a cohabiting-parent family 
     at some point during their childhood. Children in single-
     parent households and cohabiting-parent households are at 
     much higher risk of child abuse than children in intact 
     married families.
       (D) Children who live apart from their biological fathers, 
     on average, are more likely to be poor, experience 
     educational, health, emotional, and psychological problems, 
     be victims of child abuse, engage in criminal behavior, and 
     become involved with the juvenile justice system than their 
     peers who live with their married, biological mother and 
     father. A child living with a single mother is nearly 5 times 
     as likely to be poor as a child living in a married-couple 
     family. In 2003, in married-couple families, the child 
     poverty rate was 8.6 percent, and in households headed by a 
     single mother the poverty rate was 41.7 percent.
       (5) Therefore, it is the sense of the Congress that 
     increasing success in moving families from welfare to work, 
     as well as in promoting healthy marriage and other means of 
     improving child well-being, are very important Government 
     interests and the policy contained in part A of title IV of 
     the Social Security Act (as amended by this title) is 
     intended to serve those ends.

                            Subtitle A--TANF

     SEC. 8101. PURPOSES.

       Section 401(a) (42 U.S.C. 601(a)) is amended--
       (1) in the matter preceding paragraph (1), by striking 
     ``increase'' and inserting ``improve child well-being by 
     increasing'';
       (2) in paragraph (1), by inserting ``and services'' after 
     ``assistance'';
       (3) in paragraph (2), by striking ``parents on government 
     benefits'' and inserting ``families on government benefits 
     and reduce poverty''; and
       (4) in paragraph (4), by striking ``two-parent families'' 
     and inserting ``healthy, 2-parent married families, and 
     encourage responsible fatherhood''.

     SEC. 8102. FAMILY ASSISTANCE GRANTS.

       (a) Extension of Authority.--Section 403(a)(1)(A) (42 
     U.S.C. 603(a)(1)(A)) is amended--
       (1) by striking ``1996, 1997, 1998, 1999, 2000, 2001, 2002, 
     and 2003'' and inserting ``2006 through 2010''; and
       (2) by inserting ``payable to the State for the fiscal 
     year'' before the period.
       (b) State Family Assistance Grant.--Section 403(a)(1)(C) 
     (42 U.S.C. 603(a)(1)(C)) is amended by striking ``fiscal year 
     2003'' and inserting ``each of fiscal years 2006 through 
     2010''.
       (c) Matching Grants for the Territories.--Section 
     1108(b)(2) (42 U.S.C. 1308(b)(2)) is amended by striking 
     ``1997 through 2003'' and inserting ``2006 through 2010''.

     SEC. 8103. PROMOTION OF FAMILY FORMATION AND HEALTHY 
                   MARRIAGE.

       (a) State Plans.--Section 402(a)(1)(A) (42 U.S.C. 
     602(a)(1)(A)) is amended by adding at the end the following:
       ``(vii) Encourage equitable treatment of married, 2-parent 
     families under the program referred to in clause (i).''.
       (b) Healthy Marriage Promotion Grants; Repeal of Bonus for 
     Reduction of Illegitimacy Ratio.--Section 403(a)(2) (42 
     U.S.C. 603(a)(2)) is amended to read as follows:
       ``(2) Healthy marriage promotion grants.--
       ``(A) Authority.--The Secretary shall award competitive 
     grants to States, territories, and tribal organizations for 
     not more than 50 percent of the cost of developing and 
     implementing innovative programs to promote and support 
     healthy, married, 2-parent families.
       ``(B) Healthy marriage promotion activities.--Funds 
     provided under subparagraph (A) shall be used to support any 
     of the following programs or activities:
       ``(i) Public advertising campaigns on the value of marriage 
     and the skills needed to increase marital stability and 
     health.
       ``(ii) Education in high schools on the value of marriage, 
     relationship skills, and budgeting.
       ``(iii) Marriage education, marriage skills, and 
     relationship skills programs, that may include parenting 
     skills, financial management, conflict resolution, and job 
     and career advancement, for non-married pregnant women and 
     non-married expectant fathers.
       ``(iv) Pre-marital education and marriage skills training 
     for engaged couples and for couples or individuals interested 
     in marriage.
       ``(v) Marriage enhancement and marriage skills training 
     programs for married couples.
       ``(vi) Divorce reduction programs that teach relationship 
     skills.
       ``(vii) Marriage mentoring programs which use married 
     couples as role models and mentors in at-risk communities.
       ``(viii) Programs to reduce the disincentives to marriage 
     in means-tested aid programs, if offered in conjunction with 
     any activity described in this subparagraph.
       ``(C) Voluntary participation.--
       ``(i) In general.--Participation in a program or activity 
     described in any of clauses (iii) through (viii) of 
     subparagraph (B) shall be voluntary.
       ``(ii) Requirements for receipt of funds.--The Secretary 
     may not award a grant under this paragraph to an applicant 
     for the grant, unless--

       ``(I) the application for the grant describes--

       ``(aa) how the programs or activities proposed in the 
     application will address, as appropriate, issues of domestic 
     violence; and
       ``(bb) what the applicant will do, to the extent relevant, 
     to ensure that participation in the programs or activities is 
     voluntary, and to inform potential participants that their 
     participation is voluntary; and

       ``(II) the applicant agrees that, as a condition of receipt 
     of the grant, the applicant will consult with experts in 
     domestic violence or relevant community domestic violence 
     coalitions in developing the programs and activities funded 
     with the grant.

       ``(D) Appropriation.--Out of any money in the Treasury of 
     the United States not otherwise appropriated, there are 
     appropriated for each of fiscal years 2006 through 2010 
     $100,000,000 for grants under this paragraph.''.
       (c) Counting of Spending on Non-Eligible Families to 
     Prevent and Reduce Incidence of Out-of-Wedlock Births, 
     Encourage Formation and Maintenance of Healthy, 2-Parent 
     Married Families, or Encourage Responsible Fatherhood.--
     Section 409(a)(7)(B)(i) (42 U.S.C. 609(a)(7)(B)(i)) is 
     amended by adding at the end the following:

       ``(V) Counting of spending on non-eligible families to 
     prevent and reduce incidence of out-of-wedlock births, 
     encourage formation and maintenance of healthy, 2-parent 
     married families, or encourage responsible fatherhood.--The 
     term `qualified State expenditures' includes the total 
     expenditures by the State during the fiscal year under all 
     State programs for a purpose described in paragraph (3) or 
     (4) of section 401(a).''.

     SEC. 8104. SUPPLEMENTAL GRANT FOR POPULATION INCREASES IN 
                   CERTAIN STATES.

       Section 403(a)(3) (42 U.S.C. 603(a)(3)) is amended--
       (1) in subparagraph (E)--
       (A) by striking ``1998, 1999, 2000, and 2001'' and 
     inserting ``2006 through 2009''; and
       (B) by striking ``, in a total amount not to exceed 
     $800,000,000'';
       (2) in subparagraph (G), by striking ``2001'' and inserting 
     ``2009''; and
       (3) by striking subparagraph (H) and inserting the 
     following:
       ``(H) Further preservation of grant amounts.--A State that 
     was a qualifying State under this paragraph for fiscal year 
     2004 or any prior fiscal year shall be entitled to receive 
     from the Secretary for each of fiscal years 2006 through 2009 
     a grant in an amount equal to the amount required to be paid 
     to the State under this paragraph for the most recent fiscal 
     year for which the State was a qualifying State.''.

     SEC. 8105. ELIMINATION OF HIGH PERFORMANCE BONUS.

       Section 403(a) (42 U.S.C. 603(a)) is amended by striking 
     paragraph (4).

     SEC. 8106. CONTINGENCY FUND.

       (a) Deposits Into Fund.--Section 403(b)(2) (42 U.S.C. 
     603(b)(2)) is amended--
       (1) by striking ``1997, 1998, 1999, 2000, 2001, 2002, and 
     2003'' and inserting ``2006 through 2010''; and

[[Page H10607]]

       (2) by striking all that follows ``$2,000,000,000'' and 
     inserting a period.
       (b) Grants.--Section 403(b)(3)(C)(ii) (42 U.S.C. 
     603(b)(3)(C)(ii)) is amended by striking ``fiscal years 1997 
     through 2006'' and inserting ``fiscal years 2006 through 
     2010''.
       (c) Definition of Needy State.--Clauses (i) and (ii) of 
     section 403(b)(5)(B) (42 U.S.C. 603(b)(5)(B)) are amended by 
     inserting after ``1996'' the following: ``and the Food Stamp 
     Act of 1977 as in effect during the corresponding 3-month 
     period in the fiscal year preceding such most recently 
     concluded 3-month period''.
       (d) Annual Reconciliation: Federal Matching of State 
     Expenditures Above ``Maintenance of Effort'' Level.--Section 
     403(b)(6) (42 U.S.C. 603(b)(6)) is amended--
       (1) in subparagraph (A)(ii)--
       (A) by adding ``and'' at the end of subclause (I);
       (B) by striking ``; and'' at the end of subclause (II) and 
     inserting a period; and
       (C) by striking subclause (III);
       (2) in subparagraph (B)(i)(II), by striking all that 
     follows ``section 409(a)(7)(B)(iii))'' and inserting a 
     period;
       (3) by amending subparagraph (B)(ii)(I) to read as follows:

       ``(I) the qualified State expenditures (as defined in 
     section 409(a)(7)(B)(i)) for the fiscal year; plus''; and

       (4) by striking subparagraph (C).
       (e) Consideration of Certain Child Care Expenditures in 
     Determining State Compliance With Contingency Fund 
     Maintenance of Effort Requirement.--Section 409(a)(10) (42 
     U.S.C. 609(a)(10)) is amended--
       (1) by striking ``(other than the expenditures described in 
     subclause (I)(bb) of that paragraph)) under the State program 
     funded under this part'' and inserting a close parenthesis; 
     and
       (2) by striking ``excluding any amount expended by the 
     State for child care under subsection (g) or (i) of section 
     402 (as in effect during fiscal year 1994) for fiscal year 
     1994,''.
       (f) Effective Date.--The amendments made by subsections 
     (c), (d), and (e) shall take effect on October 1, 2007.

     SEC. 8107. USE OF FUNDS.

       (a) General Rules.--Section 404(a)(2) (42 U.S.C. 604(a)(2)) 
     is amended by striking ``in any manner that'' and inserting 
     ``for any purposes or activities for which''.
       (b) Treatment of Interstate Immigrants.--
       (1) State plan provision.--Section 402(a)(1)(B) (42 U.S.C. 
     602(a)(1)(B)) is amended by striking clause (i) and 
     redesignating clauses (ii) through (iv) as clauses (i) 
     through (iii), respectively.
       (2) Use of funds.--Section 404 (42 U.S.C. 604) is amended 
     by striking subsection (c).
       (c) Increase in Amount Transferable to Child Care.--Section 
     404(d)(1) (42 U.S.C. 604(d)(1)) is amended by striking ``30'' 
     and inserting ``50''.
       (d) Increase in Amount Transferable to Title XX Programs.--
     Section 404(d)(2)(B) (42 U.S.C. 604(d)(2)(B)) is amended to 
     read as follows:
       ``(B) Applicable percent.--For purposes of subparagraph 
     (A), the applicable percent is 10 percent for fiscal year 
     2006 and each succeeding fiscal year.''.
       (e) Clarification of Authority of States to Use TANF Funds 
     Carried Over From Prior Years to Provide TANF Benefits and 
     Services.--Section 404(e) (42 U.S.C. 604(e)) is amended to 
     read as follows:
       ``(e) Authority to Carryover or Reserve Certain Amounts for 
     Benefits or Services or for Future Contingencies.--
       ``(1) Carryover.--A State or tribe may use a grant made to 
     the State or tribe under this part for any fiscal year to 
     provide, without fiscal year limitation, any benefit or 
     service that may be provided under the State or tribal 
     program funded under this part.
       ``(2) Contingency reserve.--A State or tribe may designate 
     any portion of a grant made to the State or tribe under this 
     part as a contingency reserve for future needs, and may use 
     any amount so designated to provide, without fiscal year 
     limitation, any benefit or service that may be provided under 
     the State or tribal program funded under this part. If a 
     State or tribe so designates a portion of such a grant, the 
     State shall, on an annual basis, include in its report under 
     section 411(a) the amount so designated.''.

     SEC. 8108. REPEAL OF FEDERAL LOAN FOR STATE WELFARE PROGRAMS.

       (a) Repeal.--Effective as of October 1, 2006, section 406 
     (42 U.S.C. 606) is repealed.
       (b) Conforming Amendments.--
       (1) Section 409(a) (42 U.S.C. 609(a)) is amended by 
     striking paragraph (6).
       (2) Section 412 (42 U.S.C. 612) is amended by striking 
     subsection (f) and redesignating subsections (g) through (i) 
     as subsections (f) through (h), respectively.
       (3) Section 1108(a)(2) (42 U.S.C. 1308(a)(2)) is amended by 
     striking ``406,''.

     SEC. 8109. UNIVERSAL ENGAGEMENT AND FAMILY SELF-SUFFICIENCY 
                   PLAN REQUIREMENTS.

       (a) Modification of State Plan Requirements.--Section 
     402(a)(1)(A) (42 U.S.C. 602(a)(1)(A)) is amended by striking 
     clauses (ii) and (iii) and inserting the following:
       ``(ii) Require a parent or caretaker receiving assistance 
     under the program to engage in work or alternative self-
     sufficiency activities (as defined by the State), consistent 
     with section 407(e)(2).
       ``(iii) Require families receiving assistance under the 
     program to engage in activities in accordance with family 
     self-sufficiency plans developed pursuant to section 
     408(b).''.
       (b) Establishment of Family Self-Sufficiency Plans.--
       (1) In general.--Section 408(b) (42 U.S.C. 608(b)) is 
     amended to read as follows:
       ``(b) Family Self-Sufficiency Plans.--
       ``(1) In general.--A State to which a grant is made under 
     section 403 shall--
       ``(A) assess, in the manner deemed appropriate by the 
     State, the skills, prior work experience, and employability 
     of each work-eligible individual (as defined in section 
     407(b)(2)(C)) receiving assistance under the State program 
     funded under this part;
       ``(B) establish for each family that includes such an 
     individual, in consultation as the State deems appropriate 
     with the individual, a self-sufficiency plan that specifies 
     appropriate activities described in the State plan submitted 
     pursuant to section 402, including direct work activities as 
     appropriate designed to assist the family in achieving their 
     maximum degree of self-sufficiency, and that provides for the 
     ongoing participation of the individual in the activities;
       ``(C) require, at a minimum, each such individual to 
     participate in activities in accordance with the self-
     sufficiency plan;
       ``(D) monitor the participation of each such individual in 
     the activities specified in the self-sufficiency plan, and 
     regularly review the progress of the family toward self-
     sufficiency;
       ``(E) upon such a review, revise the self-sufficiency plan 
     and activities as the State deems appropriate.
       ``(2) Timing.--The State shall comply with paragraph (1) 
     with respect to a family--
       ``(A) in the case of a family that, as of October 1, 2005, 
     is not receiving assistance from the State program funded 
     under this part, not later than 60 days after the family 
     first receives assistance on the basis of the most recent 
     application for the assistance; or
       ``(B) in the case of a family that, as of such date, is 
     receiving the assistance, not later than 12 months after the 
     date of enactment of this subsection.
       ``(3) State discretion.--A State shall have sole 
     discretion, consistent with section 407, to define and design 
     activities for families for purposes of this subsection, to 
     develop methods for monitoring and reviewing progress 
     pursuant to this subsection, and to make modifications to the 
     plan as the State deems appropriate to assist the individual 
     in increasing their degree of self-sufficiency.
       ``(4) Rule of interpretation.--Nothing in this part shall 
     preclude a State from--
       ``(A) requiring participation in work and any other 
     activities the State deems appropriate for helping families 
     achieve self-sufficiency and improving child well-being; or
       ``(B) using job search or other appropriate job readiness 
     or work activities to assess the employability of individuals 
     and to determine appropriate future engagement activities.''.
       (2) Penalty for failure to establish family self-
     sufficiency plan.--Section 409(a)(3) (42 U.S.C. 609(a)(3)) is 
     amended--
       (A) in the paragraph heading, by inserting ``or establish 
     family self-sufficiency plan'' after ``rates''; and
       (B) in subparagraph (A), by inserting ``or 408(b)'' after 
     ``407(a)''.

     SEC. 8110. WORK PARTICIPATION REQUIREMENTS.

       (a) In General.--Section 407 (42 U.S.C. 607) is amended by 
     striking all that precedes subsection (b)(3) and inserting 
     the following:

     ``SEC. 407. WORK PARTICIPATION REQUIREMENTS.

       ``(a) Participation Rate Requirements.--A State to which a 
     grant is made under section 403 for a fiscal year shall 
     achieve a minimum participation rate equal to not less than--
       ``(1) 50 percent for fiscal year 2006;
       ``(2) 55 percent for fiscal year 2007;
       ``(3) 60 percent for fiscal year 2008;
       ``(4) 65 percent for fiscal year 2009; and
       ``(5) 70 percent for fiscal year 2010 and each succeeding 
     fiscal year.
       ``(b) Calculation of Participation Rates.--
       ``(1) Average monthly rate.--For purposes of subsection 
     (a), the participation rate of a State for a fiscal year is 
     the average of the participation rates of the State for each 
     month in the fiscal year.
       ``(2) Monthly participation rates; incorporation of 40-hour 
     work week standard.--
       ``(A) In general.--For purposes of paragraph (1), the 
     participation rate of a State for a month is--
       ``(i) the total number of countable hours (as defined in 
     subsection (c)) with respect to the counted families for the 
     State for the month; divided by
       ``(ii) 160 multiplied by the number of counted families for 
     the State for the month.
       ``(B) Counted families defined.--
       ``(i) In general.--In subparagraph (A), the term `counted 
     family' means, with respect to a State and a month, a family 
     that includes a work-eligible individual and that receives 
     assistance in the month under the State program funded under 
     this part, subject to clause (ii).
       ``(ii) State option to exclude certain families.--At the 
     option of a State, the term `counted family' shall not 
     include--

       ``(I) a family in the first month for which the family 
     receives assistance from a State program funded under this 
     part on the basis of the most recent application for such 
     assistance;
       ``(II) on a case-by-case basis, a family in which the 
     youngest child has not attained 12 months of age; or

[[Page H10608]]

       ``(III) a family that is subject to a sanction under this 
     part or part D, but that has not been subject to such a 
     sanction for more than 3 months (whether or not consecutive) 
     in the preceding 12-month period.

       ``(iii) State option to include individuals receiving 
     assistance under a tribal family assistance plan or tribal 
     work program.--At the option of a State, the term `counted 
     family' may include families in the State that are receiving 
     assistance under a tribal family assistance plan approved 
     under section 412 or under a tribal work program to which 
     funds are provided under this part.
       ``(C) Work-eligible individual defined.--In this section, 
     the term `work-eligible individual' means an individual--
       ``(i) who is married or a single head of household; and
       ``(ii) whose needs are (or, but for sanctions under this 
     part or part D, would be) included in determining the amount 
     of cash assistance to be provided to the family under the 
     State program funded under this part.''.
       (b) Recalibration of Caseload Reduction Credit.--
       (1) In general.--Section 407(b)(3)(A)(ii) (42 U.S.C. 
     607(b)(3)(A)(ii)) is amended to read as follows:
       ``(ii) the average monthly number of families that received 
     assistance under the State program funded under this part 
     during the base year.''.
       (2) Conforming amendment.--Section 407(b)(3)(B) (42 U.S.C. 
     607(b)(3)(B)) is amended by striking ``and eligibility 
     criteria'' and all that follows through the close parenthesis 
     and inserting ``and the eligibility criteria in effect during 
     the then applicable base year''.
       (3) Base year defined.--Section 407(b)(3) (42 U.S.C. 
     607(b)(3)) is amended by adding at the end the following:
       ``(C) Base year defined.--In this paragraph, the term `base 
     year' means, with respect to a fiscal year--
       ``(i) if the fiscal year is fiscal year 2006, fiscal year 
     1996;
       ``(ii) if the fiscal year is fiscal year 2007, fiscal year 
     1998;
       ``(iii) if the fiscal year is fiscal year 2008, fiscal year 
     2001; or
       ``(iv) if the fiscal year is fiscal year 2009 or any 
     succeeding fiscal year, the then 4th preceding fiscal 
     year.''.
       (c) Superachiever Credit.--Section 407(b) (42 U.S.C. 
     607(b)) is amended by striking paragraphs (4) and (5) and 
     inserting the following:
       ``(4) Superachiever credit.--
       ``(A) In general.--The participation rate, determined under 
     paragraphs (1) and (2) of this subsection, of a superachiever 
     State for a fiscal year shall be increased by the lesser of--
       ``(i) the amount (if any) of the superachiever credit 
     applicable to the State; or
       ``(ii) the number of percentage points (if any) by which 
     the minimum participation rate required by subsection (a) for 
     the fiscal year exceeds 50 percent.
       ``(B) Superachiever state.--For purposes of subparagraph 
     (A), a State is a superachiever State if the State caseload 
     for fiscal year 2001 has declined by at least 60 percent from 
     the State caseload for fiscal year 1995.
       ``(C) Amount of credit.--The superachiever credit 
     applicable to a State is the number of percentage points (if 
     any) by which the decline referred to in subparagraph (B) 
     exceeds 60 percent.
       ``(D) Definitions.--In this paragraph:
       ``(i) State caseload for fiscal year 2001.--The term `State 
     caseload for fiscal year 2001' means the average monthly 
     number of families that received assistance during fiscal 
     year 2001 under the State program funded under this part.
       ``(ii) State caseload for fiscal year 1995.--The term 
     `State caseload for fiscal year 1995' means the average 
     monthly number of families that received aid under the State 
     plan approved under part A (as in effect on September 30, 
     1995) during fiscal year 1995.''.
       (d) Countable Hours.--Section 407 (42 U.S.C. 607) is 
     amended by striking subsections (c) and (d) and inserting the 
     following:
       ``(c) Countable Hours.--
       ``(1) Definition.--In subsection (b)(2), the term 
     `countable hours' means, with respect to a family for a 
     month, the total number of hours in the month in which any 
     member of the family who is a work-eligible individual is 
     engaged in a direct work activity or other activities 
     specified by the State (excluding an activity that does not 
     address a purpose specified in section 401(a)), subject to 
     the other provisions of this subsection.
       ``(2) Limitations.--Subject to such regulations as the 
     Secretary may prescribe:
       ``(A) Minimum weekly average of 24 hours of direct work 
     activities required.--If the work-eligible individuals in a 
     family are engaged in a direct work activity for an average 
     total of fewer than 24 hours per week in a month, then the 
     number of countable hours with respect to the family for the 
     month shall be zero.
       ``(B) Maximum weekly average of 16 hours of other 
     activities.--An average of not more than 16 hours per week of 
     activities specified by the State (subject to the exclusion 
     described in paragraph (1)) may be considered countable hours 
     in a month with respect to a family.
       ``(3) Special rules.--For purposes of paragraph (1):
       ``(A) Participation in qualified activities.--
       ``(i) In general.--If, with the approval of the State, the 
     work-eligible individuals in a family are engaged in 1 or 
     more qualified activities for an average total of at least 24 
     hours per week in a month, then all such engagement in the 
     month shall be considered engagement in a direct work 
     activity, subject to clause (iii).
       ``(ii) Qualified activity defined.--The term `qualified 
     activity' means an activity specified by the State (subject 
     to the exclusion described in paragraph (1)) that meets such 
     standards and criteria as the State may specify, including--

       ``(I) substance abuse counseling or treatment;
       ``(II) rehabilitation treatment and services;
       ``(III) work-related education or training directed at 
     enabling the family member to work;
       ``(IV) job search or job readiness assistance; and
       ``(V) any other activity that addresses a purpose specified 
     in section 401(a).

       ``(iii) Limitation.--

       ``(I) In general.--Except as provided in subclause (II), 
     clause (i) shall not apply to a family for more than 3 months 
     in any period of 24 consecutive months.
       ``(II) Special rule applicable to education and training.--
     A State may, on a case-by-case basis, apply clause (i) to a 
     work-eligible individual so that participation by the 
     individual in education or training, if needed to permit the 
     individual to complete a certificate program or other work-
     related education or training directed at enabling the 
     individual to fill a known job need in a local area, may be 
     considered countable hours with respect to the family of the 
     individual for not more than 4 months in any period of 24 
     consecutive months.

       ``(B) School attendance by teen head of household.--The 
     work-eligible members of a family shall be considered to be 
     engaged in a direct work activity for an average of 40 hours 
     per week in a month if the family includes an individual who 
     is married, or is a single head of household, who has not 
     attained 20 years of age, and the individual--
       ``(i) maintains satisfactory attendance at secondary school 
     or the equivalent in the month; or
       ``(ii) participates in education directly related to 
     employment for an average of at least 20 hours per week in 
     the month.
       ``(d) Direct Work Activity.--In this section, the term 
     `direct work activity' means--
       ``(1) unsubsidized employment;
       ``(2) subsidized private sector employment;
       ``(3) subsidized public sector employment;
       ``(4) on-the-job training;
       ``(5) supervised work experience; or
       ``(6) supervised community service.''.
       (e) Penalties Against Individuals.--Section 407(e)(1) (42 
     U.S.C. 607(e)(1)) is amended to read as follows:
       ``(1) Reduction or termination of assistance.--
       ``(A) In general.--Except as provided in paragraph (2), if 
     an individual in a family receiving assistance under a State 
     program funded under this part fails to engage in activities 
     required in accordance with this section, or other activities 
     required by the State under the program, and the family does 
     not otherwise engage in activities in accordance with the 
     self-sufficiency plan established for the family pursuant to 
     section 408(b), the State shall--
       ``(i) if the failure is partial or persists for not more 
     than 1 month--

       ``(I) reduce the amount of assistance otherwise payable to 
     the family pro rata (or more, at the option of the State) 
     with respect to any period during a month in which the 
     failure occurs; or
       ``(II) terminate all assistance to the family, subject to 
     such good cause exceptions as the State may establish; or

       ``(ii) if the failure is total and persists for at least 2 
     consecutive months, terminate all cash payments to the family 
     including qualified State expenditures (as defined in section 
     409(a)(7)(B)(i)) for at least 1 month and thereafter until 
     the State determines that the individual has resumed full 
     participation in the activities, subject to such good cause 
     exceptions as the State may establish.
       ``(B) Special rule.--
       ``(i) In general.--In the event of a conflict between a 
     requirement of clause (i)(II) or (ii) of subparagraph (A) and 
     a requirement of a State constitution, or of a State statute 
     that, before 1966, obligated local government to provide 
     assistance to needy parents and children, the State 
     constitutional or statutory requirement shall control.
       ``(ii) Limitation.--Clause (i) of this subparagraph shall 
     not apply after the 1-year period that begins with the date 
     of the enactment of this subparagraph.''.
       (f) Conforming Amendments.--
       (1) Section 407(f) (42 U.S.C. 607(f)) is amended in each of 
     paragraphs (1) and (2) by striking ``work activity described 
     in subsection (d)'' and inserting ``direct work activity''.
       (2) The heading of section 409(a)(14) (42 U.S.C. 
     609(a)(14)) is amended by inserting ``or refusing to engage 
     in activities under a family self-sufficiency plan'' after 
     ``work''.

     SEC. 8111. MAINTENANCE OF EFFORT.

       (a) In General.--Section 409(a)(7) (42 U.S.C. 609(a)(7)) is 
     amended--
       (1) in subparagraph (A), by striking ``fiscal year 1998, 
     1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, or 2007'' and 
     inserting ``fiscal year 2006, 2007, 2008, 2009, 2010, or 
     2011''; and
       (2) in subparagraph (B)(ii)--
       (A) by inserting ``preceding'' before ``fiscal year''; and
       (B) by striking ``for fiscal years 1997 through 2006,''.

[[Page H10609]]

       (b) State Spending on Promoting Healthy Marriage.--
       (1) In general.--Section 404 (42 U.S.C. 604) is amended by 
     adding at the end the following:
       ``(l) Marriage Promotion.--A State, territory, or tribal 
     organization to which a grant is made under section 403(a)(2) 
     may use a grant made to the State, territory, or tribe under 
     any other provision of section 403 for marriage promotion 
     activities, and the amount of any such grant so used shall be 
     considered State funds for purposes of section 403(a)(2).''.
       (2) Federal tanf funds used for marriage promotion 
     disregarded for purposes of maintenance of effort 
     requirement.--Section 409(a)(7)(B)(i) (42 U.S.C. 
     609(a)(7)(B)(i)), as amended by section 8103(c) of this Act, 
     is amended by adding at the end the following:

       ``(VI) Exclusion of federal tanf funds used for marriage 
     promotion activities.--Such term does not include the amount 
     of any grant made to the State under section 403 that is 
     expended for a marriage promotion activity.''.

     SEC. 8112. PERFORMANCE IMPROVEMENT.

       (a) State Plans.--Section 402(a) (42 U.S.C. 602(a)) is 
     amended--
       (1) in paragraph (1)--
       (A) in subparagraph (A)--
       (i) by redesignating clause (vi) and clause (vii) (as added 
     by section 8103(a) of this Act) as clauses (vii) and (viii), 
     respectively; and
       (ii) by striking clause (v) and inserting the following:
       ``(v) The document shall--

       ``(I) describe how the State will pursue ending dependence 
     of needy families on government benefits and reducing poverty 
     by promoting job preparation and work;
       ``(II) describe how the State will encourage the formation 
     and maintenance of healthy 2-parent married families, 
     encourage responsible fatherhood, and prevent and reduce the 
     incidence of out-of-wedlock pregnancies;
       ``(III) include specific, numerical, and measurable 
     performance objectives for accomplishing subclauses (I) and 
     (II); and
       ``(IV) describe the methodology that the State will use to 
     measure State performance in relation to each such objective.

       ``(vi) Describe any strategies and programs the State may 
     be undertaking to address--

       ``(I) employment retention and advancement for recipients 
     of assistance under the program, including placement into 
     high-demand jobs, and whether the jobs are identified using 
     labor market information;
       ``(II) efforts to reduce teen pregnancy;
       ``(III) services for struggling and noncompliant families, 
     and for clients with special problems; and
       ``(IV) program integration, including the extent to which 
     employment and training services under the program are 
     provided through the One-Stop delivery system created under 
     the Workforce Investment Act of 1998, and the extent to which 
     former recipients of such assistance have access to 
     additional core, intensive, or training services funded 
     through such Act.''; and

       (B) in subparagraph (B), by striking clause (iii) (as so 
     redesignated by section 8107(b)(1) of this Act) and inserting 
     the following:
       ``(iii) The document shall describe strategies and programs 
     the State is undertaking to engage religious organizations in 
     the provision of services funded under this part and efforts 
     related to section 104 of the Personal Responsibility and 
     Work Opportunity Reconciliation Act of 1996.
       ``(iv) The document shall describe strategies to improve 
     program management and performance.''; and
       (2) in paragraph (4), by inserting ``and tribal'' after 
     ``that local''.
       (b) Consultation With State Regarding Plan and Design of 
     Tribal Programs.--Section 412(b)(1) (42 U.S.C. 612(b)(1)) is 
     amended--
       (1) by striking ``and'' at the end of subparagraph (E);
       (2) by striking the period at the end of subparagraph (F) 
     and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(G) provides an assurance that the State in which the 
     tribe is located has been consulted regarding the plan and 
     its design.''.
       (c) Performance Measures.--Section 413 (42 U.S.C. 613) is 
     amended by adding at the end the following:
       ``(k) Performance Improvement.--The Secretary, in 
     consultation with the States, shall develop uniform 
     performance measures designed to assess the degree of 
     effectiveness, and the degree of improvement, of State 
     programs funded under this part in accomplishing the purposes 
     of this part.''.
       (d) Annual Ranking of States.--Section 413(d)(1) (42 U.S.C. 
     613(d)(1)) is amended by striking ``long-term private sector 
     jobs'' and inserting ``private sector jobs, the success of 
     the recipients in retaining employment, the ability of the 
     recipients to increase their wages''.

     SEC. 8113. DATA COLLECTION AND REPORTING.

       (a) Contents of Report.--Section 411(a)(1)(A) (42 U.S.C. 
     611(a)(1)(A)) is amended--
       (1) in the matter preceding clause (i), by inserting ``and 
     on families receiving assistance under State programs funded 
     with other qualified State expenditures (as defined in 
     section 409(a)(7)(B))'' before the colon;
       (2) in clause (vii), by inserting ``and minor parent'' 
     after ``of each adult'';
       (3) in clause (viii), by striking ``and educational 
     level'';
       (4) in clause (ix), by striking ``, and if the latter 2, 
     the amount received'';
       (5) in clause (x)--
       (A) by striking ``each type of''; and
       (B) by inserting before the period ``and, if applicable, 
     the reason for receipt of the assistance for a total of more 
     than 60 months'';
       (6) in clause (xi), by striking the subclauses and 
     inserting the following:

       ``(I) Subsidized private sector employment.
       ``(II) Unsubsidized employment.
       ``(III) Public sector employment, supervised work 
     experience, or supervised community service.
       ``(IV) On-the-job training.
       ``(V) Job search and placement.
       ``(VI) Training.
       ``(VII) Education.
       ``(VIII) Other activities directed at the purposes of this 
     part, as specified in the State plan submitted pursuant to 
     section 402.'';

       (7) in clause (xii), by inserting ``and progress toward 
     universal engagement'' after ``participation rates'';
       (8) in clause (xiii), by striking ``type and'';
       (9) in clause (xvi), by striking subclause (II) and 
     redesignating subclauses (III) through (V) as subclauses (II) 
     through (IV), respectively; and
       (10) by adding at the end the following:
       ``(xviii) The date the family first received assistance 
     from the State program on the basis of the most recent 
     application for such assistance.
       ``(xix) Whether a self-sufficiency plan is established for 
     the family in accordance with section 408(b).
       ``(xx) With respect to any child in the family, the marital 
     status of the parents at the birth of the child, and if the 
     parents were not then married, whether the paternity of the 
     child has been established.''.
       (b) Use of Samples.--Section 411(a)(1)(B) (42 U.S.C. 
     611(a)(1)(B)) is amended--
       (1) in clause (i)--
       (A) by striking ``a sample'' and inserting ``samples''; and
       (B) by inserting before the period ``, except that the 
     Secretary may designate core data elements that must be 
     reported on all families''; and
       (2) in clause (ii), by striking ``funded under this part'' 
     and inserting ``described in subparagraph (A)''.
       (c) Report on Families That Become Ineligible to Receive 
     Assistance.--Section 411(a) (42 U.S.C. 611(a)) is amended--
       (1) by striking paragraph (5);
       (2) by redesignating paragraph (6) as paragraph (5); and
       (3) by inserting after paragraph (5) (as so redesignated) 
     the following:
       ``(6) Report on families that become ineligible to receive 
     assistance.--The report required by paragraph (1) for a 
     fiscal quarter shall include for each month in the quarter 
     the number of families and total number of individuals that, 
     during the month, became ineligible to receive assistance 
     under the State program funded under this part (broken down 
     by the number of families that become so ineligible due to 
     earnings, changes in family composition that result in 
     increased earnings, sanctions, time limits, or other 
     specified reasons).''.
       (d) Regulations.--Section 411(a)(7) (42 U.S.C. 611(a)(7)) 
     is amended--
       (1) by inserting ``and to collect the necessary data'' 
     before ``with respect to which reports'';
       (2) by striking ``subsection'' and inserting ``section''; 
     and
       (3) by striking ``in defining the data elements'' and all 
     that follows and inserting ``, the National Governors' 
     Association, the American Public Human Services Association, 
     the National Conference of State Legislatures, and others in 
     defining the data elements.''.
       (e) Additional Reports by States.--Section 411 (42 U.S.C. 
     611) is amended--
       (1) by redesignating subsection (b) as subsection (e); and
       (2) by inserting after subsection (a) the following:
       ``(b) Annual Reports on Program Characteristics.--Not later 
     than 90 days after the end of fiscal year 2006 and each 
     succeeding fiscal year, each eligible State shall submit to 
     the Secretary a report on the characteristics of the State 
     program funded under this part and other State programs 
     funded with qualified State expenditures (as defined in 
     section 409(a)(7)(B)(i)). The report shall include, with 
     respect to each such program, the program name, a description 
     of program activities, the program purpose, the program 
     eligibility criteria, the sources of program funding, the 
     number of program beneficiaries, sanction policies, and any 
     program work requirements.
       ``(c) Monthly Reports on Caseload.--Not later than 3 months 
     after the end of a calendar month that begins 1 year or more 
     after the enactment of this subsection, each eligible State 
     shall submit to the Secretary a report on the number of 
     families and total number of individuals receiving assistance 
     in the calendar month under the State program funded under 
     this part.
       ``(d) Annual Report on Performance Improvement.--Beginning 
     with fiscal year 2007, not later than January 1 of each 
     fiscal year, each eligible State shall submit to the 
     Secretary a report on achievement and improvement during the 
     preceding fiscal year under the numerical performance goals 
     and measures under the State program funded under this part 
     with respect to each of the matters described in section 
     402(a)(1)(A)(v).''.

[[Page H10610]]

       (f) Annual Reports to Congress by the Secretary.--Section 
     411(e), as so redesignated by subsection (e) of this section, 
     is amended--
       (1) in the matter preceding paragraph (1), by striking 
     ``and each fiscal year thereafter'' and inserting ``and by 
     July 1 of each fiscal year thereafter'';
       (2) in paragraph (2), by striking ``families applying for 
     assistance,'' and by striking the last comma; and
       (3) in paragraph (3), by inserting ``and other programs 
     funded with qualified State expenditures (as defined in 
     section 409(a)(7)(B)(i))'' before the semicolon.
       (g) Increased Analysis of State Single Audit Reports.--
     Section 411 (42 U.S.C. 611) is amended by adding at the end 
     the following:
       ``(f) Increased Analysis of State Single Audit Reports.--
       ``(1) In general.--Within 3 months after a State submits to 
     the Secretary a report pursuant to section 7502(a)(1)(A) of 
     title 31, United States Code, the Secretary shall analyze the 
     report for the purpose of identifying the extent and nature 
     of problems related to the oversight by the State of 
     nongovernmental entities with respect to contracts entered 
     into by such entities with the State program funded under 
     this part, and determining what additional actions may be 
     appropriate to help prevent and correct the problems.
       ``(2) Inclusion of program oversight section in annual 
     report to the congress.--The Secretary shall include in each 
     report under subsection (e) a section on oversight of State 
     programs funded under this part, including findings on the 
     extent and nature of the problems referred to in paragraph 
     (1), actions taken to resolve the problems, and to the extent 
     the Secretary deems appropriate make recommendations on 
     changes needed to resolve the problems.''.

     SEC. 8114. DIRECT FUNDING AND ADMINISTRATION BY INDIAN 
                   TRIBES.

       (a) Tribal Family Assistance Grant.--Section 412(a)(1)(A) 
     (42 U.S.C. 612(a)(1)(A)) is amended by striking ``1997, 1998, 
     1999, 2000, 2001, 2002, and 2003'' and inserting ``2006 
     through 2010''.
       (b) Grants for Indian Tribes That Received JOBS Funds.--
     Section 412(a)(2)(A) (42 U.S.C. 612(a)(2)(A)) is amended by 
     striking ``1997, 1998, 1999, 2000, 2001, 2002, and 2003'' and 
     inserting ``2006 through 2010''.

     SEC. 8115. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES.

       (a) Secretary's Fund for Research, Demonstrations, and 
     Technical Assistance.--Section 413 (42 U.S.C. 613), as 
     amended by section 8112(c) of this Act, is further amended by 
     adding at the end the following:
       ``(l) Funding for Research, Demonstrations, and Technical 
     Assistance.--
       ``(1) Appropriation.--Out of any money in the Treasury of 
     the United States not otherwise appropriated, there are 
     appropriated $102,000,000 for each of fiscal years 2006 
     through 2010, which shall be available to the Secretary for 
     the purpose of conducting and supporting research and 
     demonstration projects by public or private entities, and 
     providing technical assistance to States, Indian tribal 
     organizations, and such other entities as the Secretary may 
     specify that are receiving a grant under this part, which 
     shall be expended primarily on activities described in 
     section 403(a)(2)(B), and which shall be in addition to any 
     other funds made available under this part. The Secretary may 
     not provide an entity with funds made available under this 
     paragraph unless the entity agrees that, as a condition of 
     receipt of the funds for a program or activity described in 
     any of clauses (iii) through (viii) of section 403(a)(2)(B), 
     the entity will comply with subclauses (I) and (II) of 
     section 403(a)(2)(C)(ii).
       ``(2) Set aside for demonstration projects for coordination 
     of provision of child welfare and tanf services to tribal 
     families at risk of child abuse or neglect.--
       ``(A) In general.--Of the amounts made available under 
     paragraph (1) for a fiscal year, $2,000,000 shall be awarded 
     on a competitive basis to fund demonstration projects 
     designed to test the effectiveness of tribal governments or 
     tribal consortia in coordinating the provision to tribal 
     families at risk of child abuse or neglect of child welfare 
     services and services under tribal programs funded under this 
     part.
       ``(B) Use of funds.--A grant made to such a project shall 
     be used--
       ``(i) to improve case management for families eligible for 
     assistance from such a tribal program;
       ``(ii) for supportive services and assistance to tribal 
     children in out-of-home placements and the tribal families 
     caring for such children, including families who adopt such 
     children; and
       ``(iii) for prevention services and assistance to tribal 
     families at risk of child abuse and neglect.
       ``(C) Reports.--The Secretary may require a recipient of 
     funds awarded under this paragraph to provide the Secretary 
     with such information as the Secretary deems relevant to 
     enable the Secretary to facilitate and oversee the 
     administration of any project for which funds are provided 
     under this paragraph.''.
       (b) Funding of Studies and Demonstrations.--Section 
     413(h)(1) (42 U.S.C. 613(h)(1)) is amended in the matter 
     preceding subparagraph (A) by striking ``1997 through 2002'' 
     and inserting ``2006 through 2010''.
       (c) Report on Enforcement of Certain Affidavits of Support 
     and Sponsor Deeming.--Not later than March 31, 2006, the 
     Secretary of Health and Human Services, in consultation with 
     the Attorney General, shall submit to the Congress a report 
     on the enforcement of affidavits of support and sponsor 
     deeming as required by section 421, 422, and 432 of the 
     Personal Responsibility and Work Opportunity Reconciliation 
     Act of 1996.
       (d) Report on Coordination.--Not later than 6 months after 
     the date of the enactment of this Act, the Secretary of 
     Health and Human Services and the Secretary of Labor shall 
     jointly submit a report to the Congress describing common or 
     conflicting data elements, definitions, performance measures, 
     and reporting requirements in the Workforce Investment Act of 
     1998 and part A of title IV of the Social Security Act, and, 
     to the degree each Secretary deems appropriate, at the 
     discretion of either Secretary, any other program 
     administered by the respective Secretary, to allow greater 
     coordination between the welfare and workforce development 
     systems.

     SEC. 8116. STUDY BY THE CENSUS BUREAU.

       (a) In General.--Section 414(a) (42 U.S.C. 614(a)) is 
     amended to read as follows:
       ``(a) In General.--The Bureau of the Census shall implement 
     or enhance a longitudinal survey of program participation, 
     developed in consultation with the Secretary and made 
     available to interested parties, to allow for the assessment 
     of the outcomes of continued welfare reform on the economic 
     and child well-being of low-income families with children, 
     including those who received assistance or services from a 
     State program funded under this part, and, to the extent 
     possible, shall provide State representative samples. The 
     content of the survey should include such information as may 
     be necessary to examine the issues of out-of-wedlock 
     childbearing, marriage, welfare dependency and compliance 
     with work requirements, the beginning and ending of spells of 
     assistance, work, earnings and employment stability, and the 
     well-being of children.''.
       (b) Appropriation.--Section 414(b) (42 U.S.C. 614(b)) is 
     amended--
       (1) by striking ``1996,'' and all that follows through 
     ``2003'' and inserting ``2006 through 2010''; and
       (2) by adding at the end the following: ``Funds 
     appropriated under this subsection shall remain available 
     through fiscal year 2010 to carry out subsection (a).''.

     SEC. 8117. DEFINITION OF ASSISTANCE.

       (a) In General.--Section 419 (42 U.S.C. 619) is amended by 
     adding at the end the following:
       ``(6) Assistance.--
       ``(A) In general.--The term `assistance' means payment, by 
     cash, voucher, or other means, to or for an individual or 
     family for the purpose of meeting a subsistence need of the 
     individual or family (including food, clothing, shelter, and 
     related items, but not including costs of transportation or 
     child care).
       ``(B) Exception.--The term `assistance' does not include a 
     payment described in subparagraph (A) to or for an individual 
     or family on a short-term, nonrecurring basis (as defined by 
     the State in accordance with regulations prescribed by the 
     Secretary).''.
       (b) Conforming Amendments.--
       (1) Section 404(a)(1) (42 U.S.C. 604(a)(1)) is amended by 
     striking ``assistance'' and inserting ``aid''.
       (2) Section 404(f) (42 U.S.C. 604(f)) is amended by 
     striking ``assistance'' and inserting ``benefits or 
     services''.
       (3) Section 408(a)(5)(B)(i) (42 U.S.C. 608(a)(5)(B)(i)) is 
     amended in the heading by striking ``assistance'' and 
     inserting ``aid''.
       (4) Section 413(d)(2) (42 U.S.C. 613(d)(2)) is amended by 
     striking ``assistance'' and inserting ``aid''.

     SEC. 8118. TECHNICAL CORRECTIONS.

       (a) Section 409(c)(2) (42 U.S.C. 609(c)(2)) is amended by 
     inserting a comma after ``appropriate''.
       (b) Section 411(a)(1)(A)(ii)(III) (42 U.S.C. 
     611(a)(1)(A)(ii)(III)) is amended by striking the last close 
     parenthesis.
       (c) Section 413(j)(2)(A) (42 U.S.C. 613(j)(2)(A)) is 
     amended by striking ``section'' and inserting ``sections''.
       (d)(1) Section 413 (42 U.S.C. 613) is amended by striking 
     subsection (g) and redesignating subsections (h) through (j) 
     and subsections (k) and (l) (as added by sections 8112(c) and 
     8115(a) of this Act, respectively) as subsections (g) through 
     (k), respectively.
       (2) Each of the following provisions is amended by striking 
     ``413(j)'' and inserting ``413(i)'':
       (A) Section 403(a)(5)(A)(ii)(III) (42 U.S.C. 
     603(a)(5)(A)(ii)(III)).
       (B) Section 403(a)(5)(F) (42 U.S.C. 603(a)(5)(F)).
       (C) Section 403(a)(5)(G)(ii) (42 U.S.C. 603(a)(5)(G)(ii)).
       (D) Section 412(a)(3)(B)(iv) (42 U.S.C. 612(a)(3)(B)(iv)).

     SEC. 8119. FATHERHOOD PROGRAM.

       (a) Short Title.--This section may be cited as the 
     ``Promotion and Support of Responsible Fatherhood and Healthy 
     Marriage Act of 2005''.
       (b) Fatherhood Program.--
       (1) In general.--Title I of the Personal Responsibility and 
     Work Opportunity Reconciliation Act of 1996 (Public Law 104-
     193) is amended by adding at the end the following:

     ``SEC. 117. FATHERHOOD PROGRAM.

       ``(a) In General.--Title IV (42 U.S.C. 601-679b) is amended 
     by inserting after part B the following:

[[Page H10611]]

                      `PART C--FATHERHOOD PROGRAM

     `SEC. 441. FINDINGS AND PURPOSES.

       `(a) Findings.--The Congress finds that there is 
     substantial evidence strongly indicating the urgent need to 
     promote and support involved, committed, and responsible 
     fatherhood, and to encourage and support healthy marriages 
     between parents raising children, including data 
     demonstrating the following:
       `(1) In approximately 84 percent of cases where a parent is 
     absent, that parent is the father.
       `(2) If current trends continue, half of all children born 
     today will live apart from one of their parents, usually 
     their father, at some point before they turn 18.
       `(3) Where families (whether intact or with a parent 
     absent) are living in poverty, a significant factor is the 
     father's lack of job skills.
       `(4) Committed and responsible fathering during infancy and 
     early childhood contributes to the development of emotional 
     security, curiosity, and math and verbal skills.
       `(5) An estimated 19,400,000 children (27 percent) live 
     apart from their biological father.
       `(6) Forty percent of children under age 18 not living with 
     their biological father had not seen their father even once 
     in the last 12 months, according to national survey data.
       `(b) Purposes.--The purposes of this part are:
       `(1) To provide for projects and activities by public 
     entities and by nonprofit community entities, including 
     religious organizations, designed to test promising 
     approaches to accomplishing the following objectives:
       `(A) Promoting responsible, caring, and effective parenting 
     through counseling, mentoring, and parenting education, 
     dissemination of educational materials and information on 
     parenting skills, encouragement of positive father 
     involvement, including the positive involvement of 
     nonresident fathers, and other methods.
       `(B) Enhancing the abilities and commitment of unemployed 
     or low-income fathers to provide material support for their 
     families and to avoid or leave welfare programs by assisting 
     them to take full advantage of education, job training, and 
     job search programs, to improve work habits and work skills, 
     to secure career advancement by activities such as outreach 
     and information dissemination, coordination, as appropriate, 
     with employment services and job training programs, including 
     the One-Stop delivery system established under title I of the 
     Workforce Investment Act of 1998, encouragement and support 
     of timely payment of current child support and regular 
     payment toward past due child support obligations in 
     appropriate cases, and other methods.
       `(C) Improving fathers' ability to effectively manage 
     family business affairs by means such as education, 
     counseling, and mentoring in matters including household 
     management, budgeting, banking, and handling of financial 
     transactions, time management, and home maintenance.
       `(D) Encouraging and supporting healthy marriages and 
     married fatherhood through such activities as premarital 
     education, including the use of premarital inventories, 
     marriage preparation programs, skills-based marriage 
     education programs, marital therapy, couples counseling, 
     divorce education and reduction programs, divorce mediation 
     and counseling, relationship skills enhancement programs, 
     including those designed to reduce child abuse and domestic 
     violence, and dissemination of information about the benefits 
     of marriage for both parents and children.
       `(2) Through the projects and activities described in 
     paragraph (1), to improve outcomes for children with respect 
     to measures such as increased family income and economic 
     security, improved school performance, better health, 
     improved emotional and behavioral stability and social 
     adjustment, and reduced risk of delinquency, crime, substance 
     abuse, child abuse and neglect, teen sexual activity, and 
     teen suicide.
       `(3) To evaluate the effectiveness of various approaches 
     and to disseminate findings concerning outcomes and other 
     information in order to encourage and facilitate the 
     replication of effective approaches to accomplishing these 
     objectives.

     `SEC. 442. DEFINITIONS.

       `In this part, the terms ``Indian tribe'' and ``tribal 
     organization'' have the meanings given them in subsections 
     (e) and (l), respectively, of section 4 of the Indian Self-
     Determination and Education Assistance Act.

     `SEC. 443. COMPETITIVE GRANTS FOR SERVICE PROJECTS.

       `(a) In General.--The Secretary may make grants for fiscal 
     years 2006 through 2010 to public and nonprofit community 
     entities, including religious organizations, and to Indian 
     tribes and tribal organizations, for demonstration service 
     projects and activities designed to test the effectiveness of 
     various approaches to accomplish the objectives specified in 
     section 441(b)(1).
       `(b) Eligibility Criteria for Full Service Grants.--In 
     order to be eligible for a grant under this section, except 
     as specified in subsection (c), an entity shall submit an 
     application to the Secretary containing the following:
       `(1) Project description.--A statement including--
       `(A) a description of the project and how it will be 
     carried out, including the geographical area to be covered 
     and the number and characteristics of clients to be served, 
     and how it will address each of the 4 objectives specified in 
     section 441(b)(1); and
       `(B) a description of the methods to be used by the entity 
     or its contractor to assess the extent to which the project 
     was successful in accomplishing its specific objectives and 
     the general objectives specified in section 441(b)(1).
       `(2) Experience and qualifications.--A demonstration of 
     ability to carry out the project, by means such as 
     demonstration of experience in successfully carrying out 
     projects of similar design and scope, and such other 
     information as the Secretary may find necessary to 
     demonstrate the entity's capacity to carry out the project, 
     including the entity's ability to provide the non-Federal 
     share of project resources.
       `(3) Addressing child abuse and neglect and domestic 
     violence.--A description of how the entity will assess for 
     the presence of, and intervene to resolve, domestic violence 
     and child abuse and neglect, including how the entity will 
     coordinate with State and local child protective service and 
     domestic violence programs.
       `(4) Addressing concerns relating to substance abuse and 
     sexual activity.--A commitment to make available to each 
     individual participating in the project education about 
     alcohol, tobacco, and other drugs, and about the health risks 
     associated with abusing such substances, and information 
     about diseases and conditions transmitted through substance 
     abuse and sexual contact, including HIV/AIDS, and to 
     coordinate with providers of services addressing such 
     problems, as appropriate.
       `(5) Coordination with specified programs.--An undertaking 
     to coordinate, as appropriate, with State and local entities 
     responsible for the programs under parts A, B, and D of this 
     title, including programs under title I of the Workforce 
     Investment Act of 1998 (including the One-Stop delivery 
     system), and such other programs as the Secretary may 
     require.
       `(6) Records, reports, and audits.--An agreement to 
     maintain such records, make such reports, and cooperate with 
     such reviews or audits as the Secretary may find necessary 
     for purposes of oversight of project activities and 
     expenditures.
       `(7) Self-initiated evaluation.--If the entity elects to 
     contract for independent evaluation of the project (part or 
     all of the cost of which may be paid for using grant funds), 
     a commitment to submit to the Secretary a copy of the 
     evaluation report within 30 days after completion of the 
     report and not more than 1 year after completion of the 
     project.
       `(8) Cooperation with secretary's oversight and 
     evaluation.--An agreement to cooperate with the Secretary's 
     evaluation of projects assisted under this section, by means 
     including random assignment of clients to service recipient 
     and control groups, if determined by the Secretary to be 
     appropriate, and affording the Secretary access to the 
     project and to project-related records and documents, staff, 
     and clients.
       `(c) Eligibility Criteria for Limited Purpose Grants.--In 
     order to be eligible for a grant under this section in an 
     amount under $25,000 per fiscal year, an entity shall submit 
     an application to the Secretary containing the following:
       `(1) Project description.--A description of the project and 
     how it will be carried out, including the number and 
     characteristics of clients to be served, the proposed 
     duration of the project, and how it will address at least 1 
     of the 4 objectives specified in section 441(b)(1).
       `(2) Qualifications.--Such information as the Secretary may 
     require as to the capacity of the entity to carry out the 
     project, including any previous experience with similar 
     activities.
       `(3) Coordination with related programs.--As required by 
     the Secretary in appropriate cases, an undertaking to 
     coordinate and cooperate with State and local entities 
     responsible for specific programs relating to the objectives 
     of the project including, as appropriate, jobs programs and 
     programs serving children and families.
       `(4) Records, reports, and audits.--An agreement to 
     maintain such records, make such reports, and cooperate with 
     such reviews or audits as the Secretary may find necessary 
     for purposes of oversight of project activities and 
     expenditures.
       `(5) Cooperation with secretary's oversight and 
     evaluation.--An agreement to cooperate with the Secretary's 
     evaluation of projects assisted under this section, by means 
     including affording the Secretary access to the project and 
     to project-related records and documents, staff, and clients.
       `(d) Considerations in Awarding Grants.--
       `(1) Diversity of projects.--In awarding grants under this 
     section, the Secretary shall seek to achieve a balance among 
     entities of differing sizes, entities in differing geographic 
     areas, entities in urban and in rural areas, and entities 
     employing differing methods of achieving the purposes of this 
     section, including working with the State agency responsible 
     for the administration of part D to help fathers satisfy 
     child support arrearage obligations.
       `(2) Preference for projects serving low-income fathers.--
     In awarding grants under this section, the Secretary may give 
     preference to applications for projects in which a majority 
     of the clients to be served are low-income fathers.
       `(e) Federal Share.--
       `(1) In general.--Grants for a project under this section 
     for a fiscal year shall be

[[Page H10612]]

     available for a share of the cost of such project in such 
     fiscal year equal to--
       `(A) up to 80 percent (or up to 90 percent, if the entity 
     demonstrates to the Secretary's satisfaction circumstances 
     limiting the entity's ability to secure non-Federal 
     resources) in the case of a project under subsection (b); and
       `(B) up to 100 percent, in the case of a project under 
     subsection (c).
       `(2) Non-federal share.--The non-Federal share may be in 
     cash or in kind. In determining the amount of the non-Federal 
     share, the Secretary may attribute fair market value to 
     goods, services, and facilities contributed from non-Federal 
     sources.

     `SEC. 444. MULTICITY, MULTISTATE DEMONSTRATION PROJECTS.

       `(a) In General.--The Secretary may make grants under this 
     section for fiscal years 2006 through 2010 to eligible 
     entities (as specified in subsection (b)) for 2 multicity, 
     multistate projects demonstrating approaches to achieving the 
     objectives specified in section 441(b)(1). One of the 
     projects shall test the use of married couples to deliver 
     program services.
       `(b) Eligible Entities.--An entity eligible for a grant 
     under this section must be a national nonprofit fatherhood 
     promotion organization that meets the following requirements:
       `(1) Experience with fatherhood programs.--The organization 
     must have substantial experience in designing and 
     successfully conducting programs that meet the purposes 
     described in section 441.
       `(2) Experience with multicity, multistate programs and 
     government coordination.--The organization must have 
     experience in simultaneously conducting such programs in more 
     than 1 major metropolitan area in more than 1 State and in 
     coordinating such programs, where appropriate, with State and 
     local government agencies and private, nonprofit agencies 
     (including community-based and religious organizations), 
     including State or local agencies responsible for child 
     support enforcement and workforce development.
       `(c) Application Requirements.--In order to be eligible for 
     a grant under this section, an entity must submit to the 
     Secretary an application that includes the following:
       `(1) Qualifications.--
       `(A) Eligible entity.--A demonstration that the entity 
     meets the requirements of subsection (b).
       `(B) Other.--Such other information as the Secretary may 
     find necessary to demonstrate the entity's capacity to carry 
     out the project, including the entity's ability to provide 
     the non-Federal share of project resources.
       `(2) Project description.--A description of and commitments 
     concerning the project design, including the following:
       `(A) In general.--A detailed description of the proposed 
     project design and how it will be carried out, which shall--
       `(i) provide for the project to be conducted in at least 3 
     major metropolitan areas;
       `(ii) state how it will address each of the 4 objectives 
     specified in section 441(b)(1);
       `(iii) demonstrate that there is a sufficient number of 
     potential clients to allow for the random selection of 
     individuals to participate in the project and for comparisons 
     with appropriate control groups composed of individuals who 
     have not participated in such projects; and
       `(iv) demonstrate that the project is designed to direct a 
     majority of project resources to activities serving low-
     income fathers (but the project need not make services 
     available on a means-tested basis).
       `(B) Oversight, evaluation, and adjustment component.--An 
     agreement that the entity--
       `(i) in consultation with the evaluator selected pursuant 
     to section 445, and as required by the Secretary, will modify 
     the project design, initially and (if necessary) subsequently 
     throughout the duration of the project, in order to 
     facilitate ongoing and final oversight and evaluation of 
     project operation and outcomes (by means including, to the 
     maximum extent feasible, random assignment of clients to 
     service recipient and control groups), and to provide for 
     mid-course adjustments in project design indicated by interim 
     evaluations;
       `(ii) will submit to the Secretary revised descriptions of 
     the project design as modified in accordance with clause (i); 
     and
       `(iii) will cooperate fully with the Secretary's ongoing 
     oversight and ongoing and final evaluation of the project, by 
     means including affording the Secretary access to the project 
     and to project-related records and documents, staff, and 
     clients.
       `(3) Addressing child abuse and neglect and domestic 
     violence.--A description of how the entity will assess for 
     the presence of, and intervene to resolve, domestic violence 
     and child abuse and neglect, including how the entity will 
     coordinate with State and local child protective service and 
     domestic violence programs.
       `(4) Addressing concerns relating to substance abuse and 
     sexual activity.--A commitment to make available to each 
     individual participating in the project education about 
     alcohol, tobacco, and other drugs, and about the health risks 
     associated with abusing such substances, and information 
     about diseases and conditions transmitted through substance 
     abuse and sexual contact, including HIV/AIDS, and to 
     coordinate with providers of services addressing such 
     problems, as appropriate.
       `(5) Coordination with specified programs.--An undertaking 
     to coordinate, as appropriate, with State and local entities 
     responsible for the programs funded under parts A, B, and D 
     of this title, programs under title I of the Workforce 
     Investment Act of 1998 (including the One-Stop delivery 
     system), and such other programs as the Secretary may 
     require.
       `(6) Records, reports, and audits.--An agreement to 
     maintain such records, make such reports, and cooperate with 
     such reviews or audits (in addition to those required under 
     the preceding provisions of paragraph (2)) as the Secretary 
     may find necessary for purposes of oversight of project 
     activities and expenditures.
       `(d) Federal Share.--
       `(1) In general.--Grants for a project under this section 
     for a fiscal year shall be available for up to 80 percent of 
     the cost of such project in such fiscal year.
       `(2) Non-federal share.--The non-Federal share may be in 
     cash or in kind. In determining the amount of the non-Federal 
     share, the Secretary may attribute fair market value to 
     goods, services, and facilities contributed from non-Federal 
     sources.

     `SEC. 445. EVALUATION.

       `(a) In General.--The Secretary, directly or by contract or 
     cooperative agreement, shall evaluate the effectiveness of 
     service projects funded under sections 443 and 444 from the 
     standpoint of the purposes specified in section 441(b)(1).
       `(b) Evaluation Methodology.--Evaluations under this 
     section shall--
       `(1) include, to the maximum extent feasible, random 
     assignment of clients to service delivery and control groups 
     and other appropriate comparisons of groups of individuals 
     receiving and not receiving services;
       `(2) describe and measure the effectiveness of the projects 
     in achieving their specific project goals; and
       `(3) describe and assess, as appropriate, the impact of 
     such projects on marriage, parenting, domestic violence, 
     child abuse and neglect, money management, employment and 
     earnings, payment of child support, and child well-being, 
     health, and education.
       `(c) Evaluation Reports.--The Secretary shall publish the 
     following reports on the results of the evaluation:
       `(1) An implementation evaluation report covering the first 
     24 months of the activities under this part to be completed 
     by 36 months after initiation of such activities.
       `(2) A final report on the evaluation to be completed by 
     September 30, 2013.

     `SEC. 446. PROJECTS OF NATIONAL SIGNIFICANCE.

       `The Secretary is authorized, by grant, contract, or 
     cooperative agreement, to carry out projects and activities 
     of national significance relating to fatherhood promotion, 
     including--
       `(1) Collection and dissemination of information.--
     Assisting States, communities, and private entities, 
     including religious organizations, in efforts to promote and 
     support marriage and responsible fatherhood by collecting, 
     evaluating, developing, and making available (through the 
     Internet and by other means) to all interested parties 
     information regarding approaches to accomplishing the 
     objectives specified in section 441(b)(1).
       `(2) Media campaign.--Developing, promoting, and 
     distributing to interested States, local governments, public 
     agencies, and private nonprofit organizations, including 
     charitable and religious organizations, a media campaign that 
     promotes and encourages involved, committed, and responsible 
     fatherhood and married fatherhood.
       `(3) Technical assistance.--Providing technical assistance, 
     including consultation and training, to public and private 
     entities, including community organizations and faith-based 
     organizations, in the implementation of local fatherhood 
     promotion programs.
       `(4) Research.--Conducting research related to the purposes 
     of this part.

     `SEC. 447. NONDISCRIMINATION.

       `The projects and activities assisted under this part shall 
     be available on the same basis to all fathers and expectant 
     fathers able to benefit from such projects and activities, 
     including married and unmarried fathers and custodial and 
     noncustodial fathers, with particular attention to low-income 
     fathers, and to mothers and expectant mothers on the same 
     basis as to fathers.

     `SEC. 448. AUTHORIZATION OF APPROPRIATIONS; RESERVATION FOR 
                   CERTAIN PURPOSE.

       `(a) Authorization.--There are authorized to be 
     appropriated $20,000,000 for each of fiscal years 2006 
     through 2010 to carry out the provisions of this part.
       `(b) Reservation.--Of the amount appropriated under this 
     section for each fiscal year, not more than 15 percent shall 
     be available for the costs of the multicity, multicounty, 
     multistate demonstration projects under section 444, 
     evaluations under section 445, and projects of national 
     significance under section 446.'.
       ``(b) Inapplicability of Effective Date Provisions.--
     Section 116 shall not apply to the amendment made by 
     subsection (a) of this section.''.
       (2) Clerical amendment.--Section 2 of such Act is amended 
     in the table of contents by inserting after the item relating 
     to section 116 the following new item:

``Sec. 117. Fatherhood program.''.

[[Page H10613]]

     SEC. 8120. STATE OPTION TO MAKE TANF PROGRAMS MANDATORY 
                   PARTNERS WITH ONE-STOP EMPLOYMENT TRAINING 
                   CENTERS.

       Section 408 of the Social Security Act (42 U.S.C. 608) is 
     amended by adding at the end the following:
       ``(h) State Option to Make TANF Programs Mandatory Partners 
     With One-Stop Employment Training Centers.--For purposes of 
     section 121(b) of the Workforce Investment Act of 1998, a 
     State program funded under part A of title IV of the Social 
     Security Act shall be considered a program referred to in 
     paragraph (1)(B) of such section, unless, after the date of 
     the enactment of this subsection, the Governor of the State 
     notifies the Secretaries of Health and Human Services and 
     Labor in writing of the decision of the Governor not to make 
     the State program a mandatory partner.''.

     SEC. 8121. SENSE OF THE CONGRESS.

       It is the sense of the Congress that a State welfare-to-
     work program should include a mentoring program.

     SEC. 8122. DRUG TESTING OF APPLICANTS FOR AND RECIPIENTS OF 
                   ASSISTANCE.

       (a) Requirement.--Section 408(a) (42 U.S.C. 608(a)) is 
     amended by adding at the end the following:
       ``(12) Drug testing requirements.--A State to which a grant 
     is made under section 403(a) for a fiscal year shall--
       ``(A) require an individual who has applied for, or is a 
     recipient of, assistance from the State program funded under 
     this part to undergo a physical test designed to detect the 
     use by the individual of any controlled substance (as defined 
     in section 102(6) of the Controlled Substances Act) if the 
     State has reason to believe that the person has unlawfully 
     used such a substance recently;
       ``(B) if a test administered pursuant to this paragraph 
     indicates that an individual has so used such a substance 
     recently, or if the State otherwise determines (on the basis 
     of such indicators as the State may establish) that an 
     individual is likely to have so used such a substance 
     recently--
       ``(i) ensure that the self-sufficiency plan developed under 
     section 408(b) with respect to the individual addresses the 
     use of the substance;
       ``(ii) suspend the provision of cash assistance under the 
     program to the family of the individual until a subsequent 
     such test indicates that the individual has not been using 
     the substance; and
       ``(iii) require, as a condition of providing any benefit 
     under the program to the family of the individual, that the 
     individual comply with the self-sufficiency plan, including 
     the provisions of the plan that address the use of the 
     substance, and undergo additional such tests every 30 or 60 
     days, as the State deems appropriate; and
       ``(C) terminate for 3 years the participation in the 
     program of the family of any individual who tests positive 
     for such use of such a substance in such number of 
     consecutive tests administered pursuant to this paragraph 
     (which shall be not less than 3 and not more than 6) as the 
     State deems appropriate.''.
       (b) Penalty for Noncompliance.--Section 409(a) (42 U.S.C. 
     609(a)) is amended by adding at the end the following:
       ``(15) Penalty for failure to comply with drug testing 
     requirements.--If the Secretary determines that a State has 
     not complied with section 408(a)(12) during a fiscal year, 
     the Secretary shall reduce the grant payable to the State 
     under section 403(a)(1) for the immediately succeeding fiscal 
     year by an amount equal to not less than 5 percent and not 
     more than 10 percent of the State family assistance grant, as 
     the Secretary deems appropriate based on the frequency and 
     severity of the noncompliance.''.

                         Subtitle B--Child Care

     SEC. 8201. ENTITLEMENT FUNDING.

       Section 418(a)(3) (42 U.S.C. 618(a)(3)) 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 a semicolon; and
       (3) by adding at the end the following:
       ``(G) $2,717,000,000 for fiscal year 2006;
       ``(H) $2,767,000,000 for fiscal year 2007;
       ``(I) $2,817,000,000 for fiscal year 2008;
       ``(J) $2,867,000,000 for fiscal year 2009; and
       ``(K) $2,917,000,000 for fiscal year 2010.''.

                       Subtitle C--Child Support

     SEC. 8301. FEDERAL MATCHING FUNDS FOR LIMITED PASS THROUGH OF 
                   CHILD SUPPORT PAYMENTS TO FAMILIES RECEIVING 
                   TANF.

       (a) In General.--Section 457(a) (42 U.S.C. 657(a)) is 
     amended--
       (1) in paragraph (1)(A), by inserting ``subject to 
     paragraph (7)'' before the semicolon; and
       (2) by adding at the end the following:
       ``(7) Federal matching funds for limited pass through of 
     child support payments to families receiving tanf.--
     Notwithstanding paragraph (1), a State shall not be required 
     to pay to the Federal Government the Federal share of an 
     amount collected during a month on behalf of a family that is 
     a recipient of assistance under the State program funded 
     under part A, to the extent that--
       ``(A) the State distributes the amount to the family;
       ``(B) the total of the amounts so distributed to the family 
     during the month--
       ``(i) exceeds the amount (if any) that, as of December 31, 
     2001, was required under State law to be distributed to a 
     family under paragraph (1)(B); and
       ``(ii) does not exceed the greater of--

       ``(I) $100; or
       ``(II) $50 plus the amount described in clause (i); and

       ``(C) the amount is disregarded in determining the amount 
     and type of assistance provided to the family under the State 
     program funded under part A.''.
       (b) Applicability.--The amendments made by subsection (a) 
     shall apply to amounts distributed on or after October 1, 
     2008.

     SEC. 8302. STATE OPTION TO PASS THROUGH ALL CHILD SUPPORT 
                   PAYMENTS TO FAMILIES THAT FORMERLY RECEIVED 
                   TANF.

       (a) In General.--Section 457(a) (42 U.S.C. 657(a)), as 
     amended by section 8301(a) of this Act, is amended--
       (1) in paragraph (2)(B), in the matter preceding clause 
     (i), by inserting ``, except as provided in paragraph (8),'' 
     after ``shall''; and
       (2) by adding at the end the following:
       ``(8) State option to pass through all child support 
     payments to families that formerly received tanf.--In lieu of 
     applying paragraph (2) to any family described in paragraph 
     (2), a State may distribute to the family any amount 
     collected during a month on behalf of the family.''.
       (b) Applicability.--The amendments made by subsection (a) 
     shall apply to amounts distributed on or after October 1, 
     2008.

     SEC. 8303. MANDATORY REVIEW AND ADJUSTMENT OF CHILD SUPPORT 
                   ORDERS FOR FAMILIES RECEIVING TANF.

       (a) In General.--Section 466(a)(10)(A)(i) (42 U.S.C. 
     666(a)(10)(A)(i)) is amended--
       (1) by striking ``parent, or,'' and inserting ``parent 
     or''; and
       (2) by striking ``upon the request of the State agency 
     under the State plan or of either parent,''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect on October 1, 2007.

     SEC. 8304. MANDATORY FEE FOR SUCCESSFUL CHILD SUPPORT 
                   COLLECTION FOR FAMILY THAT HAS NEVER RECEIVED 
                   TANF.

       (a) In General.--Section 454(6)(B) (42 U.S.C. 654(6)(B)) is 
     amended--
       (1) by inserting ``(i)'' after ``(B)'';
       (2) by redesignating clauses (i) and (ii) as subclauses (I) 
     and (II), respectively;
       (3) by adding ``and'' after the semicolon; and
       (4) by adding after and below the end the following new 
     clause:
       ``(ii) in the case of an individual who has never received 
     assistance under a State program funded under part A and for 
     whom the State has collected at least $500 of support, the 
     State shall impose an annual fee of $25 for each case in 
     which services are furnished, which shall be retained by the 
     State from support collected on behalf of the individual (but 
     not from the 1st $500 so collected), paid by the individual 
     applying for the services, recovered from the absent parent, 
     or paid by the State out of its own funds (the payment of 
     which from State funds shall not be considered as an 
     administrative cost of the State for the operation of the 
     plan, and such fees shall be considered income to the 
     program);''.
       (b) Conforming Amendment.--Section 457(a)(3) (42 U.S.C. 
     657(a)(3)) is amended to read as follows:
       ``(3) Families that never received assistance.--In the case 
     of any other family, the State shall distribute to the family 
     the portion of the amount so collected that remains after 
     withholding any fee pursuant to section 454(6)(B)(ii).''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on October 1, 2006.

     SEC. 8305. REPORT ON UNDISTRIBUTED CHILD SUPPORT PAYMENTS.

       Not later than 6 months after the date of the enactment of 
     this Act, the Secretary of Health and Human Services 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 procedures that the States use generally to 
     locate custodial parents for whom child support has been 
     collected but not yet distributed. The report shall include 
     an estimate of the total amount of undistributed child 
     support and the average length of time it takes undistributed 
     child support to be distributed. To the extent the Secretary 
     deems appropriate, the Secretary shall include in the report 
     recommendations as to whether additional procedures should be 
     established at the State or Federal level to expedite the 
     payment of undistributed child support.

     SEC. 8306. DECREASE IN AMOUNT OF CHILD SUPPORT ARREARAGE 
                   TRIGGERING PASSPORT DENIAL.

       (a) In General.--Section 452(k)(1) (42 U.S.C. 652(k)(1)) is 
     amended by striking ``$5,000'' and inserting ``$2,500''.
       (b) Conforming Amendment.--Section 454(31) (42 U.S.C. 
     654(31)) is amended by striking ``$5,000'' and inserting 
     ``$2,500''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on October 1, 2006.

     SEC. 8307. USE OF TAX REFUND INTERCEPT PROGRAM TO COLLECT 
                   PAST-DUE CHILD SUPPORT ON BEHALF OF CHILDREN 
                   WHO ARE NOT MINORS.

       (a) In General.--Section 464 (42 U.S.C. 664) is amended--
       (1) in subsection (a)(2)(A), by striking ``(as that term is 
     defined for purposes of this paragraph under subsection 
     (c))''; and
       (2) in subsection (c)--
       (A) in paragraph (1)--
       (i) by striking ``(1) Except as provided in paragraph (2), 
     as used in'' and inserting ``In''; and

[[Page H10614]]

       (ii) by inserting ``(whether or not a minor)'' after ``a 
     child'' each place it appears; and
       (B) by striking paragraphs (2) and (3).
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect on October 1, 2007.

     SEC. 8308. GARNISHMENT OF COMPENSATION PAID TO VETERANS FOR 
                   SERVICE-CONNECTED DISABILITIES IN ORDER TO 
                   ENFORCE CHILD SUPPORT OBLIGATIONS.

       (a) In General.--Section 459(h) (42 U.S.C. 659(h)) is 
     amended--
       (1) in paragraph (1)(A)(ii)(V), by striking all that 
     follows ``Armed Forces'' and inserting a semicolon; and
       (2) by adding at the end the following:
       ``(3) Limitations with respect to compensation paid to 
     veterans for service-connected disabilities.--Notwithstanding 
     any other provision of this section:
       ``(A) Compensation described in paragraph (1)(A)(ii)(V) 
     shall not be subject to withholding pursuant to this 
     section--
       ``(i) for payment of alimony; or
       ``(ii) for payment of child support if the individual is 
     fewer than 60 days in arrears in payment of the support.
       ``(B) Not more than 50 percent of any payment of 
     compensation described in paragraph (1)(A)(ii)(V) may be 
     withheld pursuant to this section.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect on October 1, 2007.

     SEC. 8309. MAINTENANCE OF TECHNICAL ASSISTANCE FUNDING.

       Section 452(j) (42 U.S.C. 652(j)) is amended by inserting 
     ``or the amount appropriated under this paragraph for fiscal 
     year 2002, whichever is greater,'' before ``which shall be 
     available''.

     SEC. 8310. MAINTENANCE OF FEDERAL PARENT LOCATOR SERVICE 
                   FUNDING.

       Section 453(o) (42 U.S.C. 653(o)) is amended--
       (1) in the 1st sentence, by inserting ``or the amount 
     appropriated under this paragraph for fiscal year 2002, 
     whichever is greater,'' before ``which shall be available''; 
     and
       (2) in the 2nd sentence, by striking ``for each of fiscal 
     years 1997 through 2001''.

     SEC. 8311. INFORMATION COMPARISONS WITH INSURANCE DATA.

       (a) Duties of the Secretary.--Section 452 (42 U.S.C. 652) 
     is amended by adding at the end the following:
       ``(m) Comparisons With Insurance Information.--
       ``(1) In general.--The Secretary, through the Federal 
     Parent Locator Service, may--
       ``(A) compare information concerning individuals owing 
     past-due support with information maintained by insurers (or 
     their agents) concerning insurance claims, settlements, 
     awards, and payments, and
       ``(B) furnish information resulting from such a comparison 
     to the State agencies responsible for collecting child 
     support from such individuals.
       ``(2) Liability.--An insurer (including any agent of an 
     insurer) shall not be liable under any Federal or State law 
     to any person for any disclosure provided for under this 
     subsection, or for any other action taken in good faith in 
     accordance with this subsection.''.
       (b) State Reimbursement of Federal Costs.--Section 
     453(k)(3) (42 U.S.C. 653(k)(3)) is amended by inserting ``or 
     section 452(m)'' after ``this section''.

     SEC. 8312. TRIBAL ACCESS TO THE FEDERAL PARENT LOCATOR 
                   SERVICE.

       Section 453(c)(1) (42 U.S.C. 653(c)(1)) is amended by 
     inserting ``or of any Indian tribe or tribal organization'' 
     after ``any agent or attorney of any State''.

     SEC. 8313. REIMBURSEMENT OF SECRETARY'S COSTS OF INFORMATION 
                   COMPARISONS AND DISCLOSURE FOR ENFORCEMENT OF 
                   OBLIGATIONS ON HIGHER EDUCATION ACT LOANS AND 
                   GRANTS.

       Section 453(j)(6)(F) (42 U.S.C. 653(j)(6)(F)) is amended by 
     striking ``additional''.

     SEC. 8314. TECHNICAL AMENDMENT RELATING TO COOPERATIVE 
                   AGREEMENTS BETWEEN STATES AND INDIAN TRIBES.

       Section 454(33) (42 U.S.C. 654(33)) is amended by striking 
     ``that receives funding pursuant to section 428 and''.

     SEC. 8315. STATE OPTION TO USE STATEWIDE AUTOMATED DATA 
                   PROCESSING AND INFORMATION RETRIEVAL SYSTEM FOR 
                   INTERSTATE CASES.

       Section 466(a)(14)(A)(iii) (42 U.S.C. 666(a)(14)(A)(iii)) 
     is amended by inserting ``(but the assisting State may 
     establish a corresponding case based on such other State's 
     request for assistance)'' before the semicolon.

     SEC. 8316. MODIFICATION OF RULE REQUIRING ASSIGNMENT OF 
                   SUPPORT RIGHTS AS A CONDITION OF RECEIVING 
                   TANF.

       (a) In General.--Section 408(a)(3) (42 U.S.C. 608(a)(3)) is 
     amended to read as follows:
       ``(3) No assistance for families not assigning certain 
     support rights to the state.--
       ``(A) In general.--Subject to subparagraph (B), a State to 
     which a grant is made under section 403 shall require, as a 
     condition of providing assistance to a family under the State 
     program funded under this part, that a member of the family 
     assign to the State any rights the family member may have (on 
     behalf of the family member or of any other person for whom 
     the family member has applied for or is receiving such 
     assistance) to--
       ``(i) support from any other person which accrues during 
     the period that the family receives assistance under the 
     program; and
       ``(ii) at the option of the State, support from any other 
     person which has accrued before such period.
       ``(B) Limitation.--The total amount of support that may be 
     required to be provided with respect to rights assigned to a 
     State by a family member pursuant to subparagraph (A) shall 
     not exceed the total amount of assistance provided by the 
     State to the family.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on October 1, 2008.

     SEC. 8317. STATE OPTION TO DISCONTINUE CERTAIN SUPPORT 
                   ASSIGNMENTS.

       Section 457(b) (42 U.S.C. 657(b)) is amended by striking 
     ``shall'' and inserting ``may''.

     SEC. 8318. TECHNICAL CORRECTION.

       The second paragraph (7) of section 453(j) (42 U.S.C. 
     653(j)) is amended by striking ``(7)'' and inserting ``(9)''.

     SEC. 8319. REDUCTION IN RATE OF REIMBURSEMENT OF CHILD 
                   SUPPORT ADMINISTRATIVE EXPENSES.

       Section 455(a)(2) (42 U.S.C. 655(a)(2)) is amended--
       (1) in subparagraph (B), by striking ``, and'' and 
     inserting a semicolon;
       (2) in subparagraph (C), by striking ``fiscal year 1990 and 
     each fiscal year thereafter.'' and inserting ``fiscal years 
     1990 through 2006;''; and
       (3) by adding at the end the following:
       ``(D) 62 percent for fiscal year 2007;
       ``(E) 58 percent for fiscal year 2008;
       ``(F) 54 percent for fiscal year 2009; and
       ``(G) 50 percent for fiscal year 2010 and each fiscal year 
     thereafter.''.

     SEC. 8320. INCENTIVE PAYMENTS.

       (a) In General.--Section 455(a)(1) (42 U.S.C. 655(a)(1)) is 
     amended by inserting ``from amounts paid to the State under 
     section 458 or'' before ``to carry out an agreement''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on October 1, 2007.

                       Subtitle D--Child Welfare

     SEC. 8401. EXTENSION OF AUTHORITY TO APPROVE DEMONSTRATION 
                   PROJECTS.

       Section 1130(a)(2) (42 U.S.C. 1320a-9(a)(2)) is amended by 
     striking ``2003'' and inserting ``2010''.

     SEC. 8402. ELIMINATION OF LIMITATION ON NUMBER OF WAIVERS.

       Section 1130(a)(2) (42 U.S.C. 1320a-9(a)(2)) is amended by 
     striking ``not more than 10''.

     SEC. 8403. ELIMINATION OF LIMITATION ON NUMBER OF STATES THAT 
                   MAY BE GRANTED WAIVERS TO CONDUCT DEMONSTRATION 
                   PROJECTS ON SAME TOPIC.

       Section 1130 (42 U.S.C. 1320a-9) is amended by adding at 
     the end the following:
       ``(h) No Limit on Number of States That May Be Granted 
     Waivers to Conduct Same or Similar Demonstration Projects.--
     The Secretary shall not refuse to grant a waiver to a State 
     under this section on the grounds that a purpose of the 
     waiver or of the demonstration project for which the waiver 
     is necessary would be the same as or similar to a purpose of 
     another waiver or project that is or may be conducted under 
     this section.''.

     SEC. 8404. ELIMINATION OF LIMITATION ON NUMBER OF WAIVERS 
                   THAT MAY BE GRANTED TO A SINGLE STATE FOR 
                   DEMONSTRATION PROJECTS.

       Section 1130 (42 U.S.C. 1320a-9) is further amended by 
     adding at the end the following:
       ``(i) No Limit on Number of Waivers Granted to, or 
     Demonstration Projects That May Be Conducted by, a Single 
     State.--The Secretary shall not impose any limit on the 
     number of waivers that may be granted to a State, or the 
     number of demonstration projects that a State may be 
     authorized to conduct, under this section.''.

     SEC. 8405. STREAMLINED PROCESS FOR CONSIDERATION OF 
                   AMENDMENTS TO AND EXTENSIONS OF DEMONSTRATION 
                   PROJECTS REQUIRING WAIVERS.

       Section 1130 (42 U.S.C. 1320a-9) is further amended by 
     adding at the end the following:
       ``(j) Streamlined Process for Consideration of Amendments 
     and Extensions.--The Secretary shall develop a streamlined 
     process for consideration of amendments and extensions 
     proposed by States to demonstration projects conducted under 
     this section.''.

     SEC. 8406. AVAILABILITY OF REPORTS.

       Section 1130 (42 U.S.C. 1320a-9) is further amended by 
     adding at the end the following:
       ``(k) Availability of Reports.--The Secretary shall make 
     available to any State or other interested party any report 
     provided to the Secretary under subsection (f)(2), and any 
     evaluation or report made by the Secretary with respect to a 
     demonstration project conducted under this section, with a 
     focus on information that may promote best practices and 
     program improvements.''.

     SEC. 8407. CLARIFICATION OF ELIGIBILITY FOR FOSTER CARE 
                   MAINTENANCE PAYMENTS AND ADOPTION ASSISTANCE.

       (a) Foster Care Maintenance Payments.--Section 472(a) (42 
     U.S.C. 672(a)) is amended to read as follows:
       ``(a) In General.--
       ``(1) Eligibility.--Each State with a plan approved under 
     this part shall make foster care maintenance payments on 
     behalf of each child who has been removed from the home of a 
     relative specified in section 406(a) (as in effect on July 
     16, 1996) into foster care if--
       ``(A) the removal and foster care placement met, and the 
     placement continues to meet, the requirements of paragraph 
     (2); and

[[Page H10615]]

       ``(B) the child, while in the home, would have met the AFDC 
     eligibility requirement of paragraph (3).
       ``(2) Removal and foster care placement requirements.--The 
     removal and foster care placement of a child meet the 
     requirements of this paragraph if--
       ``(A) the removal and foster care placement are in 
     accordance with--
       ``(i) a voluntary placement agreement entered into by a 
     parent or legal guardian of the child who is the relative 
     referred to in paragraph (1); or
       ``(ii) a judicial determination to the effect that 
     continuation in the home from which removed would be contrary 
     to the welfare of the child and that reasonable efforts of 
     the type described in section 471(a)(15) for a child have 
     been made;
       ``(B) the child's placement and care are the responsibility 
     of--
       ``(i) the State agency administering the State plan 
     approved under section 471; or
       ``(ii) any other public agency with which the State agency 
     administering or supervising the administration of the State 
     plan has made an agreement which is in effect; and
       ``(C) the child has been placed in a foster family home or 
     child-care institution.
       ``(3) AFDC eligibility requirement.--
       ``(A) In general.--A child in the home referred to in 
     paragraph (1) would have met the AFDC eligibility requirement 
     of this paragraph if the child--
       ``(i) would have received aid under the State plan approved 
     under section 402 (as in effect on July 16, 1996) in the 
     home, in or for the month in which the agreement was entered 
     into or court proceedings leading to the determination 
     referred to in paragraph (2)(A)(ii) of this subsection were 
     initiated; or
       ``(ii)(I) would have received the aid in the home, in or 
     for the month referred to in clause (i), if application had 
     been made therefor; or
       ``(II) had been living in the home within 6 months before 
     the month in which the agreement was entered into or the 
     proceedings were initiated, and would have received the aid 
     in or for such month, if, in such month, the child had been 
     living in the home with the relative referred to in paragraph 
     (1) and application for the aid had been made.
       ``(B) Resources determination.--For purposes of 
     subparagraph (A), in determining whether a child would have 
     received aid under a State plan approved under section 402 
     (as in effect on July 16, 1996), a child whose resources 
     (determined pursuant to section 402(a)(7)(B), as so in 
     effect) have a combined value of not more than $10,000 shall 
     be considered a child whose resources have a combined value 
     of not more than $1,000 (or such lower amount as the State 
     may determine for purposes of section 402(a)(7)(B)).
       ``(4) Eligibility of certain alien children.--Subject to 
     title IV of the Personal Responsibility and Work Opportunity 
     Reconciliation Act of 1996, if the child is an alien 
     disqualified under section 245A(h) or 210(f) of the 
     Immigration and Nationality Act from receiving aid under the 
     State plan approved under section 402 in or for the month in 
     which the agreement described in paragraph (2)(A)(i) was 
     entered into or court proceedings leading to the 
     determination described in paragraph (2)(A)(ii) were 
     initiated, the child shall be considered to satisfy the 
     requirements of paragraph (3), with respect to the month, if 
     the child would have satisfied the requirements but for the 
     disqualification.''.
       (b) Adoption Assistance.--Section 473(a)(2) (42 U.S.C. 
     673(a)(2)) is amended to read as follows:
       ``(2)(A) For purposes of paragraph (1)(B)(ii), a child 
     meets the requirements of this paragraph if the child--
       ``(i)(I)(aa) was removed from the home of a relative 
     specified in section 406(a) (as in effect on July 16, 1996) 
     and placed in foster care in accordance with a voluntary 
     placement agreement with respect to which Federal payments 
     are provided under section 474 (or section 403, as such 
     section was in effect on July 16, 1996), or in accordance 
     with a judicial determination to the effect that continuation 
     in the home would be contrary to the welfare of the child; 
     and
       ``(bb) met the requirements of section 472(a)(3) with 
     respect to the home referred to in item (aa) of this 
     subclause;
       ``(II) meets all of the requirements of title XVI with 
     respect to eligibility for supplemental security income 
     benefits; or
       ``(III) is a child whose costs in a foster family home or 
     child-care institution are covered by the foster care 
     maintenance payments being made with respect to the minor 
     parent of the child as provided in section 475(4)(B); and
       ``(ii) has been determined by the State, pursuant to 
     subsection (c) of this section, to be a child with special 
     needs.
       ``(B) Section 472(a)(4) shall apply for purposes of 
     subparagraph (A) of this paragraph, in any case in which the 
     child is an alien described in such section.
       ``(C) A child shall be treated as meeting the requirements 
     of this paragraph for the purpose of paragraph (1)(B)(ii) if 
     the child--
       ``(i) meets the requirements of subparagraph (A)(ii);
       ``(ii) was determined eligible for adoption assistance 
     payments under this part with respect to a prior adoption;
       ``(iii) is available for adoption because--
       ``(I) the prior adoption has been dissolved, and the 
     parental rights of the adoptive parents have been terminated; 
     or
       ``(II) the child's adoptive parents have died; and
       ``(iv) fails to meet the requirements of subparagraph (A) 
     but would meet such requirements if--
       ``(I) the child were treated as if the child were in the 
     same financial and other circumstances the child was in the 
     last time the child was determined eligible for adoption 
     assistance payments under this part; and
       ``(II) the prior adoption were treated as never having 
     occurred.''.

     SEC. 8408. CLARIFICATION REGARDING FEDERAL MATCHING OF 
                   CERTAIN ADMINISTRATIVE COSTS UNDER THE FOSTER 
                   CARE MAINTENANCE PAYMENTS PROGRAM.

       (a) Administrative Costs Relating to Unlicensed Care.--
     Section 472 (42 U.S.C. 672) is amended by inserting after 
     subsection (h) the following:
       ``(i) Administrative Costs Associated With Otherwise 
     Eligible Children not in Licensed Foster Care Settings.--
     Expenditures by a State that would be considered 
     administrative expenditures for purposes of section 474(a)(3) 
     if made with respect to a child who was residing in a foster 
     family home or child-care institution shall be so considered 
     with respect to a child not residing in such a home or 
     institution--
       ``(1) in the case of a child who has been removed in 
     accordance with subsection (a) of this section from the home 
     of a relative specified in section 406(a) (as in effect on 
     July 16, 1996), only for expenditures--
       ``(A) with respect to a period of not more than the lesser 
     of 12 months or the average length of time it takes for the 
     State to license or approve a home as a foster home, in which 
     the child is in the home of a relative and an application is 
     pending for licensing or approval of the home as a foster 
     family home; or
       ``(B) with respect to a period of not more than 1 calendar 
     month when a child moves from a facility not eligible for 
     payments under this part into a foster family home or child 
     care institution licensed or approved by the State; and
       ``(2) in the case of any other child who is potentially 
     eligible for benefits under a State plan approved under this 
     part and at imminent risk of removal from the home, only if--
       ``(A) reasonable efforts are being made in accordance with 
     section 471(a)(15) to prevent the need for, or if necessary 
     to pursue, removal of the child from the home; and
       ``(B) the State agency has made, not less often than every 
     6 months, a determination (or redetermination) as to whether 
     the child remains at imminent risk of removal from the 
     home.''.
       (b) Conforming Amendment.--Section 474(a)(3) of such Act 
     (42 U.S.C. 674(a)(3)) is amended by inserting ``subject to 
     section 472(i)'' before ``an amount equal to''.

     SEC. 8409. TECHNICAL CORRECTION.

       Section 1130(b)(1) (42 U.S.C. 1320a-9(b)(1)) is amended by 
     striking ``422(b)(9)'' and inserting ``422(b)(10)''.

     SEC. 8410. TECHNICAL CORRECTION.

       Section 470 (42 U.S.C. 670) is amended by striking ``June 
     1, 1995'' and inserting ``July 16, 1996''.

                Subtitle E--Supplemental Security Income

     SEC. 8501. REVIEW OF STATE AGENCY BLINDNESS AND DISABILITY 
                   DETERMINATIONS.

       Section 1633 (42 U.S.C. 1383b) is amended by adding at the 
     end the following:
       ``(e)(1) The Commissioner of Social Security shall review 
     determinations, made by State agencies pursuant to subsection 
     (a) in connection with applications for benefits under this 
     title on the basis of blindness or disability, that 
     individuals who have attained 18 years of age are blind or 
     disabled as of a specified onset date. The Commissioner of 
     Social Security shall review such a determination before any 
     action is taken to implement the determination.
       ``(2)(A) In carrying out paragraph (1), the Commissioner of 
     Social Security shall review--
       ``(i) at least 20 percent of all determinations referred to 
     in paragraph (1) that are made in fiscal year 2006;
       ``(ii) at least 40 percent of all such determinations that 
     are made in fiscal year 2007; and
       ``(iii) at least 50 percent of all such determinations that 
     are made in fiscal year 2008 or thereafter.
       ``(B) In carrying out subparagraph (A), the Commissioner of 
     Social Security shall, to the extent feasible, select for 
     review the determinations which the Commissioner of Social 
     Security identifies as being the most likely to be 
     incorrect.''.

     SEC. 8502. PAYMENT OF CERTAIN LUMP SUM BENEFITS IN 
                   INSTALLMENTS UNDER THE SUPPLEMENTAL SECURITY 
                   INCOME PROGRAM.

       (a) In General.--Section 1631(a)(10)(A)(i) (42 U.S.C. 
     1383(a)(10)(A)(i)) is amended by striking ``12'' and 
     inserting ``3''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect 3 months after the date of the enactment of 
     this Act.

                Subtitle F--State and Local Flexibility

     SEC. 8601. PROGRAM COORDINATION DEMONSTRATION PROJECTS.

       (a) Purpose.--The purpose of this section is to establish a 
     program of demonstration projects in a State or portion of a 
     State to coordinate multiple public assistance, workforce 
     development, and other programs, for

[[Page H10616]]

     the purpose of supporting working individuals and families, 
     helping families escape welfare dependency, promoting child 
     well-being, or helping build stronger families, using 
     innovative approaches to strengthen service systems and 
     provide more coordinated and effective service delivery.
       (b) Definitions.--In this section:
       (1) Administering secretary.--The term ``administering 
     Secretary'' means, with respect to a qualified program, the 
     head of the Federal agency responsible for administering the 
     program.
       (2) Qualified program.--The term ``qualified program'' 
     means--
       (A) a program under part A of title IV of the Social 
     Security Act; or
       (B) the program under title XX of such Act.
       (c) Application Requirements.--The head of a State entity 
     or of a sub-State entity administering 2 or more qualified 
     programs proposed to be included in a demonstration project 
     under this section shall (or, if the project is proposed to 
     include qualified programs administered by 2 or more such 
     entities, the heads of the administering entities (each of 
     whom shall be considered an applicant for purposes of this 
     section) shall jointly) submit to the administering Secretary 
     of each such program an application that contains the 
     following:
       (1) Programs included.--A statement identifying each 
     qualified program to be included in the project, and 
     describing how the purposes of each such program will be 
     achieved by the project.
       (2) Population served.--A statement identifying the 
     population to be served by the project and specifying the 
     eligibility criteria to be used.
       (3) Description and justification.--A detailed description 
     of the project, including--
       (A) a description of how the project is expected to improve 
     or enhance achievement of the purposes of the programs to be 
     included in the project, from the standpoint of quality, of 
     cost-effectiveness, or of both; and
       (B) a description of the performance objectives for the 
     project, including any proposed modifications to the 
     performance measures and reporting requirements used in the 
     programs.
       (4) Waivers requested.--A description of the statutory and 
     regulatory requirements with respect to which a waiver is 
     requested in order to carry out the project, and a 
     justification of the need for each such waiver.
       (5) Cost neutrality.--Such information and assurances as 
     necessary to establish to the satisfaction of the 
     administering Secretary, in consultation with the Director of 
     the Office of Management and Budget, that the proposed 
     project is reasonably expected to meet the applicable cost 
     neutrality requirements of subsection (d)(4).
       (6) Evaluation and reports.--An assurance that the 
     applicant will conduct ongoing and final evaluations of the 
     project, and make interim and final reports to the 
     administering Secretary, at such times and in such manner as 
     the administering Secretary may require.
       (7) Other information and assurances.--Such other 
     information and assurances as the administering Secretary may 
     require.
       (d) Approval of Applications.--
       (1) In general.--The administering Secretary with respect 
     to a qualified program that is identified in an application 
     submitted pursuant to subsection (c) may approve the 
     application and, except as provided in paragraph (2), waive 
     any requirement applicable to the program, to the extent 
     consistent with this section and necessary and appropriate 
     for the conduct of the demonstration project proposed in the 
     application, if the administering Secretary determines that 
     the project--
       (A) has a reasonable likelihood of achieving the objectives 
     of the programs to be included in the project;
       (B) may reasonably be expected to meet the applicable cost 
     neutrality requirements of paragraph (4), as determined by 
     the Director of the Office of Management and Budget; and
       (C) includes the coordination of 2 or more qualified 
     programs.
       (2) Provisions excluded from waiver authority.--A waiver 
     shall not be granted under paragraph (1) with respect to any 
     provision of law relating to--
       (A) civil rights or prohibition of discrimination;
       (B) purposes or goals of any program;
       (C) maintenance of effort requirements;
       (D) health or safety;
       (E) labor standards under the Fair Labor Standards Act of 
     1938; or
       (F) environmental protection;
       (3) Agreement of each administering secretary required.--
       (A) In general.--An applicant may not conduct a 
     demonstration project under this section unless each 
     administering Secretary with respect to any program proposed 
     to be included in the project has approved the application to 
     conduct the project.
       (B) Agreement with respect to funding and implementation.--
     Before approving an application to conduct a demonstration 
     project under this section, an administering Secretary shall 
     have in place an agreement with the applicant with respect to 
     the payment of funds and responsibilities required of the 
     administering Secretary with respect to the project.
       (4) Cost-neutrality requirement.--
       (A) General rule.--Notwithstanding any other provision of 
     law (except subparagraph (B)), the total of the amounts that 
     may be paid by the Federal Government for a fiscal year with 
     respect to the programs in the State in which an entity 
     conducting a demonstration project under this section is 
     located that are affected by the project shall not exceed the 
     estimated total amount that the Federal Government would have 
     paid for the fiscal year with respect to the programs if the 
     project had not been conducted, as determined by the Director 
     of the Office of Management and Budget.
       (B) Special rule.--If an applicant submits to the Director 
     of the Office of Management and Budget a request to apply the 
     rules of this subparagraph to the programs in the State in 
     which the applicant is located that are affected by a 
     demonstration project proposed in an application submitted by 
     the applicant pursuant to this section, during such period of 
     not more than 5 consecutive fiscal years in which the project 
     is in effect, and the Director determines, on the basis of 
     supporting information provided by the applicant, to grant 
     the request, then, notwithstanding any other provision of 
     law, the total of the amounts that may be paid by the Federal 
     Government for the period with respect to the programs shall 
     not exceed the estimated total amount that the Federal 
     Government would have paid for the period with respect to the 
     programs if the project had not been conducted.
       (5) 90-day approval deadline.--
       (A) In general.--If an administering Secretary receives an 
     application to conduct a demonstration project under this 
     section and does not disapprove the application within 90 
     days after the receipt, then--
       (i) the administering Secretary is deemed to have approved 
     the application for such period as is requested in the 
     application, except to the extent inconsistent with 
     subsection (e); and
       (ii) any waiver requested in the application which applies 
     to a qualified program that is identified in the application 
     and is administered by the administering Secretary is deemed 
     to be granted, except to the extent inconsistent with 
     paragraph (2) or (4) of this subsection.
       (B) Deadline extended if additional information is 
     sought.--The 90-day period referred to in subparagraph (A) 
     shall not include any period that begins with the date the 
     Secretary requests the applicant to provide additional 
     information with respect to the application and ends with the 
     date the additional information is provided.
       (e) Duration of Projects.--A demonstration project under 
     this section may be approved for a term of not more than 5 
     years.
       (f) Reports to Congress.--
       (1) Report on disposition of applications.--Within 90 days 
     after an administering Secretary receives an application 
     submitted pursuant to this section, the administering 
     Secretary shall submit to each Committee of the Congress 
     which has jurisdiction over a qualified program identified in 
     the application notice of the receipt, a description of the 
     decision of the administering Secretary with respect to the 
     application, and the reasons for approving or disapproving 
     the application.
       (2) Reports on projects.--Each administering Secretary 
     shall provide annually to the Congress a report concerning 
     demonstration projects approved under this section, 
     including--
       (A) the projects approved for each applicant;
       (B) the number of waivers granted under this section, and 
     the specific statutory provisions waived;
       (C) how well each project for which a waiver is granted is 
     improving or enhancing program achievement from the 
     standpoint of quality, cost-effectiveness, or both;
       (D) how well each project for which a waiver is granted is 
     meeting the performance objectives specified in subsection 
     (c)(3)(B);
       (E) how each project for which a waiver is granted is 
     conforming with the cost-neutrality requirements of 
     subsection (d)(4); and
       (F) to the extent the administering Secretary deems 
     appropriate, recommendations for modification of programs 
     based on outcomes of the projects.

       Subtitle G--Repeal of Continued Dumping and Subsidy Offset

     SEC. 8701. REPEAL OF CONTINUED DUMPING AND SUBSIDY OFFSET.

       (a) Repeal.--Section 754 of the Tariff Act of 1930 (19 
     U.S.C. 1675c), and the item relating to section 754 in the 
     table of contents for title VII of that Act, are repealed.
       (b) Existing Accounts.--All amounts remaining, upon the 
     enactment of this title, in any special account established 
     under section 754(e)(1) of the Tariff Act of 1930 (as in 
     effect on the day before the date of the enactment of this 
     title) shall be deposited in the general fund of the 
     Treasury.

                       Subtitle H--Effective Date

     SEC. 8801. EFFECTIVE DATE.

       (a) In General.--Except as otherwise provided in this 
     title, this title and the amendments made by this title shall 
     be effective as of October 1, 2005.
       (b) Exception.--In the case of a State plan under title IV 
     of the Social Security Act which the Secretary determines 
     requires State legislation in order for the plan to meet the 
     additional requirements imposed by the amendments made by 
     this title, the effective date of the amendments imposing the 
     additional requirements shall be 3 months after the first day 
     of the first calendar quarter beginning after the close of

[[Page H10617]]

     the first regular session of the State legislature that 
     begins after the date of the enactment of this Act. For 
     purposes of the preceding sentence, in the case of a State 
     that has a 2-year legislative session, each year of the 
     session shall be considered to be a separate regular session 
     of the State legislature.

  The SPEAKER pro tempore. The gentleman from Iowa (Mr. Nussle) and the 
gentleman from South Carolina (Mr. Spratt) each will control 1 hour.
  The Chair recognizes the gentleman from Iowa (Mr. Nussle).

                              {time}  2230

  Mr. NUSSLE. Mr. Speaker, several months ago, we approved the fiscal 
year 2006 budget resolution. In that budget, the Republicans and 
Congress laid out our plan, which is based on our fundamental 
principles to promote economic growth, create jobs, and control 
government spending. It is part of an overall plan.
  Today we stand at what is a critical juncture in implementing that 
plan and making it a reality. The Deficit Reduction Act starts the 
process of adopting the real policies and the real reforms that make 
these massive entitlement programs more effective, more efficient, and 
less costly.
  I expect, as we have already seen, that this is going to be a very 
vigorous and even sometimes contentious debate. I welcome that. I think 
we should all welcome that. I think that is what this Chamber is really 
for. It is what our constituents sent us here to do, to set the 
priorities, to come up with a solid plan, to do the real work, even if 
it is difficult, even if it is a challenge, even if you have to fight 
for it, even if you have to make a debate and a speech and everything 
else in order to get it done. The point is, we have got to work on this 
plan and see it through.
  This is far from the first day that we have been on the floor or 
worked in committees in order to get this done. Mr. Speaker, for the 
past three budget years, we have been working on this plan to get the 
economy going, to create jobs, to control spending, and to actually 
reduce the deficit. I would like to review our plan.
  First, Republicans committed to reduce the total discretionary 
spending, making the first actual reduction in the annual spending that 
happens because we vote on it here in Congress. That is the 
discretionary spending. It is the first time we have made an actual 
reduction in this nondiscretionary spending, this discretionary 
spending part of the budget. The first time we have done that since the 
1980s.
  Second, the Republicans committed to no tax increases. More 
importantly, we did not want an automatic tax increase happening. In 
fact, if Congress does not act this year, if we fail to pass the tax 
reconciliation, taxes automatically go up, no vote. They just go up.
  Third, we decided that we wanted to tackle these important mandatory 
programs. For the past 3 years, we have stuck to our plan, and we have 
produced results. Let me just show you this chart. Mr. Speaker, when we 
started this process, we had a $521 billion deficit that was staring us 
in the face, caused by what happened on September 11, 2001, the war in 
Afghanistan, the war in Iraq, the stock market dot-com bubble bursting, 
the emergency spending we had to deal with in order to deal with so 
many broken lives, so many challenges across the country in the wake of 
the terrorist attack.
  Homeland Security spending skyrocketed; and interestingly enough, the 
same opposition party who comes to the floor tonight decrying spending, 
decrying deficits voted for most of that spending that got us to the 
$521 billion worth of deficit. As part of implementing this plan, we 
reduced that deficit from $521 billion to $427 billion in the first 
year; $90-some billion in 1 year alone the deficit came down 
implementing that plan.
  Second year, that we just closed the books on, actual reduction from 
$521 billion to $427 billion to $319 billion. I will suggest to you 
that $319 billion is not where we want to be. We are heading in the 
right direction. We are heading in the right direction because we have 
a plan to grow the economy, to control spending, to create jobs, and 
create taxpayers. As a result of that, revenues have come in. The 
strong sustained growth in our economy has driven Federal tax receipts 
up over 15 percent over last year, even with tax reduction.
  Let me repeat that. I understand all the rhetoric on the floor here 
tonight, but we reduced taxes. The economy expanded. More money came 
into Washington. That is a fact, incontrovertible fact. No one can come 
to the floor tonight and tell you any differently. Revenues have 
increased as a result of strong economic growth.
  The Democrats act like this is the government's money that we are 
talking about here tonight, that all of these, whether it is tax 
reductions or spending or whatever it is, that this is the government's 
money. This is not the government's money.
  Mr. Speaker, this is the hard-working taxpayers' money. They do the 
working, they do the sweating, they do the toiling, they are the ones 
that open small businesses and farms. They are the ones that employ 
Americans. They are the ones that do not wait for the government to 
come to bail them out. If they have a tough year, they are the folks 
who do all the hard work and pay the taxes. It is their money that we 
are talking about here tonight. That surge of revenue, that surge of 
money coming from those taxpayers was the largest factor in this 
dramatic reduction of the deficit, nearly $100 billion this year, $200 
billion over the last 2 years.
  Even combined, growing the economy and limiting just that 30 percent 
of our spending is not going to be enough. It is not going to be enough 
to get where we need to be. The set of challenges still faces us.
  We added a third prong to this important deficit reduction. We 
committed for the first time in nearly a decade to reform and find 
savings in the largest portion of our Federal spending. That is what we 
are here to do tonight. It is part of that overall plan.
  This spending is what we call mandatory, our automatic pilot-kind of 
spending. It is over now 50 percent of the entire amount of money that 
is spent by the Federal Government; and it is without boundaries, it is 
without reform, and it is pretty much without any kind of review 
whatsoever. In fact, Congress does not even have to vote on these 
increases. Let me say that again so you understand. If we do nothing 
tonight, spending automatically increases, and we have got to go to the 
taxpayers to get more money. We have got to go to those hard-working 
Americans to get more money from them in order to run the government.
  Automatically, if we do nothing tonight, just like if we do nothing 
on taxes, they will automatically increase. That is the fantasy that we 
are dealing with tonight. That is the fantasy of our congressional 
budget process unfortunately, is things automatically occur if you do 
not do the hard work of reforming and reducing our spending and our 
taxes. Compounding the problem is that unchecked spending is growing 
faster than our economy, faster than inflation, and far beyond our 
means to sustain it whatsoever. The money is usually just feeding a 
gigantic bureaucracy. Really, this is a bureaucracy that is failing 
most of the people it is intended to help.
  I asked eight of our very able chairmen and their committees to go to 
work. I asked them to make some reforms. Over the last 6 months, 
hundreds of ideas were discussed. Hearings were held. We listened to 
our constituents, to scholars, to experts, to people who understand the 
intricacies of these programs. We partnered with the States. We talked 
to our Governors. All of the committees have met or exceeded the 
original savings targets with reforms, bringing the total of savings 
that we will consider here tonight to $50 billion over 5 years.
  Really, this is not about saving money. This is an effort to start 
reforming our largest Federal programs and ensure that they can 
continue to serve their missions, to serve the people and help the ones 
who are most in need. Most of these programs desperately need reform. 
In many cases, they are operating on decades-old models.
  Take Medicaid as an example. We are talking about Medicaid tonight as 
just one of the myriad programs, invented in 1965 before the personal 
computer, before we walked on the Moon. Yes, it is a program we all 
support; but, yes, it is a program in need of dramatic reform in order 
to meet the needs of our changing society and Nation.
  Most of these programs desperately need this reform. They are 
operating

[[Page H10618]]

on these models, and we need to make this change. This process that we 
call reconciliation is just one of the few tools that we have at our 
disposal in order to make sure that we can go through this process.
  I want to give you a sampling of the reforms that are in this 
package. We expand and build upon the welfare reform that was so 
successful from 1996. We reformed Medicaid, just as the Governors have 
asked us to give the States the flexibility in those 50 laboratories to 
deliver a better-quality service to the people who need them.
  We reformed food stamps, a program that helped so many in need, but 
is in so much need of reform. We enhanced pension security, just at a 
time when the Pension Benefit Guaranty Corporation has come out telling 
us we need these reforms, otherwise people's pensions are a desperate 
concern.
  Boosting the low-income heating assistance, at a time we know the 
winter is going to be challenging and eliminating the excessive student 
loan overhead costs.
  People are going to come here tonight to protect the bureaucracy of 
these programs. We want to make sure that these programs are helping 
those in need. These are just a good start. But these reforms and 
savings are not going to solve the long-term spending problem in a 
single stroke. But if you listen to the debate, it will sound tonight 
like we are eliminating half the Federal Government. You will hear 
debate tonight that will make it sound like we have eliminated these 
programs.
  In fact, what we are talking about here is the total amount of this 
bill. If you take all of it together, the total savings amounts to less 
than one-half of 1 percent over the next 5 years. These programs will 
grow. What we are saying is we just need to slow them down a little bit 
and instill some reforms so that they can work better. Even though our 
opponents will claim that these are cuts, spending will continue to 
grow under each of these programs faster, even, than inflation.
  Under our plan, Medicaid is an example. We will continue to grow at 
7.5 percent instead of what it is currently growing at, which all of 
our Governors came to Washington to say was an unsustainable rate at 
7.7 percent. That is not a cut. Only in Washington would that be called 
a cut.
  I know my friends on the other side will disagree with our plan to 
reform our government programs and achieve these savings for American 
taxpayers. That is fair. We can have that debate tonight. But I ask 
you, through the Speaker, where is your plan?
  You were given an opportunity to present a plan tonight. You will 
come to the floor tonight and tell us how important these programs are 
and how they are already failing Americans, but you have not one 
scintilla of an idea of how to make sure that these programs can 
continue.
  What is your plan to reform these important programs? What are your 
innovative ideas, or is it simply increase taxes on hard-working 
Americans? Is it simply more politics as usual? Is it more press 
releases and attack ads? I have no doubt that is what it is going to 
be.
  I hope Democrats do not plan to come and waste our time tonight, 
telling us yet again that you do not agree with us. I mean, gee, that 
is really news. Mr. Speaker, in fact, boy, look at the balcony where 
all the reporters usually sit. It is really news that you do not 
support our plan. It is really news that you disagree with the 
Republicans. It is really news that Republicans and Democrats are 
fighting. That is not news at all.
  What would be news is if you came forward with an alternative. That 
would be news. If you came with a plan, that would actually be a 
surprise. It is not going to happen tonight.
  You were allowed to present a plan. I am proud to present our plan to 
reform these very important government programs that achieve savings 
for hard-working American people who pay the taxes around here. It is 
part of our successful ongoing effort during one of the most 
challenging times in our history to promote personal responsibility, to 
reform government bureaucracy, the same bureaucracy that they will 
defend tonight is the same bureaucracy that did not get the job done 
down in the gulf. They decry the bureaucracy on the one hand, and yet 
they try and protect it on the other.

                              {time}  2245

  This eliminates some of the waste, fraud and abuse within our system. 
And it grows our economy to create jobs and opportunities for the 
American people. We have a plan to reduce the deficit and to govern 
America.
  Mr. Speaker, I ask you, where is their plan? Where is your agenda for 
America, to govern and to reduce your deficit and get us back on path?
  I ask that we support the only plan and the best plan and that is the 
plan we propose tonight.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SPRATT. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, with all due respect, this bill is a sham. This bill 
does not reduce the deficit. It increases the deficit by at least $7 
billion, and it results from a budget resolution passed a few months 
ago that does not lower the deficit. It raises the deficit by over $100 
million over the next 5 years.
  Now, I know the supporters of this bill claim it is going to help for 
Hurricanes Katrina and Rita, well, that is a phony claim, too. This 
bill has nothing to do with paying for Katrina. It has everything to do 
with facilitating further tax cuts. This bill comes out of a larger 
budget resolution for 2006 that calls for a total of $106 billion in 
new and additional tax cuts, $70 billion in reconciled tax cuts, $36 
billion in unreconciled tax cuts. So the spending cuts in this bill are 
really just the first step in a three-step process.
  Step number two will come tomorrow or soon thereafter when tax cuts 
are introduced in the form of another reconciliation bill. And when 
these two are put together, the result will be a bigger deficit. So 
this is not a deficit reduction bill. It does not lead to deficit 
reduction. And after the tax cuts are passed, there will not be a dime 
left to pay for Katrina and Rita, but there will be a bigger deficit. 
And that brings on the third step in this process and that is a $781 
billion increase in the national debt of the United States of America. 
That is, this bill is part of the process that will require an increase 
in the national debt ceiling of $781 billion. As you can see, over the 
last 4 fiscal years, to accommodate the budgets of this administration 
and the leadership of this Congress, the Congress has raised the legal 
debt ceiling of the United States by $3 trillion 15 billion, of which 
$781 billion is included in this budget resolution, deemed approved 
when we pass the budget resolution.
  Once upon a time, the purpose for reconciliation was to reduce the 
deficit, rein in the deficit. But the reconciliation bills for this 
year, this one and the tax bill to come, stand that purpose on its 
head. They actually raise the deficit for the reasons I have just 
mentioned. And this is our first reason for opposing the bill. In the 
end, it will not reduce or rein in the deficit. It will only make it 
worse.
  Let me answer the gentleman's charge of where is our plan? We do not 
need a plan. We produced a plan as an alternate budget which they chose 
not to vote for just a few months ago. The budget resolution for 2006 
which we brought to this House floor would have balanced the budget in 
the year 2012, and accumulated far less debt than their budget 
resolution in the process.
  Where is the plan tonight? We do not need a plan because this plan 
tonight on the House floor is a plan to permit further tax cuts. It was 
our feeling that when you have a $412 billion deficit, and that is what 
it was in 2004, the first rule of holes is to quit digging. Do not make 
the deficit worse. So we did not propose further tax cuts that would 
have made the deficit worse, which we would have done and we are trying 
to mitigate with this particular bill. That is why we did not have a 
plan here. Our budget did not call for it. But our budget resolution 
would put the budget in the surplus again by the year 2012.
  This bill calls itself ``The Deficit Reduction Act of 2005,'' but it 
does not live up to its name. This bill results from a budget 
resolution that does not lower the deficit. The bill raises the deficit 
by $100 billion over the next 5 years.
  Supporters claim that this bill will help pay for Hurricanes Katrina 
and Rita. This too is a phoney claim. This bill has nothing to do with 
paying for Katrina; it has everything to do with facilitating further 
tax cuts. This bill comes out

[[Page H10619]]

of a larger budget resolution that calls for a total of $106 billion in 
new and additional tax cuts: $70 billion in reconciled tax cuts, along 
with $36 billion in unreconciled tax cuts.
  The spending cuts in this bill are the first step in a three-step 
process. The second step will come tomorrow or soon thereafter in the 
form of tax cuts, and when these two steps are completed, the net 
result will be an increase in the deficit of around $7 billion. After 
the tax cuts are passed, there will not be a dime left to pay for 
Katrina and Rita. But there will be a bigger deficit, and so that 
brings in the third step in this process, a $781 billion increase in 
the government's debt ceiling. The budget resolution of 2006 already 
deems its approval by the House.
  Once upon a time, the purpose of reconciliation was to rein in the 
deficit. The reconciliation bills for this year stand that purpose on 
its head. They will actually raise the deficit, for reasons I have just 
mentioned. This year's budget resolution called for $106 billion in new 
tax cuts over five years. $70 billion of that is assured a fast track 
through the Senate because these tax cuts are ``reconciled.'' The 
mandatory spending cuts, contained in this bill, will go to offset in 
part the revenues lost to tax cuts. Nothing goes toward deficit 
reduction or toward paying for Katrina, due to new and additional tax 
cuts.
  This is our first reason for opposing this bill. In the end, it will 
not reduce or rein in the deficit; it will only make it worse.
  Now, that outcome may not be immediately clear. That's because this 
reconciliation bill with spending cuts is being considered separately 
from a second reconciliation bill with tax cuts.
  There is another reason for the hiatus between spending cuts and tax 
cuts. The spending cuts made by this bill will hit the young, the old, 
the sick, and the poor, and hit them hard. The savings realized from 
these spending cuts will go to offset, partially at least, tax cuts for 
taxpayers whose incomes are in the upper brackets. Our colleagues from 
across the aisle want to avoid that connection, so they have separated 
the two bills.
  He may not buy the claim that this bill is ot pay for or partially 
offset the cost of Katrina. But we do believe that disaster relief is a 
form of shared sacrifice. So in paying for Katrina, we believe that the 
cost should be spread equitably over the entire country, and not just 
loaded on those least able to bear it. Yet that's exactly what this 
bill does. Who bears the brunt of the cuts made by this bill? Single 
mothers seeking child support from delinquent missing dads. Students 
struggling to pay loans for their college education. Foster children. 
The sick and poor whose only access to health care coverage is 
Medicaid, and families who depend on food stamps. Is this any way to 
pay for Hurricane Katrina? Or to pave the way for tax cuts?
  There are $11.4 bilion in cuts to Medicaid, including cuts over $8 
billion that fall upon beneficiaries through co-pays, premiums, and 
benefit reduction; -$14.3 billion in spending cuts to college student 
loan programs over 5-years, of which $7.8 billion is realized through 
increases in the interest rates and fees that students pay; -$4.9 
billion in cuts to child support enforcement, which will cut back the 
state's capacity to enforce child support orders, -$577 million in 
foster care cuts; $732 million in SSI cuts.
  Other provisions in this bill cut conservation by $504 million; cut 
deeply into rural development; and eliminate altogether the Byrd 
Amendment. The Byrd Amendment requires that duties paid by foreign 
firms, as a penalty for dumping their goods here at prices below cost, 
should be shared with U.S. firms damaged by import dumping.
  This reconciliation package claims to offset the cost of Hurricane 
Katrina. That, like the title, is a false claim for two reasons. Rather 
than helping pay for Katrina, many of the services cut, such as Food 
Stamps and Medicaid, benefit the victims of these disasters, the people 
who have been uprooted and displaced.

  I must say, we are mystified over this newfound interest in offsets. 
Since 2003, we have passed three huge supplementals to cover the cost 
of war and reconstruction in Iraq and Afghanistan. We supported all of 
them, because when we put troops in the field, we stand behind them. 
But any notion of offsetting those costs was dismissed out of hand.
  As we have asked before, why is it that you insist on offsetting the 
cost of rebuilding Biloxi, but not the cost of rebuilding Baghdad or 
Basra? Will the next supplemental for Iraq be offset? There is $50 
billion in ``bridge funding'' in the defense bill not offset.
  If this bill reduced the deficit or helped pay for Katrina, as you 
claim, we would still have trouble with the cuts you have chosen. Many 
hurt those who need help most. Moreover, the savings are overstated, 
and some won't stand scrutiny. For example:
  This bill includes $6.2 billion in increased PBGC premiums, but these 
premiums are entrusted to pay pension benefit guaranties, and in the 
near future, these additional premiums will be spent for that very 
purpose. You can claim these additional receipts as offsets to your tax 
cuts only because the federal government runs a cash-basis budget. If 
we accrue the liability for benefit guaranties, there would be no 
balance in this trust fund to use as an offset to tax cuts.
  This bill makes crippling cuts to child support enforcement: $4.9 
billion over five years. This will only shift the cost to the states, 
and if the states don't make up the difference, this reduction will 
result in a loss of more than $24 billion in child support over the 
next ten years. This is a flagrant case of false economy.
  And as if the reduction in child support were not tough enough, this 
bill allows Medicaid to charge children co-pays, and to deny care if 
the cost-sharing is not paid. At $3 and up, the co-pays may not seem 
much to us, but they can be a birch well for someone living at or below 
the poverty line. The co-pays as such do not save much in total 
Medicaid spending. The way they save money is by discouraging low-
income children and others from seeking medical care.
  This bill also claims one-time receipts from spectrum auctions to 
offset the recurring loss of revenues to permanent tax cuts, and it 
overestimates the net receipts by assuming the cost of converter boxes 
at $1 billion, though the cost is likely to be about three times that 
amount.
  This bill cuts $2.2 billion in mandatory spending to administer the 
student loan program. But these costs have to be paid. Guess where? Out 
of discretinary funds for education.
  In short, there are many reasons that this bill does not live up to 
its title. It makes deep and painful cuts all right, but it paves the 
way for new and additional tax cuts, despite an enormous deficit, and 
the end result is a larger deficit. In this respect, today's 
legislation is like the budget resolution that set it in motion. This 
is one in a series of fiscal actions that will cause the debt ceiling 
of the United States to be raised by $3 trillion between 2002 and 2006.
  So, not only is this bill a shame, it is also a sham.
  When the Bush Administration took office in 2001, it inherited a 
surplus and blithely predicted that the surplus would endure, even if 
its trillion dollar tax cuts were adopted. The Bush budget was adopted, 
and in fiscal 2005, the bottom line was not a surplus of $269 billion 
as it once projected, but a deficit of $319 billion. Realistic 
estimates show that these deficits are structural and will get worse, 
not better, over the next ten years, and that when the Bush 
Administration's full agenda is factored in, deficits will climb to 
$640 billion by 2015; the national debt will double; and debt service 
will more than double. This legislation will make deep and painful 
cuts, but it will not avoid that budget outcome or lead to balance in 
any time frame.
  So, we oppose this bill because it's not only a shame, but also a 
sham.
  Mr. Speaker, I ask unanimous consent to yield 12 minutes of my time 
to the gentleman from New York (Mr. Rangel) for the purposes of 
control.
  The SPEAKER pro tempore (Mr. Thornberry). Is there objection to the 
request of the gentleman from South Carolina?
  There was no objection.
  Mr. NUSSLE. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from 
Texas (Mr. Hensarling), a member of the committee.
  Mr. HENSARLING. Mr. Speaker, I thank the gentleman for yielding me 
time. I certainly thank him for his leadership on this vital issue.
  Mr. Speaker, everybody is aware of the classic ``A Christmas Carol'' 
by Charles Dickens. In it we are all familiar with the Ghost of 
Christmas Yet to Come.
  Mr. Speaker, let me tell you a little bit about the Ghost of 
Christmas Yet to Come for America if we follow the Democrats' plan and 
ignore the opportunity to reform government spending and achieve 
savings for the American family.
  Chairman Alan Greenspan has said, As a Nation we may have already 
made promises to coming generations of retirees that we will be unable 
to fulfill.
  The Brookings Institution, not exactly a bastion of conservative 
thought, has said, Expected growth and mandatory programs, along with 
projected increases in interest on the debt and defense, will absorb 
all of the government's currently projected revenue within eight years, 
leaving nothing for any other program.
  The Government Accountability Office has said that in order to 
balance the Federal budget in just one generation, total Federal 
spending would have to be cut in half or Federal taxes doubled. Federal 
taxes doubled.

[[Page H10620]]

  Now, we have heard our friends from the other side of the aisle say, 
well, your tax relief plan was all wrong. It is the source of all of 
our fiscal woes.
  Mr. Speaker, what does that mean? That means they want to bring back 
the death tax so that somebody has to visit the undertaker and the IRS 
on the same day. It means they want to cut the child tax credit as 
families are struggling to put food on the table, to put gas in the 
car. They want to bring back the marriage penalty and punish people who 
fall in love. They want to raise taxes 50 percent for low income 
families, take away the 10 percent bracket. And according to the 
Heritage Foundation, their program of tax increases will cost over 
400,000 jobs, turning paychecks into welfare checks.
  Ultimately, Mr. Speaker, this is what the future looks like. Doubling 
taxes on the American people as time goes by.
  What does that mean for a family of four? It means their 
transportation program is cut $1,300. A year's supply of gas they are 
taking away from the American family. Family housing will be cut 
$2,700; a choice between owning a home or renting a home. Food, $1,300 
will be cut from American families with their double the tax plan, 3 
months of groceries. Recreation budget cut, $900. There went the family 
vacation. They talk about compassion. There is no compassion there, Mr. 
Speaker.
  Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I want everyone to remember this date, November 17, 
because in the final analysis the debate that is taking place obviously 
between Democrats and Republicans will be decided not due to the 
eloquence of the gentleman from Iowa (Mr. Nussle) who obviously is 
leaving the House, but will be decided by the American people.
  There is an old western song, ``You Picked a Fine Time to Leave Me 
Lucille.'' To be the chairman of the Budget Committee and to try to 
find just what tax breaks can we give to the richest people that we 
have, and then to try to find out how you can really help the deficit 
by taking the two or $300 billion that we are paying for the war in 
Iraq and not even include that, and then to really try to look for the 
programs that deal with the most vulnerable people that we have, the 
gentleman from Iowa (Mr. Nussle) is leaving the floor.
  I can understand that. But he does not have to leave the Congress. 
When the people start looking and seeing what happens, they will be 
looking for the chairman that drafted this, and you will not be in 
Washington.
  And the reason I want people to remember November 17 is because 
November 17 is going to be an historic day. Oh, true, the gentleman 
from Iowa (Mr. Nussle) did not see reporters up there, but it is going 
to be reported tomorrow who voted on which side. So we ought to say it 
with a great bit of pride that old civil rights song, Which Side Are 
You on? And I tell you, we are so proud on this side that when the 
final vote is counted, those kids that are in foster homes that just 
have a little hope that maybe their lives could be better, the people 
on SSI that are disabled and everyone has left them, the kids who are 
trying to get a decent education and we are hitting them too, have we 
no shame on the other side as to what do we have to do in order to 
maintain the tax cuts?
  I would like to believe that this was something that could have been 
worked out. I would like to believe that Democrats and Republicans 
should not have to vote party line. But it is shameful when you look at 
the deficit, you look at the war, you look at the tax cuts and then you 
decide that you are going to reform this system.
  You try to reform Social Security and we looked at your cards and we 
found out that you are really trying to privatize it. Now every program 
that deals with the poor, every program that deals with those people 
that the Congress should be helping you want to reform.
  Well, let me say to the other side, I think when the votes are taken 
tonight people would know who have the compassion, who has the plan, 
and who has hopes for the future. And you are making it abundantly 
clear as you leave this body to do whatever you want to do, that you 
have given us a chance, I say to the gentleman from Iowa (Mr. Nussle), 
to present to the American people which side are they on? I personally 
would like to thank you for it, because it could not be made more clear 
as to the difference between our parties.
  No matter what religion you are, each one of them has some kind of 
verse that says as human beings, we have an obligation to help those 
people who are the lesser of our brothers and sisters. There is not a 
church and not a synagogue that has not looked on your reforms and they 
believe that you have forgotten the lesser of our brothers and sisters.
  I am not a very religious man, but I do believe that we will have a 
religious moments when it comes to the next election, and wherever you 
go, my prayers will be with you, I say to the gentleman from Iowa (Mr. 
Nussle).
  Mr. Speaker, I reserve the balance of my time.

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